We Study Billionaires - The Investor’s Podcast Network - TIP456: How to Build a Wealth Plan for Financial Independence w/ Katie Gatti

Starting point is 00:00:00 You're listening to TIP. On today's episode, we have Katie Gaddy, the host of the very popular podcast Money with Katie. Katie also runs a personal finance blog and is joining us today to discuss how to build a wealth plan. In this episode, you will learn how to calculate your retirement needs, how to determine how much cash you should reserve, how to think through investment account types like 401ks, IRAs, Roths, etc. The ideal allocation of index funds. when to consider alternative investments like real estate or small businesses, time and energy tradeoffs while determining your approach, how to incorporate philanthropy, and a whole lot more. Katie is highly personable and highly knowledgeable, and I learned a lot, especially around

Starting point is 00:00:43 all the amazing resources that she shares. I consider your personal finance plan to be the lead domino to building wealth. You must get this plan in place before you even consider your investing strategy. So with that, please enjoy my conversation with Katie Gatti. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Welcome to The Investors Podcast. I'm your host, Trey Lockerbie, and today I'm super excited to have on the show, Katie Gatty, welcome to the show. Thank you so much, Trey. Happy to be here. Well, you have this incredible podcast that has just exploded recently. and everyone's taking notice of your work and it's for good reason. I'm really excited to have you on the show.

Starting point is 00:01:42 I have a feeling maybe you and I have a similar background or as far as how we've found ourselves talking on a podcast today together. So I'm kind of curious what events led you to creating your own podcast and your own blog, giving that you didn't really come from that background either. Yeah. Well, first of all, that's very kind of you to say. So thank you. I really appreciate that.

Starting point is 00:02:03 Similar to you, I think the way most people kind of find, out about this stuff and get interested in personal finance and investing, I feel like usually is out of necessity. Like everyone has that financial awakening at some point, whether it's in your early 20s, God willing, or your late 50s where you're like, oh, crap. Like, this is not something that's just going to happen on its own. And so I think when I was early in my career, I was working at an airline in marketing. And I had a decent starting salary, nothing crazy. But definitely more money than I'd ever seen before previously in my little college internships. And it probably took like six to 12 months before I was like, wait a second. I, you know,

Starting point is 00:02:48 I'm giving this place like the best hours of my day during the best days of my week, during the best years of my life. And I don't really feel like I have all that much to show for it. And I'm not really feeling like I'm very proactive right now about the money that I'm receiving and what I'm doing with it and whether I'm setting myself up for the future. Like, there was no plan. There was no strategy. It was just as long as the rent money was there on the first of the month and the Discover bill was getting paid on the 27th. It was like, all right, cool, I guess I'm good. And I would say that, yeah, in that six to 12 month period, I kind of took a step back and was like, all right, I think I need to start learning about this. And for a long time,

Starting point is 00:03:26 I always kind of blamed the fact that I'd studied communications in college. And I was like, well, you know, I don't understand money. I'm not good at math. I didn't study business. I didn't study finance, come to find out that the people that studied business and finance and understand it either in their own personal lives. They understand it at the corporate level, but just because you study finance in college does not mean that you're going to be good at personal finance. So I think that that was an excuse. And interestingly, the more that I started to learn about it, the more I realized, oh my God, there's so much out there. Like, anything you could possibly want to know is available on the internet for free. So that was what kind of kicked off my

Starting point is 00:04:02 love affair and obsession with financial independence and the math that sets you free and compounding an exponential return. I mean, like, it just built on itself. And so after several years of that, finally in spring 2020, I'm sitting around. I have all this free time on my hands for reasons we all had free time on our hands in April of 2020 and decided that I kind of wanted to add my voice and my perspective to that conversation because most of the people that I was learning from didn't really look or sound like me. And I figured, hey, there are experiences that I'm having and points of view that I have that I'm not really seeing represented. And maybe there are other young women like I was three years ago that have no idea what they're doing, but are

Starting point is 00:04:52 interested in learning more. So that's kind of how I got here. You mentioned finance and accounting and people not even knowing with those degrees. And I can relate because I have friends who studied finance and even accounting and they don't even know anything about the stock market, which I always found amazing. I was like, you guys know all about this. And they'd be like, I know nothing. So I'm kind of curious when you finally sat down, you're like, I'm going to do this. Where did you start? You mentioned going online and YouTube perhaps, but do you recall like the first thing or first resource you found that you're like, okay, this kind of makes sense? Yeah. Yeah. So embarrassingly, the first thing I did was turn to all my guy friends and say, where do you guys learn about this?

Starting point is 00:05:28 because I hear you all talking about money. I hear you talking about what you're investing in. And at the time, they were all, you know, trading and like not, not anything that I do. But one of them sent me an article about traditional versus Roth from Mad Scientist, who full circle moment had him on the show a couple months ago. And it was really surreal. But so I would read Mad Scientist. I would listen to the Choose FI podcast with Brad and Jonathan.

Starting point is 00:05:54 So I kind of was getting it from like all angles. It was like the super nerdy tech. math side, but also learning about kind of the philosophy around financial independence in general, the retire early movement in general, but also just like, hey, there's a better way to go about life than what you're probably doing, how you're probably going about it now, and that, you know, if you just sleepwalk through these decisions, you're going to get really average or maybe even below average results. But like with a little bit more effort, with a little bit more intention, with a little bit more proactivity, you can have a radically

Starting point is 00:06:34 different trajectory in your financial life. So I really do owe, I think, most, if not all, of my foundation and even beyond that foundation to guys like Brad and Jonathan and Brandon from Mad Scientist. You know, you mentioned the retire early trend or moment we're having. And what I find interesting about you is while you may have started. to discover this in the last few years, you went down the very practical traditional road. You didn't come across NFTs and start flipping monkey pictures. I mean, like a lot of people have been doing the last few years to quote unquote retire early. So I'm kind of curious, is there something within you that is just more pragmatic that you

Starting point is 00:07:15 drew you to the more traditional way to study investing? Yeah, I think I'm pretty risk-averse. And I think my investing philosophy really hinges on. things that I can understand. And for me, that usually means, can I point to underlying cash flows? Do I understand why this has value? Do I understand why this makes money? And with traditional equities and things like real estate and small businesses, it's very obvious to me why those things are valuable, why they have money, how they create value. With the more speculative assets like cryptocurrency or NFTs or some of the more unorthodox things that have come onto the scene in the last

Starting point is 00:07:57 decade. For me, there is a bit of a mental block there that despite the research that I've done, I can't really overcome. And so I think for me, it was more so just like, I know this traditional path works because it's worked for millions of people. So I have a fair bit of confidence that it's going to work for me and that there is the historical data there to back it up. So I think that was really kind of why I did consider those things, but ultimately never. very seriously and why the traditional path always felt like it made more sense for me. I'm curious about you digging into all this and not finding, like you said, your own voice or someone who had a voice similar to you or spoke to you. I'm generally curious about this.

