Budgets Don't Work, Automation Makes You Rich | David Bach

David Bach, author of The Latte Factor and The Automatic Millionaire, spent nine years at Morgan Stanley and co-founded a registered investment advisory firm. He argues with Lewis Howes that automated saving and long term ownership of stocks and real estate build wealth, while get rich quick thinking keeps people broke. The conversation covers Smart Women Finish Rich, the Rule of 72, Acorns, and Federal Reserve data on emergency savings.

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

• 0:01Lewis Howes?

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• 2:06Lewis Howes?

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• 2:48Lewis Howes?

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• 2:54Lewis Howes?

  Everywhere I go, airports, events, walking down the street, people stop me and say, Louis, this show got me through one of the hardest seasons of my life. And it's one of the coolest things when people come up to me. So if you see me, please come up and say hi and let me know how this show, The School of Greatness, has impacted you. It lights me up because our mission at Greatness Media is to impact 100 million lives every single week. So if today's conversation hits home for you, do me a favor and push the follow button right now. It means that the next conversation will be delivered to you and will find you exactly when you need it. Again, thank you so much for being here and listening to The School of Greatness. Make sure to follow right now to stay up to date on the latest and greatest.

• 3:39Lewis Howes?

  Welcome everyone to the School of Greatness Podcast. We've got the inspirational David Bach in the house. I've heard your name for many years. You've written, how many, nine, 10 New York Times bestselling books, back to back to back. You've been on the New York Times Bestseller list for 40, 50, 60 weeks. I don't know, something crazy. You've been on Oprah six times, Today Show 100 times. You've been on every other media outlet there is. So I've heard about you. I've seen your work. The Automatic Millionaire is something that a lot of people talk about in the money finance space. So you're here now and-

• 4:10Speaker 01

  I'm here now in, by the way, because I'm a fan of yours, right? So like, it's a mutual love fest. You're like, I've watched all of this. By the way, it's as cool as you would imagine it is.

• 4:19Lewis Howes?

  It's fun.

• 4:19Speaker 01

  So it's really neat to be here with you live in LA because like, you know, West Hollywood, where this all happens is pretty, pretty special.

• 4:26Lewis Howes?

  Fun. And you live in Florence now in Italy, right?

• 4:28Speaker 01

  Going to. I'm gonna leave after July 22nd and go live in Florence, Italy for a year.

• 4:32Lewis Howes?

  It's amazing.

• 4:33Speaker 01

  You gotta come over to Italy.

• 4:34Lewis Howes?

  I'm gonna come and visit. I'm gonna come and visit. You got this new book out. I mean, you've written a number of books. You've got a new book out called The Latte Factor and Why You Don't Have to Be Rich to Live Rich. Now, we were just talking before this started, and you were saying that there's, you've got some controversial things that you do with money that other influencers or thought leaders-

• 4:55Speaker 01

  Yeah.

• 4:55Lewis Howes?

  -do differently.

• 4:56Speaker 01

  Totally.

• 4:57Lewis Howes?

  For example, you said that there's two things that everyone needs to be doing at a young age if you want to generate more wealth.

• 5:04Speaker 01

  Completely.

• 5:05Lewis Howes?

  Two things are investing in stocks and real estate. Is that right?

• 5:09Speaker 01

  Yeah, it's the two primary escalators to wealth.

• 5:12Lewis Howes?

  Escalators, where you can grow your money, your investment, your money can work for you as opposed to just sitting in the bank.

• 5:18Speaker 01

  Completely. It's like the game of Monopoly. I was just literally explaining this to my kids yesterday. I said, you know, when you, on the game of Monopoly, you go past go and you get a paycheck. And if you just go around the properties and you land on them, you pay rent.

• 5:31Lewis Howes?

  Right.

• 5:31Speaker 01

  And you can't win the game of Monopoly unless you buy one green home, then two green homes, and three green homes, and four, then a hotel, right? Like, you have to be an owner in the game of Monopoly. The ironic thing is that the game of Monopoly is a great lesson for all of us in life.

• 5:44Lewis Howes?

  Yeah.

• 5:44Speaker 01

  You have to own assets that make you money while you sleep, that grow while you sleep. And the challenge for most of America is that this stuff is not taught in school. Like, this little book, The Latte Factor, I wrote it as a parable to reach the 98% of people who will not normally read a financial book. You've got my other stack over here. But like, most people won't ever read a financial book. So I thought if I write it as a story, that you can read in less than 90 minutes, and I can teach you these life lessons, the importance of paying yourself first, why you, you don't need a budget. Like, we'll talk about that a little bit. But like, for this budgeting, everybody says you need to budget, and budgets totally don't work. People hate them.

• 6:22Lewis Howes?

  Hate them.

• 6:23Speaker 01

  They hate them. It's like dieting, right? Like, you try to go on a budget and you're married, you will fight about those budgets. People go on them. It's totally frustrating.

• 6:32Lewis Howes?

  So do you believe in budgets or no?

• 6:33Speaker 01

  I don't. No. What I believe is you need to have a system that doesn't require discipline, does not take time. See, this is the part that's different. The secret to everything I've taught, like, you've got my other book here, The Automatic Millionaire, is that the real secret to building wealth, how ordinary people in this country have built real wealth, is automation. They're saving money automatically.

• 6:54Lewis Howes?

  They're not even thinking about it.

• 6:55Speaker 01

  They're not thinking about it.

• 6:56Lewis Howes?

  Not stressing about it.

• 6:57Speaker 01

  They're not stressing about it. They're not writing checks.

• 7:00Lewis Howes?

  They're not putting cash in little buckets and envelopes and carrying these envelopes in their thing and being like, okay, I've only got a little bit left.

• 7:06Speaker 01

  Look, my grandmother, when she started at 30, she had nothing. And she used to literally save 50 cents a week and put it in a coffee can. And at the end of the year, she took that coffee can down to a brokerage firm and started investing in stocks. That's what changed the entire destiny of my family.

• 7:21Lewis Howes?

  Wow.

• 7:21Speaker 01

  Was that my grandmother at 30 with no college education, working at Gimbel's Department Store in Milwaukee, Wisconsin, got tired of being poor. There's some people watching today that are there, right? They're listening, they're watching this or they're listening to this, and they're tired of being poor. My grandmother was frustrated. And she came home and said to my grandfather on her 30th birthday, Jack, this is not working. Like, and when you're the guy and you hear that, you're like, what do you mean this isn't working? And my grandfather said, what's not working? And she said, we're broke. We don't have any money. And, you know, to my grandmother's credit, she decided to do something about it. And so she literally brown bagged her lunch. Every day, she brown bagged her lunch

• 8:05Speaker 01

  so she could save that money and go invest. And the way the story turns out, Louis, is my grandmother, my first book, Smart Women Finish Rich, was dedicated to her. She didn't become rich overnight. She built wealth over her lifetime.

• 8:18Lewis Howes?

  Yeah.

• 8:19Speaker 01

  I always say it's decades, not days. People who try to get rich quick stay broke long.

• 8:25Lewis Howes?

  It's true.

• 8:26Speaker 01

  Show me those banner ads on how to get rich quick, and I'll show you a way to stay poor forever.

• 8:30Lewis Howes?

  Right.

• 8:31Speaker 01

  So my grandmother realized, like, you invest in great American companies, and you just keep investing, and you leave it, and you leave it, and you leave it. And she helped me buy my first stock at age seven in McDonald's.

• 8:41Lewis Howes?

  Wow.

• 8:42Speaker 01

  And that was seven years old. It was like, she taught me, she taught me three lessons about money at seven that to this day I still teach, which I can share with you.

• 8:50Lewis Howes?

  What's that?

• 8:51Speaker 01

  So at seven, we're sitting at McDonald's, and she says, you know, David, you can get rich at McDonald's. And I looked around, my grandma, I'm eating my, you know, my cheeseburger and my french fries, and I had my apple pie. I said, what are you talking about? And she's like, I'm not having any getting a job here. She's like, see those people over there? They're working for what's called minimum wage. And I think back then, minimum wage was like a dollar.

• 9:13Lewis Howes?

  Nothing.

• 9:13Speaker 01

  And she said, it's very hard to make a living on minimum wage. She said, then there's people like you right now. Like, all these people are coming here and they're eating and they're spending money. That's called a spender. And she said, then there's some people who own this place, and owners get rich. And she said, and I loved to play Monopoly at seven. That was my thing. I'd go to my grandmother and she'd play Monopoly with me. And she said, I'm gonna teach you how to play Monopoly for real. And she took me home that day. She opened up the Wall Street Journal. She circled MCD, that's the symbol still to this day for McDonald's. And she said, here's how much McDonald's is. She put me in front of a television screen and said, watch the ticker tape. She taught me how to read that ticker tape. And she said, just call out the price on MCD. That's the price

• 9:57Speaker 01

  of McDonald's. And she said, tomorrow I'll take you down to a brokerage firm. We'll open up an account and you'll, you'll buy one share of that stock. And then every time you go there, you'll know you're making money from yourself.

• 10:07Lewis Howes?

  Wow.

• 10:08Speaker 01

  That is a wow, right? And it's funny because I'm here in LA with you, but I just went to Disneyland two days ago with my son, who's not, my son who's nine, and Disneyland-

• 10:17Lewis Howes?

  Did you buy Disney?

• 10:18Speaker 01

  I bought Disney. That was my, that was my second, that was my second stock.

• 10:21Lewis Howes?

  That's amazing.

• 10:21Speaker 01

  So like, literally at nine, I'm at Disney with grandma, and I'm like, hey, Mickey, are you guys public? Like, you know, because she taught me to think as a child, like an investor. Now, I'm doing the same thing with my kids. Now, my kids don't want to own McDonald's. They want to own Shake Shack.

• 10:38Lewis Howes?

  Right.

• 10:39Speaker 01

  So, my son owns Shake Shack.

• 10:41Lewis Howes?

  Right down the street.

• 10:42Speaker 01

  A brand new one, right? My younger son, after Disneyland, is like, I want to own Disney. His older brother owns Disney. It's doubled. He's like, well, I want to own Disney. My kids own Amazon. So, you know, they're, they're learning like I learned. Now, this stuff should be taught in school. Today, this is the school, right? Like, today, what we do is another way to teach people. So, but those are simple lessons I just gave you.

• 11:08Lewis Howes?

  Yeah.

• 11:08Speaker 01

  That, that were passed to me, and we just did that in a matter of minutes. And like this book, The Latte Factor, everybody thinks I'm trying to take away their coffee, and I'm not. But there's, we'll talk about the story inside this book. It's about a, you know, a twenty-something young woman who learns that she's richer than she thinks. And she actually learns it from somebody who works at a coffee shop.

• 11:27Lewis Howes?

  Wow.

• 11:28Speaker 01

  And one of the lessons that the person teaches her is ironically, it happens in Starbucks. He says to her, you know, the five dollars that you're spending on Starbucks, you could also be buying Starbucks stock. And we have the numbers in the book over how like a thousand dollars invested in Starbucks would be worth over a quarter of a million dollars today when it went public.

• 11:47Lewis Howes?

  Wow.

• 11:48Speaker 01

  So, I always say like, look, if, if you don't want to give something up, like that five dollars at Starbucks for your coffee, then buy the company's stock.

• 11:56Lewis Howes?

  Right.

• 11:57Speaker 01

  Invest in where you spend money.

• 11:59Lewis Howes?

