Afford Anything - Ask Paula: Okay Seriously, Why Hasn’t Anyone Solved the Budgeting Issue?

Episode Date: February 1, 2022

#362: David is questioning how to better manage his spending. He’d like a stronger framework to think through budgeting challenges. Elisa and her husband bought a home, and now they’re saving extra income every month. She has a pension and her husband is an entrepreneur. How much should they be saving for retirement and how should they invest their extra money? Geoff invested primarily in taxable brokerage accounts for the last twenty years. He’s built a $6 million portfolio and reached financial independence. He wonders about the smartest strategy for withdrawing from those taxable brokerage accounts to efficiently manage capital gains? Jenna and her husband are planning on buying their next home in a few years. She wants to know if I-bonds are a good way to save for the down payment and closing costs. Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode. Enjoy! P.S. Got a question? Leave it here. Subscribe to the show notes at https://affordanything.com/shownotes Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a trade-off against something else. And that doesn't just apply to your money. That applies to your time, your focus, your energy, your attention, any limited resource that you need to manage. Saying yes to something implicitly means turning away all other options. And that opens up two questions. First, what truly matters? Second, how do you make choices that reflect that?

which matters most. Answering those two questions is a lifetime practice, and that's what this podcast is here to explore and facilitate. My name is Paula Pat. I'm the host of the Afford Anything podcast. Every other episode, we answer questions that come from you. And my buddy, former financial planner, Joe Saul Seahy, author of the new book, Stacked, your super serious guide to money management.

Joe's here with me to answer these questions. What's up, Joe? I was going to say, Paula, we should light this candle. but as you know, we already lit the candle before we started. Exactly. Yeah. So Joe and I, a little behind the scenes here, Joe and I are recording this on Skype, I look at his image and I'm like, Joe, is there smoke in the room?

Like, dude, is your room on fire? You might want to run. It turns out he just lit a candle. So then that inspired me to light a candle. So we're doing this whole podcast by candlelight. We lit this candle. Yeah. And actually, we didn't light the candle.

the people whose questions were going to answer, they lit the candle, Paula. Now, this is like Billy Joel, we didn't start the fire. Figuratively. Wasn't my fault. Rent, would you light my candle? Or? Candle in the wind. Oh, good one, yeah.

But that didn't end well. So we don't want to really go there. Right. Yeah, turn into a dumpster fire. It's a little depressing. Hey, speaking of fire, Hey. One of our listeners who calls in with a question describes a new.

type of fire, financial independence retire early, he describes what he refers to as dumb fire. Dumb fire allowed him to build a portfolio of $6 million. That's a fun question. We're going to get to that later in the show. But we're going to start with a question that's a little bit more universally applicable. It is a question related to how to freaking keep a budget, how to figure out whether or not you can go out this weekend.

And that question comes from David. Hello, Paula. This is David Harris. I'm really confused and I can't believe that no one has really solved the budgeting issue among the whole savings and podcast crowd. I like your anti-budget. I think it's a key part of it, but that's a little too small or simple for me. I've tried other budgets that involve cash and envelopes.

And of course, I've tried Quicken or other online, you know, mint. budgeting options, which do, like you say, just take too much time and don't really give me much feedback. Can you spend some time discussing, you know, other budgeting issues, other budgeting processes, ways to analyze your finances that maybe give me some of the answers I'm looking for? I think the first one that I'm looking for is how much can I afford to spend this weekend? If something popped up earlier in the week, you know, maybe I shouldn't go to a movie or spend extra money. The other thing that I think is missing are the items we sign up for these days, the subscriptions, the phone bill, the, you know, what are the expected values that come right after how much I save? Anyways, if you could do more discussion on that, you know, maybe do some research.

I think a lot of people would be helped out by this, including myself. Thank you. Thank you so much for the question. First, let me define some of the terms that you're talking about for the sake of everyone who's listening. So in your question, you mentioned the anti-budget. And the anti-budget is the budgeting tactic that I'm a big fan of. The anti-budget is meant for people like me who are not good at details. We don't like line-itomized spreadsheets.

We prefer to take a big picture view of things. If you take a step back and you ask yourself, wide-angle lens, What is the purpose of a budget? Well, the purpose is to make sure that you're saving enough. And when I say saving, I'm referring to anything that improves your net worth. Literal savings in a savings account, retirement contributions, additional payments towards a debt above and beyond the minimum owed. So the purpose of a budget is to make sure that your expenses do not exceed your income

and also that you're saving enough, i.e., improving your net worth enough. So if that's the purpose, then hey, let's cut the noise. Let's cut the excessive line itemization. And let's just cut to the chase. In the anti-budget, you essentially form a budget with two categories, what you save and what you spend. That's it. You don't care how your spending breaks down. You only care about whether or not you're saving enough.

And so in the anti-budget, you pull your savings off the top. And again, when I say savings, I mean retirement contributions, extra debt payments. You pull your net worth improvements off the top. You handle that first. And then whatever is left over is yours to fritter away freely. And it doesn't really matter if you're spending it on rent versus gas for your car versus martini's at the bar. If you pull your savings off the top first and then you take a look at what's left in your bank account, your spending will tend to meet that. So if you think of traditional line itemized budgets as the calorie counting of the financial world, then the anti-budget is the intuitive eating of the financial world.

But to your point, David, the question that you asked is, is there something in the middle? Because the anti-budget, the intuitive eating approach of budgeting is one end of an extreme. and this excessive line itemization, that's a different end of the extreme. But there's got to be something in the middle, something that's not meticulous calorie counting, but also not as nebulous as intuitive eating, right? So what are some of those examples? Well, there's one very popular example. It's called the 50, 30, 20 budget, which is on the spectrum of excessively line itemized to

anti-budget, it kind of hovers near the anti-budget end of the spectrum, but it's not quite all the way there. So if the anti-budget, you think of as a two-category budget, saving and spending, the 50, 30-20 budget is a three-category budget, in which 50% of your income goes towards your needs, 30% goes towards your wants, and 20% goes towards your savings. That is a popular, simple, three-category budget. I'm not a fan of that budget, though. at all. Well, I mean, I like the idea of saving more than 20% as do, you know, a lot of people in the fire community. Well, I just think it's arbitrary, Paula. I mean, it's so, it is so much easier to figure out what you really want those numbers to be so that it's the 24% instead of

the 20. You know what I mean? Right. Your number's not going to be 20. Why not spend another extra hour of work figure out for at least the next six months, the next year, the next five years, a number that actually fits you and what you want versus using this arbitrary thing. Like we spend so much time getting ready for vacation. We spend so much time. And yet people go, yeah, I'm going to use this arbitrary rule of thumb for something that I want to last my entire life that's going to fuel all of these goals that I have. Yeah.

