[00:00:00] Intro: Forget the civilized path. It’s time to break the chains of debt and dependency, take control of our financial lives, and live free. This is the Fiscally Savage Podcast.

[00:00:15] Dylan Bain: Hello and welcome to Fiscally Savage. I’m your host, Dylan Bain. And I wanna tell you about a time when it was the very early days of getting my financial house in order. And I’m sitting down with my wife and we’re having a conversation about our plans, about our vision together as a couple, what type of investments we want to have, and how we wanna save. And these are the earliest days in our marriage. We’ve never really actually had the conversation, the truly intimate discussion of the nitty-gritty details that would become our life together. And I’m talking to my wife about investing, about retirement, about what it’s gonna look like in 30 years’ time, something ridiculously in the future to our very young minds at that point. And I’m going through what we should be saving for retirement and what we should be putting away and what the math says because of course that’s what I did. I’m looking at my spreadsheets and I’m so excited about my mathematical models that are telling me the truth, right? And I’m noticing she’s no longer present in the room despite sitting next to me at the table. She’s shutting down. She’s no longer there with me. She’s experiencing terror. She’s having a fear response. And I’m struggling because, well, she’s my wife. She’s my life partner. Shouldn’t we be in this together? And I kind of I’m turning to her and I say to her, I said, Love, I really would like you to be here with me in this. And she looks up at me and she’s locking eyes with me and she says, I don’t want my life to be about a number or about chasing money.

[00:02:06] And I tell that story because when we start talking about money, we inevitably get to the conversation about how much should we be saving, which leads inevitably then to the conversation about wealth. Now, if you tuned in last week to last Tuesday’s episode — if you haven’t, today’s episode’s gonna make a lot more sense if you actually go back and take a look at the episode on how to create a personal balance sheet. Link to that in the show notes — but we started talking about how do you create a balance sheet and calculate your net worth and your net worth is just very simply assets minus liabilities. We do this in my coaching practice because calculating your net worth will tell you where you stand. It’s an important number to understand and to be able to calculate and to track over time. Net worth is not just some ethereal number. It’s a measure of your financial health. If it’s negative, well, then you’re in debt and you have a hole that you need to start filling in. And if it’s positive, well, hey, you’re doing great. You’re doing better than the bottom 50% of Americans and we can just need to continue that path.

[00:03:17] But also, there is this fear that people have about how much is too much. And it has happened where I’ve had people come into the practice and we look at their personal balance sheet and I look at this number and I look at their age and I’m just shocked. And my first thought is, this number’s too high. And that might seem paradoxical. The idea that like, oh my God, your net worth could be too high, Dylan? Well, yes, because so much of my practice is about looking at the emotions of money. We’re looking at trying to take control of our financial lives and live free because this is about living, not about the spreadsheets. And as those words come tumbling out of my mouth, the CPA in me is now in the corner of my heart crying because, well, who doesn’t love spreadsheets? But it’s true. We manage our money not to manage our money. We manage our money to help enhance our lives. And if that number of your net worth is negative, somebody else holds sway over you. Your life is beholden to another person. But the other side of this equation is not necessarily better because if you’re too high, there’s an imbalance and you’re not living life. And I’ve had people come into my practice and say, Dylan, I feel like I do well in my finances. I should learn how to manage this better. And I go through it. It’s like, well, you have a budget and God, you’re doing great and let’s look at your balance sheet. That number’s outstanding. And I realize that like, oh, they’re pursuing growing their net worth. They’re doing the, quote, all the right things for all the right reasons and they’re really getting it right because at some point in their past, there’s a wound there. There’s something that’s driving them where they’re told that if they just, you know, follow all the steps, they save right and they invest right, and then they’ll be a good boy and then they will be loved. And the reverse is true. There’s so many people who have watched people live like a monk and pursue their net worth like it’s a kink. And they said to themselves, you know what? I don’t wanna be part of that, and so they go the exact opposite direction.

