1. Spend it

2. Save it

3. Give it

4. Pay Taxes

You work hard to earn what you have. Might as well make the most of your money. Today’s quick intros hit on ways to optimize your saving, giving, and reduce your taxes.

Subscribe now

[1] A Checking Account that Actually Pays You

This isn’t some CD where your money is locked up for a year or a high yield savings account. It’s a checking account, meaning you have access to your money whenever you like (via electronic transfer or debit card).

Wealthfront is a robo-advisor primarily focused on investing, but also offers this incredible checking account. I’ve been using it for a years and have been super impressed: no minimum deposit required, the interest rate is incredible, and the interface was smooth and easy to use.

And, to top it off, so much of the automation I talk about in “How to Make Your Own Money Robot” is built in.

[2] Give: …Like a billionaire 

Back in the day, the super rich had complex ways to reduce their taxes by being generous. It usually involved working with multiple teams of professionals, including tax experts and legal professionals to devise a compliant system that could batch and defer taxes that were meant for charitable giving. Now, you, me and everyone else has access to the same tools. One of them is called a Donor Advised Fund (DAF) — your own personal philanthropy account.

You can contribute money to it in one year, instantly get the tax contribution credit, and give the money away whenever you like to a 501c3. So, generous minded people can batch their giving to the DAF in one year to maximize their tax savings.

The following two institutions help you create a DAF in a few minutes. They’re super user friendly and easy to transfer money (cash, stock, crypto) into the DAF and distribute money out to charities.

1. Daffy: my current go-to. For a flat monthly fee, your can invest your non-distributed funds. For example, if you’re planning on keeping about $2,000 in the account, the interest earned covers the annual fee.

2. CharityVest: Free to use, but you don’t earn interest on funds that haven’t been distributed. If you want to invest, the fee is a percentage of assets held, which almost always ends up being more expensive than a flat fee.

[3] The Mindset of an Intelligent Investor

One of my favorite finance newsletters right now is a A Wealth of Common Sense by Ben Carlson. His thought below is similar to what I advocate here.

Intelligent investors realize effort is often inversely related to results in the market. Just because you do more or try harder doesn’t guarantee better results. In fact, doing more is more often than not damaging to your investment performance.

Doing less or doing nothing at all most of the time is the right way forward for the majority of investors.

Share

Long-form articles are helpful, but, well… long. Who wouldn’t want to read 2,370 words on the secret weapon of defining Enough. But, sometimes a brief intro is best. Just enough to be introduced to something great, but no need for the life story.

So today, three quick intros related to lowering your hospital bills

Our family has become pretty familiar with the local hospital systems the last few months: baby #2 was born, urgent care and ER visits for both kids, specialist appointments for #2, and, to top it off, an ambulance ride with a two-day stay for #1. Even with insurance, it adds up quickly. I’ve been on the hunt for ways to save a few benjamins.

[1] Just ask.

The simplest route is just to ask whoever is billing you to reduce the bill, perhaps if you pay in full. For some this sounds about as appealing as public speaking, but seriously, it can work. I’ve already seen our ambulance bill get lowered by nearly 30% because of a simple ask (here’s a sample script).

[2] Dollar For: Your Personal Advocate with Nonprofit Hospitals

Every single nonprofit hospital in the United States, which most are, is required to have a charity care program. The only problem is that many hospitals make it difficult to learn about the program, apply, and actually take advantage of it (go figure). Dollar For is a nonprofit that knows the ropes and actually advocates on your behalf with the hospital. You submit a bunch of info, and Dollar For goes to work for you by properly submitting it with the hospital and following up with them…all for free!

[3] Chuck Norris  Goodbill: Your Expert Inspector and Negotiator

If neither of the first two options get you anywhere, it may be time to call in the master negotiator. Goodbill’s the name. Goodbill is a company that will take in all your bills, inspect them for accuracy (yes, this is a major problem), and go to town negotiating on your behalf. They get paid by taking 20% of the savings. If they don’t save you money, you don’t pay a dime.

Want a bit of a deeper dive? Check out the resources below:

• NPR Life Kit: Medical Bills Can Cause Financial Crisis. Here’s How to Negotiate Them.

• Anything by Marshall Allen, like his his newsletter, this podcast interview or his book, Never Pay the First Bill: And Other Ways to Fight the Health Care System and Win. 

And, that’s a wrap.

Josh

Share intro by josh mathews

If you haven’t subscribed, there’s no better time than right about now.

Subscribe now

The stock market has been doing crazy things the last decade and especially the last few years. The graph below is from 2009-2022.

Source: Yahoo Finance

In case you couldn’t tell what was happening, I just added in the green arrow. Looks about as close to a rocket ship as possible, especially the last few years.

For perspective, if you bought $100 of an S&P 500 Index Fund, like SPY, in March 2009, you’d have $644 today. Take that in: a boring investment would have returned over 6x! 

But, since the start of 2022, here’s what the chart looks like: 

Source: Yahoo Finance

Whenever things go down, it can feel dramatic. Most media make it feel like the world is falling apart.

All humans (yes, even the most cerebral of us) are emotional. Losing money is really, really hard. In fact, there’s a whole arena of study called loss aversion that essentially concludes that a person losing $100 loses more satisfaction than the same person will gain satisfaction from making $100. Losing money hurts. 

When we start seeing the market dip, and our nest egg dwindle, our emotions get a megaphone and scream: “SELL, SELL, GET OUT BEFORE IT GET’S WORSE!”

But that usually is the worst thing to do. Here’s a better way:

1. Remind yourself when you need that money. Most people that have money in the stock market are investing for a future goal, often retirement. If you’re not planning on actually using the money in years, maybe even decades down the road, just chill. You don’t need it today so it doesn’t matter what it’s worth today. 

2. Ignore Almost All Media. Seriously, don’t worry about whatever person on TV or what some influencer is predicting. They have no clue what’s going to happen tomorrow. No one does. So getting all tangled up and anxious because some person is predicting the end of the world does no one good.

3. Think of market dips like sales. Usually a decline of 10% in the market is understood as a 10% loss. That’s true. But it could also be thought of as a 10% sale. What was once $100 is now $90. That’s a pretty good discount. If things dip even more, like in the 20% or even 30% range, think of it as an all-out clearance!

4. If you have margin, buy. What do most people do when their favorite thing is on sale? They buy it. Same thing with the market, if you’ve got margin in your budget, get in more.

5. Keep doing the same thing. If you have money in the market, you are likely doing the prereqs (paying off debt, living below your means, saving). Keep saving and putting money into the market consistently.

That’s a wrap for now. Keep on holding.

Josh

Further Reading

• Ben Carlson at A Wealth of Common Sense has become one of my favorite analytical observers of the market. His article, “This is Normal” is a nice supplement to market dips.

• Basically anything Morgan Housal writes is good. His short article, “When the stock market plunges, keep your head on a swivel” is a helpful reminder that these dips are part of the cost of investing. 

Share intro by josh mathews

If you haven’t yet subscribed, there’s no better time than right now.

Subscribe now

You’ve made it to part 5 in a series called Invest Like a Boss! We’re cutting through the noise to discover how to invest in the stock market…really well.

So far, we’ve covered:

1. Who do you want to be? Wealthy > Appearing rich.

2. Do you have the Preqs done? In other words, are you out of debt, have a 6 months emergency fund, and spending less than you earn?

3. How will you invest? Boring > Flashy.

4. What are you investing for? Define your goals. Name them, Determine the amounts, timeframes, and Risk tolerances.

5. Getting Started: The automatic, silver bullet fund

6. The Secrets of Investing [Today!]

To officially close down the Investing like a Boss series, we’re going to uncover a few secrets of investing. These secrets are like little keys that unlock doors to enjoying life. They may seem simple enough on the surface, but actually require serious focus to pursue. In some ways, they’re kind of like the holy grail to the good life.

Here’s how we’ll break it down:

1. Enough: figure out what it is for you.

2. Giving is more Rewarding than Accumulating

Let’s get right to it.

[1] Enough: Figure Out What It Is for You

Enough. Simple word. Nearly impossible to nail down. 

One of the biggest secrets in life is figuring out what Enough is for you. Enough is capitalized and in italics because it’s one of the best cheat codes to life. It’s a place few have ever reached.  If you can figure out what Enough is, you’ll catapult yourself ahead of 99.9% of people in the world. 

Lots of people want to be good at investing to get rich. And, honestly, wisely investing over a long period of time is a great way to accumulate wealth. But where does it stop? How do you know when you’ve made enough? For some, they climb the mountain of investing their whole life and never get to the top because they always feel like there’s just a little bit more to go.

This endless climb happens in all areas of life. We constantly find ourselves thinking if we just had what that other person had, we’d arrive. And, even if we kind of figure things out internally, we live in a time where everyone is telling us that we need what they have. There’s corporations and influencers and tons of other entities that drop a ton of brain power and dollars to convince you that your life would be better if you’d just get this thing, or upgrade to that product, and on and on it goes.

But always striving and never arriving is a recipe for frustration. When does it end? Where’s the finish line? Is it death? That feels a bit morbid and deflating. Perhaps your life feels like the top half of this graphic: 

Now, check out the Satisfaction Curve.1

On the left side of the chart is satisfaction. On the bottom is money spent. Now, the immediate assumption is that the more money we have to spend, the more satisfied we will be. But that’s not the case.

