Tag: financial independence

Why It’s So Important to Learn Personal Finance
When I graduated law school in 2009, I never thought about money.

Within a year, I had racked up $20,000 in credit card debt ($30,000 in today’s dollars).

And, that was on top of my student loan debt.

My salary at the time was $62,000. This was a problem.

After all these years, I still ask myself, “How did I let that happen?”

The answer, I now realize, is actually pretty simple.

I never learned about personal finance.

I wasn’t thinking about money. And, I certainly wasn’t talking about money.

It wasn’t until later that I learned that I had made every common money mistake in the book.
- Rented a fancy apartment with a garage parking spot that I didn’t need?
- Paid for Cubs season tickets I couldn’t afford?
- Traveled coast-to-coast? Traveled overseas? Put it all on credit cards?
Check… check.. and check.

It’s not that I intentionally decided to get into debt. Frankly, there was nothing unusual about me at all.

I generally wanted to make good choices. I am a relatively smart human. You are, too. You’re reading a personal finance blog with the entire internet at your fingertips.

Maybe you’re like me, and it hadn’t occurred to you that money was a thing you needed to learn about.

I didn’t know the first thing about money when I began my career.

When I graduate law school, I blindly assumed that I would earn a high enough income that I didn’t have to worry about money.

As I fell deeper and deeper into debt, I realized what a huge mistake that was.

Maybe that’s why I still remember the day so clearly when I realized I was financially heading in the wrong direction.

It was an ordinary Monday. I had grabbed my mail on the way out the door as I headed to my job at the courthouse. When I got to my desk, I opened my credit card statement and was stunned by what I saw.

$20,000 owed ($30,000 in today’s dollars) one year into my career.

I was ashamed. I was supposed to be smart. Responsible. Trustworthy.

How could I be so foolish?

Looking back, I shouldn’t have been so hard on myself. I had never learned about personal finances.

It would be like getting upset today that I’m bad at playing the piano when I never learned how to play in the first place.

I’m certain that if I taken a personal finance course, or read a personal finance blog, I wouldn’t have made the same mistakes.

I would have saved myself a lot of worry, frustration, and time if I had a basic personal finance education.

I also would have learned that so many others were struggling with consumer debt like I was. There was no reason to make it harder on myself by keeping my debt a secret and struggling alone.

I unnecessarily did it the hard way, but I figured out personal finance.

At that moment when the full weight of my debt hit me, I made it a priority to turn things around.

At the time, I didn’t know the solution.

But, I had been trained to do research in law school so I could find answers to hard questions. So, that’s what I did.

Along the way, I realized that the fundamental and basic personal finance principles are, well, basic.

George S. Clason wrote “The Richest Man in Babylon” nearly a century ago. His collection of parables set in ancient Babylon is legendary.

Everyone should read it. His advice is simple and excellent: spend less than you earn. Save. Invest.

The same fundamentals are as true today as they were then.

Easy, right?

Not exactly.

Photo by Unseen Studio on Unsplash

Personal finance education should be a constant in your life.

Money is about continuous mindset and choices.

The basic concepts are easy enough to understand. Consistently making good choices is hard.

Even as I was racking up credit card debt, I could have aced a quiz that asked, “Is it a good idea to spend more money than you earn every month and plummet deeper and deeper into debt?”

I knew that I was supposed to spend less than I earned. That didn’t stop me from overspending.

Knowing the right answer is not the same as actually doing the right thing.

The law students and lawyers I teach are smart people. Like me back in 2010, they generally know the right answers. They don’t need me to tell them to spend less than they earn.

I help them get to the next level by building a strong money mindset. Then, we work on the habits and skills that will allow them to consistently use money as a tool to control their circumstances.

It’s not enough to learn the basics of personal finance and then stop. As your life changes, you need to regularly evaluate your personal finances so your money stays in line with your values.

That’s why it’s important to make personal finance education a constant in your life, whether it’s through a blog, a course or coaching.

Too many of us choose to struggle with money alone.

For some reason, though, most of us choose to deal with money on our own. Alone, we struggle with anxiety about credit card debt and guilt about splurging on things we love.

This has never made sense to me.

Making good choices with our money is essential to a healthy and meaningful life.

Why don’t we talk more about these things with our friends and family?

That’s what I’m trying to change.

I’m done with this stigma that we shouldn’t talk about money.

I want us to get comfortable with the idea of going to our friends and loved ones to talk about money, just as we would talk about anything else.

There should be no embarrassment or shame in it. We’re all dealing with the same challenges.

By talking about money, we can help each other turn those challenges into opportunities.

If we can alleviate our money stress, perhaps we can reverse the trend of lower happiness levels among young people today.

Talking about money is not about numbers.

We’ll have plenty more to say about how to talk money. For now, let’s agree that talking about money is not about prying into how many dollars we each have in the bank.

We can benefit by talking about our money mindset, habits, and strategies, while still keeping certain information private.

Let’s also agree that talking money is a “no judgment” endeavor.

We have all had different experiences that have shaped our relationship with money.

It’s important not to pass judgment, especially when talking to our significant others. Your conversation won’t last very long if you ignore this advice.

Each session I’m with my students, I learn from their experiences and money mindset, same as they learn from mine. I encourage them to continue the conversation outside the classroom with their loves ones.

When my students report back, they tell me how empowered they felt after starting these conversations. The more we can talk money, the less we’ll feel alone. We’ll all make better choices because of it.

Photo by Lesly Juarez on Unsplash

Talk about money mindset with your significant other, family, and friends.

If you want to know where to begin the conversation with your loved ones, start with money mindset.

Money mindset touches every aspect of personal finance, so it’s the natural place to start.

I didn’t realize the power of money mindset until I wrote down my Tiara Goals for financial independence on a beach in 2017.

People tend to skip this step. They want to jump straight to investing and real estate before learning about money mindset.

But, why focus on investing if you and your significant other are not aligned on what those investments are for?

The same logic applies to budgeting. While very few people enjoy the budgeting process, it’s a crucial step to generate fuel for our savings and investments, which ultimately fund our major life goals.

The progression matters. Only after we’ve learned about budgeting, saving, and how to responsibly use debt and credit cards should we focus on investing and real estate investing.

Talking about money is not taboo.

There’s no reason to embark on your journey to financial freedom alone.

Read a personal finance blog. Take a personal finance course.

Talk about money.

Share your accomplishments and struggles with your friends and loved ones. You’ll only be better off for it.

If I can be of any help on your journey, please don’t hesitate to reach out.

Don’t forget to subscribe to my email list for all the latest money topics I’m thinking about.
October 31, 2025
That’s a Wrap: Another Successful Personal Finance Seminar
I just wrapped up another personal finance seminar with a great group of law students. After two full days of leading class, my voice is hoarse and my body is sore.

And, I had so much fun.

Can’t wait to do it again!

Here’s a recap of the ground we covered.

If you’re interested in learning more about my personal finance course for law students and young lawyers, please reach out.

I’ve taught law students and lawyers, both in-person and virtually, and would be happy to discuss how I can help you or your group.

My favorite part of class is when my students share their Tiara Goals.

We spent the first portion of class talking about money mindset. Without the right motivations, none of the other tools matter.

Without a doubt, this is always my favorite part of class.

When I say I’m on a mission to convince you that talking money is not taboo, I think of my students sharing their goals.

I get so energized by hearing their goals. My students report the same sentiment after learning what drives their friends and peers.

Over the years, my students have shared countless impactful stories. As unique as these goals can be, it’s remarkable how most of us want the same things in life.

Year after year, I hear the same motivating forces:
- Spend more time with my family.
- Travel and enjoy experiences around the world.
- Stay healthy and fit.
- Provide for my children and my aging parents.
- Work for a cause I believe in.
- Have time to volunteer.
- Enjoy more hobbies like baking, golf, jogging, sewing, and pickleball.
I also regularly hear one thing that my students, and the rest of us, don’t want:
- I don’t want to be stressed about money.
Isn’t it telling that year after year, most of us want the same things in life?

I’ve yet to hear anyone say that they dream about working endless hours and not taking their PTO.

Be specific, but not too specific, when you think about financial freedom.

When we talk about what we do with financial freedom in class, I encourage my students to get specific without being so precise that the goal becomes restrictive.

When we’re thinking about goals related to financial freedom, the idea is to focus more on big-picture, core values.

There will be a time and a place to strategize how to get there. The point here is to help define what you’re even trying to get in the first place.

For example, instead of “spending more time with family,” I would suggest something like, “never miss my child’s soccer game or dance recital because of work.”

Instead of “travel around the world,” I would suggest “at least one overseas trip of at least 2 weeks per year.”

Adding that little bit of specificity will help you visualize what you’re striving for with your money decisions.

Don’t get discouraged if you think you are not close to financial freedom.

Even when you feel like financial freedom is only a distant dream for you, it’s important to actively think about what you want out of life.

I’d even suggest that the further away you feel from financial freedom, the more important it is to think about what it would mean for you.

When you’re at your lowest point, visualizing what you would do with financial freedom is a helpful escape.

If you haven’t ever actively thought about what you would do with financial freedom, hopefully hearing about what my students shared in class will encourage you to do so.

Don’t forget to write down whatever you come up with.

I suggest you share your version of Tiara Goals with your friends and loved ones. It’s OK to keep some of your goals private.

By sharing, you will get the benefit of them cheering you on. You’ll also hopefully encourage them to share their goals with you, which can be very inspiring.

Budgeting is all about generating fuel for your ultimate goals in life.

Following our chat about money mindset, we launched into budgeting.

The essential purpose of making a budget is to generate fuel for your ultimate goals in life. This fuel is what feeds your savings, pays off debt, and grows your investments.

It’s not easy to track every penny. It’s not enjoyable to realize that your dollars are disappearing on stuff you don’t care about. But, these are crucial steps on the way to financial independence.

Learning how to create a budget that you’ll actually stick to is so important that we practiced implementing a Budget After Thinking in class.

Debt and credit are essential parts of a healthy financial life.

After focusing on the fundamentals of budgeting, we moved on to debt and credit.

Most of us have (or will have) some form of debt, whether it’s credit card debt, student loan debt, or mortgage debt.

With the right tools, we can attack that debt and eliminate it as quickly as possible.

Just as important, we can appreciate how we got into debt in the first place so we don’t make the same mistakes again.

When we talked about credit in class, we emphasized that credit impacts our largest purchases in life, like buying a home or a car. For that reason, it’s essential to understand how our credit history impacts our credit score.

From there, we explored why credit cards are a privilege.

I am a big fan of using credit cards responsibly to earn free travel. If you don’t overspend and pay your bills in full every month, credit cards can be a useful tool.

Student loans are front of mind for most law students and young lawyers.

Of course, no personal finance seminar geared towards law students and young lawyers would be complete without addressing student loans.

This year, we focused on the changes to federal student loans. We learned how to navigate paying back loans while advancing some other important financial goals, like investing.

Building wealth through investing.

Following our conversation on student loans, it was time to talk about building wealth through investing.

When it comes to investing, the key is to let compound interest work its magic.

With time on your side, you can concentrate on low fees, the proper asset allocation, and consistently fueling your investments.

Using an online calculator, we saw how even seemingly small contributions to our investments will make a huge difference over the long run.

This point demonstrates why we begin with budgeting before we talk about investing. Remember, one of the main purposes of your budget is to create money for your investments.

Every dollar that you invest rather than spend early in your career will lead to massive wealth if given enough time.

Real estate is my favorite asset class.

Finally, we discussed real estate, a topic that I am very passionate about.

We learned how to analyze when the time is right to buy a home (and when not to buy a home). We then saw how having a strong money foundation is key to qualifying for the best mortgages.

From there, we moved on to real estate investing. With real estate, investors benefit from cash flow, appreciation, debt pay down, and tax breaks.

For people pursuing financial independence, there may not be a more powerful strategy than buying a small multifamily property, living in one of the units, and renting out the others. This strategy is known in some circles as “house hacking.”

With this one decision, you can eliminate your housing costs entirely, which is traditionally the largest expense in our budgets.

That means you can repurpose the money you had been spending on housing to other goals, like paying off student loan debt.

At the same time, you have a long-term asset that you can keep for years after you decide to move out. That asset can kick off monthly cash flow, which can be saved for other investments or used to pay for current living expenses.

Money is nothing more than a tool.

In the end, I encouraged my students to recognize that money is nothing more than a tool that can be used to build a life on our terms.

When we learn how to use money in this way, we control the circumstances. The circumstances don’t control us.

Being good with money involves consistent choices. I can’t make those choices for you, but I can give you the tools to properly think through and evaluate whatever dilemma you face.

I left my students with one final request: keep the conversation going with your loved ones and friends.

Talking about money is not taboo. We can all learn so much from each other if we are just willing to share and listen.

There’s no reason to struggle with money decisions alone.

Our journeys towards financial independence should not be solo missions.

We can achieve financial wellness together.

All we need to do is think and talk about money.

If you’re interested in learning more about my personal finance course for law students and young lawyers, please reach out.

I’ve taught law students and lawyers, both in-person and virtually, and would be happy to discuss how I can help you or your group.
October 27, 2025
Don’t Blame Your Income if You Are a Lawyer in Debt
If you’re a lawyer, you make plenty of money.

It doesn’t matter if you’re in big law or working in the public sector.

And, if you’re a lawyer in debt, your income is not the reason why.

I know lawyers who make a lot of money and are in a lot of debt. I also know lawyers who make modest salaries and have no debt.

Income is not the problem.

The problem is what you are doing with that income.

You may tell yourself that more income would solve all your debt problems, but it won’t.

Not unless you understand how you got into debt in the first place and are ready to do something about it.

Today, we’ll look at my three theories why lawyers end up in debt.

@thinkandtalkmoney
Let’s change those poor financial habits. #thinkandtalkmoney #badhabits #financialfreedom #financialliteracy
♬ original sound – Thinkandtalkmoney

Looking at each of these explanations can help us understand and avoid common pitfalls that lead us into debt.

Of course, it’s expected that young lawyers will have student loan debt. While student loan debt may be considered good debt, the problem is that it can spiral into other forms of bad debt.

For example, student loan debt becomes the excuse for why we fall into consumer debt:

“I have to pay my loans this month, but I also want to eat out with my friends. I’ll just use my credit card.”

This is exactly what happened to me at the beginning of my career as a lawyer, and what I want to help you avoid.

If you fall into bad habits early, the problems only magnify when your income rises and your potential to spend rises.

The key is to eliminate the bad habits before they become bad habits. If it’s too late for that, now is the best time to correct those bad habits before the situation spirals.

Before we get to my theories why lawyers are in debt, realize that you’re not alone if you are a lawyer in debt.

Unfortunately, the data shows that debt is all too common in today’s world. Let’s begin with some scary stats about debt.

Here are some scary stats to help explain why lawyers are in debt.

According to the Federal Reserve Bank of New York, total household debt in the United States grew to $18.04 trillion by the end of 2024.

That’s such a big number, it’s hard to know what to do with that information.

Let’s break it down by the type of debt:
- Credit card balances increased by $45 billion from the previous quarter and reached $1.21 trillion at the end of December 2024.
- Auto loan balances increased by $11 billion to $1.66 trillion.
- Mortgage balances also increased by $11 billion and reached $12.61 trillion.
- HELOC balances increased by $9 billion to $396 billion.
- Other balances, reflecting retail cards and other consumer loans, increased by $8 billion.
- Student loan balances increased by $9 billion to reach $1.62 trillion.
While these numbers are still too big to comprehend, one powerful conclusion is hard to miss:

In every category, the amount of debt increased from the previous quarter.

This pattern of increasing consumer debt has been consistent for some time now.

HELOC balances have increased for eleven consecutive quarters.

Credit card balances have increased or remained the same for 10 of the last 11 quarters.

Let’s look closer at credit card debt for a moment.

According to a recent survey looking at credit card debt in 2024 by Bankrate.com:
- 48% of credit card holders carry a debt balance, an increaseof 9% since 2021.
- 53% of the people have been in credit card debt for more than a year.
- The main causes of credit card debt are unexpected medical bills (15%), car repairs (9%) and home repairs (7%).
According to another Bankrate.com survey, 33% of Americans report they have more credit card debt than emergency savings.

These last couple stats help us understand why so many people fall into debt in the first place.

Some of it has to do with the failure to have emergency savings. When we don’t have savings, the first place we turn is to our credit cards.

Even more has to do with the failure to keep our spending in check, or living below our means.

Photo by Giammarco Boscaro on Unsplash

Why is it so hard for lawyers to live below our means?

“Live below your means.”

“Money doesn’t grow on trees.”

“Don’t break the bank.”

We’ve all heard these common money phrases. If you were to ask someone older than you for one piece of personal finance advice, I’m betting you’ll hear one of these lessons.

Let me know if I’m right about that in the comments below.

There’s a reason these phrases are so common. They’re simple and easily reflect some of our core personal finance principles:
- Live below your means = keep more of the money you earn.
- Money doesn’t grow on trees = think about the limited resource that is money before it disappears.
- Don’t break the bank = don’t exceed your budget.
Most of us understand that it makes sense to spend less money that we earn, right?

How many of us remember rolling our eyes as kids after our parents wouldn’t buy something we wanted because money doesn’t grow on trees?

I’ve started using this line with my own kids.

Does anyone truly disagree with these lessons? If so, I’d be very appreciative to hear your perspective in the comments below.

Why is it that we can all agree with these core personal finance lessons and at the same time choose to ignore them?

For example, we intuitively know that we should live below our means, but nearly half of us carry a credit card balance.

On top of that, hardly any of us are completely satisfied with our savings.

It’s not that we want to have high debt and low savings.

So why is this the reality for so many of us?

Here are my three leading theories.

1. We fall into debt because we are simply careless.

When I struggled with debt at the beginning of my career, it was basic carelessness.

I didn’t have any idea how to budget or make intentional choices with my money. I had never thought about why or how to be good with money.

Like many people, I failed to create a budget and assumed that my W-2 income was plenty. I ignored emergency savings and never even thought about creating Parachute Money.

The saddest part is that I didn’t even realize that I was slipping backwards. I had no idea because I didn’t track my net worth or saving rate. I worked hard all year long and just hoped things would work out.

By the way, if this sounds familiar, you should know by now I’m not judging anyone. I’ve been very open about my money mistakes.

We all deserve a chance to learn about and talk about strong personal finance habits. That’s why I’m on a mission to flip the script: talking money is not taboo.

2. We don’t plan ahead for emergencies.

So, being careless with money is one common reason lawyers fall into debt. Another common reason is that bad things happen in life.

This might include medical emergencies, home repairs or car troubles. It’s not our fault that these things happen. But, it is our fault if we’re not prepared in advance.

While these events are unfortunate, and maybe even tragic, they are not unexpected. We all need to expect that bad things will happen.

Preparing for the unexpected is part of every solid organization’s planning.

In government, planning ahead means having a “rainy day fund.”

When managing properties, planning ahead for big repairs means having a “Capital Expenditures” or “Cap Ex” fund.

For our personal finances, planning ahead means having an emergency fund.

Whether it’s government, business, or personal finance, the goal is to have options other than taking on debt to get through challenging circumstances.

3. Blame the Kardashians.

Besides carelessness and emergencies, there’s another powerful force that contributes to rising debt levels across the world.

This force is nearly impossible to ignore. It’s become a part of our daily lives, whether we want to admit it or not.

What is this powerful force that contributes to our rising debt levels?

The Kardashians.

OK, not just the Kardashians, but they’re kind of the mascots.

The era of social media and on-demand entertainment has made it harder than ever to avoid temptation. It’s everywhere we look.

Blaming the Kardashians realtes to another timeless, common money phrase: “Keeping up with the Joneses.”

The Kardashians are the modern day Joneses.

Once upon a time, “the Joneses” represented your neighbors, people you could observe from a distance on a regular basis.

The idea behind the phrase is that you can see what your neighbors are spending money on and are either consciously or subconsciously tempted to do the same.

If your neighbors buy a new car, you buy a new car to keep pace.

If your neighbors vacation in Australia, you research diving tours at The Great Barrier Reef.

When you notice your neighbors hosting a backyard BBQ party with lots of happy looking people, you decide to host a party the next weekend.

As humans, it can be difficult to ignore the temptation to keep up with our neighbors.

Whether we like it or not, we are concerned with our social status. Part of our self-worth gets tied to comparing ourselves to others.

Who better to measure up against than the people in our neighborhood who we probably have a lot in common with?

Photo by Campaign Creators on Unsplash

Keeping up with the Joneses is compounded in the professional setting.

This same idea is oftentimes compounded in the professional setting, like at law firms. It is not uncommon to compare ourselves in the same way to our colleagues at the office.

This is especially difficult for lawyers. Fair or not, society generally expects lawyers to make a lot of money and have nice things.

If a partner at your firm joins a country club, wears fancy clothes, or sends her kids to private school, you may feel pressured to do the same.

It’s easy to get caught up in expensive tastes when you’re expected to fit in, even if you don’t have the money to spare.

One of my favorite personal finance books, The Millionaire Next Door, discusses this concept in detail.

I highly recommend you read this book if you are struggling with comparing yourself to others.

So, what’s the solution for lawyers in debt?

Deactivate social media? Cancel the internet?

Nah. If you did that, you’d miss out on epic Instagram reels like this one where I share my top five favorite personal finance books.

Instead, the first part of the solution is to recognize when you’re making careless money decisions based on what you think other people are doing.

Making money decisions based off of your neighbors, let alone the Kardashians, is the fast road to debt.

You have no idea why or how another person is spending money. For all you know, it’s all for show and that person is barely getting by.

Do you really want to blindly follow this person’s choices? Wouldn’t it be better to confer with people you trust to help you think through money decisions?

The second part of the solution is to recognize that everywhere you look, companies are clamoring for your dollars.

Not an exaggeration: nearly $2 Trillion (with a ‘T’) of marketing dollars are spent worldwide each year with one goal in mind: to separate you from your money.

If you let that reality sink in, you’ll hopefully pause the next time you’re about to spend money on something you don’t actually care about.

You make plenty of money as a lawyer. Your income is not the reason you’re in debt.

As a lawyer, your income is not the reason you’re in debt.

You make plenty of money. The issue is what you do with that money.

This is where we circle back to money mindset.

You need to have a competing force in your life that’s strong enough to overcome all the noise.

I’m referring to your ultimate goals in life. I mean the reasons you wake up every morning to get to the firm or stay up late to finish a brief.

Why are you working so hard?

When you can answer that question, you’ll know what your ultimate goals are in life.

With those goals in the forefront of your mind, it’s much easier to make consistent, intentional money decisions.

Most importantly, you’ll stay on budget and avoid sinking into debt.

You’ll also be much happier when you stop worrying about what random strangers are spending money on.

If you’re a lawyer in debt, are there other explanations for how you got there?

Let us know in the comments below.
October 14, 2025
Spend Money Based on Your Wealth Not Your Income

Let’s say you are fresh out of law school working in big law.

At the current salary scale, that means you’re making $225,000 in salary, plus another $25,000 or so in bonuses. We’ll call it $250,000 in total compensation.

That’s a lot of money.

It’s so much money, in fact, that you convince yourself you can make some lifestyle changes.

@thinkandtalkmoney
Spend Based on Your Wealth, Not Income #thinkandtalkmoney #networth #wealth #financialfreedom
♬ original sound – Thinkandtalkmoney

For starters, you figure it’s time to leave the old law school roommates behind and move into a nicer, but smaller apartment by yourself.

Even though the tradeoff for living by yourself is paying more in rent, you justify it because your income is so high.

Besides paying more in rent, you can’t help but order in more meals now that you’re earning a high income. Plus, you’re working long hours, afterall. Who has time to cook?

Even though you survived on frozen chicken breasts in law school, that won’t cut it anymore now that you’re a practicing attorney.

Finally, you start taking Ubers to get around town. It’s only $15 per ride, and you make more than $20,000 per month.

Even though you took the bus or the “L” home in law school, you can afford a ride! Uber it is!

Does this sound familiar to you?

Maybe it sounds completely ridiculous?

Personally, this story is all too familiar.

When I graduated law school, I spent money based on my income instead of my wealth.

As soon as I started making money after law school, I started spending on things I really didn’t need.

About a year after I graduated, I moved into an apartment by myself. I started spending more freely. I took taxis (no Ubers back then) when I could easily have hopped on the bus or walked.

What made it worse in my case was that I was not even making big law money. At the time, I was a judicial law clerk making around $70,000 per year.

It was because I was careless with my money that I fell into credit card debt so quickly after beginning my career as an attorney.

On top of my poor spending choices, I had student loan debt. Because I had debt and hardly any assets to my name, my net worth was less than zero dollars.

That means I had negative wealth, even though I was earning a decent income.

This is all background for the main question behind today’s post:

Do you spend money based on your income or based on your wealth?

Let’s revisit our fresh big law attorney who’s earning $250,000 per year.

Earlier, I said “That’s a lot of money.”

And, it is.

But, what I should have said was, “That’s a lot of income.”

See, earning a lot of money is not the same as having a lot of money.

There’s a key difference.

Income is temporary. There’s no guarantee that your income will always be there. People lose their jobs all the time. People also switch careers, which can result in lower income.

Wealth is your financial foundation. When you have money, meaning you don’t spend it, you can build wealth.

Of course, when we talk about wealth, we are talking about all of your assets minus your liabilities. This is your net worth.

When your liabilities are greater than your assets, you have a negative net worth, like I did when I graduated law school. By the way, the same is true for most people when they graduate law school.

A high income is not a bad thing, but it can be a wasted thing.

A high income means you have a lot of money coming in.

That’s not a bad thing, but it can be a wasted thing.

What you do with that money is what determines your wealth and financial progress.

If you use your high income to acquire assets, you are winning the game. The same goes for paying off your liabilities.

If you use your high income to buy expensive things, you’ll be stuck in place. At the end of the year, you’ll likely be in no better shape than someone making a fraction of what you make.

That’s why I prefer to think about how much money I keep each year, instead of how much I make.

Photo by freestocks on Unsplash

But, I thought high earners deserve to splurge!

You may think that a new lawyer earning $250,000 per year should be splurging on life’s finer things.

Would your opinion change if you acknowledged that lawyer’s net worth is a negative number?

Think about it: most new lawyers leave law school with hundreds of thousands of dollars in debt. They also have little to no assets. That means they have a negative net worth.

Should someone with a negative net worth really be splurging on a fancy apartment?

If that person is looking to build a solid financial foundation, the answer is obviously, “No.”

This person should continue living like a law student and spending in accordance with his net worth, not his income.

I recommend you use your high income to acquire assets and eliminate liabilities.

Don’t get me wrong. I am not suggesting that earning a lot of money is a bad thing.

Having a high income is a major benefit.

In fact, I recommend that all of my law students take the high paying job right out of school, if they can get it.

A high income means you can pay off your debt faster. It means you can build up your emergency savings and fund your investment accounts sooner.

There can be no doubt that a high income can accelerate your progress to financial freedom.

You just need to use that income to acquire assets and eliminate liabilities.

As you take those steps, you’ll see your net worth climb, and you’ve earned the right to start spending more.

We all know that it’s bad to live beyond our means. The problem is we don’t evaluate our means properly.

You don’t have to be a personal finance expert to know that living beyond your means is a bad idea.

Most of us intuitively understand that we should live within our means. Actually doing so can prove to be more problematic.

Part of the explanation may be that we don’t think of our spending in terms of our net worth.

We may not appreciate that if we are spending extravagantly while our net worth is still low, or even negative, we are living beyond our means. It doesn’t matter what our income level is.

That’s why I recommend you spend based on your level of wealth (your net worth) instead of your income.

Of course, this lesson applies to all of us, not just recent graduates.

This is challenging for lawyers and professionals who feel compelled to keep up with the Joneses.

When you’re making $750,000 per year, you may think you need to buy the $100,000 luxury car. Or, you may not hesitate to spend $10,000 to upgrade your family’s plane tickets to first class.

But, can you really justify that level of spending when your net worth does not match up with your income?

What happens if that income goes away?

Instead, you should prioritize saving and investing until your net worth justifies that higher spending threshold.

Photo by Shutter Speed on Unsplash

Spending money based on your wealth does not spending from your wealth.

When I say spend money based on your wealth, I don’t mean that you should spend from your wealth.

In other words, this is not a post on spending down your wealth in retirement.

Rather, what I mean is that you should consider your net worth before deciding how much of your income you are comfortable spending.

For example, if you earn $250,000 per year from your job and have a negative or low net worth, you should continue living like a law student.

If you earn $250,000 per year and have a net worth of $1M, you would be justified in splurging from time-to-time.

If you earn $250,000 per year and have a net worth of $10M, you shouldn’t worry about spending extravagantly with all of that income.

Why not worry about spending so much?

The reality is that your investment earnings on $10M will far exceed your $250,000 income from work.

Even a 5% investment return on $10M would earn $500,000 per year, double what you earn from your job. You actually might start thinking about why you still have that job in the first place.

These numbers are just for illustration purposes. Still, the idea is that your spending decisions should factor in your net worth at least as much, if not more so, than your income.

Don’t ignore your wealth when it comes to spending.

Whenever you are evaluating your current financial position, especially your spending decisions, I recommend that you focus on your wealth at least as much as your income.

Income is temporary. It can go away at any moment.

If you are fortunate enough to earn a high income, use that high income to acquire assets and pay down liabilities. That means you’ll have to avoid spending extravagantly until your level of wealth can justify it.

Wealth is foundational. Yes, there will be drops in the markets and your net worth can decrease. That is to be expected.

However, if you focus on spending in line with your net worth, you’ll naturally adjust your spending if your net worth temporarily drops. When it rises again, you can justify spending more. The key is to be flexible.

If you can think in these terms, you will build a strong financial foundation that will give you choices down the road.

At the end of the day, financial independence is all about choices.

The people who create choices for themselves will be the ones who don’t have to worry about money as they move through life.

They will be the ones with true wealth that supports extravagant spending, if they choose.

That’s not a bad thing.

Do you know people who spend money based on their income instead of their wealth?

Why do you think people fall into that trap?

Let us know in the comments below.

October 7, 2025
A Reminder About the Intersection of Money and Life

By now, you should know that I love Chicago.

It’s where I’m from, where I’ve chosen to raise my family, and where I primarily invest in real estate.

Last night was a good night for Chicago sports fans.

My favorite team, the Chicago Cubs, won a playoff series for the first time since 2017.

While watching the game at home, I couldn’t help but think of how different my life is today than it was in 2017.

Back then, I had season tickets and rarely missed a game. My wife and I were just about to get married. Life was good and about as easy as can be.

From a financial perspective, we were pretty boring.

By the way, being boring with money is not a bad thing.

When it comes to money, boring is good.

Back in 2017, my wife and I each made good incomes as attorneys. More importantly, we were happy saving a lot of the money we earned.

We rented an apartment and had minimal expenses besides travel and our social lives.

At that time, we had a good amount of savings because we were planning to buy a house after the wedding.

Our only investments were in retirement accounts, like a Roth IRA and 401(k). We didn’t own any real estate.

Life’s a bit different for me now.

I don’t have season tickets anymore. We don’t travel as much.

We have three kids and different financial priorities.

Life is better than ever, but maybe not as easy as it was in 2017.

OK, what does all this have to do with baseball?

Last night at home, while watching the Cubs pull out a stressful victory, I started thinking about these things. I wasn’t in the crowd like in 2017, but I knew exactly how the fans were feeling.

Each pitch was tense. The crowd went nuts after every Cubs hit or strikeout by a Cubs pitcher. Whenever the San Diego Padres had a rally going, every Cubs fan was nervous.

In the end, the Cubs pulled out the victory and thousands of people now have memories they’ll never forget.

There’s nothing better than playoff baseball. I love it and hate it at the same time.

Watching the game, I thought of some of my favorite baseball memories. It was a good reminder of why it’s so important to think and talk about money.

We say it a lot around here: money is only a tool. When used properly, you can use money to build lifelong memories. You can create stories that you’ll remember for the rest of your life.

Stories like the ones I have from 2016 when the Cubs won the World Series.

That’s when I met Phil and April.

My nice friends, Phil and April.

Throughout that World Series run, we sat next to the nicest couple in the world, Phil and April.

Phil was a diehard Cubs fan. April was more reserved.

Both were smart and very friendly. They were enjoyable people to sit with.

We chatted baseball, mostly. Pitching changes. Send the runner. Question the manager. That sort of thing. Completely normal, unremarkable stuff.

Until Game 5.

Game 5 was played on a crisp, October evening. Jackets and beanies weather in Chicago. Phil and April were sitting next to my brother and I, as usual.

Mike Napoli was playing first base for Cleveland. Around the 3rd inning, a jerk four rows in front of us taunted Napoli with a crude, juvenile insult.

It was apparent the jerk was doing his part to keep Old Style in business for another year.

None of us liked what this jerk yelled.

Phil especially didn’t like it.

Phil was nice…and tough.

Phil did what the rest of us were thinking but were too scared to do ourselves.

Phil stood up. In so many words, Phil sternly recommended that the jerk knock it off and show some class.

The jerk turned around, aggressively scanning the crowd for the man who had publicly shamed him. The jerk had that unmistakable look in his eye that meant, “Let’s dance.”

My brother and I were a bit worried for our nice… and all of a sudden tough…friend, Phil.

Phil’s wife, April, did not look worried. She sat there like nothing strange was happening. Almost like she had seen this movie before.

When the jerk locked eyes with Phil, he immediately saw that Phil was not backing down. If anything, Phil looked a little too eager.

Well, the jerk was sloppy, but he had enough sense to recognize that he wanted no piece of Phil. He wisely turned back around and sat down quietly.

That was the last we heard from the jerk that night.

Our nice (and tough) friend, Phil had restored order.

Photo by Dastan Eraliev on Unsplash

Phil’s on TV!

On the day of the Cubs’ championship parade, my brother called me excitedly, “Phil’s on TV! Phil’s on TV!”

It didn’t register right away who he was talking about.

When I turned on the TV, sure enough, there was Phil, our World Series friend. I was so confused. Phil was giving an interview on set with the Cubs announcers.

Our nice (and tough) friend, Phil? On TV?

I turned up the volume and listened to Phil talk about his experience watching the Cubs win the World Series. Maybe I was hoping he’d mention his nice friend, Matt. (He didn’t.)

I still couldn’t figure out why Phil was on TV.

Why won’t they just put his name on the screen already!?

It wasn’t until the end of the interview that I learned who Phil was.

All I could do was laugh.

Our nice, and confirmed tough, friend Phil is better known as World Wresting Entertainment (WWE) champion and icon, CM Punk.

Oh, and his wife?

WWE champion and bestselling author, AJ Mendez.

Unknowing watching the Cubs win the World Series with two celebrities with a combined 3.5 million Instagram followers?

Yup, that’s a story I’ll be telling for a while.

A memory I wouldn’t trade for anything.

As much fun as the World Series was, my favorite Cubs memory actually took place during the 2015 season, the year before they won the World Series.

It was during the 7th inning of Game 4 of the NLDS. This was the game where the Cubs knocked the rival St. Louis Cardinals out of the playoffs.

In the 7th inning, with the Cubs up 5-4, Kyle Schwarber hit one of the most epic home runs in Cubs history, landing his moonshot on top of the new right field video board.

It was such a feat, the ball is now enshrined where it landed.

The entire stadium was rocking so loud, you could feel the ground shaking beneath your feet. Every fan was jumping up and down, hugging anyone close enough to touch.

We were all dancing like nobody was watching. That moment was pure happiness.

I was there with my mom.

A lifelong Chicagoan, she too was jumping up and down and high-fiving all the other diehard fans in our section.

After the game, we met up with my wife at a restaurant and relived the victory over Champagne.

That day with my mom and my future wife is one of the best memories I have.

Photo by Oliver Sherwin on Unsplash

What does this have to do with money?

What does any of this have to do with money?

When I say money is a tool to create stories and memories, this is what I mean.

My brother and I still joke about our nice friends, Phil and April. I wouldn’t trade that memory with my mom for anything.

These are the types of experiences that I want more of.

These memories, and the desire for more like them, continue to motivate me today.

I want to be good with money, not so I can stash it in the bank, but so I can use that money to create joy for me and my family.

Beyond that, watching the crowd at Wrigley Field last night reminded me of why I started a personal finance blog.

It excites me to try and help people make intentional money decisions for meaningful experiences with meaningful people.

Talking money is really just talking life.

You may not be a baseball fan, but this conversation illustrates a foundational concept of Think and Talk Money.

Yes, we discuss money.

But, we’re really talking about our lives and our experiences.

Money is just a tool to help us.

And before you get cynical on me, of course money is not required for good experiences. That’s not the point.

What I’m suggesting is that if we’re all spending so much of our time each week at work, shouldn’t we spend some time thinking about the money we earn so we can maximize experiences like I had with my mom?

Think and Talk Money is all about awakening that thought process so we can use the tool of money to fuel meaningful lives.

You might not use that tool to get Cubs tickets.

But, what if you started thinking about money as just a currency that you trade to get your time back so you can do more of what you want with who you want?

Whatever it is that you’re after in life, thinking and talking about money will help get you there.

Have you used money as a tool recently to create stories and memories?

Let us know in the comments below.

October 3, 2025

How Does Your Net Worth Compare to People Your Age?

Pop quiz!

What is your net worth?

Kudos to you if you can answer that question quickly and relatively accurately.

Knowing your net worth indicates you are likely making intentional choices with your money. You likely are more concerned with how much money you keep, not how much you make.

It also likely means that you have a plan and are well on your way to financial independence.

Well done!

If you know your net worth, you might be wondering how you measure up to people your age.

That’s what we’re going to look at today.

First, let’s discuss why it’s important for all of us to track our net worth.

Why is it important to track your net worth?

By tracking your net worth, you can quickly see if you are making good money decisions or need to make adjustments.

I recommend everybody, no matter where you are in your financial journey, track your net worth.

By the way, tracking your net worth is not a major time commitment.

It takes me less than 30 minutes each month to track and discuss what I consider to be one of the most important metrics in personal finance.

That’s all the time it takes to know if I am progressing towards my most important financial goals.

If you don’t know your net worth, now is the time to start tracking it.

For a step-by-step guide to tracking your net worth, check out my post here:

Why You Need to Track Your Net Worth Every Month

Just like budgeting with two simple numbers, tracking your net worth is the best, and easiest, way to measure your money progress.

There’s no better way to learn how much money you’re keeping after a month of making money.

Think of tracking your net worth in terms of keeping score during a basketball game.

If you don’t know the score of the game, you don’t know if your strategy is working. You don’t know if you need to make adjustments before time runs out.

The same applies to tracking your next worth. The point is to educate yourself on your current financial situation so you can make adjustments while there is still time.

How do I know if I need to make adjustments based on my net worth?

Speaking of making adjustments, it can sometimes be helpful to look at datasets to see how you measure up to the rest of the population.

So today, we’ll look at two potentially helpfully net worth metrics.

First, we’ll look at the average net worth of Americans by age.

Then, we’ll look at the average net worth by age of the Top 1%.

The goal is to give you some benchmarks so you can assess where you’re currently at. Then, you can decide if you want to make any adjustments.

In other words, the point is to educate yourself so you can make intentional choices for your own situation. The point is not to start comparing yourself to your neighbors.

OK, let’s get to it.

green plant in clear glass cup indicating that net worth grows over time. — Photo by micheile henderson on Unsplash

What is the net worth of Americans by age?

Below is the average and median net worth of Americans by age based on research from Empower.

Keep in mind these studies are not perfect.

It’s not an easy task to track and study net worth across a wide population. Not everyone tracks her net worth, let alone makes it easy for outsiders to track it.

Use these figures as a rough guide to help your own decision-making. Just don’t get too caught up in the exact figures.

Net Worth by Age

Age	Average Net Worth	Median Net Worth
20s	$121,004	$6,609
30s	$307,343	$24,247
40s	$743,456	$75,719
50s	$1,330,746	$191,857
60s	$1,547,378	$290,447
70s	$1,444,413	$233,085
80s	$1,342,656	$233,436
90s	$1,212,583	$205,043

High school math refresher: The average is calculated by adding up all values in a dataset and dividing by the count. The median is the middle value of a dataset with an equal number of values above and below. Averages can be skewed by extreme values, so the median can give you a more accurate picture.

Here are some observations about the average net worth of American by age:

Net worth tends to increase with age. No surprise there, right? As our careers progress, we tend to earn more and invest more money.
Net worth tends to peak in our 60s. This also makes sense. When people reach retirement age, they start to draw down their portfolio. They’ve spent decades accumulating wealth and eventually it’s time to spend that savings.
Notice the effects of compound interest. From the 20s to the 30s, we see that the median net worth nearly quadruples. That’s a 400% increase! However, it equates to a median net worth increase of only $18,000.
Compare that to the change from the 50s to 60s. We see that the median net worth increases by only 50%, but the result is an increase in nearly $100,000.
The takeaway is that when you have more money invested, smaller gains result in higher earnings. You could say, “the rich get richer.”

What is the net worth by age of the top 1%?

Next, let’s take a look at the average net worth by age of the Top 1%, thanks to an analysis of Federal Reserve data by DQYDJ.

Remember, these are only rough figures. Use this data to help you strategize based on your current financial situation.

Net Worth by Age of the Top 1%

Age	Top 1% Net Worth
18-24	$653,224
25-29	$2,121,910
30-34	$2,636,882
35-39	$4,741,320
40-44	$7,835,420
45-49	$8,701,500
50-54	$13,231,940
55-59	$15,371,684
60-64	$17,869,960
65-69	$22,102,660
70-74	$18,761,580
75-79	$19,868,894
80+	$16,229,800

Are these dollar amounts lower or higher than you expected?

If these dollar amounts seem unattainable, remember that 99% of us will never hit these marks. Don’t get discouraged. You’re doing great work if you’re anywhere close to these numbers.

Did you notice that the trends in the Top 1% net worth data are very similar to the average net worth by age data we previously looked at?

We again see the net worth of the Top 1% peaking in the 60s.

We also see the same effects of compound interest.

This data reinforces the point that investing favors people who start early, even if the results do not materialize for decades. It takes time for compound interest to work its magic.

young man and older man standing at bottom of stairs representing the importance of tracking your net worth. — Photo by John Moeses Bauan on Unsplash

Tracking your net worth is the best way to measure your personal financial progress.

By now, you should have an idea of where you stand compared to the rest of the population.

What can you do with this information?

If you’re happy with how you measure up, that might mean you’ve reached a level of financial independence where you have options in life.

Having options in life means that you’ve achieved the ultimate goal: FIPE (Financial Independence, Pivot Early).

When you reach FIPE, you are free to pivot to a new challenge, if that’s what you want.

On the other hand, maybe you looked at this data and learned that you are not as far along on your financial journey as you had hoped.

Don’t panic.

The benefit is that you can now make adjustments.

What kind of adjustments can you make after learning your net worth?

When you track and study your net worth, you can make adjustments while you still have time on your side.

For example, you may decide that it’s finally time to boost your saving rate.

After all, your saving rate is the one thing you can actually control on your way to financial independence.

Or, you might take a fresh look at your Budget After Thinking to find ways to generate more fuel for your investments.

And, it might mean saving and investing that one-time windfall instead of spending it on stuff you don’t really care about.

Whatever decisions you make, knowing the average net worth by age can help point you in the right direction.

It takes me less than 30 minutes per month to track my net worth.

It takes me less than 30 minutes each month to track and study one of the most important numbers in personal finance.

Each month, I’m only looking for progress compared to what my net worth was previously.

If my net worth increases over time, it means I am heading in the right direction.

It means that I am continuing to fuel my Later Money goals. I am paying down debt. I’m letting my investments do their thing.

If my net worth is not increasing, it means I need to figure out why and consider making adjustments.

Sometimes my net worth decreases because the markets are heading down. If that’s the case, I don’t do anything. At this stage in my life, I can afford to wait while markets tick back up.

If the issue is that my debt is increasing, or I didn’t fuel my investments that month, I know I need to make adjustments.

By studying my net worth each month, I can catch these setbacks before they become a continuous problem.

Do you track your net worth?

Are you happy with how you measure up?

If not, are you prepared to make the necessary adjustments?

September 28, 2025

How Much Money Did You Actually Keep This Week?
The alarm clock goes off at 6:30 a.m.

You groggily brush your teeth and hop in the shower.

The hot water feels nice. Should I skip work today?

Then, reality sets in. What time is my first meeting today?

Shower done. Now, what to wear? The blue shirt? Again?

Let’s go, let’s go! Pick up the pace! The kids need to get dressed and eat breakfast.

Why are we always so rushed before school? Tomorrow, I’ll wake up earlier.

The train will be here in 10 minutes. “Bye kids! Bye Honey!”

I gotta get across the tracks! Speed walk!

Phew. Made it.

30 minutes to catch your breath before work starts.

What day is it today? Tuesday?? It’s only Tuesday?!?!

I’m tired.

@thinkandtalkmoney
How much money did you actually keep this week? #thinkandtalkmoney #personalfinance #richdadpoordad
♬ original sound – Thinkandtalkmoney

Do you ever notice the people on the train?

Does this routine sound familiar to anyone?

At least you’ll have something to show for it come pay day.

Wait, you go through all that effort every day and you’re not saving a good portion of your paycheck?

Let’s talk about that.

When I take the train downtown, I can’t help but notice my fellow passengers.

Some people are already cranking away on their laptops. Some are even on conference calls, which always surprises me.

Why don’t they care that everyone is annoyed with them? Do the other people on the call know that they’re talking to someone on a train?

But, I digress.

Some passengers are reading books. A good portion of passengers are doomscrolling. Just about everyone has headphones in.

It’s not that people look unhappy. They just seem to want to be somewhere else.

Do you have similar observations?

Most people don’t have a plan.

It’s at times like these when I start to wonder how many of these people have a plan.

I’m not talking about a plan for lunch or for getting to the gym after work.

I mean a plan for how to spend their time and their money.

Ideally, this plan would be based upon spending time on meaningful pursuits with meaningful people.

My guess is most people have never really thought about this kind of plan.

Instead, it’s go to work. Get a paycheck. Pay the bills.

Same thing tomorrow. That’s as far as the plan goes.

This routine may be enough for some, or even most, people. If that’s enough for you, there’s no shame in it. Holding down a steady job and providing for your family are accomplishments to be proud of you.

But, let’s be real.

You’re reading a personal finance blog.

We spend a lot of time talking about financial freedom and creating options.

You wouldn’t still be reading if you didn’t feel there was more to life than the daily train ride, right?

You may not know how or when to get off the train, but you’re interested in finding out if it’s possible.

Well, it’s definitely possible. But, you need to break the cycle and commit to a plan.

Here’s a question to help you get started.

How many hours do you work to make money?

Photo by Volodymyr Hryshchenko on Unsplash

Let’s say you work 2,000 hours per year to make money (40 hours per week, 50 weeks per year).

We won’t even count all the hours you spend getting dressed and riding the train.

Also, we will pretend you’re not looking at your emails in the evening, on weekends, and on family vacations.

We definitely won’t count the hours you’re staring at the ceiling fan worried about tomorrow’s challenges at work.

OK, so you’re working 2,000 hours (plus) per year to make money.

My question is:

How many hours per year do you think about what to do with that money?

Let that sink in for a moment.

You work a lot of hours. I’m guessing many of those hours are stressful.

Yes, you get paid money in exchange for those hours.

But, do you still have any of that money?

Do you care more about making money or keeping money?

Think back on how much time, energy, and sacrifice you dedicated to making that money.

Hopefully, you saved and invested a good portion of that money.

The problem is that most lawyers and professionals work incredibly hard, make good money, and don’t keep enough of it.

They somehow find 2,000 or 3,000 hours per year to work.

But, they won’t set aside even a few hours per month to think about what to do with all that money.

This is why I am passionate about money wellness.

Most people spend the vast majority of their lives worried about making money and practically no time at all thinking about what to do with that money.

No, I’m not suggesting that you need to think about money for 2,000 hours per year.

What I am suggesting is that even a little bit of time each week spent thinking and talking about money is just as important as the time you spent earning it.

That’s how you break the cycle of mindlessly riding the train to work and start progressing towards financial freedom.

It’s not how much money you make. What matters is how much you keep.

Robert Kiyosaki put it best in Rich Dad Poor Dad, “It’s not how much money you make. It’s how much money you keep.”

If you knew someone who made $1,000,000 per year, and at the end of the year, had only saved $20,000, what would your reaction be?

Sadly, this is how most people behave with their money.

They inherently know that they should be saving more, but they come up with excuses. They assure themselves that they’ll start saving more next year.

On the other hand, what if you knew someone who made $100,000 per year and saved $40,000?

Did your reaction change?

This is the kind of person who will actually achieve financial freedom and have choices in life.

It all comes down to how much you keep, not how much you make.

It’s why your personal saving rate is so important.

Don’t forget, your saving rate is the one thing you can truly control.

Photo by Superkitina on Unsplash

What is a saving rate?

Your saving rate is simply the amount of money you save each month divided by the amount of money you make.

Saving rate = Money Saved / Money Earned

Just like staying on budget with two simple numbers, you can monitor your progress with this simple formula.

I find it helpful to measure your saving rate based on your monthly income and savings. This way it matches up with your Budget After Thinking.

Tracking your saving rate will help you understand if you are making progress over time.

It’s not about comparing yourself to someone else. Whatever your current saving rate is, the goal is to seek personal improvement.

Just like with tracking your net worth, the purpose is to see if you are making personal progress over time.

How can you make progress with your saving rate over time?

When it comes down to it, there are really only two ways to improve your saving rate.
1. You can spend less, and save more, of the money you’re currently making.
2. You can make more money and save most of that money, all while keeping your expenses the same.
Combining those two ideas is even better: make more money, spend about the same.

Use the excess money you make to fuel your Later Money goals.

If you can do that, your saving rate and your net worth will steadily climb.

You’ll realize that you’re closer to getting off the train than you think.

How much money did you keep this week?

When you get your next paycheck, pay attention to how much of that money you actually keep.

Once you pay the mortgage/rent, car payment, and credit card bills, is there anything left for you?

If your saving rate is low, this exercise should make you mad.

Seeing 95% of your hard-earned money disappear as soon as it comes in should inspire you to make some adjustments.

Those adjustments may be small at first. Over time, you’ll experience that it feels better to keep money than to spend money.

Keeping money leads to options.

Spending money leads back to the train.

Have you ever observed your fellow commuters in the morning? What are your takeaways?

Do you have a plan to get off the train, should that be your choice?

Let us know in the comments below.
September 26, 2025
Your Saving Rate is the One Thing You Can Truly Control
On your journey to financial freedom, there is only so much you can control.

The reality is, like most things in life, much of our financial journey is out of our hands.

If your gut reaction is that I’m wrong about that, that’s OK. I get it. I used to be in denial, too.

Really smart people, like Think and Talk Money readers, don’t want to acknowledge that they aren’t in complete control of their financial lives.

To illustrate my point, here are just a few things that you can’t control on your way to financial freedom:
1. You can’t control the returns you’re going to get in the stock market. It’s reasonable to project 10% average annual returns based on historical performance. Also, we use 10% merely as a projection for planning purposes. But, there’s no guarantee anybody will earn 10% per year.
2. You can’t control whether a real estate investment appreciates. We all certainly hope our properties increase in value over time. We do our best to target areas where appreciation is likely. But, once again, there’s no guarantee.
3. You can’t control if your employer is going to give you a raise. Of course, you can work hard. Also, you can outperform all the metrics. You can go above and beyond to deliver massive value to your company. However, when it’s time for your annual salary review, it’s not up to you how much all that is worth.
So, am I wrong about any of that?

Gee, thanks for the doom and gloom, Matt.

I know, I know. Not what you want to hear.

Don’t be discouraged. All is not lost.

There is one crucial element that you can control on your way to financial freedom.

Today, we’ll focus on the one crucial element that you actually can control on your way to financial freedom.

It’s such an important concept that Mr. Money Mustache’s blog post from years ago is still a classic: The Shockingly Simple Math Behind Early Retirement.

Even more so, it’s such a powerful concept that you won’t find a personal finance blog, book or podcast that doesn’t emphasize its importance.

What is the secret?

What is the one thing you can control above all else?

The one thing you can truly control is your saving rate.

If you ignore every piece of investment advice out there and focus on your saving rate, you are going to be in great shape.

Let’s examine why.

What is a saving rate?

Your saving rate is simply the amount of money you save each month divided by the amount of money you make.

Saving rate = Money Saved / Money Earned

Just like staying on budget with two simple numbers, you can monitor your progress with this simple formula.

I find it helpful to measure your saving rate based on your monthly income and savings. This way it matches up with your Budget After Thinking.

I also find it most useful to express your saving rate as a percentage. To see your saving rate percentage, all you need to do is multiply your saving rate by 100.

Saving rate % = (Money Saved / Money Earned) x 100

Moving forward, when I refer to saving rate, I will be talking about your saving rate percentage. It’s more informative to see what percentage of your money you are saving, rather than an amount with no context.

What I mean is this: if someone asked me if saving $10,000 per year was a good target, I wouldn’t be able to comment with more context.

If that person was making $75,000 per year, I would say that seems OK. That’s a saving rate of more than 13%.

On the other hand, if someone told me they were making $750,000 per year, and only saving $10,000, I would recommend that person revisit their Budget After Thinking.

That’s a saving rate percentage of only 1.3%.

That’s… bad.

Photo by Chris Leipelt on Unsplash

What can I learn from tracking my saving rate?

Tracking your saving rate will help you understand if you are making progress over time. It’s not about comparing yourself to someone else.

Whatever your current saving rate is, the goal is to seek personal improvement. Just like with tracking your net worth, the purpose is to see if you are making personal progress over time.

When it comes down to it, there are really only two ways to improve your saving rate.
1. You can spend less, and save more, of the money you’re currently making.
2. You can make more money and save most of that money, all while keeping your expenses the same.
Combining those two ideas is even better. Like we just said, make more money, spend about the same.

Use the excess money you make to fuel your Later Money goals.

If you can do that, your saving rate and your net worth will steadily climb. You’ll experience that your Later Money goals are closer to becoming reality than you think.

Why it’s important to focus what you can control, like your saving rate.

My point here is show you how dramatically one decision can accelerate your progress towards your goals.

Each additional amount saved is one step closer to financial freedom.

Sometimes, we all need to ask ourselves:

“Is spending more money right now on things I don’t really care about going to make me happier?”

“Do I even want to go out to more restaurants? Or fancier restaurants?”

“Do I despise my home/my car/my wardrobe so much that I must replace it immediately?”

Only you can answer these questions.

Maybe you’ll realize that your life is pretty good right now as it is.

You might just decide that you don’t need the extra money at this moment.

You’d rather use the money as fuel for what you really want in life.

Here’s an example showing the importance of your saving rate.

Scott Trench, author of one of my favorite money wellness books, Set for Life, is a big advocate of improving your saving rate.

In a recent episode of his BiggerPockets Money podcast, Trench emphasized just how important your saving rate is using a simple example.

Let’s use that example to explore how improving your saving rate can accelerate your journey to financial freedom.

Assume that you earn $100,000 per year (after taxes for simplicity).

You are a pretty good saver and save 20% of your income, or $20,000. For most people, targeting a saving rate of 20% is pretty solid.

Of course, if you save 20% of your income, that means you spend 80% of your income, or $80,000 per year:
- Take Home Pay: $100,000
- Annual Spending: $80,000
- Annual Savings: $20,000
Based on the above, we can project how long you will have to work to fund one year of your life.

Because you spend $80,000 per year and you save $20,000 per year, you would have to work four years to save enough money to fund one year of your lifestyle:

$20,000 saved x 4 years = $80,000 saved (1 year of spending)

In other words, you would need to work four years to buy one year of financial freedom.

Not bad, huh?

But, look what happens when you improve your saving rate.

Photo by Alexandr Podvalny on Unsplash

What happens if you double your saving rate from 20% to 40%?

Now, let’s see what happens if you double your saving rate to 40%. That means you are saving $40,000 per year and only spending $60,000 per year.

The result is that you now only need 1.5 years of work to fund one year of financial freedom:

$40,000 saved x 1.5 years = $60,000 saved (1 year of spending)

Notice that two things are happening at the same time when you increase your saving rate.

First, you are saving more money each year. That’s a good thing.

Second, you are spending less money each year. That’s another good thing.

The result is that when you spend less money, you need to accumulate less money to fund your lifestyle.

It’s a double whammy. In a good way.

Should we complete our example by taking it one step further?

Let’s say you have a 50% saving rate. That means you save $50,000 per year and spend $50,000 per year.

How long do you have to work to buy one year of financial freedom?

Only one year.

$50,000 saved x 1 year = $50,000 saved (1 year of spending).

Now, that’s cool.

It’s motivating to think of your saving rate in terms of years to financial freedom.

So, what’s the takeaway here?

It can be extremely motivating to think of your saving rate in terms of how long you have to work until financial freedom.

Each incremental amount that you save means you’re boosting your savings at the same time you’re reducing your spending.

When you pull both of those levers at the same time, you accelerate your progress towards financial freedom.

This thought process is especially helpful for people who feel that math is not their thing. It doesn’t get much simpler than viewing savings in terms of buying financial freedom.

The cool part is that once you hit a 50% saving rate, you can essentially buy a year of financial freedom for every year that year work.

Keep in mind that that this simple illustration ignores any investment returns you may get from your savings.

Don’t worry, those investment returns will generally reduce the length of time you need to work even more. Check out Mr. Money Mustache’s post for more on that point.

Setting aside investment returns, the purpose here is to drive home the point that the more you save, the faster you’ll reach financial freedom.

That’s why it’s so important to focus on your saving rate. You can’t control everything, but you can certainly work on your saving and spending.

Have you ever calculated your saving rate in terms of how quickly you can achieve financial freedom?

Does this example motivate you to save even more?

Let us know in the comments below.
September 16, 2025
Did You Win the $1.787 Billion Powerball Jackpot!?

No!?

Me neither.

It looks like there are two winners, one from Texas and one from Missouri, who will split the massive payout.

It’s simply an astonishing amount of money. Congratulations to the winners!

I can’t be the only one thinking that money like that could easily be a blessing and a curse, right?

Hopefully, the winners take their time and come up with a plan to not only make sure the money lasts, but that they use it in a meaningful way.

Well, just because we didn’t win doesn’t mean we can’t take advantage of this opportunity.

In the spirit of the massive jackpot, I started thinking about what I would do in a more realistic scenario.

Specifically, I asked myself:

What would I do if I woke up tomorrow with $178,000 in my checking account?

@thinkandtalkmoney
What I’m doing if $178,000 hit my bank account today. #thinkandtalkmoney #lottery #personalfinance #financialfreedom #529plan
♬ original sound – Thinkandtalkmoney

I know it’s not as exciting as thinking about what you would do with $1 billion, but I think it’s more important because it is actually realistic.

Yes, I said realistic.

I truly believe that if you are a high-earning professional, like a lawyer, consultant, or real estate investor, it will happen.

There will come a point in your career (hopefully multiple points) where you earn a one-time windfall of $178,000.

For example, it may come in the form of a bonus, a commission, or profits from a sale.

When that time comes in your life, you want to be ready.

The last thing you want to do is waste that golden opportunity. You may never get another chance to materially impact your life so much in one shot.

So, let’s have some fun and plan out what we would do if we wake up tomorrow with an extra $178,000 in our bank accounts.

Here’s exactly what I would do.

The first thing I would do with $178,000 is pay off high interest debt.

I think of a bonus like this as a one-time “Get Out of Jail Free” card.

With $178,000, the first thing I would do is pay off any high interest debt that I have. High interest debt includes credit card debt, personal loans, and any lines of credit.

My main financial goal this year was to pay off the rest of the HELOC we used to buy our last rental property. That’s my first move with this windfall.

Once the debt is eliminated, I’ll be free to pursue more fun life goals. And, I’ll feel better without having that debt hanging over my head.

Photo by Steve Sawusch on Unsplash

Next, I would set aside $15,000 to $20,000 for fun money.

I would use about 10% of the money for fun right now. That comes out to approximately $15,000 to $20,000.

That is the equivalent of a really nice vacation or two. Or, it could be new furniture for the house, new gadgets or toys (like a bike or golf clubs), or anything else that brings me joy.

I’m a firm believer that we have to enjoy the journey while we’re on it. Having eliminated all high interest debt, I’ve earned the privilege to have some fun with a responsible portion of this money.

The strange thing is that for people who are dedicated to achieving financial freedom, spending money can be very difficult.

The temptation is to save and invest every possible dollar. As tempting as that may be, I encourage you to resist the urge to “live in the spreadsheet.”

This is a chance to do something for yourself that brings joy and happiness. Whatever that is for you, take advantage.

Otherwise, what’s the point in working so hard in the first place?

Next, I would revisit my Tiara Goals for financial freedom.

Let’s say after paying off high-interest debt and setting some money aside for fun, I have $100,000 remaining.

What you do with the remaining $100,000 will vary depending on where you currently are in life and what your main priorities are.

This is why I always talk about the importance of having your ultimate life goals written down and consulting them regularly.

I refer to my ultimate life goals as my Tiara Goals. Before I save and invest the remaining $100,000, I’m going to look at my Tiara Goals for inspiration.

With my Tiara Goals in mind, my top priorities right now are to eliminate HELOC debt, pay for my three kids’ college, and build my emergency fund.

Each one of these priorities align with my Tiara Goals and help me get closer and closer to true financial independence.

Because I have been aggressively acquiring real estate for the past seven years, college savings and emergency savings have been secondary goals.

Now that I’m not presently in the market for more rental properties, I can prioritize saving for college and emergencies.

With this windfall, I can make significant headway to satisfy both of those goals.

I would then use $67,000 to fund my son’s college education.

