Confessions of a “Not Car Guy” - Lessons on Personal Finance | Ep 17

Caleb Roth  
Well, welcome to episode 17 of the Stacking Habits pod. This will be another internal sowed with your co hosts, yours truly, Caleb, David, and Matthew, and we are gearing up, we're actually scheduling out a series of interviews, we're going to be doing a whole relationship series. So we're going to be kicking the tires on a series. So as you tune in every week, there's a little less of a surprise element. So stay tuned for that. But as we're lining up those interviews, we wanted to make sure that we have those fully in place before we kick things off. So we'll be looking at relationships with yourself, relationships with others, relationships to God. And so this will be a fun show this, this may last anywhere from four to four to eight weeks. We're not exactly sure. But we're lining it up some delightful guests. And of course, we always have delightful hosts. So stay tuned for that more information to come. But in the near term for this week, we wanted to hone in our one of our most viewed episodes, or most listened to episodes was with Joji Davenport, he dove into personal finances. And so I kicked out to my two hosts this morning and said, hey, what if we did an internal episode, and just talk through how each of us think about personal finances, we're not going to get into the weeds, this won't be an hour long show, we're going to try and keep it somewhere in the 30 to 40 minute range, which knowing us probably will end up 50 or 60 minutes. But the goal is to talk through how we think about finances. And then we'll share some of the practical tips and tools that we get into as well. So boys, are you on board? Let's do it. Hi, Captain. All right, just making sure you haven't changed your mind. So I want to start with a bit of a framework in just in terms of how I think about goals in general, and habits in general. And that framework is very, very simple. It's step one, where are you currently? So what's your current state? Step two? Where would you like to go? What are your goals? And then step three is how do we get there? And then kind of step three be or maybe step four, if you want to break it out is how are you going to track your progress. I'm a numbers junkie, I love to dig into the weeds. I know that numbers specifically can intimidate people. And so that's my framework, whether you want to work out, change your diet, change your sleep patterns, you have to know where you're at, what's your current state? Is there a problem there? What's your desired state, and then you want to figure out what that gap is between where you are and where you're going? And then what you can do about it. So let me stop there. Do you have any pushback? Are we okay with this basic framework as it stands?

David Chung  
Yeah, sounds fair.

Matthew Osborn  
Yeah. All sounds good.

Caleb Roth  
Okay, well, this will I need a little more debate for me, fellas, when it comes to where are you with money are actually a very first guest, Mike McCarthy said this. And in that, quote him a ton. He always asks, What does it cost to be you? He always puts his name there? What does it cost to be Mike, you could put yours and fill in the blank as you're listening to this? What does it cost to be you? And what he means by that is, what's your what's your monthly number? In the business world? We call this our burn. And so when you're a startup, you want to look at what are your What are your overhead costs? What are your software? What's your at one point, we had a scout IQ office that we pay the least for? So you want to understand what are all your costs and your labor that are going to be there before you even start bringing in money. And so when it comes to your own personal finances, step one is just understanding where you are. And we can dive into tools on that, because I think that's important. But I want to share one, one principle that I want to get out of the way is I think simplicity triumphs over everything else. So when it comes to personal finances, it's very, very easy to get stuck in the weeds and go, Oh, I tried to balance my checkbook, and I'm off by six cents. And that just it just, you know, makes makes my head spin and I can't get over it. And the point is, you missed the point. You're literally just chasing for those, you know, that's what an accountant can do at a big corporation. That's not what matters that's immaterial, or that doesn't matter to your overall financial picture. So simplicity trumps everything. For me, I used to use mint.com Rest in peace they shut down as at the end of last year. I tried several of them my wife kind of got frustrated because I like to tinker and test out all the tools, but I settled on monarch it does have a an annual fee or a monthly fee. It's not terribly expensive, but that's a tool I'm using just to bring all my transactions in and then categorize them. David Matthew, do either of you use tracking tools? There's

Matthew Osborn  
I don't use anything specifically right now I have technically a subscription for Quicken online um, but I've not been using that very consistently for personal finances but that's what I have that for for all business stuff. That all goes through QuickBooks for me though,

David Chung  
and then David, I don't have a personal Finance tool at the moment either I used to use meant. But it's just like what you said, where I blow my budget for groceries one month. And then after that I'm like, What's the point? And I sort of gave up on that halfway through. But, you know, for the business, we keep pretty tight books on a monthly basis. And personally, I've actually made some adjustments after Jodi's podcast. And so I'm excited to talk to you guys about that, as

Matthew Osborn  
well. Because same same changes. So

Caleb Roth  
we can go post change for both of you. But Matthew, how do you think about it? So do you don't keep a regular monthly family budget.

Matthew Osborn  
So that's why I was looking evicted. And we're doing this episode because no recently as the past, like, I don't know, four months or so, I've been terrible at doing our personal finances. I've had to just for tax reasons and stuff go through last year for books for just like QuickBooks, which is a little bit easier and simpler to do for our personal finances. I have not done very well the past like four months, I have it on the calendar, I have it to review twice a month, I typically say I'll get to it later end up doing something else is more important than ever kind of get back around to it. So but I am kind of in the same thought as David was, there's a lot of times where I tried to like figure out for a month, like what does it actually cost to be, as you say, Caleb, what does it cost for our family to live for a month? And what are the needs versus what are the ones because there's all kinds of things we spend in a month, we don't actually need if our income were to completely go away, and we had to live off the bare minimums, it would not look like a typical month spending. And so it's tough because there's so many months where you're like, oh, this month is different, because we bought this this month or this month is different because we had this unexpected expense. And before you know it, you look back your month, and every single month had some major unexpected expense, or some gifts you bought or something that threw it up out of the ordinary. And so none of them are quote unquote, normal months. And so after going through a few of those, we just kind of get off where like, doesn't matter as much. And then you get out of habit, a habit of doing it where I need to get back in the habit of doing it. And stop making excuses so much for oh, this expense is worth of this month, and this expense is worth it this month and try and one or two months, just say hey, what does it actually cost just to be us, if we're not making some gift purchase or some investment in the backyard or buying a new bed set or something like that, that throws off the typical monthly budget, I

