Financial Advisors Reveal Their WORST Financial Mistakes!

you know where wisdom comes from learning from your mistakes that's right today we're going to be covering money guy misses remastered it's Brian Preston the Buddy Guy so I have to give you credit beau this show is a redo or remaster remix of our march 8th of 2013 show was it really thick here's how I came to this I had a prospect meeting from a money guy listener who he's been a prospect for going on 6 or 7 years and when I went back through all of our email chains he originally reached out to us when he said I listened to these two shows and I thought they were so good I wanted to reach out and I was like gosh I ought to go see what those two shows were so I went back and pulled the show notes and then after I read the show notes I went and listened to the audio which is kind of hilarious thank God fortunately listen to the audio in 2013 and you can do this as well if you go to money guy com get our archives we actually sounded ok now when I go back to the 2006 episodes I want to cry and like we ought to really take down those archives as they sound horrible but back in 2013 it was pretty good so I thought it was great that we could go back kind of look at this as a teachable moment to go review some things that we've learned because that's fast-forward six years there's a lot of cool things that I think we've even gotten more wisdom that's right and what I think is so beautiful is not only do we get to learn from mistakes that we make right so we're even going to share some mistakes that the two of us have made over our careers over our personal financial hours but we also get to work with clients and prospects and so we get to see a lot of really interesting perspectives of ways to make and ways not to make financial decisions it's nice if we can share that with you to help you avoid that and that's just gonna be gravy hey do me a favor we're do actually doing this live right now if you've never tuned in for a live episode remember we do this every other Tuesday but if you are catching this later when when we post it at least give us a subscription so you know give us a subscribe on YouTube are on you know however you listen to your podcast and that way next time you'll get a blast I know you least get enough you know an update that we're doing this and then if you haven't signed up go to money god comm just give us your email address and then that also you're gonna be able to pull off all of our archives we do deliverables for these shows it only we also that deliverables will only go out if you're on the email list so if you want to get some of these cool template spreadsheets things that we're sharing you've got to be on the email list to make sure you get them and as you can see I mean we're a little over a year into YouTube now and we are so close to twenty thousand subscribers so go ahead and help us you know push that number over twenty thousand before we get to the next recording session so let's start off with number one man this one unfortunately is my mistake not having enough cash reserves I want to explain this to you guys this we have to go pre-2008 and I want to take you guys back in that in that time period where it had been so long since real estate had any Corrections adjustments that and and there was a saying that everybody said about real estate is God isn't making any more of it right so how could you go wrong with the real estate so everybody was you know it was considered a very viable structure to go have their stretch goals by as big of a house as you possibly could because you know what it was going to appreciate and go up in value and I was one of the beneficiaries of the fact that my house had appreciated to where I had six figures of equity and the banks at this time point in time were basically giving away access to that home equity line they could do no-cost closings they hook you up with a credit card or debit card they'd hook you up with a checkbook so there for a while knowing I had six figures worth of equity in this house I was like why do I need cash if you had an emergency I just y'all write a check I'd go transfer the money from my home equity line over and then a you know as if money comes in I'll pay it down it all seemed completely reasonable then 2008 and 2009 2010 happened with real estate and I quickly realized that what's on paper doesn't always equal reality and you guys in the money got family a big part of my realization of this I started getting emails in that 2008-2009 saying hey Brian I'm getting these emails from the bank saying my home equity line because I was opening this strategy saying that they're freezing my home equity line and I was like uh-oh cash we you know because I thought was there here's the truth of matter with cash reserves what do you want cash reserves for they're there to protect you there's a reason we call it a rainy day fund this is to protect you from all the bad stuff that can happen out there to you financially whether it's you know the water heater blowing up it's you getting in a car accident you losing your job these are all things that could happen so and then or the market just getting its teeth kicked in and everybody going oh my goodness the financial world is in turmoil cash is going to help you sleep better so I had really put myself in a pickle by not having that best sleeping pill in the world which is a nice cash reserves to get you through those bad moments so I learned a valuable lesson there and I think what's so what's so painful about the lesson that you learned is back then you know pretty 2008 you were actually you could earn money on your cash you know if you had in a money market it was earning four or five percent the real hard thing is to hold cash even when interest rates were super super low and casuals are paying anything I mean now we're at least starting to see some reasonable we get 3% all day long which was great so I want to I want to just add just a little chair to this well it's a little bit different and it's a money guy miss about having emergency reserves but I'm actually gonna go the other way with it I think a little counter to what you said I have some friends a you know back in the day who would reach out and they would say hey look I want to do this investment thing I want to start out but I don't have six months of emergency funds I got to do that got to do that and they would make the decision to do that instead of funding the Roth IRA you know the only small caveat I put out there because I think you should have emergency reserves you should have cash but recognize if you're someone who's young and it looks like your income trajectory is gonna move in a way where one day you might be out of the ability to make Roth contributions you know what you're single or married there's income limits to being able to do that you have a closing window for when you can put money into a Roth and not only that you are limited in how much you can put in by about $6,000 a year if you're under fear right now so one of the things that I tell young folks is remember that tax-free growth and Roth is so valuable even though your emergency fund might not be exactly where you want it to be you may want to put money in there early on I'll go I'll go a step further back on if you go to our order of operations episodes we've done in the past we a reason we start off when the first things you want to do is have a thousand dollars but after you get past a thousand dollars or having you know your insurance deductible covered you got to make sure you get that free matching money from a lawyer you've got to get take advantage of the Roth IRA and then yes it's aspirational we'll come back and get three to six months of cash reserves I completely agree with