Stacking Benjamins and Modern Money Management with Joe Saul-Sehy
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If you want to do more and spend less like Uber, 8x8, and Databricks Mosaic, take a free test drive of OCI at allthehacks.com slash oracle. That's allthehacks.com slash oracle. Allthehacks.com slash oracle. Hello and welcome to another episode of All the Hacks. I'm Chris Hutchins and I am excited to have you on my journey to upgrade life, money, and travel. Today's conversation is with my good friend and fellow podcaster, Joe Salcihai.

Joe's career in media started when he was the money man on Detroit's local TV station, WXYZ. And now he's the creator and host of the award-winning podcast, Stacking Benjamins, and a co-host of the Money with Friends podcast. He's also appeared online in more than 200 places, including CNBC and the Wall Street Journal. Joe's career in media started when he was the money man on Detroit's local TV station, WXYZ.

And in his previous life, he was a financial advisor and certified financial planner for over 15 years. Now, we're all quite fortunate for his decades of experience because he has a fantastic book that he co-authored with award-winning writer Emily Guy-Burken that just came out yesterday. It's called Stacked, Your Super Serious Guide to Modern Money Management. While the content is all very legit, the tone of the book, like Joe's podcast, is approachable and downright funny.

I am excited to talk to him about how to pick investments, including why he thinks the key to becoming wealthy is to strategically undiversify wealth.

When it does or doesn't make sense to hire a financial advisor, hacking all your insurance policies and more. We'll also tackle a few listener questions about money and financial planning. But before that, you should know that I work at Wealthfront and all opinions expressed by me and my guests are solely our own opinions and do not reflect the opinion of Wealthfront. This podcast is for informational purposes only and should not be relied on for investment decisions. Okay, I know you'll enjoy this conversation with Joe. So let's jump in.

Joe, it's cold in the Midwest. The holidays are around us. This book is coming out. How are you doing? Well, I'm in Northeast Texas and it's slightly cold. I'm a cold weather guy, dude. I know you're a sit on the beach guy sometimes. They say people are mountains or beach. I'm more mountain than beach. So this is good for me. It's a fire in the fireplace, a big book to read. How great is that?

Yeah, it's awesome. I'm excited. Big book launch. You have published, I'm going to guess, over a thousand episodes of a podcast in your career, all about money. But you decided that you wanted to take on another side project and write a book. What led you to do that?

Because I'm nuts. I was drunk. Would that be a good story? Dude, we were drinking one night. Yeah, no, it didn't happen that way. What did happen was very seriously. And by the way, thanks for having me on. And I know we're going to have a blast. But I had written a book over the course of 10 years, like a lot of people have. It completely sucked. It stopped. It started. It stopped. It started. It stopped. It started. And it was super, it was, you know, where this book says it's your super serious guide to modern money management. This book was overly serious. And

And it was like, this is the definitive book of big ideas on the internet. And it was just garbage and so over the top. And it didn't really resonate with me. And I was frustrated. In fact, I handed it to my spouse, first person. Is your spouse the first person that reads your stuff? Yeah. Yeah.

Yeah. I handed it to Cheryl and immediately she got three pages in. She's like, this sucks. This is horrible. And so we were on a trip out to Portland, Oregon. And I don't know if you've ever been to Powell's bookstore. Yeah. And

Yeah. And I don't know if this is the way it really happened, but in Joe's head, what happened was Powell's was this little tiny store in this block of buildings that are all connected. Right. And as the store next to them went out of business, they blew out the wall and then they made the store bigger and bigger to the point that now for people that have never been there, it's a whole block.

And the building doesn't really work. It's it's there's all kinds of weird stairs all over the place. And I think on one end, the third floor is in the same place. The second floor is on the other end. It's a great place, though, for somebody like you or I to go get lost. And I get so many creative ideas there.

And I end up in the kids section like I would, and I see the Hardy Boys detective manual. And I don't know if you read this, but in fourth grade, my brother and I carried around this thing, Chris, that was just amazing to us. It was written with the help of a real live FBI agent. So this was legit.

Second was it showed you how to do everything that a detective would do. I ended up buying the copy because I was so inspired. I remember just in...

In fourth grade, my dad would be pulling out on a day that was muddy and we'd go out and look at the tire tracks of his car to analyze his tire tracks. Or my mom would touch a doorknob and we'd go over with the tape and we'd take her fingerprint off the doorknob because you're not sure where her mom's been. And so I had this idea and I thought...

This is so great. It's so approachable. And even as an adult, I thought if there were a book like this that adults carried around the way I carried this around in fourth grade and it was about money, like that's what we're all looking for. We're looking for kind of this guide that we can dog here. And I thought, okay, I've interviewed a bunch of people on the show and I haven't had that. So that was the germ. But we fly back to Michigan where I was living at the time and my mom dropped off my stuff that was in her attic.

I'm 50 years old, man. I'm 50 years old. My mom's finally giving me the sixth place father-son bowling trophy, right? From this tournament we were in when I was like seven and my little league photos. But the big thing that was in there, it was the Cub Scout Wolf Guide. And a lot of what you talk about hacks that I think is super important to

and has always been important to me is if you gamify this, if you find ways to build milestones, like a lot of the time, my clients, when I was a financial planner, they would have these big, huge goals and they were so hard to get to. So we would build these milestones along the way so we could celebrate and we could figure out if we were ahead or behind our pace. If we keep track of pace, I've run 11 marathons.

And I keep track of my pace the whole time so that I come in where I want to come in. It's the same thing, I think, with a lot of these big financial goals we have. Tony Robbins even has said that we overestimate the things we can do in a day because we over plan the to-do list. But because we never plan a five-year plan or a one-year plan, we underestimate the number of things we can do in a year.

If we chunk those down into smaller pieces, we could do it. So the Cub Scouts, though, in the Cub Scout Wolf Guide, these guys, Chris, gamified things way before all these cool fintech apps did. And they did it in a very similar way. But back when I was a kid and it was very simply all the tools that you're going to need.

And then they told you how to do the task. And then there are a bunch of check boxes at the bottom to show proficiency, right? And then at the bottom for you to get your badge, you get a badge and there's a place for your mom to sign it to verify that you did it.

And I thought that is so cool and it's so campy. And so when we created Stacked, it starts off with people that know nothing. And at the end, as you know, we're talking about strategic under-diversification, about tax planning, about estate planning, about how to hire advisors that won't bleed you dry, about modern portfolio theory. Like we're in at the bottom of the book, some heavy stuff.

but it goes piece by piece and we do it like it's achievements. And there's a place at the end of every chapter for your mom to sign that you did it. So that was the idea. There were a few ideas. I love gamification. I don't see it enough in, in the people I've interviewed in the books that I've interviewed. I think we need that.