Caleb Roth  
guess we should throw a caveat real quick. So the three of us are entrepreneurs, so maybe those that listen that are entrepreneurs will understand. But if you work a traditional job, a W two income, if you get a steady paycheck or salary, then it may be a little bit different. I think at least for the three of us, our incomes have been incredibly variable. Meaning, you know, I think we probably each pay ourselves a salary as an escort. But in general, in terms of distributions, whether those are annual, monthly or quarterly, I think our incomes vary widely, month to month. And so part of the challenge for us is there isn't necessarily a benchmark benchmark or a baseline because it you know, our, our income varies quite a bit. And then as a result, I would imagine our expenses do as well. But Matthew, one thing that that I honed in on while you're talking it's something that I've struggled with as well, I've tended to get way in the weeds, when it comes to finances and try to track every penny and have 50 categories. I'm not kidding, across everything. I want to know what I spend on coffee shops versus donut shops for versus fast food. And then I'm like, well does Chipotle count as fast food because technically it's good for you ish. So maybe that's like restaurants versus fast food. Like you can just get stuck in the weeds. And at the end of the day, it doesn't really matter. It's just your food budget. So it's nice to have details if you're gonna go back and look at the data and make decisions. But at the end of the day, that's that's probably overcomplicating it. So and I've struggled to real quick on that point, and then I'll turn it back over to you is when big things come up. How do you plan for those? So a vacation happens? Well, that's not a normal Roth family monthly expense, as much as I'd like to go on vacation once a month. So how do you factor that in or you have to get new brakes on your car? So that's not a normal expense. So how do you factor that in? Go ahead, Matthew.

Matthew Osborn  
Yeah, no, I was gonna say one thing that I was doing last year when I was last year, being consistent with our family budget, one thing I was trying to do is limit the number of categories. But if one or two months in a row, we overshot a category by a lot. The next month, I break that into a few more categories and trying to figure out hey, what's driving this up, because you can have your food budget at $500 A month or $900 a month, whatever it is, you're doing good. But one month you stock up on alcohol or you buy a few cases of this and that's $200 or something in one trip and it looks like your food budget is overshot in reality, your food budget which is fine. You made a purchase over here that categorizes food, and now it completely overshot that category type thing which seems to be something that regularly happens as far as not alcohol overseas. to your regular every month somehow my overshoots our category, but something is thrown in there categorize and like that were throws it off and have to dig in the weeds a little bit more. But I do agree Caleb, I think it's best to just grocery stores in general or one category versus trying to break down all hygiene items and all food items here and all all the other random school expenses, whatever else you buy at the grocery store, having broader categories makes it a lot easier to stay consistent. I think our David,

Caleb Roth  
let's hear your Let's hear you chime in a little bit. Yeah,

David Chung  
I I experienced everything that you guys said. You know, I track my categories on mint and I budget $500 for you know, groceries and one one month, that would just be crazy high. And it was because I spent, you know, $300 at Costco, but half of that was something for the business and I just haven't gotten the reimbursement for it yet. So finances, just like everything in life has a way of getting messy and getting disorganized. And so that's why I was really excited when Jody was on the podcast. I don't know if you guys remember I was just super enthusiastic and asking him a bunch of questions. And ever since he came on, Katia, my partner and I, we really transformed the way that we do our finances to sort of a top down, you know, shake up where we pull all of our money, like all of our savings and retirement out first. And it everything that trickles down is money that we can spend on whatever, whether it be clothes, food going out, it can literally be anything. And then from there, it's just made it so much easier. I feel like I'm perpetually running out of toilet paper. But I think that's kind of the point. That's a little nod to the episode with Joji but, ya know, it's been super transformational, it makes it a lot more flexible. Because, again, you have the amount rollover month to month. And if you go really light one month, you know, for me, you know, I know that I have a little bit more wiggle room the following month. So it's been really life changing. Switching over to that budgeting style.

Caleb Roth  
Yeah, I love that. One thing occurred to me again, as Matthew was talking, and you sort of hit on it as well is, there's a, there's always a part of us that goes well, I should act this way. Or I should spend only this much on food. And so it's very difficult to remove ourselves when you sit down, whether it's just yourself if you're single or with with your family or your significant other. And you want to go through things. I guess first step is understanding reality. And it can be very easy to get frustrated and say, Well, I only want to spend 900 bucks on food to Matthew's point. And then I go up to 1100 bucks, and I get frustrated. And now what do I got to do? Do I just apologize, and the next month, try and cut it down to 700. You know, you start chasing gain or start chasing your tail a little bit. And I think one thing is if that's all intimidating to you set up some sort of a tracking system. And it can be very, very basic, it could just be looking at your bank, I think most bank accounts will show you your in inflows and outflows totally. And they might just break that down as a line item. And who cares what you spend it on, let's just look at that as a baseline. But before you get too far in the weeds, I think it's important to maybe let it run for three months, and then have a better understanding of hey, my my food costs were $500 $1,200 $900. And then look at that average. So that may help balance it out. But David, I love what you did. You are what Joji explained to you is let's just go upstream. Rather than trying to bottom up piece all these little expenses together and figure out where to cut. Let's do top down and say, What's a pretty good matrix to do this? So one thing I've done for me, and there is a rule out there called the 5030 20 rule, we may have talked about it and Joji show. Are you guys familiar with that? Yeah. So the idea is after tax money, so again, you want everything that you're doing here to be after tax, just assume that your employer is taking it out. And if you work for yourself, try to set that tax aside. So you don't think it's your money to spend because I've been there I've done that you get to tax season, and that's not very pleasant trying to figure out where your cash is going to come from. So after tax money 50% of your money should go toward needs 30% could or should go to wants and then 20% is going to go to savings, investments or debt pay down. And you know, depending on your situation, you may want to shift those a little bit but that's a good rule of thumb. So if you make 1000 bucks a month, then 50% of that, well, we probably use an easier number But we'll do we'll use eight grand 50%, four grand should go to needs. And how do you categorize needs? is going out for tacos and margaritas with your friends, is that a need? Well, it's food need, you need food, right? So this is where it starts to get a little bit hairy. Something that I've used for me, I call it the stoplight approach. So anything that's a monthly commitment goes into the 50% category, or the red category, that's going to be my house payment or my my rent or what however, you know, whatever my housing is, that's going to be if I have a gym membership, if I have a Netflix membership,

Matthew Osborn  
so it's not just all obligatory members, it's it's any subscription based thing you're putting in the right category, not just mandatory ones, right? Yes,