you on that and then another thing if you know you have something coming up in the next three years so you know engagement rings new car Perth down payment house down payment don't get cute with it and have that money out there and aggressive investments that stuff needs to be somewhat liquid very liquid actually so let's move on to number two know what you're investing in this is another one that I'm going to self-reflect on I love when we're talking about all your mistakes oh we're getting two years I made sure that when I was putting this recipe together that there was equal parts brought in BO but because I'm older I'm an old geezer getting to be an old geezer I've got a few more few more opportunities to make mistakes when I first started managing money I realized I came out of college in the mid nineties immediately started helping with managing money and then you know and I've shared with you guys I don't come from a lot of money right but my dad had got laid off when he was in his late 40s or the company restructured so he had had an hour a roll over that was a little you know a hundred or two hundred thousand dollars that you know and they had some savings and stuff and then of course who are your first people that you help out with when you're green behind the ears so your parents family and friends that's why I'm always so scared of anybody who immediately comes out of school and they think that they are completely experts and we'll get to that in a minute but but I'm just sharing my mistakes and faults so I started managing money and I've decided we're gonna help my parents and I was like if it's good enough for rich guys it's good for my parents because one of the things we were pushing at the firm I was working with were these separate account managers that were buying individual Holdings for clients and and here's why these things seemed right they're sexy yeah because what do you what a rich people buy the rich people buying you know managers that know how to do things better than everybody else yeah it has sizzle to it there's a reason this thing is sexy and it has exclusivity to it because you know anybody go by a mutual fund but you've got a separate account manager manager dude so I mean I thought this thing was gonna be perfect and like I said if it's good enough for the rich guys good enough for my parents and that's where I thought we should be but here's here's custom is not exactly as the brochure lays it out again I want to give you some examples my father shortly after we set up this hundred thousand dollars and one manager in the large cap arena which bothered think about that the way we talk about index investing and everything else on the whole just a mistake all the way around when we talking about misses but he started calling by Brian now I went to the the mailbox today I had a confirmation for five shares of this stock five shares of this stock five shares of this talk what what is all this he need a will bear it'll probably get all the mail for mail five shares you're gonna have a bunch of five shares and then you know so so that was like wow okay and then because we were buying five shares there was you know annual knew there was annual you know shareholder letters there was proxies there was all kind of stuff my father it was a tack of the mail my father started calling what's going on so I got all this stuff because the attorneys are going to make sure that their cover all is sending out all the disclosures and the requirements so everything was showing up and I realized that we had a portfolio of a mess it was truly a mess and here's the thing that sometimes simple is better if you get fed up with you and I don't know why you would but let's just say you need to get out of your S&P 500 index fund what do you do go press sell yeah if you're selling the ETF or you sell in the mutual fund you basically type in the symbol boom yep going easy what do you do when you have a portfolio of 70 individual holdings where the average share you have four to five shares of each holding you got to go in there and place a trade for each one of them we are at least fortunate now that trades you can get trades for 95 realize this is I did this all back in the late nineties when there was not five dollar trades I mean this was much much more expensive I felt like the biggest knucklehead for putting my family through this so know what you're investing in I'm going to transition this away from me and tell you what we see with our clients all the time and I got in trouble for this one a few weeks ago with my wife and she's like don't you ever call it that again around our friends so here we are your wife forbade you from saying this and now we're about to say in front of all of America a lot a world come on the show it's educational we were out with a couple friend of ours and they're in the medical profession okay and we got on it you know because people will know what you do for a living they ask you some questions and I said here's the biggest thing you gotta watch out for make sure you avoid dumb doctor deals I say that so often that I saw nothing wrong with calling it a dumb doctor deal my wife took issue with it later and said that sounded very condescending I was like look I think they're brilliant you're not calling the doctors dumb because let's face it these they require you to be an accredited investments all these sexy private placement type deals where they'll give you an offering document and they'll basically the offering documental say you're gonna go broke we're going you're gonna lose it all and it's go cost this go cost that we see these things that's not to say that all private deals are bad that's right but I'm just telling you the you just need to know what you're investing in and a lot of people make that mistake I think a lot of people choose to employ their money into those types of investments because of the sex appeal of it and less so because it's a sound fundamental investment once again instead of going through the order of operations people say I make great income I am you know I'm affluent I'm gonna do this the sexy way you know you know guys who were in my position they don't invest in these index means they're going we're going to step above that and that's that's a mistake that's that ego that's there's all kind of things that are playing into that here's another one that I made a mistake on then we'll move on to number three vacation rental property oh yeah this was supposed to be an investment for me I had a group of CPAs dentist that had gotten one heck of a deal by a CPA client that had gotten in financial trouble right we got a deal for about a year then the market went to crud and we realized everybody else got a better deal than we got I mean it was the very education and you think here's that here's the sizzle and sexy on vacation property I was like men not only are we gonna be owned property and a cool part on the beach in Florida we're gonna get to use this I gonna build family memories right down there using this that's malarkey you know why because the times you want to use it you can't use it because it rents too expensive use it so the only times you get to go down there is when it's it's cold nobody wants to be walking on the beach when the water crashes up and then you immediately get goose bumps because it's freezing and then you're down there fixing water damage sheetrock holes hanging new TVs checking to see what was stolen by the tenants by the way when you have a rental property especially like vacation rental property usually when you buy a couch a couch last what a decade that guy was gonna say to those property three years three years I don't know what these people are doing on the couches but the couch is going to last three years