[00:05:19] And so the middle ground here really is the sweet spot. And we can use our net worth as a metric to assess our growth, to understand what areas we might actually have to be working in and what areas we can probably put on autopilot for a while. For example, if your net worth’s negative, being able to look at your personal balance sheet and say, why is my net worth negative? Is it a savings issue or is it a debt issue? And if it’s a debt issue, it’s probably a spending issue, and so now we use the tools of budget to be able to adjust that. Or you might say, you know, my debt picture looks pretty good but I’m just not saving enough, which means that every cent that comes into my hand is going out the door. Okay. Well, again, this goes back to the budget. Now, we know where we really have to focus. And there’s also certain circumstances where you actually go through this process. You create a budget. You create your personal balance sheet. You look at your net worth and be like, I really need to grow this. And you might look in it and go, I have an income problem. I don’t make enough money. For somewhere, somehow within the market of my life, there’s an imbalance between the value I’m providing and the rewards that I’m experiencing. And then, of course, there’s those unicorns out there where you come in and go, this is too high, man. Like go on vacation. Go live life. Take your partner out for an impressive dinner. Like whatever it is. But like spend your money ’cause you have plenty of it now. Stop saving. Start living. You’ve gone too far. This is a delicate balance. This is an emotional game. We’re not actually playing the numbers. The numbers are just helping us keep score. The actual game is not in our head or on the spreadsheet or even in the checkbook and the bank statements. It’s in our hearts that are actually driving the car. Fiscally Savage, in the coaching practice, I spend a lot of time having the conversations about the heart because if it was just mathematical and that’s all we really looked at, well, I have the program that can figure out and tell you the mathematically right answer a hundred percent of the time. But no one listens to that because it’s not about the math, it’s about your heart.

[00:07:19] And so when we start talking about net worth, there’s a lot of different things that come up and I just wanna talk to you today about three friction points in terms of chasing net worth. Now, like I said, I’m trying to give credence to the idea that there is a point in time in which we’ve gone too far. I’m also gonna make the statement that I’ve been doing financial coaching for five years pretty steadily at this point, and in all that time, less than 5% of the people who have come through my coaching practice are in that you-have-saved-far-too-much category. So for the most part, we’re actually dealing with the opposite problem: people who are afraid that if they start chasing net worth, if they’re using this metric, that they’re gonna somehow become bad, naughty, or wrong. And so these friction points are much more tailored to that bottom 95% — and I hate to say “bottom” but if we’re gonna talk in positives and negatives and net worth, I guess that’s where it is — and not necessarily to the people who, you know, have hit that ceiling and then gone beyond it and really need to start like, you know, living life. So let’s get into it.

[00:08:23] So three friction points. Number one is fear. Really when it comes right down to it, the fear can be broken into subcategories. But people, when they start looking at their balance sheets, they experience a level of fear, and it’s a lot of times it’s the fear of the unknown. I’ve said this before. I’ll say this here. So much of the financial industry makes its money on what’s called information asymmetry. In layman’s terms, what that means is they know something that you don’t and they use special language and terms to purposely obscure the knowledge so that you have to pay them in order to do it. A big part of the reason I do this podcast and I give so much of my knowledge away for free is because I actually think that that is a bullshit way to make money. I don’t think that we need to be living in a world of information asymmetry. When if it was all about the information, well, information’s free on the internet, but the emotional regulation is not. And so people will come into this and they’re intimidated by the idea of having to grow net worth because in their minds, people who are wealthy are a subset of humanity that does not include them. And so they’re coming in and going, those people must know something I don’t and I don’t know it and this is scary and there’s all these terms and I don’t know if it’s a 401(k) or an IRA or an FYZ or a PDQ. I don’t know. And so they come in with this fear that they’re gonna screw it up. I gotta hire somebody or I don’t have enough knowledge to do this. I don’t know enough to know the difference between a 6% interest rate and a 5% interest rate. That’s a real quote. And so what they do is they don’t wanna do this. They’re afraid of it. They don’t like feeling intimidated, and a lot of times they don’t like feeling like they don’t know what they’re doing and they feel shame with that, and so they just stop looking at their net worth.

