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TILP #10: Financial Planner answers questions that the average person might have about money
84 Plays1 year ago
In this episode, Jim is joined with/by Cody Morgan. Cody poses questions that most people are probably wondering about regarding money, but either don't have the background to answer them alone or don't have anyone they can go to find them elsewhere.
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Transcript
Introduction to Intentional Living Podcast
00:00:00
Speaker
Hi, I'm Jim Kreider and this is the intentional living podcast where we have conversations about how to use your resources, your time, your money, your talents for what's important to you in life in an efficient and effective manner. I'm glad you're joining with us today and I look forward to this journey with you.
Cody Morgan's Background and Financial Journey
00:00:24
Speaker
All right, Cody Morgan. Thanks for joining me today on the show.
00:00:29
Speaker
Hey, how's it going today, Jim? Great. Thanks for being here. I guess before we get started, who's Cody Morgan? Why are you here? So I am Cody Morgan, and I grew up in a small farm town in Minnesota. And then I joined the Army. Then I transferred to the Air Force because I didn't know what else I wanted to do with my life.
00:00:50
Speaker
And now I'm moving back to Minnesota and, um, yeah. And I just went through life, not really understanding money a whole lot or how it worked. And I always thought like there'd always be more. And then I realized with the family that I got to start pre-planning. And so I hired somebody smarter than myself and I met Jim and through my wife and, uh, you've been awesome. You've helped us out a ton and we really appreciate it.
00:01:16
Speaker
Why are you here on the show and what do you hope to talk about?
Importance of Asking Financial Questions
00:01:22
Speaker
I'm here. This all started through a conversation with us and probably all of our little meetings about I ask a lot of dumb financial questions because I don't understand finance at all. As we stated before and talked about was, the last time I know about finance was Alan Greenspan and that money wasn't backed by gold or anything is backed by faith, and that was in 10th grade.
00:01:45
Speaker
in high school. And ever since then, I just kind of dug my head in the sand and was like, okay, I'll always just make more money. And now that I get older, I realized that I would like to retire someday. And, um, but I didn't understand money. And when I started talking to you through meetings and things and through our text messages back and forth, we're like, I'm like, there's a lot more I don't know, but there's a lot of dumb questions that I, I don't know. And I need to find someone to ask. And so that's where you get a ton of text messages from me about this or that, or whatever I find on Google that day to ask you about.
00:02:13
Speaker
That's actually one thing I like is the dumb questions you ask. I think a lot of people have dumb questions, but they're just too afraid to ask them. I like the people who are willing to ask. One, because that shows that you're willing to set aside ego for the sake of actually learning versus having this facade of pretending you know something, but then going along the rest of your life actually not knowing.
00:02:37
Speaker
that you're prioritizing the appearance of knowing over actual knowledge versus actually knowing and who cares about the appearance. So I appreciate that. And I used to always ask dumb questions in class. And there were questions that I felt stupid asking, but I was pretty confident a lot of other people in the classroom had those same questions. And sure enough, most of the time after class, people would pull me aside and like, man, I'm glad you asked about that because I was wondering the same thing. So these questions you asked today,
00:03:05
Speaker
Yeah, I'm sure some of them might seem goofy. And they're probably things like, I don't know, maybe you feel like you should know. But most people probably don't know them either. So I'm excited. I would I anticipate a hodgepodge of questions.
Exploring Financial Concepts with Cody's Questions
00:03:20
Speaker
I have no clue where this is really going to go today. So this will be fun. Oh, get ready, because I came up with a couple more the other day, too, for you. So this is going to be like a hot round of just I'm expecting a lot of ums and us just starting to throw office quotes back and forth at each other for a while.
00:03:35
Speaker
Let's do it. So you had to give, what we're going to do today is basically Cody is just going to ask questions that he has. They could be things that like for their personal money or from like, I saw this on a movie or I heard this once. Can you actually explain this to me? So this can be related to anything. Ask away. So here we go.
Understanding Bitcoin and Its Market Dynamics
00:03:56
Speaker
All right. Well then I have a choice for you first. Do you want to start off with Bitcoin questions or you want to start with just general finance questions? I'll start off with Bitcoin, get some momentum going.
00:04:04
Speaker
All right. Yeah. Your favorite. Right. Let's do this. All right. Cool. So all right. So we talked a lot about Bitcoin and stuff in your previous episodes. And I just got done with episode seven. So if this is an episode eight, I apologize if it's a repeat of the question or not. But Bitcoin is a non-central currency. And from my understanding of Bitcoin until I started talking to you was it's just this made up coin that someone made up. And I first heard about this in 2015. And I was working with some tech guru guy at a base.
00:04:33
Speaker
And I said, well, I'm going to create my own coin. Then it's going to be called Cody coin and people that are start using it. Right. And I didn't understand blockchain, all this other stuff, which your episodes helped clear up a little bit as much as my simple to mine can understand. But, um, if it's a non-central currency and this is something I don't understand, we can get into it a little bit more is how come when I have my on river, I own like 0.00007 of a Bitcoin, but it goes up and down all the time. Kind of like a stock market trend.
00:05:02
Speaker
But if it's non-central, why does it keep going up and down all the time?
00:05:06
Speaker
Yeah, the valuation of something is not dictated, hopefully not dictated based off of a centralized authority's ability to monitor or maneuver a price. That's actually where free and open markets, how they should work. Now, having a centralized control over something is something we're sort of used to, but really that is not free and open markets.
00:05:34
Speaker
We've grown accustomed to crony capitalism, which is hilarious when people, you know, you have people who come in and say like, oh, man, we need to move to more of a Marxist or whatever type of economy and government because capitalism clearly doesn't work. And what they're referring to is not actual capitalism.
00:05:55
Speaker
What they're referring to is this distortion through hijacking that actually draws us away from capitalism and actually towards Marxism and towards centralization. So you have a central bank, you have people who benefit from
00:06:17
Speaker
financial or monetary or fiscal manipulations more so than others. So centralization itself should not in a pure economy should not necessarily impact prices. So if Bitcoin is decentralized, why is there
00:06:35
Speaker
movement of purchasing power there. There's a few ways to look at this. And one, I'll give you a better answer in a second, I promise. But one way I look at this is Bitcoin itself. We think like what Bitcoin is, the technology behind it, the issuance of blocks, the mining, the code, all those things, they're stable. It's not a volatile technology.
00:07:00
Speaker
What's volatile is people and people's understanding and adoption of Bitcoin. And that's why you see volatility in the price. It's not because Bitcoin itself is changing. It's because you have more people who are learning about it. You have people who are speculating around it and you have people who are buying and selling. So, yeah, if we had, I mean, we could have a room of 50 people all bartering for a few
00:07:31
Speaker
And we're closed off in this little room. No one knows about it. So there's not a central authority to govern how we're trading. That can still go up and down in price, especially if we're on, let's say we're on an island, on our own for a decade.
00:07:46
Speaker
as we catch fish and get collect rainwater and stuff like yeah, the values of those are gonna change like if we Maybe it's really dry for a long time and there's finally a little bit of rain where we're able to collect some dew then you better That water is gonna be a lot more valuable. You're gonna demand more fish for that water But if you go through a monsoon, you're able to collect a lot of water. Well, then yeah, it's
00:08:10
Speaker
Less valuable compared to other assets and that's that's despite not having a centralized authority Well, I could get dangerous though is actually if you brought in a centralized authority and said no Water always has to be pegged to this amount of fish
00:08:26
Speaker
But why? At that point, you are messing up the communication method of supply and demand. So centralized authorities can actually mess up those communication methods. That's what, again, what money is. And how we value things is to communicate value across space and time. So yeah, the price of things communicates the value that we're placing on certain items, or at least someone's placed on a certain item.
00:08:56
Speaker
This is a super roundabout answer. So why if Bitcoin is not owned by or controlled by a centralized authority is because, again, the adoption rate, the purchasing of something at different levels. So if you have somebody wants to come in and buy a whole bunch of Bitcoin that could, you know, then you you're you're throwing a new sound or voice into the supply demand communication vector. Yeah.
00:09:25
Speaker
That was a terribly long answer, I'm sorry. No, but it makes sense, right? Because that's where we were talking about work the other day, and I'm like, well, it's tied to the US dollar, and it's going up and down, but it's not tied to the US dollar. It's just that's how we perceive the value of it, at least in this country. But it's actually helped a lot in episode seven with the guy that you had about talking about the little glass beads, and then you're talking about Roman money, and how the value of it went down because the precious metals in it were less.
00:09:51
Speaker
overall. So no, that actually helped a lot. But now here's my other question with that. So El Salvador just adopted it two years ago now. Bitcoin is one of their currencies. Let's say heaven forbid, but that country just goes bankrupt, everything like that. Will that cause the Bitcoin value to go down?
00:10:10
Speaker
Um, it could because they own a decent amount of Bitcoin. So if they had to immediately sell a whole bunch, then yeah, again, you have supply and demand. And if a whole bunch of new supply hits the market, um, you're gonna, that could drain the.
00:10:28
Speaker
exchange rate of that as you find more people who are willing to buy at the demand. Now, eventually it will reach an equilibrium as you have a number of buyers who want to come in and stabilize the purchasing price. Yeah, technically that could impact the price. Same thing if you had, I mean, Satoshi Nakamoto has a ton of Bitcoin on a wallet that hasn't moved in whatever, 15 years. So if he came in and sold all his Bitcoin, moved off there, yeah, I would drop Bitcoin's purchasing power
00:10:56
Speaker
probably relatively significantly over a short period of time, again, because you're messing with the supply demand communication method. So it'd be the same thing if that dude in England who's missing 1,000 coins in the trash or something like that, and he's going out to go and find them. That was a story a couple of years ago, I think. Yeah. I think what you're referring to is a guy in the Netherlands who's spending a fortune to unearth
00:11:23
Speaker
Uh, it was like a flash drive or something. Yeah. I was on a flash drive and he's unearthing a old, like a dump, a landfill, um, as he's searching for this thing. It's crazy. Yeah. Based off of that, like, honestly, there's, there's, there's.
