791 Be Financially Free and Pay Yourself First with David Bach

BE FINANCIALLY SELFISH. Too many people are living paycheck to paycheck. Our debt has us in handcuffs. We don’t think that financial security is possible for us. But anyone can build wealth. Anyone. You just have to pay yourself first. The key is to have your money make money. With some simple math, you can see that putting away a little bit of money every day can bring huge results. On today’s episode of The School of Greatness, I talk about financial freedom with an incredible personal finance expert: David Bach. David Bach is one of America’s most trusted financial experts who has written eleven national bestselling books. His runway #1 bestseller The Automatic Millionaire spent 31 weeks on the New York Times bestseller list. He has appeared on NBC’s Today Show more than 100 times The Oprah Winfrey Show six times. David says that by paying yourself first, you can save enough to become a millionaire by the time you retire. So get ready to learn the power of becoming financially selfish on Episode 791. Some Questions I Ask: How much should someone put down on a home? (29:00) What is missing in my personal financial portfolio? (32:00) What are three steps that people can do right now? (53:00) What’s the best money advice you’ve ever heard? (1:04:00) In This Episode You Will Learn: Why you don’t need a budget (8:00) The three lessons about money David’s grandma taught him (11:00) The three secrets to financial freedom (19:00) The “rule of 72” (40:00) The dangers of subscription services (56:00) Follow me on: Instagram @lewishowes Twitter @LewisHowes Facebook @LewisHowes Get more from Lewis! Get my New York Times Bestselling book, Make Money Easy! Get The Greatness Mindset audiobook on SpotifyText Lewis AIYouTubeInstagramWebsiteTiktokFacebookX

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

• 0:00Lewis Howes?

  This is episode number 791 with nine-time New York Times bestselling author, David Bach.

• 0:09Lewis Howes?

  Welcome to the School of Greatness. My name is Lewis Howes, former pro athlete turned lifestyle entrepreneur. And each week, we bring you an inspiring person or message to help you discover how to unlock your inner greatness. Thanks for spending some time with me today. Now let the class begin.

• 0:34Lewis Howes?

  Confucius said, "When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps." This one is all about how to become an automatic millionaire, how to live rich and be rich and finish rich. That's what this episode is about. So many people talk about their financial pain, the struggle they have with their finances, and really how to earn the type of money they want, how to invest their money, how to save their money, how to automate their money, so they can live rich and finish rich. David Bach is the financial author, nine-time New York Times bestseller consecutively, huge TV personality, motivational speaker, entrepreneur and founder of FinishRich.com.

• 1:19Lewis Howes?

  Over the past two decades, he has impacted over 100 million people through his books, seminars, speeches, newsletters, and thousands of media appearances. He's been a contributor on The Today Show more than 100 times, and a regular on The Oprah Winfrey Show, where he appeared six times to share his strategies for living and finishing rich. Again, nine-time consecutive New York Times bestseller. He's one of America's most trusted financial experts, and he is here to reveal some powerful strategies for you on why people who try to get rich quick, they end up staying broke long. How to Create System Versus Budgets for Your Money to Grow.

• 2:03Lewis Howes?

  The first lesson of David's book, which is to pay yourself first always. Always pay yourself first, and the importance of doing that. The three things people can do to get started with being wealthy right now, the action steps that you can do, doesn't matter if you feel broke, if you're making money, if you feel organized, how you can optimize all of it, it's in this interview, I'm super pumped, and make sure to share this with your friends, lewishouse.com/791, tag me on Instagram @lewishouse, and be a hero to someone today by helping them find financial peace right now by listening to this episode. All right, my fans, get ready to pay yourself first, automate your money, and become financially free with David Bach.

• 2:50Lewis Howes?

  Welcome everyone to the School of Greatness Podcast, we've got the inspirational David Bach in the house, my man.

• 2:56Speaker 01

  Buddy, good to be with you.

• 2:57Lewis Howes?

  Good clap, good clap, we're excited.

• 2:58Speaker 01

  Thank you.

• 2:59Lewis Howes?

  We just met in person, was it two weeks, three weeks ago?

• 3:01Speaker 01

  Three weeks ago in Puerto Rico.

• 3:02Lewis Howes?

  Puerto Rico.

• 3:03Speaker 01

  That was a, that was a very cool place, by the way, to meet.

• 3:05Lewis Howes?

  Amazing place to meet. I've heard of 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...

• 3:33Speaker 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, I've watched all of this, by the way, it's as cool as you would imagine it is.

• 3:41Lewis Howes?

  It's fun.

• 3:42Speaker 01

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

• 3:48Lewis Howes?

  It's fun, and you live in Florence now, in Italy, right?

• 3:50Speaker 01

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

• 3:56Lewis 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 do differently.

• 4:18Speaker 01

  Totally.

• 4:19Lewis 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.

• 4:27Speaker 01

  Completely.

• 4:28Lewis Howes?

  Two things are investing in stocks and real estate, is that right?

• 4:31Speaker 01

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

• 4:34Lewis Howes?

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

• 4:40Speaker 01

  Completely. It's like the game of Monopoly. I was just literally explaining this to my kids yesterday. I said, you know, 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.

• 4:53Lewis Howes?

  Right.

• 4:54Speaker 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 for life.

• 5:06Lewis Howes?

  Yeah.

• 5:07Speaker 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 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.

• 5:44Lewis Howes?

  Hate them.

• 5:45Speaker 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, so.

• 5:54Lewis Howes?

  So do you believe in budgets, or no?

• 5:56Speaker 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.

• 6:17Lewis Howes?

  They're not even thinking about it.

• 6:17Speaker 01

  They're not thinking about it.

• 6:18Lewis Howes?

  Not stressing about it.

• 6:19Speaker 01

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

• 6:22Lewis Howes?

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

• 6:29Speaker 01

  Look, my grandmother, when she started at thirty, she had nothing and she used to literally save fifty 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. Was that my grandmother at thirty with no college education, working at Gimbel's Department Store in Milwaukee, Wisconsin, got tired of being poor.