  That's interesting. If you go there every day, you put five dollars a day into buying the coffee, put five dollars a day into the owning the company as well.

• 12:06Speaker 01

  And now, there's so many companies that make this easy, right? Like, I'm an investor in a company called Acorns, fastest growing financial service company in, really in America today. It's covered five million accounts for millennials.

• 12:16Lewis Howes?

  Wow.

• 12:16Speaker 01

  You can open up an app on your phone, and in less than ten minutes, have an account, go click, click, click, and be saving change.

• 12:23Lewis Howes?

  Right.

• 12:24Speaker 01

  Into a diversified portfolio, and it costs like a dollar a month.

• 12:27Lewis Howes?

  Wow.

• 12:28Speaker 01

  So, technology is making it all much easier for everybody.

• 12:31Lewis Howes?

  With a few clicks, you can be investing in stocks.

• 12:34Speaker 01

  There's so many great resources. Like, twenty years ago, this was complicated. You would have come into my office at Morgan Stanley.

• 12:41Lewis Howes?

  It's all paperwork. You have to...

• 12:43Speaker 01

  Eleven pages of paperwork to save fifty dollars a month automatically.

• 12:47Lewis Howes?

  Oh, my gosh.

• 12:47Speaker 01

  Today, again, you open up an app, you go click, click, click, and it's done. And it's all automated, right? That's the, going back to this idea of like, you don't have to do it manually. Like, you've got your pad of paper, and I always tell people, they're on the back of this book, we've got a little sheet, and you track where your money goes for a day manually. But there's also a lot of great websites and apps can help you do that, too.

• 13:07Lewis Howes?

  Yeah. I love these lessons about your grandmother early on, and investing in the places you're spending money at already. And I think of two influencers. So, you say there's two things to really generate wealth, and that's real estate and stocks, the fastest way.

• 13:22Speaker 01

  And we haven't gone to the real estate part yet.

• 13:24Lewis Howes?

  Right. And it's funny, because my friend Ramit Sethi always says like, don't give up your lattes. And I know you're not saying that.

• 13:30Speaker 01

  Yeah.

• 13:31Lewis Howes?

  You're not saying that, but he's like, don't give up your lattes, but invest in things, you know, automatically as well.

• 13:36Speaker 01

  Yeah.

• 13:37Lewis Howes?

  And...

• 13:37Speaker 01

  Well, it's funny, we're meeting our buddies.

• 13:39Lewis Howes?

  Yeah, yeah, he's great.

• 13:40Speaker 01

  So, I go, I'm like, buddy, I, I know you're always making fun of my latte thing, but it's not about the lattes. It could be bottled water, it could be cigarettes.

• 13:46Lewis Howes?

  Right.

• 13:46Speaker 01

  You could just be eating out lunch every day.

• 13:48Lewis Howes?

  Right.

• 13:48Speaker 01

  Right? Like, we, we put out a little meme yesterday, and I'm saying like, you know, make, you, you say you don't have enough money to go on a trip, but if you just made your lunch at home for the next ninety days, you'd have enough money.

• 13:58Lewis Howes?

  Right.

• 13:58Speaker 01

  To go on a trip, right? Like, the way you get your freedom and your dreams is you buy them.

• 14:06Lewis Howes?

  Mm-hmm.

• 14:07Speaker 01

  Right?

• 14:08Lewis Howes?

  Right, exactly.

• 14:09Speaker 01

  You buy them. You don't borrow for them. You buy them. What too many people do is they actually borrow for them. They want to go on a trip, and then they just put it on their credit card.

• 14:16Lewis Howes?

  Yeah.

• 14:17Speaker 01

  And then, instead of that trip being a fifteen-dollar trip, by the time they pay interest, it's a three-thousand-dollar trip.

• 14:21Lewis Howes?

  Oh, my gosh, yeah. This is the Dave Ramsey model of like, never putting anything on your credit card. It's like, so, we've got the latte, and we've got, for stocks, and we've got real estate as well. And I've heard, I've seen so many studies online of like, the pros and cons of buying real estate. For people that own real estate, and they're getting checks every month from renters, great. But what if those renters leave, and you have to fix it up, and all these costs, and taxes, and fees, and these, these things that you have to pay on real estate that you're not really aware of until after the fact, or some, some type of disaster. Then you're like, this is stressful. So, we've got the Grant Cardone model, where she says, you never live where you own. What does he say?

• 15:04Lewis Howes?

  He says, rent where you live and own what you rent, and rent what you own, or something, right? So, it's never live where you actually own something, is his model.

• 15:13Speaker 01

  Yeah.

• 15:13Lewis Howes?

  But he's like, you need to be in real estate and own lots of other things that you're renting out. But don't own your own home that you live in, because you're not paying yourself.

• 15:20Speaker 01

  Right.

• 15:21Lewis Howes?

  You're not getting paid from that investment. So, what's your thoughts on this?

• 15:24Speaker 01

  So, we'll, we'll leave Grant out of this for a second. Let's just go to the core concept of... I'll go back to the Latte Factor book. What happens is, I, I wrote this book as a parable. Again, because like, my fifteen-year-old just read this book cover to cover in two hours, and was like, wow, dad, you know what? I actually need to do this. I need to open up an IRA account. We've got this chart that shows a young person how they save two thousand dollars a year at the age of nineteen. Two thousand dollars a year at the age of nineteen.

• 15:48Lewis Howes?

  By sixty-five.

• 15:48Speaker 01

  Till twenty-six. You do it from nineteen to twenty-six.

• 15:51Lewis Howes?

  Yes.

• 15:51Speaker 01

  By sixty-five, they have over a million dollars in savings.

• 15:54Lewis Howes?

  It's crazy right here.

• 15:54Speaker 01

  It's crazy. And I don't know if you can even show that later on on the camera shop, but...

• 15:58Lewis Howes?

  And if you started at twenty-seven, two thousand dollars a year.

• 16:01Speaker 01

  Does it all the way till sixty-five? That person, so they've saved way more money, right? They've saved their, basically, their entire lifetime. They end up with eight-hundred-and-five thousand dollars.

• 16:10Lewis Howes?

  It's crazy.

• 16:11Speaker 01

  Still a lot of money, right? But my fifteen-year-old son looked at this chart and goes, dad, I'm fifteen. If I get to fifteen, I'll have more than a million dollars, right? By the way, pretty smart, right? I'm like, yeah, actually, you'll have more, like, two million dollars. He's like, well, and then he takes his calculator on his phone and goes, that's five dollars and forty-one cents today. I go, exactly. That's why I didn't want you to buy the bottled water when we were all to skiing yesterday. That's why your dad had the free water, and you went and bought the stupid water.

• 16:38Lewis Howes?

  Right.

• 16:38Speaker 01

  Because that's enough money to do every day to have an IRA account. And he's like, well, then we need to do that.

• 16:43Lewis Howes?

  Wow.

• 16:47Lewis Howes?

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• 17:31Lewis Howes?

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• 18:16Lewis Howes?

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• 18:27Lewis Howes?

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• 18:59Speaker 01

  You know, these lessons are so critical. So, what I did with this book, and I'll, I'll get to the real estate here, is that I wanted to teach these core lessons. There's three secrets to financial freedom in this book, which are pay yourself first. First person who gets paid is you.

• 19:13Lewis Howes?

  So, don't pay the bills first?

• 19:15Speaker 01

  Don't pay the bills first, don't pay taxes first, don't... So, most people, they pay taxes first. They go to work at nine, they work until twelve o'clock to pay taxes. I mean, here in California, for sure.

• 19:26Lewis Howes?

  Yeah.

• 19:26Speaker 01

  Right? Then, they go, then from twelve-thirty to one, it's lunchtime. And then, from one to three, three-thirty, it's housing costs, car costs. And then, from three-thirty to five, it's everything else. And what, what most people hope through budgeting is that somehow, they're going to have a little money left over at the end of the day to save. Completely wrong philosophy. You carve out the first hour of the day for yourself. You become financially selfish. So, in this book, Zoe Daniels, who's the main character, a twenty-something millennial, she's living paycheck to paycheck. She lives in Brooklyn. She's traveling to New York City on the subway. She's working in the Freedom Tower. She's a pub, she's an editor of a travel magazine, but she never travels.

• 20:06Lewis Howes?

  She makes no money. She's working seventy hours a week.

• 20:10Speaker 01

  Exactly. And, and what happens to her is what happens to so many young people in big cities. She's making a little more money each year, but she's not saving more. Her expenses just keep going up. So, six years in, she's totally depressed, and she goes through this building called the Oculus, and she sees this LCD screen. This is all real, this is all real place. And she sees this LCD screen that's a football field long, and it says on the LCD screen, "If you don't know where you're going, you might not like where you end up." And this is all underground. And she takes this escalator up to her office, which is the Freedom Tower, and she's thinking about this. And as she comes up, she's by the nine-eleven memorial, because that's what's next to her office.

• 20:49Lewis Howes?

  I know this place very well, yeah.

• 20:51Speaker 01

  And I live across the street from there.

• 20:52Lewis Howes?

  Yeah.

• 20:53Speaker 01

  And so, I walk through this every day. So, she comes up, and for the first time in six years, she actually sits down and looks at the memorial, because she's always normally just turned right and gone into her office. You know, she's busy. She's a New Yorker, rushing to work. Today, she stops, sits on a marble bench, looks at the nine-eleven memorial, sees people crying, thinks about the people who died here, and says, says to herself, where am I going with my life? And goes into the office depressed and then proceeds to tell her boss that she's

• 21:26Speaker 01

  she's like she can't afford anything. And then through the book, she gets these mentors and she learns about paying herself first. And the magic and the miracle of compound interest, how five to $10 a day could start to free her. And then later in the book, she learns about the importance of owning real estate because she's renting. And she thinks she could never own. And one of the mentors, Henry, teaches her, you know, the amount of money that you're spending on rent, you can make a mortgage payment. And you could own an asset. And she has critics in her life who are like, oh, none of this stuff would ever work for you, right? You know, you can't make 10% rates of return. You know, it's, you don't want to own real estate.

• 22:06Speaker 01

  But then she's surrounded by some people who are older and wealthier and wiser, and they show her how to get there. So when I go to homeownership, which I took a way to get your question. The bulk of wealth is built in, America's built in real estate. So Grant's not wrong, you should buy real estate, but guess what the easiest real estate to buy at first is?

• 22:27Lewis Howes?

  Your own home.

• 22:27Speaker 01

  Your own home. First of all, it's the easiest thing to qualify for a loan for.

• 22:31Lewis Howes?

  Cause you're living in it.

• 22:32Speaker 01

  Right, so the bank will loan you money to buy a home. Second thing is it's tax deductible, right? You get tax deductions on your interest. Third thing is you have to live somewhere as long as you're alive. So you can own it eventually free and clear and have very low overhead, next to nothing besides taxes and maintenance fees. Or you can rent for the rest of your life and never have your expenses go lower. The myth is that you want to rent because you don't want to have to pay maintenance and insurance and taxes. Guess what? They're all passed on to you. The landlord passes those fees on. The landlord doesn't say, oh, you're a renter, I don't want you to pay those things. No, the landlord charges you by escalating the rents.

• 23:17Speaker 01

  I used to live in LA in 1985 to 1990.

• 23:21Lewis Howes?

  Much cheaper then.

