Tag: money mindset

  • Money on My Mind: Always Working?

    Money on My Mind: Always Working?

    Simple question. Don’t lie to yourself.

    Do you work too much?

    I’m not asking if you work too hard.

    I mean too much, as in too many hours of your life dedicated to a job.

    I started thinking about this question after recently coming across a few surveys.

    Let’s talk it out. Let me know what you think in the comments below.

    I am shocked by these survey results.

    I’m not often surprised by survey results. This is one of the rare exceptions.

    According to a recent report from MyPerfectResume, 81% of workers worry they may lose their jobs in 2025.

    8 out of 10 people! Is it just me, or is that mind-boggling?

    On the flip side, only 4% of workers report no concerns about losing their jobs.

    These numbers are shocking to me, but maybe I shouldn’t be that surprised. As Yahoo Finance explains,

    Many large corporations have already announced or kicked off a round of layoffs, including Chevron, CNN, Estee Lauder, Meta, and Southwest Airlines. And that, of course, doesn’t count the thousands of workers terminated under Elon Musk’s campaign to reduce the federal workforce.

    My mind immediately jumps to a follow-up question:

    How many of those people worried about losing their jobs have an emergency savings account?

    Sadly, the answer is probably very few people have meaningful savings.

    Surveys like this one motivate me to continue bringing attention to core personal finance issues, like having adequate emergency savings. This is why I so strongly believe that talking about money is not taboo.

    Life is too short and too precious to be in a constant state of worry. Is there any sense worrying about something, like getting laid off, when you have practically no control over whether it happens or not?

    Instead of worrying about what we can’t control, I think it’s better to use our energy on what we can control, like saving up for emergencies.

    Hopefully, you’re not one of these people worried about losing your job. If you are, there’s no better time than right now to prioritize your savings.

    If the first survey shocked me, this one just makes me angry.

    According to this Pew Research Center study, 46% of US workers take less paid time-off than they’re offered.

    I need to say that again.

    Nearly half of US workers choose to work more days than they are required to!

    And, it gets worse if you’re a high earner or highly educated.

    According to the same study, the more money you earn, the less likely you are to take your full paid time-off.

    The more educated you are, the less likely you are to take your full paid time-off.

    The more senior you are, like being a manager vs. non-manager, the less likely you are to take your full paid time-off.

    If the first survey mentioned above surprised me, this one just makes me angry.

    Do you recognize a difference between working hard and always working?

    Don’t misunderstand why these results make me angry. It’s not about working hard vs. slacking off. It’s not about being a good employee vs. a bad employee. I am 100% in favor of people working hard and working with integrity to get the job done.

    My frustration is that somewhere along the way, “working hard” turned into “always working.”

    By the way, before you accuse me of being a slacker, I am no stranger to working hard.

    I work full-time as a lawyer, manage 11 rental properties, teach law school courses on Wednesdays and Sundays, and publish three blog posts per week. Still, none of these things are more important to me than spending quality time with my family.

    Years ago, I first read Tim Ferris’ game-changing book, The 4-Hour Workweek. Ferris described how his small business took off as soon as he started doing less, not more. He empowered his staff and stopped himself from getting in the way. Not only did his company thrive, he had more time available to pursue what really mattered in his life.

    Since writing The 4-Hour Workweek, Ferris has become one of the most influential thought leaders around. To learn more from Ferris, visit his website here.

    Why do you work so much?

    If you’re one of these people choosing to work more hours instead of taking your earned vacation time, have you ever asked yourself why?

    Keep in mind, these are days off that your company has already agreed to give you. You earned them. Why are you not taking them?

    Are you worried about getting fired? Passed up for a promotion? Is your self-worth tied to how many hours per week you work?

    Years from now, when your grandkids are huddled up for story time, do you plan on telling them how much you worked and how many life experiences you skipped out on?

    These are hard questions to truthfully answer. If you’re being honest with yourself, you may start thinking about another set of questions:

    Is this job the right job for me? Do I want to spend my life stressed from working too much? What would be a better use of my working hours so I can spend more time doing the things that I love with the people that I love?

    I’ve spent a lot of time thinking about these questions. I’ve realized that I’ll never understand what the point is of working so much at the cost of spending time with the things and people you love.

    Maybe I’m the weird one. But, I don’t think I am. Unfortunately, the data backs me up and confirms that working too much can have series consequences.

    Fortunately, we can learn from strategies geared towards retirees. Let me explain.

    Apply lessons for retirees to your life today.

    Writing for BBC Science Focus Magazine, Hayley Bennett shares 5 expert tips for a healthy post-work life.

    The tips include finding a purpose, strengthening your body, and rebuilding your brain.

    Woman on beach in summer thinking about spending more time during her working years living with purpose and focused on health as learned on Think and Talk Money.

    When I came across this story, I immediately thought that we shouldn’t wait for retirement to do these things. This is solid advice for all of us, at any stage in our lives.

    Do you know what sounds pretty great to me?

    A life filled with purpose sounds pretty great. The same goes for being fit and smart.