• 6:55Speaker 01

  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 thirtieth 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 so she could save that money and go invest. And the way the story turns out, Lewis, 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.

• 7:41Speaker 01

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

• 7:48Lewis Howes?

  It's true.

• 7:48Speaker 01

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

• 7:53Lewis Howes?

  Right.

• 7:53Speaker 01

  So my grandmother realized, like, you, 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. 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.

• 8:12Lewis Howes?

  What's that?

• 8:14Speaker 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 have my apple pie. I said, what are you talking about? And she's like, I'm not having 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.

• 8:35Lewis Howes?

  Nothing.

• 8:36Speaker 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 love 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 of McDonald's.

• 9:21Speaker 01

  And she said, tomorrow I'll take you on a brokerage firm and 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.

• 9:29Lewis Howes?

  Wow.

• 9:31Speaker 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.

• 9:39Lewis Howes?

  Did you buy Disney?

• 9:40Speaker 01

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

• 9:43Lewis Howes?

  That's amazing.

• 9:44Speaker 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.

• 9:56Speaker 01

  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.

• 10:01Lewis Howes?

  Right.

• 10:01Speaker 01

  So my son owns Shake Shack.

• 10:03Lewis Howes?

  Right down the street.

• 10:05Speaker 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.

• 10:30Lewis Howes?

  Yeah.

• 10:30Speaker 01

  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 a, this, we'll talk about the story inside this book. It's about a, you know, a 20 something young woman. Who learns that she's richer than she thinks. And she actually learns it from somebody who works the coffee shop.

• 10:50Lewis Howes?

  Wow.

• 10:51Speaker 01

  And one of the lessons that the person teaches her is ironically, it happens in Starbucks. He says to her, you know, the $5 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.

• 11:10Lewis Howes?

  Wow.

• 11:10Speaker 01

  So I always say like, look, if, if you don't want to give something up. Like that $5 at Starbucks for your coffee. Then buy the company stock.

• 11:19Lewis Howes?

  Right.

• 11:20Speaker 01

  Invest in where you spend money.

• 11:21Lewis Howes?

  That's interesting. If you go there every day, you put $5 a day into buying the coffee. You put $5 a day into the owning the company as well.

• 11:28Speaker 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 5 million accounts for millennials.

• 11:38Lewis Howes?

  Wow.

• 11:39Speaker 01

  You can open up. An app on your phone and in less than 10 minutes have an account. Go click, click, click and be saving change.

• 11:46Lewis Howes?

  Right.

• 11:46Speaker 01

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

• 11:50Lewis Howes?

  Wow.

• 11:51Speaker 01

  So technology is making it all much easier for everybody.

• 11:54Lewis Howes?

  With a few clicks, you can be investing in stocks. I just heard a. What's the Robinhood is a new one? It doesn't even cost anything to trade now on Robinhood app.

• 12:02Speaker 01

  Again, one of the fastest growing financial service companies. They're now have a market valuation of like $5 billion, was the last I read. And they made everything free. Again, lots of millennials are using Robinhood. There's so many great. Resources like. 20 years ago, this was complicated. You would have come into my office at Morgan Stanley.

• 12:21Lewis Howes?

  It's all paperwork, you have to.

• 12:22Speaker 01

  11 pages of paperwork to save $50 a month automatically.

• 12:26Lewis Howes?

  Oh my gosh.

• 12:27Speaker 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, you know, in 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.

• 12:47Lewis 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.

• 13:02Speaker 01

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

• 13:03Lewis 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.

• 13:10Speaker 01

  Yeah.

• 13:11Lewis 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.

• 13:15Speaker 01

  Yep.

• 13:16Lewis Howes?

  And.

• 13:17Speaker 01

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

• 13:18Lewis Howes?

  Yeah, yeah, he's great.

• 13:19Speaker 01

  So I go, I'm like, buddy, 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.

• 13:25Lewis Howes?

  Right.

• 13:26Speaker 01

  You could just be eating out lunch every day.

• 13:27Lewis Howes?

  Right.

• 13:28Speaker 01

  Right, like we had, we put out a little meme yesterday and saying like, you know, make, you say you have enough money to go on a trip, but if you just made your lunch at home for the next 90 days, you'd have enough money.

• 13:37Lewis Howes?

  Right.

• 13:38Speaker 01

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

• 13:47Lewis Howes?

  Right, exactly.

• 13:48Speaker 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.

• 13:56Lewis Howes?

  Yeah.

• 13:56Speaker 01

  And then instead of that trip being a $15 trip, by the time they pay interest, it's a $3,000 trip.

• 14:01Lewis 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 type of disaster. Then you're like, this is stressful. So we got the Grant Cardone model, which says you never live where you own. What does he say?

• 14:43Lewis 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.

• 14:52Speaker 01

  Yeah.

• 14:52Lewis 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.

• 15:00Speaker 01

  Right.

• 15:00Lewis Howes?

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

• 15:04Speaker 01

  So 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 wrote this book as a parable again, because like my 15 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 $2,000 a year at the age of 19. $2,000 a year at the age of 19. They only do it till 26. They do it from 19 to 26.

• 15:30Lewis Howes?

  Yes.

• 15:30Speaker 01

  By 65, they have over a million dollars in savings.

• 15:33Lewis Howes?

  It's crazy right here.

• 15:34Speaker 01

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

• 15:37Lewis Howes?

  And if you started at 27, $2,000 a year.

• 15:41Speaker 01

  Does it all the way till 65? That person, so they've saved way more money, right? They've saved basically their entire lifetime. They end up with $805,000.

• 15:49Lewis Howes?

  It's crazy.

• 15:50Speaker 01

  Still a lot of money, right? But my 15 year old son looked at this chart and goes, dad, I'm 15. If I get to 15, I'll have more than a million dollars, right? By the way, pretty smart, right? Like, yeah, actually you'll have more like $2 million. He's like, well, and then he takes his calculator on his phone and goes, that's $5.41 a day. I go, exactly. That's why I didn't want you to buy the bottled water when we were all skiing yesterday. That's why your dad had the free water and you went and bought the stupid water.

