Mindy: Welcome to the BiggerPockets Money podcast where we interview Nicole Lapin from Money rehab and talk about rehabbing your finances.
Mindy: Hello, hello, hello. My name is Mindy Jensen and with me as always is my financial Mr. fix it co-host, Scott Trench.
Scott: Thanks Mindy, great to be here and we’re going to hammer home a lot of financial tips today.
Mindy: That was good. I like that one.
Scott: Nailed it, right?
Mindy: Oh my gosh.
Mindy: And again.
Mindy: All right, Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you’re starting or how much you love a good dad joke.
Scott: That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business or just become a little bit more financially literate. We’ll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams.
Mindy: All right, Scott, you know me, you know I love a good rehab project and you know I love money. So of course I’m going to be in love with this show. Today we talked to Nicole Lapin from Money rehab and we talk about fixing your finances, getting your finances in order, and all things money.
Scott: I love it. It was a great episode. We really learned a lot from Nicole and and um what a what a treat to have her on the show today.
Mindy: It was a treat. Before we bring in Nicole, we have a new segment called the money moment where we share a money hack, tip or trick to help you on your financial journey. Today’s money moment is, are you done with a book or a textbook? Rather than donate it or have it collect dust, sell it. Create an eBay account, use Facebook marketplace or go to a local used book store. Do you have a money tip to share with us? Email moneymoment@biggerpockets.com.
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Mindy: Nicole Lapin is a New York Times best-selling author, the host of the podcast Money rehab, and the only financial expert you don’t need a dictionary to understand. You may have seen her as a news anchor on CNBC, CNN and Bloomberg, as well as the financial correspondent for morning Joe and the today show. Nicole, welcome to the BiggerPockets Money podcast. I’m so excited to talk to you today.
Guest: I’m more excited. Mindy, thank you so much for having me.
Mindy: If we’re going to have an excite-off, I’m going to win.
Guest: Okay, okay, girl. It’s your show. You win.
Mindy: I’m always excited about everything and I am excited about your money story. Let’s look at where your journey with money begins.
Guest: Whoo. Uh, well, I’m the least likely person to be a money expert or to have my own money together much less teach other people about money. Um, I grew up in an immigrant family. So first generation American like no discussion about the Wall Street Journal or stocks or bonds or any of that. My family just used cash. We didn’t have a lot of it, but that was the idea that if you didn’t have money, you didn’t buy something. Um and so I was super scared of all traditional money concepts. My boyfriend in high school said he wanted to be a hedge fund manager and I thought he wanted to be in gardening. So I was like the most clueless. Um and I just needed a job uh and when I was 18, I was offered a job on the floor of the Chicago Merc, which at the time I thought was a mall. Um it’s not a mall. It’s the um it’s a stock exchange in Chicago and I lied uh and said that I knew about money news and I figured it out. And so what I realized is that money is language like anything else. We just don’t have a Rosetta stone for this language growing up. Um, I didn’t uh in my family, if you guys are like me, some families do and that’s awesome. Uh but we don’t learn this stuff in school. So I learned it at the school of hard knocks. And, you know, if you go to Wall Street, you don’t speak the language of money, you’ll be confused, right? If you go to Japan and you don’t speak Japanese, like you will be confused until you learn the language and then you’re like, oh yeah, duh, all those words that I thought were so complicated, like obviously I know what that means, but only after you learn it.
Scott: How about um how about the world of personal finance? Did you find that that was foreign to you as well? Like maybe you learned corporate finance or the the language of stocks and trading, but maybe what did you find that that correlated to personal finance or that was a separate journey in addition to that?