The first yellow dot represents our satisfaction when we go from not being able to survive to survival. Imagine not having food and then having enough money for food. That’s a huge leap in terms of satisfaction.

Then, as you progress, you may have money for comforts. So you go from just surviving to comfort. It’s an increase in satisfaction, but relative to the huge jump of not surviving to surviving, it’s just a bit more.

And the same is true for luxuries. If we can afford luxuries, great. But the degree of increased satisfaction is marginal.

What we’re aiming for is enough.

Because, there’s a downward slope to spending called overspending. It’s where we get into debt, finding our identity in things that leave us less and less satisfied. Or, maybe you have endless amounts of money, so debt isn’t an issue. Overspending can be like the endless climb, either finding definition in the number of zeros in your bank account or the experiences you can have or the cool things you can accumulate. The problem is that it’s never enough.

Instead, what if you figured out what Enough was in advance? What is enough house or enough car? What is enough money? How much is enough saved up? Really think about it.

What if you figured out what you value and designed a lifestyle around those values that’s within your means? Of course it wouldn’t have to be a straight jacket. Life happens. Change is inevitable. But still, getting out in front of defining Enough allows you to be in control rather than everyone else. I recently read that Gen Z values autonomy and flexibility like crazy. If you don’t know what Enough is, you’ll always be somewhat controlled by others and end up confined to their aspirations for you.2

So, how do you figure out what Enough is for you?

1. Start with your values. What’s important to you? What do you want your life to be about? What do you want to be known for? Think about your life personally, as a family (if you have one), as a community, and as a citizen of Earth.

2. How do those values impact major life decisions? I quickly think of the highest dollar moments: (1) college choice, (2) house, and (3) car(s). Those three categories will have an outsized impact on your life (let alone your ability to invest). 

3. Consider your means. Get a feel for your income trajectory. We all have constraints. Your income is one of them. Design a lifestyle that fits in it (oh, and be sure to account for taxes.)

4. Figure out how much money you need each year to support your Enough lifestyle. 

5. Set financial finish lines for income and welath.3 Income is how much money you need each year to cover your expenses (see #4 above).

   Wealth is how much you need for long-term goals (e.g., retirement, college education, weddings, etc). Roughly determine your wealth target by multiplying the amount in #4 above by 25. If you’ve stocked that much away in stocks/bonds, you should be able to float yourself indefinitely.4 

6. Cap your lifestyle around those finish lines. Regardless of how much you make each year or accumulate in your life, don’t change how you live because you have access to more. It’s a climb that never ends.5

7. Find someone to hold you to what you set. It’s going to be hard to maintain your Enough lifestyle when you’ve got more. It may help to have a friend that knows what you’re going after and can keep you true to your word.

Yeah, I know, that sounds crazy. It almost seems like thoughts from another world.6 Honestly, you just need to get halfway down the road of defining Enough and you’ll be miles ahead in pursuing your values and life in a way most can’t.7

[2] Giving is More Rewarding than Accumulating

The DNA of the universe includes the principle that accumulation without distribution is dangerous. 

Think about a river. It flows and flows. But what if it empties into a giant lake that has no outlet. That lake looks nice, but is also fragile because if pollutants get in, it’s really hard to get rid of them.8

Or consider your own life. Imagine if you accumulate calories (i.e., eat), day in and day out, but never move. It’s a recipe (no pun intended) for disaster. The calories we take in are meant to fuel us outward. 

Money is the exact same way. If we just set out to accumulate money in our lives and only spend it on ourselves, it often leads to diminishing satisfaction via overspending (see Satisfaction Curve above). 

The way to reach and stay at Enough is to build a lifestyle that gives money away for the good of others.9 

A guy who retired at the age of 29 after saving $600,000 and living off of $25,000 each year talks about the deeply satisfying and happy moment when he gave a chunk of change away: 

I have known for years that I wanted to start doing this, but on the day that I actually dropped all those checks into the mailbox, I felt a great lightness. That night, I fell asleep with the happy peace that comes from letting go of just a bit of selfishness and fear. After noticing not even the slightest regret, I can see that it will become even easier as time goes on.10

Why is giving such a good thing? Essentially because it’s an easy way to help us consider more in life than just ourselves. See, the problem with accumulating money is that we’re constantly thinking about what I need. It’s all about me.

But when we give, we start thinking about others: other people, other issues, other initiatives. Our minds and hearts begin lifting out of the immediate and onto other things that are important but may not seem as obvious. We begin realizing that it’s better to be a part of something grander than ourselves, that our lives are meant for more.11

So, if giving is more rewarding than accumulating, how do you start?

1. Give it a try. Find a cause or a person or something that you believe in and just give some money away. 

2. Over time, look to make it a habit. Become a monthly sponsor of something.

3. Set goals to out-give what you’ve done in the past.

There are millions of causes to give to in the world. A good place to start with considering what you value or what you want to be a part of promoting or changing. Many people of faith give to their local church. Those who have had a personal or close experience with a particular issue will give towards that.12 

One of the secrets to money is that it’s not all about accumulating. Giving money away is one of the most satisfying things you’ll ever do.

Conclusion

And there you have it, two secrets of investing like a boss. They don’t fit into the traditional nuts and bolts of stocks and bonds. Instead, the secrets recognize that we’re not just brains on a stick, but complex emotional, relational people that experience the world holistically. 

Now get to it! Practice some of these principles. Make a move. You’re future self will thank you a million times over.

And, if you’ve got any thoughts or questions, don’t hesitate to send me a note.

Closing Randomness

• Jack Bogle, the hero from part 4, didn’t say much about giving. But this article highlights a few things. his philosophy of philanthropy was “When you live somewhere, you have an obligation to that community.” And he said, “The best rule for philanthropy is to give until it hurts, as much as you can, because none of us can get through life all by ourselves.”

• Take these 8 word to heart to invest like a boss:

If you haven’t yet subscribed, there’s no better time than right now.

Subscribe now

intro exists to make your life better by introducing you to great things and helping you implement them.

**Disclaimer: This is not investment advice. I personally invest in the funds and companies mentioned below. There’s one affiliate link too.**

You’ve made it to part 4 in a series called Invest Like a Boss! We’re cutting through the noise to discover how to invest in the stock market…really well.

We’ve covered some crazy ground. 

1. Who do you want to be? Wealthy > Appearing rich.

2. Do you have the Preqs done? In other words, are you out of debt, have a 6 months emergency fund, and spending less than you earn?

3. How will you invest? Boring > Flashy.

4. What are you investing for? Define your goals. Name them, Determine the amounts, timeframes, and Risk tolerances. 

5. Getting Started: Definitions, Accounts, and Funds [Today!]

6. The Secrets of Investing

Today, we’re finally going to get started investing!!

Here’s how we’ll break it down:

1. Get a feel for the Terrain (a.k.a. defining stocks, bonds, mutual funds, etc.)

2. Define and triage the Packs you have available (a.k.a. 401k, IRA, etc.)

3. Get Your Own Pack (a.k.a. open a brokerage account)

4. Fill your Pack (a.k.a. The one-fund and two-fund options to buy)

[1] Get a Feel for the Terrain (a.k.a. defining stocks, bonds, mutual funds, etc.)

Look, I'm pretty sure a bunch of people in the financial industry got together and said, let's make this stuff as complicated as possible so that people feel confused and frustrated. Then, they'll hand all their money over to us and we'll make bank.

I'm here to cut through all the junk so you can actually understand what it all means and know how to progress. You're not just going to see the terrain, you're going to really understand it so you know how to navigate it like a boss.

One caveat: investing in stocks and bonds have risks. The comments below are generalized statements about stocks and bonds, over time. It doesn’t mean that this is what a stock or bond will do in any given year. Please be mindful that stocks and bonds can unexpectedly go up and down and that there is always risk in investing.

Stock

A stock is ownership in a company. It’s sometimes called a “share” or “equity.”  When you own a stock, you own a piece of the company. For example, if you own one Apple stock, you own a sliver of Apple.

As a whole, stocks tend to grow faster over time, but they can be volatile (meaning they can go up and down a lot). Stocks may progress as follows:

Be mindful that individual stocks have both skyrocketed and many have plummeted to be worthless. 

Bond

A bond is a loan to a company or government institution. A municipal bond is a loan to a government institution. For example, when a city needs to build new roads and needs some money, they’ll issue bonds to raise money. A corporate bond is a loan to a company. Companies may issue bonds when they need more money for a new project or initiative.

Bonds tend to grow slowly over time but are usually more stable. Bonds may progress as follows: 

Mutual Fund

There are thousands of companies out there that issue stocks. You have the freedom to buy one or as many as you like. One way to buy stocks or bonds is through a mutual fund. A mutual fund is a collection of stocks and/or bonds packaged all together. A mutual fund is like those big variety bags of candy. If each individual candy was a stock or bond, the bag together is the mutual fund.

There are tons of mutual funds out there that collect various stocks and bonds together based on a myriad of guidelines, goals, and purposes.

Most mutual funds have some minimum amount that must be purchased. For example, some mutual funds require at least $3,000 to start. On the other hand, you can buy a stock for whatever it’s selling at and however much or little as you’d like.

Index Fund

An index fund is a type of mutual fund that collects stocks or bonds which are automatically picked and maintained based on an objective standard or list. One way to think of an index fund is a collection of candy based on a rule (e.g., every chocolate candy bar). For example, there are some index funds that contain every single U.S. stock.