• 16:17Lewis Howes?

  Right.

• 16:18Speaker 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.

• 16:23Lewis Howes?

  Wow.

• 16:25Speaker 01

  You know, these lessons are so critical. So what I did with this book, and 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.

• 16:39Lewis Howes?

  So don't pay the bills first?

• 16:41Speaker 01

  Don't pay the bills first, don't pay taxes first. Most people, they pay taxes first. They go to work at nine, they work until 12 o'clock to pay taxes. I mean, here in California, for sure.

• 16:51Lewis Howes?

  Yeah.

• 16:51Speaker 01

  Right? Then they go, then from 12:30 to 1, it's lunchtime. And then from 1 to 3, 3:30, it's housing costs, car costs. And then from 3:30 to 5, it's everything else. And what, what most people hope through budgeting is that somehow they're gonna 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 20-something millennial, she's living paycheck to paycheck. She lives in Brooklyn, she's traveling in 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.

• 17:32Lewis Howes?

  She makes no money, she's working 70 hours a week.

• 17:35Speaker 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 9/11 memorial, because that's what's next to her office.

• 18:15Lewis Howes?

  I know this place very well, yeah.

• 18:16Speaker 01

  And I live across the street from there.

• 18:17Lewis Howes?

  Yeah.

• 18:18Speaker 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 mobile bench, looks at the 9/11 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 she's like she can't afford anything. And then through the book, she gets these mentors and she learns about paying herself first.

• 18:59Speaker 01

  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. 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 away to hit your question.

• 19:45Speaker 01

  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?

• 19:52Lewis Howes?

  Your own home.

• 19:53Speaker 01

  Your own home.

• 19:53Lewis Howes?

  Yeah.

• 19:54Speaker 01

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

• 19:56Lewis Howes?

  Because you're living in it.

• 19:57Speaker 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.

• 20:11Speaker 01

  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.

• 20:33Lewis Howes?

  Right.

• 20:34Speaker 01

  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. I used to live in LA in 1985 to 1990.

• 20:46Lewis Howes?

  Much cheaper then.

• 20:47Speaker 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 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.

• 21:22Lewis Howes?

  Wow.

• 21:23Speaker 01

  And you only have to do that once in a lifetime to build wealth forever.

• 21:27Lewis Howes?

  Right.

• 21:28Speaker 01

  So if you don't own real estate, you don't get in the game building wealth. 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,

• 22:13Speaker 01

  the rates of return in the stock market have been higher than real estate. 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. Follow me so far?

• 22:30Lewis Howes?

  Yeah, and the next year.

• 22:31Speaker 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.

• 22:50Lewis Howes?

  Right.

• 22:50Speaker 01

  That's a 50% rate of return.

• 22:52Lewis Howes?

  Right.

• 22:53Speaker 01

  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.

• 23:03Lewis Howes?

  Wow.

• 23:04Speaker 01

  After two years. It is wow. It's the only thing I can buy and sell and get tax free money. If I'm married.

• 23:11Lewis Howes?

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

• 23:14Speaker 01

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

• 23:17Lewis Howes?

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

• 23:18Speaker 01

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

• 23:20Lewis Howes?

  Wow, the first quarter million.

• 23:21Speaker 01

  The first quarter of a million.

• 23:22Lewis Howes?

  In profit.

• 23:23Speaker 01

  In profit.

• 23:24Lewis Howes?

  You don't have to pay taxes.

• 23:24Speaker 01

  No taxes.

• 23:24Lewis Howes?

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

• 23:26Speaker 01

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

• 23:28Lewis Howes?

  Then what?

• 23:28Speaker 01

  Half a million.

• 23:30Lewis Howes?

  Wow.

• 23:31Speaker 01

  Seriously.

• 23:32Lewis Howes?

  You don't pay taxes on any of that.

• 23:34Speaker 01

  See the hair on my skin?

• 23:35Lewis Howes?

  You don't pay taxes on any of that.

• 23:36Speaker 01

  On the first half a million dollars.

• 23:37Lewis Howes?

  This is all across the US.

• 23:39Speaker 01

  All across the US.

• 23:40Lewis Howes?

  Wow, I didn't know that.

• 23:40Speaker 01

  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.

• 23:46Lewis Howes?

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

• 23:51Speaker 01

  Legally, and I can do it over and over again.

• 23:53Lewis Howes?

  Wow.

• 23:53Speaker 01

  So I've now done this three times.

• 23:55Lewis Howes?

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

• 23:58Speaker 01

  Then you pay long-term capital gains.

• 24:00Lewis Howes?

  Yeah.

• 24:01Speaker 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. But that's a different game. And again, I want people to use retirement accounts.

• 24:22Lewis Howes?

  Yeah.

• 24:23Speaker 01

  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.

• 24:36Lewis Howes?

  Wow.

• 24:37Speaker 01

  But the way you get usually your first rental property, you buy your first home, then you rent that home out.

• 24:43Lewis Howes?

  Mm-hmm.

• 24:43Speaker 01

  Then you buy a second home, live in that for a while.

• 24:45Lewis Howes?

  It's like Monopoly.

• 24:46Speaker 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.

• 24:52Lewis Howes?

  Yeah.

• 24:53Speaker 01

  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.

• 25:01Lewis Howes?

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

• 25:05Speaker 01

  And 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.

• 25:13Lewis Howes?

  Wow.

• 25:14Speaker 01

  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 a day of your income. Don't budget, save money automatically and get yourself in a piece of property and then pay the debt down.

• 25:40Lewis Howes?

  So buy a home as early as you can.

• 25:42Speaker 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.

• 25:51Lewis Howes?

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

• 25:52Speaker 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 is 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 real, 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 gonna do if I don't make money in, in my job? He's like, well, son, nothing will motivate you like that.

