Tag: financial independence

Is Debt Snowball or Debt 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 my personal copy of the TATM Net Worth Tracker™️.

Download TATM Net Worth Tracker™️

Using this template, my wife and I have been tracking and discussing our net worth for years.

It takes me about 20 minutes to update my TATM Net Worth Tracker™️ each month. The hardest part is remembering all the passwords for our accounts.

When I finish entering the new account values, I study the TATM Net Worth Tracker™️ 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 TATM Net Worth Tracker™️ 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.

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.

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 a little story about when I first learned what net worth means.

Going into hiding straight from a London pub.

One night when I was studying abroad in London, my good friend, Kais, and I were talking in a pub.

I don’t remember what we were talking about when, out of nowhere, he said something like:

“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 spreadsheet.

Actually, it could be easier. Just use the TATM Net Worth Tracker™️.

To get started, you’ll need to understand what counts as an asset and what count as a liability.

Let’s take a look.

Download TATM Net Worth Tracker™️

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
- Brokerage account
- Health Savings Account (my favorite account…)
- 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).

Download TATM Net Worth Tracker™️

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.

Download TATM Net Worth Tracker™️

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 use the TATM Net Worth Tracker™️ to determine our net worth.

Figuring out your net worth is easy with the TATM Net Worth Tracker™️.

On the top of the TATM Net Worth Tracker™️, each row represents an asset, or something you own.

On the bottom, the rows represent the liabilities or debts you 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 there’s a new column for each month, instead of just updating the values in a single column, is so you can easily see how your net worth has changed over time.

Once all 12 months for the year are filled in, start a new sheet and repeat the process. This helps you track how your net worth has changed over the long run.

Since your TATM Net Worth Tracker™️ is for your eyes only (or your family’s eyes), you can edit the asset and liability rows to match your personal situation.

You’ll notice there are different categories depending on what kind of asset you own.

I like separating it this way because it helps me quickly visualize if my net worth is concentrated in a particular category.

Here’s a preview of what the TATM Net Worth Tracker™️ looks like.

To give you an idea, here’s what the TATM Net Worth Tracker™️ looks like:

Once you input the amounts for each cell in the appropriate column, a graph automatically populates so you can visualize your progress.

You’ll also be able to quickly see exactly how your net worth has changed since the beginning of the year:

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.

Start tracking your net worth today with the TATM Net Worth Tracker™️.

Start tracking your net worth today. It’s the only way to know if all of your hard work each month is actually paying off.

No matter your starting point, knowing your net worth will help you level up.

Maybe you need to make some adjustments.

Maybe you’re doing exactly what you should be doing.

Track your net worth so you know for sure.

All it takes is the TATM Net Worth Tracker™️.

And a cup of coffee.

Download TATM Net Worth Tracker™️
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

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
I’m Matt Adair. This is my Financial Freedom Blog for Lawyers
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 “I’m Matt Adair. This is my Financial Freedom Blog for Lawyers”
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