The Hidden Truths About Wealth That No One Talks About | Ramit Sethi (Archived Episode)

Simple and practical financial advice sounds familiar, but is rarely ever truly given. Maybe you have access to financial advisors you trust and maybe you don’t. Understanding for yourself that money, investing and living a rich life is much simpler than you could imagine is the most important thing for you to remember. Ramit Sethi has joined me twice before to bring you sound financial advice and he delivers again. He shares investing strategies worth considering if you are looking to create wealth. Even if you’re a modest investor, you’ll want to hear how he breaks down the truth behind hidden investment fees, advice for couples to understand the root of their money problems and solutions for those never-ending disagreements around finances. This episode will give you the tools you need to reconsider your investment strategy, how you approach money and why, and the best way to move towards living the rich life, however you define it! Order Ramit Sethi’s book, I Will Teach You To Be Rich: https://amzn.to/2VmKbKk https://amzn.to/2VmKbKk%20 [Original air date: 8-3-21]. SHOW NOTES: 0:00 | Introduction Ramit Sethi 1:42 | Current Financial Situation 2:31 | Low Fees Exposed 5:13 | What Great Investing Is 7:28 | Investing Isn’t Quick Money 10:53 | Understand Compound Growth 14:44 | Protecting Your Wealth 16:04 | Wealth Accumulation Strategy 26:51 | Low Cost Low Fee Funds 31:22 | Gamifying Investing 33:34 | Investment Journey 35:47 | Love and Money Solutions 42:35 | Couple with Separate Accounts 44:35 | Women Having Higher Income 49:09 | Pivotal Financial Conversations 53:43 | Spender Saver Couples CHECK OUT OUR SPONSORS: Range Rover: Explore the Range Rover Sport at https://landroverUSA.com https://landroverusa.com/ Miro: Bring your teams to Miro’s revolutionary Innovation Workspace and be faster from idea to outcome at https://miro.com https://miro.com/. Legal Zoom: Launch, run, and protect your business at https://www.legalzoom.com/ – use promo code 'IMPACT' for 10% off! Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact Follow Ramit Sethi: Website: https://www.iwillteachyoutoberich.com/ https://www.iwillteachyoutoberich.com/%20 Podcast: https://www.iwillteachyoutoberich.com/podcast/ https://www.iwillteachyoutoberich.com/podcast/%20 Facebook: https://www.facebook.com/IWT/ https://www.facebook.com/IWT/%20 Instagram: https://www.instagram.com/ramit/ https://www.instagram.com/ramit/%20 What's up, everybody? It's Tom Bilyeu here: If you want my help... STARTING a business: join me here at ZERO TO FOUNDER https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show SCALING a business: see if you qualify here. https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox: sign up here. https://tombilyeu.com/ If you're serious about leveling up your life, I urge you to check out my new podcast,Tom Bilyeu’s Mindset Playbook https://open.spotify.com/show/47VE90Cittmo6TGGFqg2xf —a goldmine of my most impactful episodes on mindset, business, and health. Trust me, your future self will thank you. Join me live on myTwitch stream https://impacttheory.co/4fitmnJ. I'm live daily from 6:30 to 8:30 am PT athttps://cms.megaphone.fm/organizations/0482bfe8-8502-11ed-af5d-3bdc320068d7/podcasts/0a41f61a-9ddf-11ed-9eb7-dbb3a40775f5/episodes/8ac68366-8a85-11ef-bb65-abca3ffdcf54/www.twitch.tv/tombilyeuwww.twitch.tv/tombilyeu https://impacttheory.co/4fitmnJ LISTEN TO IMPACT THEORY AD FREE + BONUS EPISODES on APPLE PODCASTS:apple.co/impacttheory http://apple.co/impacttheory FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

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• 1:10Speaker 01

  We have to be humble enough to recognize you do not want to be a professional money manager. You even said you have somebody you call. Most people just want their money to grow. They want it to be relatively safe. They're willing to take a little up and down, but they don't want to think about it. They spend more time looking at a Yelp review for dinner on Sunset than they do picking their investments.

• 1:31Tom Bilyeu?

  That is terrifyingly true.

• 1:32Speaker 01

  Yeah, and so instead of fighting that, let's just acknowledge it. Hey, I am never going to sit here and read all this stuff. And by the way, even if I did, that doesn't predict better returns. So I'm going to pick a simple investment strategy. I'm going to automate it, and I'll spend one hour per month on my money. Done.

• 1:51Tom Bilyeu?

  Hey, everybody. Welcome to another episode of Impact Theory. I am here with bestselling author and the most practical financial advisor I have ever met, Ramit Sethi. Ramit, welcome to the show, man.

• 2:02Speaker 01

  Thanks for having me back.

• 2:03Tom Bilyeu?

  Dude, this is round three.

• 2:05Speaker 01

  Yeah.

• 2:06Tom Bilyeu?

  So round two began at the beginning of the pandemic.

• 2:10Speaker 01

  Correct.

• 2:11Tom Bilyeu?

  And I had brought a bunch of financial advisors on that were like super high level. I feel like now, as we're maybe coming out of the pandemic, but maybe not, that a lot has changed from GameStop to crypto to Wall Street Bets, all that stuff.

• 2:28Tom Bilyeu?

  Do you think that we're living through a unique moment right now? Or are people just confused by something and really it's all the same?

• 2:35Speaker 01

  It's definitely a different situation. If you think about where we were in 1999, 2000 with the tech boom, 2008, 2009 with the housing bubble. And now, people will look back at this time as well. So we have super low interest rates. We have a bunch of people on Reddit moving markets.

• 2:56Tom Bilyeu?

  Literally, they shut an investment firm down.

• 2:59Speaker 01

  Yep. We have crypto making huge news up and down. And we also have a lot of people with changing jobs. So what does it mean for the average person?

• 3:14Speaker 01

  Most good advice doesn't change over time. So should you be saving and automatically investing? Yes. Should you be thinking about the long term and choosing low-cost investments? Yes, of course.

• 3:25Tom Bilyeu?

  Low cost means low fees?

• 3:26Speaker 01

  Low fees, yeah. Yeah, so for example, a lot of people don't know this. But anybody watching, if you go ask your parents this, you're going to have a very shocking conversation. If you pay 1% in fees, like to a financial advisor, a lot of people think 1%, no big deal. Over the course of your lifetime, guess what percentage of your gains go to the person you're paying the fees? Guess.

• 3:50Tom Bilyeu?

  I actually don't know. I know the answer is high.

• 3:53Speaker 01

  It's not 1%. People think, oh, 1%.

• 3:55Tom Bilyeu?

  It's 1% compounding.

• 3:56Speaker 01

  Correct. If you're paying 1% in fees, 28% of your returns are going to that advisor's pocket.

• 4:03Tom Bilyeu?

  Over what period of time?

• 4:04Speaker 01

  It's about over like 30-plus years. It's a long term. If you pay 2% in fees, that's over 50% of your gains going straight into their pocket. So this math is really counterintuitive. A lot of people.

• 4:16Tom Bilyeu?

  It's really counterintuitive. I know it's true and I still get tripped up by that.