    The challenge is that work often gets in the way.

    When we let this happen, the consequences can be catastrophic.

    As just one example, lawyers as a profession have long struggled with mental health issues. I first learned about these challenges during law school orientation. Today, I see it in practice. Being a lawyer is a hard way to make a living. When you work as a lawyer, the hours are intense and stress levels are consistently high.

    In 2023, the Washington Post analyzed data from the U.S. Bureau of Labor to determine what the most stressful jobs are. The study confirmed that lawyers are the most stressed.

    Of course, lawyers are not alone in struggling in this regard due to long, stressful hours. The same study showed that people working in the finance and insurance industries were right up there with lawyers as being highly stressed.

    Anecdotally, I’ve personally talked to people recently in a wide variety of other fields, like consultants and small business owners, who are frustrated for the same reasons.

    The point is, regardless of industry, many of us struggle with work stress.

    What can we do about it?

    That’s a complicated question with many possible answers. For starters, I firmly believe that by building strong personal finance habits, we can create more opportunities to find purpose and practice good health.

    I recommend you think back to our conversations about Parachute Money and why you should want to be good with money. When you’ve made thoughtful money choices, you can choose to live a life right now on your terms rather than waiting until retirement.

    I agree with what you’re probably thinking. These are not easy or fun topics to think about. However, in my opinion, it’s much worse to let life go by while failing to take responsibility.

    Am I wrong about people working too much?

    Maybe I’m wrong about people working too much?

    I don’t think I am.

    The data paints a very sad picture for lawyers, and I have to believe anyone else working long and hard hours. If you have similar data about your profession, please share it with us. I hope I’m wrong about what that data will show, but I fear I’m right.

    As always, let us know what you think in the comments below.

    And, thank you for continuing to share stories you’ve come across that would be good to discuss here.

  • Three Big Reasons Why You’re in Debt

    Three Big Reasons Why You’re in Debt

    “Live below your means.”

    “Money doesn’t grow on trees.”

    “Don’t break the bank.”

    We’ve all heard these common money phrases. If you were to ask someone older than you for one piece of personal finance advice, I’m betting you’ll hear one of these lessons. Let me know if I’m right about that in the comments below.

    There’s a reason these phrases are so common. They’re simple and easily reflect some of our core personal finance principles. In fact, we’ve covered these concepts in detail in earlier posts:

    Like many personal finance concepts, it’s not too challenging to understand the meaning of these phrases.

    Most of us understand that it makes sense to spend less money that we earn, right?

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

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

    Assuming we’re in relative agreement on these philosophies… what am I getting at?

    I’ll answer that with a question of my own:

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

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

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

    It’s not that we want to have high debt and low savings. So why is this the reality for so many of us?

    I have 3 main theories why we fall into debt.

    There are countless theories on why people end up in debt. I have three primary theories. Looking at each of these explanations can help us understand and avoid common pitfalls that lead us into debt.

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

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

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

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

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

    By the way, if this sounds familiar, you should know by now I’m not judging anyone. I’ve been very open about my money mistakes. We all deserve a chance to learn about and talk about strong personal finance habits.

    That’s why I’m on a mission to flip the script: talking money is not taboo.

    2. We don’t plan ahead for emergencies.

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

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

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

    Preparing for the unexpected is part of every solid organization’s planning. In government, planning ahead means having a “rainy day fund.”

    When managing properties, planning ahead for big repairs means having a “Capital Expenditures” or “Cap Ex” fund. For our personal finances, planning ahead means having an emergency fund.

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

    3. Blame the Kardashians.

    Besides carelessness and emergencies, there’s another powerful force that contributes to rising debt levels across the world. This force is nearly impossible to ignore. It’s become a part of our daily lives, whether we want to admit it or not. 

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

    The Kardashians.

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

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

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

    The Kardashians are the modern day Joneses.

    Once upon a time, “the Joneses” represented your neighbors, people you could observe from a distance on a regular basis. The idea behind the phrase is that you can see what your neighbors are spending money on and are either consciously or subconsciously tempted to do the same.

    If your neighbors buy a new car, you buy a new car to keep pace. If your neighbors vacation in Australia, you research diving tours at The Great Barrier Reef. When you notice your neighbors hosting a backyard BBQ party with lots of happy looking people, you decide to host a party the next weekend.

    As humans, it can be difficult to ignore the temptation to keep up with our neighbors. Whether we like it or not, we are concerned with our social status. Part of our self-worth gets tied to comparing ourselves to others.

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

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

    Some professions heighten the pressure to keep up. Have you ever noticed that real estate agents seem to always drive nice cars? Or, big city lawyers wear fancy suits? It’s easy to get caught up in expensive tastes when you’re expected to fit in.

    One of my favorite personal finance books, The Millionaire Next Door, discusses this concept in detail. I highly recommend you read this book if you are struggling with comparing yourself to others.

    What does this all have to do with the Kardashians?

    In today’s world dominated by social media and the internet, we’re no longer influenced just by our neighbors or colleagues. We’re now influenced by people throughout the world. That could mean friends or complete strangers.