I would spend a little bit more time and not use that budget. You know, if you disengage from the percentages and look at the concept of breaking down your budget into three categories, needs one. months and savings. Yeah, that can be useful. I think the other iteration of that could be, instead of needs versus wants, it could be fixed recurring bills versus discretionary spending or variable bills. I think that would be another really useful way of breaking down your budget. So David asked about subscriptions. Subscriptions are one of many examples of fixed recurring bills, right? Your rent or mortgage payment is another example. Your car payment, if you have one,

another example. So you've got all of these recurring predictable fixed monthly payments, and if you add those all up and put them in one pile, that's your fixed recurring payment pile, right? That could be one pile of your budget. And then you could have this other pile that's variable and tougher to predict. Some of those are going to be bigger ticket items like your grocery bill every month tends to be variable. Some of those are going to be seasonal, such as what you spend during the holidays or for birthdays or to go to your friend's weddings. And as a result, figuring out what that variable pile averages out to is something that will require a few months of observation. Also on that note, this is why I really,

like some of the programs out there for some of your expenses that can be variable, but you can change them to fix, like utility bills. Utility bills often have a program where you will have a fixed amount all year long rather than have it go up one season and down another based on where you live in the amount of whatever utility it is that you use. Studies show that that doesn't actually in itself, Paula, save you money. But what it does is, it gets rid of some of that variability because what we do as humans is we get paid on whatever frequency that we get paid. And then we say, I've got to hold some money back because I'm unsure. Having that expense is a fixed expense every month as much as possible, the more you can make an

expense a fixed expense, the less money you need to hold in reserve for those just in case moments. So if I'm worried about my utility bill next month, then I'm going to hold a bunch of money, maybe not a bunch of money, but I'll hold some money in reserve for that. If I know it's going to be locked in X amount for the next 12 months, it makes it easier for me to save. And that's also, you know, when you talked about the grocery bill, I know people that do things like Amazon subscribe and save, not so much because it actually saves you money because in a lot of cases it actually doesn't, but because they have this fixed amount of money that they know they're spending for at least a portion of their grocery bill that's happening every single month. And it takes even more variable. The more you can turn a variable expense into a fixed expense every month, the easier it's going to be to sock money toward your long-term goals.

Right. Exactly. So with groceries, actually, I do an iteration of this where imperfect foods, which is a former sponsor of this show, they're a company that sells ugly produce, you know, the produce that otherwise would get thrown away. And you get free shipping if you order a box that costs. at least $60. And so every week I design a box that costs exactly like $61, you know?

$60 and $32. Exactly. It's actually kind of a game for me. I try to see how close to $60 I can get it. I'm like, all right, I'm adding one lemon into this box. That's going to push me right over the $60 mark. But at any rate. Parsnip, you're in.

Yeah, exactly. Just made it. But because of that, I know that I'm going to spend $60 per week at imperfect foods. And so it's a way to, as you were describing, Joe, a way to create some degree of predictability in my grocery bill because groceries are a big ticket item. Food in general is a big ticket item. The average American, their biggest three expenses are housing food and transportation. So food is a big ticket item and necessarily a variable one. And so to your point, the more that you can create a sense of predictability and mimic the experience of it being a fixed cost, the more that you can then plan for the rest of your money.

While we're segueing, David brought up mint. Mint, and this isn't for David, this is for everyone. Mint is not a budget tool. Mint is not a budget tool. Mint is a tracking tool. And there's two different things going on with your budget. There's where you been, which is great. Mint can be fantastic.

The problem is, is a lot of people, a lot of people I talk to are like, yeah, I got mint on my phone. I'm good. Got on my phone. Have you ever opened your phone? Well, you know, I got on my phone. So I'm good. You have to look at it.

But you can still make a lot of mistakes using Mint because Paula, it only shows where you've been. It doesn't show where you're going. So a budget is planning the future. Mint can be very helpful by tracking where you've been. And I'll give you a very famous example of this. Thomas Jefferson, Tommy Jeff, as we call him. Tommy was-

Literally nobody calls him that. You don't call him that? Well, okay, maybe I don't. TJ. But you call just T. It goes by his initials, yes. So T.J wrote down all of his expenses. Like he is known, if you go look up,

Thomas Jefferson, he is known for writing down every single thing he spent money on. If you've also studied TJ, you know that he was so broke. He was so, he owed everybody money, Paula. His budget was absolutely rotten. So writing down your expenses in a ledger back in TJ's day is the same as having mint on your phone. It can be helpful to write down those things. But if you're like Thomas Jefferson, it isn't a wall that stops you from

continuing to make the same mistake tomorrow. A budget is going to help you not make those mistakes. And so Mint, while it can be useful, is much better as a tracking tool. So to use a food analogy, once again, you know, in the way that I talked about how the anti-budget is intuitive eating versus line itemized traditional budgets or calorie counting, the distinction between a tracking tool versus a budgeting tool is the difference between inputting the food that you already ate into an app like My Fitness Pal or Lose It, an app that allows you to track your calories and your macros, right?

It's the difference between inputting the food that you already ate versus making a plan for what you're going to eat tomorrow and inputting that in a forward-looking manner into that app. Right. And by the way, when people hear this, I know there's people that use Mint, and they do have some budgeting tools in meaning, Paula, I can go in and say, okay, in restaurants, I'm going to have it be $100 a month. And if it goes over $100, I will get a text message. That's a tracking tool with a little bit of budgeting. But when I use mint, it was very easy to just blow right through that. Oh, look, I got a text message while I met Outback. You know, uh, not, no, no, Joe, I'm getting some insight into your life right now. So David, you mentioned

the envelope budget. And that is a popular budget. But it's popularized by Dave Ramsey and is particularly good for people who are either beginners or who are trying to get out of debt, particularly very serious consumer debt, credit card debt. And the reason that it's highly effective in those specific use cases is because of the fact that it's forward-looking and you can't blow past the limitation. So when I say forward-looking, I mean you're making a plan for how much you're going to be. going to spend this week or this month, you're pulling all of that money out of your bank account up front. You're sticking it in envelopes. So in that regard, it's forward-looking. You're not tracking what you have done. You're thinking about what you will do. And because it's cash,

there's no way to blow past it. You can't swipe a piece of plastic or tap your phone. And so it creates these guardrails. However, it's highly inconvenient. Like, to literally physically carry around envelopes of cash in a modern society that is increasingly becoming cashless is not something that people can really stick with for the long term. Which is why I've found, though, that there are, you know, to your point, there's the apps out there that bring it to the 21st century still is difficult, but gets around some of the carrying cash around problem by having these separate virtual envelopes on your phone where you can open up in an envelope. So you just got to have to have this little, it's this nice, to your

point for people just starting out, I see it as far less onerous and still this nice little, little pause before you actually spend the money. I love that little pause. You know, just a little, do I really, should I be spending this? Are there any particular, well, you know what, actually, you know what, I take that question back. So Joe, I was about to ask if there are any particular apps or tools that you like that can perform that function. And I myself was going to mention YNAB, you need a budget. Yeah, that's probably the most popular one. It's a subscription service. You're going to pay for it. But you know what? When it's free, hello, Mint, I'm looking at you. When it's free, you are the product as much as the customer. You're being marketed all the time.

When I had Mint on my phone, I was being marketed all the time. Right. But you know, the reason that I almost kind of want to attract that question is because I think oftentimes people can get so caught up in conversations around product, what's the best app or tool to use, that the conversation around product ends up deviating from the more important conversation, which is around strategy. And I think David does a good job of asking about strategy within the question that he left us, the voicemail that he left us. And I love that because Paula, I'm I think what we're getting to that frustrates David a little bit. Like, why has nobody solved this?