Caleb Roth  
and read can be edited, right, you could move and change your housing situation, you could cancel the Netflix subscription, right. So anything that's a committed monthly expense, even car payments, Jim could be loan payment could be credit card payment, anything that is in that bucket, I just treat as red. That is that money is disappearing, before I've even had a chance to put food on the table. Yellow for me is just everything else. And so that's going to be vacations, and I want to golf clubs and golfing for that matter, it's just going to be everything else eating in groceries eating out, it doesn't matter. That's my yellow category. And I don't necessarily apply the 5030 20 to this. And then green is what's leftover. And what happens for most people is that their green is very, very small. As Americans as Westerners, we typically operate with very little margin. And so if you start looking at your plan, let's say you make eight grand a month, but you've got $6,000, between a mortgage and car payment debt payment already committed, that only leaves you with two grand to then do everything else. And you're just you know, you're a new set of tires away from blowing the rest of that budget. So as a very basic thing, what I like to do is zoom out exactly what Joji talks and explain to David is, let's look high level, let's go up and look at the big picture and say, Where am I already making big commitments. And if that number is, I don't know exactly where it where it could be for everybody. But if that number is above 50 60%, as a red category, you're going to have some some problems, probably. So that's something to look at. And you can do that without signing up for software without doing anything else is sit down and look at look at a bank statement. Because a lot of times we forget about all the small subscriptions we have. But look at that and write down everything that is recurring, that you you could cancel. But right now, if you didn't, it would still hit your accounts. And that's a really good process, at least from from what I've done it for people I've talked to. And then step two, is kind of look at that green section and say, What am I able to save at the end of each month? Do I have any margin in there? And if the answer is not very much, we want to try and raise that app. So you can either cut your monthly habits, the things that you do day to day, or you can cut your monthly commitments, those those payments. So that's that's how I think about it. Does that resonate with either of you? Yeah,

Matthew Osborn  
no, absolutely does one thing that got me thinking when you were saying that, I don't think it's too much of a sidetrack. But a little while ago, David, you were talking about a thing on one of our previous episodes, how you were going to cut a ton of subscriptions that you had, or basically cancel a lot of subscriptions. One thing I was, I thought of recently reminded me that as I got a new phone, and instead of transferring all my old apps, I wanted a clean slate because my phones had so many apps on it. And now I'm just putting new apps on my phone when I need them. It's like, oh, I need my bank app and log in my bank and adding apps in as I need them. And I've considered just canceling a ton of subscriptions and then only adding a subscription back in when I actually use it because so many of them, especially business ones I rarely use, did you actually end up doing that and trim a lot of your subscriptions down and slowly start adding ones back in? Or do you not ever, ever do that kind of like that read budget where you have that every single month, cutting a lot of that down and just only adding back in when you use it?

David Chung  
Yeah. So my process, it's, I thought I would be able to get it done this year. But I'm still making progress. It's just going to take two years. And the reason why is I'm just looking at my statements each month. And then whenever I see something pop up, I'll I'll cancel it pretty much or look for an alternative. That's one time payment. So for example, use a calendar booking tool Calendly. And for that one, I noticed ahead of time that my subscriptions coming up on March. And so I did some legwork and I found tidy Cal, which is what I use now for all my calendar booking and you know, instead of paying $144 a year, I'll be paying $30 one time and so I like that I've just been kind of sort of methodically going through it. Like for example, American Express Platinum. I don't think that expires technically until November and so I've got a little bit of time I'm gonna squeeze as much travel out as I can this year before I decide to cut the cord. But yeah, honestly, the other thing, too is like, it's really hard to make that decision when it's game time to cut subscriptions. Because if you're, you know, opening up Netflix, it's not because you're trying to determine whether you should keep it or not, it's because you want to watch it. And if you want to watch it, you're probably going to keep that subscription. So I wonder if there's a better way to control or like, determine which subscriptions are worth keeping versus not Do you guys have any thoughts on that. I

Matthew Osborn  
like what you said about finding a one time payment subscription or one time payments offers. That's something I don't do very often. But a lot of those do exist. Like a big subscription I have I've thought about is Adobe Creative Cloud, which is all the Adobe products. And the main thing I use it for is Premiere Pro for editing this podcast, and sometimes Photoshop and Illustrator. But DaVinci Resolve is a one time payment tool that works just as good as Premiere Pro, I could stop using that and just use DaVinci Resolve. And then Illustrator and Photoshop. Even though I love those tools, I'm familiar with them. A lot of stuff can be done in Canva nail and tons of it can be done with one time use tools or even free tools. And so I can really cut out that $59 A month six, nine whatever Creative Cloud it's it's expensive each month and go through a one time use thing which would solve the same problems. But it would save a lot of money that year that adds up $70 A month adds up when you do it. last seven years in a row. It really adds up when I paid for creative cloud type thing. And

Caleb Roth  
along the lines of one time use you guys familiar with App Sumo? Right? So Noah Kagan is an entrepreneur, he actually wrote his first book, I actually just got a copy of it. It's called Million Dollar weekends, we'll get we'll give him a shout out. But I've been following Noah forever. He actually has an obsession with tacos. So that earlier references probably because I've been thinking about him. But they they made a suite of like their whole business. And it's 10s of millions, if not hundreds of millions a year is built off of mate like helping shop deals that are one time use software payments. So I bought several deals, a lot of them tend to be geared more toward business. But there's a lot of personal ones that find their way in there as well. And that's exactly the concept. You know, everybody wants to sell subscription products, we we were guilty, we sold a SaaS product, software as a service. For those that aren't familiar with that acronym. It's you want that lifeblood as a business, but as an individual, the bigger your red column is, the bigger your monthly commitments, the harder it is to sort of increase that margin or get that green area to move up. So check out app sumo might be a way to do it. And there's probably a lot of other kinds of networks or platforms that aggregate those. So that might be something interesting to research further.