Guest: Oh, great question, Scott. Uh totally separate journey. So while I was covering business news, my personal finances were totally in shambles and I say this, oh gosh, 20 years later with a badge of honor, but at the time I was so embarrassed, right? because I was talking about money news to the world and I had a boat load of debt myself. Once I finally got a credit card because my family didn’t believe in debt or credit cards or mortgages or anything. I went balls to the wall like racked up a bunch of credit card debt and was still saving green cash under the sink uh like my parents did. And yeah, I had to figure out how to get out of it the hard way and once I did, I came up with a little plan for myself. I said I’m never going back. And when I was on those news networks talking to a lot of old rich white dudes about money, which is not an editorialization, it’s just like what the Neilson numbers show. I wasn’t talking to the people who needed that information most, which were my former self, you know, the girl that was freaked out, didn’t know what hedge funds were, um super clueless, got in a bunch of debt and that became my mission.
Scott: So what was your journey to paying off this debt and getting your financial act together and those types of things? Like what what what how did that what transformed? What lifestyle components or career items changed?
Guest: Totally. I came up with a plan and I love alliteration. So I actually started as a poetry major of fun fact. Um, you know, so I often say like, really if I could do this, anyone can do this, like, you know, the the whole thing of saying that you don’t know math or you’re not a numbers person. Like I was a poetry major to start out. And you know, I love alliteration, so I came up with a lot of, you know, financial tools around alliteration. So prioritize to pulverize was how I got out of debt specifically. And so, um you know, there are two methods that experts will talk about when getting out of um personal debt, the avalanche method and the snowball method. So the avalanche method just means like paying off the highest interest rate debt first, the snowball method is like, oh, you have little, you know, bills, cut those up, that will give you more momentum to um you know, pay off the bigger bills. Um and so I used the avalanche method, which was for me prioritizing to pulverize it. Um and I ranked my highest interest rate debt, which was my credit card debt, and I broke it down into baby steps because I think anything with personal finance, um super overwhelming, the only way to tackle that is to break it down into baby steps and then those little baby steps into like even baby steps. Um and so I came up with, I think it was $7 a day. Um like even the year goal was too overwhelming for me. So, and the month goal was too overwhelming. So I literally broke it down to the smallest number possible. And I was like, seven bucks a day. I can do that. And that’s what I did until it was done.
Mindy: How much debt did you have and how long did it take you to pay this off?
Guest: Um, you know, this was 20 years ago. So I had about 5,000 of debt and I think it took me two years to pay it off.
Mindy: Do you think there’s a lack of financial literacy in this country?
Guest: A thousand percent.
Mindy: Did you?
Guest: I think it’s an epidemic Mindy. This is what I get excited about. I’m going to win this excitement battle by the way. I think it really works me up. Um I think it’s a total epidemic. I think it’s actually the thing that is standing in the way of us fixing a lot of macroeconomic issues, the gender wage gap, the racial wage gap, the wealth gap, the home ownership gap that, you know, you guys are all about. Um you know, I think that the answer to fixing these issues is through financial literacy. And if I were in charge of the world financial literacy would be taught in schools. Um also like emotional wellness and but that’s a whole other podcast. Um instead of geometry or the Pythagorean theorem or like how to dissect a frog or all this BS stuff that is not helpful. So, um yeah, I mean, I said this so often that I ended up creating the money school because I was like, gosh, I keep saying like if I were in charge of the world, I’d teach a class on it. So I ended up doing that, but but truly, I think it’s the biggest issue standing in the way of, you know, us closing a lot of those gaps.
Scott: So, what what is the what what do we how do you define financial literacy? What does done look like in terms of someone’s education on financial literacy at least maybe in the context of good coming out of high school, college or entering adulthood.
Guest: Also a really good question. I don’t think there’s done. I don’t think I think it’s constantly evolving, you know, um, in the same way that I think about balance. You know, often times uh balance be work is used as a noun. And so back to my poetry roots. it’s like balance can be a noun or a verb, right? And often times we use it as a noun. like we found balance and we’re done, right? I think of it more as a verb. like it’s constantly in motion, it’s something you constantly have to cultivate. I think the same thing applies to financial literacy. I mean, guys, like when I was learning financial literacy, there was no NFTs, right? Or crypto. like it’s constantly evolving. In the back of my books, I rewrite financial dictionaries. This is maybe why I’m also single. Um because this is like what I do for fun on a Friday night is rewrite financial dictionaries in real English. Um you know, I could in Richbich or I did it in Miss Independent. You know, I think I squeezed in like NFTs as we were going to the printer, but it’s a, it’s a language that keeps evolving. And so I don’t think there’s done.
