Financial education is key to financial success. Without education, you’re afraid to take any financial risks. This is why getting a financial advisor or planner is important. It’s okay to be behind the curve on your financial knowledge. You just need to have the drive to take action. Join David Sidoni as he gets Pamela Capalad and Dyalekt from Brunch and Budget to bring their A-game today – dropping mad knowledge on all things money. Learn more about the mindset and mentality you should have when interacting with money. Discover some awesome tips on budgeting and saving that help break the cycle and beat the system. David wishes that he could have talked with them all day! Listen in for some incredible information from incredible people that want to help you, the little guy, learn how to handle your money.
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Interview With Financial Gurus For The Rest Of Us, Pam And Dyalekt From Brunch And Budget
First-Time Home Buyer Financial Tips And Advice
How to Buy a Homies, this is my little revolution for the people who are starting to get some traction. We’re at over 750,000 downloads and thousands of readers have read the blog and used the strategy shared here to dump their landlords and buy their first home. As the show grows, I’ve noticed that suddenly my inbox is getting requests from all kinds of random people who want to be a guest on my show so they can talk to you. Lots of wantrepreneurs and people with get-rich-quick scams want to use this show to reach you so they can give you their so-called expertise.
I’m not kidding. I get at least a couple of requests a week. What I’ve done instead is I scour the interwebs and I look at all the social media. I look for like-minded people who offer education and empowerment first and help those of you out there who need it. I’m finding folks with big brains and mad skills, but also with bigger hearts. In this episode, I am pleased to bring you some super dope, compassionate, and caring people with some super rad financial advice. Let’s go.
If you’re seeing all these things all over the internet and you’re trying to figure out what stuff is trying to help you and what stuff is trying to sell you, hit subscribe, like, and bang that notification bell. We’ve got interviews with people like this to help you with your finances, as well as interviews with other first-time home buyers who had no clue what they were doing and somehow found a way to get this done.
Also, remember that everybody’s situation buying a home or just trying to plan your finances is different. There is no one size fits all. There is some great information in this episode, but there’s tons of other information for people at the very beginning, the middle, or getting towards the end. We’re dropping a couple of episodes a week with information for everybody no matter where you are in the process and each episode has different nuggets for everyone. If you’re trying to figure out how to buy a home, there are tons of little details and everybody has individual questions for each individual stop. Subscribe and you get all the answers here on the channel. Each episode has a little nugget about a little detail that’ll get you to home ownership.
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What’s happening, ladies and gentlemen? I am extremely excited about this episode. I have a special guest. You guys know I’m out there looking all the time to try to find resources for you and make sure that you’re getting everything to help you in every aspect of trying to buy a home. In doing that, I found Pamela and Dyalekt, who have an awesome podcast called Brunch & Budget, which is an amazing concept and idea. They are helping take a lot of the confusion out of financial preparation. You know that I got love for them right away. Guys, thank you so much for joining me.
Thanks for having us.
Everyone, trust me, they’re dope. Let’s start right away and give our readers out there some basics. If people are reading this, the name of the show is How to Buy a Home. Let’s flip that for you guys. Give us some nuggets. How do you take care of your finances when you’re brand new to this adulting thing?
One of the things that we often take inspiration from and remember, when we’re talking about inspiration, the original meaning of inspiration is to breathe in, to take in, and give life. The thing that gives us life is the environmentalists who always say, “The best time to plant a tree was twenty years ago. The second best time is now.” We think that we’re behind no matter where we are.
I’m a musician. I remember when I was fourteen and I wanted to start an instrument and someone told me I was too old. I never picked it up because I’m too old. We get these things and these barriers are the things that stop us. We have actual practical problems that we need to surmount and we can, but not until we begin to forgive ourselves for the stuff that we’ve been told we can’t.
Even the word adulting is a way for all of us to take a breath for a second and be like, “No one taught you any of this stuff. You didn’t learn it in school. Your parents didn’t teach you because their parents didn’t teach them. Amidst all of this, there’s so much shame and embarrassment around not knowing about finances.” That truly is step one is to say, “I’m not behind. I’m okay where I’m at because I got here because I had to guess. I had to make it up as I went along.”
Part of that forgiveness is also a celebration. You don’t have enough money for a downpayment, but you managed to get that apartment, which required first, last, and a deposit and you needed to have extra money because you didn’t have any furniture.
Also, your credit score had to be good.
You’ve done all this work.
Put that on a billboard. It’s so true. There’s such fear, a wall or a barrier. I don’t think people realize it. Everybody stop and think about that. You had a credit score. You had the first and last in security. You did it, just a smaller version. You can do it again. Maybe not next week, maybe next year, but you did it. We got the mental but give me an actionable first step. If somebody right now is reading this and their five minutes are up and they’re about to go to work, what’s the one thing they can do before they read the rest of the blog to start with taking care of their finances?
My very first thought for that is to open a savings account that is at a completely different bank than your checking account. You don’t even have to start putting money in it yet, but here’s what happens. You open your checking account and your savings account. It’s usually at the same bank. You start trying to put money away into savings and then you open up your banking app to see how much money you have. You add up the checking and the savings in your head and you’re like, “That’s how much I have to spend.”