I recently used an online calculator to figure out how much money I would need to invest right now in my son’s 529 savings account to fully fund his college.

For my calculations, I targeted the premier in-state university where I live (the University of Illinois). I assumed a 10% average annual rate of return on my investment and a 5% annual increase in tuition.

I learned that with an investment today of $67,000, I could fully fund my son’s in-state tuition.

The key is to let that money grow for the next 15 years to take advantage of compound interest.

What an accomplishment that would be to not have to worry about his future college. I could cross that item off the “to-do” list once and for all.

So, with the next $67,000 of my windfall, I would fully fund my kid’s in-state tuition.

Disclaimer: if you’re doing this math for your own three-year-old, keep in mind that I’ve already begun to fund my son’s 529 account. The $67,000 is the difference that I need to add today in order to hit my goal. If you do the calculations yourself, you might come up with a different number.

With my son’s college tuition taken care of, I would move onto my next goal, which is to fund my emergency savings account.

Before we get to that, you may be wondering why I targeted the in-state school for my projections instead of aiming for a more expensive private school.

Why did I target in-state tuition?

It’s not that I don’t want my kids to have the option to attend a more expensive private school.

It’s that I have other goals that I want to accomplish in my life at the same time I’m saving for college. I view the in-state tuition target as a reasonable, minimum goal to strive for.

And, if my kid chooses to attend a more expensive private school, I plan on having additional ways to pay for it.

For example, my overall financial plan includes owning rental properties even after my kids go to college. I can use that rental property income to help pay for college.

Additionally, I plan on still earning income through a primary job. I can use that income to help pay for their college.

Between now and then, I can invest in more rental properties, a traditional brokerage account, or any other investment vehicle of my choosing.

I’ll still have the option to use that money to pay for college. The benefit is that I’ll have more flexibility.

Plus, you never know. Maybe my kid will earn a scholarship. Maybe my kid does not end up going to college.

Having different investments besides a college savings plan means that I’ll have options.

Photo by SLNC on Unsplash

I would save the remaining $33,000 in an emergency savings account.

Finally, I would take the remaining $33,000 and put it into a high-interest savings account.

I have no immediate needs for this money. I have income coming in from a variety of sources, including my primary job, my rental properties and my job as an adjunct professor.

However, it’s been a goal of mine for a few years to bump up my emergency savings. It’s been a risk not having much saved up for emergencies, and I’m taking this chance to eliminate that risk.

Because I’m not currently in the market for more real estate, I can save this money for emergencies instead of worrying about a down payment for my next acquisition.

With my emergency savings account more adequately funded, I can better protect myself should disaster strike.

That’s why I’m putting the final $33,000 in my emergency savings account.

How would you use $178,000 today?

So, that’s how I would use a $178,000 windfall today.

It’s not as fun as thinking about $1.78 billion, but it’s a more realistic thought experience.

In case you’re wondering, if I had more money to invest at this point, I would focus on my baby girl’s college. I would use the same methodology that I used to plan for my son‘s college.

No matter the amount of money, it’s good to have a plan ahead of time. As a high-earning professional, the odds are that you will earn a significant bonus like this at some point in your career.

It might not be $178,000, but the thought process will work no matter what the amount is.

The takeaway is that it’s always a good idea to have a plan before you earn the money.

Enjoy some. Save and invest the bulk of it.

What would you do with a windfall like this?

Let us know in the comments below.

September 7, 2025
Financial Independence is Not About a Life of Deprivation

Stop me if you’ve heard this advice before:

“Cancel all your subscriptions and save $1,000 a year!”

“Cut out your morning coffee if you really want to be wealthy!”

“Buy your Christmas presents in January when the sales start!”

Because of advice like this, there’s a common misconception that people who want financial independence have to lead a life of deprivation.

Nope.

I refuse to believe that.

Financial independence about so much more than that.

Financial independence is not reserved for people willing to cut their spending to the bone.

It’s for anyone willing to make intentional money decisions, including the decision to earn more money and not cut spending.

How did financial independence become synonymous with deprivation?

As my three-year-old asks during story time, “And, then there’s a problem?”

Yes, son, there’s a problem.

Too many people believe that financial independence is only about cutting spending.

That’s a big problem that is holding people back.

See, most of us lawyers and professionals work a ton of hours. We are already making major sacrifices.

To throw in major reductions in spending on our way to financial independence is not a worthwhile tradeoff.

Life is too short. None of us are guaranteed tomorrow.

I learned this lesson a long time ago by representing clients with mesothelioma, a sudden and fatal cancer.

That’s why I never encourage anyone to cut out spending on things and experiences that make them happy today.

Does this mean we should all go out and spend every dollar we make?

Of course not.

No matter what, you’ll always need to live within your means.

If you are spending more than you’re earning, you’ll never be financially independent.

However, if you earn decent money and invest it the right way, you will reach financial independence.

And, you don’t need to stop spending money on the way.

FIRE has taken on an unintended meaning.

One of the problems in the personal finance space is that many people first learn about financial independence in the context of FIRE (Financial Independence, Retire Early).

Unfortunately, there’s a stereotype that FIRE is only for people willing to aggressively lower their expenses.

In other words, the mistaken belief is that people who practice FIRE can only survive if they cut out most of life’s luxuries.

Even though this misconception fails to capture the true spirt of FIRE, the damage has already been done.

Too many people who I speak with get so discouraged by hearing “cut, cut, cut!” that they lose all interest in pursuing financial independence.

It’s not that these people are financially irresponsible. They mostly live within their means and save for important goals.

At the same time, they want to enjoy everything that life has to offer. And as mentioned above, I don’t mean enjoy life “years down the road.” They work hard and want to spend money to enjoy life today.

For people like this, FIRE’s perceived focus on deprivation is unappealing.

This is one of the reasons I don’t like to use the word FIRE around here. I prefer FIPE: Financial Independence, Pivot Early.

Photo by Jason Hogan on Unsplash

Have you noticed in the blog that we talk more about investing than cutting expenses?

If you’ve been a consistent reader of the blog, you likely noticed that we haven’t talked much about cutting back on spending lately.

We’ve been focused on creating wealth through investing, whether your preference is to invest in stocks or real estate.

I certainly encourage people to generate as much fuel as possible for their investments, especially early in their careers.

That way, you can benefit from long-term wealth generators like compound interest and appreciation.

Generating more money to invest, of course, involves making spending choices. These types of choices are the essence of the budgeting process.

However, instead of focusing on cutting your expenses to the bone, I recommend you create a reasonable Budget After Thinking that you can actually stick to.

If you eliminate all the fun stuff, no budget will last very long.

In a lot of ways, this advice is like dieting. Sure, you can lose 10 pounds in a few weeks if you eliminate every indulgence. But, how long is that diet going to work?

I recommend that you have a budget that you can stick to long term. Then, commit yourself to fighting lifestyle creep as you start making more money.

If you can do those two things, you don’t have to dramatically cut your expenses.

Yes, you have to keep your spending within reason.

No, you don’t have to cancel all your subscriptions.

Focus on earning more, not just spending less.

A good friend of ours just made $750 by doing one property showing. In total, she probably worked an hour to earn that money.

Compare that to the advice of cutting out your daily coffee ritual. If you consciously deprive yourself of coffee every day for an entire year, you could save about $1,000.

What would you rather do?

Work just a little bit more with a side hustle of your choosing, or cut out something that you enjoy each morning?

Do you really have to think that long about it?

Of course, you already know which option I’m pursuing.

Photo by Becca Tapert on Unsplash

I am a big fan of side hustle.

I’ve had side hustles for just about my entire career as a lawyer.

My first side hustle was as an adjunct professor at a local law school, teaching just one class. I eventually turned that into teaching four classes.

In the meantime, I also launched a rental property business with my wife, now managing 11 units in Chicago and Colorado.

We’re doing this with three young kids at home. I’m not bragging. My point is that I roll my eyes whenever anyone tells me he is too busy to make extra money.

By the way, earning more money does not only apply to side hustles.

There are always ways to make more money within your primary job.

For example, can you earn a larger bonus by performing better?

Can you ask your employer for more responsibilities and a corresponding raise?

Or, can you earn additional money by generating business for your company?

Lawyers, like most professionals, have the ability to earn more money if they generate business. That means bringing in clients.

How can you find these clients?

You can make it a priority to go to more events where you might meet potential clients.

You could launch a blog or create other content to help people find you and know what you do.

Either one of these pursuits could be your side hustle.

There are endless opportunities for anyone that is motivated and is looking to earn more money.

And when you earn that additional money, you’re on your way to financial independence without having to sacrifice the things that make your daily life enjoyable.

OK, but I don’t even like coffee.

I know, I’m picking on coffee. Coffee is an easy target, but it’s just one example.

Maybe coffee is not your problem. Let’s say that you’ve cut out family vacations.

Family vacations can be expensive. There’s no doubt about it.

But instead of eliminating vacations, what if you could find a way to earn an extra $5,000? That could turn into a really nice family vacation.

For some people, this is a no-brainer. They find a way to earn more money.

Other people will simply skip the family vacation because it’s too expensive.

At this stage in my life, I’m not willing to do that. I have three young kids. I already feel like they’re growing up too fast.

A year ago, my daughter wouldn’t let go of my hand when I walked her to school. Now, she’s “too cool” to waive goodbye to Daddy.

The idea of skipping out on family vacations does not appeal to me at all. I know that there will come a day when I would really regret that choice.

Instead of eliminating family vacations, I would rather find a way to make more money.

You can have anything you want; you just can’t have everything.

Warren Buffett famously told his kids that they could have anything they wanted. They just couldn’t have everything.

That sums up my approaching to spending. If there’s something I truly want that doesn’t currently fit in my budget, I would prefer to earn more instead of giving up on having that thing or experience.

I might get there through a side hustle. I might get there through investing. If it’s something I value enough, I will get there one way or the other.

If you focus on your income, not just cutting expenses, you can continue your journey to financial independence without giving up these things that make life special.

Or, you can cut out the coffee and vacations, if that’s your preference.

I’d rather challenge myself to make more money so I don’t have to make those sacrifices.

Do you think financial independence is only for people willing to aggressively cut their spending?

Or, do you agree that financial independence is for anybody willing to work for it?

September 5, 2025
When Money is Tight, Think Even More About The Future
“Money is tight.”

“I’m worried about today. I’ll deal with tomorrow later.”

“If I cut out vacations and saving for retirement, I can make it work.”

Have you ever heard money excuses like this before?

I recently had a couple of great talks that got me thinking about comments like this. These talks led me to think about common money mindsets we sometimes have when we’re worried about paying for things today.

For many of us, the natural inclination when money is tight is to ignore the future and focus on today.

The pattern goes something like this:

Go to work, pay the bills, keep food on the table.

Wake up and do it all over again tomorrow.

Dream about life-enriching experiences and retirement later.

The problem with this money mindset: how are you ever going to break the cycle?

How are you ever going to progress towards financial independence so your life is not stuck on auto-pilot?

My challenge to you?

When money is tight, think long and hard about the future. Think about what comes next.

Use a challenging period in your life as motivation to do things differently.

It helps to picture yourself 10 years from now. Imagine you don’t do anything differently.

Same Job. Same bills. The cycle continues.

Do you like what you see?

If you do, no need to read any further. Keep doing what you’re doing.

If you don’t like what you see, let me share another perspective with you.

Let’s use the future as motivation to make the hard decisions today.

That way, you can spend your money (and time) on the things and experiences that bring you happiness in life.

How do we break the cycle?

It all starts with revisiting our spending choices and our Budget After Thinking.

Budgeting is about having a plan ahead of time.

The art of budgeting is to know what you want to do with your money before it hits your checking account.

Otherwise, it’s too late. Those dollars will disappear.

In fact, the word “budget” is synonymous with “plan”.

Some dollars will be used to pay your ordinary life expenses, some dollars will be used for all the things in life you love, and some dollars will go to your financial goals.

That’s all there is to it.

When it comes to budgeting, I divide my money into three primary categories:
1. Now Money
2. Life Money
3. Later Money
Now Money

Now Money is what you need to pay for basic life expenses.

These are expenses that you can’t avoid and should be relatively fixed each month. If you have expenses for kids, pets, and other fixed life expenses, be sure to include them in your Now Money category.

Photo by Glenn Carstens-Peters on Unsplash

Life Money

Life Money is what you are going to spend every month on things and experiences in life that you love.

This bucket includes dining out, concerts, vacations, subscriptions, gifts, and anything else that brings you joy.

We can’t be afraid to spend this money. This bucket is usually what makes life fun and exciting. The key is to think and talk so you are spending this money consistently on things that matter to you.

Later Money

Later Money is what you are saving, investing, or using to pay off debt.

This bucket includes long term goals, such as retirement plan contributions (like a 401k or Roth IRA), college savings for your kids (like a 529 plan), emergency savings and paying off student loan or credit card debt.

This bucket also includes any shorter term goals, like saving for a wedding or a downpayment for a house.

Most fun of all, this bucket includes any investments you make to more quickly grow your wealth, like investing in real estate or the stock market.

Later Money is the key category that fuels your ultimate life goals, like financial independence. The more you fuel this category, the faster you can reach your goals.

Your budget is really just about finding fuel for the best things in life.

This is where we circle back to the importance of having a clear understanding of what we want out of our money.

Money is just a tool.

Ask yourself:

“Is your current spending aligned with how you want to use your money to fuel your goals and ambitions?”

If not, you can make incremental adjustments as you progress towards your ideal spending alignment.

The idea is to continuously add more fuel to our Life Money and Later Money. Why?

These are the buckets that represent the things we love the most (Life Money) and our most important life goals (Later Money).

When money is tight, resist the urge to cut these expenses from your budget. These are the expenditures that oftentimes give meaning to life and allow us to build a future on our terms.

Instead, focus on the Now Money bucket as much as possible.

For some ideas on how to do that, check out my Top 10 Budgeting Tips for Lawyers and Professionals.

You can make small adjustments, which are usually easier and faster to put in place. These adjustments might include dining out a bit less, cutting out a concert, or cancelling a gym membership or subscription you don’t use.

You can also make big adjustments, like moving to a cheaper part of town or getting rid of you car.

Small or big, the key is that when you make these adjustments, you repurpose that money in a thoughtful and intentional way. You’re now starting to align your budget with your money motivations.

These adjustments will give you options in the future.

With each thoughtful decision, you’re progressing towards your best money life. Most importantly, you’re learning about yourself and developing lasting habits. You won’t get discouraged and give up on budgeting.

Photo by Ian Chen on Unsplash

What do you really want out of life?

Creating a Budget After Thinking is really all about one question:

What do you really want out of life?

When you prioritize Life Money (experiences) and Later Money (financial freedom), each dollar you spend or invest brings you one step closer to that ideal life.

If you are totally consumed with Now Money, you’ll struggle to build the life that you really want.

I started thinking about what my ideal life would look like when I wrote down my Tiara Goals for Financial Freedom in 2017.

By that point in my life, I had paid off my student loan debt and was about to get married.

My soon-to-be wife and I had good money coming in, but I never truly thought about what I wanted in life. Sure, I had thought about things like having a family and being able to take vacations.

But, I never carved out time to purposefully think hard about what I actually wanted. I had never asked myself what truly motivates me.

I never allowed myself to dream about financial freedom.

The truth is, I don’t think I had ever visualized a life that wasn’t dominated by a full-time job.

Up to that point, my whole life had revolved around getting an education and then getting a job. I never pictured a world where I might not need a full-time job to provide for myself and eventually my family.

I had read about the concept of being financially free, but it always seemed like a possibility for other people, not me.

Writing this years later, I feel sad for that version of myself for having such limiting beliefs.

Whenever someone tells me she doesn’t make enough money to dream about the future, I think about those same limiting beliefs I used to have.

That’s the cycle I’m hoping to help people break.

When money is tight, think about the future.

When it comes to spending choices, resist the urge to cut the things from your budget that make life what it is. That might mean money spent today on memorable experiences, like vacations.

Or, it might mean money saved and invested to provide yourself more options down the road.

The key is to break the thoughtless spending cycle that can make your life feel like it’s stuck in place.

Create a Budget After Thinking that prioritizes what you truly value.

Money might still be tight, but you’ll know you’re spending on things that matter.

You’ll know that you’ll have options in the future.
September 2, 2025
How to Gain Confidence by Calculating Your Coast FIRE Number
Have you ever wondered if you really need to keep saving for retirement?

Believe it or not, you may be closer than you think to achieving your retirement goals.

That’s a very powerful realization.

Think about the options you can create for yourself if you no longer need to save a hefty chunk of your paycheck for retirement.

We recently explored some of these options while talking about the money mindset hack known as Coast FIRE.

Today, we’ll look at some specific examples of how to calculate your Coast FIRE number so you can see how you stack up.

By calculating your Coast FIRE number, you may just find that you have more options than you ever thought possible.

Let’s explore.

What is Coast FIRE?

Coast FIRE is a subset of FIRE for people who are not necessarily trying to retire early.

Instead, the idea is to aggressively fund your retirement accounts early on so you have more options as your career progresses.

The reason you’ll have options is because once you hit your projected magic retirement number, you no longer need to fund your retirement accounts.

You can sit back and let compound interest do its thing. Your retirement years are covered.

With retirement covered, you don’t need to earn as much money. You can focus more attention on your present-day self. That might mean working less hours or working the same amount but in a different job.

This is the essence of Coast FIRE: knock out retirement planning early on to create more career flexibility later.

Coast FIRE does not mean complete financial independence.

When you reach Coast FIRE, you are not financially independent because you still need money coming in to fund your current lifestyle.

But, you need less money because you no longer need to save for the important goal of retirement. That means you have earned some financial freedom, but not complete freedom.

That’s OK.

Remember, the part that separates Coast FIRE from traditional FIRE is that early retirement is not the goal.

Instead, Coast FIRE means continuing to work until normal retirement age (like age 65) but having more freedom in what you do for work.

To put a bow on it: the main money mindset benefit of Coast FIRE is that you have options once you’ve already put away enough money for retirement.

With retirement taken care of, you can:
1. Switch to a lower paying job or lower stress job.
2. Become a stay-at-home parent and live off of one spouse’s income.
3. Start a business.
4. Grow your side hustle.
5. Take some time off to think about what you want to do next.
With Coast FIRE, each of these options feels safer because you’ve already fully funded your retirement.

Your Coast FIRE number is not the same as your FI number.

As we’ll explore below, your Coast FIRE number is different from your FI number (what I sometimes refer to as your magic retirement number).

Your Coast FIRE number is the amount you need saved up today to stop saving anymore for a traditional retirement. You still need to earn money to fund your current lifestyle.

Your FI number is the amount you need saved up today to retire and live completely off your investments for the rest of your life.

You’ll see below that your Coast FIRE number is usually significantly lower than your FI number.

This is especially true the further away you are from traditional retirement age. That’s because you have a longer time horizon for compound interest to do its thing.

In fact, the reason Coast FIRE is such a powerful money mindset hack is because the Coast FIRE number seems much more attainable.

This of it like this: have you ever felt that it seems impossible to save millions of dollars for retirement?

The truth is you don’t have to come up with all that money on your own. Your job is to aggressively seed your retirement accounts early on so compound interest can do the heavy lifting.

By funding your retirement accounts early in your career, you don’t need millions of dollars. You actually need way less.

Calculating your Coast FIRE number will drive this point home.

Photo by Courtnie Tosana on Unsplash

How do I calculate my Coast FIRE number?

There are some great online calculators available to figure out your Coast FIRE number.

You simply plug in a few variables, like your current age, desired retirement age, and anticipated spending in retirement. It couldn’t be easier.

The Fioneers and WalletBurst each have easy-to-use calculators that I recommend. There are plenty of others, but these two are simple to use.

What’s nice about each calculator is that you can play around with the inputs to explore various scenarios. You can also see how your Coast FIRE number is significantly lower than your FI number.

The WalletBurst calculator has a helpful graph for visualizing your progress towards Coast FIRE.

The Fioneers calculator has a nice feature where you can input other sources of passive income, like income from a rental property.

As we know, adding just one rental property to your investment portfolio can massively shrink your magic retirement number and accelerate your journey to financial freedom.

If you’re thinking about rental property investing to supplement your retirement income, check out my recent post:

Shrink Your Magic Retirement Number With One Rental Property

Note: The Fioneers’ calculator is a Google Sheet you can download, but you need to enter your email address first. You do not need to enter an email address to use the WalletBurst calculator.

Using these calculators, let’s take a look at a few examples.

Let’s explore three different scenarios where knowing your Coast FIRE number can be very useful:
1. Clarke is 35-years-old and ready for a new job.
2. David is 40-years-old and worried about paying for college.
3. Dorothy is 28-years-old and just paid off her student loans.
In each of these examples, we’ll assume a standard retirement age of 65 and an annual rate of return of 10% (on par with the historical results of the S&P 500).

We’ll also factor in a 3% inflation rate (the historical average in the United States).

Finally, we’ll assume a safe withdrawal rate of 4.7% in light of the updated “4% Rule.”

In case you missed it, Bill Bengen, creator of the 4% Rule, just released a new book with some fun news for all of us saving for retirement.

Bengen’s updated research shows that it’s safe to increase your withdrawal rate in retirement from 4% to 4.7%.

Bengen’s new book is called A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More.

Let’s dive in.

Coast FIRE Example 1: Clarke is 35-years-old and ready for a new job.

Clarke is 35-years-old and is ready for a career change.

His job at a prestigious law firm has taught him a lot and he’s made good money. But, the stress and the hours are starting to take a toll on his personal life and on his health.

He’s ready to pivot.

Because he was making good money, Clarke maxed out his 401(k) retirement plan for the past 8 years. He now has $400,000 saved up. He also currently adds $5,000 to his various retirement accounts each month.

His goal is to have $200,000 annually to spend in retirement.

Based on the above variables, Clarke’s Coast FIRE number is $559,009.

At his current saving rate, he will reach Coast FIRE in three years. That means that at the age of 38, he will no longer need to fund his retirement.

He could then pursue a lower paying, lower stress job without sacrificing his retirement years.

Note: Clarke’s FI number (magic retirement number) is significantly higher: $4,255,319.

That’s a big number and can seem intimidating. His Coast FIRE number is more encouraging to think about.

Yes, he’ll have to keep working to fund his current lifestyle. But, he can choose to work a lot less.

What if three years still seems too far away for Clarke?

Using the Coast FIRE calculator, Clarke learns that if he ups his retirement contributions from $5,000 per month to $8,000 per month, he will achieve Coast FIRE in two years.

That’s powerful information. If he boosts his saving rate even more, he can pivot even faster.

Armed with the knowledge of his Coast FIRE number, Clarke has a newfound motivation to stick it out at his current job for just a bit longer.

Photo by Jan Tielens on Unsplash

Coast FIRE Example 2: David is 40-years-old and worried about paying for college.

David had a kid about a year ago and is freaking out about paying for college. He knows that it’s important to prioritize his own retirement before prioritizing his kid’s college.

David has $300,000 saved for retirement. His goal is to spend $150,000 annually in retirement. He currently has $6,000 available to invest each month, whether that’s for retirement or college.

Let’s help David out by using the Coast FIRE calculator.

Plugging in these variables, we see that David’s Coast FIRE number is $588,029.

Notice how David’s Coast FIRE number is higher than Clarke’s, even though he plans to spend less in retirement. That’s because he has a shorter time horizon and less currently saved.

This is another reminder to start investing early and often.

Even so, David is in great shape for retirement. At his current pace, David is 5 years away from reaching Coast FIRE. His daughter will only be six-years-old at that point.

That means that David will still have 12 years to prioritize saving for his daughter’s college, all while knowing that his retirement is covered.

This knowledge makes David feel much better. He’s no longer worried about paying for his daughter’s college at the expense of saving for retirement.

Coast FIRE Example 3: Dorothy is 28-years-old and just paid off her student loans.

Dorothy is 28-years-old and is in the early stage of her career as a lobbyist in Washington D.C. She lives with 3 roommates outside of town and keeps her expenses very low.

Dorothy has her whole life ahead of her so hasn’t thought too much about the specifics of retirement.

But, she knows enough to think and talk money with her friends and family every once in a while.

In one of these conversations, she learned about Coast FIRE and was interested in calculating what her number is. Dorothy thought about how amazing it would be to pursue a life on her own terms without worrying about retirement.

Dorothy just finished paying off her student loans. Because she was focused on her loans, she currently has only $10,000 saved for retirement.

She now plans to roll the $5,000 per month she had been using for loan payments into her retirement account.

Because she was so far away from retirement, Dorothy thought it was best to error on the side of caution with her annual spending projections.

So, Dorothy estimated that she would need $250,000 annually in retirement, much more than both Clarke and David figured.

Based on the above, Dorothy’s Coast FIRE number is $435,153. She can achieve Coast FIRE by the age of 38!

Dorothy’s Coast FIRE number is significantly lower than Clarke’s and David’s, even though she plans to spend way more in retirement.

Of course, this is because she is getting started so early.

Knowing that she can fund her entire retirement in just 10 years, Dorothy makes it a priority to do so.

By the age of 38, she will be free to pursue any line of work she chooses without needing another dollar to fund her seemingly extravagant retirement.

That makes Dorothy very happy.

Use a Coast FIRE calculator to figure out your own number.

The above examples show how knowing your Coast FIRE number can be so liberating.

When you calculate how much you’ll need to retire, you may be surprised at how close you actually are.

If you’ve been avoiding making big life decisions because of anxiety about retirement, knowing your Coast FIRE number can be a huge help.

Clarke, David and Dorothy calculated their Coast FIRE numbers and were able to come up with manageable plans.

Each person is on track for a desirable retirement, all while creating options for themselves earlier in life.

Having options is a great thing.

Have you calculated your Coast FIRE number?

Were you surprised how close you actually are to achieving your retirement goals?

Let us know in the comments below.
August 24, 2025
Why Coast FIRE is a Powerful Money Mindset Hack
Are you working a job you don’t like because you’re worried about saving enough for retirement?

Well, what if you already have more than enough saved for retirement?

Would that give you confidence to think about switching jobs? Maybe to a job that pays less but better fits your life goals?

Think about it.

If you didn’t have to save another dollar between now and retirement age, would that give you more career freedom?

Would you start looking for that job you really want instead of the job that pays the most?

To explore these questions, let’s look at the money mindset concept known as “Coast FIRE.”

@thinkandtalkmoney
Overview of the Coast FIRE 🔥 movement. #thinkandtalkmoney #coastfire #finiancialindependence #financialfreedom
♬ original sound – Thinkandtalkmoney

What is Coast FIRE?

Coast FIRE is a subset of FIRE for people who are not necessarily trying to retire early.

Instead, the idea is to aggressively fund your retirement accounts early on so you have more options as your career progresses.

The reason you’ll have options is because once you hit your projected magic retirement number, you no longer need to fund your retirement accounts.

You can sit back and let compound interest do its thing. Your retirement years are covered.

With retirement covered, you don’t need to earn as much money. You can focus more attention on your present-day self. That might mean working less hours or working the same amount but in a different job.

This is the essence of Coast FIRE: knock out retirement planning early on to create more career flexibility later.

Coast FIRE does not mean complete financial independence.

When you reach Coast FIRE, you are not financially independent because you still need money coming in to fund your current lifestyle.

But, you need less money because you no longer need to save for the important goal of retirement. That means you have earned some financial freedom, but not complete freedom.

That’s OK.

Remember, the part that separates Coast FIRE from traditional FIRE is that early retirement is not the goal.

Instead, Coast FIRE means continuing to work until normal retirement age (like age 65) but having more freedom in what you do for work.

To put a bow on it: the main money mindset benefit of Coast FIRE is that you have options once you’ve already put away enough money for retirement.

With retirement taken care of, you can:
1. Switch to a lower paying job or lower stress job.
2. Become a stay-at-home parent and live off of one spouse’s income.
3. Start a business.
4. Grow your side hustle.
5. Take some time off to think about what you want to do next.
With Coast FIRE, each of these options feels safer because you’ve already fully funded your retirement.

That’s a powerful feeling.

You can take a pay cut for a better job with Coast FIRE.

Let’s say you earn $200,000 and save 20% of your salary ($40,000) for retirement.

Once you reach your retirement goal, you no longer have that $40,000 obligation. You have achieved Coast FIRE.

With that extra $40,000, you have options. You could:
1. Live it up and spend the money on stuff you don’t care about.
2. Repurpose the money towards another financial goal.
3. Switch to a more attractive job that may only pay $160,000.
Whatever you choose, the point is that you have options.

If your job is slowly killing you inside, Coast FIRE provides the money mindset to explore other jobs.

It’s no secret that lawyers typically work long, stressful hours. That’s why burnout amongst lawyers is unfortunately a common occurrence.

For example, you may have begrudgingly taken a high-paying job out of law school to pay down your loans faster. By the way, there’s nothing at all wrong with that.

Now, with your loans gone and your retirement savings in good shape, maybe you’d like to explore a less stressful job.

Maybe you’re ready to pursue that less lucrative career that was the reason you went to law school in the first place.

Maybe you’re ready to stay at home with your kids and live off of one spouse’s income.

Of course, burnout is not limited to lawyers. Many professionals today are experiencing burnout.

Have you been putting off that career change? Does this sound too familiar?

Coast FIRE allows you to find a job that fits your life better knowing you don’t need to make as much money.

Photo by Rod Long on Unsplash

Financial Independence Pivot Early (FIPE)

If you’ve been a follower of Think and Talk Money, you know I don’t like the term “FIRE.”

The problem for me is that the FIRE end game is suggested right there in the name: become financially independent so you can retire.

If you’re anything like me, you didn’t pay all that money to go to law school just to retire in your peak-earning years. There’s plenty of meaningful work still to do.

It’s not uncommon for people to hear about financial independence and immediately think that’s only for people who want to quit their jobs and retire on a beach somewhere.

I don’t think that’s what financial independence is about at all.

Financial independence is all about creating options.

When you’re financially independent, you can make decisions based on your core values instead of making decisions based on money.

You can pivot.

That’s why I believe in FIPE not FIRE.

I prefer to think about pivoting, not retiring.

Pivot means to adapt or improve through modifications and adjustments.

That sounds appealing to me.

Retire means to withdraw, to retreat, to recede.

None of those things sound appealing to me at all.

Retiring sounds like moving backwards. I’m not working so hard to achieve financial freedom so I can move backwards in life.

With FIPE, financial independence is still the primary goal. But, the endgame is not to withdraw or retreat.

The endgame is to adapt and improve how you spend your working hours.

Financial independence is for people who want to be empowered to take more control of what they do with their working hours.

It’s not about quitting work entirely.

It’s about the freedom to pivot to other work, if you want. I’m convinced that humans are meant to be productive. We are social creatures who at our core want to be contributing.

That doesn’t mean we have to be or want to be employees. But, it does mean that we want to do something meaningful with our working hours every week.

That’s why I believe in the power of pivoting, not retiring.

That’s what FIPE is all about.

And, that’s what Coast FIRE allows you to do.

Financial independence is about much more than retiring early.

FIRE emphasizes saving more and spending less until you reach the point where your passive investments generate enough income to allow you to quit your job.

I love this part of FIRE: the idea of creating enough income streams so that you have the freedom to do what you want with your time.

I share the primary goal of saving more money and spending less to achieve more life freedom.

By the way, I call this Parachute Money. I like to view each income stream as a separate parachute string. The more parachute strings you have, the safer it is to make a big change in life.

The problem becomes when people are so focused on achieving FIRE that they sacrifice too much of their current lives.

Yes, you’ll achieve FIRE faster if you save 90% of your salary.

But, what kind of life are you left with in the meantime?

Coast FIRE is less about the grind and more about enjoying the process.

The goal is still to be financially independent, even with the recognition that it will take longer to get there.

Photo by britt gaiser on Unsplash

FIPE and Coast FIRE work well together.

FIPE and Coast FIRE are similar because they are for people who are looking for change but are not looking to retire.

By having enough saved up for retirement before you make that change, you’re giving yourself a layer of protection.

You’re giving yourself the freedom to explore better work situations for your personal situation.

That’s why Coast FIRE and FIPE work well together.

Both money mindsets actually encapsulate the entire purpose of financial independence in the first place:

To create options.

Read Die with Zero by Bill Perkins

If you don’t like the idea of Coast FIRE and foregoing future retirement contributions, you need to read Die with Zero.

No money mindset book has led to more passionate conversations with my friends and family members than Die with Zero.

First, Perkins encourages us to think about whether we are working too many hours.

In Perkins’ view, the problem is that we are sacrificing the best years of our lives. Instead, we could be creating lifelong memories.

In that same vein, Perkins makes a strong case that many of us are saving too much for retirement.

Also, Perkins questions the conventional wisdom of waiting until we die to pass money onto our kids. Instead, he suggests helping our kids earlier in life when the money will be more meaningful.

Read Die With Zero. This money mindset book will motivate you to book that vacation you’ve been putting off.

Also, read A Richer Retirement by Bill Bengen.

Bill Bengen, creator of the 4% Rule, just released a new book with some fun news for all of us saving for retirement.

Bengen’s updated research shows that it’s safe to increase your withdrawal rate in retirement from 4% to 4.7%.

If you are retiring today, it gets even better. Bengen’s research shows that you can safely withdraw around 5.25%.

Bengen’s new book is called A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More.

If you’re not sure about how much you need to save for retirement, Bengen has the answers. He’s done the research and done the math.

His conclusions will give you the confidence to select a magic retirement number that works for you. Once you reach that number, you don’t have to worry about saving more for retirement.

Coast FIRE will open your eyes.

Coast FIRE is a powerful money mindset hack.

When you reach Coast FIRE, you no longer need to save for retirement.

That gives you a lot of options, including switching to a job that better suits your lifestyle.

If you feel like you’re far away from retiring, Coast FIRE is the money mindset hack to start making you feel better about your progress.

In our next post, we’ll do some math together to figure out what your Coast FIRE number is so you can measure your progress.

Are you interested in creating options to pivot instead of retire?

Have you thought about Coast FIRE in the past?

What about FIPE?
August 22, 2025
Is the 4% Rule Actually More Like the 4.7% Rule?
Bill Bengen, creator of the 4% Rule, just released a new book with some fun news for all of us saving for retirement.

Bengen’s updated research shows that it’s safe to increase your withdrawal rate in retirement from 4% to 4.7%.

If you are retiring today, it gets even better. Bengen’s research shows that you can safely withdraw around 5.25%.

Bengen’s new book is called A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More.

If you’re at all interested in FIPE (Financial Independence Pivot Early), Bengen’s book is a must read.

What is the significance of raising the safe withdrawal rate from 4% to 4.7%?

If you are years away from retirement, you may be wondering, “Why does it matter if you withdraw 4% or 4.7% in retirement?”

There are two ways to answer that question.

Number 1: the higher the safe withdrawal rate, the more you can safely spend in retirement without running out of money.

That sounds fun.

You know what’s even more fun?

Number 2: the higher the safe withdrawal rate, the less money you need to save before you can retire.

That means you may be even closer to retirement than you previously thought.

That sounds like even more fun, right?

We’ll take a look at the math in a moment.

The title of Bengen’s book says it all: “spend more and enjoy more.”

Here at Think and Talk Money, enjoying our money is one of our primary objectives.

We are not interested in building the biggest bank accounts just so we look good on a spreadsheet. We are interested in building a life where we are in control.

That means spending money on what is important to us. It means spending more time with the people who are important to us.

So, how does a higher safe withdrawal rate help us?

Let’s explore that by first reviewing the 4% Rule

What is the 4% Rule?

The 4% Rule suggests that you can safely withdraw 4% of your investments in year one of retirement. Then, you can safely withdraw 4% plus an adjustment for inflation in subsequent years.

If you do so, you can expect your money to last for 30 years.

Without getting too technical, the 4% Rule is based off of research looking at historical investment gains, inflation, and other variables.

As an example, let’s say you have $1 million in your portfolio.

According to the 4% Rule, you can safely withdraw $40,000 in year one (4% of your portfolio), then 4% adjusted for inflation in each subsequent year, and not run out of money for 30 years.

Using the updated “4.7% Rule”, you can safely withdraw $47,000 in year one.

This simple example shows how you can take your current retirement savings and project the amount you can safely spend so your money lasts 30 years.

Photo by ÁLVARO MENDOZA on Unsplash

The 4% Rule also works in reverse.

By that I mean you can use the 4% Rule to ballpark how much money you’ll need in retirement to maintain your current lifestyle.

We’ll look at exactly how to do that below.

In either case, the 4% Rule is an effective and easy way to start thinking about a magic retirement number.

How to use the 4% Rule based on your current savings.

We mentioned above that the 4% Rule works two ways.

First, you can take your current retirement savings and calculate how much you can safely spend so your money lasts 30 years.

If you have $1 million invested, the 4% Rule says you can safely spend $40,000 annually and expect your money to last 30 years.

Here’s how the math works:

Current Savings x 4% (.04) = Annual Retirement Spending

$1,000,000 x .04 =$40,000.00

Using the 4.7% Rule, the math looks like this:

$1,000,000 x .047 =$47,000.00

That’s a useful calculation, especially if you’re nearing retirement age and just want to know how much you can spend each year.

But, what if you don’t exactly know when you want to retire?

Your main priority may not be to retire by a certain age. Instead, your aim may be to retire with enough money to maintain your current lifestyle. You’re determined to continue working for as long as it takes.

To calculate that magic retirement number, you can once again use the 4% Rule. This time, in reverse.

How to use the 4% Rule based on your current spending habits.

The second way to use the 4% Rule is to start with your current spending habits to project how much money you’ll need to maintain that level of spending in retirement.

This may seem obvious, but to do so, you’ll first need to know your current spending habits.

If you don’t know how much you’re currently spending on a monthly basis, take a look at our budgeting series here.

The good news is that once you’ve created a Budget After Thinking, this next part is easy.

To calculate your magic retirement number based on current spending, simply follow these steps:
1. Add up the amount your’re spending each month in Now Money and Life Money.
2. Take that number and multiply it by 12 to see how much your lifestyle costs per year.
3. Divide that yearly spending by .04
That’s your magic retirement number.

Current Spending / 4% (.04) = Magic Retirement Number

Now, let’s use some real numbers to help illustrate how to use the 4% Rule to project your magic retirement number.

Here’s how to use the 4% Rule to forecast your magic retirement number.

Let’s look at an example using the 4% Rule to forecast your magic retirement number.

Let’s say that you reviewed your Budget After Thinking and learned that you spend $6,000 per month in Now Money and $4,000 per month in Life Money.

Combined, that means your lifestyle costs you $10,000 per month, or $120,000 per year.

To figure out how much you would need in investments to cover your current lifestyle for 30 years, divide $120,000 by .04.

Current Spending / 4% (.04) = Magic Retirement Number

Under the original 4% Rule, that means to maintain your current lifestyle of spending $120,000 per year for 30 years, you would need $3 million in investments.

In other words, your magic retirement number is $3 million.

Photo by Towfiqu barbhuiya on Unsplash

If that number seems impossibly high to you, the updated 4.7% Rule should make you feel a little better:

Current Spending / 4.7% (.047) = Magic Retirement Number

$120,000 / .047 =$2,553,191.49

Based on the updated 4.7% Rule, you now only need $2.5 million instead of $3 million to maintain your current lifestyle in retirement.

That’s fun news.

Use the 4% Rule as an easy projection tool, not an actual withdrawal rate.

Whether you want to use the 4% Rule or the updated 4.7% Rule, keep in mind that these are projection tools.

I view the 4% Rule as a tool to ballpark your magic number, as opposed to a strict withdrawal rate once you actually retire.

I point that out because there’s some debate in the personal finance community as to whether 4% is still a safe withdrawal rate in today’s economic environment.

For our purposes, I’m not too concerned about that debate.

Once you get to retirement, your actual withdrawal rate may be higher or lower than 4% depending on a variety of factors. Put another way, you will need to adjust how much you withdraw each year based on factors outside your control.

Regardless, the 4% Rule is a great way to start thinking about how much you’ll need to save for retirement. Attaching an actual number to your retirement goals is extremely helpful.

Like Bengen argues in A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More, the point of saving money now is to spend it and enjoy it later.

For people who are used to saving aggressively during their working years, it can be hard to switch to a spending mindset.

Whether you’re nearing retirement or still have years to go, A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More will help you find that balance.

Have you read A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More? What did you think?

Will you update your retirement planning based on the new 4.7% Rule?

Let us know in the comments below.
August 17, 2025
Capital One Settlement: A Reminder to Evaluate Your Bank

How long have you been with your current bank?

Do you even remember why you opened an account with that bank in the first place?

For many of us, we opened our first “adult” bank accounts in our 20s. We probably just picked the closest bank to our apartment. I doubt many of us (myself included) put much thought into who we banked with.

Because it’s human nature to resist change, I’m guessing many of us have never thought about whether that bank is still a good fit at the current stage of our lives.

In light of Capital One’s massive class action settlement based on allegations that it deceived its customers, now seems like as good a time as ever to revaluate who we bank with.

More on the settlement below.

First, a little personal context about why I’m thrilled that Capital One is not getting away with its deceptive scheme.

I banked with Capital One for many years.

For a long time, I used Capital One for all my savings accounts. When I started law school in 2006, there was a Capital One cafe right next to my school.

You could get a cup of coffee for $.75 and talk to a banker at the same time. It was a cool concept and convinced me to bank with Capital One.

I told everyone about how great Capital One was. I had Capital One savings accounts and a Capital One credit card. You could say I was a huge Capital One fan.

Key word: was.

In November 2023, I had been a loyal Capital one customer for 17 years. This was during the time period when interest rates on savings accounts were rising dramatically.

Many banks were advertising rates as high as 4% or 5%, which were higher than most of us had ever seen.

One day that November, for whatever reason, I logged into my Capital One account to see what rate I was earning.

I was sure it would be in the 4% range, and probably closer to 5%, since Capital One was a leader in online banking.

When my statement loaded, I was shocked.

0.30%!

Shocked probably isn’t the right word. I was disgusted.

0.30% in 2023 might as well have been 0.0%.

I refused to believe that a bank that I had banked with for 17 years could do this to a loyal customer.

What the heck happened?

Well, Capital One, unbeknownst to me, switched my savings from its high interest platform into an account with the much lower interest rate.

At the same time, Capital One was still advertising and offering top rates to new customers.

When I discovered the sneaky switch, I immediately closed all of my accounts and transferred my money to a new bank. I no longer have a Capital One credit card, either.

It wasn’t the amount of interest I lost out on that bothered me.

This all happened during that time when my wife and I were aggressively acquiring properties, so we never had a lot of money sitting in savings for an extended period.

So, my anger wasn’t just about the interest.

For me, it was about the principle. I don’t want to have any relationship with a bank that would do that to its customers, especially long-term customers like me.

I did a quick search in my inbox and found a Capital One statement from December 2022 showing a 0.30% interest rate. That means Capital One had deceived me for at least a year before I caught on.

I have to admit that writing this post is reopening old wounds. Although, learning about the settlement definitely helps.

Photo by POURIA 🦋 on Unsplash

I am happy to report that Capital One did not get away with it.

It wasn’t just me who was getting ripped off by Capital One.

I am one of the many people that Capital One switched out of high interest rate savings accounts into inferior products.

These deceptive practices were subject of a federal lawsuit brought by the Consumer Federal Protection Bureau.

Additionally, disgruntled customers filed a class action lawsuit to recoup the interest that people like me missed out on.

All is well that ends well, right?

I am pleased to share that Capital One agreed to a $425 million class action settlement for its deceptive practices.

A court hearing for final approval of the settlement has been scheduled for November 6, 2025.

If you are, or were, a Capital One 360 Savings account holder at any time from September 18, 2019, through June 16, 2025, you are automatically eligible for benefits. You do not need to fill out a claim form.

Note: if you’d like to update your mailing address or receive an electronic payment, you can do so here.

What are the terms of the settlement?

According to the Notice of Settlement:

Capital One shall pay $300 million, to be used to make pro rata payments to settlement class members relative to the approximate amount of interest each settlement class member would have earned if their 360 Savings account(s) had paid the interest rate then applicable to the 360 Performance Savings account.

Translation: if you had a Capital One 360 account, you are going to be paid “some” of the interest you were owed.

The reason I say “some” is because of the word “relative” in the above paragraph from the notice.

Capital One allegedly cheated customers out of $2 billion in interest. The settlement is for $425 million. Based on that discrepancy, it does not appear we will get all of the interest we are owed.

Hopefully, I’m wrong about that and we all receive the full interest we are owed.

Disclaimer: I am not involved in the settlement negotiations and this is not legal advice.

If you remained a customer, you will receive an additional settlement amount:

The second component consists of $125 million, which will be paid by Capital One as additional interest payments to settlement class members who continue to maintain 360 Savings accounts (presently approximately 3/4 of the settlement class). In order to accomplish such additional interest payments, Capital One shall maintain an interest rate on the 360 Savings account of at least two times the national average rate for savings deposit accounts as calculated by the FDIC.

Translation: If you continue to bank with Capital One, you will receive some additional money. How much you’ll get is complicated.

By the way, I am happy to learn that customers who stayed with Capital One despite its deceptive practices will earn some additional money.

In the end, regardless of how much we receive, this news makes me very happy.

I don’t really care about the payment at this point. I’m happy that Capital One isn’t getting away with its deceptive practices.

And, I’m happy that news of the settlement serves as a good reminder for all of us to evaluate our current banking arrangements.

Even with the settlement, I still won’t bank with Capital One again. I cancelled my accounts as soon as I learned that the bank was ripping me off.

Maybe I’m being childish, but I still refuse to give my business to a company that blatantly deceives its long-time customers.

Photo by Johnyvino on Unsplash

Why do stories like Capital One’s deceptive practices matter?

The lesson here is that we all need to regularly evaluate our banking relationships. There is no such thing as “set it and forget it” when it comes to our money.

You could say stories like this are good reminders to regularly think and talk about money.

The last thing any of us needs is to be tricked by our own banks. The more we talk about what’s going on, the better chance we will catch these schemes before it’s too late.

The point is: no matter how much you trust your bank, keep an eye on your accounts.

No, I am not so cynical that I think all banks are out there intentionally ripping us off.

However, massive scandals like this are not the only red flags to look out for. Banks notoriously have hidden fees and confusing rules.

If you are not paying attention to your money, you may be unknowingly paying fees or missing out on better opportunities. It’s up to each of us to regularly evaluate whether our bank is continually providing us with the services we need.

Are you a current or former Capital One customer?

If this is the first you’re hearing about Capital One’s deceptive practices, will you continue to bank with them?

Let us know in the comments below.

August 15, 2025

How to Easily Evaluate a Rental Property with Real Numbers

For beginners, running the numbers on a potential real estate deal can seem complicated.

It doesn’t have to be.

If you’ve been practicing good budgeting habits with your personal finances, this part should actually be easy.

The key is simple: more needs to come in than goes out.

When you have more coming in than going out, that means you have positive cash flow.

For lawyers and professionals acquiring rental properties to accelerate our journeys to financial freedom, we don’t need to overcomplicate things.

What we need to know is whether a property is going to put more money in our pockets than it takes out.

Today, we’ll look at a real example of how I quickly and easily evaluate potential deals in my primary market.

If you haven’t already, check out my previous post on evaluating real estate deals for a detailed explanation on why I focus on the below elements.

As a quick refresher, let’s first look at the fixed costs and speculative costs involved in evaluating rental properties.

There are fixed costs and speculative costs involved in evaluating a rental property.

Whenever you evaluate a rental property, there are some fixed costs and some speculative costs involved. This holds true whether you are a beginner or an experienced investor.

It’s helpful to differentiate between the fixed costs and the speculative costs. In a lot of ways, we can control the fixed costs, but we cannot control the speculative costs.

Fixed costs generally include reoccurring monthly bills that are relatively constant.

The main fixed costs you’ll want to know when evaluating a rental property include:

Mortgage payment (Principal and Interest)
Taxes
Insurance
Utility Bills
Property Upkeep
Preventive Maintenance

Speculative costs include those unpredictable, irregular costs that do not occur every month and maybe don’t even occur every year.

I separate the speculative costs into three main categories:

Vacancy Rate
Unexpected Repairs
Property Improvements

Vacancy rate refers to the percentage of available units that are unoccupied at a particular time. When running the numbers on a prospective rental property, I recommend adding in the cost of 5% vacancy.

When you own rental properties, things are going to break and require money to fix. If you target properties in decent condition, I recommend saving 5% of the monthly rent for unexpected maintenance.

If you don’t improve your property over time, you risk your unit becoming unattractive. Again, if you target decent properties to begin with, I recommend saving another 5% per month for property improvements.

With these costs in mind, we can now quickly and effectively run the numbers on any available property.

Let’s take a look at a property that recently became available in my target market of Chicago.

I regularly check available properties in my target area in Chicago.

I have a searched saved on the Redfin app for multifamily properties within a certain price range in my target areas of Chicago.

That makes it easy to scroll through the listings a few times every week to keep myself educated on my local market.

I do this for a few reasons, regardless of whether I’m actively shopping for a property.

white ceramic sink near brown wooden table indicating a nice rental property but do the numbers check out. — Photo by Huy Nguyen on Unsplash

First, I want to know what new properties come on the market. I’m interested to see if developers and rehabbers are still drawn to my area.

I also check to see how much properties have sold for recently so I can stay on top of market conditions. For example, I’m curious if sellers are accepting below-asking-price offers and how long properties are staying on the market.

I’m also looking to see if there have been any price reductions on properties that previously caught my eye.

All of this simple research helps me move quickly when an attractive property becomes available.

This research has also helped me develop a list of basic requirements I look for in a rental property.

Before running the numbers, a property has to match my initial requirements.

Before I run the numbers on any property, it has to satisfy some basic requirements. This is not an exhaustive list, but here are some of the most important factors my wife and I evaluate when considering rental properties in Chicago:

Location, location, location. In Chicago, proximity to the L and social life (coffee shops, restaurants, bars, etc.) are crucial. Most of the young professionals we rent to are still in the “going out” phase of life. They want to live in fun neighborhoods so they can enjoy themselves when they’re not working. They typically stay in our apartments for 2-3 years, oftentimes before buying a place of their own and “settling down.”
Taxes. Property taxes can eat away your cash flow. We have high property taxes in Chicago across the board, but taxes vary widely from neighborhood to neighborhood. I look for properties in areas that have more attractive taxes.
Big bedrooms. One of the most common questions I get when I do apartment showings is, “Can I fit a king size bed in here?” People love big beds these days. This can be a challenge considering Chicago’s standard 25-foot wide lot. I look for properties with a minimum bedroom size of 10 x 10.
Outdoor space. Young professionals want to have outdoor space, even if they never use it. When I was a renter, I always wanted an apartment with a balcony for my grill. It didn’t matter to me that I only used it a handful of times each year. Maybe having outdoor space made me feel more grown up?
Parking. Even though Chicago is a very public transit-friendly city, people still like having cars. Because most young professionals aren’t using their cars every day, they want to keep it safe in a dedicated parking space.

If a property becomes available that meets these requirements, I’ll then run the numbers.

Only after confirming that a potential property meets these requirements do I actually run the numbers.

There’s no reason to waste time on a property that may project well in a spreadsheet but will cause me nothing but headaches as a landlord.

The other day, a new property popped up that caught my eye: 2501 N. Sacramento Ave.

It’s a five-unit apartment building listed for $1,800,000 and located directly in my target zone.

Here’s the listing description from Redfin:

Fully Gut Renovated 5-unit building, a prime turnkey investment opportunity in the best Logan Square Location Possible. Double Vanities, Fully built out walk in closets, in unit W/D, tankless hot water heaters, thin shaker kitchens and full height quartz backsplashes are just a few of the features that make this building feel more like condo living. Perfectly situated just steps from the Logan Square Farmers’ Market, residents can enjoy an eclectic mix of trendy bars, restaurants, cafes, and shops right at their doorstep. Renovation done with full plans and permits, include a new roof, windows, insulation, drain tile system with sump pump, back deck, and still warrantied appliances!

It’s not always the case, but in this instance, the pictures seemingly match the description of a beautifully renovated property. Of course, we can confirm the quality of the work when we tour the property.

So, this property passed my initial screening. Now, I can run the numbers to see if it would be a good investment.

By the way, I target gut-renovated properties because I have a full-time job as a lawyer and don’t have the time to dedicate to a major renovation project.

Let’s plug in the numbers to see if this would potentially be a good investment property.

Just because a property looks nice and is in a great location does not mean it’s a great investment. As investors, it’s our job to make sure the numbers work out so more money comes in than goes out.

Using the cost categories above, we can pull most of the information we need directly from the listing.

For example, Redfin (like most sites) provides a useful payment calculator where you can adjust the downpayment, interest rate, taxes, etc. for any property based on your personal situation.

Home office vibes perfect for running the numbers on a rental property. — Photo by Paul Calescu on Unsplash

Here are some tips before you get started:

It’s a good idea to talk to your mortgage broker ahead of time to learn what mortgage rate you will likely qualify for and what downpayment you’ll need.
Remember, this is an initial evaluation. Before you make your final decision on a property, you’ll need to confirm these numbers with your real estate team during the due diligence period.
Try to be conservative with your projections. When you otherwise like a property, the temptation is real to modify the numbers so it looks better on paper.
You’ll notice listing agents may try to enhance a property’s value by suggesting “potential rent” or “market rent” instead of the actual rent. Don’t fall into this trap and end up with a nice-looking property that makes no money.

OK, let’s look at the numbers on this property for educational purposes only. You are responsible for running your own numbers on any potential deal.

2501 N Sacramento Asking Price: $1,800,000

Monthly Rent: $13,840

Mortgage Payment (Principal and Interest)	$8,982
Taxes	$1,429
Insurance	$400
Utility Bills	$350
Property Upkeep	$200
Preventative Maintenance	$200
Vacancy Rate (5%)	$692
Unexpected Repairs (5%)	$692
Property Improvements (5%)	$692
Total Monthly Cost	$13,637

Monthly Cash Flow (Rent – Costs): $203

It took me less than five minutes to do this initial evaluation.

I can see that based on these numbers, the monthly cash flow is $203. We’ll talk about what that means in a moment.

A few notes on the above numbers:

For the mortgage payment, I estimated a 25% downpayment, which is common for investment property loans, and a 7% interest rate.
Taxes are a major cost that can make or break any deal. Make sure you are familiar with how taxes are assessed in your market. For example, in Chicago, property taxes are reassessed every three years. That means taxes go up every three years.
Many property listings will indicate the prior year’s taxes because they are lower. This particular listing has the prior year’s taxes, which I know are soon going to change for the worse. For now, I’ll run the numbers with the current taxes but would definitely account for higher taxes before moving forward with this deal.
Property insurance is a real wildcard these days. Insurance costs are going up everywhere. You’ll need to talk to a good insurance broker for an accurate estimate. I used my experience in the neighborhood with similar properties to make a reasonable estimate.

So, what have I learned from running the numbers on this property?

First, this is a beautiful property in a great location. If I made my decision based only on the pictures and the location, this would be a winner.

Unfortunately, the numbers tell a different story.

This property would not be a good investment for me. I invest for cash flow. For me, this property is way too expensive for only a couple hundred dollars of monthly cash flow.

At a price point of $1.8 million, I would only be interested if this property had a monthly cash flow of at least $4,000 per month.

Now, your preferences and goals may be different. Maybe you’re more focused on the other benefits of investing in real estate, like appreciation and debt pay-down. In that case, you may view this deal differently.

So, is that it?

Cross this property off the list and move on for good?

Not necessarily.

In our next post, we’ll explore ways to make this property a more attractive investment.

We’ll take a look at how the numbers change if we can successfully negotiate the purchase price, find a better loan option, and improve the monthly rent.

Real estate investors: let us know what you think of this property as a potential investment.

Would you be interested in moving forward at these numbers?

August 1, 2025

Does Being Good with Money Make You a Greedy Dragon?
Have you ever been called a “greedy dragon” before?

I hadn’t either before this week.

I recently posted a video on socials talking about how lawyers and professionals should not let leaky toilets prevent them from investing in rental properties.

Apparently, this video struck a nerve with the trolls.

I was called a “bottom dweller”, a “demon”, and my personal favorite, a “greedy dragon.”

I like dragons. So, that last one actually felt like a compliment.

Why does being good with money wake up the trolls?

There’s no shortage of internet trolls out there. And, there’s nothing special about me that caught the attention of the trolls this week.

Haters are going to hate. Trolls are going to troll.

But, there’s an important money lesson to be learned here thanks to the trolls.

You see, these are the types of comments you get from people with limiting money beliefs. They’ve never thought about how money can be used as a tool to build a life of purpose.

Instead, they only think of money as a dangerous weapon to be wielded for evil purposes. They automatically think that people with money are greedy.

The saddest part is that these people would rather exert their energy attacking people than improving their own situations. These are the type of people who are likely to always be controlled by money, instead of the other way around.

Now, I’ll give credit to the internet trolls where credit is due. At least these trolls are not hiding their limiting money beliefs.

That’s a good first step that many of us can benefit from.

You don’t need to stoop to the level of internet troll to have limiting money beliefs. These kinds of attitudes towards money are way more common than you think.

One of my main goals in starting Think and Talk Money is for all of us to confront our limiting money beliefs so we can take control of our lives.

If your relationship with money up to this point has held you back, you’re in the right place by reading this blog.

Another good idea is to read a good money mindset book.

A good money mindset book with help you think of your Money Why.

Money mindset books can help you because they explore the emotional side of money. They will force you to think about money in a way you never have before.

The best money mindset books don’t just talk about the numbers and math of personal finance. That not only makes the books more interesting to read, it also makes them so much more practical in the real world.

Personally, I am striving to build the best life possible for my family. To do that, I need to learn more than just the numbers.

That means I need to be good at not only making money, but also using that money to build a life on my terms. That requires finding a balance, which can be tricky.

To help strike that balance, I’ve studied how others have done it. Then, I can take what I learn and implement those lessons into my own life.

Here are my favorite money mindset books, in no particular order:
- Rich Dad Poor Dad by Robert Kiyosaki
- The Psychology of Money by Morgan Housel
- Think and Grow Rich by Napoleon Hill
- The Richest Man in Babylon by George S. Clason
- Your Money or Your Life by Vicki Robin and Joe Dominguez
- The Millionaire Next Door by Thomas Stanley and William Danko
- Die with Zero by Bill Perkins
- Millionaire Milestones by Sam Dogen
- The Simple Path to Wealth by JL Collins
Being on vacation with family gives you plenty of chances to think about your Money Why.

I highly doubt the average internet troll spends much time thinking about his Money Why.

I’ve been on vacation recently and have had a lot of reminders of my Money Why. Of course, I’ve known my Money Why since I wrote down my Tiara Goals for Financial Freedom on a beach in 2017.

Photo by Cory Bjork on Unsplash

My number one goal is to be with my wife and kids as much as I want. The weird part is I wrote down that goal before I was even married or had kids.

Yes, I want to provide for my family financially. But my Money Why is more than that. I don’t want to just provide money, I want to provide time. I want to be present and share experiences.

To accomplish that goal, I need to be good with money.

If I’m good with my money, I can achieve financial freedom.

With financial freedom, I can choose how to spend my time. That means I can choose who to spend my time with.

To the Internet trolls, these goals make you a greedy dragon.

What do you think?

Is traveling with three young kids a vacation or just “parenting in a new location?”

Anyone who’s vacationed with young kids knows that it comes with all sorts of challenges. I’ve heard vacationing with young kids described before as “just parenting in a new location.”

There’s some truth to that. Figuring out sleeping arrangements, meals, and activities to keep the kids entertained can be a headache. It’s hard not to think that it would have been easier to just stay at home.

Between the occasional meltdown and the tears, it’s fair to wonder why go through the hassle?

I’ve had these thoughts creep into my head recently while on vacation with my family.

Then, I realized why us parents do it.

It’s to see your five-year-old try over and over again before finally reaching the Little Mermaid diving toy on the bottom of the pool for the first time.

The pure joy on her face when she popped out of the water with the toy in hand is an image I hope I never forget.

It’s to watch your three-year-old play with grandma and grandpa and hearing, “Grandpa, close your eyes!” as he completes his next prank to earn an eruption of laughter.

It’s observing your wife at the playground as she manages a baby in a stroller while simultaneously encouraging her daughter on the swings and helping her son as he climbs too high.

How she does it, and keeps a smile on her face, I’ll never know.

It’s the little moments like this that make it all worth it.

Is being good with money a requirement for these types of memories?

Nah. But, if being good with money gets me more of these memories, I’m all in.

It’s important to think about your Money Why regularly.

Saying that I want to be good with money is not the same thing as saying that I want to be rich.

Funny enough, people who are good with money oftentimes feel rich regardless of what their net worth is.

Photo by Zoshua Colah on Unsplash

On the flip side, people who make a lot of money but are not good with money often feel like they’re struggling to get by. As CNBC explained after talking with financial psychologists:

Whether you’re aiming to save more cash or boost your overall earnings, it’s important to ask yourself what you hope to achieve by obtaining more money, Chaffin says. Otherwise, if you don’t change your internal money beliefs, you may still feel anxious about money even if you hit millionaire status.

The takeaway is that it is pointless to make money without stopping to think why you want that money and what you’re going to do with it.

If you’ve never thought about money that way before, here are three powerful reasons to get you started:
1. Money can give you choices.
2. Money can give you personal power.
3. Most importantly, money can give you time.
Money is nothing but a tool that you can manipulate to get what you truly want out of life. The thing is, you have to actually think about what you want if you are going to use that tool effectively.

Being good with money does not make you greedy.

Being good with money does not make you a greedy dragon.

Money is nothing but a tool. You can use that tool to build a life on your terms for you and your family.

For my money, there’s no better pursuit than that.

Do you want to be good with money?

