Tag: money mindset

  • Risk is the Cost to Invest

    Risk is the Cost to Invest

    Two young coworkers, Terry and Sally, start the same job at the same time making the same amount of money.

    While still many years away, Terry and Sally both know that they should invest early and often for retirement.

    They each decide to fund a retirement account with an initial contribution of $2,500. They are also dedicated to making contributions of $250 every month until they retire.

    Both plan to retire in 40 years while they’re in their 60s.

    There’s one major difference between Terry and Sally.

    They view risk differently.

    silhouette of man and woman under yellow sky illustrating the different investment paths of Terry and Sally.
    Photo by Eric Ward on Unsplash

    Terry doesn’t like risk.

    Terry doesn’t like risk. He wants to be able to sleep at night knowing that his hard-earned money is safe and sound in the bank. He can’t stand the idea of potentially losing money from one month to the next.

    When Terry wakes up in the morning, he likes to check his bank accounts while he drinks his coffee. He gets a jolt out of opening up his mobile banking app and seeing exactly how much money he has.

    In fact, at any given moment, Terry can tell you within a few hundred dollars what his net worth is.

    Because Terry doesn’t want to take any chances, he decides to stash all of his retirement savings in a savings account that earns an average annual return of 3%.

    Terry is lucky because this is a pretty generous return for a savings account based on historical savings account interest rates.

    Sally is more comfortable with reasonable risk.

    Sally is more comfortable with reasonable risk. Upon starting her career, Sally was aware that she had never learned basic personal finance skills. She was determined to put in a little bit of effort early on to set herself up for a prosperous future.

    She was a frequent reader of popular personal finance websites like Financial Samurai and Think and Talk Money.

    Sally even read JL Collins’ book on investing, The Simple Path to Wealth.

    Through the process of educating herself about personal finance, Sally started thinking about what she really wanted out of life. Since she was young and had just started her career, it wasn’t easy to come up with a good answer.

    Still, Sally knew that whatever she wanted to do in life, investing was an important part of her financial journey. If she wanted to create more time for herself down the road, she would need passive income from investments to sustain her.

    So, after doing her homework, Sally decided to invest her money in a low cost S&P 500 index fund.

    While she appreciated that there are no guarantees when it comes to investing, Sally knew that the S&P 500 has historically earned an average annual return of 10%.

    Unlike Terry, Sally only checked her accounts once per month when she tracked her net worth and savings rate. Sally slept fine at night because she knew time was on her side.

    Let’s see how Terry and Sally turned out 40 years later.

    Using a simple online calculator like the one at investor.gov, let’s see how much money Terry and Sally will have in their retirement accounts after 40 years.

    time steps on illustrating that the cost to invest is risk.
    Photo by Immo Wegmann on Unsplash

    Terry’s retirement savings total $234,358.87.

    After 40 years, Terry will have contributed a total of $122,500.00 to his retirement savings account.

    At a 3% interest rate, Terry will have a total of $234,358.87 after 40 years.

    In other words, Terry has just about doubled the value of his total contributions in his account.

    Not bad, Terry.

    Now, let’s check out Sally’s account.

    Sally’s retirement savings total $1,440,925.81.

    Sally likewise contributed $122,500.00. After 40 years, at a 10% interest rate, Sally’s retirement account will have a total of $1,440,925.81.

    Wow, Sally!

    Sally’s retirement account is worth 10 times more than what she personally contributed. Terry failed to even double his account.

    Recall in our little hypothetical, Sally did the exact same things as Terry, with one key difference. Sally was more comfortable taking on reasonable risk.

    Because Sally was comfortable taking on some risk, her retirement savings were worth more than six times as much as Terry’s savings. She has over a million dollars more than what Terry has!

    Look at compound interest in action.

    One last thing: take a look at the pictures of Terry and Sally’s investments over time. Notice the gaps between each of their red and blue lines.

    While they each benefited from compound interest, Sally benefited exponentially more.

    Look at how Terry’s red line stayed much closer to his blue line. Because he wasn’t earning as much overall interest, he didn’t have as much money to multiply from compound interest.

    Sally’s red line mirrored her blue line closely for the first 12-15 years. Then, the gap widened before the red line skyrocketed over the final decade or so.

    That’s the power of compound interest kicking in.

    So, what can we learn from Terry and Sally?

    The point of this hypothetical is to introduce the concept of risk when it comes to investing.

    We’ve all heard the saying, “You don’t get something for nothing.”

    That motto applies to investing as much as anything else. There is always risk involved in investing.

    The question is how do you react to that risk.

    Some people are so fearful of that risk that they don’t invest at all, like our friend, Terry.

    Other people are so desperate to get rich quickly that they take wild risks.

    The people that tend to reach and sustain financial independence are the ones who educate themselves and become comfortable with taking on reasonable risk. This is what Sally did.

    In future posts, we’ll dive into the various ways you can reduce investment risk.

    At this point, knowing why you’re investing and taking on risk is a powerful first step. I was recently reminded of my Money Why when my baby girl was born.

    Think of risk as the cost to invest.

    If you want to reach true financial independence or any other financial goal, it’s going to cost you something.

    Think of risk as the cost to invest.

    Sure, there may be some people out there who are able to reach financial independence on a massive salary.

    For the rest of us, we’re going to have to get comfortable with investing.

    There’s a reason we spend so much time talking about our ultimate life goals. It’s important to embrace the reasons why you’re investing and why you’re opening yourself up to risk.

    It never hurts to remind yourself what you are hoping to achieve in the future.

    When you know what that thing is, it’s much easier to pay the cost of risk.

    When you look at Sally and Terry’s future outlook, who would you rather be?

    It’s not really a hard question, right?

    It’s not that Sally has a bigger bank account. What matters is that she has created options for herself.

    Sally should be in position to do whatever she wants.

    Terry probably can’t.

    • Are you naturally more inclined to act like Terry or Sally?
    • If you’re more like Terry, have you thought about what outcome in life would be worth taking on some reasonable risk?

    Let us know in the comments below.

  • Investing is Actually the Easy Part

    Investing is Actually the Easy Part

    Investing is a major part of leading a healthy financial life.

    It also should be the easiest part.

    Despite all the attention, news, and marketing, investing doesn’t have to be complicated.

    Investing simply means committing money now to earn a financial return later. This is why I refer to money I invest as Later Money.

    To be honest, the most difficult part of investing is continuously generating money to invest in the first place.

    The actual investing part is pretty easy.

    That’s because when you invest the right way, your money should earn more money without much additional effort from you.

    This is the best part about investing. Your money can (and should) grow over time without your active participation. This is why investment gains are often referred to as “passive income.”

    If you are on a journey towards financial independence, you know how important passive income is. The best way to get your time back is to earn money passively through investments while you’re off doing something else.

    We’ll soon learn why investing does not have to be complicated. If you can drown out the noise, all you’ll really need to do is regularly fund your investment accounts and watch your net worth slowly grow.

    This is when personal finance starts to get really fun.

    Investing is when personal finance starts getting really fun.

    When you’ve invested the right way, your wealth will slowly multiply. You won’t notice it at first. Trust me, give it time.

    You’ll soon see that all the effort you put into educating yourself about money was more than worth it.

    No, you won’t be immune from market swings like the one we’re in right now.

    But, you’ll be educated enough to not panic. You’ll know that time is on your side.

    Have you noticed that we’re now 50 posts in and have hardly talked about investing?

    There’s a reason we’ve hardly talked about investing in the first 50 posts of Think and Talk Money.

    In order to get the benefits of investing, you need to have the right money mindset. That means knowing why you’re investing in the first place. Without the right motivation, you will struggle to consistently fund your accounts.

    After all, when you invest, you are sacrificing money you could spend right now for the opportunity to spend even more later on. Without the right motivation, too many people put off, or give up on, investing altogether.

    When they do that, they have a little more money to spend today. But, years from now, they will wonder why they’re still working so hard and don’t see an end it sight.

    A morning yoga session peering into the jungle in Ubud, Bali demonstrating how investing does not have to be complicated, it just takes consistency and dedication.
    Photo by Jared Rice on Unsplash

    What is your motivation to invest?

    Your motivation may be to reach financial independence so you can pivot directions in life. This is known as FIPE (Financial Independence, Pivot Early).

    Your goal may be to pay for your kids’ college. One way to do that is to take advantage of 529 college savings plans.

    You may not know exactly what you want down the road. That’s OK, too. Whatever it is, investing now will make it easier to pursue whatever that thing ends up being.

    Once your mindset is in the right place, you’ll be more determined to craft a budget that consistently creates money to invest.

    Think about it: would you rather be someone who invests $1,000 one time or someone who invests $1,000 every month?

    If you practice solid personal finance fundamentals, you can be the person consistently investing to accomplish your ultimate life goals.

    Too many people think personal finance is only about investing.

    Too many people skip over the part where we learn strong personal finance habits. These people think that personal finance is only about investing. 

    Let’s play a game. Walk down the hall at your office and ask the first person you see what they know about personal finance.

    I’m guessing you’re going to get a response like:

    “Personal finance? Oh, yes. I need to learn that. I don’t know anything about the stock market.”

    If I’m right, leave a comment below. This should be fun.

    By the way, people that assume personal finance is only about investing are not bad people. They just haven’t been properly educated. Just like me when I set $93,000 on fire.

    By now, you know that personal finance is about so much more than investing. You know that you need to develop strong habits so you constantly have money to invest in the first place.

    And, you’ll soon learn that investing is really the easy part.

    When you learn basic investing principles, like minimizing fees and playing the long game, your money can slowly grow over time.

    As that happens, you move closer and closer to financial independence without much effort at all.

    It’s actually pretty easy.

    We’ll cover these basic principles in upcoming posts.

    One thing we won’t discuss at Think and Talk Money is the latest hot stock tip.

    If you want to study P/E ratios and company balance sheets in a quest for the best individual stocks, I won’t stop you.

    I just won’t be joining you.

    That’s because it’s very hard to pick winning stocks. Even the “experts” have a very hard time doing it consistently.

    You don’t believe me, do you?

    What if I told you that the vast majority of investment pros underperform the S&P 500?

    Check this out from Yahoo! Finance:

    Making matters worse is that the professionals, who the average investor might turn to for guidance, have poor track records. In the past decade, an alarming 85% of U.S.-based active fund managers underperformed the broader S&P 500. Those who invest in these funds are essentially paying for unsatisfactory results.

    If the “pros” can’t beat typical market returns that are available on the cheap for all of us… why even play that game?

    Why overcomplicate things?

    Sure, maybe you’ll get lucky and your investment pro is one of the few who can beat the market. Odds are that if your pro beat the market one year, he probably won’t the next year.

    If that’s your game, I wish you nothing but good fortune.

    Personally, I’d rather do things the easy way. I’d rather focus on what I can control, like how much money I’m contributing to my investment accounts each month.

    And, that brings us to an interesting point.

    Even if you are working with a professional, you are not excused from participating in your investment journey. You still need to understand the basics.

    Plus, while you may not be watching your portfolio closely, your job is always to make sure there is consistent money to be invested.

    My guess (or is it hope?) is that your advisor has told you as much.

    Investing is a major component of financial independence.

    Whether you are striving for financial independence, or hoping to maintain it, investing is a major component.

    To be a successful investor, you first need to practice strong financial habits.

    Don’t worry. If your mind is in the right place, the investing part is actually pretty easy.

  • FIPE not FIRE: Financial Independence, Pivot Early

    FIPE not FIRE: Financial Independence, Pivot Early

    We focus a lot on financial independence here at Think and Talk Money. That’s because achieving financial independence is the ultimate goal for most of us.

    To me, financial independence does not mean retiring.

    That’s why I don’t like the popular acronym, FIRE: Financial Independence, Retire Early.

    Instead, I I like to view my financial freedom journey as FIPE: Financial Independence, Pivot Early.

    Let me explain why I believe in FIPE not FIRE.

    FIPE = Financial Independence, Pivot Early

    Whatever it is that you truly want to do in life, financial independence makes it possible.

    When you have financial independence, you have options. You can make decisions based on your core values instead of making decisions based on money. You can pivot, if necessary.

    Financial independence is for people who want to be empowered to take more control of what they do with their working hours.

    It’s not about quitting work. It’s about the freedom to pivot to other work, if you want. I’m convinced that humans are meant to be productive. We are social creatures who at our core want to be contributing.

    That doesn’t mean we have to be or want to be employees. But, it does mean that we want to do something meaningful with our working hours every week.

    That’s why I believe in the power of pivoting, not retiring.

    Why I don’t like the name FIRE.

    Part of the misconception about financial independence may stem from the name of the popular personal finance concept known as FIRE: Financial Independence, Retire Early.

    It’s not uncommon for people to hear financial independence and immediately think that’s only for people who want to quit their jobs and retire. That’s how widespread FIRE has become in the personal finance space.

    I agree with so many of the principles of FIRE. I just don’t agree with the name.

    Financial independence is about much more than retiring early.

    FIRE emphasizes saving more and spending less until you reach the point where your passive investments generate enough income to allow you to quit your job.

    I love this part of FIRE: the idea of creating enough income streams so that you have the freedom to do what you want with your time. I share the primary goal of saving more money and spending less to achieve more life freedom.

    I call this Parachute Money. I like to view each income stream as a separate parachute string. The more parachute strings you have, the safer it is to make a big change in life.

    The problem for me is that the FIRE end game is suggested right there in the name: become financially independent so you can retire.

    I don’t like that part. I don’t like what the word “retire” implies.

    If you look it up, you’ll see that the word “retire“means to withdraw, to retreat, to recede.

    None of those things sound appealing to me at all.

    Each word implies moving backwards. I’m not working so hard to achieve financial freedom so I can move backwards in life.

    Fire burning on beach, depicting the FIRE movement: Financial Independence, Retire Early instead of FIPE: Financial Independence, Pivot Early.
    Photo by Benjamin DeYoung on Unsplash

    I prefer to think of financial independence in terms of creating options. I prefer to think of financial independence as a way to move forward in life.

    I think “pivot” better reflects that mission.

    Pivot means to adapt or improve through modifications and adjustments.

    That sounds so much more appealing to me.

    With FIPE, financial independence is still the primary goal. But, the endgame is not to withdraw or retreat. The endgame is to adapt and improve how you spend your working hours.

    FIPE = Financial Independence, Pivot Early.

    Granted, the name “FIPE” is not as catchy as FIRE.

    But, I think it actually better encapsulates the entire purpose of financial independence in the first place.

    To explain, let’s look back at the modern day origin of FIRE for a minute.

    Vicki Robin and Joe Dominguez are often credited for laying the groundwork for the modern day FIRE movement. Robin and Dominguez wrote an incredible book called Your Money or Your Life.

    It’s one of my favorite personal finance books. You should definitely read it if financial independence is important to you.

    In their book, Robin and Dominguez have a lot to say about the relationship between money, work, and time. 

    Guess what?

    Most of us are doing it all wrong.

    Most of us make the mistake of chasing money at the cost of our precious time. When you read Your Money or Your Life, you will start to value your time for what it’s really worth.

    By making good choices about how to earn money- and as importantly what to do with that money- you can get the most out of your money and your life.