It’s way too easy when your savings in your checking is in the same place to transfer money back and forth. It never feels like you’re saving because you’re only using it as a slush fund for your checking. That’s what I’ve seen over and over. One of the first things that we have clients do usually is to open a savings account somewhere else. If you want to get to the next level, open high-yield savings account at an online bank like Ally Bank, Marcus, or Barclays. American Express has one.
We’re not saying that online savings accounts are better. They are more likely to be high-yield because they’re not paying for all the other stuff.
High yield means that they’re paying you more interest than a traditional bank.
I am so scared to death that this is going to be my longest episode because I’m so excited to help people understand and break down these barriers, both from a mental aspect and from the real world. We’re going to get into what you guys do to help people who listen to your podcast. It’s a shocker, everybody. I like it because they give a bunch of stuff away for free all the time and then when you’re ready, they’re able to help you with those next steps but you said so many things.
First of all, my bank just updated its app. It used to show me the 4 or 5 accounts. Now, it has the cumulative total headline when you open it. You’re right. For those of you guys who are new to the whole finance game, welcome. We’ve got a lot of stuff for you coming up. You’re going to hear things like slush fund and hysterical. It’s a term that I first heard probably on Law and Order back in the day or in the politics world.
It’s where people feel like they’re pulling money from one place to another so that it never feels like you’re running out and the yields are those profits that you’re making on your interest on your savings, which is relatively nothing these days. That out-of-sight, out-of-mind extra savings account is a fabulous first tip. I love that.
We’re going to get deep into all this. Give us a little bit of a background of where you guys come from. I did all my research on you guys, but one of the things that resonated with me is you guys said that if you ever felt lost, ashamed, or embarrassed about your finances, that you’re here to help people break down that wall. Tell us a little bit about what you guys do, all the places where people can find more of this stuff, and then we’ll dig into some more things.
What you’re bringing up is the point. We want to help people who are lost, ashamed, and embarrassed about their finances because we’ve been there. Our families have been there and we want to be able to all see clear.
I like to say that we do financial planning for people who are afraid to talk about money. That’s what we found in our work. That’s what I found working with clients. The reason why the brunch aspect of brunch and budget exists is that I had a friend who was scared to look at her credit score. She’d never looked at it before. She came up to me at a party. She found out I was in finance and she was like, “Pam, I need your help but I’m scared to look.”
I was like, “Do you want to do it over brunch or something?” Her body language completely changed. Her whole face changed. She said, “Like a brunch and budget?” I was like, “Yes,” but also adding that food aspect and adding that comfort aspect to a conversation that people generally bristle at and also hide from allowed us to find common ground. She made me a meal and we pulled up her credit score.
I held her hand while she was doing it and she was like, “That’s not as bad as I thought.” It’s getting past that barrier of anticipation because we all did make money mistakes. The problem is that we punish ourselves for making those mistakes so much that we’re so scared to do the next thing. I shouldn’t even say we punish ourselves because the system punishes us, too.
It teaches us to punish ourselves alongside the system where we are ratting ourselves. We’re thinking about these things that we’ve done as mistakes when oftentimes we’re doing the best we can to get by. There’s science behind all of these feelings. It’s great to be able to break bread and we know that psychologically that’s a thing. It makes you feel comfortable and it’s beyond being able to feel comfortable when you have community.
Community is when you’ve got at least one other person who is there to listen to the things that you’re saying. We can create these comfortable situations out of what is the most uncomfortable thing. Studies have shown that parents would rather talk to their kids about sex, drugs, or terrorism than talk about finance. Money is an amazing taboo. When we’re talking about savings, the reason why Pam was bringing all that up is that we don’t think about saving as an active thing. We think about savings as the act of not spending. It’s like, “I didn’t spend the money. It’s there in savings.”
Creating another savings account allows you to be active about your savings to make it a real thing that you do. I learned this from my wife. Chilling is not a thing that you do passively. Chilling isn’t the act of not working. Chilling is when you go and you get the drink, the snack, the show, and all the things that make you come back to you. When you can come back to you, you can take that breath, and then you can make the decisions that benefit you.
Guys, I promise you. We could list 1 through 10 and give you the audio version of the PDF of all the things that you need to do to take care of your finances but the reason why I talk to these guys is that they understand the mentality of it. I’m not talking about someone like Pamela’s friend, who was scared of credit scores. I’m talking about people who are along the way because there are mental roadblocks all the way along.
Even if you’ve got all your stuff together, you’ve got your matched 401(k) and you’ve got this, it’s constant, but Dyalekt, you hit it right on the head. Chilling is active. The problem is the same way that people take savings as withdrawing from their life pleasure as opposed to growing their security and, most importantly, a stress reliever. No anxiety.
Too many people say chilling when they mean decompressing. You go home and you scroll for 20 minutes. I’m not chilling. I am decompressing. Nobody talked to me. I’m turning my brain off for 20 minutes. Saving is the same way. Saving is not decompressing. It’s not taking away from you. It’s active and it’s pushing forward.
