Afford Anything - Q&A: Are AI Stocks About to Crater?

Episode Date: February 3, 2026

#686: Rachel: Rachel is new to investing and has noticed the stock market being dominated by AI companies. She wants to make sure her portfolio is balanced without overexposing herself.Should she rethink her index fund strategy to protect against a potential AI bubble? Sarah: Sarah just turned 65, owns her home outright, and has been relying on credit cards since losing her job last year. She’s weighing whether to claim Social Security now, pay off debt, remodel her home, or convert her traditional IRA to a Roth.How should she prioritize these major financial moves while balancing income, debt, and retirement accounts? Anonymous “Julie”: This listener is on COBRA after her spouse took a federal buyout and is exploring starting a small business with her two young kids to teach them entrepreneurship.Will employer-provided health insurance fade away, and how can she test business ideas before fully committing? Resources Mentioned: Books:  So Good They Can't Ignore You by Cal Newport The E-Myth by Michael Gerber Traction by Gino Wickman The Lean Startup by Eric Ries Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hey, Joe, look what I got. Bubbles. Bubbles. For those of you listening via audio, I am literally blowing bubbles right now. And you know why? I don't know. Because it's a celebration. Because it's a celebration, but also because everyone wants to know, is this a bubble?

Is this an AI bubble? Okay, I didn't see that coming. And by the way, it may be an AI bubble because I shouldn't admit this, but this isn't even me. I just set my AI personality along today. Oh, this is AI Joe. This is AI Joe. Chat GP Joe. Real Joe can't be bothered.

All right. So we're going to tackle the question today. Are we in an AI bubble? What should investors, particularly new investors? What should they do? How should they be thinking? You know, the start of the year is when a lot of new people began investing. People who set the New Year's resolution of this is the year I'm going to

finally max out my Roth IRA. This is the year that I'm finally going to hit my 401k match. A lot of people set New Year's resolutions. So this is a new investor time of year. And we're going to dive right in by talking about that. We're also going to answer a question about health insurance. We're going to answer a question about starting a business that your kids can work in. And we are going to answer a question from a woman who is living off of credit cards and wondering what should do. We could do all that in one episode. We got a lot of ground to cover, Joe. Welcome to the Afford Anything podcast, the show that knows you can afford anything, not everything. This show covers five pillars, financial psychology, increasing your income, investing, real estate and entrepreneurship.

It's double eye fire. I'm your host, Paula Pant. I trained in economic journalism at Columbia. Every other episode-ish, I answer questions from you and I do so with my buddy, the former financial planner Joe Saul C-high. What's up, Joe? Hey, Paula, you know how you make a Kleenex dance? How? You put a little boogie in it. No? And with that, we go to our first question, which comes from Rachel.

Hi, Paul and Joe. Longtime listener here, and I have a question about the supposed impending AI bubble, since so much of the stock market is dominated by it. I know you've talked a bit about portfolio allocation, but I'm curious if I need to be a bit more proactive with my index fund selections to have maybe a little bit more diversity, etc. I'm still pretty new to the stock market. So yeah, any help would be great. Thanks. Rachel, welcome to the stock market. I am so glad that you are a new investor. And I want to start by inviting you to consider that are we in an AI bubble is not the question, especially as a new

investor, not the question you should be asking. And here's why. Wondering what might happen in the future leads to reacting to that. If we're speculating about what might happen in the future, and I do want to directly address your question about AI, and we're going to do so in just a moment. But first, I want to question the premise of the question, because if we're making guesses about what might happen in the future, that guesswork leads to changing the actions that we take today. And statistically speaking, that is the wrong move. There's a lot of research out there. Study after study after study has found that people who try to guess what's going to happen

more often than not get it wrong, even professionals, even people who devote their lives to this, more often than not get it wrong. and make decisions that are worse over the long term than what would have happened if they had simply picked a broad basket of investments and made the same contribution every single month or every single paycheck and completely ignored what was going on in the overall market and didn't make any guesses whatsoever. Rachel, I love the fact that you're thinking about this, but the phrase being proactive and moving that way means I want to.

to be the first guesser, right? I want to be the person that guesses before everybody else guesses. And if I'm right, then my money goes up more than everybody else's does. There's always going to be something to guess on. There always has been and there will be in the future. No matter what happens with AI, there's going to be the next thing and the next thing and the next thing and the next thing to guess about. There's also going to be the thing to fear, right? We're afraid of this and we're afraid of that and we're afraid of the next thing. The first thing to do as an investor is to train your gut toward against all of this incoming stimuli and create an all-weather portfolio.

I mean, the big key to success is feel free to worry about it. And I can't stop you from worrying about it. Paula can't stop you from worrying about it. I worry about it. I'm sure, Paula, you worry about stuff. But going to the keyboard and making moves because of the fact that you worry about it, it or you want to be proactive and be the first mover, not the move to make. The best move is to create the all-weather portfolio. And here's the thing about that, too, Paula. If you create an all-weather

portfolio, you know how much of an AI upswing you will get? If AI continues to perform well, you're going to get it. If AI goes down, you're going to miss some of that downturn because of the fact that you're not 100% betting either way. Joe, can you define all-weather portfolio for people who haven't heard of this? Well, it's just a portfolio that's based on what your goal is and not based on the current economy or current stuff. If Rachel's looking at when she's going to spend the dollar, what is the type of investment that got you there, number one, with the most growth tied to the least amount of risk?