Scott: Maybe Dun is when you when you want to go work at a hedge fund and actually clip shrubbery, you do you make the right decision.
Guest: Yes, I think that, yeah, if you leave your clippers at home, then you’re you’re good enough, but you’re never done.
Mindy: So who is responsible for teaching financial literacy? Is it the parents or is it the schools?
Guest: Well, I think it’s the schools, but that doesn’t happen. I mean, we’re actually doing a financial literacy effort um with the states that has to go state by state. I mean, I could tell you more about these sort of lobbying efforts which I think are being done in parallel with parents needing to teach their kids about it. I think it’s incumbent on parents unfortunately because they’re not learning it in school. So like you could cry about it or you could just, you know, do it yourself, right? And it’s also not an excuse for adults to say like, you know, my parents didn’t teach me, I didn’t learn it at school, like, you know what, that doesn’t pay the bills. So like put your big girl, boy pants on and figure it out yourself. And that’s it’s not an excuse. I think there’s a combination when you’re thinking about this because most of not getting your financial life together is like the enemy is between your ears. So if you tell the mean girl or the mean guy to take several seats, then you can approach it with a combination of what I think is compassion and tough love. So compassion for your former self, for what he or she didn’t know, like, okay, I’m compassionate, we didn’t learn it in school, like my family was bananas, they used cash and got into a bunch of, you know, I bailed my mother out of jail using cash underneath the sink behind the maxi pads for instance growing up. These were like my early financial moments and that’s like a lot of trauma that I just threw down on you guys, but a lot of our money story is um is around how we grew up with money, right? And so it’s saying I have compassion for that girl who went through those financial traumas or had that experience, but also it’s not okay moving forward. Now that you have the resources, now that you have the opportunities to do better.
Mindy: Well, there is a point where, yes, you have to have compassion because this is scary and we didn’t learn it in school and we didn’t, like I remember my mom taught me how to pay bills by just this is where you put the name on the check and this is where you put the amount, and, you know, here’s how you balance your checkbook. But she didn’t talk about how much was coming in. and we didn’t talk about how much was going out. It was just this is this week’s bills. And they, you know, led by example, but there was not a lot of like don’t spend more than you earn because of this reason. It was just don’t spend more than you earn. And it wasn’t isn’t really like invest in the stock market. It was just, you know, you should save for your future. I, I don’t want to throw her under the bus, although I know she doesn’t listen to the show because she can’t figure out podcasts. So that’s okay too.
Guest: Bless her heart.
Mindy: Bless her heart. But, you know, there’s there’s compassion and I want to have compassion for people who are still trying to figure it out. But there’s also this like, hey, if you want to get your financial self together, get your financial self together. Why do you think people find rehabbing their finances so scary?