I think we have actually solved it, David. And I think the answer is you have to start with you. You don't start with the tool that's the best tool, which is, I think, the beginning of David's question. Like, why haven't we solved this yet in financial writer world? Why not? That's because this is unsolvable. There is definitely a different budget for somebody who can live a life of, flexibility and opportunity and someone who really needs to know where every single penny goes

so that they can build that foundation. Because at the beginning of your journey, I think setting up that foundation as quickly as possible is so important. And if there's ever a time to sacrifice, Paula, that is the time to sacrifice. That's the time when I look at money that I blew and problems that I had with money. And I wish I could take back a lot of that and instead set up a solid foundation. Because what that gets you to is this place later on where you can instead of worrying about every single dollar, you can celebrate the fact that you've the ability to be much more flexible and fluid. And like David Allen says in his book, getting things done, you can be like water, which I just love that analogy. He talks about water in a stream and just

flowing which way the stream's going. Well, it's called cash flow. Nice. It is. Yeah, so have things flow the way, if there's an opportunity, you can take it. I think in the early days especially, the set plan and the lockdown will serve you well for. And you know what? The more you lock down, the shorter time frame you'll need to do that. Okay. So then to take this back to another food analogy, think of the Atkins diet. Not that I'm advocating for Atkins, but I'm thinking about the way that they've structured it,

where they've got phase one, phase two, phase three. And so depending on how much weight you want to lose, depending on the goal that you have and the situation that you're in, you might start in the induction phase, phase one, in which case the food parameters that you're given are very different than a person who's starting in phase two or even starting in phase three. Right. So I guess to go back to the food analogy, the same thing applies with budgeting. Like the degree of strictness versus flexibility that you would be seeking in a budget is going to depend on what phase of life you're in and what phase of your financial life you're in. That can just diet is what, all meat, right? No, it's essentially a very, very low carb diet.

But the number of recommended carbs differs depending on which phase you're in. So at the beginning, you just walk in. and get the bone and rib eye. That's it. Oh, no. Oh, no. You found a way to link this back to outback, didn't you? What?

Me? David, the last thing I would say to your question is, you know, you asked about how do you know, when you get to the weekend, how do you know if you have enough money to go out and party or if you should chill out at home for a little while? There are a few different ways that you could approach the question. you could, option A, designate a certain amount of money for that activity. So let's just say broadly the activity is weekend fun with everything that that encompasses, restaurants, bars, concerts, Uber or Lyft, like everything, the sports tickets, anything that's included in going out and having fun on the weekends, you could designate a certain amount of money that you want to spend every month for that.

and that's your bucket. And if you have money left over at the end of the month, it rolls over to the next month. But if you run out midway through the month, then you're staying at home for the rest of the month, right? Like that's one approach that people take. And if you want to compartmentalize in that manner, you can certainly do so. But an alternate approach that people take is to look holistically, and this is what I tend

to advocate, look holistically at your, overall spending because so much of spending is variable and seasonal. If you've had to pay your kids' summer camp fees, right, that's a big ticket item that only happens once a year. Or if you live in a place where utility bills are way higher in the winter than they are in the summer, all right, cool, you know that's going to take a bigger bite out of your budget during the coldest months of the year. In all of those ways, spending becomes really variable. And so to answer your question, do I have enough money to go out over the weekend? Sometimes it boils down to what's left in your account this month in the designated spending portion of your account, right? Assuming that you've

pulled the savings off the top first, assuming that this is overall the bucket of money that you can spend. Did you get hit with some other surprise bills that mean that you don't have enough left over to rent an Airbnb for Halloween and go out for some crazy weekend? I mean, yes. Sure, sometimes you get hit with a crazy bill and then you have to give up that weekend trip and other times you don't. And I think what I like about not excessively line itemizing everything is that we sometimes get hit with so many varied bills, everything from parking tickets to veterinarian expenses, that trying to line itemize all of that ends up being a lot of line items. And then if you try to compartmentalize all of that and you're like, this is the stash of money

I can spend on parking tickets this year. I mean, like, where does it end, right? This is the stash of money that I can spend on dollar. food and veterinary bills, I mean, why not just break through those barriers and just call it, this is what I can spend? And then monitor your accounts weekly or monthly to see how, or every two weeks, if that's how you get paid, to see how it all lines up. I know people that that variability drives them crazy. And they would much rather have a, here's how much I can spend on dog food this year, number, and have to break through that and think about it than not. And then I know

people, of course, that would rather have it all in one big slush fund and just figure out how much I have to save, save and stop there. So I think it clearly, it clearly starts with you. The frustrating piece of this, and I love what you said about not focusing on the tool, because I think people start with the tool instead of starting with themselves. So one frustration is people will use the wrong tool, but that also brings up an opportunity. Like, I also think that seeing yourself as a human experiment and something that says you can't go to make 20, 22 the year, Paula, of trying out a bunch of different budgets. Like, how fun would that be to say, I'm going to try out four different budgets during the year and see which one worked for me best. And then compare.

Oh, that would be fun. Like I do a different budget every quarter. Yeah. And just imagine if you're focused on what's the best budget for me, how far ahead you get no matter what. I mean, especially if you're starting without one. You're ahead because you've consciously thought about it. You're ahead because of the fact that you tried four different ones. You know yourself better by the end of the year. I don't think there's anything wrong with making yourself part of a human experiment, you know, make yourself the guinea pig, so to speak, I think is pretty exciting. That also leads me to something that I think is the most important thing way above tools. And it's this constant self-talk about my budget. And I think that what happens is we get really busy. We have so many things that go

on in our lives. And then a month goes by and we forget to look at things. So I think carving a little time out, and I don't know that it needs to be more than 15 or 20 minutes, but carving some intentional time out to just review your expenses. If it's mint, once, you know, like our buddy T.J. Go through all of your expenses, which maybe means going through your bank account. How did you spend money the week before? And just go look at those things. And I found that when Cheryl and I, for example, we do that together, we end up having these

conversations then all week long that are pretty organic because we have this 20-minute, quote, meeting that it really isn't a meeting. And to make sure it's not a meeting, we either do it over pancakes or wine, depending on the time of day. So we keep it quick. We just review what expenses we had. We talk about what we're spending the next week. And by the way, you don't want to do this with somebody else. You could do this by yourself, but make sure it's this intentional time that you're going through. What did I spend this last week? What am I going to do next week? And then your subconscious brain continues working on that problem all week. But I find that when I miss that meeting, my brain stays on other things and then I really start making the big more expensive mistakes

with my money. I think that's far more important than whether you use why nabberman. Right. Just finding a way to have this intentional, consistent time that you're going to focus on this for just a little bit. Okay. So we've talked about how strategy is more important than product or tool. But I think what you're saying is mindfulness is even more important than strategy. I think that's huge. And if you're doing it with somebody else, the communication that comes from that, well, actually, I can, I can do that both ways. If you're planning it by yourself, the self-talk, the self-talk about your budget, I think, is huge. And if you're planning with somebody, the intentional conversation that you're having with that person is also way bigger than the tool.

Excellent. Well, I think we'll wrap it up there with that takeaway of the hierarchy of importance, first and foremost, is that mindfulness. Beyond that comes the strategy. And then the specific product or tool or choice of budget that you use, whether it's the anti-budget or the 50-30-20 budget or the envelope method, whether you're tracking with mint or using Wynab, you need a budget. All of those. Surface-level details are actually the least important. So thank you, David, for asking that question. And best of luck with whatever budget you end up choosing. We'll return to the show in just a moment. The holidays are right around the corner, and if you're hosting, you're going to need to get prepared. Maybe you need bedding, sheets, linens. Maybe you need serveware and cookware.

