Stacking Washingtons in Joe’s Mom’s Basement and The Efficient Frontier | Joe Saul-Sehy | 091 - Catching Up to FI: Financial Independence for Late Starters

Episode Transcript
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(00:01):
what's funny was I was livingtwo lies that I see people live.
First one is this first oneis if I just make more money,
it will change everything.
It's a total lie.
And we tell ourselves that all the time.
If I just get the next raise thesedemons, the way I manage my money
will all of a sudden become better.
If you can't handle.

(00:21):
$20,000.
I'll tell you what, it just gets worsewhen you get 50 gets worse when you
get 70 gets worse when you get 100
the money thing is, is that we're all soafraid we're gonna make a mistake, right?
When I first teach people boardgames, they've never played them.
They're all afraid they'regonna make a mistake.
They're all afraid.
And then I go, don't worry about it.
If you don't understand it, it's fine.
You're going to, by turn three,you're going to get all of it.

(00:43):
Who cared?
It doesn't matter.
Again, it's not the Olympics.
And when they relax and theylet themselves learn, we're
all smart enough to understanda board game and how it plays.
We're all smart enough to understandwhat it means to create a financial plan.
This is not outside ourrealm of possibility.
I always kind of get frustratedwhen I see somebody ask a

(01:08):
group of strangers, a question.
And then, the stranger answers.
The stranger doesn't know you.
You don't know the stranger.
Earl in Peoria can't zip up his pants.
He spends all day Facebook and you'reasking him what to do with your 401k.
Are you crazy?
Like surround yourself with peoplewho know you that, you know,
have your back and and for me,people that will argue with me.

(01:30):
I love people that will argueme and go, Joe, you know what?
You're full of it.
You can do better.

(02:03):
Hello, and welcome backto Catching Up to FI.
I'm Bill Yount, and we'regoing to laugh a ton today.
We have a really special gueston, you know him, you love him.
It's Joe Saul-Sehy of Stacking Benjamins.
We're very fortunatethat he chose to join us.
And he has a hundreddollar bill behind him.
We're not giving that away, but,we're going to give away a humor.
And we're going to doa little trivia today.

(02:25):
We've not done trivia on the show.
And we're going to ask Joe about hisOhio and Tennessee knowledge base.
Right, Joe?
I went to Michigan state, so I can'tknow anything about Ohio and that
disgusting Ohio state university.
I'm here because you'resending me two bucks.
And, I'm the Ohio girl, but at leastwe can say we're border states.

(02:45):
But I know we are rivals.
Every now and then I'll run into one ofthe, somebody wearing blue and yellow.
And typically they getlooked at really strange.
we can agree on that.
Jackie, we can agree.
We don't go there.
Yeah, no, not at all.
And what's sad is that my sisterwent to Ohio state, my lovely co
host on our real estate podcast,crystal ham and the amazing
crystal ham and went to Ohio state.
So sadly, there's some pretty awesomepeople in my life who went to Ohio state.

(03:10):
There's an a 2 bill withOhio state on there.
I give those away every dayand I had Michigan, but nobody
seems to want the Michigan one.
So
Yeah.
No, you got to go Michigan statebecause they're way cooler.
yeah,
all of our guests get a handwrittennote of thank you and Jackie's 2 bills.
It's really easy forme to spend her money.
That's
He loves do Doesn't he?

(03:32):
Funny how that works, Jackie.
That's
I know.
How does that work?
so
Well, Joe needs really no introduction,but we're going to do a little one anyway.
He's the podcaster that we knowthat records a show from his
mom's unfinished basement, or atleast that's where it started.
Joe Saul-Sehy learned from failure, justlike us late starters destroying his
credit immediately after leaving home,he had to learn about money the hard way.

(03:55):
And he's a late starter guys.
And we're going to hear that story as muchof it as he's telling other people how to
manage their money as a financial advisor.
After 16 years in the industry, Joemoved to financial media and created.
Stacking Benjamins, thegreatest money show on earth.
He is the ringmaster of aragtag bunch of characters.
It is one of the most listened topodcasts in the personal finance space.

(04:17):
Clippinger has called the show thebest personal finance podcast and fast
company has described it as a strikingbalance between fun and functional.
Joe lives in Texarkana with his spouse.
He's the only one I know in Texarkana.
His spouse is Cheryl andhe has a cat named Cooper.
Who's, who's laying by the way, for peopleon video right there, there's Cooper.

(04:40):
right, well, part of the stackingBenjamins, mascot, I guess.
Yes.
Thanks for having me guys.
Yeah, well, welcome to Catching Up to Pie.
Thank you for joining us.
And your first trivia question,just to get things rolling, is
Ohio is known as the Buckeye State.
Now, do you know what a Buckeye isand why it's called the Buckeye State?

(05:04):
I think I think it's a nut and I alsothink that if you eat it, it's poisonous.
I think it'll kill you.
Those are the two things I think Iknow, but no, besides that, I don't
Okay, well it's a tree in the OhioRiver Valley and it's called a Buckeye
is because this nut like seed, whenit's dried, appears like a rich dark

(05:28):
brown color with a single lighterbrown spot that resembles the eye
of a deer, hence the Buckeye state.
And Jackie, who's from Ohio, didn't evenknow this either, so don't feel bad.
But, is it poisonous?
Is it poisonous?
Don't know, that wasn't in my research.
We'll have to look it up.
I bet it is.
But here's another thing about the OhioBuckeye is that now, the little candies

(05:51):
that you make the little chocolates.
So when someone says, You want a Buckeye.
I'm like, sure.
I want to bite into it and it'schocolate and maybe some kind
of peanut butter or whatever.
But, Buckeyes, baking Buckeyes arelike a big thing here and you eat them.
Now those are fine.
Now the real ones, they probablyare part poisonous to be honest.

(06:12):
Well, we have to do a little Tennesseetrivia because I am from Tennessee
where Jackie's from Ohio and we'llstart with The volunteer state.
When did Tennessee becomeknown as the volunteer state?
Well,
the year it volunteered to enter theunion, like it decided that would

(06:32):
go ahead and just volunteer beforeit got conscripted into the union.
I don't know.
That's cheating.
We need a number, right?
A year.
Oh, it's gotta be a year.
it has to do with soldiersand volunteering soldiers
into the war of 1812.
So it was 18, 1812 that it becameknown as the volunteer state.
You're 0 2, Joe.

(06:52):
You're going to get a few more chances,and you have a running total of
the trivia on your show and I thinkOG is winning if I'm not mistaken.
Yeah.
This is the reason why I askedthe trivia and I don't answer
the trivia there you got it.
I had to make up an answerand it wasn't sufficient.
Well, we turned the tableson you, as we should, okay?
It's our goal today to embarrassyou with the fact that you don't

(07:15):
know the answers to the questions.
Because most of the time,you seem right, Jackie?
Yes, yes.
Well, and Joe, if you come up with anygood trivia for Bill and I during the
show, throw it our way and we'll see ifwe can answer Bill's a pretty smart guy.
I like to think I'm a pretty smart girl.
So we'll see.
Well, what you don't know about Joeis he loves board games, or maybe

(07:37):
you do if you listen to his show.
You go to a conference with Joe,he's laying out, after the conference
is over, he's down there with 20,30 people playing some board game.
I've done one of these.
He is a great board game master.
So, I hope you get a chance to play a gamewith Joe, just like we're doing today.
Know who likes board games?
Brad Barrett from Choose FI

(07:58):
he does.
I always see him.
I see that group.
I remember whatever the hotel is neareconomy I definitely saw Joe and I
saw Brad and a bunch of other guys andgirls that just love Board games and I'm
like, you know what I need to do that
What's your board game of the week, Joe?
I don't.
Hmm.
I.
I don't know.
I, I just got a new, I just got a newone today called Pompeiro and I've never

(08:23):
played it, but it looks really cool.
It's about, you're creating a companythat does wind energy, so you're
trying to be the best entrepreneurcreating wind power for communities,
Wow,
many board how many how manyboard games do you think you own?
Probably, this is my vice.
I don't collect stuff except board games.