    That’s what FIRE is really all about. It’s about choosing to use your working hours in a way that is more meaningful to you than clocking in-and-out as an employee each day.

    It’s not about retiring from meaningful work. It’s about pivoting to work that is more meaningful to you.

    FIRE proponents would likely agree that the goal is not to withdraw or retreat.

    I think proponents of FIRE would actually agree with me that the end game is really not about withdrawing or retreating. The mission is always about moving forward, not backwards.

    My belief is that people who are disciplined and skilled enough to reach financial independence in the first place are the type of people who don’t retreat or withdraw.

    They may opt for periods of temporary retirement, as they should. But, I don’t think financially independent people are truly wired for full-time retirement.

    That’s why you see so many people who have obtained financial independence continue to pursue income streams.

    That might mean managing real estate investments, teaching others, or even starting a financial freedom blog.

    So, technically speaking, most people who have obtained financial independence have not actually retired. They haven’t withdrawn or retreated. Instead, they have pivoted.

    They are now spending their working hours doing other things. They may not be working full-time for an employer, but they’re still working.

    They’ve achieved financial independence and have earned the right to pivot.

    Financial Independence, Pivot Early.

    Even FIRE leaders would likely agree that the end game is not to completely retire.

    FIRE is not about retiring or quitting. It’s about pivoting to more meaningful life pursuits.

    I don’t want to speak for Robin, but I think this is what she was getting at.

    I also think this is what modern day FIRE leaders like Mr. Money Mustache and the Financial Samurai believe in. Not long ago, Financial Samurai actually wrote an excellent post called “Why Early Retirement / FIRE is Becoming Obsolete.”

    I just think the name FIRE doesn’t accurately portray the mission. Pivoting early seems more appropriate to me than retiring early.

    We all have the same goals in mind: financial independence. And, I believe we have the same end game in mind: pivoting to more meaningful work.

    That’s why I like FIPE instead of FIRE.

    Are you looking to retire early or simply to pivot?

    What is it that you’re aiming for by getting your personal finances in order? If you want to retire early, there’s nothing at all wrong with that. You may be at the point in your career and life where that makes sense.

    Personally, I’m not looking to retire early. That’s why I like to view financial independence as a chance to pivot.

    Pivoting doesn’t mean you have to switch jobs or change things up just for the sake of change. It just means that you have that option if you want it or need it.

    By the way, I’m not alone in viewing financial independence as a chance to pivot instead of retire.

    Scott Trench, CEO and President of BiggerPockets has been beating this drum for a while. He’s also talked about it on the BiggerPockets Money podcast.

    I’m in complete alignment with Trench. I like almost everything about FIRE, just not what the name implies. 

    With FIPE, the goal is not to retire. The goal is to give yourself the freedom to choose what to do next.

    Whether you want to retire early or just pivot to a new chapter in your life, being good with money is key.

    Do you like the name FIRE or FIPE?

    At the end of the day, whether you like to view it as FIRE or FIPE, the mission is the same. We are all looking for the freedom to choose what to do next.

    When striving for financial independence, the goal is to create options. Those options likely include pivoting to more meaningful work, rather than withdrawing or retreating.

    Personally, I think the name FIPE better encapsulates that mission.

    • Do you agree?
    • What name resonates more with you on your financial freedom journey?
    • Are you interested in retiring early or pivoting early?

    Let us know in the comments below.

  • My Journey to Financial Freedom

    My Journey to Financial Freedom

    Financial freedom doesn’t happen overnight. I’ve been on my journey to financial freedom for more than a decade.

    I’m not there yet.

    Here’s a look at how my journey to financial freedom has progressed since I graduated law school in 2009.

    My journey to financial freedom began in my late-20s and was focused on eliminating debt.

    In my 20s, I needed to pay off credit card debt and student loan debt. All I knew about the journey to financial freedom back then was that it seemed very far away.

    I started budgeting, which meant reigning in my spending on things I didn’t really care about.

    I began to establish good money habits. It wasn’t easy, and I was far from perfect. That’s OK. The 80/20 rule reminds us that we don’t need to aim for perfection.

    By the way, my life didn’t all of a sudden become boring and miserable when I became more money conscious. Quite the opposite, actually.

    I became more confident in myself because I had a plan. I no longer felt like I was sliding backwards. With each paycheck, I moved one step closer to erasing my debt. That was a powerful feeling.

    In my early-30s, my journey to financial freedom was about fueling my savings.

    By the time I turned 30, I had paid off my credit card debt and my student loan debt. I’ll never forget the day I made my last student loan payment as my family and I were heading out to Colorado. A huge weight had been lifted from my shoulders.

    I felt free. My journey to financial freedom was still in the early stages, but I was on my way. Most importantly, I still had good habits and a plan.

    The byproduct of eliminating my debt was that I had more fuel to accomplish my other goals.

    Financial Freedom wooden sign with a beach on background, illustrating that my journey to financial freedom and the journey to financial freedom for lawyers and professionals does not happen over night.

    What other goals?

    The money I had been allocating to student loan and credit card debt could now be put towards more fun goals and experiences.

    Instead of aimlessly spending the thousands of dollars each month that had been going towards debt, I rolled that money directly into savings. Highest on my list was saving for an engagement ring.

    Within a year, I had enough saved to purchase the ring. I thought being free from debt was strong motivation. Turns out that motivation was nothing compared to the desire to buy a ring for the woman you love.

    As your career progresses and you earn more money, you will benefit from strong personal finance habits.

    As my career progressed, like many of you, I started earning more money. When I earned more, I did my best to use that additional income as fuel for my goals.

    I’m grateful I had previously learned strong personal finance habits on my journey to financial freedom when I earned relatively little.

    For most of us, our usual career progression is the exact opposite of the typical lottery winner. Who hasn’t heard the stories about the lottery winners that hit it big and then quickly go broke?

    These stories are unfortunately all too common. What starts out with so much elation usually ends in tragedy.

    The normal downfall involves unrestrained spending on things like houses, cars, and extravagant nights out. It also involves the pressure to give money away to family, friends, and charities.

    The same pattern has been well-documented for professional athletes who earn millions before quickly going broke.

    The challenge is the same for lottery winners and professional athletes. They come into a lot of money suddenly without any prior personal finance education. When this happens, that money disappears quickly.

    What can we learn from lottery winners and professional athletes?

    I think it’s safe to say that none of us are going to win the lottery or earn millions as a professional athlete. I hope I’m wrong about that!

    But, we can still fall victim to the same set of challenges on the journey to financial freedom. It may not be a sudden rise and then an equally sudden drop-off. Our financial growth presents itself more slowly.

    Over time, we may earn referrals/commissions, raises, and bonuses. These earnings certainly add up and can make a huge difference in our lives, if we have a plan. That’s a big “if” for most of us.

    I didn’t have the full plan figured out in my 20s. Our goals change as life changes. There’s nothing wrong with that.

    That said, because of the steps I took in my 20s to learn about personal finance, I was better prepared for the opportunities and challenges that arose in my 30s. I learned that when you create a solid foundation for yourself, you have options.

    To me, life is all about giving yourself options. Nobody likes feeling stuck, including me.

    In my mid-30s, my journey to financial freedom was about building wealth through real estate.

    Besides saving for an engagement ring and a wedding, I was able to save up for a downpayment on a home. At the time I started saving up for a home, I had no idea that I could use my savings to invest in real estate.

    It wasn’t until I went to a Cubs game with a good friend of mine, The Professor, that I learned about real estate investing.

    This is when my journey to financial freedom really accelerated.

    See, The Professor had a beautiful condo with an incredible rooftop deck near Wrigley Field. During the game, he told me he was selling the condo and moving into a 4-flat with his fiancee in an up-and-coming part of town.

    Huh?

    Why on earth would you give up your amazing condo? And move to a random neighborhood I’d maybe been to one time in my life?

    I thought The Professor had lost his mind. Back then, I had no idea what a 4-flat even was. I couldn’t even point to his new neighborhood on a map of Chicago.

    The Ivy at Wrigley Field illustrating when Matthew Adair accelerated his journey to financial freedom through real estate investing.

    The Professor set me straight.

    He walked me through the numbers. He explained that he was going from paying $3,000 per month for his condo to receiving $700 per month on top of living for free in the 4-flat. That’s a $3,700 difference per month!

    The Professor also introduced me to BiggerPockets. That was huge for me because I believe in the motto, “Trust but verify.”

    Over the next week, I read everything I could and listened to podcasts every day. It didn’t take long before I was convinced that I wanted a 4-flat of my own.

    Eight years later, I own three buildings and 10 apartments in that same Chicago neighborhood. I have a ski rental condo in Colorado.

    Without that great talk with The Professor, I don’t think I would be where I am today on my journey to financial freedom.

    Man I’m glad The Professor wasn’t afraid to talk money with me!

    He knew that taking about money is not taboo.

    We all need to position ourselves to benefit when luck comes our way.

    I was fortunate to have learned from The Professor’s experience. We all need some luck on the journey to financial freedom. I’m convinced that we’ll all catch a break here or there. The question is what we do with that luck when it comes our way.

    If I hadn’t taken the time to learn about personal finance in my 20s, I wouldn’t have been positioned to benefit from that conversation with The Professor.

    That’s why I say the journey to financial freedom doesn’t happen over night. It’s about one building block at a time.

    For any aspiring real estate investors out there, please take that message to heart. Before you can successfully invest in real estate, you have to invest in your own financial literacy.

    I’ve learned firsthand that the same principles that apply to personal finances apply to managing a real estate portfolio. Each pursuit takes a plan that only works with discipline and patience.

    In my late-30s, my journey to financial freedom was about paying off debt.

    In my late-30s, my journey to financial freedom pivoted from acquiring properties to optimizing my portfolio. My wife and I decided we were ready to transition from growing our real estate portfolio to paying off our debt.

    In a way, I’ve come full circle on my journey to financial freedom.

    We owe a lot of credit to Chad “Coach” Carson and his excellent book, Small and Mighty Real Estate Investor: How to Reach Financial Freedom with Fewer Rental Properties.

    Reading Small and Mighty Real Estate Investor helped us conclude that at this point in our lives, we have enough. Our portfolio generates enough income to help fuel our current goals. If we were to continue expanding, the headaches could end up outweighing the financial benefits.

    Progress is not linear, either. I’ve taken on debt in the form of mortgages and HELOCs to invest in more real estate.

    In the short term, that mortgage debt pulls me further away from financial freedom.

    If my plan works, that same debt will push me more rapidly to financial freedom.

    Financial freedom through real estate has existed for decades, if not centuries.

    By the way, I didn’t invent the plan of achieving financial freedom through real estate. That idea has existed for decades, if not centuries. I’d avoid anyone who tells you they pioneered this concept.

    Years ago, I remember sharing my newfound passion for real estate with mom. She had this smile on her face as I excitedly shared this “new” phenomenon of investing in real estate to achieve financial freedom.

    The next time I saw her, I realized her smile was actually more of a smirk.

    She handed me a book called How You Can Become Financially Independent by Investing in Real Estate.

    It was written by Albert J. Lowry, Ph. D.

    In 1977!

    Picture of a financial independence book showing that my journey to financial freedom through real estate is a concept that has existed for decades.

    Financial Freedom doesn’t happen over night.

    It’s natural to want to jump to the finish line. I’m guilty of that, too. I think about achieving financial freedom every day and need to remind myself to take it one step at a time.

    Even with all I’ve learned about personal finance, it can sometimes feel like I’m heading in the wrong direction.

    Wherever you currently are on your journey to financial freedom, remember that it doesn’t happen over night. I need to constantly remind myself to stay the course.

    Keep coming back to Think and Talk Money for daily reminders that financial freedom is within all of our grasps.

  • The Biggest Money Question: What is Your Money Why?

    The Biggest Money Question: What is Your Money Why?

    What is your Money Why?

    @thinkandtalkmoney

    It’s that simple. #thinkandtalkmoney #mywhy #financialfreedom #firemovement #personalfinance #moneywellness #realestateinvesting

    ♬ original sound – Thinkandtalkmoney

    I had the happiest occasion to think about that question this past week.

    My wife and I welcomed our third child, a little baby girl.

    We were very fortunate and had a smooth delivery process.

    Even so, when you’re in the delivery room, your mind runs wild. You just want everything to go well. It’s completely out of your hands by that point.

    Things get really interesting when you’ve been at the hospital for a while and haven’t slept. There’s no telling where your mind will go.

    No matter how much you tell yourself not to do it, you can’t help but think of all that can go wrong.

    During these moments, I can assure you that one thing you’re not thinking about is money. If anything, you’re thinking that you would trade all the money you have for a healthy baby and a healthy mom.

    I guarantee you won’t be thinking about free falling markets. You’re not thinking about setting up a 529 college savings plan, either.

    When you finally hold your new baby, nothing else in the world matters. Everything around you goes quiet. The sense of relief is overwhelming and you cry.

    It’s a beautiful thing.

    In those first few moments, I told my baby girl that I love her. I promised that I will always protect her. Whatever she needs, I will be there.

    If I want to keep that promise, I need to be good with money.

    To be good with money, I need a powerful Money Why.

    Matthew Adair, founder of Think and Talk Money, holding his baby girl and remembering why he wants to be good with money.

    What is my Money Why?

    I’ve known my Money Why since I wrote down my Tiara Goals for Financial Freedom on a beach in 2017. My number one Tiara Goal for Financial Freedom is to be with my wife and kids as much as I want.

    I wrote down that goal before I was even married or had kids.

    Years later, my Money Why hasn’t changed. The only thing that’s changed is my Money Why has gotten stronger and stronger since then.

    • In 2017, my Money Why got stronger when I got married.
    • Then in 2020, my Money Why got stronger when my daughter was born.
    • Again in 2022, my Money Why got stronger when my son was born.
    • This week, my Money Why got stronger when my baby girl was born.

    My Money Why has never been more clear. It doesn’t even matter if my brain is functioning at half speed right now on limited sleep.

    My Money Why is my baby girl, my son, and my daughter. My Money Why is my wife.

    Of course, I want to provide for my family financially.

    But my Money Why is more than that.

    I don’t want to just provide money, I want to provide time. And, I want to be present and share experiences.

    Most of all, I want to be with them.

    My overall goal in life is to spend as much time as possible with the people who are meaningful to me. To accomplish that goal, I need to be good with money.

    If I’m good with my money, I can achieve financial freedom.

    With financial freedom, I can choose how to spend my time. That means I can choose who to spend my time with.

    My Money Why is not about being rich.

    Saying that I want to be good with money is not the same thing as saying that I want to be rich. Funny enough, people that are good with money oftentimes feel rich regardless of what their net worth is.

    As nicely put by Sam Dogen, founder of Financial Samurai, one of the preeminent personal finance blogs:

    But I’ve noticed on my path to financial freedom there were several times when I felt incredibly rich and money wasn’t the dominant reason.

    I couldn’t agree more with Dogen. There’s no richer feeling than having just come home from the hospital with a healthy baby girl. That feeling has nothing to do with money.

    Check out more from Dogen at his website financialsamurai.com. There’s a reason why he is one of the leading voices in the personal finance space.