• 4:21Speaker 01

  I'll give you a quick story of a young woman who wrote me on Instagram. And she's read my book and she goes, Ramit, I think I'm overpaying for this financial advisor, but I'm not sure. I said, okay, tell me your information. She's thirty one, she makes about eighty K a year, and she was paying one percent. I said, cool. How much do you think over the course of your lifetime you will pay in fees? And she had no idea. I said, just take a guess. She goes thirty grand. I said, okay, how do you feel about that? She said thirty grand over the next thirty years. I feel okay about it. It sounds fair. I said, great, let's do a couple of quick calculations. So

• 5:02Speaker 01

  we run the numbers and I told her, you know, your income will probably increase a bit, da, da, da, da, da, your investments. It turns out she thought she was paying thirty K in fees. She would actually pay three hundred and fifteen thousand dollars in fees. So I tell her this and on Instagram, she's like, no, no way. This cannot be real. I go, it's real. And so this is one of those things that sounds really boring. Oh, fees, you know, who really cares one percent? But you could take three hundred thousand dollars and use it to go out and have a blast, buy a house, invest more, spend it on the things you love. And so we want, even in a time like this where everything seems so crazy, it's actually not that crazy.

• 5:45Speaker 01

  We know what to do when there are low interest rates. We know that.

• 5:48Tom Bilyeu?

  What do we do? I actually don't know. Like, I am horrendous at investing money.

• 5:52Speaker 01

  Yeah.

• 5:53Tom Bilyeu?

  And I was, I'm good at making money.

• 5:55Speaker 01

  Yeah.

• 5:55Tom Bilyeu?

  I'm not good at investing money.

• 5:57Speaker 01

  Well, you don't have to be that good. Are you good at like breathing oxygen?

• 6:01Tom Bilyeu?

  Yes.

• 6:01Speaker 01

  Okay.

• 6:02Tom Bilyeu?

  I'm practiced anyway.

• 6:03Speaker 01

  Exactly, because you've done it a ton of times. You don't think about it. Great investing is not sitting there looking at some Bloomberg terminal and choosing the right stock. It's actually quite boring. It is setting up automated investing. It's having the money flow where it needs to go automatically. And if you do it right, you don't even think about it. You spend less than one hour per month on your investments.

• 6:26Tom Bilyeu?

  So here's what I find interesting about you, and this is the reason that I always love spending time with you. You're very practical. It's the advice that people should do. You also have a psychology background, so you know why people don't end up doing it.

• 6:36Speaker 01

  Yeah.

• 6:37Tom Bilyeu?

  The theme that I find most interesting right now is how much things have changed. So it's interesting to hear you echo that they really have changed. From the things that I get involved in, it may seem even more sort of dramatically different than it really is, but I'll walk you through some of the things that I think you're up against with this very sage advice.

• 6:55Speaker 01

  Yeah.

• 6:56Tom Bilyeu?

  But we're living in a moment now where investing is attracting younger and younger people. They have a sense the system is broken. They don't know what that means, but that something doesn't work and so people are trying to find that like quick flip, that quick buck. You get crypto coming, which I heard you say, you may have changed, you may have doubled down, that people that invest in crypto are crazy. I think crypto is fucking interesting.

• 7:20Speaker 01

  Yeah.

• 7:21Tom Bilyeu?

  As the self-professed guy that is not good at investing, so take that for what it's worth. But there's something happening now between crypto, between GameStop, Wall Street Bets, the way that like the collective of people can fuck up hedge funds, like there's something going on right now where there's a casino mechanic. And people are getting really into this casino mechanic, like even NFTs, which I don't think of as an investment vehicle, but I am very excited about as a technology, but that's drawn me into this world where I see just a gaggle of people treating it like a casino, essentially.

• 7:57Speaker 01

  Yeah.

• 7:58Tom Bilyeu?

  And now that it's sort of high risk, high reward, lots of fun, ding ding ding, flashing lights, how many people do you think are getting pulled in in a way that's exciting? Like, hey, now you've got 17-year-olds creating YouTube content around investments, which is real, and I am utterly shocked by that. And how much of this is like, oh my God, we're heading towards a cliff?

• 8:18Speaker 01

  That's a great question. Okay, let me start off with what happened with my first investments. So here it is, it's around 1999, 2000, everybody thinks they're a tech genius. You put money in any stock, it goes up 26% the next day. So what do I do? I take my college scholarship money and I put some of it in the stock market thinking, this is easy money.

• 8:44Tom Bilyeu?

  Guaranteed 20%.

• 8:45Speaker 01

  Yeah, guaranteed. And every day, it's going up and down, but mostly up.

• 8:49Tom Bilyeu?

  Was there massive euphoria? I wasn't focused on this at all.

• 8:52Speaker 01

  Yes, yes. Everybody was, um, everybody believed they're a genius. So in a bull market, everybody believes they're a genius. And, um, they all say the same phrase. This time it's different. It's such a funny phrase that in the investment world, people make fun of it. It's a, they're mocked because it's never different. It's actually the same thing. Bubbles expand, uh, but over time, they mathematically cannot continue. So here we have people making millions of dollars who would otherwise be working in a parking garage. And they are giving stock tips out and telling everybody, you gotta get into this. JDSU, this, you know, all kinds of stuff.

• 9:35Speaker 01

  So I take my college scholarship money, put it in the market, and I very quickly lose half the money.

• 9:41Tom Bilyeu?

  Because of the crash?

• 9:42Speaker 01

  Yeah, because of the crash. And so what happens is I realize, oh my God, I'm not as smart as I thought. It's not easy to become a millionaire through investing in two weeks. And so here is where there was a pivotal moment. One, I could have doubled down and said, I just picked the wrong stock. Let me pick another stock. This is very similar to what you hear with people in the crypto world. Well, my investment, quote, investment dropped 50%, but you know, I gotta do this coin or that coin, et cetera. What I chose to do is go different and say, you know what? I don't think I'm that smart about investing. And I actually want to learn how fundamental, basic investing works.

• 10:22Speaker 01

  So things like low, low cost, long term, things like reading about John Bogle's philosophy, et cetera. And I started to learn about it and I realized you could spend your entire life trying to trade, but traders hardly ever make money over the long term.

• 10:39Tom Bilyeu?

  And if we were going to define trade, timing the market.

• 10:41Speaker 01

  Yeah, it's like.

• 10:42Tom Bilyeu?

  I understand this stock.

• 10:43Speaker 01

  Yeah.

• 10:43Tom Bilyeu?

  It's undervalued.

• 10:44Speaker 01

  Yeah.

• 10:45Tom Bilyeu?

  I'm gonna buy because I know it's going back.

• 10:46Speaker 01

  And I'm gonna do it short term, right? So I'm gonna create this narrative that, ooh, this stock, look at the trading, look at the chart, and I'm gonna try to make quick money in, in four weeks. Everybody now knows somebody who trades. Those people almost all lose money. You'll notice. They're your best friend when they're making tons of money. Hey, bro, I made 600% in this stock. When it goes down, you don't really hear from them. Okay, that's called survivorship bias. Those people simply disappear. But they're really loud when they're making money. And you learn that mathematically, even top Wall Street investors, over 80% of them don't even beat the market. What does that mean? It means that you, watching this show right now, can pick a simple Vanguard fund,

• 11:30Speaker 01

  and you can beat over 80% of these fancy Wall Street suits. These guys were paid over a million dollars a year. This stuff is really hard to believe. It's really hard to believe because it's counterintuitive. Like, 1% fees can be 28% out the door. People also don't understand compound growth. So, for example, a lot of people right now are really dissatisfied. Hey, I don't have enough money. I'm not going to ever be able to afford a house. And so, therefore, I'm going to have to invest in these high-risk investments that are pure speculation. What's really happening there is they don't understand how compound interest works in one year than the last 20 years combined.