(08:44):
So just so people know, before youhear this number, I would say over 200.
Yeah.
Oh, my God.
You could start a store.
got store right there.
yeah,
Now I do I do have to give Joe credit.
Our backstage Diana, our awesomegraphics person, she did send me about
the Buckeye and it says removing theshell and roasting the nut neutralizes

(09:06):
it's harmful tannic acid content andmakes for a protein packed snack.
That's great.
But if not prepared properly, Buckeyenuts are toxic to humans symptoms
including weakness, diarrhea,vomiting, paralysis, and death.
Look at Joe.

(09:27):
I get half a point.
Maybe I get half
All right.
Yeah.
Yeah.
He gets definitely half a point.
Thanks, Diana, for being in thebackground and making us look bad.
We love.
right.
Can I tell you guys a storyabout the board games though?
Because I think that This is a goodstory that I don't often get to tell,
which is that I was in eighth grade.

(09:48):
My grades were okay, but not wonderful.
I was maybe a B, B minusC plus kind of student.
And our TV died.
And so back then we didn'thave a ton of money.
We had one TV.
A lot of houses back then.
I'm 56 years old, only had one TV.
So we went to the CurtisMathis dealership, which was,

(10:10):
there was a TV dealership.
There was no best buy.
And they drove my little brother, mylittle sister and I in the station wagon.
They rolled the windows down partway.
So we, would breathe back inthe day when you could leave
your kids in the back seat.
And they walked into this to buy a TV.
And they came out and madethe most horrifying decision

(10:31):
to an eighth grader ever.
They said, you know what?
We just looked at the price ofthe TVs and we thought about
whether we wanted or needed TV.
And we decided to see howlong we could go without one.
The very next year, my grades wentto from a B minus C plus to all A's.
I had always number two was Iwrote a book in eighth grade.

(10:54):
It was a horrible book, but it was thisfantasy thing, but it was 120 pages.
I did it in my free timebecause I tons of free time.
And then the third thing wasour family talked more and got
really close through board games.
Card games, because instead of all ofus facing in one direction, watching
this box, we were watching each other.

(11:16):
And so the reason I like board gameshas nothing to do with wind energy
or whatever the game of the day is.
It's the fact that we can have thisfun, sit around laughing about a.
Constructed situation, whatever thegame is that we're enjoying each other.
I don't play games for the game.
I play it to enjoy thepeople that I'm around.

(11:37):
In fact, tonight, the night we'rerecording this, we have friends that
are coming over all of my friends.
Most of them had never playedgames before they met me.
And if they did, they were hypercompetitive and all of them have said the
thing they love about playing games is.
I don't really care if I win.
I don't really care who wins.
I'm not going to flip the tape.
It doesn't matter.
We're going to remember itwhenever anybody gets really

(11:58):
upset about a board game.
I always go, really?
This isn't the Olympics.
Who cares?
Nobody care.
Big deal.
so you lost the game or youdidn't understand the rule.
It's not a big deal.
And I think this has a lot of Analogy,not just to life and about enjoying
where you are and enjoying people,and also fencing off your time.
I think there's some things therebecause how much of our time gets

(12:20):
consumed by social media, Netflix,all this other programming.
I mean, if you aren't careful, thesecompanies will fill your day with stuff
that helps them, but really goes againstall the things that bring us joy.
But I think this also hasa lot to do with money.
And the money thing is, isthat we're all so afraid we're

(12:41):
gonna make a mistake, right?
When I first teach people boardgames, they've never played them.
They're all afraid they'regonna make a mistake.
They're all afraid.
And then I go, don't worry about it.
If you don't understand it, it's fine.
You're going to, by turn three,you're going to get all of it.
Who cared?
It doesn't matter.
Again, it's not the Olympics.
And when they relax and theylet themselves learn, we're
all smart enough to understanda board game and how it plays.

(13:03):
We're all smart enough to understandwhat it means to create a financial plan.
This is not outside ourrealm of possibility.
I think we have to giveourselves a little more grace.
We have to relax a little,if we relax and we're okay.
If we screw it up a couple of times,we're going to do way better than
what we usually do, which is nothing
I, I love that.

(13:24):
Joe.
aspect of community is one of thestrongest aspect of the FI community.
Everybody should join because, Getting toevents, meeting you, meeting other people.
This is, as I've mentioned before,totally changed and broadened my life.
My life is so much biggerthan it ever was before.
And
specifically when you met me ateconomy, you're talking about.

(13:45):
well, we were havingbeers, I'll say anything.
And I think you boughtme a couple of beers.
So, were a friend immediately.
Oh gee, I missed out on the free beers.
know
see you next year.
I'll see you next year,
you, me economy.
Yes.
Yes.
All right.
Well, we mentioned in the intro and we'llshift a little bit to financial topics.
You're a late starter.

(14:05):
Much like our audience, and maybe thisis a story you haven't told very often.
We want to hear your late starter story.
Yeah.
The first half of the story, I I'll kindof gloss over cause I have told that a
lot, which is how I messed up my money.
Like most people do early on.
I got myself into credit card debt.
The bad news is at the time that allof this happened, where I had tons of

(14:26):
debt, I was also a financial planner.
That was a very good one, but.
But I didn't think any ofthat advice applied to me.
Are you kidding me?
I was going to give other peopleadvice and they take it and I'll go
do the thing that doesn't make sense.
Actually, no, what's funny was I wasliving two lies that I see people live.
First one is this first oneis if I just make more money,

(14:49):
it will change everything.
It's a total lie.
And we tell ourselves that all the time.
If I just get the next raise thesedemons, the way I manage my money
will all of a sudden become better.
If you can't handle.
$20,000.
I'll tell you what, it just gets worsewhen you get 50 gets worse when you
get 70 gets worse when you get 100.
I had a client that was I was ata TV station for nine years as

(15:10):
the money guy in Detroit, and Iworked with one of the anchors.
She made $350,000 a year, andshe couldn't make it work.
And the reason she couldn't makeit work had nothing to do with the
amount of money she was making.
I mean, that was huge money.
I mean, by the way, and this was15 years ago, so we could almost
double that today's standards, right?
With inflation.
So she's making money hand over fist.

(15:32):
It was the second that we actually.
Figured out how to get her budgetin order, how to get her lifestyle
in order, how to understand that thekey to this whole thing was building
a difference between the amountcoming in and the amount going out.
Almost Mr.
Money Mustache is, very simplemathematics around financial independence.

(15:53):
Just spend less, bring in, bring in more.
So making more money, It didn't matterhow much money I made until I figured
out how to actually manage my money.
That was number one.
Number two was, I also thoughtthat I could hang around with
a bunch of people that were bigtime spenders chasing the Joneses.

(16:14):
I was in this lifestyle, a lot offinancial planners, by the way,
are in this lifestyle of more andmore and more and more and more.
I mean, it's the samething as lawyers, doctors.
Bill, you see this all the time withdoctors you see this all the time.
They're just more, more, more,not even spelled M O R E.
It's like M O A R like more.
So I was living that and I realizedI needed to surround myself with

(16:37):
better people and it wasn't thatI got rid of my old friends.
I still hung out with someof those friends over time.
We kind of drifted away, but I setup really a board of directors,
which were people that I respectedthat were doing great things with
their life and with their money.
And I actually formalized that.
And, when I changed the peoplearound me to people that could

(16:57):
teach me who had already walkedthat walk, that was phenomenal.
And that's why I like thingslike we talked about the economy
conference earlier, highlyrecommend that I love camp FI.
I'm going to be at campFI Midwest this year.
I was at camp FI, Texas last year, acouple of years ago, I was in the one
in California, the West coast one.
I love those find a group of people.
Find people that are, where youwant to be, but then these people

(17:21):
should be people that know you whileI love the idea of internet forums.
I mean, you guys have agreat group of people online.
We have a great group of people online.
I always kind of get frustratedwhen I see somebody ask a
group of strangers, a question.
And then, the stranger answers.
The stranger doesn't know you.