Guest: Because of all of those stories um that we’ve told ourselves. I think the most common ones are, um I don’t have enough money to start. Um I’m not a math person or I’m not a numbers person. Um you know, and that I can’t do it for whatever reason. And so, you know, I think that tackling those stories and recognizing that those are just stories we tell ourselves is like the first step, right? Um the reason that I have Money Rehab and the reason that all of my books are 12 step plans is because I truly believe the first step to any recovery is admitting you have a problem. So that, you know, let your problems speak like they they are probably um taunting you or haunting you. like, you know, once you let that narrative come out, you can um you can confront it. and I I think, you know, and I’ve thrown out a lot of kind of emotional wellness tactics and I’m gonna throw down some philosophy right now which, you know, forgive me, but I think that it’s all connected, right? Um I don’t think you can uh get financial literacy and wellness together without emotional wellness. I think it’s very intertwined um and and I believe that stoicism plays a big role in getting your financial life together too because we suffer more in imagination, I believe than in reality. And so once we let like that worst case scenario, um, uh, have a voice, have a platform, it’s often times that we can then take the necessary steps to confront it, right? So like this happens with taxes a lot. You know, what is your biggest fear? Just like say it, right? People think they’re going to go to jail, right? And so, you know, it’s like playing out that worst case scenario and debunking it, right? Most folks do not go to jail. It’s just not a thing. And and most folks that don’t have under a certain amount of money, like don’t get audited. Just look at, you know, look at the numbers, look at uh the reality there. And then let’s say like somehow you do get in trouble with the IRS. What’s gonna happen next, right? Like play out those steps or if you, and and the answer ultimately is it’s gonna be okay, right? Uh same thing happens like I used to catastrophize a lot. if I lost a gig or if I, you know, didn’t have money, I still have an irrational fear of being broke alone and homeless and dying in the gutter. Uh and it still exists. It will never be done Scott, like it will not shut up. But I know it’s there and when it comes out, I’m like, I see you, I see you thought about being homeless, like, and you know what, if I did not get this job or this project, I will not be homeless, like I will go live with Sarah, my best friend, right? Like it will be okay. I will not be in the gutter. And so I think some of those exercises are are really important to, you know, uh uh to calm the mind, you know what that we do to ourselves around money.
Scott: I love that. I think it’s I think everyone feels that way. I’m sure Mindy, you feel the same way from time to time. I certainly do and I’m supposed to be good at this um just like you, Nicole. Um I do wonder however, uh your books are all many of them are targeted towards women, like Miss Independent, Rich bitch, boss bitch. Do do you think that women maybe feel these feel perhaps experience some of these feelings more acutely or that they have less access to financial literacy? Is that one of the reasons why you particularly emphasize women in finance in your work?
Guest: Yeah, there’s a couple of reasons. First, I think uh with the book medium and particular, um and a lot of media, uh you can’t be all things to all people or you’re nothing to anyone, right? Like I needed to really know who that person was and like get her. And I’m not for everybody and that’s okay. Like I wish I actually had more controversy around the launch of Rich bitch. Like I wanted more people to hate it. Um because of the title and like whatever. Um but you know what, it’s not, it’s not for everyone. I knew who I was reaching and I wanted to like go deep with her. She was my former self. You know, I knew everything about her. Um and so I wanted to like make an impact on a smaller group of people then trying to go wide. I actually, um it took me 10 years to get my first book published. I went through four agents, um I talk about this, I think in boss bitch, um four false starts, like I sold manuscripts and then weird things happened like over the holidays, the editor got fired and then like come new year, the book was gone. you know, stuff and I just thought it was never going to happen for me. Um, and the book before Richbitch that I sold and the holiday thing happened was called Making Bank. I recently like found this proposal. It was uh like all things to all people cool, fun finance. That book would have been terrible. It would have been dead on arrival. Like who wants to read a a like vague book like that, right? And so um so that’s part of it, you know, to answer the question around uh do women have less access. I think there’s just more fear. studies have shown and I put some of these in Miss Independent, um that little boys and little girls associate different words with money. Little boys associate like ambitious words, aspirational words, little girls associate scarcity words. um, just fear words when it comes to money. And so I think we’ve been socialized a lot around that. um and that’s it just is what it is, like it’s a different conversation. Um and I wanted to go first because they think that money is still one of our last taboos in society. like we’ll talk about sex at the dinner table, no problem. We’ll talk about politics, no problem with our girlfriends. Like I talk about wild sex stuff with my girlfriends all the time. And then uh I’ll ask them about what’s in their bank account and it’s crickets. And I’m like, hey sister, you just told me about your bikini wax and this is taboo. Like asking you what you make is taboo. You know, if we don’t open up this conversation, we’re not going to be able to fix these problems. And I get that it’s hard to have it. so that’s why I said I’ll go first. Somebody has to go first with hard money talks. So let that be me.
Mindy: Well, let’s talk about uh investing. Let’s talk about your new book, Miss Independent and your 12 step plan to start investing and grow your own wealth. What are you investing in?
