Episode 10: "No Savings? Take Control and Make the Right Financial Choices"

most people they spend money to impress people that don't they don't even know it they might even hate let's clearly identify what are the goals here that what what are what are the goals that that we're trying to set here let's make sure we're clear on that people who are in the results economy many many times it's a big Mitzvah to push them to the max okay I saved a few 00,000 I have it in real estate let me see what I'm going to do going forward with $100,000 number one is your mindset number one is your your your occupation get the widom for [Music] your part of part of financial decisions have to do with how much we value the object that we we want to buy and you know you oftentimes have to make that decision you know I can get cheap sunglasses for $20 or I can get you know nice sunglasses with a fancy title on them for2 $300 what point do you make that decision what point do you do you justify that you know what this is something I want and and you know and something that's going to make me feel better you know or or or do you have to say every financial decision I make has to be tless if I can save 20 if I can save myself $180 and buy the cheaper sunglasses that's what I have to do even though when I put those cheap sunglasses on I'm still not gonna I'm just not going to feel as cool as I would if I had the other ones like how do how does those values and it's such an important question how do those values play a role in our financial decisions that we make at what stage do we do we acknowledge that it's okay for me to spend money because it's something I really want is going to make me feel better and at what stage we say you know what it's just not financially responsible how do you how do you come to that that kind of that you know something you know the first thing is that the first question that I think people should ask is if you really want it or you just think it's cool because somebody else is going to think that you're cool like for me it's perfectly legitimate to spend $100 on sunglasses so SCH and Freeman should think I'm cool right but B for me that SCH Freeman thinks I'm cool anyway so I don't have to spend it but that's right but but the unfortunate thing is that most people they spend money to impress people that don't they don't even know it they might even hate right who are who might also be people that spend the money to make you impress to to impress you so right it's it's it's unfortunate and for the first thing you have to think about it is you know you want to be cool for home if you want to be if you feel good with the sunglasses then go ahead and do it if you have the money and it's a good conversation to have how much to spend and it's not a black and white uh conversation Depends for whom depends inot a lot of things but the first thing that you should ask yourself is it is it you is it truly you that that want that or is it you trying to impress somebody and and you don't you don't care about that I I want to tell you a a good story you want to say something first I was just going to I was just going to maybe question what you're saying because at the end of the day there is a that you know you know who are in positions of leadership have to make sure that they are very well presented you know we we have to there is some stage we have to acknowledge that we as human beings do judge other people on their appearance and therefore I have to be aware of that if I'm in a leadership position even if I'm going you know I I have people that I interview you know throughout the course of my work and you know somebody who comes who's just not well presented now of course I don't mean if they're wearing clothes from Walmart as opposed to wearing clothes from saxi Avenue you know that's not a fair judgment call depending on the situation okay uh you know if it's somebody who's going to be doing you know more basic work and and and maybe maybe just working in an office maybe you know as long as they look clean and presentable that's fine but if if I'm going to meet with somebody let's say a Xin who I'm thinking about investing millions of dollars with and and and and K Xin walks in and wearing clothes that that clearly do not represent the type of lifestyle that I envisioned somebody like K Xin should it may make me wonder so you KX te might say what's the big deal I'm happy to wear the cheapest clothes possible I don't need to to for me personally but on the other hand in order to make sure that the people I'm working with I recognize are going to judge me on my appearance you know I have to take that into account as well so you know there is a balance depending on the situation as well but you're taking it to a different to a different perspective now now you're talking about business now you're talking about different a different subject talking about Thea I agree with you SCH you should you should be dressed like a normal inish we call it s you should dress you know put your act together clean um but but to buy jeans that's ripped apart because you want to look cool it's ripped apart anyway I mean it's not cool and uh and you know I always joke with my children that you know they asked me in the Su middle of summer I went to Manhattan so why did you see him Manhattan I tell them oh the people are so poor in Manhattan it's terrible terrible they don't even money they don't even have money to buy clothing and even the few people who do have clothing it's ripped apart it's crazy so they think they're cool but this is what I'm talking about you're talking about a different I agree with you you should you know in such a case you you present yourself as AA you have a responsibility to to to attract honor to you to attract if you're a business person you deal with high level people that expect you to be dressed a certain way it's a business decision I get that that's not what I'm talking about I make a business decision that because I want to deal with this multi multi multi multi don't know how many multi-millionaire shulan fredman I'm gonna dress up right but but uh but you talk about sunglasses in order to be cool you know they have to understand what you know what are you talking about right yeah no that's that's very fair I all all I'm trying to say is that you know there's a balance we have to we have to think about what you know what are act my actual values and who am I trying to impress it's unbelievable it's such a boring podcast because we agree on this we have to not we have to find a subject that can disagree