One of the things that happen with finances is that there’s a giant gap. You learn the basics and the reason why my readers come to me is that it feels like it’s all or nothing. It feels like you don’t know what’s going on and then you turn on CNBC and they’re talking about dividends and quarterly reports. You’re like, “What does that have to do with me?” You are doing what I’m trying to do but on the financial side. Talk to us about that first mentality that you guys did where you’ve got the little test. I found out I was a money monk. Explain to us what that is.
I’m not surprised at all.
You’re referring to our Money Personality Quiz. It’s a two-question quiz. If you go to BrunchAndBudget.com/personality, you can take the quiz. This all started because no matter where you are in your financial journey, we all have a relationship with money that has gone unexamined most likely. Whether you know it or not, you’ve started getting messages about how to feel and think about money as soon as you could start understanding words. That’s where the money personalities came from.
There are studies that show, as young as six, people have a relationship with money in our education work. We have another company, Pockets Change, where we work with young people. We had a six-year-old more than once come up and say, “Are we talking about money? I’m bad at money.” Most of the time, the things that we’re taught are that we’re bad at money from different angles.
To get a little bit further than our pay grade about stuff, a lot of times, these things come from actual factual trauma. It takes a lot, even more than only education, to be able to unpack these things and start making the decisions that help us. We often talk about the habits that help you survive or not the habits that help you thrive because we do these things that are reactions to the way that money has affected us negatively. These are armors that we put on that allow us to get through our day, but they’re not building security and safety. They’re not moving us forward. They’re only keeping the enemies at bay for now.
[bctt tweet=”The habits that help you survive are not the habits that help you thrive.” via=”no”]
I didn’t talk about what Brunch & Budget is. It is a financial planning practice. We’re registered investment advisors. We work with clients one on one on their financial plans, but we make every single person who comes through our door take this Money Personality Quiz. We do it for them and we also do it for ourselves.
I feel like as a financial planner, I need to understand what your money tendencies are and where you are coming from with your relationship with money so that I can tailor my advice to that. Your money personality, David, has a short threshold for how long you can think about your finances. Maybe you can talk about finances all day long as a concept, but when you have to sit down and think about your finances, you have a limited threshold.
Forty-five minutes, money monk and finance educator. I’ll do an eight-hour workshop with you about your money but when it comes to my finances, I still will gloss over it after about 45 minutes.
When you know that about someone or a client, we’re able to say, “We’re only going to tackle 1 thing instead of trying to tackle 5.” When you know that about yourself, you can also stop blaming yourself for not getting everything done in one sitting. You can break it out into smaller pieces so that you are like, “These are my financial priorities, and here are five different steps. I only have to do step one now.”
To be a little bit more granular about Brunch & Budget, it is a registered investment advisor. It’s a planning firm and there is a podcast that we do together. Pam is a certified financial planner and an accredited financial counselor. I am an AFC candidate, but not a CFP, and I don’t plan on being one. I am a financial educator. I am the Director of Pedagogy at Pockets Change. We’re a hip-hop and finance organization for the youth where we use hip-hop pedagogy to demystify a lot of these things for young people.
It’s a lot of the same work that we do. We think of these as sister companies and they work in tandem. In the podcast, our roles are Pam with financial expertise and mine as a financial educator, who is also an artist. I’m a rapper and theater maker. I’ve been creative my entire adult life and the thing that got me the most when we started doing this podcast because it came from our creative community, TastyKeish, TK in the AM is a great podcast or radio person. She invited Pam to have her own podcast. She said, “Dyalekt, come on. You know the boards, the switches, and things like that.”
I thought that I would only be Ed McMahon and be like, “Yes.” As an educator, I had opinions and even more importantly, I found that not just as an educator, but as an artist. I didn’t know that I was a small business owner and a freelancer and that all of the discrimination, all of the barriers, all of the paperwork, all of the self-recrimination that happens to freelancers not only happens with artists but was founded by us. The same stuff that they’re doing to Uber drivers is the same stuff that nightclub owners were doing to us. I was able to take a bit of that expertise combined with my educational philosophy and we’re able to find a middle ground for wherever you’re at in your financial journey.
It’s incredible because we’ve talked off the air, but we’ve never discussed this. This is a big part of what I’m trying to help people understand and demystify buying a home like you guys are trying to demystify finances. There are so many people out there that offer this service, but they strictly offer the service. What I’ve tried to do is what you guys are doing. I only have to do it as a split personality.
I can offer the highest level of real estate services, just like CFPB, but a lot of the time, we’re talking about goals. People want to put everything in one box by understanding where they come from mentally and by understanding where they came from. A lot of times, Dyalekt, I have to talk to their inner child. I’m with you. It is having the team that’s going to not treat you like a number, but having the team that’s going to take this momentous thing and divide it into two different categories. What are the goals? How do you approach these goals?
You guys get a little deeper in like, “Let’s talk about why you maybe even have those goals and should we reassess those?” Also, there’s the service and that’s where you give the advice and the products and all the things that you do. It’s so important for people to realize. Thank you for taking the time to email me, but if you email me three sentences, I’m not going to decide from those three sentences if you should or shouldn’t counter offer on that house.