Exchange Traded Fund (ETF)

ETFs are a collection of stocks and/or bonds that can be purchased one share at a time (as opposed to a minimum dollar amount). Like Index Funds, an ETF usually tracks something, like 500 of the biggest U.S. companies.

Brokerage Account

A brokerage account is an account used to buy and sell stocks and bonds. Like a checking account is to a debit card and checks, a brokerage account is to stocks and bonds.

[2] Define and triage the Packs you have available (a.k.a. 401k, IRA, etc.)

Every climb requires a pack(s) (a.k.a. account(s)) to carry your essential items. There are different account types available based on your employer and income level. Different packs have different tax implications. Just like you’d have a variety of packs for a long climb, you’ll likely have a variety of account types based on your goals.  You can have multiple account types at one financial institution.

So what kinds of packs are available? Here are the most common ones:

Employer Provided Packs: 401(k), 403(b), etc.

Often, your employer will provide a pack for you. On top of that, your employer may provide some benefit for you to put money in the pack, like an employee match. For example, an employer may say for every 3% you put into the pack, they will match it with another 3%.

If something like this is available to you, it is the first and best place to begin investing.

Standard Brokerage Account

When you open a brokerage account, it usually comes with a standard brokerage account pack. This pack gives you complete freedom but has minimal tax advantages. Complete freedom means you can put as much or as little money in as you like, and you can take out as much or as little money as you like, whenever you want.

But, the money put into the standard brokerage account has already been taxed (usually from a paycheck). When you withdraw money, you are taxed on the growth. However, all taxes are at capital gains rate, which is usually less than income tax rates (at least for now).

In summary: complete freedom with no tax advantages.

Traditional Individual Retirement Account (Traditional IRA)

A Traditional IRA is a pack intended to help you retire that limits your freedom but gives you an immediate tax benefit. The benefit is that you can put money into the pack that is not taxed. Money contributed reduces your taxable income for the year. However, you are taxed when you take money out. 

For this really nice benefit, there are some rules the government puts on the money. The rules are updated and slightly change over time, but generally they are: you can only put a certain amount of money in each year; you will incur a penalty to take the money out before the age of 59 ½, and you can’t make too much money.

ROTH Individual Retirement Account (ROTH IRA)

A ROTH IRA is a pack intended to help you retire that limits your freedom but gives you a tax benefit later. Money that goes into the account is already taxed, but then it’s not taxed when you take it out.

Similar to a Traditional IRA, a ROTH IRA has limitations and guidelines. However, there’s a bit more flexibility to take money out.

COMPARING VARIOUS PACKS

Here’s how these accounts roughly compare to one another:

Notice that each account type has at least one key benefit (highlighted in green). But, the benefit comes with a cost (the unhighlighted cells).

TRIAGE AVAILABLE PACKS

Now that we’ve defined the different account types, it’s time to triage which one to pick and fill. Here’s a rule of thumb:

• Tier 1: Max out 401K up to employer matching (e.g., if your employer matches up to 3% of your contributions, contribute the full 3%).

• Tier 1.5: Max out Health Savings Account (HSA) if you have one (this is a bit more complicated, but is a way to have funds go in tax-free and come out tax-free, as long as it’s used for medical expenses).1

• Tier 2: Max out ROTH if you have 10+ years until retirement

• Tier 3: Max out Traditional if ROTH isn't possible or nearing retirement

• Tier 4: Max out Standard Brokerage account or go back and max out 401(k) if available 

There are nuances in all this, but this should help you get started. 

[3] Get Your Own Pack (a.k.a. open a brokerage account)

Get a feel for the packs you have available. Again, many employers provide you a pack in the form of a 401k or 403b. I always recommend everyone has their own pack (e.g., Standard Brokerage Account, Traditional IRA, and/or ROTH IRA). If you don’t already have a Standard Brokerage Account, go open one.

There are two institutions I recommend for brokerage accounts: (1) Vanguard and (2) Betterment.2 Vanguard is the cheapest, best, and most aligned with your interests. But it’s ugly and has a clunky interface. Betterment is a bit more expensive but it’s beautiful and simple. It’s way easier to automate things and set various goals in Betterment. So, if you’re looking for ease, pay a bit more and go with Betterment. If you’re willing to learn the ropes a bit and save some money, go with Vanguard. 

[4] Fill your Pack (a.k.a. The one-fund and two-fund options to buy)

Let’s get ready to fill some packs (e.g., buy funds). Your goals should dictate the amount of risk you’re willing to take. Remember, stocks tend to be more risky but also grow faster. Bonds tend to be more stable, but tend to grow slower. So, based on the timeline of your goals, you want to have a ratio of stocks and bonds. The more time you have, the more risk you can take, therefore the greater percentage of stocks you should have. But, as the due date gets closer, you should reduce risk by having less stocks and more bonds. 

Now, all that may feel super complicated and way beyond you. But, it can be easily done by purchasing just one fund.

One Fund to Rule Them All: Target Date Fund

There are 3,781 stocks and over 10,000 bonds in the U.S. stock market. How in the world do you know which one to buy? And, once you buy it, how do you sell it at the right time? And, how do you adjust it as you get older?

Thankfully, there is one fund (yes, one fund!) that will do it all for you! Automatically! It’s called a Target Date fund.

A Target Date fund provides a ratio of stock and bonds based on your timeline. And the target fund automatically changes the ratio of stocks and bonds as it gets closer to your deadline! Here’s how it works: you pick the year of your deadline. Let’s say you want to save up to buy a house in 10 years. Choose a target date fund that is 10 years from the current year (i.e., 2031). Then, regularly put money into the fund. 

The graph below gives you a sense of how a Target Date fund changes as the deadline gets closer:

The red and yellow are stocks. The blues are bonds. Notice how stocks decrease and bonds increase as the target date gets closer.

If you’re just getting started, this is the one-fund I’d recommend. It’s simple, straight-forward, inexpensive, with no maintenance. Just put money in consistently, sit back, and relax. 

At this point, you’re welcome just to skip to the end and call it a day. 

But, if you want a slightly advanced strategy, add one more fund.

Two-Funds: 60% Target Date + 40% Small Cap Index

If you’d like to take on more risk with the potential of more gain, then put 60% of your funds in the Target Date Fund. With the remaining 40% buy the Small Cap Index Fund. I’ve linked to Vanguard’s, but any institution will have it. So what in the world does Small Cap mean? Well, there are Small, Medium, and Large Cap companies. Cap stands for market capitalization and is a measure of how much a company is worth. Small Cap Companies are worth between $300 million and $2 billion (e.g., Williams-Sonomoa). Mid Cap Companies are worth between $2 billion and $10 billion (e.g., Chipotle). Large Cap companies are worth more than $10 billion (e.g., Apple). 

So why buy the Small Cap fund? Well, smaller companies tend to have more room to grow. The larger you get, the harder it is to get bigger and bigger. Having exposure to smaller companies gives you the ability to participate in the potential growth.

Notice though that small cap funds aren’t tiny. They are usually at least worth $300 million. This isn’t your mom and pop store or a penny stock. These are usually established businesses with lots of room to grow.

Advanced Strategies

There are a handful of more complex strategies out there that I like. If you’re interested, feel free to send me an email and I’ll break it down. 

Conclusion

After months of figuring out who you want to be, how you’re going to invest, and what your goals and approach to investing will be, we’ve finally put it all together. You can finally go out and invest with confidence.

If you’ve got questions or thoughts on anything here, don’t hesitate to drop me a quick note (hit reply or email josh@introemail.com).

But, before you think it’s all done, there’s just a bit more to cover. Next time: the secrets of investing like a boss.

Closing Randomness

• JL Collins was the first guy to help me really see the secret sauce that makes Vanguard unlike any other investment firm out there. You can read that piece here. Simply: Jack Bogle created Vanguard so that the customer owns the company, which means the interests of the customer and company are perfectly aligned.

• This move, for customers to own Vanguard, meant millions of people had access to great funds at a super low cost. And it meant that Bogle passed on billions (that’s with a “b”) of dollars of personal wealth so the common person like you and me could have more. As one writer put it: “he’s the biggest undercover philanthropist of all time.”

• Warren Buffet said this about Bogle:

  If a statue is ever erected to honor the person who has done the most for American investors, the handsdown choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value. In his early years, Jack was frequently mocked by the investment-management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.3

• By far my favorite article of the last month: David Perell’s “Why You’re Christian.” A self-proclaimed “religious atheist,” David makes a strong argument that, no matter what we believe, much of our assumed foundation comes from Christianity.

If you haven’t yet subscribed, there’s no better time than right now.

Subscribe now

intro exists to make your life better by introducing you to great things and helping you implement them.

You’ve made it to part 3 in a series called Invest Like a Boss! We’re cutting through the noise to discover how to invest in the stock market…really well.

Part 1 posed the serious question: are you investing to be wealthy or look rich? The answer will help you understand why you’re investing. Part 2 covered the prereqs, the key things that have to be in place to invest well. If you missed them, I’d highly recommend jumping back to part 1 and part 2.