before we do that before we do that let me just tell you uh the grape juice story okay you know the grape juice story no I I I I I completely relate to it I'm I hope that you're going to relate to it too it's not going to be like uh I hope I'm not GNA have to explain the joke okay so usually what happens is that when the the the father at home makes kidos after kidos he gives grape juice to all the all the all the participants in the in the by the suda right how much gra juice does he get okay okay so the way it goes is that one father will give a tiny bit little grap grap ju is a very very expensive drink you don't drink a lot of it you just drink a little bit for kidos right so so the father distributes grape juice to the whole to to all the participants of the shabas suda and everybody has a tiny bit of grape juice this is how much he gives now the sun grows up and the son says I don't understand what a what a Frugal father ah had you you can M on you know what it's a little bit more grape juice okay it's another dollar fine you know big deal why do you have to put into the children such a such a Trauma from grape juice one therapy session is more expensive than to give a bottle of grape juice to each child give them normal grape juice when I when I grow up and I'm gonna have my own children I'm GNA do my own suda everybody gets a full cup of grape juice after kidos enough with that nonsense okay it's it's a different generation so he he gets married he builds up his own family and he has a beautiful shabas Su and everybody gets a full cup of grape juice he's not like his father he gives grape juice be like like like yob told Yehuda right a lot of grape juice for everybody oh he was talking about wine okay so the so the children grow up and they don't understand you know what a pan what I you know okay you want to give orange juice I understand grape juice why do you have to give so much and then they see the grocery bill how much gra juice cost they say you know you're not going to be like TTI when I grow up when I gonna I'm gonna have my own family my own suda I'm gonna give a little bit grape juice after kidish why do I have to drink so much grape juice I don't understand you know what are my father thinking so and this is what happening so the cycle basically goes generation after generation you look at how much gravee juice the father gives to the children usually it means that his father did the opposite the the opposite this is the grap juice story is it the same as the song glasses um I I think you were just talking about how how we perceive others and and expectations and so on right but I want to bring you up another thing um I had a conversation with a somebody who read my book you know the is in in Yiddish and in English people buy it and I got great great feedback and somebody sends me such a message I'm gonna I'm gonna a few of the details I'm going to change but more or less like this okay the person lives in Brooklyn let's say in bar Park or flatb wherever beautiful income he likes what he does he makes like a I think like $300,000 a year and he bought like a home in the cat scho and then now he he never saved money that's where it is he never saved money soon he's going to have to marry your children he never saved money doesn't know what he should do and then he was thinking how about should I buy a home for myself where I live in Brooklyn you know moving away is not an option big family you know all the children already settled in schools and he has his partos so there moving is not an option what should I do in a year from now or a year and a half I'm going to have to go out from my apartment I have a rented apartment I like my apartment but I'm going to have to leave my lease is terminating and uh is is expiring and and the landl wants me to leave buying a home that I really need the the the type of house apartment that I really need for myself and my family it's probably going to cost me 13 14 $15,000 a month in mortgage payments what do I do should I do that or should I just rent and and uh and and keep the cycle like every few years move and and rent again what do I do right so it's it's it's a very you know when I saw this question I saw such an email when the question came in into my inbox I was very very I got a lot of pain I have to tell you because you know you're talking about you don't talk about somebody who for whatever reason didn't make it income wise he has a good income and I think if the question would have been asked like 10 or 15 years before it would have been you know is doing what he's doing but in hindsight this question should have been as 15 years 20 years before right and and then the the the the answer would have been much much different and it would be much better for this individual but now this this is the situation what do you tell them what what would you think he should do you know it's I think it's a matter of of sitting down and having I I'm guessing that you know you have to sit down and identify so what what are your priorities you know what how how are you going to prioritize I want to have my own home I want to marry off my children what do I do I don't save money he didn't save any money the only thing I'll tell you is that the last two or three years he built a house some in the cat right so what do you do here I I think that's something that I would have to think about more than just off the cuff on the moment because it sounds like you're you are a instantaneous guy it's true I okay when you stand in SCH and you have to give an essay to the I would I would take him through I would take him through my process the first first question is okay let let's clearly identify what are the goals here that what what are what are the goals that that we're trying to set here let's make sure we're clear on that that we know very clearly where you are now and where you want to be okay the next step is so let's identify what resources do you have to get there what what resources presently exist and let's look around and see tell you I can tell you first two questions I want to have I I want to do the right thing as far as my living is concerned and I want to have money to marry off my children at a time etc etc okay um so we so we okay that takes care of the goals what what are the options what options exist presently to to get there right anything if if the route that you're going to take is going to be okay you know what let me let me give you a little bit more details and um and and let me tell you also what I the conversation I had with them um the first the first