The only person who should be answering that question is someone who has spent an hour talking with you at minimum, if not weekends and weekends. By starting with this personality test, you open the door to these conversations. The whole brunch concept encapsulates the last three minutes of rambling that I just did, which is what I love when you take the finances, but go deeper with it. If someone’s younger and they are adulting comes to you in their twenties, what do you tell people who are like, “Don’t tell me to 401(k). I want a YOLO?”
One of the other things that we have at Brunch & Budget is this framework that we call the 5 Stages To Your Financial Legacy. The stages are financial safety, financial stability, financial sustainability, financial independence, and financial legacy. If you are in the financial safety stage, if you’re only starting out, that might mean that maybe you don’t contribute to your 401(k) yet. Everyone will be like, “What about the match?”
If you don’t have liquid savings in your account, that 401(k) match is not going to help you tomorrow when you don’t have money for rent. It’s about being clear and honest about where you are financially because that will also help you filter what financial advice to take. That 401(k) match is something you can take on later. It will still be there and you’re not missing out.
The other way that we feel bad is there’s this weird FOMO around finances like, “I didn’t start when I was twenty, so now it’s over.” Going back to your tree example, Dyalekt, when it comes to starting out in your twenties, prioritize saving and minimizing debt but learning how to save and understand what your values are around spending money and where that money goes is critical.
[bctt tweet=”Learning how to save, and understanding what your values are around spending money is really critical.” via=”no”]
Those two things are going to make it, so you don’t hate your twenties. Please don’t hate your twenties because you want to feel safe in your 60s. We want you to feel safe in your 60s and there is a lot of psychological stuff about how we don’t know about our future selves, so we have to create all these mechanisms. They’re all true but if you live spartanly where you’re there, you’re sleeping on a rock, it is not going to do you well.
Even more importantly, it’s going to break you. You’re not going to end up saving all that money. You’re going to end up taking that money and being like, “I’ve been so good.” You’re going to splurge and blow all of that stuff that you’re doing. You have to maintain yourself in healthy ways with your practices and sometimes, that will include spending money on things that other people will call frivolous.
One of the huge things that we want to shout from the rooftops is wants are needs, too.
It was months later. We were looking at a graph.
I didn’t even realize that until you said it.
I was talking about the kids’ thing. We are having our second song contest, where we’re asking students to make rap songs about personal finance. Go to PocketsChange.com to check it out. Wants Are Needs, Too is the theme of this year’s contest.
The reason why that is so important to us is that there’s always been this wants versus needs. They’re battling. You have to choose between your wants and your needs. That is not humanly possible in the most literal sense. We have needs that we have to take care of but our wants are fulfilling our emotional needs. We need to feel like ourselves, recharge, and decompress. If you don’t put money and include that in your budget, then you are going to do that binging thing. You’re not going to be happy.
That’s huge with housing. They teach seminars on wants and needs. I talk a lot about compromising when you’re buying your first home and have the wants and the needs. We talk a lot about it. I’m getting really deep now here. A lot of the things that I do when I’m talking about 401(k)s with an example, potentially reducing your contributions for your 401(k) for a limited time period so that you can afford a higher monthly payment.
In other words, what that sounds like is I am sacrificing, again, the chill versus decompress, the save versus a bad thing. It’s not only taking away because by substituting a mortgage for rent, you have a whole other part of the equation that is adding up. A lot of times, people will think, “I want that want, but I’m just going to focus on exactly what I need.”
Sometimes I’ll look at them and say, “I get it that you want to put $500 a month to your 401(k) but I’m not necessarily sure that you want to call that second bathroom a want. Sure you only need one bathroom because there are only two of you right now, but you told me you guys want to have a kid next year. You also want something that’s going to be potentially better for you down the line to rent. If that’s the case, you want two bathrooms so that you could possibly rent it with two roommates.”
It’s that difference between work and wants a little bit and consider that some of those wants can be something that you can sacrifice something else for. That’s an amazing concept coming from a financial planner because everyone’s always like, “Put your money in your 401(k).” By the way, the market’s been going up for years. I don’t know about contributing to your 401(k) for the next few years. I’m just saying. That’s only me.
That’s an important point that you brought up because life is about competing priorities and figuring out what those priorities are. The reality is you’re not going to be able to do all of the things and take all the financial advice that you get. That’s why it’s so important to have a clear understanding of your values and also like the timeline around your goals.
What you’re describing is if someone gets a house with one bathroom, they’re probably going to have to get a new house or put in a bathroom in five years when they have kids versus like, “Let me like shift around my priorities and say, ‘I’m going to stop contributing as much to my 401(k) right now,’” and that’s not forever. That’s like, “I’m going to stop contributing to it until I make more money, until I find another source of income or until my other bills go down,” or whatever that is. When you understand how all of these pieces fit in together and that all your priorities can’t happen at once, then that will help also give you some peace of mind.