00:11:39
Speaker
amounts of units that will impact. Same thing with stocks. If you are a majority shareholder or an executive of the company, you have to disclose when you're going to sell things. There's things called dark pools. If you own, maybe you're BlackRock and you're trying to acquire a whole bunch of a smaller company,
00:12:00
Speaker
If you go out and start buying that and everyone knows that you're buying it you're buying a whole bunch Well, it's just gonna cause the price to grow up to go up and you're gonna buy it a higher dollar amount Because of that so you can go in you can purchase these things Runt's will be secretly to help not scoop up the price if you're buying a whole lot you'll buy it over a prolonged period of time now me if I go out and buy like a
00:12:22
Speaker
two shares of Apple, that won't impact the price at all, just because the amount I'm purchasing compared to the total market cap. So yeah, if there's a percentage of total market cap that is bought or sold, can certainly bring in price swings more heavily. Yeah. All right. Well then, here's my other question for you. This is your utopian Bitcoin society coming out.
Bitcoin's Role in Global Economics
00:12:46
Speaker
Would you ever see that it would take away the euro, the US dollar, anything like that, and we'd all just deal in Bitcoin all the time?
00:12:54
Speaker
Possibly. I don't know how this is going to play out. So we could have fiat currencies or what are currently fiat currencies that become backed by Bitcoin. So maybe it is just like the US dollar. The US dollar was originally backed by gold. We used to trade in gold. And then it was too difficult to trade in gold. So you were issued a depository note of, hey, at this bank,
00:13:21
Speaker
this paper signifies that you have this gold, you go to the bank, you could turn it in for your gold. And then it got to the point where people are trading those note those notes from another like I give you this note. And then you can have once you have that note, you can go to the bank and exchange it for the gold. And then eventually people are just trading those notes back and forth.
00:13:37
Speaker
And then we had governments come in, create those notes that was backed by the gold that was owned by them. And then eventually they removed the gold itself. And now we're just trading notes that say it's backed by nothing except the ability to say that it's backed by their power, their authority. So yeah, we could eventually get where like this US dollar is related to this much Bitcoin. Or we could just get away from that completely. And yeah, everything is priced in Bitcoin directly.
00:14:06
Speaker
Do you foresee gas instead of being, I think it was like $2.50 today or something like that in Texas now? Can you see it where it's like 0.0001 Bitcoin per gallon?
00:14:18
Speaker
Yeah, so Bitcoin itself, like you don't have to buy a full Bitcoin. They're denominated in units called satoshis. So a satoshi is one one hundred millionth of a Bitcoin. So currently you can purchase multiple satoshis with one penny. So eventually, yeah, we would expect like a gallon of gas will be ex satoshis. Now, there is unit of account issues, in my opinion.
00:14:42
Speaker
that will be resolved over time naturally to like, it's gonna be tough to say like, hey, for that, whatever, for that car, that's gonna be, you know, this many satoshis, where it's just astronomical, or we're like, yeah, that cup of coffee is whatever, 5000 satoshis.
00:15:04
Speaker
Yeah, I think we'll we will probably come up with different denominations to signify amounts of Bitcoin over time. Yeah, that's that's how it would work is like, even if it's the, you know, a dollar is not one Bitcoin, a dollar is whatever, 100 satoshis, if we reach dollar, if we if we reach Satoshi sent parity, then obviously one or 100 satoshis would be $1. So we could have Satoshi dollar percent parity at that point.
00:15:30
Speaker
Yeah, so we kind of like the US to the yen kind of like a pennies like one yen, roughly. Correct. Yeah. And that's where is it is it backed by this? Is it backed directly by it? If so, then like how many dollars equals that? Can it change? Like, that's where if more dollars are created, technically, that dollar would be worth less Bitcoin. Now, that's where
00:15:57
Speaker
You all have a trust, you have a lot of trust by centralized authority to say that they are backing this thing by something else. And that's where that that trust was massively eroded in 1971 when it came out that basically from the 1940s till 1970s.
00:16:12
Speaker
we were creating more dollars than we had in the gold that was supposed to back those dollars. And that's how we were able to fund all these wars and all this massive expansion in the US. It really benefited us. And then other countries started sort of getting a little bit privy on that and saying, hey, let's go ahead and I'll take delivery of my gold. Finally, 1971, we had to come clean and say, hey, you know what, the amount of dollars we have in conjunction to the amount of gold that's supposed to back those dollars, it doesn't fit. It doesn't line up.
00:16:39
Speaker
Now, Bitcoin is easier to verify and authenticate or audit than gold is. But still, yeah, if a government started creating more dollars somehow, then yeah, it would change the dollar to Bitcoin like parity amounts. So let's just say that perfect world, like one shiitoshi blah, blah, blah, zero, zero, zero.
00:17:07
Speaker
equals one penny, right? Just for easy math, right? And let's say me and you are, you're doing, I'm doing landscaping for you, right? And you're like, I'm like, Hey, that's going to be one Bitcoin astronomical, but just for easy math, right? Yeah. And I do all that. And then I'm like, all right, cool. You owe me a Bitcoin. We each have wallets we transferred, however, but isn't it where from my understanding from your, uh, the Swedish dude you had on who's heating his house with Bitcoin miners, which I need to figure out how to do here.
Bitcoin Transactions and Future of Digital Currency
00:17:34
Speaker
Um,
00:17:35
Speaker
It refreshes every 10 minutes. So we have to wait around for those 10 minutes. Because Venmo right now, I can send you money and be like, all right, cool. See you later, man. High five. We're out. But now would I have to wait for those 10 minutes for that hash rate to refresh to get that? Or could I? This creates another problem that I could see is, could I be at your house, spend that? You could give me that one Bitcoin. And then you run inside before that 10 minutes up and spend the Bitcoin somewhere else real quick. And now it causes an error in the system. And it freaks out and can't figure out what to do.
00:18:06
Speaker
Yeah, there's a few points to that is the easiest answer that eventually the in already at this point, but it will be built out more so that the actual day to day payments layer of Bitcoin will not be on the main Bitcoin chain. It will be on other layers. So like right now there's the the primary layer to.
00:18:27
Speaker
technology for Bitcoin is called the Lightning Network. So Lightning Network is really if you're going to send relatively small transactions or makes relatively small transactions in Bitcoin, rather than paying the main chain fees and waiting for that to settle in 10 minutes or 24 hours, depending on the fee you're willing to pay.
00:18:51
Speaker
you can make that transaction over the Lightning Network and it's going to settle instantaneously in that network and then will also cost way less than it would to get into the actual block space. That's going to become really important because when Bitcoin was created and this was really
00:19:10
Speaker
a point of contention a few years back with block space and block sizes. But Bitcoin was decided that they would emphasize security and decentralization over efficiency and block sizes. And some people have beef with that and thinks that the block sizes should be larger. We can put more data in there that we could. We should we should make it better as a payments level. But that would
00:19:40
Speaker
that could bring about issues from the security and for the amount of people that to easily run a node and verify the network. So I would rather have the base of Bitcoin be a secure network and then find these workarounds on additional layers that's built upon security. If you're building, if you're not building security, you can have the most efficient thing that's not secure and it's dangerous. That'd be like building a, you know, whatever amazing house on sand.
00:20:10
Speaker
Yeah, maybe it's amazing, this amazing place. It's beautiful and has really good insulation, so it's efficient there. But it's going to crumble versus you have something that's built on a rock solid foundation. You can build on top of that and know that it's not going to just crumble off from underneath you. So Bitcoin made that trade off.
00:20:29
Speaker
So again, because it's built on security, we have, it is relatively inefficient compared to some of these other cryptocurrencies out there in that sense, but that's where layers will be built upon it. So like the Lightning Network, how that works in a very simplified manner is like you and I could open up a tab together and it's like, all right, we're gonna put in some Bitcoin towards this thing and you and I, like you mow my lawn and I,
00:20:57
Speaker
I don't know, I cut your hair. And we just keep running tab between us. And one day we want to settle that tab. And based off like, all right, you mow my lawn, you give me one Bitcoin, oh, I cut your hair, I give you half a Bitcoin, you mow my lawn again, you give me or I give you another one. And it keeps tab of that. And then we can finalize that transaction. So that's really how it's gonna work. Now, not everyone's gonna have
00:21:21
Speaker
their own lightning node like I'm not gonna have one with just you and me probably like there's already big lightning nodes that are sort of centralized there are risks there in a sense but uh yeah like I use a lightning network pretty much daily to send or receive Bitcoin like I just bought some wine a couple days ago
00:21:42
Speaker
paid with Bitcoin over the Lightning Network. And I saw that it settled immediately. I sent it to my buddy. He lives in Colorado. And yeah, I said, how much for a few bottles of wine? He told me I sent it to him. And like he received that settled payment right then. Yeah, no, it's just something I was thinking about when we were talking to that Swedish dude about hash rates and stuff like that. Like that might slow down transaction time, right? When we're
00:22:08
Speaker
getting faster all the time with Apple Pay and even credit cards are slow now compared to like writing a check. Yeah. Well, all those things, again, you're technically like a check. I mean, heck, you think about that. Like a check can bounce. They're not going to that checks going to bounce for a few days. Same thing with credit cards. Like that's going to take a bit of time to go through that. Unsettle instantaneously. There is a level of trust that that level of trust is obfuscated to Visa or MasterCard or the bank in the case of a check.
00:22:35
Speaker
That's why the bank gets mad at you for the check was bounced because that sort of comes back bad on the bank for letting you write a hot check. So yeah, Bitcoin in that sense is actually more efficient even on just its main block space right now. Eventually it will be tougher to get in as more that block space becomes more vulnerable, valuable as more and more people adopt Bitcoin.
00:22:54
Speaker
One last thing about the payments level and money like backed by currencies and so on. This is sort of maybe people had argued it's tenfold hot conversation. I feel like people think it's less so than it was four years ago when I was saying this. But I do believe there's a pretty good chance that we will have central bank digital currencies or CBDCs.
The Rise of CBDCs and Inflation Concerns
00:23:16
Speaker
in short order, maybe a couple of years or I would say in the next decade, for sure, we will have central bank digital digital currencies that are related that it's
00:23:30
Speaker
Yeah, it's money that the digital currencies that your governing institution can issue and it will be sort of like Bitcoin. They'll probably try to spin it like that. Oh, it's it's a cryptocurrency and blah, blah, blah. And they'll try to make it sound like Bitcoin. And so it's a marketing scheme.