(17:41):
You don't know the stranger.
Earl in Peoria can't zip up his pants.
He spends all day Facebook and you'reasking him what to do with your 401k.
Are you crazy?
Like surround yourself with peoplewho know you that, you know,
have your back and and for me,people that will argue with me.
I love people that will argueme and go, Joe, you know what?
You're full of it.
You can do better.

(18:02):
And that was great.
So that was my first part.
The big part about me starting latethough, was I actually at age 40,
40 was when I got serious at age 40.
I've already solved alot of my money problems.
I'm doing good, not great.
And I get this, this letter in my box.

(18:24):
I'm working with American express.
I get this letter from a guy inmanagement who I had a lot of trust in.
It was really a mentor.
He's actually two years youngerthan me and was a mentor.
And Chris was writing.
Is two weeks notice letter blew me away.
Chris is leaving the company andChris's letter said, I like financial

(18:44):
planning, but I don't love it.
It's about 90%, but, I don't believethat my life is about living at 90%.
It's about living at a hundred percent.
And I, the frustrating thing is I spendso much time, so many hours of my life.
I spent doing this job.
That's 90 percent that Idon't have time to figure out

(19:05):
what the other 10 percent is.
So I've decided I've donea good job of saving.
I've got a nice emergency fund.
I'm not going anywhere else I'm justgonna take a sabbatical I'm gonna leave
and I'm gonna figure out what it isbecause I think I have other mountains
to climb and that didn't just hitMe that hit by the way, my co host.
Oh gee.
I knew tangentially.
He was with American Express too.

(19:25):
It changed his life It changed mylife because he knows this guy.
Chris is his name.
I thought he was being metaphorical whenhe said he had other mountains to climb.
He went and climb Mount Everest twice.
He's climbed most of the tallmountains around the world.
He now runs an adventure travel companyand he has the time of his life.
He's in Boulder and he found his 100%.

(19:48):
And so I was looking at thatand I thought the same thing.
I'm like financial planning.
I like it.
I don't love it, I would love to becomea high school teacher and a track coach.
My wife and I met each otheras middle school track coaches.
And I thought I'm goingto go back and do that.
And I'd already got myfinancial picture in shape too.
I didn't know what the term wasthen, but we've named it now.

(20:09):
It was coast fi, right?
So I was going to beokay if I made the move.
Plus I knew my business was a separateentity, so I had a sellable thing.
And so I was able to also have that money.
So between the money that I.
Was going to get fromselling this business.
And the fact that I'd cleaned up myfinancial situation gave me the ability to

(20:29):
age 40 to reset now, 40 is an interestingyear because you guys know for the
average person in America, 40 is when youstart earning your peak earning years.
Right.
So we talk about starting over.
I'm wait, I'm 16 years into this fieldand I'm going to go hit the reset button
at the same time that I could havebeen cha chinging the cash register.

(20:53):
It was time for me to actually get paid.
I'd put in all the hard work.
The job was finally gettingeasy, but it was only 90%.
And I think for a lot of people whoare in the Catching Up to FI community.
You might be there too.
And I got to say, I don't look back.
I don't think that was a bad trade off.

(21:13):
Like, even if you're not coastfi, you certainly want to make
sure you have an emergency fund.
You got your debt in order.
Like you are set up to go.
You don't just want to go toyour boss and go, you know what?
I heard this great podcast withJackie bill and I quit my job today.
Don't do that,
We haven't heard that one.
I don't want to hear that That would
no, but get yourself set up.
Do the a hundred percent thing.

(21:35):
Do the a hundred percent thing.
Because I didn't end up becoming ahigh school teacher or a track coach.
But that led me to the fact thatmy friends, I was doing media, as I
mentioned before, my friends askedme to start writing for them, their,
their newsletters and, and, andtheir making videos for them, writing
scripts for them when they were on TV.
I did that.

(21:55):
I realized I could do thatin shorts and a t shirt.
My kids were in high schooland I could be home with them.
That led to a blog.
The blog was called thefree financial advisor.
Free financial advisor led to a podcast.
We called worst of the free financialadvisor became a podcast called two
guys in your money, which became ashow called the stacking Benjamin show.
And it was, but if I would have neverdone that at age 40, I wouldn't have

(22:18):
gotten to be on Catching Up to FI,which is, you highlight of my existence.
You have made it.
That
you're on our show, youknow you have made it.
We only have the big people on this show.
I'm only here to tell you I'm done, Bill.
I'm only, there's nothing left.
What do I do after this?
So
No, we also tell stories of, we've hadpeople who are on their first podcast who

(22:39):
are telling their story of catching up.
So we try and span the spectrum

(23:43):
you made some big mistakesalong the way to our audience
has made some big mistakes.
Can you come clean and be transparentwith the kinds of mistakes you
made that may have been made
Oh my God, there isn'ta mistake I didn't make.
I mean so the biggest mistake, themost costly mistake was to number one
was when I was a first year financialplanner, because I own my business

(24:06):
as a franchise, I was then a 10 99.
Employee meaning I wasn'treally employee at all, right?
I own my business.
So when I got compensationin for my financial planning
stuff I had to withhold taxes.
I had no idea what that was and back in1993 the type of organization I worked
for was more of a sales organization.

(24:27):
I learned everything about how to sellyou That you needed financial help that
you needed product at that time, right?
Cause my career started off ascommissions that ended up as fees.
So it actually spanned bothsides of that equation.
But when I started, there were very,very few fee only financial planners.
So I start off in this organization.

(24:48):
I'm very good at it.
I make a ton of money.
I think in 1993, I made about $87,000.
And I was one of the top 5 percentof new advisors in the Detroit area.
And I remember it was like maybeApril 10th of the following year.
I went, well, I got to file my taxes.
And so I got a lead on a guy and the guygoes, Oh, you only give me five days.

(25:13):
I'm like, Hey, he goes, well,you must have it all together.
I'm like, have what together?
Like, what are you talking about?
No idea.
So, and by the way, the scarything is here, this, my clients
thought I was a financial advisor.
I don't even know how taxes work.
I got no idea.
So there's a whole podcast there, buthe comes to me then on April 15th and

(25:35):
says, I owe something like $22,000between my wife's income and mine.
And he could have said 500 bucks.
I didn't have it.
I didn't have a dollar.
I had every dollar thatcame in the front door.
I went ahead and spent and more.
I had tons of credit card debt, maybe20, $25,000 of credit card debt.

(25:57):
So I spent all that.
And so I remember my first reactionwas I got really mad at this guy, Bill.
I'm like, how could you do this to me?
What's funny is Bill didn't do crap to me.
I did this to myself, right?
But my first thing was to lashout like how could you do this?
What are you talking about?
How come you couldn't...
now what is bad is that I didn't choose aCPA with the heart of a teacher number one

(26:20):
because I tried to get bill then to teachme what I did wrong and bill couldn't
teach me I ended up with a wonderful womana few years later named susan who sat me
down and said here's what we're lookingfor Here's the way you set this up.
Here's how you keep your books Here'show we make sure we never get in this
situation again But until that timeand I said a few years later, I did
the second best strategy which was WhenI found out I owed that much money in

(26:45):
taxes, guys, guess what I did about it?
You didn't pay him?
Oh, heck no.
And you know what?
I didn't even file the next year,Jackie, because I knew I'd have
to come up with that money too.
And then I didn't filethe year after that.
So I went three years and what'sbad is so my tax bill between fees
and everything ended up being about,around $90,000 that I owed the IRS.