You’re saying, if you make a plan, you don’t have to fight. I love the precise language you’ve been using with this, David, where you talked about compromise and sacrifice. If we prioritize and compromise, we don’t have to sacrifice because sacrifice means killing. With sacrifice, you’re either killing a person to save a village or you’re killing a dream to save another thing.
That’s not going to be healthy for us. It’s not sustainable. We’re simply not going to do these things. As Pam is saying, all these feeling stuff may feel hippy-dippy, but finance-wise, if you’re going to have to go buy a whole other house or you’re going to have to make a huge renovation, these things may be more expensive in the long run.
I appreciate you, analytical people, and pragmatic people who are reading this and are excited about understanding and want the spreadsheets of the tips and everything that you need to do. There are emotional people and trust me, I’m in real estate, there are emotions everywhere. Also, there are the analytical people who say, “I’m not going to be dumb. I’m not going to make a decision based on my emotions.” Your spreadsheet releases your anxiety. Therefore, you are still emotionally making a decision.
That’s why I talk about the C-word in my show all the time, compromise. What’s awesome is that you added the P-word, prioritize, to my C-word. I grabbed my pen while you were talking, Dyalekt. I was like, “You’re right,” because now we’ve got to prioritize and that will help you figure out the compromise. It is to live a life. You, spreadsheet people, might feel better putting your money away, but realize why you feel better. Take a step back and go to your inner child that needs to learn something. I bought some books for my kids for teenage money management from this guy, Adam Carroll, who is big in the student loan world.
Everybody’s got a different way to figure it out. The reason why I wanted to bring you guys on was to demystify. On my show, I talk about crushing the confusion. Now, we’re getting into hippy-dippy stuff, but Pamela, I know if I grill you, we can rock all this and get into it. Let’s discuss the same thing as the environmentalist planting a tree, it’s the same thing with buying a house. Here’s the difference. The best time to buy a house is twenty years ago or yesterday and if you can’t do that, then now.
It’s the same thing with personal finance, except you can do some smaller starter things. Besides listening to Brunch & Budget to educate and empower themselves, why should people not be afraid to reach out to a financial planner? I deal with this all the time. People TurboTax for ten years, then they buy a house with me, and the next year, they have a house. They won’t spend $500 on a tax professional because they’ve been doing TurboTax for many years and that’s the way they do it.
I haven’t talked to a tax professional and even though they’ve done TurboTax for years because it’s a home, it’s a whole different thing. The professional helps them save another $4,000. That’s a good return on investment. What about you, for someone who’s scared of a financial planner? I don’t want to pay somebody. I don’t have $50,000 to invest. Why would I call Brunch & Budget?
That’s the most common stuff. I’m going to DIY because I’ve been DIY-ing. Again, that’s to survive and not thrive.
I always say that my biggest competition isn’t another financial advisor. It’s people doing nothing. It is just doing the same thing that you’ve done over and over, even though your circumstances have changed. When it comes to financial planning, I don’t want to elevate it to the point of like, “It’s an investment in yourself,” because people use that phrase too often, first of all, and use it as a way to coerce or sell people into buying something.
[bctt tweet=”A financial advisor’s biggest competition isn’t another financial advisor. It’s the people just doing nothing.” via=”no”]
Usually, people come to us for two reasons. One is that there’s an immediate pressing need like starting a family, buying a home, making more money, and changing jobs. The other reason that people come to us is that they have tried to DIY it. They’ve tried to organize it themselves. They tried every budgeting app. They’ve read all the books and they’re more confused than when they started.
If you’re someone who feels that you need guidance that’s specifically tailored to you or someone is going to take into account you as a whole person and help you figure out the financial side of that, that’s when it’s time to talk to a financial planner. The other biggest barrier though is there’s a fear around sharing your finances with someone. We had a financial planner. Financial planners hiring a financial planner is a real thing. Every financial planner should do it.
Lawyers hire lawyers.
Therapists have therapists. You can’t be objective about your own finances, no matter how analytical you think you’re being and no matter how many spreadsheets you have. I resonated with what you said because my money personality is the complicator and we love our spreadsheets. I have spreadsheets for my spreadsheets. What you said about you putting your anxiety onto the spreadsheet so you don’t have to think about anymore, it spoke to me for real. You can overanalyze and get into analysis paralysis, no matter how on top of it you think you are.
When someone gives you the space to step back and say, “Here’s a simpler way to do it. What you thought makes more sense over here.” When someone has that objective viewpoint and also someone who’s a professional, who’s able to take all of the experience, skills, and education and say, “This is what I think makes sense for you,” whether or not you take the advice, you are able to make decisions from a perspective that resonates more with you and your values.
Can I do my artist thing real quick to talk about like DIY stuff? Before I even thought that I was a participant in the financial world, I was told, “As an artist, you need to work hard, and someone is going to pluck you from obscurity.” What you’re doing in the meantime, you are not saying that you’re making a lot of money on your taxes and you are doing all of your expenses yourself. I thought that I was smart. I’m confused. I was like, “I’m confident. I read all this stuff. I did all the things I made it look like I was making the least amount of money possible. Anything that came in cash, I was told to do. I was discounting or only showing a part of that. I was doing all of my expenses.”