[00:10:04] There’s also a fear of becoming a bad person. And I wanna really put this in context because I see this, you know, as a political football that gets kicked around all the time with, you know, you know, the damn billionaires and like the billionaires should be our heroes. Like okay. You’re both not looking at this holistically here. The reason that people are worried about when they pursue wealth that they’ll become a bad person is because we all have been hurt by that person in some way, shape, or form and it’s not us directly. It’s somebody we love. Wonderful example of this: in my hometown of Kenosha, Wisconsin, there is quite literally a hole in the middle of the city where the old engine plant used to be. Kenosha was a factory town. We had American Brass, Jockey International used to be there, and of course we had it started off as Nash Motors and then it was AMC and then eventually it was Chrysler. Well, they shut that plant down and bulldozed the entire area, and now there’s a hole in the city of land that can’t be used for anything else and economic devastation all the way around it. And if you know your history, you know they didn’t have to do that. They just took those jobs and went to Mexico and then spent the whole time going, well, it’s all you greedy Americans wanting a solid living out of your work. And so they look at that person and they know. Like we all know what happened. The managers were told to shut down the plant and they were given enough of a bonus, so they didn’t think about the families that they whose lives they just destroyed. Right now, we’re seeing a lot of stories of layoffs, and we know that with these layoffs, you know, these are families, these are men and women with children or thinking about wanting to have children whose lives have now just been impacted. But then at the same time, these same companies are producing record profits with record bonuses for all these other people. And we look at it and go, I don’t wanna be the person who devastates these other people’s lives. And it’s kind of a problem because there’s this separation between the upper management of those corporations and the frontline employees who are actually being impacted here. We get to see it front and center ’cause, you know, we got a front-row ticket to the whole show, whereas they might be in a corporate headquarters in a completely different state, sometimes in a completely different country. But a lot of times we look at it and go, well, the only way that those people became wealthy was by hurting other people. And I gotta tell you, ladies and gentlemen. They’re not wrong. That happens. But I’m also gonna tell you that there is nothing wrong with becoming wealthy. There’s nothing wrong with looking at how do you add value into the marketplace and are rewarded for the value in return. That’s a very healthy system. That is like the core of a well-functioning, capitalistic society. I provide value; the market rewards me in return. Now, we don’t live in that society for a variety of reasons. But ideally, the capitalism that I believe in where both sides of every transaction will walk away better than when they showed up, well, that’s how it works. And so part of this process is helping people understand that you accumulating wealth does not mean you have to screw over another person. That happens. It’s a real thing. Payday loan stores are probably exhibit number one for this. But the reality here is is that people carry that fear with them.

[00:13:18] Another fear that I see a lot is the idea that money will come to dominate their lives; that they’ll become so focused on this. And this is typically a parent wound, a lot of times where they had a father or a mother who was career-driven and that career then took all the time away from them as children. So it’s the young boy who walks up to their father and says, Hey, Papa, let’s go play catch. And he’s like, no, no, I got a meeting. And so he’s on the phone all the time. Well, what did that father just teach their son? Well, that work was more important than they were. And this can be tricky and I’ve told my story a lot on this podcast. And when my principal asked me to commit fraud in 2015, I had a lot of inner turmoil in the idea that I was gonna quit and go back to school because I was going to sacrifice those years of my daughter’s life and that was hard. But I also looked around at my apartment, the cheapest in Flagstaff, and the drainage ditch was my backyard, and went, my daughter deserves better than this. And so the deal I made with myself was that, yes, I was going to quit teaching and I was gonna go back and I was gonna chase my income. I was gonna increase my bottom line because damn it, my children were worth me doing that. And when it came right down to it, the other promise I went with it was and when they asked me to read to them, to color with them, or to play with them, I was going to drop everything that I was doing and go do that thing. And I did. There were times where I’m studying for the CPA exam. Papa, can you read to me? Yes, little one, I can. A hundred percent of the time. I wanted my daughters to understand that I was doing this for them and I wanted them to not just intellectually understand this. I wanted them to emotionally understand this. And I’ll be completely honest with you, ladies and gentlemen. It was hard. It was also worth it because where I stand today, I’m able to provide for my daughters such an amazing opportunity to do things like my daughter going to New York with her school. She went to the Model United Nations and gave a speech on the UN floor and had a wonderful time in New York City and I was able to pay for that because I left teaching because I went and did this. And when I came home from my hunt just at the same time she’s coming back from New York, we had a big hug. It’s okay to chase money. Just make sure that you’re in alignment with everything else. The solution to fear really just comes down to having a solid sense of self; to know that you can learn, you can make mistakes, you can know who you are and what you’re about, and you get to make the decisions. There is nothing set in stone about any of this and you get to determine the rules of engagement, just like I did. Yes, I was gonna go chase an income. Yes, I was gonna chase a bottom line. Yes, I was gonna chase a net worth. And when my daughters asked me to read to them, I would always say yes because there’s a finite number of times that they’re going to ask me and I wanted every single one of them.

[00:16:17] Okay. So let’s go to number two in terms of friction points in chasing a net worth: the size of the task. Like this is huge. It turns out if you actually look at like evolutionary biology or you look at like human psychology in any way, shape, or form, one of the things that comes out pretty quickly is like, God, we’re dumb. And it’s not really that humans are dumb, but I think we’ve all had that thought, right? It’s that humans are really bad at large problems and longtime horizons. It’s the whole idea like — and this always blows my mind when like politicians are like, we need to create a system in which these high school students are gonna really think about their futures. Okay. I don’t know about you guys, but when I was high school, the idea of what I was gonna be doing at age 25 was completely irrelevant as to whether or not I could get the number from the cute girl in class. Like I didn’t think about that because humans don’t think about that because evolutionarily speaking, if I die today, tomorrow doesn’t matter. We’re literally hardwired this way. If you teach humans how to do probability equations or risk management, we are just ridiculously bad at it because the emotions are actually what evolved first, and the emotions are quite literally entirely focused on the moment at all times. So when you have really large problems, we tend to just check out and say, yep, not me. Too big. Can’t do it. Or if you have really long time horizons, we always think that we have time. That’s the greatest lie we always tell ourselves; that we have time. We don’t. Like for somebody in my shoes, I see this all the time and I feel this all the time. But understand that net worth and wealth operates on an exponential equation.