I think second, a guide that people can dog ear and carry around could be very important. And then third, and you and I have talked about this a lot. There's a report that I love by this group called Nonfiction, and it's the secret financial life of Americans. And this thing hit me hard. But a big statistic was that 150 million people in America report that they've cried about their money.

150 million people. And you'd think that those people are people that are living paycheck to paycheck, but almost 50%, a little less than 50% of people that make over $250,000 a year report that they're crying about their money. And it's funny when we talk about money, we often talk about, so what's hot? What's the new thing? What's the cool new tech?

I don't think, Chris, people are crying about the fact that central bank digital currency is probably going to be a factor in our lives more and more in the next couple of years. And that's like the hot new thing. They're not crying about the fact that the mega backdoor Roth IRA might be going away. It's not what they're crying about. So there's a lot of people I think that are being missed because even though apps, I think, are doing a kick-ass job of gamifying, I haven't seen as much in the press. So we want to have a book that kind of bridges that gap.

I appreciate the advanced copy and I definitely checked off some boxes and I actually loved it because there were some chapters where I was like, I got this. I'm just going to move to the next one. And it made it really easy for, at least for me to process and run through. You mentioned some of the advanced stuff, which is where the hacks come in. I know there's a lot of fundamentals and I think a lot of people listening have laid the fundamental groundwork. And if not, now there's a book, you can go buy it. I assume it's sold wherever books are sold. Right. Absolutely. Yeah.

We can skip to the advanced stuff is what you're saying. No, no, no. I'm just saying that I feel like the theme is like digging into some of the hacks and

And some of the basics of personal finance, like when you're when you have debt, some of the basics are tackling it from the high interest first and getting down to the point that the only debt you really have is so low interest that the most important thing is to probably invest for the future instead of pay off your one or two percent loan. So I don't want to gloss over that because for so many people, those foundations are really important. But.

But in the spirit of the hacks, I wanted to dig into a few of the things that I thought were a little bit contrarian that to me, I was like, oh, this seems like an opportunity for me to tweak and optimize. And it doesn't have to be at only the advanced level. But one of the things was around investing and how people make a decision on what to invest in. And we did an episode with my boss, Andy Ratcliffe, who started Wealthfront. And we talked kind of at

kind of at a high level on some of the fundamentals of investing, when to buy, not to time the market and that stuff. But we didn't really talk too much about picking investments and how to decide what to do. How has your kind of conversations with people and all the research you did for the book led you to have your own new opinion on how people should invest?

The funny thing is for me, actually, it isn't a new opinion. It's been my opinion for a long time because whether I was a financial advisor and that was a long time ago to the whole stacking Benjamins second career, having fun, having a podcast, people writing me their questions,

The question always, a lot of questions wrapped up in FOMO, wrapped up in, hey, there's this thing going on. Should I jump in? Or what's the hot investment? I go to a party. I try not to tell people that I, that, you know, what I do a lot of the time, because it's almost always. So what are you telling people to invest in today? What's the one thing that people should be getting into? Everyone wants that hot tip. Yes. Yes.

And the frustrating thing is that I feel like that makes you walk around, that makes people walk around like I'm so afraid that I'm going to miss something that I have this whole fear missing out. And I think that the better way to do this in the hack is all in your approach.

I love, by the way, when I read this book, I didn't think it, I didn't think it appealed to me. Like I read this book and I went, uh, a long time ago, it's this book called little book called Stephen Covey's seven habits of highly effective people. And I know a lot of your audience has probably read this book. And if you haven't read it, you probably should, because at the time I thought it was okay. It was me. And now I quote this book all the time.

Because if you begin with the end in mind and you work backward, it is so much easier, Chris, to choose investments. Because the key to choosing the right investments is in doing enough research to make the right decision on the investment for you. And if we're trying to track the full field of all the investments that are out there,

We're going to end up not building a good enough funnel with enough data points to make a good investment decision. So the first key is I want to limit my scope and the amount of time at the top of the funnel so that I can spend more time digging into just a few investment opportunities. And clearly the way to do that is...

Think about it like a farmer thinks about crops in a field, right? If I'm planting corn, I'm from West Michigan, so everything is agriculture for me. If I'm planting corn, farmers over thousands of years have figured out that there's a day you plant or a week or a time you plant the corn, and there's a time that you take it out. You don't plant it at different times. You don't take it out of the field at different times. And so you think about your planting time and your harvest time. It's the same thing with investments.

So if I have a 15 year timeframe, let's say, and I know how much money I'm going to need at that time, I can build a simple spreadsheet that shows me how much money I need to save to get there. Maybe, you know, per month, per year, per week, whatever you want to do.

times whatever interest rate I need equals the goal. And once I have that, by the way, for all my different goals, and I like building a visual sheet because most people, just the way our brains work, we're visual people. So instead of writing this, I like having visuals on a timeline.

Once I have that, though, and I know how my goals work against each other, I can then start figuring out my cash flow toward those goals better. And when I look at those interest rates, it takes this huge field of investments that are available to everybody and it narrows the field to only the investments that have fit that purpose.

And when I start there, then I limit the top of the funnel by so much. And then all these inputs that you and I get all the time of, Hey, there's this opportunity. There's this new thing. There's this cool deal I can invest in. I can immediately fit it to the end and go, yeah, that doesn't fit. Which means an investment might be cool. It might be great. It might be awesome. And it still just isn't for you.

because it doesn't fit. And is being able to say no to some opportunities that might be a great opportunity, but good for somebody else is a lot of times the best thing you can do for yourself. How do you find that kind of world of investments and narrow it down? You know, everyone's always looking for the next hot investment, but let's...

shelve that because I feel like finding the next hot investment is almost always a losing proposition. People who professionally try to pick the next hot investment over time seem to always underperform. But what about just sourcing alternative investments? Do you have an opinion on things outside of just the stock market fitting into people's portfolios, whether they're real estate, agriculture, crypto, all that kind of stuff?

Yeah. Yeah. I love all of those. Yes. The answer is yes. And when it comes to alternative investments, I don't think you start with the field, Chris, because if you start with the whole field, once again, you're going to get this FOMO and you're going to waste a bunch of time investing stuff that doesn't fit what you want. And a key, I think with alternative investments is,

I hate the word passion, but I think you have to be into it enough. You have to like it enough that you can do the research it's going to take for you to get in there. So I'll give you an example. Recent crowdfunding rules have really opened things up for people, which is super exciting. It used to be that very few people could invest. And I'll give you an example that I like in the world of art, right? Art used to be something that has been a high potential return place for

You can also get your butt kicked in art, but art is super interesting, mostly because of the fact that over long periods of time, it consistently art has beat the pants off of inflation, has just smoked inflation.

But art was something when I was a financial planner, I couldn't recommend because back then before these crowdfunding rules, I couldn't tell my client to go find a Van Gogh. Right. If I'm working with somebody that that maybe has a million and a half dollars or five hundred thousand dollars or whatever the amount is, the Van Gogh is going to suck up a huge portion of that. And to have that in one painting is.