You did your own taxes.
It was TurboTax-type stuff but it’s costumes. “You can’t wear this thing and go out to eat.” I did all of that stuff and then, I started doing well. I wanted to get real money and grant money was available to me. I needed to talk to an accountant and do all this stuff. One, I didn’t get that first round of grants because they were like, “Your financials show that you’re an unsuccessful artist who doesn’t make any money.”
Also, the accountant pulled me aside and said, “Please don’t ever do your expenses again because all the stuff that you are expensing, you shouldn’t and there’s a whole bunch of stuff that you’re not expensing that you should.” It’s a Dunning-Kruger situation. We are experts in our world and it’s good to be that. We should also share the stuff with the people who do this all the time, rather than allowing ourselves to get beaten by the head. The same system that told me to do all this stuff is the same system that was already exploiting me, so why am I going to trust it? For all my skeptics out there, please run into some of the experts and they will show you what’s up.
For the hustle, I came from where you came from where there’s the creative side. I was fortunate. When I was 21 years old, my best friend was successful and learned the lesson on his own. He sent me to an actual tax professional when I was young. I got lucky. You guys let me know how you feel about this. What you were talking about, a lot of people do. They write everything off.
What people don’t understand is that when you just make decisions, the small financial investment to work with a financial planner before you think you need to can help you avoid those types of things where you write everything off. What’s going to happen is if you’re only taking TikTok 30-second advice here and there, you’re going to go, “I can do a dope side hustle and write everything off. The stuff I used to do when I was a kid is write off MTV, movies, and any meal and entertainment because that had to do with what I was getting paid for.”
The problem is this. I had a loan officer tell to me not long ago. They’re like, “If you’re an independent contractor and you’re trying to buy a house, you come to me and show me last year’s 1099 that says you made $150,000, but you thought you were smart and you got your little DIY tax thing and you wrote off $75,000. It’s all legit. It can look like it. Now, whether it is or isn’t that, do you know what you’re telling the bank that you want? You’re not saying, ‘I made $150,000.’ You’re saying, ‘I need to spend $75,000 to make $75,000.’”
That’s what you’re saying and I have people that will come to me and they’ll have to go back and redo last year’s taxes. Reclaim $40,000 of that $75,000 is stuff they can’t write off and then pay $10,000 taxes on that so they can show more income. If you are lost and zoning out right now, that’s why you need a financial planner. If this stuff isn’t intriguing you, sucking you, and pulling you in, talk to us about people coming to a financial planner at different steps. A lot of people will say, “I’m still in debt. Why would I talk to a financial planner?” I have my answer. Let’s hear it from you.
It’s interesting because when I first started this business, my first thought was like, “Why would someone pay me money to tell them to save money?” It felt so counterintuitive but as I started working with people, I realized this goes back to you figuring out what your priorities are and what your plan is. It’s hard to do that when you feel like you’re buried. A lot of people who are in debt can’t see a way out. It feels like that one day you woke up and all that debt was there and the way to dig out of it feels impossible.
When you work with a financial professional, you work with a financial planner who has helped people out of debt, who has helped people save at the same time they’re paying down debt, and who has helped people reach their goals. Also, I feel like a huge part of my job is to understand the system enough to help you figure out how to take advantage of it legally. As you said, I have told clients, “I know you’re trying to buy a house. Don’t write everything off you’re planning to do.”
We prevented that from happening for people because I knew their goal was this. I’m saying, “Make sure you make as much money as you can this year. Make sure you only write off the absolute basics. Talk to your mortgage lender now and ask them how much income you need to show on your tax return so that you can tell your accountant that. Let’s plan for you to pay that extra tax bill. Let’s plan for you to save a little more every single month so that you can cover that tax liability.”
When you’re able to have someone who’s looking ahead while you’re present, then that gives you the ability and the peace of mind to say, “I know that there’s a plan and we’re looking ahead so that I can stay here and figure out what I need to do right now.” Especially when you’re in debt, it feels like the last thing you should do is spend money on something else. The reality is that we have helped people get out of debt because we help them shift their mindset around what the priority was.
The priority when you’re in debt is never to just pay down the debt. I’m going to say that right now. If you are the only focus, if you’re only extra money goes towards paying down debt, you’re going to end up in more debt, and here’s why. The true scenario is if all of your extra dollars go towards paying down debt and an emergency happens, how are you going to pay for that emergency? You’re back in debt.
[bctt tweet=”The priority when you’re in debt is to never just pay down the debt.” via=”no”]
This is the savings thing that we’re talking about. It’s about savings being an active thing and being an important part of what you’re doing as you’re trying to pay down debts. They never show this. This is never the big article like, “This couple saved $50,000 and kept it in the account.” They’re like, “This couple paid off $50,000 in debt and now they have no money. If anything happens, they’re going to go back into debt.”
You’re right. You got your diet pill before and after pictures. You’re before and after pictures for financial planning are always, “I got out of debt.” It’s not, “I saved $20,000 while I got out of $30,000 in debt.” All of that makes so much sense to me, especially for people who are understanding adulting and getting into it right now. God bless you. Have big goals. Try to live debt-free your entire life. Here’s a truth bomb. You’re going to have debt. A house is a debt. A child is a debt. A dog will put you in medical debt.