What kind of life are you hoping to build?

Let us know in the comments below.
July 27, 2025
Being Good with Money is About Consistent Choices
Having taught personal finance to law students and young lawyers since 2021, I’ve picked up on a common theme.

At the conclusion of class, my students tend to be motivated and excited to get good with money.

This makes sense because we spend a lot of time thinking and talking about what our ideal lives look like. Then, we learn how to use money as a tool to build those lives.

In the weeks following class, I usually hear from several students who want to follow-up about topics we cover in class, like side hustles or investing in real estate.

I’ll meet each student for coffee downtown and give them some feedback on their ideas. I love these money talks over coffee.

My students’ excitement to take control of their money and their lives is contagious.

Their excitement rubs off on me. I leave these conversations motivated to check in on my own money strategies and goals.

When our chat is wrapping up, I always encourage my students to keep me posted on their journeys. I invite them to check-in every few months so I can help keep them accountable and to adjust any plans we’ve put in place.

Unfortunately, less than 10% of my students ever follow-up after these initial meetings.

After a while, I figured out what was going on.

See, every now and then, I’ll run into one of these former students at a lawyer event or hanging around the courthouse. I’ll ask them about work and life and eventually about the money plan we talked about.

That’s when I usually hear something like, “I’m still thinking about that side hustle. I just put it on the back burner for now. I’m going to do it someday.”

Do you see the problem?

As a wise man once taught me, “someday” means “no day.”

Photo by Yuliia Martsynkevych on Unsplash

Financial freedom is about consistent, intentional choices.

Ask anyone who has reached true financial freedom how they did it, and you’ll pick up on something right away.

You’ll quickly realize that people who reach financial freedom got there by making consistent, intentional choices with their money.

They came up with a plan and they stuck with it.

They didn’t say “some day.”

Achieving financial freedom is not about being the highest earner or the best investor.

It’s about consistency.

There are endless ways to make money. The same goes for investing that money.

You can reach financial freedom as a lawyer who invests in index funds.

Just the same, you can be a consultant who owns rental properties.

Or, an engineer who buys laundromats.

The point is the avenue you choose to build wealth is less important than the consistency of your choices.

For example, if you commit yourself to investing 20% of your salary in index funds, you will be well on your way to financial freedom.

But, if you can’t follow through on your plan for more than a few months, you’re never going to get there.

Of course, we’ve all experienced this tendency in various areas of life. The easiest examples to think of relate to fitness and healthy eating.

How many of us have said we’re going to commit to working out five days a week or eating vegetables every meal, only to give up after a couple months?

It’s not that we want to give up, just that the rest of life gets in the way. We tell ourselves that we’ll return to healthy living someday, which actually means no day.

When it comes to your money choices, don’t let the rest of life get in the way. Money is such a powerful tool when wielded properly and consistently.

Don’t waste this powerful tool.

To help make consistent choices, think about why money matters.

To help you make consistent money choices, the first step is to think about a simple and powerful question: why does money matter?

For me and many others, money is about financial independence, which translates to the power to choose.

When we have the power to choose, we have the power to live a life that conforms to our personal values. That means we can live on purpose, not on auto-pilot.

What does it mean to live on purpose?

It means that we can choose to spend our working hours doing what is meaningful to us. It means we can choose to spend more time with the people who are meaningful to us.

My favorite part during my personal finance for lawyers class is when my students share their motivations with each other. We all learn so much from these honest conversations.

It’s why I believe talking about money is so important. We all benefit from knowing that we’re not alone in our money worries. We can be inspired by hearing what our friends want from their money and their lives.

The more you think and talk about why you want to be good with money, the clearer your motivations will become.

To help you get started, here are three powerful reasons why I want to be good with money:

1. Money can give you choices.

This may seem obvious, but when you have money, you have choices.

You can choose where to live. You can choose who you work for or can work for yourself. On a daily level, you can choose how you eat, exercise, relax, and travel.

This holds true whether you make $50,000 or $250,000. Of course, your options may be different. The point is that when you’ve made good money choices, you’ll at least have options.

2. Money can give you personal power.

This is another way to say that money gives you control of your life situation.

If you are in a bad relationship, a bad job, or just need a change, money gives you the personal power to do something about it. When you don’t have money, you may be stuck.

3. Money can give you time.

When you have enough money to be truly financially independent, you have earned the freedom to do whatever you want with your time.

As I mentioned earlier, you can spend your working hours at a job that is meaningful to you. And, you can spend more time with people who are meaningful to you.

It’s been said many times, “time is our most precious resource.”

When you have money, you can buy your time back.

Photo by Constantin Panagopoulos on Unsplash

What would you do with financial freedom?

Years ago, I asked myself this important question. I wrote down my answer and called it my Tiara Goals.

If you haven’t ever actively thought about what you would do with financial freedom, now’s the time to do so. It is extremely motivating.

Even when you feel like financial freedom is only a distant dream for you, it’s important to actively think about what you want out of life.

I’d even suggest that the further away you feel from financial freedom, the more important it is to think about what it would mean for you.

When you’re at your lowest point, visualizing what you would do with financial freedom is a helpful escape.

Don’t forget to write down whatever you come up with.

Here are my 7 Tiara Goals for Financial Freedom:
1. Be with my wife and kids as much as I want. Dad never missed a game. Mom never missed a game. Nana never missed a game.
2. Not be forced to commute to work on Friday or Tuesday or whatever day, if I need that day for myself.
3. Choose how to spend my working hours (representing clients, teaching, volunteering, building a business, etc.).
4. Continue to study and learn constantly.
5. Take at least one big trip every year.
6. Never turn down an exciting or smart opportunity because I can’t afford it.
7. Work alongside people that value my contributions.
Keep in mind that I wrote these goals before I had kids and before I was even married. This was also years before the pandemic when working from home was a foreign concept to most of us.

I think it says a lot that I was thinking about these things way back then.

Being consistent means thinking just a little bit about money every week.

My goal is to help you think even a little bit about your money choices every week. That way, your money life remains in balance with the rest of your life, and you can continually evolve and adapt your choices as your life changes.

I want to encourage you to think, and to talk, and to choose. If all I do is help you and your loved ones think more purposefully about your money, Think and Talk Money will be a success.

Maybe your goal is also financial independence, or the power to choose and to live on purpose.

Maybe it’s something else entirely. Whatever it is, discovering your motivation is the crucial first step.

It’s so important that I’ll encourage you to think about that motivation every week.

I’ve learned that money is something that we all need to think about as a regular part of our lives. Not that we should only think about money. Or that we need to obsess over money. Simply that we can’t ignore money.

How sad is it when we realize our hard earned money has just vanished? That at the end of each month, we have less money?

If this sounds familiar, you’re not alone. There are a lot of smart people who need somewhere to turn learn about money. Or, maybe just a reminder to actively think about their money.

You don’t have to struggle with making continuous money choices alone.

Most of us could use someone to talk to or something to read to help us learn about personal finance.

I hope Think and Talk Money can be that place for you.

I can’t, and won’t, tell you what to do with your money. It’s your life, after all. But, I will strive to help you think and talk with purpose about your money.

The basic money concepts are easy enough to understand. Consistently making good choices is hard.

Most of us could ace a quiz that asked, “Is it a good idea to spend more money than you earn every month and plummet deeper and deeper into debt?”

Knowing what to do is not the same as actually doing it. Remember, someday is no day.

That’s why it helps to not be afraid to talk about money. For some reason, most of us choose to deal with money on our own. I’d like to change that.

There’s a stigma that we shouldn’t talk about money. I’d like to change that, too.

That way, we all have a better chance of making intentional, consistent choices with our money.

Have you been excited about money in the past only to lose that excitement not long after?

Have you tried talking about money with your friends and family to help you stay motivated? If not, what is holding you back?

Let us know in the comments below.
July 24, 2025
Invest in Real Estate and Other People Pay Your Debt

Imagine that you have the chance to own something that might be worth a lot of money down the road.

To buy this thing, you will need to pay 25% of the purchase price. The other 75% of the price will be paid by someone else.

Your job is to take care of that thing and keep it for a long time. It won’t be easy, but if you can handle it, you’ll wake up years from now owning something outright that is very valuable.

So far, this sounds pretty good, right?

Of course, there’s a catch. That person paying for 75% of the item will want to be paid back. He’ll want to earn interest, too.

You might be thinking that this opportunity doesn’t sound so promising anymore. Having to pay off that debt might be enough to convince you not to move forward with buying this thing.

You’re smart to be thinking about the debt. I could understand if the prospect of paying back a debt like this didn’t appeal to you. Who really wants to use their own hard-earned money to pay off debt anyways?

Fair enough.

But, what if I told you that other people are going to pay back that 75% (plus interest) on your behalf?

Even more, while those other people are paying back the debt, you still get to benefit from owning the item.

Does that change how you’re viewing this opportunity?

Maybe now you’re thinking that this is too good to be true?

Nope.

This is exactly how real estate investors generate long-term wealth. They buy a property using a loan and then pay back that loan using other people’s money.

This example leads us to the next main reason I invest in real estate:

Other people pay off my debt.

When you acquire the right rental properties, your tenants will pay monthly rent and that rent can be used to pay off your loan.

That means you can pay off that loan without using any of your own money.

As your loan balance shrinks, your net worth increases. As your net worth increases, you are creating wealth for you and your family.

Along the way, you can reap the benefits of monthly cash flow and appreciation. That means your net worth increases even more.

That’s a powerful combination to generate long-term wealth.

If this concept sounds like something you may be interested in, read on.

Before we talk more about debt pay-down, let’s review two of the other main reasons I invest in real estate.

1. Rental property cash flow is king.

With cash flow, you can cover your immediate life expenses. For anybody hoping to reach financial freedom, it is essential to have income to pay for your present day life expenses.

For my money, cash flow from rental properties is the best way to pay for those immediate expenses.

Photo by Frames For Your Heart on Unsplash

If your present day expenses are already covered, you can use your cash flow to fund additional investments.

That might mean buying another rental property or investing in another asset class, like stocks.

2. Long-term wealth through appreciation.

Appreciation simply refers to the gradual increase in a property’s value over time.

While cash flow can provide for my immediate expenses, appreciation is all about the long-term benefits.

Like investing in stocks over the long run, real estate tends to go up in value. The key is to hold a property long enough to benefit from that appreciation.

To benefit from appreciation, all I really need to do is make my monthly mortgage payments, keep my property in decent condition, and let the market do the rest.

Now that we’ve reviewed how cash flow and appreciation work together to generate long-term wealth, we can look at the additional benefits of debt pay-down.

With rental properties, other people pay off my debt.

When I buy a rental property, I take out a mortgage and agree to pay the bank each month until that mortgage is paid off. At all times, I remain responsible for paying back that debt.

However, I do not pay that debt back with my own money.

Instead, I rent out the property to tenants. I do my best to provide my tenants with a nice place to live in exchange for monthly rent payments.

I then use those rent payments to pay back the loan.

Each time I make a mortgage payment, part of the payment goes to interest on the loan and part of the payment goes toward the principal. This concept is known as amortization.

By the way, this is how real estate investors use Good Debt, also know as leverage, to generate wealth.

You may be totally against debt of all kind. That’s OK. Debt certainly carries risk. I’m not here to convince you that debt is a good thing or a bad thing. I’m just showing you how it works.

For more on the difference between good debt and bad debt, check out my post here.

What is loan amortization?

Amortization is the process of paying back a loan over time in predetermined installments. While your payment amount remains the same, the composition of that payment changes over time.

In the early years of paying off a mortgage, the vast majority of your payment goes to the interest. With each additional payment, more of the money goes towards the principal.

When you take out a mortgage, your lender will give you an amortization table that shows you exactly how much of your monthly payment goes towards interest and principal for the duration of the loan.

For example, if you take out a 30-year mortgage, you’ll receive a chart that shows 360 payments (12 monthly payments for 30 years). You can then look at any month in that 30-year period to see how much of your payment goes to interest vs. principal in that month.

Photo by Naomi Hébert on Unsplash

If you’re so inclined, you can also use an online calculator, like this one at calculator.net, to create an amortization chart for any loan you have.

I’ll admit, looking at the amortization chart is the least fun part of any real estate closing.

Seeing debt payments as far out as 30 years is a bit scary. It’s hard not to think of all the things that can go wrong during such a long time period. That’s why I prefer to think of amortization in general terms instead of specifics.

Generally speaking, I know that some of my monthly payment goes to interest and some goes to principal. The longer I pay back the loan, the more of my payment goes to principal. That’s good enough for me.

With a fixed-rate loan, your monthly payment remains the same.

When you have a fixed-rate mortgage, your payment remains the same for the duration of the loan.

At the same time, because of inflation, rents tend to go up over the long run. Rents may also go up if market conditions improve or if you have forced appreciation through enhancements to your property.

When your rental income goes up, and your debt obligation remains constant, that means more cash flow for you.

For example, say your monthly mortgage payment is $2,500 each month for the next 30 years. And, let’s say you currently earn $3,000 in monthly rent payments.

Over time, your rental income should gradually increase. Some years in the future, you may be earning $4,000 or $5,000 per month in rental income. All the while, your monthly mortgage payment remains $2,500.

You can use that extra income, after covering all other expenses, to pay for your immediate life expenses, pay off your loan faster, or invest in other assets.

It’s for these reasons that having a fixed debt payment over a long time horizon is one of the biggest advantages to investing in real estate.

Think of it this way. Just like with your personal Budget After Thinking, you can make significant strides towards financial freedom when your income increases and your expenses remain fixed.

What do you think of investing in real estate so other people can pay off your debt?

Now, you know three of my main reasons for investing in real estate: cash flow, appreciation, and debt pay-down.

Regarding debt pay-down, each month my tenants pay rent, I can use that income to shrink my loan balance.

As my loan balance shrinks, my equity in the property increases. Equity is just another way of saying ownership interest.

When my equity in a property increases, my net worth increases.

So, on top of monthly cash flow and appreciation, debt pay-down is another way to generate wealth through real estate over the long run.

That’s three ways to make money off of a single investment.

Not bad, huh?

If you’re a real estate investor, let us know how you’ve used debt to increase your net worth.

June 22, 2025
Money on My Mind: Read The Simple Path to Wealth
The Simple Path to Wealth by JL Collins is the best book on investing I’ve ever read.

It is a must-read for anyone trying to figure out why and how to invest in the stock market.

If you’re a new investor and don’t understand how to invest in the stock market, Collins will set you on your way.

If you’re a seasoned investor unsure what to do in times of economic uncertainty, Collins is here to help.

Maybe you just need a bit of motivation or a reminder of how simple it is to build long-term wealth. There’s no one better than Collins to provide that pep talk.

Who is JL Collins?

JL Collins is sometimes described as “the Godfather of Financial Independence” in the personal finance community. He has a popular blog where you can read more about his story.

The short version is that he wrote a series of letters to his then teenage daughter about money, investing, and life. He wanted to impart the wisdom he had accumulated during his lifetime and help her avoid the mistakes he had made.

Those letters eventually led to his blog, which then led to his bestselling book, The Simple Path to Wealth, first released in 2015.

Since then, Collins has been a thought-leaders in the financial independence community. He has inspired thousands, if not millions, of people around the world to accumulate massive wealth by following a few simple rules.

What makes Collins so transformative is his ability to make seemingly complex topics (like investing) into easily digestible and actionable information.

If you have any intention of becoming financially independent and haven’t read The Simple Path to Wealth, now is the time to do so.

I’ve read his book cover-to-cover twice and constantly refer back to his lessons.

Photo by Jack Skinner on Unsplash

Each time I read his book, I’m reminded how simple it is to reach financial independence if I can just follow a few simple tips.

I’ll share those simple rules with you at the bottom of the post. Before I do, here is a bit of context about each time I read his book, first in 2019, then again in 2025.

Seeing those dates, you may already be wondering if world events between 2019 and 2025 changed his philosophies.

Let’s find out.

I first read The Simple Path to Wealth in 2019 as a DINK.

I first read The Simple Path to Wealth in 2019 and just finished the updated version. Even if you’ve read the original version, I highly recommend you read new edition released in 2025.

Here’s why.

When I read the original version in 2019, market conditions and the world economy were in very different places than they are in 2025.

Back in 2019, the stock market had been closing out one of the best decades in history. As reported by US News:

From a market’s perspective, the 2010s will forever be remembered as an era of slow but steady gains on Wall Street, and a period of sustained growth for investors and their retirement accounts.

By the end of the 2010s, the market had been on the longest bull run in history. It was such an epic run that it was fairly common for most people to see big gains in their portfolios without much effort or knowledge.

On a personal level, my life was also very different in 2019. My wife and I were enjoying married life before having kids. We had just purchased our first rental property in a trendy Chicago neighborhood.

On top of that, we were DINKs (“Dual Income No Kids) and able to save aggressively for our next investment.

We were considering another rental property, but I first wanted to learn more about the power of investing in the stock market.

This is what led me to read The Simple Path to Wealth the first time.

Side note: If you are currently a DINK, or will soon be a DINK, please pay extra attention here.

Don’t waste this powerful opportunity to supercharge your investments.

When you’re in a relationship where you have two incomes coming in and are sharing financial responsibilities, you have the opportunity to supercharge your Later Money goals.

This is what my wife and I were able to do, even if we didn’t know what a DINK was. We each had good incomes coming in and our monthly expenses were low.

Also, we didn’t have to worry about childcare. We were young so the odds of unexpected medical care were lower. All things considered, it was pretty easy to keep our Now Money to a minimum with plenty to spare for Life Money.

This allowed us to fuel our Later Money goals. We had money in the bank and seemingly endless choices.

And, I didn’t want to screw it up.

Reading The Simple Path to Wealth was a way to educate myself in hopes of not screwing it up.

I read the new version of The Simple Path to Wealth in 2025.

Fast forward to 2025. I read the new version o The Simple Path to Wealth because I was curious if Collins’ viewpoint had changed due to major world events, like the Covid-19 pandemic.

I was also curious to see whether his advice would still resonate with me now that I’m a seasoned real-estate investor and have a personal finance blog.

Well, I’m happy to report that Collins’ message hit me stronger today than it did in 2019.

If anything, Collins’ lessons are even more applicable today than they were in the 2010s when markets were soaring.

In the new edition, Collins discusses how recent world-changing events, like the Covid-19 pandemic and international wars, actually strengthen his long-time recommendations.

This was very refreshing to learn because I have been following his advice and recommending his book for years.

In times of economic uncertainty, Collins explains, it’s even more important to have a plan for your money.

Once you have that plan, you need to stick to it, no matter what.

Collins provides the motivation and tools to stick to the plan.

Why is The Simple Path to Wealth such an important book?

When I teach my personal finance class to law students, I ask at the beginning of class what my students hope to learn.

One of the most common responses I hear every year is, “I want to learn how to invest in the stock market.”

OK, fair enough.

The truth is I’ve yet to find any resource better than The Simple Path to Wealth to teach us how and why to invest in the stock market.

What makes Collins such a good teacher?

In The Simple Path to Wealth, Collins uses basic, every day, language that we can all understand. This is his greatest gift.

Too many books on investing are so dense that they are useless to the average person.

Collins is different. He successfully blends his life experiences with the historical data, in easy to understand terms, to show us that investing is not hard.

For many people, especially people at the beginning of their careers, investing can seem intimidating.

As Collins explains, that’s because it’s big business for investment companies and banks to make investing seem hard and scary.

These companies spend billions of dollars marketing every year to convince us that investing is complicated. Their goal is to convince us to pay them lots of money to manage our money.

You don’t have to believe them. You certainly don’t have to pay them tons of money to invest in the stock market.

Collins will not only show you how invest on your own, he’ll also give you the tools to outperform the financial professionals.

What are Collins’ simple rules to live by?

Collins’ main message is that investing should not be complicated. When done the right way, it’s simple and effective. Hence, the title of his book.

Collins explains that each of us can achieve long-term wealth by following a few simple rules:
1. Spend less than you earn.
2. Invest the surplus.
3. Avoid debt.
Sound advice, indeed.

If you can live by these simple rules, the next question is what to do with your surplus money earmarked for investments.

Collins has a simple and effective plan for you that he details in his book.

What is Collins’ simple and effective plan for investing?

Collins’ plan is both simple and effective. He doesn’t expect you to just take his word for it, either. He has the research and historical data to back it up.

Make no mistake: just because something is simple does not mean it is ineffective.

So, what is Collins’ simple and effective plan to invest for long-term wealth?
1. Invest in low-cost, broad-based index funds. His favorite investment has always been Vanguard’s total stock market index fund, VTSAX.
2. Ignore the noise. Be mentally tough. Stay the course.
That’s it.

You don’t need fancy investments. You don’t need a financial advisor. All you need to do is commit to the plan.

If you’re thinking that this is too good to be true, you need to read The Simple Path to Wealth.

How can it really be that simple?

You might be thinking, how can it really be that simple? If all people had to do was invest in index funds, everyone would be rich.

That’s exactly Collins’ point!

Everyone could be rich if they follow these simple rules.

The problem is most people allow their emotions to get in the way and steer them off the path.

Collins does his best to help you deal with those emotions.

If you don’t believe that index fund investing will make you wealthy, look at this stat about the recently announced sale of the NBA’s Los Angeles Lakers:

A mind blowing stat:

Jerry Buss bought the Lakers for $67M in 1979, and just exited for 149 times his money at $10B in 2025

Sounds like a lot, right?

That is somehow less than he would have made simply indexing the S&P 500 over that time period ($13B)
— Ankur Nagpal (@ankurnagpal) June 19, 2025

That’s right. The Buss family would have an extra $3 billion today if they had invested in the S&P 500 instead of purchasing the Lakers in 1979!

Many thanks to blog reader, DJ, for passing this one along!

I know, I know. Owning the Lakers was probably a ton of fun. They also surely made money on the team along the way.

The point remains: investing in an S&P 500 index fund also would have generated massive wealth. And, that wealth would have come without the effort and the headaches of running a major professional sports organization.

I can picture Collins having a good laugh about stats like this.

Read The Simple Path to Wealth.

I recommend The Simple Path to Wealth to all of my students and friends who ask me about investing.

There is not a better book out there to make the concept of investing seem approachable for all of us.

Collins is clear and humorous. He’s also stern when he needs to be.

If you read this book, you’ll realize that becoming wealthy through the stock market does not have to be complicated.

It can be wonderfully simple.
- Have you read The Simple Path to Wealth?
- Are you convinced that investing can be both simple and effective?
Let us know in the comments below.
June 20, 2025
Invest in Real Estate for Wealth Through Appreciation

We previously looked at the main reason I invest in real estate:

Rental property cash flow is king.

With cash flow, you can cover your immediate life expenses. For anybody hoping to reach financial freedom, it is essential to have income to pay for your present day life expenses.

For my money, cash flow from rental properties is the best way to pay for those immediate expenses.

What if you don’t need your cash flow to cover your immediate life expenses? Maybe you have a full-time job that provides more than enough.

That’s even better. There’s no rule that says you have to spend your cash flow.

If your present day expenses are already covered, you can use your cash flow to fund additional investments. That might mean buying another rental property or investing in another asset class, like stocks.

The point is cash flow gives you options. Having options is never a bad thing, right?

That’s why cash flow is the number one reason I invest in real estate.

However, cash flow is not the only reason.

I also invest in real estate to generate long-term wealth for me and my family.

I am a buy-and-hold real estate investor.

That means when I buy a property, I intend on keeping it for many years. Circumstances may change, of course, but my intention is to hold property for a minimum of ten years.

The reason I buy-and-hold for the long term leads us to the next major reason I invest in real estate:

Appreciation.

While cash flow can provide for my immediate expenses, appreciation is all about the long-term benefits. Appreciation is how I will generate long-term wealth for my family through real estate.

Today, I want to talk about what appreciation is and how it can significantly improve your net worth over time.

Let’s dive in.

What is appreciation in real estate?

Appreciation simply refers to the gradual increase in a property’s value over time.

For example, if you buy a property for $500,000, and some years later it’s valued at $750,000, your property has appreciated by $250,000.

That means through appreciation, your net worth has increased by $250,000.

Except for when you’ve forced appreciation (we’ll discuss below), you have earned that money through appreciation by doing very little. All you have to do is make your monthly mortgage payments, and let the market do the rest.

This is exactly how many Americans generate significant wealth over time.

Photo by Tierra Mallorca on Unsplash

How to target properties with a strong likelihood of appreciating is beyond the scope of this post. I’ll soon share with you my criteria, but there’s no one way to do it.

Entire websites and books have explored this topic. If I were just starting out, I would spend a lot of time on BiggerPockets.com.

For that matter, even as an experienced investor, I still spend a lot of time on BiggerPockets.

For now, remember one main point when it comes to appreciation:

Appreciation takes time.

Successful real estate investors know that appreciation takes time.

I’m not talking about speculators or gamblers. I’m talking about people who are interested in building long-term wealth for their families.

To build long-term wealth through real estate, you need to remember this main rule about appreciation.

It’s so important, it’s worth repeating:

If you can hold a property for years or even decades, you have a really good chance of that asset being worth significantly more than when you paid for it.

Your property may not appreciate at the same rate every year. Some years, your property may even lose value. That’s OK because you’re in it for the long run.

The hard part is just holding on long enough to realize the benefit of appreciation.

In this way, investing in real estate is like investing in stocks.

How is investing in real estate like investing in stocks?

Many of the same fundamentals apply to investing in real estate as to the stock market.

We just mentioned one of the biggest keys with either asset: the longer you hold that asset, the more that asset should eventually be worth.

With stocks, we’ve already spent a lot of time in the blog discussing why you need to invest early and often.

For more information on investing in stocks, you can read a variety of posts here.

When you invest in stocks early and often, you can benefit from compound interest and safely ride out down market cycles. The stock market does not always go up every year, but given enough time, it does always go up.

In large part, the same is true when you invest in real estate.

If you buy good properties in good markets, given enough time, your property should appreciate in value. Like with stocks, the key is your ability to hold on and ride out down market cycles.

Want to know the secret to riding out down markets?

Cash flow.

You saw that one coming, didn’t you?

Cash flow will help you ride out market cycles and benefit from appreciation.

When you own strong, cash flowing rental properties, the cash flow covers all the expenses.

That means you can stay patient in down markets because holding that property is not costing you any money.

To take it a step further, as long as your property is cash flowing, you can hold it for decades and generate massive wealth through appreciation.

Cash flow and appreciation working together is a powerful force. You can see why real estate investors get so excited about their investments.

When a property is performing, the cash flow allows an investor to hold that property indefinitely. During that time, the property becomes more valuable through appreciation.

It’s a beautiful partnership.

What is forced appreciation?

I mentioned earlier that there is one other form of appreciation worth talking about here: forced appreciation.

Forced appreciation is when you improve your property in such a way that it increases in value.

Common examples may include remodeling the kitchen or bathrooms or adding another bedroom. When you make these enhancements to your property, your property should increase in value.

This is what house flippers do. They buy a property in need of some work, do the improvements, and then aim to sell that property for a profit.

It’s not a strategy that I personally use, but it has worked for many people for many years.

The thing is, forced appreciation is not just for house flippers or investors hoping to realize a quick profit.

When done correctly, forced appreciation is another way to make money over the long-term for buy and hold investors, like me.

For example, in one of our rental buildings, we added in-unit washers and dryers. By doing so, our units now command a higher monthly rent, which in turn increases the value of the property.

As a final point, forced appreciation is one way investing in real estate is different from investing in stocks.

When you buy real estate, you are in control. You decide what improvements to make and not to make. Many real estate investors love having this type of control over their assets.

By contrast, when you own stock in a company, there is very little (if anything) you can do to impact how that company is run. Unless you have boatloads of stock in a particular company, you’re essentially just along for the ride until you sell your stock.

What do you think about generating long-term wealth through appreciation?

Now you know two of my favorite reasons for investing in real estate: cash flow and appreciation.

Have you invested in real estate and benefited from appreciation?

Did you force appreciation or hang tight and let the market do it’s thing?

Let us know in the comments below!

June 17, 2025
Money Question: What Would I do with $10 Million?

In a recent post, I asked: If you woke up tomorrow with $10 million in your bank account, would you do anything differently?

I ask a version of this question whenever I teach my personal finance course to law students.

Asking what you would do with $10 million is just another way to ask what you would do with financial freedom.

Attaching a specific dollar amount to the question helps make financial freedom seem real. It turns the aspirational concept of financial freedom into actual numbers.

@thinkandtalkmoney
In a recent post, I asked: If you woke up tomorrow with $10 million in your bank account, would you do anything differently? I ask a version of this question whenever I teach my personal finance course to law students. Attaching a specific dollar amount to the question helps make financial freedom seem real. Many thanks to one of our blog followers, Ian, for turning the question around and asking me what I would do with $10 million! #thinkandtalkmoney
♬ original sound – Thinkandtalkmoney

Many thanks to one of our blog followers, Ian, for turning the question around and asking me what I would do with $10 million!

It’s been some time since I put some real thought into this question. I’m happy to have gone through the thought process in crafting this post.

If you haven’t already, I encourage you to do the same and think about exactly what you would do if you woke up with $10 million.

Before I share my answer, I want to highlight some other reader responses to the question, which should shed some light on my decisions.

Let’s get to it.

🚨If you know anybody who would benefit from thinking and talking about money even just a little bit, please share the Think and Talk Money blog with them! I post 3 times every week. 🚨

Disappearing on a beach.

The most common response to what people would do with $10 million involved some version of:

Invest the money and then disappear on a faraway beach.

In a way, the “disappear on a beach” response illustrates what many of us are striving for with financial independence. By that, I mean the goal of having enough money to then not have to work if we don’t want to.

Photo by Maarten van den Heuvel on Unsplash

Personally, I share the goal of becoming financially free, but I’m not looking to retire early and disappear. After all, I believe in FIPE not FIRE.

I think jetting off to the beach would be nice at first but then get old pretty fast. That said, I can certainly appreciate the desire to take some time away from life’s daily stressors.

Invest and then buy a shotgun.

One reader, Sean, shared a pretty sensible plan:

Put $9 million in the S&P 500, pay off debt with the rest and buy a nice shot gun.

It’s hard to argue with this plan. Of course, it’s never a bad idea to pay off debt or invest in the S&P 500.

I think it’s also important to treat yourself, within reason. I’m not in favor of earning financial freedom if it means being afraid to spend money on the things that make you happy.

While I don’t know the first thing about shotguns, I’m guessing they represent a hobby of Sean’s. I’m certainly in favor of spending on hobbies, experiences, and activities that bring you joy.

Well done, Sean.

The struggle between “should” and “want.”

Finally, Zach shared a sentiment that many of us struggle with when it comes to money decisions:

I know what the answer should be but I’d really like to buy a house and a couple of the cool cars I’d always ogled over growing up.

Zach’s comment stood out to me in the way he phrased it. He knows what he should do, which in his mind is different from what he wants to do.

Zach’s one sentence comment sums up a money struggle that many of us have.

We know what we should do, but we’re constantly fighting what we want to do.

I would challenge Zach, and anyone else feeling this way, to take some time thinking about what you truly want out of life. I did this when I wrote down my Tiara Goals for Financial Freedom while on a beach in Florida.

If you put some real thought into it, you might find that material possessions are actually not that important to you. Rather, buying your freedom is so much more valuable.

I would want to know more about Zach’s desire to buy a couple of cool cars. Maybe, like our previous reader wanting a shotgun, having cool cars is a hobby for him that brings much joy.

However, I have my doubts that’s what Zach meant. The way he phrased it (“cars I’d always ogled over growing up”) leads me to believe he wants these cars to show off.

Here’s the problem with that type of spending.

Buying a couple of cool cars would likely only give you a short-lived burst of happiness. Sure, it would be fun to drive them around at first. Maybe it’d also be fun to have your friends over and show off what you just bought.

But, studies routinely show that the burst of happiness from material possessions like cars only lasts for so long.

When that initial burst fades away, you’re stuck with the hassle of owning multiple cars that you probably wouldn’t even drive much. Your friends would stop caring before too long.

Add in the cost of insurance, maintenance, and garage space, and these cool cars will be a major drag on your financial freedom.

By the way, there’s nothing at all wrong with buying a house. You need to live somewhere. Just keep it reasonable.

Otherwise, you’ll end up working long hours for a lot of years just to keep the house. That might not be a trade off you want to make.

What I would do with $10 million.

Without further ado, here’s exactly what I would do if I woke up with $10 million tomorrow.

1. $50,000 to go on an African safari with my wife.

My wife and I have three kids at home ages five and under. With a newborn, even date night can feel like an epic adventure. My wife does so much for all of us, that this is the easiest decision I’ve ever made.

With the first $50,000, she and I are packing our bags for Africa and leaving the kids with Grandma. Since this would be our first big trip in six years, we’re balling out without worrying about the cost.

I am a big advocate of using money as a tool to build memories. How could I do better than taking a dream vacation with my wife?

2. Pay off my house.

My goal is to be financially free. A big part of that is not having any debt. That’s why the next chunk of the $10 million is going to pay off my house.

I could certainly make more money long-term by investing in the stock market or purchasing more rental properties. But, with $10 million at my disposal, I don’t need any more money. I know when enough is enough.

I love my house and my community and would rather know that I can stay here with my family for the long run.

3. Pay off my rental ski condo.

In 2021, my wife and I bought a ski condo in Colorado. We currently rent it out for most of the year.

If I had $10 million, I would pay off the mortgage on the ski condo, stop renting it out, and spend a lot more time out west with my family.

Photo by Jon Flobrant on Unsplash

As I mentioned, one of my main goals in life is to create as many experiences and memories as possible with my family.

Paying off my condo would allow all of us to spend more time together doing the things we love, like skiing, hiking, biking, and swimming.

Best of all, we could do these things while sharing our condo with our extended family members.

4. $250,000 in a high yield savings account.

Everyone should have an emergency savings account. I would put $250,000 into a high yield savings account and turn to this money as my first line of defense in case of emergencies.

After eliminating my mortgage debt on my primary home and my ski condo, $250,000 would be enough to fund my life for about 2 years. That’s a lot of runway and provides peace of mind.

5. $300,000 total in my kids’ 529 college savings accounts.

Besides eliminating debt, my other major financial goal right now is to save enough to pay for my three kids’ college. To cross this goal off my list once and for all, I would put a combined $300,000 into their 529 accounts.

I landed on $300,000 by playing around with an online calculator, like this one. $300,000 should be enough to reach my goal for each kid.

6. 70% of the rest in a total stock market index fund.

I am an index fund investor, through and through. I have no interest in trying to beat the market or time the market.

I’m perfectly happy with earning around 10% per year, which is the historical annual average return of the S&P 500.

So, I would put 70% of the rest of my money in a total stock market index fund. I prefer Vanguard’s popular offering, VTSAX.

If you’re wondering why I’m not putting all my money in “safer” asset categories, like cash or bonds, it’s because I still have a long investment horizon in front of me.

I plan on investing for decades to come. I’m OK riding out the market swings that come with investing in stocks. I also want to keep up with inflation so my purchasing power remains strong in the future.

7. 30% in a total bond market index fund.

While I would mostly be invested in stocks, I would be highly motivated to preserve more of my wealth. Like I mentioned before, enough is enough.

Investing in bonds is a good way to de-risk your portfolio, even if it means earning less each year.

For that reason, I would allocate the remaining 30% of my money to a total bond market index fund. I would choose Vanguard’s VBTLX.

I would not pay off my rental properties or quit my job.

You may have noticed I did not mention paying off my rental properties or quitting my job.

My rental properties are all on very low-rate mortgages and generate strong monthly cash flow. These properties are performing beautifully as is.

I don’t see any good reason to mess with a good thing. I could always re-visit if circumstances changed.

With $10 million, why am I not quitting my job and jetting off to a beach?

The truth is I really like my life right now. I don’t see any good reason to make sudden, major life changes.

I like the people I work with and the work that we do for our mesothelioma clients.

On top of that, I like where I live and am not really craving any major purchases. I would probably get some new furniture for the house. Maybe I’d plant another tree or two in the backyard.

Plus, because I’m still earning an income in this scenario, I can continue to use my income to fund my life. That’s why I didn’t account for daily spending in my plan for $10 million.

In fact, I’d have more income available because the $10 million is more than enough for my long-term savings and investment goals.

I could use the money I had been saving for these goals for more present day spending. I’m not sure I would, but I could spend more freely, if I wanted to.

So, there you have it. That’s exactly what I would do with $10 million right now.

What do you think of my plan?

Would you do anything differently?

Let us know in the comments below.

June 14, 2025
Real Estate has Accelerated my Journey to Financial Freedom
I invest in real estate for one reason and one reason only:

To accelerate my journey to financial freedom.

Through monthly cash flow, debt pay-down, appreciation, and tax benefits, I’m convinced that owning rental properties is the fastest way to reach financial freedom.

We’ll soon discuss each of these advantages in more detail. For now, here’s a quick overview:
- Cash Flow: After paying all the bills each month, whatever is left is considered cash flow. You can use this cash flow however you want.
- Appreciation: Real estate tends to increase in value over the long-term. If you hold real estate long enough, you should benefit from appreciation. This also means that your net worth grows.
- Debt Pay-down: If you have a mortgage on a rental property, your tenants are the ones paying down that mortgage each month. That means your net worth grows because your debt is shrinking.
- Tax Benefits: The tax code favors real estate investors. Whereas W-2 income is heavily taxed, many real estate investors pay little in taxes (and sometimes nothing in taxes). Some of the biggest reasons for this are depreciation and lower tax rates for capital gains.
With these four major advantages in mind, you can hopefully start to see how investing in real estate will accelerate your journey to financial independence.

Additionally, you may have noticed that investing in real estate provides both immediate and long-term financial benefits.

Let’s focus on that point for a moment.

Investing in real estate offers immediate and long-term financial benefits.

To be truly financially free, you need to cover immediate life expenses and prepare for future life expenses.

In terms of your Budget After Thinking, your Now Money and Life Money are considered immediate life expenses. Your Later Money is for future expenses.

Rental properties can help you in each budget category. The monthly cash flow and tax benefits will cover your Now Money and Life Money needs. Debt pay-down and appreciation offer significant upside for your Later Money.

I’ve been hard-pressed to find any other asset class that provides as many benefits for both for the here-and-now and the future.

There’s another major reason I believe in the power of investing in real estate.

It has to do with one of my ultimate life goals: to create more time to spend with my family. This is one of my major life goals, in part, because of what I’ve learned in my career as an attorney.

What I’ve learned about time and family as an attorney.

I graduated law school at age 24 and spent the first couple of years of my career clerking for an appellate court judge.

To this day, I tell my students that clerking for a judge is the best job for recent graduates. I recommend that all my students apply for judicial clerkships.

When my clerkship ended, I joined my current law firm where I continue to represent people with mesothelioma, a rare and terminal cancer caused by asbestos.

If it wasn’t for what I’ve learned from my mesothelioma clients, I would have never started investing in real estate.

Let me explain what I mean.

I’ve learned invaluable life lessons from my clients with mesothelioma.

Most of my clients are in their 70s and 80s. That’s because mesothelioma is a disease that takes decades to manifest. A person can be exposed to asbestos in his 30s and not get sick until his 70s.

A significant part of my job has been meeting with my clients in their homes after they have just found out they have incurable cancer. Before we ever get around to talking about the case, we inevitably end up talking about life.

During these conversations, I do most of the listening. You can imagine what I’ve learned about life in these moments. It is not a stretch to say that many of my core beliefs have been shaped by these powerful experiences.

When I listen to my clients talk about life, certain themes continue to surface.

One major theme I hear from my clients is the importance of family. They’ve taught me the importance of creating experiences and memories with loved ones, usually involving family vacations or time spent with friends.

Photo by Natalya Zaritskaya on Unsplash

Like my clients, I want to create as much time as possible with my family and friends. When I look back on my life, I want to look back on all the experiences and memories I’ve created.

With rental properties, I can earn money without being physically present. And while investing in real estate is not completely passive, it provides tremendous upside without requiring all of my time.

That means I can spend more time with my wife and three kids while still making money.

Because of what I’ve learned from my clients, there’s nothing more important to me.

I started investing in real estate in my mid-30s.

By the time I reached my mid-30s, I had paid off my student loan debt. I had successfully saved up for an engagement ring and a wedding. Newly married, my focus shifted to saving up for a downpayment on a home.

At the time I started saving up for a home, I had no idea that I could use my savings to invest in real estate.

It wasn’t until I went to a Cubs game with a good friend of mine, The Professor, that I learned about real estate investing. This is when my journey to financial freedom really accelerated.

See, The Professor had a beautiful condo with an incredible rooftop deck near Wrigley Field. During the game, he told me he was selling the condo and moving into a 4-flat with his fiancee in an up-and-coming part of town.

Huh?

Why on earth would you give up your amazing condo? And move to a random neighborhood I’d maybe been to one time in my life?

I thought The Professor had lost his mind. Back then, I had no idea what a 4-flat even was. I couldn’t even point to his new neighborhood on a map of Chicago.

The Professor set me straight.

Photo by Maria Ziegler on Unsplash

He walked me through the numbers. He explained that he was going from paying $3,000 per month for his condo to receiving $700 per month on top of living for free in the 4-flat. That’s a $3,700 difference per month!

I immediately thought about the experiences and memories that I could create with my wife if we had an extra $3,700 per month to spend.

I already knew what my clients would say about the opportunity to create such memories.

It almost sounded too good to be true.

I did my homework and bought my first investment property less than a year later.

During my talk with The Professor, he introduced me to BiggerPockets.

If you haven’t heard of BiggerPockets, it is a treasure trove of online resources to help real estate investors of all levels.

At BiggerPockets, you can listen to podcasts, read blog posts, and ask questions on the forums. You can also choose from a wide selection of incredible books on real estate investing.

One of my favorite BiggerPockets books is Chad “Coach” Carson’s book, Small and Mighty Real Estate Investor: How to Reach Financial Freedom with Fewer Rental Properties.

Coach Carson’s message is right there in the title: you can use real estate to efficiently reach financial freedom. He makes a compelling argument to use real estate to build a life, not the biggest bank account.

Being introduced to BiggerPockets was a game changer for me. I believe in the motto, “Trust but verify.” With BiggerPockets, I could do my own research and decide for myself if real estate investing was for me.

Over the next few weeks, I read everything I could about investing in real estate. When I wasn’t reading about real estate, I listened to podcasts.

It didn’t take long before I was convinced that I wanted a 4-flat of my own.

I am using real estate to accelerate my journey to financial freedom.

To me, investing in real estate is all about fast-tracking my journey to financial freedom. It has not always been easy, but it’s definitely been worth it.

I’m fortunate that my career has introduced me to so many wonderful people.

I am convinced that I would not have been as motivated to act if it weren’t for my conversations with my mesothelioma clients. If nothing else, I know that talk with The Professor about real estate would not have resonated with me the same way.

Fast forward to the present day, I now own 10 apartments in Chicago and a rental ski condo in Colorado.

Coming up in the blog, I’ll share with you everything I’ve learned about investing in real estate along the way.

As always, reach out if you have any questions or leave a comment below.
June 10, 2025
Best Money Mindset Book? My 9 Favorite Picks
On my journey to financial independence, I’ve read close to 100 personal finance books.

My favorite books motivate me to think about the relationship between life and money. I think of this type of book as a “money mindset book.”

@thinkandtalkmoney
What is your favorite money mindset book? If you need a summer read, I rank my top eight here: https://thinkandtalkmoney.com/best-money-mindset-book-my-8-favorite-picks/ #thinkandtalkmoney #moneymindset #summerreads #personalfinance
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In today’s post, I’ll show you my nine favorite money mindset books. These books share a common theme: they will inspire you to use money to build a life that you’re proud of.

One of the ways these books do that is by exploring the emotional side of money. In other words, they don’t just talk about the numbers and math of personal finance.

That not only makes the books more interesting to read, it also makes them so much more practical in the real world.

See, I am striving to build the best life possible for my family. To do that, I need to learn more than just the numbers.

That means I need to be good at not only making money, but also using that money to build a life on my terms. That requires finding a balance, which can be tricky.

To help strike that balance, I’ve studied how others have done it. Then, I can take what I learn and implement those lessons into my own life.

As a personal finance teacher, I can also share these lessons with my students.

And, that brings us to my favorite money mindset books.

Each one of these books has helped me develop my core life philosophies. Importantly, these books have helped me acquire and use money in alignment with those core beliefs.

Of course, when I review my Tiara Goals for Financial Freedom, I can feel the influence of each of these books on my most important values.

I recommend that you check out each of these money mindset books. You will learn not just how to acquire money, but also how to use that money to live your best life.

Let’s take a look at my favorites, in no particular order.

1. Rich Dad Poor Dad by Robert Kiyosaki

There’s a reason Rich Dad Poor Dad is the best selling personal finance book of all time. Its message is so powerful and simple that I’ve been recommending this money mindset book for years.

If you read Rich Dad Poor Dad, your entire money mindset will be changed. Kiyosaki brilliantly shares the stories he learned about money while growing up in Hawaii.

His Rich Dad was really his best friend’s dad, who was a very successful real estate investor and business owner. His Poor Dad was his actual dad, a highly educated and hardworking man who followed a traditional career path.

Using these two role models in his life, he makes a very compelling case that most of us go about life and money all wrong.

This is the money mindset book you want to start with.

Read Rich Dad Poor Dad. It’s the money mindset book that will light a fire under you like no other book I’ve read.

2. The Psychology of Money by Morgan Housel

In The Psychology of Money, Housel writes about how people make decisions with their money in the real world. Housel agrees with one of our main themes at Think and Talk Money:

Money is emotional.

We can all be shown data and spreadsheets and understand what we should do. But, that’s usually not enough to change our behavior.

Housel is here to help with that. In The Psychology of Money, he takes core personal finance lessons and translates those lessons into regular life concepts.

Additionally, Housel teaches us the different ways people think about money. Then, he offers his perspective on how we can make better sense of money through our own life experiences.

Read The Psychology of Money. This money mindset book will help you understand the relationship between money and happiness.

3. Think and Grow Rich by Napoleon Hill

Think and Grow Rich is another classic money mindset book that will shift your entire viewpoint on earning a living.

I first read this money mindset book in college when I learned my friend’s dad offered him $50 if he read this book.

$50 to read a book?

I needed to see what this book was all about.

At the time, I didn’t appreciate how much this money mindset book would change my life.

Originally published in 1937 and later updated, Think and Grow Rich, will convince you that you can be successful.

Initially, Hill studied innovators like Henry Ford and Thomas Edison. In the updated version, you’ll learn about modern figures like Bill Gates and Mary Kay Ash.

Photo by Susan Q Yin on Unsplash

Hill’s book is so good because of what he reveals about these legendary figures.

The secret?

There was nothing mystical about any of them. Before they became legends, they were just like you and me.

You can be successful in any walk of life if you just stop sleepwalking through life like everyone else and do something.

Read Think and Grow Rich. This money mindset book will motivate you to do that thing you’ve been saying you would do, but haven’t yet.

4. The Richest Man in Babylon by George S. Clason

The Richest Man in Babylon is a third classic money mindset book originally published nearly 100 years ago.

This book is a quick read. It’s ideal for anyone still not convinced that they have to pay attention to their personal finances.

Clason wrote a simple collection of fables set in the ancient city of Babylon. Each fable illustrates the importance of a key money habit, like saving and investing.

Through his stories, you’ll see how you can get ahead in life by practicing strong financial habits.

It’s not enough to just be good at making money. You need to be good at keeping that money, too.

Read The Richest Man in Babylon. This money mindset book will introduce you to the building blocks of a healthy financial life.

5. Your Money or Your Life by Vicki Robin and Joe Dominguez

Your Money or Your Life is the complete package when it comes to money mindset books.

Vicki Robin and Joe Dominguez are often credited for laying the groundwork for the Financial Independence Retire Early (FIRE) movement.

While I prefer the term Financial Independence Pivot Early (FIPE), I share their viewpoints on the relationship between money, work, and time.

Spoiler alert: when it comes to life and money, most of us are doing it all wrong. We chase money at the cost of our precious time.

First, you’ll learn to think of money as nothing more than a tool to build your ideal life. Next, you’ll learn how to specifically use that tool to achieve financial independence.

Read Your Money or Your Life. This money mindset book will motivate you to start valuing your time for what it’s really worth.

6. The Millionaire Next Door by Thomas Stanley and William Danko

It can be difficult to ignore the temptation to keep up with our neighbors. Whether we like it or not, we are concerned with our social status. Part of our self-worth gets tied to comparing ourselves to others.

One of my favorite money mindset books, The Millionaire Next Door, discusses this concept in detail.

To start, you need to adjust your perception of how real life millionaires behave.

You may be surprised to learn how most millionaires have made their fortunes. Also, you may be surprised to learn about their modest lifestyles.

Read The Millionaire Next Door. This money mindset book will help you if you’re struggling with comparing yourself to others.

7. Die with Zero by Bill Perkins

No money mindset book has led to more passionate conversations with my friends and family members than Die with Zero.

First, Perkins encourages us to think about whether we are working too many hours. In Perkins’ view, the problem is that we are sacrificing the best years of our lives. Instead, we could be creating lifelong memories.

In that same vein, Perkins makes a strong case that many of us are saving too much for retirement.

Also, Perkins questions the conventional wisdom of waiting until we die to pass money onto our kids. Instead, he suggests helping our kids earlier in life when the money will be more meaningful.

Read Die With Zero. This money mindset book will motivate you to book that vacation you’ve been putting off.

8. Millionaire Milestones by Sam Dogen

In Millionaire Milestones, Dogen covers his journey from finance bro in New York in his 20s to present day life as a writer, investor, and husband and father.

What separates Millionaire Milestones from other personal finance books is that Dogen’s still on his journey.

Photo by Joel Muniz on Unsplash

He’s not a newbie, and he’s not preaching from the rocking chair on his patio.

Dogen’s presently raising kids. He’s focused on his website and his investments. Like you and me, he can relate to the present day challenges of personal finance because he’s still on his journey.

You can read my full review of Millionaire Milestones in my separate post here.

Read Millionaire Milestones. This money mindset book is the Goldilocks of personal finance books.

9. The Simple Path to Wealth by JL Collins

The Simple Path to Wealth by JL Collins is the best money mindset book on investing I’ve ever read.

It is a must-read for anyone trying to figure out why and how to invest in the stock market.

If you’re a new investor and don’t understand how to invest in the stock market, Collins will set you on your way.

If you’re a seasoned investor unsure what to do in times of economic uncertainty, Collins is here to help.

Maybe you just need a bit of motivation or a reminder of how simple it is to build long-term wealth. There’s no one better than Collins to provide that pep talk.

Collins is sometimes described as “the Godfather of Financial Independence” in the personal finance community. He has a popular blog where you can read more about his story.

The short version is that he wrote a series of letters to his then teenage daughter about money, investing, and life. He wanted to impart the wisdom he had accumulated during his lifetime and help her avoid the mistakes he had made.

Those letters eventually led to his blog, which then led to his bestselling book, The Simple Path to Wealth, first released in 2015.

Since then, Collins has been a thought-leaders in the financial independence community. He has inspired thousands, if not millions, of people around the world to accumulate massive wealth by following a few simple rules.

What makes Collins so transformative is his ability to make seemingly complex topics (like investing) into easily digestible and actionable information.

If you have any intention of becoming financially independent and haven’t read The Simple Path to Wealth, now is the time to do so.

I’ve read his book cover-to-cover twice and constantly refer back to his lessons.

Each time I read his book, I’m reminded how simple it is to reach financial independence if I can just follow a few simple tips.

You can read my full review of The Simple Path to Wealth in my post here.

Read The Simple Path to Wealth. It is quite simply the best money mindset book on investing I’ve ever read.

What is your favorite money mindset book?

So, these are the money mindset books that I recommend most often.

Wherever you are on your personal finance journey, there is something for everyone in one of these books.

If you have read some of these money mindset books in the past, I suggest you read them again. As our lives and priorities change, so does our relationship with money.

You’ll get something new and different from reading these books again. Personally, I didn’t fully appreciate these money mindset books until I was years into my career and knew what it felt like to work for money.
- Have you read these money mindset books?
- What money mindset books am I missing?
Let us know in the comments below.
May 26, 2025
Why Target Date Funds: The Easy Way to Invest
Don’t be fooled. The easiest option can also be the best option.

You already know I’m a big fan of making things easy, especially investing.

And, there is no better example of making things easy than investing in target date funds.

Maybe we’ve been brainwashed into thinking that the harder something is, the better it is. Of course, there’s that often-repeated phrase, “If it were easy, everybody would do it.”

We’ve been programmed into thinking that “hard work” automatically means “better results.”

I certainly agree that hard work pays off when it comes to things like career and exercise.

As another example, baking cinnamon rolls comes to mind. With cinnamon rolls, the harder way is probably also the better way.

My daughter and I bake pre-made cinnamon rolls every week. We have fun with it and it’s quick and easy.

She loves how they taste, so that’s all that really matters. But, they don’t come close to tasting as good as homemade cinnamon rolls, which are certainly harder to make.

So in the context of cinnamon rolls, I think “harder” does mean “better.”

On the other hand, I don’t agree that investing has to be hard. I don’t believe that just because something is easy, it must not be that good.

And, that brings us to target date funds.

There’s nothing easier than investing in target date funds.

My wife and I have been investing in target date funds for years. Target date funds have been both easy and effective for us.

That’s important because we’re also at the stage in our lives where we are trying to make things easier, not harder.

The idea behind target date funds is that your portfolio automatically rebalances as you move closer to your predetermined life event, like retirement or your kid’s college start date.

That means over time, your target date fund will gradually become more conservative to protect all the money you had saved and earned over the years. It typically does so by reducing exposure to stocks and increasing exposure to safer assets, like bonds.

You do not have to do a thing.

It simply cannot get any easier than this.

Today, we’ll take a closer look at how target date funds work. The goal is to help you make an informed decision on whether they are the best option for your situation.

Before we jump in, if you need a refresher on some key investment terminology, check out my post on the language of investing:

Learn the Language to Make Investing Easier

What are target date funds?

Target date funds are a form of mutual fund. When you invest in target date funds, you are essentially getting a complete portfolio in a single fund.

Target date funds are typically comprised of broad stock index funds and bond index funds.

That is one of the keys to remember about target date funds. They automatically provide investors with strong diversification and optimal asset allocation based on their chosen time horizon.

Target date funds are ideal for long-term investment goals. They are designed to help you manage risk as you move closer to your pre-determined goal.

Typically, target date funds invest more heavily in stocks in the early years in an effort to earn greater returns. As you move closer to your pre-determined goal, the fund will automatically shift to buying safer assets, like bonds.

What types of investments are typically in target date funds?

Most target date funds are made up of index funds. That means that when you buy a target date fund, you are getting exposure to a wide variety of stocks and bonds through index funds.

An index fund is a type of mutual fund that seeks to track the returns of a market index, like the S&P 500 Index.

As explained by Vanguard:

An index mutual fund or ETF (exchange-traded fund) tracks the performance of a specific market benchmark—or “index,” like the popular S&P 500 Index—as closely as possible. That’s why you may hear people refer to indexing as a “passive” investment strategy.

Instead of hand-selecting which stocks or bonds the fund will hold, the fund’s manager buys all (or a representative sample) of the stocks or bonds in the index it tracks.

It’s very hard, even for professionals, to beat the returns of the S&P 500. Historically, the S&P 500 has averaged an annual return of 10%.

Photo by Artur Matosyan on Unsplash

I Invest in target date funds because they give me a great chance to match those historical average returns without any effort on my part.

What are the advantages of investing in target date funds?

Target date funds share the same benefits as investing in index funds. That’s because, as we just discussed, most target date funds are comprised of index funds.

In addition to the benefits of index funds, target date funds offer one additional major benefit we’ll discuss below.

By the way, you already know 7 things I love about index funds:
1. Anybody can do it
2. No wasted mental energy
3. Low fees
4. Automatic diversification
5. The closest thing to predictability
6. I don’t have stock FOMO
7. Good enough for Buffett, good enough for me
For a more in depth look, check out my post here:

7 Things I Love About Index Funds

Target date funds automatically rebalance

In addition to sharing the 7 benefits of index funds, target date funds offer one additional, major benefit:

automatic rebalancing

Importantly, target date funds automatically rebalance to continuously maintain your optimal mix of stocks and bonds.

That means as time goes on, you don’t have to worry about rebalancing on your own. That’s one less stressor on your plate.

What do I mean by rebalancing?

Let’s say an investor’s optimal asset allocation is 50% stocks and 50% bonds. After a year of impressive stock market growth, this investor’s portfolio now consists of 60% stocks and 40% bonds. That’s because his stocks increased in value at a greater rate than his bonds.

As a result, he’s now weighted more heavily in stocks than his optimal asset allocation. To rebalance his portfolio, he could take a variety of steps. He could sell some stocks or purchase more bonds to get back to where he wants to be.

With target date funds, he would not have to worry about this situation. That’s because target date funds automatically rebalance for you.

That’s a big load off an investor’s plate. It’s the main reason why I like investing in target date funds.

Target date fund or build your own?

After you open an investment account, you can select a combination of index funds on your own or choose a target date fund.

There’s nothing wrong with buying index funds on your own instead of through a target date fund.

You will actually save money on fees if you go that route, but not very much.

For example, the popular Vanguard Total Stock Market Index Fund (VTSAX) charges a fee of .04%.

Vanguard’s Target Retirement 2065 Fund presently charges a fee of .08%.

Just remember to rebalance your portfolio from time-to-time to stay within your preferred asset allocation.

If you don’t want that added responsibility, you can invest in a target date fund that automatically chooses the index funds for you.

Then, the target date fund will automatically rebalance your portfolio over time to maintain an optimal balance of stocks and bonds.

As you saw above, you will pay slightly more in fees for the added convenience. To me, that extra .04% in fees is absolutely worth it.

In the end, both options are good ones.

Investing with target date funds is the easiest choice.

How can you invest in a target date fund?

Most employer-sponsored retirement plans, like 401(k) plans, now offer target date funds. In fact, target date funds are usually the default investment option for new plan participants.

You can also invest in a target date fund outside of your employer-sponsored plan. Most major investment companies offer target date funds in a variety of account types.

In addition to retirement accounts and traditional brokerage accounts, 529 college savings plan providers usually offer target date funds based on when your child will start college.

If you’re curious about my favorite investment account types, you can read more here:

My 4 Favorite Investment Accounts

Regardless of the account type, the process for selecting the right target date fund is the same.

Generally, you’ll see various target date fund options based on your personal time horizon.

For example, if you are currently 25-years-old and plan to retire in 40 years, you would select the target date fund corresponding to 2065. This fund will automatically rebalance as your career progresses towards that retirement date.

Typically, there are target date funds offered in 5-year intervals. Choose the one closest to your preferred retirement year, even if there isn’t one that matches your exact year.

The same concept applies to a 529 college savings plan. If you have a newborn, like I do, you would select the plan that corresponds with your child starting college around 2043.

After you make this one decision, there’s nothing more to do it.

Your focus should be on adding as much money to that account as possible without worrying about things like rebalancing.

I personally invest in target date funds.

My wife and I invest in multiple target date funds. We have various target date funds for our retirement savings and for our kids’ college education.

At this stage in our lives, we’ve placed a premium on doing things the easy way.

We have full-time jobs as attorneys, manage our own rental properties, and have three kids at home. The last thing we need is to add more complication to our lives.

Our personal accounts are with Vanguard, which has long been known as an investor-friendly company that prioritizes low fees.

Why target date funds?

Just because something is easy doesn’t make it wrong.

Investing in target date funds is as easy as it gets. By taking the easy option, you can have exposure to a broad range of index funds that automatically rebalances over time.

Are you doing things the easy way?

If you’re a busy professional like I am, don’t sleep on target date funds.

You’ll always have people that look down upon target date funds as too basic. Ignore them. Let them stress about picking the next hot stock, rebalancing, and timing the market.
- So, are you doing things the easy way? Are you a target date fund investor?
- Do you agree that target date funds are an easy and effective way to invest for the long term?
- Has anyone ever looked down on you for investing in target date funds?
Let us know in the comments below.
May 23, 2025
7 Things I Love About Index Funds
For my money, there’s no beating index funds.

More important, than my money, for my sanity, there’s no beating index funds.

In today’s post, I want to highlight 7 things I love about index funds.

My 7 reasons range from the low costs and automatic diversification to the minimal mental effort required for long-term wealth.

If you’ve been a consistent reader of the blog, you know that money is as much emotional as it is rational. I don’t want to be worried about my money any more than you do.

That’s why the reasons I love index funds take into account both the numbers and the emotions of investing.

Let’s dive in.

7 Things I Love About Index Funds
1. Anybody can do it
2. No wasted mental energy
3. Low fees
4. Automatic diversification
5. The closest thing to predictability
6. I don’t have stock FOMO
7. Good enough for Buffett, good enough for me
1. Anybody can do it

I’ve said it before, and I’ll say it again:

Investing is actually the easy part.

And, when I say investing is actually the easy part, I’m talking mostly about investing in index funds.

You don’t need an MBA or a financial background. You don’t need to read the Wall Street Journal.

All you need to do is consistently fuel your investment account and to let compound interest work its magic.

Oh wait, one more thing:

You also need to read Think and Talk Money. I post three times every week.

Oh, and tell your friends about Think and Talk Money!

2. No wasted mental energy

It goes without saying that most professionals are busy people. On top of working our day jobs, we’re also doing our best to stay healthy, be good family members, and have some semblance of a social life.

Some of us even have side hustles that occupy our time and mental energy.

Photo by Robson Hatsukami Morgan on Unsplash

The last thing we need is another stressor in our lives, like actively trading stocks.

I invest in index funds to take this stressor out of my life.