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a fifth third better. Our next question comes from Elise. Hi, Paula. I'm calling because my husband and I aren't sure what to do next with our extra income. We just bought a house and all of our extra income was going into our house fund. Now that we've bought the house, we have a $10,000 emergency account that's fully funded. and we have between 1,500 and 1,500 left over every month. I've also been contributing to a Roth. Our accountant says that next year, we won't be able to contribute to the Roth

because we'll be over the income limits. My husband owns his own business. I work full-time for a company, and my company, in addition to my salary, puts 12% of my salary into a pension fund. So I have some retirement money, but my husband hasn't been contributing to a retirement fund. So I guess my question is twofold. The question is, how much should we be contributing to retirement? And also, where should we be putting our additional funds? Should we put them into retirement?

accounts, should we put them in an IRA? We originally thought that we would purchase a multifamily home as a rental property. But I think between my husband starting his business and us purchasing a home that needs some renovations, now is probably not the time to do that. I would say that's more in like a 10-year timeline. So in the meantime, we need to know where to invest our money. Thanks for taking my call, Paula. Elise, thank you so much for that question. A few things come to mind right off the bat. Number one, you mentioned that you soon will no longer be eligible for the Roth IRA as a

result of your income. However, you can still make what's referred to as a backdoor Roth contribution, which means that you first make a non-deductible contribution into a traditional IRA, and then you move the money from your traditional IRA. IRA into your Roth IRA. It's called a backdoor Roth contribution. So you can continue to contribute to your Roth IRA accounts through that mechanism. Second, you mentioned that you need to make renovations to your home. Do you have a renovation fund set up yet? If not, then that's the first use case that I see for this money that you're talking about. You'll need to set aside more than you

think you'll need for these renovations. Whatever amount of money you're expecting the renovations to cost, add at least another 20% onto that and set that aside. And that should, of course, be separate from your emergency fund. That's specifically a renovation fund. Beyond that, it sounds as though you do want to tap this money prior to retirement, based on the question that you asked, You talked about potentially buying a multi-unit property. I get the sense from the way that you structured your question that you want accessibility. You don't want to lock this money away until you reach your 60s. So non-retirement accounts, i.e. taxable brokerage accounts might be a good choice in that it gives you flexibility and access to this money.

And then if you're putting money in a taxable brokerage account, then it's simply a matter of choosing which investments you want to go into. Given that this has a 10-year time horizon, I don't see any reason to shy away from equities. So a broad market index fund or a series of broad market index funds that represent different underlying indices or even a small allocation towards individual stocks, I think any of those would be fine given the 10-year time horizon. Yeah, let's dive into the order of operations here, Paula, because I think this is a fantastic financial planning question that Elise has. And what a wonderful place to be where you're looking at free cash flow and how to capture that. Because as you know, so many people don't have any idea how much free cash flow they have. And because of that, they spend a lot of money on things that they really don't care about instead of making sure that they get this future that they deserve. So the order of things, if I'm a lease, is to map out what she wants. And the more crystal clear she can become on that, the easier the planning gets. And I know this is the most difficult part because often we don't know what we want. And if we don't, that we generally solve for flexibility.

But if we put a baseline on what Elise wants in the future, if it's to maintain the lifestyle that she has now after X day but not have to go to work anymore, I think that's a fine place to start if you have no idea. Just try to do that first and then solve for how much money do I need to set aside for that type of a future that begins on X day. That date that she sets her sights on determines then the tax strategy. So the second piece then, Paula that you mentioned, which is the the Roth IRA is absolutely fantastic as long as she wants it after a certain date in the future. If it's early money that she wants it for, which to your point, it doesn't sound like she does,

then that's a fantastic. That's the number one tax haven to put money inside is the Roth IRA. Choosing investments inside that also is the second piece. So how do I structure the tax ramifications, Roth IRA first? Are there any opportunities? Let's go through some of the opportunities she might have available. She mentioned that her company puts 12% into a pension for it. How great is that?

Yeah, right? That's amazing. That is fantastic. So is there room in a 401k or retirement plan at her work then? Is there room for her husband to set up a retirement plan through his own business? Can she do that? That's the next thing. generally speaking, there is a cost to setting up a retirement plan, and that can go from an

incredibly low cost if it's a one-person operation to a huge cost of its hundreds or thousands of people that he has in the company. So without knowing those details, I don't know what is best, but I will say this, the least expensive option out of pocket is probably contributing to hers first because somebody else is picking up the fees. That doesn't mean, by the way, that she might not have fees in those investments. She very well might. So she still needs to know what the fee structure is inside of her retirement plan.

But in terms of setting it up costs, she won't have to have any of those. Yeah, the administrative burden. Those are already taken care of through her employer. But then certainly I would look at his work and see if there's opportunities there. Yeah, there could be. So the simple IRA or the solo 401K, those could be, those are both good. options for people who are self-employed? If it's if it's just him, the solo 401K, of course, if he's got 100 people working for

him, won't work. So we don't know enough about that. But assuming it is, is a small business, he's got, he has some opportunities available there. Beyond that, you know, you and I talk all the time, Paula, then solve for flexibility. What are some fairly tax-efficient ways of investing where you won't have, a lot of friction, of tax friction, but can also have the money in a place where it should be. And you pointed out equities is one of those places.

And something like an exchange traded fund that mimics one of the big indices or the total stock market is a fine place to start. An exchange traded fund will be more tax efficient than a mutual fund because exchange traded funds enjoy some tax loopholes that mutual funds don't. So if I'm given the choice to do one or the other, I'll choose an exchange trade of fund over a mutual fund. But I also like an index so that I'm not buying an individual position. And I don't have to consistently weed that garden, so to speak. I don't have to, I don't have to track the stock and make sure that the company is still doing what I originally intended for it to do.

Beyond that, I thought about something else too, which is when you start your own business, And this is the powerful thing about starting your own business that people don't think about. We think of having a business as an income stream for today. But Paula, a business can also be part of your retirement strategy. I mean, part of the reason I'm talking to you today right here is because at age 40, I was able to sell my business and then do something that I preferred to do over being a financial planner. Wow.

So you're the original early retiree. I'm not the first one. I'm sure there was somebody before me. Maybe one or two. But you know what I mean? I think that I think that looking at the resale value of his business and building it with an intention to sell it in the future is also something I think any business owner should look at. How do I increase the value of this business? And I'll tell you what happens because a lot of people don't think about their business that way.

They run their business sub optimally. and when you build a business with the intention of selling it in the future, what do you do? You end up creating systems. You create processes. You get rid of some of the things that slow down the business growth. You start thinking about business growth. And you do this marvelous thing with your business, which is you, in a lot of cases, make it better. The business serves the customer better and it serves you more.

A guy that has a podcast that I like a lot on this, and he's written some books on it, his name's john warlo if you are searching for him it looks like it's warrillo so it's w a r r i l-l-o-w and his podcast is called built to sell it is profiles of business owners and how they set up their business to sell it and his books and his company is all based around how do you set up a business um i like his writing i like his podcast john warlo is a a fantastic resource for any business owner who's looking to tweak how they run their business. The book The E-Mith by Michael Gerber, also a good resource. That is my number one favorite book in the world of business.

I mentioned John first because of you're listening to podcasts and you want to plug into another podcast, but about that specific topic. Yeah. John is a podcast. Michael doesn't. Yeah. Yeah. Well, when I say book, I consume most of my books in audio.

book form. Yeah. Yeah. Michael is fantastic and the E-Mith. I heard about the E-Mith first from the President of American Express when I was working for American Express. And when you have people that are running one and two-person operations and the E-Mith is their favorite book. And the president of American Express also says the E-Myth is his favorite book, a gentleman named Ken Chenal. You know this is a book with a lot of great universal truce. A book that can scale with you. Yes. Yeah.