David Chung  
I was I was going to say, as I was doing research for these one time payment alternatives, I ran across a subreddit that I've never heard of before. It's called self hosted. And the description for that is, it's a place it's subreddit for people who are looking for essentially self hosted apps or web services. So like something that you can host on your own computer. And I think it's a privacy thing. But what I found is, if it's tool really focused around privacy, it's usually just like a one time payment as opposed to some sort of subscription. And so I was able to find some really interesting alternatives and reviews on this subreddit called self hosted, it might be worth checking out

Matthew Osborn  
Caleb, didn't you and I stay at Noah Kagan's Airbnb once in Austin, Texas. Are we live imagining that? I think it was so sure we stayed at his house one time number from the Airbnb thing because it was like one of his rental houses or one of his old houses or something. I

Caleb Roth  
might have saved it. It would have been someone that managed it for him. So I think it was when Airbnb was pretty early. I don't think it's his primary house, but maybe it was his first house. I just

Matthew Osborn  
feel like we did or somehow it was related to him. The house we stayed at I'm pretty sure it Austin, Texas. Yeah, yeah, back the very first time we went to the proof party, before they became Jasper and got their billion dollar valuation in the early days, way

Caleb Roth  
back way back in our early days, too. So along the lines of looking for subscriptions, again, you can come through your bank statements, most of the tools out there, which we're just saying don't pay for monthly subscriptions, but most of these financial tools like copilot or Quicken or you know used to be meds or monarch or any of these, they will actually have a section that calls out your recurring subscription so they will find them. They're pretty good about it. They'll look you know their algorithms are searching for weekly or monthly or annual payments in the case of David where you pay for You're up front. And they will actually alert you a lot of them have calendar views. And they'll tell you when your bills are coming out. So you can see the a monthly view with all of your payments on it. And you can see the more riddle that is, the more commitments that you have. And there's more opportunity to shave some things down. Because monarch monarch, I believe they do, I don't, I mostly just want to track where things are. And then my rhythm is at the end of the month, I see what I did. But let me pull it up.

Matthew Osborn  
This is maybe something we can get into a little later on this episode. But do you keep a weekly cadence Caleb? Or is it something you're doing once a month for your personal finances, it's

Caleb Roth  
mostly monthly each each week. So most of the tools now and I'll speak for monarch, they auto categorize pretty well. So Chipotle always goes to food. Of course, if you write a check, or a lot of times, if you use Venmo, it's not necessarily going to know what that is. So you have to go through and kind of categorize a few things. And so I tend to do that, you know, in a perfect world. You know, once once a week, I'd go back in and kind of just brush up while it's familiar. A lot of times while I'm on the toilet, I think most men understand that where you sit on the toilet for a bit. I'll try and categorize transactions and update my mileage and things like that. While I'm while I'm pooping, so sometimes once a day, sometimes every other day,

Matthew Osborn  
sometimes the intro to the podcast. Yeah, exactly. So they

Caleb Roth  
have a recurring section. And it literally lays out a calendar. So yeah, that's where I was getting it from, it doesn't know something. So it'll pull like marathon. Like we tend to buy gas on the same day a week, because we're down with dance practice for the kids. So it thinks the gas station is like a weekly thing. But I see things like YMCA, Starlink, internet, Netflix, YouTube, TV, Spotify, I've got Adobe as well. So those things show up. And then it'll actually kind of list them out. And you can see what they are and shows you what the amounts are. So that's, that's pretty nice. And again, step one is current state, where are you and so this is nice, it sinks into your pretty much every bank out there. And it'll pull in your transactions, and it does a pretty good job categorizing them. So I'm not trying to turn this into an advertisement for monarch. But it's it's monarch like the butterfly monarch money.com. And they did some pretty nice rollovers, I think they're doing 50% off your first year, David, if he did want to switch from it. So that might be might be something you can do and pull in all your transactions. But you know, step one is just understanding where you are. And that's a pretty good way to do it and realize, do I have a ton of reds? Do I have a ton of yellow? Do I just have a ton of discretionary spending? Or hopefully in best case, do you have a ton of green, or you do have some of that margin so that you know month to month, your yellow can go up or down? Because for me, it's not really about the goal of say, did I spend 900 bucks a month on food at the end of the year, that doesn't matter to me, what matters is did I spend less than I made. And so when you switch things around and do Profit First are some of the things we talked about with Joe g where you say, hey, if I'm going to make 80 grand this year, I want to save a minimum 15% of that. And so you can, you know, baked that in and basically throw that money somewhere else, you can automate it, that's one of the biggest hacks to personal finance, and then you never see the money. And then it's you know, after tax, it's actually after tax after automation money. If you only see a certain amount, hit your checking account, then odds are, that's all you're going to spend, if you at least look at what you have.

David Chung  
I would also just add on to one thing you said, you look at what you spend, it's not about just looking at what you spend is also making sure that what you spend is less than what you make. And you touched on this briefly. But I think having a goal some sort of financial goal, whether it's early retirement retirement in itself, or you know, saving up for a car or a house or a larger purchase is also just a great way to keep you know, you and anyone else in your household on track. I know for for Katya and me, like, as we set up our monthly pools, you know, the polls from the top of the funnel, it, it was calculated based on what we need to save for. And so even though it sucks, I mean, dude, some sometimes someone's sucks, like because I'm like, Well, I think I'm out of money. Not really, because I have savings, but like in my checking account, like I'm out of money. And so in those cases, it's incredibly motivating to know that you're still on track, even if, you know, if it doesn't feel like it. I think I think

Caleb Roth  
that's a really good reframe as well. When you are constantly telling yourself I think one reason we don't like to look at budgets as humans is because you're telling yourself No, there's always the discipline and oh, I shouldn't be doing this, or oh, I'm spending too much here. And so rather than doing that if you can get away from the negative aversion and say, Hey, I am saving this much and that's your scoreboard now instead of Oh crap, I spent too much. If you say hey, I'm saving for this wedding, or I'm saving for this house or I'm saving for whatever. Now you can watch that number hopefully go up and increase in that gives you way more motivation, then what can't I do this month,

David Chung  
especially if it's in a high yield savings account, because the interest rates are pretty good right now. And so when you get a few $100, and interest payments in a month, it feels pretty damn good. Yeah, it does. It feels like free money. The more I

Matthew Osborn  
look into personal finance in, the more I examine what I'm doing well, and what I'm doing poorly, the more I tend to agree with the whole Dave Ramsey thing of personal finance. And money is not all about the numbers. Most of it's a mental battle. And a lot of times a thing, especially if people are very into numbers into that, like, oh, I can just do the math. And we'll work out this way, when in reality, a lot of times, there is something mentally if I were to put $900 in an envelope of cash, and take that out at the grocery store and see that stack dwindling throughout the month, that will mentally do something different than swiping my credit card every single time. Not that it's better to always pay in cash. But I'm saying there is something to that effect of hate. There's money is very mental, even if you know the numbers, the numbers all worked out, right. If you're not mentally there, you can still make some big mistakes. And sometimes, doing tricks like that can help you stay on track, or get back on track, if you've gotten off as just paying attention to the mental side of it. And it doesn't always make maths. And that makes mental sense that helps you stick with it. And I noticed that more and more in my own also personal finance journey.