so it's just it's a complete failure so I know there's a lot of other people have you made money with vacation we're own properties doing things but just go into it with your eyes wide open it's not always as good as the brochure or is your friends my person I think again the big takeaway there isn't that rental property or vacation property is a bad thing necessarily it's the reason you bought it as you just thought you were getting a great deal yeah where you thought that there was there was some vision that it was gonna be something Emma financial order of operations is way out of whack and they know business buying that vacation rental property where I was I mean I was doing well I was you know saving for retirement saving for the future but I had nowhere near the net worth to be substantive a keishon rental but it sure sounded sexiest I mean you tell people I got a place down in Florida you sound like a big guy yeah I was crying on the inside every time that I looked through the financials because that's the promise we'll move on once you make over sir everybody says well you get a great tax deduction yeah that's Oh go buy a riddle problem rental property you know once you make over a certain sum of money they make you defer those annual losses right until you sell the things so you end up getting so excited to sell this thing at a much lower price than you probably should just so you can unlock the $50,000 of losses that have been embedded over the last decade so not a great deal but we'll keep moving on because we realize there's a whole industry that will help you part with your money Madison Avenue there's you know manipulators advertising of Zechs they'll work with you and that you'll notice that trend comes up later number three don't invest money without a core investment philosophy what is your wha now what do you guys we'll hire somebody to help you with your investments or your financial plan I think this ought to be one of the first things you ask them is what is your core philosophy on how you manage money how you invest it and then also apply this to yourself as well yeah that's one I promise we're gonna switch the script on you if we just camped on yours that actually works out a lot better for me I have a thing that I don't talk about it as much but I tell people avoid chasing the hot dot this used to be a bigger problem back when magazines I guess you can still do this on the web but hey be kiplyn jurors would come out with that best-performing mutual funds of 1997 right and you go look at these funds and you'd be like okay well that thing was the best performing in 1997 is probably the dog next two years but that wasn't the logic of the right these things were sold it was chasing the hot dog I started to realize that Roth IRAs came out in the 90s I still qualified for Roth IRAs I bought a Roth IRA I invested in a funded a Roth IRA and then there was realize I can't I came out in the mid 90s and this might sound crazy now especially for young whippersnappers the internet was brand new back in the nineties I guess I'm the young whippersnapper brand-new well we have we have other whippersnappers that are in the chat room right now and so it's kind of like Bitcoin is now Bitcoin has this excitement around at people especially now now it's a dog everybody's like oh a bit going because he got it crushed but a year and a half ago it was all the right hand we even had some some you know who you are in the chatroom guys that were throwing a little bit out there just to play around with this thing it was the same way with the internet I'm guilty of this too with chasing the hot dot is there was what was called the internet fund or Internet investments in general because it didn't matter if you had a just pile of poop if you put comm on it in the 90s all of a sudden everybody in the private sector wanted to invest in it they can get private deals you could do all kind of crazy stuff so I invested $2,000 because that's what you could put into IRAs back in the day that 2,000 within three months turned into 4,000 it's incredible that's not supposed to be the way that's incredible so you had it all feel is such a humble investor that I went and told everybody I wouldn't told all my friends what a genius I was I was the cocktail story that you hear me talking about be careful of your friends cuz they never tell you that losses they only tell you that so I was telling over so I told my friends about it so then they go and set up Ari's which is a good that's a win that's a positive thing right they put two thousand and it turns into three we're all geniuses at this point what could go wrong here you know because they're two they're two turn two three my four turned to six I'm like this investing thing is the greatest thing on earth right and then the rest of the story happens I finally I didn't ride this thing to zero but I did not when I sold it it was not a thousand dollars so my two thousand turned to six the six wrote all the way down to I think and this is the number that pops in my head and my brain does crazy eight hundred and seventy six dollars I think I turned remember that because I'm tell you this burned to my core that I let six thousand dollars which a think about if I were to diversified that six thousand into an SP five hundred fund what that could be worth today eight hundred seventy six dollars you know I was so Oshin Elise trained but I want to forget that money ever existed so so pay attention of that stuff that like I said bitcoin is the perfect distraction it goes back to the point of don't invest without a core investment philosophy my mistake there was I did not I was a rudderless I was just investing because that's where I was chasing the hot dot I can think about my sister-in-law she brought me her 401k to look at one year and I was like what what was your quote how did you what was your investment philosophy why did you choose these I chose everything with growth in the time yeah yeah that's I think I think the big thing that you're saying is if you're good invest in something if you're going to employ your dollars to go work for it you have to have a reason you know and not because some of the folks on here are mentioning Bitcoin and you know there there are some fans of that and that's great if you're someone who wants to invest in Bitcoin you understand the technology just make sure you understand what you're doing why you're doing it not just because it's the the next hot thing or because your neighbor told you how much money they I mean even some of the core components of the Internet fund probably turned out to be spectacular but that did not need to be my core invest my philosophy and that's what so let me tell you cuz you a lot of you guys you might be in Prospect land and you're like well I hear you talking about this you say and ask an investment advisor what's your core investment philosophy so here's what ours is is that I think during good markets good thing good times and good things are going on the economy I want you to get two-thirds of the three quarters of the upside you you didn't say outperform you didn't say beat it you didn't say I want to go off there and knock the cover off the ball you said I want to get you a lot of it but not all of it yeah red flags when somebody says they can beat the market we'll come back to that in a bit but just know we won't not all of it because we're do this concept called diversification oh and here's the truth of matter rising tides lift all boats meaning that you can't tell who's good who's bad right when things are cranking but when and I love Warren Buffett has a great saying and I'm just gonna read the quote I was smart enough to go pull the quote whereas when we did this show in 2013 I did not because I booked the