Absolutely. And the long and short of that book, by the way, is develop processes, develop systems, have an organizational chart. Even if you're a company of one person, have an organizational chart to outline all of the roles because there's a distinction between the person and the role. So form that org chart, even if it's a one person company, because you want to see how these roles interact with one another so that eventually

you can replace yourself in certain roles. Like, in other words, the org chart must be identity agnostic. Yeah. That, by the way, Paula, helped me in two ways. Number one, it showed me what I wanted to delegate first. Because I realized when I had all these different functions that I was doing, I knew which one I needed to delegate. And it also helped me with a second thing. When I say delegate, what a lot of business owners do in the book does a great job of pointing this out, most business owners abdicate.

They don't delegate. They go, oh, you've got a bunch of experience, Paul, in this area. Why don't you take that over? And then I completely forget about you. I forget about that whole business function. I don't have any process of oversight. Then I burn out the person that I handed that to. and when the person leaves because they're disgusted that I have no oversight, no opinion, I've just handed it to them and it's not their business, it's mine. When they quit, I don't even know what they did. And that will sink your business if you abdicate instead of delegate. And it's hard.

There's an art to being able to get that right. It's incredibly difficult. Anyway, to get back to, Lisa's question. Because we've gone down the business as asset rabbit hole. Yeah, exactly, exactly. Investing some of that money into that business, you know, reinvesting back into the business that he runs could be an excellent use of that money. But it's much more volatile. And the returns are harder to predict and harder to quantify. You know, you know when you're looking at a stock chart. You can look at VTSAX and see how it's performed over the last 30 years. It's very

hard to quantify the ROI of an extra thousand dollars into a business that you own and operate yourself. And there's a risk with any small business. There's always a risk that it might collapse. But if it works out, it can work out big. Which is where I think before you invest in more infrastructure before you invest in new tools, I would invest in the E-Mith or built-to-sell. Oh, you know what? Actually, no, zooming out from that, forget the specific recommendations that we're making, again, because there's a distinction between product versus strategy, right? Forget the specific product, in this case, the specific pieces of content that we're recommending.

Zooming out from that, the bigger recommendation is investing. in lifelong learning. Invest in taking courses, taking classes, getting mentorship, getting coaching. What Stephen Covey, the author of Seven Habits of Highly Effective People, refers to as sharpening the saw. That's another type of investment, similar to investing in your own business, where the returns are incredibly difficult to quantify, and there's always a risk that it may not have any payoff because that's completely up to you, so the payoff might be zero. But if it does pay off, it can be the highest earning returns that you ever experience. And going back to David's question, what a great part of the budget that is.

Right. Spending X percent of it on your own education. Same thing with a time budget as well. I've been thinking about that in terms of the team here to afford anything, trying to encourage them. I just started a Slack channel called Sharpening the Saw, started it yesterday. you know, encouraging them to devote a chunk of their paid working hours to acquiring new skills. You know, that's an investment I'm willing to make that I'm happy to make.

You know, knowing full well that any of them can quit tomorrow and they get to keep the benefit of everything that they've learned, they get that for life that they're doing on company time. But I'm, you know, happy with that because my role as an employer is to make space for the people in my team to develop these skills that will benefit them for life to sharpen this all and to plant such a stake in the ground is like the priority on lifelong learning that I'm willing to put my money where my mouth is. You know, I'm willing to pay people to learn. At anyway, I feel like we're straying far from Elise's question. I think we gave her a lot of great ideas, though, on where to put it, at least where to start, and I think that order of operations is super important. Right, exactly. And I think

big picture, what we're trying to say is, sure, you've got taxable brokerage accounts and index funds and maybe a small allocation of individual stocks. Those are all examples of product, once again. But product is less important than strategy and objective. Like David's question, it goes back to what do you want and what are you trying to achieve. And if what you're you're trying to achieve is greater business growth, well, then that's informative. Whereas if what you're trying to achieve is diversification away from the business that you run, the business that your husband runs, well, all right, then that's also informative because it means that then you don't put that money into the business. It means that you diversify out of it by sticking with

market investments. And if what you're trying to achieve is a combination of both, you want to grow his business and you also want to diversify a little bit away from it. Well, heck, you can always split the money. Use half of it for each purpose. So thank you, Elise, for asking that question. We'll come back to this episode after this word from our sponsors. Our next question comes from Jeff. Hey, Paula. My name's Jeff, and I have a question about how to deal with a large amount of capital gains in taxable brokerage accounts as I enter semi-retirement. I'm 50 years old, and I've reached financial independence through what I think of as dumbfi. Basically, about 20 years ago during the first dot-com boom, I was lucky enough to sell a small

web company, not unicorn money or anything like that. I took home maybe $500,000 maybe. And at that time, I just took that money, bought a bunch of individual stocks. I'd do it differently now, by the way, but bought a bunch of individual stocks, set the dividends to reinvest, and then had more or less pretended that that wasn't there for the last 20 years. I continued to work in the tech industry, lived within the means of that employment, didn't dip into the savings, and saved a little bit more, but mainly let that in the original amount grow. So today, as a 50-year-old, got about $6 million in investments plus a paid-off house. But of that $6 million, only $1 million in retirement accounts.

The other $5 million or so in taxable brokerage accounts, and a huge chunk of that is capital gains, like at least half, maybe more. A most extreme example, you know, bought Microsoft stock for about 50,000, and that's worth $820,000 now. In terms of current income, we get dividends of about $60,000 a year. I do a little consulting a couple hours a week, and my wife tutors at the local elementary school for fun, and that's another 50 or $60,000 a year. So, you know, this is a great lesson, I guess, in the power of compounding and time and patience and living within your means.

and I'm super appreciative and feel lucky of that. But I'm kind of at a loss of a strategy for how to start realizing these capital gains in a way that makes sense. For example, do I sell stock every year, even if I don't need the cash just to spread out the gains? Do I sell large amounts or small amounts, kind of like reverse dollar cost averaging? Is there a strategy of which stocks I should sell first, like income generating versus those that have appreciated the most? In terms of my philosophy, I like simplicity, peace of mind. I don't want to deal with this stuff. I'd rather just be hiking and skiing and traveling instead of pouring over spreadsheets.

So I want to be smart about it, but I don't want to obsess over the perfect optimization. So I'd love your and Joe's thoughts on a strategy of how to move forward. Love your podcast and the community you've built. I really appreciate it and would love any advice you could offer. Thanks, Paula. Cheers. Jeff, thank you so much for the question. Congratulations on everything that you've built.

So congratulations on a cheque. achieving dumbfi. And I want to compliment you on your philosophy. As you said, you want 80-20 optimization. You want to make sure that you are directionally doing the right things. You want to make sure that you're picking all the low-hanging fruit, but you don't want to get so lost in the weeds that you end up missing out on life, pouring over spreadsheets instead of hiking or skiing. I love that philosophy, and I want to encourage everyone listening to consider adopting a similar philosophy, because often, anecdotally, I have seen people one extreme or another. They either are oblivious to their money, or they swing the pendulum way too hard in the other direction and get so lost in the weeds that they end up losing sight of life and living entirely out of a spreadsheet. So, kudos to you for that philosophy. This is, Jeff, a fairly complex financial planning question.