Starting point is 00:08:42 I mean, in the last year, I interviewed something like 80 people, I think, and only 5% were female. And that was with me actively seeking female guests. So it's just becoming more apparent to me that there are just aren't enough women in the space that are studying this or at least doing it professionally, shall we say. So when you were getting into this, is that the void you saw for yourself? And you said, look, no one's doing this. And do you have any thesis as to why that is? Yeah, that's a good question. Because there certainly were some at the time, and particularly because my preferred method of information gathering was like books and podcasts and blogs. And so there are people like Paula Pant or Christy Shen.

Starting point is 00:09:25 Like there were some women that I would see, but by and large, it was, you know, majority male. And when I say I didn't see and hear people like me, I partially do mean female, but on the other side of that coin, I think my approach is very irreverent and like a little bit raunchy. And like, I swear and use kind of like explicit analogies. And it's just because that's what's more fun for me. Like that is my personality. And I didn't really come across many personal finance or investing podcasts or blogs that did that.

Starting point is 00:09:59 And even today, we'll get messages or emails moving. Like, I really like your content, but you're kind of unprofessional when you say the F word. I'm like, well, I might not be for you then. But I mean, I think that that is also what I mean, like that very casual and kind of like humorous angle. That was also, I felt like something that I didn't see a ton of. obviously some, but by and large, the stuff I would listen to is very serious and very buttoned up and very professional. And that's just not how I learn best. And I tend to get bored with that type of stuff if that's the only thing that I'm listening to. So I figured that, you know,

Starting point is 00:10:38 that might kind of apply to others. As far as why women aren't as involved, you know, I wonder, I wonder if it does kind of stem from the fact that finance has traditionally been like a male dominated industry. I think you could probably say that about any industry until like the last 20 or 30 years that it was male dominated. I think that that just takes time to break down those walls. And I think if women have historically been excluded from something, like they're probably going to be less likely to be interested in it now. But that's changing. It's certainly changing. So I think with time, we'll continue to see that shift. But good on you for like specifically seeking out female voices. I do think that men and women approach investing and finance differently,

Starting point is 00:11:24 like at an aggregate level. Obviously, there will be outliers within either side, but I think that it is interesting to hear from both sides. I was just listening to a Michael Lewis podcast last night, actually, about that and how women, when compared to men and their investing styles do tend to be more conservative and exhibit less hubris in stock picking, which tends to net better results. So I just I think it's kind of funny because we do tend to have like gender differences in the way that we approach money. And yeah, I think we'll see more women coming into the space. And I think they have been, even since 2020, I've noticed more women coming in. Yeah, I mean, I think you're doing a great service. And to your point about the voice that you're putting, you're presenting, you know, my wife will listen

Starting point is 00:12:07 to your show. She won't listen to my show. So you're doing a great service. And it's no surprise that you've partnered now with Morning Brew. We know those guys well. They've been on the show and, Alex and et cetera. And we've been big fans of them and their voice and the content they've been putting out. So I'm just kind of generally curious how that evolved and how you came to partner with Morning Brew. Yeah, totally. Well, weirdly enough, the way that I met Austin Reach was the CEO completely, you know, random. A couple years ago, I got a traffic citation because I was sitting at a red light reading Morning Brew. And so I tweeted Morning Brew. And I was like, I am so dedicated to this newsletter that I just got a $150 citation for reading it at a red light.

Starting point is 00:12:49 And so then Austin DMs me from the Moring Brew account and is like, hey, we're going to pay for the ticket. Like, what's your PayPal? So then we start going back and forth. I realize, oh, this guy's like one of the founders. We follow each other on Twitter and just kind of had that like periphery acquaintance situation on on social media. Well, then years past when I launched money with Katie, he started following on Instagram. He subscribed to the news. newsletter. And then last November, he reached out and said that they were thinking about expanding more into personal finance content and wanted to know if I'd be open to talking. And at the time, I thought he just wanted to set up like a consulting call or like, hey, you know, what are you learning?

Starting point is 00:13:30 What are you noticing? But then by the end of the conversation, he's like, well, we want to buy you. And I was like, oh, that's not where I thought this was going. So like, yeah, month of negotiations ensues. we talked through kind of like technically what it looks like. It didn't end up being like an aqua hire situation. So like they hired me as an employee to run money with Katie, but then like acquired all the intellectual property and the brand and all of that since it was already kind of like an established business. So it's been interesting.

Starting point is 00:13:59 I think I was the first one that got brought on in that way. But yeah, it's been great. The growth since joining has been explosive and the amount of resources and even things like video editing. Like, I'm not a video editor. But now we're putting the show on YouTube because we have a team of video editor. So it's been a really cool experience to get to plug into an already established kind of media enterprise and benefit from the resources that they have and that like broader

Starting point is 00:14:29 mentorship that you just don't really get when you're doing it by yourself. So I've been really happy with how the relationship is kind of evolved. That's really cool. All right, so shifting gears a little bit, I want to go into sort of the nuts and bolts of what you've been learning about and teaching people about personal finance. And I have this experience, and I don't know if you can relate, but when people text me about, should I buy stocks now or even worse, should I buy company X now, right? It's always telling me that they haven't done the first step of investing, which is, in my opinion, determining what is quote unquote

Starting point is 00:15:04 enough. So, for example, if we're to use this very elegant wealth planning tool that you have on your website. We might find that based on the earnings we're expecting to make and the spending estimates over say the next 30 or 40 years. We may only need like a 7% annual return on our investments to get a comfortable retirement or we might even, you know, maybe on the other hand, we might need like 15%. But either way, it's good to know because that will dictate your investing. If you only need 7%, you know, index funds, great. That might be the best path forward. What are some of the key principles for setting up your own wealth plan that you've developed over time? Yeah. So I think it comes down to a few key variables. And I've been

Starting point is 00:15:48 surprised repeatedly how few people have really stopped to think about these things. And I guess it makes sense because before I kind of fell into this rabbit hole world of fie, I had never really thought about it. But I think what it boils down to is understanding both what you're spending now, so what's your life costs now. And if that is the amount of money that you anticipate wanting to spend in the future, like, is the amount of money I'm spending now sufficient for living the lifestyle that I want to continue to live? Or am I overshooting or undershooting that in any significant way? So because of the 4% rule of research, And I know that there are people that say that, oh, it's no longer valid.