tried to remember so here's the quote from uncle Warren he says only when the tide goes out do you discover who's been swimming naked it's so true world it is how they so you can take all the risk in the world you know Bitcoin the Internet fund you choose whatever your flavor is of what's doing awesome there can be too much of a good thing if you not think about what your core philosophy is and it's when those things go ugly you need to have a philosophy of protection on the other side because remember I didn't say I want all of it I want two-thirds of three-quarters of the upside because I'm going to diversify so I only have a quarter to you know to a half of the downside potential that's that's a better balancing core philosophy of understanding how diversification you know another big thing is that you know in our opinion and you may differ from this investing is just one piece of the puzzle your rate of return of your investment strategy should complement ultimately what your goals are now some folks might have a goal they want to go out there and turn a million dollars into a billion dollars and that's fine but most folks just want to be able to do what they want to do when they want to do it the way they want to do it yeah if that's what you want your vet investment philosophy should mirror that should match that yeah you don't want to take on too much risk right you also want to make sure you have some type of structure or plan that that addresses the behavioral restrictions that really keep you headed on the path to failure if you're not careful so let's talk about number four and this is a great segue based upon what we were just talking about be honest about blind spots and limitations know what you know and know what you don't know and guess whose time it is to get on the hot seat all right so cold sweats you know ah I was so fortunate that I went to the the the finest university in all the land I'll graduate from the University of Georgia hodo national planning degree from there and when I came out you know I did that made you an expert they made me an expert having that degree made you as soon as they put my name on that paper I was ready to tell anybody everybody exactly what they should do and how they should manage manage their money would have been the same age you could have gotten in the inner vent internet fund would have been in there right with you and and so what ended up happening is I was so ambitious and so confident and so sure of myself I decided I was gonna get an internship where I could start calling on all of the folks that I knew in the community all of my family all of my friends and I was gonna go start telling them all the decisions that they should be making with their finances and specifically the products that they should buy paid me well they were gonna be in their best interest beau comes from a background if you ought to know this might be a dirty little secret he was pushing life in jail look we buy a lottery we own a lot of life insurance we recommend life insurance but beau started his career selling life insurance you were you were kind of getting close to but you weren't telling everybody that you were out there selling I was out there selling life insurance and I realized pretty quickly that maybe I didn't know quite enough to be able to be offering the advice that I put in there so you know I didn't realize that one of my limitations was all of my knowledge was purely academic I'd gone through school and I'd learn some things and I don't there's some sales training but I'm probably at the ripe age of twenty years old when I started doing this was ready to start telling people exactly what they should be doing with their finances yeah we talked about this this is something we tell people a lot it really does and this goes back to my internet fund story that I was sharing to is that it takes 10,000 hours to develop that expert status that mastery and we all know that you know based upon 2,000 our work you know work year that's about five years of service that's that whole outliers from Malcolm Gladwell and so forth I mean that is a great concept to know and it's the same thing with kind of investing I think somebody it takes a while for an associate and a financial planning firm or somebody who's doing Investment Management to kind of understand how everything works to figure out you know what they truly believe of the financial world and then have some core competency that gets built in that's you too a lot of you guys when you do it yourself and figure it out I will tell you my first two investments this is embarrassing it was the regional bank fund and the special special equity fund from John Hancock and I didn't even I didn't even buy the best share class I bought a B share which had a huge sales charge on the back end I mean let's be honest about what you know and what your blind spots are when you first start doing something you know and now we'll chalk that one up to inexperience in a bit of naivety another thing you can struggle from is overconfidence so one of the very first things that I did is I took my very first investment course fortunately you know a lot of my mistakes a lot of years to happen when we were young I took my very first investment course not a sign I was gonna go out and pick some stocks and I had recognized that a toy company at the time the big toy company had just had a major recall so I was you know serving tables waiting you know as a serving as a waiter at Chili's sure I was gonna I've had this thing figured out that because this toy company had a big recall I was gonna go put some money into that and I had heard about this Sirius satellite thing and they were gonna be merging with XM and so as soon as that merger happened I was the only person with figured out that was gonna be the greatest investment the world so it's a year contrary and you must be Warren Buffett at some point you know I'd figured this thing out no one else has so I went and dumped some money into these stocks and you know the rest of story it didn't turn out so well I didn't recognize early on the fact that I thought I had figured something out I was not nearly as smart as I thought that I was and that's why I do go back I've already picked on myself but be careful of the cocktail party discussions I've had a lot of people that will tell you their wins they never tell you their losses so be careful when you're coming across the person bragging to you about their individually right stock prowess number five this does it now these things gonna run together this is what we got to do together fortunately oh yeah we got to screw this one up together don't gamble and call it investing options futures currency trading and let's throw Bitcoin in there too I mean cuz I mean I think it hits all those high points look I'm just gonna I'm sorry that he's just attacking Bitcoin so much I'm just gonna tacking Bitcoin I'm just telling you that it can be somewhat speculative it can't be spected a lot of folks who don't know what they're doing again aids I will agree with that um here's the quote that I put on this this is from one of my favorite movies from years ago uh-huh if you can't spot the sucker in your first half-hour at the table then you are the sucker I love it I think that's from rounders you know if you don't you know what's funny is that we go back and watch that how young Matt Damon the looks Ed Norton and those guys really got into poker after making this stuff I mean they tried to be students of the game and I think that's what happens to us when we find out about people who are making money doing stock options we I mean you know with currency trading futures there's all kind of ways and levered levered investing let's talk about levered investing you can