It's just a ridiculous risk that I would never recommend that anybody takes. And I know we're going to talk about strategic underdiversification, but I still wouldn't take that risk. But now when I can put my money in a fund that buys art, or I can put my money toward a painting, but only own a fractional share of that painting. Now, all of a sudden I'm really interested in this asset class, right?

But then I also look at, so when I look at that asset class, I also have to think about historically, how has it bumped around and how has it bumped around versus other things that I've invested in now? And for that, and if we really want to deep dive, I think we get into modern portfolio theory and Dr. Harry Markowitz and the Efficient Frontier theory.

And if you look at the line on the Efficient Frontier, if I'm buying art, I also want to buy other things along with art that can also not just smooth out my ride, but make it so that because that art's probably going to be is going to have some characteristics like illiquidity that might get ugly. Art during downturns tends to hold its value. However, during downturns also, it holds its value because there are fewer sales like people, which increases the illiquidity. So look at the way that I just looked at it.

Instead of starting off with what are all the different things out there? I look at, okay, I'm really interested in art. Is there a way for me to buy into the art community? What are the different ways to buy? I can buy fractional shares of a painting. I can buy an individual painting. I can buy into a fund that buys a lot of different paintings. Then I look at how those different things work. I look at how art works over time. I place it with the rest of my portfolio and see where it will fit with the rest of my portfolio. Then

And then I start thinking about making a decision. And that decision then later on down the funnel will include what's the cost of

Right. Because the people that run these funds, these crowdfunding funds, they ain't doing it for free. So what's my cost benefit analysis? Also with crowdfunding, is the world changing and how is that changing? And I don't have answers, Chris, to any of those questions, but look at what I just did. Like I created this whole funnel of interesting conversations that are going to lead me to a much better decision point. And at anything, I went to Catholic school and

And I remember Brother Jim in my religion class telling me that at some point you either believe or you don't, right? And I think it's the same with investing. You get as much data as you can. And my goal has always been to drive as much data as I can to put the odds in my favor. And it's only after I have a bunch of data that I actually decide whether I'm going to pull the trigger. And at that point, do I believe or do I not believe?

And then I push the button to buy or I go looking for the next opportunity. So two things. One, if we lost anyone talking about modern portfolio theory or the efficient frontier, I'll just put some links in the show notes to some stuff to read, including the book. So that's one. Two, we didn't get into any specifics. Are there any platforms out there that you talk to a lot of fintech companies that are interesting or exciting to you that if someone wants to think about things that are worth checking out?

Let me tell you this. I'm going to tell you what to avoid because there's garbage out there, Chris. What I get more worried about than what's the hot thing. And I'll give you a couple of things that I like to since you asked. So I'm not going to completely avoid the question, but I'll tell you there is a real estate syndication company and I'm not going to say the name.

But there's a real estate syndication company that for a long time, people ask about it. I saw somebody ask about it in a Facebook group yesterday. And this company drives me crazy because on the front page of their website, they had a forward-looking graph about how this is expected to perform. And it said, name of the company engineered for superior real estate results.

hell do you and I know in real estate that isn't hoping to engineer for superior results? Like really real estate's like the oldest asset class on earth.

these whiz-bang people finally figured out a method that nobody's figured out before them to engineer for superior results. And then they show a forward-looking graph, which by the way, if the SEC was paying attention, you and I know a mutual fund can't do that. An exchange-traded fund can't do that. I don't know how these guys were getting away with it. So beware charts and graphs. Number one, beware somebody that tells you that they have picked the lock on something that nobody else has ever done. Really? Yeah, I just don't think so.

Yeah. Yeah. And when it comes to any alternative, one thing I always ask is the value proposition, the way the company makes money, is it by providing a value that was new to people, right? So take the case of fractional art. We're going to take a fee. We're not telling you art is going to

10x because of our company. We're just saying we can give you access to it and we take a fee to manage that access. And I'm like, oh, right. I will pay someone to do something that allows me to do something I couldn't otherwise do. That makes sense. Absolutely. And so look at what they're trying to present themselves as. That's an important one. But I'm going to hold you to it. You said you're going to share some of the ones you're interested in.

Yeah, I do get interested in farmland. I think that farmland, even though the past few years have been really a lot of investors going that way, I think farmland is still super exciting. I think it's exciting for a guy like me because it's so damn boring. The things that I like about investments aren't the new, sexy, wild things. And don't get me wrong, those are fine. But if an investment, if I can easily understand how somebody makes money, I can easily understand my downside, I get...

why I would make money. And I think there's a reasonable expectation that I will make money. And my downside is not that high. I think that's why I like farmland. It's just, it's easy. It's straightforward. It's simple. It's one that even though so many investors have gone to the last few years, I still don't see the rush there like I have in residential real estate. And it's completely the opposite of what's going to happen in commercial real estate. Commercial real estate is, it has to have a transformation now.

And I don't think a lot of people, definitely people above my pay grade are figuring that out today as we speak.

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So when you talk to most people about investments, they'll say you got to diversify as much as possible. And one of the contrarian opinions in the book is that the key to becoming wealthy is to strategically undiversify. Can you unpack that? And the reason I write about this is because it's what everybody wants their advisor to do. And being a guy that was an advisor for a long time, they want advisors to make them rich. Let's be clear. A fiduciary financial advisor will never tell you how to get rich with money.

They won't. They'll show you how to diversify your money for two reasons. Number one, they know that your number one way of becoming wealthy is actually keeping an income stream that adds to investments that beat inflation. So if they can help you figure out the behaviors to continue to put more money in, and then they can diversify usually into something that mimics the indexes, right? And keep you close to the efficient frontier. What I'm saying, Chris, is that

what a certified financial planner is going to tell you is boring is good, but sexy is not where you want to be. Boring is good. And doing the other thing is great, but I'm not a financial planner anymore. So I get it. And by the way, the other thing is think about what can go wrong with strategic under diversification. If you are wrong, what we're going to do here is do something called increased standard deviation. So let's take standard deviation. Standard deviation is the wiggle in your portfolio.

And when people used to come into my office and we would build a portfolio together and we determine what indexes we're going to mimic and how we're going to put the portfolio together, I would then run the software to show you the standard deviation on that portfolio. And if you look at one standard deviation either way, I'll tell you, Chris, for you and your family, this historically, we're aiming for eight and a half percent after tax. We're in for an eight and a half percent rate of return. That's what we're getting. Now, here's the good news is

One standard deviation, and we're not going to go into all that, but in most years, we can have 14% above that, and it's still a normal year. That's fantastic. We could also have 10% below that, and it's still going to be in the range of expected results, and we're going to be okay. If we get that wiggle, which is what we expect with this portfolio, we're going to be okay.