Starting point is 00:16:34 We did a really big deep dive on the pot about this about a few weeks ago. But even if you wanted to say, okay, I'm more comfortable with like a 3% conservative withdrawal rate, it's very easy to take those withdrawal rate best practices, flip them on their head, and say, okay, well, if I know I'm spending X dollars per month, that's X dollars per year, multiply by 12, right? then I'm going to multiply by between 25 and 33 to understand how big my portfolio needs to be in order to reliably spin off that three or four percent number per year represents the amount of money that I want to be spending.

Starting point is 00:17:13 And so what the tool that I built does is it basically asks you, how much have you invested now? What do you have invested in the stock market right now? How much are you earning right now? and what type of raises are you anticipating getting, whether it's 3% per year or 5% per year, so you can kind of project out how that income is going to change. And then really it's just, what are you spending right now?

Starting point is 00:17:38 What is your monthly spend? Do you want to pad it a little bit, assuming you might want to spend more in the future, or are you maybe living like the high life right now and you actually think once you're retired, things are going to get tapered down a little bit? And then it uses those variables along with the average estimated return, which usually will use 7%. I like to do 7% before inflation just so that we're being

Starting point is 00:18:00 super, super conservative and accounting for the fact that we may have higher medical expenses in retirement or something may come along and change. Or maybe inflation will be higher than we're thinking it's going to be or returns are going to be lower. And then it projects out a timeline for you to say, based on what you currently have, what you're currently earning, and what you're currently spending, this is tentatively how many years away you are from having that critical mass invested to where you are now work optional, that you do not have to do work for money anymore, that you could feasibly live off of this investment portfolio, and theoretically never run out of money.

Starting point is 00:18:39 Obviously, there are myriad assumptions baked into that. Like, sequence of returns risk is kind of ignored because you're just assuming a flat 7% down the line. It's also assuming that inflation stays relatively consistent and that the actual holdings that you have are invested in such a way that they will reliably produce 7% per year, which no one knows for sure, but we know what types of indices and decisions will get us closer to that than maybe like yoloing everything into Tesla. Like nobody knows how that's going to pan out 40 years from now.

Starting point is 00:19:10 But what it does, I think, is it gives you an estimate, right? It gives you a helpful ballpark. So even if I think I need $2.3 million, but what I actually need is $2.7. Okay, but I'm still on the same planet. I'm still in the same universe of what I'm actually going to need. Whereas if I've never thought about this or never bothered to run the numbers for myself, I have no idea how much money I need to have invested. I don't know how close I am.

Starting point is 00:19:36 I don't know how much longer I need to work. And I find that when we don't know the answers to those questions, it's very hard to make strategic decisions about your life and your life style. Maybe I should scale up into a bigger home because maybe I'm five years away from five and I have no intentions of stopping working and like I'm making great money. Okay, well, then maybe, you know, increasing the mortgage payment by $500 a month is truly not a big deal. But if you're 20 years away and a higher mortgage payment is going to make it such that you are 30 years away, well, that decision is going to look very different. So I find that it just gives you a really nice

Starting point is 00:20:13 baseline that you can then tweak those variables and say, okay, if I spend more or I spend less, how does this timeline shift? And it gives you, I would say, like, more evidence-based footing for making those types of decisions versus just being like, I don't know, I hope it works out, maybe. Yeah, you know, what you're saying there was making me recall an experience I had when I was just a musician. And I couldn't even fill out a retirement form because I was like, I don't know, they were like, how much money do you make? I'm like, which month? know, like what year? So I know you speak to a lot of people who either have side hustles or they're doing contract work. What's your advice for them? Like if they don't have such a predictable source

Starting point is 00:20:53 of income? For people that have variable income, I think you almost just have to walk at one step back and assess your lifestyle based on, you know, more stringent, like fixed needs versus discretionary spending. So obviously with your fixed expenses, those are bills. that have to be paid every month. It's not like you can scale up or down on how much rent you pay, depending on how much you're earning. Like, that is what it is. Whereas, like, you might have an amazing month and decides you're going to go out

Starting point is 00:21:25 to eat a little bit more. Well, that's discretionary. And you're, you know, reacting to your income. So I think for people that have super variable income, I would recommend really having a solid grasp of what is the bare minimum you're going to need every month to survive comfortably. and then making sure that you have a few multiples of that in like a low month fund, separate from an emergency fund, but almost like a floater, if you will,

Starting point is 00:21:53 where if you are having a lean month income-wise and you're going to need a little bit more to make ends meet, you can pull from that kind of like floater fund, whereas if you're having an amazing month and like you're crushing it, well, then that's a month where you would maybe replenish what you took out the previous month where things were not as good. But I think ideally, you want to get it to the point, I think that like your cash flow is predictable to the point that even in a lean month, you're not going to have any trouble paying the bills. I think that's obviously everybody's hope is that they're not having to dip into savings in a month where like their income is maybe

Starting point is 00:22:30 less than they were anticipating. And I think that that just speaks to like truly living beneath your means and choosing fixed expenses that are not going to stretch you thin or require you to have a banner year in order to like service those debts or service those payments. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its

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Starting point is 00:26:38 sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. Yeah, the idea of an emergency fund is kind of an interesting topic, and I know it's so subjective, but I love that you highlighted this in one of your blog posts about, like, this probably came from Dave Ramsey or something because there's this idea that you need. And then we all just blindly

Starting point is 00:27:10 Yeah, okay, because there's this idea out there that you need three to six months of cash. And, you know, it depends on if you have kids or if you're single and all that good stuff. But in your experience, why have you found that that might not be the right number? Yeah, well, for one thing, I think you nailed it when you said like, you know, it probably came from Dave Ramsey. I feel like it's arbitrary. Like I, when I found myself thinking about it one night, and I was like, what is the emergency fund really for? Like, why do we have a cash cushion like that? And the reality is that it's to prevent us from going into debt. If we need enough money in cash on the side to prevent us from going into debt, it probably makes sense to think about, well, what types of

Starting point is 00:27:55 things could send us into debt? And that is dependent on your lifestyle. If you are a, a childless renter, the extent of the emergencies that are going to impact you are probably different and smaller in scale than the extent of the emergency that's going to impact the homeowner with four kids. So I think it's worth thinking about on the personal basis, like what really constitutes an emergency? And I find that when we talk about emergencies, we think about them in kind of two general camps. There's the stuff like, oh, the tire, you know, I ran over a couple of nails and I had replace two tires unexpectedly or I need a new H-FAC system because that broke. Well, if you own a car and a home, chances are you know that at some point you're going to need new tires and a new

Starting point is 00:28:43 roof and a new H-FAC system. Those are not unexpected emergencies. They're actually quite predictable from the standpoint of like, you know if you own those things, you're going to have to pay for those things eventually. The timing might be unpredictable or a surprise, but hopefully we're thinking about those things before they're happening and planning for them. The other side of the stuff that usually gets brought up in this emergency fund discussion is something like job loss or like total loss of income, whether that be through something like as routine as a layoff or as extreme as like you become disabled or like something like in your life majorly changes. And I found that when I was thinking through worst case scenarios, you know, the worst case scenario,