David Chung  
It's also adding friction to spending. Yeah, I,

Matthew Osborn  
if you're letting something go, yeah,

David Chung  
for sure. I removed my credit card from Amazon. And it's completely changed my spending behavior. You know, in the past, I would just add things to cart and one click checkout and just buy random crap that I thought I needed. But now that I know that I have to add it to the cart, and oh, my Amazon Prime account is ending for the first time in like 1516 years. It's ending in March. So I can't do that to you. I have it scheduled to cancel. But you know, they're showing ads now in front of prime videos. Did you guys see that? Have you guys seen

Matthew Osborn  
that often? So I haven't noticed that? No, it's

David Chung  
horrible. And I think you still get free shipping over like $35. Right? Even if you don't have prime? I believe so. Yeah. And so you know, I can save up my cart until it's above $35. And wait three days, that's fine with me. But where was I going with this? Oh, yeah, I removed my credit card, I removed my credit card. And it's it's such a hassle to then pull out your wallet, pull out the card, and then type it all in on the phone and then checkout. And so I went from not spending that much on Amazon. But like, you know, buying a handful of things every month to the I think in the last four months, I bought two things like a bike Bell and a book. So

Caleb Roth  
there's a timing principle, it's actually in my notes where I wanted to go I'm really glad you touched on it is the longer you can wait. So if you have this impulse or this urge to buy something, if you add friction, right in the software world, we want to remove friction, make it easy, just you know, blink twice if you want to buy the product. Okay, cool, we got it. But when it comes to tricking ourselves, or trying to encourage ourselves to do the right thing, or the thing that when we were healthier, we said we wanted to do weighting and adding that friction matters. It's one thing I've done, I haven't gone to that extreme David but I liked that I might have to is I find this a lot when I'm you know, watching ads, and I'll click through and I'm like, Man, this this would really benefit my life, whatever this you know, stretching assistant, whatever, you know, I'm I'm a sucker for ads just as my wife. But a lot of times if they don't have Apple Pay, or something else, where I can literally just click right there, my wallet, I leave it at the front where my car keys are. And so I actually have to physically get up, walk across the house. And then my wife can be like, where are you going, I'm like getting my wallet because I was watching ads again. So adding that friction several times, I've actually come back and gone. I don't need this thing. Just that simple walk to the other side of the house and back clear my mind enough to say who? And so I've heard people call it a 15 minute rule. If you want to buy something and you force yourself to wait 15 minutes, that may not be practical. If you're at the grocery store and you're holding up the line and people are like what are you doing, bro? Like I'm waiting 15 minutes to see if this still settles and feels good. But I think we're appropriate adding some amount of friction. You know, Dave Ramsey says put your credit card in, in the freezer. And you have to wait for it to thaw out before you can actually get that number. And that process as silly as it sounds, I think protects us from ourselves.

Matthew Osborn  
Yes, the mental side of it. It's not all just a number. What

David Chung  
are some other ways that you guys have added friction into spending or just like different parts of your life because I'm also thinking too, if I don't pick up junk food from the grocery store, I'll actually eat pretty clean all week. But the weeks that I have a really tough day and go to Whole Foods and pick up. You know, Pringle their fancy version of Pringles. It's Well, bad for you, you know, Pringles and cookies and all that. And it's sitting in the house, you know, I'm gonna dig into it. So what are some other ways that you guys have added friction to, I guess, negative behaviors. One

Matthew Osborn  
thing that I did recently was after the Joji episode I started doing this is I got, we got in a bad habit for a while join, I have mainly me encouraging, but I'll get in the habit of sure to be like, hey, our checking account is low, we have this this coming out, you transfer some money into the checking account? Oh, sure. How much do we transfer transfer money in the checking account, we just do that, but eventually go down and transfer money in. And eventually we sat down, I was like, hey, what do we want to spend each month what we want our budget to be, I'm gonna set an auto reoccurring thing on the 28th of each month at 27. So it gets there before the first when bills start coming out. And we have this amount we can spend every month, if we go over this, we'll know because this is all it's in the account. And then we can kind of make adjustments from there. But I'm not gonna just do random transfers the middle of the month, if it goes down, like here's our budget, there'll be transferred on this same day, every single month, this exact amount. And then we can go off that, and it's kind of that upstream thing, kind of like Jodi was talking about. If you only have this amount of span, you're gonna make do with what you have, because this is the amount that you have to spend type thing. And so that was like three months ago, we started that or four months ago. So we have one Automated Transfer, I'm not transferring things randomly in the middle of month anymore, we know how much we have. And then we can see that number going down throughout the month and be like, Hey, we're lower than we probably shouldn't be at this point in the month, or, Hey, we're doing pretty good in our budget type thing, without me ever even looking at a personal finance tool. And so that's been helpful, the last three months to start doing that more consistently. Yeah, that's

Caleb Roth  
awesome. And you actually freed up time. So you actually were you did the opposite of what David asked you, but you were you removed friction in the standpoint that now you're not constantly transferring money throughout the month, you just do it one time. That's not your scoreboard as it ticks closer and closer to your baseline, maybe it's zero if you zero the account out. And then the next month, it replenishes again.