    Instead of just learning your neighbors went on vacation, now you know when anyone in your circle is on a trip. At any moment, you may be on the train in 12 degree weather heading to work. One look at your phone and you’ll see plenty of wonderful pictures of people doing cool things. It’s hard to not want that for yourself.

    The byproduct of social media and the internet is the never ending temptation to spend money. Even if that means spending money we don’t have. That’s a powerful force pushing us deeper into debt.

    I am fighting this temptation in my life right now. Having moved to a new home not long ago, there are so many things we want to buy and projects we want to do. I need to constantly remind myself to slow down so I don’t again fall victim to consumer debt.

    So, what’s the solution? 

    Deactivate social media? Cancel the internet?

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

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

    Making money decisions based off of your neighbors, let alone the Kardashians, is the fast road to debt. You have no idea why or how another person is spending money. For all you know, it’s all for show and that person is barely getting by.

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

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

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

    Digital Marketing Technology Solution for Online Business Concept - Graphic interface showing analytic diagram of online market promotion strategy on digital advertising platform via social media, leading to us spending more money and sinking into debt as learned on Think and Talk Money.

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

    This is where we circle back to money mindset.

    To counteract social media and mass marketing, you need to have a competing force in your life that’s strong enough to overcome all the noise.

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

    Why are you working so hard?

    When you can answer that question, you’ll know what your ultimate goals are in life. With those goals in the forefront of your mind, it’s much easier to make consistent, intentional money decisions. 

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

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

  • Scary Stats to Know about Debt

    Scary Stats to Know about Debt

    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 applicable 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.

    Credit cards, close up, illustrating on Think and Talk Money that too many people worldwide have some form of debt.

    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.

  • Big Decisions are Easier with Parachute Money

    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.

    Elderly father lends money to his adult son. He helps his child deal with financial problems. His son is hoping to not be dependent on his father anymore thanks to Parachute Money learned on Think and Talk Money.

    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

    Subscribe Here to Join our Newsletter!
    Please enable JavaScript in your browser to complete this form.
    Name
  • Great Talk: Money and Cheeseburgers

    Great Talk: Money 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. She shared 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.

    Two men eating out in cafe or restaurant talking about financial independence as learned on Think and Talk Money.

    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 that 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.

  • Why it’s Not Taboo to Talk Money

    Why it’s Not Taboo to Talk 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.

    Subscribe Here to Join our Newsletter!
    Please enable JavaScript in your browser to complete this form.
    Name

    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.

    Elementary Classroom of Diverse Bright Children Listening Attentively to their Teacher Giving Lesson. Brilliant Young Kids in School Learning to Be Great Scientists, Doctors, Programmers, Astronauts, but not learning about personal finance, which is why they need Think and Talk Money.

    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.

    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. 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.

  • Q&A: Look for a Valuable Side Hustle

    Q&A: Look for a Valuable Side Hustle

    In this week’s Q&A, we talk about how the timing was right to launch Think and Talk Money, why you should consider a side hustle, and what comes next for the website.

    As always, please email your questions or leave a comment below or on socials.

    Subscribe Here to Join our Newsletter!
    Please enable JavaScript in your browser to complete this form.
    Name

    You have a lot on your plate. Lawyer, teacher, landlord, young kids… why launch Think and Talk Money now?

    I had been thinking about writing a book or starting a website for a couple years. Over the holidays, my dad gave me the final push I needed.

    We were casually chatting while the kids played in the other room. Out of nowhere, he said, “Matt, you should do it.”

    Do what?

    “You should write a book.”

    Oh, no biggie.

    I didn’t expect him to say that. He went on to explain how you get to a certain age and you look back on life and wonder where it all went. You think about all the things that you wanted to do but never got around to doing.

    No regrets, blogging then book.

    He knew I had been thinking about writing a book for a while and didn’t want me to regret not doing it.

    I thought about it and realized he was right. I would never forgive myself if I didn’t take this chance.

    Now that I’ve thrown this out there, I have to do it, right?

    There’s never a perfect time in life. If I didn’t start Think and Talk Money now, I might never have gotten around to it. Something always comes up. It’s too easy to make excuses.

    It’s true we have a lot going on. Fortunately, I had a system already in place that gives me time to write thanks to Hal Elrod’s The Morning Miracle.

    I hesitate to say a certain book “changed my life.” This might be one of them.

    For almost 10 years now, I’ve been waking up at 5:30 a.m. to read, journal, and relax. It’s so beneficial to have that time for myself, especially now with kids, before the day gets away from me.

    To learn more about the benefits of a daily morning ritual, check out Elrod’s miracle morning website.

    Since launching Think and Talk Money, I use my mornings to blog instead of reading. I like teaching and writing about personal finance, so my mornings are still enjoyable.

    That being said, I may need to adjust the schedule to read the latest book in the Empryean series, Onyx Storm.

    How do you feel about side hustles?

    Short answer: I love side hustles.

    We’ll spend some time in a future post talking about all the advantages of having a side hustle.