Starting point is 00:29:29 I think Tim Ferriss calls it fear setting, like actually allowing your brain to go to the worst case scenario and then thinking, okay, well, what would I do? And I think in a total loss of income situation where all of our sources of income went away overnight, the first things that I start thinking about is, well, okay, that vacation that we planned to Scandinavia, probably not taking nut, probably not booking the five-star hotel, probably not going out to eat three times that week, probably not shopping for new clothes. Very immediately, there are things that are baked into our regular budget that are most likely going to get slashed if we find ourselves in a position where the $10,000 we thought was coming in. Next month is no longer coming in anymore. I also think it's worth thinking through in those types of worst case scenarios, what other resources are available to you? if you are somebody that is married and both of you have good relationships with your parents and those parents are financially secure, you might actually be able to move home in a situation where something goes super awry long term or you may be able to borrow money from those parents or go on unemployment. I think the worst case scenario for most people is a lot less extreme

Starting point is 00:30:43 than we think. And sure, you probably don't want to move home or borrow money from your parents, But if push came to shove, I think it's worth acknowledging consciously that that is an option on the table. And maybe I don't need $100,000 in cash sitting in my savings account. So I tend to think that those are the types of things that we want to be asking on a personal basis to determine what is an appropriate amount of cash to have on hand. And the reason I think those questions are important is because I find that more often than not, a lot of the people that I talk to, they haven't undersaved, they have oversaved. And that cash has become a bit of a security blanket for them. And it's preventing them from investing more aggressively because they have this notion

Starting point is 00:31:30 in their head that it's not safe for them to have less than $60,000 in cash in their savings account. When in reality, if I'm like, what is going to happen to you that you're going to need $60,000 like on that short of notice? And typically, people can't think of an answer. It's really just like a psychological barrier. So I think to avoid cash drag, especially when you're young and to like avoid that scenario where you are over-saving or like way too cash heavy because of some like nebulous

Starting point is 00:32:00 abstract emergency that could come up, I think it just is worth taking the time to define what emergency would actually mean for you and what other resources you would have available to you if that were to happen. Yeah, you can't save your way to wealth, right? And so I'm curious if you came to this conclusion, because as you kind of highlighted there, I think with cash drag, this idea of understanding compound interest and being like, okay, well, every dollar I put into this machine is going to benefit and multiply over time. So therefore, I want to put as much of this dollars into that machine as possible. And so I can skim back on things that, as you mentioned, create a cash drag or something that takes away from that ultimate total return. So I'm kind of curious if you have an emergency fund, and it may be less than through your six months. And even if it is, I guess, where would be the best place to park it, right? Is it best sitting in cash or under your mattress or other vehicles you found that, you know, still generate some kind of yield but are still liquid enough? Yeah, totally. Well, and I do think,

Starting point is 00:32:59 like, you want to have some cash, no doubt. Like, the worst case scenario, I think, is finding yourself in a position where you're strapped for cash and you're having to sell equities at a loss. It's like, well, you played yourself because now you're locking in a loss that you wouldn't have had to. So I definitely don't think you should invest every single dollar, but for us personally, we don't have kids and we do rent. So that does change our risk profile a little bit. But my preferred method is to just have two months worth of full expenses. So like our normal budgeted expenses with nothing cut down in checking at all times. So we spend between $7,500 and $8,000 a month, just the two of us. So at any given time, I want to make sure we have $15,000 or $16,000

Starting point is 00:33:51 in that checking account. And then anything in excess of that that comes in from income or from paychecks, I will just immediately move it into our investment accounts. So as long as there's more money coming in every two weeks, that threshold should never really be breached, even as we're like paying off bills or, you know, paying credit card bills that are coming in that may be $5,000. But as long as there's more money coming in, it's constantly being replenished. Beyond that, we tend to just treat our taxable brokerage account as like a backup emergency fund. Like if for some reason we needed more than $16,000 in one fell swoop immediately, we could tap that taxable account. But I tend to think, like, hopefully your emergency fund is not so large that you're really

Starting point is 00:34:42 giving up a ton of interest by having it just sitting in cash. I know some people don't like to have it in checking because it's like tempting to spend it or it makes them feel like, oh, I have more money than I actually do or I actually want to spend. But I think once you get to the point that you've mastered your cash flow enough and mastered your own kind of self-discipline around spending, and especially if you have multiple sources of income, I think it's okay to just have it in a checking account, especially like in today's day and age where there's no ostensible difference between your checking and savings account interest-wise. It's not like you're really going to get any benefit from putting it in savings except for maybe that

Starting point is 00:35:24 additional friction step of having to move the money over. But for us, it just is kind of the easiest path of least resistance to just have the cash that we've got sitting in checking. And if we need it, we need it. And if we don't, we don't. But we just try to keep it, you know, at or right around that 15 or 16,000 mark because that's two months worth of expenses. You know, another thing that I think is sort of missing in this whole picture is the best way to budget. And what I mean by that is not like the tactical, well, I guess it is kind of tactile. I'm more talking about the tools required to budget properly, especially when you have a family or your dual income and you have like some complexity. So, you know, for example, my wife and I ended up just building like a pretty

Starting point is 00:36:07 robust pro forma Excel sheet that's like broken down per month because each month is different. The kids might have an expense that's different and it's not every, you know. So what have been the ways that you've solved for budgeting and what do you recommend to most people how to get started. Yeah. So I like, I kind of use a hybrid approach. I have a spreadsheet called a wealth planner that I use, but I also use an app because we do have, we're into like the credit card hacking, travel rewards, all of that. So we each have five or six credit cards that we're going to be using for different things depending on if we're trying to hit a spend threshold to get a sign up bonus or we're buying something where it's five X points versus two X points. And so I think once

Starting point is 00:36:51 you get to the point that you're dealing with, you know, 10 to 12 credit cards between two people, that's a lot to keep track of manually and a lot of accounts to kind of be like keeping tabs on. So I really like this app called Copilot. It was founded by an ex-Google software engineer. And so the user experience is just amazing. It's available in the US and on iOS system. So not Android yet, but I do believe they're working on it. And it's like six or eight bucks a month. I mean, it does cost some money, but for me, the benefit of having all my credit cards, all of our cash accounts, like checking and savings accounts, all of our investment accounts aggregated in one spot where every transaction is neatly categorized automatically

Starting point is 00:37:39 has been such a game changer because I can go in and know that anything that happened in our financial universe is going to be cataloged in that app. going to see it. So I'll always joke like my husband will buy lunch at work when I thought he was bringing his lunch. I'll be like, what was this $14 charge from this Mexican restaurant? Like I, he calls me a story of my life. Because I'm always like, I just want to know where it's going, what we're spending. And to make sure that it's actually you too, because there have also been times where like, I'll see a charge come in and I'll be like, that looks weird. And it was fraudulent. So it's helped me to catch that kind of stuff in a way that I absolutely would not have if it were on