question that I have in such a situation is I want to understand your income how do you make your income okay why is that important because I want to know if it's entrepreneurial income which I call the results economy or it's employee income which is usually the time economy okay time economy means that you trading time for money if you're if you're trading time for money it doesn't matter how much you make you're limited with how much time you have okay if you want to make more money you can put in more time but if you if you don't have more time then you you C right that doesn't mean that you're employe could be your self-employed but could be your self-employed also making money based on time for example you're Trad you're trading your time yeah yeah versus the results economy which is more the entrepreneurial economy which is trading results for income right so if I can somehow create better results or work with a different type of clientele or uh do it faster than I used to do it it's your profit it's your R and you can increase you can improve right so in my experience what I can tell you scham is that people who are in the results economy many many times it's a big MIT to push them to the max okay even if you jump into something you don't a pink you don't have exact how you're going to be able to do it but this person is trained and has experience and making things happen okay he's getting paid on a result so maybe all I need to do I need to turn on your switch I need to turn on your ATA to attract more results attract more income attract more opportunities where you can make income and the way I do it is by pushing them to get out of the comfort zone okay now now when you talk about people in the time economy it's more challenging what are you going to tell them they don't have you know they only have so many hours so you're very limited what you can produce um as long as you're going to if this is your decision that you're staying in the time economy which I I understand in in in our subject case that we're discussing this was the decision and you know he has a big family and he is a big metop he's not going to change now all of a sudden like it's it's very unlikely for him to change so I don't think his income is going to go up dramatically that's that's one thing that I wanted to address which I think should be the first concern when it comes to uh when it comes to making these kind of decisions okay and and I I I wholeheartedly agree and understand that I mean that that that's kind of the general distinction we make between are you a a visionary or you more of an operations person and generally speaking in the in the business world or in the professional world people tend to be fall into one of those two categories either they're Visionaries they're more the entrepreneurial CEO type or they're more operations minded and they're more of the the um the CEO coo and more time you know what do you call it time based economy you know um but you as you said we not not everybody is cut out to be an entrepreneur and every one's cut out for operations and and like you said we have to identify that but even that process of identifying what type of person this is is in of itself a process you know you you you have to have a method that you use to help facilitate this person's understanding of who they are what are they capable of to push somebody to become more entrepreneurial if that's just not their personality they're going to be miserable and very likely fail absolutely and I understand where you're coming from because you are an expert and helping people identify their talents and their personality and what they what they're good at um I know you're doing this with people who want to switch careers and people who who are starting out you have courses for that and by the way I I see that you don't want to talk about yourself so I will say it that uh if somebody's interested in joining and could be a lifechanging experience send a text email whatever so we hook up with Witham or up with me and I'll look you up with doesn't matter very ni but what what we're talking about is a different situation we're not talking about somebody who's looking what to do we're talking about anas an a a a a this is the last few years this is what he's doing this is how he's making his income and he's happy where he is now the reason I'm saying this I don't want the listeners to think that you know here's a guy who's got who's an employee so if if if we push him out of his comfort zone to start thinking more entrepreneurial that'll be an the a but all all I'm saying is that you have to make sure that you know who you're dealing with absolutely I'm not pushing him no and I'm not pushing him to be an entrepreneur right I'm dealing with the facts all I said is that you should know I have to know it's not a okay I think this is the right answer it's not a numbers question so much as the as the facts on the ground what's going on right when he sent me an email he asked me numbers he asked me ideas but numbers but the first thing I need to know before I I can even go there is what is this situation as far as entrepreneurial or absolutely employee right right and then that falls within the the the options category of this this the steps that I had mentioned as well you know identify the goals identify the options who is this person where is he what you know those are the resources that we're talking about right excellent fine so that was the first thing so check employee not employee he's not an employee but check time economy so for about having a conversation about increasing his income dramatically right not to say that it's impossible depends what I'm economy you are maybe you're a therapist and maybe you're a lawyer and maybe you undercharging maybe you should give better uh service better packages whatever we can talk about it but in this case I don't think the in the in in the simplistic conversation it's going we're going to change his employment and and and his income too much for the time being okay got it next um I wanted to understand better how the building the house and the catc went so this guy comes to me with a broken heart I don't save money I make good income but I don't save money and then expenses come and I don't know where to start and blah blah blah I should I should move now to a bigger house I should buy a house it's going to cost me a fortune every month and then I'm going to I really going to really going to be screwed I don't know what to do so I wanted to understand the building the house and the cat for the