    The obvious advantage is you can make more money. The important thing is what you do with that money to make the side hustle worth it. A side hustle is another time commitment, after all. If you’re going to take on the responsibility, make sure it counts.

    Before you consider a side hustle, have a plan in place for why you want additional money. Are you looking to pay down debt faster? Save for a wedding? Invest in your first rental property?

    One of my favorite experiences teaching personal finance to law students involved a side hustle. A couple of years ago, a student approached me during a break and told me about his credit card debt. It had been weighing heavily on him.

    After our discussion about side hustles, he committed himself to driving for DoorDash and using the income to pay off his credit card balance.

    Six months later he sought me out to share that the plan worked. His side hustle allowed him to pay off his credit card in less than six months. All while working a full-time job and attending law school par-time. I couldn’t have been happier.

    To help you think through why you might want a side hustle, check out these three posts:

    You Should Want to be Good with Money
    Part 1: How to Budget to Fix the Disappearing Dollar
    Why You Need to Fuel Your Savings

    BTW, you’re not too busy or important for a side hustle.

    Some people reading this will automatically think, “I’m way too busy to even think about another job.”

    In my personal finance class for law students, we spend a lot of time challenging that notion. Very few people- and I mean very few- are too important or too busy to take on a side hustle.

    You may think you’re one of those “too important” people. I would challenge you to assess whether you’re confusing “too important” with “too stressed.”

    Setting that conundrum aside, the ideal side hustle is something you enjoy doing that can earn you extra money at the same time. Some examples my students have come up with in class include:

    • Bartending. Entice your friends to come to your bar by offering cheap drinks. You get to hang out with them and get paid at the same time.
    • Fitness instructor. Instead of paying $48 for the spin class you love, become the instructor and get paid to lead the class.
    • Dog Walker. If you love dogs and don’t currently have one of your own, what better way to fill that void in your life while making money. The same applies to babysitting.
    • Home Baker. Make homemade treats with your kids and sell them to parents who don’t have the time.

    There is always a way to make more money.

    The point is there are always ways to make more money by doing things you like to do anyways. Even if you’re busy. You just have to exert some mental energy to figure out how.

    I’m reminded of another conversation my dad and I had when I was in high school.

    Growing up, my siblings and I were busy kids. Sports, clubs, performances, classes, you name it. I made a remark to my dad about it at one point.

    He responded that being busy wasn’t a bad thing because you don’t have time to fool around. When you have no choice other than to stay focused, you actually perform better in all facets of life.

    You’re not thrown off by distractions because you’re locked in on accomplishing your goals.

    Smiling female bartender talking with customers as her side hustle to make extra money learned on Think and Talk Money

    After launching Think and Talk Money, I feel a heightened sense of focus. It’s benefitting me in all of my pursuits. I take care of business as best I can, while prioritizing my family and my health.

    I can see your eye rolls through your screen.

    This guys is nuts. He’s a workaholic. He has no life.

    The people who know me best would beg to differ.

    They might just tell you that I’m striving to build a life where I spend my working hours doing what is meaningful to me.

    I spend my personal time with the people that are meaningful to me.

    Have you ever used a HELOC to invest in real estate?

    Yes, I’ve used HELOCs, which stands for Home Equity Lines of Credit, to scale my real estate portfolio.

    This question leads to so many concepts we need to discuss, from debt and credit to investing. We’ll come back to HELOCs more fully in a separate post.

    The bottom line is using HELOCs to scale your investment portfolio is a more advanced strategy that I would not recommend for everyone. I probably wouldn’t recommend it for most people, even experienced real estate investors.

    I say that for good reason. When you hear HELOC, think debt. For many of us, debt is problematic and leads to negative emotions.

    I experienced these negative emotions associated with debt. I only got comfortable with taking on debt as I learned to trust myself again with the responsibility.

    HELOCs are like credit cards, just in another form of debt.

    My advice: if you have proven to yourself that you can responsibly handle debt, using a HELOC may be a worthwhile strategy for you.

    By responsible with debt, I mean:

    If you satisfy all of the above, a HELOC may be useful to scale your real estate portfolio. If you’re thinking about using a HELOC in the near future and want to talk it out, please feel free to reach out.

    What’s it like being a blogger?

    It’s only been five weeks, but I’m happy I took the chance to launch Think and Talk Money.

    It’s been fun.

    And, it’s been hard.

    First, the fun stuff. I’ve enjoyed writing and talking about personal finance concepts that are important to me. I’ve especially enjoyed all the interactions with our readers.

    One unexpected element I’ve appreciated is the sense of accomplishment that comes with publishing every post. This is very different from my experience as a lawyer where we typically work on a case for years before its conclusion.

    I’ve also had fun writing in a new style. I haven’t ever blogged before. I haven’t done any writing other than legal writing since college. If you’ve ever had the pleasure of reading a legal brief or court opinion, first off, I’m sorry. Second, you understand how different legal writing is from blog writing.

    Even though the writing styles are different, there is certainly some overlap in the fundamentals. My aim in both styles of writing is to be clear, concise, and informative. I hope to be somewhat interesting, as well.