Starting point is 00:38:18 me to be logging into all 12 credit card accounts every day and keeping tabs and micromanaging every single little transaction. So anyway, I'll use co-pilot throughout the month to make sure all the spending is captured and, you know, daily go in, make sure things are being categorized correctly. And then at the end of the month, I'll sit down with the wealth planner. I'll plug in how much we earned, how that kind of tracked to what we thought we were going to earn the final totals for every budget category to see like how much we've actually spent. I had to add a new one this month because our wedding ceremony is in two weeks. And so we've been paying these like 10,000, $15,000 invoices. So our budget looks ridiculous this month. And then like what we've saved and

Starting point is 00:39:04 invested and where that money went. So just so we kind of have a track record of like, okay, we put in this much to our 401ks this month. We put this much in the taxable brokerage. And then I really like the wealth planner. This is like such a shameless plug because I built it, but I really like it because it does show you this like bird's eye view of throughout the year, you know, what your overall save rate is, how you're progressing towards your FIGL, your tax advantage investing versus your taxable investing. It's very helpful at tax time when you're trying to go back and confirm, like, oh, I did put X amount of dollars into this solo 401k for my side hustle. And, you know, that was an over-contribute.

Starting point is 00:39:45 So now I need to go take some out. It just says I love having everything in one place. So I kind of mix and match the automatic with the manual to have a system that works for us. Fantastic. And for those listening, all those resources or as we're collecting them, we'll put them in the show notes so you guys can find them and find the links. You mentioned earlier a taxable brokerage account that you used. And, you know, it seems like the most popular route to investing in over the last couple of years has been something like Robin Hood. and you would think that people signing up with these taxable accounts are missing out on a bunch of tax savings.

Starting point is 00:40:20 And my first question around this is related to the fact that a lot of listeners don't make their primary income from investing. So what would be the optimal account types for those who are working off of W-2s or even self-employment? Yeah. So I think Robin Hood really is kind of a gateway drug. Like it was what got me into investing because I had a friend that, you know, I wanted to start. I was very intimidated by like the Vanguard website, the Fidelity website. I didn't know how any of that worked. Robin Hood was like built by millennials for millennials. So I'm like, okay, cool, I'm going to go buy some ETFs. So it's not that I necessarily think there's anything like

Starting point is 00:40:56 inherently wrong with it, just that I think we tend to underestimate the tax savings that we are giving up when we invest our investable dollars in a taxable account instead of a tax advantage account. And so for me, the big neon flashing light is like if you have access to a 401k, whether that's through your employer, maybe of a 403B or 457, like there are plenty of different types depending on industry and whatnot. But if you have access to an account like that where you can put in pre-tax dollars, and for the self-employed, this would be solo 401K or CEP IRA, it is hard to overstate how valuable that upfront tax savings can be, particularly as you start to make more money. So, for example, if I have, let's say, my investable funds this year comprised just that $20,500 amount that I could put into a 401K.

Starting point is 00:41:55 That's your maximum contribution for 2022. If I put it into a 401k pre-tax and I am in the 24% tax bracket, that is about $5,000 worth of tax savings that I'm getting. That's money that stays in my pocket that I no longer have to pay to the IRS this year because I put $20,500 into that 401k. If I were to take home that $20,500 and then invest it on my own in Robin Hood, for example, or anywhere else in a taxable brokerage account, I now, my tax bill is, you know, I'm paying that full $5,000 in taxes, or I think it's like $4,920 or something. I don't remember exactly off the top of my head.

Starting point is 00:42:37 But that just means that now whatever I invest in in that taxable account has to make an extra $5,000 this year just for me to break even with the tax savings that I gave up by not investing in that 401K. So I think for a lot of people, the reason, that there may be a little bit hesitant about some of these tax-advantaged accounts is because on the surface, like they are locking up your money, so to speak, like, oh, I can't access this until I'm 59.5. What if I needed earlier? But that's the beauty of all these nerds who read the IRS website for fun is that in the financial independence retire early community, they've all figured out all the loopholes and all the tax footwork that you have to do to get out

Starting point is 00:43:22 this money early with no penalty. And in some cases, completely tax-free. So once I learned about all of those loopholes and kind of how to enact them in my own life, I became infinitely more comfortable with the idea of locking up my money because I knew it wasn't truly locked up. And I knew that each year that I'm, you know, clocking in that $5,000 plus tax savings, that that is just bolstering my path forward and creating even more investable income that I can now turn around and put somewhere else. So I'm a huge proponent of pre-tax. I love traditional 401K, solo 401K, what have you.

Starting point is 00:44:01 And then there's obviously also the Roth options. You can do a Roth 401K, no upfront tax savings, but I think everyone probably listening to this understands the benefits there. You've got your Roth IRA. So there are plenty of different vehicles, but I do think that while that tax diversification is important and you probably want to have some money in a tax pool account, I do think it's silly to like completely ignore something like the 401K or to not take any advantage of something where you're going to be able to significantly reduce your tax bill.

Starting point is 00:44:33 I think we've reduced ours this year by like $30,000 or $40,000 by using solo 401K and 401Ks. So when does a taxable account actually beat something like a Roth or how do you come to that conclusion to say, okay, in this instance, this makes more sense? Yeah, I think the, so when we're talking like pre-tax traditional stuff versus taxable accounts up front, I think it's pretty hard to make the argument for the taxable. But when we're talking against something like Roth, particularly in the drawdown phase, I think we don't give the taxable account enough credit. And the reason I believe that is because the capital gains tax brackets are so favorable to investors as opposed to the way ordinary income. is taxed that I was just looking at this this morning. I'm pretty sure a married couple, like if you were a married couple in 2022 and you had no other ordinary earned income, like you were just retired living off of your assets, I'm pretty sure you could withdraw $109,250 from a taxable account this year and pay $0 in taxes. Because the first $83,350 of gains is taxed at zero percent. And then you've still got a $25,900 standard deduction. So at that

Starting point is 00:45:58 drawdown period, as long as you're not withdrawing hundreds of thousands of dollars, the chances that you're going to pay nothing or next to nothing on those capital gains is pretty good. The only, I guess, caveat to that that I would make is that the Roth is preferable from the standpoint of like every single year that passes, it is tax sheltered. So if you're doing any rebalancing, you're not going to pay taxes on gains that are realized. Or if you have dividend income or like interest income from bonds in a Roth IRA, you're not going to pay any taxes on that every year. You're paying it up front and then you're done. But typically, I think for most people, the dividend income and the bond interests that they're paying taxes on as they're accumulating wealth over time is probably