The series will progress as follows:

1. Why Invest: Being Wealthy > Looking Rich [Part 1]

2. Digging, Standing or Climbing? What Stage are You in? [Part 1]

3. Prereqs [Part 2]

4. The Approach: Boring > Flashy [Right now!]

5. Getting Started: Definitions, Accounts, and Funds

6. The Secrets of Investing

This week we’re on #4, The Approach: Boring > Flashy. Back in part 1, I shared anyone can invest like a boss, but it’s so simple, may I say boring, that you’ll be tempted to ignore it. Today, you’re going to be put to the test. 

Here’s what we’ll cover in this email: 

1. The Boring and Flashy Approaches to Investing

2. Why Boring > Flashy

3. Why You’ll be Tempted to Ignore this Advice

4. Determine Your Goals to Determine Your Path

THE BORING AND FLASHY APPROACHES TO INVESTING

Investing is like climbing a mountain. You’ve got to determine why you’re climbing (being wealthy or appearing rich), which will determine how you climb (boring or flashy approach). 

Often, a person looking to be wealthy will be inclined towards the boring approach. And, a person looking to appear rich will be inclined towards the flashy approach.

The boring approach to investing is simple, lazy and cheap. The flashy approach to investing is complicated, involved, and expensive. Let’s unpack how the two approaches are different.

Simple > Complicated

The boring approach to investing is simple. The flashy approach to investing is complicated. 

Simple means it makes sense, it’s straightforward and understandable. The boring approach to investing is predictable and planned. Based on your goals (which we’ll get to in a bit), the boring approach lays out a simple plan of investing in stocks and bonds. That’s about it. 

Unfortunately, investing seems to be one of those areas where people like to make it seem super complicated. Some finance experts make you feel like this whole investing thing is way above your pay grade and needs to be outsourced...to the expert. What with options and shorts, buying and selling, bears and bulls, market caps and P/E ratios, it’s all just too complicated to understand. 

Lazy > Involved

The boring approach to investing is lazy. The flashy approach to investing is involved. 

The boring approach is essentially to set it and forget it. Figure out your goals, find the right ratio of funds, put money in every month, and forget about it (I’ll cover all this before the end of the series). 

The chart below captures it well. The top investor is flashy. The bottom is boring.1 Think of each emoji on the bottom chart as money put into the market each month.

And the effect of this consistency is captured best by Jack Bogle, the founder of Vanguard, 

When you get your retirement plan statement every month, don’t open it. Don’t peek. When you retire, open the statement and believe me if you’ve been putting money in there for 40 or 50 years, you’ll need a cardiologist standing by you when you open it.

But being lazy doesn’t seem to make sense. Usually the person working hard in life gets farther ahead than the person sitting around twiddling their thumbs. When it comes to investing, it can seem like the guy constantly checking their Robinhood account, reading up on the coolest stock, and talking about buying and selling the latest and greatest company must be killing it. They usually aren't! In fact, they almost never are. Why? Constantly buying and selling stocks is expensive (not just because of the potential fees, but because of the tax consequences), risky (you never know when the perfect time is buy and sell), and consuming (once you get into being actively involved, you have to constantly pay attention).

The best lazy investors know that one of the greatest contributors to long-term wealth is: time in the market. Simply having money in the market for the long-haul ends up having the best returns. For example, Warren Buffet is currently worth about $101 billion. Yes, staggering. But do you know how much he was worth at 65, just 25 years ago? $3.1 billion.2 

My head can’t compute that kind of growth. Much of Buffet’s success is that he invests for the long-term and doesn’t freak out and sell when things get rough.

The best lazy investors know that it’s really hard to do better than everyone else (a.k.a. the market) once. It’s almost impossible to beat the market consistently over a long period of time. 

Involved investors may put too much stock into their own ability to see into the future (p.s., no one knows the future). They may do endless amounts of research into a company or wonder if they should switch their strategy over and over. But, at the end of the day, all this time and effort yields little to no advantage. 

In fact, investing is one of the few times in life where it’s better to be lazy than involved. It’s better not to work. Got that? Set it and forget it > work, work, work.

Cheap > Expensive

The boring approach to investing is cheap. The flashy approach to investing is expensive.

The dramatic effect of fees was already covered in part 2 (if you missed it, just a 1% fee could be the difference of $200,000). 

Nothing is free, especially investing. There are fees and costs all over the place. But the financial industry is smart, they don't tell you how much you're paying in dollars, but instead in percentages. When you see something costs 1% it feels like nothing. To make this worse, it's not just a one-time fee, it's ongoing (like forever). The higher your fees, the better your investment has to do to just break even.

Think of someone running the 100 yard dash but having to start 10 yards behind the starting line. They would be at a huge disadvantage to the other racers. Why? Because they've got to make up 10 yards just to be in the same spot as everyone else. That's what high fees do to investments. It automatically sets you back. Instead, low cost investments are actually superior. It doesn't set you back and they're usually really simple (see simple > complicated).

WHY BORING > FLASHY

The boring approach to investing uses your goals to determine a ratio of stocks and bonds to buy consistently over time. It takes a planned amount of money and puts it away on a predictable schedule, regardless of what the news is saying, month in and month out for decades.

The flashy approach to investing often disregards goals and invests in the hottest stock in fits and spurts, over a sporadic period of time. The goal is to buy low and sell high, but often the flashy approach ends up buying high and selling low. 

Overall, the boring approach is far superior in nearly every way: in the long-term, you’ll accumulate more money, in less hands-on time, with little stress. Or would you rather have less money, waste more time, and have a bunch of stress?

Boring is better than flashy because you’ll make more money in the long run.

Boring is better than flashy because it will take you less hands-on time.

Boring is better than flashy because it will be far less stressful.

WHY YOU’LL BE TEMPTED TO IGNORE THIS ADVICE

Regardless of all that’s been said, the flashy approach to investing is really enticing because we all have FOMO and want things now. Let’s unpack these two things.

FOMO (Fear of Missing Out)

No one likes missing out on good things. I’m sure you’ve had the feeling of regret when you look down at what you’ve ordered at a restaurant and compare it with your friend across the table. You know you’ve made the wrong choice and it stinks.

Well, things are amplified when it comes to money. When everything is going well and it seems like the whole world is getting richer, you don’t want to miss out on the rocket ship. Often, more educated investors start taking risks that they normally wouldn’t take. This can lead to a whole range of bad decisions, including putting money in completely fraudulent ventures.3

Now

Olive is our cute 2 1/2 year old that says things like “I want a snack…now.” I don’t think she realizes how rude it sounds (at least I hope not). The reality is that we all feel this way. We’ve been conditioned to assume things just work…like right away. Can you imagine how you’d feel if it took 2 minutes for your browser to open up (for those of you who remember AOL, you know how that feels)? Or, what if your Amazon order took a week to deliver? Pandemonium.

The flashy approach to investing can give you that validating feeling of making money now. It’s really fun to feel like you doubled your money in a week. Again, take a close look at the emojis on the top line. Look at those emotions.

The results of the boring approach usually take decades and feels like this:

Your approach (boring or flashy) is how you invest. I’m hoping you’re convinced that the boring approach to investing is far better than the flashy approach. There’s just one more step before we can get climbing.

DETERMINE YOUR GOALS TO DETERMINE YOUR PATH

Before we can effectively climb the wealth-building mountain, it is critical to define your goals. Your goals are like your trail guide, helping determine your best route. Choosing the boring approach sets the tone of how you’ll climb the mountain. Determining your goals will determine what steps you’ll actually take.

Every goal has four elements that needs definition: 

1. What is your goal?

2. How much money do you need for the goal?

3. When does the money need to be available?

4. How much risk are you willing to take? (low, medium, high)

Your risk capacity is partially based on personality, but should mostly be based on time frame (see #3 above). The longer the time frame, the more risk you can take (because there’s time to recover if the market goes down). The shorter the time frame, the less risk you should take (because the deadline may come before a recovery). A rule of thumb for risk is:

• <5 years = little to no risk (use a savings account)

• 5-10 years = low/medium risk

• 11-20 years = medium/high risk

• 21-50 years = high risk

Every goal has to have a name, an amount, a timeframe, and a risk capacity. These create the trail guide of your climb: name, amount, timeframe, risk. Behind these four elements are deep values, hopes, and dreams. To invest wisely, these four components have to be defined, even if it’s a rough guess.

There are tons of goals a person may have. Let’s look at a few examples:

Goal: Buy a house

• Amount: $40,000 for a 20% downpayment on a $200,000 house.

• Timeframe: Five years

• Therefore, Risk = Low

Goal: Retire

• Amount: $1,000,000

• Timeframe: 35 years

• Therefore, Risk = High

Goal: Buy a Car

• Amount: $7,500

• Timeframe: 2 years

• Therefore, Risk = None

So define your goals. The more detailed, the better. 

NEXT STEPS

We’ve covered some ground today:

1. Which approach will you take: boring or flashy? Why?

2. Define your goals. Name it, determine the amount, timeframe, and risk capacity. 

CONCLUSION

Alright all, we’re on the brink of climbing the wealth-building mountain. We’ve covered who you want to be (wealthy or appear rich), how you want to invest (boring or flashy), and which trail you want to take (based on your goals). Next time, we’re going to put it all together and get started. I’m talking stocks and bonds and fund recommendations. The whole nine yards! Can’t wait!

CLOSING RANDOMNESS

• I’m not huge on financial advisors, but one of my favorites out there is Alan Roth. You can check out some of his stuff here and sign up for his newsletter if you’re really into it here.