really maximize these things I even here's something that I remember is that I was at out shopping and there was a business card left on my windshield saying you could make it was like fifty percent in a month it was like a thousand percent return with stock options I was like oh if you didn't know any better this sounds like a great that is but here's the problem look I want you to know it's just like we were picking on Bitcoin but you know but same thing with stock options is that stock options actually serve a very important role if you have a highly concentrated position say you're an insider or you just from working at a company for years there's all kind of cool strategy strategy you can use stock options for to help you like I've done collar strategies you can also you can sell calls to create an income stream off of the options really cool stuff the problem when you speculate because that's what we're talking about we're talking about speculating with stock options or gambling if you want to just be honest yeah you can be and this is the example of SWAPO set we came up with a strategy this is when Bo was doing his CFA studies - we thought we were to come up with this brilliant hedge strategy academic knowledge has led to a lot of my financial is the real world works that way - is that we were gonna go long on Apple options we were going to go not short but we're going by puts meaning we're betting against the direction of the stock price of Netflix at the top now this is years ago here's a problem with stock options they are Tom certain you can be absolutely right with your decision but you can be completely a hundred percent wrong on your timing and you may be at the party you don't get any points for getting it close so and and I'm gonna focus I'm not gonna worry about the Apple because it did okay I don't think we got crushed on Apple but here's the problem with Netflix Netflix I don't you guys cuz we even have some employees from Netflix they went through a rapid growth period than where they went up to like $200 a share but then they had some bad news come out or I think they were getting rid of the disk you know there's a huge change the price went from $200 a share down to $42 very rapidly guess what it happened three weeks after our options all expired three weeks after what we were sure was going to happen we just didn't pick the right time it was a very much an emotional educational experience because we learned once again that she could be a hundred percent right on your decision-making and then still create run a few thousand dollars a zero very rapidly so we tell you this stuff and you look it's embarrassing looking at it now but we were gambling this was not part of a core of investment philosophy was not part of an order of operations we thought it would be sexy we thought it'd be cool we never did this with clients just was just meaning you were fun and it was a and I will give us some credit we did it with a small sum of money that wasn't gonna change the overall direction of our portfolio the truth of the matter here's here's how this all starts the worst thing it can happen to you with these speculative strategies is to actually make money on your first $1,000 remember what happened I took $1,000 we turned it into about $3,500 within two weeks on Apple option that's right we decided we're going to take that $3,500 and try to turn it into a million dollars I think I don't know what our goal was we turned that $3,500 into zero yep so I mean that's that's so like I said the worst thing happens you get it right the first time yeah got it I mean there's so many learning opportunities to know not to gamble and speculate you got to go through that financial order of operations to be successful number six emotional attachment to holding oh man this oh this one's is so deep this is I've dealt with how many people have we talked to over the decades beau that have told you when you ask them what their net worth is they'll say well currently or mo the pika was ever yeah because there have been executives that were multiple million dollars that have been crushed by having their personal capital meaning their human capital as well as their investment capital all tied into the exact same place and it's all because they were emotionally attached - that that stock a lot of you guys that work for companies I think you know the insider trading is illegal but you through the B&B Nome insiders unless it's like a transaction that's coming up if it's just the day-to-day operations insider sometimes their optimism can actually work against them the fact that you know the company intimately and you feel invested in it can actually skew what you what's actually true it's the same reason we think you know you watch American Idol and you see this doting doting parent just so excited for their maybe the voices I don't know the American Idol so old-school now but you know you see this doting parent that's can't wait for jr. or their daughter to sing and then you hear them sing and then back when you're talking about American Idol Simon would just rip them up and you be like what the heck were those parents that doing thinking that they could put their kid out there and who's tone-deaf and they're gonna be okay no it's the same thing with insiders we stock sometimes they think that their stock is just so beautiful so good but the meanwhile it gets ripped to shreds out there and in the market cycles so so pay attention to human capital because I mean I worked with loosen employees in Atlanta there's and other things where it's just it's it's heartbreaking if you have so much tied into it it's nice if you can at least go into it with your eyes open and not make mistakes and I don't don't miss hear me I'm not saying that rsu's employ stock purchase plans stock options that you might give through your employer those are all incredible opportunities usually they're giving you discounts they're giving you all cuz those are golden handcuff moments where they're trying to keep you excited and staying working there I'm just saying go into the experience fully understanding what the risk are so you can make an educated decision and have a plan of action I think you know a quick public service announcement if you are somebody who does have access to employer incentives whether it be options are SAS rsu's Employee Stock Purchase plan if you don't have a strategy for it if you haven't actually thought about how those plans work together independently as well as with your investment portfolio and as well as with your tax situation there's a big chance that you could be missing out on a lot of tax opportunity and potentially even some free money so if you are someone who has as incentives make sure you understand what they are and how you can best utilize those yeah no doubt oh I love this next one oh that means it's gonna be it's gonna be fun you know what this this one's a number seven this no don't don't defend it before I even get it out yeah I'm physically slouching down don't be too cheap and I put cut your nose off to spite your face needless self-destructive overreaction to a problem so here's what I want to set the tape I know I know the show notes say that you're gonna set this up but you know I'll be honest no Bo doesn't like to cut his grass I have I don't know if it's an allergy or what but you know I just I kind of get high V and been ready so here's here's here's what I think is funny this the first one is really educational second one's just weird the first one is educational in the fact that you I remember when you brought this this is art your house back in Georgia yep maybe I shouldn't give so many details but um we could get ourselves in trouble with some of these people but um you ever read telling me