I want as much growth as I can get, but I also don't want to take a ton of risk getting there. And so I'm going to choose based on that timeframe and not based on what's going on between now and the day I'm spending the dollar. Right. And that points to broad index funds in a couple of different asset classes. I mean, if you want to go very, very, very simple, you could do total stock market, total bond market and a small slice of total international. I mean, that's a very simple way to start. You could expand into a little bit of small cap, maybe a little bit of value. As you journey from a new investor to a more intermediate investor, you might want to add a little bit of additional complexity by adding in a couple more funds here and there in slices like small cap or slices like value. Ultimately, you pick an asset

allocation that's tied to the goal and it's tied to the timeline and it's tied to your risk tolerance. You pick that asset allocation, which is just a fancy way of saying how you slice up the pie and you stick with it. And once a year, you rebalance either literally by buying and selling to get back to your target allocation, which is a fancy way of saying how big those pie slices are. You rebalance once a year either by buying and selling to get back to that or by making new contributions that buy into whatever didn't grow as much. And then you kind of ignore it. You know, like the best thing to do with your portfolio is ignore it. And that is the opposite of what most people think. Because in every other area of our lives, you get better at something by putting

more effort into it. In our jobs, you get better at your job. You get better at writing or coding or design by putting more effort into it. In sports or in athletics, you get better by practicing more, by training more, in learning a foreign language. Same deal, right? In every other area of our lives, effort yields better results. Investing is the opposite. The more effort you put into it, statistically speaking, the worse your outcomes are likely to be. The best thing that you do is, is take the time initially, which you're doing right now, to learn the basic structure of how to set it up. And once you've set it up, forget about it.

And do not pay attention to what's happening in the world. What's cool, though, Paula, is it still addresses her AI question. Because think about this. If Rachel's goal is 25 years from now, and we're in an AI bubble, you know what's going to happen. AI then crashes.

it comes back. Because you're in exchange traded funds, these are self-cleaning, meaning that any companies that do incredibly poorly, Rachel's not going to have to sell them. They will automatically exit the index. Other companies that always pop up that take advantage of the fact that things are now down, the index will buy those when they're large enough. And then you have this new portfolio that's meant to withstand what happened. And not only that, if AI does go through a bubble and the goal is 25 years from now, we'll have the bubble, the bubble will end. AI goes back up, right? We had this internet bubble in 1999, 2000 to 2002.

And look at internet-based companies now. You know, we don't even talk about internet-based company. Every company is an internet-based company. You know what I mean? Yeah. There was this bubble and it's gone away and the stock market has roared since 2000. Right. If you didn't think about it then and you just let it happen, your portfolio went down.

Your portfolio came back up and now you have a ton more money. If Rachel's goal is five years from now, you're not even going to be in the type of stocks that really worry about AI. I mean, your portfolio is designed to be much. much more ready to pick the fruits of it, which you'd never be in a stock like Nvidia, if you've got a five-year goal or Microsoft, you'd be crazy to be in those stocks. You're addressing the AI bubble possibility by designing for the long term or the short term. I actually looked up what would happen if you had invested at the peak of the dot-com bubble. March 2000 was the peak of the dot-com bubble.

If you bought the S&P 500 at that time in March 2000 and you held, then that investment would have between a 7.5 to 8% long-term annualized return today. Right. So I want to make a few points about that. Number one, at the peak, you literally, if you bought at the worst possible time, that money, 25 years later, would have an 8% long-term annualized return. turn, that's a very good return. Number two, you're not going to only buy once in your life, which is at the exact peak and then never buy again. You're going to buy a little bit from every single paycheck, you know, put a little bit of every paycheck in. So when people, dollar cost average, which is a fancy way of saying you buy in regular periodic increments,

and you do that either per paycheck or per month, depending on how you manage your budget. when you do that, that means, sure, you're going to buy in March of 2000, which is the peak at the dot-com bubble, but it also means that you're going to buy, you know, in January, February, April, May, like you're going to be spreading out what you buy across this wide basket of times. And so the worst sliver of that portfolio, the March 2000, that worst sliver would have had an 8% return, which means all of those other slivers that were not purchased at the peak would have done even better. Yeah, every time she's purchasing, she's lessening the threat that she made the wrong call. Right. Now, I do want to address your question directly about whether or not we're in an

AI bubble. My position is no, we are not. Although I will be the first to say, don't make any money moves based on guesswork. Guesses can be wrong. But my guess is that no, we are not. And I believe that the reason that this question comes up so much is, number one, people remember the dot-com bubble from the year 2000. I think that's a big part of why this keeps coming up. Number two, I think many people make the mistake of confusing high valuations with bubbles. So there's this fear of heights, that if values rise too much, if valuations climb too much, that means that a bubble exists. You actually saw this in 2017, 2018. A lot of people were really scared about a quote-unquote housing bubble at that time. And it was because over the previous five years, from 2012 to

2017, home prices rose so much during that five-year period that everybody, by 2017, everybody was like, it's a bubble, it's a bubble, it's a bubble. And then nobody wanted to buy a, I shouldn't say nobody, but many people refrained from buying homes who were otherwise capable, financially capable of purchasing a home in 2017 or 2018, but they refrained from doing so because they were convinced it was a bubble because valuations had climbed so significantly in the previous five years. And as we now know in hindsight, that would have been a major mistake. If in 2017, you sat there and thought, well, I've got this down payment.

I could buy a house. But you know what? I think it's a bubble. I'm going to wait for the bubble to pop. Well, if that's what you said in 2017, you're still waiting. Well, and that is interesting because there's still a lot of pros out there saying we do have a housing crisis. We have a housing. I think it might be worse than a bubble.

And yet, seven years later, it has a pop. Right. Exactly. So I think what happens is many people conflate high valuations with a bubble. There's a fantastic quote, more than a quote, it's an insight from Morgan Howell, who has been a guest on this podcast many times. I encourage you to go into our archives and listen to our interviews, multiple interviews with him. He talks about how bubbles are not the result of high valuations.

They are the result of time horizons shrinking as more. short-term traders into the playing field. I'm going to state that again because this is very important. Bubbles are not about valuations rising. They're about time horizons shrinking. If you're a long-term investor, then housing is a perfect example. You buy a house in 2017 that you're planning on living in for the next 10 years or 20 years or 30 years. You're a long-term investor. Valuations going up when people in the game are long-term investors, that just means values are climbing. That's not a bubble. But if a lot of short-term traders get in, they're playing a different game and they're flipping, you know, they're in it to flip contracts not to assess the long-term viability of a company.