00:23:48
Speaker
And then I would venture to say that this will also come in with two other things. Like I think that some sort of universal basic income will become a norm and it'll be easier to issue that universal basic income with a CBDC. So like every month the Morgan family will get $500 dropped into your CBDC wallet.
00:24:11
Speaker
Now I think, take this further, I think that there will be measures tied to your wallet of CBDCs. So like, all right, these, that $500 you get on a monthly basis, that expires quarterly. So on a rolling quarter basis, that $500 is,
00:24:30
Speaker
expires. So you're forced to try to spend because the government's forced to keep people spending money, like we're on this treadmill of consumerism. So they're going to prioritize that versus savings. Again, to take the tenfold hat maybe a little bit further, I would speculate that that will also go in line with some sort of like social credit score.
00:24:54
Speaker
So, I mean, yeah, with a CBDC, you think through, like, with cash, the government doesn't like cash really too much. Which, side note, it's pretty funny when people think that Bitcoin's evil because it can be used for nefarious cases. Like, okay, well, so can cash. Like, around 90% of US dollars have traces of cocaine on it.
00:25:13
Speaker
I can't remember the statistic. It was pretty astounding though. If we got rid of $100 bills and $50 bills and our largest denomination that was used in regular circulation was a 20, then in-person drug transactions would drop significantly because it'd be really hard to hand over a wad of 20s. Way harder to do that than it is a wad of hundreds.
00:25:37
Speaker
So yeah, people don't talk about that. Anyways, I think the government is aware of that. And that's why they're, you know, they're pushing for, you know, other payment mechanisms. Also, you can maybe have under the table, you know, transactions that they're not be able to collect taxes on because, you know, you give me 20 bucks for cutting your hair, you know, you don't.
00:25:57
Speaker
Can you, do you have to report that legally? Well, you should legally, but yeah, you gave me 20 bucks. They all know about that. Anyways, there's so many reasons that I think the government would push for CBDCs. And yeah, one is those, one of those, I think we monitor monitoring transactions. So I, again, this is all speculation, but I would be, I'd be sort of surprised if this doesn't happen in the next 10, 15 years is. Well, if you, if you, let me ask you this real quick, right? So, right.
00:26:26
Speaker
What would stop the government? Let's just use the dollar right now, because that's everything that me and you understand. What would stop the government from going, hey, you know what? We're done printing money. We're done. The coins, everything, we're just done. It's all going digital. It's over. Whatever you have in your pockets, whenever it goes through circulation, you could pay cash for the next 10 years. But eventually, your money, the dollar isn't going to be worth the dollar anymore. It's just like a collector's item now. Wouldn't that become a cryptocurrency in and of itself?
00:26:55
Speaker
What would become a cryptocurrency, like the US dollar? The US dollar would become a crypto because it's digital now. Yeah, it'd be a digital money. That's why it's central bank digital currency. Now, is it backed by cryptography and like
00:27:10
Speaker
what do we mean by cryptocurrency and oh, the blockchain lot stuff like, yeah, there's some level of digitization of the dollar. But that does not mean it's remotely the same thing as Bitcoin. And that's why I think I think that's where things will go is basically we'll remove we will suck out actual tangible physical dollars and coins from circulation, and you'll be forced to use digital currencies.
00:27:37
Speaker
Again, I think they're gonna push that for a few reasons. One of those is for primarily is gonna be for monitoring where your money goes. And then also they're gonna say, oh, like, this will make it easier for us to give you your monthly subsidy, which I think they're gonna do is everyone's gonna get so many dollars per month or whatever, but they're gonna monitor your spending. And it's like, hey, Cody, y'all's family, y'all get 500 bucks a month for existing. Congratulations.
00:28:06
Speaker
But again, there's going to be parameters. You have to spend that $500 quarterly to keep money in circulation, because that's what keeps our economy going. Two, I think it'll be where like, hey, Cody, if you're using your money for things that we don't approve of,
00:28:21
Speaker
Next quarter, you're not getting your 500, you're getting 250. You do it again, the following quarter or following month, you're not getting anything. Like, hey, you spent too much money on fossil fuels or too much on red meat, or I don't know, maybe you gave to this organization that we don't agree with.
00:28:37
Speaker
You better watch it. And I think they're going to try to force people to use their money in a way that they want you to. You know, this is big. Again, this is tin foil hat stuff, like most people would say at least. But if we follow like what the World Economic Forum is pushing.
00:28:53
Speaker
It would indicate this is probably the direction we're heading, which I think Bitcoin is the antithesis of this. And yeah, I think this is coming to a head of battle of these forms of money from self-sovereignty and
00:29:09
Speaker
relative surveillance proof. Bitcoin is not anonymous, but it's certainly more surveillance proof than a central bank digital currency would be. I think that's another reason besides number go up and I'm trying to increase my purchasing power from protecting my family and not
00:29:31
Speaker
allowing Uncle Sam to come in and say, like, Jim, you can't give that organization. I think that's another reason to own Bitcoin. I actually saw someone last night I was reading I was on Twitter and I saw some dude posted that Bitcoiners only own Bitcoin to increase their like to make more money and that anyone who says otherwise is basically lying, which I disagree with. I think there's a lot of good reasons to own Bitcoin outside of I think it will increase my purchasing power. There's a lot of use cases outside of that. So.
00:30:01
Speaker
Yeah. Oh, man. You're super tin foil hat right now. Well, then I'm going to add to that. Is Bitcoin just another way for Skynet to take over and become sentient? AI is coming, chat GPT. And now we got Bitcoin terminated right around the corner. Judgment Day coming down.
00:30:15
Speaker
I think that AI will discover and begin using Bitcoin because it will recognize that it is the superior form of money and that can transact itself. So you will have AI systems that you give permission like, hey, you do your job and here's your budget to do these tasks and you put Bitcoin in these things and then yeah, it will go out and perform a task like, hey, I have this AI system, I need to build spreadsheets, but it can't do everything for me. So it's gonna use other AI systems that maybe you've built
00:30:44
Speaker
to bring in attachments to it, but your attachments cost 10 SATs. Well, my AI spreadsheet system is going to go find your system. I know this is a good purchase. I have the ability and authority to give you X amount of SATs for a transaction, and it will do that, and they'll communicate to each other. I think that's going to be done over the Bitcoin network.
00:31:08
Speaker
All right. So Skynet is coming around and Terminator's coming around. So I need to buy more. So I could be more for the robot overlords to like me. Correct. We're talking about, I'll put this more towards a Terminator two, where he comes back. He's a good guy. Yes. That's the best one, by the way. I'm just throwing that out there.
00:31:28
Speaker
Yeah, terminator one was good. Terminator two was definitely the best. Yes, we're talking about would be I would say CBDC's would be the the the dude that dresses up as a cop. And yeah, the T1000, the liquid guy. Sweet. Yeah, he he looks like the good guy, but he's clean cut, looks good. But there's a level of
00:31:56
Speaker
authority there that again I'm not trying to obfuscate authority like I'm not trying to hide taxes like these are narratives that are put out like people who like Bitcoin like it because you don't pay taxes like that's not that's not true it's a matter of like what is a better form of money that's where a lot of people come in like you like Bitcoin because you're trying to make money it's like no I like Bitcoin because it's better money
00:32:19
Speaker
Yeah. So I think Bitcoin is honor Schwarzenegger in Terminator 2, not Terminator 1, where he's trying to kill you. It's your friend. Good. Yeah, right? All right. So all right. We're going to move away from the Bitcoin talk for a little bit. And I came up with this question this morning when me and Jess were driving back after we got a cup of coffee. So inflation's going up at 2% per year.
00:32:41
Speaker
is what we're talking about, right? And right now it just pops in my head, like, let's say, right, there's no number basis for this or evidence, but let's say right back in the 1940s, people were making a dollar a day, right? And there's penny candy and gas was like five cents, right? And now we're making $15 in minimum wage, right? But gas and everything's gone up with how much we make, right? So eventually, let's say 20 years from now, I'm making $100 in minimum wage.
00:33:09
Speaker
but a house costs me $5 billion, because it's sticking with and we're shifting. Eventually, aren't we going to reach that level of that Zimbabwe billion dollar that you have? We're eventually just going to be handing around money. It's going out of style. And this isn't just the US global economies inflating. And it's just like, well, can't we just reset and be like, OK, everything's back down. We're moving the decimal spot three spaces again. We're starting over.
00:33:37
Speaker
Yeah, I think the writing's on the wall. That's where we're headed. I'm not aware of a case in history where a fiat currency has worked out and they're able to just taper inflation over a prolonged period of time and actually go back to a
00:33:56
Speaker
total deflationary, disinflationary, reset, act like none of this happened scenario. We're going back to 1940s prices. I don't know how you would do that. That would be pretty much impossible from the government's perspective. We have so much debt. How in the world, our debt is priced in US dollars. How would we ever pay off $34 trillion of debt if we made it where
00:34:24
Speaker
one dollar is worth way more than it currently is.
00:34:29
Speaker
Suddenly, that'd be like, if the dollar was worth what had the purchasing power of $10, well, suddenly instead of $34 trillion, we have whatever, $340 trillion of debt in purchasing power and cents. The government said, I don't wanna do that. If anything, they're gonna make it worth $34 trillion is like paying off $10 trillion of debt. And to do that, we're gonna have to make money cheaper. And when you do that, that's done through inflation. And it's just endless cycle.
00:34:56
Speaker
So yeah, I don't see how it'd be possible. Now the crazy thing here is there's a few parts to that. One, like what you've described is, I mean, it's manipulation, it's a sneaky tax on people. There's so many issues with this. Let me think here. So one issue is when you have inflation, you are forced to invest your dollars in order to just keep up with, keep your purchasing power.
00:35:25
Speaker
there. Now, the thing is, let's say inflation is 10%. Okay, well, now I have to go buy assets that will appreciate by 10% in order just to keep up with my current purchasing power. Thing is, if I make 10% on investment, I have to pay capital. Let's say I hold it for a long period of time, so it's long-term capital gains. Well, now I have to pay, what, 15 to 20 to maybe have state taxes, 30%.