And it's like a weather report or it's the pilot of the plane who tells you you're putting the fasten seatbelt sign on because it's going to be a bumpy ride. Like looking ahead. I love standard deviation because it's a look ahead on what I can expect from this investment. And I'll give you an example. When you saw the last couple of years, the market drop 14%.

14% for the S&P 500 is within that first standard deviation, meaning that's a normal day. That's actually a normal time. It's not a bear market. And what's going on in CNBC and Fox Business? They're freaking out. They're freaking out. We're going to bed. The things are tail spinning. No, they're not. This is just pretty bumpy day on the ride. So what we do to strategically under diversify is we increase standard deviation.

Which means our upside potential gets higher, but you also have to remember, Chris, then what does that do to the downside? We're also taking on a lot more risk. And to give you an example of how this has worked for people, Dave Ramsey, my buddy Dave in Tennessee, tells his followers to...

to invest in actively managed mutual funds, usually through a company called American Funds. And that's what he advocates. Dave is a hugely wealthy person, just monster wealthy, but wealthy, built a huge company, lives in this monster house, has a gigantic net worth. Dave did not get wealthy following Dave's advice. Dave didn't diversify a bunch of mutual funds. Dave

twice. The first time he bought some real estate properties and he went bankrupt. So he increased standard deviation through real estate and he went bankrupt doing it. Ode people a bunch of money. Then he came back, right? This is Dave's story. Dave comes back and he builds a company telling people not to do that. And he made money not owning a diversified collection of stuff, but by owning one company, one thing. That's how Dave got rich. So if you're really interested in being wealthy and

find something that's good, make sure it doesn't stink, make sure that it's going to actually do what you hope it does, and you're going to get wealthy a lot faster. The bad news is you're going to get poor a lot faster if it doesn't go the way that you want.

Yeah. And like you said earlier, focus on something you know about, you care about, you can pour your heart and soul into some random thing that someone told you at a party. Jason Zweig, who's a phenomenal writer in the Wall Street Journal a couple of weeks ago, was talking about a gentleman who has been managing money since the mid 1970s.

And he's only given five interviews during his career. He's stepping down from managing money. And Jason talks about the key to his success. He owns very few companies. He doesn't waste a lot of time on the top of the funnel like we talked about earlier, dealing with FOMO and all these different ideas. He owns just a few companies and he spends 90% of his time understanding the heartbeat of those companies and

explicitly. He knows everything about these companies. Yeah. It sounds like you got to make good decisions and stick to them, which you said the value of hiring an advisor is about helping you make good decisions and

A question I've gotten a few times from listeners is how do you make the decision to hire an advisor? When does it make sense? How do you interview them? You've been one for over a decade. Now you're not one and you can give whatever advice you want. How would you answer that question to people? Yeah, and I want to and I would be careful here because I've been told by people that because I was a financial advisor, people all of a sudden think that I'm going to have a bias toward them. And so when I talk about advisors, I want to just warn everybody ahead of time that

that I think differently about advisors, I think, than most people do. And when people fire their advisors, I generally think that is a good thing to fire your advisors. And it's mostly, Chris, because they have the wrong relationship with their advisor. I think, so with that preamble, let me lay this out. I think we all need advisors. Everybody needs advisors. I need somebody who's not me, who's not emotional about my stuff, right?

who I know has my back and who is going to give me some good ideas and tell me where I'm stepping in it. What's cool is that Walt Disney, back when he was creating Disneyland, and this was, think about Disneyland at the time. The thing that he was competing against were these fairs that went, these garbage fairs that went from place to place and carnivals were known as dirty and dirty people that the

that work there and sketchy environment in a lot of cases, he's trying to create this clean family, something that's differentiating from that.

but he still was a pioneer going in this new direction. So a great story about Walt Disney was he would often wear a disguise where he's wearing a hat or a hat and a wig or some sunglasses. And he'd walk around the park and he'd stand in lines and he'd fire up a conversation with people in line with him and go, Hey, what do you think about this ride? What do you think? What have you heard about it? Is it, do you think this is good, man? I've been thinking about some things that this park could have that it doesn't have. What could this park have that he's looking for advice from,

And for him, it was hard to give Walt Disney advice. I've read a lot about Walt and it was, he was very, very,

And it was hard to look him in the eye and say, I think you're messing up. But he craved that. And I think we should all crave that. I think too often we get defensive and instead we should be asking ourselves, where am I messing this up? If I ask more often, I have that growth mindset. Where am I messing this up? I think I'm going to do a better job. So even if I'm just starting out, Chris, I want to take wealthy people that are going, that have already been where I want to go. I want to take them to lunch. I want to pick their brain. I want to put them on my board of directors, right?

And the reason I like people firing advisors is because if you have an advisory relationship where you have abdicated the throne and they're doing it for you instead of advising you and how you won't step in it and how to do a better job, you have the wrong relationship. And to give you an idea, everybody talks about Tesla. I'm actually...

As a Detroit guy, I'm a fan and I groan sometimes, but I am a fan of General Motors. I'm a fan of Mary Barra and the job that she's done taking this legacy organization and trying to make them competitive. And I watch that because that's a huge struggle for the whole city.

But Mary doesn't not show up at work, Chris. She doesn't not show up at work. She doesn't go, Hey, okay, I'm going to meet with you twice a year about these cars we're making. And I'm going to go do something else, which is what people do with their financial advisors.

No, Mary goes to all the meetings. She knows everything about a car. I just went to this thing, Camp Fi, which was awesome. She goes to the camp outs and meets with other people that are car enthusiasts. She goes to the engineering meetings. She talks the talk about unions and pay scale and economics and what's selling and what's hot, what's new. She goes to everything. But then what does she do? She surrounds herself with these phenomenal engineers and

and vice presidents who are smarter than she is about every aspect of the car. And that, I think, is what we want in our life. So my standpoint, in the most long way possible, I think we should all have advisors. I really, it is less dangerous to hire a CFP. But as you can tell by my explanation of what an advisor is and what advisor isn't,

I actually don't really care. Hire people that you know have your back. We say hire a CFP and hire a fiduciary. Why is that? Number one, a CFP is somebody who I know has this depth of knowledge about the things that go on in creating a financial plan. That's good. I want that. The second thing I know about some CFPs is they are this thing called a fiduciary, which means they are required to do what they think is in my best interest. I want all my advisors to be fiduciaries.

So those two things, if you're checking boxes, yes, ask those. But more important, I'm really just looking, what is my fit? What is your expertise? How do you make me go faster? How do you make me smarter? How do you involve me in the process so that I can still do other things and still be involved in what we're trying to create together? That's who I'm looking for as advisors. And-

What about on the execution side? Do you think it makes sense to hire someone to rebalance your accounts and tax loss harvest and that kind of stuff? That's not really advice as much as execution. Doesn't matter at that point, right? That's not advice. That's delegation. Do you want to hire a team to do that? Do you want to hire asset managers to manage the asset for you to hold them? Maybe. It depends on what your if you start with your end and where you're trying to go and work backward, you'll make some great decisions on whether what you delegate and what you keep.