Yes, I could pay someone a lot of money to manage my money for me.

Or, I could invest in index funds and rest comfortably knowing that I’m going to be in great financial shape down the road.

Why am I confident I’m going to be in great financial shape?

For three main reasons, discussed next.

3. Low fees

Because index fund are passively managed, the fees are significantly lower than actively managed mutual funds.

My favorite index fund is Vanguard’s popular fund called the Vanguard Total Stock Market Index Fund (VTSAX). This fund currently charges .04%, which is just about the lowest fee you will ever see.

Compare that to the 1% fee commonly charged by investment advisors. Also, don’t forget it’s very difficult for even the professionals to beat the returns consistently generated by the S&P 500.

If you don’t think that difference in fees matters, check out my post on what a 1% fee really costs you:

How Much Money a 1% Advisor Fee Really Costs

While I can’t control what returns I may earn, I can control the fees I pay.

I’d rather pay .04% than 1%.

That’s especially true when there’s no guarantee that an advisor can perform better than the returns I earn through index funds.

4. Automatic diversification

By investing in an index fund, like an S&P 500 index fund or a total stock market index fund, my stock portfolio is by definition diversified.

For example, when I invest in an S&P 500 index fund, I essentially own a piece of 500 large companies.

Some companies may go up in value, others may go down. I’ll never know which ones are going to make money or lose money. By investing in an S&P 500 index fund, it doesn’t matter. I’m covered either way.

That’s the point of diversification: smooth out the ride so I’m less susceptible to the fortunes of one particular company.

Photo by Artem Beliaikin on Unsplash

As another example, I also invest in Vanguard’s total stock market index fund (VTSAX). This fund offers exposure to nearly the entire U.S. stock market, which consists of 3,598 companies.

Now, that’s really good diversification.

5. The closest thing to predictability

The S&P 500 has historically earned an average annual return of 10%.

By investing in an index fund that tracks the S&P 500, like I do in my 401(k), I have a pretty good chance of earning consistent returns in the long run.

Sure, there may be ups and downs.

But, check this out:

Since 1996, the S&P 500 has ended the year in positive territory 23 times and negative territory only 7 times.

In other words, the S&P 500 has generated positive returns three times more frequently than it generates negative returns.

And even with those 7 negative years, with the exception of 2000-2002, the S&P 500 returned to positive territory the following year.

What this all means is that while the S&P 500 will drop occasionally, the down periods are historically short-lived.

Because of this historical consistency, index funds give me the best shot at predictability.

Note that predictable returns does not mean guaranteed returns. There are no guarantees in the stock market. That’s why my preference is predictability.

I’m very happy with consistent returns and a smoother ride.

6. I don’t have stock FOMO

Depending on the index fund you choose, you may own pieces of a handful of companies or as many as 3,598 companies.

I invest in S&P 500 index funds and total stock market funds. That means I own pieces of lots of companies.

It also means I never have stock FOMO.

You know what stock FOMO is, right?

Stock FOMO is when you find yourself in a conversation talking about something fun like your favorite new show. Then out of nowhere, someone volunteers the hot stock he bought that’s up 20%.

If you have stock FOMO, you feel like you’re missing out by not owning that stock. You think to yourself, “Oh man, that guy’s going to be so rich and I missed the boat!”

You might even run back to your desk so you can buy that hot stock, not realizing that you’ve probably already missed the train.

Stock FOMO can cause a lot of stress. I don’t want that stress.

So, I invest in index funds.

When a stock jumps 20%, I feel good because I already own every company in the U.S. stock market.

No stock FOMO here.

7. Good enough for Buffett, good enough for me

In 2013, Buffett famously instructed that after he dies, his wife’s cash should be split 10% in short-term government bonds and “90% in a very low-cost S&P 500 index fund.”

Good enough for Buffett, good enough for me.

It’s not just Buffett, though. One of my favorite authors on investing, J.L. Collins, wrote about the advantages of investing in a total stock market index fund in his seminal book, The Simple Path to Wealth.

In fact, Collins makes a compelling argument that the Vanguard Total Stock Market Index Fund (VTSAX) we discussed above may be the only stock fund that you’ll ever need.

Buffett and Collins are smart guys. Taking advice from smart guys seems like a good idea to me.

I highly encourage you read The Simple Path to Wealth.

You can read my full review of The Simple Path to Wealth in my post here.

What do you think of the 7 things I love about index funds?

To recap, I love index funds for these 7 reasons:
1. Anybody can do it
2. No wasted mental energy
3. Low fees
4. Automatic diversification
5. The closest thing to predictability
6. I don’t have stock FOMO
7. Good enough for Buffett, good enough for me
My reasoning combines the emotional side and the rational side of investing.

Like you, I want to earn a nice investment return. At the same time, I don’t want to be worried about my investments 24-7.

Index funds give me the best of both worlds.

What am I missing?

Help me grow my list of 7 into a list of 10 by leaving a comment below on why you invest in index funds.
May 21, 2025
My 4 Favorite Investment Accounts for Long-term Wealth
We recently talked about that to start investing, there are really only two main steps:
- Step 1: Open an account.
- Step 2: Pick the investments for inside that account.
Today, we’ll discuss my four favorite investment accounts. These accounts are all tax-advantaged and match my evolving priorities, like saving for retirement and paying for college.

To help explain why you may want different investment accounts, I’ll show you how I went from a single account in my 20s to 14 investment accounts today.

Even if you’re just starting out in your career or new to investing, it’s likely that you’ll eventually have multiple types of investment accounts.

You’ll almost certainly have different goals and priorities as life moves on.

Before you do anything else, you’ll need to decide what type of investment account matches your investment goals. As we’ll see, investing is about more than just saving for retirement.

By understanding the type of accounts to use that match your evolving priorities, you’ll have a better chance of reaching your goals.

Let’s begin by looking at how my investment accounts have changed from the time I started investing in my 20s to the present day.

My investment accounts in my 20s.

When I started working in my 20s, I had one investment account:
1. My 401(k).
In my 20s, I was just starting my career and was proud to be investing in a 401(k). Back then, tracking my net worth was pretty easy.

Part of the reason I only had one investment account was because I didn’t really know there were other types of accounts.

It wasn’t until I prioritized learning about personal finance that I realized what else was out there.

Quick side note: during law school, I did have a traditional brokerage account with a financial advisor. But, I closed that account when I learned we had set $93,000 on fire.

There were two other main reasons I only had one investment account back then.

First, I had student loan debt to pay off. I didn’t exactly have the means to invest in other accounts.

If you’re in a similar boat and have student loan debt, be sure to check out my post:

10 Student Loan Tips for Lawyers and Professionals

Second, in addition to student loan debt, I also had credit card debt.

It was only after a year of working and seeing my credit card debt grow each month that I decided to do something about it. In a lot of ways, my experience with credit card debt is what led me to start Think and Talk Money.

If you’re likewise dealing with credit card debt, check out my post:

10 Credit Card Tips for Lawyers and Professionals

As time went on, a few things happened that led me to opening more investment accounts.

First, I educated myself and learned that there were other investment accounts I could take advantage of.

Then, as my career progressed, I started making more money. Because I had paid off my student loan debt and credit card debt, I had money leftover to invest.

Finally, I got married and had kids. That meant my investment goals evolved.

To match my evolving goals, it was beneficial to open different types of investment accounts.

My investment accounts at age 40.

Fast forward about 15 years, and my family’s balance sheet looks a little bit different than it did in my 20s.

Between my wife, our three kids, and me, we now have 14 investment accounts:
1. My 401(k)
2. Wife’s 457(b)
3. Wife’s Roth IRA
4. My Roth IRA
5. Wife’s Traditional IRA
6. Wife’s Pension
7. Daughter’s UTMA
8. Son’s UTMA
9. Baby’s UTMA
10. Daughter’s 529
11. Son’s 529
12. Baby’s 529
13. HSA
14. Traditional Brokerage Account
Photo by MIGUEL GASCOJ on Unsplash

The point in sharing my various account types with you is to give you an idea of how your investment priorities will change over time.

The most savvy investors know how to match their investment accounts to those changing priorities.

With this context in mind, let’s now take a closer look at my four favorite investment account types that help me maximize tax benefits.

With these tax-advantaged accounts, I have a better chance of reaching financial freedom.

Favorite Account No. 1: 401(k)

A 401(k) is likely the first investment account most people will have.

401(k) plans are employer-sponsored retirement plans. Employees can elect to participate in their company’s 401(k) plan and choose from a variety of investment options, usually mutual funds and index funds.

There are four major reasons to invest in a 401(k) plan.

1. You can invest with pre-tax dollars.

That means more of your money gets invested rather than going towards your taxes. When you have more money invested, you can earn more in returns.

2. Your contributions are automatic.

Once enrolled, your employer will automatically deduct money from your paycheck and invest it directly into your investment selections.

Because the money never hits your checking account, you won’t be tempted to spend it on things you don’t really care about. You’ll be used to living without this money because it never hits your account.

You also don’t have to worry about consistently making transfers into your account because it will happen automatically.

3. Your earnings grow tax-free.

In addition to not being taxed on your contributions, you also won’t be taxed on your earnings. That’s a double tax advantage that acts to magnify the power of compound interest. You will be taxed when you make withdrawals.

4. Your employer may offer a match.

Many employers today offer a match to incentive employees to contribute to their 401(k) plans. To qualify for the match, you must be participating in your company’s plan and make contributions yourself. The match is usually a percentage of your overall salary, usually between 3-6%.

For example, if you contribute 5% of your salary, your company may match you with an additional 5% contribution.

If your company offers a match, it’s a no-brainer to take advantage of that match. It’s often described as “free money.”

I don’t like the term “free money” because it implies that you have not earned that money as an employee for your company. I prefer to refer to the company match as a bonus you’ve rightfully earned.

The key is to accept that earned bonus by ensuring you are meeting the minimum requirements to qualify.

401(k) Contribution Limits and Penalties

Keep in mind there are annual limits to how much you can contribute to your 401(k) plan. The IRS regularly increases the contribution limits. In 2025, you may contribute up to $23,500.

If you are between the ages of 50 and 59, or 64 or older, you may contribute an extra $7,500 per year. If you are between the ages of 60 and 63, you may be eligible to contribute up to $11,250.

Also, remember that 401(k) plans are intended for retirement savings. To discourage early withdrawals, a 10% penalty on top of regular income taxes apply to people under the age of 59 ½.

Because of these contribution limits, early withdrawal penalties, or other strategic reasons, you may benefit from another type of investment account.

Let’s look at our next popular type of investment account called a Roth IRA.

Favorite Account No. 2: Roth IRA.

A Roth IRA is another type of retirement investment account that also provides double tax benefits.

Unlike a 401(k), you make after-tax contributions to your Roth IRA. Your earnings then grow-tax free, and your withdrawals are tax-free.

Another major advantage is that you can withdraw your contributions tax-free and penalty-free at any time.

There are penalties if you make withdrawals from your earnings before the age of 59 1/2.

Roth IRA Contribution and Income Limits.

Because of the amazing tax advantages associated with Roth IRAs, there are income limits that apply. In 2025, individuals must have a Modified Adjusted Gross Income (MAGI) of less than $150,000, and joint filers less than $236,000.

On top of the income limits, there are annual contribution limits, as well. In 2025, the contribution limits are $7,000 if you’re under age 50, and $8,000 if you’re over age 50.

Why think about opening a Roth IRA?

For many investors, it’s not a bad idea to consider opening a Roth IRA in addition to your 401(k).

For starters, we mentioned the contribution limits to each account. You may need more money in retirement than just what your 401(k) plan will provide.

For another reason, 401(k) plans and Roth IRAs are treated differently from a tax perspective. It may be wise to have some tax-free income in retirement from a Roth IRA to go along with your taxable income from a 401(k).

You can open a Roth IRA with any number of investment companies, like Vanguard, Fidelity, and Charles Schwab.

Favorite Account No. 3: Health Savings Account (HSA)

A Health Savings Account (HSA) is another tax-advantaged account that you can use to pay for eligible medical expenses.

HSAs are linked to employer-sponsored health insurance plans. Oftentimes, employers will make an annual contribution to help fund your HSA.

Photo by Derek Finch on Unsplash

One of the trade-offs to having an HSA is that you’ll need to enroll in a high deductible insurance plan. You are still covered by insurance, but you’ll pay more out-of-pocket each year for medical treatment.

But, if you’re relatively healthy and/or have the means to pay for your present day medical care, you stand to benefit immensely down the road.

That’s because you can choose to invest your HSA contributions just like you might invest in a 401(k) plan.

If you do so, your contributions, earnings, and withdrawals are all tax-free if you follow some basic rules.

Because of these triple tax benefits, HSAs are my absolute favorite investment account.

Remember, 401(k) plans and Roth IRAs only offer double tax benefits. HSAs are even better because they offer triple tax benefits.

What are the key rules to follow with HSAs?

To get the triple tax benefits, you need to follow some basic rules.

One of the key rules is that you must use your withdrawals for eligible medical expenses. The good news is that “eligible medical expenses” is a very broadly defined term.

You can take a look here for a comprehensive list of eligible medical expenses. Some examples include prescriptions, contact lenses, and flu shots.

Another key rule to know is that there are no time limits for when you have to use your HSA funds. As long as you keep your receipts, you can reimburse yourself for eligible medical expenses years, or even decades, later.

If you put these two rules together, you’ll see why HSAs are so beneficial.

As long as you have the means to pay out-of-pocket for your current medical expenses, you can allow your pre-tax HSA investments to grow tax free for years.

That means you can take advantage of the magic of compound interest for decades, tax-free.

Then, years later, you can withdraw those funds to reimburse yourself for eligible medical expenses you paid for years prior.

HSA contribution limits.

Like 401(k) plans and Roth IRAs, there are annual contribution limits for HSAs.

In 2025, the contribution limit for an individual with self-coverage is $4,300 and $8,550 for family coverage.

Favorite Account No. 4: 529 College Savings Plan

529 college savings plans are state-sponsored, tax-advantaged investment accounts.

While there are certainly other ways to save for college, 529 plans are hard to beat because they typically offer triple tax benefits.

To read more, check out my in-depth post on 529 Plans for Sky High College Costs:

529 Plans for Sky High College Costs

What do you think of my 4 favorite investment accounts?

There are certainly others, but these are my 4 favorite investment account types. Each comes with tax advantages that will help me reach financial freedom sooner.

As your life and priorities change, you may also benefit from opening multiple investment account types.

So, what do you think of my four favorite investment accounts?

Did I miss any?

Let us know in the comments below.
May 19, 2025
What is Your Magic Retirement Number?
Have you thought about your number recently?

According to a recent study by Northwestern Mutual, Americans expect they will need $1.26 million to retire comfortably.

When you first hear that retirement number of $1.26M, does that sound impossibly high? Does it sound way too low?

Or, maybe your reaction was like what my five-year-old says when questioned about who made the mess:

“No clue.”

I think it’s safe to say that, at some point, most professionals accept that they need to save for retirement. Hopefully, you are in that group and have been investing early and often.

However, I suspect most people have never thought about how much they’ll actually need to retire comfortably. That’s understandable since retirement can seem like such a far-off goal.

Still, it’s a good idea to start thinking about how much you’ll need to retire comfortably. We’ll refer to that amount as your magic retirement number.

That way, you can start taking the necessary steps today to reach that magic retirement number.

Today, we’ll learn how to calculate your magic retirement number.

So, how do I figure out my magic retirement number?

To answer that question, let’s turn to the “4% Rule.”

The 4% Rule is one of the most popular ways in the personal finance community to ballpark how much money you’ll need in retirement.

Of course, your personal answer depends on a variety of factors, like when you want to retire and how much you expect to spend in retirement.

You can imagine how someone hoping to achieve FIPE (Financial Independence Pivot Early) may require a different amount than some retiring in his 70s.

Your answer may also change after reading a book like Die with Zero, where author Bill Perkins brilliantly argues that most of us are actually saving too much for retirement.

In any event, the 4% Rule can give you a good idea of where you currently are. Then, you can decide what changes you may want to make to ensure you hit your magic number.

Let’s dive in.

What is the 4% Rule?

The 4% Rule suggests that you can safely withdraw 4% of your investments each year, adjusted for inflation, and expect your money to last for 30 years.

Without getting too technical, the 4% Rule is based off of research looking at historical investment gains, inflation, and other variables.

For simplicity, let’s say you have $1 million in your portfolio. According to the 4% Rule, you can safely withdraw $40,000 per year (4% of your portfolio) and not run out of money for 30 years.

Using the magic retirement number of $1.26 million, you could safely withdraw $50,400 and not run out of money for 30 years.

These simple examples show how you can take your current retirement savings and project how much you can safely spend so your money lasts 30 years.

The 4% Rule also works in reverse.

By that, I mean you can use the 4% Rule to ballpark how much money you’ll need in retirement to maintain your current lifestyle. We’ll look at exactly how to do that below.

In either case, the 4% Rule is an effective and easy way to start thinking about a magic retirement number.

Use the 4% Rule as an easy projection tool, not an actual withdrawal rate.

I view the 4% Rule as a tool to ballpark your magic number, as opposed to a strict withdrawal rate once you actually retire.

I point that out because there’s some debate in the personal finance community as to whether 4% is still a safe withdrawal rate in today’s economic environment.

For our purposes, I’m not too concerned about that debate.

Once you get to retirement, your actual withdrawal rate may be higher or lower than 4% depending on a variety of factors.

Regardless, the 4% Rule is a great way to start thinking about how much you’ll need in retirement.

So, let’s practice using the 4% Rule.

Our goal is to help you project a magic retirement number based on your current spending habits.

How to use the 4% Rule based on your current savings.

We mentioned above that the 4% Rule works two ways.

First, you can take your current retirement savings and calculate how much you can safely spend so your money lasts 30 years.

If you have $1 million invested, the 4% Rule says you can safely spend $40,000 annually and expect your money to last 30 years.

Current Savings x 4% (.04) = Annual Retirement Spending

$1,000,000 x .04 =$40,000.00

That’s a useful calculation, especially if you’re nearing retirement age and just want to know how much you can spend each year.

Photo by Hugo Delauney on Unsplash

But, what if you don’t exactly know when you want to retire?

Your main priority may not be to retire by a certain age. Instead, your aim may be to retire with enough money to maintain your current lifestyle. You’re determined to continue working for as long as it takes.

To calculate that magic retirement number, you can once again use the 4% Rule.

How to use the 4% Rule based on your current spending habits.

The second way to use the 4% Rule is to start with your current spending habits to project how much money you’ll need to maintain that level of spending in retirement.

This may seem obvious, but to do so, you’ll first need to know your current spending habits.

If you don’t know how much you’re currently spending on a monthly basis, take a look at our budgeting series here.

The good news is that once you’ve created a Budget After Thinking, this next part is easy.

To calculate your magic retirement number based on current spending, simply follow these steps:
1. Add up the amount your’re spending each month in Now Money and Life Money.
2. Take that number and multiply it by 12 to see how much your lifestyle costs per year.
3. Divide that yearly spending by .04
That’s your magic retirement number.

Current Spending / 4% (.04) = Magic Retirement Number

One note related to your Budget After Thinking: for this exercise, ignore your Later Money (with one caveat). Only use your Now Money and Life Money totals.

The reason is that since you’re retiring, you likely won’t be focused on saving for future goals anymore. Presumably, you’ve already reached your goals. If you include your Later Money in your monthly spending, you’re magic retirement number will be artificially inflated.

The caveat is for those people pursuing FIPE. In that case, you should include your Later Money in your calculations. That way, you have a buffer in place to cover you over a longer retirement period.

Now, let’s use some real numbers to help illustrate how to use the 4% Rule to project your magic retirement number.

Here’s how to use the 4% Rule to forecast your magic retirement number.

Let’s look at an example using the 4% Rule to forecast your magic retirement number.

Let’s say that you reviewed your Budget After Thinking and learned that you spend $6,000 per month in Now Money and $4,000 per month in Life Money.

Combined, that means your lifestyle costs you $10,000 per month, or $120,000 per year.

To figure out how much you would need in investments to cover your current lifestyle for 30 years, divide $120,000 by .04.

Current Spending / 4% (.04) = Magic Retirement Number

$120,000 / .04 =$3,000,000.00.

That means to maintain your current lifestyle of spending $120,000 per year for 30 years, you would need $3 million in investments.

In other words, your magic retirement number is $3 million.

If that number seems impossibly high to you, you now know to make some adjustments to your current spending.

Let’s look at how your magic number changes with some tweaks to your spending habits.

Assume you’re open to cutting some expenses in retirement to reduce your magic number. That might mean spending less money on transportation, meals out, your wardrobe, and whatever else.

Let’s assume that by making those cuts, you shaved $1,000 off your Now Money expenses.

As a result, you only need $9,000 to cover your retirement lifestyle each month. That’s $108,000 per year.

Using the 4% Rule, your magic retirement number has now shrunk to $2.7 million.

$108,000 / .04 =$2,700,000.00.

That means that by reducing your spending by $1,000 per month, you have reduced your magic retirement number by $300,000.

It also means you have just sped up your timeline to retirement by reducing your lifestyle expenses.

A surprising note about people’s magic retirement number in 2025.

At the beginning of this post, we learned that according to a recent study by Northwestern Mutual, Americans expect they will need $1.26 million to retire comfortably.

What’s most interesting to me is that this year’s magic retirement number dropped from $1.46 million reported in the same study just last year.

Think about that for a minute.

Because of inflation (and now tariffs), things are only getting more expensive year over year. If anything, you would think that people would say they need more money to retire comfortably in today’s enviornment.

Except, the study found the opposite happened. Instead of wanting more money to pay for all these more expensive things, people think they can retire comfortably on nearly 14% less money.

How does that make any sense?

For starters, I doubt many of these respondents used the 4% Rule to project their magic retirement number based on their current spending habits.

If they had, they would have seen that their spending has likely gone up this year, unless they’ve made big cutbacks. Then, they would have seen that their magic retirement number also went up to account for those higher expenses.

Besides ignoring the 4% Rule, my other takeaway relates to one of our major themes at Think and Talk Money:

Money is emotional.

If our money thoughts were strictly rational, there would be no way that someone could say he needs less money to survive when everything is more expensive.

The reality is that our decisions don’t always make rational sense.

And, that’s OK.

Recognizing that our money decisions are not always rational, what can we do about it?

We can think and talk about money.

Talking to our people about our money decisions, like we would anything else, is the best way to find a balance between our emotional side and our rational side.

So, what is your magic retirement number?

Now you know how to use the 4% Rule to calculate your magic retirement number.

Be sure to use the 4% Rule as a tool to help you think about making adjustments to your current spending or savings habits.

Knowing how to use the 4% Rule, does a magic number of $1.26 million seem too high, too low, or maybe just right?

Let us know in the comments.
May 16, 2025
2 Easy Steps to Start Investing for Long-Term Wealth
By now, I hope I’ve begun to convince you that investing is actually the easy part. The more challenging part is consistently coming up with money for your investments.

If you’ve been worried about the risks associated with investing, we covered that, too. At the end of the day, reasonable risk is the cost to invest.

Because of inflation, the reality is that it’s more risky to not invest than it is to invest. Take a look at what happened to our pretend friend Terry who chose to play it safe.

At a bare minimum, investing is a way to play offense and defense. Investing to do fun things later on is playing offense. Investing to counteract inflation is playing defense.

We’ve also previously covered three great ways to minimize investment risk:
1. Invest early and often. Take advantage of the power of compound interest by starting early and being consistent. Over time, compound interest will lead to wealth.
2. Minimize fees. One of the few things we can control when we invest is what we choose to pay in fees. Keep fees to a minimum to maximize your long term gains. Even a fee of only 1% can do significant damage to your future prosperity.
3. Learn the language. Investing can seem intimidating when you hear phrases like “asset allocation” and “diversification.” Once you learn the language, you’ll realize that practicing asset allocation and diversification is actually not that hard.
With this backdrop in mind, there should be no more excuses for why you can’t start investing.

So today, we’re going to talk about the two main steps to get started investing.

How to start investing in 2 steps.

If you’ve never invested before, are you nervous about how complicated the process is going to be?

Don’t be.

To start investing, there are really only two main steps involved.
- Step 1: Open an account.
- Step 2: Pick the investments for inside that account.
There really isn’t much more to it.

But, don’t forget to complete both steps.

Step 1: Open an account.

The first step to investing is simply to open an account.

There are endless investment companies available where you can easily open an account online. Some of the more popular companies are Vanguard, Fidelity, and Charles Schwab.

I personally use Vanguard.

Once you’ve chosen an investment company, you’ll next select the type of investment account to open.

There are two main types of investment accounts and some other popular accounts I’ll highlight below.

Before you do anything else, you’ll need to decide what type of account matches your investment goals. Once you know the type of account that best suits you, you will need to open that account before moving on to step 2.

It really is that easy to start investing.

Photo by Jay Clark on Unsplash

You don’t need a financial advisor or a broker to open an account. Like most things these days, as I mentioned above, you can easily open an account on-line by yourself.

In fact, most of us begin investing in employer-sponsored retirement accounts, like 401(k) plans. When you start a new job, your HR department will provide you detailed instructions on how to enroll.

So, what are the main types of investment accounts to choose from?

Tax-advantaged retirement accounts.

The most common tax-advantaged retirement accounts include 401(k) plans, Roth IRAs, and traditional IRAs. “IRA” stands for Individual Retirement Account.

We’ll soon take a deep dive into the advantages and disadvantages of each type of account.

As a whole, the primary difference between tax-advantaged retirement accounts and traditional brokerage accounts relates to taxes.

The government wants us to save for retirement. To encourage us to do so, retirement accounts come with major tax advantages. That’s why most investors begin investing in these types of retirement accounts.

Traditional brokerage accounts do not have the same tax advantages.

In addition, tax-advantaged retirement accounts, like a 401(k) plan, are commonly offered by employers. That makes it easy for employees to invest.

You may be wondering: with these great tax advantages, why would someone open a traditional brokerage account?

Let’s take a look.

Traditional brokerage (non-retirement) accounts.

There are two main reasons to open a traditional brokerage account.

First, tax-advantaged retirement accounts have caps in place for how much someone can invest per year.

While the government is happy to encourage investing for retirement, its generosity only goes so far. Uncle Sam still depends on tax revenue and can’t afford to give us an unlimited free pass.

Once you reach those caps, and still have money that you want to invest, you’ll need to open a traditional brokerage account.

Most investors try to max out their retirement accounts to receive the full tax advantages before moving on to investing in traditional brokerage accounts.

The second reason is that tax-advantaged retirement accounts are intended for long-term retirement planning.

If you withdraw from your account before reaching a certain age, typically 59 1/2, you’ll be subject to penalties and taxes.

Of course, Think and Talk Money readers know that there are other reasons to save and invest besides retirement.

You may be investing to buy a home in 10 years. Maybe you have reached financial independence and rely on your investment income to fund your life.

Whatever the case, traditional brokerage accounts provide flexibility for people to withdraw their money when they want to.

Other types of investment accounts.

Besides tax-advantaged retirement accounts and traditional brokerage accounts, there are two other popular investment accounts to highlight.

529 Savings Plans for College: 529 college savings plans are state-sponsored, tax-advantaged investment accounts. While there are certainly other ways to save for college, 529 plans are hard to beat because they typically offer triple tax benefits.

To read more, check out my in-depth post on 529 Plans for Sky High College Costs.

Health Savings Accounts (HSA): An HSA is a tax-advantaged account that you can use to pay for eligible medical expenses.

These accounts are typically linked to employer-sponsored health insurance plans. You can choose to invest your HSA contributions, similar to how you might invest in a 401(k) plan.

Like with 529 plans, the reason to invest in an HSA is to receive triple tax benefits that are hard to beat. Your contributions, earnings, and withdrawals are all tax-free if you follow some basic rules.

We’ll explore this further in a future post.

You are not limited to just one type of account.

To recap, the first step to investing is simply to open an account.

There are two main types of investment accounts to consider: tax-advantaged retirement accounts and traditional brokerage accounts.

There are also other investment accounts intended to help with specific goals, like saving for college or medical expenses.

For almost all investors, it makes sense to first open a tax-advantaged retirement account before considering the other types of accounts. For many of us, that means participating in our employer-sponsored 401(k) plan.

Keep in mind, you are not limited to just one investment account. Many investors have various accounts for different goals. My wife and I have multiple retirement accounts, 529 plans for each of our kids, an HSA, and others.

Once you’ve opened an account, you’re ready to move onto step 2. The next step is choose what investments you want inside that account.

Step 2: Pick the investments for inside that account.

Now that you have an account opened up, the next step is to pick what investments you want inside that account. By that, I mean selecting what mutual funds, index funds, individual stocks, or bonds you want to buy.

Each major investment company offers a variety of investments to choose from, including target retirement date funds that are as easy as it gets.

Picture the account you just opened as a bucket. Now, you need to fill that bucket with something.

What you fill that bucket with are your investments.

This second step is crucial. It’s also easily overlooked.

More often than you might think, when people new to investing complete step 1 by opening an account, they mistakenly believe that their job is done. That’s not the case.

When you first open an account (other than employer-sponsored plans), you will need to fund that account with a minimum required deposit.

The key to remember is that once you make that transfer, your money will sit in your new investment account, not earning much or any interest, until you choose how to invest it.

Until you complete this second step, your money sits in your account and you don’t reap the benefits of investing.

As a side note, you’ll likely need to complete this second step every time you make a transfer into your investment account. You can link your checking account to your new investment account to make transfers easier.

One other side note, I mentioned that employer-sponsored plans, like 401(k) plans, operate a little differently. That’s because when you first enroll in your 401(k) plan, you will make your investment selections right then and there.

Because your contributions are automatically deducted from your paycheck, they will automatically be invested in your preselected investment choices.

Don’t laugh about people forgetting to choose their investments.

When I first taught my financial wellness course to law students, I thoughtlessly made a joke about people who forget to complete this second step. At the time, it seemed obvious to me that once an account was opened, the next step was to select the investments.

Boy, was I wrong.

In that first class, a student raised her hand and said she had made that mistake before. Her money sat in her investment account, without earning any interest, for more than a year before she realized her mistake.

She was not laughing at my joke.

Nor was she the only person in my class who had made that mistake. It turned out nobody was really laughing.

Since that first class, I’ve realized that it’s actually a common mistake.

That’s why I now emphasize there are two steps to start investing. The first step is to open an account. The second step is to pick investments for that account.

Photo by Kenny Eliason on Unsplash

And, guess what?

I recently made the exact same mistake.

My HSA had been with one provider for years before that provider changed. My money was automatically transferred over to the new provider.

However, somehow I missed the announcement that my money would not be invested until I chose the investments for that new account.

It took me about six months of earning no interest to realize what was going on.

That’s what I get for making a joke about step 2!

How do I pick the right investments to fill my account?

We recently discussed the importance of learning the language of investing. In that post, we talked about stocks, bonds, mutual funds, and index funds. When you’re selecting investments, you’re choosing between these types of options.

We also talked about the importance of asset allocation and diversification. These terms make investing seem more complicated than it really is.

Ultimately, you’ll need to do your homework or pay an advisor to do it for you. Before you make your decision, be sure to check out my previous posts on investing so you have a good understanding of your options.

Personally, I invest in index funds to keep my costs down and to ensure a certain level of diversification. If I don’t have the option to invest in a total stock market index fund, I invest in an S&P 500 index fund.

I also invest in target date retirement funds since these funds automatically rebalance for me as time goes on. It doesn’t get any easier than this.

Now you know how easy it is to start investing.

If you were ever hesitant to start investing in the past, now you should be feeling more confident in how to get the process started.

There are really only two steps:
1. Open an account.
2. Pick investments for that account.
It doesn’t have to be any more complicated than that.

As always, leave a comment below if I can answer any questions as you get started.
May 14, 2025
Money on My Mind: Read Millionaire Milestones
On my journey to financial independence, I’ve read close to 100 personal finance books.

This week, Sam Dogen of Financial Samurai fame, released Millionaire Milestones: Simple Steps to Seven Figures.

I pre-ordered my copy of Millionaire Milestones and read it cover-to-cover in three days. You may have noticed my posts this week have been slightly delayed. Now, you know why.

You can find a breakdown of my favorite money mindset books here. I recently added Millionaire Milestones to my list. It was that good.

If you’re serious about becoming financially independent, I highly recommend you read Millionaire Milestones.

Who is Sam Dogen aka The Financial Samurai?

Dogen has been a leader in the personal finance space since he launched Financial Samurai in 2009. Since then, he’s shared his experience and knowledge for free with three posts per week. I do my best to read every post.

Millionaire Milestones is his third book. Dogen’s also written the Wall Street Journal Bestseller Buy This, Not That and the bestselling e-book How to Engineer Your Layoff.

What separates Millionaire Milestones from other books?

As many of you know, I’ve been on my journey to financial independence since 2010 when I was drowning in credit card debt. Since then, I’ve read every personal finance book I can get my hands on.

Allow me to over-generalize and separate the books I’ve read into two broad categories.

The first category of books are written by authors who are at a very early stage in their personal finance journeys. These authors tend to be in their 20s and early 30s. They are intelligent people, good writers, and have a lot of valuable advice to share. I certainly gained a lot of insight from these books.

The second category of books are written by authors who had not only achieved, but also sustained, financial independence. Contrary to the first category, these authors are typically in their 60s and 70s. They have decades and decades of experiences and knowledge to draw upon. They are absolute legends in the financial wellness space.

Photo by Blaz Photo on Unsplash

With those overly broad categories in mind, do you see where I’m going with this?

Category 1: Too young.

Category 2: Too old.

Enter Dogen AKA The Financial Samurai.

AKA… Goldilocks?

Millionaire Milestones is the Goldilocks of Personal Finance books.

Yup, Dogen is part samurai and part golden-haired girl.

Let me explain.

Dogen is in his mid-40s. He’s not too young. He’s not too old. His book hits just right.

In Millionaire Milestones, Dogen covers his journey from finance bro in New York in his 20s to present day life as a writer, investor, and husband and father.

What separates Millionaire Milestones from other personal finance books is that Dogen’s still on his journey. Don’t get me wrong, he’s been financially independent for more than a decade. He certainly has accumulated decades of knowledge since his time working on Wall Street.

But, Dogen’s still in the thick of things. He’s not preaching from the rocking chair on his patio overlooking his immaculate yard.

Dogen’s presently raising kids. He’s focused on his website and his investments. Like you and me, he can relate to the present day challenges of personal finance because he’s still on his journey.

To recap, Dogen’s not wet behind the ears. You don’t have to question his credentials.

At the same time, he’s not so far removed from his peak earning years that his advice is outdated.

That’s why I think Millionaire Milestones is the Goldilocks of personal finance books.

In Millionaire Milestones, Dogen doesn’t pull any punches.

Now, Dogen might be part Goldilocks.

But, make no mistake. He’s still all samurai.

If you read Millionaire Milestones, Dogen will tell it to you straight. He’s not going to sugarcoat anything for you. The journey to financial independence is hard. Most people don’t have it in them to make the sacrifices that Dogen recommends.

The fact that Dogen doesn’t run away from that reality is what separates his book from others I’ve read.

If you want the truth about what it takes to become a millionaire, Dogen will give it to you.

Throughout his multiple decades studying and teaching personal finance, Dogen has seen many ups and downs. He’s not shy about sharing his mistakes in hopes that we can learn from those mistakes.

He opens up about his relationship with his wife and his young kids. This is key because it helps understand why money even matters to him in the first place.

Dogen has felt the pain.

Importantly, Dogen has felt the pain. I’ve previously expressed my opinion that personal finance education is best suited for people that have already begun their careers or are just about to start.

This is why I teach personal finance to law students and launched Think and Talk Money for lawyers and professionals.

I know that personal finance education didn’t matter to me until I felt the pain. By feeling the pain, I’m talking about that struggle that comes with balancing rent, debt, and a social life for the first time with your own money.

I don’t know Dogen, and I wouldn’t presume to put words in his mouth. But, my impression after reading Millionaire Milestones is that he would agree that personal finance education is best suited for people that have felt the pain.

Dogen is not shy about sharing how he’s felt the pain at various stages of his life.

In fact, he will tell you that if you want to be truly independent, you’re going to have to feel the pain, too. And, it won’t come easy.

But, he’ll also convince you that it’s well worth it.

Read Millionaire Milestones to the very end to see why it’s all worth it.

Reaching financial independence is hard. If you make excuses, Dogen will be the first to tell you that you aren’t going to get there.

But, if you take responsibility for educating yourself about money, Dogen will also be the first to tell you that it’s all worth it.

Read Millionaire Milestones to the very end. If you think you might not be cut out for the journey, seeing what it looks like at the finish line may persuade you otherwise.

Dogen does an excellent job of not only showing you how to amass wealth, but also what you can do with that wealth you’ve worked so hard for.

That was my favorite part of the book.

At this point in my personal finance journey, I know the steps I need to take to become financially independent.

What I’m still sorting out is what to do with myself once I’m there.

Reading Dogen’s perspective on what is possible once you’ve amassed enough wealth was fascinating.

I found his conversation about how much to spend each year once you’ve left full-time employment especially valuable. As he puts it, there’s a sweet spot between spending too much and spending too little. He gives you the tools to find that sweet spot.

Dogen also talks about spending money in ways that boost your happiness. That could mean something as small as leaving a generous tip or as large as a once-in-a-lifetime trip for your friends.

Most of all, his conversation about helping others through the knowledge he’s acquired really resonated with me.

I started teaching personal finance and launched Think and Talk Money because of all the knowledge I have acquired from people like Dogen. My life has been greatly enhanced through this education.

I’ll be nothing short of thrilled if I can carry the torch and share my personal finance journey in order to help others like Dogen has helped me.

I highly recommend you read Millionaire Milestones.

Wherever you are on your journey to financial independence, I highly recommend you read Millionaire Milestones.

Dogen has not only done it all, he’s still doing it.

Dogen won’t pull any punches. The journey to financial independence is not an easy one.

But, as he makes clear, it’s well worth the sacrifice in the end.
- Have you read Millionaire Milestones?
- Let us know what you think in the comments below.
May 9, 2025
How Much Money a 1% Advisor Fee Really Costs
I recently attended a “financial empowerment” workshop hosted by a financial advisor.

The financial adviser was smart and very passionate about helping people plan for retirement. She shared a lot of valuable information, such as investing early and often.

She also shared good examples on how compound interest works and how inflation eats away at our purchasing power.

I liked just about everything she was sharing with the audience. It was solid advice, and her presentation included many informative charts and examples.

I was not even bothered that she was frequently pitching her services in hopes that audience members would hire her to manage their money. It was her presentation and she earned the right to promote herself.

The thing is, and I was not surprised by this in the least, the topic of fees hardly came up at all.

In fact, the first mention of fees did not come up until the very last slide. In total, fees were addressed for maybe 30 seconds in an hour-long presentation.

I don’t necessarily blame the advisor for not discussing fees until the very end. She’s trying to make a living and doesn’t want to scare people off before hearing what she had to say.

I think most people in her situation would have structured the presentation the same way.

That said, in my opinion, fees should be one of the first things discussed when it comes to investing. It should not be a throw-in at the end of a presentation.

The amount we pay in fees is one of the main things we as in investors can control.

There is not much we can control as stock investors. Markets are unpredictable. One of the only things we can control is the amount we pay in fees.

There are two primary types of fees: transaction fees and ongoing fees.
- Transaction fees are charged each time you make a transaction, like buying a stock.
- Ongoing fees are charged regularly, like account maintenance fees.
Whenever you are choosing how to invest your money, pay close attention to the fees associated with that investment option.

You cannot avoid fees completely, but you can minimize the amount you pay depending on the investments you choose.

Below, we will take a look at how even a seemingly small fee of 1% can have a huge negative impact on your account balance over time.

As a general rule, passively managed investments like index funds, charge lower fees. Actively managed investments charge higher fees.

If you choose to work with an investment advisor, be sure to understand all of the fees charged for those services. Pay particular attention to the ongoing fees, which can have a big impact on your investment portfolio.

I am not on a crusade against financial advisors.

Before all the financial advisors out there bite my head off, let it be known that I am not on a crusade against you.

Believe it or not, I’m not here to tell anybody whether he should work with a financial advisor or not. That’s not for me to decide.

I believe that advisors can offer significant benefits to a lot of people, including benefits that are difficult to quantify. For example, an advisor may help someone stay calm during market dips so that person stays invested for the long term.

I view my role in the personal finance food chain as that of an educator. I am not a financial advisor, and I won’t be giving personal investment advice.

My purpose in writing this post is to help you decide whether the cost of hiring an advisor is worth it to you.

Photo by Benjamin R. on Unsplash

I do the same thing when I teach personal finance to law students. I try my best to present options and information so they can make the best decisions.

When it comes to investment fees, it’s hard to know exactly what we’re paying. What does a 1% fee even mean?

By looking at the examples below, you should get a better idea of what a 1% fee looks like over the long term. Then, you can be better equipped to make a thoughtful decision on whether to work with an advisor.

In the end, I’ve done my job if I’ve helped you acquire enough personal finance knowledge to make educated choices with your money.

So today, we’re going to talk about fees.

Remember, none of us can control the market, and that includes financial advisors. The best any of us can do is project what may happen in the future based on what has happened in the past.

Since we can’t control the market, let’s focus on what we can control, like fees.

To help us understand how fees can be a drain on our investment returns, let’s revisit our friend Sally.

Sally earns 10% a year and pays no advisor fees.

Remember our friend, Sally?

While in her 20s, Sally funded her retirement account with an initial contribution of $2,500. She then made contributions of $250 every month for 40 years.

She was comfortable with reasonable risk and invested in the S&P 500, which has historically earned an average annual rate of return of 10%.

After 40 years, Sally had contributed a total of $122,500.00. Her retirement account grew to $1,440,925.81.

Sally set herself up to have a lot of choices come retirement.

Now, let’s make one slight adjustment to our hypothetical to account for a fee of “only 1%.”

Sally earns 10% a year and pays a 1% advisor fee.

Let’s assume that Sally decided to work with a financial advisor that charges a 1% fee. That means every year, Sally pays her advisor 1% of her account balance.

We’ll assume that her advisor also averaged a 10% annual rate of return for Sally. However, because Sally pays her advisor a 1% fee, Sally’s actual earnings rate drops from 10% to 9%.

Let’s see how that 1% fee changes Sally’s performance over 40 years.

After 40 years of earning 9% after paying a 1% fee to her advisor, Sally will have $1,092,170.89.

The 1% fee resulted in Sally’s account dropping by $348,754.92.

That’s 24% less money than she had in our example when she earned 10%.

The impact of even a 1% fee is monumental.

Through this example, you should be able to see that even a seemingly small fee can have major consequences on your long term gains.

When people start investing, the 1% fee does not seem like a bad deal. In my experience, whenever a financial advisor has explained fees to me, he uses words like “just 1%” or “only 1%”.

I think that language is misleading and deceiving. Sally would probably agree that words like “only 1%” do not accurately express a cost of $350,000.

If you look at the very beginning of Sally’s investment profile, it’s true that the 1% fee seems to have little impact.

In Sally’s case, the difference in her account in the two scenarios after 1 year is only $25.
- Sally’s account after 1 year at 10% interest: $5,750.
- Sally’s account after 1 year at 9% interest:$5,725.
That’s a pretty marginal difference. However, it takes time for the impact of fees to materialize.

The reason is because it takes time for the magic of compound interest to set in. That’s why we need to invest early and often.

Let’s look at the difference in Sally’s account over time:

10% Return
9% Return
After 1 year $5,750 $5,725
After 10 years $54,296.63 $51,497.20
After 20 years $188,643.75 $167,491.39
After 30 years $537,105.57 $442,091.81
After 40 years $1,440,925.81 $1,092,170.89

Looking at these numbers, it becomes clear how much a 1% fee can impact your overall investments.

One other consideration: the fee also typically gets taken straight out of your account. That can make it feel like the fee is relatively small or doesn’t exist at all.

It would feel much different if each month you had to go through the process of writing a check to your advisor. Maybe feeling that pain would impact your decision to pay the fee.

Decide for yourself if the real cost of an advisor is worth it to you.

You can play with these numbers to match your personal situation. Maybe you have an advisor charing less. Maybe yours charges more.

If you want to tweak the annual rate of return you expect to earn by working with an advisor, please do.

Or, maybe you just want to ask your advisor or potential advisor about fees and how they may impact your portfolio over the long term.

Hopefully, looking at these numbers gives you something to think and talk about.

I personally do not work with a financial advisor.

Let’s circle back to the financial empowerment workshop I attended the other day.

At its conclusion, the advisor’s husband came by to collect the sign-up sheet. I happened to be the last person to receive the clipboard.

Seeing that I had not signed up for a free consultation, he looked at me and said, “Oh, you forgot to sign up!”

I chuckled.

Uhh, no I didn’t “forget”.

I respectfully declined to be added to the list. I’ve chosen not to work with an advisor.

I shared my story about how I set $93,000 on fire when my former advisor pulled me out of the markets in 2008.

In that post, I also shared that it wasn’t her fault. It was my fault for not being educated.

Since then, I’ve been convinced by endless reports, such as this from Yahoo! Finance, that I’m better off without an advisor when considering the cost:

Making matters worse is that the professionals, who the average investor might turn to for guidance, have poor track records. In the past decade, an alarming 85% of U.S.-based active fund managers underperformed the broader S&P 500. Those who invest in these funds are essentially paying for unsatisfactory results.

How much does 1% matter to you?

I recently calculated how much I would have paid an advisor by this point in my life. I determined that If I had been working with an advisor, I would have paid more than $100,000 in fees so far.

When I think about all the things I could do with more than $100,000, I’m very happy that I chose to educate myself and keep that money instead of paying it to an advisor.

Maybe I would have earned more if I worked with an advisor. Maybe that $100,000 would have been a worthwhile price to pay. Then again, maybe not.

If you choose to work with an advisor, I won’t blame you. Hopefully your advisor consistently beats the returns of the S&P 500 or provides value to you in other ways.

Whatever the case may be, you now should have a better understanding of what you’re paying when you hear the phrase “only 1%.”
- Do you work with an advisor?
- What fee does your advisor charge?
- What are the top benefits you receive in exchange for the cost?
Let us know in the comments below.
May 5, 2025
Why Successful Investing is Playing Offense and Defense

When you hear the word “inflation,” what’s the first thing that jumps to mind?

Is it the price of eggs?

Eggs really have it bad right now. If it’s not being the poster child for inflation, it’s the bird flu causing eggs problems.

Eggs are even getting blamed for ruining Easter! Just look at this headline from AP News:

“US egg prices increase to record high, dashing hopes of cheap eggs by Easter”

Yeesh. I feel bad for eggs.

I’ve certainly noticed the elevated price of eggs at the grocery store.

But, eggs are not the first thing that comes to mind when I think of inflation.

When I think of rising prices, my mind immediately goes to lunch downtown during the work day.

Now, please indulge me for a minute. I know I’m about to sound like the old man who yells at clouds.

I try to bring my lunch most days. It’s partly trying to eat healthier. The other part is that I have a hard time justifying the cost and have decided that lunch is really not something I care about.

Ever since I was a really lost boy in my 20s and started budgeting to create fuel for my investments, lunch was an easy thing to cut.

Even so, there are days when I run out of time in the morning to get a lunch packed before I’m out the door. On those days, I’m usually looking for something relatively quick and healthy.

I’ve noticed that no matter where I go near my office, it seems like the cost of a fast-casual lunch is between $15-$20. That’s true whether it’s a sandwich or a salad or a burrito.

$20 for a lunch that is not even the least bit exciting! That’s hard for me to swallow (sorry, couldn’t help myself…)

Am I yelling at the clouds alone here?

Why does it matter that everything is getting more expensive?

There’s no single explanation for why things are getting more expensive. For example, restaurants are facing higher costs for ingredients, labor, and even online reservation sites.

Setting aside isolated explanations, the reality is that all things tend to get more expensive over time.

The word for that reality is “inflation.”

Specifically, inflation is defined as “ongoing increases in the overall level of prices.”

If you were accustomed to paying $10 for lunch, and now that same lunch costs $20, that’s what inflation looks like.

Photo by Nick Scheerbart on Unsplash

Why do we care about inflation?

We care about inflation because inflation reduces the buying power of our hard-earned money. We can’t control or stop inflation. It’s going to happen.

Ask your parents how much they paid for their first car.

Or, you can ask my high school basketball coach. When we would complain, he would respond “That and $1.25 will get you a ride on the bus!”

Don’t worry, none of us knew what it meant either. Although, I wonder if he’s updated his quip to “That and $5.50…”

The point is, In order to counteract the drain of inflation, we need to invest our money.

Investing to do fun things later on is playing offense.

We’ve spent a lot of time in the blog talking about all the amazing things you can do with your money if you develop strong personal finance habits.

Strong personal finance habits include budgeting, paying off debt, and saving. We do these things so we have fuel to invest.

When you invest, your money grows without much effort on your part. You can then do those amazing things in the future.

That’s playing offense.

Look back at our friends Terry and Sally.

Terry took no risk and kept his money in a savings account. Terry did not play offense.

Sally took on reasonable risk and invested in the S&P 500. Sally played offense.

What happened after 40 years in our hypothetical scenario?

Terry, at a 3% interest rate from his savings account, had a total of $234,358.87.

Sally, at 10% annual returns from the S&P 500, had a total of $1,440,925.81.

As a result, Sally will have $1,200,000 more than Terry to do fun things with in retirement.

Sally clearly played offense. Terry clearly did not.

Investing to counteract inflation is playing defense.

You may be thinking that at least Terry’s “safe” approach meant that he played good defense.

Nope.

Terry’s approach was bad defense just like it was bad offense.

All because of inflation.

Investing to counteract inflation is playing defense. It’s protecting your hard-earned purchasing power.

Over the long term, it’s critical to invest your money and earn a return that exceeds the rate of inflation.

Otherwise, you risk not being able to afford the same items you’re accustomed to buying today because those items will be more expensive.

In our earlier examples of eggs and workday lunches, we’ve seen how things feel like they’re getting more expensive over time.

It’s not just eggs and lunches that get more expensive. Everything does.

Let’s plug some numbers into US Inflation Calculator to illustrate how things really are getting more expensive.

Let’s say you bought something in 2000 for $100. Based on the actual inflation rates between 2000 and 2025, that same $100 item would could $185.71 today.

That’s an increase of 85.7%!

So, by keeping his money in a savings account earning 3% interest, Terry may have thought he was doing the right thing because his balance was getting bigger.

The problem is that while his bank balance was increasing, so was the cost of everything he might want to buy. So, he had more money, but he could buy less things with that money.

That’s what inflation does.

The only way to get ahead of inflation is by investing and earning a higher rate of return.

So to return to our question: was Terry really playing good defense by keeping his money in savings?

No, because his actual purchasing power diminished even though his balance grew.

Investing is about playing offense and playing defense.

By now, you should hopefully be motivated to invest as a way to play offense and play defense.

It’s fun to think about what you can do with your money when it grows with very little effort on your part.

It’s just as important to think about investing as a way to protect your ability to buy the very same things in the future that you buy today.

Instead of being the man who yells at the clouds, you can be the one buying as many eggs and lunches as you want.

May 2, 2025
Money on My Mind: Financial Literacy Month
April is known as National Financial Literacy Month.

That’s cool. It’s never a bad idea to pay a little extra attention to your finances.

Of course, Think and Talk Money readers don’t wait until April to be reminded of all the things we should be doing with our money.

With more than 50 posts already at our disposal, Think and Talk Money readers pay attention to our money year round.

We know how important money is to reaching our ultimate goals in life. That’s why we like to think and talk money just a little bit every week.

Think and Talk Money readers know that personal finance starts with getting our money mindset in the right place. That’s why we create our personal version of Tiara Goals for Financial Freedom.

With the right mindset, we can stay on budget and consistently generate fuel for our investments.

When other people get worked up over the stock market, we talk to our people and stay calm.

We know that time is on our side.

Plus, investing is actually the easy part.

We control what we a control. That’s why we invest early and often to get the maximum benefit of compound interest.

So, Think and Talk Money readers don’t need a national personal finance month.

And, we’re happy that personal finance gets a little extra attention each year in April.

Photo by Joel Holland on Unsplash

These credit card fees are getting out of hand.

Is it just me, or are you also noticing more and more businesses charging fees to use credit cards?

I wrote about my disdain for credit card fees recently.

In just the past couple of weeks, I’ve chosen to pay with cash instead of credit card on multiple occasions:
- At the butcher shop, which charges a 3% fee, and is kind of smug about it.
- At the local ice cream shop, which charges a 4% fee and misleadingly labels it a 4% discount for customers paying in cash.
- For the garage door repair guy, who creatively indicates the fee in terms of cash instead of a percentage. In this instance, $11 instead of 3% of the total bill.
- At the tree nursery, which also charges a 3% fee for credit cards. This one hurt the most. Trees are expensive! I really would have liked those points.
By paying cash, I avoided hundreds of dollars in fees. Don’t get me wrong, I love credit cards points as much as anyone. But, I just can’t stomach paying these fees to earn the points.

I even ran the numbers recently and determined that the points don’t make up for the added penalty of using a card.

I know many business owners disagree, but in my opinion, these fees are bad for business.

Fees act as a deterrent for me to spend money. I imagine they are a deterrent for others, as well. If I do shop at one of these establishments, I end up being more selective and spending less money than I otherwise would have.
- At the butcher shop, I didn’t buy the side items to go with my skirt steaks.
- At the ice cream shop, I bought ice cream for my kids but not for myself. Luckily (or unluckily?), my son gave me his leftover, melty Superman ice cream with rainbow sprinkles.
- I had no choice with the garage door guy- the garage was broken and needed fixing. You win, garage door guy!
- At the tree nursery, I bought half as many trees and plants as I intended.
The way I see it, both the customer and the business lose out because of these fees.

For example, at the nursery, I didn’t get all the plants I wanted. That made me kind of sad.

At the same time, the nursery lost out on more than $1,000 in plant sales. I don’t know how that made the business feel. Obviously, it’s not that sad since it continues to charge the fee.

Taking a broader viewpoint, maybe these credit card fees are actually good for us consumers.

In our consumer-driven society, we all spend too much money when we go out to eat or go shopping. Studies have consistently proven that we spend less money when forced to use cash.

In that sense, a deterrent to spending, which is exactly what these fees are, is probably a good thing for us consumers.

I can’t imagine it’s good for business, though.

What do you think?

It’s OK that tracking your net worth is less fun during a market dip.

I track my net worth once per month using a simple spreadsheet. Today was the first day I updated the spreadsheet since “Liberation Day” and markets dipped.

Like so many others, my net worth took a hit this past month.

That’s not fun.

But, I’m not losing my mind over it.

I’m not saying it feels good. I would much rather see my net worth steadily improving.

Photo by Mark Olsen on Unsplash

I’m just saying I’m not freaking out about it. Time is on my side.

I expect dips like this will occur multiple times throughout my investing timeline.

One thing I’ve found is that it helps to talk about money when things aren’t going well. You realize that you’re not alone. Your friends and family are probably having the same feelings that you’re having.

You don’t have to share how much money you have or how much you lost. You can still benefit emotionally by acknowledging to your loved ones that you’re thinking about the markets a little bit more these days.

People are going bananas for The Bananas.

A reader sent in a great story about a couple who went $1.8 million into debt to start The Savannah Bananas.

If you haven’t heard of The Bananas, they might just be the best story in sports right now.

The Savannah Bananas are the best story in sports.

Owner Jesse Cole and his wife Emily went $1.8 million in debt to start the team, but they now have a broadcast deal with ESPN and will sell two million tickets this year.

That includes sold-out games in 18 MLB ballparks and… pic.twitter.com/m3PsmZHxHU
— Joe Pompliano (@JoePompliano) April 30, 2025

Despite countless opportunities to cash in by taking on investors, the owners still own 100% of the team. They continue to do things their way, even if that means foregoing massive profits.

I love stories like this. These owners bet on themselves and found success. Instead of cashing in at the first chance, they’re staying true to themselves.

At the end of the day, they’re making money and seem to enjoy what they’re doing.

Is there anything better than that?
April 30, 2025
Risk is the Cost to Invest
Two young coworkers, Terry and Sally, start the same job at the same time making the same amount of money.

While still many years away, Terry and Sally both know that they should invest early and often for retirement.

They each decide to fund a retirement account with an initial contribution of $2,500. They are also dedicated to making contributions of $250 every month until they retire.

Both plan to retire in 40 years while they’re in their 60s.

There’s one major difference between Terry and Sally.

They view risk differently.

Photo by Eric Ward on Unsplash

Terry doesn’t like risk.

Terry doesn’t like risk. He wants to be able to sleep at night knowing that his hard-earned money is safe and sound in the bank. He can’t stand the idea of potentially losing money from one month to the next.

When Terry wakes up in the morning, he likes to check his bank accounts while he drinks his coffee. He gets a jolt out of opening up his mobile banking app and seeing exactly how much money he has.

In fact, at any given moment, Terry can tell you within a few hundred dollars what his net worth is.

Because Terry doesn’t want to take any chances, he decides to stash all of his retirement savings in a savings account that earns an average annual return of 3%.

Terry is lucky because this is a pretty generous return for a savings account based on historical savings account interest rates.

Sally is more comfortable with reasonable risk.

Sally is more comfortable with reasonable risk. Upon starting her career, Sally was aware that she had never learned basic personal finance skills. She was determined to put in a little bit of effort early on to set herself up for a prosperous future.

She was a frequent reader of popular personal finance websites like Financial Samurai and Think and Talk Money.

Sally even read JL Collins’ book on investing, The Simple Path to Wealth.

Through the process of educating herself about personal finance, Sally started thinking about what she really wanted out of life. Since she was young and had just started her career, it wasn’t easy to come up with a good answer.

Still, Sally knew that whatever she wanted to do in life, investing was an important part of her financial journey. If she wanted to create more time for herself down the road, she would need passive income from investments to sustain her.

So, after doing her homework, Sally decided to invest her money in a low cost S&P 500 index fund.

While she appreciated that there are no guarantees when it comes to investing, Sally knew that the S&P 500 has historically earned an average annual return of 10%.

Unlike Terry, Sally only checked her accounts once per month when she tracked her net worth and savings rate. Sally slept fine at night because she knew time was on her side.

Let’s see how Terry and Sally turned out 40 years later.

Using a simple online calculator like the one at investor.gov, let’s see how much money Terry and Sally will have in their retirement accounts after 40 years.

Photo by Immo Wegmann on Unsplash

Terry’s retirement savings total $234,358.87.

After 40 years, Terry will have contributed a total of $122,500.00 to his retirement savings account.

At a 3% interest rate, Terry will have a total of $234,358.87 after 40 years.

In other words, Terry has just about doubled the value of his total contributions in his account.

Not bad, Terry.

Now, let’s check out Sally’s account.

Sally’s retirement savings total $1,440,925.81.

Sally likewise contributed $122,500.00. After 40 years, at a 10% interest rate, Sally’s retirement account will have a total of $1,440,925.81.

Wow, Sally!

Sally’s retirement account is worth 10 times more than what she personally contributed. Terry failed to even double his account.

Recall in our little hypothetical, Sally did the exact same things as Terry, with one key difference. Sally was more comfortable taking on reasonable risk.

Because Sally was comfortable taking on some risk, her retirement savings were worth more than six times as much as Terry’s savings. She has over a million dollars more than what Terry has!

Look at compound interest in action.

One last thing: take a look at the pictures of Terry and Sally’s investments over time. Notice the gaps between each of their red and blue lines.

While they each benefited from compound interest, Sally benefited exponentially more.

Look at how Terry’s red line stayed much closer to his blue line. Because he wasn’t earning as much overall interest, he didn’t have as much money to multiply from compound interest.

Sally’s red line mirrored her blue line closely for the first 12-15 years. Then, the gap widened before the red line skyrocketed over the final decade or so.

That’s the power of compound interest kicking in.

So, what can we learn from Terry and Sally?

The point of this hypothetical is to introduce the concept of risk when it comes to investing.

We’ve all heard the saying, “You don’t get something for nothing.”

That motto applies to investing as much as anything else. There is always risk involved in investing.

The question is how do you react to that risk.

Some people are so fearful of that risk that they don’t invest at all, like our friend, Terry.

Other people are so desperate to get rich quickly that they take wild risks.

The people that tend to reach and sustain financial independence are the ones who educate themselves and become comfortable with taking on reasonable risk. This is what Sally did.

In future posts, we’ll dive into the various ways you can reduce investment risk.

At this point, knowing why you’re investing and taking on risk is a powerful first step. I was recently reminded of my Money Why when my baby girl was born.

Think of risk as the cost to invest.

If you want to reach true financial independence or any other financial goal, it’s going to cost you something.

Think of risk as the cost to invest.

Sure, there may be some people out there who are able to reach financial independence on a massive salary.

For the rest of us, we’re going to have to get comfortable with investing.

There’s a reason we spend so much time talking about our ultimate life goals. It’s important to embrace the reasons why you’re investing and why you’re opening yourself up to risk.

It never hurts to remind yourself what you are hoping to achieve in the future.

When you know what that thing is, it’s much easier to pay the cost of risk.

When you look at Sally and Terry’s future outlook, who would you rather be?

It’s not really a hard question, right?

It’s not that Sally has a bigger bank account. What matters is that she has created options for herself.

Sally should be in position to do whatever she wants.

Terry probably can’t.
- Are you naturally more inclined to act like Terry or Sally?
- If you’re more like Terry, have you thought about what outcome in life would be worth taking on some reasonable risk?
Let us know in the comments below.
April 28, 2025
Investing is Actually the Easy Part

Investing is a major part of leading a healthy financial life.

It also should be the easiest part.