(27:10):
The bad news was a lot of that waspenalties, but a lot of those penalties
were based on the fact I didn't even knowhow to categorize my business expenses.
I had so many business expensesthat I never kept track of that.
I never accounted for that.
I probably, even after the penaltiesowed maybe a quarter of that.

(27:31):
So I kind of call it, otherpeople have called it this before.
Other things.
I call it my stupid tax.
I paid $90,000 a stupid tax.
And then I went and I finally found Susan.
And I came clean with her becausethe IRS then was after me, the IRS
was sending me letters and I went,okay, I can't keep doing this.
And number one, I felt like a sham.
Anyway, I felt like a liar, I'm sittinghere with some of the the top engineers,

(27:56):
the smartest people in Detroit, andI'm helping them with their money
and my money is just a disaster.
And so I find this woman,Susan, who is wonderful.
And Susan said, the firstthing we're going to do is
we're going to call the IRS.
I'm like, Oh no, we don't want to do that.
She goes, that's thefirst thing we're doing.
We're calling them and we'regoing to beg forgiveness and
we're going to see what they got.
I'm like, well, what if I don't like it?
She goes, it doesn't matter.

(28:16):
You screwed it up.
The only way we can make thisbetter is to face your fear.
And nobody wants to do that.
Feel the fear and do it anyway.
And I felt the fear.
She set it up with the IRS, and weended up on a payment plan that was
part of a bigger get out of debt plan.
That whole period of my life that I talkedabout where I was starting to get my stuff
together, correct all these mistakes.

(28:38):
And it was wild.
Once I faced my fear, I gotout of debt really quickly.
Like really quickly, I startedfocusing on the right things, which was
control my expenses, grow my income.
I gamified it.
So every month I had a set amount ofmoney I had to send to my creditors and

(28:58):
had to send to the IRS as a creditor.
And I would always tryto beat that number.
Right?
And the next thing you know, I'm tryingto double the number and I'm working not
just my main job, but I'm going out doingthese, we call them side gigs now, right?
I'm doing all this stuff.
And by gamifying it, it took meabout three and a half years to
get the debt completely wiped.

(29:19):
But that wasn't even the cool part.
The cool part was three and a halfyears later, I had so much momentum.
Then that turned into far more assetsthan I thought in a much quicker, At
a much quicker pace than I could haveever believed that I was capable of.
I would have never thought I justhad to keep the momentum going.
And I did and ended up, in a good place.
So Joe, I have a quick question.

(29:41):
So you were a financial planner whileyou were dealing with this and you
said your finances was in shambles.
Do you think you were unique?
Like, were there a lot offinancial planners that might've
been in the same boat, you think?
Yes.
Yes.
I mean, I found that, I don'ttraditionally practice financial

(30:01):
planning, but I do have myCFP and I'm around that world.
And I feel like I do see that a lot.
I guess it would be crazy ifa potential client said, well,
let me see your finances.
That probably, they wouldprobably not do that.
I mean, I'm pretty open with my, butI know most financial planners won't.
So that's something totake into consideration.
To consideration, if you are lookingfor a financial professional, not

(30:23):
that they're going to, tell youexactly what their finances look
like, but keep in mind that they maynot have everything together as well.
Cause they don't teach you thatin financial planning school, do
No, no, not at all.
and they, they do aslittle as they do now.
They did even less backthen, way less back then.
I mean, then it was clearlyalmost all sales, right?

(30:46):
And I'll say this.
There was something that Ivehemently used to disagree with.
I remember Susie Orman on some showin the nineties saying, do not,
do not hire a financial pro unlessthey have 10 years of experience.
And, I thought, oh, that's crap.
That's baloney.
I'm I know what I'm doing.
I know.
I know.
I think I've been inbusiness like four years.
I go back and I look at that guythat was me going, no, no, no.

(31:08):
I disagree with that.
I wholeheartedly agree with that nowbecause if they've been around 10 years,
they have gotten their act together.
I mean, you're around it everyday and that guilt, right?
The Edgar Allen Poe, a beating heart inthe wall, where you could just hear the
telltale heart of I'm a sham, I'm a sham.
I don't think it's just me.
I think it's any financialplanner would go through that.
If you're faced withthat every single day.

(31:31):
I do think the experience is there.
And I also think that over my first10 years, I saw everything, maybe
not everything, everything, butI saw, I'm talking about Jackie.
I saw like 99 percent of all theweirdness that you'll see out there,
but like in year number four, peoplewould come in with something and
I go, I have no idea, but I'venever heard of that before year 10.
You could tell me thewildest story on earth.

(31:53):
And I would have gone, okay,yeah, you're not the first
person to, tell me that story.
So, let's get busy and fix it.
Well, what you're saying applieswholeheartedly to medicine.
physicians have all the same problems.
It's almost synonymous, thelifestyle inflation and being
10 years into the game is true.
You can't make this s*** up onceyou've heard all these stories

(32:16):
and nothing surprises you anymore.
And so, you actually do wantto go to a physician as well.
Who's been through the ringer.
Heard all the stories and then seesall the patterns so that, okay,
we can do this with you this time.
Let's point you in this direction.
That's what we do with our health care.
We don't have a financial advisor, butthat's what I would do if I needed one.

(32:38):
right, Joe, we have some questionsfrom the audience, but let's
start with a little more trivia.
Give people a pause.
All right,
You're killing me.
Jackie, you want to takea trivia question here?
We got a few more.
Do you want to scroll back there andgiven one that maybe can stump him?
I feel like you're feeding memy own medicine right here.

(32:58):
We try, we try to be welcoming.
Okay.
How about a short one?
How about the state that ranks numberone in Swiss cheese production?
Any idea
Oh, well.
It's got to be Wisconsin.
We got to go with the cheese heads.
Let's go Wisconsin, Jackie.
that's a great guess,but is that right, Bill?

(33:20):
That's not right.
it's not.
Actually, Ohio
the game SwiftG's production.
We're not far from Wisconsin.
Yeah, we're not far.
And I knew, we both, I think ofcheese, Wisconsin when it comes
to cheese, but yeah, it's Ohio.
Can you believe that?
I
Jack you didn't know that one either, butand we got one that's, we got one that's
geared specifically for Frank Vasquez.

(33:43):
He loves roadside attractions.
He seeks them out wherever he goes.
He found like a haunted castlein the Knoxville area that was,
covered in weeds and he goes andvisits it and it had a pet cemetery.
Now this guy, it's, it's part of his,just, And so for Frank, if you're out

(34:04):
there, Uncle Frank which state housesthe world's largest cuckoo clock?
I think there is a, so I think acuckoo clocks, I think of Bavaria,
and I think that in Washington state,there is a cool Bavarian community.

(34:26):
Out in the mountains that I've neverbeen to, but we've talked about
when I go visit my son sometime,we're going to venture out there.
He's been there and said, it's amazing.
Everything looks veryGerman in, in that area.
So I'm going to say state of Washington,
Joe I told you at the front end thatwe're doing Ohio and Tennessee trivia.
You, you had, you, yeah.

(34:48):
Ha
to say that was a well thoughtout answer, but it's wrong.
well thought out wrong answer,
Right.
had a 50 50 chance and totally blew it.
You went off the reservation.
See what it would be likeplaying games with me.
You're you beat at a You'd
you're making mistakes just likeour audience, and that's for you.