    Simply making a lot of money will not make you feel rich.

    On the flip side, people that make a lot of money but are not good with money often feel like they’re struggling to get by. As CNBC explained after talking with financial psychologists:

    Whether you’re aiming to save more cash or boost your overall earnings, it’s important to ask yourself what you hope to achieve by obtaining more money, Chaffin says. Otherwise, if you don’t change your internal money beliefs, you may still feel anxious about money even if you hit millionaire status.

    The takeaway is that it is pointless to make money without stopping to think why you want that money and what you’re going to do with it.

    If you’ve never thought about money that way before, here are three three powerful reasons to get you started:

    1. Money can give you choices.
    2. Money can give you personal power.
    3. And, money can give you time.

    Money is nothing but a tool that you can manipulate to get what you truly want out of life. The thing is, you have to actually think about what you want if you are going to use that tool effectively.

    Don’t wait for a major life event to start thinking about money.

    You don’t have to wait until you have a baby to start thinking about what money can do for you. In fact, if you wait for a major life event like that, it’s going to be a lot harder than if you start thinking now.

    Ask yourself:

    “What is my Money Why?”

    Whatever comes to mind, write it down.

    Maybe you want to retire early. Maybe you’re just looking for a life pivot, as Scott Trench, CEO and President of BiggerPockets wrote about recently and has regularly discussed on the BiggerPockets Money podcast.

    I personally agree with Trench, and I like almost everything about FIRE, which stands for Financially Independent Retire Early. It’s just that I know that retiring early is not for me.

    I prefer to think of it as FIPE:

    Financially Independent Pivot Early

    With FIPE, the goal is not to retire. The goal is to give yourself the freedom to choose what to do next.

    Whether you want to retire early or just pivot to a new chapter in your life, being good with money is key.

    Besides, I’ve never seen the point in working endless hours to make money, while spending hardly any time seriously thinking about how to keep that money.

    What’s your Money Why?

    My Money Why gets clearer by the day. It has never been more clear than it is right now after bringing home a little baby girl.

    • What is your Money Why?
    • Has your Money Why changed over time?
    • How does your Money Why impact your relationship with money?

    Let us know in the comments below.

  • Top 10 Student Loan Tips for Lawyers and Professionals

    Top 10 Student Loan Tips for Lawyers and Professionals

    Student loans are…heavy.

    That’s it.

    They’re. Just. Heavy.

    They’re a weight that we carry around long before we even make the first repayment. Sometimes that weight feels so heavy, it’s hard to imagine it ever going away.

    And as much as we wish we could, we can’t ignore our student loans.

    One way or the other, we have to get rid of them.

    And when we do get rid of them for good, there might not be a better personal finance feeling in the world. Personally, I’ll never forget the day I made my last payment and shared the news with my future wife and family.

    To help you have that same feeling of accomplishment, here are my top 10 student loan tips for lawyers and professionals.

    Top 10 Student Loan Tips for Lawyers and Professionals

    1. Locate all your loans.
    2. Sign up for automatic payments.
    3. Do not miss a payment.
    4. Consider using Debt Snowball or Debt Avalanche.
    5. Make an extra monthly payment.
    6. Create a BAT that generates fuel for your student loans.
    7. Make more money and use that money for your loans.
    8. Take a tax deduction and use your tax refund for your loans.
    9. Consider a loan consolidation.
    10. Look for ongoing scholarship opportunities.

    1. Locate all your loans.

    As a first step, be sure that you are aware of all of your loans. Most people end up needing both federal loans and private loans, which are not tracked by the same loan servicers.

    Additionally, you may have taken out different types of loans at different stages of your education. It’s not uncommon to forget about some of those loans.

    Before you can implement a thoughtful strategy to pay back your loans, you need to ensure that all of your loans are accounted for.

    The best place to locate all of your loans is on your credit report. The next best option is to ask your school’s financial aid office.

    A credit report is a document that tracks your history of repayment and the current status of any loans you’ve taken out.

    You are entitled to receive a free copy of your credit report from each of the three main credit reporting agencies every year. To do so, simply visit annualcreditreport.com.

    For federal loans, you can also check online at studentaid.gov. But, your private loans won’t be tracked by the federal government at studentaid.gov.

    Besides checking your credit report, you can access all your private loan information from your loan servicer.

    Once you’ve identified all your loans, you can implement a strategy to pay them off efficiently.

    2. Sign up for automatic payments.

    By signing up for auto pay, you can save .25% interest on your federal loans. Many private loan companies also offer a .25% discount for using auto pay.

    Over time, those savings will add up. And, there’s really no downside to you.

    In fact, you should be using automatic payments even if your loan servicer does not offer a discount.

    When it comes to paying back loans or achieving any other financial goal, automating your money is a very good idea. In The Automatic Millionaire, David Bach thoughtfully explains how the single step of automating your finances can help you achieve all of your financial goals.

    You can learn more about Bach’s philosophy on his website.

    I personally implement many of Bach’s strategies in my own life. I used to automate my student loans payments. Now, I automate my mortgage payments. 

    The Automatic Millionaire is definitely worth a read.

    3. Do not miss a loan payment.

    You know that expression, “Act now, apologize later”?

    That absolutely does NOT apply to loan payments.

    No matter how responsible or well-intentioned you are, sometimes life happens. Whether it’s technically your fault or not, a missed loan payment is a big problem.

    It may seem unfair, but even a single missed payment can severely impact your credit history and credit score.

    Pieces of wood with message fair and unfair on wooden background illustrating one of the 10 student loan tips for lawyers and professionals is to not miss a payment.

    Because the consequences of a missed payment are so severe, this is another reason why setting up auto payments is such a good idea.

    If you know ahead of time that you won’t be able to make a payment, it is imperative that you notify your loan servicer ahead of time. Your loan servicer may be able to work with you and figure out a solution before major consequences set in.

    4. Consider using Debt Snowball or Debt Avalanche to pay off your student loans.

    When you apply the Debt Snowball strategy, the idea is to focus on the loan with the smallest balance first, regardless of interest rate.

    Once you have paid off the first loan in full, you move to the loan with the next smallest balance, again regardless of interest rate. The money you had been paying to the first loan can now be rolled into the second loan.

    When you apply the Debt Avalanche strategy, the idea is to prioritize the loan with the highest interest rate, regardless of the balance.

    Once you’ve paid off the loan with the highest interest rate, you move to the loan with the next highest interest rate. Just as before, the money you had been paying to the first loan can now be applied to the second loan.

    Either approach works perfectly for paying off multiple student loan balances. Regardless of which method you choose, always pay the minimum required amount on all loans every month.

    For more on the pros and cons of each method, check out our deep dive on Debt Snowball v. Debt Avalanche.

    5. Make an extra monthly payment for massive savings.

    You may be surprised how big of an impact even a small additional payment each month can have on your loans.

    Let’s look at an example.

    Let’s say you owe $100,000 in student loans and currently pay back $1,250 per month with an 8% interest rate.

    Using calculator.net, you learn that at this pace, it will take you 9 years and 7 months to pay off your loans. You’ll pay back a total of $143,377.94.

    Student loan calculator illustration showing the power of one additional monthly payment as part of Think and Talk Money's 10 student loan tips for lawyers and professionals.

    Now, let’s imagine you are able to pay back an additional $100 per month.

    Look what happens:

    Student loan calculator showing the power of one additional $100 monthly payment as part of Think and Talk Money's 10 student loan tips for lawyers and professionals.

    You can eliminate your loans an entire year sooner and save $5,040.13 in interest payments. Just with an extra $100 per month!

    What about if you are able to pay back an extra $250 per month?

    This is when I start to get excited.

    Check this out:

    Student loan illustration showing the power of an additional $250 monthly payment as part of Think and Talk Money's 10 student loan tips for lawyers and professionals.

    For just $250 per month, you can knock off 2 years and 2 months of loan repayments and save $10,684.35 in interest!

    Think about how good it will feel to get 2 years and 2 months of your life back without loan payments.

    How are you supposed to come up with an extra $100, $250, or more per month?

    I’m glad you asked.

    6. Create a Budget After Thinking that generates fuel for your student loans.

    If you want to pay off your student loans faster, you really only have two options.

    The first option is to create a Budget After Thinking that prioritizes loan repayment. One of the key purposes of budgeting is to generate fuel for your future goals, including eliminating student loan debt.

    Instead of letting your hard-earned dollars disappear, put them to good use. Even $100 a month can make a big difference, as we just saw.

    If you’re having a hard time generating additional fuel for your student loans, check out my 10 Tips to Win the Budget Game.

    So, the first option to pay off your loans faster is to create a budget and spend less money elsewhere.

    What’s the second option?

    7. Make more money and put those extra earnings directly to your loans.

    If you’re not going to cut spending in favor of student loan repayment, then your only other option is to make more money.

    That might mean getting a valuable side hustle. Or, it might mean earning a raise or a bonus at your primary job.

    Whatever the case may be, as you make more money, focus on improving your savings rate.

    Financial bills and adhesive note with text - Side hustle showing one of the 10 student loan tips for lawyers and professionals is to get a side hustle.

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

    Even though it’s called “savings rate,” there’s no reason why you can’t include debt repayment in your calculations. Whether you are adding money to a savings account or eliminating debt, your net worth improves.

    It all counts in my book.

    The point is that when you start to earn more money, put that money to good use.

    Instead of shopping at more expensive stores or eating at fancier restaurants, keep your spending habits the same. Put those higher earnings towards your important life goals, like eliminating student loan debt.

    8. Take a tax deduction and use your tax refund for your loans.

    The IRS permits borrowers, up to certain income limits, to take a federal tax deduction up to $2,500 per year for student loan interest payments. That means that you can reduce your taxable income by up to $2,500 per year based on the interest you paid that year.

    The actual amount of money you’ll save with this tax deduction depends on variables like your tax bracket. Check with your accountant or tax professional for specifics.

    Regardless, as we’ve seen above, even a small amount of extra money can go a long way if used for additional student loan debt payments.

    In the same vein, what if you made it a goal to apply your entire tax refund to your student loan debt?

    Let’s return briefly to our example above.

    This time, let’s assume that each year, you receive a tax refund of $1,700. Instead of wasting that $1,700 annually on things you don’t care about, you decide to put that money directly towards your student loans.

    Look what happens when you apply that $1,700 tax refund to your student loans each year, without making any additional payments whatsoever:

    Student loan illustration showing the power of an annual $1,700 payment as part of Think and Talk Money's 10 student loan tips for lawyers and professionals.

    With just that one decision to use your annual tax refund for student loan payments, you knock off 1 year and 4 months of payments and save $6,099.26!

    That seems like a great use of money that you’ll never miss anyways.

    9. Consider a loan consolidation.

    Consolidating your various loans into a single loan can help make your life easier and save you money.

    Your life should get easier when you only have to track and pay one loan back each month. There’s also a much smaller chance that you forget to make a payment or lose track of a loan altogether.

    Besides the convenience, when you consolidate, you should receive an overall lower interest rate. That means long-term savings.

    Before you consider a loan consolidation, be sure to do your homework. One major consideration is that you will lose whatever federal loan benefits you currently have if you consolidate, such as the possibility for loan forgiveness.

    10. If you’re still in school, look for ongoing scholarship opportunities.

    This is something that didn’t occur to me until my final year of law school. It took me that long to realize that schools regularly offer scholarships, stipends, and grants to current students, not just prospective students.

    During my third year of law school, I applied for a scholarship and was awarded $2,000. I didn’t think of it at the time, but looking back, I could have used that $2,000 to prepay my student loan interest.

    That would have accelerated my progress towards eliminating my loans while I was still in school.

    This is a good time to point out that personal finance requires consistent attention. You don’t have to think and talk about money every day. Not even I want to do that.

    But, you do have to intentionally make your personal finances a regular part of your life.

    Let’s revisit our example once more.

    Sorry, I can’t help myself.

    What if you combined some of the 10 tips we just talked about?

    Let’s say you decide to make an extra $250 monthly payment, contribute your $1,700 tax refund annually, and make a one-time payment of $2,000 for a scholarship you earned while finishing up school.

    Let’s take one more look at calculator.net:

    With just three relatively painless decisions, you can knock off 3 years and 1 month of student loan payments! And, you’ll save $15,481.76!

    Think about what you could do with an extra 3 years and 1 month of your life without student loan payments.

    You can now use that $1,500 per month you had been using for student loans on other goals. Not to mention what you could do with your annual tax refund.

    On top of that, think about what you could do with that $15,481.76 you saved in interest payments.

    Decisions like these are how financial freedom happens.

    That’s powerful stuff.

    What are your favorite student loan repayment strategies?

    To recap my top 10 student loan tips for lawyers and professions:

    1. Locate all your loans.
    2. Sign up for automatic payments.
    3. Do not miss a payment.
    4. Consider using Debt Snowball or Debt Avalanche.
    5. Make an extra monthly payment.
    6. Create a BAT that generates fuel for your student loans.
    7. Make more money and use that money for your loans.
    8. Take a tax deduction and use your tax refund for your loans.
    9. Consider a loan consolidation.
    10. Look for ongoing scholarship opportunities.
    • Have you applied any of these strategies?
    • What am I leaving out that has worked for you?

    Let us know in the comments below.

  • Money Questions: Markets in Free Fall

    Money Questions: Markets in Free Fall

    A reader reached out late last week and asked, “What do you do when the markets are in free fall?”

    It’s a question that really captures the intersection between money and emotions.

    I’m not an investment advisor, but I’m happy to share what I’m currently doing as the markets drop. Your personal situation may be different than mine so be sure to check with your investment advisor.

    Before we jump in, here’s a recap from Yahoo! Finance about how significant the drop was last week:

    US stocks cratered on Friday with the Dow Jones Industrial Average (^DJI) plunging more than 2,200 points after China stoked trade-war fears and Fed Chair Jerome Powell warned of higher inflation and slower growth stemming from tariffs.

    The Dow pulled back 5.5% to enter into correction territory. Meanwhile, the S&P 500 (^GSPC) sank nearly 6%, as the broad-based benchmark capped its worst week since 2020. The tech-heavy Nasdaq Composite (^IXIC) dropped 5.8% to close in bear market territory.

    The major averages added to Thursday’s $2.5 trillion wipeout after China said it will impose additional tariffs of 34% on all US products from April 10 — matching the extra 34% duties imposed by Trump on Wednesday.

    My hyper-technical analysis: that’s not good.

    Read on to see how I’m handling the market drop, how The Simple Path to Wealth helped shape my personal investing strategy, and how Die with Zero changed my perspective on how much to save for retirement.

    Let’s dive in.

    So, what am I doing with my portfolio right now while markets are falling?

    Despite how bad it seems, this is not a difficult question for me to answer.

    I’m not doing anything.

    I invest in the stock market to help achieve my long-term goals. My two main long-term goals are to save for college and to save for retirement.

    Each objective is so far away that time is on my side.

    man puts fingers down in lake kayaking against backdrop of golden sunset, unity harmony nature illustrating staying calm when markets are in free fall.