• 12:12Tom Bilyeu?

  Because of the doubling.

• 12:13Speaker 01

  Because of compound interest, yeah, because of how it works.

• 12:16Tom Bilyeu?

  Is it really as simple as 1 doubling to 2 isn't very interesting? 2 doubling to 4 is not very interesting? But when you start getting to 1,000 doubling, that becomes real interesting real fast.

• 12:25Speaker 01

  And it happens, and we know the math. If you plug in your numbers to a compound interest calculator, you can predict essentially down to the month and year when you will become a millionaire.

• 12:35Tom Bilyeu?

  And does that calculate a doubling every seven years? Or is that a made-up thing?

• 12:39Speaker 01

  No, you can change your assumptions. I generally choose a 7% return rate, 7% to 8% because historically, that's what we know happens, and that factors inflation in. So, at roughly 7% to 8%, your money's doubling approximately every 10 years.

• 12:55Tom Bilyeu?

  And people are going to get that by putting it in the stock market and forgetting about it.

• 13:00Speaker 01

  And just contributing to it every single month.

• 13:02Tom Bilyeu?

  Dollar-cost average.

• 13:03Speaker 01

  Yeah, 50 bucks, 500 bucks, 5,000 bucks, whatever works for you. That's how it works. That's simple, boring. So a lot of people watching this going, oh, this old guy, this Luddite. I prefer crypto. It's really exciting. Listen, investing is not about excitement. You want excitement, get a dog, watch a TNT drama. Investing is boring. It's like watching concrete dry, and it should be. The real fun is what you do with your money, how you live a rich life.

• 13:31Tom Bilyeu?

  All right, before we get to that, I want to like really drill down. So I'm currently not taking your advice. And you can legitimately just point out all the things that are stupid.

• 13:40Speaker 01

  Okay, this is my fantasy. All right, go ahead.

• 13:43Tom Bilyeu?

  I'll give you my sort of thesis, the way that I think about it. So the because we're printing so much money, that scares the life out of me. I'm super ignorant when it comes to economics and money. So now I'm just operating on emotion. And I'm like, okay, people are printing just like metric shit, tons of money. That does not seem like a sustainable thing. So I tell my money manager, hey, I want to be as close to my money buried in the backyard as humanly possible. She's like, this is a terrible strategy because of inflation. Like you don't understand your money's going to get cut, but I was thinking sort of that same thing, one to 2% a year, whatever. Like I have plenty of time to figure this out. Then I start listening to Michael Saylor, who's like, A, that might not be the real inflation rate.

• 14:24Tom Bilyeu?

  It might be substantially higher. And when you get to, I forget the exact number of inflation, but if it's like at 15%, you cut your money in half in like seven years or something ridiculous. And I was like, what? So then I was like, okay, now I'm paranoid about that. But when I look at the stock market and it's, and I don't know where we are today, but it's like, it was at the time that my money manager was like, you need more exposure to the stock market. I just kept thinking, I've made a lot of money. I believe I will make a lot more.

• 14:58Tom Bilyeu?

  I just want to protect my downside. I'm not trying to grow my money. I'm just trying to like maintain my money. And the idea of buying into the stock market, even dollar cost averaging, when it seemed so clear to me, this has to be a bubble. Like you said, it just cannot go up forever. So there has to be some sort of correction. And the economy shut down. So I was like, how the fuck could this possibly? But of course now, because I didn't have much exposure to the stock market. I had some, but I didn't have much exposure to the stock market. It's like up 28%.

• 15:28Speaker 01

  Yeah, you missed out on millions.

• 15:29Tom Bilyeu?

  100%.

• 15:29Speaker 01

  Okay, no doubt. Let's talk about this.

• 15:31Tom Bilyeu?

  But am I about to like be the one who's laughing when this finally all corrects?

• 15:36Speaker 01

  Well, nobody knows. First of all, nobody knows. And if you bring anyone on this show who tells you what's going to happen in the stock market, they're an idiot and or they're lying. So I'm not going to do that. Nobody knows. And you'll find this in politics and money. A lot of people want to be comforted by essentially a parental figure, somebody who comes in here and tells you, it's all going to be okay. Or conversely, it's all going to shit. And they prey on people's weaknesses as to what's going on. The best investors are humble. They know that nobody knows anything. What do we know? We know that over time, the market continues to return approximately seven to eight percent. And that's over 100 plus years.

• 16:19Speaker 01

  We know that there are always people on Reddit and Twitter who've got these fanciful narrations of what's going on in the world. And they all disappear once the narrative is proved incorrect. So people have been talking about inflation forever. This is very low inflation. And in fact, even the recent inflation numbers are, I think, over 30% of it is due to used car prices.

• 16:43Tom Bilyeu?

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• 17:25Tom Bilyeu?

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• 18:09Tom Bilyeu?

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• 18:52Speaker 01

  Okay, if you try to peg your investments to macroeconomics, you will be potentially losing out on lots of money. Now let's talk about your situation. Your situation is different than the people watching this. You already have a lot of capital. So if you're somebody who's 25, 30, 35 and you're trying to grow your wealth, that strategy is going to be different than your strategy, Tom. So let's break them both down.

• 19:18Speaker 01

  For the person who's in the wealth accumulation phase, right? They have a job, they want to make some more money. Great. The best strategy for them is low-cost, long-term investing. Take some percentage. I'd recommend at least 10, preferably 20% of your gross income if you can.

• 19:33Tom Bilyeu?

  Gross, pre-tax.

• 19:35Speaker 01

  Well, I like to be aggressive. If you can't do 20, go ahead and do 10.

• 19:39Tom Bilyeu?

  We're going to point them to a Vanguard? Just something real simple.

• 19:41Speaker 01

  Really simple.

• 19:42Tom Bilyeu?

  Not Robinhood.

• 19:43Speaker 01

  No, I don't. No individual investor should be using Robinhood.

• 19:46Tom Bilyeu?

  Is that how Robinhood works? Like, they're day trading on your behalf? Or they're encouraging you to day trade?

• 19:50Speaker 01

  They are encouraging you to trade. And you can see this through a variety of the design principles they use. They give you free shares. We don't want to be engineered into trading. Trading is the enemy for real investment returns. We want boring, simple. That's where the real money is made. So when I talk to my friends who are high-income earners, and I ask them, you know, we talk about their investment strategy, and they go, "Yeah, I just have it all in Vanguard." I'm like, "These are the people who have serious money." Because the others have a lot of earnings, but they're trading at all. And as we know, even 1% fees can reduce it. Trading, taxes, those dramatically reduce your returns. So back to our 35-year-old friend. They want to accumulate some money.

• 20:34Speaker 01

  They say, "Okay, I'm going to automatically contribute 10, 15, 20%." Whatever they can do aggressively. And at first, it seems really boring. "Oh, I'm putting like 100 bucks a month or 1,000 bucks a month." That's not that much. But what they forget is that not only do you keep adding that, but over time, the market tends to go up. And we know what happens. So your money isn't just doubling every 10 years. It's actually much faster than that because you're contributing more. And suddenly, they wake up and they go, "Oh, my God. That's a lot of money. And in three years, I'm going to have more money from that than I get from my job." Wow, now you have some serious opportunity. You can choose whether to work there, start a business, go part-time.

• 21:14Tom Bilyeu?

  Are there different Vanguard account types?