• 23:21Speaker 01

  I went to USD. All the real estate here was like probably one fifth what it is today. Right? And so I'm in a friend's house in the Hollywood Hills, she bought it in 1994. Right, out of, out of college. She's did all the things you have to do to save. She bought the home, it's a total fixer-upper. I'm sitting in this home overlooking all of Hollywood last night with this beautiful pool that she's put in. One of those edge pools. I, I don't know what her homes were today, but I bet it's worth five million. And I bet it's gone up three to four million since she bought it. And you only have to do that once in a lifetime to build wealth forever. So if you don't own real estate, you don't get in the game of building wealth.

• 24:06Speaker 01

  There was somebody who was on CNBC the other day comparing how, well, they actually used Brooklyn as an example, which is ironic because Zoe lives in Brooklyn. They said, you know, if you rent in Brooklyn, it's $25 a month. It's not, by the way, it's more than that. But if you did, if you rent for $25 a month, he said it would cost you, it could cost you $4,500 to own. And he said, and you know, so if you didn't do that, you could save the extra $2,000 and you could put it in a diversified portfolio and you could make a better rate of return. And I'm watching this and I'm thinking, no, that's wrong. And here's why it's wrong. I believe in the stock market. I give examples of earning seven, eight, nine, 10%. And I know, I know stat wise, meaning like statistically, the rates of return in the stock market have been higher than real estate.

• 24:52Speaker 01

  But it's misleading. The reason it's misleading is if you give me $100,000 and you put it in mutual funds and I earn 10%. My $100,000 grew to 110.

• 25:04Speaker 01

  Follow me so far?

• 25:05Lewis Howes?

  And the next year?

• 25:06Speaker 01

  And the next year, right? So, but if I put $100,000 into real estate, I didn't put $100,000 in real estate. I put in probably 20,000. The bank loaned me 80. So when that $100,000 grows to 110, I just made $10,000 profit on $20,000 investment. That's a 50% rate of return. And if I bought it as a personal residence, which is what most people do first, I can sell it. And if I'm single, I can make up to a quarter of a million dollars tax free. After two years. It is wow, it's the only thing I can buy and sell and get tax free money if, if I'm married.

• 25:45Lewis Howes?

  You don't have to pay, you don't have to pay taxes on the money from selling a home?

• 25:49Speaker 01

  On the first quarter of a million dollars. If I'm single.

• 25:51Lewis Howes?

  Why the first quarter million? That's every home.

• 25:53Speaker 01

  That's just, that's just, that's just government law right now.

• 25:55Lewis Howes?

  The first quarter million.

• 25:56Speaker 01

  The first quarter of a million.

• 25:57Lewis Howes?

  In profit.

• 25:58Speaker 01

  In profit.

• 25:58Lewis Howes?

  You don't have to pay.

• 25:59Speaker 01

  No taxes.

• 25:59Lewis Howes?

  Wow, that's interesting, I didn't know that.

• 26:01Speaker 01

  If I'm married, if I'm married.

• 26:02Lewis Howes?

  Then what?

• 26:03Speaker 01

  Half a million.

• 26:06Speaker 01

  Seriously.

• 26:07Lewis Howes?

  You don't pay taxes on any of that?

• 26:08Speaker 01

  See the hair on my skin?

• 26:09Lewis Howes?

  You don't pay taxes on any of that?

• 26:10Speaker 01

  On the first half of a million dollars.

• 26:11Lewis Howes?

  This is all across the US?

• 26:13Speaker 01

  All across the US. So like my home in Manhattan that we just sold because now we're moving to Florence and I'm not going back to New York by New York.

• 26:20Lewis Howes?

  So the first, the first half a million, you don't pay any taxes? You can keep a half a million tax free.

• 26:25Speaker 01

  Legally, and I can do it over and over again. So I've now done this three times.

• 26:30Lewis Howes?

  How much of a tax do you pay on the other profit?

• 26:33Speaker 01

  Then you pay long-term capital gains.

• 26:36Speaker 01

  So I had a home in San Francisco, same, moved to New York, sold it, got all that money tax free. Bought my first home in New York, sold it, bought a bigger home in New York, got that money tax free. Third home I've just sold, got that money tax free. I can never do that in mutual funds unless it's in an IRA account. That's a different game. And again, I want people to use retirement accounts. And then I want them to own real estate. If you have those two vehicles, you pay yourself first, you save money automatically and you own real estate. And by the way, I'm not against, I want people to own rental properties too. I own rental properties with my wife, she's got a rental property in our building. But the way you get usually your first rental property, you buy your first home, then you rent that home out. Then you buy a second home, live in that for a while.

• 27:20Lewis Howes?

  It's like Monopoly.

• 27:21Speaker 01

  It's like Monopoly. Then you rent that home out. In the automatic millionaire, I say three homes over a lifetime and you're done financially, don't need to worry. Two of them, you've rented out, you've got rental income, the third one you've paid down, you have no debt. And now you're in your 50s or your 60s and you're not depending on social security.

• 27:35Lewis Howes?

  Yeah, and those two homes should be paid off by then and then they're just paying you every month.

• 27:40Speaker 01

  We get people, you know, posting on our website all the time. We had one the other day, you know, 10 years ago I had nothing and now I've got five rental homes because I did exactly what you talked about. So it's, it's, these are not pie in the sky ideas. I'm not telling people to go buy homes and flip them like I was listening to some radio out on the way over here and I thought, those are the things that don't usually work. You go to one of those seminars and they're free and the next thing you know, they're putting you into a $30,000 coaching program to flip homes. I'm just talking about basic, simple stuff. Pay yourself first, one hour to have your income, don't budget, save money automatically and get yourself into a piece of property and then pay the debt down.

• 28:15Lewis Howes?

  So buy a home as early as you can.

• 28:17Speaker 01

  As early as you can. And the thing is when you're young, what you, what happens is you think you're, a lot of times you'll come to a place like LA or San Francisco.

• 28:26Lewis Howes?

  You're like, I can't afford this.

• 28:27Speaker 01

  And you go, I can't afford it. So you know what you do is you buy something and then you get two or three of your friends to be the ones that rent from you. And they help you make mortgage payments. My first home I bought with my best friend from growing up, it's a complete dump. It needed, we needed sweat equity. We put every dollar that we had into it. I had less than six months of expenses set aside and I was in, I was in real estate, I was in commercial real estate, commission only. I remember calling my dad and going, you know what? I don't have enough money after six months to pay mortgage payments. What am I going to do if I don't make money in, in my job? He's like, well, son, nothing will motivate you like that.

• 29:03Lewis Howes?

  Yeah, that's true.

• 29:04Speaker 01

  And as I'm cold calling, he was right. And we rented bedrooms to friends to help us make mortgage payments.

• 29:11Lewis Howes?

  Crazy. So. Do what you gotta do.

• 29:13Speaker 01

  Gotta do what you gotta do, that's how you get started.

• 29:15Lewis Howes?

  That's it, man. So how much should someone put down on a home? Should they put as much as they can down first or should they put the minimum amount down?

• 29:25Speaker 01

  The most important thing when you buy a home is to make sure you can afford to buy the home. And so whatever the bank, I always start with whatever the bank will loan you, borrow less.

• 29:33Lewis Howes?

  Borrow less.

• 29:33Speaker 01

  Yeah, so if the bank says I'll loan you $200,000, borrow less than $200,000. Cause they don't really care as much as you need to care. So borrow less than you think you can, you know, people always try to get the next level house. Get the house you can afford or lower. Your first home is rarely your dream home. My mom actually cried when she came to see my first house. Cause she couldn't, she's like, oh God, you don't know what you've done. I'm like, we didn't actually know what we had done. There's a lot to be said for being young and stupid, right? But we thought it would be fun to fix all this stuff up. It was a lot of work. But I think you want to, you want to buy less than the bank will loan you. I, I kind of ascribed to Warren Buffett, right? Like a good old fashioned down payment, 10 to 20%.

• 30:15Speaker 01

  More is better because your payments are lower. But one thing is you need to have six months to a year worth of mortgage payments set aside. I would not recommend somebody do what I did, which was only have like a little window of. Um, I think if you can have a year's worth of expenses set aside, you're better off. You're, you're more prepared to buy your home. But I will say one thing is that people think buying a home is risky.

• 30:43Speaker 01

  So is renting. Like if I buy a home, I've got to pay the bank. If I rent, I've got to pay my lease. If I don't pay my lease, my landlord can evict me. If I buy a home and I don't pay my mortgage payment, it's a lot harder for the bank to get me out of that home.

• 30:55Lewis Howes?

  Hmm, really?

• 30:56Speaker 01

  Yeah. So I'm not suggesting people at home do not make bank payments. What I'm suggesting is the same discipline it takes to pay rent is the discipline it takes to make a mortgage payment. But owning, owning real estate long-term frees you, especially if you're lucky enough to be in markets that are going up.

• 31:12Lewis Howes?

  Wow. Now, I feel like I've been doing everything I can. Maybe not yet because I don't own real estate. But I've invested at a young age in maxing out my whole life insurance policies for the tax-deferred and, you know, all those things. I've, um, I've got 401Ks, Roth IRAs, defined benefit plans, all maxed out every year for many years. I invest in my own business. I invest in my personal brand. I invest in learning new skills. I invest in people, my team. I invest in new projects that we own, assets within my business. I'm investing in real estate funds.

• 31:56Lewis Howes?

  I'm investing in all these things. And what would you say is missing for me? That, that I could be doing? I mean, I put a lot away every month.

• 32:04Speaker 01

  Well, I mean, first of all, listening to you, I'm like, you're doing everything right, right? And a lot of things you just said so quickly that people don't know what you're talking about. But like a defined benefit plan. It's the single greatest vehicle ever

• 32:14Lewis Howes?

  Is it?

• 32:15Speaker 01

  For a self-employed person.

• 32:16Lewis Howes?

  Okay.

• 32:16Speaker 01

  Who doesn't have a bunch of employees.

• 32:18Lewis Howes?

  Right.

• 32:18Speaker 01

  Right? Because you can put up to over $200,000

• 32:22Lewis Howes?

  Yeah.

• 32:22Speaker 01

  Tax deductible into that retirement vehicle. Now, most people don't set this up until they're in their 50s.

• 32:28Lewis Howes?

  Wow.

• 32:29Speaker 01

  And, and a lot of people say, oh, you can't do this. And you really don't want to do it until your 50s because of the, all these different requirements. Totally wrong. You can go and max out a defined benefit plan for two or three or four or five years, then just shut the plan down. Then if your income doesn't stay the same, then roll that into an IRA account and you can get a fortune put away, tax-deferred. It's all about taxes. I don't want to pay taxes if I don't have to.

• 32:53Lewis Howes?

  Right.

• 32:53Speaker 01

  Legally.

• 32:54Lewis Howes?

  That'll be smart.

• 32:55Speaker 01

  That'll be smart, but well, that's what people who become wealthy do. They focus on not paying taxes legally. So when you put $100,000 or $200,000 into a defined benefit plan.

• 33:04Lewis Howes?

  For the last four years, yeah.

• 33:05Speaker 01

  You didn't pay taxes on that money.

• 33:07Lewis Howes?

  Right.

• 33:07Speaker 01

  Now, critics will go, oh yeah, but you'll have to pay taxes later. Fine. I'll have my money grow for the next two, three decades and I'll pay taxes later. I like that.

• 33:15Lewis Howes?

  Yeah, yeah, yeah. Because eventually you got to pay taxes on something, whether it grows tax-deferred or.