last few years how it went so I identified that really what happened was that it cost them for the last few years about $100,000 a year to build his home put you know in the construction or whatever so it cost him about you know a few hundred, and and and he doesn't have K from it he doesn't have any debt so I told them you know you're making a big mistake you think that you didn't save any money in the last few years you did because you forced yourself to build now you have this asset that's worth a few hundred, let's assume he's going to rent it out I don't know you know it's not important for the conversation what he's going to do with it but lamasa it's an asset that he has a few 00,000 asset and you did save $100,000 a year that you just finished the question is now what do you do with $100,000 going forward are you just going to relax I'm finished now I'm going to go vacation and and and and and increase your standard of living or you're going to say okay I saved a few $100,000 I have it in real estate let me see what I'm going to do going forward with the $100,000 right so that that was the second conversation we had and the the answer to this question depends on on the on the third issue which is buying a house to live in or not right if you're going to buy a house and you're going to have like a gazillion dollars a month that you're going to have to pay rent mortgage then it's not realistic to say that you have $100,000 to save right but if you going to do something else maybe rent then maybe you you do you do have options now here's the thing one of the reasons that people want to buy a house instead of renting and I'm again I'm I'm I'm very much Pro buying a house to live for stability of the family and for many other reasons but one of the reasons that people want to buy instead of renting is because they're afraid because they see that every year prices go up and then when you say that it can't go up on anymore it still goes up right and I remember having the same exact conversation with somebody like seven eight years ago the exact same conversation the only difference was the numbers you were talking about cheaper houses back then it seemed like wow how much more can it go up but now seven years later we see that it can go up more and and we don't know what's going to be in another seven years so people want to buy the house because prices are going up now in the in in the neighborhoods that from people live I'll P off most of the time the gap of rent and mortgage is huge meaning the if you would have financed the entire purchase it would have been much more expensive in cash flow every month than if you pay rent for the same type of house it's a big gap so what I ask this fellow is how about if you know of course it would be nice to say go buy a house but then I I hate to see you stretching so much and I don't know if you're going to be able to do it and then maybe you're going to you're going to start falling behind in the mortgage payments and then you know who knows what's going to happen you might lose your home and then you us start kicking in you know the the the the marrying of the children so how about let's do this how about if you're okay with this go rent another apartment in a year from now try to have a long-term lease in the meantime you're marrying both children you your family is going to start getting smaller and smaller meaning the family that you're going to need for the housing maybe in 15 20 years from now you're not going to need such a big house anyway so start renting but you should buy a home I'm not saying it should be in Brooklyn maybe it should be in another place where it makes sense but buy some real estate and put in the $100,000 that you put in in the in the in the the building of the house in the cat skills put it in as a mortgage payment for the new house that you're buying until you have enough cash flow then you do it again then you do it again that's one option and the the reason I said that is because I identified that this person until three years ago didn't save any money the only reason he saved because he had this pressure of the house that he is building right so some people I know that I'm sure you're not like that but I I am probably more like that that the only way you make things happen is if you force yourself to do it by example building a house for example buying a house you have to make the mortgage payment so you don't have to buy a gazillion dollar home and then stretch yourself like crazy you can do it different ways maybe you open a portfolio of some stocks some funds some uh Diversified portfolio that you save the money until you have a a nice amount of money that you can put down for a down payment or maybe you can find something 100% financing that you can uh that you can just uh make the mortgage payments from the money that you have this is more or less the conversation that we had around that okay um yeah the the what the person is going to do I don't know but my point is that there's so many different thing because I get so many I I get so many emails from people reading the book you know what do you think about this what do you think about that how come this Pro said this and you say different how come this there is no such a thing as black and white there's no such a thing as one SI F all right absolutely I and I think more than that what what you're saying is that that that there is a solution for every problem as long as you approach it responsibly and and you know you I think the fact that he this person is reaching out to you is already a very positive sign that he's he's looking for a way to address this in a more proactive manner which which I think is huge and what I'm hearing from you is that as dire as a situation may seem if we if you're proactive about making something happen you can find a solution it's just a matter of how to get there if you really want some people are not interested in Solutions some people are interested in knowing who who is who is to blame for their problems well that of itself requires needs attention and and you have to kind of yeah but the worst thing you can tell such a person is that it's your issue deal with it like a grownup you know approach it you know face it head tohe and deal with it that's the worst thing they would rather want you to say yeah I don't see I don't think you have a way out you know you know inish we say you know what that means yeah he didn't come to this world to lick honey for some people this is their solution this is their comfort zone this is what they love they love to have