• 21:16Speaker 01

  Yeah. So the thing that I really like for simple investments called a target date fund. If you're 35, you know that, you can just assume you're going to retire at 65. You might retire earlier or later, but just assume. And so you would pick a Vanguard fund, like a 2050 fund. What is that? Imagine you have a pie chart. In that pie chart, you have basically two different kinds of investments. Equities or stocks and fixed income or bonds. Equities are more aggressive. They tend to outperform bonds. What a target date fund does is you just pick one fund. That's it. Just one. Put all your money in there and it automatically reallocates over time.

• 21:58Tom Bilyeu?

  How did I pick that fund? Is it just like S and P?

• 22:01Speaker 01

  No, no, it's just by age.

• 22:02Tom Bilyeu?

  So they do it?

• 22:02Speaker 01

  Yeah, so you tell them.

• 22:03Tom Bilyeu?

  I just say, hey, I want to retire by 65. I'm currently this age.

• 22:07Speaker 01

  Bingo.

• 22:08Tom Bilyeu?

  And then they go.

• 22:09Speaker 01

  And it will say, I'm going to put you in China. No, no, no. They say, I'm going to put you in the Vanguard 2050 fund.

• 22:15Tom Bilyeu?

  So it's the 2050.

• 22:16Speaker 01

  2050 means you're going to retire in 2050.

• 22:18Tom Bilyeu?

  But how are they thinking about that? Is this like the world's most diversified portfolio? Is that sort of their basic?

• 22:24Speaker 01

  It's automatically diversified. So it has international exposure.

• 22:28Tom Bilyeu?

  Automatically diversified. There's a human in this somewhere, even if it's just a human programming AI.

• 22:32Speaker 01

  Well, they have chosen to diversify in these target date funds based on this criteria. What they do is they include.

• 22:40Tom Bilyeu?

  The Boglehead model?

• 22:41Speaker 01

  Yeah, yeah. So they include.

• 22:42Tom Bilyeu?

  Value investing?

• 22:43Speaker 01

  No, it's not, it's not necessarily value investing.

• 22:46Tom Bilyeu?

  Give us the 30 second breakdown.

• 22:47Speaker 01

  So when you invest, a lot of people will pick some stock. That's like me going over to your house for dinner and you go.

• 22:55Tom Bilyeu?

  Meaning some specific stock?

• 22:56Speaker 01

  Yeah, they'll pick like this stock. Yeah, they'll pick Tesla. That's like me going over to your house and you go, tonight we're eating salt. What? That's not a meal. A meal includes your proteins and all kinds of other things. In your investment portfolio, if you just have Tesla, you might feel really good. You might say, hey, Ramit, nice investment strategy, but my investment's up 400%. Cool, I'm glad, but over time, that cannot sustain itself. And so when that goes down, you want to have other investments that that are going up and diversify. And again, yes, you may lose out on a little bit of gains. Like if you had picked Apple or Amazon, that would have been nice.

• 23:39Speaker 01

  But you have to remember, most people don't pick Apple. They don't pick Amazon. And so the people who pick it, you're usually too late.

• 23:45Tom Bilyeu?

  Meaning they just picked something dumb.

• 23:47Speaker 01

  Yeah.

• 23:47Tom Bilyeu?

  They were hyped on it for some reason.

• 23:49Speaker 01

  That's why they're called mom and pop investors. That's an insult. Ma and Pa are the dumb money. The dumb money are random retail investors who are sitting in their basement using E-Trade or Robinhood. The sophisticated people are on Wall Street and even they can't pick the winners more than 20% of the time. So a target date fund automatically diversifies internationally.

• 24:14Tom Bilyeu?

  Really fast, so follow the incentives. This is very good advice for people. If I'm the guy on Wall Street, like I'll let this person remain nameless, but there's somebody in my life that I know and love, care about, think they're amazing. And they like to day trade. It gives them a sense of purpose. They do a lot of research and all this. And I remember one day I just thought, are you up or down all time? They're like, down. And I was like, what are you doing? Like if, and they had been in it for 15 years.

• 24:41Speaker 01

  Yeah.

• 24:41Tom Bilyeu?

  So it wasn't even like a brief period of time. And I just thought, that's so interesting. It's like adult baseball cards.

• 24:47Speaker 01

  Yeah. You know what gives me a sense of purpose? Having a huge investment portfolio.

• 24:53Tom Bilyeu?

  What does that mean?

• 24:54Speaker 01

  I want a portfolio that takes basically no time.

• 24:57Tom Bilyeu?

  Huge from a dollar perspective?

• 24:59Speaker 01

  Yeah, huge.

• 25:00Tom Bilyeu?

  So I put it in something really simple.

• 25:01Speaker 01

  Target date fund or a series of index funds.

• 25:04Tom Bilyeu?

  What percentage of your net worth is in a target date fund?

• 25:07Speaker 01

  I would say not a target date fund. Now, I have index funds, a series of index funds, as well as I've had a target date.

• 25:13Tom Bilyeu?

  Index, meaning people don't fucking day trade it.

• 25:15Speaker 01

  Yeah.

• 25:15Tom Bilyeu?

  It's like a group of companies grouped in some way, S and P 500 or whatever.

• 25:20Speaker 01

  Yeah. It's basically what's inside of a target date fund, but just taken outside of it. Simple, low cost, etc. Over 90% of my net worth is in index funds.

• 25:31Tom Bilyeu?

  So how many different ballparkous index funds are you in?

• 25:34Speaker 01

  Hmm, less than 10.

• 25:37Tom Bilyeu?

  Now, is that because Ramit is more clever than other people?

• 25:39Speaker 01

  No, it's because I have a larger net worth.

• 25:43Tom Bilyeu?

  And so you don't want to cram it all into one thing?

• 25:45Speaker 01

  That's correct, because for 99% of people, a target date fund is a fantastic investment. Why? It's one place that you invest. You do not have to choose all kinds of crazy stuff. Two, and this is really important, it automatically gets more conservative as you get older. Now, if you're watching this right now, you're like, "I don't care about that down the road." But think about it. When Grandma and Grandpa were in 2008, and we all heard these stories of people losing 50% of their net worth overnight. Those older folks should have never been invested that aggressively. A target date fund will-

• 26:20Tom Bilyeu?

  Into high-risk things.

• 26:21Speaker 01

  Into equities. They should have had more conservative investments.

• 26:25Tom Bilyeu?

  Bonds.

• 26:25Speaker 01

  Yeah, and so you-

• 26:27Tom Bilyeu?

  Aren't bonds like the gifts of death right now?

• 26:30Speaker 01

  No, there's a big debate about whether or not people should even buy bonds or have cash or whatever. But you have to remember, the average person watching this right now is not reading all the intricacies of bonds versus cash and yields. They're like, "I just want my money to go where it should go." So we have to be humble enough to recognize you do not want to be a professional money manager. You even said, "You have somebody you call." Most people just want their money to grow. They want it to be relatively safe. They're willing to take a little up and down, but they don't want to think about it. They spend more time looking at a Yelp review for dinner on Sunset than they do picking their investments.

• 27:07Tom Bilyeu?

  That is terrifyingly true.

• 27:09Speaker 01

  Yeah, and so instead of fighting that, let's just acknowledge it. "Hey, I am never going to sit here and read all this stuff, and by the way, even if I did, that doesn't predict better returns. So I'm going to pick a simple investment strategy. I'm going to automate it, and I'll spend one hour per month on my money. Done." And over time, I'm going to accumulate a very, very substantial portfolio. And I can take amazing vacations. I can provide for my family. I can have fun. That's a rich life.