Starting point is 00:46:47 pretty insignificant compared to the overall amount in the account. And so I think in exchange for the level of flexibility you get with respect to no contribution limits, no penalties for early withdrawal, really no rules whatsoever, I think it's a pretty fair trade. So I tend to put Roth and taxable on fairly equal footing. The Roth edges it out a little bit. But I think I do think that when you're in that drawdown period, the taxable is actually a pretty dang tax-efficient means for living off your own wealth. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect

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Starting point is 00:50:46 This is a paid advertisement. All right. Back to the show. So you and I, I think, differ right about here as far as like our focus. So for example, I got into sort of the personal finance side of things. And then what really grabbed me was what I call sort of the art and science of picking stock. So we talk on this show, for example, a lot about stocks. Because to me, it's like a Rubik's Cube or something where you're,

Starting point is 00:51:10 You're uncovering this value and finding something that's underpriced in the market. And it's so rewarding when it pays off. And there's some kind of game to that that I really like. But traditional advice would tell you to stay away from picking individual stocks and just to do something like an index fund. So I'm curious, in your experience, have you come across this decision for yourself or what you recommend to other people? Is there a time where it makes sense to invest in singular stocks versus just putting something

Starting point is 00:51:39 into an index fund if you're not doing it professionally every day? Yeah. Well, for me, the answer has been no. And the reason the answer is no for me personally is because I think there's this guy named Jack Raines. He's a great writer. And he wrote an article recently that I think encapsulated it perfectly where he basically talks about the true cost of alpha.

Starting point is 00:52:02 And he's like, if you make a winning pick and let's say it nets just making the same. up, you know, $10,000, right? Well, if it took you 50 hours to analyze that stock and to determine that that was going to be the one you wanted to buy, then, you know, that $10,000 was not free. It cost 50 hours of your time. So it's like getting paid out $200 an hour. Now, in some cases, that's going to be a pretty good trade. I think $200 an hour is a great return. But, you know, in some cases, if you don't have much to invest or even a 100% return on something is only going to net out to be a thousand bucks, it may not be worth your time. And so for me, I've found that like, A, I don't trust myself enough with individual stock picking to like take that risk.

Starting point is 00:52:54 I think the risk reward analysis for me is a little bit lacking. Like, sure, I could, you know, strike it rich and have it really pay off or I could totally like, blow it. my entire bet. And so for me, I think it comes down to that risk or reward. I'm like, or I could just put it in an index fund where I'm fairly certain it's going to do what I want it to do. And it takes me no time to do that. I'll take that bet all day long. But I know that that's not how everyone's brain works. I just think that I know you've had Nickma Julian before. I think his, his philosophy on this is probably the most persuasive, which is just that it's very hard to know if you're actually good at it. You know, how many years are you going to allow

Starting point is 00:53:34 yourself to lose money before you say, maybe I'm just not that good at this, or maybe you do really well for a year, but how are you going to know whether you're actually good or you're just lucky? It's very challenging to make that distinction with any level of certainty. And I think when we're talking about like long-term wealth building and something as consequential as that, I would be very leery to put up too much of my net worth to that level of risk. My husband's a little different. He does like to, you know, I think like between five to 10 percent of his half of our net worth is like allocated to individual stocks and, you know, bets that he's making. But I don't know. I just think when I think about it practically, like the amount of time

Starting point is 00:54:20 and effort that I would have to spend analyzing fundamentals to find something where I'm confident that it has not already been priced into the market, I think it would probably take me a pretty long time. So that's how I personally think about it for myself. But I know that there are people like you who like really enjoy it and get enjoyment from it. And in that case, it's probably both like the monetary return of when it really pays off and also the hobby aspect of it. So I don't think it's necessarily something that I'd say someone should never do. But I think if your ultimate goal is to have as much money as possible, then statistically speaking, the way to do that is probably pretty clear. I just can't help myself. That's the problem.

Starting point is 00:55:03 So anyway. Exactly. So I'm not going to tell you not to. So we could go out there and buy, say, a total market fund and just like set it and forget it, check back in 40 years. But even that might not be the most optimal allocation. So in fact, one of your recent blog posts, it stated that that might be the fifth best strategy based on your back test.

Starting point is 00:55:23 So walk us through the results of this back test. And what surprised you the most of these findings? Yeah. I think when I started learning about FI, it seemed like, everyone was beating the drum of VTSAX. And it was almost like a foregone conclusion that just owning the total stock market and not even the total global market, but just the total US market, that that was always going to be the best path forward and that that was, you know,

Starting point is 00:55:51 totally diversified because you own everything. And the more that I learned about it, the more I realized that that level of diversification that you think you're getting by owning the whole market, air quotes, is a little bit misleading because it's still a cap-weighted fund. So you're still very overweight large-cap companies and in many cases, large-cap growth. So the more that I kind of dug in, the more curious I got about, hey, it seems like we would be well-served to include some small cap and to include some value and maybe some emerging markets and maybe, you know, some global index funds.

Starting point is 00:56:34 And what about bonds? Like there were just so many things that I felt like we were completely ignoring by saying that all you needed was VTSAX. So one day I just sat down with Portfolio Visualizer. And I truly built random portfolios. Like there was no research or like rhyme or reason, really, that I like diversified outside of the total stock market in these back tests. I just wanted to see like to.

Starting point is 00:56:58 what degree do randomly assorted diversified portfolios underperform or outperform a 100% U.S. total stock market portfolio? And I did a 25-year look back because I felt like that was a little bit more in line with like an average investing timeline would have gone back 40 years, but because of the way some of these tickers have changed and asset classes have changed over time. I felt like that maybe would have skewed it a little bit. So in any case, I did 100% U.S. total stock market as my baseline test, a 50% large cap growth, 50% small cap value, so like polar opposites, a 90% U.S. large cap growth, and then 10% total bond market, and then a 50-50, you know, total stock market, total bond market. And then a really random grab bag one that was

Starting point is 00:57:53 50% large-cap growth, 10% emerging markets, 20%. 25% small cap value, 10% global stocks, whatever the allocation was in portfolio visualizer that it gives you for international, and then 5% bonds. So very random allocations. And then a 100% small cap value just to see what would happen. And it was interesting because the top performer was the 50% large cap growth, 50% small cap value. It had an average annualized return of 11% every year, for that 25-year period. So that is compared to the 100% total stock market portfolio that had a 10% average annualized return. So you've got a full 1% higher return over each year, over those 25 years, which is a pretty substantial outperformance when you're talking about something that's