• The Simple Path to Wealth by JL Collins. What I’m putting together here is partially inspired by this book. If you want a one stop shop to see his work, buy the book. If you want to read all the blog posts that ended up becoming the book, get started here.

Got questions? Want to intro me to something you’re loving? Hit reply and drop me a note.

If you haven’t yet subscribed, there’s no better time than…right now.

Subscribe now

intro exists to make your life better by introducing you to great things and helping you implement them. 

You’ve made it to Part 2 in a series called Invest Like a Boss! We’re cutting through the noise to discover how to invest in the stock market….really well.

In part 1 (catch it here if you missed it, it’s essential reading), there were two key questions to answer:

1. Do you want to be wealthy or look rich?

2. Are you financially digging a hole, standing on ground, or climbing a mountain? 

Your answer to the first question will help uncover why you’re investing, which determines how you invest.

Your answer to the second question is your starting point, where you’re at right now.

The series will progress as follows:

1. Why Invest: Being Wealthy > Looking Rich [Part 1]

2. Digging, Standing or Climbing? What Stage are You in? [Part 1]

3. Prereqs

4. The Approach: Boring > Flashy

5. Getting Started: Definitions, Accounts, and Funds

6. The Secrets of Investing

This week we’re on #3, Prereqs. We’ll dive into where you’re at right now and ensure you're positioned to invest well over the long haul. 

I remember hating the first lesson of any new sport in gym class. It was a day of running through rules and barely playing the game. Today’s kind of like that: before we can think about investing, we’ve got to be sure to have the Prereqs covered. You might be itching to get to the juicy details of some hot stock tip, but if the Prereqs aren’t in place, the whole investing thing can come crumbling down.

We’re going to make two moves today:

1. Get on Solid Ground

2. Embrace being a human

GET ON SOLID GROUND

If investing is climbing a mountain, the first thing you've got to do is stop digging a hole. Accumulating debt and spending more than you earn are sure fire ways to not invest or invest poorly. If you have any kind of debt (other than a mortgage), do all you can to eliminate it. Here's the quickest way out:

1. See your debt as a problem. Debt’s like a leech, sucking away your hard earned money. You may not feel it at first, but over time, debt has a way of crippling your life. Make it your aim to rip debt out of your life. 

2. Do everything you can to reduce your expenses and increase your income. Pretty simple here: earn more money and spend less of it. 

3. Organize your debt from the lowest balance to the highest. Use this paper form or website.

4. Pay the minimum required for all your loans.

5. Take any extra money and put it towards the smallest debt.

6. Once the smallest debt is paid off, take all the money that you were putting towards the smallest debt, combine it with what you're already paying on the second debt, and go after debt #2 with all you got.

7. Repeat until all the debt is gone.

This is called the Debt Snowball and it's seriously worked for millions of people.

If you're in debt, this is going to be tough. But the mindset, work ethic, and discipline needed to get out of debt, is exactly what's going to accelerate your investing. So think of paying off your debt as the required training necessary to kill it as an investor.

As you climb out of the debt hole or if you’re already out, get a budget. You can do a paper budget. Or you can set up your own money robot. A real, working budget is the quickest way to find weak spots in your spending habits, create margin, and have the extra needed to invest like a boss. 

No matter where you’re starting from, you’ve got to get to solid ground (3 month emergency fund, no debt other than the mortgage, and consistently spending less than you earn) to be positioned to start investing well.

And, you’ve got to embrace being a human.

EMBRACE BEING A HUMAN

I’m 100% sure that you are a human. Yep, captain obvious here. When it comes to investing like a boss, you've got to embrace your humanity and use it to your advantage. You must come to terms with things you can and can’t control. So, let’s cover a few:

You can't control the past

The past is the past. It's over. And yes, the things we did in the past do affect us today, but you can't go back in time. In business it's called a sunk cost. There's no use beating yourself up about what you should or shouldn't have done. What good is it going to do anyways? You can, of course, learn from the past. But there’s no going back.

You can't control the future

While we're at it, you can't control the future either. You don't know what's going to happen with some company or the economy or a country or the world. I mean, if 2020 has taught us anything it's that anything can happen. So, don't get caught up trying to figure out if the market is going to go up, down, left or right. Honestly, you're not going to know for sure (and, the reality is, no one knows).

You can control the present

There actually is something you can control. It's the present. It's where you are right now. You have the ability to make choices that will impact you now and into the future. So, no matter what has happened in the past (which you can't control) and what will happen in the future (which you can't control either), it leaves you with the critical space, right now, to make decisions that will make your life better.

You can control how you invest

Here we go now. We all have an approach to investing (by the way, not investing is an approach). If investing is climbing a mountain, there are a lot of different trails. The trail you choose will affect the journey and final destination. The way you choose to go about investing will affect your life now and later.

You can control the kinds of investments you purchase. 

If you want, you can put all your money in one stock (p.s., this is a very bad idea!). Or, you can spread your money around. A diversity of funds ensures that if a few do poorly, there are others that may be doing well to balance it out.

You can control how much you pay for investing (a.k.a. fees).1

Why in the world are we talking about fees?! We’re talking about fees?! Not investing? Fees!

Seriously. Look, they may seem minuscule but have massive effects over time. 

Just like everything in life, there are more expensive and less expensive funds. One fund could have several types of fees. So be mindful of the fees and clear about what you’re paying for upfront. All this information is public, but it can be hidden.

For fun, let me show you the massive impact of a 1% fee. 1%. Doesn’t seem like much, right? I mean, what difference could a measly 1% make?

Let’s say you’re just starting to invest. You’ve got $0 put away. But you’re geared up, so you’re dropping $500/month into investments for the next 30 years. If you average 10% return each year, you’ll have a whopping….

$1,085,661

You’d be a millionaire!

But what if you averaged 9% return, assuming all the same stuff earlier. No big deal right. It’s just 1% less. Well, you’d have...

$891,451

That’s still a lot of money. But did you notice the difference just 1% made? Here’s a close up of those last two bars:

$194,210.

You’d have nearly $200k less just because of a 1% difference. Your next egg would be almost 20% less!

You can control how much you save.2

Hold up, don’t rush past this one. Your savings rate (the percentage you save of your income) is way more important than fees or what return you’re getting on your investments. Seriously, WAAAY more important. It’s why people who make lots of money can end up with way less wealth than people who make less money but save more. Something like 78% of NFL athletes are bankrupt after two years of retirement.3 On the flip side, check out the remarkable story of this guy, Ronald Read.

Savings rate is all about lifestyle. For most, as income increases, so does lifestyle expenses. Which leaves very little for savings and investing. On the flip side, if you know what enough is, as income increases, expenses stay the same, building more and more for things like investing.

We are all limited, finite human beings. And that’s a wonderful thing. Enjoy it, embrace the confinements. And then move forward.

CONCLUSION

Prereqs aren’t usually fun, but they’re essential. Get on stable financial ground and embrace being a human. If you get these two things down, you’re off to the races to climb the mountain of investing like a boss. 

Next email, we’ll finally cover two approaches to investing: the boring and the flashy. 

Talk soon,

Josh

CLOSING RANDOMNESS

• I watched Allen Iverson’s infamous “Practice!” video writing this post. It’s one of those classic videos that is still quoted. But then I read a post that argues that Iverson was likely drunk and certainly grieving the death of his best friend.

• 30 for 30, “Broke” Documentary. It’s a startling and honest look at athletes that go make a fortune playing professional sports but go broke shortly after retiring.

• I’ve loved Judah & The Lion’s “Spirit” this past month. The song alone makes me want to see the Mighty Ducks new series.

If you haven’t yet subscribed, there’s no better time than…right now.

Subscribe now

The way you go about buying a house is pretty different than how you buy cereal. Why? Well, cereal is relatively cheap, usually lasts a week or two, and really only helps you feel half-hungry in the morning. On the other hand, a house costs a ton of money, will last people anywhere from a few years to a few decades, and affects almost every facet of your life. So, of course, the way you approach buying a house is a whole different ball game than buying cereal. You’re going to do your homework, compare and contrast, ensure you understand what you’re getting into, work with other people to help you, and eventually settle on something that will be good for the long haul. 

But there’s something even more valuable than a house, that usually spans several decades, that will affect every aspect of your life: where you live, how you live, your family, your career, your legacy, your freedom, and a whole host of other smaller and bigger things that fit in between. And yet, most give little to no attention to this area of life. For most, it falls into the top left square above. What is this important, yet overlooked arena? Investing in stocks and bonds.

There’s just one big problem...noise.

You’ve got talking heads confidently jabbering about the future (like they’ve been there and are coming back to tell us about it), professional finance people that often make money topics sound like a foreign language, and endless forms and documents that were seemingly drafted by a bunch of lawyers attempting to put you to sleep (by the way, I’ve got mad respect for the lawyers and finance pros I know). 

Then there’s the noise of life. Bills and decisions, plans and schedules, taking the trash out and doing taxes while trying to teach your kid to use the toilet (this is hitting close to home). 

Oh yeah, one more thing. There are things inside of you that make noise: emotions.

Our emotions can be all over the place with money. Money can make us feel anxious and fearful, excited and safe, even oddly compelled and controlled. When it comes to money, our emotions can be on a roller coaster.

All that noise, both outside and inside you, over the course of your life can lead many to throw up their hands and give up, ignore it, and forget about it.