Instead of deciding, “I’m going to talk to a financial planner after I’m out of debt,” how about you go, “I’m going to have debt forever and I’m going to work my best to get rid of it but I will eventually get to a point where maybe a child wants to go to school. Maybe instead of me paying for their college in cash, what if I can get a loan and leverage it and work it better?”
That’s something people don’t understand. When you’re leveraging your money in your life, you don’t have to be just 100% liquid. You can work with debt. Don’t let the fear of it stop you from talking to a financial planner because learning all your priorities and learning how to handle saving and reducing debt at the same time is going to be crucial for you later on in your life.
Every rich person that you’ve ever met buys stuff on debt and uses debt. We love to talk about it. If you got $1 million in cash and you want a $1 million house, you’re not going to buy it in cash. That’s not a good idea. That’s not what most folks will do in those situations. What you’re talking about is also most countries. America runs on debt. We got a debt that we’re never going to pay off as a country. People will abstractly and politically like, “China’s going to come calling one day,” and no because they are running into debt, too.
The thing too is that for some reason, if you’re a corporation or an entity, leveraging debt is a good thing but when you’re an individual, you are maligned for it. You’re punished for it. We are told that we need to punish ourselves for it and this is why we keep trying to get rid of it. The reality is that we have this little language change that we like to talk about because we feel like a lot of people who feel ashamed about their debt feel like they’re in debt.
That’s the common term.
I’m in debt. It’s like a characteristic of you. It’s like a character flaw. It’s an albatross on your back.
It’s a literal burden.
What about if, instead of being in debt, you just have debt?
You use debt. You’re in control.
Have and use. You said albatross and in debt, I was thinking in well. You’re in debt versus I have debt, which is you and your little plate of debt. I love the idea, “Now, I’m going to go from my savings and I’m going to use debt.” For you people who feel emotional about your spreadsheet, I’ve done the spreadsheet and realize that with the 4% interest that I pay, I’m going to get an 8% return. I could do this all day. Let’s play some email tag and let’s try to get together some stuff for next time. What I’d like to talk about with people is to help them understand that things are all tied. Every time I’m going to say something practical, I go back to the emotional.
People will say to me, “Why am I going to pay for a financial advisor?” It’s the same thing I say for why you are going to pay for a tax guy. You might be able to do your own taxes, but for $400, $500, or $600, you can save $5,000, $6,000, or $7,000. Give me the quick hits. What are some of the first things that you are going to be able to help someone versus someone trying to do DIY for the first 3 to 5 years of not them having you make a commission off of any investments, but to pay you the same way that we would pay any advisor? What are some of the immediate returns that you see over the first 3 to 5 years as far as helping people get set up for life?
First of all, a disclaimer. Results are not guaranteed. I have to say that as a registered investment advisor. What we’ve seen, if we’re thinking about clients as case studies, are clients who have gone from $50,000 of debt to $50,000 of savings. Instead of focusing on paying down the debt, we focused on increasing your savings.
I’ve also seen people who, from the time they start working with us to when they stop working with us, which is usually 3 to 5 years, probably a good time span. We help clients increase their income. We help clients negotiate salaries. We help clients negotiate offers. The other side of it is getting over your own impostor syndrome by having someone give you concrete and practical strategies to say, “Here’s how to increase your income. Here’s why you should say, no, I deserve more money.”
That’s the other side of it. We talk about saving. We talk about cutting back on your expenses. We talk about restricting, but the other side of the equation is like, “How can you make more money and get paid what your work is worth?” That’s a big thing that we help clients with, and we’ve seen clients increase their income year over year.
I want to share a little bit from the education side. Three years is about how long it takes to go from, “I have given up, and I can’t do this,” to, “I can be somebody.” I had a former student on, and this student was in a crisis situation that I didn’t feel comfortable sharing publicly. It took three years of coming, skipping, getting the notes, reaching back, asking to go from a brilliant person who was cannonballing towards a deleterious future for themselves and others. To someone who is not only a leader and organizer but an activist and philanthropist who teaches other people how to do these things and has been able to affect hundreds of people.
It took three years to go from like, “I’m smart. I know I’m smart, and the system is messed up. I’m just going to give up. I will find these things because it’s worth it to me.” Those three years are the thing that makes it worth it to you. Like the thing right above your head about believing, you have to believe that this is real, and this can be a thing because the system hits you in contradictory ways.
When you show a fifteen-year-old what credit scores are like, it hits you in these ways where you’re like, “I’m never going to get through it.” It’s going to take time for you to get to that part. Even though it seems intangible, because it’s about your feelings, it is so amazingly valuable for you and your community.
You make such a huge difference. We require minimum one-year commitment to work with us, and one of the reasons why is because we know it takes a year for you to start building confidence around your finances. In that first year, we’re just organizing your finances. Many people come to us, and they don’t know where their money is going.