    My oldest child is five-years-old. I have 13-14 years until she even begins college. We make regular contributions to a 529 college savings plan to pay for her education. We fully anticipate that the market is going to go up and down over these next 13-14 years.

    As for retirement, I’ve still got decades in front of me. Same as what we just talked about with saving for college, I fully expect the market is going to go up and down many times before I retire.

    Make no mistake, I don’t enjoy seeing my portfolio drop so suddenly.

    Like everyone else, I don’t enjoy seeing my portfolio drop suddenly.

    It’s not fun to read the headlines right now. My brain seems to jump to the worst case scenario. Maybe you do the same thing. It’s nice to have someone to talk to about it. Misery loves company, right?

    This is one of the reasons why I only look at my portfolio once per month when I track my net worth.

    To remind myself to hold steady during the down times, I think of a study that examined what would happen if an investor missed the 10 best days for the market in each decade since 1930.

    As summed up by CNBC:

    Looking at data going back to 1930, the firm found that if an investor missed the S&P 500′s 10 best days each decade, the total return would stand at 28%. If, on the other hand, the investor held steady through the ups and downs, the return would have been 17,715%.

    These results illustrate how risky it would be for me to try to time the market. The last thing I want to do is miss the upswing. I have no idea when it’s coming.

    But, time is on my side.

    I’m going to do my best to be in the market when that upswing eventually comes.

    And, I am confident that upswing will come. It may not be until years from now. That works for me and my investment horizon.

    One other mental hack that’s helping me right now:

    I’m telling myself that the market is on sale right now. How so? I can buy the exact same stocks today for less money than they would have cost even a few days ago. I do love a good sale.

    In the end, no matter how bad things seem right now, I plan to continue making regular contributions to each of my investment accounts.

    Since I’m investing for the long run, I’ll let the market do its thing while I’m off doing my own things.

    Disclaimer: Your situation may be different. I am not an investment advisor. Do your homework and make the best decisions for your personal situation.

    What is my personal investing strategy?

    My personal investing strategy is largely based off of J.L. Collins’ exceptional book The Simple Path to Wealth. If you want a complete and easy to understand guide on all things investing, check out The Simple Path to Wealth.

    You can read my full review of The Simple Path to Wealth in my post here.

    If nothing else, it’s crucial to educate yourself so you can make informed decisions, especially in times of economic uncertainty like we’re in right now.

    The Simple Path to Wealth is a great place to start when it comes to investing in the markets.

    As Collins explains, benign neglect of your finances is never the solution. ReadThe Simple Path to Wealth and check out Collins’ website for a gold mine of information when it comes to personal finances and investments.

    So, what is my personal investing strategy?

    When it comes to investing in the markets, I’m about as boring as can be.

    My wife and I invest primarily in index funds.

    What is an index fund?

    As explained by Vanguard:

    An index mutual fund or ETF (exchange-traded fund) tracks the performance of a specific market benchmark—or “index,” like the popular S&P 500 Index—as closely as possible. That’s why you may hear people refer to indexing as a “passive” investment strategy.

    Instead of hand-selecting which stocks or bonds the fund will hold, the fund’s manager buys all (or a representative sample) of the stocks or bonds in the index it tracks.

    Why index funds?

    The simplest way to answer that one is to direct you to the single greatest investor of our lifetimes, if not ever: Warren Buffett.

    In 2013, Buffett famously instructed that after he dies, his wife’s cash should be split 10% in short-term government bonds and “90% in a very low-cost S&P 500 index fund.”

    Good enough for Buffett, good enough for me.

    For more on index fund investing, check out our full series on investing or read The Simple Path to Wealth.

    To sum it all up, my wife and I are not active traders. We don’t seek out the newest, hottest stocks.

    We’re pretty boring, actually.

    We simply make regular contributions to our various investment accounts and let the markets take care of the rest.

    As an example, for my daughter’s 529 plan, we chose a passive investment option that’s a mix of stock index funds and bond index funds.

    Our portfolio automatically rebalances over time based on my daughter’s projected first year of college. Essentially, the closer we get to her first year in school, the more conservative our portfolio becomes.

    We chose a similar option for our son’s 529 plan.

    One other note for context: Keep in mind that my wife and I are real estate investors. We own five properties and 11 total rental units. Our real estate investments comprise a major part of our overall net worth.

    How much money do I put towards each of your financial goals?

    Between saving for emergencies, saving for college, and saving for retirement, there are a lot of options. In addition, you may have other short term goals, like paying for a wedding or a house. Or, you may want to invest in real estate.

    So, how do you determine how much to allocate to each goal?

    There’s no perfect answer here.

    The first thing you can do is to spend some quality time formulating your version of Tiara Goals for financial freedom.

    Then, let those goals inspire conversations with your people to help you make the best decisions. This is exactly how my wife and I came up with our financial goals for this year.

    It also helps to attach specific targets to your financial goals, like we did when we estimated how much you should be saving to pay for college.

    I went through a similar exercise with my retirement savings after reading Die with Zero by Bill Perkins.

    Woman thoughtful about work at home office desk laptop wondering whether she is saving too much for retirement.

    As crazy as it sounds, are you saving too much for retirement?

    In Die with Zero, Perkins suggests that many of us are saving too much for retirement at the expense of using that money to live our best lives now.

    It’s one of the most compelling personal finance books I’ve read in a long time, and I highly recommend it. You can also learn more about Perkins and his journey on his socials.

    Perkins is not suggesting that saving for retirement isn’t important. He’s saying that the hard data shows that most of us are over-saving.

    When I read Die with Zero, I used an online calculator to estimate my projected retirement savings. As Perkins would have expected, at our then savings rate, my wife and I risked over-saving for retirement.

    With that realization, I made some adjustments and am now paying down HELOC debt at a faster rate.

    How much should you save for retirement?

    There’s no way to fairly answer this question. Spend enough time on the internet, and you’ll get many different answers. There are just too many variables in play, like what kind of retirement you want and when you want to retire.

    Perkins points out in Die with Zero that most of the advice out there encourages people to save too much money. You might agree or you might not.

    I encourage you to read Die with Zero and make that determination for yourself.

    At the end of the day, whether it’s saving for retirement or other major life goals, the most important thing is that you are consistently generating money fuel for your life.

    Don’t stress yourself out by worrying about the perfect amount to save towards each goal.

    Are you talking about your money mindset these days?

    It’s never been more important to talk to your friends and family about your money mindset. You don’t have to talk numbers to help each other during uncertain times.

    • Are you talking to your people about your money mindset?
    • What types of conversations are you having to help get through these times of uncertainty?
    • Would you recommend any books or articles that have helped you in the past?

    Let us know in the comments below.

  • 529 Plans for Sky High College Costs

    529 Plans for Sky High College Costs

    My five-year-old has already decided that she’s not going to college.

    She doesn’t want to sleep there, she says. Instead, her plan is to move in with her aunt.

    At least that’s one kid I don’t have to worry about when it comes to paying for college.

    In case your five-year-old hasn’t already decided her future, read on to learn about 529 educational savings plans, one of the best ways to pay for college.

    My students are already worried about paying for college for their unborn children.

    Whenever I teach personal finance to law students, we take some time to at the beginning of class to discuss what each of us would do with financial freedom.

    This is always my favorite part of class.

    Over the years, I’ve had students who want to travel the world, start businesses, pursue hobbies, and take care of aging parents.

    I’ll never forget the student who wants to coach high school football after working as a lawyer. Or, the student who simply wants the time to exercise every day. As she put it, “look good, feel good.”

    Of all the goals I’ve heard, there is one that comes up more than any other: paying for their children’s education.

    A lot of times, I hear this goal from students who don’t even have kids yet. I think that shows how important education is for many people. It also shows how worrisome it is to think about paying for college.

    What’s troubling is that my students typically have their own student loans to pay back. And, before they’ve even started their careers, they’re thinking about paying for the education of their unborn children.

    That’s intense. But, understandable.

    Some students share that they want to pay for their children’s college because they benefitted from their parents paying for college. These students were grateful for the opportunities their parents gave them.

    For other students, they want to pay for their children’s college because their parents did not pay for their college. They want to help their children avoid student loan debt as they begin their careers.

    For most people, saving for college is a top priority.

    According to a recent study by Fidelity, 74% of parents say they are currently saving for college.

    77% of parents think that the value of a college education is worth the cost.

    At a time when there is a lot of uncertainty surrounding student loans, it’s never been more important to have a plan to pay for your kid’s education.

    One of the best ways to do that is with a 529 college savings plan.

    In today’s post, we’ll discuss the major advantages of 529 plans. We’ll also learn how you can estimate the cost of college for your child so you can figure out how much you should be saving today.

    Be warned, the numbers are scary.

    What is a 529 college savings plan?

    529 college savings plans are state-sponsored, tax-advantaged investment accounts. The name stems from Section 529 of the Internal Revenue Code.

    While there are certainly other ways to save for college, 529 plans are hard to beat.

    The reason 529 plans are such a great way to save for college is because you receive triple tax benefits:

    1. Most states offer tax breaks on contributions to its residents for participating in the in-state plan. For example, as Illinois residents, my wife and I can deduct up to $20,000 in contributions to the Illinois-sponsored 529 plan from our state income each year.
    2. Your investment earnings grow tax-deferred, meaning your investments will benefit from tax-free compound interest. That means your savings will grow faster without being hindered by taxes.
    3. Investment earnings are 100% free from both federal and state taxes when used for eligible education expenses. Eligible education expenses include things like tuition, room and board, books, computers and other standard costs associated with college.

    An investment opportunity with triple tax benefits like this is almost unheard of.

    How do 529 plans work?

    In basic terms, 529 plans are investment vehicles designed to grow your contributions and make paying for college easier. When you invest in a 529 plan, you are generally investing in some combination of stocks and bonds.

    That means there is risk involved, just like with any other investment.

    Once you open your 529 account, you will choose how to invest your contributions. In this sense, 529 plans are similar to a 401(k) plan offered by your employer.

    Like with your 401(k) at work, a 529 plan will typically provide you different investment choices within the plan. You can choose how aggressive or conservative you want to be with your investments.

    The investment options will vary depending on which state’s 529 plan you choose.

    Every state offers a 529 plan.

    Every state offers a 529 plan. You don’t have to be a resident of that state to use its plan. You also don’t have to use your 529 savings for a school located within that state.

    Regardless of what plan you choose, the federal tax incentive remains the same. Money invested in 529 plans grows tax free. That means no federal taxes on your 529 earnings as long as the money is used for qualified educational expenses.

    While you also won’t have to pay state tax on earnings (same as federal), there are some additional state tax implications to be aware of.

    These state tax benefits are a bit more complicated because they vary state-to-state.

    Blue USA map with borders of the states and names on grunge background illustrating that each state offers a different 529 college savings plan.

    Remember, there is no federal tax benefit when you make your original contributions. But, most states do offer its residents a tax break on their original contributions for investing in-state.

    Morningstar has a detailed breakdown of which states offer additional tax benefits to its own residents.

    If your state offers tax benefits to invest in-state, that’s usually a good reason to choose your in-state plan.

    My wife and I use Illinois’ 529 plan, called Bright Start 529, for the added tax benefits we receive as Illinois residents.

    Besides the state tax benefits, keep in mind that not all 529 plans are created equal. 529 plans may offer different investment options or charge different fees. States may also provide different level of oversight, which may be important to protect your investments.

    You should always do your homework before choosing a plan to find one that matches your goals.

    I’ve found Morningstar’s rankings and analysis of each state’s plan to be the most helpful tool. According to Morningstar’s most recent rankings, the top 529 plans are offered by:

    1. Alaska
    2. Illinois
    3. Massachusetts
    4. Pennsylvania
    5. Utah

    To recap, when choosing which 529 plan to participate in, pay attention to what investment options are available within that plan. Also, look to see if you will qualify for additional state tax benefits.

    How much can I contribute to a 529 plan?

    Besides choosing the type of investments in your 529 plan, you can also choose how and when to contribute.

    Some people prefer automatic monthly contributions. Others prefer to contribute sporadically throughout the year, like when they receive a bonus at work.

    Unlike with most retirement plans, there are no yearly contribution limits for 529 plans. Instead, each state sets lifetime contribution limits per beneficiary, typically ranging from $235,000 to $550,000.

    This is a good time to point out that you can have a separate account for each of your kids. This allows you to save more money overall sine the contribution limits apply separately to each kid.

    It’s also a good idea to have separate accounts when you have different investment horizons based on the ages of your kids.

    For a complete list of the contribution limits by state, click here.

    By the way, if those limits sound incredibly high to you, you may be in for a shock when it comes time to pay for college.

    Keep reading to see what the projected costs of attending college are for a current kindergarten student.

    What happens if my kid does not go to college or I have money left over?

    If you have money left over in your 529 plan, you have some options. You can use that money for one of your other kids, without penalty. You can save it for a grandchild.

    As of 2024, you can roll extra 529 funds into a Roth IRA for the beneficiary, with some limitations. This was a terrific development for families worried about having too much money saved for college.

    If none of the available options work for you, rest assured that your money will always still be your money. You will have to pay a penalty and some taxes. Any unused earnings are subject to a 10% federal tax penalty plus income tax.

    How much should I be saving in my 529 college savings account?

    This is the ultimate question, right?

    While nobody can say for certain how much college will cost or how your investments will perform, we can make reasonable estimates to help form your strategy using an online calculator.

    I like the calculator available on Illinois Bright Start 529 website. What’s nice about this website is you can look up the future estimated cost of attending specific schools around the country.

    I also like using calculator.net. They have a College Cost Calculator where you can see how much college costs on average today and how much it is estimated to cost when your child starts college.

    Whatever online calculator you use, you’ll have to make some assumptions when you start plugging in numbers.

    For example, nobody can predict what your exact investment return rate will be. That said, you still need to plug a number into the calculator.

    What number should you use for investment return rate?

    • Bankrate.com and NerdWallet each suggest using an investment return rate of 10% annually (before inflation) based on historical stock market performance.

    10% seems like a reasonable number to use, keeping in mind that we’re just looking for an estimate to help us decide how much to save for college. Your actual returns may be lower.

    Besides the estimated return rate, you’ll also need to account for the rising costs of college. Most of the online calculators recommend you assume the cost of college will increase by 5% each year. That also sounds reasonable to me.

    One last thing: it’s never a bad idea to run through different investment scenarios to get a more complete picture. Try playing around with what the numbers look like if your investments only return 8% per year. Or, see what happens if college costs increase by 6% per year.

    With these assumptions in mind, you can start to get an idea of how much you should be saving for college today.

    Be warned, the dollar amount will probably scare you.

    Let’s look at an example using a current kindergarten student.

    Illinois’ Bright Start 529 calculator estimates that the cost of this kindergarten student attending the University of Illinois Urbana-Champaign will be $264,735.

    Assuming you don’t have any current savings and you estimate a 10% annual rate of return, the Bright Start 529 calculator indicates you should save $10,796 per year.

    Does that sound like a lot of money?

    Want to really be scared?

    What if your kindergarten student is interested in private school for college? Maybe your child has his heart set on Northwestern University?