And particularly when leverage gets involved, and that is the one thing that I would add, personally, that I would add to the Morgan Howsel Insight, when Time Horizon Shrizzan, and when excess leverage enters the picture, that's when you've got these short-term contracts that are levered up, which means, which is another way of saying they're dangerous. You can't afford to lose. And when a lot of that enters the market, that's when bubbles tend to form. At least based on the evidence that we currently have, that is not what is happening. people are looking at AI as a long-term game-changer and are in making investments that they expect will pay off over the next 50 years, right?

Because AI is going to be a big enough game changer that you want to be the person who owns the first crop of railroad stocks before the railroad gets built across America. right, you want to be the person who owns that first crop of electricity stock, right? You want to be in 2000 people wanted to be the people who owned the first crop of dot-com stock. But in that case, in the year 2000, the money was flowing to companies that weren't making any money that didn't have any revenue. Pets.com. Today, money is flowing to companies that make revenue, that sell, products and bring in revenue. And that's what makes AI investing very different from dot com investing, the fact that most of the money is flowing companies that are bringing in

revenue. You know, I don't have a, I don't have a position on this because I generally don't make these types of bets, but I read a ton and I like to read what people who know a lot more than I do and who have a ton more research than I do suggest. And I would, was reading piece from Fidelity about the AI bubble pola. Their position is that also that we won't see a bubble. And the reason they think that there won't be a bubble is because of the utility of AI and the fact that because there is such a user base and the user base is growing daily, people that would have never used AI a year and a half ago now using it on a weekly basis or even a monthly basis, people that we're using on a weekly basis, using it on a daily basis, people using on a daily basis, using it on an hourly basis. So you're seeing this quickening where AI is in different areas of our life. And if you look at CES as an example, the consumer electronic show, we're also seeing the ridiculousness of some of the AI, AI in places where we

clearly don't need it, right? Oh, you know, they make facial recognition of cat litter boxes now. Of course, because we need that in our life. We do need that in our life. I'm old enough to remember a CES where the front of your refrigerator would have the internet on it because the internet was going to be the hot thing. So about going to your fridge every day and on the front it's got I can just, who needs a computer or now a cell phone? Right. Ridiculous. But even though there's this ridiculousness, the fact is instead of a bubble, what they believe is there will be a slowdown in stocks associated with AI because of the fact that these earnings. earnings have been so far ahead of the game.

So instead of seeing a crash, what you'll see is just a slowdown where the AI stocks begin to reflect. It might even be a laggard for a while. But a general retreat, we're not going to see. You know, I look at this and for people that don't know what I'm talking about, I was just at Disney World and the prices at Disney are ridiculous. And Disney, by the way, is paying the price of this. so much negativity around Disney pricing right now because a guy named Bob Chapec, who is the CEO,

just raised prices on everything through the roof. What's interesting right now with Disney, though, that all the analysts are talking about, Paula, is that Disney is not going to lower their prices. Disney has tons of hotel occupancy. They're offering all kinds of deals, but they are not going to come out in public and lower their prices, even though they clearly made this huge mistake and overstepped. You know what they're going to do? They're going to leave the price the same for a longer period of time until inflation just catches up. And I think if you think about AI, this is really Fidelity's position about AI. Are stocks in AI overheated? Yeah. Are they going to come down? No, I don't think so. What I think's going to happen, though, is the rest of the market's

going to continue to bleed into AI, and it becomes ubiquitous where companies that you wouldn't think about AI are now using AI in all of their processes, meaning we're going from 2000 to 2002 and internet companies, which is ridiculous today, from AI companies today to Procter and Gamble using AI in more of their processes. Nobody thinks of Procter & Gamble is an AI company or any of the railroads, right, using AI. But 30 years from now, we're going to talk about AI companies. People are going to be like, what are you talking about? So bubble, fidelity says no.

Now, does that mean there won't be a bubble? No. There could be a huge retreat in those stocks, which is another reason I think, too, rather than trying to get in front of what your guess is, Rachel, is to not play the game. Yeah. And by not play the game, we mean don't time the market. Pick your basket of stocks, pick that asset allocation, dollar cost average into it, and leave it alone. I said basket of stocks, what I meant is basket of funds, not individual stocks. Pick your basket of broad funds. By the way, Joe, to build on what you said, I want to drive.

a distinction here between deceleration and reversal, because I think this is another concept that many people conflate. If you're driving a car at 60 miles per hour and then you slow down to 30 miles per hour, you've decelerated. You're still moving forward. But you haven't put the car into reverse. What Joe's talking about is that maybe AI stocks won't grow as fast as they have been, maybe that growth will decelerate. That's very different than going in reverse. Well, think about this ridiculousness that, you know, politicians talking to us about how prices are going to come down and people online talking about how many times during your lifetime have prices ever come down? Well, yeah, so the reason that I bring this up is because I was thinking about

how often I hear this when it comes to inflation over and over and over. People on TV are like, Well, hey, inflation used to be 9%. In 2022, inflation peaked at 9.1%. Right? And today, trailing 12-month inflation as of December was 2.7%. And there are all these people on TV who are like, oh, come on, inflation was at 9%. You're telling me, inflation was at 9%. Now it's at 2%.

2.7. If that's true, why haven't prices come down? Right. That is a classic case of conflating. deceleration with reversal. You drive a car at 60 miles per hour and you slow down to 30 miles per hour. That's, well, specifically, if we want to use the exact numbers, you drive a car at 91 miles per hour and you slow down to 27 miles per hour. That's what it means for inflation to go from 9.1% down to 2.7%. You've been driving the car at 91 miles per hour. Now we've slowed the car to down to 27 miles per hour. But the car is still moving in the same direction. It's still moving forward.