• 33:21Speaker 01

  Eventually, when you go to, when you go to take the money out of these retirement accounts, you'll pay taxes on it. So what? I'd rather pay taxes later than now. Now, you mentioned Roth IRA. I love Roth IRAs for people who can fund them because the money, you pay taxes going in, but it grows tax-free forever coming out. So they're both great vehicles. I like insurance for the right person. You don't have any, but you're not married. You don't have any kids. So the ironic thing about insurance, usually insurance is designed to be a death benefit.

• 33:48Lewis Howes?

  Absolutely.

• 33:49Speaker 01

  It can also be an investment vehicle, which is how you're using it as a sophisticated investor.

• 33:53Lewis Howes?

  Yes.

• 33:53Speaker 01

  So with everything that you just said to me, and you're probably invested in privately in companies too, right? Like startup companies? So.

• 34:00Lewis Howes?

  Which that doesn't make me any money, but those are just risky.

• 34:02Speaker 01

  We, we call that the hopeful someday pile.

• 34:05Lewis Howes?

  I've never made any money on the last eight years of all, like eight startups that I've invested in, but.

• 34:10Speaker 01

  It's a hard way to get wealthy. Nobody really talks about that. It looks super sexy, but usually you're putting your money in. You're lucky, you're lucky if you see it back in 10 years.

• 34:17Lewis Howes?

  Yeah.

• 34:18Speaker 01

  Um, what I would say, not knowing how you organize everything, because it seems to me like you're doing everything right.

• 34:24Lewis Howes?

  Yeah.

• 34:24Speaker 01

  It's all about having this on a dashboard. Because as you, as you start to have all this stuff, what happens is we're all busy. And if you're not tracking everything, that's the big thing.

• 34:35Lewis Howes?

  I just started doing that like seven, eight months ago because I was like, I don't even know where all these accounts are. They're all in different portfolios and plans and companies. And it's like, where's all my money?

• 34:44Speaker 01

  So whether you use, you know, there's all kinds of tools you can use, but even just a simple spreadsheet, which lays it all out. So also that if God forbid something happened to you, your family would know where everything is. Because, you know, if you, if you die and your family doesn't know where this stuff is, they, they may never get it.

• 35:01Lewis Howes?

  Really?

• 35:02Speaker 01

  Yeah, because like, let's use, let's use an example of investing in a startup. Okay, you know, God forbid something happens to you tomorrow. Your family doesn't know that you have, you have private equity in a startup.

• 35:13Lewis Howes?

  Yeah.

• 35:14Speaker 01

  They're not coming looking for you. You know, if you have money in an old 401K plan, there are billions of dollars in old 401K plans that people have died, that the family doesn't know it's there and it's just sitting there in an unclaimed asset. All the time this happens. So having it like, it's all sitting there, it's all organized, you know. You have a sister, right?

• 35:34Lewis Howes?

  Yeah, I've got two sisters and a brother.

• 35:36Speaker 01

  Two sisters and a brother. Like somebody in your family that you trust is like, like here's where all this stuff is if something happens to you.

• 35:41Lewis Howes?

  Yeah, yeah. Okay, so have it organized. And would you recommend me investing in real estate? See, I invest in real estate funds because I'm like, I don't want to manage a property. I don't want to deal with it. But I know I'm investing in real estate.

• 35:54Speaker 01

  Like, first of all, you're renting this apartment?

• 35:56Lewis Howes?

  Yes.

• 35:57Speaker 01

  I mean, so you've got to buy a place here in LA. Are you going to stay in LA?

• 36:00Lewis Howes?

  Yeah.

• 36:00Speaker 01

  So I'd buy a place and then, by the way, I'd rent part of this, like this is an office here.

• 36:05Lewis Howes?

  Yeah, yeah.

• 36:05Speaker 01

  I'd have your company, your LLC. Or, you know, the other thing I'd do? I'd buy a condo in a separate LLC. And then I have your business rent the condo.

• 36:18Lewis Howes?

  And pay my, pay the business?

• 36:20Speaker 01

  Yeah.

• 36:21Lewis Howes?

  That's legal?

• 36:21Speaker 01

  Totally.

• 36:22Lewis Howes?

  Interesting.

• 36:23Speaker 01

  You still have to pay taxes somewhere on it, but the point is your business, your business is paying the rent to another piece of property that you own. Ultimately, how business owners get rich, who don't do what you're doing. Because you're, you're doing things that are the exception. They, most, most business owners don't have defined benefit plans, don't save money automatically, aren't, aren't actually investing like you are. I give you all the credit in the world. Like a lot of influencers are broke.

• 36:45Lewis Howes?

  Yeah, they are.

• 36:46Speaker 01

  I mean, you know this, right? Like you, you see all the bling, bling.

• 36:48Lewis Howes?

  They make a lot of cash and they spend it all. They have nothing to show for it. Looks like pro athletes too.

• 36:52Speaker 01

  It's really sad. I spent nine years at Morgan Stanley and what my, my clients who became wealthiest, I always say they became wealthiest by accident. They owned a business and they bought real estate that the business was in. And 20, 30 years later, that building was worth millions, sometimes tens of millions of dollars. The business wasn't worth anything.

• 37:10Lewis Howes?

  The building, the asset was.

• 37:12Speaker 01

  So, and, and then if the business is worth something and you can sell the business, you can make the buyer turn around and have to do a 10-year lease with a building that you own and you're collecting rent. You don't even sell the building. You just still have the asset.

• 37:23Lewis Howes?

  Right.

• 37:25Speaker 01

  So you should totally buy something.

• 37:27Lewis Howes?

  Okay.

• 37:29Lewis Howes?

  It's always been like the, the peace of mind and the freedom of like, I don't want to deal with the logistics. So I'd rather pay a premium to have freedom. A peace of mind and like, someone can fix this and take care of this. I just want to do what I do best, focus on that. But.

• 37:45Speaker 01

  I'm buying a condo in, down, like in this area. There's no logistics. I've had a condo for most of my time in New York, right? Like, I don't do anything. I don't know how to do anything. My wife says, you know, you're totally useless, right? Like, oh my God, that's why we have the guy downstairs. You just call him and he does it.

• 37:59Lewis Howes?

  Right, exactly. My friend, I hope you're enjoying this episode. And the School of Greatness drops new conversations every Monday, Wednesday, and Friday around money, mindset, healing, manifestation, and relationships. And if you're not yet following the show, then you're missing all of them. Please tap the follow button right now and you'll get notified the moment every new episode drops because the next one might be exactly what you need. Now, let's get back to the conversation. Support for this episode comes from Ring. Whatever shows up around home this holiday season, with Ring, you're protected. The holidays get busy fast. You're running errands, gifts are showing up at the house.

• 38:42Lewis Howes?

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• 39:24Speaker 02

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• 39:53Lewis Howes?

  So there's two things that you need to be doing, real estate stocks. And I have been doing index funds for everything that I've been doing. Cause I tried doing like individual stocks and betting and guessing. And I'm like clueless to this stuff. So I'm just like Warren Buffett model, just put my money in. If it grows seven to 10% a year on average or whatever, just like it's not sexy. That's what I've been doing. Is that what you recommend as well?

• 40:18Speaker 01

  It's a great way to go. By the way, I invest in Warren Buffett too.

• 40:22Lewis Howes?

  Yeah.

• 40:22Speaker 01

  I own Berkshire Hathaway.

• 40:24Lewis Howes?

  Okay.

• 40:24Speaker 01

  So I invest in Warren Buffett. I own Berkshire Hathaway. I also own index funds. I run a registered investment advisory firm. I think I was telling you that earlier, that I'm a co-founder of a firm that literally today, we just went over $7 billion on the platform.

• 40:37Lewis Howes?

  Amazing.

• 40:37Speaker 01

  So I sit on our investment committee. So I've got a lot of different things, right? I've got mutual funds and ETFs, index funds and individual stocks. But if you're not somebody that's excited by individual stocks, like you heard me talking about how excited I was when I bought McDonald's and Disney. If that doesn't excite you, then put in an index fund. Warren Buffett told his wife, when I die, take the money and put it in this Vanguard index fund. That was his advice to her. I'm like, you know what? Cause you can't really go wrong owning an index fund. If you don't want to spend a lot of time on it. I think the real key to managing money is diversification. You shouldn't have all your money in the S and P 500. It shouldn't be all stocks. Even though I say you need to own stocks and real estate, I own bonds.

• 41:22Speaker 01

  I've got a diversified portfolio. Our clients have diversified portfolios. Cause I actually am shooting to get the return that you just said earlier. My goal for my money is somewhere between seven, eight, nine percent annually. And the reason that is, is that I'm not looking for home runs. I'm looking to double my money every 10 years. There's a rule called the rule 72. It's a great formula to learn. The rule 72, you take the number 72, you divide it by the rate of return that you're earning, and it will tell you how long it takes to double your money.

• 41:53Lewis Howes?

  So if you're getting seven percent or 10% rate of return, you divide that by 72 and it'll give you the number.

• 41:58Speaker 01

  So 72 divided by seven, it's gonna come out right in like 10 years. 72 divided by 10, it's gonna come out right in like seven years.

• 42:05Lewis Howes?

  So that's doubling your money.

• 42:06Speaker 01

  Doubling.

• 42:07Lewis Howes?

  Yeah.

• 42:07Speaker 01

  If you're in a bank account earning 1%, you're gonna double your money in 72 years.

• 42:13Lewis Howes?

  Oh my gosh. So get your money out of a bank account, savings account.

• 42:16Speaker 01

  Only, only your emergency money should be in a bank account. And even then it needs to be at least earning today 2%, right? There's all kinds of online savings vehicles today that are earning 2%. And so don't be earning zero at the typical bank account.

• 42:30Lewis Howes?

  How much should you have in, what's an emergency fund? You know, it's like, if you've got a lot of cash, how much should you have in savings, checking, and then the rest in stocks or real estate?

• 42:42Speaker 01

  Okay, so if you and I were having this conversation and nobody was watching right now, right? Like I'd say, I'd say, well, I would say to you, Louis, how much money do you need to have in terms of expenses set aside to feel safe, to sleep well?

• 42:55Lewis Howes?

  For how long expenses for, just in general, for like six months or something or?

• 42:58Speaker 01

  But so I would, I would ask you personally, what's the, what's the amount of money?

• 43:03Lewis Howes?

  Probably a hundred grand.

• 43:05Speaker 01

  Oh, I wasn't even asked the dollar amount.

• 43:06Lewis Howes?

  No.

• 43:06Speaker 01

  I would even just ask you like in terms of how much months, how many months?

• 43:10Lewis Howes?

  Yeah, six, six months or something. Yeah, maybe, I don't know.

• 43:12Speaker 01

  Okay, so, so, so that's your answer. So for you, and then I'd probably go, are you sure? Is six months, I would probably go like, if I was your advisor, I'd probably go like, be your buddy, like, no, maybe I have more than that.

• 43:21Lewis Howes?

  Like if I lost everything and this is all I had left type of thing?

• 43:25Speaker 01

  See, everybody's different in terms of how they sleep at night. Like for me, I want two years of expenses set aside in cash.

• 43:31Lewis Howes?

  Okay.

• 43:31Speaker 01

  I sleep better.

• 43:33Lewis Howes?

  Peace of mind.