So this is a question where before I answer it and I will do that, I would definitely encourage you to work with someone who knows you and knows your goals because there are going to be some strategies. and while you would love to be skiing or hiking, unfortunately, the downside of this is that you're really going to need to know what the strategy is. The good news is that once you know how the strategy works, I think that it can pretty much run itself. But I'm going to tell you two different roads that you can go down to keep it very simple for the podcast and then you can dive into it on a more granular level. from there. But the first option you have is that the IRS is going to be your ride or die partner, meaning that for most people in the United States, the capital gains tax is a flat tax. And whether

you cash in a lot in one year or just cash it when you need it, it really doesn't matter because it's not a graduated tax system like in income taxes. So if you sell it all at once, the tax rate's going to be the same for most people as it. if you do it a little bit at a time. So if you're going to leave things the way that it is, I would look at this as if it's a money tree and I would just pick the shares off when you need them and sell them and realize that 20% of that is going to go to Washington.

That is the simplest way to do this. It is the most flexible way to do it, and it's also the most expensive. That said, keeping four out of five dollars isn't a bad rate when compared to earning $600,000 a year. Through W2 income, yeah, or through income that's passed through income to your personal taxes. Yeah, this can be a lot less onerous. Now, to give you an idea of the complexity of the strategies that you can use to mitigate that,

and pay less tax, especially for people that have beneficiaries or charitable intentions, there are trusts out there where you take these highly appreciated stocks. You mentioned Microsoft. So let's go with that stock. You take the highly appreciated stock. You place it inside of this trust and then you sell it. And when you sell the stock inside the trust, you will either have a greatly reduced or zero tax penalty. here's the problem.

The problem is these trusts are irrevocable, meaning once you set this up and you move the money into that trust, you can't change your mind. You can set up a structure where the trust pays you an income stream for X amount of time. And if you put enough money in the trust, I've seen people take this with a lot of money. they end up taking out all of the money that they put in over a number of years and get all the money back, maybe even get some of the interest back, and they still donate a heck of a lot

of money to the charitable organization or whoever it is on the other side and they have zero tax or very, very small amount of tax that they pay. I'm not going to get into any more than that because Paula, it is highly complex. It is very complex. and the fact that it's irrevocable should scare you. But if your goal, if you know that you have a consistent income need for yourself and you know what that's going to be, and you're okay with not varying that income stream that comes to you from year to year and you have it be like a pension where you're getting the same

amount every year back out of this trust that you set up. and you have charitable intentions, that could be a phenomenal strategy that would reduce the tax on this money that actually serves three purposes. First, it reduces the tax on the money, but second, it also brings along a charitable side of what you're doing. And by the way, Paula, what's cool about this is a couple of things. Number one is you're helping your community, you're giving back to your community. That can be fantastic.

second thing that's really cool is even when you give a forward-looking gift, meaning a charitable organization knows that they're not getting all of the gift today, but they do know it's irrevocable so they know they're getting it on the selfish side. And this is a horrible way to think about things. But I've been around charitable organizations long enough to know that people like being recognized. A lot of these college campuses that have people's names on the building those are forward-looking gifts in an irrevocable trust. And the university sometimes doesn't have the money yet, but they are willing to put your name on the building

because of the fact that you gave a bazillion dollars. Now, Jeff might not be giving that kind of money, but there also may be things that in his community, he is recognized for a gift today that he's actually going to give over time later because the gift is irrevocable, the organization is very happy to recognize him in his community. That's not a reason to give, by the way.

I want to be clear. Don't give money to an organization because you're going to get your name on something. Give it because you love the thing. But there also can be some benefits to that, which are also nice. And the third, the third thing is, I think people think that when they give money to a charitable organization, that they can't, they can no longer access that income. With the right trust work, you can still get at some of that money.

And as I mentioned earlier, sometimes it's the entire amount that you give. As long as you're taking out it is slow enough rate and the money continues to grow, that your gift to the organization is still fulfilled and you're able to also get an income stream from that cash and avoid the capital games tax on that money. So there it is, Paula. it's going to be complex for a little while, possibly, or he just has his ride or die partner be the IRS, which is simpler and more expensive, but also not irrevocable. He can change his mind that way.

Right. I'll just mention two other details. Number one, Jeff, if you have any capital losses, if you've made any investments in GameStop or AMC that ended up tanking, you can, of course. have your capital losses offset capital gains in the year that you harvest them. So if you do realize any paper losses, you know, turn your paper losses into real losses, you'll want to time when you do that in such a way that that loss can offset a gain. That's one point. The other point is that if you don't want to go through everything that Joe was just talking about,

if you're not trying to create an income stream from a trust, but you instead taking a simpler route, just want to make sure that at least a portion of the money that you've grown is spent on some charitable activity that you value. You could create a donor advised fund. In fact, not just you, everyone who's listening, donor advised funds are very, very easy to set up. You don't need a bunch of money in order to do it. I've got one. A lot of my friends have them. And a donor advised fund allows you to donate your appreciated stock into that fund

and have the full amount of the appreciated stock then go to charity. So you yourself individually, personally, won't benefit from it. But you know that whatever charity you support ends up getting, a much, much bigger chunk of money. That is a wonderful point, Paula, because one thing, Jeff, that you should never do ever again is give cash to charities. I would always, always, if I'm you, donate stock to the charity. Absolutely.

Just change around the way that you spend money. If you were going to give cash, keep the cash, use that for your groceries. Use appreciated stock to give to the charitable organization. 100%. 100%. Yeah, that's how I do all of my charitable giving is I donate appreciated stock into my donor advised fund, and then I make distributions out of my donor advised fund to whatever nonprofit I'm supporting that year. Mine, by the way, is set up through Schwab Charitable, Charles Schwab.

So if you just Google Charles Schwab, look up Schwab Charitable, super easy to set up. And I say that, Jeff, not just for you, but for everyone who's listening. So thank you, Jeff, for asking that question. and definitely whenever you make a move, get a tax professional on your side. Our final question today comes from Jenny. Hi, Paula. I recently learned that eye bonds have reached over 7% interest. I'm thinking my husband and I should buy the maximum amount of 10,000 each.

A bit about us. We recently refinanced our mortgage to 2.875% with the thought that we would stay here for another five years, but then move to a larger place. We have one child and we'll try first. second in a year, so in five years, if we're both still working from home, we expect our three-bedroom house will feel smaller than we'd like. If we stay in our current high-cost-of-living area, we'd likely be looking at a 200k-20% down payment. We have at least 140K in equity in our current place, and some market estimates of our home would put us at almost 200K. I bond seemed like a great

option saving for a down payment and closing costs in five years. I see three potential downsides. seems to be reset every six months. Is there a risk that it will substantially drop? Second, with I bonds, we can't cash out for a year. This seems fine, as I feel fairly certain that we would not want to touch this for a year. We have a 40K emergency fund of six months of expenses, and we were reasonably able to weather a layoff by tightening our belts and living on one income, even not tension this fund. Our combined income is now 270K. Number three is a greater risk, there's a possibility we'd want to move sooner than five years. We could probably make due without these exact 20K funds if we really wanted to move before then, as we have 130k

in a taxable brokerage, about 100K in Roth funds where we could tap our contributions without penalty, although that's generally not our preferences. We're saving those funds along with our pre-tax retirement funds towards Coast Fire. The three months of interest penalty for I-bonds for tapping before five years, though, seems quite small. For where the funds will come from, I'll receive a 12-pay bonus this year, and about 10% of our taxable brokerages and bonds, which haven't done so well. So we could substitute that for iBonds. Our iBonds are low-risk way to get fairly substantial returns now? We'd love to get your thoughts. Thank you for everything that you do. Jenny, thank you so much for that question. First, for the sake of everyone listening,