    As a blogger, I’m still finding my voice, as they say.

    It can be challenging to make core personal finance concepts- like budgeting and saving money- educational, simple, and entertaining. If I’m doing my job, then my personal finance content should also be relatable and understandable.

    Please let me know you have any feedback on what’s working (or not working for you)!

    So, what’s hard about blogging?

    Now, for the hard stuff.

    My wife and I launched Think and Talk Money with zero knowledge, skills, or experience in starting a website.

    Can you tell? Be nice.

    We have no tech background whatsoever. Two months ago, I had no idea what SEO, caching, or plugins were.

    We also have no design or marketing background. I didn’t even have social media (other than LinkedIn) until we launched. The fact that we have 129 Instagram followers (don’t laugh) seems like a small miracle to me.

    My first post on LinkedIn had more than 12,000 impressions in the first few days. I still have no idea what that means, but it’s exciting!

    If you’ve ever started a website, you know exactly what I mean. Creating the content is only the first step. So much more goes into it behind the scenes. We’re still only scratching the surface.

    To sum it up, the tech stuff has been challenging and time consuming. We’ve learned so much already but have so much more to learn.

    Thank you to everyone who has reached out with tips and suggestions!

    What’s the end game for Think and Talk Money?

    I completely understand why this is an important question to think about. The truth is we’re just getting started and haven’t thought about Think and Talk Money in terms of an end game.

    I’ve always liked to teach and write, and this lets me do more of both. For now, our mission is to introduce the most important concepts of personal finance through the blog.

    We post three times per week on Mondays, Wednesdays, and Fridays.

    Some of the posts cover core personal finance topics in depth. Other posts are more targeted and address specific strategies or lessons.

    A writer engrossed in their work at a desk overlooking a tranquil lake, finding inspiration in the natural surroundings to write about personal finance at Think and Talk Money.

    There’s an intentional order to the way we’ve been introducing concepts. The order is important and mirrors the curriculum in my personal finance class for new lawyers.

    We started with money mindset, then moved to budgeting, then moved to savings.

    These are core personal finance concepts that we will always revisit in the blog. If your mind is not in the right place, it doesn’t matter if you know the particulars of how to budget or save.

    We’ll soon move on to topics like debt and credit, investing, and real estate.

    So, what comes next for Think and Talk Money?

    My wife and I are thinking about all the options: podcast, online courses, personal coaching, speaking events, and a book.

    Of all these options, the book might be the surest thing. I’ve wanted to write a book for a long time.

    Whatever happens, we’ll do our best to continue creating valuable content and listen to what our audience wants.

    Let us know if you have any thoughts or ideas on what should come next!

  • Why You Need to Track Your Net Worth

    Why You Need to Track Your Net Worth

    On the first of every month, I wake up at 5:15 a.m., brush my teeth, and put on my robe.

    I walk downstairs, pour a cup of coffee, and head to my favorite chair in the living room.

    I then power on my laptop and open an Excel file called “Adair Family Balance Sheet.” Using this basic spreadsheet, my wife and I have been tracking and discussing our net worth for years.

    It takes me about 20 minutes to update our family balance sheet each month. The hardest part is remembering all the passwords for our accounts.

    When I finish entering the new account values, I study the spreadsheet for about two minutes.

    I hope to see that our money efforts that month resulted in our assets increasing in value and our debts decreasing.

    When I’m finished with the updates, my wife grabs her coffee and sits with me. She will likewise study the family balance sheet for about two minutes.

    We’ll then spend about three minutes talking about the changes from the previous month.

    And, that’s it.

    It takes us less than 30 minutes each month to track and discuss what I consider the most important metric in personal finance.

    That’s all the time it takes to know if we are progressing towards our most important goals. By tracking our net worth, we can quickly see if we are making good money decisions or need to make adjustments.

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

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

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

    In this post, we’ll talk about what “net worth” means, how to track it, and why it’s so important.

    Let’s start with what net worth means.

    Going into hiding straight from a London pub.

    One night when I was studying abroad in London years ago, my good friend, Kais, and I were talking in a pub. I don’t remember what we were talking about when he offered:

    “If I was in trouble and needed to go into hiding, I could sell everything that I own, pay all my debts, put the leftover money in the bank, and be fine for a couple of years.”

    Uhh, OK…

    At the time, I had no idea what he was talking about.

    Still, I had to admit that it seemed pretty cool that he had that kind of financial flexibility. I knew I couldn’t survive for a couple of weeks, let alone a couple of years.

    People in an english pub talking about their net worth as learned on Think and Talk Money.
    Photo by Luca Bravo on Unsplash

    Looking back years later, I now realize that he was talking about his net worth.

    Kais, if you’re reading this, drop me a line to let me know you’re not hiding.

    So, what is net worth?

    Your net worth is simply all of your assets less all of your liabilities.

    Net Worth = Assets – Liabilities

    Yup, you only need those two numbers to calculate your net worth, the most important number in personal finance.