• 43:33Speaker 01

  Peace of mind. Most Americans don't even have three months of expenses set aside. In fact, what led me to write the Latte Factor was about three years ago, the Federal Reserve came out and said that four, four out of 10 Americans can't get their hands on $400 in case of an emergency. Six out of 10 Americans can't get their hands on $1,000 in case of emergency. Seven out of 10 are living paycheck to paycheck, they're men. And eight out of 10 women are living paycheck to paycheck.

• 44:06Lewis Howes?

  Wow.

• 44:07Speaker 01

  So when I say, oh, I need two years, that's really extreme, right? Like I would love to get the average American to get $1,000 in savings set aside. Which by the way, if you just save 10 bucks a day, in a hundred days, you've got more than six out of 10 Americans. So when I go back to the Latte Factor metaphor, I'm like, you know what? Yes, five, 10, 15, $20 a day can change your life. Because in a hundred days, you could have more money than the average person walking down the street.

• 44:37Lewis Howes?

  Yeah, in 40 years, you're a million, you got a million bucks.

• 44:39Speaker 01

  And again, people go, oh, in 40 years, a million dollars won't be worth a lot. Guess what? It'll be worth a million dollars more than zero.

• 44:45Lewis Howes?

  Exactly.

• 44:45Speaker 01

  Which is what the average Americans working towards. And you know, I was thinking about one other thing on the way over here. Cause like, things get me fired up. Like the dumbest thing Americans spend money on are new cars. So when you borrow money, you borrow money to buy assets that can go up in value, like a home. You don't borrow money to buy assets that go down in value, like a car. So the average American buys a new car constantly, right? Like the car industry is just starting, it was on CNBC yesterday saying that the car industry is getting nervous that people are gonna buy less cars. Good, people should buy less cars. Millennials are starting to use Uber everywhere. My kid doesn't even want a driver's license. The average American's car payment right now for a new car is $533.

• 45:28Lewis Howes?

  Crazy.

• 45:28Speaker 01

  A month. When you factor in insurance, and God forbid you have to pay for car key, gas.

• 45:35Lewis Howes?

  Thousand bucks a month almost.

• 45:36Speaker 01

  It's almost a thousand bucks a month. And the average American is spending three months a year to make their car payments.

• 45:44Lewis Howes?

  Wow.

• 45:45Speaker 01

  And when you think about it that way, and you're buying an asset that goes down in value the moment you drive it off the lot by 20, 30, 40%, it's just the wrong place to put your money. But we're marketed to, to get the new.

• 45:57Lewis Howes?

  Lifestyle, the feeling.

• 45:58Speaker 01

  Lifestyle, the new hot car, the new special thing. And we're basically trapped by marketing. We're trapped by, you know, when you succeeded, you should have this. And so what we've done for a lot of young people is we've gotten them, and we haven't talked about student loans yet, but like, you know, Zoe Daniels has got student loans in this book and.

• 46:15Lewis Howes?

  Hundred grand, 300 grand, whatever it is.

• 46:18Speaker 01

  We are trapping an entire generation, two generations now, with student debt that they'll never be able to pay off. And it's, it's sad because if you go to college and you're, first of all, you don't even know better, right? And you take out a hundred thousand dollars in student loans, it could take you 20 years to pay those loans off, if you're lucky. And you can't walk away from those student loans. Literally the laws are set up that you can't get away from student loans. It's the only thing in life that you can't get away from through a bankruptcy is student loans. That's because the government got into the student loan business. They should have never been in the student loan business. I went to school right down the street here, USC. That was a super expensive school to go to when I was going there back in 1985.

• 47:02Speaker 01

  Today it's a fortune.

• 47:04Lewis Howes?

  It's like 50 grand a year, 60 grand a year, right? It's crazy.

• 47:06Speaker 01

  And I just go, you know.

• 47:08Lewis Howes?

  How do you afford it to pay that off?

• 47:10Speaker 01

  It's just so hard. And I think, you know, I would tell anybody who's young today, don't, don't get trapped by these debts. Like go to junior college for two years.

• 47:16Lewis Howes?

  Yeah.

• 47:17Speaker 01

  Actually like find it, find an inexpensive way, go to junior college.

• 47:20Lewis Howes?

  Go to state school.

• 47:21Speaker 01

  Go to state school, transfer into the school you want to ultimately be at when you're a junior, senior. Take on as little debt as possible. We're just not preparing people properly to realize how, we're not, we're not explaining correctly that these are handcuffs. And so people are getting out of school with these handcuffs that aren't a year or two long. That's what it used to be. It's now decades long. And so, I don't know, I mean, I guess.

• 47:45Lewis Howes?

  Unless you can learn how to build wealth fast, you're not gonna pay that off.

• 47:49Speaker 01

  You're not gonna pay it off. I mean, imagine if you and I had an online course and we said it's a hundred thousand dollars to join. We have absolutely no way to guarantee that you'll ever make money from it. We're not even sure it will improve your life. But it's, but by the way, we know you don't have a hundred grand, so borrow it.

• 48:03Lewis Howes?

  And then pay us massive interest.

• 48:05Speaker 01

  We would go to jail, right? Like, like, like literally like, but that's what the university systems are like. So I'm not against college. I want my kids to go to college. I just don't want people to get these debts.

• 48:17Lewis Howes?

  It's crazy. It's interesting because my dad never bought new cars. He would have like 10 year old cars. We had a 1989 Oldsmobile. They would, I don't think Oldsmobile is out of business now, but we would drive, he would drive that thing. He would, he would run his business and drive that thing. And he would just save his money and invest it. And the challenging thing is, you know, I look at my mom now. She went through divorce, I don't know, 20 years ago with my dad. And she bought some real estate properties and made some money renting them out. But she had a lot of expenses of her own and she really didn't have a lot of savings, right? She had the money to live off of from the divorce. She was working to pay for stuff. And I look at it now, she, you know, she's gonna have her,

• 49:00Lewis Howes?

  what is it, social security that she can take out now? Or if she waits a couple of years, it's a little more money that comes out. And then she's got a retirement from working at the company she worked at.

• 49:09Speaker 01

  She's got a pension plan.

• 49:09Lewis Howes?

  Yeah, pension plan. But they're both like, what? One's like a thousand bucks a month, one's maybe 800 or 1200 a month. It's $2,000 a month and she just moved to LA. She's got a little apartment down the street. That doesn't even pay rent for the rest of your life, right? If you've got 2,000, 3,000 bucks a month, it doesn't even pay that much. Challenge is, it's like, what do you do then? You know, it's like, you can't save anything. You don't want to go keep working, you know, you're working part-time at that age maybe.

• 49:37Speaker 01

  It's, this is why like 80% of the poverty-stricken elderly are women.

• 49:41Lewis Howes?

  Wow.

• 49:41Speaker 01

  What you just described is the single biggest financial challenge. This is what women face. When I wrote Smart Women Finish Rich, it was because I saw all these women being hurt financially. They had gone through divorce. They had gone through widowhood. Eighty percent of women die, die widowed. Eighty percent of men die married. So what happens in the real world in marriages is that a lot of times, the wife has delegated the financial well-being to the husband.

• 50:07Lewis Howes?

  She's not educated then.

• 50:08Speaker 01

  She's not. She hasn't learned. I tell, in this book, Zoe Daniels is basically the mentor says to her, Prince Charming is not coming. You need to be your own Prince Charming. And in this book, the mentor who's also, I don't want to give it all away, but like, one of her mentors at work turns out to be extremely wealthy. And she had no idea. And she says to Zoe, you need to be in charge of your finances. I don't care who you marry, local bank president, as a woman, you have to take charge of your financial life. Because what you don't want to do is turn, I mean, I hate to say this, like, you don't want to turn around at sixty-eight and figure this out. Because at sixty-eight, like you just said, she doesn't want to work anymore. A lot of people are having to work in their sixties because they don't have enough money.

• 50:48Lewis Howes?

  Yeah. And unless they have family that can support them and pay for them, but you can't rely on that for everyone. You know, she's got me.

• 50:55Speaker 01

  You need to put your mom on the payroll.

• 50:56Lewis Howes?

  She's got, oh, she is. Oh, she is. Trust me. So she's, I mean, she's fine.

• 51:00Speaker 01

  Yeah.

• 51:01Lewis Howes?

  But it's like, if she didn't have me, or someone in the family that could help out, it's like, then what?

• 51:05Speaker 01

  No. And, and, and.

• 51:08Lewis Howes?

  I'm not blaming her or anything. She did what she could. She saved her money in the best way she had retirement. You know, she's still working, but it's like, it's still not that much money, you know?

• 51:16Speaker 01

  It's not that much money. When you know, I would go back to when you know better, you can do better. Right? Like, like, this little book, which I hope will go worldwide, I was inspired to write it by Paulo Coelho.

• 51:27Lewis Howes?

  Yeah, he's great.

• 51:28Speaker 01

  He's my hero, as far as a writer goes. And

• 51:31Lewis Howes?

  He's great.

• 51:31Speaker 01

  And I went to Geneva to meet him and have dinner with him.

• 51:34Lewis Howes?

  I want to meet him someday.

• 51:36Speaker 01

  You know, I've had, because Brendan, Brendan and I went over to have dinner with him. And my wife goes, you're gonna go to Geneva to have dinner with who?

• 51:45Lewis Howes?

  Paulo Coelho.

• 51:45Speaker 01

  Paulo Coelho, he wrote The Alchemist. It's the greatest book of all time. She goes, you're gonna go to dinner? I mean, go to Geneva for dinner? I go, yes, I am. And, right, this is also the importance of like, you know, when you get a chance to be in front of somebody that you respect, admire, and want to learn from, yeah, you get on a plane and you go. So, we go out, we close this restaurant down. Paulo Coelho is amazing. We go to, we have drinks, and we basically stay out. Paulo likes to stay out. So we're, I'm like, I'm staying out with Paulo's latest. Paulo wants to stay out. And around two or three in the morning, his handler is like, okay, we gotta get going. And he says, and he says, um, let me ask you a question, David, before I leave. Like, what's the book that you haven't written yet that your soul desires to write? Right?

• 52:29Speaker 01

  All right, Paulo, Paulo. And I go, Paulo, I want to write this book like you've written, like a parable. I want to write a little story that will inspire people to realize that they're richer than they think, that they have more strength than they know, and that their dreams can still come true. I don't want to package up these financial lessons in a little story that anyone can read, they'll transcend all the world. And he goes, then David, you must write this book.

• 52:56Lewis Howes?

  And then he walks away.

• 52:57Speaker 01

  And then he leaves. And like, literally, Brendan's like, what did he say? So like, we're leaving this restaurant, you know, pitch blackout, we're totally buzzed, and I'm like, he said I should write the book. Right? So I'm like, literally on cloud nine, and I get home, and I go, you know, I get home, I'm all jet lagged. And the first thing my wife, Lacey, says is, so what did Paulo say? And I go, he said I should write the book. And she goes, well, I've been telling you to do this for ten years. And I go, I know this Paulo. So, you know, that was the end of 2012. I've been wanting this book for fourteen years. And finally, I partnered with John Mann, who wrote this great book, The Go-Giver. And said, let's try to write this parable, but let's write it until it's perfect, and then we'll sell it. It's

• 53:39Speaker 01

  the first time I ever wrote a book without a deadline. And, you know, I just, I spent two years working on it. Now we spent a year getting ready to market it. So, look, I thank you for having me out, because you have such a big community. I hope that this will reach some people. And, you know, I got on a plane to come see you, because you've got one of my favorite podcasts in the whole world. And it was super cool to be with you.