you had figured out the perfect deal to get in your grass cut is that you had a neighbor who said who gave you a sweetheart deal that he would cut your grass yeah just agreed to pay him because he had a big old fancy lawnmower you ride around like this is great I'm not going to buy my own lawn more I'm just gonna let him cut the grass yeah the problem is he didn't come cut your grass very frequently did he it doesn't seem it sure didn't look like a well manicured lawn at least in my opinion yeah the yard was getting no treatments it was not getting cut but what were you getting I got an invoice you still got invoices I got big invoices so your your desire of being cheap led you to getting invoices for services you weren't even getting and then an awkward conversation to have with an a well the neighbor with like a human being that's like a few doors that fast-forward you moved to Tennessee you buy a house in Tennessee that's right and this one freaked me out when I heard this I was like man the guy is not learning from past mistakes I find out you have bought lawn equipment with a neighbor so well here's what happened I was like okay I'm not gonna pay somebody else to cut my grass because that was a so I guess I cut it myself but I still wondered out what was wrong in the first ones you don't have enough skin in the equipment half price it with somebody so I decided my neighbor because we have relatively small yards and doesn't take a long time to cut the grass and stuff so I said hey instead of us both going out to brand new neighborhood brand-new construction said of us both going out and buying our own you know lawn mower and weed eater and blower let's just go into this thing together and you our of manipulation is strong within you look and young padawan because how do you get a neighbor to agree to this craziness that's what I think is what's why I'm gonna throw this out there well this one maybe listen and her money got missed this one has not come out to buy me egg this is actually worked out well until one of you moves one of you gets divorced so there's all kind of conversation yeah we haven't had though what happens if somebody moves yet but so far so good it's worked out you know pretty pretty well I have another one this one's go get us some hate mail I'm so worried in the world of Dave Ramsey that if to say this one I'm always like we're gonna get blowback on this one yeah I'll say it though and I put it I put a disclaimer I'm so scared to say this well I'm gonna put it's gonna because he used cars but here's the disclaimer that our nekkid and not protected by a warranty yeah I suppose you share yours first and then I would I'll tell you guys the wasn't my first car was my second car my third car ever my third car was a used Acura RL this is when I was working I just left public accounting I was working in asset management at a big financial planning firm bought this used RL and this thing is Acura was spectacular I love this car it had a warranty the first 20,000 miles owned it it was great driving problem is I'm good at maintenance so it asks for a timing belt so I did the timing belt and changed all the the belts and hoses or whatever you're supposed to do with the certain mileage that's great the problem is is that when I had that repair work done the guys who did the repair work and I didn't realize this until after months had passed as you'll see what I mean by this they didn't put a belt back on the air conditioning fan so a probably syllabus took something apart put it back together yes it's like me assembling a Kia you end up with a bunch of stuff left over afterwards it's the same thing with this auto repair shop that I was working with at the time is that and the thing is is Georgia's hot in the summer I mean it is like you cut the humidity in Georgia so it probably at the time I probably got this done in the winter no big deal right summer comes air conditioners working but what I don't realize is poor air conditioners no longer getting the cooling fan to cool the compressor down so the compressor goes out on the air conditioner air conditioners on cars are not cheap and they're about impossible to get a good repair done so that perfectly good used car now Minh into the biggest headache or pain in the rear end it's not because you anything neglectful that you did that summer was the worst summer of probably might because you'd have to either take it to get worked on or drive around with the windows down sweating I mean there was not enough deodorant in the world to keep me from stinking driving around in a hot Georgia summer with no air conditioning so I got wanted to get rid of that car I mean that car probably single-handedly got me to buy my next car was a new car yeah so you've had a similar experience a lot of sense to buy used cars because whenever you buy a new car there's so much depreciation that was on the front end you don't want to do that and so a couple couple of years ago my wife when we this was right after the first got married we've bought her a brand new Honda Accord and it was an awesome car and we did the nice one and all that good stuff and it was fantastic well then you know we moved to Tennessee and we started having some kids and we decided okay we need an SUV so we went to go buy this SUV and at the time the the car that I was driving was the car that I had in college it was an Acura TL it's funny we had almost the same car that's weird now it's try to Acura TL esperan then I was driving and my wife was driving this Honda Accord so we were going to buy a new SUV and we had to decide which car we were going to trade in well common sense says that I should probably trade in the 2005 accurate had like a hundred and eighty thousand miles and keep driving the relatively new Honda Accord that had maybe like thirty thousand but you think he commutes only a mile and a half I was thinking my commute is so short and I knew what the trade-in value of the Accord was in every single year it was just going to depreciate more and more and more well my acura was at you know basically residual value it wasn't gonna go down anymore so the price of that was pretty much locked in well I told myself well since my commute is so long and it's an Acura it's gonna last forever I should trade in the nice 2013 nice Honda Accord with low mileage and keep driving the Acura and so that's what we did and what of course happened within no time you started having maintenance issues started having maintenance issues on the old car that's what that's why I had to be careful because I look I owned a lot of used cars before I bought my first new one but there is a point with a lot of these used cars if they're uncovered and out there get high mileage they can I mean well you could start getting scared that you'll be walking that's right you don't want you just you have to be careful so I just put that don't be too cheap yep now I know we're gonna get some blowback on that one and I'm ok with it because I think that there does come a time that you want to graduate we've done shows on that it just gives you a little more peace of mind you need to know what kind of automobile purchased and we've done again go go look in our archives go to money guy com search auto and you can go look at how to buy a car and how to think about that it depends on the type of car buyer that you are as to whether it makes sense to buy new or to buy used yeah because we're not against use I'm just saying that there are some risk associated nothing with used the last one this will be kind of fun it's just then we'll move on I just want to pick up my mom a little bit as I didn't know until I got married we always bought our washing detergent at the big wholesale clubs in these big 5 gallon containers and you'd open it