Despite all the attention, news, and marketing, investing doesn’t have to be complicated.

Investing simply means committing money now to earn a financial return later. This is why I refer to money I invest as Later Money.

To be honest, the most difficult part of investing is continuously generating money to invest in the first place.

The actual investing part is pretty easy.

That’s because when you invest the right way, your money should earn more money without much additional effort from you.

This is the best part about investing. Your money can (and should) grow over time without your active participation. This is why investment gains are often referred to as “passive income.”

If you are on a journey towards financial independence, you know how important passive income is. The best way to get your time back is to earn money passively through investments while you’re off doing something else.

We’ll soon learn why investing does not have to be complicated. If you can drown out the noise, all you’ll really need to do is regularly fund your investment accounts and watch your net worth slowly grow.

This is when personal finance starts to get really fun.

Investing is when personal finance starts getting really fun.

When you’ve invested the right way, your wealth will slowly multiply. You won’t notice it at first. Trust me, give it time.

You’ll soon see that all the effort you put into educating yourself about money was more than worth it.

No, you won’t be immune from market swings like the one we’re in right now.

But, you’ll be educated enough to not panic. You’ll know that time is on your side.

Have you noticed that we’re now 50 posts in and have hardly talked about investing?

There’s a reason we’ve hardly talked about investing in the first 50 posts of Think and Talk Money.

In order to get the benefits of investing, you need to have the right money mindset. That means knowing why you’re investing in the first place. Without the right motivation, you will struggle to consistently fund your accounts.

After all, when you invest, you are sacrificing money you could spend right now for the opportunity to spend even more later on. Without the right motivation, too many people put off, or give up on, investing altogether.

When they do that, they have a little more money to spend today. But, years from now, they will wonder why they’re still working so hard and don’t see an end it sight.

Photo by Jared Rice on Unsplash

What is your motivation to invest?

Your motivation may be to reach financial independence so you can pivot directions in life. This is known as FIPE (Financial Independence, Pivot Early).

Your goal may be to pay for your kids’ college. One way to do that is to take advantage of 529 college savings plans.

You may not know exactly what you want down the road. That’s OK, too. Whatever it is, investing now will make it easier to pursue whatever that thing ends up being.

Once your mindset is in the right place, you’ll be more determined to craft a budget that consistently creates money to invest.

Think about it: would you rather be someone who invests $1,000 one time or someone who invests $1,000 every month?

If you practice solid personal finance fundamentals, you can be the person consistently investing to accomplish your ultimate life goals.

Too many people think personal finance is only about investing.

Too many people skip over the part where we learn strong personal finance habits. These people think that personal finance is only about investing.

Let’s play a game. Walk down the hall at your office and ask the first person you see what they know about personal finance.

I’m guessing you’re going to get a response like:

“Personal finance? Oh, yes. I need to learn that. I don’t know anything about the stock market.”

If I’m right, leave a comment below. This should be fun.

By the way, people that assume personal finance is only about investing are not bad people. They just haven’t been properly educated. Just like me when I set $93,000 on fire.

By now, you know that personal finance is about so much more than investing. You know that you need to develop strong habits so you constantly have money to invest in the first place.

And, you’ll soon learn that investing is really the easy part.

When you learn basic investing principles, like minimizing fees and playing the long game, your money can slowly grow over time.

As that happens, you move closer and closer to financial independence without much effort at all.

It’s actually pretty easy.

We’ll cover these basic principles in upcoming posts.

One thing we won’t discuss at Think and Talk Money is the latest hot stock tip.

If you want to study P/E ratios and company balance sheets in a quest for the best individual stocks, I won’t stop you.

I just won’t be joining you.

That’s because it’s very hard to pick winning stocks. Even the “experts” have a very hard time doing it consistently.

You don’t believe me, do you?

What if I told you that the vast majority of investment pros underperform the S&P 500?

Check this out from Yahoo! Finance:

Making matters worse is that the professionals, who the average investor might turn to for guidance, have poor track records. In the past decade, an alarming 85% of U.S.-based active fund managers underperformed the broader S&P 500. Those who invest in these funds are essentially paying for unsatisfactory results.

If the “pros” can’t beat typical market returns that are available on the cheap for all of us… why even play that game?

Why overcomplicate things?

Sure, maybe you’ll get lucky and your investment pro is one of the few who can beat the market. Odds are that if your pro beat the market one year, he probably won’t the next year.

If that’s your game, I wish you nothing but good fortune.

Personally, I’d rather do things the easy way. I’d rather focus on what I can control, like how much money I’m contributing to my investment accounts each month.

And, that brings us to an interesting point.

Even if you are working with a professional, you are not excused from participating in your investment journey. You still need to understand the basics.

Plus, while you may not be watching your portfolio closely, your job is always to make sure there is consistent money to be invested.

My guess (or is it hope?) is that your advisor has told you as much.

Investing is a major component of financial independence.

Whether you are striving for financial independence, or hoping to maintain it, investing is a major component.

To be a successful investor, you first need to practice strong financial habits.

Don’t worry. If your mind is in the right place, the investing part is actually pretty easy.

April 23, 2025
How to Set $93,000 on Fire

My first experience investing did not go well.

You could say I set $93,000 on fire.

Here’s what happened.

Matthew Adair, founder of Think and Talk Money

Back in 2008, I was a third-year law student. My entire life savings at that point was about $10,000. A lot of this money came from savings bonds gifted to me by my grandma for my birthday since the year I was born.

I mentioned the year was 2008, otherwise known as the beginning of The Great Recession. As detailed in Forbes Advisor:

The Great Recession of 2008 to 2009 was the worst economic downturn in the U.S. since the Great Depression. Domestic product declined 4.3%, the unemployment rate doubled to more than 10%, home prices fell roughly 30% and at its worst point, the S&P 500 was down 57% from its highs.

Suffice it to say, 2008 was not a great time to be graduating or looking for jobs.

Those of my friends fortunate enough to have secured a job offer soon learned that their offers were being rescinded. Such were the times.

But, I digress.

Back to how I set $93,000 on fire.

As I mentioned, my life savings at the time totaled about $10,000. I had previously decided to use a financial advisor to invest my money for me.

I had been working with this financial advisor for a few years prior to The Great Recession.

All these years later, I couldn’t tell you what she had me invested in prior to the markets imploding. I’m assuming that she took into account my age and risk tolerance and designed a suitable portfolio for me.

What I can tell you is that my portfolio suffered the same fate as just about everyone else towards the end of 2008. My $10,000 balance was shrinking.

At that point, my advisor took me out of the markets and stashed the remainder of my money in a savings account earning close to 0% interest.

I didn’t notice this maneuver right away. In fact, it wasn’t until 2010 that I noticed that my money was sitting in a savings account.

When I finally caught on that my account balance had not changed for a couple years, I called my advisor. She explained that she had pulled me out of my investments when things weren’t looking too good.

She didn’t have a good explanation for why I was still in the savings account in 2010. To be honest, it seemed like maybe she forgot about me.

By that point, the markets were improving. I had already missed all of the upswing from 2009. Since I had felt neglected, I withdrew my money and closed my account.

I wish I could tell you that I started investing on my own at that point.

Nope, that’s not how you set $93,000 on fire.

Instead of investing, I let the money sit in my checking account until it just kind of disappeared. I had no plan for the money. All these years later, I have no clue what I spent it on. I just know that it disappeared.

Photo by frank mckenna on Unsplash

But Matt, you said you only invested $10,000. How did you end up setting $93,000 on fire?

I’m glad you asked.

If I had known then what I know now, I would have invested that $10,000 in a low-cost S&P 500 index fund.

I also would not have taken my money out of that S&P 500 index fund when the markets dropped.

Time was on my side. The smart thing would have been to do nothing at all.

Between the start of 2009 and the end of 2024, the S&P 500 earned an average annual return of 14.98%.

That means my $10,000 invested in a low-cost S&P 500 index fund at the start of 2009 would have been worth $93,265.90 by the end of 2024.

That, my friends, is how I set $93,000 on fire.

And, I have nobody to blame but myself.

Let me make one point perfectly clear:

It’s nobody’s fault but my own that I missed out on those earnings.

It was my fault for not taking a more interested, and educated, approach to my personal finances.

In a way, I’m glad I learned that lesson with only $10,000 at stake instead of later in life when I had more to lose.

It’s not my financial adviser’s fault. She did what she thought was best. For some people, her strategy was probably successful.

My problem was I blindly trusted my adviser without educating myself first. I didn’t know the right questions to ask. I didn’t understand the plan.Worst of all, I didn’t pay attention when my account statements arrived in the mail each month.

In my mind, once I transferred my money over to my advisor, I was excused from taking any responsibility for my future.

That was a mistake I’ll never make it again. When things didn’t go well, I had no one to blame but myself.

We all need to understand the basics of investing.

Whether you choose to work with an advisor or not, it’s up to each of us take accountability for our own future.

We need to educate ourselves enough to be part of the planning process. We need to know why we’re taking certain steps and be savvy enough to ask the right questions.

You may be more comfortable working with a financial advisor. That’s perfectly fine. You still need to understand the basics of investing.

My problem in 2008 and 2009 was that I hadn’t educated myself. I like to share this little story to illustrate how important it is to pay attention to our finances.

These days, I manage my own investments. I’ve determined that paying fees for someone else to manage my money is not worth it to me.

By the way, we’re going to spend a lot of time talking about fees so you can decide for yourself if you want to pay them.

Whether you manage your own investments or you use an adviser, it’s critical to understand the basics about investing in the stock market. The good news is the basic principles of investing are relatively straightforward.

Always remember: there are some things we can control and a lot of things we can’t control.

We’re going to focus on what we can control.

That means focusing on how much fuel you’re generating each month to invest in the first place.

Then, it means minimizing fees and maximizing your time in the market.

If you can successfully implement just those ideas, you will wake up years from now with major gains to your net worth due to the power of compound interest.

There are other strategies we’ll cover, as well. You’ve likely heard fancy terms like “diversification” and “asset allocation.” We’ll talk about what those phrases mean with the goal of convincing you that investing does not have to be complicated.

That’s right. Investing does not have to be complicated.

You don’t have to read the Wall Street Journal. You don’t have to study financial statements. Even people who do that for a living struggle to predict what’s going to happen next.

So, let’s not waste our time. We’ve got better things to do on our way to financial independence than studying corporate balance sheets.

With even just a little bit of knowledge, you can feel comfortable and confident investing in the stock market. Then, all you’ll need to stay on track is the occasional reminder to think and talk about money with your loved ones.

You won’t even have to set $93,000 on fire first.

April 21, 2025
Happy that I Delayed Financial Independence
I’m further away from financial independence today than I was five years ago.

You know what’s funny?

I couldn’t be happier about where I am today.

Let me explain.

In 2020, my wife and I had very minimal expenses.

At the start of 2020, my wife and I were both working as lawyers in Chicago. We lived in an apartment in a 4-flat that we had purchased in 2018. We had no kids at the start of the year, but were about to welcome our first.

This was a good apartment in a popular part of town. It had 3 bedrooms and 2.5 bathrooms. That was plenty of space for my wife and I, and eventually the two babies we brought home there.

We purchased this 4-flat from a real estate investor who had done a decent job on the renovation. It had in-unit washer/dryer, modern finishes, and plenty of storage.

We had a small outdoor patio with enough room for a grill and little table. We also had a garage parking space but ended up parking our 20-year-old car on the street most days.

When we purchased the building, it was the most expensive 4-flat that had ever been sold in that part of town. It was a bit of a risk to set the high-water mark in the area.

In the end, the risk was more than worth it.

Even though the building was expensive for the area, this was not a fancy apartment. This part of town was still up-and-coming. Some people probably thought it was not a nice part of town.

I doubt many people came over and thought, “Wow, look at this amazing apartment!”

The more likely reaction was probably something like, “What the heck are they doing?”

To be fair, I asked myself that question plenty of times.

So, what were we doing?

We were paying ourselves to live there.

Say that again?

My wife and I paid ourselves to live in that apartment.

We lived for free. And made a profit at the same time.

See, the rental income from the other three units covered the entire mortgage plus all expenses for the property.

But, that’s not all. On top of covering all the expenses, the rental units generated a profit of $1,000 per month on average.

So, not only did we spend zero dollars each month on housing, we profited $1,000 per month.

Looking back, getting paid to live in a decent apartment was maybe the best decision we ever made.

What happens to your finances when you live for free?

Let’s take a look at how living for free can be a major advantage on your way to financial freedom.

The common wisdom is for people to spend no more than 30% of their gross income on housing. Regardless of how much you make, that usually means thousands of dollars.

Because our tenants were paying our living expenses for us, we did not have that expense for the five years we lived in that apartment.

In other words, we didn’t have to worry about budgeting for housing.

We also drove a nearly 20-year-old car and could walk to the “L” (Chicago’s subway). We lived in a neighborhood with plenty of nearby restaurants and shops. That meant our transportation costs were next to nothing.

Because we weren’t paying for housing and had very minimal transportation costs, we could supercharge our savings.

How much were we able to save?

Let’s take a look.

Between 2018 and 2023, my wife and I acquired three buildings and ten apartments in that same neighborhood. We’re very familiar with market rents in the area.

We rent our apartments for anywhere from $2,300 to $3,600 per month. Our usual tenants are professionals like engineers, lawyers, doctors, consultants, and pilots.

The unit we were living in from 2018 to 2022 was one of our larger units. At the time, it would have rented for $3,500 per month on average. That equals $42,000 per year to rent that apartment.

Keep in mind, if someone was paying rent to live there, that would be $42,000 of after-tax money.

Since we owned the building, we lived there for free. We could save that $42,000 we would have otherwise paid in rent. Instead of spending that savings on things we didn’t need, we were able to save that money for our next real estate investment.

Plus, we earned $1,000 on average per month while we lived there. That’s an additional $12,000 per year in profit.

We lived in that unit for almost five years.

Add it all up and we saved $270,000 by living in that apartment for five years.
- $42,000 saved rent x 5 years =$210,000.
- $12,000 profits x 5 years = $60,000.
- Total savings = $270,000
We used that $270,000 for a downpayment on a rental condo in Colorado ski country.

It took five years of living in a decent, but not-awesome, apartment to have a ski condo that will hopefully be in our family for decades.

Choosing to live in our 4-flat to save $270,000 over five years was one of the best financial decisions we’ve ever made.

Photo by Alain Wong on Unsplash

I highly recommend you consider house hacking if you’d like to start investing in real estate.

Many of you are familiar with the strategy of living in a building (or home) you own while tenants (or roommates) pay for it. Brandon Turner, of BiggerPockets fame, popularized the concept he dubbed “House Hacking”.

You can read all about house hacking on BiggerPockets here.

For even more information on house hacking, Craig Curelop wrote a book for BiggerPockets called The House Hacking Strategy: How to Use Your Home to Achieve Financial Freedom.

Without a doubt, there is no better strategy for entry level real estate investors than house hacking. I gave you a glimpse of the financial upside earlier in this post.

Besides the financial upside, it’s like landlording with training wheels. Since you live on site, you can more easily learn how to manage a rental property, including responding to tenants and handling routine maintenance.

The naysayers will say something like, “I don’t want to live with my tenants. They’re going to stress me out. I don’t want to be bothered at 2 a.m.”

Ignore them.

My wife and I lived with our tenants for five years at this property and two more years at a subsequent property. We did this while working full-time jobs as lawyers and raising two kids.

Because we didn’t listen to the naysayers, we now have four income-generating properties and our “forever home” just outside Chicago.

Even though we’re no longer living for free, the income from our rental properties is enough to cover the expenses of our home.

So, why am I further away from financial independence today?

I’m further away from financial independence today because my expenses have gone up since 2020. I’ve already alluded to those increased expenses throughout the post.

In 2020, we had our first child. Now, we have three children.

Also, after seven years of house hacking, we decided it was time to purchase a long-term home for our growing family just outside the city in a terrific area.

We also finally traded in our 21-year-old car for our first new car ever.

How’s this for easy math:

Three Children + Nice House + New Car = Further Away from Financial Independence

While that combination means I’m further away from reaching financial independence, I now have everything that I could possibly ever want.

That’s why I couldn’t be happier with where I’m at today.

My end game is finally in sight. Five years ago, I didn’t know where I’d be living or what car I’d be driving or what my family situation might be.

Now, the picture is clear.

I can calculate with reasonable certainty how much money I need to be truly financially independent. I can use that number as a target and make every financial decision with that target in mind.

That’s why in 2025, I’m focused on paying down HELOC debt. Each time I make a debt payment, I move closer to financial independence.

Besides, my goal is FIPE not FIRE.

My goal is to reach FIPE not FIRE.

FIPE means Financial Independence, Pivot Early.

I have no intentions of retiring any time soon. Retiring early is not, and has never been, my goal.

My goal is to become financially independent to create as many options as possible to protect myself and my family. I want to be financially independent so I can pivot no matter what life throws at me.

If my goal was to retire early, I may have skipped the single family home in a great neighborhood. I could have continued house hacking, minimized my expenses, and lived off of the rest of the rental income.

But, I want more for me and my family. I don’t want to just survive.

Have you delayed financial independence to craft the life you really want?

My life has certainly changed in the past five years, but all that change has been for the better.

That meant house hacking at first to keep expenses as low as possible. Now it means enjoying the wealth I created by making those earlier sacrifices.

In order to have the life I want, I needed to temporarily move further away from financial independence.

Still, I’m confident that I’ve taken the right steps to not just reach financial independence, but to reach it while living the life I want.

The tradeoff is that it will take me longer to be truly financially independent. I’m perfectly happy with that.

Financial independence has never been more clearly in sight. It’s just delayed a little bit.
- Is your goal to reach FIPE and pivot as quickly as possible?
- Or, are you OK with delaying FIPE temporarily for the life you truly want?
Let us know in the comments below.
April 18, 2025
FIPE not FIRE: Financial Independence, Pivot Early
We focus a lot on financial independence here at Think and Talk Money. That’s because achieving financial independence is the ultimate goal for most of us.

To me, financial independence does not mean retiring.

That’s why I don’t like the popular acronym, FIRE: Financial Independence, Retire Early.

Instead, I I like to view my financial freedom journey as FIPE: Financial Independence, Pivot Early.

Let me explain why I believe in FIPE not FIRE.

FIPE = Financial Independence, Pivot Early

Whatever it is that you truly want to do in life, financial independence makes it possible.

When you have financial independence, you have options. You can make decisions based on your core values instead of making decisions based on money. You can pivot, if necessary.

Financial independence is for people who want to be empowered to take more control of what they do with their working hours.

It’s not about quitting work. It’s about the freedom to pivot to other work, if you want. I’m convinced that humans are meant to be productive. We are social creatures who at our core want to be contributing.

That doesn’t mean we have to be or want to be employees. But, it does mean that we want to do something meaningful with our working hours every week.

That’s why I believe in the power of pivoting, not retiring.

Why I don’t like the name FIRE.

Part of the misconception about financial independence may stem from the name of the popular personal finance concept known as FIRE: Financial Independence, Retire Early.

It’s not uncommon for people to hear financial independence and immediately think that’s only for people who want to quit their jobs and retire. That’s how widespread FIRE has become in the personal finance space.

I agree with so many of the principles of FIRE. I just don’t agree with the name.

Financial independence is about much more than retiring early.

FIRE emphasizes saving more and spending less until you reach the point where your passive investments generate enough income to allow you to quit your job.

I love this part of FIRE: the idea of creating enough income streams so that you have the freedom to do what you want with your time. I share the primary goal of saving more money and spending less to achieve more life freedom.

I call this Parachute Money. I like to view each income stream as a separate parachute string. The more parachute strings you have, the safer it is to make a big change in life.

The problem for me is that the FIRE end game is suggested right there in the name: become financially independent so you can retire.

I don’t like that part. I don’t like what the word “retire” implies.

If you look it up, you’ll see that the word “retire“means to withdraw, to retreat, to recede.

None of those things sound appealing to me at all.

Each word implies moving backwards. I’m not working so hard to achieve financial freedom so I can move backwards in life.

Photo by Benjamin DeYoung on Unsplash

I prefer to think of financial independence in terms of creating options. I prefer to think of financial independence as a way to move forward in life.

I think “pivot” better reflects that mission.

Pivot means to adapt or improve through modifications and adjustments.

That sounds so much more appealing to me.

With FIPE, financial independence is still the primary goal. But, the endgame is not to withdraw or retreat. The endgame is to adapt and improve how you spend your working hours.

FIPE = Financial Independence, Pivot Early.

Granted, the name “FIPE” is not as catchy as FIRE.

But, I think it actually better encapsulates the entire purpose of financial independence in the first place.

To explain, let’s look back at the modern day origin of FIRE for a minute.

Vicki Robin and Joe Dominguez are often credited for laying the groundwork for the modern day FIRE movement. Robin and Dominguez wrote an incredible book called Your Money or Your Life.

It’s one of my favorite personal finance books. You should definitely read it if financial independence is important to you.

In their book, Robin and Dominguez have a lot to say about the relationship between money, work, and time.

Guess what?

Most of us are doing it all wrong.

Most of us make the mistake of chasing money at the cost of our precious time. When you read Your Money or Your Life, you will start to value your time for what it’s really worth.

By making good choices about how to earn money- and as importantly what to do with that money- you can get the most out of your money and your life.

That’s what FIRE is really all about. It’s about choosing to use your working hours in a way that is more meaningful to you than clocking in-and-out as an employee each day.

It’s not about retiring from meaningful work. It’s about pivoting to work that is more meaningful to you.

FIRE proponents would likely agree that the goal is not to withdraw or retreat.

I think proponents of FIRE would actually agree with me that the end game is really not about withdrawing or retreating. The mission is always about moving forward, not backwards.

My belief is that people who are disciplined and skilled enough to reach financial independence in the first place are the type of people who don’t retreat or withdraw.

They may opt for periods of temporary retirement, as they should. But, I don’t think financially independent people are truly wired for full-time retirement.

That’s why you see so many people who have obtained financial independence continue to pursue income streams.

That might mean managing real estate investments, teaching others, or even starting a financial freedom blog.

So, technically speaking, most people who have obtained financial independence have not actually retired. They haven’t withdrawn or retreated. Instead, they have pivoted.

They are now spending their working hours doing other things. They may not be working full-time for an employer, but they’re still working.

They’ve achieved financial independence and have earned the right to pivot.

Financial Independence, Pivot Early.

Even FIRE leaders would likely agree that the end game is not to completely retire.

FIRE is not about retiring or quitting. It’s about pivoting to more meaningful life pursuits.

I don’t want to speak for Robin, but I think this is what she was getting at.

I also think this is what modern day FIRE leaders like Mr. Money Mustache and the Financial Samurai believe in. Not long ago, Financial Samurai actually wrote an excellent post called “Why Early Retirement / FIRE is Becoming Obsolete.”

I just think the name FIRE doesn’t accurately portray the mission. Pivoting early seems more appropriate to me than retiring early.

We all have the same goals in mind: financial independence. And, I believe we have the same end game in mind: pivoting to more meaningful work.

That’s why I like FIPE instead of FIRE.

Are you looking to retire early or simply to pivot?

What is it that you’re aiming for by getting your personal finances in order? If you want to retire early, there’s nothing at all wrong with that. You may be at the point in your career and life where that makes sense.

Personally, I’m not looking to retire early. That’s why I like to view financial independence as a chance to pivot.

Pivoting doesn’t mean you have to switch jobs or change things up just for the sake of change. It just means that you have that option if you want it or need it.

By the way, I’m not alone in viewing financial independence as a chance to pivot instead of retire.

Scott Trench, CEO and President of BiggerPockets has been beating this drum for a while. He’s also talked about it on the BiggerPockets Money podcast.

I’m in complete alignment with Trench. I like almost everything about FIRE, just not what the name implies.

With FIPE, the goal is not to retire. The goal is to give yourself the freedom to choose what to do next.

Whether you want to retire early or just pivot to a new chapter in your life, being good with money is key.

Do you like the name FIRE or FIPE?

At the end of the day, whether you like to view it as FIRE or FIPE, the mission is the same. We are all looking for the freedom to choose what to do next.

When striving for financial independence, the goal is to create options. Those options likely include pivoting to more meaningful work, rather than withdrawing or retreating.

Personally, I think the name FIPE better encapsulates that mission.
- Do you agree?
- What name resonates more with you on your financial freedom journey?
- Are you interested in retiring early or pivoting early?
Let us know in the comments below.
April 16, 2025
My Journey to Financial Freedom

Financial freedom doesn’t happen overnight. I’ve been on my journey to financial freedom for more than a decade.

I’m not there yet.

Here’s a look at how my journey to financial freedom has progressed since I graduated law school in 2009.

My journey to financial freedom began in my late-20s and was focused on eliminating debt.

In my 20s, I needed to pay off credit card debt and student loan debt. All I knew about the journey to financial freedom back then was that it seemed very far away.

I started budgeting, which meant reigning in my spending on things I didn’t really care about.

I began to establish good money habits. It wasn’t easy, and I was far from perfect. That’s OK. The 80/20 rule reminds us that we don’t need to aim for perfection.

By the way, my life didn’t all of a sudden become boring and miserable when I became more money conscious. Quite the opposite, actually.

I became more confident in myself because I had a plan. I no longer felt like I was sliding backwards. With each paycheck, I moved one step closer to erasing my debt. That was a powerful feeling.

In my early-30s, my journey to financial freedom was about fueling my savings.

By the time I turned 30, I had paid off my credit card debt and my student loan debt. I’ll never forget the day I made my last student loan payment as my family and I were heading out to Colorado. A huge weight had been lifted from my shoulders.

I felt free. My journey to financial freedom was still in the early stages, but I was on my way. Most importantly, I still had good habits and a plan.

The byproduct of eliminating my debt was that I had more fuel to accomplish my other goals.

What other goals?

The money I had been allocating to student loan and credit card debt could now be put towards more fun goals and experiences.

Instead of aimlessly spending the thousands of dollars each month that had been going towards debt, I rolled that money directly into savings. Highest on my list was saving for an engagement ring.

Within a year, I had enough saved to purchase the ring. I thought being free from debt was strong motivation. Turns out that motivation was nothing compared to the desire to buy a ring for the woman you love.

As your career progresses and you earn more money, you will benefit from strong personal finance habits.

As my career progressed, like many of you, I started earning more money. When I earned more, I did my best to use that additional income as fuel for my goals.

I’m grateful I had previously learned strong personal finance habits on my journey to financial freedom when I earned relatively little.

For most of us, our usual career progression is the exact opposite of the typical lottery winner. Who hasn’t heard the stories about the lottery winners that hit it big and then quickly go broke?

These stories are unfortunately all too common. What starts out with so much elation usually ends in tragedy.

The normal downfall involves unrestrained spending on things like houses, cars, and extravagant nights out. It also involves the pressure to give money away to family, friends, and charities.

The same pattern has been well-documented for professional athletes who earn millions before quickly going broke.

The challenge is the same for lottery winners and professional athletes. They come into a lot of money suddenly without any prior personal finance education. When this happens, that money disappears quickly.

What can we learn from lottery winners and professional athletes?

I think it’s safe to say that none of us are going to win the lottery or earn millions as a professional athlete. I hope I’m wrong about that!

But, we can still fall victim to the same set of challenges on the journey to financial freedom. It may not be a sudden rise and then an equally sudden drop-off. Our financial growth presents itself more slowly.

Over time, we may earn referrals/commissions, raises, and bonuses. These earnings certainly add up and can make a huge difference in our lives, if we have a plan. That’s a big “if” for most of us.

I didn’t have the full plan figured out in my 20s. Our goals change as life changes. There’s nothing wrong with that.

That said, because of the steps I took in my 20s to learn about personal finance, I was better prepared for the opportunities and challenges that arose in my 30s. I learned that when you create a solid foundation for yourself, you have options.

To me, life is all about giving yourself options. Nobody likes feeling stuck, including me.

In my mid-30s, my journey to financial freedom was about building wealth through real estate.

Besides saving for an engagement ring and a wedding, I was able to save up for a downpayment on a home. At the time I started saving up for a home, I had no idea that I could use my savings to invest in real estate.

It wasn’t until I went to a Cubs game with a good friend of mine, The Professor, that I learned about real estate investing.

This is when my journey to financial freedom really accelerated.

See, The Professor had a beautiful condo with an incredible rooftop deck near Wrigley Field. During the game, he told me he was selling the condo and moving into a 4-flat with his fiancee in an up-and-coming part of town.

Huh?

Why on earth would you give up your amazing condo? And move to a random neighborhood I’d maybe been to one time in my life?

I thought The Professor had lost his mind. Back then, I had no idea what a 4-flat even was. I couldn’t even point to his new neighborhood on a map of Chicago.

The Professor set me straight.

He walked me through the numbers. He explained that he was going from paying $3,000 per month for his condo to receiving $700 per month on top of living for free in the 4-flat. That’s a $3,700 difference per month!

The Professor also introduced me to BiggerPockets. That was huge for me because I believe in the motto, “Trust but verify.”

Over the next week, I read everything I could and listened to podcasts every day. It didn’t take long before I was convinced that I wanted a 4-flat of my own.

Eight years later, I own three buildings and 10 apartments in that same Chicago neighborhood. I have a ski rental condo in Colorado.

Without that great talk with The Professor, I don’t think I would be where I am today on my journey to financial freedom.

Man I’m glad The Professor wasn’t afraid to talk money with me!

He knew that taking about money is not taboo.

We all need to position ourselves to benefit when luck comes our way.

I was fortunate to have learned from The Professor’s experience. We all need some luck on the journey to financial freedom. I’m convinced that we’ll all catch a break here or there. The question is what we do with that luck when it comes our way.

If I hadn’t taken the time to learn about personal finance in my 20s, I wouldn’t have been positioned to benefit from that conversation with The Professor.

That’s why I say the journey to financial freedom doesn’t happen over night. It’s about one building block at a time.

For any aspiring real estate investors out there, please take that message to heart. Before you can successfully invest in real estate, you have to invest in your own financial literacy.

I’ve learned firsthand that the same principles that apply to personal finances apply to managing a real estate portfolio. Each pursuit takes a plan that only works with discipline and patience.

In my late-30s, my journey to financial freedom was about paying off debt.

In my late-30s, my journey to financial freedom pivoted from acquiring properties to optimizing my portfolio. My wife and I decided we were ready to transition from growing our real estate portfolio to paying off our debt.

In a way, I’ve come full circle on my journey to financial freedom.

We owe a lot of credit to Chad “Coach” Carson and his excellent book, Small and Mighty Real Estate Investor: How to Reach Financial Freedom with Fewer Rental Properties.

Reading Small and Mighty Real Estate Investor helped us conclude that at this point in our lives, we have enough. Our portfolio generates enough income to help fuel our current goals. If we were to continue expanding, the headaches could end up outweighing the financial benefits.

Progress is not linear, either. I’ve taken on debt in the form of mortgages and HELOCs to invest in more real estate.

In the short term, that mortgage debt pulls me further away from financial freedom.

If my plan works, that same debt will push me more rapidly to financial freedom.

Financial freedom through real estate has existed for decades, if not centuries.

By the way, I didn’t invent the plan of achieving financial freedom through real estate. That idea has existed for decades, if not centuries. I’d avoid anyone who tells you they pioneered this concept.

Years ago, I remember sharing my newfound passion for real estate with mom. She had this smile on her face as I excitedly shared this “new” phenomenon of investing in real estate to achieve financial freedom.

The next time I saw her, I realized her smile was actually more of a smirk.

She handed me a book called How You Can Become Financially Independent by Investing in Real Estate.

It was written by Albert J. Lowry, Ph. D.

In 1977!

Financial Freedom doesn’t happen over night.

It’s natural to want to jump to the finish line. I’m guilty of that, too. I think about achieving financial freedom every day and need to remind myself to take it one step at a time.

Even with all I’ve learned about personal finance, it can sometimes feel like I’m heading in the wrong direction.

Wherever you currently are on your journey to financial freedom, remember that it doesn’t happen over night. I need to constantly remind myself to stay the course.

Keep coming back to Think and Talk Money for daily reminders that financial freedom is within all of our grasps.

April 14, 2025
The Biggest Money Question: What is Your Money Why?
What is your Money Why?

@thinkandtalkmoney
It’s that simple. #thinkandtalkmoney #mywhy #financialfreedom #firemovement #personalfinance #moneywellness #realestateinvesting
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I had the happiest occasion to think about that question this past week.

My wife and I welcomed our third child, a little baby girl.

We were very fortunate and had a smooth delivery process.

Even so, when you’re in the delivery room, your mind runs wild. You just want everything to go well. It’s completely out of your hands by that point.

Things get really interesting when you’ve been at the hospital for a while and haven’t slept. There’s no telling where your mind will go.

No matter how much you tell yourself not to do it, you can’t help but think of all that can go wrong.

During these moments, I can assure you that one thing you’re not thinking about is money. If anything, you’re thinking that you would trade all the money you have for a healthy baby and a healthy mom.

I guarantee you won’t be thinking about free falling markets. You’re not thinking about setting up a 529 college savings plan, either.

When you finally hold your new baby, nothing else in the world matters. Everything around you goes quiet. The sense of relief is overwhelming and you cry.

It’s a beautiful thing.

In those first few moments, I told my baby girl that I love her. I promised that I will always protect her. Whatever she needs, I will be there.

If I want to keep that promise, I need to be good with money.

To be good with money, I need a powerful Money Why.

What is my Money Why?

I’ve known my Money Why since I wrote down my Tiara Goals for Financial Freedom on a beach in 2017. My number one Tiara Goal for Financial Freedom is to be with my wife and kids as much as I want.

I wrote down that goal before I was even married or had kids.

Years later, my Money Why hasn’t changed. The only thing that’s changed is my Money Why has gotten stronger and stronger since then.
- In 2017, my Money Why got stronger when I got married.
- Then in 2020, my Money Why got stronger when my daughter was born.
- Again in 2022, my Money Why got stronger when my son was born.
- This week, my Money Why got stronger when my baby girl was born.
My Money Why has never been more clear. It doesn’t even matter if my brain is functioning at half speed right now on limited sleep.

My Money Why is my baby girl, my son, and my daughter. My Money Why is my wife.

Of course, I want to provide for my family financially.

But my Money Why is more than that.

I don’t want to just provide money, I want to provide time. And, I want to be present and share experiences.

Most of all, I want to be with them.

My overall goal in life is to spend as much time as possible with the people who are meaningful to me. To accomplish that goal, I need to be good with money.

If I’m good with my money, I can achieve financial freedom.

With financial freedom, I can choose how to spend my time. That means I can choose who to spend my time with.

My Money Why is not about being rich.

Saying that I want to be good with money is not the same thing as saying that I want to be rich. Funny enough, people that are good with money oftentimes feel rich regardless of what their net worth is.

As nicely put by Sam Dogen, founder of Financial Samurai, one of the preeminent personal finance blogs:

But I’ve noticed on my path to financial freedom there were several times when I felt incredibly rich and money wasn’t the dominant reason.

I couldn’t agree more with Dogen. There’s no richer feeling than having just come home from the hospital with a healthy baby girl. That feeling has nothing to do with money.

Check out more from Dogen at his website financialsamurai.com. There’s a reason why he is one of the leading voices in the personal finance space.

Simply making a lot of money will not make you feel rich.

On the flip side, people that make a lot of money but are not good with money often feel like they’re struggling to get by. As CNBC explained after talking with financial psychologists:

Whether you’re aiming to save more cash or boost your overall earnings, it’s important to ask yourself what you hope to achieve by obtaining more money, Chaffin says. Otherwise, if you don’t change your internal money beliefs, you may still feel anxious about money even if you hit millionaire status.

The takeaway is that it is pointless to make money without stopping to think why you want that money and what you’re going to do with it.

If you’ve never thought about money that way before, here are three three powerful reasons to get you started:
1. Money can give you choices.
2. Money can give you personal power.
3. And, money can give you time.
Money is nothing but a tool that you can manipulate to get what you truly want out of life. The thing is, you have to actually think about what you want if you are going to use that tool effectively.

Don’t wait for a major life event to start thinking about money.

You don’t have to wait until you have a baby to start thinking about what money can do for you. In fact, if you wait for a major life event like that, it’s going to be a lot harder than if you start thinking now.

Ask yourself:

“What is my Money Why?”

Whatever comes to mind, write it down.

Maybe you want to retire early. Maybe you’re just looking for a life pivot, as Scott Trench, CEO and President of BiggerPockets wrote about recently and has regularly discussed on the BiggerPockets Money podcast.

I personally agree with Trench, and I like almost everything about FIRE, which stands for Financially Independent Retire Early. It’s just that I know that retiring early is not for me.

I prefer to think of it as FIPE:

Financially Independent Pivot Early

With FIPE, the goal is not to retire. The goal is to give yourself the freedom to choose what to do next.

Whether you want to retire early or just pivot to a new chapter in your life, being good with money is key.

Besides, I’ve never seen the point in working endless hours to make money, while spending hardly any time seriously thinking about how to keep that money.

What’s your Money Why?

My Money Why gets clearer by the day. It has never been more clear than it is right now after bringing home a little baby girl.
- What is your Money Why?
- Has your Money Why changed over time?
- How does your Money Why impact your relationship with money?
Let us know in the comments below.
April 11, 2025
The Time is Now: Student Loan Basics
Have you noticed all the attention on student loans lately?

To say there is some confusion and uncertainty would be an understatement.

I don’t have any better idea than you do about what may happen in the student loan landscape.

No matter what happens, the way I see it, you have two options .

The first option is to do nothing, get angry, and blame everyone else.

The second option is to take ownership, get prepared, and educate yourself about the student loan system so you’re ready for whatever comes next.

If you’ve chosen the second option, you’re in the right place. That means you’re determined to not let outside factors you can’t control hinder your progress towards financial freedom.

In this post, we’ll cover the basics about federal and private student loans so you can begin to make informed decisions to most efficiently eliminate your student loan debt.

Whether you are finishing up school or currently paying off loans, this is a good place to start. No matter how the student loan landscape changes, it’s a fair bet that these basic concepts will remain in place.

In the end, paying off student loan debt is really not that different from paying off any other form of debt. However before we start playing the game of conquering student loan debt, we need to understand some key ground rules.

Let’s dive in.

Student loan debt is a major obstacle to reaching financial freedom.

Student loan debt is one of the major obstacles for people striving for financial freedom. That makes sense given that more than 42 million people in the United States currently have student loan debt.

It’s not just about the number of people who have student loan debt. It’s the dollar amount of those loan balances. In my opinion, I don’t see how someone can be truly financially free when burdened by student loan debt.

This is especially true for professionals with advanced degrees. According to the Education Data Initiative:
- The average person with a graduate degree owes up to $102,790 in federal student loan debt.
- 54.0% of all graduate school students have federal student loan debt.
- 55.2% of people with master’s degrees have federal student loan debt.
- 74.8% of people with professional doctorates have federal student loan debt.
- 76.2% of doctors have student loan debt.
It’s because so many of us rely on student loans to pay for school that there is no shortage of information available online. The problem is there’s so much information, it’s hard to know where to start.

Let me help you get started.

Federal loans are better than private loans.

The first thing to know about student loans is that there are two entirely different types: federal loans and private loans.

Federal loans are funded by the United States government. You can access the main federal student loan website at studentaid.gov.

Private loans are funded by lenders, like banks. Some of the most popular private student loan companies are SoFi, College Ave, and Sallie Mae.

When you hear about student loans in the news, you’re hearing about changes to the federal loan system. There may be some side effects for the private loan system, but the federal system is getting all the attention right now.

There’s no real dispute that federal loans have long been a better option for borrowers than private loans. Federal loans almost always offer the best rates and terms. Even the private loan companies admit as much.

The reason people have both federal and private loans is because federal loan amounts are capped. Once you’ve taken out all the federal loans you are eligible for, private loans become necessary to fill whatever funding gap remains.

With tuition costs rising for college and grad school, it’s likely you’ll leave school with both federal and private loans.

Understanding the available options and differences for each type of loan will help you eliminate your student loan debt as efficiently as possible.

What to Know about Federal Student Loans

Even with a changing landscape, below are the key aspects to keep in mind regarding federal loans.

With this background in mind, you’ll be better equipped to make adjustments to your student loan payoff strategy should that time come.

There are 3 main types of federal student loans.

There are three main types of federal student loans: Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans.

Direct Subsidized Loans offer the best rates and terms and are designed for undergraduate students with financial need.

The main advantage of subsidized loans is that the federal government pays the interest for the borrower for a certain period of time, like when the borrower is still in school. That could be major savings.

Direct Unsubsidized Loans are available for undergraduate and graduate students and are not restricted to students with financial need. However, the borrower is responsible for all the interest on the loan.

Your school determines which type of loan you are eligible for. Keep in mind there is cap to the amount you can borrow for each type of loan. We’ll discuss the caps in a moment.

Your credit score does not factor into Direct Subsidized or Unsubsidized Loans.

Unlike with private loans, Direct loans do not depend on your credit score. This is a key advantage of federal loans for people who have no credit history or poor credit history.

Direct PLUS Loans are available for parents and graduate students.

Direct PLUS Loans are for eligible parents and graduate and professional students.

The other main differences with PLUS loans relate to the amount you can borrow and the interest rate you’ll pay, as seen below.

Also, with PLUS loans, the borrower’s credit history is a factor considered during the application process. These loans are not available to people with poor credit.

Federal Loans are capped depending on the loan type and education level.

The amount you can borrow in federal loans depends on the loan type and education level (undergraduate or graduate/professional).
- As an undergraduate, you can borrow up to $12,500 in Direct federal student loans each academic year.
- As a graduate or professional student, you can borrow up to $20,500 in Direct federal loans each academic year.
- For PLUS loans, you can borrow up to the cost of attendance for your school minus any other financial assistance received.
With these caps in mind (besides PLUS loans), you can see how federal loans alone are usually insufficient to cover the full costs of higher education.

Federal loans offer the best interest rates and lowest fees.

As mentioned above, federal loans have long offered the best interest rates and lowest fees.

Rates are always subject to change. For illustration purposes, here are the current interest rates for federal loans:

Loan Type Level Interest Rate
Direct Subsidized and Unsubsidized Undergraduate 6.53%
Direct Unsubsidized Graduate/Professional 8.08%
Direct PLUS Parents or Graduate/Professional 9.08%

In addition to interest, most federal loans also include loan fees. These fees are taken out of the loan at the time the loan is first disbursed. That means the amount you’re borrowing and responsible for paying back is more than the amount you actually receive.

Loan fees for Direct Subsidized and Unsubsidized loans is currently set at 1.057%.

Loan fees for PLUS loans is currently set at 4.228%.

As you can see, even within federal loans, the interest rate and fees charged vary depending on the type of loan and level of education.

The federal government contracts with loan servicers to manage your loans.

The federal government will assign your loan to a loan servicer to handle billing and other services. When you need information or have questions about your federal loans, you’ll need to contact your loan servicer.

The federal government currently works with the following loan servicers:
- Edfinancial
- MOHELA
- Aidvantage
- Nelnet
- ECSI
- Default Resolution Group
- CRI
Keep your loan servicer’s contact information close by, especially these days.

Your first federal loan payment is typically due six months after leaving school.

With federal loans, you will usually have a six month grace period after you leave school before your first loan payment is due.

Not all federal loans have a grace period, and interest usually will accrue during the grace period. You are allowed to pay this accrued interest before you enter repayment.

The federal government offers a number of loan repayment plans, for now.

The federal government offers a number of loan repayment plans.

At least, for now.

It’s anyone’s guess if these repayment plans will continue to exist and who may be impacted.

For up-to-date information on the available repayment plans, please visit studentaid.gov or contact your loan servicer.

So, what is a loan repayment plan?

Generally speaking, a standard repayment plan means paying your loans back in equal monthly payments spread over ten years.

In addition to the standard repayment plans, there are a number of plans currently available to reduce your monthly payment and extend your repayment term. These plans are typically based off of income level.

The idea behind most of these repayment plans is to help you pay back your loans while still affording your other monthly expenses.

Your loan servicer will work with you to determine the best repayment plan for your situation.

With federal loans, there should be no prepayment penalty if you accelerate your loan payments on your way to financial freedom.

One important note: regardless of the repayment plan you choose, you are still responsible to pay back the entire loan. If you choose a plan that offers lower monthly payments spread over a longer time period, you will end up paying more in total interest.

Loan Deferment, Forbearance, Forgiveness and Discharge

With federal loans, you typically have better options when you are struggling to repay your loans. Note that just because you may have more options does not mean you’ll be let off the hook.

Loan forgiveness may be available to people who work in eligible public service jobs who make loan payments for ten years.

Again, this may be all in flux.

For up-to-date information on the available repayment plans, please visit studentaid.gov or contact your loan servicer.

What to Know about Private Student Loans.

With a basic understanding of federal loans as context, it’s not too difficult to understand how private loans work.

The key here is that when it comes to private loans, there are more variables to consider. Lenders may have different rates, loan terms, and repayment schedules.

Be aware that private loans likely will not offer loan forgiveness and may involve additional fees and potential penalties.

The best thing you can do is to compare the various options for private student loans. A good place to start is with three of the most common private lenders:
Each of these lenders provides detailed information on its websites. Even if you don’t choose any of these lenders, you can still do your homework on their websites.

Besides just the interest rate on a potential loan, pay attention to other important factors like:
- Loan fees
- Repayment options
- When the first loan payment is due
- Prepayment penalties
- Consolidation options and fees
- Quality of service and responsiveness
In the end, you’ll likely find that most private loan lenders offer comparable rates and terms. They are competing with each other for your business, after all.

Where are you in your student loan journey?

Ultimately, only you are responsible for your loans. You can blame everyone else for the changing landscape or you can educate yourself and make a plan.

Whether you are finishing up school or currently paying off loans, this post is intended to provide student loan basics that should hold true no matter how the student landscape changes.

Now that you understand the basic ground rules, you can work on a plan to pay off your loans as efficiently as possible on your way to financial freedom.

Where are you in your student loan journey?

Do you know anyone who would benefit from taking about student loan basics?
April 2, 2025
Money on My Mind: Global Happiness
This week, we discuss recent reports on global happiness and starting families.

We also discuss lessons from successful businesses that we can apply to our personal lives.

The World Happiness Report 2025

Since 2012, an organization known as The World Happiness Report (WHR) has studied global wellbeing and how to improve it.

Each year, they analyze data from 140 countries and publish their findings in an effort to give everyone the knowledge to create more happiness for themselves and others.

That sounds like a great mission to me.

They also publish a global happiness ranking of all the countries studied. The rankings are based on answers to a single question:

Please imagine a ladder with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?

WHR explains that this “life evaluation” question empowers people to make their own judgments about what matters most.

As part of its analysis, WHR uses economic modeling to explain countries’ average life evaluation scores. They look at six variables, and one of them jump out at me:

“Freedom to make life choices.”

What countries would you guess scored the highest on the 2025 rankings?

The top five countries in the happiness rankings are:
1. Finland
2. Denmark
3. Iceland
4. Sweden
5. Netherlands
Each of these nations has ranked near the top for a long time.

Where is the United States on the happiness chart?

The United States fell to number 24, its lowest happiness ranking ever.

The United States’ highest ranking was 11th place way back in 2011.

I’m not totally surprised that the United States’ ranking is as low as it’s ever been.

We’ve discussed some theories that may help explain this drop:
- Americans’ debt balances are increasing year over year. Of course, Debt can cause some serious negative emotions, like shame and embarrassment.
- 8 out of 10 of us are worried we may lose our jobs this year.
- Nearly half of us don’t use our hard-earned paid time off (PTO) and choose to work more days than we are asked to.
I wasn’t surprised to see the United States rank 24th in the global happiness rankings, but I was shocked by the sub-ranking for this specific question:

Are you satisfied or dissatisfied with your freedom to choose what you do with your life?

The United States ranked 115th out of 147 countries in response to the freedom question!

That ranking truly shocked me.

It also helps explain one of the primary goals of Think and Talk Money: to help each of us reach financial freedom.

When we are financially free, we can choose to live life on our own terms. To me, that sounds a lot like what the WHR freedom question is trying to answer.

When you have financial freedom, you can make important decisions based on what truly matters. When you don’t have financial freedom, you risk making unsatisfactory decisions for money reasons.

We can choose to spend more time with the people who are meaningful to us.

We can choose to use our skills for work that is meaningful to us.

Most of us grow up thinking that life only revolves around getting an education and then getting a job. We don’t allow ourselves to believe that financial freedom is possible for us.

This was exactly how I felt before I wrote down my Tiara Goals one day on the beach in 2017.

My goal with Think and Talk Money is to help us all realize that financial independence is within our reach. If we can think and talk about our money choices even a little bit every week, we can make sure our money life remains in balance with the rest of our life.

By practicing strong personal finance habits, each of us can feel more satisfied with our freedom to choose what to do with our lives.

How would you rank yourself on the freedom question?

Are you satisfied with your freedom to choose what you do with your life?

What are your core values?

Have you ever written down your core values?

Do you know what you’re striving for?

Successful businesses look at these questions regularly. I find it helpful to learn how successful businesses operate so I can apply similar principles to my own life.

For example, there’s a great business book called Traction by Gino Wickman. In the book, Wickman encourages businesses to focus on vision, mission, and values.

It seems like a pretty good idea for all of us to think about vision, mission, and values as they apply to our own lives.

For example, if you’re one of the nearly half of Americans not taking your PTO, are you making that choice based on your core values?

It’s possible that you are. Perhaps you’re being strategic and have formulated a plan to benefit from all those extra hours at the office.

Or, it’s possible that you’ve never really stopped to think about why you’re working so much. You’ve never paused to articulate to yourself what you want out of life.

In Traction, Wickman makes a compelling argument why businesses should not skip this crucial step.

We all should take the same step in our personal lives. In 2017, I wrote down my core values, what I call my Tiara Goals.

Looking at the big picture, my Tiara Goals have helped me visualize what I truly want out of life.

In the short term, my Tiara Goals help guide me through difficult decisions. As long as I’m clear with myself about what I want in the long run, I can make daily decisions to get my closer to those goals.

Millennials want more kids but can’t afford them.

According to a recent report from Business Insider, Millennials want more kids but can’t afford them.

This makes me sad.

The study points to rising costs, as well as the reality that Millennials are saddled with large amounts of student loan debt.

Combined, it makes sense that Millennials are worried about money.

If you want to start a family, or grow your family, what better motivation could there be to spend a little bit of time each week thinking and talking about money.

If this is your reality, or you know someone in this position, establishing strong personal finance habits is crucial.

Each week at Think and Talk Money, we focus on developing these strong personal finance habits.

Please share Think and Talk Money with your friends and loved ones.

I hope that in spreading the word about Think and Talk Money, we can all help each other make big life decisions without worrying about money.

This is important whether you are hoping to start a family or have other life goals in mind.

We can all benefit from making intentional and informed decisions with our money.
March 21, 2025
No Need to Obsess Over Credit Score
Your credit score is very important.

And, you need to stop obsessing over it.

Here’s why both those statements are true.

Your credit history will touch almost every important financial transaction you enter into today. I don’t just mean credit cards and loans.

If you apply for a job, need insurance, or want to rent an apartment, those companies are going to review your credit report and credit score.

So, even if you don’t intend to take out loans, your credit history and credit score are still important.

But, obsessing over your credit score is counter productive.

Has obsessing over any number ever served you well, anyways?

GPA…

Weight…

Social Media Followers…

Yes, these things may be important to you. But, obsessing over the number itself is not how they improve. The habits behind the number are more important.

If you want to improve your GPA, you need to study more.

To lose weight, you need to practice healthy living.

For more social media followers, you need to create better content.

The same logic applies to credit scores.

If you want a good credit score, the best thing to do is to practice strong personal finance habits that we routinely discuss in the blog.

Obsessing over your credit score number is a waste of mental energy.

With this backdrop in mind, we can discuss credit scores.

What is a credit score?

As we learned in our post on using credit the right way, credit refers to an agreement to borrow money with the obligation to repay that money later, usually with interest.

Credit also refers to a person’s trustworthiness or history of repayment.

We then learned that a credit report is a document that tracks that history of repayment, as well as the current status of any loans you’ve taken out.

Your credit report will typically include:
- Personal information (name, social security number, current and former addresses)
- Credit accounts (current and historical accounts, including credit cards and any other loans)
- Collection items (missed payments, loans sent to collections)
- Public records (liens, foreclosures, bankruptcies)
- Inquiries (when you apply for a new loan)
Now, we’ll talk about credit scores.

A credit score is a three-digit number calculated based on your credit history that represents your present day creditworthiness.

Your credit score captures a moment in time. That means it will change over time, sometimes quickly and dramatically.

We each have multiple credit scores depending on the scoring service. While there are many others, the two main scoring services are FICO and VantageScore.

Keep in mind that your score may vary depending on the type of loan you are applying for. For example, an auto lender looks at different factors than a mortgage lender.

For that reason, FICO alone has more than 50 different versions of your score that it may send to lenders.

What is a good credit score?

FICO and VantageScore each assign a score ranging between 300-850.

For both services, if you’re around 800, you’re doing very well. If you drop below 650, you’ve got some work to do.

Before we look at the factors that go into your credit score, I can’t emphasize this next point enough:

Don’t obsess over your credit score.

You certainly want to pay attention to dramatic changes in your score so you can understand where you need to make adjustments. That said, you should not be concerned with slight movement in either direction.

For example, FICO considers a score between 800 and 850 as “Exceptional.” Once you’re in that range, it makes no difference whether your score is 804 or 837. You may notice slight variation from month to month. That’s normal and perfectly fine.

Instead of worrying about fluctuations in your score, spend your time and energy on more important financial wellness strategies, like writing down your Tiara Goals.

What factors go into your credit score?

Regardless of the scoring service, your credit score generally consists of these factors:
- Payment history
- Current unpaid debt
- The types of loan accounts
- Length of credit history
- New credit inquiries
- Amount of available credit being used
- Collections, foreclosures or bankruptcies
Of course, not each factor counts equally. For example, FICO weighs each factor like this:
- Payment history: 35%
- Amounts owed (credit utilization rate): 30%
- Length of credit history: 15%
- Credit mix: 10%
- New credit: 10%
VantageScore does not assign percentages to each factor, but does define the importance of each factor like this:
- Payment history: Extremely influential
- Total credit usage: Highly influential
- Credit mix and experience: Highly influential
- New accounts opened: Moderately influential
- Balance and available credit: Less influential
In comparing the two main scoring methods, we can see that both methods generally look at the same factors. They both also place the highest emphasis on payment history and place less emphasis on new accounts opened.

Here’s all you need to know about each factor.

There’s no reason to overcomplicate what each factor means.

Here’s all you need to know:

Payment history reflects whether you consistently make on-time payments.

Amounts owed, credit utilization rate, and total credit usage refer to how much of your available revolving credit you are currently using.

Revolving credit mostly refers to credit cards, but could also include loans like a line of credit.

For example, if you have a credit card with a monthly limit of $1,000, and you are currently charging $300 per month on that card, your credit utilization rate is 30%.

To maximize your credit score, aim for using 30% or less of your available credit. This ratio applies to each individual account and to your total account balances.

Length of credit history refers to how long various accounts have been open.

The longer the accounts have been open, the better your score will be.

Credit mix looks at what types of loans you have open.

Generally, lenders prefer to see a variety of loans, like credit cards, auto loans, and mortgages.

New credit refers to how many loans you’ve applied for recently.

Applying for too many loans in a short period can negatively impact your score since you may seem desperate for loans to fund your lifestyle.

What factors are not considered in your credit score?

Credit scores do not take into account personal information like race, gender, age, or marital status.

Credit scores also do not consider income or employment history.

Keep in mind that while personal information or employment history is not a factor in your credit score, it certainly will be considered as part of your application by lenders.

For example, mortgage lenders and landlords will want to confirm your history of steady employment and income before entering into a financial relationship with you.

Don’t get caught up in precisely how your score is calculated.

FICO and VantageScore provide the above information as general guidance. However, each of our credit scores is determined on a unique set of circumstances that changes over time.

While these factors are generally considered for everyone, specifically how each factor is weighed varies for each of us.

As FICO explains:

Your credit report and FICO Scores evolve frequently. Because of this, it’s not possible to measure the exact impact of a single factor in how your FICO Score is calculated without looking at your entire report. Even the levels of importance shown in the FICO Scores chart above are for the general population and may be different for different credit profiles.

Like we mentioned before, it’s important to not get hung up on the different methodologies that each scoring service uses. For the most part, your score won’t vary significantly from one service to another.

The key point is to pay attention to the general factors that impact your score but understand that your score is always changing. Don’t waste your energy trying to decipher how much weight is given to each factor.

How to check your credit score.

These days, it’s easier than ever to monitor your credit score.

Most major banks offer free credit scores to their customers.

You can also sign up for credit monitoring, including credit scores, with the major credit bureaus, Equifax, Experian, and TransUnion. Note that only some services are provided free of charge.

Of course, there are also no shortage of apps and websites providing similar services, sometimes free and sometimes for a price.

If you’d like additional guidance on how to obtain your credit score, please reach out on the socials or by replying to our weekly newsletter.

What should I do instead of obsessing over my credit score?

Instead of obsessing over your credit score, focus on the strong financial habits we discuss regularly in the blog.

You should not have to worry about your credit score if you:
- Create a Budget After Thinking
- Stay within budget with two simple numbers
- Fuel your savings for big purchases
- Create an emergency fund for untimely expenses
- Confidently tackle debt with our top 10 strategies
- Responsibly use Good Debt
When you can make these habits part of your regular life, your credit score will automatically rise along the way.

Look at credit scores from a potential lender’s point of view.

I hope this goes without saying, but lenders are in the business of making money. They make money by gauging risk. The lower an applicant’s credit score, the more the lender’s risk increases.

When the lender’s risk increases, it may decide to not lend you money. Or, it may choose to lend you money and charge you a higher interest rate to compensate for that higher risk.

The same logic applies when other entities besides lenders are reviewing your credit score.

For example, an employer may check your credit score to determine your level of trustworthiness before offering you a job.

A landlord may check your credit score before agreeing to rent you an apartment to confirm whether you are likely to make the required payment each month.

Always remember why credit scores are used in the first place.

If nothing else, remember why credit scores are used in the first place:

Credit scores are used to measure how risky it would be for someone else to enter into a financial relationship with you.

In other words, can you be trusted with money.

If you have a history of not making on-time payments, or not paying loans back, that indicates you are not responsible with money.

When you are using up most of your current credit and carrying high balances, that demonstrates that you have a hard time limiting your spending.

If you are constantly applying for new credit, it shows that you may be dependent on credit to fund your life.

In any of these scenarios, the risk of entering into a financial relationship with you increases.

Credit scores are especially important before big purchases.

If you have a big purchase coming up, like buying a home or a car, it’s important to have your credit score in a good spot before applying. This is because your credit score will impact the interest rate you are offered.

For a big purchase, even slight variations in the interest rate can make a huge difference.

Because it’s normal for your credit score to change frequently, it is worth waiting to apply for that loan until after you’ve improved your score.

The best ways to improve your score in the short term are to pay off debt and avoid applying for new credit.

By paying off debt, you’ll improve your payment history and your credit utilization rate, two of the most important factors in your score regardless of scoring method.

The best thing you can do to avoid the costly consequences of a poor credit score is to implement the personal finance fundamentals we routinely discuss in the blog.

Have you ever needlessly obsessed over your credit score?

Let us know what that felt like in the comments below.
March 17, 2025
Great Talk: Money and Fences
Know anything about fences?

We need to replace a 20 year-old wood fence at our home that’s one strong storm away from falling over. In these past few weeks, I’ve learned more about fences that I care to admit.

On the bright side, shopping for a fence has led me to think about and practice many of the personal finance habits we talk about in the blog.

Let me walk you through my thought process to help you whenever you have a big expenditure in front of you.

In the world of privacy fences, there seem to be three primary choices available: wood, vinyl, and composite. I won’t bore you with all the details. The key points to consider for our conversation are:
- Wood is the cheapest, but requires the most upkeep and will eventually need to be replaced.
- Vinyl (plastic) comes with a lifetime warranty, requires little-to-no upkeep, but is 30-40% more expensive than wood.
- Composite is the most durable, looks incredible, requires no upkeep whatsoever, has soundproofing ability, is made from recycled materials, comes with a 25-year warranty, but is nearly 3x more expensive than wood.
We’ve ruled out wood after doing our research and determining that we’ve got too much going on to worry about annual fence upkeep.

So, that leaves vinyl and composite. From our research, both would be good options. However, there’s really no doubt that composite is the best overall option, if you can stomach the cost.

Talk to your people about expensive purchases.

This is a big financial decision, so of course, I’ve been talking to my people for weeks about what they would do.

I’ve gotten three common responses that go something like this:
- “You’re planning to live in this home for the long run, make the investment in the best fence possible and never worry about it again.”
- “How much do you really care about a fence? I’ve never even noticed my fence. Think of what other projects you could spend that money on.”
- “Dude, leave me alone. I don’t want to talk about your fence.”
As you can see, talking to your people does not mean that you’re off the hook for making the decision yourself. You will likely get a wide spectrum of advice.

However, you’ll gain invaluable perspective to consider so you can make the best decision for your personal situation.

Expensive purchases test your personal finance habits.

Whenever you have a big purchase ahead of you, many of the strong personal finance habits you’ve been working to establish will be tested. You’ll be asking yourself questions like:
- Do I really need this thing?
- Can my budget handle the purchase?
- Do I have sufficient savings to cover it?
- What else could I spend this money on?
- Should I invest the money instead?
- Are there financing options to spread out the cost?
My wife and I have considered all these questions as we’ve talked through the options.

As of this moment, we’re leaning towards the composite fence so we never have to think about fencing again.