• 27:38Tom Bilyeu?

  Okay, this stuff gets really interesting, but I think there is a layer of complexity that it's wise for people to begin to pull back. So, um, all right, low cost means low fees, so that's an important thing. Vanguard funds are the place to start.

• 27:52Speaker 01

  Vanguard is great. I don't wanna, I'm not pitching Vanguard. It's where I have a lot of my money.

• 27:56Tom Bilyeu?

  Why not pitch Vanguard?

• 27:57Speaker 01

  I like, I like them. I just don't, I want everybody to know, I don't have a deal with them.

• 28:00Tom Bilyeu?

  You're hedging. Fair.

• 28:02Speaker 01

  No, there are other companies that are also great. You can choose, you know, Fidelity has a lot of great low-cost funds.

• 28:09Tom Bilyeu?

  Is what makes them great that they have the same theory as the Vanguard fund?

• 28:13Speaker 01

  Um, no. Vanguard, in my opinion, the reason I have my money there is that the firm is built on low cost. So the entire DNA of the firm is low cost. There are other firms like Fidelity that did not start off like that. They started off charging high net worth investors a lot of money. Now, because of Vanguard, they had to lower their fees because they were getting eaten alive. And so they did add these things. But they always have this DNA of, let's charge higher fees for high net worth people. Now, if you wanna pay, let's talk about fees for a second because I think this is interesting. I have no problem if you wanna hire an advisor and pay a premium price. 500 bucks an hour, 5,000 bucks for a review. I have no problem. Pay it.

• 28:57Speaker 01

  For, for, if you have a specific, complex situation, or you're high net worth, you want a second set of eyes, great. Most people would rather pay $250,000 in hidden fees than pay $10,000 out of their pocket. Do you realize how insane that is?

• 29:13Tom Bilyeu?

  Yeah.

• 29:14Speaker 01

  They would rather pay 250 grand in hidden fees. And even when I tell them, hey, look at that 1%, let's do a little bit of math and I'll show you how much it adds up to. It's on paper, it's math. They go, ah, 1%, he's a nice guy. I go, you know, I'm sure he's a nice guy. Take him out to a baseball game and save $240,000 and go out with your husband or wife. That's how crazy our psychology is around fees.

• 29:38Tom Bilyeu?

  So what's broken? What, what are people doing wrong there psychologically?

• 29:42Speaker 01

  Well, they do not understand the complexity of fees. Fees and return rates.

• 29:48Tom Bilyeu?

  Do you think it's just that? Like, I'll tell you why I make this very poor decision.

• 29:51Speaker 01

  Well, you wanna delegate out to somebody else.

• 29:52Tom Bilyeu?

  I don't think about it.

• 29:53Speaker 01

  Yeah, exactly.

• 29:54Tom Bilyeu?

  Well, you don't have to think about it, though. I do, though. There are realities to be faced. I mean, that's the crazy thing. This is the root of my obsession with you is that here's what I want people to understand. I am clinging to your every word. Yeah. But you're still like, there's something that is not hitting you here. What's interesting is it takes seven touches to get a conversion. So this is the third time I've had you on, and now I'm like, fuck, man. Like, every time that I sit down with you, I'm like, there's a way. So first, I have to understand my own psychology. Okay, I don't want to think about it. That's rule number one. Rule number two is I need a gamified element. So part of what got me into crypto was I had an employee, shout out to David Kim, and he would relentlessly fucking drip on me.

• 30:38Tom Bilyeu?

  And he's like, Tom, are you looking at crypto? This is high to the bull market. Tom, are you looking at crypto? I'm like, David, I don't give a shit about investing. Every second that I spend thinking about the money that I already have, I'm not building something new. My obsession is building. Yeah. So I'm literally like getting to the point where I'm like, hey, dude, stop fucking bringing this up. And but I know that that's not a wise strategy. So he's like dripping on me, and I'm like, ah, damn. And then finally, NFTs becomes a thing, and I realize it's going to be hugely important for my business. I dive into NFTs as a technology which forces me to learn about cryptocurrency and blockchain and all that. And so all of a sudden, I'm like, wait a second, this is actually really interesting. So that gave me the impetus I needed to get over the initial hurdle of,

• 31:23Tom Bilyeu?

  okay, what is it? Which ones are legit? Yeah. How does one get a wallet? All that stuff. So I do all of that. Then I get into the gamification part of it of like, okay, dollar cost averaging, which I think is smart because I don't think of myself as clever when it comes to investing. So I start dollar cost averaging into this. And since I'm looking at any investment as like a 10 to 30 year horizon, so momentary ups and downs, I literally don't care. I only invest the amount of money I'm prepared to lose. Yeah. So I put it in, and instead of looking at how much is my money going up, I started looking at how much is the average price at which I have bought in going down?

• 32:06Tom Bilyeu?

  And so that became my obsession, like buying the dip. Like, as long as the thesis isn't broken, you know, you buy the dip, you buy the dip. So that's where this gets interesting. So as you're talking about Vanguard, I'm like, okay, how do I gamify this so that I'll actually do it? Let's, let's.

• 32:21Speaker 01

  Add some context around your investment desires. I think that one of the mistakes that a lot of financial people make is they try to make everything about math. Hey, Tom, let me tell you all the reasons what you just said is wrong and let's look at the return rates. And you might listen to me politely, but deep down you're like, I don't like what this guy's saying. Let's actually start with psychology, okay? What you just told me is, hey, I like gamification. I don't want to think about it and I have a long, long time horizon. Okay, let's start there. Perfect. And you also said something really important, which is you like to create. That's what drives you. Just managing what you've got is not exciting.

• 33:06Speaker 01

  Are all those things accurate? Facts. So here's what bad advice would be, and then here's, I think, what would be better advice. Bad advice would be, Tom, sell all that bullshit. It's all like crackpot stuff. Put it in a simple target date fund and get on with your life. Come on, Tom, that's what the investment returns say. And you're gonna be like, get the hell out of here. Better advice would be, hey, Tom. It sounds like you want to have some control over your investments. It sounds like it actually drives you to see, you know, at what price you're purchasing it. But it also sounds like you don't want to think much about the basic mechanics. So why don't we do something like this? Why don't we take eighty, ninety percent of your portfolio and put it in low-cost funds?

• 33:52Speaker 01

  And take ten percent and say, this is total play money. In fact, you have to play with it or invest it or spend it in some way. And if it's gonna be on NFTs or Bitcoin or whatever, great. Suddenly now you have a real thesis, which is, this is long-term stuff. We kind of know the returns there. Great. I'm gonna be safe no matter what happens. But I'm also going to be making, giving room for my psychology. My need and desire to track things and gamify it and play with it.

• 34:23Tom Bilyeu?

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• 35:06Tom Bilyeu?

  My link gets you an exclusive 30 days free instead of the usual 14-day trial. There's no credit card payment needed. Just head to pipedrive.com/impact to get started. Again, that's pipedrive.com/impact and you can be up and running in minutes. Yeah, that clarity, knowing what you want, getting people. It's one of the things that you do really well, getting people to be hyper-specific.