• 54:00Lewis Howes?

  I appreciate it.

• 54:01Speaker 01

  In Puerto Rico, when you turned to me and said, hey, man, let's have you on the podcast. I'm like, okay, I'm getting on a plane to come see you.

• 54:05Lewis Howes?

  Yeah, yeah.

• 54:09Lewis Howes?

  The School of Greatness is brought to you in partnership with Airbnb. And some of my favorite travel memories are the smaller moments. Walking through a neighborhood, finding a local cafe, a local spot, and getting a real feel for the place that you're visiting. And I've got a space I make available on Airbnb, and I love that someone else gets that same chance to experience the area like a local. The extra income can also help fund more travel of my own, which is pretty cool. And maybe there's a big game or concert bringing people to your city. And if you have space available, that can be an opportunity to make some extra cash and put it towards your own next travel. A space you already have can help make that next adventure a little easier to say yes to.

• 54:53Lewis Howes?

  Your home might be worth more than you think. Find out how much at Airbnb.com/host.

• 55:02Lewis Howes?

  This is a paid ad by BetterHelp. World Mental Health Day matters because it gets people talking about something that can be easy to push aside. But your mental health doesn't only matter one day a year. It matters on the random Tuesday when work feels heavy, when a relationship is weighing on you, or when it just doesn't feel like you're being yourself. For some people, therapy can be one way to support their mental well-being. And it doesn't have to be about some huge life decision. With over thirty thousand therapists worldwide, BetterHelp is one of the leading online therapy platforms, serving millions of people globally. Their therapists have at least three years and a thousand hours of hands-on experience, with flexible ways to connect that can fit different

• 55:47Lewis Howes?

  schedules. Your mental health doesn't need a special occasion or anyone else's permission to matter. BetterHelp can connect you with a therapist who gets you, so you can make space for what matters to you. Visit BetterHelp.com/Greatness to explore your payment options. That's Better H E L P dot com slash greatness. I appreciate you coming out. Make sure you guys get The Latte Factor. I've got a few questions left for David. Make sure you get this. Super short. You can get this and read it in a couple hours. Even I can read this quickly, and it's super inspiring. Plus, it gives you a lot of practical things you can do at the end, really manage your money. What are three steps people should do right now? Whether they get this book or not, that they can start doing today, that it's

• 56:29Lewis Howes?

  like, if you did these three things right now, it could help you set you up for financial freedom later.

• 56:34Speaker 01

  So, number one thing, make a decision today to become financially selfish.

• 56:39Lewis Howes?

  Okay.

• 56:40Speaker 01

  And here's what I mean by that. Make a decision today to become financially selfish. Decide today to pay yourself first. So like, if you were gonna have like little Chyrons, it would be like, your first thing is, become financially selfish, pay yourself first. The formula to paying yourself first is one hour a day of your income. If we could get everyone watching to make it a goal to save one hour a day of their income, whatever they're earning an hour, you'd be earning minimum wage. Literally, like, you could have a fifteen dollar an hour job. If you could save fifteen hours a day.

• 57:11Lewis Howes?

  Fifteen dollars a day, yeah.

• 57:13Speaker 01

  Fifteen dollars a day, your first hour a day of your income, your whole, especially in your twenties, you'd have financial security by the time you reach retirement.

• 57:21Lewis Howes?

  So you save fifteen bucks a day for seven years?

• 57:24Speaker 01

  Well, seven years, I mean, like, I'll go back to charts, right? Because it's not, it's always the compound interest over decades, right? So if you look at like, I've got these great charts back here. Like, let's just use fifteen dollars a day. In thirty years at ten percent, happens to be it's one million, seventeen thousand dollars.

• 57:39Lewis Howes?

  So fifteen dollars for thirty years?

• 57:40Speaker 01

  Yeah. In forty years, it's, without my glasses on, two point eight million.

• 57:44Lewis Howes?

  Wow.

• 57:44Speaker 01

  In ten years, it's ninety-two thousand dollars. Still a lot, by the way.

• 57:47Lewis Howes?

  It doesn't seem like a lot. Like, oh, ten years, we're saving.

• 57:50Speaker 01

  Doesn't, and here's the thing, these decades go by like this.

• 57:55Lewis Howes?

  If it's automatic, you don't have to think about it.

• 57:57Speaker 01

  You don't have to think about it. So I would say, if you've got a 401k plan, just from this podcast, go sign up for it, and save one hour a day of your income. Happens to be the math on that is twelve and a half percent of your gross income. With your company's match, which you probably will have, you'll be saving sixteen percent of your income, which is like four times what the average American saves. It's huge. If you don't have a 401k plan, go open up an IRA account. Fund that. Or if you're self-employed, do a set by IRA. Second thing I would say is,

• 58:26Lewis Howes?

  Okay, so pay yourself first, one hour a day.

• 58:28Speaker 01

  One hour a day of your income.

• 58:29Lewis Howes?

  Yeah.

• 58:30Speaker 01

  Second thing I would say is, track where your money's going, but don't budget. So I would download an app. And

• 58:37Lewis Howes?

  Like, what are a couple of?

• 58:37Speaker 01

  So I would use, like, an app that I was an investor in. We sold the company to Goldman Sachs. It's called Clarity Money. Clarity Money is my favorite app. You can, it's like Mint.com on steroids. But Mint's good, too.

• 58:48Lewis Howes?

  Yeah. It's the same as Betterment, similar stuff?

• 58:51Speaker 01

  Well, no, because Betterment's for investing.

• 58:52Lewis Howes?

  Gotcha. So this is a management dashboard.

• 58:55Speaker 01

  It's a, you hook up a thing like Clarity Money, and in minutes, you'll see where all your money's being spent. You can put your credit cards in there, right? So one of the great features of an app like Clarity Money is that it'll show you not just where you're spending money, but it'll show you where you're spending, where you're spending money automatically, monthly.

• 59:15Lewis Howes?

  On all your things?

• 59:16Speaker 01

  All your subscription fees.

• 59:17Lewis Howes?

  So you can start canceling a lot of stuff that you don't.

• 59:19Speaker 01

  Yes. And there's a cancellation button in the app. So what happens is, I call this the piss-you-off factor.

• 59:25Lewis Howes?

  Oh, my God. You're like, I've been spending this much for years.

• 59:28Speaker 01

  You also, you don't realize it, right? Because we didn't used to have all these subscription services. And so when they're summarized in your phone.

• 59:36Lewis Howes?

  You've got thirty of them.

• 59:37Speaker 01

  And you're like, wow, I'm spending three, four, five hundred dollars in these, and I'm not using a lot of this stuff. And then there's a little but, these companies hate this, right? Because we were talking about how people sign up for things, and then they unsubscribe. But you go click, and then you unsubscribe. Well, you take a typical fifty dollar a month box that's being sent to you, right? Like, everybody's trying to send you these boxes of stuff. And you turn that off, well, that's six hundred dollars a year. It's not fifty dollars a month, it's six hundred dollars a year. Fastest way to change your life financially is get rid of some of these fixed expenses. So the way to do it, use an app like Clarity Money, Mint.com. Then, I would go back to this idea of saving money automatically, right? Because besides your 401k plan, there's other ways, other things to save

• 1:00:19Speaker 01

  for, like your dreams. Like, I want to go take a trip, I want to go start my business. I want, you know, a lot of people

• 1:00:25Lewis Howes?

  I want to get married, I want to do that, whatever it is.

• 1:00:26Speaker 01

  Whatever it is. So I would use another app, like an Acorns.

• 1:00:30Lewis Howes?

  Acorn?

• 1:00:31Speaker 01

  Acorns. It's A C O R N, Acorns.com. And there's, I'll give you multiple ones. So, because Acorns, I'm also an investor.

• 1:00:40Lewis Howes?

  Okay, yeah.

• 1:00:40Speaker 01

  So, but I got invested in Acorns three years ago.

• 1:00:42Lewis Howes?

  Robinhood.

• 1:00:43Speaker 01

  Robinhood, Acorns, Robinhood, Stash. You talk about Betterment. These are some of the bigger players in automated investing. But, but

• 1:00:54Lewis Howes?

  Go sign up for one of them.

• 1:00:55Speaker 01

  Go sign up for one of them. Companies like Acorns or Robinhood, Stash, make it so you can put very small amounts of money away.

• 1:01:01Lewis Howes?

  Put fifteen bucks on

• 1:01:02Speaker 01

  Pick a number. Whoever you, because everybody's different, right? But come up with something that you're gonna save automatically.

• 1:01:07Lewis Howes?

  Hundred bucks a month, two hundred bucks a month, automatically it comes out of your money.

• 1:01:12Speaker 01

  In the book Zoe Daniels, Henry, one of her mentors says to her, Zoe, you know how you get your dreams? You buy them. So like, having a dream without a payment plan is a wish. Having a dream where you're saving for it automatically, that's how it becomes real. Like in her case, she wants to take a sabbatical and she wants to travel. She's a travel editor who's never traveled and he teaches her how to like, save for this break. And then later in the story, I don't want to give it all away, but she like starts to take these trips. Well, she got there because she saved for them.

• 1:01:45Lewis Howes?

  Then it just happened magically.

• 1:01:46Speaker 01

  It just happened magically.

• 1:01:48Lewis Howes?

  It's just like unfold.

• 1:01:49Speaker 01

  Yeah, people, the thing is, you have such a great audience and people come here because they want, because they're great and they want to get greater, right?

• 1:01:57Lewis Howes?

  School of Greatness.

• 1:01:58Speaker 01

  And

• 1:02:00Speaker 01

  someone said to me yesterday, is there ever a point at which you feel like you don't need to grow anymore? Right? I'm like, no, right? Because what got us to where we are is we're curious and we're growers. Like, you know, we were this mastermind together in Puerto Rico, right? And everybody's hugely successful at that mastermind and we were all there to grow. We were all there with our journals, taking notes on every single word that everybody was saying because we're still learning. So there's no finish line in life. I think that's a big thing that I try to convey in this book is that it's about living rich. But there's no finish line.

• 1:02:31Lewis Howes?

  Right.

• 1:02:32Speaker 01

  So whatever age you're at right now, if your mom is 68, forget the money for a second. I'd be talking to your mom about what is she excited about? Because the problem at 68 is that people get depressed. And like your mom at 68, the next 10 years is the most important of her life. They're going to be the healthiest of her life between 68 and 78. She's not getting healthier from 78 to 88. So I'd be sitting there with your mom and being like, well, mom, what do you want to do in the next three years that you haven't done yet? Let's work on a dream planner for you. I had this guy David Bach on the show and I came home and thought, you know, is there anything that you're not doing that you want to do? Like, is there anywhere you want to go that you haven't gone?

• 1:03:07Lewis Howes?

  That we can start planning for, saving for.

• 1:03:09Speaker 01

  Go take a trip with your mom. My mom, my mom told me she wanted to go on a safari. And my mom's health is also getting worse because she's 70, my dad's 70, she's 76. Her dream trip was a safari, which we went on last summer.

• 1:03:25Speaker 01

  And I'm like, well, then mom, let's go.

• 1:03:28Speaker 01

  Because like, if we don't go now, I don't know when we're going. So, yeah.

• 1:03:31Lewis Howes?

  Yeah, it's good advice. What's missing in your life right now?