• 26:29Lewis Howes?

  Yeah, that's true.

• 26:30Speaker 01

  And as I'm cold calling, he was right.

• 26:33Lewis Howes?

  Yeah.

• 26:33Speaker 01

  And we rented bedrooms to friends to help us make mortgage payments.

• 26:37Lewis Howes?

  Crazy.

• 26:37Speaker 01

  So.

• 26:38Lewis Howes?

  Do what you gotta do.

• 26:38Speaker 01

  Gotta do what you gotta do. That's how you get started.

• 26:40Lewis 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?

• 26:50Speaker 01

  The most important thing when you buy a home is 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.

• 26:58Lewis Howes?

  Borrow less.

• 26:59Speaker 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 wanna buy less than the bank will loan you. I kinda ascribed to Warren Buffett, right? Like a good old fashioned down payment, 10 to 20%. More is better because your payments are lower.

• 27:45Speaker 01

  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. I think if you can have a year's worth of expenses set aside, you're better off.

• 28:00Speaker 01

  You're more prepared to buy your home. But I will say one thing is that people think buying a home is risky.

• 28:09Speaker 01

  So is renting. Right? Like if I buy a home, I've gotta pay the bank. If I rent, I've gotta 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.

• 28:21Lewis Howes?

  Really?

• 28:21Speaker 01

  Yeah. So I'm not suggesting people buy homes and 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 real estate long-term frees you, especially if you're lucky enough to be in markets that are going up.

• 28:38Lewis 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

• 28:57Lewis Howes?

  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. 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.

• 29:30Speaker 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.

• 29:40Lewis Howes?

  Is it?

• 29:40Speaker 01

  For a self-employed person.

• 29:41Lewis Howes?

  Okay.

• 29:42Speaker 01

  Who doesn't have a bunch of employees.

• 29:43Lewis Howes?

  Right.

• 29:44Speaker 01

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

• 29:47Lewis Howes?

  Yeah.

• 29:48Speaker 01

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

• 29:53Lewis Howes?

  Wow.

• 29:54Speaker 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. It's all about taxes. I don't want to pay taxes if I don't have to.

• 30:18Lewis Howes?

  Right.

• 30:19Speaker 01

  Legally.

• 30:19Lewis Howes?

  That'd be smart.

• 30:20Speaker 01

  That being 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.

• 30:29Lewis Howes?

  For the last four years, yeah.

• 30:31Speaker 01

  You didn't pay taxes on that money.

• 30:32Lewis Howes?

  Right.

• 30:32Speaker 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.

• 30:41Lewis Howes?

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

• 30:46Speaker 01

  Eventually, when you go to, when you go to pick 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.

• 31:13Lewis Howes?

  Absolutely.

• 31:14Speaker 01

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

• 31:18Lewis Howes?

  Yes.

• 31:19Speaker 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.

• 31:25Lewis Howes?

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

• 31:28Speaker 01

  We call that the hopeful someday pile.

• 31:31Lewis Howes?

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

• 31:36Speaker 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.

• 31:43Lewis Howes?

  Yeah.

• 31:44Speaker 01

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

• 31:49Lewis Howes?

  Yeah.

• 31:50Speaker 01

  It's all about having this on a dashboard. Because 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.

• 32:01Lewis 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?

• 32:10Speaker 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, if God forbid, something happened to you, your family would know where everything is.

• 32:19Lewis Howes?

  They'd know where everything is, yeah.

• 32:21Speaker 01

  Because, you know, if you die and your family doesn't know where this stuff is, they may never get it.

• 32:27Lewis Howes?

  Really?

• 32:28Speaker 01

  Yeah, because like, 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 private equity in a startup.

• 32:39Lewis Howes?

  Yeah.

• 32:40Speaker 01

  They're not coming looking for you.

• 32:43Speaker 01

  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?

• 32:59Lewis Howes?

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

• 33:01Speaker 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 me.

• 33:06Lewis 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.

• 33:19Speaker 01

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

• 33:22Lewis Howes?

  Yes.

• 33:22Speaker 01

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

• 33:25Lewis Howes?

  Yeah.

• 33:26Speaker 01

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

• 33:30Lewis Howes?

  Yeah, yeah.

• 33:31Speaker 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.

• 33:43Lewis Howes?

  And pay my, pay the business.

• 33:45Speaker 01

  Yeah.

• 33:46Lewis Howes?

  That's legal.

• 33:47Speaker 01

  Totally.

• 33:47Lewis Howes?

  Interesting.

• 33:48Speaker 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.

• 34:11Lewis Howes?

  Yeah.

• 34:11Speaker 01

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

• 34:14Lewis Howes?

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

• 34:17Speaker 01

  It's really sad. I spent nine years at Morgan Stanley and what my, well, my clients who became wealthiest, I always said 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.

• 34:36Lewis Howes?

  The building, the asset was.

• 34:37Speaker 01

  So, 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.

• 34:49Lewis Howes?

  Right.

• 34:50Speaker 01

  So you should totally buy something.

• 34:52Lewis Howes?

  Okay.

• 34:55Lewis 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, 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.

• 35:10Speaker 01

  I'm buying a condo in downtown, 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, I'm like, that's why we have the guy downstairs, you just call him and he does it.

• 35:25Lewis Howes?

  Right, exactly. Okay. So there's two things that you need to be doing, real estate, uh, stocks. And I have been doing index funds for everything that I've been doing, because 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?

• 35:52Speaker 01

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

• 35:56Lewis Howes?

  Yeah.

• 35:56Speaker 01

  I own, you own Berkshire Hathaway.

• 35:57Lewis Howes?

  Okay.

• 35:58Speaker 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, of a firm. That literally today, we just went over $7 billion on the platform.

• 36:10Lewis Howes?

  Amazing.

• 36:11Speaker 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 or 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.

• 36:56Speaker 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 7, 8, and 9% 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.

• 37:27Lewis Howes?