• 35:34Speaker 01

  We all have to go on our own investment journey. I did when I thought I was a genius in 2000 and I put it all in the market, picking individual stocks. And I realized, oh man, I gotta learn how this works. And so there are some basic investment truths and there are some basic truths in every industry. For example, you have people, they struggle to lose weight, for example. In my case, I struggled to gain weight. I was a really skinny guy. And you could have sat there and told me, hey, Rameet, you need to eat more calories. And I would have said, no, no, no, no, no, you don't understand. Like I have a fast metabolism, blah, blah, blah. And I had to go through this journey. I had to ask friends to help me train at the gym. I had to watch other people, read a bunch of books and get trainers.

• 36:17Speaker 01

  And eventually I realized, oh my gosh, it's actually pretty simple. But to get there. I had to go like this. So I actually have a lot of compassion for anyone who's on their investment journey or financial journey, whether it's talking about investments in some pretty technical stuff like recovery, whether it's talking about money with your partner, because this stuff is not easy. Once you really get good at it, it's quite simple and you realize, oh, my gosh, I only need to sort of set up 20% automated savings, da, da, da, da, da. I need to have these kind of basic ratios. But the rest of it's just like, easy. To get there is not easy. So I totally understand that. And for anyone watching, we all start

• 37:01Speaker 01

  at different places, whether it's on our fitness journey, money journey, spiritual journey. And, you know, the goal, I think, is to find something that fits us, is simple, and helps us lead a rich life.

• 37:15Tom Bilyeu?

  Yeah, I love that. And I encourage people to watch, Episodes 1 and 2, we talk more about the rich life. The love and money stuff that you're doing now, I find really, really interesting. I've watched you with couples, like, almost like a therapy session. It's really good, by the way. I've really fallen in love with a lot of the content you've done through the pandemic, that sort of really intimate stuff. But what do you find in the love and money section, where couples are coming together, maybe for the first time? What are some common issues that they struggle through? And how do you help them get to the other side of that?

• 37:47Speaker 01

  The most common issue of all is that one partner is a spender and one is a saver. There are other issues which a lot of people will say, I can't seem to get on the same page. And when I ask them, tell me about a specific time in the last 30 days where you two were not on the same page, they're like, blah. They instantly know, and it hits them very deeply.

• 38:12Tom Bilyeu?

  Is this like a personality type thing? Like, what's driving these disconnects?

• 38:17Speaker 01

  We have to remember that most of us don't even understand money for ourselves. And then when we get with a partner, it's like one plus one equals twenty. We really don't understand how to bring our perspectives together. And so here, we have one person who says, hey, we have a lot of money. Like, we can actually afford to go out to a nice vacation or dinner. And the other person says, I don't feel safe. And so one person's saying, what? Look at the math. That was pretty much me, early on in my relationship with my wife.

• 38:51Tom Bilyeu?

  You were the I don't feel safe?

• 38:52Speaker 01

  No, no, no, I was like, look at the math. I was like, look at the co- the compound interest. We have a growth rate assumption here. I was like, let, living in the spreadsheet. And my wife, she said, I want to use money to feel safe. I was like, what does that word mean? Safe? Because to me, the word I use to describe money is growth. I would guess that that's similar for you. Like, growth, I want to grow, I want to have an impact. And so when we originally started talking, we started to rewind. And, and we would talk about, you know, what were the things our parents said around the dinner table? And it was striking. Everyone has money beliefs that they learned as a kid. So their parents might have said, we don't talk about money in this family.

• 39:37Speaker 01

  Or, oh, those rich people, that's for rich people, not for people like us. Do you have any things that you remember hearing as a kid about money?

• 39:47Tom Bilyeu?

  I don't.

• 39:47Speaker 01

  Okay.

• 39:48Tom Bilyeu?

  I thought about that when I was researching. I thought, God, what did my parents say about money? It was just more, we couldn't afford that. That I heard a lot.

• 39:55Speaker 01

  That's a huge one.

• 39:56Tom Bilyeu?

  Yeah.

• 39:56Speaker 01

  So think about when you grow up hearing, we can't afford that, we can't afford that. One day, when you have actually a pretty decent amount of money, a lot of people still tell themselves, we can't afford that. So they still go on the same type of vacations they would have gone on fifteen years ago. They still tell their kids, we can't afford that. But when we look at the numbers, actually, you can afford that and a lot more. But everybody talks about how to save, and nobody talks about how to spend. So when I'm speaking to these couples, It's really fascinating. They will come to me and we do this podcast and they'll fill out all their information, it's full dossier. I know their net worth, I know their income.

• 40:38Speaker 01

  And I talk to them about their problem and I go, on a scale of one to 10, how big of a deal is this? And they go, ah, you know, like maybe a four out of 10.

• 40:48Tom Bilyeu?

  In their relationship?

• 40:49Speaker 01

  Yeah, in their relationship. I go, you came on this show, were using your real numbers and name and voice, and you're telling me this is a four out of 10? And they go, yeah. They minimize the problem. So what I say to them is, okay, the two of you don't see eye to eye on how much you spent on a car. Now imagine fast forwarding 30 years. You've got two kids, you've got a mortgage, you've made 10,000 financial decisions. How big of a deal do you think this disagreement is? And they instantly go, oh, that's a nine out of 10. Because most of us in the moment, we minimize our financial problems with our partner, but we can easily see how people get divorced over money when it calcifies

• 41:31Speaker 01

  and amplifies over the next 25 years. And that's really what I want to work with these folks on this new podcast, where people come in and for the first time ever, you can hear real couples sharing real stories with real numbers behind closed doors.

• 41:47Tom Bilyeu?

  So as you help them work through this, is step number one, all right, let's figure out what your money narrative is. Let's get to the things that your parents said.

• 41:55Speaker 01

  I always ask them, what's your rich life? And I start there because when people come in to talk about money, they're really nervous and apprehensive. Guess what they think I'm going to tell them the first thing in this conversation?

• 42:12Tom Bilyeu?

  Either you can't afford it, you have to save?

• 42:14Speaker 01

  Yeah. Just like a series of shitty restrictive things that make them feel bad. You can't go out to eat, you can't afford that car, no, your kids can't go to school. And so they're already like this when they come in. I go, all right, I know your numbers, that's cool. What's your rich life? And this is striking. You can almost hear it. They're visibly affected. They go, I want to do what I want, when I want. I go, okay, what do you want to do?

• 42:43Speaker 01

  They've never thought about it. They're just stuck. Or they go, I want to have a million bucks. I go, okay, what does a million get you? Ah, I don't know. They just pick that number. Or they say, we're in debt and we just want to get to zero. I don't find that very motivational. It's like getting to zero, that's your rich life. So I push them and a lot of people will say something like, I want to travel. You know, we want to travel. I say, great, where do you want to go? Want to go to Bali? Which seat on the airplane do you want to sit on? And they're looking at me like I'm crazy. Because no one has actually ever taken an interest in what they want to do with their money. It's always, no, no, no. Where do you want to eat? Who do you want to take with you?

• 43:28Speaker 01

  What are you going to show your kids when you go there? And their face is lighting up, you can hear it. Everybody deep down knows something they want to do with their money. One woman told me, I want to go to Whole Foods. And be able to spend without having to look at the price tag. That was a very modest goal. I said, okay. And by the way, she already had like hundreds of thousands of dollars of net worth. She could already do it.

• 43:56Tom Bilyeu?

  Whole Foods is expensive. The main guy is expensive.

• 43:58Speaker 01

  Maybe if she was going a few times a week, you're right. But I said, what then? And she was stumped. Here we have somebody in their late 30s, who's been very financially successful. And her dream, her dream is to go to Whole Foods and not look at the price tag?

• 44:14Tom Bilyeu?