But it doesn’t have to be that way. You can learn to invest like a boss.

Over the next few emails, we’re going to cover some serious ground. Here’s where we’re headed:

1. Why Invest: Being Wealthy > Looking Rich

2. Digging, Standing or Climbing? What Stage are You in?

3. Prereqs

4. The Approach: Boring > Flashy

5. Getting Started: Definitions, Accounts, and Funds

6. The Secrets of Investing

We’ll cover the first two in this email. 

By the end of this series, you’ll be able to invest better than 90% of the population. You’ll know exactly where you’re at now and the next step to start building wealth. You’ll get both the big picture and the details, a vision for the good life and step-by-step guide to get there financially. 

Let’s get started.

WHY INVEST: BEING WEALTHY > LOOKING RICH 

There’s an ancient wise saying that goes:

One pretends to be rich, yet has nothing; another pretends to be poor, yet has great

wealth.1

Would you rather be wealthy or look rich? No, it's not a trick question. And yes, those are two different things.2

Wealth is what you don't see. Looking rich is what you do see. 

Wealth is money saved. Looking rich is money spent. 

A person driving down the street in a brand new car looks rich, but may actually be broke. A person driving down the street in a beater may look poor, but may actually be wealthy. 

Looking rich is often dictated by what other people think (e.g., “I’ll buy this thing because people will be impressed with it”). Wealth is often dictated by your values (e.g., “I’ll save this to pursue my dreams” or “I’ll donate there because I believe in what they’re doing”).

Morgan Housel puts it like this: 

Spending money to show people how much money you have is the fastest way to have less money… The only way to be wealthy is to not spend the money that you do have. It’s not just the only way to accumulate wealth; it’s the very definition of wealth.3

This approach to wealth may appear boring and mundane, but produces a life that has freedom, margin, and plenty. Looking rich may appear flashy and exciting, but often produces a life that is confined, tight and wanting.  

On this journey to invest like a boss, the very first choice you have to make is whether you want to be truly wealthy or appear rich. You only get to pick one, so really consider your decision. 

Why you’re investing, to be truly wealthy or appear rich, will dictate how you invest. Who you want to be will determine what you do. 

Before getting too far, let’s figure out where you’re at right now.

DIGGING, STANDING, OR CLIMBING?

Digging a hole. Standing on ground. Climbing a mountain.

When it comes to your money, you're likely in one of three situations. You're either digging a hole, standing on ground, or climbing a mountain. Think about which best describes your current situation. 

Digging a hole (a.k.a. I'm in or accumulating debt)

You're spending more than you earn and/or taking out non-mortgage debt (think student loans, credit cards, auto loans, medical debt, etc). Most college students are in this category, but many of us find ourselves in all sorts of debt well after our school years.

Standing on ground (a.k.a. figuring this money thing out)

You're spending less than you earn, paying off debt, and saving for an emergency fund (at least $1,000 in a savings account for emergencies). You’re fully out of the hole and on level ground once all debt (except a mortgage) is paid off and your emergency fund has increased from $1,000 to whatever it would take to float your life financially for three months.

Climbing a mountain (a.k.a. approaching or already building wealth) 

You’re spending less than you earn and that margin is going towards long-term goals. You’re climbing the mountain as money is saved and growing consistently over time.

So, roughly, where are you at?

(que Jeopardy music)

If you're either in the hole or standing on ground, pay close attention to the “Prerequisites” section in a future email. But if you're beginning to think about building wealth, over the next few months you’re going to learn how to invest super well. 

Now that you know where you’re at, let’s close this down with some good news and bad news.

The Good and Bad News of Investing

The good news first:

You can invest like a boss. It's possible. And no, you don't have to have a bunch of letters behind your name or carry around a TI 89 for fun.

And, for the bad news:

Investing like a boss is so simple that you'll be tempted to ignore it. You’ll think to yourself, “There’s got to be more here. It has to be more complex. If it was this easy, anyone could do it.” Well, yes, anyone can invest well, with just a few concepts and tools in place.

CLOSING UP

There’s lots to come in the next few weeks, but for now, you have two things to figure out so you can hit the ground running:

1. Would you rather be wealthy or look rich? 

2. Identify which category best describes your financial situation: digging a hole, standing on ground, or climbing a mountain?

Before you can invest like a boss, you’ve got to work these things out. So take a few minutes, talk to your spouse if you’re married, and get ready for round two in a week or so.

Until then, I always love feedback and perspective. If you've got thoughts, just hit reply and let me know.

SOME RANDOMNESS

• Check out the music video for Lecrae’s song, “Fakin.” It’s funny and hits a bit on the theme of looking rich.

• Thomas Stanley’s New York Times Bestseller, The Millionaire Next Door, deepens the argument that many of the wealthy people in the United States don’t live in mansions or drive fancy cars.

• The article “Hockey Has a Gigantic-Goalie Problem” by Ken Dryden. It reminds me of Michael Lewis’ The Blind Side and Moneyball. Small changes over time can dramatically change an entire sport.

Want to intro me to something that's really helped you? Drop me a note.

Catch you later,

Josh

PS Did someone forward this to you? Subscribe here.

If this was forwarded to you, you can jump in by tapping the button below:

Subscribe now

intro exists to make your life better by introducing you to great things and helping you implement them. 

Last time you met my friend, Cal Newport. Cal has been saying crazy things for nearly two decades. I introduced you to three of his countercultural, mic-drop ideas that came from his last three books:

1. Don’t follow your passions. Instead, hone a valuable skill that may become a passion.

2. To get ahead, learn to do deep work.

3. Technology likely has control over you. So take it back.

This guy doesn’t beat around the bush.

A purposeful and meaningful life takes more than just being aware of some good ideas. You’ve got to incorporate the ideas into the nitty gritty of your life.

Today I’m going to share my top five actionable takeaways from Cal.

Here’s what we’ll cover:

1. Time Blocking: a method to add two hours to your day

2. Digital Declutter: 30 days to free your life from technology’s control

3. Technological Distance: put space between you and your tech

4. Transition Time: your new jet pack for deep work

5. #DeleteSocialMedia (get the irony?): the one-move game changer

[1] Time Blocking: a Method to Add Two Hours to Your Day

We all have good intentions for our day. Actually following through is where things get dicey. Let me show you a simple method to help ensure your intentions and priorities are represented in how you spend your minutes and hours. The simple practice will save you some serious time (like hours a day!). Sounds great, right?

Time blocking is the most important skill Cal has taught me. It has reshaped my work day (and, sometimes even my days off).

Time blocking is a method to thoughtfully plan what you want to do throughout the day. It gives every minute of your work day a job. Don’t let that freak you out. It’s easier than you think.

Here’s how you start: [from Deep Work pages 223-225]

1. Get a lined piece of notebook paper.

2. On the left side, mark every other line with an hour that represents your normal work day.

3. Divide your work day into blocks of activities. For example, you may create a block from 1:00-1:30 PM to read my emails. :)

4. Fill out your entire work day with blocks. They don’t all have to be big projects. It can include blocks for tasks, relaxing, lunch, or whatever else.

5. At a minimum, block 30 minutes at a time. If you have several different tasks you want to do in one block, just label it “tasks” and then create your list off to the side.

Here's what a time-blocked day could look like:

You may be thinking, “That looks great and all, but my day never goes as planned.” That’s totally fine. Your time block plan isn’t meant to be rigid. Be flexible with the things that come up. If you have to shift something around, go ahead and cross it out and rework the rest of the day’s schedule accordingly.

Here's what a real day might end up looking like: 

Time blocking is attempting to plan in advance how you’ll use your time throughout the day. No big deal if plans change. The goal is to avoid randomly going through the day, hoping to do deep work, but never getting around to it because of one seemingly urgent request after another. Time blocking takes all our good intentions and creates a concrete plan to make it happen. It’s all about being proactive rather than reactive. By time blocking in advance, you’re telling your day what you want to do with it, rather than addressing anything and everything as it comes your way.

It’s painful to remember my life before time blocking. I’d usually start the day checking emails and allowing the tasks in my inbox to dictate the day. This was a surefire way to ensure I was constantly doing shallow work. I’d often feel like my day was full, busy, and yet got nothing done. It was as if I had handed control of my day over to other people’s requests. If you aspire to focus and do deep work, you have to make time for it. The best way to make time is to proactively block off time.

Now, getting into the weeds:

• Build extra margin for each time block. Most of us will underestimate how long something will take. At the start, build in more time than you think you need.

• Find your prime time. Most people have a time in the day when they’re most productive. For me, back in college, it was 7:00-10:00 PM. For the last several years, it’s definitely before noon, roughly 8:00-11:30 AM. Aim to use and protect your prime time for deep work. Avoid checking email or addressing random to-dos.

• If your schedule changes throughout the day, find a minute to cross out the rest of the day's plans and reorganize it. I write in pencil so I can easily erase my previous plans and rework it a bit.

• You can get started with a sheet of lined paper. If you’d like, get a spiral notebook. Or if you want to level up, I use this. It’s affordable and already has the hours printed in it. (Don’t buy Cal’s own Time Block Planner. It’s really bad. The cover is flimsy, the pages don’t lay flat, and there’s not much room to make changes.)

Give time blocking a try for two weeks. You’ll be shocked at how different your day looks simply by following this strategy.