00:35:48
Speaker
capital gains tax on that. So in order to keep up inflation, I have to invest, but then the government is going to tax me because I made money off of that. But yes, I technically made money, but I did not increase my purchasing power. So it's a double tax. You're taxed by reducing your purchasing power, but then you're taxed because you're trying to just keep up with that purchasing power. It's super manipulative and really dangerous.
00:36:11
Speaker
Sorry, where are we going with your initial question? Oh, no, that was good. See, this is why it's so much fun because I like to set you off on rants and see where it leads. Well, it's dangerous. No, it was just, um, yeah, no, it's just, I was just wondering like, why, especially like, okay, we're in debt. How many other trillion, right? Right now, just in the U S who do we owe that to? That's my next question. Like who, I know it's probably the, like, I know we have, you know,
00:36:38
Speaker
government contractors and stuff. And we always hear like those, there was a commercial, what was that two years ago, where it was like, in the future. And it's like a Chinese guy saying like, we own the US and stuff. It was like this like propaganda thing about, you know, like we need to get our, it was probably during the political season like we're coming into
US National Debt and Economic Implications
00:36:55
Speaker
now. Right? So like, but that's a lot of money, a couple trillion, more than a couple. Who do we owe all that money to? Is there some secret organization we owe it all to?
00:37:06
Speaker
There's a few types of debt. There's a spot you should go check out. It's a US debt clock. Let me see. Yeah, usdebtclock.org. It's a real-time debt clock, and it's broken down to what people think of as general national debt. It shows it over different periods of time. It shows
00:37:28
Speaker
it breaks down our types of debt. But then also in one of the final numbers is our unfunded liabilities. So going back up, like US national debt, where is like, when we say debt, what is that? Like, do we owe visa? Do we owe like, you know, the some do we owe some guy in China? No, I mean, that debt is pretty much all through like US bonds. So Treasury notes, Treasury bills, Treasury bonds. So
00:37:58
Speaker
I mean that is what bonds are. You are allowing people to lend you money and we will one day pay you that amount back with interest. We might pay you all the interest at the end or we might pay you what's called a coupon where you get interest over a period of time and the end we give you that. So if you buy a treasury note for 10 grand, you could over the next, let's say it's a,
00:38:27
Speaker
10 year treasury note for 10,000 bucks, just for simplicity sake. Well, over the next 10 years, you can get 5% per year on that note. And then at the end of that time, you'll get your $10,000 back. So the US government owes you that debt. So you are an owner of US debt.
00:38:44
Speaker
Now, so all of those US Treasury notes and bills and bonds, that's where that debt comes from. Now, this debt is auctioned off regularly, and people purchase that, like all different people have purchased that. There's a lot of governments who own US debt.
00:39:00
Speaker
We also as a US government, we own a lot of our own debt. There's individuals who own this debt. So that's where you hear people like, you know, the US owns, owes China a trillion dollars of debt, but China owes the US a trillion dollars of debt. Why don't we just cancel it and start all over? Which, yeah, that's fun to think through, but that's not really how it works. If you actually start pulling that thread, it would all unravel when you got back down to like,
00:39:24
Speaker
Who all is involved with this debt? Right in the US right now, you have tons of pensions. Pensions basically have to own so much of bonds because they're considered a safe investment. I can't imagine the amount of... I could look it up, but yeah, the amount of debt that just US companies own inside of their pension plans.
00:39:51
Speaker
So yeah, there's those people, there's other governments, there's individuals, there's our own government institution. There's lots of people. So there's that debt, but then there's also unfunded liabilities. So that's like really our total debt. So that could be like, all right, you want a bond? Maybe a...
00:40:10
Speaker
I kind of think the easiest way. So like a simple illustration and be like, all right, Cody, I'm gonna give you, or I borrow 10,000 bucks from you. And we have a note saying like, look, you have this, or I have this $10,000 and I owe you in a year, I owe you that $10,000 back, but I'll also give you an extra thousand. So 10% one year note. Okay, so in a year, I'm gonna give you 11 grand.
00:40:36
Speaker
Okay, that would be our general like gym or in this case like US national debt. Okay, so that's our debt. But then I also it's like, Oh, I forgot to tell you in in five years, I have to give you $500 per month. Because I promised you I would at some point a long time ago.
00:40:58
Speaker
those are unfunded liabilities. So that would be things and our governments would be like sole security, Medicare, those types of programs. So you lump all these in on top of our bonds that we owe, we have all these other liabilities. And it's astronomical. So like our US national debt right now is 34 trillion in change, that just turned over from 33 trillion, like
00:41:20
Speaker
a few weeks back. And like a couple months before that, it was 32 trillion, like this is escalating at a crazy rate. But then we add in like the US unfunded liabilities is actually $211 trillion. So per citizen, that's $630,000. Yeah, so we're talking about numbers that like are unfathomable of how much we owe to everybody.
00:41:49
Speaker
So then why, if our debt keeps going up, who keeps buying it? Cause like, let's just say, right. Uh, I'm going to loan you 10 grand and that's why we have credit. Right. And then I realized that you've owed me 10 grand for the past five years and never paid me back. I'm not going to give you any more money. Right. It makes sense. Right. I'm not a dude. No, it ain't going to happen. So who would buy up debt or other countries debt? Cause eventually someone's going to be stuck with the bill. This is like a game of, uh,
00:42:16
Speaker
where we're going to like that 70s show when they dine and dash, right? Eventually someone gets stuck at the table and you get stuck. Yeah. Well, there's a few things here. We, we, we pay our debts by issuing new debt. That's what we do. So it's like, Hey, we've got a trillion dollars of, uh, of bonds that are being, uh, uh, that are maturing this month. Let's say, okay, well, gosh, we need to go, we need to go sell a trillion dollars worth of bonds. We can pay off those other people's trillion dollars.
00:42:45
Speaker
That's what we essentially do as a government for decades now. It's just snowballing. Now, fortunately, it worked out in a fortunate way since 1980, basically, that we were issuing debt at lower and lower interest rates. So at first, let's say a bond was 15%, and then we were able to issue new bonds and roll that debt over to a 10%, and then a 5%, and then a 2% interest rate. So our debt was getting cheaper in a sense. Well, over the last couple of years, our interest on our debt has gone up. So we're refinancing debt at a high
00:43:15
Speaker
higher interest right now. So other thing like other governments, so one, we have paid our debt, sort of, we've paid it by, we paid it by getting more debt, that'd be like UO visa.
00:43:29
Speaker
your payments coming up. And it's like, I can't actually make, I don't have a thousand dollars in my bank account. I need to go and get a new MasterCard. And then I'm gonna roll that, I'll get a cash advance on that MasterCard to pay my Visa card. Like, look, I've always paid all my debts. It's like, yeah, but you actually have more debt. And what's happened is previously that Visa interest rate was 10%, but your MasterCard interest rate is 8%. Hey, actually you're rolling it over at a cheaper rate.
00:43:55
Speaker
you're getting more and more debt because now you rolled over that $10,000 or that $1,000 and you're adding more on, you're digging in your whole self and whole, but at least at a lower rate. What's happening now is we're doing that, but we're rolling over from a 10% interest rate to a 15% interest rate while adding more debt. And what's happened is our receipts as a government, like our income has gone down, like whenever the market doesn't do very well when
00:44:23
Speaker
corporations aren't producing and capital gains aren't being realized, all that fun stuff. Then our gross receipts aren't as high. So like the amount that we're bringing in actually is not good. So I'd be like, you know, Cody, you're continuing to spend at the same rate. You're actually consuming way more. So you're spending more money. You're rolling over your existing debt. So you're not paying that off. You're just rolling it over and you're rolling it at a higher interest rate right now. Oh, and the amount of money you are making as a house just dropped as well. So that's more like what's going on.
00:44:55
Speaker
Don't know where I am. No, that's perfect. Yeah, absolutely. Because I mean, I think that's where a lot of us get caught up where we hear a lot in the news, like, hey, the debt ceiling is going up, especially we're coming up in a political season, right? So that's all we're going to talk about is fiscal responsibility and all that other stuff. But I mean, it'd be political suicide for anybody to be like, hey, we're super in debt, and we're just going to try and dig out of it. And I don't know. It's terrible, because the best thing to do
00:45:21
Speaker
on a, if we're talking about generational, my grandkids, great grandkids, the best thing to do is to rip the bandit off and say, you know what guys, we can't afford this stuff. I mean, that's, you know, you try that as a family. It's like, well guys, we're eating beans and rice. We're not going on vacation. We're unplugging the TV. It stinks right then. That's what's good for your family.
00:45:42
Speaker
The problem is we have people who are more concerned about saving face. I just want to look like I'm a good dad. So keep watching TV. We're going to keep going to vacations. Behind the scenes though, I'm stressed as could be and we're broke. And that's where we're at. Politically, we are short-term focused on saving face rather than actually thinking through the longevity and the betterment of our country overall.
00:46:04
Speaker
So we'll keep doing that otherwise like hey we're gonna have to cut these entitlements those unfunded liabilities we have to cut some of those don't want to do that. No one wants to be the guy who says you know what so security sorry we're gonna get rid of it or medicare that's going down or the amount of money we're spending to continue to fight wars has to drop like normal to do that but.
00:46:25
Speaker
What else you can do? Like you gotta cut the cable at some point. That or keep spending. Now we're at a fortunate place where we can keep making our own money. Fortunate, sort of.
00:46:36
Speaker
Oh, that's what I was going to say earlier. One other thing is, historically, you asked, why would someone keep buying our debt? Well, we've been at a privileged spot where other countries have basically been forced to buying our debt. So we've benefited from what's called the petrodollar system, where basically other countries were forced to, when they transacted for oil and gas, they had to do so using the US dollar.
00:47:04
Speaker
So if you're forced to do that, you better keep some dollars on your balance sheet because maybe your currency, maybe you had yen or francs or whatever, and that goes down in value compared to the dollar, well, you're sort of hosed. So you're going to be forced to keep some dollars on your balance sheet. You're not going to actually keep dollars for the most part. You're going to buy US debt that will continue to pay you in dollars. So other countries, because of the petrodollar system and a few other mechanisms, have been forced to buy our debt.