    There’s no complicated math involved. Just addition and subtraction, which couldn’t be easier in a basic balance sheet (or spreadsheet).

    Let’s start with understanding what counts as an asset.

    What are assets?

    An asset is anything that has economic value and can be owned or controlled.

    In even simpler terms, an asset is just about anything you can think of that could be exchanged for money.

    My family’s current assets include:

    • Retirement accounts for both me and my wife
    • College savings accounts for each kid
    • Health savings account (my favorite account… we’ll revisit)
    • Checking accounts
    • Savings accounts
    • Cars
    • Jewelry
    • Properties
    • Cash on hand

    Other common examples of assets include:

    • Collectibles (artwork, coins, designer bags)
    • Furniture
    • Household goods (TVs, appliances, rugs, etc.)
    • Clothes
    • Tools
    • Recreational gear (bicycles, golf clubs, boats)
    • Toys

    It’s up to you to decide what assets to include in your balance sheet. There is no strict science to it. That said, there’s no point in overstating (or understating) your assets. You (and your family) are the only ones who will be reviewing your balance sheet.

    I personally don’t include all of our household items, but you are certainly welcome to. For me, it’s not worth the time and effort to determine how much I could earn by selling my TV or snowboard.

    a closet that is organized and neatly arranged with clothes, shoes, and accessories, illustrating items that could count as assets learned on Think and Talk Money.

    It’s perfectly acceptable if you want to tally up the value of your items. I think it makes sense to do so if you have a lot of nice things. If you choose to do so, aim for estimates, rather than precise values, to make your life easier.

    Why it is so important to acquire assets.

    Assets can, but don’t always, appreciate (increase in value) over time. For example, a property may appreciate over the long term, but a typical car will do the opposite and depreciate (lose value over time).

    Assets can also generate income, but don’t always. A good rental property should generate monthly cashflow. A stock portfolio can generate dividends (payments from companies to investors).

    On the other hand, a designer bag won’t generate income, unless you charge people to borrow it. Even so, a designer bag is still considered an asset because you could exchange it for money.

    To state the obvious, owning assets is a very good idea. Especially assets that appreciate and assets that generate income.

    When you own these types of assets, your net worth will increase over time without much extra effort on your part. You don’t have to specifically trade your time for money with these types of assets.

    Think of it like this: the best way to achieve financial independence is to own assets that increase in value over time and generate income.

    By tracking your net worth each month, you’ll know how your assets are doing.

    Does my home count as an asset?

    Some people, like personal finance legend Robert Kiyosaki, don’t think you should count your home as an asset. The argument goes something like, “You can’t really sell your home because then you wouldn’t have anywhere to live. So, you shouldn’t count it as an asset.”

    I couldn’t possibly disagree more.

    For many of us, our homes are our most important purchase in our lives. Over the long run, most of our homes will appreciate in value, even if not as much as we hoped.

    We spend years working to make money so we can pay down the mortgage. Each payment we make reduces our debt and increases our equity in the home, thereby improving our net worth.

    Don’t overcomplicate it. Include your home as part of your net worth. Just don’t forget to include the mortgage as a liability (we’ll discuss below).

    How do you determine the value of your home for purposes of tracking your net worth?

    Make it easy on yourself. The goal is to obtain a reasonable estimate. If you’ve worked with a real estate broker, ask her for the current value of your home. She will use recent “comps”, meaning similar comparable properties in the area, to come up with a fair value.

    You can also make a decent estimate of the value of your home by studying comps yourself. Platforms like Redfin or Zillow make it easy to see what homes have sold in your neighborhood.

    Look for homes as similar to yours as you can find. Focus on size, the number of bedrooms and bathrooms, and the quality of the finishes.

    Remember, this is not an exact science. We’re aiming for an estimate of your home value only for the purpose of measuring your net worth.

    On our family balance sheet, I only update the estimated value of our properties once per year. That’s good enough for me, and all you really need to do.

    Now that we know what assets are, we need to figure out what liabilities are to calculate our net worth.

    What are liabilities?

    A liability is any debt or obligation that you owe to someone else. Liabilities are most commonly found in the form of loans.

    Unlike assets, liabilities diminish your overall net worth.

    To speed up your path to financial independence, focus on reducing or eliminating liabilities.

    Closeup image of a woman holding and choosing credit card to use, which she knows counts as liabilities from Think and Talk Money.

    My family’s current liabilities include:

    • Lines of credit
    • Mortgages

    Other common examples of liabilities include:

    • Credit card debt
    • Student loan debt
    • Auto loans
    • Personal Loans
    • Consumer loans

    When you are beginning your career, it’s common for your liabilities to be greater than your assets. This is usually because of student loan balances.

    Remember our real life, really lost boy? He had a negative net worth for years.

    Don’t let that discourage you from tracking your net worth. Even if you’re in negative territory, each month is a chance to shrink that negative number, which means your net worth is increasing.

    Whether you are paying down debt, or adding to your savings or investments, the result is the same: your net worth increases.

    The reason for tracking your net worth also remains the same: individual progress, over time.