[2] Digital Declutter: 30 Days to Free Your Life from Technology’s Control

11 hours. That’s how long the average American adult spends in front of a screen. Now, you may think, “Of course, I’m in front of a computer all day for work.” But 45 minutes of that 11 hours is social media. Nearly 5 hours is some sort of TV or video (Nielson).

People say that tech addiction is a real thing. Here’s what I’m sure of: technology is everywhere. It’s almost always with us, from the moment we wake up to when we go to bed at night.

You may or may not be controlled by tech. But there’s a way to find out. Try to declutter your tech. Sounds easy, right? Think again.

A digital declutter is a 30-day technology break to rediscover and repave an enhanced existence. The following steps are from Cal’s book Digital Minimalism:

1. Set aside 30 days to take a break from optional technologies in your life.

2. Before the 30 days, explore and rediscover activities and behaviors that you find satisfying and meaningful.

   1. Make a list of activities to fill the empty space. I started carrying a book around with me. As in a physical book with paper pages to turn.

3. At the end of the break, reintroduce optional technologies into your life, starting from a blank slate. For each technology you reintroduce, determine what value it serves in your life and how specifically you will use it so as to maximize this value.

   1. Does this technology support something that I deeply value?

   2. Is this technology the best way to support that value?

   3. How will I use this technology going forward to maximize value and minimize harms?

The point of the declutter isn’t just a reset. It’s intended to change your relationship with technology for the long haul. At the end of 30 days, only add technology back into your life that is meaningful and useful. Honestly assess each piece of technology and evaluate whether or not it promotes or detracts from your values and dreams. Don’t let short-term convenience derail you from going after your long-term goals and dreams.

My Experience with a Digital Declutter

I did a 30-day digital declutter back in 2019. It meant no TV or non-work related computer and smartphone use. Yeah, can you imagine a month without ESPN, Youtube, The Office or your favorite app?

Let me tell you, it was really hard! But it was so worth it.

The effect of those 30 days has made me more aware, focused, and present.

Awareness

I found that I used my phone as a mini-escape from something hard or boring.

• Challenging project at work → Scan through my email again

• Five Minutes of Downtime → Find a good (but distracting) article to read

• Waiting at a red light → Check to see if there are any new texts

• Hard decision to make → Get the latest update from ESPN...again

• Need to rewrite a poorly written paragraph → Check my phone home screen for any new notifications (this actually just happened)

I was surprised to see how much of my day, whether conscious or unconscious, was spent avoiding what I knew I should be doing. Values are really important to me, but my day was often dictated by impulse.

In addition, I noticed how nearly everyone around me was in front of a screen. Old and young alike, at the store or hanging out, work or relaxing, screens were everywhere.

Focus

With a hearty dose of awareness, I was able to focus like never before. Projects that had lingered for months (sometimes years) started getting done. You know, the things you should do but can never quite find the time? Yeah, like writing a will. It actually got done. Challenges I thought would require an entire day ended up getting knocked out in just a few hours.

Presence

Prior to the declutter, my phone would always have a slice of my attention. Moments of boredom were quickly diverted to looking at a screen. Even when I hung out with people, I’d check my phone frequently or sense phantom notifications (seriously, phantom notifications are a thing).

Now, especially when hanging out with people, I find myself listening more, engaging in conversation, and connecting on a deeper level. It’s almost like operating on a different wavelength.

Life hasn’t been perfect since the declutter, but it’s been a lot better. My intake of ESPN (and sports in general) has plummeted. I stopped using my phone as an alarm clock and began using the time before falling asleep to read books. My ability to focus has skyrocketed. In short, life is better.

A digital declutter isn’t easy. But it’s worth it. It will be eye-opening at the least and life-altering at the most.

[3] Technological Distance: Put Space Between You and Your Tech

Create physical distance between you and technology.

Don't always have your phone on you. Find ways to separate from your phone. [e.g., put your phone in the foyer]. For example, when you get home, plug your phone in somewhere and leave it plugged in. For the rest of the night, use it like a corded phone. Remember those? Or, if you’re hanging out with friends or heading to the store, leave your phone in the car.

Distance creates a small barrier to use your phone. And that small barrier can be huge to help you take control of your life, do deep work, and be present.

[4] Transition Time: Your New Jet Pack for Deep Work

Transition times are gold mines for deep work. It’s the time we spend commuting, waiting in line at the store, walking to and from places. Often transition times are spent being entertained by our phone. Instead, try taking advantage by considering a project you’re working on. Think about what might be challenging or next steps you want to take.

Mulling over deep work in a non-work environment provides new ways of looking at problems and taps into deeper levels of creativity. I know people who intentionally take walks in the middle of the day to do this very thing.

For me, my morning commute often produces some insight on a current project that allows me to hit the ground running once I’m in the office.

Next time you have some transition time, try it out. 

[5] #DeleteSocialMedia: The One-Move Game Changer

Ready for the last one? Brace yourself. Seriously. Alright. Here it goes. Delete all social media. Yep, I just went there. Just get rid of it all and see what happens. This might be the quickest, easiest way to accomplish 80% of the benefit of being a digital minimalist. The quickest way to get back 10 hours a week is to delete all your social media accounts. Every single one. Facebook, Instagram, TikTok, Snap, and whatever new ones crop up. Delete them from your phone. Deactivate your accounts. You’ll be more free than you ever knew.

Now, I want to be straight up. I still have a Facebook account. Does that make me a hypocrite? Perhaps, but here’s how I use it: I’ve defined what I want Facebook to do for me and limit my usage to just that. So, I have Facebook to use the Marketplace. I’ve done all I can to limit every other aspect of Facebook. I’ve disabled the NewsFeed. I don’t have the app on my phone. I’ve systematically deleted all notifications and emails (though, they have a sneaky way of continuing to show up).

Don’t get me wrong, I’m not doing these things because I think I’m great. It’s because I know how I can throw away hours of my time aimlessly scrolling in a world of information that’s almost entirely irrelevant to me and will leave me discontent. And, honestly, I just feel way freer without it.

Now you know my friend, Cal, and my top five ways to take action. Let me know if you end up trying any of his advice. I’d love to hear how it goes.

Key Resources + Some Randomness

• Cal, in his own words, explaining time blocking: article and/or this video.

• Is Google Making Us Stupid? by Nicholas Carr. An insightful article written back in 2008 that shows how technology is actually changing our brains.

• Tech-Wise Family by Andy Crouch. A helpful book as you think about tech use beyond yourself, into your home and family.

• “Why the News Makes Us Dumb” by C. John Sommerville. A fascinating look at how the product of daily news itself (not some media company) is one reason why we've lost the ability to reflect, consider complex issues, and become so polarized. Oh yeah, it was written in 1991!

I always love feedback and perspective. If you've got thoughts, just hit reply and let me know.

And, want to intro me to something that's really helped you? Drop me a note.

Until next month,

Josh

PS Did someone forward this to you? Subscribe here.

If this was forwarded to you, you can jump in by lightly stomping the button below:

Subscribe now

intro exists to make your life better by introducing you to great things and helping you implement them. 

Cal Newport doesn't seem like a bad guy. I mean, just look at him.

But he's on a mission to make your life better by seemingly ruining it. Yep, you just read that right. Newport boldly smashes popular ideas-- ideas that most of us accept without a second thought. Then, he replaces them with alternatives that initially look hard and unattractive, but have a profoundly positive effect over time.

If intro is all about making your life better by introducing you to great things, you have to meet Cal (oh yeah, we’re on a first name basis…he just doesn’t know it yet).

Here’s what you can expect in this introduction:

1. Who in the world is Cal Newport?

2. What are his “mic drop” ideas?

3. Why should you listen to him?

In this short email, you’re going to get a snapshot into Cal’s three most recent books and one, big, countercultural idea from each. But before we get there.

[1] Who in the World is Cal Newport?

Cal is a professor of Computer Science at Georgetown University. I'll spare you the juicy details of his resume (it’s long and impressive). But somehow, without the fanfare of social media or an electric personality, Cal has managed to excel in his primary career (the dude got tenured at the age of 35!), and wrote six books, one of which is a New York Times bestseller. Oh yeah, AND he’s married and has three kids.

It’s cool and all to be a successful professor and writer at a young age. It’s even more impressive to do those things while maintaining a solid family life.

[2] What are His “Mic Drop” Ideas?

I was introduced to Cal around 2015. It wasn’t long before I realized Cal had a way of sayings that sound unpopular but are unusually insightful. Little did I know that he’d been writing like this for years.

Don't Follow Your Passions

Cal wrote a trio of books 10 years earlier aimed at helping students dominate school. His study hacks bucked conventional wisdom and provided streamlined ways to rise above the rest. Then, in 2012, he wrote a book titled So Good They Can’t Ignore You that contradicted what most were saying: don't follow your passions.

What, Cal? Come again? Don't follow your passions?! Everyone says the way to have a happy, fulfilled life is to follow your passions.

Steve Jobs, in one of the most famous commencement speeches of modern history, urged new grads to pursue their dreams, saying :

Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.

Notice what Jobs' advocates: great work is work you love. And how do you find this work that you love? By looking.

But what if you look and can't find it? Just keep looking. Keep holding out for that job that makes your dreams come true. Someday, you will find it, and once you do, you will live happily ever after.

In contrast, Cal argues that following your passions will leave most people searching endlessly and terribly unsatisfied. Our idealistic dreams are a bad gauge for determining our life work. Cal, instead, advocates developing skills that are valuable in the workplace. As you hone your skill over time, you’ll find increasing joy and passion around it. 