You have no idea how much you’re spending on food. You have no idea how much your bills are. You have no idea how much you’re spending on shopping, Amazon, and things like that. Getting organized and developing a system around keeping you organized is a lot of work in the first year. As you build more wealth and more confidence around that, there’s the other aspect of it where it’s about protecting your wealth.
Make sure you have the right insurance. Make sure that you’re taking advantage of all your employer benefits. Make sure that you have the right estate planning documents in place. It’s all-encompassing as you go, but the biggest transformations that we’ve seen are people who went from being afraid to look at their finances to being able to advocate for themselves. It’s for you to be able to ask questions, for you to be able to negotiate rates, for you to be able to dispute charges for you, to be able to like talk to three different mortgage lenders instead of just the one that your friend told you about.
When you’re able to go in and say, “I can take control of the situation. My accountant is treating me like crap. I’m going to go to a different accountant. I don’t have to take this.” To get people to that point where they’re like, “I don’t have to take this. I can go to whatever I want and find people who will treat me right.” That in and of itself is like a huge transformation for so many of our clients.
I can tell you to educate and empower to grow confidence. As you were talking about that individual, three years to go from an intense, buried situation to an activist in changing other people’s lives, being able to have that transformation, what’s interesting is what Pamela is talking about. I don’t think people can. I’m glad that you feel like you can empower yourself and do everything through Google.
I don’t understand why there are people that are going to WebMD the hell out of every doctor. “You turn off the podcast. It is not for you. You have trust issues. You need to be on a therapist podcast and we’ll talk later.” The people whom I talk to in this show and what you guys do, people put a little trust in somebody who is trying to put the good out there like what you guys are doing.
I appreciate and understand that everybody wants to google all this and empower it, but doing what you talked about with a coach or a certified planner. I did a podcast on the recession. I have a better example. I did the Biden loan, a forgiveness one. You can take eight hours and research it or you can listen to me, who simply regurgitated the things you need to know. It’s the same thing. The only difference is that I’m giving it away for free, but you need to hire a financial planner.
If you’re going to court, you should hire a lawyer. You should hire a doctor. It’s a small investment in yourself to hire someone like you to work for a year. You can go to the gym on your own but 95% of you would do a lot better if you paid a trainer for 1 million different reasons, accountability, and someone to walk you through it. They say something like a plane going to New York is off course 98% of the time but the computer tells it how to change every millisecond.
It’s the same thing when you’re trying to do your finances. Take the time, research, and then have somebody else to help guide you. Be your bumpers on your bowling lane at Cosmic Bowling. You throw the ball and it’s hit the big bumpers. I could do this forever. We’re going to talk after the episode. Tell everybody where they can find you. Give us all your debts.
You can find us at BrunchAndBudget.com. Follow us on Instagram @BrunchAndBudget. Also, on the Twitter app, @BrunchAndBudget.
Again, if you were listening about the education stuff and you’re more curious about that, that’s PocketsChange.com. It’s the same on socials. @PocketsChange everywhere is where you’ll find that stuff. The contest that we were talking about is called the Hip Hop FinFest. You can go to HipHopFinFest.com and check out those things.
Everyone out there, it’s Brunch & Budget. You guys who are trying to buy a home, I’m talking directly to you. I got my mom on my shoulder and my whole family are educators and working in that world, are you talking to other educators and giving them some resources and tools?
We were writing. We’re all up in all of that.
All my school people, check out Pockets Change because it’s way better than that dumb guy with the puppets coming to do an assembly again. God bless him. Says the guy who wore white overalls and a bright color primary colored shirt and performed at elementary schools when I was 19 and 20. Thank you very much.
Puppet guy, we’ll give you a workshop and you can do some good stuff with puppets. People talk about the history of how puppets have been used to represent marginalized people, all that stuff. We can get busy.
Find them and for those of you guys, go to HowToBuyAHome.com and hit me up with your financial questions. I’ve got a podcast coming out called What to Do the First Year After You Buy a Home based purely on listener feedback. I’m going to do the same thing. I’m going to bring back Pamela and Dyalekt, and we’re going to go through your questions. What do I ask a financial planner?
Thank you guys so much. This has been incredible. I haven’t done a show where I go into the emotion of it and I discovered some things. I appreciate it because whether it’s your finances or you are trying to buy a home, there are some large barriers that I know we align on, but we didn’t even talk about. Because the system is out there and you have a choice, be angry about it or find a trusted coach and work and try to beat the system with people who can give you advice.
God bless you if you want to google your life away and do it all on your own but if you want a little bit of help and I appreciate your skepticism, know these guys are awesome. That’s why everything’s in the name. We’re going to talk about your budget, but we’re going to do it like brunch so everybody can chillax. Thank you guys so much. We’re doing this again. You guys stay right there. HowToBuyAHome.com, ask your questions. You can do this.
Important Links
- Brunch & Budget
- BrunchAndBudget.com/personality
- Pockets Change
- 5 Stages To Your Financial Legacy
- @BrunchAndBudget – Instagram
- @BrunchAndBudget – Twitter
- @PocketsChange – Twitter
- HipHopFinFest.com
This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!
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