To help defray the cost, we’re considering a financing option that offers 0% interest for 18 months.

Important side note: if you ever choose to go with an attractive financing option, always read the fine print first.

The lender is hoping you fail to pay off the purchase within the 0% interest period so you’re forced to pay insanely high interest on the remaining balance. The financing option we’re looking at jumps from 0% interest to 26% interest if we fail to pay off the loan in 18 months. That’s a serious penalty.

Financing aside, we’ve also concluded that other projects will have to wait for a while so we don’t crush our money goals for the year.

We’ll make our final decision this weekend.

What would you do?

Leave a comment below to help my wife and I decide.

Sharing Think and Talk Money with Others.

Over the past couple days, I’ve heard from several readers who have shared Think and Talk Money with people they care about.

One reader told me that he shared the blog with his 25 year-old son. The reader was very appreciative because he’s experienced how important personal finance is.

He knows his son will only benefit in the long run if he implements strong money habits at the beginning of his career.

Another reader shared the blog with a friend who is now tracking her spending for three months. This is the first time she has ever tracked her spending to learn where her money is going each month.

She is using her phone and a simple spreadsheet to track her expenses. She reports that even though it’s only been a month, she’s learning things about her money choices she never knew before.

I love reader stories like this because they reflect one of our core philosophies at Think and Talk Money:

It’s not taboo to to talk about money.

When you start the conversation, you’re not just helping yourself, you’re helping people you care about.

It doesn’t matter if you’re talking about paying for a fence or starting a budget. We all could use help when it comes to making good, consistent money decisions.

Your friends are likely going through the same money challenges.

Since writing about my challenges with credit card debt at the beginning of my career, I’ve had some great talks with friends I knew back then.

Multiple friends have shared with me that they were dealing with the same credit card debt issues at the same time that I was.

None of us ever knew it at the time. We were hanging out with each other every weekend, spending money we didn’t have. The joke of it all is that we were likely encouraging each other’s poor habits.

Learning that I was in the same position as my friends all these years later does make me feel at least a little bit better about the mistakes I made back then. But, that’s not the important takeaway.

The big takeaway for me is that if my friends and I were dealing with the same money challenges back then, we’re probably dealing with similar money challenges today.

It might not be credit card debt from our social lives, but it might be something like saving for college or paying for a home. Maybe it’s what we should do when the stock market slumps.

Just like we mentioned above, my friends and I will only benefit from having these kinds of money talks.

Instead of just talking about mistakes we made in the past, we can talk about how to get it right as we move forward.
March 14, 2025
Why Credit Reports are So Important
I first learned about credit when I was in law school. My teacher wasn’t a professor, though.

My teacher was a surprisingly pleasant debt collector.

I spoke to this debt collector after breaking my wrist snowboarding.

For the second time in a year.

Let me explain.

About six months earlier, my friends and I took a road trip to go snowboarding in Wisconsin. I had never been to this location before and wanted to explore the entire ski area. After a few loops on the main run, I found my way to the terrain park.

My plan was to scout out the terrain park and report back to my friends. I must have forgotten the plan as I approached a jump that I had no business approaching. That turned out to be a mistake.

Heading towards the jump, I had too much speed and, for lack of a better word, panicked. My friend reported afterwards that as soon as I jumped, my body and snowboard turned parallel to the ground like I was lying in bed.

After all these years, It almost seems peaceful to picture myself lazily flying through the air on a beautiful, blue sky, sunny day.

Almost.

To state the obvious, this was not a good position to be in since I needed my feet and snowboard to hit the ground first and land safely.

I ended up landing on my backside with my hand and wrist hitting the ground first. The unpleasant result was a trip to the emergency room and a broken wrist.

My reputation for having fragile wrists was secured.

OK, back to the debt collector.

A few weeks after returning to Chicago, I received a bill in the mail from the emergency room for approximately $200.

I didn’t understand why I was receiving a bill since I had insurance and provided that information to the emergency room. I figured it must have been a mistake to send me a bill, and that my insurance company would pay for it.

So, I crumbled up the bill and threw it in the trash.

Before you shake your head, remember that I was still in school and on my parents’ insurance. This was my first interaction with a medical provider where the bills came to me instead of them.

I didn’t know at the time that even with insurance, I could potentially be responsible for some portion of the bill.

For the next few months, I continued to receive bills from the emergency room. And, I continued to throw these bills straight in the trash.

At some point, I received a new type of letter in the mail. This one caught my attention. It was from a collections agency.

The letter said something to the effect of, “Call us immediately to dispute or pay this medical bill before we are forced to take action against you.”

The scare tactic worked.

I picked up the phone and had a surprisingly nice conversation with the debt collector. The debt collector explained how the collections process works and the potential impact failing to pay would have on my credit report.

Credit report?

Never heard of that before. Don’t think I have one.

After hanging up the phone, I did some research and realized the debt collector wasn’t scamming me.

I certainly did have a credit history, as reflected in my credit report, that I needed to be mindful of.

I wrote a check to pay the bill the next day.

This is how a broken wrist and a debt collector first taught me about credit reports.

What is a credit report?

As we learned in our post on using credit the right way, credit refers to an agreement to borrow money with the obligation to repay that money later, usually with interest.

Credit also refers to a person’s trustworthiness or history of repayment.

A credit report is a document that tracks that history of repayment, as well as the current status of any loans you’ve taken out.

Your credit report will typically include:
- Personal information (name, social security number, current and former addresses)
- Credit accounts (current and historical accounts, including credit cards and any other loans)
- Collection items (missed payments, loans sent to collections)
- Public records (liens, foreclosures, bankruptcies)
- Inquiries (when you apply for a new loan)
Every time you open a loan, like a credit card, auto loan, or mortgage, it will appear on your credit report. Likewise, whenever you make a payment or miss a payment, that information will be reflected on your credit report.

When someone has “good credit,” it means they have a reliable history of repayment. When someone has “bad credit,” it means they have not previously demonstrated a reliable history of repayment.

Remember this key point: your credit report represents a complete picture of your interactions with credit over an extended period of time. Your credit report will include information about you going back years and years.

This means that the information reflected on the report will follow you for the long term. Any negative information on your credit report will typically stay on your credit report for 7-10 years, depending on the credit reporting agency.

What is a credit reporting agency?

In the United States, there are three credit reporting agencies:
- Equifax
- Experian
- TransUnion
By law, you are entitled to receive a free copy of your credit report from each credit reporting agency every year.

To do so, simply visit annualcreditreport.com.

If you haven’t obtained your credit report recently, I highly encourage you to do so.

Regularly checking your credit report is the best way to make sure that nobody has fraudulently opened any accounts using your social security number. It’s also the best way to monitor all the loans you are currently responsible for.

Believe it or not, it’s not uncommon for people to forget about loans they have previously opened.

Did you ever go to a Cubs game in college and sign up for a credit card just to receive a free XXL white t-shirt with a blue W on it?

No?

Uhh… me neither.

How about signing up for a new credit card while making a purchase at your favorite store to save a whopping 10% that day?

You may never end up using these credit cards and completely forget that you opened them. They’ll still appear on your credit report, and you are still responsible for those credit cards.

Is a credit report different from a credit score?

Yes, credit reports and credit scores are different.

We’ll soon discuss credit scores in detail. For now, understand that a credit score is a number calculated based on your credit history that represents your present day creditworthiness.

Your credit score captures a moment in time. That means it will change over time, sometimes quickly and dramatically.

Unlike a credit score, your credit report does not change quickly. Like we mentioned earlier, any negative information on your credit report will typically stay on your credit report for 7-10 years.

Why does my credit report matter?

We typically rely on our ability to borrow money to make our biggest purchases in life. When you take out a mortgage or finance a car purchase, you are relying on your ability to borrow money to make that purchase.

In these scenarios, lenders will “pull your credit” or do a “credit check” before agreeing to give you a loan.

If you have a history of responsibly borrowing money and paying it back on time, a lender is more likely to lend you money.

On the other hand, if you have a history of falling behind on payments, a lender may choose to not lend you money.

Or, a lender may agree to give you a loan and charge you a higher interest rate to compensate for the increased risk. This could end up costing you lots of money.

Poor credit history can lead to lost opportunities.

Besides just financial consequences, a poor credit history can also lead to lost opportunities.

As an example, it’s common practice for landlords to check an applicant’s credit history before renting them an apartment. Most major rental property search websites, like Zillow and Apartments.com, offer credit checks as part of the standard application process. My wife and I require a minimum credit score for all potential tenants.

It makes sense why a landlord would pull an applicant’s credit. When you rent an apartment, you are signing a contract (a lease) to pay a predetermined about in exchange for a place to live.

Landlords rely on those rent payments to pay for the property’s mortgage and upkeep. These rent payments can also directly impact the landlord’s livelihood.

It should be no surprise that landlords are hesitant to rent apartments to people who have a poor track record of paying for things.

Just as a landlord is sizing up your ability to pay the rent each month, other lenders, like a car dealership or mortgage lender, are sizing up the likelihood you can repay its loan.

Don’t ignore your credit history.

Have you checked your credit report this year?

My wife and I check our reports at least once per year to make sure there are no red flags.

Fortunately, I realized my mistake with the debt collector before that red flag ended up on my credit report.

If I hadn’t, I would have seen that negative mark on my credit report for 7-10 years. This would have severely impacted my ability to qualify for mortgages and grow my real estate portfolio.

I’m glad I learned that lesson about credit reports.

I’m also glad that I haven’t been back to a terrain park since law school.
March 12, 2025
Good Credit with Unicorn Cake
Something can be good and bad at the same time.

I’ll give you an example. This weekend, we hosted a birthday party for my five-year-old daughter. She wanted a rainbow unicorn theme.

When asked what she wanted for a present, she would unhelpfully respond, “No clue.”

OK, great.

Fortunately, the local toy store was stocked with rainbow unicorn items: puzzles, books, stuffed animals, craft kits, etc. The kids at school must be on the same page with their interest in rainbow unicorns this year.

The rainbow unicorn party went well. We started with pizza, decorated cupcakes, and had a unicorn egg hunt.

The highlight of the party?

The birthday cake.

We ordered a rainbow unicorn cake from one of the most popular bakeries in Chicago, Sweet Mandy B’s. The next time you’re in Chicago, do yourself a favor and pop in for a cupcake or cookie.

After singing “Happy Birthday,” I started cutting pieces of cake for the kids. A few jumbo pieces of cake later, one of our guests came to my rescue and showed me how to cut smaller, kid-appropriate pieces.

It’s a good thing she did because with the way I was cutting the cake, we were going to run out before all the adults got a piece. And that would have been a bad thing.

See, this cake was incredible. I’m not always a cake guy (unless it’s ice cream cake), but this one was special.

Vanilla confetti cake with buttercream frosting. It had the perfect balance of cake and filling. Sweet, but not too sweet. Soft and also firm.

It wasn’t just me. I never saw a cake disappear so fast. Usually, we end up with so much cake leftover that I’m sneaking bites every time I open the fridge for the next week. Not this time. Sadly.

By the end of the party, we had barely a single piece left (which was devoured within 24 hours).

There is a bright side to finishing the cake, though.

If I had an unlimited supply of this cake, I’m not sure I could stop myself from eating it. The temptation would be too strong to sneak back to the fridge all day long, fork in hand. One little bite at a time.

It’ll be fine.

What does birthday cake have to do with personal finance?

You know where this is going.

Eating a wonderful cake at a birthday party is a good thing.

Eating cake every day for the next week, no matter how good it is, would be a bad thing.

You see? Something can be good and bad at the same time.

And that leads us to our next major topic in the blog: the responsible use of credit.

What is credit?

Credit refers to an agreement to borrow money with the obligation to repay that money later, usually with interest. In this context, think of “credit” as another way of saying “debt.” When you use credit, you’re taking on debt.

Credit also refers to a person’s trustworthiness or history of repayment. When someone has “good credit,” it means they have a reliable history of repayment.

It’s important to always remember that credit and debt go hand-in-hand. That’s why before we discuss how credit can help us, we learned scary stats about debt. We discussed three big reasons why we’re in debt. And, in a preview to our conversation on credit, we learned the difference between Good Debt and Bad Debt.

We typically rely on credit for big purchases.

We typically rely on our ability to borrow money, or our credit, to make our biggest purchases in life. When you take out a mortgage or finance a car purchase, you are relying on your ability to borrow money to make that purchase. That ability to borrow money is known as credit.

If you have a history of responsibly borrowing money and paying it back on time, a lender is more likely to lend you money.

On the other hand, if you have a history of falling behind on payments, a lender may choose to not lend you money. Or, a lender may charge you higher interest rates to compensate for their increased risk.

This could end up costing you lots of money.

Poor credit will cost you more than just money.

Besides just financial consequences, a poor credit history can also lead to lost opportunities.

As an example, it’s common practice for landlords to check an applicant’s credit history before renting them an apartment. It should be no surprise that landlords are hesitant to rent apartments to people who have a poor track record of paying for things.

These reasons, and other reasons we’ll soon discuss, illustrate why it’s so important to responsibly use credit.

In our initial series on credit, we’ll discuss:
- The basics of credit reports and credit scores and why they each matter.
- How the responsible use of credit cards can fit into our personal finances.
- What you need to know to maximize the benefits of credit card reward programs.
- How to use other forms of credit, like a Home Equity Line of Credit (HELOC), to accelerate your progress towards financial freedom.
By understanding what credit is and how your credit history is tracked, you’ll gain the confidence to use credit responsibly as part of a healthy financial life.

I am in favor of the responsible use of credit.

As I previewed in our discussion on Good Debt, I’m in favor of people responsibly using credit as part of a healthy financial life.

That applies to our every day choices, like using credit cards to track our spending. It also applies to other forms of credit, like Home Equity Lines of Credit (HELOCs), to acquire assets. We’ll discuss these and other benefits of responsibly using credit in our upcoming posts.

The important caveat, however, is that like the Sweet Mandy B’s birthday cake, we have to know when a good thing can become a bad thing.

If we abuse the privilege of credit, the consequences can be severe. I abused the privilege of credit cards at the beginning of my career, and it took years to dig out of the hole.

By understanding how credit works and how your credit is tracked, I hope you can avoid falling into a similar mess.

I want you to happily enjoy the cake without the potential negative consequences.
March 10, 2025
Powerful Money Lessons from Alone

One of my favorite shows is Alone.

I’ve been talking about it a lot lately with anyone willing, or in the case of my students, with anyone without a choice but to listen.

@thinkandtalkmoney
How the TV show Alone can teach us about personal finance #thinkandtalkmoney #personalfinance #alonetvshow #alone #outbackmike @Outback Mike
♬ original sound – Thinkandtalkmoney

If you haven’t seen it, the show is a competition between 10 survival experts who are dropped off in the middle of nowhere, completely isolated from all human contact. Each person is allowed to bring ten survival items, some clothes, and a safety kit. They all have cameras to film their journeys. Whoever survives the longest wins $500,000.

It is astonishing what these people are capable of. They build their own shelters and catch all their own food. On a daily basis, they’re forced to solve problems. They have no one to help them, or to blame, but themselves.

My favorite competitor is an Australian guy named Outback Mike. I was blown away by the ideas he came up with and the things he built. There was no mental or physical challenge that he backed down from.

My wife and I first discovered Alone during the pandemic. It was the perfect show during that time of immense mental and physical hardship. There was something about the way each survivalist focused on that day’s tasks, and blocked everything else out, that resonated with us.

Watching the latest season of Alone these past few weeks, it occurred to me that the show is full of analogies for the personal finance topics we discuss in the blog.

I’ve found analogies to be great teaching tools, so here we go.

1. Not all calories are created equal.

The major challenge in Alone is getting enough calories to survive. Food is not exactly plentiful in the remote locations where the competitors are dropped off.

To survive, competitors dedicate endless hours strategizing and looking for food. Common strategies include fishing, trapping, hunting, and foraging.

One of the first things you learn is that not all calories are created equal. Calories from fat and protein are at a real premium. Even with an unlimited supply of berries and greens, the competitors make clear that you cannot survive for long periods without fat and protein.

Besides the importance of the type of calories, the way the calories are procured is just as critical.

This makes perfect sense in a survival scenario. If you expend 2,000 calories of energy to catch a fish, and that fish only provides you 1,000 calories of food, that is a losing proposition. If you continue on that trajectory long enough, you’ll starve to death.

This is why contestants on the show always think about ways to passively procure food, such as setting traps or using gill nets. If they can obtain food passively, they can then use that time to rest (save calories) or on other necessary tasks.

In the show, most competitors eventually tap out, on the brink of starvation, having failed to obtain enough food. It’s never for a lack of effort. It’s just really hard.

So what do calories have to do with personal finance?

Just as not all calories procured are created equal, not all dollars earned are created equal.

This begs the question:

If you think about what you do to earn money, are you the contestant trading 2,000 calories of energy for 1,000 calories of food?

In other words, are you always working?

Let’s look at two hypothetical professionals.

The first professional works 80 hours per week and earns an annual salary of $200,000.

The second professional works 40 hours per week and earns an annual salary of $120,000.

Which one would you rather be?

Would your answer change if we convert the annual salary to an hourly rate?

On an hourly rate, the first professional ends up earning $48 per hour.

The second professional earns $58 per hour.

If you’re still leaning towards the first professional who earns more overall but less per hour, did you think about how valuable that extra 40 hours per week could be?

That’s time that could be spent on your true passions. It’s time that could be spent with friends and family. That’s time that could also be spent developing a skill or earning income through a side hustle.

Looking at it another way, what if you could earn the same $200,000 without having to work 80 hours per week? This is where passive income streams come in.

Like the gill net that catches fish without the active involvement of the fisherman, have you explored ways to make money while freeing up your time for other worthwhile pursuits? This is an unavoidable step on your way to financial freedom.

For what it’s worth, I’m confident that the survival experts would all choose to be the person who makes more money per hour while also having more time available for other pursuits.

2. Attitude is everything.

Watching Alone, you see a wide range of personalities. While each contestant has the resume of a survival expert, one attribute always separates the winners from the losers: attitude.

The contestants are forced into what would be impossible survival scenarios for the average person. It’s completely understandable to have tense, frustrating, and stressful moments.

This isn’t me judging the contestants who have poor attitudes. I wouldn’t last an hour in the woods by myself. I’ve never even been camping. My wife caught more fish when she was six than I’ve caught in my whole life.

This is just my observation that most of the time, contestants have similar survival skills. What separates the winners is their attitude and ability to recognize that things will go wrong.

When things go wrong, they don’t blame anyone else or play the victim.

Instead of getting frustrated and quitting, they think of solutions to the problem at hand. This is what so impressed me with Outback Mike.

Yes, we all need a bit of luck in life to thrive. But, we need to put ourselves in position to benefit from luck when it comes our way. That takes intentional thought and effort.

I’m guessing we all know very smart and talented people that have bad attitudes. When things don’t go their way, they immediately blame other people. Nothing is ever their fault. They feel entitled to success without doing the work.

That type of person usually doesn’t lead a very happy or fulfilling life.

For sure, that person would not last a week on Alone.

3. Along with starvation, missing family is the hardest part.

If it’s not starvation, odds are contestants will tap out because they miss their families. The physical challenges of being forced to survive on limited food in rugged conditions is hard enough.

To do it alone and isolated from your family makes it nearly impossible.

One of the most enlightening parts of the show is when the contestants reveal their mental struggles to the camera. Since they’re alone, and typically starving, we get to see raw emotion in real time. You learn a lot about the human condition in these moments.

One unavoidable truth is that us humans are social creatures.

We need our people. We need love and support and connection. Going through life alone goes against our DNA.

Even the chance at winning more money than the contestants ever dreamed of is not nearly enough to keep them away from their families any longer.

This is why I want to encourage you to not isolate yourself with your money decisions. Money touches all aspects of our lives. Don’t try to go it alone. Include your people in your money life. Talk to them. You will only be better for it.

There’s one other lesson Alone teaches us about the importance of family. A lesson that is extremely relevant to me right now.

When each season begins and the new contestants are introduced, my wife and I know right away who isn’t going to make it: the people with young kids.

These people have all the skills necessary to survive. But, those skills don’t matter when they start missing their kids. The emotion is too strong. The longing to be with their kids overcomes all else. They simply do not want to miss another day of their kids’ lives.

I think about this lesson in the context of our daily lives. Like the professional in our example above working 80 hours per week, at what sacrifice do all those hours come? How many hours away from home is that? How much time away from our kids?

When I think about those questions, I again think about what I would do with my time if I was financially free.

I think about my Tiara Goals.

Have you watched Alone?

Do you agree with my observations?

Let us know in the comments below!

March 7, 2025
Debt Snowball or Avalanche Better?
Let’s take a deeper dive into the two most common strategies for paying back debt when you have multiple loans: Debt Snowball v. Debt Avalanche.

In our post on how to confidently tackle debt, we discussed that it’s a smart idea to apply one of these strategies. Here, we’ll see why.

You’ll notice we have lots of charts and numbers in this post. Don’t worry, you don’t need to do any math. I’ll show you how to use a simple online calculator to help you decide with strategy is best for you.

Before we look at the strategies, always keep in mind the number one rule:

Always pay the minimum required amount on every loan no matter what.

Whatever strategy you end up using, always pay the minimum payment on every loan. If you fail to do so, you will be charged penalties and your credit history and score will be negatively impacted. You will also accrue interest on those penalties, compounding your mistake.

Don’t worry if this sounds confusing right now. We’ll discuss credit cards and the responsible use of credit in detail in upcoming posts.

The below strategies apply to any excess funds you have left after paying at least the minimum on every loan balance. No matter what, you need to make the minimum payment on each loan every single month.

What is the Debt Snowball method?

The first strategy is known as “Debt Snowball.” When you apply the Debt Snowball strategy, the idea is to focus on the loan with the smallest balance first, regardless of interest rate.

Remember, these strategies are for helping you pay back multiple loan balances.

Once you have paid off the first loan in full, you move to the loan with the next smallest balance, again regardless of interest rate. The money you had been paying to the first loan can now be rolled into the second loan.

What is the Debt Avalanche method?

The second strategy is referred to as Debt Avalanche. With this method, you will prioritize the loan with the highest interest rate, regardless of the balance.

Once you’ve paid off the loan with the highest interest rate, you move to the loan with the next highest interest rate. Just as before, the money you had been paying to the first loan can now be applied to the second loan.

You can apply either of these strategies in the same way no matter how many loans you have.

The first step in choosing a debt payoff strategy is to gather some basic information on each loan that you have.

For each loan, you’ll need to find the outstanding balance, the interest rate, and the minimum required monthly payment. You can pull this information from your most recent monthly statement.

Once you have this information, you can plug the numbers into a simple online calculator. By doing so, you’ll get an idea of how much it will cost you (in terms of time and money) to pay off these debts.

I like using calculator.net.

They have calculators for all sorts of different purposes, including a Debt Payoff Calculator. Using the Debt Payoff Calculator, you can decide the best payoff strategy for your personal situation.

You may prefer the quicker emotional wins that come with the Debt Snowball method. Or, you may prefer the savings that come from the Debt Avalanche method.

There’s no wrong answer. The choice is yours.

Let’s see how Debt Snowball and Debt Avalanche work in practice.

Note, for simple illustration purposes, the minimum payments in these examples remain the same throughout the life of each loan.

Example 1: Two Different Credit Card Balances

Imagine you have two credit cards with balances owed.

Credit Card 1: $5,000 balance with a 15% interest rate and a minimum required payment of $150 per month.

Credit Card 2: $10,000 balance with a 20% interest rate and a minimum required balance of $200 per month.

Balance Rate Min. Pay.
Credit Card 1 $5,000 15% $150
Credit Card 2 $10,000 20% $200

After creating a Budget After Thinking, you’ve determined that you have $1,000 per month to put towards these two loans. Because you have to pay a minimum of $150 to Credit Card 1 and $200 to Credit Card 2, you have $650 left to deploy.

How should you do it?

Debt Snowball

If you apply the Debt Snowball approach, you prioritize paying off the loan with the smallest balance. That means paying $800 to Credit Card 1 ($150 minimum payment plus $650 remaining funds) until that loan is paid off completely. The remaining $200 needs to be applied to cover the minimum payment on Credit Card 2.

Once Credit Card 1 is paid off completely, you will add that $800 payment to Credit Card 2 for a total payment of $1,000.

Balance Rate. Min. Pay. Snowball
Credit Card 1 $5,000 15% $150 $800
Credit Card 2 $10,000 20% $200 $200

Using calculator.net, you’ll see that it will take you 18 months to eliminate both loans with the Debt Snowball approach. It will cost you a total of $17,303.70, of which the total interest is $2,303.73.

Importantly, Credit Card 1 will be completed paid off in 7 months.

Debt Avalanche

Now, let’s see what happens when we apply the Debt Avalanche approach. Under this approach, you would prioritize Credit Card 2 because it has the higher interest rate. That means you would pay $850 to Credit Card 2 and only the $150 minimum payment to Credit Card 1. Once Credit Card 2 is paid off, you would pay the full $1,000 to Credit Card 1.

Balance Rate Min. Pay. Avalanche
Credit Card 1 $5,000 15% $150 $150
Credit Card 2 $10,000 20% $200 $850

Using calculator.net, you’ll see that it will take you 18 months to eliminate both loans with the Debt Avalanche approach. You’ll end up paying a total of $17,071.84, of which the total interest is $2,071.87.

It will take you 14 months to eliminate the first loan, Credit Card 2.

Now, we can compare the results of using Debt Snowball or Debt Avalanche.

Under the Debt Snowball approach, you’ll pay $231.86 more in interest. It will take you 18 months to eliminate both debts under each approach.

However, under the Debt Snowball approach, it will only take you 7 months to completely erase one loan. Under Debt Avalanche, you will not erase the first loan until 14 months have gone by.

Now that you have this data, you can decide whether you prefer Debt Snowball or Debt Avalanche. Some people may prefer the emotional win of eliminating one loan completely after 7 months using the Debt Snowball method.

Other people will prefer the Debt Avalanche approach, which results in more savings. The tradeoff is that they won’t eliminate any loans completely until month 27.

As we said before, there is no right or wrong answer. It is entirely a matter of personal preference.

Why not just pay the same amount to each credit card?

If you pay $500 to each credit card from the beginning, let’s see what happens:

Balance Rate Min. Pay. Equal
Credit Card 1 $5,000 15% $150 $500
Credit Card 2 $10,000 20% $200 $500

You will end up paying off both loans in 18 months and paying a total of $17,249.39, of which the total interest is $2,249.42. You won’t eliminate any loans completely for 11 months when Credit Card 1 is paid off.

Compared to the Debt Snowball approach, splitting the payments evenly means four more months to pay off the first loan completely. That means you’re waiting longer for your first emotional win.

Compared to the Debt Avalanche approach, you’ll end up paying $177.55 more in total interest. If you’re looking to maximize your savings, splitting payments is not the way to go.

As you can see, whatever your preference is, it makes sense to pick either Debt Snowball (fastest emotional win) or Debt Avalanche (most money saved).

Personally, I prefer the Debt Snowball approach.

I prefer the Debt Snowball approach because of the emotional win that comes with eliminating a debt in less time, sometimes even twice as fast.

That victory is more important to me than saving $231.86 spread out over 18 months (the length of time it takes to eliminate both debts).

If you prefer paying the least amount in interest, I won’t argue with you. There’s nothing wrong with saving money. It’s a personal choice.

That said, there is one instance where I prefer Debt Avalanche to Debt Snowball.

If you have Bad Debt, like credit card, always pay that debt first.

Bad Debt typically has significantly higher interest rates than other forms of debt, like student loans, auto loans, or mortgages.

Compare these current (February 2025) average interest rates for various types of loans:
It’s not hard to see that credit card debt comes with a significantly higher interest rate than any other form of common debt.

This is why I recommend you always pay your credit card debt first.

Let’s look at a second example to illustrate this point.

Example 2: Auto Loan and Credit Card Balance

Auto Loan: $8,000 balance with an interest rate of 5% and a minimum required payment of $50 per month.

Credit Card: $20,000 balance with an interest rate of 20% and a minimum required payment of $400 per month.

Balance Rate Min. Pay.
Auto Loan $8,000 5% $50
Credit Card $20,000 20% $400

Just as before, you’ve determined that you have $1,000 per month to put towards these two loans. Because you have to pay a minimum of $400 to your credit card and $50 to your auto loan, you have $550 left to deploy.

How should you do it?

Debt Snowball

If you apply the Debt Snowball approach, you would prioritize paying off the loan with the smallest balance. That means paying $600 to your Auto Loan until that loan is paid off completely. The remaining $400 needs to be applied to cover the minimum payment on your credit card debt.

Once the auto loan is paid off completely, you will add that $600 to the credit card debt for a total of $1,000.

Balance Rate Min. Pay. Snowball
Auto Loan $8,000 5% $50 $600
Credit Card $20,000 20% $400 $400

Using calculator.net, you’ll see that it will take you 37 months to eliminate both loans with the Debt Snowball approach. It will cost you a total of $36,753.16, of which the total interest is $8,753.18.

Importantly, the auto loan will be completed paid off in 14 months.

Debt Avalanche

Now, let’s see what happens when we apply the Debt Avalanche approach.

Under this approach, you would prioritize the credit card loan because it has the higher interest rate. That means you would pay $950 to the credit card and only the $50 minimum payment to the auto loan. Once the credit card is paid off, you would pay the full $1,000 to your auto loan.

Balance Rate Min. Pay. Avalanche
Auto Loan $8,000 5% $50 $50
Credit Card $20,000 20% $400 $950

Using calculator.net, you’ll see that it will take you 34 months to eliminate both loans with the Debt Avalanche approach. You’ll end up paying a total of $33,822.14, of which the total interest is $5,822.17.

It will take you 27 months to eliminate the credit card debt.

We can again compare the results of using Debt Snowball and Debt Avalanche.

Under the Debt Snowball approach, you’ll pay $2,931.01 more in interest. It will also take you three months longer to eliminate both debts.

On the plus side, your auto loan will be completely paid off in 14 months, which is nearly twice as fast as with Debt Avalanche.

Some people may still prefer the emotional win of eliminating one loan completely after 14 months using the Debt Snowball method.

For me, the price of that emotional win has gotten too expensive. I would prefer to save the $2,931.01 and have both loans paid off in less time, even if that means waiting longer to pay off a single loan.

If you do this exercise with any normal credit card compared to another form of loan, you’re likely going to find that the credit card interest rates are so high that you should target those loans first.

Do you prefer Debt Snowball or Debt Avalanche?

As we said before, there’s no right or wrong answer. Money decisions are emotional. Paying off debt is the perfect example.

Using a simple online calculator can help you make the best decision for your situation. All you need to do is find the balance, interest rate, and minimum payment for each of your loans and the calculator will do the rest.

Whichever method you choose, stick with it. Save yourself the stress of doing mental gymnastics each month.

The most important thing is that you are making your payments every month.

Have you used Debt Snowball or Debt Avalanche?

Which method do you prefer?

Let us know in the comments below.
March 5, 2025
How to Realistically Pay Off Debt on a Budget
In this post, we’ll learn how to pay off debt on a budget. In our initial series on debt, we first looked at some scary stats about how common debt is in society.

We learned that 8 out of 10 people have some form of debt. We also learned that nearly half of credit card users carry a balance. Finally, we saw that consumer debt is a worldwide problem.

By recognizing that debt is something that impacts nearly all of us, I hope that you stop feeling alone if your’e in debt. There’s no reason to be ashamed. You are not a bad person.

If people were more willing to talk about money, you may not have had those feelings in the first place. You may have already learned how to pay off debt on a budget.

Understanding how you got into debt is the first step in working your way out. That’s why we next looked at three big reasons why people are in debt.

Of course, there are other explanations, but in my opinion, these three explanations sum it up:
1. We can be careless with our money.
2. We don’t plan ahead for emergencies.
3. And, we try to keep up with the Kardashians.
With these common causes in mind, we can now start focusing on how to pay off debt on a budget.

These strategies can work whether you are trying to eliminate Good Debt or Bad Debt.

In my experience, both Good Debt and Bad Debt can feel heavy. While Good Debt can help you achieve financial freedom, the debt will still hang over your head until it’s paid off.

Before we get to my top 10 strategies to eliminate debt, let’s get one thing straightened out:

If you’re looking for a magic wand to immediately erase all your debt, you’re in the wrong place.

Paying off debt takes time. It requires patience and discipline. You may not notice much progress in the beginning, but you need to stick with it.

It most likely took you years to get into debt, so be reasonable with your expectations of how long it will take to pay it off.

My top 10 strategies for how to pay off debt on a budget.
1. Write down your Tiara Goals.
2. Create a Budget After Thinking so the debt stops growing.
3. Prioritize Later Money funds for debt.
4. Apply our Top 10 strategies for staying on budget.
5. Talk to your people about paying down debt.
6. Track your net worth and saving rate for small wins.
7. Pick a strategy and stick with it: Debt Snowball v. Debt Avalanche.
8. Think about loan consolidation.
9. Get a side hustle.
10. Don’t let yourself fall backwards.
1. Write down your Tiara Goals.

Have you ever asked yourself what you would do with financial freedom?

I asked myself that powerful question on a beach years ago and came up with my Tiara Goals.

Debt is a major obstacle on the way to financial freedom. To help you stay motivated to eliminate debt, write down your version of Tiara Goals. By reminding yourself what you’re actually striving for, you’re more likely to stay on track.

Whenever we talk about good money habits, it always starts with establishing strong motivations. This is especially true when it comes to debt. There are too many temptations that can push us off track.

When you’re faced with these inevitable temptations, take a look at your Tiara Goals. I keep my Tiara Goals in my notes section on my phone. I also have a picture on my phone of the original sheet of notebook paper I scribbled on.

All it takes is a quick glance at my most important life values to overcome whatever temptation is in front of me.

Getting out of debt is not easy. Make it easier by regularly reminding yourself what you would do with financial freedom.

2. Create a Budget After Thinking so the debt stops growing.

If you’re currently in debt, it’s crucial that you stop that debt from getting larger. Think about it. If you’re paying off $1,000 of credit card debt each month, but you’re still spending $1,200 more than you earn, your efforts will be for nothing.

Your debt is growing faster than you’re paying it off. You’re not getting any closer to being debt-free.

That’s why to eliminate debt, you need to first create a Budget After Thinking.

Once you’ve stopped the disappearing dollars and learned where your money is going each month, you can make thoughtful decisions to pay off debt on a budget.

Then, you can be confident that any money you allocate to debt will actually lower your debt balance.

3. Prioritize Later Money funds to pay off debt.

As we’ve discussed, the art of budgeting is to generate fuel for your Later Money goals. The more fuel you can generate each month, the faster you will achieve your personal finance goals.

There are lots of options on what to do with your Later Money. For example, you can invest in real estate or the stock market.

When you’re in debt, I recommend you prioritize using your Later Money to eliminate that debt. This is especially true if you have Bad Debt, like credit card debt. Your number one money focus needs to be to eliminate that debt.

This is the key to learning how to pay off debt on a budget.

There’s a good reason to focus on paying off your Bad Debt.

The interest rate on Bad Debt is generally very high. The amount you pay in interest each month will be significantly greater than what you may reasonably expect to earn through investments.

If you only have Good Debt, like student loan debt, you have some more flexibility in whether to focus on that debt or your other investment goals. This is because Good Debt generally carries lower interest rates, so your investment returns may match or even exceed what you’re paying in interest.

In this scenario, I suggest that you consider splitting your Later Money between debt pay down, savings, and investments. This is what my wife and I are currently doing in 2025.

Seeing your savings and investments grow while focusing on how to pay off debt on a budget can provide an emotional lift. Establishing good savings and investment habits now will also have longterm benefits that should survive your debt phase.

4. Apply our Top 10 Strategies for staying on budget.

Our Top 10 Strategies for staying on budget will help you generate more money to allocate to debt. These tips are crucial if you’re trying to learn how to pay off debt on a budget.

For example, when you see something that you might want to buy, make a note in your phone instead of buying it right away. After a couple weeks, you probably won’t even want that thing anymore. Take that money you didn’t spend and put it towards your debt.

As another example, how about playing The $500 Challenge Game? When you come in under budget that month, use the excess funds to pay down debt.

When you have debt, applying our Top 10 strategies to staying on budget can teach you something powerful. You’ll see for yourself that the emotional high of paying down debt is better than the feeling you’d get from spending that money on things you don’t care about. It’s important not to ignore these emotional wins when learning how to pay off debt on a budget.

5. Talk to your people about how to pay off debt on a budget.

Stop me if you’ve heard this before:

Why do we insist on struggling with our money choices alone instead of talking to the people we trust and love?

Talking money is not taboo. That includes talking about our current money goals and money challenges. Of course, it includes talking about how to pay off debt on a budget.

I’m currently focused on paying down HELOC debt, building up my emergency savings, and funding my kids’ 529 college savings plans.

What are your current money priorities? If you don’t want to share with us, are you sharing with your friends or family?

I struggled with debt when I began my career as a lawyer. For years, I kept that to myself. I wish I had been more open. I’ve recently learned that many of my friends were struggling in the same way.

The problem was that none of us talked about it. I think about how much stress we could have saved each other if we were just willing to talk about money like we talked about everything else. Instead, we hid our truths from each other. Even worse, we likely enabled each other’s poor spending habits.

I now know that it didn’t have to be that way. I would have been better off if I was open about it.This part still bothers me today: I also might have helped my friends facing the same challenges just by starting the conversation.

6. Track your net worth and savings rate for small wins.

Remember that your net worth grows when you reduce your liabilities, meaning debt. When we think of net worth, it’s common to focus on growing our assets. Don’t forget that reducing your debts has the same impact on your balance sheet.

For example, when tracking your net worth, eliminating $1,000 in debt is the same as an investment that grows by $1,000.

Even when you’re focused on how to pay off debt on a budget, tracking your net worth can be very motivating. Every payment you make to reduce that debt improves your net worth.

This is especially helpful if you are focused on paying off student loans or paying down a mortgage. You may not have many appreciating assets, but you can still make a positive impact on your net worth by reducing your debt.

The same logic applies to tracking your savings rate. Measure and feel good about each additional amount you dedicate to eliminating debt. The goal is to stay motivated while you pay off debt on a budget.

7. Pick a strategy and stick with it: Debt Snowball v. Debt Avalanche.

There are two common strategies to consider when you hope to pay off debt on a budget. These strategies are referred to as “Debt Snowball” and “Debt Avalanche.”

Debt Snowball means paying down your smallest debt balance first, regardless of interest rate. When you’ve paid off that loan completely, you then move to the next smallest balance, again regardless of interest rate.

Debt Snowball is ideal for people that are motivated by the emotional wins that come with eliminating a loan completely, even if it costs more money in interest in the long run.

Debt Avalanche means you pay down the debt that has the highest interest rate first, regardless of the balance. Once that debt is gone, you move to the loan with the next highest interest rate.

Debt Avalanche is for people who would prefer to pay less overall interest, even if it will take longer to pay off a single loan and receive the emotional win.

I discussed the pros and cons of each strategy here. Some people will prefer the emotional wins of the Debt Snowball method, while others will prefer the mathematical advantage of the Debt Avalanche method.

Personally, I use the Debt Snowball method.

I value the emotional wins of eliminating a debt entirely, even if it ends up costing me more in the long run. I am currently applying the Debt Snowball method to pay off HELOC debt.

I’ve experienced firsthand that our money choices have more to do with emotions than they do math. If you prefer to play it strictly by the numbers, I completely understand.

The key is that whichever strategy you pick, stick with it. You’ll save yourself a lot of unnecessary mental gymnastics by choosing one approach and then moving on.

One word of caution: whichever method you choose, be sure to always pay the minimum on all of your loans. Otherwise, you’ll be in violation of your loan terms and face devastating penalties.

The idea with either of these methods is to allocate whatever funds remain to the single loan you have prioritized after paying the minimum on all loans first.

8. Think about loan consolidation or balance transfers.

Whether you have credit card debt, student loan debt, or even mortgage debt, you may have the option to consolidate each type of loan into a single loan. If you do your homework, you should end up with a lower overall interest rate and have only one loan payment to make each month.

If you choose to go this route, make sure you fully understand the fine print involved.

For example, if you’re thinking about consolidating your student loans, you’ll end up sacrificing certain loan forgiveness provisions that accompany federal loans.

The same caveat applies when considering a credit card balance transfer. A balance transfer is when you move the balance from one credit card to a different credit card with a lower interest rate. Most major credit cards accept balance transfers from other banks’ credit cards.

The main reason to consider a balance transfer is if the card you are transferring into carries a significantly lower interest rate than your current card. In some instances, you may even qualify for a promotional rate with no interest charged for a limited period of time.

I used balance transfers when I was focused on eliminating credit card debt at the beginning of my career. I did my homework and found a card that was advertising 0% interest for 12 months with no balance transfer fees. That meant that for an entire year, I paid no interest. Every payment I made went directly to lowering my overall debt.

If you’re considering a balance transfer, be mindful that there are usually upfront fees involved, usually around 3%. That fee may end up cancelling out any benefit from doing the transfer in the first place.

9. Get a side hustle to help pay off debt on a budget.

You’re not too busy or too important for a side hustle.

At the end of the day, there are really only two ways to more quickly pay off debt on a budget: spend less money and/or make more money.

We already talked about creating a Budget After Thinking to help on the spending side.

If you really want to get rid of your debt faster, earning more money and the same time you’re spending less money is a dominate combination.

If you take on a side hustle, you can use every dollar you earn to pay off debt. Since this is new money you’re earning, you shouldn’t need it to fund your Now Money or Life Money.

Avoid the temptation of using that money on things you don’t really want anyways. Think about how much faster that debt will disappear if you’re able to throw additional money at it each month.

If you’re not ready for a side hustle, the same logic applies anytime you earn a bonus or commission at your primary job. Put that money to good use by paying down your debt.

10. Don’t let yourself fall backwards while you pay off debt on a budget.

When you do succeed in eliminating a debt, don’t let yourself fall back into bad habits. It’s hard to pay off a debt. It takes time. It takes patience and discipline.

Don’t let it all be for nothing.

When you pay off a loan, celebrate that accomplishment!

Be proud of yourself and let that good feeling motivate you to continue on your journey towards financial freedom.

Before you know it, debt will be part of your past life. You can shift all your attention to the opportunities that comes next for you and your family.

Let us know in the comments below:

Have you used any of these strategies to pay off debt on a budget?

What about any other strategies to pay off debt on a budget that have worked for you?
March 3, 2025
My Path to Financial Freedom with Tiara Goals
A few months before we got married, my wife and I took a trip down to Florida. One afternoon, I headed out to the beach with a book, a notebook, and a few ice cold beverages.

The weather was perfect. It was sunny but not too hot. Blue skies and just a slight breeze. The beach was quiet that afternoon. I set up my chair to face the ocean and started reading. This little break was exactly what I needed in the middle of “wedding planning.”

@thinkandtalkmoney
What I would do with financial freedom 👊🏼 #thinkandtalkmoney #financialfreedom #personalfinance #tiaragoals #realestateinvesting
♬ original sound – Thinkandtalkmoney

I don’t recall the book I was reading that day. I’ve been meaning to look back at my journals to see if I can figure it out. Anyways, I’ll never forget what I learned about myself that afternoon.

The author wrote about the power of financial freedom. We’ve discussed financial freedom in previous posts. The basic idea is that when you are financially free, you can choose how to live your life on your own terms. You can make important decisions based on what truly matters to you, as opposed to being forced down a certain path for money reasons.

On the beach that day, the concept of financial freedom was not new to me. I had read about it for years. The concept really hit home that afternoon when the author asked a simple but powerful question:

What would you do with financial freedom?

Maybe the question really resonated with me because I was about to get married. It’s only natural to daydream about what life would be like after the wedding, even though my wife and I had been a couple for six years by that point.

Over the years, we had talked a lot about what we wanted our lives together to look like. We knew long before the wedding how we each felt about major topics like starting a family and where we wanted to live.

We were also on the same page when it came to money decisions. My wife and I met early on during my personal finance journey, not long after I had determined to get my money life sorted out. My wife still jokes that she was my first personal finance student.

By the time we got married, I had been on my personal finance journey for about seven years. I was out of debt and was starting to think about the options that were now available to me. It was around this time that I learned one of the most powerful words in personal finance:

DINK

Back then, my wife and I were both working as lawyers in Chicago. We didn’t have any kids. I didn’t realize it until later on, but we were DINKs.

DINK means “Dual Income No Kids.”

When you’re in a relationship where you have two incomes coming in and are sharing financial responsibilities, you have the opportunity to supercharge your Later Money goals.

If you are currently a DINK, or will soon be a DINK, please pay extra attention here.

Don’t waste this powerful opportunity to supercharge your Later Money goals.

This is what my wife and I were able to do, even if we didn’t know what a DINK was. We each had good incomes coming in and our monthly expenses were low. The two of us could comfortably share an apartment, instead of each paying for an apartment separately. That’s major savings each month.

We didn’t have to worry about childcare. We were young so the odds of unexpected medical care were lower. All things considered, it was pretty easy to keep our Now Money to a minimum with plenty to spare for Life Money.

This allowed us to fuel our Later Money goals, like having a nice wedding and saving up for a home or rental property. We had money in the bank and seemingly endless choices.

And, I didn’t want to screw it up.

Which brings us back to me sitting on the beach, thinking about what I would do with financial freedom, with maybe 1 or 2 less beverages in the cooler.

What did I really want out of life?

I put my book down and looked off into the ocean, thinking about what I wanted out of life. I started thinking about what my ideal life would look like. By this point, I was engaged in the type of deep thought where you don’t even realize what’s happening around you.

It quickly occurred to me that I had never truly thought about what I wanted in life. Sure, I had thought about things like having a family and being able to take vacations.

But, I never carved out time to purposefully think hard about what I actually wanted. I had never asked myself what truly motivates me.

Without a doubt, I had never written down the answer to that powerful question: what would I do with financial freedom?

I hadn’t ever allowed myself to dream about financial freedom.

The truth is, I don’t think I had ever visualized a life that wasn’t dominated by a full-time job. Up to that point, my whole life had revolved around getting an education and then getting a job. I never pictured a world where I might not need a full-time job to provide for myself and eventually my family.

I had read about the concept of being financially free, but it always seemed like a possibility for other people, not me. Writing this years later, I feel sad for that version of myself for having such limiting beliefs.

That said, I completely understand why I felt that financial freedom was unattainable for someone like me. This was in the phase of my life where I had been preoccupied with eliminating debt. Because of that debt, I didn’t allow myself to dream about what life could look like if money wasn’t holding me back.

This was also before my wife and I had rental properties. It was before we recognized the impact of side hustles and multiple streams of income. I had read about and understood these concepts in theory, but I hadn’t put what I learned into practice.

That day on the beach, it was like a light went on in my head.

After years of patience and discipline, I had climbed out of debt. I was now a DINK with Later Money in the bank waiting to be deployed. That meant I had created opportunities.

I wasn’t financially free, but for the first time in my life, I allowed myself to accept that financial freedom was possible for me.

This was one of the most powerful moments in my life.

With that realization in my mind, I walked into the ocean to cool off and think some more.

What would I do with financial freedom?

There in the ocean, I wasn’t thinking about dollars or career goals. This was more important than that. I was thinking about what I wanted my life to look like if money was not an issue. I was thinking about what I would do with my time if I was in complete control.

Floating there in the water, it was like I had an epiphany. Everything suddenly became clear to me. I ran out of the ocean to get back to my chair before I forgot what just popped into my head.

I whipped out my top bound spiral notebook and started writing with a blue pen. Minutes later, I had written down seven answers to the question: what would I do with financial freedom?

My “Tiara Goals” were born.

Nearly eight years later, I still have that sheet of notebook paper. I keep it safe in a leather binder protected by a laminated page holder. It has those familiar tear marks on the top of the page where the paper connected to the spiral binding.

Even though I have these seven goals memorized by now, I still look at this sheet of paper every month. Looking at this sheet is an incredible reminder of that day on the beach when everything became clear to me.

A quick aside, I call my goals “Tiara Goals” because it’s a silly, but meaningful, description to me. Have some fun with what you name your goals. If you do it right, you’ll be thinking and talking about these goals a lot.

What are my Tiara Goals?

So, here are my original Tiara Goals from 2017, as scribbled on that sheet of paper and edited for clarity:
1. Be with my wife and kids as much as I want. Dad never missed a game. Mom never missed a game. Nana never missed a game.
2. Not be forced to commute to work on Friday or Tuesday or whatever day, if I need that day for myself.
3. Choose how to spend my working hours (representing clients, teaching, volunteering, building a business, etc.).
4. Continue to study and learn constantly.
5. Take at least one big trip every year.
6. Never turn down an exciting or smart opportunity because I can’t afford it.
7. Work alongside people that value my contributions.
Keep in mind that I wrote these goals before I had kids and before I was even married. This was also years before the pandemic when working from home was a foreign concept to most of us.

I think it says a lot that I was thinking about these things way back then.

In a future post, we’ll unpack each of these goals.

While I haven’t reached financial freedom yet, I think I’m doing a pretty good job already living by these fundamental values.

How do my Tiara Goals help me today?

My Tiara Goals motivate me to continue striving for financial freedom. We’ve talked extensively about the importance of having strong money motivation in our lives. When we have these powerful motivations, we can stay on budget, get out of debt, and fuel our Later Money goals.

We can obtain Parachute Money. We can choose to do meaningful work and choose to spend more time with people who are meaningful to us.

No, it’s not easy to achieve financial freedom. But, it is a whole lot easier when you know what you are striving for in the first place.

That’s why at the beginning of my financial wellness class, I ask my students to write down their own versions of Tiara Goals. I want to help them avoid the limiting beliefs that I had before that day on the beach.

My favorite part of class is when my students share their Tiara Goals.

Without a doubt, this is always my favorite part of class. When I say I’m on a mission to convince you that talking money is not taboo, I think of my students sharing their goals. I get so energized by hearing their goals. My students report the same sentiment after learning what drives their friends and peers.

Over the years, my students have shared countless impactful stories. As unique as these goals can be, it’s remarkable how most of us want the same things in life. Year after year, I hear the same motivating forces:
- Spend more time with my family.
- Travel and enjoy experiences around the world.
- Stay healthy and fit.
- Provide for my children and my aging parents.
- Work for a cause I believe in.
- Have time to volunteer.
I also regularly hear one thing that my students, and the rest of us, don’t want:
- I don’t want to be stressed about money.
Isn’t it telling that year after year, most of us want the same things in life? I’ve yet to hear anyone say that they dream about working endless hours and not taking their PTO.

Be specific, but not too specific, when you think about financial freedom.

When we talk about what we do with financial freedom in class, I encourage my students to get specific without being so precise that the goal becomes restrictive. When we’re thinking about goals related to financial freedom, the idea is to focus more on big-picture, core values.

There will be a time and a place to strategize how to get there. The point here is to help define what you’re even trying to get in the first place.

For example, instead of “spending more time with family,” I would suggest something like, “never miss my child’s soccer game or dance recital because of work.”

Instead of “travel around the world,” I would suggest “at least one overseas trip of at least 2 weeks per year.”

Adding that little bit of specificity will help you visualize what you’re striving for with your money decisions.

Don’t get discouraged if you think you are not close to financial freedom.

Even when you feel like financial freedom is only a distant dream for you, it’s important to actively think about what you want out of life. I’d even suggest that the further away you feel from financial freedom, the more important it is to think about what it would mean for you.

When you’re at your lowest point, visualizing what you would do with financial freedom is a helpful escape.

If you haven’t ever actively thought about what you would do with financial freedom, hopefully this post will encourage you to do so.

Don’t forget to write down whatever you come up with.

I suggest you share your version of Tiara Goals with your friends and loved ones. It’s OK to keep some of your goals private. By sharing, you will get the benefit of them cheering you on. You’ll also hopefully encourage them to share their goals with you, which can be very inspiring.

Have you thought about what you would do with financial freedom?

Have you ever written it down or shared your answers with others?

What are your Tiara Goals?

Let us know in the comments below!
February 28, 2025
Buy a Home Now or Wait for Mortgage Rates to Drop?
In today’s Q&A, we’ll address two great questions from readers about shopping for a home in today’s environment. We’ll also talk through how to know if you have enough Parachute Money.

As always, please continue to reach out with your questions on our socials or by replying directly to our weekly newsletter emails. I personally read and reply to every email.

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Should I wait for mortgage rates to drop before buying a home?

This question has been on people’s minds for a few years now. Ever since rates started climbing from the all-time lows during the pandemic, people have been hoping they might significantly drop again.

In my humble opinion, that ain’t happening. At least not anytime soon.

Google “Are interest rates going to drop” and you’ll find that nearly every major news outlet and mortgage lender has a prediction. Most predictions right now are about the same. US News summed it up just about perfectly:

Analysts expect the 30-year fixed mortgage rate to stay elevated between 6% and 7% for the next two years. Just two months ago, economists thought it would fall into the 5% range by the second half of 2025. With such wild fluctuations in the forecast, you’d be just as likely to get a satisfactory mortgage rate outlook from a Magic 8 Ball: Cannot predict now. Ask again later.

Nobody knows what’s going to happen with rates. Just two months ago, US News thought rates would drop. Now, they’re expected to stay elevated. What are you supposed to do with that information?

I recommend you ignore it.

My advice is to buy a home when you’ve decided it’s the right moment in your life to do so. Make that decision regardless of what current interest rates are.

Why do I recommend you ignore mortgage rates?

There are really only three things that can happen to mortgage rates over time:
1. Stay the same.
2. Go up.
3. Go down.
In any of those three scenarios, there’s no point in basing your decision to buy a home only on the current rates. Let me explain.

Let’s say you have a crystal ball and can look three years into the future. Looking into your crystal ball, let’s play out each of the three scenarios mentioned above.

1. Your crystal ball shows you that mortgage rates stayed relatively consistent.

Since rates stayed the same, there would be no point in waiting to buy a home because of rates. The rates three years from now are the same as they are today.

By waiting, you’re likely going to experience that homes have gotten more expensive. The longer you wait, the more expensive they are going to be.

The data shows that homes have become more expensive historically and in the recent past. In 2024, U.S. homebuyers paid nearly double what they paid for homes in 1965, accounting for inflation. More recently, in Chicago for one example, home prices are up more than 9% since just last year.

So, even if rates stay the same, prices are likely to go up and you shouldn’t sit around waiting for them to drop.

2. Your crystal ball shows you that mortgage rates went up.

If rates go up, it’s easy to conclude that it’s a mistake to delay your home buying decision. Higher rates, combined with higher prices, is… not good.

3. Your crystal ball shows you that mortgage rates went down.

This is the scenario that many people are waiting for. When rates go down, you can afford a more expensive home. That’s a good thing, right?

Not so fast.

Do you think you’re the only person sitting around waiting for rates to drop? For the same reasons that you’re waiting, many other people are also waiting.

So, what happens when lots of people are waiting to buy the same thing? Demand goes up. When demand goes up, you have more competition to buy that same house. That means prices go up. You’ll end up paying more money for the house, even with a lower interest rate.

Take it from me, bidding wars are not fun. I would much prefer to get the house I want without the added competition.

If mortgage rates end up dropping later on, I’ll refinance my loan into the lower rate. I may pay more on a monthly basis in the short term, but long term, I have the house I want at the best available current rate.

So, there you have it. No matter what happens to rates, in my opinion, you’re best off shopping for a home when the time is right in your life.

Forget about the rates. If rates do end up going down in the future, you can still benefit by refinancing.

My wife and I are considering buying a home that would be the most expensive home ever sold in the neighborhood. Is that a bad idea?

This is another great question. Opinions will certainly vary, so I encourage you to talk to your inner circle to get a variety of perspectives.

Personally, I have no problem buying the most expensive property in a neighborhood, under one condition: I plan on holding that property for at least 10 years.

Like the data above shows, home prices tend to go up historically. Since 1990, home prices nationally have appreciated on average at a rate of 4.4%.

If you’ve done your homework and are shopping for real estate in good neighborhoods, it’s only a matter of time before another home sells for a higher price.

The longer you hold the real estate, the more home appreciation works in your favor.

Appreciation is one of the best reasons to invest in real estate, after all.

When we bought our first rental property in Chicago in 2018, we paid the highest price for any 4-flat in our neighborhood. At the time, we were a bit concerned that we were overpaying. Those worries were short lived. With seven years of appreciation working in our favor, numerous properties have sold since then for significantly more money.

Yes, there are always going to be dips in the market. Do not expect your home to steadily appreciate every year. This is why my one condition is to hold the property for at least 10 years. When you hold property (or any investment) for the long run, time is on your side. You can wait out any dips in the market.

As long as you’ve done your homework and are willing to hold a property for the long run, I would have no hesitations in buying the most expensive property in a neighborhood.

I’m fascinated by the concept of Parachute Money. My question is: how will I know if I have enough Parachute Money?

The idea of Parachute Money is one of my favorite concepts in personal finance. Check out our post here to learn more about how empowering Parachute Money can be.

To know how much Parachute Money you need, look back at your Budget After Thinking. All you need to do is add up your monthly Now Money and Life Money to figure out how much Parachute Money you’ll need to maintain your current life.

For example, let’s say your budgeting process taught you that you need $6,000 of Now Money and $4,000 of Life Money each month. Your Parachute Money target is $10,000.

If your goal is to walk away from your primary job, you’ll need to create $10,000 of income streams not counting that primary job. That could be from any combination of investments and side hustles. Once you hit $10,000 in parachute strings, you should be able to safely walk away from that job.

Note that for calculating your Parachute Money, you can ignore your Later Money goals. The reason why relates back to the purpose of Parachute Money.

The purpose of Parachute Money is to be able to choose to walk away on your own terms while continuing to support yourself.

Presumably, choosing to walk away from a bad situation accomplishes one of your primary goals for saving and investing money in the first place.

At this phase of your life, it’s OK to temporarily set aside your Later Money goals. If and when you choose to seek new sources of income, you can start fueling your Later Money goals again.

The exception to this rule is if you have debt obligations that are not accounted for in your Now Money. If that’s the case, be sure to include your debt obligations in your Parachute Money target.

One last thing about Parachute Money: achieving true Parachute Money is hard. Just remember, the payoff could be extremely valuable to you: not having to work your primary job if you choose not to. That’s the definition of financial independence.

Thanks again for all the great questions!

If we didn’t get to your question this week, we’ll do our best to get to it in an upcoming post.
February 21, 2025
Scary Stats to Know About Debt to Help You Get Out of It
My four-year-old daughter created a game recently that I’ll call “The Raise Your Hand Game!”

At random times, she’ll say something like, “Raise your hand if you have an ‘M’ in your name!”

I raise my hand. Refusing to play along is not an option.

With my hand in the air, she’ll nod in approval that I participated and didn’t lie.

That’s the whole game.

Let’s play. I’ll be the host.

“Raise your hand if you currently have debt!”

Come on, play along. Get those hands up.

Nearly 80% of you should have your hand in the air.

Yup, 8 out of 10 of us have some form of debt. Put another way, just about everyone reading this post has debt. That’s why learning to effectively deal with debt is a core personal finance concept.

For the next couple of weeks in the blog, we’re going to focus on debt so we can continue our progress towards financial independence.

Those of us who can successfully eliminate debt will move closer and closer to financial independence.

Those of us who don’t want to learn will remain debt’s financial prisoner.

As we begin our discussion on debt, let’s start with some scary statistics.

According to the Federal Reserve Bank of New York, total household debt in the United States grew to $18.04 trillion by the end of 2024. That’s such a big number, it’s hard to know what to do with that information.

Let’s break it down by the type of debt:
- Credit card balances increased by $45 billion from the previous quarter and reached $1.21 trillion at the end of December 2024.
- Auto loan balances increased by $11 billion to $1.66 trillion.
- Mortgage balances also increased by $11 billion and reached $12.61 trillion.
- HELOC balances increased by $9 billion to $396 billion.
- Other balances, reflecting retail cards and other consumer loans, increased by $8 billion.
- Student loan balances increased by $9 billion to reach $1.62 trillion.
While these numbers are still too big to comprehend, one powerful conclusion is hard to miss:

In every category, the amount of debt increased from the previous quarter.

This pattern of increasing consumer debt has been consistent for some time now. HELOC balances have increased for eleven consecutive quarters. Credit card balances have increased or remained the same for 10 of the last 11 quarters.

Now, let’s look at the statistics on a per household basis.

Per household, we see the same picture of increasing consumer debt in the United States.

According to an Experian report that compared consumer debt per household from 2023 to 2024, we see that:
- Credit card balances increased 3.5% to $6,730.
- Auto loan balances increased 2.1% to $24,297.
- Mortgage balances increased 3.3% to $252,505.
- HELOC balances increased by 7.2% to $45,157.
- Student loan balances actually decreased by 9.2% in 2024 to $35,208. This one’s an outlier due to federal loan forgiveness programs.
Let’s look closer at credit card debt for a moment.

According to a recent survey looking at credit card debt in 2024 by Bankrate.com:
- 48% of credit card holders carry a debt balance, an increase of 9% since 2021.
- 53% of the people have been in credit card debt for more than a year.
- The main causes of credit card debt are unexpected medical bills (15%), car repairs (9%) and home repairs (7%).
According to another Bankrate.com survey, 33% of Americans report they have more credit card debt than emergency savings.

These last couple stats helps us begin to understand why so many people fall into debt in the first place. It goes back to our previous conversation about the importance of emergency savings. When we don’t have savings, the first place we turn is to our credit cards.

Consumer debt is a worldwide problem.

While the above statistics are specific to the United States, you’re not off the hook if you live elsewhere. In fact, the data in your nation may be worse.

Any readers in Denmark, Norway or Switzerland?