  What do you do though, when the couples like, they each have this really vivid sense of what they want, once you pull it out of them? But that they really are different?

• 44:21Speaker 01

  Okay. The good news is that you don't have to always agree with your partner on certain things. He might want to spend money on a certain thing. It's fine. If you can, if you can jointly afford it, or he can individually afford it.

• 44:34Tom Bilyeu?

  Oh, what do you mean? So these are couples, do you have them separate their money?

• 44:38Speaker 01

  Well, some of, they just come to me as is. I'm first most interested in their story. So some of them have a joint account. Some of them are totally separate. Or what I like to recommend for couples is they have a joint account and they have. Have their own independent.

• 44:54Tom Bilyeu?

  Dude, word.

• 44:55Speaker 01

  Yeah.

• 44:55Tom Bilyeu?

  What do you do? That that's well, we don't now, but when Lisa and I first got married, that's exactly what we did. We said, all right, we have one account.

• 45:01Speaker 01

  Yeah.

• 45:01Tom Bilyeu?

  Where this is for all the bills.

• 45:02Speaker 01

  Yeah.

• 45:03Tom Bilyeu?

  Then we each get an equal amount of spending money in a separate account. So now you can do whatever you want. You can save your money. You can spend your money. And that was the saving grace, like figuring that out early on was.

• 45:14Speaker 01

  What what did that do for you?

• 45:16Tom Bilyeu?

  It freed us up because the things I wanted to spend money on, she thought was dumb. And the thing she wanted to spend money on, I thought was dumb.

• 45:22Speaker 01

  Yes.

• 45:23Tom Bilyeu?

  So I was just like, hey, you do you.

• 45:24Speaker 01

  But look at the approach you took. It's so important for everybody to catch this. You could have fought about it. You could have discussed it.

• 45:31Tom Bilyeu?

  Oh, we started there.

• 45:32Speaker 01

  Yeah.

• 45:33Tom Bilyeu?

  Yeah.

• 45:33Speaker 01

  But but people do this for their entire lives and they're they're basically asking three dollar questions. The thirty thousand dollar question they should really be asking is, how do we set up a system? That lets us honor each other's financial desires. So again, you could sit there and fight about cosmetics or cars or suitcases or whatever. And you do that for the rest of your life. That's what most people do.

• 45:57Tom Bilyeu?

  Oh, my god.

• 45:58Speaker 01

  It's horrible. It's awful to sit there and you're fighting the same battle you fought twenty years ago. You're doing it today. Or what you and Lisa did, which is amazing, you set up a system. Okay, joint, now we got our mortgage or rent covered, etc. Independent accounts and now the problem vanishes. So money always is going to be complicated, especially when you have two people, different earnings, different money philosophies. But the solution is not to simply fight and talk each other into seeing your perspective. Yes, you should talk about it. But sometimes you need to add some systems and psychology, which really solves the problem.

• 46:35Tom Bilyeu?

  Let's get into a problem that I have to imagine is becoming a thing. Where the woman is making more than the guy.

• 46:42Speaker 01

  Yeah.

• 46:43Tom Bilyeu?

  And he's not feeling great about it. Is that a thing?

• 46:45Speaker 01

  Yeah. Oh, yeah. More than ever. In fact, in urban areas, uh, in their twenties, women earn more than men. Which is a little known fact. Yeah.

• 46:53Tom Bilyeu?

  That's interesting.

• 46:53Speaker 01

  It's very interesting and more women graduate from college, so that number will continue to become skewed. So I think that there are a lot of different issues that get brought to bear. In these couples conversations and a lot of times we're not aware of them. So I spoke to a a couple and they both were earning about a hundred and fifty K each. So they're a high earning couple, no kids.

• 47:20Speaker 01

  And he had decided, as he put it, he said, I'm the man of the house. And so he was paying for everything. So I said to him.

• 47:29Tom Bilyeu?

  Even though she's making the same amount of money?

• 47:31Speaker 01

  Correct.

• 47:31Tom Bilyeu?

  That's interesting.

• 47:31Speaker 01

  Very interesting. So I said.

• 47:32Tom Bilyeu?

  And he's young?

• 47:33Speaker 01

  They're both young. I said, what does man of the house mean to you? Okay, and he thought he'd never thought about it. He said, well, I guess it means, you know, providing financially for my family. And yeah, that's it. I said, okay, man of the house means you provide financially. Okay. And then I asked his partner, what do you think about this? She goes, I want to contribute. I make basically the same amount. I've tried to. He won't let me. And now he's anxious about money because every month he's in the red. So let's get this. He created a scenario that he now has to live in. Where because he's the quote man of the house, he's got to pay for everything.

• 48:18Speaker 01

  He can't afford to. And so each month he's going red and now he's really anxious about money. So, okay, what's the obvious solution? It's for them to, uh, you know, have a joint expense. Break it down. She contributes basically equally to what he does. That's the easy part. That's what most people think. Okay, done.

• 48:38Tom Bilyeu?

  Were they married or dating?

• 48:40Speaker 01

  Um, I believe they were married. They had a mortgage together. Yeah. But the more complicated thing, which we talk about in this episode that's on my podcast is, how did you get there? Why did you think that you have to be the quote man of the house? Where'd that come from? So what we unwind it and I ask him a lot of questions. Guess what he tells me? He goes, his parents were immigrants. They didn't speak very good English. He said that he had to help deal with the collection calls that were coming in because his dad would overspend. I asked him what age he was dealing with collection agencies. You know what he told me? Elementary school.

• 49:16Tom Bilyeu?

  Whoa.

• 49:17Speaker 01

  So since elementary school, he's been fielding off these collectors. He sees money as a series of problems he has to fix. No joy. There's no joy in money for him. I asked him, you know, would, when you go on a trip, would you ever stay at a place that's a little bit nicer? He goes, why would I? I can stay at like basically a motel six. This guy has a substantial asset base. So does she. And I find that heartbreaking. You know, they're both working so hard. They're very diligent. They spend less than eleven percent on their mortgage.

• 49:50Tom Bilyeu?

  Wow.

• 49:50Speaker 01

  And there's no joy. So she wanted to go on a trip. And we worked and worked. And finally, he agreed to let her take the lead on it. When you listen to this episode, you realize it's not just the math and the spreadsheet. That's the first temptation is, well, they should just split their assets and expenses. Da, da, da, da. Okay, that's easy. It's really saying, how did we come to thinking about money like this? How'd you grow up with it? When you describe money, is it a sense of joy or purpose? Or is it something I'm scared of and anxious of? These are the things that nobody really talks about because you have to know money and psychology at the same time.

• 50:31Tom Bilyeu?

  Man, that is really interesting. When Lisa and I first got together, I definitely wanted to, I wouldn't have said be the man of the house, but I liked that I was able to make enough that I could take care of both of us. I mean, we were dirt poor, but at least we had a roof over our heads.

• 50:46Speaker 01

  Yeah.

• 50:46Tom Bilyeu?

  And, you know, as she became more interested in business and like really got into it, it's a really big transition. Like, if you come in with a certain mindset, it's gonna be hard to shift. But she, in the beginning anyway, couldn't work. I don't, if she were making money, I never would have said, oh, I'm gonna still pay for everything and be stressed the fuck out all the time.

• 51:08Speaker 01

  Wow. So do you think, just hypothetically, you would have had a conversation or a series of conversations? How do you think that transition would have been?

• 51:17Tom Bilyeu?