Just realized this, that I had a family member die recently. And the thing that we always try to optimize is our money. And the thing I don't think we optimize enough is our time.

And it made me realize yesterday that you don't know when the story is going to end and don't waste your time doing tasks that are below your pay grade. And by pay grade, I don't mean a money amount, meaning stuff that you really don't value that aren't going to give you that richness that we're all looking for. Delegate that crap, delegate as much of it as you can.

But be involved to know how the decisions get made. Absolutely. Don't abdicate. And I love it when I hear, Chris, people fire their advisors. They're like, I just fired my financial advisor. And generally, I think that's a good thing if you're trying to reinsert yourself in the process because you made this mistake of being in a relationship where you just handed over the keys to the kingdom. You don't want to do that.

Okay, this is going to be a bit of a hard turn, but it's something that I thought was really interesting. In the book, maybe we should have started here because it's a far more first step thing. You talk about emergency funds.

And the reason I want to bring this up is I have always looked at the emergency fund and thought, okay, I can leave a couple months of cash somewhere. And the argument was always, you might lose your job, you might need to pay for an expensive medical bill. And those are all fine. And those are good reasons to hold emergency funds. There were a few things you put on there that kind of made it seem like an emergency fund could be a hack to save you money. And I would love to

to talk about them because I've always seen the emergency fund as this boring thing that costs you, right? It's cash that's sitting somewhere and not earning. But you pointed out things like raising the deductibles on your policies because you have this emergency fund which saves you money each month.

Can you talk a bit about some of the things that you think make emergency funds financially beneficial beyond just paying for emergencies that might arise? Yeah, insurance companies want to talk about buying insurance and you don't want to have that discussion.

The discussion you and I want to have as owners of our personal business, which is our life is our business. We want to think about risk management. And even we talked about portfolio building. We talked about risk management, right? What can go wrong? So the first thing I want to ask is not what insurances should I buy? It is what could go wrong and then how do I meet that? And for most of us, once you build an emergency fund, it can save you, to your point, Chris, so much money and not just insurances. I'll tell you in another way.

When you build that fund, you can then self-insure that you can meet it because you have cash in the bank. Why would I hire an insurance company to do something that may also be a low risk? So I look at the risk of it happening versus the amount of money that I'm paying for it. And I'll give you an example here. When we look at our homeowners and our car insurance,

which of those insurances cost more? For most of us, it's your car insurance costs more, but which asset for most of us costs more? If you're maybe for some of us, our car costs more than our house. But I think for most of us, if we own a house, our house costs more than our car, but insuring it's a lot less. What,

Why is that? A house has a bigger magnitude. The magnitude of the loss will be bigger. The chance of the loss is much, much smaller. I believe the numbers are for car insurance. I think it's one in 300 and for homeowners insurance, it's about one in 1200. And those are stats off the top of my head.

But whenever you look at what the insurance company is offering, I always look at what's the pricing on these different policies. And this is a mind shift for most people. I want to focus not on insurance, but I want to focus on those issues that actuaries have told me are expensive by jacking up the price on insurances. And I want to have a great strategy in those areas. And if it's something that they're valuing very cheap, then

I know that the risk of that happening is not as big and I don't need to focus on it. So is it so for car insurance and for homeowners? I can know I have this opportunity to have a low deductible or a high deductible. That's the amount you're going to pay first before you have a claim. So make sure your experience is good before you do this.

But if you have an emergency fund, you can jack up the deductible and you save yourself a bunch of money because you're going to self-insure. And you're not saying self-insure the entire loss. No. You're just saying self-insure against needing a low deductible.

Exactly. Self-insure the first thousand dollars or the first 10% or whatever that might be. Self-insure that minimal thing and ensure the catastrophic stuff, right? The stuff that's going to sink your financial plan, ensure all that. Disability is another one. Keep long-term disability insurance in place, but short-term disability insurance, which is super expensive because you're going to use that first, the first maybe six months. If you get to the point that you have six months of expenses and

in an emergency fund i don't have to i don't have to buy short-term disability i can use that emergency fund now to do it and i've avoided a huge expense and by the way something that statistically happens to a lot of people at the same time there's another thing that i said that where you also save money i see people freak out about their investment strategy

especially people that tell me that they have a high risk tolerance, but they've never seen a downturn. And there are, as you know, Chris, a lot of people listening to the show who started investing in 2008, 2009, right? And all they've seen is this roaring up market. They haven't been through 2007 in the early days of 2008. They haven't been through 2000 to 2002, which is when I lost all my hair. They haven't been through

those times you act a hell of a lot differently than you think that you will and i'll give you an example people say oh i can deal with a 25 loss that sounds fine let's say your portfolio is a million dollars let's put that in dollar numbers if you and i are sitting across the table from each other and i say you lost a quarter of a million dollars in the last three weeks

You're going to act differently. You're not going to act like 25% doesn't mean anything to my brain. A quarter of a million dollars sounds absolutely horrible. So when you take these and you put real numbers on them, I saw people as an advisor do all kinds of bad stuff. But this is where an emergency fund comes through. Yeah. A lot of people say your emergency fund is not earning anything.

But then I thought about pet insurance and I thought, oh, I've set aside enough money in my emergency fund to cover if anything goes wrong. And pet insurance, you know, it could be 50, 60, 70 bucks a month. I don't actually remember the exact amount.

But what my emergency fund is earning is not paying that pet insurance each month. So in a way, if you think about it from that perspective, it actually is earning interest, but it's earning interest in the form of not forcing you to pay for these things that you otherwise would have maybe paid because you don't want to have to sell your portfolio to pay for your pet surgery or something like that. Yeah. Yeah. Emergencies you don't have to meet and also bad decisions that you can avoid.

Yeah. Now, part of that, you talked about insurance. And I think you've talked to me about in the past different ways to hack insurance and some tips and tricks. Disability is where you started. I know very few people I know have ever talked about disability insurance. Lots of people talk about life insurance. I know some employers cover it. I don't actually know if employers usually cover enough.

But in the book, you kind of talked about disability insurance as this thing that a lot of people overlook. Is it something more people need to be looking at? Is it only for people who aren't employed? Or how do you advise people to think about it?

No, it's the number one insurance that I think that we need. And it's the number one thing we don't want to talk about. We think we're pretty safe people. We're safe skiers. And it's not about you. And if you look at how expensive it is, actuaries have figured out that the chance of it happening to you is better than you think. By the way, the number one reason people default on their home loan, and most people don't know this, it's not that somebody's a deadbeat and they just stop paying their mortgage. It's actually a disability.