(35:09):
Joe is not perfect.
you do shows with Paula, and youhave the answer for everything.
And we have managed to stump Joe.
We're going to have to callthis show, The Stump Joe Show.
Yes,
Okay,
we'll have a few more coming back toTennessee in a minute, but we have a
few questions that from our audience,it's sort of a ask me anything.
So the second half of our show isgoing to be, letting you give us

(35:32):
a little bit of financial advice.
Our first question comes from Catherine B.
And she's one of our moderators.
And her general statement was, can youplease explain, this is a little bit in
the weeds, the efficient frontier to me.
doesn't really understand it.
This is a, this is a difficult one.
But you gave a talk called FIRE 201 at theFIRE Financial Freedom Retreat in Bali.

(35:55):
And you explained efficiencyusing critters or animals.
Do you remember that?
Remember that?
Yeah, yeah.
Okay.
Maybe you want to start with thatdefinition of efficiency, but then tell
us about in, in sort of lay terms forour audience, what is the efficient
frontier and why is it maybe important?
Well, let me tell you where I reallystarted because my job at, at by 2.

(36:16):
0 was to dispel some myths thata lot of the practitioners in the
fire movement really, don't thinkabout it's like we, we had 1.
0, which was, we discover a new world.
We discover a new area where we'reon this boat on this journey, we get
to the new area and we all high fiveourselves because we found a new area.

(36:39):
I believe that's whatthe fire movement is.
We discovered this new thing,really not a new thing, right?
Fire was there before the termfire, but this new way of defining
a new way of thinking about it.
It's super exciting to talkabout financial independence.
A lot of people in the movement.
But then I feel like peopledidn't get off the boat.
Like we sat and we pointed,we're like, Hey, we found it.
High five, high five, high five.

(37:00):
But there are things that we can do pastthat, that will make this even better.
And I'll give you anexample, which is this.
I love.
L.
O.
V.
E.
J.
L.
Collins book, the simple path to wealth.
I love it.
I love it.
I love it because one of the mainquestions I was asked when I was

(37:21):
on television, now that we havethe show is I'm just starting out.
I don't know what investment to pick.
And I worry, I freak out about allthe different investments to pick.
And JL Collins picked that lock for us.
We got rid of the biggestthing that gives us heartburn,
makes our blood pressure go up.
He said, relax, everybody.
You know what you do?

(37:41):
You just buy the total stock market index.
And you know what?
When you do that, you will getthere and you will be okay.
You never have to change it.
It's amazing.
I think the simple path towealth is just an incredible
thing for people starting out.
Here's the rub.
I also know that JL Collins is ahell of a brilliant guy and he's very

(38:04):
good at naming his books He didn'tcall it the optimal path to wealth.
He didn't call it the best path towealth He didn't call it the kabam.
I'm making more money thanany other way type of wealth.
He called it the simple path to wealthAnd when you look at what practitioners
have done once your money, and I think thetime to look at this is when you get to
the point, this is, this really comes fromNick Majuli, who wrote a wonderful book.

(38:30):
He, he has a blog called of dollarsand data, which is a really nice blog.
And Nick and his book said the timewhen you start getting more analytical
about your investments is when pick aperiod, let's say a month over a month.
If that motion that's created by thereturns of those investments matters

(38:51):
more than the amount you put in it.
So let's say over a month I puta thousand dollars in and it
only grows or loses 500 bucks.
I don't need to think about it, but ifit's 1, 000 goes in and it moves 2, 000,
just what was already in there, it's pasttime to get more analytical because it's
going to start to pay dividends, gettingaway from VTSAX or the total market index.

(39:18):
Now there's two ways to go about this.
The first way is tofollow a guy that I love.
And I know you guys love Paul Merriman.
Paul Merriman talks about taking thatsimple path to wealth and, and moving
up the number of funds that you have.
I get frustrated when Ihear people delineate.
You'll see this.
People have a three fund approach, a fivefund approach, an eight fund approach.

(39:40):
You know what?
It's going to take you Five minuteslonger due to the eight funds than
it will to do the three funds.
It truly will.
Maybe that not the first time whenyou first do it, but to go with a
little bit more diversification,you're going to get closer to this
thing called the efficient frontier.
And I'll go over what thatmeans in just a second.

(40:01):
But when you get closer to theefficient frontier, what you
find, what Paul Merriman found.
Was that he could be a simple index.
If you started with $100,000 and yougave it, I believe it was 35 years.
Not going to, I mean, you can factcheck me on that because I don't
remember the exact amount of time.
It's been a while since I gave that talk,but it is in the 30, 35, 40 year range.

(40:21):
You give it that amount of time.
You create an extra 4 million, an extraextra over that one simple path to wealth.
And now the thing I got back from people,when I started talking about this,
I'm like, you're giving away money.
A lot of these people inthe fire movement, they're
like, no, no, no, no, no.
I live a frugal lifestyle.

(40:42):
I think about the dollars that I spend.
I make sure that my budgetis true to what I love to do.
And then I go and I blow money.
On my asset allocation.
I won't blow money on anexpensive financial advisor.
I won't blow money on stuffthat that doesn't light me up.
I won't blow money on all these things.

(41:02):
And then I blow money by not takingan extra hour a year to get a
little bit more analytical aboutmy financial asset allocation
that that 4 million people cameback to me and they said, well,
you know what, Joe, I'm doing fine.
I won't spend it.
So if I won't spend it, then it'sjust 4 million extra dollars.

(41:24):
And my answer to that always is.
Good for you.
Like that's so good for you, butthink about what you could do.
Sure.
You won't spend it, but you've gotthis community of people around you.
You might want to build a legacy.
You might want to buildintergenerational wealth.
You might have, I'm part of agreat nonprofit here in Texarkana.
If I could give them 4 millionto help us build better walking

(41:46):
trails and safe routes to school.
Like how great would that be?
The things that I could do because ofmy ability to understand this stuff,
just a little bit, not even a toncan bring this additional wealth over
and above the simple path to wealth.
So don't get me wrong.
I'm not saying I don'tlike the simple path.
I love the simple path to wealth, butI think that's the place to start.

(42:08):
I think then you graduate when you getto that point where the and generally,
by the way, for everybody wonderingwhen that is, that's about when your
portfolio reaches about $100,000.
You get to about $100,000.
It's time to get more analytical.
So this is all based on modernportfolio theory, which is this
thing called the efficient frontier.

(42:28):
The efficient frontier wona Nobel prize guy named Dr.
Harry Markowitz was lookingat different asset classes.
And if you think about just a graph,right, we've got the axes going north,
south, and we got the east, west axes.
So let's take just north, south.
On the north south axes, he put returnsand for any time period and any tax

(42:51):
consideration, some investments willgive you a really low return and other
ones will give you a really high return.
So as an example, cash is goingto be on the bottom, right?
And then collectibles couldbe way up high, right?
You could potentially from acollectible, get a lot of money.
But what's the other differencebetween cash and collectibles risk?

(43:12):
If I buy a baseball card thinking it couldpay me a ton of money, there's a hell of a
lot of risk that it probably won't, right?
So they showed risk going left to right.
Very little risk to very high risk.
And what Dr.
Markowitz did.
And in my book, I thought aboutthis, like Markowitz pours himself
a glass of wine cause he's cookingnow and he's all excited, right?

(43:33):
He puts on maybe a little Barrywhite cause he's like grooving
starts thinking, this is pretty cool.
I think I'm onto something.
So then he takes large company stockand it's about halfway up both ways.
It's much higher return than cash.
A lot less risk than collectibles,small companies way out further to
the right international companies.
He puts all different andthen he gets even crazier.