Matthew Osborn  
So that's kind of removal of friction, not an additional friction. No, but

Caleb Roth  
that's a rule. I think, I think a lot of times, there's just read a book, I think psychology of money talks about this. But if we make rules, like hey, I don't drink on Tuesday nights, I don't drink alcohol, or I don't drink. Let's just say Tuesdays, if it's Tuesday night, and you're out with your buddies, and you go and they're like, Hey, do you want a beer, they're pouring it. It's so it's a nice, warm day, you had a long day at work, that beer sounds great. But if you're like, Well, I don't want to be drinking anymore. I shouldn't drink anymore. That's a lot easier. Your friends will probably not razz you, because no one really does that much anymore. But even if they did, or you're going to feel that pressure, but if you go, Hey, I don't drink on Tuesday nights, your friends are like, okay, cool. That just makes sense. And it just makes sense to yourself. So adding rules, I only transfer money once a month, that I think, you know, reduces the friction, but also just makes it easy. Where you're not renegotiating with yourself. Yeah, so one rule I've done not really to add friction, I didn't have a lot of answers to that, David, other than, you know, remove, remove automatic payments, because those aren't going to be frictionless. You know, you get the bill so many times and go crap, I meant to cancel Netflix, and I forgot. Of course, it's nice when it's your utility bills, and you're not forgetting to pay those. But one rule I have is, as it relates to larger decisions, so I call it the 1% rule. So take 1% of your take home pay, let's say it's, you know, $50,000 after taxes, then 1% of that is $500. So that's kind of my threshold for I need to reevaluate any decision that's going to be more than 500. So if the decision is should I buy that $100 bottle of bourbon to celebrate something, it's no problem. Now, you can't make death by 1000. paper cuts, you can't make a ton of those small decisions throughout the year. But the 1% rule is that threshold and this might be something good for if you're in a relationship, where if you're going to spend more than that individually, you want to run it by the other person that'll add the friction. Why does 1% matter? Well, you can only do 100 of those a year. But also 1% of a year is three and a half days, it's half a week. So if you're willing to spend, what would cost you three and a half days of your life to generate, whether you work for salary or whatever, then is that okay? So when it's like, hey, I really like that golf club will be awesome, that new driver and is $500, when you suddenly put it in the frame of I can only make this decision at most 100 times in a year and really a lot less because that's not discretionary income. But am I willing to trade three and a half days in my life for this thing that I'm about to buy? And if it's $1,000, and that's a week of your life for that thing that you're going to buy. So that 1% rule, that threshold really does matter. And as income goes up, if you're fortunate enough to make half a million dollars a year it's $50,000 or $5,000 threshold. So you might want to lower that accordingly, depending on how your spouse would feel if you spent $4,000 on something. But that for me has been a pretty good rule. David, do you have any rules or mantras or things that you've you've implemented? I

David Chung  
I've made so many rules in my life. I have

Caleb Roth  
many of you kept longer than a few months.

David Chung  
You know For a decent amount, so I, I forget who I was talking to. But, you know, I only keep two spoons, two knives and two forks in the house. So that way, when I run out of forks in the cupboard, or drawer, it means that I have to go do more dishes. I also have four plates, four bowls, and, you know, for medium sized bowls for that same reason it sort of forces me into, you know, creates friction in just stacking unlimited amounts of plates in my sink. Financially, one thing that I'm coming to the realization, I don't know if I'm just getting old, but like, one thing that I'm coming to the realization is like, if I don't have it already, I probably don't need it. And if I do get it more times than not, it's going to feel like some sort of obligation or commitment. What do I What do I mean by that? I have an obsession over jackets, I add shoes, actually. So shoes and jackets, if I see a really cool pair, or just a really cool jacket, I'll go out and buy it. And I have spent more than I feel comfortable or not embarrassing on jackets. But you know, for the jackets, it's like, you buy this really nice jacket, right? It's like this, you know, super warm winter parka. And like you spill something on it, or you ruined it in some way. Now you feel that obligation of like, either going to try to get it fixed or repaired or cleaned up. Or you might be like, Okay, well, I'm going to try to get rid of this, maybe get a new jacket or what have you. And so now you have like, this obligation to this thing that you didn't have, you know, just a short while ago, same thing goes with like a car, I realize everyone needs a car, but like, you know, I got my dream car a few years ago, it was a Porsche 911. It was like a really old one classic. And it honestly, it kind of sucked, like I love driving it but like you have to change the oil on it. And every oil change costs hundreds and hundreds of dollars. And you know, I'm concerned about getting a flat tire because that means I have to get it towed. And then I have to get another really expensive tire on. And so it's just like this thing that cumulatively has now brought me like maybe 50 hours of joy in my life. Like I'm thinking about way longer than 50 hours. And so I'm just being a little bit more protective of my energy and my focus now and just being a little bit more mindful of what I bring into my life. Because I'm starting to convince myself that the simple life is the good life, having less is more and every thing that you bring into your life can take away from your happiness just as much as it brings you happiness. That's very

Caleb Roth  
deep. And on that note, we should probably wind things down. But as you said that I wonder if we're going to turn into the minimalists. You guys are familiar with them. They've blown up. I know they have a Netflix show and all that too. But, David, one question I had is weird. When did you come to that realization specifically with your is it Porsche or Porsche? I never know how to call it.

David Chung  
I think it's Porsche if you're American. So the Porsche Well, you're

Caleb Roth  
the Porsche owner. So I want to make sure I do that properly. But when it came to that, where you started having those second thoughts, even after you own the thing, was that a piece? Like were you sat down and intentionally reflected on purchases? Or were there enough negative things that eventually kind of hit you upside the head where you said, Man, this thing that I thought I owned? It turns out, it's owning me?

David Chung  
Yeah, that's a great way to put it, I, I knew that I was going to be financially beat up with this car. Because I've read the forums and heard about all the words that it takes, just like everything needs to be replaced every so often. So I've put a lot of money I probably put half of what I paid for the car, into the car for repairs and maintenance and swapping things out. And I was excited about that. I know it sounds kind of stupid, or like silly, but like I was excited for sort of that commitment to this thing that was going to bring me so much joy and passion. And like I had this all hyped up in my mind. I was like, I know it's going to cost me 1000s of dollars a year to like own this vehicle, but it's going to be so worth it's going to make it that much worth it. And what I realized after getting it and like driving it maybe 20 days in a year is like nope, it just it just is eating my wallet alive. And so it you know and here's the thing, what I What I learned out of all that is like, I'm not a car guy. I think that's like the Grand realization is like, I think for a lot of people, they love cars, they enjoy it. And like, it's totally worth it for them. But what I realized is, I thought I was a car guy, I'm not a car guy. And, you know, unfortunately, it was somewhat of an expensive mistake to learn. I still have it, I actually lost the title, I had to get a duplicate last week. So again, there it goes, again, like, I spent four hours of my life last week because I couldn't find this damn title. And so I had to go to the DMV and like, drive all around town because I went to the wrong DMV at first and, you know, weighed in to any

Caleb Roth  
of our dozens or hundreds of listeners are in the market for a Porsche reach out to David.