We have not put the car in reverse. And we're not going to be putting the car in reverse. We're hoping that we can slow the car down to 20 miles per hour. Right. Like that's the goal. But we're not putting the car in reverse. To use my same vacation analogy from a couple weeks ago, I predict that Disney prices are not going to rise for the foreseeable future. They're not going to rise, but they're also not going to go backwards. Right. You're not going to see a lower price, but you're not going to see the price of a ticket to the mouse house go down. Yeah. I can think of one market, and there might be more, but in my everyday life, there's one market where prices truly do come down, but that's the nature of how this commodity is bought and sold,

and that's gasoline. Gasoline prices will retreat and will move up. Now, they're fast. And they're to move up and they're slower to retreat. But with with gasoline, that's because this is an open commodity exchange, which is much less insulated. Like me at the end of the gas pump, I am far less insulated from the movement in worldwide oil prices than I am with my breakfast cereal or buying a book or whatever the other thing is that I might be doing. Well, there are specific industry sectors that are generally deflationary. One gigabyte of memory is a lot cheaper today than it was in 1980. You know, so we see in the technology sector, from a consumer perspective, costs come down as those markets mature. A home computer is accessible to most U.S. households today, and that was not

the case back in 1980. So we do see in certain very specific sectors prices decrease as those sectors become more efficient and more advanced. And that's looking sector wide, not product-wide. As an example, you'll see a computer sometimes go on sale, but that general model's base price is not going to retreat. They're going to come out with, instead of model X, they're going to come out with Model XL, and Model XL will be, because of innovation, will now have a lower price point than Model X had. Rachel's like, what does this have to do with the AI bubble? Price is coming down. Sometimes the thing, but not often.

Rachel, there you have it. The twofold answer to your question, number one, neither Joe nor I believe that we are in an AI bubble. number two, both Joe and I acknowledge that we could be wrong. Number three, both Joe and I agree that the question is irrelevant to the decisions that you make as an investor because you should be making decisions that are agnostic to what might happen in the future. In other words, you should be making decisions that are free of guesswork. Don't be proactive and don't be reactive. Don't be active. Be passive. Thank you, Rachel, for the question.

And welcome to the world of investing. We're going to take a moment to hear from the sponsors who make this possible. And when we return, we are going to hear from a listener who is living on credit cards. That's up next. Welcome back. Our next question comes from Sarah. Hi, Paula. I really enjoy your podcast and always recommend it to others.

I'd like to get your opinion about my situation and whether I should apply for retirement, paying off my credit card debt from savings or transfer it to another 0% interest credit card, which they charge 5% for the balance transfer, and should I pull money from my non-retirement account and retirement account to remodel my house and should I convert my traditional IRA to Roth IRA? I just turned 65 and live in Southern California. I own my home, and it is fully paid off. I previously called you, and you recommended that I rent out a room in my house.

I partially remodeled the room and added a kitchenette, but unfortunately I haven't found anyone yet. In California, the laws tend to favor tenants over landlords, and I'm also very cautious about who I allow in my home, so I haven't had any luck. I lost my job last year, and I've been relying on credit cards to cover my expenses. I currently owe $16,000 on one card, zero percent interest until December 2024, and $12,000 on another zero percent interest until March. I have some non-retirement savings in total of $250,000, which I invested in bonds for either

three months or six months. I was wondering if you have any recommendations for investments with potential future growth, and I have another account under Federated Hermes-Kaufman Fund. The expenses ratio is 1.95% non-retirement for about $100,000. I wanted to know if you have any recommendations regarding that. Also, my income tax rate is 12%. If I retire now, I would receive about $1,049 per month in Social Security if I wait until age 67.

The amount is $1,211, and if I wait until $70, then the monthly benefits increase to $1,502. I also have both a Roth IRA $180,000 and a traditional IRA 128,000. My questions are, 1. Should I apply for retirement now or wait until I turn 67? Considering that I'm currently not working and using savings and credit cards for expenses. 2. Would it be a good idea to convert my traditional IRA to a Roth IRA while my income tax bracket is still 12%? Given that I didn't work last year, should I pay for fully remod? remodeling my house from my savings, I think the cost of a full remodel is around $300,000. Do you have any other recommendations for me?

Thank you very much for your time. Sarah, thank you so much for the question. And man, you've got a lot going on in your life. And Paula, I think I remember, Sarah. I think I remember, you know, this is an income issue and is there a way to create some income? So I'm glad that you put in motion the steps to begin finding a renter and finding some more income. And I think because, you know, often when somebody has, Sarah, as many questions as you have, I often when I was a financial planner, I needed to set them aside.

And I'm going to do that in this case, Paula. Sarah, I'm going to set your questions aside, not because I don't think they're good questions. They definitely are. But I think what's the unifier here? because there are all of these branches that Sarah is looking at. And is there something that we really need to answer? And there is a definite yes. There's a huge yes here, which is this, living on credit cards is not sustainable. It is not sustainable. And so your question, first of all, around should I refinance my credit card?

That's question number two. Question number one is, how do I create a sustainable existence? Because if Paula and I today help you make a decision to refinance the credit cards and get the interest rate down or keep them down or make the payment less, whatever it is, all that's going to happen tomorrow is we're going to continue to exacerbate the problem. And the problem is there's not an income stream that is going to help you next year, which means your other question about when to apply for retirement. And by apply for retirement, I'm assuming what you mean is Social Security. And if that is the case and you're not working,

my number one question, my number one question to you, Sarah, if we were sitting across from each other, would be this, where's the income going to come from? And I want you, just like we're a brand new company or we're a marketing organization and we're trying to figure out all these things. We're going to begin spitballing ideas about where is the money going to come from. And I will tell you, my least favorite place is going to be that Social Security number because of what you said in your question. If I let that go, I get this huge reward from the government by delaying it every year. But if there is no other answer, if we can't get around the problem that you can't find a renter, if we can't get around the problem that you don't have other income streams,

if we can't create good income streams from the portfolio, then we have to take Social Security today. I mean, you have to. Because the solution that you're living on, today doesn't work. Zero percent chance that ends well. That's my first thought here, Paula, is all of these branches. I need to worry about that later. Let's worry about that stuff later. Right now, let's write the income versus expenses ship. That is A number one, got to solve it. Every day we don't solve it creates more complexity in your financial situation, creates more frustration that you'll have with your financial situation. There is no other problem to me that's bigger than that one.