00:47:31
Speaker
But that's starting to go away. Other countries are sort of getting ticked off. You're starting to see the rise of the BRICS nations, Brazil, Russia, India, China, South Africa. So you're starting to see these rise of these other countries who are saying, you know what? We're not going to transact for oil and gas using the petrodollar system. We'll use our own currency. We'll use this one. And so again, you're obfuscating the need of other countries to buy our debt. So I think what's going to happen is the US will have to buy more and more of our own debt.
00:48:00
Speaker
And it becomes this weird, we issue debt, the other guy in the same team buys it. And it's a strange game of sort of musical chairs.
00:48:15
Speaker
Yeah, that's where it all looks so choppy. That's why I love referencing, you mentioned earlier, my post-World War I picture of the German mark. There's a chart at that same period of gold to German marks.
00:48:32
Speaker
And it's showing over a few year period, the value or purchasing power of marks versus gold. And it's super volatile. So there were days and years or whatever that you look like a total moron if you sold your marks for gold, because oh, yeah, maybe maybe we do have a zillion of these things, but oh, well, it'll be fine. We'll figure it out. There were other times you look like an idiot for holding it. You should have bought gold over the long period. We all know that like German marks became
00:49:01
Speaker
truly worthless and you should have owned gold. But it wasn't clear that point when you looked at it as a chart.
00:49:09
Speaker
and did not think through actually underlying problems here. And that's what we have people who are trying to shop from the rooftops. We're not talking about Bitcoin as a hype, but rather, I knew Bitcoin would come back in the conversation. We're not talking about hard assets for hype. We're talking about, a lot of Bitcoiners are really interested in macroeconomics because they're so intertwined. Bitcoin's important because there's a hard supply cap.
00:49:39
Speaker
and uh versus us dollar doesn't and it can be easily manipulated when you have someone to centralize authority to control these things who can create print by their own like it's it's it's too much power on one one person's hands and you have what's you alluded this earlier as well um early on the conversation.
00:49:59
Speaker
but there's something, I always butcher how it's pronounced, but it's very like, it's called the like cancel on effect effect. So what that is basically is people who are closer to the money printer benefit more by printing money. So US government would benefit more by issuing new, by printing more dollars than, you know,
00:50:21
Speaker
basically anyone else. But then like big banks would benefit as well. Like right now there's these crazy temporary measures in play for banks to be able to essentially like take loans. So they're going to benefit more than
00:50:42
Speaker
whatever, like Bill Gates, but Bill Gates will benefit more than, you know, a small business owner, that small business owner is going to benefit more than like a 10, maybe like a W2 employee, but that guy's going to benefit more than like the old lady who's living off her deceased husband's
00:51:00
Speaker
pension that has no cost of living adjustment. That old lady is a person who hurts the most. Can you imagine living like, what if your only income was a pension that, like there's TRS, Texas Retirement System, pretty much almost all school districts in Texas. If you participate in TRS, you don't participate in Social Security. And a lot of TRS, TRS does not technically have a cost of living adjustment. They can give you an increase whenever they decide it's time or fitting to, but they don't have to.
00:51:28
Speaker
So imagine if you were a 85 year old woman and you spent your entire career working in, uh, the Texas retirement system or in Texas schools and you're, and you had no other assets. Maybe you're renting or maybe you own, but you just have property taxes. Let's say you rent, just take it to an extreme. You rent, you have no assets.
00:51:53
Speaker
Your income stream is your TRS, text retirement system, that technically doesn't have a COLA associated with it. And groceries go up by 25% between 2020 and 2022. And your rent goes up by 50%.
00:52:08
Speaker
but you, maybe TRS was generous enough to give you a 5% increase, but they didn't have to. Like that's who's hurt the most. That's a canceling effect. And that's why like, that's why this stuff really gets me like fired up is to think through those people. That's real. I remember
00:52:25
Speaker
I remember a couple of years ago, I was at the store, when groceries started really, it was almost exciting how much more expensive groceries were getting. It was infuriating, but yet curious to go to the store and observe, wow, I can see how much more expensive it was than it was last week. For a few months there, I always asked the high school kids, bagging my groceries.
00:52:47
Speaker
one, like how much more expensive would you say these like an average person basket is compared to a year ago? And then I would also ask like roughly what percentage of people that you all check out comment on the price of groceries. That was really interesting. But man, I remember one there's one one time I was at the grocery store and this old lady behind me, she had like five items. You're like it was really it was almost like cliche. It was like hot dogs and cat food, like coat hangers, few little things like that. And
00:53:16
Speaker
She went to check out and they were bagging my groceries and they rung up a few of the items. And then she looked and saw that already reached how much she could spend. So she was gonna have to put some stuff back. And that's infuriating. That's where you have people who are like inflationist theft. If you own assets, it benefits you. So think through like,
00:53:44
Speaker
Let's go to another country because it has experienced hyperinflation. Let's go down to Venezuela. Let's say you own a 10,000 acre ranch in Venezuela. You had a great job, you made a lot of money, and you own this ranch. But you took a mortgage on the ranch, and it's 2% mortgage for a million bucks.
00:54:06
Speaker
use Venezuelan currency. So what is it, the peso or whatever. So you buy this thing for Venezuelan dollars for a million bucks over a 30 year timeframe mortgage for 2%. But you also have other assets. You have a 401k and stock plan and all that fun stuff. And then we reach hyperinflation.
00:54:25
Speaker
the value of your pesos or dollars or whatever we're gonna call them gets annihilated. So suddenly you owe a million dollars on this thing and maybe prior, you're making a lot of money. So maybe you're making half a million a year. So that was two years of work that it would cost you to pay this thing off. But you decided to take a note because the debt was cheap. Let's go ahead and do that. Well, hyperinflation comes and suddenly you're making $5 million a year. Your salary went up by tenfold. Well, now you can pay off that
00:54:54
Speaker
land with a few months of your salary. You benefited. You just got 10,000 pristine acres of, you know, you got a beautiful stream, not stuff like desirable land. You just got for next to nothing. And your assets, if they are good assets, went up as well because people are fleeing to those things as stores of value. People who are renting and don't own hard assets,
00:55:20
Speaker
They just got annihilated. Maybe they had a few bucks in the bank. Or maybe they're not even gonna get a bank. This happens a lot in smaller countries. They're unbakable. So they had a few bucks stored away under their mattress. And that money that they just worked, if you're able to scroll away $1 a week, and finally you have enough for down payment on a little cottage, like our little condo, it took you five years.
00:55:46
Speaker
to scroll that amount away. But then all of a sudden you reach hyperinflation and that five years of savings was just turned into a month of savings. And the cost of that condo went up in tandem with how much inflation took place. You just got wiped out.
00:56:03
Speaker
Um, not only days that was, was your money stolen, but ultimately was stolen was your time, your dreams, like your family's hopes of having your own place. That's infuriating. Um, and that's, that's what happens when we reach places of like hyperinflation. It's obvious, but inflation itself, like we're okay with saying like 2% inflation is good and normal and healthy. Why? Like that is unnecessary, but is a, uh, that is a narrative that we must continue propagating in order to keep this thing going.
00:56:33
Speaker
Nice. Well, that's why I like talking to you because you get so passionate about this stuff and it gets me fired up too. I'm like, yeah, let's start mining some Bitcoins and stuff. Let's do this.
Retirement Planning and Investment Strategies
00:56:43
Speaker
So let's talk about something fun, right? Retirement. Everybody wants retirement, right? We got this whole fire movement, right? And experts and there's commercials, JP Morgan, you know, invest with us.
00:56:54
Speaker
We'll let you reach your dreams and all this other stuff. Yeah, there's people sitting in those Adirondack chairs. Oh, yeah. Just like sipping their coffee, and they're like, and I'm getting dressed to go to work. Like, oh, I can't wait to be there. Right? Yeah. So let's talk about it. I was thinking of a Seattle's commercial instead. I was thinking of people in a bathtub holding hands in a field. Well, I mean, if that's your retirement, you live how you want to live, Jim, all right?
00:57:25
Speaker
Anyways, so let's say I want to retire, right? This whole fire movement's like, you know, retire as soon as you can, right? And you had a guy on the other day who I actually agreed with where these fire people work their butts off for like 10 years and miss out on their family.
00:57:38
Speaker
And then all of a sudden they can retire, but their family's not there anymore. And that can be said for anybody who works. You get people who, investment bankers, military people, anybody like that. But let's just say, perfect world, I want to retire when I'm 50. I got a good, hopefully 50 years left of my life. And so everyone says, hey, you got to invest. Let's invest. Let's invest. OK, cool. So let's say I retire when I'm 50.
00:58:03
Speaker
but then I have an accountant or a financial planner such as you, and now I want to live on my farm and I have a fixed income, everything like that. How do I plan that out? I know your most hated thing is, I want to make enough money to retire. How do I make that happen? Because everything's so volatile. But I'm talking like the very basic stuff like, do I sell a stock a year? But then if I sell a stock a year, eventually I'm going to run out. So am I trying to plan that perfect peak of I die when all my stock runs out?
00:58:33
Speaker
Or like, how, like, I don't know. Like it is the dumbest question, but nobody ever talks about it. They're just like, yeah, invest and you'll retire. It'll be great. You invest and you retire on it. Like, what does that mean? Right. It's like, you got like 401ks and you got IRAs and everyone's like, you know, you got to do this, you got to do that. And you're like, okay, but I want to retire when I'm 55. And they're like, cool. Okay. Like, what, what, okay. I retired now. What do I do? Like, I know I'm sitting around.
00:59:01
Speaker
sipping coffee in my Cialis commercial, I get that. But like, where's my where's my money at? Right? You know, like, and where's it coming from? Yeah, that's a
00:59:15
Speaker
I got you thinking about bathtubs now. Sorry. You got the names right. I've heard so many like, oh, where's my K104? There's like a radio station or my 401k. There's a guy who thought his 401k meant that you get $401,000 when you retire.