  Well, so, one, I can tell you what we did is, so we'd been married for about eight years when she stepped into a true entrepreneurial role. And it was very difficult because it went from she would facilitate my entire life. So she set my clothes out, she made my food, she like paid the bills. She just made sure that I didn't have to think about anything other than building a business.

• 51:40Speaker 01

  Yeah.

• 51:41Tom Bilyeu?

  And that was extraordinary. I cherish that gift more than you can imagine. And so when she stepped into being an entrepreneur, she very quickly realized, I cannot do both. This isn't fun. And so she was just like. Like, look, I'm not gonna be able to keep taking care of this stuff for you. And she put like a timeline, I don't remember how long, but like for the next month, I'll still help. But hey, at the end of that, like, you're really gonna have to deal with all this stuff on your own.

• 52:03Speaker 01

  Yeah.

• 52:03Tom Bilyeu?

  And there was friction in the marriage through that moment, like really changing roles, changing like what this dynamic is gonna be, but we're very communicative.

• 52:15Speaker 01

  Yeah.

• 52:15Tom Bilyeu?

  And I have very strong rules in my life. And so one of my rules around my wife is that I only do things that elevate her. So I don't shut her down, I don't make her feel less than. So it was like, if she wants to be an entrepreneur, first of all, she's quite good at it. And by the time she made that decision, it was pretty apparent, she's got some fucking skills on her. So I just said, look, by my own code of ethics, like, I want you to live whatever life you wanna live and to become like the most joyful, powerful version of yourself. And so if this is the direction you wanna go in, then, you know, we'll figure this stuff out. But then I also put limits on it and said, look, I don't mind you not cleaning anymore, but don't expect me to clean. So we'll create areas. And if it's a common area, I will do my half of it, you do your half.

• 53:00Tom Bilyeu?

  But there are gonna be areas that are mine, and they're gonna be as fucking messy as I want them. And as long as you never come give me a hard time about my own areas, and I never fuck you up in common areas, then I will expect that we are fine.

• 53:14Speaker 01

  Yeah.

• 53:14Tom Bilyeu?

  And so that was stuff where I think for a while, there was friction there for her, where it was like, well, I don't like that your part of the closet is messy. And I'm like, hey, homie, like, I, we both have to come to a shared understanding of, you know, what works for you and what works for me.

• 53:33Speaker 01

  So, so many things I heard in that example, thanks for sharing that. I didn't know that, but I think every couple has gone through some sort of financial series of conversations, not as elegantly as you did. Honestly, I think the things that I hear are, one, there was a pivotal moment where something changed, you're, Lisa decided to become an entrepreneur. Two, it caused some pain. It had to cause pain in order for you to make a change. Three, you sat down and had a series of conversations. Doesn't sound like it was just one.

• 54:02Tom Bilyeu?

  No, no, no.

• 54:03Speaker 01

  Yeah, it was probably months or even years of conversations. Same as my wife and I have continued to have. And then four, you came up with some agreements. You mentioned that you have a rule for how you relate to your wife. I love when people have rules for their life. I don't even have to agree with them, but when they tell me, you know, I have four rules for parenting or three rules for eating. In my case, I have Ramit's 10 money rules. That shows that someone has really thought about it. And by the way, I love that you elevate your wife. I think that's, I think that's awesome. So lots of examples in there that I would love for others to learn from. And this is some of the stuff we talk about on the podcast, which is when, when partners think about money,

• 54:48Speaker 01

  the way that they usually relate to it is they know something that they disagree about. They try to Band-Aid over it, paper over it until it blows up. And then they try to basically extinguish the fire and then they just go back to living life the way they were. And it works. It works for a while. Many of us have parents or relatives that have been fighting the same fight for 50 years. But I don't really think that's a joyful way to live with money. I think that when you and your partner, in your case, you and your wife are financially aligned, then instead of, you know, I'm a spender, she's a saver or vice versa, you're both rowing in the same direction and life becomes way more fun. You can live the kind of life you want.

• 55:32Speaker 01

  You can have a beautiful house, take, eat at the places you want, spend money in the way you like. That is a really joyful way to use money to live your life.

• 55:43Tom Bilyeu?

  So after you have the rich life definition and you've got one person is a spender and one's a saver, how do you help them? So separate spending accounts, sounds like one thing.

• 55:52Speaker 01

  Well, again, I spend 70% of the time listening to their story. I want to first understand it. They don't even understand their own story. Most people are behaving a certain Way about finances and when you ask them, why do you do that? They actually have no idea. And in less than 10 minutes, we can trace it back to something they learned in college or as a child. And they go, oh, my God. For example, I had, I spoke to a young woman who was obsessed with buying a house. She was obsessed. In America, real estate is religion. A lot of us believe gotta buy a house. It's the best investment ever. That's not true. But I started probing her. How come? And first of all, I said, what kind of house you want to buy?

• 56:34Speaker 01

  She lights up. This is in New York. She goes, I want to have an apartment on the Upper East Side, two bedrooms, da, da, da, da. She had the whole thing laid out on her head. Great. And I said, you know, tell me more. What do you want to do with your money? She said, well, I want to be able to go out. I want to eat, travel, etc. So the house thing really interested me because she was so deep on what type of house she wanted. And she felt frustrated because she couldn't afford it. I asked her why. It turns out that she she grew up fairly upper class. And in high school, during the recession, her dad lost everything. And they lost their house. So what do you think a house represents to her?

• 57:18Speaker 01

  Safety, security. And so she was sacrificing all kinds of things she could have been doing today. So that she could buy a house. And when I asked her, why do you want a house? She didn't even connect that with safety. Now that she understood that. She said, oh, my gosh, now I can make better financial decisions. I can save and project exactly when I'm going to get a house. I don't need a two bedroom. I could have a one bedroom. It's fine. So I spend time unpacking their story. And often, almost always, you find that there's some way they're behaving. That when it's pointed out to them, they go, oh, my God, I never realized that.

• 57:57Tom Bilyeu?

  Yeah, the story of money right there.

• 57:58Speaker 01

  Yeah.

• 57:59Tom Bilyeu?

  Dude, I could talk to you about this stuff all day. So the new podcast, where can people find it? What's it called?

• 58:04Speaker 01

  It's called I Will Teach You To Be Rich With Ramit Sethi. And you can find it on Apple, Spotify, any podcast place. And I think you will love to hear these stories because, I mean, we've never, none of us have ever been given permission to sit in a room and hear a couple talk about their money disagreements, share the amount they have. And I have people on the show who have $30,000 incomes. I have people who have over $8 million in net worth. And they're sharing everything. So it's an opportunity to listen and see what others are doing and then reflect on how you think about money in your relationships.

• 58:44Tom Bilyeu?

  Word, dude. I'm so glad you're doing that. Like, your content is fantastic. Thank you so much again for coming on. Guys, when it comes to money, I'm telling you, I have talked to some of the most famous people in the space of finance. And there are few people that can ground it the way that he can in terms of what you should do right now today. And speaking from experience, like, this applies no matter what your net worth. So take his advice, put it to action. I know I'm going to be. It took me three, three times, but we have three episodes now. So make sure that you watch all three. And speaking of things you should do immediately to improve your life, if you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care.

• 59:26Speaker 01

  Peace. It's so important to be, to be really incorporating your own psychology when you think about money. And part of that is, what do I want? Where did I get these beliefs from? Whether it's a movie or a family friend? And then what can I do today to start moving along and developing my rich life?

• 59:44Tom Bilyeu?

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