(43:54):
He goes, what if I did like 50 50 stocksand bonds or different types of bonds?
So he litters this entire graphwith dots and guess what he finds?
He finds there are no dotsnorth of this imaginary line.
And this imaginary line is whatwe call the efficient frontier.
And what the efficient frontier meansis that the thing we all want is BS.

(44:17):
What do we all want?
We all want huge returns andno risk, and it doesn't exist.
So somebody tells you somethinglooks too good to be true.
It proved that it is.
It also, there's another rule herecalled the law of diminishing returns.
Initially, when you bring the riskout just a little bit, You find the

(44:39):
line goes north at first, but thenit starts going east west much more.
So you can take more and moreand more risk and it's just not
going to pay for itself, right?
So what does this meanto the average person?
I start off with a fund like VTSAX,like the vanguard of the fidelity
one size fits all total marketreturn fund that will get us there.

(45:00):
It will get us there, but I, Popthat on the efficient frontiers,
nowhere near the efficient frontier.
And I can make one or two moves.
If the wiggle in that fund is too much forme, I can move it left over to the line.
What does that mean?
I'm going to get the same return withthis new diversification because when
I move it to the line, it's goingto tell me what mix of investments
would get me the same return, butwith a lot less up and down a lot less

(45:24):
what they call standard deviation.
I could do that.
So if my client back when I was afinancial planner, wasn't sleeping
well, and we were getting theright return, just move it left.
And now they can sleep much better.
I know their portfolio is going towiggle less, still same outcome.
Or if they're sleeping good, I can moveit straight up to the line, which means

(45:44):
I'm not going to take any more riskthan I was taking with the total stock
market index, but I'm going to get amuch better return than that got over
the time period that I'm looking at.
That is what.
If you want to use just a sampleportfolio one of Paul Merriman's
portfolios will do to VTS ax.
But if you really want to do this,right, Jackie's a financial planner.

(46:07):
You actually figure out where youneed to be to reach your goals, right?
It's neither one of those.
It's okay.
What do I need?
And then you go find that spoton the efficient frontier.
And what's cool is once you know that thissolves so many problems, which investment
choices you made that you should keep,which ones should be swapped out and you
know what asset class to swap it out for.

(46:27):
None of the efficient frontierstuff that I know, uncle Frank
might know, but I don't know.
Doesn't tell me what fund to buy.
I got to still do that research, butit will say, Hey, you don't have any
money in real estate right now, or yougot way too much money in large company
stocks, not enough in small companies.
What's weird about this too, Isthat often it will tell you to buy

(46:47):
investments that by themselves are moreaggressive than what you already own.
That tends to freak people out.
But I'll tell you what's cool aboutis because you have this mishmash of
different roller coasters you're oninstead of one, you could actually
add three investment choices tothat, that one fund that are more
aggressive than what you have now andpotentially have it be less risky.

(47:11):
Then what you're doing now, becauseyou went from one fun, one roller
coaster to four roller coasters.
So that is, I hope I kept people there.
I found it fascinating.
I don't know if you guys fell asleep,
Well, honestly, without thegraph, I think you did a perfect
job of the efficient frontier.
think we,
that the math, but I could visualize it.

(47:33):
Well, you had your handsup, you were waving.
We kind of got it North, South,
Now that's if they watch the YouTube.
Well, we want people to watch the YouTubeyou know, you're going to see Joe's facial
expressions and he talks with his hands.
So, this is the way to do it.
Now, this is the way over the futureand podcasts go to the YouTube,
subscribe, watch Joe make fun of himself.

(47:53):
Yeah.
Watch me, watch me gesticulate andwatch my shoulder go out of my socket.
As I'm explaining.
Harry Markowitz with Barry White.
By the way, I heard that, thatanalogy is the way I think about it.
Cause I always think whatwe do is sexy, right?
The sufficient frontier stuff, very sexy.
So I think of Harry Markowitzbeing just this bad ass maybe
in leather pants or something.
Probably I've been told may,it might not be the case.

(49:28):
All right, Jackie, let's, let'sdo another listener question
and you pick one this time.
Yeah.
So let's see here.
How about James C?
Let's see what his question is.
This is from our Facebook and James Csays I suspect that many people in this
group are looking at the standard path towealth And retirement, ie many years of

(49:52):
careful saving and investing and thinkingthere's no way I'll ever get there.
Does Joe have any thoughts or storiesof people who have found success
by taking a different path, likelifestyle, career change, et cetera,
maybe just a shift in mindset.
Oh, Jackie.

(50:13):
I love this question.
What's their name?
James C from our Facebook
James.
This is a fantastic question becauseI and I even love the premise of
this question, which is sometimesthe problem is not a math problem.
Sometimes we need to workthrough what you truly want.
And I'll tell you that.
I had a client once who would have beena perfect Catching Up to FI listener,

(50:36):
had a lot of life thrown at her, right?
Like a lot of us have.
And she did not have enough moneyto do what she wanted to do.
I'm from Michigan.
She wanted a house along thatWest Michigan bank looking out
over Lake Michigan, so she couldwatch the sunset every day.
Well, I'm from Kalamazoo originally,and maybe an hour from that area.

(51:00):
And I'll tell you that land ain'tcheap and it's never been cheap.
And she could not afford her dream.
What she really wanted to dowas have this house where she
could sit and watch the sunset.
So we talked about it for a while.
We actually came up with this plan thatended up being way more awesome than
we thought it was because at first youstart off with just you know We do this

(51:21):
when we create stacking benjamin shows.
We have like a five week productionschedule and doc g helps us We have
a professional comedian and we sitin this room and we come up with all
these really dumb ideas But over timeand collaboration they get better
and better and better and by the timewe record it I think they're pretty
funny and they're pretty instructive.

(51:41):
And I think that's what you got to do.
You got to just startthrowing stuff out there.
So what we threw out was this, the landacross the road from the super expensive
houses were a lot less expensive thatland across the road, much less expensive.
And we actually found ahill with a beautiful view.
Of Lake Michigan.

(52:01):
You had to look over someother properties, but at a
beautiful view of Lake Michigan.
And we brought the priceof that property down.
The sad news was shestill couldn't afford it.
But then we talked about what shereally wanted from retirement.
And here's the deal.
She was a complete extrovert,loved being around people,
didn't want to isolate herself.
One of the biggest problemswe see in retirement, right?

(52:23):
You guys talk about this allthe time is that people isolate
men, especially do this.
You see the reason a lot of men die.
Early is because they just, , don'thang out with anybody anymore.
They hung out with people from work, theyleave work and now they don't do anything.
And so she didn't want to do that.
So she was open to havinga job as long as she could.

(52:45):
She actually bought abeautiful Victorian home.
She got a loan from thelocal community to help her.
It was a combination of grantand loan to refurbish it.
And she was able to getthe property rezone.
So a bed and breakfast could be there.
She turned this Victorianhouse into a bed and breakfast.
It brought in money and every singleday she got to meet new people, which

(53:08):
was one of the things she wanted to do.
And at the end of the day,she got to sit on that bed.
Porch with all of her new friends orwhichever friend she wanted to watch
the sun go down over Lake Michiganjust by changing her mindset and
looking at the goal differently,she was actually able to get this
thing she thought was unreachable.

(53:29):
All
That is a beautiful story.
That is a great answer to that question.
And that speaks exactly to what afinancial plan or advisor should be doing.
Start with the goal in mind and finda way to help that person make it
happen and realize their dreams, right?
Yeah, absolutely.
I mean, my friend Roger Whitney, theretirement answer man said this best.

(53:51):
I quote him all the time.
He said, if you ever meet an advisor,if you're hiring an advisor and they
begin with product and not process.
You should run.
It's always process.
Bill, what are you trying to do?
If they open them up withwhat are you trying to do?
Tell me about what you're trying to do.
And then let's map outwhat you're trying to do.
And then the very last thing we do iswe explore the products that do that.