Guest: Um so I have a cup, I just put it away but it’s uh it’s part of our merch that’s index funds and chill. Um and I advocate index funds and chilling a lot. This is um you know, what Warren Buffett himself put in his will for his own family to invest in, low cost S&P 500 index funds. Um and I think that uh especially if you’re a first time investor picking individual stocks is not awesome. Like during the pandemic, people you know would slip into my DMs and listen guys, like these are the fun sexy DMs I get. Um like should I buy Zoom, what about Peloton, you know? Um everybody, you know, was becoming an investor. We saw the the first time brokerage accounts open um at record levels. Um but you know, it was this idea that’s still folks think like there is a get rich quick plan. There is not. You know, I do like a, you know, a fun sexy conversation. When it comes to my money, I don’t actually want it to be fun and sexy. I want it to be so boring. Like the most boring possible. Um, you know, I I get asks about like, how about likeification for like and you know, all these exotic stuff. I’m like hard pass. Like I don’t you want a game or like you want a fun go on Tinder. Like go get a weekly magazine. I don’t know, like go read page six. If I want to look at my Schwab account, like I want it to be so basic boring, um, slow, steady. and I think that’s the best way to grow long term wealth.
Mindy: Okay, I have two things for you. First is a hot stock tip. It’s this little tiny company, maybe you’ve heard of it, it’s called Berkshire Hathaway. They sell A and B shares. I want you to get at least one share of B so you can then go to the most boring meeting ever, the Berkshire Hathaway annual meeting. Yes.
Guest: No, it’s fun. Have you been to Omaha?
Mindy: Multiple times. I’m going again this year and you can listen to Mr Warren Buffett talk in person, potentially ask him a question and listen to him and Charlie talk about financial stuff. It’s fascinating unless you’re my 16 and 13 year old and they’re like, oh my God, mom, do I have to go? It’s so boring. Um but yeah, if you want to talk about like a world class financial uh seminar for the bargain price of I don’t know what a B share is 100 200 bucks.
Guest: Uh And then you can sell it afterwards.
Guest: So I just looked up A shares. Uh A shares are 492,000. It’s one of the most uh expensive individual stocks uh there are. And uh yeah, Berkshire Hathaway B shares are 317 bucks. You’re right. You know what? I’ll I’ll go with you on that one. Buy a buy a Berkshire Hathaway B share.
Scott: I’ve never been to the conference, but my portfolio, my stock portfolio is VOO and then one share of Berkshire B. That’s the that’s the.
Guest: I love this. I am down with this portfolio. I think VOO is even better than SPY now. I was just looking at my portfolio. Uh these are so if for anyone listening, um VOO is the ticket symbol for um an ETF that’s an S&P 500 index fund essentially. SPY is another one. there are they’re a bunch. you can also find, you know, tickers that associate with mutual fund, index funds or two varieties, um, you know, of index funds, ETF varietal and the mutual fund varietal.
Scott: Yeah, this is a great example, right? I just threw out jargon VOO. Thank you for for clarifying that.
Guest: I can’t help myself. I’m
Scott: But that’s it, that’s it. One of the things that you do better than maybe anybody else is making finance feel this this accessible. So like how like we just went into a very tactical VOO. what’s that? That that’s going to be overwhelming just as one point to somebody who’s brand new to finance. What is the first thing you’d recommend for someone just starting to rehab their finances? Where do they begin to to dive in and and immerse themselves in this world?