00:59:37
Speaker
That was a given. There's so many crazy things out there. I have a notebook somewhere of the craziest statements I've heard people make about their money and retirement. One day I'll write a book just summarizing like, this is the state of the average American when it comes to financial literacy, and it's astonishing. Speaking personally, ours was, there's a song out there like, buy dirt. It's a country song, but growing up on a farm, it was, hey, if you got land, you got money.
01:00:07
Speaker
Like, that's it. Cool. But now all of a sudden we go into stocks and they're like, hey, if you've got a piece of paper that says you own some Apple.
01:00:14
Speaker
You got money, like, okay, but where is this money? I want it, like, it's my money and I want it now, right? And so- Yeah, give me my money, man. But like, so then do I like, would I have to like plan it out where like you say, Hey, Cody, you're retiring at 55. Congratulations, me and you high five each other. Woo. Great. So then for the next, let's say 30 years, I'm selling 10 stocks a year to survive. Is that what's going on? Or how do I do that?
01:00:41
Speaker
So I try to make things as simple as possible. There's enough complex things in the world, the things that can be simplified. Let's simplify them. And, uh, yeah. So how we look at this in a general sense is a few fold. So one, we're going to look at fixed income sources that you'll have during retirement. So that could be sole security or a pension or a military disability. It could be income from a rental property, things like that. Okay. So let's say.
01:01:11
Speaker
Let's say that's 50 grand a year that you'll get from military disability and pension and social security. So 50 grand a year from fixed income sources. All right. And then let's say you have $2 million of investment assets. All right. So you got $2 million there. And let's say y'all needed $100,000 a year to live the lifestyle you want. So we have 50 grand a year that we know is coming in.
01:01:34
Speaker
We need 100,000, so we need another $50,000. We have to get that from your investment assets. So what we're trying to figure out is fixed income plus a distribution rate of investment assets equals how much you can draw from or you'll receive annually during retirement. And the goal is to get that equal to or greater than, in that case, $100,000, then we're at 100%.
01:01:59
Speaker
Okay, so what we look at that would be, so a distribution of investment assets. So in that case, you have 2 million bucks. So if you have $2 million, and this is again, this is speaking in general terms, but let's say you're in a diversified portfolio. So like a 60-40 portfolio is what's utilized in the case studies here. So 60-40 being 60% stocks, 40% bonds, diversified portfolio. All right, so
01:02:28
Speaker
Here, before I go too deep, there's a study done to figure sort of this question out. So back in the 90s, the market went up for a long time and you all these goofy talking heads on the news saying like, hey, the market's up by 12% this year. You can pull out 12% of your portfolio and you won't run out of money. Like you can pull out 12% every year and you'll actually keep your initial basis in there because you're just pulling out the growth.
01:02:50
Speaker
which sounds great and it gives a lot of people a sense of false hope. The problem is what if the market doesn't go up by 12%? What if it goes up by four? What if it goes down by 12 or goes down by 30% and you pull out 12% of your portfolio? That's what's called sequence of return risk. So I'm not talking about just the general returns, maybe your portfolio on average returns 12%, but in what order does that average of 12% take place? Like if you have a negative 25% followed by a positive
01:03:19
Speaker
60%, well, that's a good return. But if you have that negative 25% for the first couple of years, and you're pulling out 12% of your portfolio, you're in big trouble. So the order of which returns happen is really important here. So anyways, in the 90s, you had these goofy people saying, hey, you can pull out so much of your portfolio. You had a guy named Bill Binion who went and said, well, that doesn't seem quite right.
01:03:42
Speaker
Let's look at more data to figure out what number is in reality. If it's not 12%, then what is it? He went and did a study. I believe it went back to 1926. Then he actually redo the study going back to the mid 1800s a few years back to grab a distribution rate. It's called the safe withdrawal rate. Basically, he wanted to see, all right, if you retire and you're going to live for 30 years in retirement,
01:04:06
Speaker
What dollar amount of your portfolio can you pull out in year one and then adjust that amount according to inflation annually for every year thereafter? And in any situation, would you have not run out of money at that 30 years? So that could be like retiring and right before the Great Depression happens or in the early 1970s during these terrible times of retire, how much could you pull out of your portfolio then?
01:04:34
Speaker
So the number came out to about 4.2%. They rounded it down and said it was 4%. So there's a rule, it's called the 4% safe withdrawal rate. So in reality, if you only pull out 4% of your portfolio, like 98% of the time, you would die after 30 years with more money than you started off with, because that's accounting for a safe withdrawal rate during these worst case scenarios historically.
01:04:57
Speaker
So to answer your question, that's a big explanation for how we arrive at this. But basically, if you have that situation, if you have $2 million of a diversified portfolio, if we utilize the Trinity study for this, then you can pull out 4% of your portfolio, which would be 80 grand per year. And statistically, you would not run out of money over that period. Actually, 98% of the time, going to historical numbers, you would die with $2 million or more dollars.
01:05:23
Speaker
in that situation. There's a lot of times you would die with way more than $2 million because you're pulling out only 4% each year. And again, if 4% first year, that'd be 4% of 2 million is 80 grand. Well, then let's say inflation the next year is 5%. Well, you would adjust that number by 5%.
01:05:39
Speaker
Now what we actually utilize is what's called guardrails. So for our retired clients, we use a higher distribution rate. We use a five and a half percent distribution rate, but we utilize what's called guardrails. So a guardrail is like, all right, you have $2 million, five and a half percent distribution rate would be $110,000 in year one.
01:06:00
Speaker
Now, if your portfolio goes up during that year and $110,000 actually is now only 3% of your portfolio, we're going to give you a good raise the following year. If the market drops during that first year and $110,000 is now like 8% of your portfolio, well, that year we're not going to give you a raise.
01:06:22
Speaker
Um, we actually, if it's bad enough, might say like, Hey, instead of going on four vacations this year, you're going to go on two, but that allows for a, by having those parameters, it allows for a higher total distribution rate because you're monitoring, uh, the spin down of your portfolio. So with that, what I want is for you to be able to call me and say, Hey, I need you to go buy that pontoon boat. You've been eyeing up really badly.
01:06:43
Speaker
actually buy two, you have too much money. Yeah, there's way too much money here. Yeah, like you just don't there must be a rounding error somewhere because you got to go buy a lot of stuff. And yeah. Okay, no, that answers that. Okay, now I'm going to change it again one more time on you, right? Because this is from an outsider's perspective, right?
01:07:01
Speaker
the stock market. All I know about it is from what I've seen on the Wolf of Wall Street and the dark night rises when Bain walks in and the guy's like, there's no money here. And he's like, why are you all here? And then he's like, he's the dude up, right? But like all there's a bunch of people walking around yelling sell, sell, sell or buy. And it seems like chaos, but yet we base everything on these NASDAQ's and all these other
01:07:23
Speaker
portfolios being like, Oh, they're going to make more money. So buy more stocks or it's worth more. So it seems like it's all built on faith and people just like, it seems like a giant fantasy football game to me. Yeah, sort of. Yeah. So, so like we're basing all of this on that and people put so much faith into this, like, but why? Like what's the whole point? Well, you have to keep in mind, personally, I don't think
01:07:52
Speaker
that our market currently is built on true fair and open free and open markets. So that's where it's like, I want to invest in good companies. So that's what you're doing. When you buy a stock, you're buying partial ownership of a company. If you think that the company, the value of that company is going to go up, if you think they're going to have free cash flows, they'll distribute to dividend, then maybe you want to own some.
01:08:17
Speaker
bond is debt. That person is investing in something good, but they need some money in order to build up infrastructure. In a year, they'll give me that initial money back plus a little bit more. You don't own that. They're building a bridge. You don't own the portion of the bridge. You just loan the money as they can build the bridge and they give you payment on top of that. In reality,
01:08:39
Speaker
You're just looking for good places to deploy your money. From a risk-adjusted perspective, what can give me return on my money greater than what my cash would be doing? And that's where you deploy your dollars. The thing is, where we're at right now, that's not the case. Owning companies that actually are solid and make money,
01:09:01
Speaker
is not necessarily what's in vogue. It's what companies have access to cheap debt and can continue to scale and grow. And like maybe they're zombie companies. They're not making any money. Or maybe it's debt that we know is terrible. Like there's a few years ago, countries were issuing negative interest rate debt. Like you give me a thousand bucks and in 10 years, I'll give you $900 back. That's ridiculous. Who would buy that? You're not gonna buy that because of
01:09:31
Speaker
any rational thinking.
01:09:33
Speaker
you're buying it out of speculation of manipulation. You're buying that because you think that the centralized authorities are going to take interest rates where instead of, right now you buy it, you buy $1,000, you'll get $900 back. Well, if you buy it next year, you only get $800 back. So I was like, man, that $900 back is way better than $800 back and someone's gonna want that one later on. That has nothing to do with the rational investments. That has to do with playing this goofy game.
01:10:01
Speaker
So there's a I think there's a good reason that's not easily understood.
01:10:08
Speaker
Yeah, in general, what we should be observing is the market figuring out values of certain things. So yes, I think that this company is going to do well, that they're deploying their capital well, they have good marketing, they have good executives, they have what's called a moat around the company. So they have something that's protecting them from outside intruders that's gonna protect their longevity. So they have a good moat as a company.
01:10:37
Speaker
They produce free cash flows and they're growing whatever it's like that's a good place to put my money. So that's not what works and other people like i think it's i think it's valued fairly right now i don't think it's gonna go up so i'll sell it so i can buy something else that i think will do better and the other people are saying like i wanna buy that i want to sell it perfect let's make a market market when they connect buyers and sellers on.
01:11:00
Speaker
That's why there's so much yelling. It's just people trying to communicate what they think is the best place to put their money at. But again, we've lost touch with reality. We lost the plot so long ago. Even right now, with the rise of index funds,
01:11:18
Speaker
Very few people even know what the heck they invest in. You go buy an index fund, you own everything. In that thing, there's so many like, cruddy companies buried deep in there that don't have any business being owned, but they're carried along because they're part of the index.