According to a recent study by Compare the Market, these three nations lead the way with the highest household debt. The same study ranked the United States at number 18.

What can we learn from these scary debt statistics?

Whether we look at the national figures or per household numbers, the picture is clear.

Worldwide, we have a consumer debt problem. And, it’s getting worse.

For most of our conversation on debt, we’ll focus on credit card debt. Most everyone agrees this is the worst kind of debt to have. It’s also the type of debt that’s the most relatable to many of us, regardless of where we are in our careers.

Before we go any further, it’s important to understand the two main reasons why I share studies like these about debt.

1. If you are currently in debt, please know that you are not alone.

These scary stats make it abundantly clear that many of us are struggling with debt. You probably don’t know if your friends and family are in debt because we’ve been brainwashed not to talk about money.

As you know, I’m on a mission to change that.

Nearly half of us in America are burdened with credit card debt. And yes, it is a heavy burden. There’s no sense in trying to convince yourself that you’re not worried about it.

The good news is there are proven strategies for getting out of debt that we will learn in upcoming posts.

These strategies are not hard to implement, but they are challenging to stick with. Temptation to overspend is everywhere. To succeed in eliminating your debt, you need to have strong motivations.

Personal finance always come back to your money mindset. Just like with budgeting, I can give you proven techniques and strategies.

If your money mindset is not in the right place, it won’t matter. You’ll stay in debt, or worse, your debt will continue to increase.

2. If you think you are immune from falling into debt, think again.

When we are presented with statistics like this, it’s not uncommon for us to be in denial. We might say to ourselves:

“No, I understand that other people are in debt. But, that won’t happen to me.”

Or, “No, I make good money. I can pay off my credit card debt if I really wanted to.”

If it were really that easy, then why do half of Americans carry credit card debt? Why is our credit card debt growing instead of shrinking?

You may not currently be in credit card debt, and that’s a very good thing. But, what if one of those emergencies mentioned above surfaces in your life?
- If you were hit with a large, unexpected medical bill, could you cover it without credit cards?
- What if your roof needs to be replaced? Or, your furnace breaks during the middle of winter? Do you have tens of thousands of dollars saved to cover these necessary expenses?
- Do you own a car? How awful is that annoying “Check Engine” light? A simple trip to the mechanic could be another few thousand dollars out of your pocket.
These types of financial emergencies do not discriminate.

Each one of these situations could happen to any of us at any time. Let’s not forget that 90% of us are not completely satisfied with our savings. That means almost all of us would have to turn to credit cards to cover these emergencies.

Ending up in debt might come as an unpleasant shock to you. Knowing these statistics will hopefully put your mind at ease that you’re not alone.

So, even if you’re comfortable in your job and make good money, you may still end up in debt. If you do end up in debt, the lessons we’ll soon learn will ensure that your stay in the financial penalty box is as short as possible.

In our series on debt, we’ll soon learn:
- How in today’s world of social media, “Keeping up with the Joneses” is really more like “Keeping up with the Kardashians.”
- There is a difference between “good debt” and “bad debt.” When used responsibly, good debt can help you reach your financial goals faster.
- Paying off debt is hard. It’s heavy. It’s stressful. There’s no shame in admitting that. Just because it’s hard, doesn’t mean we can ignore it any longer.
- The top strategies to pay off debt as efficiently and painlessly as possible.
Whether you currently have debt or smartly want to be prepared just in case, our series on debt is crucial for anyone seeking financial independence. There is no faster way to undue all your hard work than to fall into debt.

You don’t need me to tell you that debt is a major barrier to reaching financial freedom. In fact, debt is oftentimes the exact opposite of financial freedom.

When you have debt, your choices are limited. It’s like you’re in financial prison. When you are free of debt, you are in control.

Learning about handling debt does not have to be depressing or scary. When we talk it out together, I think you’ll find that you’re not alone. Like with all hard things, there’s no point in struggling by yourself.

Hands in the air. We got this.
February 17, 2025
Big Decisions are Easier with Parachute Money
Pretend your life is like flying on an airplane.

Maybe you feel like your airplane is a fighter jet, moving too fast to enjoy the ride. Maybe your airplane is a small regional carrier, boringly flying back and forth between the same two airports.

For whatever reason, you decide you need to get off this airplane. You decide to take control and make a change. You’re ready to jump.

All you need is a parachute.

You have a choice between the only two parachutes on the plane.

The first parachute has only one string (or line) connecting the canopy to the harness . You think to yourself, “This doesn’t seem very safe. What if that one string breaks? That would end very badly for me.”

Then, you look at the second parachute. This parachute has 10 strings. You say to yourself, “OK, this one looks much safer. If one string breaks, the parachute still has nine other strings to keep me safe. Even if something goes wrong with one or two strings, I would glide safely to the ground.”

It’s obvious which one of these parachutes to choose.

This situation illustrates what I believe is one of the most empowering concepts in personal finance.

It’s what I call “Parachute Money.”

Before we move on to our next core personal finance topic, credit and debt, let’s take a few minutes to discuss this powerful money concept.

What is Parachute Money?

The central idea of Parachute Money is to create multiple sources of income so you are not beholden to any one source.

Parachute Money includes your primary job, any side hustles, any income generating assets, and your emergency savings account. It also includes the income of your significant other, if you share finances.

With Parachute Money, if one of your sources of income dries up, you are more than covered with your other sources.

Picture each source of income as a string on your parachute. The more strings on the parachute, the stronger it is. Likewise, the more sources of income you have, the stronger your personal finances are.

Note that multiple sources of income does not have to mean multiple jobs. Even with one job, you can still pursue additional, or stronger, parachute strings.

Let’s say you earn a salary and also could earn commissions or bonuses. Each one of those income streams could be another string in your parachute.

Or, you could prioritize boosting your emergency savings even more than you normally would. You might even consider a separate savings bucket called “Parachute Money.” Besides boosting your savings, you could also focus on passive income streams, like investing in dividend stocks.

The central idea remains the same. Protect yourself with as many income sources as you can.

Think of Parachute Money as a way to visualize financial independence.

Think of Parachute Money as a way to visualize what financial independence really means.

Parachute Money empowers you to confidently make big life changes. When you have Parachute Money, you are financially free to control your life, not the other way around.

Parachute Money is all about your intentional decisions. It’s for when you’ve decided, on your terms, that you’re ready to make that big change in your life. You’re excited to take matters into your own hands, but you don’t want to disrupt your entire life in the process.

To return to our airplane analogy, you could stay on the plane if you wanted. Nobody is forcing you to jump. But, you’re ready for something different. And when you do jump, you want a parachute that will help you land as safely as possible.

That’s what Parachute Money can do for your life. It allows you to make that leap while landing gracefully.

You could say it out loud like this, “I have Parachute Money. I am financially independent because I am not beholden to any single source of income. If one source of income goes away, because I’ve decided it’s time for a change, my other sources of income will protect me.”

Parachute Money is more than just emergency savings.

Parachute Money is more than just a bank account. We’ve talked about how an emergency savings account is the first savings account that everyone needs.

An emergency savings account is part of your Parachute Money, but there’s more to it.

Recall that an emergency savings account is what you turn to when life dictates your choices. If you unexpectedly lose your job or have a large bill to pay, emergency savings will keep you afloat. You didn’t choose for these things to happen, but you still need to be prepared.

So, emergency savings are for protecting yourself and your family from the unexpected. Like we talked about above, Parachute Money is about you dictating the course of events, not the other away around.

What are my current parachute strings?

My wife and I have worked hard to create multiple sources of income. We currently have the following strings in our parachute, in no particular order:
- My primary job as a mesothelioma attorney
- My wife’s primary job as an attorney
- Rental Property 1
- Rental Property 2
- Rental Property 3
- Rental Property 4
- Law School Professor
- Emergency Savings
Combined, these sources of money provide a solid parachute for us.

If you wanted to, you can break out some of these sources of income into further parachute strings.

For example, Rental Property 1 consists of 4 apartments. Each apartment could be a separate string. I teach multiple law school courses; each course could be another string. Like we talked about above, your job may include a salary, commissions, and bonuses. Each could be a separate parachute string.

What are some situations where Parachute Money can make big decisions easier?

Let’s look at three possible situations where Parachute Money can empower you to make the best choices for you and your family.

1. It’s time for a new job.

After working for the same company for 10 years, life around the office looks different.

Your direct supervisor left for a new job. You were passed up to take her place. New policies are rolling out, including a requirement to be in the office five days per week.

You feel stuck in place. You still like your job and most of the people you work with. And, you could hang around for the steady paycheck.

Or, you can take control and make a change. If you have Parachute Money, you can take your time looking for a new job that matches your priorities. Maybe you decide not to go back to full-time work at all.

2. It’s time to move.

You live with a roommate and have another 10 months on your lease. Things have gotten uncomfortable.

He doesn’t clean up after himself. He stays up late watching movies so loud you can’t sleep. He eats your favorite leftover Thai food you had saved for lunch the next day.

You could “tough it out.” He’s still a good friend of yours.

Or, you can take control and make a change. If you have Parachute Money, you can handle the costs of breaking the lease and finding a new apartment.

3. It’s time to stop depending on your parents.

You’re a full-grown adult and are still financially dependent on your parents.

Sure, the money is nice to have.

The problem is your parents have let it be known, in so many words, that they are to be consulted on how you spend their money.

You may think you are choosing where to live or where to send your kids to school. Deep down? You know your parents will have the final word.

You can continue letting your parents dictate your life.

Or, you can take control and make a change. If you have Parachute Money, you can tell your parents, “Thanks, but no thanks.”

Parachute Money gives you control.

These are just a few examples of how Parachute Money allows you to regain control of your life.

Notice that in each situation, you’re not dealing with a sudden emergency. Instead, you’ve reached a tipping point and decided it was time for a change. Without Parachute Money, your options would be limited.

In our example above about wanting a new job, Parachute Money allows you to make that leap. You may temporarily be without your primary source of income- that string on the parachute broke.

But, you’ll be more than fine because you have other parachute strings to land you safely, like an emergency savings account, a side hustle as a ghost writer for a blog, and a rental property.

Parachute Money is one of my favorite personal finance concepts.

Parachute Money is one of my favorite concepts in personal finance. I first learned about the general idea from J L Collins in his renowned book on investing, The Simple Path to Wealth: Your road map to financial independence and a rich, free life.

The Simple Path to Wealth is a must read for anyone wanting to learn the power of investing on your own through index funds.

We’ll have plenty more to say about how Collins has influenced my own decisions in our investing series. I credit him for teaching me that investing does not have to be hard. It’s actually pretty simple if you follow his tips.

To learn more from J L Collins, check out his website here.

In his book and blog, Collins describes what he calls “F-You Money.” He tells the story of getting in a shouting match with his boss one day at work, shortly before walking away from that company. As Collins explains, nobody deserved an “F-You” more than that guy.

In Collins’ example, he had enough money saved up where he could say those choice words to his boss. His “F-You Money” empowered him to live on his own terms.

On your way to financial independence, don’t ignore Parachute Money.

The reason I love the idea of Parachute Money is because it encapsulates so many of the money wellness habits and goals we’re striving for with Think and Talk Money.

Parachute Money gives you flexibility and control. When you have multiple sources of money, you are not beholden to any one source.

Think back to the image of the parachute with only one string. What happens if that one string breaks?

Likewise, what happens if your only source of money no longer fits into your best life?

As you think about these questions, picture yourself jumping out of the airplane.

What parachute are you reaching for?

Disclosure: This page contains affiliate links, meaning I receive a commission if you decide to purchase using my links, but at no additional cost to you. Please read my Disclosure for more information.

© 2025 Matthew Adair
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February 14, 2025
Great Talk: Money, Friends and Cheeseburgers
Talking money is not taboo.

The only thing that’s taboo is avoiding your personal finances.

To help flip the script and convince you that talking money is not taboo, I plan to regularly post about the current money conversations that I’m having. Through my examples, I hope to encourage you to have similar conversations.

In our first “Great Talk” post, we’ll discuss what my wife and I decided to do with our Later Money throughout 2025. We’ll also talk about how really smart people I know have started budgeting. We’ll conclude with an empowering conversation I had with a friend about what you can do with your time if money wasn’t an obstacle.

What I’m doing with my Later Money in 2025.

Later Money is what you are saving, investing, or using to pay off debt. This bucket includes long term goals and investments, like retirement and college savings. It also includes emergency savings, paying off debt, or any other shorter term goals, like saving for a wedding or a downpayment for a house.

Later Money is the key category that fuels your ultimate life goals, like financial independence.

The more you fuel this category, the faster you can reach your goals.

So, what are my wife and I doing with our Later Money in 2025?

We recently had a great talk about our options and came up with a plan that will guide us throughout the year. Before we talk about our 2025 goals, it’s important to keep in mind that your Later Money goals will change over time. That’s perfectly fine.

Our goals in 2025 are not the same as they were between 2016 and 2024. Prior to 2025, my wife and I were focused on expanding our real estate portfolio.

We purchased our first rental property in 2018, a four-flat in an up-and-coming Chicago neighborhood. Less than a year later, we bought a three-flat in the same neighborhood.

In 2021, we invested in a Colorado rental ski condo. In 2022, we purchased our fourth rental property, a three-flat, in the same (now booming) neighborhood in Chicago.

After living in our rental properties since 2018, we purchased a single-family home just outside Chicago in 2024.

During this timeframe, any spare dollar we earned went towards acquiring more real estate. We contributed towards other financial goals, like retirement and college, but our priority was investing in real estate.

Knowing when enough is enough.

Our goals have changed in 2025. We started talking about revamping our goals towards the end of 2024. I owe a lot of credit for our new goals to Chad “Coach” Carson and his excellent book, Small and Mighty Real Estate Investor: How to Reach Financial Freedom with Fewer Rental Properties.

In his book, Coach Carson makes a compelling argument to think about when enough is enough. His message was about acquiring more and more real estate, to no end, but also applies to any pursuit in life. You can learn more about Coach Carson and his incredible journey on his website.

Reading Small and Mighty Real Estate Investor helped my wife and I conclude that at this point in our lives, we have enough. If anything, we’re closer to having too much on our plate. We self-manage our 10 units in Chicago and work closely with a property manager in Colorado. With our full-time jobs and kids at home, we’ve bitten off as much as we can chew.

Our portfolio generates enough income to help fuel our current goals. If we were to continue expanding, the headaches could end up outweighing the financial benefits.

We want to build a life full of experiences and memories. That means we need more time, not more money. Acquiring and managing more properties right now would take up a lot of time. That tradeoff is not currently worth it to us.

So, if we’re not pursuing additional properties in 2025, what are our goals?

After talking it through together and weighing all our options, my wife and I came up with these three goals for 2025:
1. Our first goal is to continuing paying down our mortgage debt. We used HELOCs (Home Equity Line of Credit) to help us acquire some of our properties. Now that we’ve determined that “enough is enough,” we’re focused on paying back these loans.
2. Our second goal is to build up our emergency savings. We mostly ignored our emergency savings between 2017 and 2024. It was risky and led to some touch-and-go moments that we’d like to avoid moving forward.
3. Our third goal is to boost our contributions to our kids’ college savings accounts. We use what’s called a “529 college savings plan.” 529 plans are state-sponsored, tax-advantaged investment accounts. We use Illinois’ 529 plan because we receive a tax break as Illinois residents. Just about every state offers a 529 plan. They are a great way to save for college.
With our plan in place ahead of time, we now know where every dollar is going before we earn it. This takes the anxiety out of trying to figure it out after the money has already hit our bank account.

At the end of each month, all we need to do is make our Later Money transfers to each account. We can rest easy knowing that we’re making progress towards our personal finance goals.

How Budgeting is Helping Very Smart People.

One of my favorite moments since launching Think and Talk Money occurred just last week. Walking down the hall in my office, one of my colleagues called me over.

She was very excited to share that she started tracking her spending so she can create a Budget After Thinking.

We chatted for ten minutes. She’s been reading the blog on her commute to work every Monday, Wednesday, and Friday. She used Think and Talk Money vocabulary, like “Now Money” and “Life Money.”

She showed me the app she’s been using to track her spending, one I wasn’t familiar with and am now looking into. The best part was that she’s been telling her friends about Think and Talk Money because she’s already learned so much.

This is exactly why talking about money is not taboo. She taught me something new and helped me think about my own budgeting process. She gave me new ideas to think about.

How could this type of conversation be bad?

We didn’t need to talk numbers. We talked strategy and habits. That’s what talking money is all about.

What would you do with your time if money was not an obstacle?

I had lunch with an old friend last week at a downtown Chicago lunch spot that’s been serving up epic burgers since the 1970’s. My friend and I are both balancing careers as lawyers in Chicago with young families at home.

In between bites of a massive BBQ-bacon-cheeseburger, I asked him a question I like asking smart people:

“What would you do with your time if money wasn’t an obstacle?”

Without hesitation, he answered that he would work with his hands. He likes working on projects around the house. He gets immediate satisfaction from completing a repair or making an improvement.

His answer was great and very relatable. My years as a landlord has taught me the same feeling of satisfaction in completing a project.

What stood out to me the most was how quickly he answered the question. He knew exactly what he would do if money was not an obstacle.

This simple question helps illustrate what I mean when we talk about financial independence. It’s not an easy goal to accomplish, but I can’t think of a better goal to strive for.

You are financially independent when money is not an obstacle.

When you are financially independent, you can spend more time doing what is meaningful to you.

You can spend more time with people who are meaningful to you.

Whether you want to work with your hands or represent clients or teach kids, the choice is yours when you’re financial independent.

That seems like a goal worth striving for.

What could ever be better than that?

So, let me ask you:

What would you do with your time if money was no obstacle?

Please share below!

And always remember, talking money is not taboo.
February 12, 2025
Money Truth: It’s Not Taboo to Talk About Money
Why do so many smart people feel like they’re barely getting by?

Even with salaries of more than $100,000, too many people across the United States are living paycheck to paycheck.

Whether you are a high earner or not, we all need to exert mental energy on our personal finances.

Don’t make the mistake that just because you make a lot of money, you are immune.

@thinkandtalkmoney
Talking about money is not taboo. The only thing that is taboo is avoiding your personal finances. #thinkandtalkmoney #moneyisnottaboo #taboo #financialfreedom #financialliteracy #personalfinance
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One of the biggest misconceptions in personal finance is that people that make a lot of money don’t have money worries.

I’m not saying that we should feel sorry for people that are high earners. I’m pointing out that personal finance education is important for all of us.

It’s not your fault if you’ve made poor money choices, up to a point.

I don’t blame anyone, high earners included, for making poor money choices (up to a point). Most people never learn basic personal finance skills.

Think about an emergency room physician. He was likely one of the top students in his class his entire life. He’s proven that he can learn complex matters. He can do the hardest things imaginable, like saving someone’s life.

The problem is he was never taught to use his brain to manage his own personal finances.

If that ER doctor is living paycheck to paycheck, he likely won’t receive much sympathy. He’s probably blamed for not making better money choices.

People will say he makes plenty of money. It’s his own fault. He must be irresponsible or selfish or craves expensive things.

I don’t think that’s fair.

I think that ER doctor should get a pass from undeserved judgment. I’m not saying you have to feel bad for him or offer him your sympathies. What I am saying is he should be given a chance to learn about personal finance just like the rest of us.

Does that mean he is forever excused from taking responsibility for his money choices?

Of course not.

We all need to take responsibility to educate ourselves. That’s the reason a website dedicated to thinking and talking about money exists in the first place.

Fortunately, more than half of the United States now requires some form of personal finance education for high school students.

That’s a great start, but it’s not enough.

Personal finance education is for all stages of our lives.

Personal finance education needs to continue throughout adulthood. So many of the concepts we talk about won’t resonate with high school kids who are still provided for by their parents.

Personally, I needed to feel the pain of being out on my own before the core lessons sunk in. I had no perspective prior to that.

One of my priorities with Think and Talk Money is to help you learn these core principles before you feel too much pain.

If you’re in the early stages of your career, there is no better time than now to develop strong money habits. It can be very difficult to correct bad habits as time goes on. A better plan is to work on developing good money habits now.

If you’re already established in your career, maybe all you need is a reminder or a sounding board to more consistently make good choices.

If you’ve struggled up to this point and want to work on your money habits, there’s good news. You have a major advantage.

You’ve felt the pain.

You know what it’s like to live paycheck to paycheck.

Use that perspective to motivate yourself to make adjustments.

Don’t blame yourself or feel ashamed. Like the ER doctor, personal finance education wasn’t something you knew you needed. Now you know better. Time is still on your side, if you get started today.

Talking about money is not taboo.

One of my other priorities with Think and Talk Money is to confront the negative money stereotypes that dominate society. To start with, I’m on a mission against the common refrain that it’s taboo to talk about money with our family and friends.

Are we supposed to accept that it’s better to struggle alone?

That we should isolate ourselves in a constant state of worry?

That we are forbidden from seeking out help by talking to the people we trust the most?

I refuse to accept any of that.

Who even said talking about money is taboo in the first place?

What does “taboo” even mean? Let’s look it up.

Taboo: “Banned on grounds of morality or taste.”

Morality or taste? What does that mean? Let’s look up “moral.”

Moral: “of or relating to principles of right and wrong in behavior.”

Ah, I see.

With these definitions as context, let me try to define taboo in terms that actually make sense:

Taboo means we shouldn’t do things that we know are wrong.

OK, that I get.

I’m flipping the script on what taboo means when it comes to money.

And with that understanding in mind, I’m flipping the script on what taboo means when it comes to money.
- From here on out, it’s taboo to struggle alone with money decisions.
- It’s taboo to always worry about money instead of learning how to become empowered by money.
- It’s taboo to lie to yourself that you are the only smart person who is living paycheck to paycheck.
- It”s taboo to avoid talking about money decisions with your friends and family.
I can keep going all day. I think you get the point. Talking money is not taboo.

Keep an eye out for posts about the current money conversations I’m having.

In the spirit of convincing you that talking money is not taboo, we are introducing a new post series this week. So in this continuing series, I will highlight the current money conversations that I’m having with my friends and family.

In our first of these posts later this week, I’ll share how my wife and I recently talked through our decision to split our Later Money between emergency savings, college savings and mortgage debt.

I’ll also share some of the empowering conversations I’ve had recently with Think and Talk Money readers. I learn so much from these conversations, whether they’re with my mesothelioma clients, my students, or my friends.

Let’s flip the narrative together.

Talking money is not taboo. The only thing that’s taboo is avoiding your personal finances.

Have you had any beneficial money talks lately? How did it feel afterwards?

Please continue to reach out in the comments or on socials with your responses and thoughts.
February 10, 2025
Why You Need to Track Your Net Worth Every Month
On the first of every month, I wake up at 5:15 a.m., brush my teeth, and put on my robe.

I walk downstairs, pour a cup of coffee, and head to my favorite chair in the living room.

I then power on my laptop and open an Excel file called “Adair Family Balance Sheet.” Using this basic spreadsheet, my wife and I have been tracking and discussing our net worth for years.

It takes me about 20 minutes to update our family balance sheet each month. The hardest part is remembering all the passwords for our accounts.

When I finish entering the new account values, I study the spreadsheet for about two minutes.

I hope to see that our money efforts that month resulted in our assets increasing in value and our debts decreasing.

When I’m finished with the updates, my wife grabs her coffee and sits with me. She will likewise study the family balance sheet for about two minutes.

We’ll then spend about three minutes talking about the changes from the previous month.

And, that’s it.

It takes us less than 30 minutes each month to track and discuss what I consider the most important metric in personal finance.

That’s all the time it takes to know if we are progressing towards our most important goals. By tracking our net worth, we can quickly see if we are making good money decisions or need to make adjustments.

I recommend everybody, no matter where you are in your financial journey, track your net worth.

Just like budgeting with two simple numbers, tracking your net worth is the best, and easiest, way to measure your money progress.

There’s no better way to learn how much money you’re keeping after a month of making money.

In this post, we’ll talk about what “net worth” means, how to track it, and why it’s so important.

Let’s start with what net worth means.

Going into hiding straight from a London pub.

One night when I was studying abroad in London years ago, my good friend, Kais, and I were talking in a pub. I don’t remember what we were talking about when he offered:

“If I was in trouble and needed to go into hiding, I could sell everything that I own, pay all my debts, put the leftover money in the bank, and be fine for a couple of years.”

Uhh, OK…

At the time, I had no idea what he was talking about.

Still, I had to admit that it seemed pretty cool that he had that kind of financial flexibility. I knew I couldn’t survive for a couple of weeks, let alone a couple of years.

Photo by Luca Bravo on Unsplash

Looking back years later, I now realize that he was talking about his net worth.

Kais, if you’re reading this, drop me a line to let me know you’re not hiding.

So, what is net worth?

Your net worth is simply all of your assets less all of your liabilities.

Net Worth = Assets – Liabilities

Yup, you only need those two numbers to calculate your net worth, the most important number in personal finance.

There’s no complicated math involved. Just addition and subtraction, which couldn’t be easier in a basic balance sheet (or spreadsheet).

Let’s start with understanding what counts as an asset.

What are assets?

An asset is anything that has economic value and can be owned or controlled.

In even simpler terms, an asset is just about anything you can think of that could be exchanged for money.

My family’s current assets include:
- Retirement accounts for both me and my wife
- College savings accounts for each kid
- Health savings account (my favorite account… we’ll revisit)
- Checking accounts
- Savings accounts
- Cars
- Jewelry
- Properties
- Cash on hand
Other common examples of assets include:
- Collectibles (artwork, coins, designer bags)
- Furniture
- Household goods (TVs, appliances, rugs, etc.)
- Clothes
- Tools
- Recreational gear (bicycles, golf clubs, boats)
- Toys
It’s up to you to decide what assets to include in your balance sheet. There is no strict science to it. That said, there’s no point in overstating (or understating) your assets. You (and your family) are the only ones who will be reviewing your balance sheet.

I personally don’t include all of our household items, but you are certainly welcome to. For me, it’s not worth the time and effort to determine how much I could earn by selling my TV or snowboard.

It’s perfectly acceptable if you want to tally up the value of your items. I think it makes sense to do so if you have a lot of nice things. If you choose to do so, aim for estimates, rather than precise values, to make your life easier.

Why it is so important to acquire assets.

Assets can, but don’t always, appreciate (increase in value) over time. For example, a property may appreciate over the long term, but a typical car will do the opposite and depreciate (lose value over time).

Assets can also generate income, but don’t always. A good rental property should generate monthly cashflow. A stock portfolio can generate dividends (payments from companies to investors).

On the other hand, a designer bag won’t generate income, unless you charge people to borrow it. Even so, a designer bag is still considered an asset because you could exchange it for money.

To state the obvious, owning assets is a very good idea. Especially assets that appreciate and assets that generate income.

When you own these types of assets, your net worth will increase over time without much extra effort on your part. You don’t have to specifically trade your time for money with these types of assets.

Think of it like this: the best way to achieve financial independence is to own assets that increase in value over time and generate income.

By tracking your net worth each month, you’ll know how your assets are doing.

Does my home count as an asset?

Some people, like personal finance legend Robert Kiyosaki, don’t think you should count your home as an asset. The argument goes something like, “You can’t really sell your home because then you wouldn’t have anywhere to live. So, you shouldn’t count it as an asset.”

I couldn’t possibly disagree more.

For many of us, our homes are our most important purchase in our lives. Over the long run, most of our homes will appreciate in value, even if not as much as we hoped.

We spend years working to make money so we can pay down the mortgage. Each payment we make reduces our debt and increases our equity in the home, thereby improving our net worth.

Don’t overcomplicate it. Include your home as part of your net worth. Just don’t forget to include the mortgage as a liability (we’ll discuss below).

How do you determine the value of your home for purposes of tracking your net worth?

Make it easy on yourself. The goal is to obtain a reasonable estimate. If you’ve worked with a real estate broker, ask her for the current value of your home. She will use recent “comps”, meaning similar comparable properties in the area, to come up with a fair value.

You can also make a decent estimate of the value of your home by studying comps yourself. Platforms like Redfin or Zillow make it easy to see what homes have sold in your neighborhood.

Look for homes as similar to yours as you can find. Focus on size, the number of bedrooms and bathrooms, and the quality of the finishes.

Remember, this is not an exact science. We’re aiming for an estimate of your home value only for the purpose of measuring your net worth.

On our family balance sheet, I only update the estimated value of our properties once per year. That’s good enough for me, and all you really need to do.

Now that we know what assets are, we need to figure out what liabilities are to calculate our net worth.

What are liabilities?

A liability is any debt or obligation that you owe to someone else. Liabilities are most commonly found in the form of loans.

Unlike assets, liabilities diminish your overall net worth.

To speed up your path to financial independence, focus on reducing or eliminating liabilities.

My family’s current liabilities include:
- Lines of credit
- Mortgages
Other common examples of liabilities include:
- Credit card debt
- Student loan debt
- Auto loans
- Personal Loans
- Consumer loans
When you are beginning your career, it’s common for your liabilities to be greater than your assets. This is usually because of student loan balances.

Remember our real life, really lost boy? He had a negative net worth for years.

Don’t let that discourage you from tracking your net worth. Even if you’re in negative territory, each month is a chance to shrink that negative number, which means your net worth is increasing.

Whether you are paying down debt, or adding to your savings or investments, the result is the same: your net worth increases.

The reason for tracking your net worth also remains the same: individual progress, over time.

Now that we know what assets and liabilities are, we can create our balance sheet and determine our net worth.

Creating your own net worth balance sheet is very easy.

I’m happy to share the spreadsheet I currently use to track my net worth. Subscribe to our weekly email newsletter, and send me a reply to the next email asking for my net worth spreadsheet.

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On the top of my family’s net worth spreadsheet, each row represents an asset, or something we own.

On the bottom of the spreadsheet, the rows represent the debts we owe.

Each of the 12 columns (one column for each month) in the spreadsheet indicates the value of each asset at the end of the month.

The reason I add a new column for each month, instead of just updating the values in a single column, is so I can easily see how our net worth has changed over time.

Once all 12 months for the year are filled in, I start a new sheet and repeat the process. This helps us track how our net worth has changed over the long run.

Since your balance sheet is for your eyes only (or your family’s eyes), feel free to design it however you want.

On our family spreadsheet, I use different colors to illustrate the different types of assets we own and liabilities we owe:

Turquoise for securities (stocks and bonds). Orange for checking accounts. Purple for savings and objects (like cars and jewelry). Green for properties.

I like color coding because it helps me quickly visualize what we own or owe in each broad category.

Here’s what a simple balance sheet looks like:

If you want to create your own balance sheet, here’s what it might look like:

Assets January February March
401(k)
Roth IRA
529 College
HSA
Checking
Savings
Car
Home
Rental Properties
Total

Liabilities January February March
Credit Cards
Mortgage
Student Loan
Auto Loan
Total

Once you input the amounts for each cell in the appropriate column, use the “sum” function to total your assets and separately total your liabilities.

Then, all you need to do calculate your net worth is create one final row labeled “Net Worth”.

In the “Net Worth” cell, simply use the “sum” function again to subtract the liabilities total from the assets total.

January February March
NET WORTH

That’s all there is to it. Now, you know your net worth.

Tracking your net worth is the best way to measure your personal financial progress.

By now, you should be thinking that it’s not too difficult to track your net worth.

It takes my wife and I less than 30 minutes each month to track and talk about the most important number in personal finance.

How can we spend so little time on the most important number in personal finance?

Because we’re only looking for progress compared to what our net worth was previously.

We’re not interested in anyone else’s numbers. We only care about making personal improvements for our family.

If our net worth is increasing over time, it means we are heading in the right direction.

It means that we are continuing to fuel our Later Money goals. We’re paying down debt. We’re letting our investments do their thing.

If our net worth is decreasing, it means we need to consider making adjustments.

Sometimes our net worth decreases because the markets are heading down. If that’s the case, we don’t do anything. At this stage in our lives, we can afford to wait for the markets to tick back up.

If the issue is that our debt is increasing, or we haven’t fueled our investments that month, we make adjustments.

By studying our net worth each month, we can catch these setbacks before they become a continuous problem.

That’s all there is to it.

All before the kids wake up.

Do you currently track your net worth?

Have you found it useful to measure your overall financial health?
February 3, 2025
Money on My Mind: Capital One Edition
From time to time, I’ll post about current events and news I come across that adds to our recent discussions.

In today’s post, we’ll talk about Capital One’s alleged deceptive practices, rising credit card balances, and how much we should save for retirement.

Like with our Q&A posts, please leave a comment below, email me, or reach out on the socials if there are any stories you’d like to discuss here.
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Let’s start with recent news that impacted me personally.

A reminder to consistently evaluate your banking relationships.

For a long time, I used Capital One for all my savings accounts. When I started law school in 2006, there was a Capital One cafe right next to my school. You could get a cup of coffee for $.75 and talk to a banker at the same time. It was a cool concept and convinced me to bank with Capital One.

I told everyone about how great Capital One was. I had Capital One savings accounts and a Capital One credit card. You could say I was a huge Capital One fan.

Key word: was.

In November 2023, I had been a loyal Capital one customer for 17 years. This was during the time period when interest rates on savings accounts were rising dramatically. Many banks were advertising rates as high as 4% or 5%, which were higher than most of us had ever seen.

One day that November, for whatever reason, I logged into my Capital One account to see what rate I was earning. I was sure it would be in the 4% range, and probably closer to 5%, since Capital One was a leader in online banking.

When my statement loaded, I was shocked.

0.30%!

Shocked probably isn’t the right word. I was disgusted.

0.30% in 2023 might as well have been 0.0%… from a bank that had been a leader in online savings accounts that I had banked with for 17 years.

What the heck happened?

Capital One, unbeknownst to me, switched my savings from its high interest platform into an account with the much lower interest rate. At the same time, Capital One was still advertising and offering top rates to new customers.

It wasn’t just me. I am one of the many people that Capital One switched out of high interest rate savings accounts into inferior products. These deceptive practices are now the subject of a federal lawsuit brought by the Consumer Federal Protection Bureau.

When I discovered the sneaky switch, I immediately closed all of my accounts and transferred my money to a new bank. I no longer have a Capital One credit card, either.

Capital One, of course, denies the allegations. Maybe they did nothing legally wrong. For me, I saw the deceit in my own statement and the damage was already done.

Why do stories like Capital One’s alleged deceptive practices matter?

It wasn’t the amount of interest I lost out on that bothered me.

This all happened during that time we talked about when my wife and I were aggressively acquiring properties, so we never had a lot of money sitting in savings for an extended period.

For me, it was about the principle. I don’t want to have any relationship with a bank that would do that to its customers, especially long-term customers like me.

That said, I have to admit that writing this post is reopening old wounds.

I did a quick search in my inbox and found a Capital One statement from December 2022 showing a 0.30% interest rate. That means Capital One had deceived me for at least a year before I caught on.

Now I’m getting hot all over again.

“Take a deep breath,” as my son says to his sister when she’s crying.

On the bright side, this experience was a good reminder of how important it is to look at our accounts regularly.

You could also say it’s a good reminder to regularly think and talk about money so something like this doesn’t happen to you.

No matter how much you trust your bank, keep an eye on your accounts.

Americans are spending more on credit cards and carrying bigger balances.

The Wall Street Journal reported this week that Americans are spending more on credit cards and carrying higher balances month to month.

As The WSJ notes, “Bigger credit-card balances mean people are paying more in interest charges, with rates hovering around their highest levels on records. The average credit-card rate was around 21% late last year, according to data from the Federal Reserve.”

These findings are consistent with a recently published study by The Federal Reserve reporting that consumers are using credit cards more often when compared to cash transactions.

Higher credit card balances combined with more frequent credit card use is a problematic combination.

I am no stranger to carrying a credit-card balance. These reports don’t come as a shock to me. Especially in an era where the cost of living is rising so sharply everywhere.

It’s because I’ve personally felt the negative emotions tied to credit card debt that I never like seeing stories like these.

I understand that some people don’t have options besides using credit cards because of life circumstances. I’m hopeful that through money wellness education, more and more people will realize that they do have options.

I’m not saying it’s easy. But, there is a path forward. You can create a money plan that is consistent with your life goals and does not include high-interest debt.

How much money should you have saved for retirement by age 50?

Investopedia recently summarized reports from three major 401(k) providers on the average balances people have in their 401(k) plans. These articles can be helpful to measure your progress. Just be careful on what you take away from them.

We all have different goals in retirement. That could mean when we hope to retire. Or, how we plan to spend our money in retirement.

Plus, some of us have different investments, such as real estate holdings, that would not be reflected in studies like this.

For many of the same reasons that I’m not a fan of a rigid 50-30-20 budget framework, I don’t find these types of comparisons too helpful. I prefer we strive for personal improvement, like fitness instructors have been teaching us for years.

Let’s look at one of the potential issues with articles like these. Empower reports that the average balance for someone in their 50’s is $592,285, and the median balance is $252,850.

That’s a big difference. Let’s refer back to high school math (ok fine, Google) for a refresher on what “average” and “median” are.

The average balance is calculated by adding up everyone’s account balance and dividing by the total number of people. The median reflects the middle account balance if we list everyone’s balance from smallest to largest.

Using Empower’s data, the average balance seems skewed on the high side. This is likely because of a subset of high net worth individuals driving the average up. The median value is probably a more informative number for the average American.

Let’s put this all another way. Whether my colleague has $50,000 saved or $500,000 saved should not impact my retirement planning. The amount he has saved doesn’t matter to me.

Instead of talking about his numbers, I can still benefit from talking to him about his goals. I should be talking to him about his money mindset, like what motivates him to save in the first place.

Am I saving too little or too much for retirement?

Since 2011, I’ve represented individuals with mesothelioma, a terminal cancer caused by exposure to asbestos. Most of my clients are in their 70’s and don’t get the chance to enjoy their retirements because of their mesothelioma.

My perspective on work, family, and life has undoubtedly been shaped by visiting with my clients in their homes and talking about their life experiences. I am forever grateful for what I have learned in these moments.

When I see stories like this one from The WSJ about the financial regrets of people over age 80, I pay attention. I read these stories about people who are living longer than they expected and can’t help but think of my clients with mesothelioma who won’t have that same experience.

I also think about Bill Perkins and his excellent book, Die with Zero. You can read more about Perkins and his philosophy that many of us are saving too much for retirement on the Die with Zero website.

For my own money decisions, I’m still sorting out these three competing realities:
1. Some people, like my mesothelioma clients, don’t get to enjoy a full retirement;
2. Others outlive their money in retirement; and
3. Still other people saved more than they’ll ever spend in retirement.
My main takeaway is that I want to make choices today that allow me to spend more time with the people I love and more time doing the work that I love. However those three realities play out in my own life, I’m confident I won’t regret living this way.

This mindset is what led me to start Think and Talk Money. I enjoy helping people think through these types of choices.

Please help me spread the word about Think and Talk Money so more of us can consider these important concepts.
January 31, 2025
Protect Yourself With an Emergency Savings Account
In our last post, we talked about the importance of fueling your savings and how savings differ from investments.

Here, we’ll discuss how to best optimize your savings so you are protected in times of emergency and can achieve your short-term goals.

We’ll also talk about whether you should automating your savings, and if it makes sense to start saving while you’re paying off debt.

Let’s begin with the most important savings account we all need: an emergency savings account.

The first savings account you need is an emergency savings account.

The first savings account you need is commonly referred to as an emergency savings account. This is your ultimate security blanket for whatever life throws at you.

For example, if you lose your source of income, your emergency savings will keep you afloat until you find a new source of income. The idea is to use your savings so you don’t have to pull from your long-term investments.

Your emergency savings is not just for when you lose your job. Your emergency savings will also protect you in times of emergency (brilliant, huh?), like unexpected medical bills or expensive home repairs.

The idea remains the same: instead of pulling from your investments, you will have cash available in your savings account to cover your needs.

Aim for 3-6 months of Now Money saved for emergencies.

Aim for building up 3-6 months of your Now Money saved in a dedicated emergency savings account.

Why aim for saving enough Now Money instead of saving enough to cover your total Budget After Thinking?

Because Now Money represents the consistent, reoccurring expenses that you need to pay every month to take care of yourself and your family. Since you will only be using this money in times of emergency, you can, and should, forego some of life’s luxuries until you get back on track.

The same is true for fueling your Later Money goals. Take a pause until you sort out whatever it was that caused you to spend your emergency savings in the first place.

Come on Matt, should I save 3 or 6 months of Now Money?

It depends! Personal finance is personal.

If you have no dependents, 3 months worth of savings is a good benchmark. In most circumstances, that should give you enough time to get back on your feet.

If you have dependents, that means you are responsible for additional humans, sometimes tiny humans. These humans are counting on you for support. Targeting 6 months of savings is a good idea so you can continue to provide for them.

You should also consider your source and consistency of income when deciding how much you’ll need saved for emergencies. If you are not paid regularly throughout the year, you should target a larger amount in your emergency savings to cover those longer gaps between pay.

When you are part of a dual-income household, you may be able to get away with less emergency savings since two people are contributing to the monthly bills. If one of you suffers a sudden job loss, the other person’s income can still be used to keep the household afloat.

One last thing: Building up to 3-6 months of emergency savings will take time. Don’t pressure yourself to accomplish this goal overnight. Each month, you can add to this account until you reach your target. Any and all progress is good progress.

Do not rely on credit cards for emergencies.

Unfortunately, many of us rely on credit cards to pay our bills. When we do this, our debt grows and cancels out any gains we’re making through our savings and investments.

Just as you shouldn’t pull from your investments in times of emergency, you should not rely on credit cards to protect you.

Savings is also for more fun, short-term goals.

We just talked about the first savings account you need, an emergency savings account. I agree with you that thinking about emergency savings is not exactly fun. Job loss… medical treatment… car repairs. Yup, not fun.

Let’s talk about more fun stuff. Savings is also for short-term goals, whatever those goals are for you. This is your Later Money in action fueling your life goals.

Remember, we said emergency savings was your first account. Not your only account.

Once you’ve identified your specific Later Money goals, it’s a good idea to create separate savings accounts, or buckets, for each goal. This will help you visualize the progress you’re making towards each goal. It will also help you not use your savings that was intended for one goal on something else.

What kind of savings buckets might you have? Before I got married, I had separate savings accounts for:
- Engagement ring
- Wedding
- Down payment on a home
- Travel
- Cubs Season Tickets
- Emergency Savings
- Budget Busters
I had a specific amount in mind for each category and would make transfers each month into those buckets. Not each account received an equal amount.

For example, I knew how much I needed for Cubs tickets, usually payable at the end of the year, and divided that amount by 12 months.

The amount needed to purchase something like an engagement ring was more… fluid.

My students in recent years have suggested other savings buckets, as well. We’ve talked in class about saving for a car, saving for holiday presents, and saving for kids’ schooling.

Whatever your savings goals are, using separate buckets will help you stay on track.

Setting up separate savings accounts online is easy.

It’s easy to set up separate savings accounts online with most major banks. Once you create your initial account, you can create sub-accounts that will appear on the same landing page as your primary account. Each account will have an individual account number, and you can label them however you like.

When you do set up your savings accounts, it’s a good idea to have a different bank for your primary checking account and your savings accounts. This will help you resist the temptation to spend your savings. Out of sight, out of mind, and all that.

I’ll soon have a post on my favorite online savings accounts. There are a number of them out there that offer good interest rates and a solid user experience.

Automating your savings is a good idea, but I don’t personally automate.

I automate a lot of my money tasks, like setting up automatic bill payment for every bill that comes to mind. This includes my mortgages. I also have automatic deductions taken from my paycheck for my 401k plan.

Automating your money is a very good idea. In The Automatic Millionaire, David Bach explains how the single step of automating your finances can help you live rich and retire richer. You can learn more about Bach’s philosophy on his website.

I don’t disagree with Bach and implement many of his strategies in my own life. The Automatic Millionaire is definitely worth a read.

Still, I don’t automate my savings transfers.

I automated my savings transfers in the past and learned that I prefer the emotional high of manually making savings transfers.

Money is emotional. This is just one example.

I like how it makes me feel to go into my checking account and transfer that month’s Later Money to my savings. It makes me feel good to see the pop up on my computer: “Your transfer is complete!”

I like that feeling so much that I’m not worried about skipping a savings transfer. That moment gives me a lot of joy.

Whether you choose to automate or manually transfer into your savings account, please make sure the dollars are not disappearing and are actually going towards your most important goals.

If you have debt, should you still build up your emergency savings?

During my money wellness class, I usually get a question like this:

“Should I build up my savings while I’m paying off student loans or other debt?”

My recommendation is different depending on the type of debt. That’s because interest rates are generally much lower for student loans or mortgages than for credit card debt.

In a future post, we’ll talk about what is commonly referred to as “good debt” and “bad debt.” Student loans and mortgages, in my opinion, represent good debt. Credit card debt is almost universally considered bad debt.

Typically, good debt has much lower interest rates than bad debt. You might be paying 20% or more on your credit cards and closer to 8% on your student loans (and probably even lower on your mortgage).

If you have high interest credit card debt, pay that off first before you prioritize savings. It doesn’t make any sense to pay 20% interest to a credit card company just so you can earn 4% interest in a savings account.

On the other hand, if you have student loan debt or mortgage debt, I recommend you start building your emergency savings account while you’re simultaneously paying down that debt.

Yes, paying 8% interest is mathematically worse than earning 4% in savings account. If you are driven strictly by the math, you should pay off that 8% debt before you start saving in a 4% interest account.

Never forget that money is emotional.

But, money is emotional. I think it’s worth paying the interest on your good debt so you can experience your savings growing.

Plus, if you do have an emergency that requires you to tap into your savings, you won’t have to rely on credit cards and pay the much higher penalty.

Keep in mind that if you go this route, you still need to make your required debt payments. We are only talking about extra money that you have available that could go towards additional debt payments or to savings.

The temptation to ignore your savings is real, especially when you have debt.

The temptation will be there to pay off whatever debt you have as quickly as possible and forego saving altogether.

I still feel this temptation every month. Should I contribute my next dollar to building up savings or paying down mortgages?

For most of the past year, I was laser focused on paying down mortgage debt. More recently, I’ve reassessed and have been working to build up my savings.

Having talked it over with my wife, we want to make sure we’re protected should something unexpected happen, even if that means temporarily slowing down our progress on our mortgages.

This way, we won’t end up in a cycle of using credit cards to cover us in times of need.

If you’re faced with a similar decision, know that you’re already ahead of the game by even thinking about how to use your Later Money to fuel your goals.

Whether you are paying down debt or increasing your savings, you are heading in the right direction.

Please drop a comment below if you have any additional tips to share!

Do you prefer automatic savings or manual transfers?

What are some of your favorite savings buckets you’ve used?
January 29, 2025
Why You Need to Fuel Your Savings
Would it surprise anyone to learn that most Americans are not satisfied with the amount they have saved?

Let’s take look at some of the key findings in the recently published Yahoo Finance/Marist Poll 2025 National Survey on the State of Savings:
- Only 10% of households are completely satisfied with the amount of money they have saved.
- Only 20% reported saving more in 2024 than in 2023.
These numbers are scary. You can read more here. The scariest part for me is that these results aren’t surprising at all. They closely mirror the stats I first showed my students back in 2021 when discussing savings.

Why are these numbers so scary?

In the abstract, I can understand why these stats may not seem too scary to you.

Let’s look at another stat that illustrates what happens when we don’t have adequate savings:
- About 33% of households would not be able to pay their bills or expenses for one month, if faced with a sudden loss of income.
- This number rises to 38% of Gen Z and 41% of Millennials who report they could not pay their bills for even a month.
What do these numbers mean?

1 in 3 people currently reading this post, in the comfort of their homes they have worked so hard for, would not be able to afford those homes for even one month if they suddenly lost their jobs. It’s worse for Gen Z and Millennials.

Maybe you’re on the train commuting to work while reading this. How many people are in the train car with you? 30 or so? Pick out 10 passengers, really look at their faces.

They’re just like you, typically good people, working a job to provide for themselves and their families. If these 10 people suddenly lost their jobs, they wouldn’t be able to pay their bills next month.

Count me in the group of people not completely satisfied with their savings.

If you read these stats and are honestly not worried about your savings, you are in the minority and are doing a tremendous job managing your personal finances.

Keep up the good work and please let us know in the comments below what strategies are working for you.

On the other hand, if you’re being honest with yourself, you’re most likely in the 90% of people that are not completely satisfied with their savings.

Count me in this group.

From 2017 to 2024, my wife and I prioritized using all of our available money to acquire real estate. The downside was limited funds available for savings.

We now have work to do to build our savings back up. Instead of presently shopping for investment properties, we are now focused on paying down mortgage debt and increasing our savings.

Most people attribute their low savings to rising cost of living.

What is the most common explanation given by people that have so little saved? Rising cost of living across the nation:
- Nearly 66% of Americans believe that the cost of living for the average family is not affordable in their area.
Millennials and Gen X are the most worried about the cost of living, with more than 70% of each group feeling unprepared. 64% of Gen Z and 59% of Baby Boomers likewise feel unprepared.

Cost of living includes necessary expenses like housing, food, transportation, and healthcare. In other words, Now Money.

There are any number of reasons we can point to that are combining to drive up the cost of living, like limited housing inventory, higher interest rates, and more expensive groceries.

Whatever the reason for why costs are going up, I’m more interested in adapting and thriving in the current environment rather than making excuses.

So, what exactly can we do to improve our savings?

We can first eat Italian beef while working on our money mindset.

Then, we can create a Budget After Thinking that fuels our goals.

The next part, figuring out what to do with that money you generated for savings, is much easier. Before we talk about specific savings tips, let’s make sure we’re on the same page as to what we are trying to accomplish through saving.

Savings are for short term protection and short term goals.

When we talk about savings, what exactly are we talking about anyways?

According to Merriam-Webster, saving means “the preservation from danger or destruction: deliverance.”

Uhh, that’s intense.

Scrolls down…

Savings (pleural) means “the excess of income over consumption expenditures.” Much better.

That’s about as simple as it gets. Savings is the money you have left over that you didn’t otherwise spend. In Think and Talk Money vocabulary, it’s your Later Money.

In The Richest Man in Babylon, George Clason described savings with one of my favorite quotes in all of personal finance:

“A part of all you earn is yours to keep.”

Translation: you worked hard to earn that money. You should think about keeping some of it.

Actively saving money to fuel your Later Money goals is a non-negotiable step towards financial independence.

You can use your savings to protect yourself and your family in times of need. You can also use your savings for short-term goals, like paying for a wedding or a downpayment on a house.

Think of it this way, your savings make it so all those hours you spend on the job- the time away from your family or your passions- was not for nothing.

What is the difference between saving and investing?

Keep in mind that savings is different from investments, although both count towards your Later Money.

Savings is for (1) short term protection and (2) short term fuel for your life goals. Your savings is your security blanket for the here and now so you don’t have to take away from your wealth-generating investments at the wrong time.

Keep this money in a dedicated savings account (or accounts) so the money is readily available when you need it.

There is very little, if any risk, involved with saving money. That’s because reputable banks in most countries carry deposit insurance to protect your money. In the United States, deposits are protected up to $250,000 by The FDIC.

So, how are savings different from investments?

Investments are assets that you purchase with the goal of making a profit over time. That might be through the stock market, real estate, or any number of other options. Think of investing as the best way to supercharge your wealth over the long term.

Investing is a major component of overall money wellness, but investing comes with risk. As the saying goes, “you don’t get something for nothing.”

Because you can lose your money in any investment, it’s not a good idea to expect that money will immediately be there when you need it. That’s one reason why you should have savings distinct from your investments.

One way to counteract investment risk is to invest for the long-term, so you don’t want to interrupt those investments for short-term goals. This is another reason why we need savings in the short term.

One final point about saving vs. investing. There is a point when you will have enough saved in the bank that you can solely focus on growing your investments. This is a very comfortable place to be and where I am currently focused on returning.

Saving is an essential part of overall money wellness.

To recap, saving money to fuel our Later Money goals is crucial to overall money wellness. Sometimes, we’ll use our savings for protection, like in times of emergency. Other times, we’ll save with a clear goal in mind, like paying for a wedding or a house.

Saving is not the same as investing, although both are important. The reason we save money, rather than invest it, is so that money is readily available when we need it.

In our next post, we’ll discuss what to do with the money we are saving for maximum results. We’ll cover some key strategies for what to do with the money you have generated so your savings align with your overall money goals.

Let me know in the comments below if you’re not completely satisfied with your savings, like me.

Have you taken any steps to join the 10% of Americans who are completely satisfied?
January 27, 2025
Better at Making or Keeping Money?
When people learn that I’ve been teaching money wellness to law students, I usually get a reaction like, “I need that class! I know nothing about investments and the stock market.”

It’s a fair reaction. Investing in the stock market can be complicated. Most of us never learn basic stock market principles, let alone how to manage an investment portfolio.

It’s also a reaction that has always fascinated me. Yes, wanting to learn about investing is important. But, it’s not where money wellness begins.

I often wonder, why do people automatically assume that money wellness means investing? There are so many things that we need to get right before we can focus on investing.

Learning about the stock market wasn’t going to help me when I was struggling with debt. I needed to first figure out how to make better spending choices and get out of debt. I needed to play defense before I could go on offense.

Yes, investing is important.

No, it shouldn’t be the first thing we think of when we hear money wellness.

We’ve hardly mentioned investing so far in this blog.

Have you noticed that so far in the Think and Talk Money blog we have hardly even mentioned the word “invest”?

That’s because in order to invest, we first need available money.

To have available money, we need a budget that actually works.

To have a budget that actually works, we need honest, powerful life goals.

Are you starting to see why we first talk about money mindset? Then we moved on to budgeting?

We will talk about investing once we have a plan to continuously generate money to invest.

We will soon talk about investing. A lot. Don’t worry. In my money wellness class, we discuss in depth the importance of investing to create wealth.

Here at Think and Talk Money, we will also talk extensively about investing, including in the stock market and in my preferred asset class, real estate.

Investing is not as hard as generating money to invest.

For now, our goal is to establish sound habits so we have real money to consistently invest over time. It doesn’t make sense to learn how to invest until we have a strong foundation in place.

I think you’ll also find that investing is really not that hard. If learning how to do it on your own doesn’t sound like something you want to do, there are professionals that can do it for you. Whether it’s a good idea to go that route is something we’ll discuss so you can make an informed decision.

If you do hire a professional to invest your money, you still need to know enough so you can talk to this person.

Plus, this person will likely tell you that your ongoing mission is to generate more cash to fuel investments. That’s what we’re focusing on now.

The fun part is once you’ve discovered your motivations and established strong habits, you will consistently have money available so you can invest month after month for the rest of your life.

You could be a terrific investor. If you only have $1,000 to invest a single time, your upside will be limited. If you continuously generate $1,000/month of Later Money to invest, your options (and your wealth) will grow exponentially.

My wife and I would not own five properties today if we didn’t first learn personal money wellness.

My wife and I would not own five properties (11 rental units) today if we had not first learned money wellness fundamentals. I don’t just mean we wouldn’t have had money available to invest, although that is certainly true.

I also mean we wouldn’t have the skills and knowledge to successfully run our real estate business. If you’ve ever wanted to be a business owner or investor, working on personal finance skills now is critical.

Maybe that’s not your path. Still, these skills are critical whether you are a consultant, a writer, or a teacher. Would you agree that having money issues and stress at home can distract you from performing your job at the highest level?

How many hours per year do you work to make money?

Lately, when people ask me why I’m so passionate about money wellness, I respond with a question of my own that goes something like this:

“Let’s say we work 2,000 hours per year to make money (40 hours per week, 50 weeks per year).

We won’t even count all the hours we spend getting dressed and commuting to our jobs.

We also will pretend we’re not looking at our emails in the evening and on weekends.

We definitely won’t count the hours we’re staring at the ceiling fan because we can’t sleep.

OK, so that’s 2,000 hours (plus) per year, to make money.

How many hours per year do we think about what to do with that money?”

Let that sink in for a moment.

How many hours do you work every year to make money? 2,000? 3,000? I’m guessing a lot of those hours are stressful.

Now, how many hours do you think about what to do with that money?

Do you spend any hours at all talking about what to do with that money?

This is why I am passionate about money wellness. Most people spend the vast majority of their lives worried about making money and practically no time at all thinking about what to do with that money.

No, I’m not suggesting that you need to think about money for 2,000 hours per year.

What I am suggesting is that even that little bit of time each week spent thinking and talking about money is just as important as the time you spent earning it.

Think and Talk Money is about encouraging each other to make purposeful money choices.

Robert Kiyosaki put it best in Rich Dad Poor Dad, “It’s not how much money you make. It’s how much money you keep.”

If you knew someone that made $1,000,000 per year, and at the end of the year, had only invested $20,000, what would your reaction be?

What if you knew someone who made $100,000 per year and invested $20,000? Did your reaction change?

Think and Talk Money is all about actively thinking and talking about money so we can help each other make informed choices with our hard earned money.

Whether you make a lot of money or a little money, it doesn’t matter. What you choose to do with that money is up to. It’s your life.

All I want is for you to make those choices from a position of informed confidence.
One response to “Better at Making or Keeping Money?”
1. Kevin
  
  January 22, 2025
  
  Great insight! The foundation is so important!
  
  Reply
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January 22, 2025
Help a Professor Out: Ask Your Money Questions Here

Think and Talk Money’s motto is “Money Wellness Together.” The more we all talk, the more we all benefit. The best way to keep the conversation going? Ask questions!

I’ve learned through teaching in law schools for the past 15 years that most of us prefer seminars with questions and answers to long lectures. Thanks for all the great questions so far! I’m hoping we can do a Q&A post like this just about every week.

Please keep the questions coming in the comments on any post, by responding to our newsletter, or on Instagram.

In our first Q&A post, we’ll cover my favorite personal finance books, whether you should keep your condo as a rental unit, and the most important question of all: what is Italian beef?

1. Do you have a favorite personal finance book that you would recommend?

What a great question. I always recommend starting with books that focus on money mindset. Like we always talk about, the first step is getting our money mindset in the right place. I would start with:

1. Rich Dad Poor Dad by Robert Kiyosaki. There’s a reason this is the best selling personal finance book of all time. If you read Rich Dad Poor Dad, your entire money mindset will be changed. Kiyosaki brilliantly shares the stories he learned growing up from his Rich Dad (really his best friend’s dad, very successful real estate investor/business owner) and his Poor Dad (his actual dad, highly educated/traditional career path). Using these two role models in his life, he makes a very compelling and easy to follow case that most of us go about life and money all wrong.

Read Rich Dad Poor Dad. It will light a fire under you like no other book I’ve read.

2. Think and Grow Rich by Napoleon Hill. Another longtime classic that will shift your money mindset. I first read this book in college when I learned my friend’s dad offered him $50 if he read this book. $50 to read a book? I’m in.

Originally published in 1937 and recently updated, Think and Grow Rich, will convince you that we can all be successful. Hill studied innovators like Henry Ford and Thomas Edison. In the updated version, you’ll learn about modern figures like Bill Gates and Mary Kay Ash. To translate the title into my own words: Wake up! Use your brain! You can be successful in any walk of life if you just stop sleepwalking through life like everyone else and do something!

Read Think and Grow Rich. You will be motivated to do that thing you’ve been saying you would do, but haven’t yet.

3. The Richest Man in Babylon by George S. Clason. A third classic originally published nearly 100 years ago. Clason wrote a simple collection of fables set in the ancient city of Babylon to illustrate the power of fundamental money habits: earn, save, invest, protect. Through his stories, you’ll see how you can get ahead in life by practicing strong financial wellness habits.

Read The Richest Man in Babylon. You’ll understand the building blocks of a healthy financial life.

4. Your Money or Your Life by Vicki Robin and Joe Dominguez. Vicki Robin and Joe Dominguez are often credited for laying the groundwork for the Financially Independent Retire Early (FIRE) movement. They have a lot to say about the relationship between money, work, and time.

Most of us are doing it all wrong. We chase money at the cost of our precious time. By making good choices about how to earn money- and as importantly what to do with that money- you can get the most out of your money and your life.

Read Your Money or Your Life. You will start to value your time for what it’s really worth.

5. Die with Zero by Bill Perkins. Perkins makes a strong case that many of us are saving too much for retirement. We work too many hours and save more money than we’ll ever need. Instead, we could be using that money during the best years of our lives to create lifelong memories.

Perkins also questions the conventional wisdom of waiting until we die to pass money onto our kids. He suggests helping our kids earlier in life when the money will be more meaningful.

Read Die With Zero. You won’t wait any longer to book that vacation you’ve been putting off for no good reason.

If you have read these books already, but it was some time ago, read them again. I didn’t fully appreciate all the lessons until I was years into my career and knew what it felt like to work for money.

2. $500 Challenge? I could never do that!

In Part 3 of our series on budgeting, I gave you 10 of my favorite tips to help stay on budget. One of the tips involved a game my wife and I play called the “$500 Challenge.”

Part 3: How to Win the Budget Game

If $500 is a nonstarter for you, increase the amount of the game. Whether you play with $750 or $1,000 or more, the point of the game remains the same. If $500 is too much for you, pick a smaller number that works. The amount doesn’t matter. The point is to set a number for yourself that will get you back on track after overspending in the previous month. January is a great time to play the game.

3. When I’m creating my budget categories, does my health club membership count as Now Money or Life Money?

When I said I‘m not a fan of a rigid budgeting framework like 50-30-20, this question illustrates exactly why. Elizabeth Warren popularized 50-30-20 in her book, All Your Worth: The Ultimate Lifetime Money Plan, first published in 2005.

In a 50-30-20 framework, you must choose what category to put your health club membership in. Same with every other borderline expenditure. What if you think working out should be Now Money, but it pushes you over 50%? OK, just move it to Life Money. Wait, now I’m over 30% in my Life Money. Why is this so hard?