  So if you're getting 7% or 10% rate of return, you divide that by 72 and it will give you the number.

• 37:32Speaker 01

  So 72 divided by 7, gonna come out right in like 10 years. 72 divided by 10, gonna come out right at like 7 years.

• 37:39Lewis Howes?

  So that's doubling your money. Is that what that does?

• 37:40Speaker 01

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

• 37:47Lewis Howes?

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

• 37:50Speaker 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.

• 38:04Lewis 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?

• 38:16Speaker 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?

• 38:28Speaker 01

  Sleep well.

• 38:28Lewis Howes?

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

• 38:32Speaker 01

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

• 38:37Lewis Howes?

  Probably a hundred grand.

• 38:39Speaker 01

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

• 38:40Lewis Howes?

  Oh.

• 38:40Speaker 01

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

• 38:43Lewis Howes?

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

• 38:46Speaker 01

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

• 38:55Lewis Howes?

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

• 38:59Speaker 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.

• 39:04Lewis Howes?

  Okay.

• 39:05Speaker 01

  I sleep better.

• 39:07Lewis Howes?

  Peace of mind.

• 39:07Speaker 01

  Peace of mind.

• 39:08Lewis Howes?

  Yeah.

• 39:09Speaker 01

  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.

• 39:39Lewis Howes?

  Wow.

• 39:41Speaker 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.

• 39:48Lewis Howes?

  Wow.

• 39:49Speaker 01

  Which, by the way, if you just save 10 bucks a day, in 100 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 dollars a day can change your life. Because in 100 days, you could have more money than the average person walking down the street.

• 40:10Lewis Howes?

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

• 40:13Speaker 01

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

• 40:16Lewis Howes?

  It's better than nothing.

• 40:17Speaker 01

  A million dollars more than zero.

• 40:19Lewis Howes?

  Exactly.

• 40:19Speaker 01

  Which is what the average American is working towards. And, you know, I was thinking about one other thing on the way over here because I get, things get me fired up like the dumbest thing Americans spend money on are new cars.

• 40:29Lewis Howes?

  Hmm.

• 40:30Speaker 01

  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 going to 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.

• 41:01Lewis Howes?

  Crazy.

• 41:02Speaker 01

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

• 41:09Lewis Howes?

  Thousand bucks a month almost.

• 41:10Speaker 01

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

• 41:18Lewis Howes?

  Wow.

• 41:19Speaker 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.

• 41:31Lewis Howes?

  Lifestyle, the feeling.

• 41:32Speaker 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.

• 41:49Lewis Howes?

  Hundred grand, 300 grand, whatever it is.

• 41:51Speaker 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 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 at USC. That was a super expensive school to go to when I was

• 42:34Speaker 01

  going there back in 1985. Today, it's a fortune.

• 42:37Lewis Howes?

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

• 42:40Speaker 01

  Yeah. And I just go, you know.

• 42:42Lewis Howes?

  How do you afford to pay that off?

• 42:44Speaker 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.

• 42:50Lewis Howes?

  Yeah.

• 42:51Speaker 01

  Actually, like, find an inexpensive way. Go to junior college.

• 42:54Lewis Howes?

  Go to state school.

• 42:55Speaker 01

  Go to state school, transfer into the school you want to ultimately be at when you're a junior or 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.

• 43:19Lewis Howes?

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

• 43:23Speaker 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.

• 43:37Lewis Howes?

  And then pay us massive interest.

• 43:39Speaker 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 deaths.

• 43:50Lewis 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. I don't think Oldsmobile is out of business now, but 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's gonna be 68 this year. 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.

• 44:30Lewis Howes?

  She was working to pay for stuff. And I look at it now, she, you know, she's gonna have her, 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.

• 44:45Speaker 01

  She's got a pension plan.

• 44:46Lewis 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 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 wanna go keep working. You know, you're working part time at that age, maybe.

• 45:13Speaker 01

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

• 45:17Lewis Howes?

  Wow.

• 45:18Speaker 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. 80% 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 wellbeing to the husband.

• 45:43Lewis Howes?

  She's not educated then.

• 45:45Speaker 01

  She's not, she hasn't learned. I tell, in this book, Zoe Daniels, 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 doesn't, 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.

• 46:25Lewis Howes?

  Yeah, 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.

• 46:31Speaker 01

  You need to put your mom on the payroll.

• 46:32Lewis Howes?

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

• 46:37Speaker 01

  Yeah.

• 46:37Lewis 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?

• 46:42Speaker 01

  No, and, and, and.

• 46:44Lewis 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?

• 46:53Speaker 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.

• 47:04Lewis Howes?

  Yeah, he's great.

• 47:05Speaker 01

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

• 47:07Lewis Howes?

  He's great.

• 47:08Speaker 01

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

• 47:11Lewis Howes?

  I want to meet him someday.

• 47:12Speaker 01

  You know, I've met him.

• 47:13Lewis Howes?

  I want to interview him.

• 47:14Speaker 01

  Brendan, 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?

• 47:21Lewis Howes?

  Paulo Coelho?

• 47:22Speaker 01

  Paulo Coelho, he wrote The Alchemist.

• 47:23Lewis Howes?

  It's the greatest book of all time.

• 47:25Speaker 01

  It's the greatest book of all time. She goes, you're gonna go to dinner to have, I mean, go to Geneva for dinner? I go, yes, I, 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, and we basically stay out. Paulo likes to stay out. So we're, I'm like, I'm staying out with Paulo as late as Paulo wants to stay out. And around two or three in the morning, his handler's 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?

• 48:04Speaker 01

  Right?

• 48:04Lewis Howes?

  Oh, it's got gelz.

• 48:05Speaker 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. And I want to package up these financial lessons in a little story that anyone can read, they'll translate all over the world. And he goes, then David, you must write this book.

• 48:32Lewis Howes?

  And then he walks away.

• 48:33Speaker 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 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 10 years. And I go, I know, but it's Paulo.

• 49:01Lewis Howes?

  It's Paulo.