    Now that we know what assets and liabilities are, we can create our balance sheet and determine our net worth.

    Creating your own net worth balance sheet is very easy.

    I’m happy to share the spreadsheet I currently use to track my net worth. Subscribe to our weekly email newsletter, and send me a reply to the next email asking for my net worth spreadsheet.

    Subscribe Here to Join our Newsletter!
    Please enable JavaScript in your browser to complete this form.
    Name

    On the top of my family’s net worth spreadsheet, each row represents an asset, or something we own.

    On the bottom of the spreadsheet, the rows represent the debts we owe.

    Each of the 12 columns (one column for each month) in the spreadsheet indicates the value of each asset at the end of the month.

    The reason I add a new column for each month, instead of just updating the values in a single column, is so I can easily see how our net worth has changed over time.

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

    Since your balance sheet is for your eyes only (or your family’s eyes), feel free to design it however you want.

    On our family spreadsheet, I use different colors to illustrate the different types of assets we own and liabilities we owe:

    Turquoise for securities (stocks and bonds). Orange for checking accounts. Purple for savings and objects (like cars and jewelry). Green for properties.

    I like color coding because it helps me quickly visualize what we own or owe in each broad category.

    Here’s what a simple balance sheet looks like:

    If you want to create your own balance sheet, here’s what it might look like:

    AssetsJanuaryFebruaryMarch
    401(k)
    Roth IRA
    529 College
    HSA
    Checking
    Savings
    Car
    Home
    Rental Properties
    Total
    LiabilitiesJanuaryFebruaryMarch
    Credit Cards
    Mortgage
    Student Loan
    Auto Loan
    Total

    Once you input the amounts for each cell in the appropriate column, use the “sum” function to total your assets and separately total your liabilities.

    Then, all you need to do calculate your net worth is create one final row labeled “Net Worth”.

    In the “Net Worth” cell, simply use the “sum” function again to subtract the liabilities total from the assets total.

    JanuaryFebruaryMarch
    NET WORTH

    That’s all there is to it. Now, you know your net worth.

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

    By now, you should be thinking that it’s not too difficult to track your net worth.

    It takes my wife and I less than 30 minutes each month to track and talk about the most important number in personal finance.

    How can we spend so little time on the most important number in personal finance?

    Because we’re only looking for progress compared to what our net worth was previously.

    We’re not interested in anyone else’s numbers. We only care about making personal improvements for our family.

    If our net worth is increasing over time, it means we are heading in the right direction.

    It means that we are continuing to fuel our Later Money goals. We’re paying down debt. We’re letting our investments do their thing.

    If our net worth is decreasing, it means we need to consider making adjustments.

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

    If the issue is that our debt is increasing, or we haven’t fueled our investments that month, we make adjustments.

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

    That’s all there is to it.

    All before the kids wake up.

    Do you currently track your net worth?

    Have you found it useful to measure your overall financial health.

  • Strong Motivation to Talk Money with Friends

    Strong Motivation to Talk Money with Friends

    My favorite teachers share a common gift of using analogies to make a teaching point more clear. My mentor and moot court coach in law school (he preferred we call him Sensei) was an expert at analogies.

    Back in law school, after working for months on a brief for a moot court competition, my team messed up and submitted a brief with a bad formatting error on the cover page.

    We knew we were going to get penalized, but after months of working on it, we still felt proud of our work. And, it felt good to be done.

    Diverse students high fiving together after completing a moot court brief.

    We called Sensei in celebration that we were finished. When we told him about the formatting error, he was… not pleased.

    “You fumbled the ball on the one yard line!”

    I told you he was good with analogies.

    Analogies can help us internalize key money concepts.

    I’ve found that analogies work well when trying to implement key money wellness habits into our lives. Like the idea of generating fuel for our ultimate life goals through our budgeting choices.

    I’m always on the lookout for new analogies to help make money concepts more relatable. It probably has to do with the common misconception that being good with money means knowing the ins-and-outs of the stock market.

    That just isn’t true.

    I want to help people realize that being good with money has little to do with understanding the stock market and more to do with generating money to invest in the first place.

    Relating money concepts to other familiar areas of life can help with that.

    Fresh vegetables being added to soil in a garden, symbolizing healthy financial habits learned at Think and Talk Money.

    This is one of the things I like best about teaching personal finance. Money touches all aspects of our lives, whether we like it or not. So, talking about money is really just talking about life. Sometimes that means using analogies.

    Which leads us to Peloton.

    See you on the leaderboard.

    My wife and I bought a Peloton bike during the pandemic, probably like a lot of you. I’m still a big fan, especially because of the flexibility an at-home workout provides when juggling life with kids.

    If you’re also a Peloton fan, who are your favorite instructors? For me, it’s Alex Toussaint and Matt Wilpers. And recently, Selena Samuela, because she loves Fourth Wing.

    It occurred to me the other day that my friends and I talk about Peloton a fair amount. I pretty much know who all their favorite instructors are and what type of music they ride to. I’ve been accused of having a hot bike that juices my score, which I continue to deny.