    Bright Start 529 estimates the cost of Northwestern University for your kindergarten student will be $691,942. That means if you have no current savings, you should be contributing $28,217 per year.

    Yikes.

    And that’s only for one kid.

    How are you supposed to save that much money for college?

    If these numbers sound scary to you, what can you do about it?

    I have some thoughts:

    1. First, you need to spend some time thinking and talking about why it’s important to you to be good with money. Maybe the reason is as simple as paying for your kids’ college. Whatever your money motivations are, write them down. This is what I did with my Tiara Goals for Financial Freedom.
    2. With the right motivation in mind, you then need to make a Budget After Thinking. The overall purpose of your budget is to generate fuel for your future goals, including paying for college.
    3. Next, you need to stick to that budget by tracking two simple numbers. Making a budget does you no good if you aren’t sticking to it.
    4. Monitor your savings rate and aim for steady improvement over time, even if you’re only able to save a small amount to begin with.
    5. While you start to build your savings for college, avoid the three big causes for why many of us fall into debt, which can cancel out all your progress.
    6. Along the way, talk to your people. Remember the cardinal rule of Think and Talk Money: talking about money is not taboo. You are not alone in trying to save for college or trying to live a financially responsible life. Talking to your people will help you stay on track when times seem tough.

    The most important thing is that you take responsibility for your own money life.

    Nobody else can do this for you.

    The good news is that embracing these tips will help you beyond just paying for college. These are the exact strategies that will lead you to a life of financial freedom, the ultimate goal for many of us.

    It’s not supposed to be easy. If it were easy, everybody we do it.

    By educating yourself on 529 plans and talking to your people about money, you are way ahead of the curve.

    Do you have a plan to save for college?

    • Have you started saving for college?
    • Are you currently using a 529 college savings plan?
    • How do you motivate yourself to make regular contributions in light of other financial goals?

    Let us know in the comments below!

  • Money on My Mind: Global Happiness

    Money on My Mind: Global Happiness

    This week, we discuss recent reports on global happiness and starting families.

    We also discuss lessons from successful businesses that we can apply to our personal lives.

    The World Happiness Report 2025

    Since 2012, an organization known as The World Happiness Report (WHR) has studied global wellbeing and how to improve it.

    Each year, they analyze data from 140 countries and publish their findings in an effort to give everyone the knowledge to create more happiness for themselves and others.

    That sounds like a great mission to me.

    They also publish a global happiness ranking of all the countries studied. The rankings are based on answers to a single question:

    Please imagine a ladder with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?

    WHR explains that this “life evaluation” question empowers people to make their own judgments about what matters most.

    As part of its analysis, WHR uses economic modeling to explain countries’ average life evaluation scores. They look at six variables, and one of them jump out at me:

    “Freedom to make life choices.”

    What countries would you guess scored the highest on the 2025 rankings?

    The top five countries in the happiness rankings are:

    1. Finland
    2. Denmark
    3. Iceland
    4. Sweden
    5. Netherlands

    Each of these nations has ranked near the top for a long time.

    Where is the United States on the happiness chart?

    The United States fell to number 24, its lowest happiness ranking ever.

    The United States’ highest ranking was 11th place way back in 2011.

    I’m not totally surprised that the United States’ ranking is as low as it’s ever been.

    We’ve discussed some theories that may help explain this drop:

    I wasn’t surprised to see the United States rank 24th in the global happiness rankings, but I was shocked by the sub-ranking for this specific question:

    Are you satisfied or dissatisfied with your freedom to choose what you do with your life?

    The United States ranked 115th out of 147 countries in response to the freedom question!

    That ranking truly shocked me.

    It also helps explain one of the primary goals of Think and Talk Money: to help each of us reach financial freedom.

    When we are financially free, we can choose to live life on our own terms. To me, that sounds a lot like what the WHR freedom question is trying to answer.

    When you have financial freedom, you can make important decisions based on what truly matters. When you don’t have financial freedom, you risk making unsatisfactory decisions for money reasons.

    We can choose to spend more time with the people who are meaningful to us.

    We can choose to use our skills for work that is meaningful to us.

    Group of happy friends posing for a selfie on a spring day as they party together outdoors because they understand happiness is tied to financial freedom.

    Most of us grow up thinking that life only revolves around getting an education and then getting a job. We don’t allow ourselves to believe that financial freedom is possible for us.

    This was exactly how I felt before I wrote down my Tiara Goals one day on the beach in 2017.

    My goal with Think and Talk Money is to help us all realize that financial independence is within our reach. If we can think and talk about our money choices even a little bit every week, we can make sure our money life remains in balance with the rest of our life.

    By practicing strong personal finance habits, each of us can feel more satisfied with our freedom to choose what to do with our lives.

    How would you rank yourself on the freedom question?

    Are you satisfied with your freedom to choose what you do with your life?

    What are your core values?

    Have you ever written down your core values?

    Do you know what you’re striving for?

    Successful businesses look at these questions regularly. I find it helpful to learn how successful businesses operate so I can apply similar principles to my own life.

    For example, there’s a great business book called Traction by Gino Wickman. In the book, Wickman encourages businesses to focus on vision, mission, and values.

    It seems like a pretty good idea for all of us to think about vision, mission, and values as they apply to our own lives.

    For example, if you’re one of the nearly half of Americans not taking your PTO, are you making that choice based on your core values?

    It’s possible that you are. Perhaps you’re being strategic and have formulated a plan to benefit from all those extra hours at the office.

    Or, it’s possible that you’ve never really stopped to think about why you’re working so much. You’ve never paused to articulate to yourself what you want out of life.

    In Traction, Wickman makes a compelling argument why businesses should not skip this crucial step.

    We all should take the same step in our personal lives. In 2017, I wrote down my core values, what I call my Tiara Goals.

    Looking at the big picture, my Tiara Goals have helped me visualize what I truly want out of life.

    In the short term, my Tiara Goals help guide me through difficult decisions. As long as I’m clear with myself about what I want in the long run, I can make daily decisions to get my closer to those goals.

    Millennials want more kids but can’t afford them.

    According to a recent report from Business Insider, Millennials want more kids but can’t afford them.

    This makes me sad.

    The study points to rising costs, as well as the reality that Millennials are saddled with large amounts of student loan debt.

    Combined, it makes sense that Millennials are worried about money.

    If you want to start a family, or grow your family, what better motivation could there be to spend a little bit of time each week thinking and talking about money.

    If this is your reality, or you know someone in this position, establishing strong personal finance habits is crucial.

    Each week at Think and Talk Money, we focus on developing these strong personal finance habits.

    Please share Think and Talk Money with your friends and loved ones.

    I hope that in spreading the word about Think and Talk Money, we can all help each other make big life decisions without worrying about money.

    This is important whether you are hoping to start a family or have other life goals in mind.

    We can all benefit from making intentional and informed decisions with our money.

  • Great Talk: Money and Fences

    Great Talk: Money and Fences

    Know anything about fences?

    We need to replace a 20 year-old wood fence at our home that’s one strong storm away from falling over. In these past few weeks, I’ve learned more about fences that I care to admit.

    On the bright side, shopping for a fence has led me to think about and practice many of the personal finance habits we talk about in the blog.

    Let me walk you through my thought process to help you whenever you have a big expenditure in front of you.

    In the world of privacy fences, there seem to be three primary choices available: wood, vinyl, and composite. I won’t bore you with all the details. The key points to consider for our conversation are:

    • Wood is the cheapest, but requires the most upkeep and will eventually need to be replaced.
    • Vinyl (plastic) comes with a lifetime warranty, requires little-to-no upkeep, but is 30-40% more expensive than wood.
    • Composite is the most durable, looks incredible, requires no upkeep whatsoever, has soundproofing ability, is made from recycled materials, comes with a 25-year warranty, but is nearly 3x more expensive than wood.

    We’ve ruled out wood after doing our research and determining that we’ve got too much going on to worry about annual fence upkeep.

    So, that leaves vinyl and composite. From our research, both would be good options. However, there’s really no doubt that composite is the best overall option, if you can stomach the cost.

    Talk to your people about expensive purchases.

    This is a big financial decision, so of course, I’ve been talking to my people for weeks about what they would do.

    I’ve gotten three common responses that go something like this:

    • “You’re planning to live in this home for the long run, make the investment in the best fence possible and never worry about it again.”
    • “How much do you really care about a fence? I’ve never even noticed my fence. Think of what other projects you could spend that money on.”
    • “Dude, leave me alone. I don’t want to talk about your fence.”

    As you can see, talking to your people does not mean that you’re off the hook for making the decision yourself. You will likely get a wide spectrum of advice.

    However, you’ll gain invaluable perspective to consider so you can make the best decision for your personal situation.

    Expensive purchases test your personal finance habits.

    Whenever you have a big purchase ahead of you, many of the strong personal finance habits you’ve been working to establish will be tested. You’ll be asking yourself questions like:

    My wife and I have considered all these questions as we’ve talked through the options.

    Rear view friends sitting on chairs talking at the bar but hiding from each other that they are in credit card debt.

    As of this moment, we’re leaning towards the composite fence so we never have to think about fencing again.

    To help defray the cost, we’re considering a financing option that offers 0% interest for 18 months.

    Important side note: if you ever choose to go with an attractive financing option, always read the fine print first.

    The lender is hoping you fail to pay off the purchase within the 0% interest period so you’re forced to pay insanely high interest on the remaining balance. The financing option we’re looking at jumps from 0% interest to 26% interest if we fail to pay off the loan in 18 months. That’s a serious penalty.

    Financing aside, we’ve also concluded that other projects will have to wait for a while so we don’t crush our money goals for the year.

    We’ll make our final decision this weekend.

    What would you do?

    Leave a comment below to help my wife and I decide.

    Sharing Think and Talk Money with Others.

    Over the past couple days, I’ve heard from several readers who have shared Think and Talk Money with people they care about.

    One reader told me that he shared the blog with his 25 year-old son. The reader was very appreciative because he’s experienced how important personal finance is.

    He knows his son will only benefit in the long run if he implements strong money habits at the beginning of his career.

    Another reader shared the blog with a friend who is now tracking her spending for three months. This is the first time she has ever tracked her spending to learn where her money is going each month.

    She is using her phone and a simple spreadsheet to track her expenses. She reports that even though it’s only been a month, she’s learning things about her money choices she never knew before.

    I love reader stories like this because they reflect one of our core philosophies at Think and Talk Money:

    It’s not taboo to to talk about money.

    When you start the conversation, you’re not just helping yourself, you’re helping people you care about.

    It doesn’t matter if you’re talking about paying for a fence or starting a budget. We all could use help when it comes to making good, consistent money decisions.

    Your friends are likely going through the same money challenges.

    Since writing about my challenges with credit card debt at the beginning of my career, I’ve had some great talks with friends I knew back then.

    Multiple friends have shared with me that they were dealing with the same credit card debt issues at the same time that I was.

    None of us ever knew it at the time. We were hanging out with each other every weekend, spending money we didn’t have. The joke of it all is that we were likely encouraging each other’s poor habits.

    Learning that I was in the same position as my friends all these years later does make me feel at least a little bit better about the mistakes I made back then. But, that’s not the important takeaway.

    The big takeaway for me is that if my friends and I were dealing with the same money challenges back then, we’re probably dealing with similar money challenges today.

    It might not be credit card debt from our social lives, but it might be something like saving for college or paying for a home. Maybe it’s what we should do when the stock market slumps.

    Just like we mentioned above, my friends and I will only benefit from having these kinds of money talks.

    Instead of just talking about mistakes we made in the past, we can talk about how to get it right as we move forward.

  • Powerful Money Lessons from Alone

    Powerful Money Lessons from Alone

    One of my favorite shows is Alone.

    I’ve been talking about it a lot lately with anyone willing, or in the case of my students, with anyone without a choice but to listen.

    @thinkandtalkmoney

    How the TV show Alone can teach us about personal finance #thinkandtalkmoney #personalfinance #alonetvshow #alone #outbackmike @Outback Mike

    ♬ original sound – Thinkandtalkmoney

    If you haven’t seen it, the show is a competition between 10 survival experts who are dropped off in the middle of nowhere, completely isolated from all human contact. Each person is allowed to bring ten survival items, some clothes, and a safety kit. They all have cameras to film their journeys. Whoever survives the longest wins $500,000.

    It is astonishing what these people are capable of. They build their own shelters and catch all their own food. On a daily basis, they’re forced to solve problems. They have no one to help them, or to blame, but themselves.

    My favorite competitor is an Australian guy named Outback Mike. I was blown away by the ideas he came up with and the things he built. There was no mental or physical challenge that he backed down from.

    My wife and I first discovered Alone during the pandemic. It was the perfect show during that time of immense mental and physical hardship. There was something about the way each survivalist focused on that day’s tasks, and blocked everything else out, that resonated with us.

    Watching the latest season of Alone these past few weeks, it occurred to me that the show is full of analogies for the personal finance topics we discuss in the blog.

    I’ve found analogies to be great teaching tools, so here we go.

    1. Not all calories are created equal.

    The major challenge in Alone is getting enough calories to survive. Food is not exactly plentiful in the remote locations where the competitors are dropped off.

    To survive, competitors dedicate endless hours strategizing and looking for food. Common strategies include fishing, trapping, hunting, and foraging.

    One of the first things you learn is that not all calories are created equal. Calories from fat and protein are at a real premium. Even with an unlimited supply of berries and greens, the competitors make clear that you cannot survive for long periods without fat and protein.

    Besides the importance of the type of calories, the way the calories are procured is just as critical.

    This makes perfect sense in a survival scenario. If you expend 2,000 calories of energy to catch a fish, and that fish only provides you 1,000 calories of food, that is a losing proposition. If you continue on that trajectory long enough, you’ll starve to death.

    This is why contestants on the show always think about ways to passively procure food, such as setting traps or using gill nets. If they can obtain food passively, they can then use that time to rest (save calories) or on other necessary tasks.

    In the show, most competitors eventually tap out, on the brink of starvation, having failed to obtain enough food. It’s never for a lack of effort. It’s just really hard.

    So what do calories have to do with personal finance?

    Just as not all calories procured are created equal, not all dollars earned are created equal.

    This begs the question:

    If you think about what you do to earn money, are you the contestant trading 2,000 calories of energy for 1,000 calories of food?

    In other words, are you always working?

    landscape photo of man fishing on river near mountain alps symbolizing that not all dollars are created equal as discussed on Think and Talk Money.

    Let’s look at two hypothetical professionals.

    The first professional works 80 hours per week and earns an annual salary of $200,000.

    The second professional works 40 hours per week and earns an annual salary of $120,000.

    Which one would you rather be?

    Would your answer change if we convert the annual salary to an hourly rate?

    On an hourly rate, the first professional ends up earning $48 per hour.

    The second professional earns $58 per hour.

    If you’re still leaning towards the first professional who earns more overall but less per hour, did you think about how valuable that extra 40 hours per week could be?

    That’s time that could be spent on your true passions. It’s time that could be spent with friends and family. That’s time that could also be spent developing a skill or earning income through a side hustle.

    Looking at it another way, what if you could earn the same $200,000 without having to work 80 hours per week? This is where passive income streams come in.