• 49:03Speaker 01

  So, you know, that was the end of 2012. I've been wanting this book for 14 years. And finally, I partnered with John Mann, who wrote this great book, The Go-Giver. And said, let's, let's try to write this parable, but let's, let's write it until it's perfect, and then we'll sell it. It's the first time I ever wrote a book without a deadline.

• 49:19Lewis Howes?

  Wow.

• 49:19Speaker 01

  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 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.

• 49:35Lewis Howes?

  I appreciate it, man.

• 49:35Speaker 01

  And it was super cool to be with you.

• 49:37Lewis Howes?

  I appreciate it.

• 49:37Speaker 01

  In Puerto Rico. And 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 and come see you.

• 49:41Lewis Howes?

  Yeah, yeah. 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, it's super inspiring. Plus, it gives you a lot of practical things you can do at the end to really manage your money. What are three steps people should do right now? Whether they get this book or not.

• 50:01Speaker 01

  Yeah, yeah.

• 50:01Lewis Howes?

  That they can start doing today, that is like, if you did these three things right now, it could help you set you up for financial freedom later.

• 50:08Speaker 01

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

• 50:13Lewis Howes?

  Okay.

• 50:13Speaker 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.

• 50:39Lewis Howes?

  Yeah.

• 50:39Speaker 01

  You'd be earning minimum wage. Literally, like you could have a $15 an hour job. If you could save 15 hours a day.

• 50:45Lewis Howes?

  $15 a day, yeah.

• 50:46Speaker 01

  $15 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.

• 50:54Lewis Howes?

  So you'd save 15 bucks a day for seven years?

• 50:57Speaker 01

  Well, seven years, I mean, like, I'll go back to charts, right? Cause 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 $15 a day. In 30 years at 10%, happens to be it's $1,017,000.

• 51:12Lewis Howes?

  So $15 for 30 years?

• 51:14Speaker 01

  Yeah, in 40 years, it's, without my glasses on, 2.8 million.

• 51:18Lewis Howes?

  Wow.

• 51:18Speaker 01

  In 10 years, it's $92,000. Still a lot, by the way.

• 51:21Lewis Howes?

  It doesn't seem like a lot. You're like, oh, 10 years of savings.

• 51:24Speaker 01

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

• 51:28Lewis Howes?

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

• 51:31Speaker 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 12 and a half percent of your gross income. With your company's match, which you probably will have, you'll be saving 16% of your income, which is like four times what the average American saves.

• 51:51Lewis Howes?

  It's huge.

• 51:51Speaker 01

  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 SEP IRA. Second thing I would say is.

• 52:00Lewis Howes?

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

• 52:02Speaker 01

  One hour a day of your income.

• 52:03Lewis Howes?

  Yeah.

• 52:03Speaker 01

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

• 52:10Lewis Howes?

  Like what are a couple of you?

• 52:11Speaker 01

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

• 52:22Lewis Howes?

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

• 52:24Speaker 01

  Well, no, because Betterment's for investing.

• 52:26Lewis Howes?

  Gotcha. So this is a management dashboard.

• 52:28Speaker 01

  It's a man, it's, you, you hook up a thing like Clarity Money. And in minutes, you'll see where all your money's being spent. You can, you can put your credit cards in there, right?

• 52:36Lewis Howes?

  Wow.

• 52:37Speaker 01

  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.

• 52:48Lewis Howes?

  On all your things?

• 52:49Speaker 01

  All your subscription fees.

• 52:51Lewis Howes?

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

• 52:52Speaker 01

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

• 52:59Lewis Howes?

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

• 53:02Speaker 01

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

• 53:10Lewis Howes?

  You've got thirty of them.

• 53:11Speaker 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 that these companies hate this, right? Cause 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. Wow. 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 for, like your dreams. Like I want to go take a trip, I want to go start my business.

• 53:57Speaker 01

  I want, you know, a lot of people.

• 53:58Lewis Howes?

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

• 54:00Speaker 01

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

• 54:04Lewis Howes?

  Acorn?

• 54:05Speaker 01

  Acorns, it's A-C-O-R-N, acorns.com. And there's, you know, I'll give you multiple ones. So, cause Acorns, I'm also an investor.

• 54:13Lewis Howes?

  Okay, yeah.

• 54:14Speaker 01

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

• 54:16Lewis Howes?

  Robinhood.

• 54:17Speaker 01

  Robin, Acorns, Robinhood, Stash. You, you talked about Betterment. These are some of the bigger players in automated investing, but

• 54:27Lewis Howes?

  Go sign up for one of them.

• 54:28Speaker 01

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

• 54:35Lewis Howes?

  Put fifteen bucks a month.

• 54:36Speaker 01

  Pick a number, whoever you, because everybody's different, right?

• 54:39Lewis Howes?

  Yeah.

• 54:39Speaker 01

  But come up with something that you're gonna save automatically.

• 54:41Lewis Howes?

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

• 54:45Speaker 01

  In the book Zoe Daniels, Henry, one of her mentors says, Zoe, you know how you get your dreams? You buy them.

• 54:52Speaker 01

  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.

• 55:02Lewis Howes?

  Yeah.

• 55:02Speaker 01

  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 wanna give it all away, but she like starts to take these trips. Well, she got there because she saved for them.

• 55:18Lewis Howes?

  Hmm, then it just happened magically.

• 55:20Speaker 01

  Didn't just happen magically.

• 55:21Lewis Howes?

  It's just like unfold.

• 55:23Speaker 01

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

• 55:30Lewis Howes?

  It's the school of greatness.

• 55:31Speaker 01

  And

• 55:34Speaker 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, 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.

• 56:03Lewis Howes?

  Yeah.

• 56:04Speaker 01

  But there's no finish line.

• 56:05Lewis Howes?

  Right.