Starting point is 00:58:45 compounding over time. And then all of the other portfolios I tested outperformed the 100% total stock market portfolio, everything that had even a little bit of diversification outperformed, it was just a matter of like to how much did it outperform. The only one that did not beat 100% total stock market was the 50-50 portfolio, and that got about 8%. So it didn't even underperform as much as I would have expected it to. So yeah, I think it just speaks to the fact that you don't have to be a day trader and you don't have to add a ton of complexity to do a little bit better and to have a little bit of diversification, that even just adding a few different indices will likely protect your downside,

Starting point is 00:59:34 especially in periods like the 2000 to 2009 era where I'm pretty sure the S&P 500 was lower in 2009 than it was in 2000. But it's hard to say. And I think especially with things like small cap value, like the historical precedent is there. But I think since the 90s, like the value premium in the U.S. has been not really observable. So I don't know. I don't know what's going to happen in the future. But I do think that there is a fairly compelling case to be made in the data that diversifying beyond the U.S. total market is generally a good idea. So if we're talking about building wealth, you get a lot of opinions out there saying that either real estate is actually the best way to build wealth or there's people that say collecting

Starting point is 01:00:16 small businesses is the best way to build wealth. Things outside of the stock market. In fact, one of the books that made an impact on me early on was rich, dead, poor debt. I don't even think it talks about the stock market at all in that book. It's like buying actual assets that produce cash flow. So I'm kind of curious, when does it make sense, in your opinion, to consider those kind of ways to diversify outside the stock market? Totally.

Starting point is 01:00:38 Well, for one thing, I think we have a bit of a recency bias with these types of comments. Like the last couple of years, I mean, everything's been going up until, right about now. So yeah, if you were like, oh, real estate's the best investment possible. If you said that in 2021, people are going to have a hard time disagreeing with you. You say that in 2009, people are going to call you a moron. So I do think that like the recent history of what we've seen impacts kind of what camp gets an edge. But, you know, there are numbers that you can look at that will tell you that if you are a really good rental property investor or you have a holding company that acquires small businesses and you're pretty hands off, that, yeah,

Starting point is 01:01:20 those higher effort exploits are generally going to outperform just buying a broad-based index fund. But in exchange for that overperformance, you are putting in a lot more legwork. It is much harder to find a real estate deal that is going to cash flow, to rehab it appropriately, to find tenants, to get your property management in place if you're going to use property management or on the small business example to find the deal where even if things go sideways, you're going to be okay liquidating what you've gotten. You're going to be fine. You've got a good operator in place. You are paying a premium for that premium. And it's typically coming at the cost of your own time and energy. So I think if you're okay with that and you're interested in that

Starting point is 01:02:06 and you want to do that for the higher returns, then great. Those are probably asset classes that make a lot a sense for you. I think if you're somebody that has two kids and works full time and just wants to passively build wealth in the background, I think it's probably hard to make an argument that just investing in passive index funds is not the best thing to do. I think that it's probably pretty clear that that's going to be the easiest and best path forward. But I think it totally depends on your energy level and your comfort level with risk. Because in both the small business space and the real estate rental property world, you're dealing with leverage, often in a way that you're not dealing with when you're talking about investing in index funds. Of course, you can trade

Starting point is 01:02:49 on margin, but that's not super advisable because obviously leverage is going to magnify your gains and your losses. So I think for me personally, we've definitely, I mean, our entire net worth is in the stock market. We don't own any real estate. We don't own any businesses, despite my best efforts recently. So I think that it's probably the best way for everybody to start. And then from there, you can make that call about, do I want to invest in something that's going to be higher risk, higher return, higher energy output? Or am I making $500,000 a year as a partner at a tech company? And I'm actually cool with just shoveling hundreds of thousands of dollars a year into the market

Starting point is 01:03:31 and doing practically nothing for my returns. So I think it depends on your circumstances quite a bit, especially like I know people that got into rental property investing because they didn't make much money. And so it was a way for them to use leverage to their benefit and to kind of compensate for the fact that maybe their jobs are not as highly paid as they would have wanted. So I think that those are some other considerations that help determine whether something is best for you or not. I want to stick on this idea of time and energy. Something you said a few moments ago stood out to me, and it was around comparing indexing to just stock picking and the amount of time and energy

Starting point is 01:04:08 that might go into that stock and the tradeoff of that. And this really is an interesting line to draw because when it comes to personal finance, you often see sort of this overuse of ideas of frugality, for example. So one of my favorites is it was in Carol Loomis's book about Warren Buffett, tap dancing to work, and there's a story about them walking down the street and he had to make a call on a pay phone and he had a quarter, but it's a 10-cent phone call. So he's a went into a store to break the quarter to like two dimes and a nickel to like because he didn't want to overspend, you know, on that tense. I mean, the guy was a billionaire at this point, right? So what's funny is when you often get to these levels of wealth, you can't turn off that

Starting point is 01:04:47 frugality switch that kind of got you there in the first place. And Peter Malook, another guest previously on the show talks about this a lot with his clients. And he says, that's been the hardest thing for him to get his clients to do is turn off that switch, especially later in life and say, okay, look, you made the money. Now enjoy it. Now use the money for. what it's meant to be for. So what is your typical advice about, you know, once say we've gotten there, we've gotten to, I mean, neither of us have yet, right? But when we've gotten to that comfortable retirement stage, you know, how does the brain supposed to shift at that point? And how does your strategy shift from there? Well, and the one thing I want to say about Buffett is like,

Starting point is 01:05:22 I hear stuff like that all the time. Or like, oh, he still eats McDonald's. Oh, he still lives in his same house in Omaha. And it's almost touted as like, that's what you have to do. to be a billionaire. It's like, the dude also has a private jet, and we don't talk about the jet very often. But like frugality is not what got Warren Buffett to be a multi-billionaire. That was not the path forward. It's not like he was like buying generic brands at the store and woke up one day. So I think it's, I always like to call that out when I see that because I think it's

Starting point is 01:05:52 very misleading. And it, it does put that unfair expectation on people that like once you have wealth, you shouldn't even enjoy it because it almost makes it like a moralistic thing. Like, there's something wrong with enjoying your money or that it's irresponsible to spend your money. And I just don't think that that's true. I think when we talk about like mindset shifts around that sort of thing, I kind of think about it in two different ways. A, it's going to feel unnatural. I think no matter what, if you're someone that has been, even if you're not frugal, like I used to be very frugal.