I want to clarify something that you said in your question. So in your question, you mentioned accurately that when you put money into eye bonds, you can't take that money out for the first year. Later in your question, you also mentioned that there's a penalty of three months of interest for taking money out in fewer than five years. Now, to the people who are listening to this, who might have heard that and gone, what? Wait a second. Is it one year or five years? Here's how it works. During the first year, you cannot take money out. And during years two through five, you can take money out, but there is a

penalty of three months of interest. And Jenny, I agree with you. That penalty is so small that it's a little bit of a who cares. So I agree with you in that that penalty is nothing to worry about and basically a rounding error and just not something that's even worth sweating over. Yeah, Jenny, I think I'm right there with Paula. And when it comes to making this move, I'm all for it. I don't know about you, Paula, but I think this is a great move. That interest rate might be reset. So it's a combination of a fixed interest rate matched with whatever's going on with inflation.

And the reason why we have such a high rate is because of the fact that the consumer price index went up by, I think, the numbers of a billion last quarter, Paula. So because of that, we now have this opportunity. And by the way, by opportunity, don't mistake this. What this product is intended to do is to keep up with inflation. It isn't something to make a bunch of money, but it is something to preserve some of your capital, your buying power while prices are going up. So while some people go, wow, 7.

whatever percent and think this is a phenomenal giveaway and the Treasury must have made a mistake, no. On the other side, you're looking at prices going up very quickly lately. And this is just a counter. So while we may frame this, Paul, is a great thing. I don't look at this as a great thing. Right. I look at this as kind of a reaction to a scary thing.

But I would definitely make this move as long as you can stomach that moat of leaving your money in place for one year. I think that's good for short money. Now, when you talk about your bonds and bonds not performing well, this is not a bond the same way that a corporate bond is a bond. A corporate bond can be bought and sold at auction. And that's going to depend on interest rates, which we think are going to probably go up. However, the markets for bonds are often forward-looking, meaning that for a long time, bond traders have been pricing into bonds the fact that they think that interest rates are going to go up. I mean, this has been several years now that we've seen this. So while bonds are underperforming, I look at this differently, Jenny.

I actually look at when you look at an asset in your portfolio and not a specific investment. like, you know, Jeff mentioned Microsoft. Microsoft versus the category of bonds are looking at two different things. If you look at Microsoft, you should look at how that company's doing, how they're doing versus competitors. Are they keeping up? Are they making new products? Do they have great free cash flow, things like that? When it comes to a category of the market, whenever you hear yourself say, this category is not doing very well. So I think I should sell it. Realize that over long periods of time, there is always a reversion to the mean. There always is. So the time that most investors think is the time that they should get rid of it is often the time of the most opportunity in that

asset class. The time when we're high-fiving ourselves and we think we're doing phenomenally well, I'm looking at you tech six months ago. And if you're in tech now, you're seeing the other side of that. When you're high-fiving yourself, that is actually the time of the greatest risk in that asset class. So I may sell your bond funds if I'm you, but I don't do that because of the fact that bonds haven't done well lately. I would only do it because it doesn't fit

the asset allocation you need to reach your goal. Bonds in general will do what bonds always do over long period. If you have bonds in your portfolio for a long period of time, bonds will rebound. They will do what they've done over longer periods. I get the short term. Bonds have been horrible, a rotten place to invest money.

That's not always going to be the case. So in closing, I don't think that your bond funds are the same thing as an I bond. I think we're looking at actually, Paula, two different things here. So from an asset allocation perspective, they're not interchangeable, but from a should I buy I bond's perspective, for Jenny, that answer is yes. Yeah. Yeah. Yeah. I agree.

You know, Jenny, there was something that you said, which was the fact that you recently weathered a layoff by tightening your belts and living on only one income. That, I mean, I was already convinced even before you said that, but that really extra convinced me that you absolutely can lock this money away for a year. You've already been through the layoff. You've already experienced that financial stress. And the fact that you were able to get through it with your money. emergency fund intact, and now you're on the other side of it looking ahead and saying, hey,

how should I invest my money? I mean, that tells me that you're in a very solid financial position and that there won't be a problem locking this money away for a year. And I agree, it's a great way to give yourself an inflation hedge, especially right now with the cost of everything from homes to cars to gas. and groceries absolutely skyrocketing, that inflation hedge is more important than ever. Equity's exposure can do that as well, but most people don't want to be 100% equities. And real estate is also a good inflation hedge, but of course that comes with its own set of

complexities. So thank you, Jenny, for asking that question. Joe, we've done it once again. I can't believe it. It's over. And I still had three references to Outback Steakhouse left. Oh, what were they? What were they? Let's hear them. Well, I didn't mention Tripp on the Barbie. Trip on the.

Outback is, boy, Paula. Well, okay, what Barbie like barbecue? It's an Australian. Australian slang. It's an Australian chain. So they have their shrimp on the Barbie. Is Outback? I don't think Outback is actually an Australian chain.

Oh, my. Where? Where? I don't. I mean, okay, sure. Maybe they're referencing. the outback of Australia. The whole thing.

They serve fosters. That's the second thing. Foster's is like their signature beer. Nobody in Australia actually drinks fosters, though. The oil can of beers? I call it the oil can of beers. That's what Americans think Australians drink. Australians don't actually drink fosters.

I don't know. Okay. My Aussie listeners, please. Chime in. Chime in, yeah. I'm sure they're going to be all about the outback. Like, oh, yeah, hear me. in Brisbane, it's all we do is eat it out back.

All we do. We get the blooming onion. Yes. Just before we go, hang out with the wallabies. I don't know. The a kidnas. I got no idea. Well, if you're in Brisbane, then you're out at the Great Barrier Reef.

So, yeah, that's a great place to be. Great Barrier Reef is up further north. It's like by canes. Whatever. You're surfing, aren't you? If you're in Brisbane. then you're surfing. Yeah, yeah, you could be surfing there.

Yeah, there you go. All right. I got something. I got some reference. Would it be great? Somebody was complaining, by the way, about sex in the city lately. And I will admit, I do not watch sex in the city. Yeah, they have that reboot.

Yes. And just like that, I think is what it's called. Yeah. As tough as it is for me to admit that I don't watch it, I don't watch it. But I have heard lots of complaints, though, that there are tons, Paula, of product placements on the new one. Like they're consistently and constantly showing off different brands of liquor or products they use or whatever. And it's painfully obvious.

And I don't know myself, but we may want to think about that as an alternate income stream. Paul is, I'm sitting here with my blooming onion. And drinking your, what was that sparkling water that we were talking about on a previous episode? Oh, come on, spin drift. Spin drift. Yes. See, we're giving this away. We're doing it wrong. We're giving it away. Yeah. We're talking about good business advice. Yeah, seriously. Look at us missing the boat. Yes. I think, though, in fairness, for people that don't know that we're joking, we will continue to miss that boat. Yeah, 100%. That is a boat we will continue to miss. I will continue to make jokes about different products and pretend that we're going after marketing money. And we're not.