David Chung  
Yeah, I'll give you a screaming deal. But yeah, it's I think it's okay to spend time and energy and money in the areas that you know, you're passionate about, for example, if I had to spend that same amount, maybe not that same amount, but like, let's say a few $1,000. On us going out for a weekend, we just have like the best weekend of our lives. Worth it? I'll do that 10 times over. But if I have to spend that amount on a card, I'm like, not so sure anymore. I'm not sure if there are many things that many physical tangible things that I feel like are really worth I guess I'm more of an experienced guy, typical millennial, for

Caleb Roth  
sure. Well, that same principle applies to timeshares. It's really easy to think when you're typically just married, you sit down and hear these you guys sat down

David Chung  
through presentations. And so yeah, oh, yeah, for sure.

Caleb Roth  
Alright, just just making sure we're on the same page. But what happens is, you tell yourself, I am the kind of person that is going to be successful enough to take three to five vacations a year, and use these properties all over the planet or wherever. And so you sell yourself that you are that person that does it. But we never test that on a small case and go, Hey, next year, rather than buying the timeshare, right now, what if we just traveled twice and paid Airbnb money somewhere paid resort fees somewhere, even though that's crazy, because we could have got it cheaper? Let's just test it out. See, am I the kind of person that actually does take vacations and wants to? And so David, I wonder if there was a small way for you to test that's hard with the dream car? Because that's different than a regular car. But on big purchases? Is there a way to test it out? And see if you are that person that you think you are before you spend all that money?

David Chung  
Yeah, I think that's what your 20s and early 30s are all about? And, you know, I look at my dad, and you know, I don't know when the last time he bought new clothes was like, it must be at least 10 years, probably not that maybe five years. But I always looked at my dad and was like, man, like, how come you don't buy anything? You know, he doesn't own any watches. He wears the same, you know, pair of SaaS shoes that he's had for 10 years, and I never really got it. And now that I've lived life a little longer, I'm like, Okay, I think I'm getting it. It's just like, once you're once you find your thing, and once you're happy with it, like there's really no need to go out and experiment. That being said, Oh, no, oh my gosh, that's, that's for our YouTube viewers. But anyway.

Caleb Roth  
So they're listening, David flashbay Apple vision Pro. So yeah, I think it is good to, again, don't keep up with Joneses. If you're playing someone else's game, that's a quick way to run out of money. If you're if you're trying to chase everything versus understanding what what matters to you. Matthew, I'm gonna throw you on the spot real quick. David shared the Porsche purchase where he you know, thought he was a car guy learned he wasn't and you know, kind of regret spending that? Is there anything over the last? Could be last few months could be last two years that you've bought, and you've regretted a button that I've regretted regretted the spend? And maybe maybe you could make it back and return it on Amazon maybe you weren't able to return it that doesn't really matter. But was there something like David's story where you thought you were a certain way, bought a toy or you know, a camera or something? And then just said, Hey, that wasn't it? I don't. So this

Matthew Osborn  
is kind of I don't know, I want this fits what you're asking or not. One thing that's been on my mind more recently is that I have a ton of hobbies that I've invested money into that I still do occasionally. But it's so far and few in between that. I know I don't want to get rid of all of it. Because I know I will use it again eventually. But it's not something I use very often it takes up so much space. For example. I know one day I will go backpacking again. I have tons of backpacking equipment, but it takes up tons of room in a closet and I use it once every four years. And it's like I don't really want to sell it then I'll use it again. But it's a lot of money. Just be sitting there taking up space and then all my hunting himself takes up a whole another side of the closet, I'll use that maybe once a year max, then we have all our family camping stuff, taking up a whole shed basically, in the backyard. It's like we use that a couple times a year. And it's all these little hobbies where it's like I've spent money, I know eventually use again, but it just takes up so much space. And in a sense, kind of does rob you of joy, just having full of clutter everywhere that you don't really want to get in, get rid of, but you hate looking at all the time and it clutters up every closet in your house and kind of like us. As Caleb as Americans, we're very, we very much live paycheck to paycheck sometimes. But we also fill our spaces we live in, I feel like very easily. And so I feel like we've expanded and filled up the space we live in. And it's annoying to look at every single crevice and see we have some object everywhere. And so there's a lot of those little purchases or bigger purchases that happen over time where I'm like, You know what, maybe I should just, I don't necessarily regret buying all these things. But maybe I should focus on one thing, invest in that and get rid of a lot of these other things that don't bring me joy consistently and trim out a lot of those camping things. I only use once every four years and take away a lot of the snow stuff we use once a year that are the kids will never use again type thing. And so I don't know one major purchase, but there's a lot of those little purchases, I've started to see laying around the house where I'm like, maybe it's better to get rid of it now than just hope I'll use it again, next three, four years, are just taking up a lot of our space and cluttering our life. When it doesn't need to

Caleb Roth  
be, have you considered getting a bigger house to just maybe a bigger house,

Matthew Osborn  
I think it'll probably solve the problem of total joy. We just need like four more sheds out back. And I think you could probably solve the problem. So I

Caleb Roth  
think I think a universal solution you hit on it is both in finance and space. As humans, we tend to fill the amount of space that we give ourselves and also relates to time, if we have a project to at school, I know I'm guilty of procrastination. But we if I give myself an hour to do something versus 10 hours, I'll probably fill that amount of time. And then as it relates to money, whatever amount of money you have, we typically tend to spend. So I think maybe to go back to the beginning of the conversation, one of the biggest take home principles is limit what you see. And so if you can find a way to automate, and you know, your taxes, you never see that money, right? Because your employer takes it. So if you make $80,000 a year, but you bring home 60, you don't even think about is 80 That sounds like the number you tell your friends over drinks. But when you're building your budget, all you ever see is five grand a month 60 grand coming in. So if you can do the same thing to yourself by automating and throwing money into a separate account that could be that can be as simple as most banks have a checking and a savings. So when you have your checks come in, try and get them, you know, go deposit it and then move it right to savings as a first roll and then only move part of that money back. Or if you just want to deposit it and move, you know, 10% as your safety net over, then you never see that money. And so now instead of $5,000 a month that shows up in your account that you're spending down. Now it's only 4500. And so you learn to wean yourself off of that. So I think that's probably the biggest takeaway, the simplest step that we could do is to limit what you can see, and then you it'd be a lot harder to spend it. What's

David Chung  
the author's name of profit first, Mike? I can't like not how

Caleb Roth  
am I? Rich? Yeah, I think he's polish.