    Like the gill net that catches fish without the active involvement of the fisherman, have you explored ways to make money while freeing up your time for other worthwhile pursuits? This is an unavoidable step on your way to financial freedom.

    For what it’s worth, I’m confident that the survival experts would all choose to be the person who makes more money per hour while also having more time available for other pursuits.

    2. Attitude is everything.

    Watching Alone, you see a wide range of personalities. While each contestant has the resume of a survival expert, one attribute always separates the winners from the losers: attitude.

    The contestants are forced into what would be impossible survival scenarios for the average person. It’s completely understandable to have tense, frustrating, and stressful moments.

    This isn’t me judging the contestants who have poor attitudes. I wouldn’t last an hour in the woods by myself. I’ve never even been camping. My wife caught more fish when she was six than I’ve caught in my whole life.

    This is just my observation that most of the time, contestants have similar survival skills. What separates the winners is their attitude and ability to recognize that things will go wrong.

    When things go wrong, they don’t blame anyone else or play the victim.

    Instead of getting frustrated and quitting, they think of solutions to the problem at hand. This is what so impressed me with Outback Mike.

    Yes, we all need a bit of luck in life to thrive. But, we need to put ourselves in position to benefit from luck when it comes our way. That takes intentional thought and effort.

    I’m guessing we all know very smart and talented people that have bad attitudes. When things don’t go their way, they immediately blame other people. Nothing is ever their fault. They feel entitled to success without doing the work.

    That type of person usually doesn’t lead a very happy or fulfilling life.

    For sure, that person would not last a week on Alone.

    3. Along with starvation, missing family is the hardest part.

    If it’s not starvation, odds are contestants will tap out because they miss their families. The physical challenges of being forced to survive on limited food in rugged conditions is hard enough.

    To do it alone and isolated from your family makes it nearly impossible.

    One of the most enlightening parts of the show is when the contestants reveal their mental struggles to the camera. Since they’re alone, and typically starving, we get to see raw emotion in real time. You learn a lot about the human condition in these moments.

    One unavoidable truth is that us humans are social creatures.

    We need our people. We need love and support and connection. Going through life alone goes against our DNA.

    Even the chance at winning more money than the contestants ever dreamed of is not nearly enough to keep them away from their families any longer.

    This is why I want to encourage you to not isolate yourself with your money decisions. Money touches all aspects of our lives. Don’t try to go it alone. Include your people in your money life. Talk to them. You will only be better for it.

    There’s one other lesson Alone teaches us about the importance of family. A lesson that is extremely relevant to me right now.

    When each season begins and the new contestants are introduced, my wife and I know right away who isn’t going to make it: the people with young kids.

    These people have all the skills necessary to survive. But, those skills don’t matter when they start missing their kids. The emotion is too strong. The longing to be with their kids overcomes all else. They simply do not want to miss another day of their kids’ lives.

    I think about this lesson in the context of our daily lives. Like the professional in our example above working 80 hours per week, at what sacrifice do all those hours come? How many hours away from home is that? How much time away from our kids?

    When I think about those questions, I again think about what I would do with my time if I was financially free.

    I think about my Tiara Goals.

    Have you watched Alone?

    Do you agree with my observations?

    Let us know in the comments below!

  • My Path to Financial Freedom with Tiara Goals

    My Path to Financial Freedom with Tiara Goals

    A few months before we got married, my wife and I took a trip down to Florida. One afternoon, I headed out to the beach with a book, a notebook, and a few ice cold beverages.

    The weather was perfect. It was sunny but not too hot. Blue skies and just a slight breeze. The beach was quiet that afternoon. I set up my chair to face the ocean and started reading. This little break was exactly what I needed in the middle of “wedding planning.”

    @thinkandtalkmoney

    What I would do with financial freedom 👊🏼 #thinkandtalkmoney #financialfreedom #personalfinance #tiaragoals #realestateinvesting

    ♬ original sound – Thinkandtalkmoney

    I don’t recall the book I was reading that day. I’ve been meaning to look back at my journals to see if I can figure it out. Anyways, I’ll never forget what I learned about myself that afternoon.

    The author wrote about the power of financial freedom. We’ve discussed financial freedom in previous posts. The basic idea is that when you are financially free, you can choose how to live your life on your own terms. You can make important decisions based on what truly matters to you, as opposed to being forced down a certain path for money reasons.

    On the beach that day, the concept of financial freedom was not new to me. I had read about it for years. The concept really hit home that afternoon when the author asked a simple but powerful question:

    What would you do with financial freedom?

    Maybe the question really resonated with me because I was about to get married. It’s only natural to daydream about what life would be like after the wedding, even though my wife and I had been a couple for six years by that point.

    Over the years, we had talked a lot about what we wanted our lives together to look like. We knew long before the wedding how we each felt about major topics like starting a family and where we wanted to live.

    We were also on the same page when it came to money decisions. My wife and I met early on during my personal finance journey, not long after I had determined to get my money life sorted out. My wife still jokes that she was my first personal finance student.

    By the time we got married, I had been on my personal finance journey for about seven years. I was out of debt and was starting to think about the options that were now available to me. It was around this time that I learned one of the most powerful words in personal finance:

    DINK

    Back then, my wife and I were both working as lawyers in Chicago. We didn’t have any kids. I didn’t realize it until later on, but we were DINKs.

    DINK means “Dual Income No Kids.”

    When you’re in a relationship where you have two incomes coming in and are sharing financial responsibilities, you have the opportunity to supercharge your Later Money goals.

    If you are currently a DINK, or will soon be a DINK, please pay extra attention here.

    Don’t waste this powerful opportunity to supercharge your Later Money goals.

    This is what my wife and I were able to do, even if we didn’t know what a DINK was. We each had good incomes coming in and our monthly expenses were low. The two of us could comfortably share an apartment, instead of each paying for an apartment separately. That’s major savings each month.

    We didn’t have to worry about childcare. We were young so the odds of unexpected medical care were lower. All things considered, it was pretty easy to keep our Now Money to a minimum with plenty to spare for Life Money.

    This allowed us to fuel our Later Money goals, like having a nice wedding and saving up for a home or rental property. We had money in the bank and seemingly endless choices.

    And, I didn’t want to screw it up.

    Which brings us back to me sitting on the beach, thinking about what I would do with financial freedom, with maybe 1 or 2 less beverages in the cooler.

    What did I really want out of life?

    I put my book down and looked off into the ocean, thinking about what I wanted out of life. I started thinking about what my ideal life would look like. By this point, I was engaged in the type of deep thought where you don’t even realize what’s happening around you.

    It quickly occurred to me that I had never truly thought about what I wanted in life. Sure, I had thought about things like having a family and being able to take vacations.

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

    Without a doubt, I had never written down the answer to that powerful question: what would I do with financial freedom?

    I hadn’t ever allowed myself to dream about financial freedom.

    The truth is, I don’t think I had ever visualized a life that wasn’t dominated by a full-time job. Up to that point, my whole life had revolved around getting an education and then getting a job. I never pictured a world where I might not need a full-time job to provide for myself and eventually my family.

    I had read about the concept of being financially free, but it always seemed like a possibility for other people, not me. Writing this years later, I feel sad for that version of myself for having such limiting beliefs.

    That said, I completely understand why I felt that financial freedom was unattainable for someone like me. This was in the phase of my life where I had been preoccupied with eliminating debt. Because of that debt, I didn’t allow myself to dream about what life could look like if money wasn’t holding me back.

    This was also before my wife and I had rental properties. It was before we recognized the impact of side hustles and multiple streams of income. I had read about and understood these concepts in theory, but I hadn’t put what I learned into practice.

    That day on the beach, it was like a light went on in my head.

    After years of patience and discipline, I had climbed out of debt. I was now a DINK with Later Money in the bank waiting to be deployed. That meant I had created opportunities.

    I wasn’t financially free, but for the first time in my life, I allowed myself to accept that financial freedom was possible for me.

    This was one of the most powerful moments in my life.

    With that realization in my mind, I walked into the ocean to cool off and think some more.

    What would I do with financial freedom?

    There in the ocean, I wasn’t thinking about dollars or career goals. This was more important than that. I was thinking about what I wanted my life to look like if money was not an issue. I was thinking about what I would do with my time if I was in complete control.

    Floating there in the water, it was like I had an epiphany. Everything suddenly became clear to me. I ran out of the ocean to get back to my chair before I forgot what just popped into my head.

    I whipped out my top bound spiral notebook and started writing with a blue pen. Minutes later, I had written down seven answers to the question: what would I do with financial freedom?

    My “Tiara Goals” were born.

    Nearly eight years later, I still have that sheet of notebook paper. I keep it safe in a leather binder protected by a laminated page holder. It has those familiar tear marks on the top of the page where the paper connected to the spiral binding.

    Even though I have these seven goals memorized by now, I still look at this sheet of paper every month. Looking at this sheet is an incredible reminder of that day on the beach when everything became clear to me.

    A quick aside, I call my goals “Tiara Goals” because it’s a silly, but meaningful, description to me. Have some fun with what you name your goals. If you do it right, you’ll be thinking and talking about these goals a lot.

    What are my Tiara Goals?

    So, here are my original Tiara Goals from 2017, as scribbled on that sheet of paper and edited for clarity:

    1. Be with my wife and kids as much as I want. Dad never missed a game. Mom never missed a game. Nana never missed a game.
    2. Not be forced to commute to work on Friday or Tuesday or whatever day, if I need that day for myself.
    3. Choose how to spend my working hours (representing clients, teaching, volunteering, building a business, etc.).
    4. Continue to study and learn constantly.
    5. Take at least one big trip every year.
    6. Never turn down an exciting or smart opportunity because I can’t afford it.
    7. Work alongside people that value my contributions.

    Keep in mind that I wrote these goals before I had kids and before I was even married. This was also years before the pandemic when working from home was a foreign concept to most of us.

    I think it says a lot that I was thinking about these things way back then.

    Travelers couple look at the mountain lake. Adventure and travel in the mountains region in the Austria after thinking about what to do with financial freedom.

    In a future post, we’ll unpack each of these goals.

    While I haven’t reached financial freedom yet, I think I’m doing a pretty good job already living by these fundamental values.

    How do my Tiara Goals help me today?

    My Tiara Goals motivate me to continue striving for financial freedom. We’ve talked extensively about the importance of having strong money motivation in our lives. When we have these powerful motivations, we can stay on budget, get out of debt, and fuel our Later Money goals.

    We can obtain Parachute Money. We can choose to do meaningful work and choose to spend more time with people who are meaningful to us.

    No, it’s not easy to achieve financial freedom. But, it is a whole lot easier when you know what you are striving for in the first place.

    That’s why at the beginning of my financial wellness class, I ask my students to write down their own versions of Tiara Goals. I want to help them avoid the limiting beliefs that I had before that day on the beach.

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

    Without a doubt, this is always my favorite part of class. When I say I’m on a mission to convince you that talking money is not taboo, I think of my students sharing their goals. I get so energized by hearing their goals. My students report the same sentiment after learning what drives their friends and peers.

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

    • Spend more time with my family.
    • Travel and enjoy experiences around the world.
    • Stay healthy and fit.
    • Provide for my children and my aging parents.
    • Work for a cause I believe in.
    • Have time to volunteer.

    I also regularly hear one thing that my students, and the rest of us, don’t want:

    • I don’t want to be stressed about money.

    Isn’t it telling that year after year, most of us want the same things in life? I’ve yet to hear anyone say that they dream about working endless hours and not taking their PTO.

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

    When we talk about what we do with financial freedom in class, I encourage my students to get specific without being so precise that the goal becomes restrictive. When we’re thinking about goals related to financial freedom, the idea is to focus more on big-picture, core values.

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

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

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

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

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

    Even when you feel like financial freedom is only a distant dream for you, it’s important to actively think about what you want out of life. I’d even suggest that the further away you feel from financial freedom, the more important it is to think about what it would mean for you.

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

    If you haven’t ever actively thought about what you would do with financial freedom, hopefully this post will encourage you to do so.

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

    I suggest you share your version of Tiara Goals with your friends and loved ones. It’s OK to keep some of your goals private. By sharing, you will get the benefit of them cheering you on. You’ll also hopefully encourage them to share their goals with you, which can be very inspiring.

    Have you thought about what you would do with financial freedom?

    Have you ever written it down or shared your answers with others?

    What are your Tiara Goals?

    Let us know in the comments below!

  • 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 to Help You Get Out of It

    Scary Stats to Know About Debt to Help You Get Out of It

    My four-year-old daughter created a game recently that I’ll call “The Raise Your Hand Game!”

    At random times, she’ll say something like, “Raise your hand if you have an ‘M’ in your name!”

    I raise my hand. Refusing to play along is not an option.

    With my hand in the air, she’ll nod in approval that I participated and didn’t lie.

    That’s the whole game.

    Let’s play. I’ll be the host.

    “Raise your hand if you currently have debt!”

    Come on, play along. Get those hands up.

    Nearly 80% of you should have your hand in the air.

    Yup, 8 out of 10 of us have some form of debt. Put another way, just about everyone reading this post has debt. That’s why learning to effectively deal with debt is a core personal finance concept.

    For the next couple of weeks in the blog, we’re going to focus on debt so we can continue our progress towards financial independence.

    Those of us who can successfully eliminate debt will move closer and closer to financial independence.

    Those of us who don’t want to learn will remain debt’s financial prisoner.

    As we begin our discussion on debt, let’s start with some scary statistics.

    According to the Federal Reserve Bank of New York, total household debt in the United States grew to $18.04 trillion by the end of 2024. That’s such a big number, it’s hard to know what to do with that information.

    Let’s break it down by the type of debt:

    • Credit card balances increased by $45 billion from the previous quarter and reached $1.21 trillion at the end of December 2024.
    • Auto loan balances increased by $11 billion to $1.66 trillion.
    • Mortgage balances also increased by $11 billion and reached $12.61 trillion.
    • HELOC balances increased by $9 billion to $396 billion.
    • Other balances, reflecting retail cards and other consumer loans, increased by $8 billion.
    • Student loan balances increased by $9 billion to reach $1.62 trillion.

    While these numbers are still too big to comprehend, one powerful conclusion is hard to miss:

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

    This pattern of increasing consumer debt has been consistent for some time now. HELOC balances have increased for eleven consecutive quarters. Credit card balances have increased or remained the same for 10 of the last 11 quarters.

    Now, let’s look at the statistics on a per household basis.

    Per household, we see the same picture of increasing consumer debt in the United States.

    According to an Experian report that compared consumer debt per household from 2023 to 2024, we see that:

    • Credit card balances increased 3.5% to $6,730.
    • Auto loan balances increased 2.1% to $24,297.
    • Mortgage balances increased 3.3% to $252,505.
    • HELOC balances increased by 7.2% to $45,157.
    • Student loan balances actually decreased by 9.2% in 2024 to $35,208. This one’s an outlier due to federal loan forgiveness programs.

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

    According to a recent survey looking at credit card debt in 2024 by Bankrate.com:

    • 48% of credit card holders carry a debt balance, an increase of 9% since 2021.
    • 53% of the people have been in credit card debt for more than a year.
    • The main causes of credit card debt are unexpected medical bills (15%), car repairs (9%) and home repairs (7%).