01:11:36
Speaker
Sort of like a real estate investment trust as well. A REIT is like a mutual fund with real estate. Maybe you own some place in the bottom of that REIT is like some cockroach invested apartment complex in the middle of a junk
01:11:56
Speaker
little spot that no one wants to rent, but it's being invested in just because it slipped into that thing. With anyone in reality, if you actually went and visited that place and looked and said, I think it's a good investment, no one's going to buy that thing. It's slipping through the cracks because we got to keep the money going. Yeah. It is a big gamble. It's a big fantasy football game then.
01:12:18
Speaker
Yeah, sort of. Yeah. Except for, well, and that's where it's hard, right? Especially when we're talking about, you know, being 35 year old who didn't grow up learning about this stuff is that you're like, uh, there's too much to know here. The hedge funds, index funds, all of a sudden we're talking about mutual funds and everything. I'm like, I don't know what we're talking about anymore. It's just getting chopped up into bits and don't know. Um,
01:12:40
Speaker
But the last big question I have for you, shorting stocks, since we're talking about the stock market. So the movie The Big Short, Christian Bale's character is jamming away on some drums or something like that. And he's like, I'm going to short all mortgage companies' stock for some reason. I don't know why. I didn't understand half the things that were going on in it. But here's my question for you. So let's say you buy stock in, let's just say AIG.
01:13:10
Speaker
That was one of the banks that went under, right? I think in 2008 when this happened, right? You own stock and I short them. I said, hey, now something's going to happen. These guys are going to fail, right? So I'm basically betting on them failing and you're betting on them winning. So we're basically in a horse race against each other. Yeah. Yeah. So let's say then they do, they do fail, you know? Okay. Like they did historically. Where does that, so I shorted the stock. I said, yeah, you're going to fail. Well, their company goes under. Do I get your money then? Is that where that money's coming from?
01:13:39
Speaker
What you're describing is options trading. Options can get super complex, but it doesn't have to be that hard. There's what's called call options and put options. Call option.
01:13:57
Speaker
is if you think the value of something's gonna go up, here, so we'll make it, you're the purchaser of a call option. Okay. So you think that AIG is going to go up, but you don't wanna go buy AIG right now, but you want the ability to buy it later on for 30 bucks. So today it's trading at $28 and you want the ability to buy it for $30 in six months.
01:14:22
Speaker
All right, cool. And I think that AIG is going to stay flat or go down. Well, maybe I own AIG, so it's a covered call. Well, I'll say, all right, well, I want to keep holding this thing, but I don't think it's going to go up to it's 28. I don't think it's going to go up to 30, maybe up to 29. Well, yeah, I'll buy. We'll come up with agreement where you have the ability within the next six months to purchase it for $30 a share.
01:14:48
Speaker
And I have to, if you exercise your option, if you say, Jim, I wanna buy this thing from you for 30 bucks, I have to give it to you for that amount, okay? Now, you have to pay me for that option.
Options Trading and Market Strategies
01:15:01
Speaker
So you are giving me a pre-agreed upon amount that you deliver upfront for that agreement. Maybe it's 50 cents.
01:15:12
Speaker
Well, I get 50 cents to take that risk of it going up too much. So that day I profit 50 cents. So what happens is, let's say in this scenario, again, it's called a strike price is $30. So that's, actually, let's stay away from terminology. It's 28 bucks today. You have the ability to exercise at 30. You give me 50 cents for that ability to exercise, okay? For the next six months.
01:15:38
Speaker
If AIG goes from 28 to 35, you would exercise because you'd buy it from me for 30 and immediately sell it if you'd like for 35. You just got $5 per share built in. You paid 50 cents for the ability to do that.
01:15:53
Speaker
I lost. Well, I own the stock, so I made the difference from 28 to 30, but then I lost the other run-up. So I made $2.50. You made the difference. If AIG goes up from 28 to 30, well, you're not going to exercise on me because, or let's say it goes up to $29.99, okay? Well, you're not going to exercise because why would you buy it for $29.99? You don't have the ability. You have to buy it at 30.
01:16:22
Speaker
So I win, I made 50 cents. It went up, so I made the amount that went up by, and it made my 50 cents. Same thing if it goes down. Now if it goes, let me think here. If it goes up to, let me think. Here, let's skip through this stuff. You're talking about shorting. So shorting is another option. It's the ability to,
01:16:54
Speaker
you're hoping a stock goes down, so you have the ability to sell it to me at a predetermined price, okay? So let's stick with AIG for 30 bucks, and you think that AIG is gonna go to zero, and I don't think that's the case. So I'll say, all right, well here, you think it's gonna go to zero, you have the ability to sell it to me for 30 bucks later on.
01:17:18
Speaker
And we know that agreement. You're going to pay me for taking that risk. So you give me 50 cents for that right to exercise. So AIG goes from 30 to $1. Then you can go buy it for $1, but then sell it to me for $30. You just built in a $29 gain. So we're kind of playing the prices right a little bit.
01:17:43
Speaker
Yeah, you're speculating on movement. The thing is, there's different option periods. You can say, all right, for that price that you're paying for the ability to force me to do something, that price is going to be dictated based off the market. If we're talking about a stock that moves a whole bunch, it's going to cost you more money in order to get that option.
01:18:08
Speaker
If we're talking about something super stable, it doesn't really move. Well, that's going to be super cheap option because it's more likely it won't move into that band. Also, we're talking about timeframes. If we're talking about an option that expires tomorrow, the chance from it going from 30 to zero in the next day is super low, so it's going to be inexpensive.
01:18:24
Speaker
If we're talking about a year long open option period, let's be more expensive because more things could just happen. There's how close it is. So like if we're talking about something that's like it's called being out the money. So if it's.
01:18:40
Speaker
currently trading at 40 bucks, and you have the ability to exercise at 30. That's a long ways, so it's going to cost less. Versus it's at 30, and you can exercise at 30. That's going to be a lot of money. You're going to have to pay me in order for me to take that bet. Because if it drops any, you're in the money. So yeah, I know I just did a terrible job explaining this. No, it sounds like a lot to me to simplify. I like sports betting and stuff like that. So it's just like being at Vegas and being like, hey, the Browns are going to win the Super Bowl.
01:19:10
Speaker
Yeah, dude, that's a thousand and one odds. All right. Let's do this. I'm going to put down $10, right? Compared to, you know, betting on, you know, one of the better teams, uh, chiefs winning the super bowl, right? So, and the more volatile it is, the more money you could make off of it.
01:19:25
Speaker
Correct, and like maybe the less it costs you, yeah, like betting on some crummy team is probably gonna cost you very much, you know, because the chances of it are slim. So you're considering, there's someone else on the upside of that trade who has a different opinion than you. Yep.
01:19:42
Speaker
and you're just meeting an agreement to say, I think it's going to go this, I think it'll do that. That's why in the big short, he went to the banks himself, in the movie at least, he went to the banks and was like, hey, I want to short these mortgage backed securities. And they all laughed at him because there's no way it's going to go down. He had to create this new product that would allow him to do this. So yeah, he was
01:20:04
Speaker
He was forcing them, or he was, he bought the ability to be able to buy that company back from them at a predetermined price. So if it goes to zero, he has these big, built-in gains. Now at the end of the movie, Steve Carell was like, we got to do it. It's now or never. You know what I'm talking about? He's on top of the skyscraper. It's actually not him who says that it's the dude who's yelling at him. He's like, he has this moral conflict. Should he actually do it? Will he be like the rest of the bad guys? And finally he's like, fine, we'll do it. They make a gazillion dollars.
01:20:31
Speaker
Um, in that scenario, I think what that came, I mean, tell you, you could exercise at zero because someone, you got to get the thing delivered for 30 bucks a share. So you just made 30 bucks per share. I think that situation where it's like, if you don't do it now, it's never going to happen. Um,
01:20:46
Speaker
That could have been, again, I'm not the person to talk to about options by any means. If you can't tell, I haven't thought about options in eight years since I took all these tests. I don't trade options. I'm a pretty boring dude. The only time options are considered is with clients who own, not to confuse things, but stock options or equity positions in their companies. We might look at options to hedge their risks of companies.
01:21:09
Speaker
If you own private, if you own a company's stock that you can't sell, it's going to invest in three years. Maybe we could buy some options in order to hedge that risk of something you can sell. That's really the only time I even think about these things. So that's why I sound like an idiot right now. You're someone way smarter than me. I'm the one asking about, you know, Christian Bale drumming on drums to figure out how to short a stock. Nah, you're good. Anyways,
01:21:34
Speaker
I don't know where I said, Oh yeah, at the end of the movie, he's like, we got to do this. It's now or never. There's a few reasons that could happen. Again, like options expire. So like, I mean, they basically automatically exercise. If it makes sense, like it'll just exercise it for you. But maybe those wouldn't automatically. And maybe they actually expired that day. And it was like, we got to do this before they expire and you'd lost all your money. Or maybe it was like a liquidity place, like
01:21:56
Speaker
This place is literally not going to have money to pay you, so you have to exercise now. If we're talking about Apple stock and you short Apple stock from $100 to $95, you would make that and it went down, you would get that difference. That's why in that movie it seems so crazy at the end is probably because we're talking about not just shorting a company, we're talking about this cataclysmic collapse.
01:22:18
Speaker
Yeah, and I mean, well, if it was just a normal like, ooh, you made five bucks, you wouldn't make a movie about it. We'd be like, well, that was the most important movie I've ever seen in my life. The OK short. Wow, that was sweet, dude. You bought yourself a 24 pack of Bushlight on that. Good job. I'm happy for you. All right. So now we're going to come up to the end of this, but I have some fun questions for you, OK, to change it up. All right. So here's the first
Hypothetical Historical Meetings and Personal Investment Choices
01:22:42
Speaker
one. Are you ready for this? Let's do it. All right. If you can meet one person from history,
01:22:47
Speaker
or right now, dead or alive, who would it be and why? I guess it's probably super cliche, but it'd be Jesus. Right? Yeah. That's a good one. I was trying to say Warren Buffet. I'm not going to lie to you. No, no. Jesus is way better than Warren Buffet. Yeah, we can all agree upon that one. Come on now. I feel like, yeah, we got some of the cop-out answer almost. Yeah, that was okay. All right. Let's do, okay. Besides him, obviously, yes, okay.