A disability happens, all of a sudden they can't make the mortgage payment, default on the loan, and they're out of their house. So disability insurance is huge. If you have it through work, look at that policy first. The problem with workplace policies is that they often have a cap. So in other words, they'll say, we will, Chris, give you 65% of what you earn, but we're going to cap it at $3,000 a month, which for many people listening to this show, I

isn't 65% of what they earn. They may earn north of that. And so it really is a $3,000 a month policy. On top of that amount, that money also, if it's taken out as a pre-tax deduction, it's also going to be taxed. Now we're really getting in the weeds. So you're not actually getting all that money either. If you buy a policy on your own, it's generally going to be used with after-tax dollars, which means that the benefit will be tax-free when you receive it. So it's an expensive insurance policy.

people should get it, but start off with what do I need, right? What's my need? And then work backward. What do I have through work? Watch out for the cap and then go buy extra. So when I see that Aflac duck commercial, the emergency insurance, I'm the guy going, yeah, yeah. Directionally that's, and that's not an Aflac commercial. I'm just saying that's what the Aflac people are talking about and people should start investigating that. And it's the same by the way,

It is. It's the same when people are retired. The number one threat to your long retirement is long term care that we're going to have this catastrophic illness there. The long term care insurance is a bloodbath. It is so ugly that, frankly, we're at this spot where where, oh, gee, it was a working CFP still on our show. He and I commiserate. Chris, we don't know what to do.

We know you need a plan because it's the A number one threat, but buying long-term care insurance is just, the cost benefit is so tough and you have to dedicate so many assets to it that it really drives me crazy. It's a conundrum you see a lot of CFPs talking about right now. What do we do in the case of long-term care and really,

I don't have a great answer. How about that? None of the hacks. We should recall that part of the show. None of the hacks. Well, you had a good one for homeowners insurance, which I loved, which I've never had a homeowners claim. And I believe you have. Can you talk about what happens when you get that claim and how you can make it go a lot better? Yeah, it's wild. Some of this stuff, unfortunately, I play tested. A

I like there was a time when I was a nomad in the middle of my life and I play tested what we told people for a long time, which is try your financial independence dream ahead of time. But unfortunately, I also tried out my homeowner's coverage and I've been telling people for a long time to take pictures of your house. Take a video. Just go around your house with your phone. Take a video. Go open drawers. You can cruise through rooms at a fairly quick rate.

And just look at everything because my experience and most people's experience, if you're working with a good insurance company and most of them are fine, they will ask you, they gave me Chris, they gave me a blank sheet and they said, what's in your house?

What did you have? Our house got robbed. Okay. House got robbed.

and had ripped it open and for who knows what reason they were able to disable my not that great apparently security system at the time and they took stuff.

And luckily we had taken video of our house. There was a second thing there too, though, that was wild, which is for some of the electronics that we had, they said, do you have the serial number of your televisions? Because if you have your serial number, here's what's usually going to happen. They're going to take it to a pawn shop and they're going to try to get some money for it. But if you have the serial number, when they turn that in, we've got them. Like we've, I still, I took the video. I didn't have my serial numbers. When you buy high priced electronics, you're,

Just have a place where you put down all the security, all the serial numbers of your things. And would they not reimburse you if you didn't have the serial number? They did. They actually still did. Mine did. I had a great insurance company that I was working with and they reimbursed me for my... I had two computers stolen. I had an Xbox stolen. I had two televisions stolen.

We had some jewelry that was worth nothing to anybody except my spouse. And that was really sad because some of it was heirloom stuff. We had some art stolen that was expensive. That stuff I had not had appraised. And because I hadn't had it appraised and had it added to the policy, we had had some other things added to the policy. Luckily, Cheryl was wearing an expensive ring that she had. She'd taken it with her. So that one we had separate as itemized on the policy.

But, but yeah, make a quick video because for a lot of stuff they sold, they reimbursed me. I just had to know what I had. And think about that. If your house burns down, it's going to be the same thing. But if your house burnt down today and they gave you a blank sheet of paper and they said, Chris, what's all the stuff you owned? I don't even know where to start. Yeah. I get a quarter of it, man. I wouldn't even get a quarter of it. And I don't think I own that much, but I still wouldn't get that. Wouldn't get that much. So yeah, that's a great hack.

Yeah. If there's one thing you do after listening to this, walk through your house, make your own, as you said in the book, like your own MTV cribs, treat it like a fun thing and save, save a record of everything you own. And I guess if you have serial numbers, do that also. But yeah, I wouldn't even, I don't even know if I would get a quarter of the stuff. It's just, there's jackets that you'd forget and it would be so easy to just take a video and the quality of

Most videos now is so good. If we did this 20, 30 years ago, it's like, well, there's some clothes in the closet. But in most cases, we just need something to spur our memory. You go, oh yeah, oh yeah. In that corner, there was that thing and this other thing. And yeah. Yep. Love it.

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Before we go, we've hit a lot. I do want to tackle a few questions that I've gotten from listeners.

that I feel like who better than a former CFP and snarky podcast host to help answer these questions. We answered one about financial advisors and how to think about it. One that I wanted to know if you had any tips for. Someone said, you know, I'm kind of new to investing. I started investing

are a little bit more, it's not an employer thing as easy where it's just so obvious they withhold. What does someone investing need to know about taxes and are there any tricks? You do need to know a bunch about taxes, but really knowing the basics. If you start off with the basics, taxes are way more easier than you think. What I would recommend that everybody understand

And I actually had a tax expert. We talked about advisors. One of my best advisors was a CPA who sat me down and told me about how taxes work. You know what they did first, Chris? They had me read with them just the 1040 form and the itemized deduction form.

And the itemized deduction form does not apply to as many people as it used to because of some tax reform a couple of years ago. But still, once you understand how the 1040 is laid out, believe it or not, you're going to find opportunities much more quickly. And it's like riding a bike. Once you read it once and you understand it once, you'll understand why a credit...

beats a deduction. You'll also understand where any write-offs you can do work, how tax lost harvesting works. You'll also understand why using an HSA is kick-ass. And an FSA, if you can use an FSA and you have a

good budget can also work for you. FSA is a little different than an HSA. You use it or lose it. There's some exceptions around COVID right now, but in an average year with an FSA, you're going to use it or lose it. Yeah, totally agree on the FSA. If you're listening and you don't subscribe to the All the Hacks newsletter, we actually did a whole thing maybe a week or two ago about FSAs and a whole bunch of other year-end tax tips, tax loss harvesting, what to do there and all that good stuff. So if you're not a subscriber to that, go check it out.

And I'm sure, Chris, you went over this in the newsletter, but I will say one thing. There was a headline we did this year. We have a headline segment in our show. And there was a guy who is actually a professional who was trading GME like a lot of people were. And he kept getting in and out and in and out and in and out. And he...

He didn't realize wash sale rules mean that if it's not in an IRA, when you sell something, you got to stay out for 30 days to be able to claim it on your taxes. Wash sale rule is an easy thing once you know it, but it's also this speed bump that a lot of people get wrong.