    There’s nothing better than doing a Peloton ride at home and seeing that your friend is doing the same ride. It gives you a jolt of energy to know your friend, in that exact moment, is doing the same thing as you.

    You know where I’m going with this Peloton analogy.

    It’s long been normal to talk about and motivate each other to exercise. But, it’s still considered taboo to talk about money.

    Why can’t we talk about money the same way we talk about exercising?

    I’m guessing that you know exactly what your closest friends and family members do for exercise. Weights? Yoga? Jogging? You also know which people do nothing at all.

    I’m also guessing you have no clue what motivates each of these people to work 2,000 plus hours per year to make money.

    Or, what their strategies are for using that money they make to fuel their life goals.

    Exercising has long been made better with a personal trainer or a friend to keep you on track. Those days when you don’t feel like working out, having someone to push you is a great advantage.

    Why shouldn’t we seek out that same great advantage when it comes to our money, something that touches every aspect of our lives?

    Fit people lifting dumbbells together during a workout session symbolizing thinking and talking about money.

    This idea extends well beyond exercise habits. I’m sure you know your friends’ current favorite travel destinations, books, and food?

    For me, it’s Colorado, Fourth Wing, and Italian beef, obviously.

    Do you know your friends’ current money goals?

    For me, it’s paying down mortgage debt on our rental properties.

    What are you waiting for?

    When we moved to our new neighborhood, the first people we met at the playground were a lovely couple that own a local fitness center. They’re also real estate investors and have young kids, like us.

    We’ve become friends and have had some amazing talks about life and money. In one such talk, I mentioned that I was thinking about starting Think and Talk Money.

    My friend heard me out and didn’t say a word until I finished. He then looked me square in the eyes, like only a coach could do, and said, “What are you waiting for?”

    He was absolutely right. A few months later, I launched Think and Talk Money and sent him a message thanking him. I was grateful for our talk about life. He was happy to have motivated me.

    Our friends can help with money just like they can help with exercise.

    Lately, I’ve thought about how much my friends and I can help each other if we talked about money concepts just like we talk about Peloton.

    One thing to mention, I don’t want to give you the idea that we’re constantly talking about exercise. It comes up from time to time, every once in a while. That’s enough of a reminder to pay attention to our fitness. Talking money is the same thing.

    You don’t have to bring up money with your friends every week or even every month. How about just every once in a while when it’s on your mind? I think you’ll find your friends are the best people to help you stop worrying about money.

    I think you’ll also find that you can be the one helping and motivating your friends. You don’t have to be an expert. Sharing any ideas can help jumpstart the thought process for your friends. That’s a really good feeling.

    Always remember, the amount of money we have doesn’t matter anymore than our scores on the bike. There’s no reason to talk about numbers unless the people in your life are comfortable with that.

    One caveat, I encourage you to talk specifics with certain people who are impacted by your money choices, like a spouse or partner.

    The point of talking money is not to compare yourself to others.

    Fitness instructors know that it’s not helpful to tell people to compare themselves to each other. We’re all built physically different and emotionally different. Instead, they encourage us to seek personal improvement, consistently over time.

    That’s how we should be talking money with our friends.

    We all basically agree with this concept, right? That it’s not helpful to compare ourselves to others. That’s a lesson that’s been drilled into our brains since we were kids.

    Let’s remember that lesson when we start approaching our friends to talk money. It’s not how much money any of us have, it’s what we’re doing with that money to fuel our goals that matters.

    Do you talk to your friends about paying for college?

    Many of my friends have young kids like me and saving for college is a common goal we share.

    In news that’s not news to anyone, college is expensive.

    Wouldn’t it be beneficial for us to talk about how we’re planning to pay for it?

    Students in university paid for by parents who learned good money habits on Think and Talk Money

    By talking about paying for kids’ college educations with your friends, you may learn about education-specific investment accounts, like 529 plans, which is a common strategy we’ll soon discuss.

    You may also learn less common, but potentially more appealing, strategies for your situation. An example is buying an investment property when your kids are young with the intention of selling it years later to pay for college. This is what Brandon Turner did, and he’s a very smart guy.

    The idea is you may learn something that makes it more likely to achieve your goals, whether that’s paying for college or anything else, like saving up for a wedding or paying off student loans.

    Is there a stronger motivation than helping your friends and loved ones?

    You don’t have to talk numbers. Talk about the strategy and help each other stay consistent. You both will benefit.

    Is there any stronger motivation in life than helping our friends and loved ones? On the same note, what better people to learn from than your friends, people you know and trust.

    That’s what talking money is all about.

    Leave a comment below if you’ve talked money with any of your friends lately.

    How did it go?

    Did you learn anything that you’d recommend when approaching the topic of money?

  • Better at Making or Keeping Money?

    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?

    Multicultural group of women stacking hands together - Female community concept with different girls support each other - Girlfriends hugging outdoors encouraging each other to visit think and talk money.

    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 Avatar
      Kevin

      Great insight! The foundation is so important!

      Reply

    Leave a Reply

    Your email address will not be published. Required fields are marked *