Guest: Yeah, I think we’re all in different places. Um, yeah, and and thank you for saying that. it’s something I can’t help myself uh but to just decode as I go because I was that person who would like, you know, my eyes would glaze over and it would totally go over my head when any of this conversation would come up and I just like remember what that was like and so I’m not embarrassed at all of like even asking questions about acronyms because there’s so many, there’s new ones. if I don’t know it, um and I did this when I was on the news, um much to others just may, I think because people like to like hide behind jargon and sound smart and I just don’t, I just am like, I don’t understand, I’m a really smart person. Um, I have good self-awareness. And if I don’t know whatever that thing is, like, I don’t think other people watching are gonna know either. So, um, so yeah, I I just uh I I love that decoding. so thank you for that. I think when you’re getting your financial life together, you need to know um and take inventory of where you are. So, like Richbich my first book was a 12 step plan to get your financial life together and that was like basic personal finance, budgeting, you know, uh buying a house or renting, um and sort of tips and and thoughts around that. Um if you’re doing it for the first time, you know, car leasing, buying, whatever, um basic retirement, basic, you know, estate planning and things like that. And so, and then Miss Independent went into actual investing once you got, that was like part two, right? Once you got your basic uh infrastructure in place like you kind of can’t skip steps. I get questions a lot at IRL events especially like, I just how do I buy a house? And I’m like, hold on sister, often it’s like a woman and I say, uh do you have debt? Like I need to know I have more, I have a thousand more questions, right? And so I think that um knowing where you’re starting from, uh it’s going to be different. I know that sounds like a cop out answer, but you know, I like the choose your own adventure books. I don’t know if you guys read those back in the day. Um, but uh that’s how I have set up a lot of my well, especially my books but a lot of my content. It’s like, yeah, at different points you’ll go back to this when you need something else. Um, and that’s how a financial journey really looks. I don’t think it’s like a ladder, just like I don’t think there’s a career ladder. I think it’s more of like a rope swing or a rock climbing.
Scott: No, I love it. what we see and maybe this is maybe this is the same for some folks in personal finance. We see in real estate investing, for example, is folks just need to just like start immersing themselves, kind of passively at first and just like absorbing information for dozens or even in some cases hundreds of hours before they feel fully comfortable with the ins and outs of real estate investing. And maybe that’s the parallel that you’re kind of getting towards in personal finance, wherever you’re starting, just dive in and start absorbing and that will direct the direction will become clearer after, you know, a couple a couple dozen podcasts for example, or a book or book or three.
Guest: Yeah, totally. I I think that um yes, and, right? Like you don’t want to you don’t want to say, okay, on Saturday, I’m going to just sit down and binge, listen to Biggerpockets and Money rehab and like, you know, and and at the end of the day, I’m going to get my financial life together, right? I did this around my taxes for the first time where I was like, okay, I’m just going to do it on Saturday, like get it done and here’s all the receipts and here’s all the and then it will all begin. And what happened at the end of that Saturday was I ended up drinking like an entire bottle of wine and I think a whole thing of maybe Hog at the time. Um with nothing was done. And so I cuz I was so overwhelmed by this idea of like I need to do all of these things in one day. And so I I tackle that by like the baby steps thing. I just one day, I only gave myself the task of uncrinkling my receipts. That was it. And like, if I uncrinkled my receipts, I would that I checked it off, right? That’s all. The next day was like put them in little bundles. That’s it. Um, and so I think it’s like, you know, smaller manageable goals that you can actually stick to, right? And and also to your point um of listening to a podcast, obviously, you know, we, we all love ourselves a financial podcast for obvious reasons and we are biased uh around it. But there is always time. like, there truly is, if you take an inventory of your time like P andL, right? you will, you will see where you can cut. you people spend more time researching boots that they’re going to buy or like the vacation that they’re about to take, then they do researching a mutual fund or an index fund or, you know, whatever uh around this.
Mindy: I love when people say, oh, does anybody have a mutual fund recommendation or a index fund recommendation? I’m like, no, do your own research. I’m investing in this because we’ve done a lot of research or this is what we are interested in or this is, you know, where we feel is a good fit for our money. But what works for me might not work for you or it might not work for Scott. It doesn’t matter what I’m doing. Uh my risk tolerance is different than your risk tolerance and it’s different than Scott. My goals are different. I’m way older than Scott, so my my uh needs are different. It’s, it’s what you need for your situation and your specific set of circumstances at this exact time.
Guest: I love that you suggest to break it down into baby steps but that name has already been taken, Nicole, you need to come up with a new name.
Guest: Oh, oh, yeah.