• 56:05Speaker 01

  So whatever age you're at right now, your mom is sixty-eight. Forget the money for a second. I'd be talking to your mom about what is she excited about? Because the problem at sixty-eight is that people get depressed. And like your mom at sixty-eight, the next ten years are the most important of her life. They're gonna be the healthiest of her life between sixty-eight and seventy-eight. She's not gonna be healthier from seventy-eight to eighty-eight. So I'd be sitting there with your mom and being like, well, mom, what do you wanna 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 wanna do? Like, is there anywhere you wanna go that you haven't gone?

• 56:41Lewis Howes?

  That we can start planning for, saving for?

• 56:43Speaker 01

  Go take a trip with your mom. My mom, my mom told me she wanted to go on a safari. My mom's health's also getting worse, cuz she's seventy, my dad's seventy, she's seventy-six. Her dream trip was a safari, which we went on last summer. And I'm like, well, then mom, let's go. Cuz like, if we don't go now, I don't know when we're going. So, yeah.

• 57:05Lewis Howes?

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

• 57:10Speaker 01

  Wow, I don't, probably at the very moment, cuz I'm on tour, is my, is, 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 a hundred 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 wanna get the message out, you gotta go do the work.

• 57:44Lewis Howes?

  There's a finish line.

• 57:45Speaker 01

  There's a finish line. Then I'm gonna 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.

• 57:50Lewis Howes?

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

• 57:52Speaker 01

  You know what? I will find a guest room.

• 57:54Lewis Howes?

  A job next to me?

• 57:55Speaker 01

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

• 57:58Lewis Howes?

  I would love to.

• 57:59Speaker 01

  Bring your girlfriend.

• 58:00Lewis Howes?

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

• 58:01Speaker 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 fifteen-year-old son who's gonna be a sophomore. And what's about to be missing in my life is this kid's gonna go to college in three years. So, because I wanna live my home, the principles I teach, I wanna 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 ninety-two days.

• 58:41Lewis Howes?

  Crazy.

• 58:42Speaker 01

  It's crazy. And it's like, you know, it's, 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've done so many amazing things. 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 overnight, 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"?

• 59:23Lewis Howes?

  That's probably about 10 years. Yeah, 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, so now it's 2019.

• 59:42Speaker 01

  It's 12 years.

• 59:43Lewis Howes?

  12 years, yeah. And it wasn't really until a couple of years ago, you know, two years ago, I got an L in, and that was like, kind of helped expand it more and more. Yeah, exactly. So, um, you know, I wrote a New York Times bestseller about 10 years after the fact I started in the business. It took a lot of time.

• 59:59Speaker 01

  And it was easy, right?

• 1:00:02Lewis 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 you're like, you know, I started this one episode and one listener. And you're like, "Oh, is anyone gonna listen to this"?

• 1:00:23Speaker 01

  And the one listener was your mom, right?

• 1:00:24Lewis Howes?

  Exactly. And then it's like, and then it gets to listening, she tells a friend.

• 1:00:27Speaker 01

  Your sister got on to listen to it, right?

• 1:00:29Lewis Howes?

  Exactly. So, and I 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.

• 1:00:41Speaker 01

  Yeah.

• 1:00:42Lewis Howes?

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

• 1:00:50Lewis Howes?

  Because you've heard from all of them.

• 1:00:53Speaker 01

  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 people. I'm the young person. I would be around all these incredibly successful people in their sixties and seventies. 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.

• 1:01:22Speaker 01

  He's like, I can't tell you how many things I've sold over my lifetime that went higher.

• 1:01:26Lewis Howes?

  Oh.

• 1:01:27Speaker 01

  Buy quality investments, buy quality and leave it alone. 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, when you're in the business of managing money, you think you're so smart that you take a risk with your own money that you wouldn't take for a client.

• 1:02:09Speaker 01

  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 rolling, 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.

• 1:02:38Lewis Howes?

  Best in startups, you're going to blow up a thousand times your.

• 1:02:42Speaker 01

  Cryptocurrencies that are going to go.

• 1:02:43Lewis 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 tried to use that money and put it in here.

• 1:02:56Speaker 01

  So I'll give you one more nugget, which is people call it play money.

• 1:03:00Lewis Howes?

  Yeah.

• 1:03:00Speaker 01

  I go, 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? Cause if you didn't, then it's called work money. Never refer to your money as play money.

• 1:03:18Lewis Howes?

  Oh, interesting.

• 1:03:18Speaker 01

  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 play 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. You have one of the greatest websites, one of the greatest quality podcasts. You, you put money into your brand, your business, invested in you. Smart, right? Cause 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, ah, 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

• 1:04:03Speaker 01

  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 gonna come back.

• 1:04:10Lewis Howes?

  Right, right. And make all our money back.

• 1:04:12Speaker 01

  Right, right.

• 1:04:12Lewis Howes?

  Equal it out, yeah.

• 1:04:14Speaker 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.

• 1:04:23Lewis 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.

• 1:04:53Speaker 01

  Okay.

• 1:04:54Lewis Howes?

  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.

• 1:05:02Speaker 01

  Wow.

• 1:05:03Lewis 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?

• 1:05:15Speaker 01

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

• 1:05:20Lewis Howes?

  It's in there, man.

• 1:05:23Speaker 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 makes me just for them. Um, my first truth would be to love fully.

• 1:05:37Speaker 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 masculine.

• 1:05:46Lewis Howes?

  Masculinity, yeah.

• 1:05:47Speaker 01

  Yeah, but like, you know, a lot of times, especially guys, like

• 1:05:50Lewis Howes?

  Being vulnerable.

• 1:05:50Speaker 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. And, oh, man, I wanna make, don't be afraid to tell somebody you love them.

• 1:05:59Lewis Howes?

  Yeah.

• 1:06:00Speaker 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.

• 1:06:09Speaker 01

  Thinking that she's having a stroke.

• 1:06:10Lewis Howes?

  Wow.

• 1:06:11Speaker 01

  And had eight doctors around her in the emergency room.

• 1:06:15Lewis Howes?

  Wow.