(54:15):
That's a great financial planner.
If they start off with, Hey, I got aproduct that has no volatility, but
that participates in the stock marketthat can never go down right here.
Indexed annuity.
Like you frickin run.
Yeah, that whole, the real financialplanning process, the cycle, pretty much
the last step is any recommendations.

(54:36):
The first step is educating, getting toknow the person, giving feedback, asking
more questions and things like that.
And then, You can start to recommendand that's kind of the easy part.
That's what's already prepared.
there's already something there, somelever you can pull, but all the other
stuff, makes up, okay, how on earthdo I know what this person's need?
If I haven't talked tothem, I don't know them.

(54:58):
So that becomes the bottom line of ifyou want to work with a professional.
And Jackie, I want to give youa hug because that is 100%.
I think that The problem that wehave that I see all the time is that
people blow up their own plan, right?
They blow it up.
They do the dumb thing.
Like people go buy an indexfund and then they day trade it.
They don't think they're day tradingbut three or four times a year, I get a

(55:20):
thought about the election or about thefed or about the inflation or whatever.
And they move the money in and out.
And maybe it's only three or fourtimes a year, but you really think
you're smarter than the market.
Like, are you kidding me?
So we blow up our own stuff.
What I think makes yourfinancial plan stickier.
Is if it starts off with what you wantto do, and you see these products, not

(55:42):
as an annuity that doesn't go down,but you see this product is this is my
house to build an Airbnb fund, or thisis my fun to get that Airbnb going fun.
And I found that when we put these tags onthe different accounts and what they did,
you were less likely to blow up your plan.
You would then keep it.
But it's because Jackie, exactlywhat you said, we start off

(56:04):
with, what are you trying to do?
And then we match the product to it.
But wonderful, wonderful.
Yeah.
right, Joe, we want to give you achance to get a trivia question right.
You've
I got one half, right?
half a point.
So, it's trivia about Ohio and Tennessee.
Let's remind you of that.
Which state was the birthplace of MountainDew, Cotton Candy, and the Moon Pie?

(56:34):
Oh, the, the moon piehas got to be Tennessee.
It's got to be Tennessee.
Yeah.
You are ding, ding,
And we knew it was something southernbecause I've only really down south.
Maybe they've made theirway up north by now.
But, yay!
right.
One more, one more Tennessee one,because you have a great podcast, i.
e.
radio show.

(56:55):
Which state.
Is home to the world's oldest radio show.
Oh, the world, theworld's oldest radio show.
Well, you said we got tohave another Tennessee one.
So I'm going to
Oh that was,
terrible.
I can't believe I did that.
I'm going to cheat bill.
I I will take the win.

(57:15):
I think it is the 10 se.
okay.
Oh, what?
Oh,
What is the name of the show?
I have no idea.
Oh, come on.
Think about it.
No, it's not Dave Ramsey.
Oh, Grand Ole Opry.
Oh, of course.
Yeah, much easier.
I thought we were going closer to home.

(57:36):
I'm like, I know that.
I think our friend Wes Mosshas been around on the radio
longer than Dave has been.
So I thought, yeah, who knew?
I gave you a hundred percent opportunityto get it right, because I was stupid.
Thanks for getting it right andnot blowing it when I tell you
which state the answer is in.
Every chance I get to cheat.
I
All right, Jackie, do we have any otherquestions from the audience that you

(57:58):
think we can cover in our remaining time?
think so.
Frank Vasquez.
Now he is long winded.
So I'm not going to ask allthree we know he is a genius.
Okay.
It's like crazy, but he's a genius.
This does come up a lot.
So that's why I wanted to askit about target date funds.
Because a lot of people, I consider thatthe easy button, and that's typically

(58:20):
what employers will default you in if theydo automatic, enrollment into the plan.
So he just wants to know, he says thatrecent academic research, he provided
the link and all that, but he did say Joehas expressed skepticism on the use of
target date funds instead of index funds.
Recent academic research suggeststhat he has been right all along.

(58:41):
That's you, Joe.
And the target date funds create adrag of about 1 percent over time
due to fees and other problems.
So can you speak to target date fundsand what your thoughts are on them?
What's funny is I think Frank and I havebeen in two economies together and it's
always my goal to actually meet Frank.

(59:02):
So I've been in the same place as Frankand we've never gotten together and I
feel like I I need to give him a hugfor this one because target day funds
have traditionally been the easy button.
I don't like them for two reasons.
Number one is I think JL Collinshas the easy button right with
the total stock market index.
And the reason is I don't think,especially when you're starting

(59:24):
out, that you need bonds inyour portfolio in any way.
I also don't think you need to pay thatmuch attention to asset allocation.
So if you're going to use a one of theserobo advisors, when you first start
out, that, that do things like that.
Tax loss harvesting.
I put my first a hundred dollars thatI'm going to do tax loss harvesting.
That's a financial planning joke.

(59:44):
For people that don't know financialplanning, there's nothing to do there,
but that's their target market, right?
People starting out, always go to a, oneof these robo advisors that use target
date funds, but the second reason Idon't like target date funds is because
a lot of target date funds have a lotof fees in the way most of them work.
Not all of them.
I will say that theVanguard target date funds.

(01:00:04):
The fidelity target date funds,the ones that a lot of people work
for the federal government, theones that are in the thrift savings
plan, they're fine, they're fine.
I still don't like them, but they're fine.
But the problem is you know howon Sunday afternoon, your favorite
restaurant will have that Sunday brunch.
If you ever read Tony Bourdain's book,Kitchen Confidential, he talks about

(01:00:28):
the reason they do that is the chef hasall the stuff in the back of the freezer
that didn't sell all week, so they turninto a bunch of salads, they offer Sunday
brunch, they mark it up, and everybodywants to go, and it's crappy food.
This is kind of what most companiesdo with their target day fund.
They will take these funds thatdon't sell a ton, they'll stick

(01:00:49):
it in to represent a category, soyou already have a crappy fund.
That represents his investment categoryrun expensively, and then not only
does the fun family stick a bunch ofthese together into a salad, then they
charge you an additional fee becauseyou have them all together as a package.
So you have fees on top offees and not phenomenal product

(01:01:12):
underneath the structure.
So I don't like that.
That still isn't thereason why I don't like it.
I don't like them also becauseyou land the plane too soon.
What most people do is they willpick a fund that's based on,
let's say their retirement date.
And even though the fund may continueto be a little bit aggressive,
the fund before retirement, mostlybecause the asset manager doesn't

(01:01:35):
want to get sued, it doesn't haveas much to do with you as you think.
They definitely don't want to getsued if things don't go right.
They will begin backing downthe risk fairly aggressively.
And when they do that, the problemis most of us are coming in hot,
especially people Catching Up to FI.
We're coming in really hot.
Like we need stuff to work.
So if we use this rule called the ruleof 72, And I know I'm mixing metaphors a

(01:01:59):
little bit, but the rule of 72 talks abouthow quickly your money's going to double.
It's this cool mathematical thingwhere if you take the interest
rate, you think you're goingto get, you divide it into 72.
It tells you how many years it'sgoing to take your money to double.
So if I think I'm going to get 8%,divide eight into 72, my money's
going to double every nine years.
And then back to the envelope math.

(01:02:20):
Now, every nine years, I'mgoing to get that money.
Well, what happens when I get to.
Age 55 and I want to retire at 62.
My target date fund is backingdown the risk level and
dammit, I need one more double.
I got to have that last double.
And all the research says that if youkeep enough cash in a position to maybe

(01:02:43):
last you two and a half, maybe threeyears, if you're very risk averse and
stick with that, Total market index fund.
You're going to do much, much better.
And you're still going to get the doubleor what I prefer the efficient frontier.
And it's funny that this isan area I love Brad Barrett.
He's a great guy and he disagreeswith me vehemently on this.