[00:17:56] So let me give you an example of how exponential equations work. Let’s imagine that you have a body of water the size of Lake Michigan. And one day, you walk out there and there’s a lily pad. And the next day, there’s two, and then there’s four, and then there’s eight, and so on. And you look at it and you say, oh my God. Eventually, someday, these lily pads will cover the whole lake and all the fish will die and then we will no longer have any water. But I’ve got time, right, because it’s just this small little area, right? There was one and then there was two and then there was four and there was eight, so I’ve got time. And then one day you show up and one-fourth of Lake Michigan — and it’s been a long time to get here — but one-fourth of Lake Michigan is covered, and you’re like, alright. It’s time. I gotta do something about this. I’ll come back in three days and I’ll clear it out. And when you come back in three days, the remaining 75% of Lake Michigan is now completely covered in lily pads. Why? Because the vast majority of the growth, 75% of it occurred in the last two days, even though if you actually run the math, it’s going to take you about 98 days to get to that point but 75% of the growth’s within the last two days ’cause that’s how exponential equations work. Turns out, wealth is like that too. It’s compound interest. It’s Warren Buffett’s thing of just put $500 a month into an account, never look at it, and when you open up your statement in 35 years after having saved $500 a month into an account that’s invested in the stock market, have your cardiologist standing by because you’re gonna have a heart attack about how wealthy you are. That’s absolutely true. This is Charlie Munger, who’s Warren Buffett’s right-hand man who says, well, just get your first a hundred grand. Do whatever you have to do. And once you have that, you can kick back a little bit. Because once you have that, that’s really when you start going up to that exponential equation. But humans, we don’t necessarily think like that, so we tend to just completely miss how we can actually have huge results over time due to things like compound interest. And when we start to actually like create our net worth and we look at it and we realize, okay, well, my retirement number say is $2.4 million. I’ll never have that. Now, there’s no possible way I can do it. What this then does is it causes us to freak out because the target tends to be outside our current window of possible because like I can’t conceptualize what $2.4 million looks like but maybe you can. Probably you can’t. So we just sit there and we just kind of like, nope out of it or we decide that this idea that we’re just gonna take a systematic approach over the long term is not gonna work, so we start taking huge swings, which is why YouTube is just full of people being like, I made $65 billion in real estate. You should buy my book. Because they’re preying on that very fear. That’s why crypto’s so popular because it’s a big problem with longtime horizons that we have a hard time wrapping our head around, and so everybody and their brother who wants to take advantage of that shows up to help you know how to take a big swing. Of course, you know, if the big swings worked, they wouldn’t be selling you a course. They’d be swinging themselves. So the solution to this is to understand that it’s a process; to understand that time in the market is the most valuable thing you have. Timing the market is never going to work. There are times where people get lucky because that’s just how statistics work. It’s the whole lottery question. What’s the probability somebody’s going to win the lottery? It’s 100%. What’s the probability it’s gonna be you? Next to nothing. So these two things exist in parallel to each other. But if you understand that in terms of creating wealth and chasing your net worth, the size of the task might be huge, but it’s going to be dealt with by a systematic process over time. When you work the process, the process becomes ruthless execution, and the execution becomes an inevitability. That’s what we want to go for. We don’t wanna be taking big swings and having huge emotional highs and lows. Investing in wealth building for the vast majority of people should not be fun. It should be boring because processes are boring. That’s how this works.