Yeah. So the main takeaways and Cody, thanks for sending this question in. We didn't even hit the basics. It's just if you're investing and you hold something for a year, you get preferential tax treatment. But like Joe said, anytime you sell or buy something, if you do the same thing within 30 days, it can really mess you up.

So keep an eye on that. And you do have to hold the money for taxes. So if you have a big gain in early in the year, that money that you're going to owe in April the following year, you can't go spend it. I have a horrible story from someone I worked with who played the crypto game. And in, I want to say it was like 2017, they made like $800,000 on crypto and they took all their earnings and

And in 2018, the following year, they went and invested in some other crazy crypto thing and lost it all.

no and when it came time to file their 2017 taxes they didn't have the money to pay the bill and you can't use a future year you can't say well no no i lost the money later so they i don't i never heard the resolution but that was either a you know negotiate with the irs or file for bankruptcy kind of thing so if you sell anything and have a gain take

the money you're going to owe the IRS, put it in a separate account and ignore it because you need that money next year. And there's not a lot of options if you don't have it. Oh, that's just, yeah. And I'm betting what they ended up was a payment plan. I'm sure they probably ended up on a, I would do a payment plan way before bankruptcy there. But Chris, I thought of one more that people are still listening to this in the last couple of days of this year.

that is super important. We think that the backdoor Roth IRA might go away. I would make sure if you have, if you're doing a conversion and talk to your team that you've set up that we talked about earlier about whether you're doing conversions or not, man, if you're doing backdoor Roth IRAs, I would, I'd make sure you do it this year because it might be bye-bye. Yeah. Yeah. One of the items on the list is a backdoor Roth. So

check that out. And the same goes for Roth conversions. If you have a lot of traditional IRA assets, I mean, you're in a low tax year, it could make sense to roll them all over to a Roth. You'll take a little bit of a tax hit this year, but you know, you won't pay taxes in the future. So get it done. Amen.

What one more Jeff asks what to do and how to hack and how to optimize for aging parents. A lot of us are going to be in a circumstance where our parents, if they're still around, you know, might not have everything they need. We might need to take care of them. We might even, they might have everything they need, but we might need to help them with money. It's not as easy as our friends where we're like, Oh, just go get a robo advisor and think about it in 40 years. And any advice for someone whose parents are aging and don't have their finances in order?

Yeah. The first thing that I would worry about, Chris, is I would worry about talking to your parents the right way because your parents knew you way back when. And I remember I've been a financial planner for 10 years. My practice was very successful. And I remember my dad 10 years in saying, so this financial planning thing, you think you're still going to do it? Like you think you're going to stick with this? Yeah. Yeah, dad. I think it's

I think it's going to go okay. Feeding my family. I think we're doing fine. But so your parents have a different outlook about you and they're going to take your advice differently. And they may also feel like you're pressuring them and you don't want to do that. They may also wonder what your agenda is depending on your family dynamic. I will point people to another book, which is written by a woman named Cameron Huddleston. You know Cameron, Chris? No.

Yeah, Cameron Huddleston wrote a great book about talking to elders about their money, talking to your parents about their money. And I believe the book is called Mom and Dad, We Need to Talk. And it is a fantastic book about all the things that can go wrong in those discussions. But to begin that discussion in the right way is really important. And one hack that she shared with me was,

is that often your parents don't want you butting into their money, especially parents of a certain generation. They might be very private and

If they are private, if you start off with a little oversharing on your part about what you're doing, they may then reciprocate. I used to read these great books, these detective books that were written about the Navajo Nation, which were fantastic. And this detective in the book was a guy named Joe Leephorn. And when I was a financial planner, I would use the Joe Leephorn rule of getting more out of people than I probably deserved.

And what I would do

that Joe Leaphorn did was I'd share a little bit about me that was maybe a little oversharing. And in almost every case, Chris, the person across the table from me would also then share something on their end that they weren't supposed to share. That might be a little extra. With parents, especially, just say, hey, you know what? I've really been thinking about like how I manage my money the next 10 years. And here's what I was thinking for the next 10, 15 years, that this would go, you know, that I do this, I do this, I do this.

And then they'll share, well, I was thinking about I'm doing this and this thing. And now we have an in to start talking about their money. And you still preserve the parent-child relationship where in the big scope of things, they're also giving you advice. One more thing.

still with older people solve for when they're going to spend the money. A big mistake that I find, Chris, is that people go, and I'm going to just throw this out there. They're going to say, let's say that you think that crypto is a great idea and you go not with grandma's money, right? I'll tell you that if grandma is never going to spend that money and it's going to go in a glad bag with all the other estate stuff and go to the child, right?

you think about when that money is going to be spent. If the money is never going to be spent and the money is an asset that's meant for a child to maybe spend, grandma taking risks is not always a bad thing. If you start with the end in mind, I have seen lawsuits, lawsuits,

which I always wonder about. I wonder about some third-party family member coming into a situation going, oh my God, my grandma owns a growth stock. Grandma doesn't buy green bananas. Like, why are we buying something that's as volatile as a growth stock? It might be because grandma has a team of people she's working with and grandma's not thinking about her lifetime. She's thinking about this is money that in my trust is going to go to my grandkids. My grandkids are now three and this is money that's going to be spent 15 years from now.

So even with grandma, don't think about end of life. Think about when that crop needs to be harvested. Yeah, that's great advice.

Last one is from John. And this is a fun one. He wanted to understand leverage in a portfolio, right? And it was interesting. He said, you know, I move around a lot. Buying a house is not something interesting. But it seems like everyone who buys a house takes out a mortgage and gets this great leverage where you put 20% down on an asset that can appreciate. And if that asset appreciates, you get the appreciation from the whole asset and you only put down 20%. So what role does leverage have for someone who's not buying a house?

Oh, great question. Cause leverage magnifies everything, which means it's going to go hella good. It's going to go so much better when times are good, but it's also going to unravel more quickly. So what wealthy people know is that they are predisposed and

And I've seen so many studies on this. Most wealthy people are predisposed to not using leverage except in very strategic cases. So I'll give you an example. Interest rate on your mortgage, very low. If you've got a pot of money sitting in a bank account,

where you can pay the mortgage off right now and it's not going to mess with your psyche, not paying it off. Why would I take money that's earning in an I bond earning over 7% and put it down on a house with a mortgage that's at two and a half?

I shouldn't do that. Now, what I might do is if there's a way and there's not with an I-bond, but taking money out of my investment portfolio every month and have it pay that monthly bill. So I just have freedom from worry and the pile of money can pay it. That's a great use of leverage. I'm using interest rate arbitrage between those two positions. But I start off from a place of it's incredibly dangerous.

And I don't want to use it unless I have completely thought through, not while this looks like a great opportunity, but if the walls come crashing down, how is this going to look? And I'll give you an old guy story.