• 1:03:36Speaker 01

  Wow, I don't, probably at the very moment because I'm on tour. Is my, is sleep in my routine and exercise, but you know, I actually have a lot of routines. I'm one of those people who gets up very early, meditates, does my positive focus, normally exercises. But I'm living a pretty unbelievably blessed life right now. And also I know like when you put out a book, like I'll do 100 podcasts and I'll be on the road for two months almost. We're doing a nationwide tour with this book, but then I'll be done. Right? I mean, you do all this work, you want to get the message out, you've got to go do the work.

• 1:04:11Lewis Howes?

  There's a finish line.

• 1:04:11Speaker 01

  There's a finish line. Then I'm going to go to Florence early and spend a year and like eat pasta and drink wine and hang out with friends when you come visit me.

• 1:04:16Lewis Howes?

  That'd be amazing. You got a guest room for me?

• 1:04:19Speaker 01

  You know what? I will find a guest.

• 1:04:20Lewis Howes?

  A job next to me.

• 1:04:22Speaker 01

  My wife's like, don't tell me we have a guest room. Seriously, come out to Florence.

• 1:04:25Lewis Howes?

  I would love to.

• 1:04:25Speaker 01

  Bring your girlfriend.

• 1:04:26Lewis Howes?

  Yeah, I would love to. I would love to.

• 1:04:28Speaker 01

  The reason I'm taking a year to go to Florence right now, even though I'm co-founder of a big business and got a lot of other businesses. I've got a 15 year old son who's going to be a sophomore. And what's about to be missing in my life is this kid's going to go to college in three years. So because I want to live my home, the principles I teach, I want to live them. I said to my wife, you know what? The last year I can take this kid abroad as a family is his sophomore year. So let's go live abroad for a year and let's take the kids to go see the world and let's have them learn another language. A lot of work to go pull this all off, but we're almost there. Like we're leaving in 92 days.

• 1:05:07Lewis Howes?

  Crazy.

• 1:05:09Speaker 01

  It's crazy. And it's like, you know, it's exciting. So I feel blessed that we've been able to do it, but we didn't just snap our fingers and do this. It was like a two-year plan. And I, and I just say that to anybody too, like when you see the greatness, right? Like this incredible wall over here with all these people who have done so many amazing things.

• 1:05:28Speaker 01

  They worked on it for years. Most people, by the time they end up on a School of Greatness podcast, they've been doing it for decades. Or longer, right? Like I used to always joke like, yeah, yeah, it was easy. I was a 15 year overnight success story. Right? Like, this stuff takes a long time. You were kind of an over, but you really weren't, right? Like, how many years did you work before you were like, oh my God, people now know who I am?

• 1:05:49Lewis Howes?

  That's probably about 10 years. Yeah. It's probably close to 10 years of working hard. I mean, depends on the industry I was in. I was playing a sport for my whole life, mastering myself in a craft to be great as an athlete. Then transitioned in 2007, got injured playing professional football. You know, I wrote a New York Times bestseller, but 10 years after the fact, I started in the business. It took a lot of time.

• 1:06:13Speaker 01

  And it was easy, right?

• 1:06:16Lewis Howes?

  And this is, you know, six, we're six years now, but it's like three times a week, every week for six years. Almost, you know, almost 800 episodes. It's every day showing up and not every day is fun. You know, you go through weeks and months and years where like, you know, it started as one episode and one listener. And you're like, oh, is anyone going to listen to this?

• 1:06:37Speaker 01

  And the one listener was your mom, right?

• 1:06:38Lewis Howes?

  Exactly. And then it's like, and then it gets to two listeners. She tells a friend.

• 1:06:42Speaker 01

  Your sister got on to listen to it, right?

• 1:06:43Lewis Howes?

  Exactly. So, and I had never, I didn't know what I was doing. I didn't have any skills as an interviewer or doing a show or I had no clue. I just wanted to have conversations with smart people and share the wisdom.

• 1:06:55Speaker 01

  Yeah.

• 1:06:56Lewis Howes?

  And so I'm curious for you, what's, what's the best money advice you've ever heard? If you give one piece of advice you ever heard?

• 1:07:04Lewis Howes?

  Because you've heard from all of them.

• 1:07:07Speaker 01

  It's, it's a funny phrase, but it's called benign neglect. And it was given to me by somebody who used to run, Dean Witter. And he said to me, um, because I used to ask this question a lot to young, I'm the young person. I would, I would be around all these incredibly successful people in their 60s and 70s and I asked that question. And he said benign neglect. And I said, what do you mean? He's like, buy quality investments and leave them alone.

• 1:07:36Speaker 01

  He's like, I can't tell you how many things I've sold over my lifetime that went higher. Buy quality investments, buy quality and leave it alone. And I was like, huh, okay. That was super powerful. The second, I'll give you two. The second thing was I came to financial services industry and I had all these successful financial advisors who would, I asked for mentorships. You know, tell me, tell me what you learned after being in the business for 30 years. And these financial advisors would say to me, if you invest for yourself, the way you invest for your clients, you'll be extraordinarily wealthy. He said, the problem, and they were all joking. They're like, the problem is when we got, we, when you're in the business of managing money,

• 1:08:18Speaker 01

  you think you're so smart that you take a risk with your own money that you wouldn't take for a client. We didn't talk about the issue being a fiduciary, but like when you're a fiduciary, you have this massive responsibility. You can't not put the client's interest first. And, but a lot of people, when they become wealthier and more sophisticated and the income starts to roll in, you start to take these, you take additional risk with your money. And so keeping this, keeping it simple, buying quality, leaving it alone, not going off and doing a bunch of crazy things to try to get rich.

• 1:08:52Lewis Howes?

  Best startup, so you're going to blow up a thousand times your.

• 1:08:56Speaker 01

  Cryptocurrencies that are going to go.

• 1:08:57Lewis Howes?

  I've tried all this stuff and I lost all my money. I'm like, luckily I never spent a lot of it in this. I just like played with it with a little bit. I'm like, okay, I'm willing to lose 50 grand or 20 grand. But then you're like, what was I thinking? I could have used that money and put it in here.

• 1:09:10Speaker 01

  So I'll give you one more nugget, which is people call it play money. I go, I, I put my play money into Bitcoin, my play money into this cryptocurrency and I go, you know, did you play to make that money? And they go, what do you mean? Like, did you play? Like, did you go outside and kick a ball and somebody gave you money to like, so that you could then go invest it? Because if you didn't, then it's called work money. Never refer to your money as play money. It's work money. You, you just talked about, you did three podcasts a week. You worked for your money. And then we turn it over to somebody else that goes and plays with it and it goes away. Right? Like you, one thing you said early in the show is that you invested in you, which is by the way, why you've been so successful.

• 1:09:49Speaker 01

  You have one of the greatest websites, one of the greatest quality podcasts. You, you put money into your brand, your business, you invested in you. Smart, right? Because nobody cares about your brand more than you do. The next thing you know, you see a great idea and you're like, oh, here's 50 grand. Well, it doesn't matter until it doesn't come back. And then you do 10 of those and you're like, believe me, we've all been there. I have so many friends, we talk about this now because we're like, we've all put money into 10 or 15 or 20 of these deals. And then you go 50 grand a pop, it's a million dollars. And now it just didn't come back. Right? Like, and then we all hope one of them's going to come back.

• 1:10:25Lewis Howes?

  Right, right. And make all our money back.

• 1:10:26Speaker 01

  Right, right.

• 1:10:27Lewis Howes?

  Equal it out.

• 1:10:28Speaker 01

  So meanwhile, I would have just rather have been in an index fund. It's liquid. I could sell it tomorrow or bought one more condo. So.

• 1:10:37Lewis Howes?

  This is called the three truths. I ask it at the end. Imagine it's your last day on earth, as long as you want to live, but at some point you have to die. It could be 200 years from now, right? And you've written, you know, multiple more books. You've done everything you want to do. You've lived your dreams. You've seen your kids do what they want to do, grandkids, whatever you want. You've created it. But it's time to go and everything you've created, you've got to take with you. So your work, your messages, your videos, audios, virtual reality, whatever you created by then, it's got to go with you. But you get to leave behind a piece of paper and you can write down three things you know to be true about all the lessons you've learned in your life.

• 1:11:16Speaker 01

  Wow.

• 1:11:17Lewis Howes?

  And this would be kind of your commandments to the world. And this is all they would have to remember you by. It could be on anything, but your greatest lessons, what would be your three truths to the world?

• 1:11:30Speaker 01

  Okay. Now, now that's, that's deep.

• 1:11:37Speaker 01

  And I'm thinking about my kids, right? Because ironically, I just, I've been working on a book of life lessons for them, which may just be just for them. My first truth would be to love fully.

• 1:11:51Speaker 01

  Don't hold back on a love. You know, like, we've all been there when we're like, you know, you wrote a book about being, I'm gonna blink on your masculinity. Yeah, but like, you know, a lot of times, especially guys.

• 1:12:03Lewis Howes?

  Being vulnerable.

• 1:12:04Speaker 01

  Being vulnerable, like, we're sometimes, like, when you're young, you're afraid, like, you might be in love with somebody, but you're afraid to tell them. Right, and, oh, man, I wanna make, don't be afraid to tell somebody you love them.

• 1:12:13Lewis Howes?

  Yeah.

• 1:12:14Speaker 01

  Love fully, love fully in the relationships that you're in. You know, I was unfortunately last week in a hospital with my wife.

• 1:12:23Speaker 01

  Thinking that she's having a stroke.

• 1:12:24Lewis Howes?

  Wow.

• 1:12:25Speaker 01

  And had eight doctors around her in the emergency room.

• 1:12:29Lewis Howes?

  Wow.

• 1:12:30Speaker 01

  And, um, I'm like, wait a minute, we're going to Italy like in ninety-four days. She can't be having a stroke. Like, like, this is how life works. And then she had to go have an MRI, and I'm waiting in the waiting room for hours. This is Wednesday, and I'm like, oh, my God, like, my whole life has just changed. Her life is potentially changed, my whole life has changed. That's how life is. And I started thinking about our last eleven years together. And it's amazing, because I told my wife I loved her and wanted to marry her and have, I told you this actually in front of her, I told her I loved her, wanted to marry and have children with her before I kissed her.

• 1:13:06Lewis Howes?

  Wow.

• 1:13:07Speaker 01

  Which is insane, but it was true. And, you know, we've had an amazing eleven years together, and I had not fully done that in the past. And I was like, this is the girl I gotta love fully, I like, I gotta not hold back. But sitting in the emergency room, I was like, okay, what have we been focused on that doesn't really matter? Like, I gotta keep going back to like, it's the love, love fully.

• 1:13:30Lewis Howes?

  Wow.

• 1:13:30Speaker 01

  So that would be number one. And.

• 1:13:33Lewis Howes?

  Is she doing okay?

• 1:13:34Speaker 01

  She is doing okay. You know what, she came back with a complete clean bill of health, and I think it was stress related.

• 1:13:40Lewis Howes?

  Oh, my gosh, yeah, probably changing your whole life around.

• 1:13:42Speaker 01

  You know, we had just gotten back from Florence, we just got our lease signed, and this is a lot of stress. Um, cause probably, sometimes going for your dreams is stressful.

• 1:13:49Lewis Howes?

  It can be.