Sarah, I want to address the finding a renter because that's going to get you some income right now. I want you to be aggressive about doing whatever it takes to get a renter in there. Because unless you are in an extremely remote area, like population, 100, unless you're in a very, very remote location, there are people in your community who are looking for a place to live. And you have a place to live that you can offer. You know, you have that space that you can offer. And we know this. We know this, Paula, because of our answer for Rachel earlier. When we were talking about housing, we were talking about real estate. There is a housing crunch right now. Yes. There are tons of people looking

for affordable housing. Yeah, there's a huge housing shortage nationwide and in California. This is a great market to be in. You have a spot. There are tons of people who want a house. Right. So creating a way. Or a room in a house. Yeah. Creating a way, creating filters to get people in is big job. You know, when students in my rental property investing course ask me about occupancy, right, vacancy versus occupancy. The answer that I always give is that there is a balance, a seesaw between the price of a rental and its occupancy rate. And let me just use an exaggerated example in order to illustrate this point. If you rent something out for $1, you're going to get a ton of applicants. And if you rent something out for $10 million, you're probably going to

zero applicants. Somewhere in between those two numbers is your ideal price point. That's a very exaggerated example, but I say that to illustrate the relationship between pricing and occupancy. If the place is priced correctly, you will get applicants. And if you're not getting applicants, it might not be priced correctly. So it's your responsibility as the landlord to play with that pricing so that you get a good supply, a good volume of applications. That's number one. Number two, you mentioned that you're cautious about who you live with since this person is going to be living with you. Totally get that. You need very specific criteria and that criteria needs to be fairly applied to everyone. So is it a particular income that a person needs in order to

qualify? Is it a particular credit score? Is it, what, no criminal background, which you can, that can be part of the application? You can run a criminal background check. What's your screening criteria? Once you have that screening criteria developed, it needs to be equally applied to all applicants. Do those two things, and I do not see why you wouldn't be able to have this place filled. After you find the income stream, a discussion that we would also have, Sarah, if we were sitting face to face, you talk about remodeling your house. The first thing I want to do before we look at remodeling your house, I want to know why you want to remodel your house. Because of the fact that if remodeling your house is going to create more jeopardy for your income streams in the future,

then we need to reconcile those things. Because when I heard, I'm living off of credit cards and I want to remodel my house, those two things don't go together. Right. You're creating a world of hurt. Now, if your house has severe issues, which make it so that you can't live there or you can't get renters in there, if you have problems with code, then we need to remodel your house.

But if it's, I just wanted to look better, that unfortunately has to wait until we write the ship. I think the question is, is it a safety issue or is it a cosmetic issue? Yeah, 100%. If it's a safety issue, that's a very different discussion. Then if it's just, oh, the cabinets are dated, the countertop is dated. And I think even the safety issue just puts a fuss. under you to find that income stream faster because I still want to solve the income stream

before I solve for anything else. The interesting thing portfolio-wise, and I really don't even want to answer the portfolio questions, frankly, but I will. The cool thing about your portfolio, Sarah, is that once you have the income stream in place that's sustainable, you don't need $250,000. in a I might use it today position. You don't need it. What you need is growth.

And what's cool is, is that you can begin then to explore those growth opportunities. But I wouldn't explore them today because that $250,000 sitting in a very low risk, low return spot is there specifically because you don't have income coming in. And I would not move that money. anywhere. I wouldn't move it anywhere today until you have money coming in because if you end up needing that money, it's in a safe place that usually doesn't lose money. But for your long-term security,

I hear $250,000 sitting in something that you know and I know and all other afforders know is not going to grow is not at all the solution. But we can't move it from there until we solve the income problem. Once you solve the income problem, it's like it solves so many issues, Paula. This income problem solves so many issues. And I know it's frustrating and I'm, I don't want to sound flippant like this is just easy. Just hey, solve the income problem. Duh. I know it's not easy. I would take all these questions and I would focus on just one. And once we get that one solved, then a world of opportunities opens up and all these other things that you're talking about.

And I think, Sarah, the question for you becomes, what are the various ways that you can make some money, just something, you know, anything, anything, like let's get that money coming in the door. Let's get a renter in there. Let's get freelance income. Let's get paid. Like, that doesn't necessarily mean you need a full-time job, but you do need to get paid. It's very hard to manage money when there isn't a supply of new money coming in.

Even people who are retired have a supply of money that they have built for themselves through constructing a portfolio. Thank you for the question, Sarah. And the next time that we hear from you, I hope that you are telling us that you have developed multiple income streams. We look forward to getting that update. We're going to take one final break to hear from the sponsors who allow us to bring you this. show at no cost to you. When we return, we're going to hear from someone who has two questions. One is about health insurance, and the other is about starting a business that her kids can work in. Welcome back. Our final question today comes from Anonymous. I am calling with a couple of questions.

I'm hoping to hear thoughts on, and maybe it will be interesting or useful to other listeners. My first question is on health insurance. My family and I have been, on a HSA plan for the past several years and has worked out well. My spouse took one of the federal buyout options and is still currently looking for work. Fortunately, we are post-fi and I can bring in enough money to make ends meet while my spouse continues to work. However, I do not have a benefit eligible position. So we're currently on COBRA, at least until the end of the year, because we've already met are deductible. And going forward, we've never really had to look for private insurance before. I have had some great recommendations of brokers and are starting to go down that path.