Mindy: Dave Ramsey has a baby step. So…
Guest: my least favorite person. I’m not trying to step in his territory. Um, uh, yeah, little toddler steps.
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Scott: Maybe maybe diving one level deeper here. I know you do a lot of live Q and A on your show. What what are some of the questions that you get most frequently from folks that are new to personal finance?
Guest: So many. I mean, usually it’s like around the stock pick stuff because I think, you know, people just want a secret. And the the secret is, I think there’s this dad joke. If you want to double your money quickly, just fold it in half. I’m like, I love a dad joke. It was one of my I think most popular TikToks I just folded money in half and I was like, easiest, quickest way to like double your money, right?
Scott: These people are on a tear with their money.
Guest: Thank you. Thank you for the pity applause there.
Scott: I tried.
Guest: You’re so great. Yeah, can we put a sound effect, please? Um, yeah, I I think that that’s often the question I get because we’re just condition to want to skip steps, right? Um when I used to be on these morning shows like the today show, I remember producers would say like our audience wants to get fit without working out, you know, make gourmet meals without cooking, um and get rich without doing anything, right? Like you’re kind of conditioned to think that there’s a cheat code. and the cheat code uh that I give is like, it might you might not love it. like it might not be a quick fix. but the cheat code is, you know, take advantage of compound interest. which is often used against us in the financial system with debt. That same cool force um can be used in your favor, right? Um and so I think it’s more about time in the market than timing the market and picking a stock, right? You don’t need a lot of money to start. You need the more time possible to take advantage of this beauteous, glorious force of compound interest that is like literally your money makes money for you while you’re sleeping, while you’re doing nothing, while you’re listening to bigger pockets, while you’re buying real estate.
Mindy: But you have to have some of that money set aside so it can start growing for you. You can’t just spend it all.
Guest: Well, that’s the thing. I mean, it’s like, you know, the also the adage, I like to rethink conventional financial wisdom across the board and help well because I did this myself and to think for myself and help others think for themselves and it’s not really like living within your means, it’s living below your means. Nobody wants to hear that, but living within your means doesn’t work. And then you have this lifestyle creep. So when you make more money, then you’re, you know, nice to have, become your need to have and like it’s this lifestyle creep thing that, you know, ultimately people that get raises, they increase their, you know, um, lifestyle more and so they don’t actually keep more money. It’s really not how much you make but how much you keep, how much you save, how much you invest that matters the most.
Scott: I love the answer around this is about the fundamentals, spend less than you earn, invest in index funds. There you can’t get fit without working out. Um that’s said I’m going to uh just go there and say, I think you also champion a large number of money hacks and tips and tricks and you do have some shortcuts and and good strategies that help people move ahead with their money. Would you mind sharing a few of your favorite tactical items that people that that are powerful levers that people can pull?
Guest: In the context of those great fundamentals you mentioned.
Guest: Sure, in like personal finance investing.
Scott: Yeah, let’s start with personal finance.
Guest: Yeah, so with um you know, coming up with a basic budget for the first time, I break it down into the three E, which is essentials, end game and extras where 70% of your overall uh I I call it a spending plan because it feels easier to stick to than a budget. In the same way as an eating plan feels more likely that you’re going to continue it than a crash diet, right? You allow yourself a small piece of chocolate so you don’t end up noshing on a big hunk of chocolate cake in the middle of the night because you’re so hungry and deprived on a crash diet. And so that’s spending plan allows for extras. So 15% to the extras, which is whatever does it for you, the latte that, you know, people will tell you not to buy. I think that’s ridiculous and that’s not sustainable. Um and then 15% to the end game, to your future self, your savings, your uh retirement, you’re investing, all of that good stuff.
Scott: Awesome. How about investing? What are some of the ones on the investment side that you that you’d you have there? What are some of your frameworks there?