We're not. Yeah, exactly. There will be no product placement. You know, I'm a big believer in having a firm line between advertising and editorial. And that comes from my journalism days. It comes from working at a newspaper. You do not blur that line. And one thing that I will use the word hate, even though it's a strong word. One thing I absolutely hate about many blogs that are out there is that they blur the line by having content that's basically an advertorial. I see so many campaigns, Paula, where they don't disclose that they're being paid and it drives me crazy. And by the way, these are the same people that are all over and on one hand rightfully so, a lot of commission based financial planners. And yet they will, they'll take product money and do a blog post or an Instagram campaign or whatever it is and not disclose that it's a paid campaign. Isn't that the same thing? Right, right. And it's fine to take that money, but like, disclosure needs to be there. Disclosure totally needs to be there. When you hear an ad on the Afford Anything podcast, it's clear that it's an ad, right? It's obvious that it's an ad.

Right. So there is never any question as to what is editorial content, what is advertising? It is abundantly clear which is which. And it needs to be. Exactly. It's so needs to be. And it drives me crazy. But Joe, as you sit here drinking your spin drift and waxing, poetic about the outback. Yes, exactly, exactly. Tell us more about where we can find you other than Texas and or a chain restaurant. Where else can we find you? You will find me at the Stacking Benjamin show every Monday, Wednesday, Friday, along with Paula and a bunch of really cool people. that are on that show, we call ourselves a three-ring circus because of the fact that we always have just great, fantastic people that we've curated ahead of time that are great voices in our community.

So that's Monday, Wednesday, Friday. But can I take a second, Paula, and just thank the afford anything community for a second? Yeah. I know you were nice enough to have me on an episode outside of this talking about my new book Stacked. As you and I are recording this, well, to tell everybody, and thank you so much. to this awesome community. We debuted on number one on two different Amazon charts, which is incredible.

Hopefully we reach a lot of people that haven't reached financial literacy, don't really know what they're doing. And hopefully they get a great beginning on this journey that I think all of us are already on. As I looked at the chart again just before we started recording, we're number 18. in all of business books, which is amazing and fantastic, that a little, that a little personal finance book would be competing with Bray Brown. And don't get me wrong, she's number one. We're number 18. And we're probably, Brené, you probably don't have to worry about us that much. But I would love it if she did because that means we're spreading the word on financial literacy.

Anyway, it's been fantastic. So thank you to the whole community for supporting the project. And on behalf of Emily Guy Berkin, my co-author, just a huge thanks. I'm so happy to hear that, Joe, and I'm happy to hear that your book debuted at number one on multiple charts because it is an excellent book, and that is very well deserved. Well, thank you. And I'm not just saying that because you mentioned me on page 13. She actually, for people listening, she was very upset that she wasn't on page 12. My first words, I was like, lucky 13, huh? What could go wrong with that number?

And actually in the audiobook, if you listen to the audiobook, it's funny because we have a great, in the first chapter, we talk about this great idea of timeline of your goals, which we talk about a lot here. We actually talked about today, beginning with the end of mind. and the first we do snippets of different interviews I've done, but the first one is actually from the Afford Anything show. The rest of them are from Stacking Benjamin's, but the first one's from Afford Anything, and you hear Paula talking about timeline of your goals, and then I talk about it after her. So you will hear what sounds like me just reaffirming how awesome Paula is when she introduces this.

Well, this is my new favorite audio book now. It is super. fun. We've got, yeah, mom's in it, Emily's in it, I'm in it, it's very fun. And lots of different interviews. But anyway, big thanks to everybody. Awesome. Well, thank you, Joe, for spending this time with us. And thanks to you for listening and for being part of the Afford Anything community. So if you want to discuss this episode with other amazing people in the Afford Anything community, go to Affordanithingcom slash community, where you can chat.com. with people based on your life circumstances, such as the decade of life that you're in,

or whether or not you are pre-retirement, post-retirement. You know, you can chat with people based on life circumstances. You can chat with people based on topics of interest like real estate or index fund investing or cryptocurrencies, whatever it is that you're interested in, whatever phase of life you're going through, whatever geographic region you live in, you can find your village of people there. So afford anything.com slash community to chat about this episode or any topic related to financial independence and personal finance.

You can find your village there. Completely free. Thanks so much for tuning in. My name is Paula Pant. This is the Afford Anything podcast. If you enjoyed today's episode, please open up whatever app you're using to listen to this show and hit the follow button. That way you won't miss any of our awesome upcoming shows.

and while you're there, please leave us a review. These reviews are incredibly instrumental in allowing us to book amazing guests. I want to give a shout out to someone who left us a review on Apple Podcasts. They go by the name True Blue, and they said, quote, Initially, I started listening to boost my financial literacy, but this podcast is more than just finance. You can take the information given here and apply it to so much more.

Paula is so knowledgeable and is a great interviewer. the Q&A episodes with Joe are a treat to get well-rounded answers that consider different points of view. I feel a lot more confident in my financial knowledge, thanks to Paula and her guests. I'm so happy to hear that, True Blue, and thank you for taking the time to leave us a review. I also want to give a shout out to V. Glenn 1417, who said, quote, I started listening to Paula at the start of the pandemic. Because of this podcast, I've been inspired to pay off debt, spend less, earn more, and invest for the rest of my future. All of the guests she brings on are so knowledgeable and inspiring,

and I look forward to listening to her podcast every week. I'm proud to say that I'm debt-free, have been able to increase my savings rate to over 50%. What? Steve, can we get to sound effect here? And I'm on the path to retire early and be financially independent. Thank you for all that you have done in the personal finance and fire community, Paula. Well, Vigland 1417, congratulations to you for doing all of the work, for becoming debt-free, for boosting your savings rate, to over 50% you're saving more than half of your income. That's amazing. So huge, huge congrats to you for doing the work.

And I am so honored that I could be even a small part of this journey, as could the rest of the fire community. So big thanks to V. Glenn 1417, to True Blue, to Jeep Man, 415. to JWE 2022, to everyone who has left us a review. If you haven't done so yet, please go to Apple Podcasts or whatever app you're using to listen to this show and leave us a review. Leaving a review is one of the ways that you can help support the show and become part of the community. You can also subscribe to the show notes at afford anything.com slash show notes. Thanks so much for tuning in. This is Paula Pant.

Oh, one more. You can find me on Instagram at Paula Pant, Pau LaPant, P.A. A. P-A-N-T. All right, I'm done. Okay. Thank you again. And I will catch you in the next episode. Here is an important disclaimer. There's a distinction between financial media and financial advice. Financial media includes everything that you read on the internet, hear on a podcast, see on social media that relates to finance. All of this is financial media. That includes the Afford- Anything podcast, this podcast, as well as everything afford-any produces. and financial media is not a regulated industry. There are no licensure requirements.

There are no mandatory credentials. There's no oversight board or review board. The financial media, including this show, is fundamentally part of the media. And the media is never a substitute for professional advice. That means any time you make a financial decision or a tax decision or a business decision, anytime you make any type of decision, you should be consulting with licensed credential experts, including but not limited to attorneys, tax professionals, certified financial planners or certified financial advisors, always, always, always consult with them before you make any decision.

Never use anything in the financial media, and that includes this show, and that includes everything that I say and do, never use the financial media as a substitute for actual, professional advice. All right, there's your disclaimer. Have a great day. All right, let's head out back.