up and it just be a scoop of white powder and I didn't you know you don't think about being a kid you don't know what you don't know yeah you just don't it's just like I didn't know about good toilet paper until I got to college I didn't know about real washing detergent until I got married right because I just assumed when you wore a brand new shirt you know within a month it was just gonna look be kind of worn out it's gonna be faded a little bit because that's just what happens when you wash clothes not knowing that when I married my wife and she starts showing me better Keter gence how you could keep the colors could last a little longer I mean and it's just one of those things so I had to learn you know from that washing detergent you can be too cheap to where you're actually costing yourself on the wear and tear of your clothes we I know my mom would babysit our oldest daughter when she was young we just knew whatever we sent over there we go come back differs gonna come back different than just because of the way it was well I think and this is one of things you sell the time Brian enough it was in I think it was a dr. Stanley's original book and I think Sarah may have even revisit it in the next minute next door there's you got to understand when you when you when it's okay to spend money when it's okay to spin on value and when sometimes maybe you're just cheeping out not for a good reason yeah I mean I think that you can spend a lot of effort like I said it's the whole thing I've cut your nose off to spite your face right and you focus on the little things that really aren't changing your financial life your ears focusing on which credit card to use when you're not paying attention to the fact that you bought way too big of a house or you bought you know there's nothing well you just heard me talk about used cars versus new cars maybe I mean we got an email from somebody asking about a Tesla purchase no business whatsoever looking at Tesla purchase that's a premium brand if you can't pay cash and it doesn't and there's not other purposes for that money you shouldn't be doing that with your money so pay attention to those things number eight measure twice on big life goals and purchases did you mean to segue that good right there cuz you just mentioned the Tesla's no that's my whole life is mister magoo bells pretty fantastic but just because you can avoid of for the monthly payments doesn't mean you can truly afford the purchase I would if there was one thing that I could tell brand-new married couple starting out it's that yeah the monthly payment is not what you can afford the actual cost of the thing is what you have to for they get that wrong all the time it breaks my heart I think this goes back to remember there's a whole cottage industry and advertising where they are trying to tell you what you should be doing with your money and it really this stuff comes in a plane I picked on you about this bow knot with about expenditures but just about how you run through we all want you're successful you're driven you've your there's this internal thing within all of us that we're trying to say where should we be at this station or life what are the purchases I should be making what does a person of my stature I hate that that stuff's in there you can say it's not but we all are subjected to that if human conditions and the behavioral things that go on and because of that a lot of times we will get sold a bill of goods it doesn't bring happiness I will go ahead and tell you that more successful I'm reading Jonathan Clements book and he has a whole section the first section is unhappiness and I know this when I'm reading this I'm like Amen I mean I feel like I'm at church yes you know yelling out amens on this thing because there's so many things that confirm if you think buying a nicer car nicer house is going to make you happy it's just not going to do it I mean you can feel that you're not gonna fill that hole up it's just a human condition so you just have to make sure that you don't let somebody pitch you on extending your life so measure twice cut once on those big life purchases one thing I always hear you say too is don't fake success you know again I will I will wear this badge of honor what you know when I first my senior year of high school I went out and I mean senior year of college I went out and bought and that I had an a truck that was paid for and drove fine there was nothing wrong with it but I was about to be a financial adviser and then I mentioned that I had a degree from the University so I needed a really a nicer car so I went out and bought this nicer car I didn't need to do that and I was just kind of faking the success that I hadn't really earned yet I thought because I put this on there a lot of us will talk about a big life change that you need to measure twice cut once on is what if you go change careers what if you go start a business do a side hustle or something like that I always tell people you need to have you're gonna notice planning is so paramount to most things that we talk about you need to be a person that has builds a plan for all scenarios so let me give you the three that always tell people have a plan of survival this means that you've made a big decision like change a job or start a business move the big move across country some a plan for survival means that you are looking at this situation and you're assuming the worst you're going what happens if this thing is going back what does that scenario look like let's take let's plan for what will likely happen that's gonna be option two that's what you think really will happen that's not the worst-case scenario it's kind of right middle road and then the third one is oh my god we're going to be rich that one's fun cuz it's great to be aspirational it's no different than you putting a picture of you you know of a swimsuit or something if you're a trip if you're trying you know are things you know trying to keep you motivated on point with things you can do the same thing by creating a business plan or a life plan or a financial plan for where you want to be to because I think it will help you get motivated to move forward but don't skip the step of the plan of survival option which is go be how bad things really could be if you're not doing it right when you think about planning for your own finances and planning for financial independence if your plan is dependent upon you making 12% per year every year from now until retirement and you're gonna save just the right amount of dollars to get you there you may want to look like okay what happens if I only make five percent what if that's my long-term trajectory and make sure you're looking at that as a possibility that could happen we've hinted at this one but I think it's worth repeating is that you don't need to take unnecessary risk here's something that I I think it's so interesting becoming wealthy over your lifetime is really is surprisingly simple I mean I'm gonna tell you right now here's the secret to success this could be its own thing that could be the name of our book we wrote a book that get being rich is easy it really is that idea all you have to do here's all you if you want to be rich this is so simple you have to save fifteen to twenty percent of your gross income that's not an army of dollar bills putting them to work for you avoid debt as much as reasonably possible of it and then focus on investing in yourself and finding a job that truly doesn't feel like work I said those three magical ingredients if you do those things you will be successful unfortunately simple does not mean that there's not going to be distractions or roadblocks or obvious obviously struggles that you that you have during the process but if you've won the financial game