But I guess I'm looking more in the global sense of what are your thoughts on health insurance being a benefit that employers continue to provide, or at least supplement in the future? Or is this something that will go by the wayside, like a pension, that more and more people will start using the private insurance option and just selecting a plan that suits their needs better. I'm interested to hear what your thoughts are. My second question is a little unrelated, but I am currently a W-2 employee in the future. I would like to have my own small business, whether that's a side hustle or something that I can do, that my two young kids can help me with, and we can kind of make a family business to teach them some of the skills of entrepreneurship.

entrepreneurship and what it takes to put something out into the world. I have tried to start a couple businesses during the pandemic, and neither of them really panned out. I'm trying not to be frustrated, and I know this is something that happens, and so I guess I'm taking a step back and really sort of reevaluating. I have read the EVE myth. That book made a very big impression on me, and I look at a lot of the ideas that I have in through that lens, but I do find that sometimes I have a definitive answer of, yes, I do want to be the one baking the pies or, no, I'd rather be the one doing the operations, but sometimes I don't really know. And so I guess I'm wondering if you can speak to any other ways or any other litmus test really to flush out ideas before needing to go down

that path several times. I know there's a lower cost ways to do it as well, but again, just looking for your insights. Thanks. Anonymous, thank you for the questions. And before we answer, we need to give you a name. Joe, have you watched anything interesting lately? I haven't, but you know, it's funny is that we were talking earlier about pets.com. You brought up pets.com. And this is cool because of Anonymous's thoughts about entrepreneurship. And as you know, entrepreneurship is a lot of failure. It is failure and failure and failure and failure. And what is exciting to me is I read a Maya Angelou quote about two weeks ago. And, Maya Angelou said that while there's going to be lots of defeats in our life, we should never

be defeated. And I think that's the perfect thing for an entrepreneur to think. So I actually interviewed Julie Wainwright, who was the CEO at Pets.com, when the awfulness happened. And what's funny is most people don't even associate Julie anymore with what is one of the most publicized disasters in history because she went on to be the creator of high-end consignment company, the real real. No way. And a ton of people know the real, real. And Julie is a monster success.

She was also at the helm of Pets.com. It's Stackin' Benjamin's episode 1703 for people that want to hear it. It is, especially for our entrepreneurial afforders, it's very, very life affirming. Like, you will get beyond, if Julie can get beyond that, you can get beyond whatever you're dealing with. So I think we call her Julie. Beautiful. I love that. So we've got some good news for Julie, I think. Oh. Don't you think so? With regard to health insurance or with regard to- 100%. Because if you look at just the landscape today, if you look at the landscape today, where are people pushing is the push. Now, this is maybe short-termish, but even over my 57 years,

I feel like the groundswell has been moving toward, and there's always a bunch of forces pushing against it. But the push is always toward more and better health insurance options. And when we don't get more and better health insurance options, we rail against politicians that are negative toward health insurance options. And even if over the short term, that's a win, you still hear the beating. the constant beating of better health insurance, more health insurance, better health insurance, more health insurance. So the question is, will companies continue to offer this? I think the answer is, heck yeah. But I also think I'm optimistic that even if companies don't, that I believe that we

will have, and maybe not right away and the way we always come up with things, especially in the United States, is kind of ugly and we go through the pit of darkness for a little while before we get there. but I think the trend is toward more and better, not toward less and worse. If we remove the word insurance and broaden this out to how do you get your health bills paid, we can certainly see the proliferation of health shares, which is not insurance, to be clear, and as we've talked about in previous episodes, not actuarially sound, but the proliferation of health shares, which there are more of those today, than there were even 10 years ago.

We see direct primary care options and concierge care options. We see more catastrophic coverage options. So we see more choices on the market today. We also see the expansion of since it was first created the HSA. The HSA, much wider adoption. Right. More plants are HSA eligible. Yeah, more companies pushing people toward HSA. I'm 100% with you because if we think just about

insurance, I'm sure there's a bunch of people out there. They're going, no, Joe, it has gotten crappier. And it is worse. And the answer is yes. But as that happens, the answer is 100% yes. Because like I remember HMOs when they first came out. HMO means health maintenance organization. And the deal was, was that insurance companies were going to help you be healthier now while you're healthy and we're going to give you all this cool stuff while you're healthy so that you wouldn't get sick as much and immediately well not immediately it took a few years but it got degraded to lowest benefit lowest touch ugly we don't help with anything is just cheap crap right i'm in an hMO yeah but you know are they always telling you paula hey we've got all this gym stuff or

all of these proactive trainings that we were told we're going to be a big part of an issue. None of that exists. Right. None of that stuff. So it is crappier and it is worse. But to your point, as that one thing is crappier's and worse, look at what happened. Then PPO's came around after HMOs, then we got PPO. Better again, becoming junkified over time as well.

And then HSAs came around and then the concierge coverage and the health shares. Your options continue to get better and wider. and you get all of these new ways to take care of yourself that didn't used to exist. Right. And as I've mentioned on a couple prior episodes, last year, 2025, I did not have health insurance coverage. I had a health share. This year, 26, I decided that I wanted health insurance, but I went for an HMO because it was significantly cheaper than a PPO. again, if we expand outside of simply the narrow definition of insurance per se, and we look at options for receiving care, that optionality has grown wider.

And look at who's adopted that to Julie's specific question around companies offering it. Man, benefits packages today for many of the big companies are far wider with respect to health, including mental health coverage than they were even 10 years ago. Right. It's pretty impressive what companies offer when it comes to benefits packages. Yeah, yeah. I will say as a small business owner, that's where it is very hard to compete for talent. We use Gusto as our HR and payroll and benefits processor.

Gusto is also a sponsor of this show. But for small businesses, I mean, we're talking two or three, three employees. When you're shopping for health insurance options for such a small workforce, choices are pretty limited. And so, Julie, to your direct question as to whether or not employers will continue to offer this, I think mid-sized companies and large companies, the offerings get better and better. Where it gets really tough is when you're talking about extremely small companies, 10 or fewer employees, that's where the selection, the availability that is open to very small companies, that menu just isn't there in the way that it is for big ones.

I've spent a lot of time going back and forth with a lot of gusto benefits reps talking about what are our health insurance options that we can give to our employees. and the approval process, oh my goodness, like that's a second job just going back and forth with them for the approval process because they want to make sure that you are a bona fide company, especially when you've got only two or three employees. They don't want you to be a group of friends who filed an LLC and you're just trying to scam health insurance. Yeah, exactly. they demand all of this proof that you are a bona fide company and just providing that and going through that burden of proof takes so much effort. So yeah, anyway, having spent a lot of time buying health insurance or afford anything, I know how hard it is for small companies.