    According to another Bankrate.com survey, 33% of Americans report they have more credit card debt than emergency savings.

    These last couple stats helps us begin to understand why so many people fall into debt in the first place. It goes back to our previous conversation about the importance of emergency savings. When we don’t have savings, the first place we turn is to our credit cards.

    Consumer debt is a worldwide problem.

    While the above statistics are specific to the United States, you’re not off the hook if you live elsewhere. In fact, the data in your nation may be worse.

    Any readers in Denmark, Norway or Switzerland?

    According to a recent study by Compare the Market, these three nations lead the way with the highest household debt. The same study ranked the United States at number 18.

    What can we learn from these scary debt statistics?

    Whether we look at the national figures or per household numbers, the picture is clear.

    Worldwide, we have a consumer debt problem. And, it’s getting worse.

    For most of our conversation on debt, we’ll focus on credit card debt. Most everyone agrees this is the worst kind of debt to have. It’s also the type of debt that’s the most relatable to many of us, regardless of where we are in our careers.

    Before we go any further, it’s important to understand the two main reasons why I share studies like these about debt.

    1. If you are currently in debt, please know that you are not alone.

    These scary stats make it abundantly clear that many of us are struggling with debt. You probably don’t know if your friends and family are in debt because we’ve been brainwashed not to talk about money.

    As you know, I’m on a mission to change that.

    Nearly half of us in America are burdened with credit card debt. And yes, it is a heavy burden. There’s no sense in trying to convince yourself that you’re not worried about it.

    The good news is there are proven strategies for getting out of debt that we will learn in upcoming posts.

    These strategies are not hard to implement, but they are challenging to stick with. Temptation to overspend is everywhere. To succeed in eliminating your debt, you need to have strong motivations.

    Personal finance always come back to your money mindset. Just like with budgeting, I can give you proven techniques and strategies.

    If your money mindset is not in the right place, it won’t matter. You’ll stay in debt, or worse, your debt will continue to increase.

    2. If you think you are immune from falling into debt, think again.

    When we are presented with statistics like this, it’s not uncommon for us to be in denial. We might say to ourselves:

    “No, I understand that other people are in debt. But, that won’t happen to me.”

    Or, “No, I make good money. I can pay off my credit card debt if I really wanted to.”

    If it were really that easy, then why do half of Americans carry credit card debt? Why is our credit card debt growing instead of shrinking?

    You may not currently be in credit card debt, and that’s a very good thing. But, what if one of those emergencies mentioned above surfaces in your life?

    • If you were hit with a large, unexpected medical bill, could you cover it without credit cards?
    • What if your roof needs to be replaced? Or, your furnace breaks during the middle of winter? Do you have tens of thousands of dollars saved to cover these necessary expenses?
    • Do you own a car? How awful is that annoying “Check Engine” light? A simple trip to the mechanic could be another few thousand dollars out of your pocket.

    These types of financial emergencies do not discriminate.

    Each one of these situations could happen to any of us at any time. Let’s not forget that 90% of us are not completely satisfied with our savings. That means almost all of us would have to turn to credit cards to cover these emergencies.

    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:

    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

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  • Great Talk: Money, Friends and Cheeseburgers

    Great Talk: Money, Friends and Cheeseburgers

    Talking money is not taboo.

    The only thing that’s taboo is avoiding your personal finances.

    To help flip the script and convince you that talking money is not taboo, I plan to regularly post about the current money conversations that I’m having. Through my examples, I hope to encourage you to have similar conversations.

    In our first “Great Talk” post, we’ll discuss what my wife and I decided to do with our Later Money throughout 2025. We’ll also talk about how really smart people I know have started budgeting. We’ll conclude with an empowering conversation I had with a friend about what you can do with your time if money wasn’t an obstacle.

    What I’m doing with my Later Money in 2025.

    Later Money is what you are saving, investing, or using to pay off debt. This bucket includes long term goals and investments, like retirement and college savings. It also includes emergency savings, paying off debt, or any other shorter term goals, like saving for a wedding or a downpayment for a house.

    Later Money is the key category that fuels your ultimate life goals, like financial independence.

    The more you fuel this category, the faster you can reach your goals.

    So, what are my wife and I doing with our Later Money in 2025?

    We recently had a great talk about our options and came up with a plan that will guide us throughout the year. Before we talk about our 2025 goals, it’s important to keep in mind that your Later Money goals will change over time. That’s perfectly fine.

    Our goals in 2025 are not the same as they were between 2016 and 2024. Prior to 2025, my wife and I were focused on expanding our real estate portfolio.

    We purchased our first rental property in 2018, a four-flat in an up-and-coming Chicago neighborhood. Less than a year later, we bought a three-flat in the same neighborhood.

    In 2021, we invested in a Colorado rental ski condo. In 2022, we purchased our fourth rental property, a three-flat, in the same (now booming) neighborhood in Chicago.

    After living in our rental properties since 2018, we purchased a single-family home just outside Chicago in 2024.

    During this timeframe, any spare dollar we earned went towards acquiring more real estate. We contributed towards other financial goals, like retirement and college, but our priority was investing in real estate.

    Knowing when enough is enough.

    Our goals have changed in 2025. We started talking about revamping our goals towards the end of 2024. I owe a lot of credit for our new goals to Chad “Coach” Carson and his excellent book, Small and Mighty Real Estate Investor: How to Reach Financial Freedom with Fewer Rental Properties.

    In his book, Coach Carson makes a compelling argument to think about when enough is enough. His message was about acquiring more and more real estate, to no end, but also applies to any pursuit in life. You can learn more about Coach Carson and his incredible journey on his website.

    Reading Small and Mighty Real Estate Investor helped my wife and I conclude that at this point in our lives, we have enough. If anything, we’re closer to having too much on our plate. We self-manage our 10 units in Chicago and work closely with a property manager in Colorado. With our full-time jobs and kids at home, we’ve bitten off as much as we can chew.

    Our portfolio generates enough income to help fuel our current goals. If we were to continue expanding, the headaches could end up outweighing the financial benefits.

    We want to build a life full of experiences and memories. That means we need more time, not more money. Acquiring and managing more properties right now would take up a lot of time. That tradeoff is not currently worth it to us.

    So, if we’re not pursuing additional properties in 2025, what are our goals?

    After talking it through together and weighing all our options, my wife and I came up with these three goals for 2025:

    1. Our first goal is to continuing paying down our mortgage debt. We used HELOCs (Home Equity Line of Credit) to help us acquire some of our properties. Now that we’ve determined that “enough is enough,” we’re focused on paying back these loans.
    2. Our second goal is to build up our emergency savings. We mostly ignored our emergency savings between 2017 and 2024. It was risky and led to some touch-and-go moments that we’d like to avoid moving forward.
    3. Our third goal is to boost our contributions to our kids’ college savings accounts. We use what’s called a “529 college savings plan.” 529 plans are state-sponsored, tax-advantaged investment accounts. We use Illinois’ 529 plan because we receive a tax break as Illinois residents. Just about every state offers a 529 plan. They are a great way to save for college.

    With our plan in place ahead of time, we now know where every dollar is going before we earn it. This takes the anxiety out of trying to figure it out after the money has already hit our bank account.

    At the end of each month, all we need to do is make our Later Money transfers to each account. We can rest easy knowing that we’re making progress towards our personal finance goals.

    How Budgeting is Helping Very Smart People.

    One of my favorite moments since launching Think and Talk Money occurred just last week. Walking down the hall in my office, one of my colleagues called me over.

    She was very excited to share that she started tracking her spending so she can create a Budget After Thinking.

    We chatted for ten minutes. She’s been reading the blog on her commute to work every Monday, Wednesday, and Friday. She used Think and Talk Money vocabulary, like “Now Money” and “Life Money.”

    She showed me the app she’s been using to track her spending, one I wasn’t familiar with and am now looking into. The best part was that she’s been telling her friends about Think and Talk Money because she’s already learned so much.

    This is exactly why talking about money is not taboo. She taught me something new and helped me think about my own budgeting process. She gave me new ideas to think about.

    How could this type of conversation be bad?

    We didn’t need to talk numbers. We talked strategy and habits. That’s what talking money is all about.

    What would you do with your time if money was not an obstacle?

    I had lunch with an old friend last week at a downtown Chicago lunch spot that’s been serving up epic burgers since the 1970’s. My friend and I are both balancing careers as lawyers in Chicago with young families at home.

    In between bites of a massive BBQ-bacon-cheeseburger, I asked him a question I like asking smart people:

    “What would you do with your time if money wasn’t an obstacle?”

    Without hesitation, he answered that he would work with his hands. He likes working on projects around the house. He gets immediate satisfaction from completing a repair or making an improvement.

    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 who are meaningful to you.

    Whether you want to work with your hands or represent clients or teach kids, the choice is yours when you’re financial independent.

    That seems like a goal worth striving for.

    What could ever be better than that?

    So, let me ask you:

    What would you do with your time if money was no obstacle?

    Please share below!

    And always remember, talking money is not taboo.

  • Money Truth: It’s Not Taboo to Talk About Money

    Money Truth: It’s Not Taboo to Talk About Money

    Why do so many smart people feel like they’re barely getting by?

    Even with salaries of more than $100,000, too many people across the United States are living paycheck to paycheck.

    Whether you are a high earner or not, we all need to exert mental energy on our personal finances.

    Don’t make the mistake that just because you make a lot of money, you are immune.

    @thinkandtalkmoney

    Talking about money is not taboo. The only thing that is taboo is avoiding your personal finances. #thinkandtalkmoney #moneyisnottaboo #taboo #financialfreedom #financialliteracy #personalfinance

    ♬ original sound – Thinkandtalkmoney
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    One of the biggest misconceptions in personal finance is that people that make a lot of money don’t have money worries.

    I’m not saying that we should feel sorry for people that are high earners. I’m pointing out that personal finance education is important for all of us.

    It’s not your fault if you’ve made poor money choices, up to a point.

    I don’t blame anyone, high earners included, for making poor money choices (up to a point). Most people never learn basic personal finance skills.

    Think about an emergency room physician. He was likely one of the top students in his class his entire life. He’s proven that he can learn complex matters. He can do the hardest things imaginable, like saving someone’s life.

    The problem is he was never taught to use his brain to manage his own personal finances.

    If that ER doctor is living paycheck to paycheck, he likely won’t receive much sympathy. He’s probably blamed for not making better money choices.

    People will say he makes plenty of money. It’s his own fault. He must be irresponsible or selfish or craves expensive things.

    I don’t think that’s fair.

    I think that ER doctor should get a pass from undeserved judgment. I’m not saying you have to feel bad for him or offer him your sympathies. What I am saying is he should be given a chance to learn about personal finance just like the rest of us.

    Does that mean he is forever excused from taking responsibility for his money choices?

    Of course not.

    We all need to take responsibility to educate ourselves. That’s the reason a website dedicated to thinking and talking about money exists in the first place.

    Fortunately, more than half of the United States now requires some form of personal finance education for high school students.

    That’s a great start, but it’s not enough.

    Personal finance education is for all stages of our lives.

    Personal finance education needs to continue throughout adulthood. So many of the concepts we talk about won’t resonate with high school kids who are still provided for by their parents.

    Personally, I needed to feel the pain of being out on my own before the core lessons sunk in. I had no perspective prior to that.

    One of my priorities with Think and Talk Money is to help you learn these core principles before you feel too much pain.

    If you’re in the early stages of your career, there is no better time than now to develop strong money habits. It can be very difficult to correct bad habits as time goes on. A better plan is to work on developing good money habits now.

    If you’re already established in your career, maybe all you need is a reminder or a sounding board to more consistently make good choices.

    If you’ve struggled up to this point and want to work on your money habits, there’s good news. You have a major advantage.

    You’ve felt the pain.

    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. So in this continuing series, I will highlight the current money conversations that I’m having with my friends and family.

    In our first of these posts later this week, I’ll share how my wife and I recently talked through our decision to split our Later Money between emergency savings, college savings and mortgage debt.

    I’ll also share some of the empowering conversations I’ve had recently with Think and Talk Money readers. I learn so much from these conversations, whether they’re with my mesothelioma clients, my students, or my friends.

    Let’s flip the narrative together.

    Talking money is not taboo. The only thing that’s taboo is avoiding your personal finances.

    Have you had any beneficial money talks lately? How did it feel afterwards?

    Please continue to reach out in the comments or on socials with your responses and thoughts.

  • 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.

    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 Every Month

    Why You Need to Track Your Net Worth Every Month

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

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

    I then power on my laptop and open my personal copy of the TATM Net Worth Tracker™️.

    Download TATM Net Worth Tracker™️

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

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

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

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

    When I’m finished with the updates, my wife grabs her coffee and sits with me. She will likewise study the TATM Net Worth Tracker™️ for about two minutes.

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

    And, that’s it.

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

    That’s all the time it takes to know if we are progressing towards our most important goals.

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

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

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

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

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

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

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

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

    Let’s start with a little story about when I first learned what net worth means.

    Going into hiding straight from a London pub.

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

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

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

    Uhh, OK…

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

    Still, I had to admit that it seemed pretty cool that he had that kind of financial flexibility.

    I knew I couldn’t survive for a couple of weeks, let alone a couple of years.

    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 spreadsheet.

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

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

    Let’s take a look.

    Download TATM Net Worth Tracker™️

    What are assets?

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

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

    My family’s current assets include:

    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).

    Download TATM Net Worth Tracker™️

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

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

    When you own these types of assets, your net worth will increase over time without much extra effort on your part.

    You don’t have to specifically trade your time for money with these types of assets.

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

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

    Does my home count as an asset?

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

    I couldn’t possibly disagree more.

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

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

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

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

    Make it easy on yourself. The goal is to obtain a reasonable estimate. If you’ve worked with a real estate broker, ask her for the current value of your home.

    She will use recent “comps”, meaning similar comparable properties in the area, to come up with a fair value.

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

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

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

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

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

    Download TATM Net Worth Tracker™️

    What are liabilities?

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

    Unlike assets, liabilities diminish your overall net worth.

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

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

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

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

    On the bottom, the rows represent the liabilities or debts you owe.

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

    The reason there’s a new column for each month, instead of just updating the values in a single column, is so you can easily see how your net worth has changed over time.

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

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

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

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

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

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

    The TATM Net Worth Tracker makes it easy to quickly calculate and visualize your net worth without needing to share your private information with any third party apps.

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

    The TATM Net Worth Tracker makes it easy to quickly calculate and visualize your net worth without needing to share your private information with any third party apps.

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

    The TATM Net Worth Tracker makes it easy to quickly calculate and visualize your net worth without needing to share your private information with any third party apps.

    That’s all there is to it.

    Now, you know your net worth.

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

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

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

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

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

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

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

    It means that we are continuing to fuel our Later Money goals.

    We’re paying down debt.

    We’re letting our investments do their thing.

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

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

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

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

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

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

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

    Maybe you need to make some adjustments.

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

    Track your net worth so you know for sure.