Guest: Yeah, I think that um it depends first on on your risk tolerance uh Mindy as you so smartly noted, like everybody has a different risk tolerance and everybody has a different, you know, balance to, um, you know, how long they need the money, um, you know, how long it’s going to be until retirement and all of that stuff. Um, but I think that there are low risk ways to start. Um, CDs are really good right now. Um, so what happens, um, I was just explaining this to somebody, um, with interest rates going up, you know, mortgages are higher, right? And so that sucks. uh if you are getting debt, but if you’re saving, it’s awesome because like interest rates are up. So on the flip side, you’re getting way higher rates, um, than we have been for, you know, the last more than a decade, right? We got nothing in a savings account. Well, that’s changing. Um, CD rates are changing. like some are 4 and 5% right now, right? That’s great. Um, so I think that the lower cost ways um are good gateways into like higher risk, um, right? Even if you’re just starting to get into bonds, you can look into tips, which are treasury inflation protected securities, which are like, you know, super basic, uh from the government, bonds from the government or T bills or T notes or T bonds, they’re all the same, treasuries from the government. Um, you know, and so I think that there are a lot of different options. It’s not a hack, it’s just kind of like know your fighter.
Scott: Oh, I have one one quick comment on that. Um I’ve been thinking, hey, interest rates are rising, that has problems for so many asset classes. Real estate is not a fan of rising interest rates, for example, right? Neither are stocks nor private businesses nor bond funds because that decreases the value of bonds when interest rates rise. Um, but one kind of obvious conclusion is like, what what’sسيط like the lowest risk investment you can think of in a practical sense? Well, it’s maybe your friend or your family member who has an 800 credit score makes 100,000 in household income, uh, and just bought a house and is paying their mortgage, right? That mortgage is at 7%, six and a half 7%. So there’s a way to get 7% return right there. Now, that may not be achievable, but that begins to open up like, oh, bonds are back, debt’s back. What how can I take advantage of that? And your your thoughts around treasuries or other very safe debt instruments, I think I think are are great. And I don’t think enough people are very thinking about this very very simple, logical way to just rebalance their portfolio. You shouldn’t, in my opinion, if had a lot of money in bonds the last 10 years at two, you know, 0% um federal funds rate, but now maybe they’re back. so I completely agree and think it’s a a great way to think about it.
Mindy: Nicole, this was so much fun and I really appreciate your time today. Please share with our listeners where they can find more about you.
Guest: You can subscribe to Money Rehab Daily Personal Finance Podcast advice show uh wherever you get your favorite podcast or any of the other shows uh on our network, Money News Network. Uh we have seven shows in the slate that cover a lot of different personal finance topics in a deeper dive. So find those wherever you get your favorite podcast or find me on the Instagrams, slipped in slip into my DMs with those nerdy questions at Nicole Lapin or you can find our network at Money News. Yeah, that is our handle. It’s super cool.
Guest: At Money News. What a great handle is that?
Mindy: That’s an awesome handle and easy to remember. If you know how to spell money and who doesn’t. Uh sometimes I’ll be spelling Mindy and I type out money instead.
Guest: Look at that subconscious at work.
Mindy: Yeah, sometimes that happens and sometimes I feel rather silly doing that because I’ve known Mindy a lot longer than I’ve known money.
Guest: All right, Nicole, thank you so much for your time today and we will talk to you soon.
Scott: All right, Scott. That was Nicole Lapin from the Money Rehab podcast. That was so much fun.
Scott: Yeah, that was great. I I really think she’s doing a lot to really spread the message of financial literacy in a fun and engaging way. And if you haven’t already, go check out her show at Money Rehab.
Mindy: Yep. The only financial expert you don’t need a dictionary to understand. All right, Scott, should we get out of here?
Scott: Let’s do it.
Mindy: That wraps up this episode of the BiggerPockets Money podcast. He is Scott Trench and I am Mindy Jensen saying Asta Manana, Savannah. Bigger pockets money was
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Mindy: created by Mindy Jensen and Scott Trench, produced by Calin Bennett, editing by Exodus Media, copywriting by Nate Wine Troub. Lastly, a big thank you to the BiggerPockets team for making this show possible.