problems and the worst thing that could happen for them is you take away the problems of course they're not going to admit it but these people attract problems to them all the time right versus you know gave me this thing to deal with with prayer and with we're gonna deal with it and we're gonna get out of it which is fantastic and it sounds to me like you know you've you you're already being able to to advise this person and hopefully he'll he'll he'll listen to your advice but I'm curious to know when you do meet these people who come with those attitudes that it's not my fault and I am just a victim of you know life or whatever how do you deal with those people do you do you have to turn them away and just say I'm not the person to help you or does your attitude that I it might take more work but I can I can help this person turn around it depends it depends it's a good question I I the first thing I always want to know because you can't help anybody if they don't want to be helped right you there's no way for me to help somebody if I want it more than them they have to want it more and I can try to assist so the first question I would ask them is how's that been working for you and when they say terrible I would ask and how do you see it the next three four five years oh I don't see any way out of this right you know what they say in such a case I would usually tell them the you know and I would just give them a but if they will tell them yeah it's terrible but I don't see any way out of it and I hope you can help me I will usually tell them you should know one thing that if you're going to keep doing what you did the last I don't know how many years you're probably going to get the same results right and you know just today I met somebody who told me the same thing you know I believe blah blah blah blah blah blah blah okay you believe that and and how how has the how has this been working for you right and he explains me all this trouble I said so why don't you do something else he said because I believe blah blah blah I said but you see where you got with this belief so maybe you have to change your Bel in order to have different results right oh I didn't so it's a big you know not everybody's ready for it but right no you You' said previously that you know the first step in really being successful financially is addressing your mind ET you know where where are you holding with your mindset and you've said this before and I think it's important to absolutely absolutely because it's so stupid when you look at all these financial planners Financial gurus Financial professionals they might be bright people but I you look online you look whatever you look they start talking about numbers what you know what numbers is secondary numbers is important but it's secondary number one is your mindset number one is your your your occupation like we discussed earlier what do you do for for a living what is what do you do to trade your energy or your time or your whatever to to to to bring in some income what do you do for that if you hate what you do then who cares about the numbers you're not going to be successful and if you are going to be financially successful you're probably going to be miserable as well but if you love what you do then we're talking about somebody you know there is life if I tell this person you know you love what you do and you need more income do more of that you he says oh wow I have an opportunity to do more of that if you tell me you need more income speak another hour a week to I would say wow how can I have two more hours right but now I you have to go no I just but I do want to just finish off I think what you're saying is huge and I think mindset is such an important topic and I think we should explore that further because you know that's that's step one in any of these conversations but I also wanted to say just to go back to to the original discussion so you know I you had asked me how how would I um how would I address the situation and I wanted to just say that you know we we covered the goals and we covered the options but there's another piece of this process that I would I would go through with this person which is after we've gotten those things clear let's discuss obstacles what what is getting in the way presently from stopping you to achieve that because that's another big piece of the puzzle is you you know we we know what you are capable of we know you know your different resources but what do we have to be aware of that's going to get in the way or is getting in the way to make this happen because identifying those obstacles and making a plan to address them is just as important as identifying the resources you have and and the planning you can do you know and sometimes the obstacles are as simple as mindset I just don't have the proper mindset to to make this or you know I I I I don't have the proper knowhow or I don't have the type of personality you know but these are things that are going to come up that also have to be addressed as part of this process I just wanted to men absolutely absolutely and and and for most people it's it's the obstacles is the same as overeating you know what's going to happen that because of that you're not going to be able to stick to your eating uh to to the to the healthy eating that you wanted to stick to and it could be many many things but when it comes to finance its mindset it's definitely financial success especially long-term success is 80% psychology only 20% numbers and it's the mindset but to the way to get around it is to force yourself to success like buying a home and now you have a mortgage payment to make you have no other choice you're forcing yourself right so and and just setting up a monthly draft to a certain account for some people that's not going to be enough because they can stop it and they have the other negative financial habits that's going to come into play right and so forcing yourself but responsibly forcing yourself I think that's ex force yourself to do something that you know you're able to do but the same as me telling you take out all the chocolate and all the goodies from your pantry throw it out now you don't have what to eat I mean you can go to the supermarket but until you go to the supermarket you know you want to quit smoking you know flush down the toilet the the few cigarettes that you have in your pocket at least for the next few hours you don't smoke right very crucial fantastic listen uh we'll speak next week I know you got to go you have a meeting but [Music] get down the wisdom for your wealth