    All it takes is the TATM Net Worth Tracker™️.

    And a cup of coffee.

    Download TATM Net Worth Tracker™️
  • 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

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  • You will Easily Know and Feel Money Well Spent

    You will Easily Know and Feel Money Well Spent

    Coming up, we’re going to do our first Q&A post where I’ll answer questions from readers. So many good questions have already come in. Please keep them coming! Leave a comment below, subscribe to our newsletter, or find us on Instagram.

    One question we already received was so good, I’ve answered it here in a dedicated post. The question came from someone that I love to talk money with. He read the Think and Talk Money Welcome Post where I mentioned that my credit card debt was partially due to having Chicago Cubs season tickets.

    He knows that I’m a big Cubs fan and asked me if I would I really trade all those great experiences and memories just to save money.

    It’s such a good question because it points to the intersection of money and life. It took me all of two seconds to know and feel the answer was, of course, “No, I would not have given up my Cubs tickets.”

    He was absolutely right. If I gave up my tickets in 2010 when I was struggling with debt, I never would have been in the stadium in 2016 with my family for the Cubs’ World Series run. Those are some of the best memories I have.

    In hindsight, I would have done some things differently so I could enjoy the experiences without the money worries. Let’s talk about that.

    But first, story time.

    Our nice friends, Phil and April.

    Throughout that World Series run, we sat next to the nicest couple in the world, Phil and April. Phil was a diehard Cubs fan. April was more reserved. Both were smart and very friendly. They were enjoyable people to sit with. We chatted baseball, mostly. Pitching changes. Send the runner. Question the manager. That sort of thing. Completely normal, unremarkable stuff.

    Until Game 5.

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

    Around the 3rd inning, a jerk four rows in front of us taunted Napoli with a crude, juvenile insult. It was apparent the jerk was doing his part to keep Old Style in business for another year.

    Phil was nice…and tough.

    Anyway, the rest of our section was none too pleased with the jerk’s shameful display. Nobody was more displeased than Phil, who did what the rest of us were thinking but were too scared to do ourselves. Phil stood up. In so many words, Phil sternly recommended that the jerk knock it off and show some class.

    The jerk turned around, aggressively scanning the crowd for the man who had publicly shamed him. The jerk had that unmistakable look in his eye that meant, “Let’s dance.” My brother and I were a bit worried for our nice… and all of a sudden tough…friend, Phil.

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

    When the jerk locked eyes with Phil, he immediately saw that Phil was happy to accept the invitation to tango. Well, the jerk was sloppy, but he had enough sense to recognize that he wanted no piece of Phil. He wisely turned back around and sat down quietly.

    That was the last we heard from the jerk that night. Our nice, and now confirmed tough friend Phil had restored order.

    Phil’s on TV!

    On the day of the Cubs’ championship parade, my brother called me excitedly, “Phil’s on TV! Phil’s on TV!” It didn’t register right away who he was talking about. When I turned on the TV, sure enough, there was Phil, our World Series friend. I was so confused. Phil was giving an interview on set with the Cubs announcers. Our nice (and tough) friend, Phil? On TV?

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

    I still couldn’t figure out why Phil was on TV. Why won’t they just put his name on the screen already!?

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

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

    His wife? WWE champion and bestselling author, AJ Mendez.

    Life, huh?

    A memory I wouldn’t trade for anything.

    As much fun as the World Series was, my favorite Cubs memory actually took place during the 2015 season, the year before they won the World Series. It was during the 7th inning of Game 4 of the NLDS. This was the game where the Cubs knocked the rival St. Louis Cardinals out of the playoffs.

    In the 7th inning, with the Cubs up 5-4, Kyle Schwarber hit one of the most epic home runs in Cubs history, landing his moonshot on top of the new right field video board. It was such a feat, the ball is now enshrined where it landed.

    The entire stadium was rocking so loud, you could feel the ground shaking beneath your feet. Every fan was jumping up and down, hugging anyone close enough to touch. We were all dancing like nobody was watching. That moment was pure happiness.

    I was there with my mom. A lifelong Chicagoan, she too was jumping up and down and high-fiving all the other diehard fans in our section. After the game, we met up with my wife at a restaurant and relived the victory over Champagne.

    What does this have to do with money?

    What does any of this have to do with money? When I said money was emotional, this is what I meant. I wouldn’t trade that memory with my mom for anything. My brother and I still joke about our nice friends, Phil and April.

    These are the types of experiences that I want more of. These memories, and the desire for more like them, continue to motivate me today. I want to be good with money, not so I can stash it in the bank, but so I can use that money to create joy for me and my family.

    So, to get back to my friend’s question. Would I really have given up my Cubs tickets? No, absolutely not.

    What would I have done differently to keep the tickets but not the worries?

    In hindsight, what could I have done differently so my Cubs tickets were not a major source of financial worry?

    Even back then, I knew and felt that spending money on Cubs tickets was money well spent. I didn’t need to wait for hindsight to come to that conclusion.

    That said, I would have put more thought into solutions to keep the tickets and the experiences without the debt and the shame. I would have looked at expenditures in my Now Money and Life Money buckets that were ripe for adjustment.

    Maybe that would have meant giving up something else less meaningful, like my gym membership. Or, I could have looked into a side hustle as a way to earn more money, something we’ll explore at another time.

    Whatever the solution was, I would have been more intentional with my decisions so my experiences were not overshadowed by my worries.

    Talking money is really just talking life.

    This was such a good question to illustrate a foundational concept of Think and Talk Money. Yes, we discuss money. But, we’re really talking about our lives and our experiences. Money is just a tool to help us.

    And before you get cynical on me, of course money is not required for good experiences. That’s not the point. What I’m suggesting is that if you’re spending most of your time each week at your job, like most of us do, shouldn’t we think about the money we earn so we can maximize experiences like I had with my mom?

    Think and Talk Money is all about awakening that thought process so we can use the tool of money to fuel meaningful lives. Would you use that tool to get you Cubs tickets? Or, do you prefer trips to Disney World? What if money is just the currency that you trade to get your time back, so you can do more of what you want with who you want?

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

    Keep the questions coming!

  • How to Make a Budget After Thinking

    How to Make a Budget After Thinking

    What would you do right now with $20,000.00?

    Imagine it’s a $20,000.00 bonus that was unexpectedly deposited into your checking account.

    No strings attached. It’s your money to do anything with.

    Answering this question should be fun.

    It’s a free $20,000.00!

    But, my guess is that if you thought seriously about it, you didn’t have much fun at all.

    Many of us likely struggled with what to do. We want to do the right thing, but we don’t know what that right thing is.

    Should we pay down debt?

    Should we invest?

    Take a vacation?

    Do nothing?

    Do you have a plan for where your next dollar is going?

    The reason we struggle with decisions like this is because most of us don’t have a plan for where our next dollar is going. What ends up happening is we do nothing.

    Our money hits our checking account, we spend it on this or that, and pretty soon that money has disappeared. We haven’t used the money to advance any of our priorities. It’s just gone.

    To me, this is one of the most important money mistakes that we need to fix right away. Having a plan for our money, before we earn it, is essential if we want to reach our goals.

    With a plan, we can eliminate the disappearing dollars with confidence that our money is being used to serve our purposes.

    And, that leads us to budgeting.

    Budgeting is having a plan for your next dollar before you earn it.

    Here, in Part 1 of our series on budgeting, we’re going to learn that the art of budgeting is having a plan for your next dollar before you earn it. That way, you avoid having disappearing dollars.

    We’ll learn how to create our baseline budget based off of our current personal situation. Wherever you currently are in life, you can then make adjustments to your spending based on what you truly want.

    In Part 2 of our series on budgeting, we’ll use a real life example to work through the budgeting process together. Through this example, you’ll see how even seemingly minor adjustments can make a big impact to your budget.

    In Part 3, we’ll take a deep dive into my top 10 strategies for making thoughtful adjustments to our budgets so we can add more fuel to our financial and life goals.

    In the end, I’ll show you how to use the information you’ve learned about yourself to create a lasting money plan that does not require you to track every penny.

    What I mean is that if you can practice these budgeting tips for just a little while, you actually won’t need to budget anymore.

    That’s when thinking and talking about money starts to be a lot of fun.

    Let’s dive in.

    Budgeting is about having a plan ahead of time.

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

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

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

    How do you come up with a plan?

    I teach my students that to create a budget, you need to first study your own personal situation to figure out where your dollars are currently going.

    Then, you can figure out a plan for how to use your next dollar before you earn it. This applies not just to bonuses or other unexpected dollars, it applies to every dollar you earn.

    When you put the time in to study your own habits, you can then create a realistic budget. When you have a realistic budget, you will have confidence that your dollars are working for you.

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

    That’s all there is to it.

    Let’s take a look at three steps to take when first creating a budget.

    Step 1: Track your spending for at least 3 months.

    I recommend everyone, regardless of where you are in life, start with this first step of tracking your spending for at least three months.

    Without knowing where your money is currently going, you won’t be able to think about adjustments.

    I won’t lie to you. This step can be hard and you probably won’t like it. This is the step that makes people think budgeting is a nasty word. I get it and don’t blame you for having that reaction.

    Still, there’s no getting around this first step. Remember, you don’t have to budget forever, just long enough to learn your own behaviors towards money.

    Please know that many of us struggle with this first step. You might not like what you learn by tracking your spending.

    When I first started budgeting, I learned that I was $20,000.00 in debt and was spending way more than I earned.

    That wasn’t fun, but I’m happy that I put in the effort to find my blindspots and make adjustments.

    I often think to myself, “Where would I be today if I didn’t go through this process 15 years ago? How much further into debt would I have fallen?”

    Talk to your people as you go through the budgeting process.

    One last thing, budgeting is one of those areas where it can really help to talk with our people along the way for support and encouragement.

    You don’t have to budget in secret. We’re all in this together. Put the mental energy into this step, so you can stop wasting mental energy worrying about money and start getting energized thinking about money.

    In Part 2 of our budgeting series, we’ll talk about the different ways you can track your spending. I’ve used apps, spreadsheets, and even the notes function on my phone.

    The good news is, tracking your spending is easier today than it’s ever been.

    Regardless of how you track your spending, be honest with yourself. If you intentionally or mistakenly leave out certain expenditures, you won’t learn where your money is actually going.

    A budget, which is just a plan, is only as good as the data it’s built off of. Be honest about your data.

    One quick note: Budgets are usually done monthly, so you’ll want to create a separate accounting for each month you tracked.

    The reason we track three months of spending is so you’ll be able to identify any patterns or inconsistencies in your spending from month-to-month.

    This helps ensure you’re making decisions based off the best data possible.

    Step 2: Separate your spending into three three main categories.

    Great work completing the first step! That wasn’t easy, but you did it.

    Now that you have tracked your spending for three months, you can assign each expense into separate categories.

    Most personal finance experts agree, though we have different names for each category, that you should divide your money into three main buckets.

    I refer to these buckets as:

    1. Now Money
    2. Life Money
    3. Later Money

    1. Now Money

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

    These expenses include housing, transportation, groceries, utilities (like internet and electricity), household goods (like toilet paper), and insurance.

    These are expenses that you can’t avoid and should be relatively fixed each month.

    2. Life Money

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

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

    We can’t be afraid to spend this money. This bucket is usually what makes life fun and exciting.

    The key is to think and talk so you are spending this money consistently on things that matter to you.

    3. Later Money

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

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

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

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

    You’ve probably guessed it already. Later Money is the key category that fuels your ultimate life goals, like financial independence.

    The more you fuel this category, the faster you can reach your goals.

    Don’t worry about assigning a percentage to each category.

    I have intentionally not recommended target amounts or percentages to allocate to each of your three categories.

    The reason is because of what I’ve learned from my students over the years. I’ll lay out my full reasoning in a separate post.

    The short version is that in my experience working with law students, assigning target percentages for each category is counterproductive.

    When I used to teach my students to aim for certain percentages in each category, I could tell that they would get discouraged as soon as I put the numbers on the slideshow. I completely understand why.

    Each of us is starting in a different place. If you are currently spending 80% of your monthly income on Now Money, it’s not helpful to have someone tell you to create a budget that automatically drops that level to 50%.

    My students would tune me out as soon as I put those numbers on the board.

    Now, I teach my students to think and talk about their current personal realities and aim for steady and lasting improvements.

    I want my students to create a plan that will last, not an unrealistic plan that they give up on after a few months.

    So, whatever amount you’re currently spending in each bucket, that’s what we’re going to work with as we move on to step 3.

    One other thing before you move on to step 3: don’t get hung up stressing about what type of expense goes into each category.

    Sometimes, it gets tricky. Do clothes you buy for work count as Now Money or Life Money?

    Don’t stress. It doesn’t really matter. It’s not worth the mental energy thinking about it. Just stay consistent and move on.

    If you still want a target, aim for 20% of your income added to your Later Money each month.

    All that said, I know that some of us operate better if we have a specific target in mind. If that’s you, the conventional wisdom is to aim for 20% of your income added to your Later Money each month.

    Targeting 20% savings each month was popularized in Elizabeth Warren’s book, All Your Worth: The Ultimate Lifetime Money Plan, first published in 2005 (before she was Senator Warren, she was a law professor and author).

    Senator Warren advocated for a 50-30-20 budget framework with 50% going to fixed costs (what I call “Now Money”), 30% going to wants (“Life Money”), and 20% going to financial goals (“Later Money”).

    Most personal finance experts agree that the 50-30-20 framework is a solid plan for your budget.

    In theory, I agree.

    In reality, I’ve become convinced through working with my law students that the 50-30-20 framework does not cut it in today’s environment. Like me, some experts have also recognized a 60-30-10 framework may be more appropriate today.

    While I agree the 60-30-10 framework is more realistic, my experience has taught me that assigning rigid percentages is just not a practical framework for most people at the beginning of budgeting process.

    Step 3: Make adjustments so your spending better aligns with your true motivations and desires in life.

    OK, so now that you have assigned your spending to each of the three categories, the next step is to think and talk about your current habits and whether you’re spending matches your true motivations and desires in life.

    If you decide that your spending does not match your life values, then it’s time to make some adjustments. What kind of adjustments?

    We’ll talk much more about how to make those adjustments in Part 2 of our budgeting series.

    In essence, my budgeting philosophy is to aim for steady and lasting improvements based on your current reality and your ultimate motivations. What does that mean?

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

    small tree growing with sunshine in garden like small money choices before big.

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

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

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

    The idea will be to continuously add more fuel to our Life Money and Later Money, the buckets that represent the things we love the most (Life Money) and our most important life goals (Later Money).

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

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

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

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

    As we wrap up Part 1 in our budgeting series, keep the three initial steps in mind.

    • Step 1: Track your spending for at least 3 months.
    • Step 2: Separate your spending into 3 main categories.
    • Step 3: Make adjustments so your spending better aligns with your true motivations and desires in life.

    As you start to implement these steps, you’ll start to have a clearer picture of how your money can work for you.

    And, the next time you’re asked what you would do with $20,000.00, you’ll know the answer ahead of time because you have a plan in place.

    Answering the $20,000.00 question will be fun. No more anxiety-inducing, disappearing dollars.