Back to my original point though, Paula, which I think you're making. Let's even look at Gusto. Think about five years ago, six years ago. Gusto, I think was just an infant company then. And it's because they saw this need in the market. And now we're seeing gusto competitors, right? Right. Where this need is not being served. And so now even if you have a small company, it's ugly, it's time consuming. I love your second job thing.

But it wasn't even a second job 10 years ago. It didn't exist. Like your ability to even make that happen was people like, are you kidding me, putting all this stuff together? I don't think that can happen. Gusto made it happen. I think that's getting better as well. Right.

Well, Julie, let's go to the second part of your question on the topic of small companies, small businesses, because this might be something that you end up doing in the future, buying health insurance for your employees. And with regard to that question, Paul, I think we have to define when she says, I do want to be the one making the pies because a lot of people have not read the E-myth. They don't know what the hell she's talking about. Right, right. In a nutshell, the E-Mith by Michael Gerber is a book in which he talks about how, you know,

if you're really good at baking pies or making cakes, everybody's, says, wow, you should open a business doing this. But the reality is running a business means having processes. You build an organizational chart. You write job descriptions for every role with the scope of responsibilities and a scorecard of outcomes. You hire people and put them in the role and then take a second job just trying to buy health insurance for them. You know, you send a lot of paperwork back and forth to your payroll and benefits in HR processors. trying to buy health insurance for them. And you design systems.

You design standard operating procedures. You pick a project management software and you put every single task into the project management software. You find a point of sale system. You coordinate with the marketing team. You develop processes and you develop systems and you grow teams. And at no point are you really the person baking the cake anymore or baking the pie. Well, and I think, and we can circle back to that because I think that you can be.

But what is clear is the reason most small businesses fail, according to Gerber, is not because you bake crappy pies. It's because it's all you know how to do and you're so busy baking pies that you never create any of these systems and you become a mess because you can't fulfill orders. People love you. They swarm you with all these orders. You don't have anybody to deliver. You don't have any system around delivery.

You don't have pies coming out at the right time. you're wasting a bunch of inventory. You don't have anything showing up at the right time. And because you didn't pay attention to all these other pieces of the puzzle, you go nowhere. Right. And so that is the first lesson is if you're going to be an entrepreneur, it ain't going to be about making pies.

It's going to be about all this other stuff. But that doesn't mean, Paula, that you can't be the baker as well. This is the way I took the E-Mith at first. And I think that piece is wrong. I think you can be the baker. I think you just have to understand that being the baker is different than being successful at the business. You can talk about money on a podcast, but having a successful, sustainable business that involves a podcast is not buying a microphone and talking about money.

Those two things, while they're related, are not the reason you're going to be successful. You're going to actually have to run a business that employs people to create. systems around getting the word out that you actually have a podcast. Right. And around booking guests and around even just organizing these voicemails, like picking three voicemails per episode and organizing all of that and having the show notes prepared and having the descriptions and all of the links. And, you know, there's a lot of systems, a lot of systems.

Yeah. Just realize that if you're not in it for the operations piece, it's going to be painful. because if your joy of, you know, I spoke to Austin Cleon, the guy, Steele like an artist, about this idea that, hey, whenever you make cupcakes really well, that everybody goes, oh, you should have a company making cupcakes. He goes, you just got to know that's going to suck the joy out of making cupcakes. And you know, Paula, it will. Yeah.

It 100% will unless you go in knowing that there's going to be all these other places. And certainly you and I love being on the microphone. we love helping the community. We'd love this piece of it. But if I would have thought this was all it was, all the time in the stupid editing bay or dealing with the website or the social media stuff

or dealing with sponsors and contracts, that would have sucked the joy out of it if I thought that just being on a microphone was what this was. I think the answer to that is that while it doesn't have to be something you're passionate about, I think there's a lot of people talking about, well, do something, don't do something you're passionate about.

One of my most successful clients made stop signs. And he wasn't, he wasn't like a guy that went, wow, no, there's an octagon. Gorgeous octagon. Did you see how red that sign was? If that had been a hexagon, it wouldn't have worked. He did like helping cities. He did like the relationships of working with these different municipalities to make their signs.

He liked the contracts. He liked the setting up the facility. But what he was passionate about was operations. And he happened to be in an industry that nobody really cares about. You know, I mean, the stop sign. Don't give me, people are worried about safety and all these other things. I think going after passion is highly overrated. And I also think that's why Target is now selling ring lights and all of this stuff to be an influencer is because everybody,

passionate about being an influencer online and go see how that works for you because that's a tough road where stop signs might be a better way to go. But think about something that for you is sustainable, that you can be as excited waking up and going to the business about 10 years from now, but also think about where that matches the need for your community. You know, I think a lot of the time. Entrepreneurs have these, quote, great ideas. And then they get halfway down the road and they realize, nobody wants this crap. I'm excited about it, but there isn't a thirst for it. Right. So it has to be where the opportunity in your excitement matches an audience. Right. And so, Julie, your question, which is how do you pressure test ideas, the number one thing

that I would do to pressure test an idea is to see if there is demand for it. You know, I once was brought in to advise a group of journalists, they wanted to start a new publication, a new news organization. And I went to their initial meeting, and they spent the entire meeting talking about the stories that they wanted to write. And I was like, I was just sitting there with my head and my hands going, you guys are thinking way too much about what you want and not at all about what your audience wants. You need to be super, if you want this to work, you need to be super, super, super clear on who is your audience? What does that audience want? How do you best serve them? This isn't about you. This is about them. Right. So how do you best serve them, your audience, your clients,

your customers, your students, whatever it is that product or service. It's not about you. It's about them. Who are they, first of all? What are their worries? What keeps them up at night? What are their hopes? What are their fears? You know, what are their dreams and what's keeping them from getting there? You need to understand them and then develop something that will solve one of their problems or help them get closer to their ideal life. And then before you put a lot of money into developing that thing, make a basic early prototype and then test it, see if people will actually buy it. That's what the beta version is all about. It's not about gathering the seed money.