Take it from me and my students who have attempted 50-30-20 budgeting, making these choices gets to be very frustrating. What is the point in agonizing over decisions like this?

So, what should you do with your health club membership?

It doesn’t matter! You saw in our really lost boy’s budget that I counted it as Now Money. Today, I’d actually probably count it as Life Money. How’s that for an answer!?

Instead of agonizing, pick a category and leave it there. The whole purpose of our budget is to generate fuel for our Later Money. Whether that fuel comes from adjustments to Now Money or Life Money is irrelevant.

In our Budget After Thinking, we’re not limiting ourselves by rigid frameworks and agonizing over spending categories. We’ve got better things to focus on, like creating more fuel for our dreams.

4. Do I need to actively budget forever?

Nope! I’m going to do a post soon on what I recommend for people that have done the budgeting thing for a while and have a pretty good idea what their spending is. If you’re at that point, and are relatively responsible, you won’t need to track your spending anymore.

Let’s look at a quick example. Say you learned that your Budget After Thinking includes $1,000 of Later Money. That means each month, your top priority is to put that $1,000 of fuel towards your financial goals.

In this plan, you’ll need a “cushion” in your checking account to make it work. In this example, let’s use $5,000 as our cushion. At the end of the month, after you’ve made your Later Money transfers out of your checking account, and you’ve paid all your bills and credit cards, you should have $5,000 left.

If you have less than $5,000 left, compensate the next month by spending less so you get back to $5,000 at the end of month 2. If you’ve way overspent, that’s an indication you are not ready to stop budgeting.

No matter what, don’t short your Later Money. Do the $500 challenge if you need to. If you have more than $5,000 left, transfer the surplus to your savings account so you can use the excess to cover budget busters or top off your checking account if you overspent a little the previous month.

This budgeting process is similar to zero-based budgeting, a concept that’s been around for a long time. I find this method takes almost all of the anxiety out of budgeting. The key is you just have to be disciplined enough that if you have less than $5,000 left at the end of month 1, you course correct in month 2 so you’re back on track.

5. I am thinking about either selling my condo or keeping it as a rental unit. What should I do?

I’m a real estate investor, so my mind always goes first to keeping the condo as a longterm rental unit. Based on the question, it seems this reader is interested in real estate investing, too. If that’s true and your financial situation permits, I would consider keeping the condo as a rental unit.

It could be a great way to see if you like being a landlord without putting time and resources into acquiring a different property. Best case scenario, you hold the condo for many years and it turns out to be a great investment. Worst case scenario, you sell it in a year or two if being a landlord isn’t your thing.

Of course, there are so many factors that go into real estate investing. You need to do your homework first on whether your condo is a plausible rental unit. Leave a comment below or reach out on Instagram if you need some help deciding if your condo might be a good rental unit.

6. What is Italian Beef?

This person, I cannot help.

Fortunately, there’s a current Emmy winning show out there about Chicago and Italian beef!

Thanks for all the questions! Please keep them coming in the comments on any post, by responding to our newsletter, or on Instagram.

January 17, 2025
You will Easily Know and Feel Money Well Spent

Coming up, we’re going to do our first Q&A post where I’ll answer questions from readers. So many good questions have already come in. Please keep them coming! Leave a comment below, subscribe to our newsletter, or find us on Instagram.

One question we already received was so good, I’ve answered it here in a dedicated post. The question came from someone that I love to talk money with. He read the Think and Talk Money Welcome Post where I mentioned that my credit card debt was partially due to having Chicago Cubs season tickets.

He knows that I’m a big Cubs fan and asked me if I would I really trade all those great experiences and memories just to save money.

It’s such a good question because it points to the intersection of money and life. It took me all of two seconds to know and feel the answer was, of course, “No, I would not have given up my Cubs tickets.”

He was absolutely right. If I gave up my tickets in 2010 when I was struggling with debt, I never would have been in the stadium in 2016 with my family for the Cubs’ World Series run. Those are some of the best memories I have.

In hindsight, I would have done some things differently so I could enjoy the experiences without the money worries. Let’s talk about that.

But first, story time.

Our nice friends, Phil and April.

Throughout that World Series run, we sat next to the nicest couple in the world, Phil and April. Phil was a diehard Cubs fan. April was more reserved. Both were smart and very friendly. They were enjoyable people to sit with. We chatted baseball, mostly. Pitching changes. Send the runner. Question the manager. That sort of thing. Completely normal, unremarkable stuff.

Until Game 5.

Game 5 was played on a crisp, October evening. Jackets and beanies weather in Chicago. Phil and April were sitting next to my brother and I, as usual. Mike Napoli was playing first base for Cleveland.

Around the 3rd inning, a jerk four rows in front of us taunted Napoli with a crude, juvenile insult. It was apparent the jerk was doing his part to keep Old Style in business for another year.

Phil was nice…and tough.

Anyway, the rest of our section was none too pleased with the jerk’s shameful display. Nobody was more displeased than Phil, who did what the rest of us were thinking but were too scared to do ourselves. Phil stood up. In so many words, Phil sternly recommended that the jerk knock it off and show some class.

The jerk turned around, aggressively scanning the crowd for the man who had publicly shamed him. The jerk had that unmistakable look in his eye that meant, “Let’s dance.” My brother and I were a bit worried for our nice… and all of a sudden tough…friend, Phil.

April did not look worried. She sat there like nothing strange was happening. Almost like she had seen this movie before.

When the jerk locked eyes with Phil, he immediately saw that Phil was happy to accept the invitation to tango. Well, the jerk was sloppy, but he had enough sense to recognize that he wanted no piece of Phil. He wisely turned back around and sat down quietly.

That was the last we heard from the jerk that night. Our nice, and now confirmed tough friend Phil had restored order.

Phil’s on TV!

On the day of the Cubs’ championship parade, my brother called me excitedly, “Phil’s on TV! Phil’s on TV!” It didn’t register right away who he was talking about. When I turned on the TV, sure enough, there was Phil, our World Series friend. I was so confused. Phil was giving an interview on set with the Cubs announcers. Our nice (and tough) friend, Phil? On TV?

I turned up the volume and listened to Phil talk about his experience watching the Cubs win the World Series. Maybe I was hoping he’d mention his nice friend, Matt. He didn’t.

I still couldn’t figure out why Phil was on TV. Why won’t they just put his name on the screen already!?

It wasn’t until the end of the interview that I learned who Phil was. All I could do was laugh.

Our nice, and confirmed tough, friend Phil is better known as World Wresting Entertainment (WWE) champion and icon, CM Punk.

His wife? WWE champion and bestselling author, AJ Mendez.

Life, huh?

A memory I wouldn’t trade for anything.

As much fun as the World Series was, my favorite Cubs memory actually took place during the 2015 season, the year before they won the World Series. It was during the 7th inning of Game 4 of the NLDS. This was the game where the Cubs knocked the rival St. Louis Cardinals out of the playoffs.

In the 7th inning, with the Cubs up 5-4, Kyle Schwarber hit one of the most epic home runs in Cubs history, landing his moonshot on top of the new right field video board. It was such a feat, the ball is now enshrined where it landed.

The entire stadium was rocking so loud, you could feel the ground shaking beneath your feet. Every fan was jumping up and down, hugging anyone close enough to touch. We were all dancing like nobody was watching. That moment was pure happiness.

I was there with my mom. A lifelong Chicagoan, she too was jumping up and down and high-fiving all the other diehard fans in our section. After the game, we met up with my wife at a restaurant and relived the victory over Champagne.

What does this have to do with money?

What does any of this have to do with money? When I said money was emotional, this is what I meant. I wouldn’t trade that memory with my mom for anything. My brother and I still joke about our nice friends, Phil and April.

These are the types of experiences that I want more of. These memories, and the desire for more like them, continue to motivate me today. I want to be good with money, not so I can stash it in the bank, but so I can use that money to create joy for me and my family.

So, to get back to my friend’s question. Would I really have given up my Cubs tickets? No, absolutely not.

What would I have done differently to keep the tickets but not the worries?

In hindsight, what could I have done differently so my Cubs tickets were not a major source of financial worry?

Even back then, I knew and felt that spending money on Cubs tickets was money well spent. I didn’t need to wait for hindsight to come to that conclusion.

That said, I would have put more thought into solutions to keep the tickets and the experiences without the debt and the shame. I would have looked at expenditures in my Now Money and Life Money buckets that were ripe for adjustment.

Maybe that would have meant giving up something else less meaningful, like my gym membership. Or, I could have looked into a side hustle as a way to earn more money, something we’ll explore at another time.

Whatever the solution was, I would have been more intentional with my decisions so my experiences were not overshadowed by my worries.

Talking money is really just talking life.

This was such a good question to illustrate a foundational concept of Think and Talk Money. Yes, we discuss money. But, we’re really talking about our lives and our experiences. Money is just a tool to help us.

And before you get cynical on me, of course money is not required for good experiences. That’s not the point. What I’m suggesting is that if you’re spending most of your time each week at your job, like most of us do, shouldn’t we think about the money we earn so we can maximize experiences like I had with my mom?

Think and Talk Money is all about awakening that thought process so we can use the tool of money to fuel meaningful lives. Would you use that tool to get you Cubs tickets? Or, do you prefer trips to Disney World? What if money is just the currency that you trade to get your time back, so you can do more of what you want with who you want?

Whatever it is that you’re after in life, thinking and talking about money will help get you there.

Keep the questions coming!

January 15, 2025

	10% Return	9% Return
After 1 year	$5,750	$5,725
After 10 years	$54,296.63	$51,497.20
After 20 years	$188,643.75	$167,491.39
After 30 years	$537,105.57	$442,091.81
After 40 years	$1,440,925.81	$1,092,170.89

Loan Type	Level	Interest Rate
Direct Subsidized and Unsubsidized	Undergraduate	6.53%
Direct Unsubsidized	Graduate/Professional	8.08%
Direct PLUS	Parents or Graduate/Professional	9.08%

	January	February	March
NET WORTH

How to Budget with a Real Life, Really Lost, Boy

In Part 1 of our series on budgeting, we learned that the art of budgeting is having a plan for your next dollar before you earn it. That way, you avoid having disappearing dollars. It’s not a good feeling to work hard all month and then realize you have nothing to show for it.

We also learned the three steps to get started with a realistic budget based off your current personal situation:

Step 1: Track your spending for at least 3 months.
Step 2: Separate your spending into 3 main categories.
Step 3: Make adjustments so your spending better aligns with your true motivations and desires in life.

Here, in Part 2 of our series on budgeting, we’ll use a real life example to work through the budgeting process together. Through this example, you’ll see how even seemingly minor adjustments can make a big impact to your budget.

In Part 3, we’ll take a deep dive into my top 10 strategies for making thoughtful adjustments to our budgets so we can add more fuel to our financial and life goals.

Before we get ahead of ourselves, let’s meet a real life, really lost, boy.

Learning from a real life, really lost, boy.

In today’s budgeting example, we’ll look at real numbers from a real life, really lost, boy: 26-year-old Me. Remember when I told you I started a money journal in 2010? The dollar amounts below are what my actual income and spending looked like back then, adjusted for today’s dollars and rounded for easier math.

For some context, I was 26-years-old, living by myself in Chicago (no dependents, no pets), and working as a slasher. Not a joke, that was my actual job title. I worked for a judge with the Appellate Court of Illinois, and as the junior member of the team, my responsibilities included lawyer duties and secretarial duties. I was a judicial law clerk “slash” secretary. Hence, slasher. Lawyers are funny, huh?

In today’s dollars, I earned an annual salary of $90,000.00. That means I earned $7,500.00 per month. We did not have bonuses at the courthouse, so the $90,000.00 salary was my full compensation.

How to benefit from this budgeting example.

The benefit of going through an example like this is not to compare your situation to mine. Your income might be much higher or much lower. Same with your expenses. Instead of the numbers, focus on the thought process so you can start to think about adjustments that suit your current life.

Below, you’ll see charts showing that I completed each of our three budgeting steps:

Step 1: I tracked my spending for 3 months and reflected the average monthly amount for each expenditure in the column labeled “Baseline Budget.”
Step 2: I created a separate chart for each of the three main categories: Now Money, Life Money, and Later Money.
Step 3: I made thoughtful adjustments to better align my spending with my true motivations in life. I illustrated my decisions in the third column labeled “Budget After Thinking.”

Now Money

Now Money is what you need to pay for basic life expenses. These are expenses that you can’t avoid and should be relatively fixed each month. If you have expenses for kids, pets, and other fixed life expenses, be sure to include them in your Now Money category.

Now Money	Baseline Budget	Budget After Thinking
Apartment rent	$2,200	$2,200
Renter’s Insurance	$20	$20
Parking spot	$430	$0
Gas for car	$40	$40
Car Insurance	$50	$30
Car Maintenance	$150	$150
Utilities	$120	$120
Internet	$60	$30
Cell Phone	$55	$35
Groceries	$300	$240
Personal upkeep(wardrobe, haircuts, etc.)	$100	$75
Gym Membership	$360	$360
Budget Busters	$300	$300
Now Money Total	$4,185	$3,600

What I learned tracking Now Money.

Now Money is pretty easy to track. There is not a whole lot of variance from month to month.

You’ll notice immediately that I had one major expenditure that needed immediate adjustment. That parking spot for $430? Definitely did not need that. I lived 2 miles from work in one of the best cities for public transportation in the country. It was frustrating at times to look for street parking, but I didn’t use my car enough to justify the cost of a parking spot.

The other adjustments resulted in more minor savings, but don’t ignore these. Each adjustment took relatively no effort to make, just a little bit of thought beforehand. When I say relatively no effort, I mean three phone calls and three reductions for car insurance, internet, and cell phone. That’s $70 saved per month, or $840 saved per year, for about 30 minutes of effort.

Otherwise, I decided to show a bit more restraint when grocery shopping and found a cheaper place to get my haircut.

All told, I reduced my Now Money Budget After Thinking by $585 per month with a little bit of thought and hardly any effort. That’s $7,020 per year of fuel for my Later Money.

Life Money

Two happy girlfriends looking on the shopwindow while standing with shopping bags near the mall because they created a budget with think and talk money

Life Money is what you spend every month on things and experiences in life that you love.

Life Money	Baseline Budget	Budget After Thinking
Social Life (dining out, concerts, ball games, etc.)	$800	$700
Purchases (books, fun clothes, gifts, etc.)	$200	$150
Travel	$500/mo ($6,000/yr)	$400
Cubs Season Tickets	$400/mo ($4,800/yr)	$400
Budget Busters	$200	$200
Life Money Total	$2,100	$1,850

What I learned tracking Life Money.

When you’re reviewing your Life Money expenses, don’t be overly aggressive in cutting here. These are the things and experiences that make your life enjoyable. Even modest adjustments can make a big difference in the long run.

In Part 3 of our series on budgeting, I’ll show you my favorite strategies for adjusting your Life Money without sacrificing the things and experiences you love.

As we saw with Now Money, with some thought and very little effort, I reduced my Life Money Budget After Thinking by $250 per month. That’s another $3,000 of fuel for my Later Money.

Some bonus tips for tracking Life Money

Life Money is the most annoying category to accurately track. These expenses vary month-to-month. You may buy concert tickets or have a trip planned some months, but not every month. So, how do we get an accurate picture of our Life Money?

This is why I recommend you track your spending for at least three months. You’ll get a more accurate picture because you can average your Life Money spending over those 3 months and balance out any inconsistencies. Of course, if you have the patience to track your spending for even longer, you’ll get an even more accurate picture.

Fortunately, it is easier to track our spending today with the availability of apps and online banking platforms that can automatically track your spending. We’ll review some of these tracking options in a future post.

Keep it simple when tracking your Life Money.

I highly recommend you keep it simple when tracking your Life Money. Many of my students give up on budgeting because they make this category more complicated than it needs to be. I really struggled with this at first because I was so concerned about doing it right.

What I learned was that it doesn’t matter. If you go to happy hour with friends, don’t agonize over whether that goes into your “Dining Out” category or your “Drinks” category? It doesn’t matter. Make it easy on yourself. Have one category called “Social Life” and move on.

Don’t forget that the point of budgeting is to learn your current habits so that you can make thoughtful adjustments. Don’t let yourself become so obsessed with the details that you get stressed and give up on budgeting.

Break down large, annual expenses on a monthly basis.

One last tip, when you have large expenses, like season tickets or a big vacation, it’s helpful to break down those expenses on a monthly basis. That way, you can see how much those individual purchases are impacting your overall monthly goals.

I’m not suggesting you actually pay for that trip over 12 months (like on a credit card), or that you can only spend that much on travel in a certain month. Think of it this way: you likely will not take a trip every month of the year.

Using my Budget After Thinking figures, let’s say I did not take a trip in January, February or March. That would mean that for my planned April trip, I now have $1,600 available that I can use, assuming you didn’t let those dollars disappear. In Part 3, we’ll talk about what to do with the money you didn’t spend in the first three months to make sure they don’t disappear when April rolls around.

Later Money

happy family mother father and children dancing at home in their home they bought by budgeting with think and talk money.

Later Money is what you are saving, investing, or using to pay off debt. This is the fuel for your most important goals.

Later Money	Baseline Budget	Budget After Thinking
Student Loans	$1,100	$1,100
Credit Card Debt	$150	$900
Savings	$0	$50
Pretax Retirement (401k)	$300*	$300*
Other Investments	$0	$0
Total Later Money	$1,250	$2,050

*This was pretax money to my employer’s retirement plan. For budgeting purposes, it’s easier not to count the amount here.

What I learned tracking Later Money.

This is where all your efforts in tracking your spending and making thoughtful adjustments starts to pay off, IF you have a plan for your next dollar before you earn it.

In my baseline budget, I was very good about paying my student loan debt in full every month. I knew enough not to mess with student loans. The consequence was my credit card bills were the last to get paid each month. This usually meant only paying the required minimum since I had run out of money by this point. It also meant no money for savings or investments.

In my Later Money Budget After Thinking, because of the thoughtful choices I made with my Now Money and Life Money, I created $800 of fuel.

With that fuel, I had committed myself to paying off my credit card debt as quickly as possible. I also wanted to start the habit of saving each month. So, I added $750 of fuel to my credit card bills and $50 of fuel to my savings. I stayed true to my plan and put that money to work. Otherwise, what was the point of budgeting?

Some bonus tips for tracking Later Money.

When I run through this exercise with my students, I usually get a question along the lines of, “I’m aiming to save 20% of my income each month. Should I count the pretax money I’m saving for retirement towards that 20%?”

It’s a sneaky question. Think about it: the rest of your budget relates to your take-home paycheck, meaning your after-tax money that hits your checking account. Your retirement savings are typically withdrawn from your paycheck before taxes and before you ever see the money.

How to account for your pretax retirement savings can be another one of those tricky areas when you start budgeting. In my example, you may have noticed that I contributed $300 of pretax money through my employer’s retirement plan, but I did not count that money in my budget calculations.

Should you count that money if you’re aiming to save a certain percentage each month? Setting aside that this question demonstrates how a standardized framework, like 50-30-20, can be very confusing…

Yes! Give yourself credit where credit is due! Contributing to your retirement plan is a good choice. If you are aiming to save 5% or 10% or 20% each month in Later Money, count your pretax money towards that goal.

Make budgeting as easy as possible for yourself.

That said, I want to encourage you to make budgeting as easy as possible for yourself so you stick with it. In my example, I excluded the $300 pretax retirement savings because I am creating a plan for the $7,500.00 that hit my checking account each month. These are the dollars in jeopardy of disappearing.

The entire point of your budget is to create a plan for your next dollar before you earn it. You already wisely chose to save your pretax dollars by enrolling in your employer’s retirement plan. Those dollars are already accounted for and working for you. They are not disappearing dollars. You did your job!

Like in my example above, you can exclude the amount you’re saving for retirement in pretax dollars from your budget calculations. Feel good knowing that you’re saving that money. It’s icing on the cake. No need to worry about it when budgeting.

The real life, really lost, boy was starting to figure it out.

Let’s look at the complete picture before and after I started the budgeting process:

	Baseline Budget	Budget After Thinking
Now Money	$4,185	$3,600
Life Money	$2,100	$1,850
Later Money	$1,250	$2,050
Total	$7,535*	$7,500

Income of $7,500

With some thought and relatively little effort, I was able to stop the disappearing dollars and start making progress towards my ultimate life goals.

In my baseline budget, I was spending more than I earned each month. That meant I had no money to pay my credit card bills, which kept getting bigger because I kept spending. In my Budget After Thinking, I broke my habit of living above my means and generated $9,600 of fuel in one year for my Later Money goals.

Taking these first steps may seem like minor steps on the way to financial independence, but they were the most important steps I ever took on my personal financial journey.

The real life, really lost, boy was starting to figure it out. The spark was lit. There was no turning back.

January 11, 2025

How to Make a Budget After Thinking
What would you do right now with $20,000.00?

Imagine it’s a $20,000.00 bonus that was unexpectedly deposited into your checking account.

No strings attached. It’s your money to do anything with.

Answering this question should be fun.

It’s a free $20,000.00!

But, my guess is that if you thought seriously about it, you didn’t have much fun at all.

Many of us likely struggled with what to do. We want to do the right thing, but we don’t know what that right thing is.

Should we pay down debt?

Should we invest?

Take a vacation?

Do nothing?

Do you have a plan for where your next dollar is going?

The reason we struggle with decisions like this is because most of us don’t have a plan for where our next dollar is going. What ends up happening is we do nothing.

Our money hits our checking account, we spend it on this or that, and pretty soon that money has disappeared. We haven’t used the money to advance any of our priorities. It’s just gone.

To me, this is one of the most important money mistakes that we need to fix right away. Having a plan for our money, before we earn it, is essential if we want to reach our goals.

With a plan, we can eliminate the disappearing dollars with confidence that our money is being used to serve our purposes.

And, that leads us to budgeting.

Budgeting is having a plan for your next dollar before you earn it.

Here, in Part 1 of our series on budgeting, we’re going to learn that the art of budgeting is having a plan for your next dollar before you earn it. That way, you avoid having disappearing dollars.

We’ll learn how to create our baseline budget based off of our current personal situation. Wherever you currently are in life, you can then make adjustments to your spending based on what you truly want.

In Part 2 of our series on budgeting, we’ll use a real life example to work through the budgeting process together. Through this example, you’ll see how even seemingly minor adjustments can make a big impact to your budget.

In Part 3, we’ll take a deep dive into my top 10 strategies for making thoughtful adjustments to our budgets so we can add more fuel to our financial and life goals.

In the end, I’ll show you how to use the information you’ve learned about yourself to create a lasting money plan that does not require you to track every penny.

What I mean is that if you can practice these budgeting tips for just a little while, you actually won’t need to budget anymore.

That’s when thinking and talking about money starts to be a lot of fun.

Let’s dive in.

Budgeting is about having a plan ahead of time.

The art of budgeting is to know what you want to do with your money before it hits your checking account.

Otherwise, it’s too late. Those dollars will disappear.

In fact, the word “budget” is synonymous with “plan”.

How do you come up with a plan?

I teach my students that to create a budget, you need to first study your own personal situation to figure out where your dollars are currently going.

Then, you can figure out a plan for how to use your next dollar before you earn it. This applies not just to bonuses or other unexpected dollars, it applies to every dollar you earn.

When you put the time in to study your own habits, you can then create a realistic budget. When you have a realistic budget, you will have confidence that your dollars are working for you.

Some dollars will be used to pay your ordinary life expenses, some dollars will be used for all the things in life you love, and some dollars will go to your financial goals.

That’s all there is to it.

Let’s take a look at three steps to take when first creating a budget.

Step 1: Track your spending for at least 3 months.

I recommend everyone, regardless of where you are in life, start with this first step of tracking your spending for at least three months.

Without knowing where your money is currently going, you won’t be able to think about adjustments.

I won’t lie to you. This step can be hard and you probably won’t like it. This is the step that makes people think budgeting is a nasty word. I get it and don’t blame you for having that reaction.

Still, there’s no getting around this first step. Remember, you don’t have to budget forever, just long enough to learn your own behaviors towards money.

Please know that many of us struggle with this first step. You might not like what you learn by tracking your spending.

When I first started budgeting, I learned that I was $20,000.00 in debt and was spending way more than I earned.

That wasn’t fun, but I’m happy that I put in the effort to find my blindspots and make adjustments.

I often think to myself, “Where would I be today if I didn’t go through this process 15 years ago? How much further into debt would I have fallen?”

Talk to your people as you go through the budgeting process.

One last thing, budgeting is one of those areas where it can really help to talk with our people along the way for support and encouragement.

You don’t have to budget in secret. We’re all in this together. Put the mental energy into this step, so you can stop wasting mental energy worrying about money and start getting energized thinking about money.

In Part 2 of our budgeting series, we’ll talk about the different ways you can track your spending. I’ve used apps, spreadsheets, and even the notes function on my phone.

The good news is, tracking your spending is easier today than it’s ever been.

Regardless of how you track your spending, be honest with yourself. If you intentionally or mistakenly leave out certain expenditures, you won’t learn where your money is actually going.

A budget, which is just a plan, is only as good as the data it’s built off of. Be honest about your data.

One quick note: Budgets are usually done monthly, so you’ll want to create a separate accounting for each month you tracked.

The reason we track three months of spending is so you’ll be able to identify any patterns or inconsistencies in your spending from month-to-month.

This helps ensure you’re making decisions based off the best data possible.

Step 2: Separate your spending into three three main categories.

Great work completing the first step! That wasn’t easy, but you did it.

Now that you have tracked your spending for three months, you can assign each expense into separate categories.

Most personal finance experts agree, though we have different names for each category, that you should divide your money into three main buckets.

I refer to these buckets as:
1. Now Money
2. Life Money
3. Later Money
1. Now Money

Now Money is what you need to pay for basic life expenses.

These expenses include housing, transportation, groceries, utilities (like internet and electricity), household goods (like toilet paper), and insurance.

These are expenses that you can’t avoid and should be relatively fixed each month.

2. Life Money

Life Money is what you are going to spend every month on things and experiences in life that you love.

This bucket includes dining out, concerts, vacations, subscriptions, gifts, and anything else that brings you joy.

We can’t be afraid to spend this money. This bucket is usually what makes life fun and exciting.

The key is to think and talk so you are spending this money consistently on things that matter to you.

3. Later Money

Later Money is what you are saving, investing, or using to pay off debt.

This bucket includes long term goals, such as retirement plan contributions (like a 401k or Roth IRA), college savings for your kids (like a 529 plan), emergency savings and paying off student loan or credit card debt.

This bucket also includes any shorter term goals, like saving for a wedding or a downpayment for a house.

Most fun of all, this bucket includes any investments you make to more quickly grow your wealth, like investing in real estate or the stock market.

You’ve probably guessed it already. Later Money is the key category that fuels your ultimate life goals, like financial independence.

The more you fuel this category, the faster you can reach your goals.

Don’t worry about assigning a percentage to each category.

I have intentionally not recommended target amounts or percentages to allocate to each of your three categories.

The reason is because of what I’ve learned from my students over the years. I’ll lay out my full reasoning in a separate post.

The short version is that in my experience working with law students, assigning target percentages for each category is counterproductive.

When I used to teach my students to aim for certain percentages in each category, I could tell that they would get discouraged as soon as I put the numbers on the slideshow. I completely understand why.

Each of us is starting in a different place. If you are currently spending 80% of your monthly income on Now Money, it’s not helpful to have someone tell you to create a budget that automatically drops that level to 50%.

My students would tune me out as soon as I put those numbers on the board.

Now, I teach my students to think and talk about their current personal realities and aim for steady and lasting improvements.

I want my students to create a plan that will last, not an unrealistic plan that they give up on after a few months.

So, whatever amount you’re currently spending in each bucket, that’s what we’re going to work with as we move on to step 3.

One other thing before you move on to step 3: don’t get hung up stressing about what type of expense goes into each category.

Sometimes, it gets tricky. Do clothes you buy for work count as Now Money or Life Money?

Don’t stress. It doesn’t really matter. It’s not worth the mental energy thinking about it. Just stay consistent and move on.

If you still want a target, aim for 20% of your income added to your Later Money each month.

All that said, I know that some of us operate better if we have a specific target in mind. If that’s you, the conventional wisdom is to aim for 20% of your income added to your Later Money each month.

Targeting 20% savings each month was popularized in Elizabeth Warren’s book, All Your Worth: The Ultimate Lifetime Money Plan, first published in 2005 (before she was Senator Warren, she was a law professor and author).

Senator Warren advocated for a 50-30-20 budget framework with 50% going to fixed costs (what I call “Now Money”), 30% going to wants (“Life Money”), and 20% going to financial goals (“Later Money”).

Most personal finance experts agree that the 50-30-20 framework is a solid plan for your budget.

In theory, I agree.

In reality, I’ve become convinced through working with my law students that the 50-30-20 framework does not cut it in today’s environment. Like me, some experts have also recognized a 60-30-10 framework may be more appropriate today.

While I agree the 60-30-10 framework is more realistic, my experience has taught me that assigning rigid percentages is just not a practical framework for most people at the beginning of budgeting process.

Step 3: Make adjustments so your spending better aligns with your true motivations and desires in life.

OK, so now that you have assigned your spending to each of the three categories, the next step is to think and talk about your current habits and whether you’re spending matches your true motivations and desires in life.

If you decide that your spending does not match your life values, then it’s time to make some adjustments. What kind of adjustments?

We’ll talk much more about how to make those adjustments in Part 2 of our budgeting series.

In essence, my budgeting philosophy is to aim for steady and lasting improvements based on your current reality and your ultimate motivations. What does that mean?

Your budget is really just about finding fuel for the best things in life.

This is where we circle back to the importance of having a clear understanding of what we want out of our money. Money is a tool. Ask yourself:

“Is your current spending aligned with how you want to use your money to fuel your goals and ambitions?”

If not, you can make incremental adjustments as you progress towards your ideal spending alignment.

The idea will be to continuously add more fuel to our Life Money and Later Money, the buckets that represent the things we love the most (Life Money) and our most important life goals (Later Money).

You can make small adjustments, which are usually easier and faster to put in place. These adjustments might include dining out a bit less, cutting out a concert, or cancelling a gym membership or subscription you don’t use.

You can also make big adjustments, like moving to a cheaper part of town or getting rid of you car.

Small or big, the key is that when you make these adjustments, you repurpose that money in a thoughtful and intentional way. You’re now starting to align your budget with your money motivations.

With each thoughtful decision, you’re progressing towards your best money life. Most importantly, you’re learning about yourself and developing lasting habits. You won’t get discouraged and give up on budgeting.

As we wrap up Part 1 in our budgeting series, keep the three initial steps in mind.
- Step 1: Track your spending for at least 3 months.
- Step 2: Separate your spending into 3 main categories.
- Step 3: Make adjustments so your spending better aligns with your true motivations and desires in life.
As you start to implement these steps, you’ll start to have a clearer picture of how your money can work for you.

And, the next time you’re asked what you would do with $20,000.00, you’ll know the answer ahead of time because you have a plan in place.

Answering the $20,000.00 question will be fun. No more anxiety-inducing, disappearing dollars.
January 8, 2025
You Should Want to be Good with Money
So far, we’ve talked about why we need to think about money, why we need to talk about money, and Italian beef. Before we dive deep into budgeting, saving, paying off debt, and investing, we need to make sure our money mindset is locked in.

I hope you’ve started thinking about why you want to be good with money. This will be personal for all of us and may change with time. The more you think and talk about why you want to be good with money, the clearer your motivations will become.

Three powerful reasons why I want to be good with money:
1. Money can give you choices.
2. Money can give you personal power.
3. Money can give you time.
1. Money can give you choices.

This may seem obvious, but when you have money, you have choices. You can choose where to live. You can choose who you work for, or can work for yourself. You can choose how you eat, exercise, relax, and travel.

This holds true whether you make $50,000 or $250,000. Of course, your options may be different. The point is that when you’ve made good money choices, you’ll at least have options.

2. Money can give you personal power.

This is another way to say that money gives you control of your life situation. If you are in a bad relationship, a bad job, or just need a change, money gives you the personal power to do something about it.

3. Money can give you time.

When you have enough money to be truly financially independent, you have earned the freedom to do whatever you want with your time. You can spend your working hours at a job that is meaningful to you. You can spend more time with people who are meaningful to you.

It’s been said many times, “time is our most precious resource.” When you have money, you can buy your time back.

Photo by Aron Visuals on Unsplash

The most important part of talking is listening.

From the time we’re in diapers, we start learning by observing people older than us. As my family prepares to leave the house, my son has recently started chanting “Let’s roll! Let’s roll! Let’s roll!” Yup, that one’s on me.

The same idea applies when it comes to life and money. I’ve mentioned before how much I’ve learned about life from listening to my clients suffering with mesothelioma. I’ve learned even more by listening to my family, friends, and mentors.

When you listen to enough people with more years behind them than you, certain themes continue to surface, like the importance of family. You’ll hear about creating experiences and memories, usually involving vacations or time with friends.

One thing I’ve never heard? Someone saying “I wish I spent less money on doing the things I loved.”

You don’t have to agree with everything you hear, but the act of listening will start turning the wheels in your own mind. And when your wheels start turning, you can’t be afraid to spend money on the things that make you happy.

Why do we need to actively think about the things that make us happy?

A sneak peak of how I look at budgeting.

I said we weren’t going to discuss budgeting yet, and we won’t. “Budgeting” is kind of a nasty word. Nobody likes to say it out loud, let alone aggressively do it each month. This is why we spend so much time in the beginning talking about our money mindset.

A budget is worthless if you are not motivated to stick to it. Sure, you may stick to your budget plan for a month or two, but you’ll fall back into old habits if you haven’t prioritized what matters most to you.

We’ll save the particulars for another day. A sneak peak at how I teach my students:

Like it or not, everyone needs a budget… for a little while. Once we’ve identified what we spend money on and made some thoughtful choices, most of us don’t need a rigid budget.

If you’ve thought and talked enough about your true motivations, you won’t need a budget either. Each month, you will take care of your obligations, grow your net worth, and use the rest of your money to buy things you love and to create experiences.

Talking money should be emotional.

If you’re being honest with yourself, talking money should be emotional. Remember, most of us exert mental energy pretending we’re not worried about money. My challenge to you is to exert that same energy into figuring out why we behave in certain ways when it comes to money.

The reason it matters is because we’re soon going to be talking in detail about budgeting, which is just the process of making thoughtful choices about how we spend our money. If we don’t know why we choose to spend in certain ways, we won’t be able to make lasting adjustments to our budget.

Have you ever thought about why you dine out?

Photo by Kevin Curtis on Unsplash

Let’s look at an example to start prepping ourselves for the budgeting process. This is a good time to revisit one of the main principles when talking money with your people: no judgments allowed. We’re not looking to shame ourselves or each other. We are aiming for understanding so we can make thoughtful decisions.

Say you’ve looked at your monthly spending and realize that you’re spending a lot of money dining out. The key to creating a budget you will actually stick to is actively thinking about why you spend so much money dining out. You might learn that dining out is an essential part of your best life. You might learn it’s really not.

Ask yourself these questions:

Is there an emotional reason you dine out frequently, like it makes you feel successful? Or, you like spending time with friends? Do you get joy out of trying new dishes?

Maybe it’s something else entirely and unrelated to your emotions. Maybe you don’t have time to cook at home because of your work schedule? Maybe it’s just laziness?

It might have nothing to do with how often you eat out, but where you choose to eat and what you choose to order. Do you order a bottle of wine with dinner? Could you have drinks at home beforehand instead?

When you honestly think about and answer these questions for yourself, you can start to make thoughtful decisions on whether that spending matches your priorities. If it doesn’t, then it’s an area for adjustment.

And, that’s really all that budgeting is. Not so nasty, right?
January 6, 2025
How to Think About Money and Italian Beef
Too many of us are really good at pretending not to worry about money.

“Credit card debt?” Everyone has it.

“Emergency savings?” My job is secure.

“Retirement?” I have so much time.

Accept money for the tool that it is.

Instead of honestly assessing our relationship with money, we actively ignore it. Yes, actively ignore. We don’t passively hide from our credit card bills. We all have the credit card apps on our phones and receive multiple emails about our bills. We know what the numbers are, and we bury that knowledge. We exert mental energy to not think about our money.

Let’s stop doing that and re-frame how we think about money. Instead of convincing ourselves that we’re not worried about money, let’s accept money for the tool that it is. Let’s get energized thinking about what money can do for us.

Thinking about money does not make you a bad person.

Thinking about money does not make you a bad person. Always remember what money is: a tool. You are not a bad person for wanting to use that tool to build the best life for you and your family.

Remember, the goal is not to fall in love with or obsess over the dollars in your bank account. The goal is to think about how you can use those dollars to maximize your life experiences. When you start thinking like that, money is energizing.

A higher income won’t cure your money worries.

You are not immune from worrying about money just because you have a high income. Ask people further along in their careers if earning more money magically solved all their money worries. A lot of times, the opposite is true.

The more we earn usually means the more we spend. We tell ourselves that we deserve to spend more. Or, we need to spend more to match our neighbors or colleagues. You can see this through the clothes people wear, the vacations they take, the restaurants they eat at. This habit of spending more, even as we earn more, explains why credit card debt in America continues to surge.

The other thing about earning more? It also usually means we’re working more. If you were worried about money when you had more available time to think about it, what’s going to happen now that you’re working longer, harder hours?

Vicki Robin, often credited for laying the groundwork for the FIRE movement, has a lot to say about the relationship between money, work, and time. Her book Your Money or Your Life is a must read.

“Sushi Rice” by Skitter Photo/ CC0 1.0

I could go for an Italian beef.

Years ago, my friend came to Chicago to visit. He loves good food and treated me to one of the premier restaurants in the city. Very fancy, Japanese menu. 12 courses. Sake pairings. At one point, my friend spilled some sauce on his shirt. Having noticed his predicament, the waiter walked over and discreetly handed him a stain removal pen folded in a napkin. Classy, right?

It was one of the best dining experiences I’ve ever had, but it had nothing to do with the food. I loved being there with my friend, and he knows it wasn’t about the food.

Towards the end of the meal, I got up and went to the bathroom. I returned to my friend and the couple at the table next to us gushing about the meal. Turning to me, one of them asked, “Did you absolutely love the food, too?” He choked on his Unagi when I responded, truthfully, “I could really go for an Italian beef.”

I want you to spend your money.

OK, so what’s the point? I am in no way saying we should all stop spending money. Or, that we shouldn’t use our money to enjoy what we want in life. Quite the opposite, actually. I want you to prosper. What I really want is for you to define for yourself what a prosperous life means.

If that means you want to use your money to eat Japanese delicacies instead of Italian beef, please do! Just do it because you put some intentional thought into how spending your money that way fits into your overall life experience.

Get energized thinking about money.

If you’ve read this far, I’m assuming that you’re tired of pretending not to worry about money. You’re tired of treating money just like everyone else. You’re tired of fooling yourself that if you just made more money, everything would be fine. You want the worrying to stop.

Now, you want to feel like you’re moving forward. You’re ready to be energized about using money as a tool to reach your hand selected goals, regardless of how much you make.

To start moving forward, we need to change how we exert our mental energy when it comes to money. In the beginning, many of us exert mental energy into making excuses about our money. Or maybe worse, we actively ignore our money. We convince ourselves that we’re just like everyone else. We pretend not to worry.

Let’s flip that around. Instead of exerting mental energy to ignore our money worries, let’s get energized thinking about how we can use money as a tool to build our lives. It starts with discovering what truly motivates us. Only then can we talk about strong personal finance habits. Without the motivation, we’ll slip back into that existence of pretending not to worry.

There’s no dress rehearsal in life.

Life doesn’t come with a dress rehearsal. There’s no practice game to test out new plays. We need to think about our motivations now and continue to think about those motivations as we go.

You’ll soon hear all about my Tiara Goals, my made-up name for what truly motivates me. At this point, I’ll share the simple recognition that we each only get one life. I don’t say that to be morbid or depressing. I don’t say it to be inspirational, either. I’m saying it simply because it’s true.

Bill Perkins, author of Die with Zero, makes a very convincing argument that most of us wait too long to start using money to create life-changing experiences. You should read Die with Zero and talk about it with your people. This book has led to more money conversations with my friends and family than any other book I’ve read.

This truth is a powerful reminder for me to use money as a tool to accomplish my Tiara Goals. That truth helps explain why I work hard for my clients with mesothelioma, own rental properties, teach law students, and now write this blog.

I encourage each of you to start thinking about what truly matters to you. Not in a theoretical sense. Not what you expect other people would say should matter to you. What you, after deliberate thought, believe truly matters. You won’t have all the answers right away, but you need to start somewhere.

For now, let’s start by helping each other. Let’s stop pretending that we aren’t worried about money, so we can do something about it.

“Credit card debt?” Yup, and I’m attacking it.

“Emergency savings?” Growing each month.

“Retirement?” Not a problem.

“Unagi?” Eh, I’ll have the Italian beef. Dipped, hot peppers.
4 responses to “How to Think About Money and Italian Beef”
1. Kevin
  
  January 11, 2025
  
  This really hit home for me! I read the book Die With Zero, and loved it.
  
  Reply
  
  Matthew Adair
  
  January 12, 2025
  
  Glad you enjoyed the post! And thank you for being a consistent reader of Think and Talk Money!
  
  Reply
2. SA Bandoni
  
  January 12, 2025
  
  So, is the Italian beef like a ‘steak & cheese sub’ in Boston?…if so, then , hell yes… Italian beef over Unagi every time. It is great to see you tackle the topic and attempt to make money a candid discussion. I suspect your teachings, and this blog will inspire more people to do the same.
  
  Reply
  
  Matthew Adair
  
  January 12, 2025
  
  I appreciate those kind words, SA. It’s all about starting the conversation. And, Italian beef is probably like a steak & cheese sub… only better!
  
  Reply
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January 4, 2025
A New Financial Freedom Blog for Lawyers and Professionals
I named my financial freedom blog “Think and Talk Money” because most of us don’t do enough of either.

I believe we can make it easier on ourselves to make consistent, good money choices if we just spent a little time each week thinking and talking about money.

Wouldn’t most of us agree that doing new things, and especially doing hard things, is easier when we have a partner?

Someone to bounce ideas off. And, someone to keep us accountable. Or, someone to pick us up when we aren’t at our best.

Have you ever talked about money or read a financial freedom blog?

Who is the person that knows the most about you?

Your best friend? Significant other? Brother or sister?

This person knows your most embarrassing stories. She has seen you cry. She has been there for you through thick and thin.

But, have you ever talked to this person about money?

Have you ever shared what drives you to wake up at 6 a.m. for work?

Have you mentioned that you’re worried about how you’re going to pay off debt?

Or, have you ever talked about how you’d like to use money as a tool build your life on your terms?

You might be surprised how powerful these conversations can be. It’s likely the person you’re talking to will be relieved you started the conversation.

If you don’t know where to begin with conversations like this, a financial freedom blog is a good place to start.

I didn’t read a financial freedom blog or talk about money in 2010.

I certainly didn’t think to have conversations about money in 2010 when I fell deeper and deeper into debt.

Maybe that’s why I still remember the day so clearly when I realized I was financially heading in the wrong direction.

It was an ordinary Monday. I had grabbed my mail on the way out the door as I headed to my job at the courthouse.

When I got to my desk, I opened my credit card statement and was stunned by what I saw. $20,000 owed ($30,000 in today’s dollars) one year into my career.

I was ashamed. I was supposed to be smart. Responsible. Trustworthy.

How could I be so foolish?

Looking back, I wonder if I would have had these feelings for so long if I had read a financial freedom blog. Or, what if I was more willing to discuss my money choices with the people I trusted?

I likely would have saved myself a lot of worry, frustration, and time if I hadn’t struggled alone. Perhaps I would have learned that so many others were struggling with consumer debt like I was.

I made it harder on myself by not talking.

I unnecessarily did it the hard way, but I figured it out. Right then and there, I made it a priority to turn things around.

At the time, I didn’t know the solution. But, I had been trained to do research so I could find answers to hard questions. So, that’s what I did.

Along the way, I realized that the fundamental and basic personal finance principles are, well, basic. George S. Clason wrote “The Richest Man in Babylon” nearly a century ago. His collection of parables set in ancient Babylon is legendary.

Everyone should read it. His advice is simple and excellent: spend less than you earn. Save. Invest. The same fundamentals are as true today as they were then.

Easy, right?

Not exactly.

Money is about continuous choices.

Money is about continuous mindset and choices. The basic concepts are easy enough to understand. Consistently making good choices is hard.

Even as I was racking up credit card debt, I could have aced a quiz that asked, “Is it a good idea to spend more money than you earn every month and plummet deeper and deeper into debt?”

For some reason, though, most of us choose to deal with money on our own. I’d like to change that with my financial freedom blog. There’s a stigma that we shouldn’t talk about money. I’d like to change that, too.

Get comfortable talking about money.

I want us to get comfortable with the idea of going to our friends and loved ones to talk about money, just as we would talk about anything else. There should be no embarrassment or shame in it. We’re all dealing with the same challenges.

By talking about money, we can help each other turn those challenges into opportunities. If we can alleviate our money stress, perhaps we can reverse the trend of lower happiness levels among young people today.

Talking about money is not about numbers.

We’ll have plenty more to say about how to talk money in this financial freedom blog. For now, let’s agree that talking about money is not about prying into how many dollars we each have in the bank.

We can benefit by talking about our money mindset, habits, and strategies, while still keeping certain information private.

Let’s also agree that talking money is a “no judgment” endeavor.

We have all had different experiences that have shaped our relationship with money. It’s important not to pass judgment, especially when talking to our significant others. Your conversation won’t last very long if you ignore this advice.

Each session I’m with my students, I learn from their experiences and money mindset, same as they learn from mine. I encourage them to continue the conversation outside the classroom with their loves ones.

When my students report back, they tell me how empowered they felt after starting these conversations. The more we can talk money, the less we’ll feel alone. We’ll all make better choices because of it.

What topics will we cover in this financial freedom blog?

In this financial freedom blog, we’ll talk about the importance of money mindset and why you should want to be good with money. Money mindset touches every aspect of personal finance, so it’s a theme we’ll keep returning to.

I didn’t realize the power of money mindset until I wrote down my Tiara Goals for financial independence on a beach in 2017.

We’ll talk about personal finance fundamentals, like eliminating disappearing dollars with a Budget After Thinking.

While very few people enjoy the budgeting process, it’s a crucial first step to generate fuel for our savings and investments, which ultimately fund our major life goals.

In addition to budgeting, saving, and investing, we’ll learn how to responsibly use debt and why credit is important.

We’ll spend a lot of time discussing real estate investing, one of my favorite ways to achieve financial freedom.

Along the way, you’ll hear me regularly share one of my core beliefs:

Talking about money is not taboo.

There’s no reason to embark on your journey to financial freedom alone. Share your accomplishments and struggles with your friends and loved ones. You’ll only be better off for it.

I certainly will be doing that with my financial freedom blog.

Please share in the comments below if you’ve ever benefited from talking about money with a friend or loved one.

Don’t forget to subscribe to our email list for all the latest!
2 responses to “A New Financial Freedom Blog for Lawyers and Professionals”
1. Kevin
  
  January 3, 2025
  
  I’ve been learning from Prof. Adair for the past decade. Not only that, I’ve followed his advice, and it is one of the reasons I am financially independent today. I could not be more excited for this website – there’s so much more left to learn!
  
  Reply
  
  Matthew Adair
  
  January 3, 2025
  
  Love our chats about life and money, Kev! I’m always looking forward to our next conversation!
  
  Reply
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January 2, 2025
Why Personal Finance for Lawyers is so Important
I founded Think and Talk Money after years of teaching personal finance for lawyers and law students.

My purpose is to share these principles of personal finance for lawyers with all professionals striving for financial freedom.

I like to think and talk about money. To help us achieve financial freedom, we can’t be embarrassed or afraid to talk about money with our friends and family.

That’s why I’m on a mission to convince people that talking money is not taboo.

I like thinking and talking about life and money.

“If you want to get Matt talking, bring up life and money.”

My wife knows me better than anyone.

I like thinking and talking about life and money. That’s why I started teaching financial wellness to law students in 2021 and started this blog in 2024.

But, I wasn’t always like that.

When I graduated law school in 2009, I never thought about money. Within a year, I had racked up $20,000 in credit card debt ($30,000 in today’s dollars), on top of my student loan debt.

My salary at the time was $62,000. This was a problem.

How did that happen?

Well, I wasn’t thinking about money. I certainly wasn’t talking about money.

Of course, I later learned that I had made every money mistake in the book.

Rented a fancy apartment I didn’t need?

Paid for Cubs season tickets I couldn’t afford?

Traveled coast-to-coast? Traveled overseas? Put it all on credit cards?

Check… check.. and check.

It’s not that I intentionally decided to get into debt. I generally wanted to make good choices. I am a relatively smart human. You are, too. You’re reading a blog about financial wellness with the entire internet at your fingertips.

Maybe you’re like me, and it hadn’t occurred to you that money was a thing you needed to think about. And to talk about. Preferably with people impacted by your money choices.

I dedicated myself to learning about money.

Since 2010, I’ve dedicated myself to learning about money and its role in crafting a healthy life.

First, I read all the personal finance books and listened to podcasts.

Along the way, I kept a money journal. Plus, I talked to people I trusted.

In the end, I started to make choices with my money that matched my values.

Years into my own money journey, and now teaching personal finance for lawyers and professionals, here are a few things to know about me:

I work for clients with mesothelioma, a cancer caused by asbestos.

Since 2011, I’ve represented hundreds of people suffering from mesothelioma, a rare cancer caused by asbestos.

Most of my clients are in their seventies and eighties. A significant part of my job since I’ve been in my twenties has been meeting with individuals in their homes after they had just found out they have incurable cancer.

Before we ever get around to talking about the case, we inevitably end up talking about life.

I do most of the listening. You can imagine what I’ve learned about life in these moments. Many of my core money beliefs have been shaped by these powerful experiences.

I am a real estate investor and own rental properties in Chicago and Colorado.

In 2018, my wife and I bought our first rental property in Chicago, a 4-flat in an up-and-coming neighborhood. We lived in one unit and rented out the other three.

I’ll never forget riding my bike with my wife and a buddy, heading from the fancy part of the city where I had been living to my new home. I could tell my buddy was skeptical about my new neighborhood.

Finally, he saw something he recognized and said, “Hey, nice! A spin studio!” He saw a sign that read “Cycle Spin.”

It was a laundromat.

He wasn’t the only one who was probably thinking, “what is Matt doing?”

Well, that 4-flat allowed my wife and I (and eventually two kids) to live for free for six years.

See, the rent we collected covered our mortgage, insurance, taxes, maintenance, and then some.

With the money we saved, we bought our second rental property in 2019, a nearby 3-flat.

In 2022, we purchased another Chicago 3-flat, where my family lived for about two years before moving to our permanent home.

My tenants are doctors, lawyers, engineers, TV personalities, pilots, and other young professionals.

In 2021, we bought a rental condo in Colorado ski country. This had been a dream of mine hatched at The 1800 Club in Evanston during college.

Back then, I amused my friends on many a ski trip by cartwheeling down the mountain as I learned to snowboard.

To pay for flights and lift tickets, I took a couple part-time jobs in local offices. I told myself one day I would “Get that Mountain.”

While my wife and I were contemplating life during the height of the pandemic, we determined that a ski condo fit perfectly with our desire to be with family, to be active, and to be outdoors as much as possible.

So, we delayed buying our “forever home” for another investment property, this time one in Colorado that we could rent out and use a little bit ourselves.

I started a money journal in 2010.

I started a money journal in 2010. It has been a lot of fun to look at as I launched my financial wellness course and as I’m writing this blog.

I’ll refer back to these entries as I share my lessons about personal finance for lawyers and professionals.

Some entries are just scribbles while I worked through that month’s money question.

Some entries go deep.

My favorite: I wrote in 2011 that someday I was going to marry the girl I had been dating at that time for the past few months.

That girl became my wife in 2017.

I encourage everyone to keep some sort of money journal. It doesn’t have to be a daily log or a detailed memoir. Use to help you think. It will also reinforce the idea that we all need to think about money continuously.

Some of the same challenges I had in my 20’s, are resurfacing today, like paying off debt. Then, it was student loans. Now, it’s mortgages.

I am more confident today because I can look back at how I handled those obstacles back then.

I have taught personal finance for lawyers since 2021.

Since 2011, I’ve taught law students how to research, write, and communicate in the courtroom. We work on finding answers to difficult questions.

Oftentimes, there are many possible answers, and we have to think and analyze which is the best for our situation.

I regularly have coffee with students who want to talk about what comes next after finishing school. I learned that, just like me in 2009, my students didn’t typically think or talk about money and life. They never really thought about learning personal finance for lawyers.

I wanted to help them avoid the money struggles that I had experienced at the beginning of my career.

That’s why in 2021, I designed and launched a course focused on personal finance for lawyers.

My goal with that course, and this website, is to help us all think about using money as a tool to build a life that conforms to our personal values.

The point is not to get rich. Though, you will if that’s your goal and you follow along. The point is to live your life on purpose where you actively think and choose what happens next.

Think about why money matters.

The first step is to think about a simple and powerful question:

Why does money matter?

For me and many others, money is about financial independence, which translates to the power to choose. When we have the power to choose, we have the power to live a life that conforms to our personal values.

That means we can live on purpose, not on auto-pilot.

We can choose to spend our working hours doing what is meaningful to us.

We can choose to spend more time with the people that are meaningful to us.

And it all starts with using money as a tool to do what we want with our lives.

My favorite part during my personal finance for lawyers class is when my students share their motivations with each other. We all learn so much from these honest conversations.

It’s why I believe talking about money is so important. We all benefit from knowing that we’re not alone in our money worries. It is inspiring to hear what our friends want from their money and their lives.

If nothing else, I want you to think and talk about money.

As a lawyer, I’ve been trained to build upon the work of those who have come before us.

Think and Talk Money is my contribution to this essential field of personal finance, building upon what I was so grateful to learn. Not just from authors, but from all the people in my life who talk with me about life and money.

In teaching personal finance for lawyers, I’ve learned that most of us are facing the same challenges. Maybe my voice and my experiences will resonate with you. Maybe not. And that’s ok.

I will be honest about the mistakes I’ve made and the lessons I’ve learned. We’ll talk about motivation, habits, and fundamentals. We’ll talk about careers and goals. Of course, we’ll talk about investing in real estate and managing rental properties.

I’ll share my thoughts on key news and developments. I don’t expect you to agree with everything I say. Not every post will be immediately helpful for you. That’s not my goal or even realistic.

Think just a little bit about money every week.

My goal is to help you think even a little bit about your money choices every week.

That way, your money life remains in balance with the rest of your life, and you can continually evolve and adapt your choices as your life changes.

I want to encourage you to think, and to talk, and to choose. If all I do is help you and your loved ones think more purposefully about your money, this website will be a success.

Maybe your goal is also financial independence, or the power to choose. The power to live on purpose.

Maybe it’s something else entirely. Whatever it is, discovering your motivation is the crucial first step.

It’s so important that I’ll encourage you to think about that motivation every day.

I’ve learned that money is something that we all need to think about as a regular part of our lives. Not that we should only think about money. Or that we need to obsess over money. Simply that we can’t ignore money.

How sad is it when we realize our hard earned money has just vanished?

That at the end of each month, we have less money than at the beginning?

You’re not alone. There are a lot of smart people who need somewhere to turn learn about money. Or, maybe just a reminder to actively think about their money.

Most of us could use someone to talk to or something to read to help us learn about personal finance for lawyers and professionals.

I hope Think and Talk Money can be that place for you.

I can’t, and won’t, tell you what to do with your money. It’s your life, after all. But, I will strive to help you think and talk with purpose about your money.

Here we go.
12 responses to “Why Personal Finance for Lawyers is so Important”
1. Bill Molander
  
  December 31, 2024
  
  Well written, Matt! Best wishes to you in future endeavors.
  
  Reply
  
  Matthew Adair
  
  January 1, 2025
  
  Thank you, Bill!
  
  Reply
2. Clarke Nobiletti
  
  December 31, 2024
  
  Excited for the valuable advice!
  
  Reply
  
  Matthew Adair
  
  January 1, 2025
  
  Thank you, Clarke!
  
  Reply
3. Laurie
  
  December 31, 2024
  
  Hey, I think your ideas are very interesting. Thanks for your thoughts. Maybe keeping money journal is a good idea for me too. A fresh outlook and clean slate for starting out the new year makes sense too.
  
  Reply
  
  Matthew Adair
  
  January 1, 2025
  
  Great attitude, Laurie! Keep me posted on your money journal!
  
  Reply
4. Jeffrey Tallis
  
  January 1, 2025
  
  Smart young man! He listens to people! He takes what he hears and learns from it! Great stuff here! Your law students are lucky to have you as a money mentor!
  
  Reply
  
  Matthew Adair
  
  January 1, 2025
  
  Thank you, Jeff! Glad you enjoyed the first post!
  
  Reply
5. Diana
  
  January 1, 2025
  
  This was a great read — thanks for sharing!
  
  Reply
  
  Matthew Adair
  
  January 1, 2025
  
  Thank you, Diana!
  
  Reply
6. Nicholas Faklis
  
  January 1, 2025
  
  Matt What are your thoughts on index funds vs individual stocks ?
  
  Reply
  
  Matthew Adair
  
  January 1, 2025
  
  Great question! I invest in index funds and think that’s the best choice for many of us. We’ll have to revisit this topic in a future post. Stay tuned!
  
  Reply
December 31, 2024

	Balance	Rate	Min. Pay.
Credit Card 1	$5,000	15%	$150
Credit Card 2	$10,000	20%	$200

	Balance	Rate.	Min. Pay.	Snowball
Credit Card 1	$5,000	15%	$150	$800
Credit Card 2	$10,000	20%	$200	$200

Assets	January	February	March
401(k)
Roth IRA
529 College
HSA
Checking
Savings
Car
Home
Rental Properties
Total

Liabilities	January	February	March
Credit Cards
Mortgage
Student Loan
Auto Loan
Total

Tag: financial independence

I didn’t know the first thing about money when I began my career.

I unnecessarily did it the hard way, but I figured out personal finance.

Personal finance education should be a constant in your life.

Too many of us choose to struggle with money alone.

Talking about money is not about numbers.

Let’s also agree that talking money is a “no judgment” endeavor.

Talk about money mindset with your significant other, family, and friends.

My favorite part of class is when my students share their Tiara Goals.

Be specific, but not too specific, when you think about financial freedom.

Don’t get discouraged if you think you are not close to financial freedom.

Budgeting is all about generating fuel for your ultimate goals in life.

Debt and credit are essential parts of a healthy financial life.

Student loans are front of mind for most law students and young lawyers.

Building wealth through investing.

Real estate is my favorite asset class.

Money is nothing more than a tool.

And, if you’re a lawyer in debt, your income is not the reason why.

Today, we’ll look at my three theories why lawyers end up in debt.

Here are some scary stats to help explain why lawyers are in debt.

In every category, the amount of debt increased from the previous quarter.

Let’s look closer at credit card debt for a moment.

Why is it so hard for lawyers to live below our means?

1. We fall into debt because we are simply careless.

2. We don’t plan ahead for emergencies.

3. Blame the Kardashians.

The Kardashians are the modern day Joneses.

Keeping up with the Joneses is compounded in the professional setting.

So, what’s the solution for lawyers in debt?

You make plenty of money as a lawyer. Your income is not the reason you’re in debt.

When I graduated law school, I spent money based on my income instead of my wealth.

Do you spend money based on your income or based on your wealth?

A high income is not a bad thing, but it can be a wasted thing.

But, I thought high earners deserve to splurge!

I recommend you use your high income to acquire assets and eliminate liabilities.

We all know that it’s bad to live beyond our means. The problem is we don’t evaluate our means properly.

Spending money based on your wealth does not spending from your wealth.

Don’t ignore your wealth when it comes to spending.

When it comes to money, boring is good.

OK, what does all this have to do with baseball?

My nice friends, Phil and April.

Phil was nice…and tough.

Phil’s on TV!

A memory I wouldn’t trade for anything.

What does this have to do with money?

Talking money is really just talking life.

Why is it important to track your net worth?

How do I know if I need to make adjustments based on my net worth?

What is the net worth of Americans by age?

Net Worth by Age

What is the net worth by age of the top 1%?

Net Worth by Age of the Top 1%

Tracking your net worth is the best way to measure your personal financial progress.

What kind of adjustments can you make after learning your net worth?

It takes me less than 30 minutes per month to track my net worth.

Do you ever notice the people on the train?

Most people don’t have a plan.

How many hours do you work to make money?

Do you care more about making money or keeping money?

It’s not how much money you make. What matters is how much you keep.

What is a saving rate?

How can you make progress with your saving rate over time?

How much money did you keep this week?

There is one crucial element that you can control on your way to financial freedom.

The one thing you can truly control is your saving rate.

What is a saving rate?

What can I learn from tracking my saving rate?

Why it’s important to focus what you can control, like your saving rate.

Here’s an example showing the importance of your saving rate.

What happens if you double your saving rate from 20% to 40%?

It’s motivating to think of your saving rate in terms of years to financial freedom.

What would I do if I woke up tomorrow with $178,000 in my checking account?

The first thing I would do with $178,000 is pay off high interest debt.

Next, I would set aside $15,000 to $20,000 for fun money.

Next, I would revisit my Tiara Goals for financial freedom.

I would then use $67,000 to fund my son’s college education.

Why did I target in-state tuition?

I would save the remaining $33,000 in an emergency savings account.

How would you use $178,000 today?

How did financial independence become synonymous with deprivation?