Real estate right now, we talked about earlier about how there's so many shysters in real estate. The reason, Chris, is that the real estate market's been, it's easy to be an expert. So there's tons of experts out there. And the reason why they're making money hand over fist is because of exactly what he's saying. That because people are using mortgages, they're not creating stock market winners, which are small. No, I'm using leverage and I'm creating these big winners. But what happened in 2007, 2008? Real estate.

Real estate has a much bigger, and this is by the way, not just that one downturn, but when real estate goes bad, real estate flushes so many people. Real estate just has a great toilet flushing system when things go horrible and it's all because of leverage. So real estate is going to be much better than the stock market when things are really great and it's going to be much, much worse when things go wrong.

Yeah, the couple things I'll point out that I think make it a little bit different to take on leverage with your investment portfolio is that when you take out a loan against your portfolio, if your portfolio drops enough...

the brokerage firm's gonna call back and say, "Hey, you need to deposit more money." - Right, we need to do that. - And if you own a house and the house value drops, if you don't have money to pay your bills, then you're gonna be underwater, but the bank isn't gonna take back the house if the value drops. So one of the biggest reasons that leverage on your investment portfolio is much riskier than leverage on a home

is that you're not guaranteed that they won't recall that if the underlying asset drops. And then the second big one is that you're not locking in an interest rate. So you could borrow money from your portfolio at one price and interest rates rise and that rate would go much higher and cost much more than you thought it would. I have never had a client back when I was a planner where I recommended it. And I also never had a client who it didn't make them sleep well.

better at night. It always made him sleep worse. Yeah. For the two reasons you said, if the stock market goes south tomorrow, I might get called. If you keep those loans small, maybe, but I don't know. Yeah, that's one thing that I talked about in another newsletter was, look, if you keep the loan small enough, right? If you borrow against your portfolio and you borrow 10% of it,

your portfolio is going to have to go down. I'm not going to quote numbers, more than half. I think the magic number is somewhere around like 30, 30, 40%. Your portfolio would have to drop by 50%. So if you borrowed against 10% and did something with it, I don't think that you have a lot of risk that you're going to get called. I still think there's a lot of interest rate risk. Someone told me, what if I borrow against my portfolio at 2% and I go put it somewhere where I can earn 5%. And I said, look,

If it's a short-term kind of thing, whether it's an investment or whether it's to renovate your house...

and you have a plan to pay that back either with savings or by withdrawing money, then you're not really subject to the interest rate risk because if the interest rates go up, hopefully you can pay it off. And I don't expect interest rates to go up by 5%, 10% in a matter of months. I've always said, look, if it's small enough that you're kind of avoiding the margin risk and it's short term or the money you're using it for is something you have access to, it's not

as scary. Unfortunately, because of those things, because you're not locking in the interest rate, because I just don't think you can take the kind of leverage you can with a home as safely. So for me, it's not something that I'm forexing by, you know, I'm not taking 80% of the value out of my portfolio and trying to bet it somewhere.

And the stuff, Chris, that can go wrong has nothing to do with you. When we look at the last numbers on inflation and we know what the response is for the Fed rate to come up, which is not a direct link for all other things, but the Fed rate is the prime mover that begins the cascade of other interest rates going up. So whether directly or indirectly. So if we're in a rising interest rate environment like now, I think the risk is even higher. Yeah.

Yeah, and I don't think people that have only been thinking about buying a home and realize that interest rates for mortgages in the recent past have been way higher.

So early 2000s, interest rates got as high as 7%, 8%. And my parents have talked about interest rates being in the teens. Back in the 80s. Yeah. So I think it's easy to think, gosh, borrowing money is always 1%, 2%, 3% because that's what it's been the last few years. Yeah.

It's very possible if history is any indication that those interest rates to borrow money could go up. And that's great if you locked in your mortgage rate for 30 years, but it's not great if you borrowed against your portfolio and your interest rate is variable with the market.

I also like, and this is another hack I like based on what you're talking about. I like looking at the next domino, right? And another domino that gets played here, if people are zoning out because they're like, this doesn't apply to me. There's a broader thing that we're saying, which is that if you have loans that aren't fixed rate loans and you have the opportunity right now in this environment to lock in a fixed rate strategy on your debt, if you've debt, you don't have a fixed rate strategy, I

I would be trying hard to switch to a fixed rate strategy. Yeah, yeah, yeah. We refinanced. And this is a good example of where, I guess you could use leverage to invest if you do have a home. If you're refinancing your home and it's appreciated, you might have the option to take some money out. And so this is an interesting one that I had a fun debate with Andy Ratcliffe about. You know, his kind of stance is you probably should never invest

borrow to invest. And that was his kind of belief. And I said, well, when you buy a new home, it's okay to put 20% down. He's like, yeah. And I was like, but if I own a home and I have 40% equity, can I take 20% out and invest it? And he's like, oh, this is a, you caught me in a situation where I would tell you if you were buying a new home, then yeah, put 20 down and take the extra and invest it.

But for me, if you have an opportunity to cash out and refinance it, that's an opportunity that I have personally taken. I'm not obviously going to recommend anyone do anything, but it's something to consider. And the hack here, and this probably only matters if you live in a high cost of living area, but if your mortgage interest deduction is $750,000 now in the U.S.,

If you cash out refi and your mortgage ends up being greater and you invest that difference, the interest expense you pay on that additional mortgage is actually deductible as long as it pays off interest expense you've earned, meaning capital gains,

dividends, appreciation. So that's, I'll put a little quick something in the show notes if you want to dig in there, but that's a little too technical for the rest of this talk. And we've already gone deep enough. So I'm going to, I'm going to stop here. And if you want more from Joe, he has a wonderful podcast that I've had the pleasure of joining a few times and a great book. But Joe, where can people find everything you're working on? Yeah, you'll find us at Stacking Benjamins and the book is at stackingbenjamins.com slash stacked.

I'm doing a 42-city tour, Chris, coming to see as many stackers as possible around the country. We're going to try to get as many people like you wherever people live, get as many of the financial community there. So hopefully meet some local people that you might have read or heard before in different towns. It's going to be fun for that whole tour and to meet up with us. I know in San Francisco, we're going to be at South Pacific Brewing. I used to live one block from there. Wonderful venue. Yeah.

I heard it's a fantastic place. I can't wait to go. But anyway, to get all the dates, stackyourbedjamins.com slash stacked and come and hang out with us and other people. We call them stackers, but come other people trying to stack. You got stackers. I guess we got hackers. Hackers and stackers. Let's get it in San Francisco. Let's get the hackers and stackers together. Sounds great. All right. Thank you so much for being here. Thanks a lot, man. That was fun.

Wow. There was a lot of great stuff in there and I really hope you enjoyed it. Lots of stuff for the show notes. And if you haven't already looked up Joe's book, definitely check it out on a separate note. We are a few days away from 2022. So I just want to say thank you for all your listening and support. I can't wait for everything that's coming next year. Have a wonderful new year's Eve and I'll see you next week.