01:23:17
Speaker
Who else then? Yeah, I guess my other answers would be super cliche. It'd be other apostles. So probably Peter, maybe Paul. Okay, you can't. Okay, we're moving on to another one. You're a cheater. No biblical person. Yeah. Man, I don't know. Maybe King Griffey Jr. I'm just kidding. That was my favorite baseball player. He was my first glove, man, back in the day. I had the blue glove. It was sweet. It was signed by him in gold. It was the coolest glove I ever had.
01:23:44
Speaker
I do everything I hit left handed on all sports because of when I was little, like I'm naturally right handed, but I wanted to be a lefty like Griffey. So I screwed me up. Uh, but isn't it amazing? Isn't it amazing? Like a guy like that, right? Like, I mean, yeah, he was good and the team was okay, but they weren't phenomenal, right? There's not like a Derek Jeter out there. Like.
01:24:05
Speaker
the best ever, but everybody from our age group knows exactly who King Griffith Junior is. Best swing in history. That's amazing. It's awesome. It's like being from Minnesota and if you don't know who Kirby Puckett is, it's like you might as well just get out of the state, man.
01:24:20
Speaker
I realize maybe my great, great, great, something grandpa many generations down was a guy named John Rogers, who was burned at the stake by Bloody Mary for translating the Bible to English, like people's English in England, and he was burned at the stake while his wife and kids watched, but one of those kids was my great, great, great, something grandpa. That's pretty crazy. Dude, that's nuts, man.
01:24:49
Speaker
All right. Yeah. Wow. All right. That's a bold one. All right. Cool. All right. We'll make this one fun. All right. Take a trip to the beach or to the forest. Which would you rather do? Is the forest flat or mountainous? Let's say, okay. Now it's three. All right. The beach or you can go to like Yosemite where it's mountainous hiking or it's a flat forest like the plains of like Montana.
01:25:15
Speaker
Yeah, I do the mountains. I grew up as a beach guy, but man, I just love the crisp mountain air, a good mountain, like a good stream of mountains and maybe Aspen Grove. Can't beat it. Nice. A little town called Aspen. Yeah. All right. All right, cool. Now, let's say, right, you go back to being
01:25:36
Speaker
You're just getting out of college. Let's say you're not going to start your own company. You're going to go work for a company, right? And they offer you this. They say, hey, we can either give you invest in 401k for you, or we're going to start giving you a Bitcoin in your retirement fund. Which one would you pick? We already know which one you would pick, obviously. Is this me present getting out of school, or is this me graduating in 2011? OK, 2011, Jim. And then let's say there's another person of you who just is about to graduate this May.
01:26:03
Speaker
and you already have your job and they call you, let's say I'm about to graduate this May, I'm gonna go work for a company and I call you up and I say, hey Jim, I need some advice. They're offering me these options, which one would you do? So let's start out with Jim in the 2011.
01:26:16
Speaker
2011, heck yeah, I take Bitcoin. No, no, that's my mind. You can buy five, three pizzas with it. It'd be awesome. Uh, present Jim, uh, if, I mean, let's say let's all think equal, they'll give me a hundred dollars a month in company match. Uh, if I have to do the 401k to get that company match, I'll do the 401k up to the company match. If they say, Jim, I'll just give you a hundred bucks. You can put towards, I'll put it towards a 401k or towards Bitcoin. I take the Bitcoin.
01:26:43
Speaker
Okay. Awesome. I do like participating in 401Ks up to a company match, at least depending on your situation and tax situation, all that. My wife and I, we were both fortunate enough in our late 20s to work with companies with fantastic matches. My wife worked at a company that had a dollar for dollar 10% match, and the company I worked had a dollar for dollar 7% match. We took advantage of those and invested it really well and made a whole bunch of money. Now, my wife, most of her friends, she worked at an airline
01:27:12
Speaker
Most of her friends did not participate in the 401k because they were like 26 and I was like, oh, I just want to go to brunch and like, you know, I just want to travel, which is great. Like go to brunch and travel. But like, but they were 30 and had never put a dollar into their 401k plan versus my wife has a whole bunch of money in hers. Like, yeah, there's it's good. It's free money. So. OK, and then this this is a question that my son asked me the other night. And so I got to ask you this. If you could only eat one food the rest of your life, what would it be? Would it be healthy for me by default?
01:27:43
Speaker
Yeah, like, yeah, sure. Christmas Chronicles 2, you eat cake and it's like broccoli or something like that, right? I don't know if you've seen that yet, but yeah. I haven't. You'll live like you'll be who you are, whatever, but you can only eat one food. It's like literally every other food disappears off the planet except for this one food and you have to eat it. What would it be? Oh, that's tough. I'm conflicted. Maybe either like a medium rare ribeye or fillet or
01:28:12
Speaker
or chocolate ice cream. That was like the most Texas answer I've ever heard in my life. It'd be one of those. If I was going to make more things, we have more more Texas would be like, or maybe enchiladas. Nice, nice. Awesome. Okay. And then the last thing I got for you is what would you give? I was talking about a person who's just graduated from college or trade school or whatever, let's say mid twenties, right? And they're about to start,
01:28:42
Speaker
Hey, we just got out. I don't have any debt right now. What advice would you give them right away?
Career Exploration and Self-Discovery Advice
01:28:50
Speaker
I really encourage people to think through investing your time and in yourself really well. A large part of your 20s is to learn about yourself and to learn about
01:29:03
Speaker
the world and things around you. Investing by trying stuff is really important. One, try things.
01:29:17
Speaker
I say this, I try to hedge what, how to say this. So try things and be willing to stop when you recognize that you don't enjoy or aren't good at something, but also don't just sit around waiting like, Oh, what am I like? I don't want you to sit around, like think about what you're passionate about while not doing anything. You're not going to find your passions or your talents by doing nothing. So try stuff at the same time. Don't allow that. Try things, side of things to be an excuse to be flaky.
01:29:46
Speaker
Do things really well. You also won't learn about yourself and learn about things unless you're doing them well. Like if you're just haphazardly trying things and just flippantly going about it, you won't get enough out of it and also you'll be cheating other people. So yeah, invest in yourself and learning about things. Kendra and I got married when I was, I just turned 22. I always romanticized being a poor newlywed and we were super poor newlyweds. Like 2013, I think our gross household income was like 13,000 bucks.
01:30:16
Speaker
like super broke. And I tried different weird jobs and I started a business that was a flop, but it was so much fun. And like, we just tried different stuff. And then I actually went to, I had a career job for like four days.
01:30:32
Speaker
And I remember those four days. The first day I was like, wow, this is sort of fancy. I had a big office and it was like the 60th floor, this fancy high rise in Dallas. It was a big corner office, all glass. And the first day I was like, this is sort of neat. I feel like an adult. Day two, I remember getting in the elevator and it was like, man, when you're a kid and you think I don't want to grow up because I don't want to be an adult, this is the adulthood that you picture that you don't want to be. By day three, like I began praying and fasting about whether I should be there. And day four, I quit.
01:31:01
Speaker
And then I went from a few different jobs and I tried stuff. I remember feeling a lazy bum in that period. I felt like my in-laws were probably disappointed for letting my wife marry me, because I wasn't in a secure job. And it wasn't because I wasn't trying things or trying to do well. It's because I wanted to explore and figure out where I should be and what I am good at. Meanwhile, I have a few friends who have since told me this, almost apologetically.
01:31:27
Speaker
I have a few friends who worked really decent jobs doing things that were safe and secure and comfortable that they knew weren't long-term jobs, but they were the responsible thing to do. And those friends since are now like we're all in our early mid thirties and a lot of them are now, they've recently left those jobs because it was sort of like, it worked out really well in your twenties. And now they're sitting there like, I don't know what I want to do when I grow up, but now I'm married with three kids and it's really hard to like,
01:31:55
Speaker
try new things at this point. And I have a lot of friends who have since told me, like, Jim, never told you this, but I definitely thought you were a bum for a few years there. And now I realize that you learned enough about yourself that you were able to go deep. So for me, when I started in finance, I didn't know what a CFP was or really financial planning was at all. I just knew I wanted to help people with their money. That's it. And that's where I started. And I took a friend of a friend to help me get a job at a big firm with that premise. And from day one, I found a...
01:32:25
Speaker
vice president was like, hey, how do I have better conversations with people? How do I get in front of people instead of on the phone? Oh, you need to read these books. You need to get this certificate. You need to go to this position. I started running so hard. I was working 70 hours a week and reading any chance I could. And I went from job to job to job and certificate to certificate and all that fun stuff and grew. And over time, I didn't know that I eventually wanted to have my own financial planning company serving people in this way.
01:32:52
Speaker
But I did get more direct like, OK, I don't want to do roofing sales. I know that for sure. Oh, I like working with people with money. Like, oh, I actually like working with people with like their holistic money picture. Oh, I like working with people about these things. Oh, I need that in my own company. Oh, I like working with this type. Like, oh, I want my company to look like this. Eventually I've ended up here. So, yeah, I came to that conclusion by learning about myself and also what was out there. Nice. Well, look at that.
Conclusion and Disclaimer
01:33:20
Speaker
Awesome. Well, that's all I got for you. Unless you got any parting shots. Oh man. I think that's it. I talked way too much, but thanks for flattering me with all of your questions. I had fun. Oh yeah, me too. And I bet it's different being on the other side where you normally just ask the question and let the guy talk. Now you got to be the one talking the whole time. So yeah, the, the, I feel like, uh,
01:33:43
Speaker
the Wizard of Oz, suddenly the curtain's gone up and it's just me behind there pulling some ropes. Just tell me. Yeah. Oh, you're a big deal in our household, by the way. So yeah. Thanks, Cody. You're the financial guru. Dang. I'm it. Nice. Awesome. Thanks for coming on, Cody. Oh, thank you very much.
01:34:04
Speaker
Hey, thanks for listening to the Intentional Living Podcast. Now, today's show is simply entertainment and educational in nature. Do not take this as tax, legal, or investment advice. If you are looking for tax, legal, or investment advice, you should go talk with a tax, legal, and or investment advisor. Again, this content is simply educational and entertainment purposes.
01:34:32
Speaker
Thanks again for listening. We look forward to you joining us on the next episode.