this is the problem we have with people they'll come to us and they will have done a great job of accumulating assets of one the financial gain but they still don't know what their number you know when you start dialing the wrist down or how to enjoy the spoils of of good planning and building financial resources all you need is I mean here's a perfect study we had somebody that was in our life I don't want to give too many details but the the the father was super successful had basically built financial independence wanted to help his son who decided he wanted to get into real estate investing so father took his resources basically guaranteed a lot of the loans for the the the venture that they had created and for a period of time it was successful and then the real estate collapse occurred now said father was broke and financial independence at retirement age two dead broke having give up a lot of stuff oh that's unnecessarily as it was it took unnecessary don't watch ESPN's 34:30 titled broke on all the professional athletes that had thirty million dollars that are broke so I mean that's why you've just got to understand measure twice on big life goals and purchases don't let somebody tell you when and where you should be kind of have a plan of action for everything number nine was be careful of things that seemed too good to be true especially in the financial world if if they're too good to be true odds are they're probably aren't I find it interesting when we do prospect meetings people were so polite to us they really are they know they don't want to they don't want to offend us but you can sense what they're trying to ask in an indirect way they'll start saying so um you know I wanna know how things are going who holds my money who you know they're trying to figure out are we cruel right I get it how do I completely get it yeah so cuz in what they're worried about and it's we had a little bit of Tom pass but everybody knows old Bernie Madoff that's right Bernie Madoff got celebrities he got charities Bernie didn't care who he was taking his money as long as he got more money in and we've talked about this and then you were exactly right beau if things seem too good to be true in financial in the financial world it probably is and we always tell people that you can protect yourself very easily and there were a lot of red flags with Bernie Madoff here's the here's the example I give everybody Barney was the guy if you said hey Bernie I want to sign up with you who do I make the checks payable to it would be like Bernie Madoff Association you get monthly statements you know where those monthly statements were printed and created by Bernie Madoff and associates you know so your quarterly report would come from Bernie Madoff there was no separation who placed the trades for you there was no separation of powers of who held your money who invested your money who reported on your money there was no separation whatsoever Bernie controlled everything and all you had to do was go look at his a TV that was registered with the SEC and you could see all these red flags of all the things but people didn't care because you know what Bernie didn't lose money according to Bernie right because he was doing all the reporting and since he wasn't losing money who cares about all the red flags we're just go our greed is gonna kind of push us down this road of too good to be true so again quick public service announcement if you are somebody out there who is either working with an advisor or maybe you're thinking about working with advisors or interviewing make sure you ask for their ADV it's the thing that tells you who the advisor is what they do how they get paid have never the ever been sued I've never stolen money from anybody if you have that document it's gonna tell you everything you need to know or at least a lot of the information you need to know about what that person is and how they do business and the key thing is like we always tell people we don't you don't actually write checks to us you know there's always a third party custodian like a fidelity investments or Charles Schwab you write your checks to those people you can still use their apps you can use the fidelity app you can use Charles Schwab app and then those those account statements that give you accountability give us accountability we'll tie - what we report on quarterly reports there's levels of separation for who holds the money versus there's a reason the SEC is so curious about custody when they're doing exams and things they want to know who's protecting the client and that's something to pay attention to don't let greed be the thing that jejune to making a very bad decision that's perfect um here's the thing this is kind of closing moment I know it's ridiculous OH about their mistakes or their clients mistakes is because we want you to learn I really didn't mean it when I said the intro of the fact is that wisdom comes from learning from mistakes and and it probably is a little confessional that we shared so many of our mistakes but I think it's good because when you see profiles of successful people they always it seems almost so romantic that there's no ups and downs it's just win after win after win but the truth of the matter is that's not how life works a lot of us get knocked down a lot and it's really how you react to those misses those money got misses that you have do you get back on the horse and then also learn from it to create a plan of action so that you don't make those mistakes again that's exactly right you know what we're gonna do now is when we wrap up this show we're gonna do a Q&A and if you guys out there listening live right now have some questions for us you're gonna be able to ask us if you're someone who's not tuning in live with us after every live episode we do a question and answer you can ask us anything about the show personal finance your situation we'll choose some of them Brian likes to give away Tom another way I think someone said hey I got my tumblr in the mail last week it's awesome it's a great conversation piece that makes us excited that you're talking about us letting let people know and you're probably I mean we learn from this stuff a lot of this also comes from working with clients we work with clients all over the country if you like what you hear and you can't believe that we just give it away like we do because that is the abundant cycle is that we're gonna love on you give you tons of free advice all we ask in return is that we get to a level of success that you need somebody to look over your shoulder and kind of look at your assets or maybe you're getting stressed out about the size and success of what you've had reach out to abound wealth reach out the money guy if you go to our Contact Us page you can write us directly I'll try there money guy calm abound wealth calm we just this is the greatest blessing in the world there we get to share our content that we have hearts of educators and we just want to see you continue to be successful so go check us out money guy calm if you have not connected with us or subscribed with us through all of our social media platforms you're missing out we'll be back 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Channel: The Money Guy Show

Views: 20,555

Keywords: money guy show, debt, budget, cash, real estate, insurance, how to make money, save, credit card, compound interest, buying house, buy stock, success, personal finance, Financial Advisors Reveal Their WORST Financial Mistakes!, worst money mistakes, money mistakes, money mistakes to avoid, money, how to save money, financial mistakes, finance, saving money, financial, biggest money mistakes, the money guy show

Id: 7CXaqcGjoHY

Length: 57min 37sec (3457 seconds)

Published: Fri Mar 01 2019