[00:22:06] Okay. So number three. Number three is we take our eye off the ball. Again, money’s emotional, so a lot of times when we start building a net worth, it starts messing with our psychology, particularly if you’re doing things like I have this big lump sum of cash. I’m just gonna move it from here and put it in there, and aha! I now have an emergency fund. Well, okay. The problem is is that we start thinking about that emergency fund, let’s just call it 20 grand, as safety and security. But then your mind can’t comprehend what 21 grand is. Like logically, we know that 21 grand and 20 grand are relatively the same thing. But emotionally, well, but the 20 number was safe, not the 21. And so what ends up happening is we start believing that, oh, I have this money, therefore I’m fine. And it leads to overspending. People now start spending recklessly because their race car has brakes. And this is just human nature. So part of the understanding here is that when you’re working the process, don’t take your eye off the ball. You’re building wealth here and this is a process. So just because you have the money doesn’t mean that you get to stop doing all the things that helped you get the money in the first place. The other thing that will help us take our eye off the ball is when we think we say to ourselves, well, hold on a second. I’ve really done good. I’ve been saving and I’ve got, you know, the numbers come up. I’ve been so good. I deserve something to just splurge with. Now, intellectually, I have no issue with this. But this is kind of akin to dieting when you’re like, yeah, I’ve been really good today. I went for a nice long walk, so I’m gonna order a Papa Murphy’s pizza and roll it into a burrito and eat the whole thing. Like that is not good practice for health and nutrition at all. And full disclosure: I’ve never done that, although I can see the appeal. The point being though is that the idea of like I’ve been so good, therefore I can take the day off is a good way to then take the next day off and then the next day and then the next day. Yes, there are times where you really just should say, yeah, I’ve done an amazing job saving. I’ve hit my targets for this year, and now I’m gonna go buy that thing I’ve had my eye on or I’m going to pay for this experience for myself or my partner. But we want to be able to do that intentionally as part of the process, not as a kind of feel good event. And the third reason why we take our eye off the ball, ladies and gentlemen, is because life is lumpy. Shit happens. Like there are things that are going to knock you off course. Like when I lived in Flagstaff and we were on welfare and, you know, like every month was this challenge to try to not go further into debt, which never worked. The thing that killed us almost a hundred percent of the time was the random crap that happened. Like, oh, I have a flat tire. Well, now I gotta replace all four tires. That’s gonna be $700. Oh, crap. I need an oil change. Oh, my daughter’s sick. The list goes on. And so when life is lumpy, it’s going to affect things. This is why budgets are living documents that evolve and change over time. And so when life is lumpy, it’s important for us to be able to have something in place, so that we can go back to the process and be like, oh, yeah. Well, yeah, that was a bump on the road. That was less than ideal, but I have this methodology that’s gonna put me right back where I need to be.

[00:25:19] So the bottom line here when it comes to chasing your net worth and really looking at it and saying, I now know what my net worth is. I now can use this as a metric for my financial health, and I’m gonna go chase a number. Know it’s okay. You’re allowed to chase the number and that’s why we do this because it’s a simple and easy metric by which we can just look at this one number, our net worth, and know how we’re doing. And if you’re sitting there saying, well, I feel uncomfortable about growing wealth. Shouldn’t my focus be on service? It’s okay to grow your wealth. If your whole thing is, well, I can’t. My worth is entirely wrapped up in how much I’m of service to everyone else, let me just hit you with this one: how much more of service will you be when money is no longer an issue for you, when you have complete freedom to say “yes” to the things that nourish and feed you, along with nourishing and feeding other people? It’s okay to grow your wealth. In fact, if what you wish to do is be of service, you can go back to my episode on the hierarchy of service and listen to it. If you feel called to service, your number one step, your number one most important thing is service to self first and growing your wealth is part of that equation. And lastly, it’s okay to cultivate yourself and your money. It’s okay to embody a gardener with your talents and with your money; to get involved elbows-deep into this process; and to grow yourself and your money, so that you can be in control of your life and live the life you wish to live.

[00:26:59] And I know what it’s like to have to face down a lot of this fear because I’m now back at the table with my wife. And she’s telling me she doesn’t want a number and money to be dictating her life. And I look in her eyes and I see the fear and I tell her, My love, this is not about the money. This is about the security for our family. This is about creating the base by which we can help our daughters grow into the best versions of themselves. This is about knowing where the bounds are because we’re the ones who get to write this story. And I look at my wife and I’m looking in her eyes and I say to her, and I’ve got the best partner in the world to do this with because I know you’re gonna keep me honest and I’m gonna be here to keep you honest too. And so we went on this process with our negative net worth, digging our way out of the hole. And then one day, I had 6 cents. Six pennies positive net worth. And then we really started to grow it bit by bit. And that foundation has unlocked doors to a life that me in 2015 couldn’t have possibly imagined.

[00:28:16] Outro: Thanks for listening. If you like what we do here, please hit that subscribe button. Leave us a rating and review. And share the content with somebody who would benefit from the message. You can follow us on Instagram, Facebook, and Twitter, all @fiscallysavage. And head over to fiscallysavage.com to get our free tools, suggested reading, and everything else you need to take control of your financial life and live free.