• 1:06:16Speaker 01

  And, um, I'm like, wait a minute, we're going to Italy like in 94 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 to change, my whole life has changed. That's how life is. And I started thinking about our last 11 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 action for me, I told her I loved her, wanted to marry and have children with her before I kissed her.

• 1:06:52Lewis Howes?

  Wow.

• 1:06:53Speaker 01

  Which is insane, but it was true. And, you know, we've had an amazing 11 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.

• 1:07:16Lewis Howes?

  Wow.

• 1:07:16Speaker 01

  So that would be number one. And

• 1:07:19Lewis Howes?

  Is she doing okay?

• 1:07:20Speaker 01

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

• 1:07:26Lewis Howes?

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

• 1:07:28Speaker 01

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

• 1:07:35Lewis Howes?

  It can be.

• 1:07:36Speaker 01

  The second thing I would say.

• 1:07:40Speaker 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 86, 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, because 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.

• 1:08:08Lewis Howes?

  Oh, my gosh.

• 1:08:09Speaker 01

  And in those regrets, she said, it's not about the individual things. 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.

• 1:08:32Lewis Howes?

  Wow.

• 1:08:33Speaker 01

  And she's like, I know. And she's like, I'm sitting here now at 86. 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 90 days. You're totally getting out of here. You're 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.

• 1:09:17Speaker 01

  So that you don't turn around at 86 and wonder what you should have done with your life. So that would be lesson number two, which is like, listen to your little boy or little girl. 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 at Presbyterian 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 52, and maybe I'll live 50 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,

• 1:10:01Speaker 01

  this is probably the hardest one, which is forgive the people you're mad at.

• 1:10:08Lewis Howes?

  Gosh, it's so true.

• 1:10:11Speaker 01

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

• 1:10:18Speaker 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.

• 1:10:33Speaker 01

  Still, like, it could have been 10 years ago. 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 10, 20, 30 years of lifetime together. I saw this as a financial advisor. The thing that was insane to me being a financial advisor, because 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.

• 1:11:18Speaker 01

  You know, I'd say in meetings, "Are you sure you came up with a conversation with them? 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.

• 1:12:02Speaker 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'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?

• 1:12:42Lewis Howes?

  Yeah.

• 1:12:43Speaker 01

  And it reframes you, right? I mean, it happened to be, yeah, Dean and I were together. You had Dean here too. Dean and I were together at a Tony Robbins event and we both had our journals and we were writing out whatever it was. Because everybody's got this, right? And then we wrote our whole big thing of 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 you're making yourself continue to suffer.

• 1:13:15Lewis 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.

• 1:13:23Speaker 01

  I like these last three questions.

• 1:13:25Lewis Howes?

  Powerful, huh?

• 1:13:26Speaker 01

  Yeah.

• 1:13:26Lewis 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.

• 1:13:44Speaker 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 A Live, because you've done a class with Chase, we've got a 19 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 $200 of the bonuses on that website, lattefactor.com. People are loving the book. And so I just thank you for having me on.

• 1:14:12Lewis Howes?

  Excited, man. I wanna, before I ask the final question, I want to acknowledge you, David, for showing up with a lot of energy in your life at 52.

• 1:14:21Speaker 01

  Thank you.

• 1:14:21Lewis Howes?

  52, right?

• 1:14:22Speaker 01

  Yeah.

• 1:14:23Lewis Howes?

  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 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.

• 1:14:47Speaker 01

  Thank you.

• 1:14:47Lewis 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 just show up to serve people. I think that's the greatest thing you can do. So I appreciate you, man.

• 1:14:59Speaker 01

  Thank you.

• 1:14:59Lewis Howes?

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

• 1:15:03Speaker 01

  Ooh, why is my definition...

• 1:15:09Speaker 01

  So 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 most important thing we have to do while we're on this planet is 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.

• 1:15:53Speaker 01

  It could be the gift of being a mom, it 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 you're gonna pay the bills. And so I think the way you get to your greatness is you free yourself, but you gotta listen.

• 1:16:37Speaker 01

  You gotta 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 gotta 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.

• 1:17:03Lewis Howes?

  It's coming.

• 1:17:04Speaker 01

  It's just like, it's this weird thing. And I go, that's cuz 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 years, so like, oh, okay, fine, right? Like, so I think greatness is listening to your soul consciously as much as you can throughout your life and making space for that.

• 1:17:29Lewis Howes?

  David Bach, my man. Thank you.

• 1:17:31Speaker 01

  Thank you. Really appreciate you. Thank you. It was awesome.

• 1:17:37Lewis Howes?

  There you have it, my friends. I hope you enjoyed this episode. I'm always looking for the best and brightest in the world to help you unlock your potential and reach greatness in your life. Financial freedom is one of those things that you want to master in your life. It's a thing that we all need to handle and deal with, living in the modern world with the economy and expenses. But once you have a handle on this, you can have peace of mind and peace in your heart and allow yourself to take on life's greatest challenges and optimize every area of your life. So I'm super excited about this one. Be a hero for someone today. Just take the link for this. Text it to a friend right now. Put it on your Instagram story. Put it on Facebook or Twitter.

• 1:18:19Lewis Howes?

  You get to be the hero for someone in your life, a friend, a family member. Text them this link on your podcast app or lewishouse.com/791. Do it right now, guys, because I want to see everyone find peace in their heart around finances. Again, Tag me @lewishouse, you can tag David Bach as well, that's B-A-C-H, over on Instagram, Twitter, and everywhere online. As Confucius said in the beginning, "When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps." Your goals are not too big, it's the actions you're taking every single day. It's the way you think about your actions, the way you think about everything.

• 1:19:04Lewis Howes?

  And when you can start to automate things with your finances, you can start really seeing the goals come true. That's what I love about this episode with David. He really unlocks a lot of that for you by automating and creating systems. So make sure to become financially free, automate your money, pay yourself first, always. I love you guys so very much. I hope this was a helpful one. Make sure to share it with your friends. And you know what time it is, it's time to go out there and do something great.