• 1:13:49Speaker 01

  Um, the second thing I would say,

• 1:13:54Speaker 01

  it's actually the core of this book, ironically. My grand, the very back of this book is a lesson from my grandmother, and my grandmother shared on her deathbed. At eighty-six, my grandmother had a stroke, and I didn't know she was gonna die, and I was finishing Smart Women Finish Rich, and I asked my grandmother, cause she knew I was dedicating the book to her, I said, Grandma, do you have any regrets in life? And she proceeded to go through her regrets, going back to being a teenager, and she went through five of them.

• 1:14:22Lewis Howes?

  Oh, my gosh.

• 1:14:23Speaker 01

  And in those regrets, she said, it's not about the individual thing, she goes, my regrets were, I came to a fork in the road, and there was one road that had more risk, which is where all the gold was at the end of the road. It was what I really wanted to do. And then there was a safe route. And she said, every regret, I took the safe route.

• 1:14:46Lewis Howes?

  Wow.

• 1:14:47Speaker 01

  And she's like, I know, and she's like, I'm sitting here now at eighty-six, and she said to me, and I'm, I'm gonna die, and I'm not gonna leave this bed. And I was like, no, Grandma, I'm getting married in ninety days, you're totally getting out of here, coming to the wedding. She's like, no, I'm not. And she said to me, I'm, I'm here to tell you that you're young, I was in my twenties. She said, if I can give you one last lesson and gift, and she's like, and you should share it with other people, and I do a lot from stage. I said, she said, tell people when they get to a fork in the road, there's gonna be the little boy or little girl inside of them wanting to take the risk, like, you're gonna get to these forks in the road, and there's gonna be a little boy inside of you that wants to go take this risk. And then there's gonna be a big boy inside of you who doesn't. And she's like, let, listen to the little boy, and let him come out and play.

• 1:15:31Speaker 01

  So that you don't turn around at eighty-six and wonder what you should have done with your life.

• 1:15:36Speaker 01

  So that would be lesson number two, which is like, listen to your little boy or little girl, and, and, and it's hard to take the extra risk in life, but I go back again to my wife, I'm sitting in the emergency room last Wednesday, I'm presbytery in a hospital, and I'm thinking to myself, God willing, she's okay, this is why we're going to Florence. This is why we're taking a year moving abroad, because I'm fifty-two, and maybe I'll live fifty more years, but who knows what can happen? So we gotta take the risk and go live the life now, which is all about living rich. And, yeah, and then the third thing I would say, this is probably the hardest one, which is forgive the people you're mad at.

• 1:16:21Lewis Howes?

  Hmm, gosh, it's so true.

• 1:16:25Speaker 01

  And if you need to say you're sorry, just say you're sorry. And, and I, and I

• 1:16:32Speaker 01

  and there's so many things below that, but like, right now, someone, everybody watches, for the most part, there's somebody in your life that you're not talking to. You had a falling out, and it hurts you.

• 1:16:47Speaker 01

  Still, like, it could have been ten years ago, and a lot of times, it's family, which is the saddest thing. And people typically wait until the person's dying, if there's a deathbed part of it, where they show up at the hospital and try to say, I'm sorry, or I love you, and they've lost out on the ten, twenty, thirty years of lifetime together. I saw this as a financial advisor. The thing that was insane to me, being a financial advisor, because you, you get to know clients better than a therapist knows them, is how many clients we had that weren't talking to their kids? They got all this money, and they've had falling out with their children, and the children don't speak to each other way more often than not, and we would try to help these clients make up.

• 1:17:32Speaker 01

  You know, I'd say in meetings, are you sure you came up a conversation with, like, you haven't seen your grandkids in five years? Are you sure? How about you just reach out to them? Like, and we, a lot of times, we'd have both generations of the accounts, I'm like, I could call them right now, like, I just saw them last week. Your grandkids are gorgeous. And people get stubborn, or they're afraid to say they're sorry, or they're just and then what happens is the person gets sick. Then they, then it's like, in the hospital room, and Dad's dying. So I would just say, forgive and say you're sorry. And if you're not gonna actually bring this person back into your life, then figure out a way to forgive them on your own.

• 1:18:16Speaker 01

  So that the pain that it's causing you can go away. Because if we hold on to that resentment, that pain eats at us. That's where disease comes from, like, we could do a whole segment on health, but like, that's where the pain of life comes from, and that's why a lot of people get sick and die, is because there's this spot that they're holding on to, where they're so angry with somebody that did them wrong. And, you know, we, we've had, you said you had Tony Robbins on the show three times. He does an amazing thing at one of the seminars, where he gets you to take that thing that you're so angry about, and turn into like, how did that help you?

• 1:18:56Lewis Howes?

  Yeah.

• 1:18:57Speaker 01

  And he, and it reframes you, right? I mean, it happened, yeah, Dean and I were together, you did, you had Dean here too.

• 1:19:03Lewis Howes?

  Yeah.

• 1:19:03Speaker 01

  Dean and I were together at a Tony Robbins event, and we both had our journals, and we were writing out whatever it was, and cause everybody's got this, right? And then we wrote our whole big thing, I was like, well, this is what I gained from it. Like, there's always something positive that can come from the pain. But if you keep holding that person, or that business, or that thing inside of you, and you don't let it go, then the person who's, who you, you're making yourself continue to suffer.

• 1:19:29Lewis Howes?

  Yeah, yeah, it's like drinking poison and trying to, it's like trying to poison someone else, but you're drinking the poison. Yeah, you're mad at someone, but you're feeling the pain.

• 1:19:37Speaker 01

  I like these last three questions.

• 1:19:39Lewis Howes?

  Powerful, huh?

• 1:19:40Speaker 01

  Yeah.

• 1:19:40Lewis Howes?

  This is gonna be the theme of your next book, so I'm setting you up, getting you ready, David. Make sure you guys get this book, this is really gonna be powerful. Get it for your friends, get it for your kids, get it for your parents. Super quick read, The Latte Factor, Why You Don't Have To Be Rich To Live Rich.

• 1:19:58Speaker 01

  We've also got on our website, we've got a website for the book, like, obviously, but it's called thelattefactor.com, and we've got, I don't know when you're gonna air this, but we have a bunch of bonuses on there. So when you buy the book off our website, our class that we did with Create Alive, cause you've done a class with Chase, we've got a nineteen video class called Start Late Finish Rich. That's free, when you buy the book from us, and you send us your receipt, you get that, you get that course. So we've got like two hundred dollars of the bonuses on that website, lattefactor.com. People are loving the book, and so I just thank you for having me on.

• 1:20:26Lewis Howes?

  Excited, man, I wanna, before I ask the final question, I wanna acknowledge you, David, for, for showing up with a lot of energy in your life at fifty-two.

• 1:20:35Speaker 01

  Thank you.

• 1:20:35Lewis Howes?

  Fifty-two, right?

• 1:20:36Speaker 01

  Yeah.

• 1:20:37Lewis Howes?

  You've got a lot, you've got a childlike joy inside of you that radiates. And the fact that you keep showing up and create meaningful, you don't have to be writing these books, and you don't have to keep serving people to help them heal the pain and the stress and anxiety of, of finances, but you're doing it in such a powerful way, and you're being innovative to reach different people in different ways that will resonate for them.

• 1:21:01Speaker 01

  Thank you.

• 1:21:01Lewis Howes?

  So I really acknowledge you for taking the time to go on a two-month book tour, even when your wife is going through some health challenges, and, and just show up to serve people, I think that's the greatest thing you can do, so I appreciate you, man.

• 1:21:13Speaker 01

  Thank you.

• 1:21:13Lewis Howes?

  Appreciate you, man. Final question is, what's your definition of greatness?

• 1:21:17Speaker 01

  Ooh. Why is my definition of greatness?

• 1:21:23Speaker 01

  So I believe, I believe in God. I believe in a higher power. And I believe that everybody is given God-given gifts. That we're all given, whoever your God is, right? Like, we're given these gifts, and they're inside of us. And the, the most important thing we have to do while we're on this planet is to listen to what those gifts are, and then go use them. Like, bring the gift out. So I think greatness is listening to your soul. Truly listen to your soul, not your head, and going, okay, I was given this gift. I know I want to go do this, but it's so scary. And getting that gift out into the world, whatever it is.

• 1:22:07Speaker 01

  Could be the gift of being a mom, could be the gift of being a good dad. Like, we're all given these gifts. But when I think about why I've done what I've done for 26 years, I think what my gift was, I was given this talent to try to free people financially to actually use their God-given gifts. It's actually not about the latte. It's not about the million dollars. It's not about the real estate. It's about the financial freedom to use your God-given gifts. And I think what happens is we become trapped financially. When I tell you that six or seven or eight people out of them in America are living paycheck to paycheck out of every 10, it's very hard to hear your soul and hear a higher power if you're worried about money every day and how are you going to pay the bills. And so I think the way you get to your greatness is you free yourself, but you've got to listen.

• 1:22:51Speaker 01

  You've got to listen to your soul. And we do a lot to not listen, right? Some of us are working, working, working, working to not listen. Some of us are drinking to not listen. Some of us are taking drugs to not listen. Some of us are cheating on our spouses to not listen. Like, you've got to listen to your soul. And if you don't listen to your soul, the thing about the soul conversation is that it doesn't go away.

• 1:23:17Lewis Howes?

  It's coming.

• 1:23:18Speaker 01

  It's just like, it's this weird thing. And I go, that's because it's a higher power that said, I gave you this, and you're not listening to it. And so that's, finally, like, a lot of times you're like, finally, there was six or seven, like, oh, okay, fine, right? Like, so I think, I think greatness is listening to your soul consciously as much as you can throughout your life, and making space for that.

• 1:23:42Lewis Howes?

  That's right. David Bach, my man. Thank you. My friend, I hope you're enjoying this episode right now because we are on a mission to impact 100 million lives every single week. And every follow here on this podcast helps us reach more people. Make sure to hit the follow at the top of this show's page right now. It's the single biggest thing that you can do to support the show and the impact of us reaching you every single time we have new episodes. I appreciate you, and I can't wait to see you in the next episode. I hope you enjoyed today's episode, and it inspired you on your journey towards greatness. Make sure to check out the show notes in the description for a full rundown of today's episode with all the important links.

• 1:24:24Lewis Howes?

  And if you want weekly exclusive bonus episodes with me personally, as well as ad-free listening, then make sure to subscribe to our Greatness Plus channel exclusively on Apple Podcasts. Share this with a friend on social media and leave us a review on Apple Podcasts as well. Let me know what you enjoyed about this episode in that review. I really love hearing feedback from you, and it helps us figure out how we can support and serve you moving forward. And I want to remind you of no one has told you lately that you are loved, you are worthy, and you matter. And now it's time to go out there and do something great.

• 1:25:09Lewis Howes?

  It's time to level up your education, and Columbia Southern University makes it easy. Earn an accredited degree 100% online with 24/7 course access, $0 textbooks, and monthly start dates. So you can truly earn your degree on your schedule. Plus, you can compare their costs to more than 1,500 online degree programs. It's free and only takes a few seconds. Visit columbia southern.edu/schoolofgreatness to learn more.

• 1:25:42Speaker 03

  Hey, this is Will Ornate, host of Smartless. Smartless is a podcast with myself and Sean Hayes and Jason Bateman, where each week one of us reveals a mystery guest of the other two. We dive deep with guests that you love, like Bill Hader, Selena Gomez, Jennifer Aniston, David Beckham, Kristen Stewart, and tons more. So join us for a genuinely improvised and authentic conversation filled with laughter and newfound knowledge to feed the smartless mind. Listen to Smartless now on the Sirius XM app. Download it today.