(01:03:05):
He's like, no, no, no, Joe, peopleneed target a funds and they need these
back of the envelope calculations.
I told Brad the same thing I'm goingto tell you guys, I will always vote
that you're smart enough to do this.
You are smart enough tofind the efficient frontier.
You're smart enough to gowith your own eight funds.
You can build your own target date fund.
That's going to be muchcloser to your actual goal.

(01:03:25):
And the cool thing is instead of havinga crappy target date bummer, you don't
even know what the hell you're in.
You actually know why you're there.
Which makes it stickier.
You set it up yourselfwhich makes it stickier.
The key is behaviorally you want to makesure your plan works for you and if you
know what you got, you know why you boughtit versus a target date fund which the

(01:03:45):
only reason you did it was because yourcompany said this is the easy button.
I'm going with you being smartenough to do this the right way.
So that's why I prefer.
Start off with the totalstock market index.
You get to about a hundredthousand switch to the efficient
frontier, manage it that way.
Hopefully then by the time youget to retirement, the efficient
frontier has gone from this, Ihate the name efficient frontier.

(01:04:09):
I hate it because itmakes it, it sounds so.
Academic.
I agree with that.
I'm like, Bill, shouldwe be talking about that?
Those are some big words.
I know it's horrible.
And then, and then like we dida class for some of our stackers
and we had like 20 of us.
And you know what?
Everybody came out of that classgoing, this isn't anywhere near as

(01:04:30):
hard as I thought it was going to be.
And it's not.
And, that's the sad thing.
But but yeah, no target date funds for me.
This has been great.
Right, Jackie?
I mean,
it's been awesome.
on the efficient frontier and we'vetouched on many little aspects that
are technical, but Joe's explainedthem in very understandable terms.
I love it.

(01:04:51):
And you know, how do we,how do we close this show?
We could talk to him for hours.
Well, you know what we really want toknow what he's up to now, Joe, tell
us what you're up to now, becausewe love the way you explain things.
We love stacking Benjaminthat's been around for so,
it was one of my first shows.
I have to say that, but, you continueto grow and, you stood the test of time.

(01:05:12):
So what is next for stacking Benjamins?
Well, thanks Jackie.
And please stop, keep going, pleasestop, keep going, stop, keep We,
we, we here's what we're up to now.
People know us for a podcast, butwe're actually transitioning more into
being a financial education company.
And we're building some guides inareas that I don't see enough of.

(01:05:35):
And this is what, I don't seemost people don't know how to use
their benefits at work very well.
And I'll give you an example.
And Jackie is the financial planner.
this one, there's a type ofinsurance people buy because it's
really cheap and they sit at a deskall day and they don't need it.
And it's called accidental deathand dismemberment coverage, but

(01:05:55):
we buy it because it's cheap.
Now don't get me wrong.
If you don't have it, there's always adownside to getting rid of insurance.
And you got to know what that is.
But if you go through and youunderstand your benefits better, you
wouldn't choose accidental death anddismemberment in the first place.
You'd go for a good, robustdisability coverage plan instead.
So.
Understanding your benefits isour guide coming out in September.

(01:06:19):
It's going to come out right atthe beginning of September, and
it's going to cover everything.
We start off with a quick start guide.
If you don't want to understandanything, we've got a checklist.
Just do this, do this, do this, dothis, do this, and you're going to
do way better than you're doing now.
And then we have an in depth guideof Videos and snippets from the
podcast, written areas where wedive into how it actually works

(01:06:41):
for the nerds that want to know.
The cool thing about the guide too, isthe average person is going to change
jobs seven times during their career.
And the rules are going to change.
The number of times the rules of thegovernment's changed the rules on
us, or your company changes benefits.
You have a lifetimesubscription to this guide.
As long as we continue to makeit, which I continue to make

(01:07:02):
this for a hell of a long time.
So it's stacking Benjamin's dot comslash benefits is the URL to go.
We're going to release it inSeptember, but you can get an email.
If you give us that will send you anemail the second that we release it.
And if you want to be on that list andas a thank you to Jackie and Bill, we
were talking before this, I'd love toalso give you guys something I used

(01:07:24):
when I was a financial planner untilthen, because this isn't coming out.
What for a little bit?
The guide is, so I want togive you something right now.
I have this thing that I used tocall my Sherlock Holmes sheet.
And when I was a financial planner,if I was looking at somebody's budget
and I was trying to find money, likehidden in the sofa cushions that
we had, and they were easy to get,like as an example, comparing your.

(01:07:45):
Auto insurance or yourhomeowners insurance.
Like, those are a couple of the boxeson this changing your cell phone plan.
Looking at your credit card interestrate and doing consolidation.
These.
Types of things.
There's a ton of them, but I justmade a checklist for me when I was a
financial planner because sometimesif I was meeting with bill, I would
remember them and then I meet withJackie next and I would forget half of

(01:08:07):
them and I'm thinking about other ones.
And so I need to be consistent.
And then when we started thepodcast, I said, you know what I
need to turn this into somethingthat, that our community can use.
And I'd love for you guys to haveit if you want the benefits guide.
So anyway, we'll throwthat in right at the link.
Okay.
So you'll give us alink for the show notes.
Yes.
Stacking Benjamins.

(01:08:27):
com slash benefits bill.
Well, we'll put it in.
This has been fantastic.
I love this is probablyour first ask me anything.
And this is our firstattempt at doing trivia.
I'm going to ask Joe if he'll comeback and do this again with us.
Well, you can see how bad I amat trivia, which is embarrassing.
Cause we do trivia onour show every episode.

(01:08:49):
So you can see whodoesn't answer the trivia.
Yeah, but are you going to come back and
do it
yeah.
Are you with you guys?
Anytime.
right.
All right.
Alright, so, Jackie, any final thoughts?
Yeah.
Only that I love the benefits guide.
I feel like the most questions I getthrown my way are about benefits and
most companies after working for thesame company for 21 years, don't do

(01:09:13):
a very good job of explaining them.
So I'm glad that you guys are doing that.
I'm all about education.
That's my thing.
So I will drop the link in theshow notes and we'll make sure
everybody knows how to do that.
But I think it's goingto be extremely helpful.
But Joe, this has been awesome.
Thank you so much.
Finally got to meet you.
Not quite face to face, but
Likewise.
So
And, I got to sneak inone last trivia question.
So in a percentage, what percentage ofpeople on this podcast don't have hair?

(01:09:43):
You're outnumbered.
You are outnumbered.
Well, that's, that'sstraightforward, Jackie.
I did my hair before the show,but I it doesn't, you can't tell.
I've enjoyed laughing and justshooting the shit, hanging out.
With joe salsihai today.
He's a friend.
He's your friend my friend and you heardit here First stacking benjamin's becoming

(01:10:05):
a financial education company look tohim for your needs beyond humor beyond
Podcasting beyond so many things i'm gladto hear they're growing and we're happy
to be a part of it Joe has now made it.
He's on FI.
Thanks for thanks for being uswith us here today Oh show us
your mug again before you go
Yeah.
those in the podcast, it says,Woke up sexy as hell again.

(01:10:28):
And we'll end there.
Thank you again beingon Catching Up to FI.
thank you.
Cause bald guys are sexy.
Jackie.
Oh, absolutely.
A lot of testosterone.
Bye, guys.
See you soon.

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Stacking Washingtons in Joe’s Mom’s Basement and The Efficient Frontier | Joe Saul-Sehy | 091