Welcome back.
Thanks again for being here.
One of my favorite movie scenes is in Lawrence of Arabia.
When Lawrence himself strikes a match and puts it out with his fingers and he doesn't even flinch.
There's another man who watches this happen and he tries to do the same thing.
He lights a match. He tries to snuff it out with his fingers and he yells in pain.
He asks Lawrence, he says, wow, that hurt.
What is the trick? And Lawrence says, the trick is not minding that it hurts.
That I love that scene and that is how most hacks work.
When I heard people are looking for a hack in life, the real actual hack that actually works is not minding that it hurts or the equivalent of that.
Many years ago at a job, someone hired a social media consultant where I used to work.
And this consultant sat down and did a three hour session with us where she walked through how to use hashtags on Twitter and what time of day you should post to maximize engagement and had a thread of post, those kind of hacks to increase their social media influence.
And this consultant was very nice.
But she never mentioned the most important social media hack.
The thing that actually works, which is right good content that people want to read.
That's the only hack that actually works, right?
It's the same in writing, maybe in podcasts too.
And this because writing good stuff is not a hack.
It's not a shortcut. It's hard.
It takes time. It takes creativity.
It can't be manufactured.
It works. It absolutely works.
But it's the social media equivalent of like a heavy workout.
It's hard. That's why it works.
And that story is pervasive.
It's the same with diets and marketing and in finance.
He wants a shortcut and it's always been like that.
But I suspect it's getting worse as technology just inflates our benchmark of how fast results shouldn't occur.
Hacks are so appealing because they look like hats to prizes without the effort.
But in the real world, that rarely exists.
And it is the same of course in finance.
The personal finance industry is filled with advice that sounds and feels good.
But it doesn't really work.
And people need to recognize that.
So I came up with a list of quote unquote hacks in finance that do work.
Even if none of them are fun because nobody said that this would be easy.
All right, dive right in.
Number one. This accepting that living below your means requires suppressing your ego to below your income.
Spending money above a certain level of basic needs and basic leisure is mostly just ego and social climbing, social aspirations.
So savings then is just a diversion from boosting the appearance of your status today to have more productive use tomorrow.
And when you define savings as the gap between your ego and your income, you realize why many people with decent incomes save so little.
It's a daily struggle against your natural instincts to show off, to extend your peacock feathers to their outermost limits and to keep up with others who are doing the same.
People with enduring personal finance success, which is not necessarily the same as those who have a high income.
And to have a propensity to not care what others think about them.
It's not easy. It can be painful.
But it's a very important and powerful personal finance hack.
All right, number two. A spouse who sees eye to eye with you on spending.
One of the fastest ways to break your finances is to marry someone with wildly different spending expectations.
It doesn't matter whether the other spouse wants to spend a lot more than you or a lot less than you.
If you don't see eye to eye on it, it's very difficult to make it work.
I would actually say that having two married people who spend a lot of money is probably a safer financial arrangement than having one saver and one spender.
Since money disputes, just disagreements are leading cause of divorce and divorce is a fastest way to split your money into.
A related personal finance hack, therefore, is don't get divorced.
Hard, obvious, but then again, all of the hacks are.
All right, number three.
Just avoiding trouble to begin with.
Charlie Munger, the late great investor, he had a saying I loved.
He said, nobody survives open heart surgery better than the guy who did not need the procedure in the first place.
And there is an obvious corollary here, which is nobody gets out of debt faster than the person who avoided it to begin with.
But that is so rare. Look at how many programs there are in the economy to consolidate and manage your debt.
Compared with those who encourage strategies to say get a college degree without debt by going to a low cost community college or something, it's like a hundred to one.
It is way more appealing for people to try to find something to get them out of debt than to not go into debt to begin with.
Because not going into debt to begin with is hard.
It's a hard hack as all of them are.
And I think it's the same in investing.
Part of why get rich quick schemes are popular is because so many people need to get rich quick after delaying their savings for too long.
And so an underappreciated truth in finance, especially in investing, is that you don't need to make many great decisions to do well over time.
You just have to consistently not blow it and not screw up and not make bad decisions for a long period of time.
Alright, next one. A finely tuned bullshit radar that screams red alert when you see a promise of abnormal gains without abnormal sacrifices.
This includes just being skeptical of most financial hacks, which tend to be appealing, but fictitious shortcuts.
You should also be scared and have that red alert radar go off when you see someone who is charging you a big sales commission or wearing a suit when it is unnecessary to wear a suit.
Alright, last one. Take a career that may not be your passion, but pays a decent wage.
This is great advice from Chris Rock, the great comedian, who says, stop telling kids that they can be whatever they want to be.
He says, you can be whatever you're good at as long as they're hiring.
Scott Galloway has similar advice.
He says, people who tell you to follow your passion are already rich.
That's why they're telling you to follow your passion.
They already made their money, they're already independent, and then they can follow their passion.
It's unpopular to say, but a career that is not your passion, but earns a good income, can be preferable to the alternative.
And this is less about money, and it's more about freedom.
A low-income passion job may breed resentment as you age and have kids and have a mortgage and all kinds of higher bills that become burdens large enough to suffocate the joy that you get from working in your passion.
But a job that you merely like that pays a decent income, provided that you live below your means and save a chunk of that income, can eventually offer you a level of financial flexibility that allows you to pursue your passion as a hobby, purely for its pleasure.
Jeff Bezos once had this advice too that thought was really good.
He said, if you can get to a spot in your career where you enjoy half of it, that's good.
That's the picture of success.
There is always a downside that is difficult, that might be drudgery, that might be medial, that comes with any career, and that's part of it.
And so balancing that with a job that pays well and using that money to give yourself freedom to enjoy the passions that you have on the side is an incredibly powerful personal finance hack.
That's it for this episode this week.
By the way, if you're looking for another podcast to listen to, check out the rundown by my friends at public.com.
It's a financial news podcast that you can listen to in just five minutes.
Short and sweet, just like my own podcast.
In the rundown, you'll learn about the stocks that are making the biggest moves this week.
You get caught up on what happened in the global economy and figure out what's happening in the wild, all of the volatile world of crypto.
Maybe you'll even learn why your co-workers crypto advice is probably terrible and you shouldn't listen to it.
Each episode of the rundown is just five minutes and you'll walk away in the loop of understanding everything that's happening in the finance and economic world.
Check it out. Hope you enjoy it.
And thanks again for listening.