David Chung  
Okay, Mike, McCalla wits, talks about in profit first having that secondary account at a completely different banking institution. So your way, when you log into your bank, you don't even see that number. And, I mean, that's what we did. We opened up a completely different bank account, and we log in once a month, just to make sure all the money's going in there. But it's awesome that one time a month you go in, we're saving up for a house. So it's like, it's really cool seeing that amount get bigger and bigger. Yeah, so great way to do it. As we wind things down, I know we're way over the time already. But have you guys heard of this red tag system for manufacturing, lean manufacturing, it's called Five, five s red tagging. And it's essentially something that you use, you know, in workplaces, and you put a red tag on something that is in your work area that you know, maybe shouldn't be there, and you put that item in a designated red zone. And essentially it's a timeout and after, you know, one month, six months a year if you don't touch it, then you either need to donate it, give it away, sell it or throw it away. And so Matthew, as you're you know talking about all your closets full of all that hunting gear and you know, stuff like that, and I'm more than happy to help you sell it on eBay if you don't end up touching it more than once a year. We'll split the profits but might be interesting thing to do. You know at home to just like get these red tags and stick it on the item and you just put the date on it. One cool way

Caleb Roth  
I've seen that in a closet. I think I saw this on Pinterest. You can take all your hangers and put them backwards to start getting them a year or just right now turn them all backwards. And then when you put them back on the rack, put it back forwards or vice versa doesn't matter. But then what you can do is at the end of the year or two or three, however long your cycle is, you can easily see which ones you've never even worn. Even though I love that blue polo. I have 800 Other polos and I don't I didn't wear it. So then it's time to say, You know what I can I can donate that are part with it. Yeah, Matthew, back to your camping stories. I know some of that probably fits you like the backpack might be sized to you. Your hiking pants would be you know, fit, etc. Would that be something you'd consider renting? If you did a, you know, some kind of a camping trip or a rafting trip or went up with Avery again and hunted? Would you rent all that

Matthew Osborn  
equipment? Could you or would I talk with you?

Caleb Roth  
Would you be willing to sell it? Let David come over right now and sell it all on eBay? Take that cash. And then if you needed it, every four years, you could simply rent it. I

Matthew Osborn  
guess I could the only benefit. I think to that though, it'd be the space savings. Because I feel like the cost to rent, it would probably be fairly similar to what it would be worth now if I were to sell most of that. So let's say I sell it all right.

Caleb Roth  
You were right to the money you would write to the money? Yes, I'm right. Yeah. So let's just go to psychology first, ignoring the money, would you rent it? Like, are you attached to your gear? And that it's important to you to have the same stuff? That's your most

Matthew Osborn  
of us know, a few items here and there? Sure. But most of it No, it's not like I need this specific backpack. Well, for hunting is different. But for backpacking, it's not like I need a specific backpack for it or Yeah, specific sleeping bag for that. Yeah, I'm not as attached each individual item. No. Yeah. And

Caleb Roth  
just for fun, let's build a business case for this. What would you be willing to spend? Would you spend 10% of the purchase price of an item to rent it? Would you spend 30%. And we can think about camping because that's what we were just talking about or switching to other gears.

Matthew Osborn  
I feel like 10% Makes sense once it gets like too far past that, like 30% on the edge for me, once you get to like 40 to 50%. I don't know. I

David Chung  
think frequency matters to like ISO one for sure. One for sure. You know, I actually skied for the first time last year in 15 years. And I rented the skis for like $120 I think a new pair of skis and poles cotton boots cost like, I don't know, 800 to $1,000, like a decent pair, I'm guessing. Yeah. And so that was about 10%. But like, I would even if it was 30%. Even if it's 300, I wouldn't go out and buy a brand new pair to just go skate on Wednesday. Yeah, I'm not going to use ever again, it's interesting,

Caleb Roth  
because I know there's some benefits to getting used to the equipment, like you'd want to break your own skis in and understand exactly what you have. So I think if there's sizing that plays a role, maybe that that changes the equation. But I think like I went out bought, I wasted a lot of mental energy, because I'm a nerd. And like to research options, I went and bought a riding mower. And I didn't want to pay someone to mow my yard. That's something I can do. But I also I live in a neighborhood, there's 12 homes right here, all with decent size yards. And so there's probably 10 riding lawnmowers, and two of them, pay someone else to do it. But it's like, I use that thing once a week. And I can easily share. So there's a lot of things too, that we have, or I'd be happy to rent or share. Just because I don't need to have so many things. Yeah, I

David Chung  
think a lot of libraries. Also, I don't know if it's libraries, but they're typically tool libraries in every major city, where you know, if you need a circular saw, or jigsaw or whatever it you know, they have things of tools available for you to rent for like a annual cost. And so yeah, I think renting is not always a bad option, especially if you're just I should have rented my 911 point of stories. I just rented it for a month and then no, it would have been a lot cheaper than doing all the work that I

Caleb Roth  
do. Yeah. Now, you'd probably didn't have as easy a way to do it. But with Turo, you probably could know for sure

David Chung  
one, yeah, yeah. I like to have

Caleb Roth  
a fair example, you would have had to rent the car for a little bit and also rent the oil change expenses and everything else to kind of feel the headaches along the way.

David Chung  
The thing that's eating me alive right now is like, because it's just sitting in a garage, but the insurance payments on it, because you know, the insurance, it's it's like a sports car. It's a convertible. And so they're like, it's gonna be this much every six months. And I'm like, I guess I have to pay it. And so I'll go ahead.

Matthew Osborn  
This entire episode be summed up and spend less than you make? Yeah,

David Chung  
I'd say for sure. More or less.

Caleb Roth  
That's a Taurus. And I think the reality is that we will spend what we have, whether it's time, money, or resources or whatnot, so find a way to artificially shrink them. Yeah. So if you again, hide hide from yourself, protect you from yourself and then you can only spend what's there love it? Well, with that we will wind things down again be looking for that relationship series will kind of kick that off and share a little bit more direction on where that's headed. But we really want to dive into the habits of relationships because as one of our previous guests, Nathan hand said, relationships are Everything or he said something like that so with that we'll sign off catch you again next week.