Starting point is 01:06:27 I would not describe myself as frugal anymore. Like, my cleaning professionals are downstairs as we speak. We have food being delivered this afternoon for the week from the local chef service. Like, we definitely pay a premium for convenience now. And we do like to enjoy some of the money that we have. But I think even if you're not frugal, that mindset switch from, okay, I'm working, I'm earning, I'm earning, I'm saving, I'm saving. Now let me throw it, put it in park, throw it in reverse and just immediately start going

Starting point is 01:06:56 backwards. That's going to feel crazy no matter who you are. So I think it's something that I was talking to Chris Peterson from Paul Merriman's Financial Education Foundation the other day. And he said that when they retired, it took them like three years of drawing down assets before they actually got comfortable. And we're like, oh, it's okay. Like we're not going to run out of money. We're going to be fine. Look, we have more money than when we started with. And I think that that's probably like a realization that each person, while you can cognitively understand that, it's almost like when the market goes down,

Starting point is 01:07:29 You think you're going to be fine. You think you're going to hold. You don't know what you're going to do until you actually see that number on that screen going down. I think it's the same thing. You don't know how you're going to react in retirement until you're actually putting it in reverse for the first time. And if you've got to go a little bit slow at first, I think that's okay. But I think it's something that we have to actually experience for ourselves that like the world doesn't end when we buy the appetizer. Or we select the more expensive option on the car.

Starting point is 01:07:56 Or we book the first class flight. Like, oh, what do you know? I didn't bankrupt myself. Everything's actually okay. And I think within a reasonable parameter, like as long as you're actually calculating a safe withdrawal rate and have a solid plan in place and you are properly diversified, I think within those parameters that you're checking all those other boxes

Starting point is 01:08:17 and you're being responsible about the way that you're approaching and stewarding your wealth, I think that most of us will come to the point where cutting those types of corners and being unnecessarily frugal, will start to feel a little bit silly. Okay, I have a last question for you, and there's no wrong answer here. I'm just kind of generally interested in your opinion here. So essentially, it's around philanthropy. So I've heard this idea that money is just a magnifier, right?

Starting point is 01:08:43 So if you're a philanthropic person, you can make more money, you're going to give more. If you're a materialistic person, you're just going to spend more. And there is also this idea of building your wealth to then give it away versus giving away, you know, as you go. So I'm kind of curious, you know, Bill Gates, for example, he was so frugal, or you could call it another name, but, you know, he waited until he was, you know, compounded as much as he possibly could. And then he flipped in reverse, as you said, and said, okay, I'm giving this all the way. There's that approach or there's giving while you go. So where do you stand on this line? Not that there's a wrong answer, but is there an approach that you found works best for

Starting point is 01:09:22 you or that you've thought about or that you may be like, you know, again, in the words of Peter Luke, he would say it's better to give with a warm hand than a cold one, right? So, which really stuck with me. But I'm just curious. Yeah, I'm curious if you've given this any thought. Definitely. It's funny timing that you asked this, too, because recently we just did two some kind of substantial fundraisers on, you know, money with Katie, Instagram.

Starting point is 01:09:47 Instagram will allow you to attach a fundraiser to a post and raise money for things. So we just did one a couple weeks ago that raised, I think, $21,000. We set the goal at 10,000. We did one last week that raised last I checked. We hit our goal. We wanted to raise 5,000 for something. And it's become more of a focus for me recently because I finally feel like I'm at the place where I can give generously without feeling like I am disadvantaging my own future by doing so.

Starting point is 01:10:17 So I kind of think about it like the oxygen mask analogy on the plane. I wouldn't recommend putting on someone else's mask first. But like if yours is on, then it's probably okay to look around and see if other people need help. Like I've met people that were already kind of struggling that we're still trying to tithe and give away 10% of their income. And you kind of have to have that tough conversation of like your heart is in the right place. And I'm amazed by your selflessness. But you are never going to be able to retire if you keep doing this. And you are going to eventually put that burden on someone else, whether it be the state or your kids or someone is going to have to fund your lifestyle when you can

Starting point is 01:10:56 longer work. And if it's not going to be you, it's going to be somebody else. So it's, you know, it's good right now that you're giving so much and it's amazing that you're so generous, but you want to make sure that you are protected and set up first. So I think beyond that initial level of like, I am tracking toward my financial goals at an appropriate pace, I do think it, I am more in the camp of like, I'd rather give it away as I go and allot it into the budget. what is an appropriate amount of money that I feel comfortable giving away every month? And is there a particular cause that I can set up a recurring donation to? Because I know that charities really like that because then they can budget for it.

Starting point is 01:11:36 And it helps their cash flow if they have the same amount coming in every month, as opposed to just waiting until the end of the year and then like giving some big amount or waiting until the end of your life and giving some big amount. They're obviously not going to turn that down. But like from a planning perspective on your side and like from their side, I think it is preferable to have like that recurring money coming in. So I think I'm more a proponent of that, but again, not until you are in a position where like you are cruising, you are cruising altitude.

Starting point is 01:12:04 We'll put it that way to extend our plane metaphor. I love it. And I think you're right about that. I mean, it's also assuming you live long enough to give it away too, right? So you have to make that assumption. So anyways, Katie, this has been so much fun. I've learned a lot. and I've really been enjoying the content you're putting out.

Starting point is 01:12:23 And thanks for coming on our show and sharing so much of it with us. And I know our audience is going to get a lot from it. So you've provided a ton of resources already. But before you go, I want to make sure you can hand off to our audience where they can learn more about you and your blog and your blog and your podcast and anything else you want to share. Thank you so much. And likewise, really enjoy your content as well. I'm excited to have you on my podcast. Shameds, shameless plug.

Starting point is 01:12:44 So, yes, blog is at www. W.MoneywithKady.com. I publish every Monday, rain or shine. So there's always a new blog post out on Mondays. Money with Katie show on Apple Podcasts, Spotify, wherever you get your podcasts. And we publish a new episode every Wednesday. If you're listening to this right now, I assume you like podcasts, that's probably a good fit. We cover all sorts of topics from the very technical to the very juicy, like this week's episode is about pre-ups. So that should be fun. And then Money with Katie on Instagram and Twitter. trying to take a little bit of a social media break right now, which is kind of hard when your full job, like full-time job as being a content creator, but trying to get a little bit

Starting point is 01:13:26 of distance right now. So yes, Money with Katie on Instagram and Twitter is where you can find me. And we are posting every single day, whether I like it or not. Well, Katie, congratulations on all your success today. And I'm looking forward to following along. So we'll do it sometime again soon. I appreciate you at the time. Absolutely. Thank you so much, Trey. All right, everybody, that's all we had for you today. If you're loving the show, don't forget to follow us on your favorite podcast app. If you're ready to start learning how to invest, be sure to check out the resources we have for you at the investorspodcast.com or just Google TIPP finance.

Starting point is 01:14:02 And lastly, you can always reach out with feedback. You can find me on Twitter at Trey Lockerby. And with that, we'll see you again next time. Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by the Investors Podcast Network and learn. how to achieve financial independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by the Investors Podcast Network.

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We Study Billionaires - The Investor’s Podcast Network - TIP456: How to Build a Wealth Plan for Financial Independence w/ Katie Gatti

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