Beta versions come out because you're just trying to validate whether or not the demand is there. There's an old-time motivational speaker who said this a long time ago, named Zieg Zieg. And Zieg built his entire career on saying that if you, you know, you help a lot of people get what they want, you will always get what you want. And I think that frames it very nicely, that if you focus on the customer and delivery and making their lives better than your life will just come along for the ride, it's going to be great. The book that you read, the E-Meth, I think, was the perfect place to start, Julie. But I'm going to point you to another book that talks

about specifically what Paul is talking about, and this is another classic. It's by a guy named Eric Rice, R-E-I-S, and it's called the Lean Startup. And what he says in the Lean Startup is create your minimum viable product, give it as few features as possible, don't spend a lot of money creating it, put it out in the universe and let the audience create it. Because the audience will tell you that go, you know what, I really like this, but I wish it had blank. I wish it did this.

And then before you spend a lot of money on features and benefits that nobody's going to buy, iterate based on what the audience buys in the product. And you see a lot of the popular products that we use today, Paula, that were created that way. They were headed one direction and they did a massive pivot because they saw that their audience wanted it to do something completely different than what they were doing when they first started out. I've got another book for you, Traction by Gino Wickman. Yeah, Gino's book. is basically that is the e-myth on steroids. Yeah. In detail. Yeah. Gerber lays out, this is the e-myth and Gino goes, this is how to do it. Right. Yeah. This is the step-by-step

playbook of how to do it. Yeah, exactly. The e-myth is the theory and then traction is the application. Yeah. Here's what I wouldn't do, though, Paula. What's that? I would not spend a ton more time reading. You had a book and I had a book. I think the real point is to go create something with 100% belief that it might be the wrong thing. It might directionally be there because that's what all these books are going to tell you anyway. And when I interviewed Alex Hermose, who's a very successful entrepreneur last year, Alex said the same thing. I'm like, what books do you recommend? He goes, I recommend reading fewer books and getting out and doing it.

And by getting out there and doing it, you're going to make all the necessary mistakes. And if you're quick to fail and quick to learn from that failure, you're going to do much better than reading 18 million different books or sitting on the idea. So what I would do, Julie, is I would do that idea in your spare time. I would bootstrap it. I would not spend a ton of time on it if you're doing other things, but I would get it out there in the universe and see what happens. You know what you're going to learn?

You're going to learn what you don't know about in a hurry. You're going to learn what you don't know about. I learned about creating landing pages this way. Like, everybody's like, you need, what tells a landing page? I didn't know what, I remember not even knowing what a landing page was. And people that don't do what you and I do, probably have no idea we're talking about, which is the point, right? There's all these little hidden things that you need to know about. And very quickly you get up to speed on these things.

And then what's cool is once you know what a landing page is, it's like riding a bike. You're like, okay, yep, I know what it is. I know how to make it. I got that done. One more skill. Check. but you're not going to do that by reading it in a book. Right.

Or you're going to start asking who, not how. Exactly. And then you're going to know specifically what book you need to read, which you and I, we read all the time, but we know specifically what we're plugging, not big time theory. Exactly. Alex Armosey said something else, which goes right along with what you said earlier. He said, be the most valuable person. The best marketing is to be the person people value more than any person.

else. And it's funny how you hear one person say one thing and it's their, it might be their little stick or their little thing. And it could be cool. It could be useful. But when you hear multiple people say that, you know, I realize Alex Hermose said, be the person people need and they keep coming back to. Steve Martin in his master class, and this is now, a lot of our afforders have already heard this line before. But Steve Martin said, be so good. They can't ignore you. Yeah, that was the title of his book. It's all the same advice, right? Be the person that people want and that they need.

And I think if you solve that, a lot of these other problems solve themselves. Be the best stop sign creator. Actually, Steve Martin's book was not Be So Good They Can Ignore You. That was a quote that Steve Martin said, and it became the title of Cal Newport's book. Yes, correct. So Good They Can Ignore You. And he said that quote in his masterclass. Which is a sponsor of Afford Anything.

Masterclass.com slash afford. Perfect. Well, thank you, Julie, for the question. Joe, we did it again. That was cool. It's so funny how sometimes the theme is all the questions align and other times we're all over the place. Yeah, we covered a lot of ground. We certainly did.

If people want to hear you cover even more ground, where do they go to find you? One of my favorite topics, whether you're somebody who's just trying to do better at work or you're trying to create some excitement for your family or you are an entrepreneur is coming up with these great ideas. All of us, I think, would agree, man, if I could get great ideas more often, that would be really cool. Well, a guy named George Newman, who is one of the leading authorities in, where creativity comes from. And we all think it's these geniuses in a cabin in the woods. And that ain't

it at all. Everybody can have better ideas. So listen to our show from last Wednesday and just look for how good ideas happen. We're going to teach you how to have more good ideas. And that's on the Stacking Benjamin show. Wherever the finest podcasts are found. Only the finest. Well, thanks to all of for being afforders. If you enjoyed today's episode, please do three things. First, subscribe to our newsletter. Affordanything.com slash newsletter. Second, open the finest podcast playing app. Leave us a review and make sure that you hit the follow button so you don't miss any of our amazing upcoming shows. And third, tell your friends, tell your neighbors, tell the person who sells pies and cakes, tell Steve Martin, tell Cal Newport, tell Eric Rice and Gino Wickman, and Michael Gerber.

Tell your tenants in California. Tell the people who are asking if AI's in a bubble. Tell the people who sell you your health insurance. Tell the people who run the HMO. And tell the person at CES who's developing a facial recognition cat litter box. Tell all of those people and more. about this episode, because that is the most important way that you spread the message of F-I-I-R-E. Thanks again for tuning in. I'm Paula Pant.

I'm Joseph L.C. Hi. And we'll meet you in the next episode.