It’s a shift from the “passion mindset” (I’ll only do what I love) to the “craftsman mindset” (I’ll work hard at something and will likely develop a love for it as I become good at it). Worthwhile work over time produces valuable skills, which leads to passion.

Worthwhile Work + Time = Valuable Skills → Passion

To Get Ahead, Learn to Focus

My pull into Cal’s orbit came when he talked about the key competitive advantage in the workplace. He called it "deep work" and wrote an entire book with the same title.

In Deep Work, Cal unpacks that most knowledge-based workers think busyness is the same as productivity.

Busy ≠ Productive

Many of us go through our day in a chaotic mess of emails, meetings, messages, dings, and dongs and whatever else. Our days are packed, our brains are fried, and yet, we get to the end wondering if we have anything worthwhile to show for all that stress. Can I get an amen?

This is all shallow work. Responding to the constant stream of inputs is shallow. It’s not demanding, very task oriented, and often performed while distracted. And yet, most of our days are filled with it.

The solution, my friends, is deep work. Cal defines deep work as:

DEEP WORK: Professional activities performed in a state of distraction-free concentration that push your cognitive capabilities to their limit. These efforts create new value, improve your skill, and are hard to replicate. (Deep Work, 3)

In short, deep work is the ability to "concentrate on a demanding task without distraction." (source)

I read Deep Work shortly after taking in Angela Duckworth's book Grit: The Power of Passion and Perseverance. Duckworth defines grit as:

GRIT: Passion and perseverance for long-term goals. (source)

Grit and deep work both have the elusive sticking-it-out-over-a-long-period-of-time ability. It's one thing to be interested in something. It's semi-easy to get pumped about a topic for a minute, or even a month. Some might even take a few steps down the road. (Cue 7th grade Josh who thought being a drummer only entailed getting some sticks and a set. After two weeks of lessons, my drumming career was over. Who knew you had to practice so much?!)

But, deep work over a long period of time gets you from novice status all the way to proficient (and even further). It's what helps a person learn how to bake a fluffy loaf of bread with a perfectly crusty exterior, even though it takes months of getting flour all over the kitchen and completely failing loaf after loaf. Deep work is the ability to stay on the task you know is most important, even though everything in you wants to check your email or social media (for just a quick minute, of course).

Deep work produces a satisfaction that can't be matched. Yeah, watching random Youtube videos can be fun and mindlessly entertaining in the moment. But after an hour, you don't feel any better about yourself. On the other hand, after pressing in on a hard task with focused perseverance, pushing the boulder one more foot up the mountain, gives you a distinct sense of accomplishment.

Even as I write this, I feel the pull. I know I should be writing. It's good work. But I just got a ping on my Teams chat and I feel the pull to read the note and respond. It feels good, after all, to get the momentary satisfaction of checking something off the list, even if it keeps me from something more important.

So how in the world do you sustain a laser focus on a challenging task or topic that you know will take you days, weeks, months, maybe even years? You may think you’re not smart enough for deep work or that your attention span is shot. Or that you’ve got a million things to juggle, things at home and at work, tasks, reports and responsibilities that need to be addressed. Deep work feels impossible.

I’ve got some good news for you.

You can learn to do deep work.

That’s what both Cal and Angela conclude: you can learn to do deep work or have grit. Deep work isn't a gift for just a select few. It's a skill that can be honed.

Cal’s Deep Work is a perfect follow-up to his earlier book, So Good They Can't Ignore You. Learn how to do deep work and over time you’ll become a master. Mastering something produces passion. Deep work actually helps you love what you do.

But Deep Work leaves you with a major dilemma: how in the world can we cultivate the ability to do deep work when our lifestyle outside of work (and often inside of it) is one big distracted jumble?

Your Technology Controls You More than You Think.

It sounds harsh to say your technology controls you. But for most of us, this blunt statement is true.

How can you focus at work when you spend your entire "normal" life distracted like crazy? Cal’s answer to honing the skill of deep work is to become a digital minimalist. And, of course, he wrote a book, called… can you guess?

Digital Minimalism came out in 2017 as a rallying cry to carefully choose the technology that you allow into your life (rather than taking it all in and assuming it’s all good). Cal’s strong critique and call to disconnect from the normal trends of society was startling then and still is now. 

Cal advocates having no social media, limiting your internet use, and going on a 30-day digital declutter to fast from all things digital (that won't leave you unemployed). Then, once the declutter is complete, only add things back into your life that align with and promote your values. Get rid of the rest and gladly miss out on stuff.

While Deep Work gave me some helpful tips (which I'll share in a follow-up email later this week), Digital Minimalism rocked me.

I'm getting more and more distracted as the years go on. My ability to focus and read is shrinking. When I encounter a challenge in a project, my instinct is to break for a snack or check email.

After completing the 30-day digital declutter, I couldn't believe how much my smartphone had affected my life. My digital world had become like a third arm, always with me, no matter what. I almost felt naked without my phone. I didn’t realize how often I’d glance at it, infuse any down time with checking something on it, and feel oddly vulnerable when I didn’t have it in my pocket.

There are many who talk about the negative effects of social media and the way technology has crept into every corner of our lives. It's become a fairly accepted idea in the last several years. Few, though, actually have guts to advocate drastic change.

But that doesn't stop Cal. He champions minimalist approach to technology, only keeping what has a specific purpose. The rest, get rid of completely or put firm boundaries around it.

Cal wants us to have a controlled, purposeful relationship with technology, both inside and outside of work.This produces unbelievably valuable things like the ability to be bored and the goodness of deep work that leads to increasing joy.

[3] Why Should You Listen to Him?

Cal’s looking at the landscape and seeing people flounder left and right. His books are advocating for a better, deeper, more satisfying life. Getting a better life isn't easy. It requires saying no to mediocre and even good things (especially in the digital space). It requires developing a habit of pressing into work that is challenging and stretching. It requires shaping our personal and professional life around our deepest values and biggest dreams.

Cal (and I) want you to have a better life. But he knows that you need to hear, and do, some hard things to get it. Is it worth it? Totally! Is it easy? Not a chance.

Later this week I'll drop you an email that's full of actionable takeaways to live the deeper, richer life.

Key Resources + Some Randomness

• You can find all of Cal's books here. And if you want to do a super deep dive into all his interviews, podcasts, articles and more, you're welcome.

• Cal's got his own podcast. The podcast is alright, but focused on folks that already love what Newport is doing and want to go deeper. I definitely wouldn't start here. But, after reading his stuff, if you want to get into the weeds, this could be fun.

• Angela Duckworth deserves her own email.  To get a feel for her book, Grit, listen to her TED Talk.

• For an entertaining and insightful look into how hard it is to focus, check out Tim Urban's article, "Why Procrastinators Procrastinate.

• I've never seen a Mr. Beast Youtube video. Supposedly he's a big deal. But I did watch these guys break down why Mr. Beast dominates Youtube. The simple answer: he creates varying levels of tension every six seconds. Imagine what happens to a person's brain if they are trained to be surprised every six seconds? Talk about a deep work killer.

I always love feedback and perspective. If you've got thoughts, just hit reply and let me know.

And, want to intro me to something that's really helped you? Drop me a note.

Look out for an email later this week with my top five actionable takeways from Cal. They are game-changers!

Have a solid week,

Josh

PS Did someone forward this to you? Subscribe here.

If this was forwarded to you, you can jump in by lightly tapping the button below:

Subscribe now

intro exists to make your life better by introducing you to great things and helping you implement them.

This email is a beast: step-by-step instructions and tons of details that get waaay into the weeds. But, by the end, you’ll have the game plan to gain control of your money and pursue your dreams by making your own money robot.

Here’s what we’ll cover:

1. A Quick Review: Budgets are Stuck in the Stone-Age

2. The Recipe to Create an Automatic Money Robot

3. A Few Tips and Tricks

A Quick Review: Budgets are Stuck in the Stone-Age

In the last email, I introduced the idea that money is like laundry, and we all have to find a way to deal with it. If you haven’t read it, take a sec to check it out.
There’s just one problem: the leading solution -- making and keeping a budget -- is from the stone age. It’s manual, tedious, and requires constant attention, which leads most to drop it fast. Part of the problem is that everything wildly and randomly goes in and out of one account. It may look something like this...

All that tedious, stone-age budgeting combined with the crazy, free-for-all in your checking account decreases confidence, increases stress, and makes it hard to pursue your dreams.

But there’s a better way: your own automatic money robot. Your money robot takes the plan you create and automatically makes sure it gets done. You set it and then mostly forget it.

Your automatic money robot looks something like this…

In this email, I’ll show you how to implement it, a.k.a., give you step-by-step instructions to make your own automatic money robot.

The Recipe to Create an Automatic Money Robot

Want to see what your Automatic Money Robot will look like? Let's take a peek...

Click and zoom into the image if needed. Red is money going out. Green is money coming/staying in. All the boxes represent accounts or something to set up. The arrows are items related to that account. 

Let's approach it like a recipe. First, gather all your "ingredients." This might take a hot minute. Once you’ve got your “ingredients” ready to go, set aside some time to work through the "instructions" below. Estimate roughly 3 hours.

By the end, you'll have created your own automatic money robot who will keep you on top of your finance goals, ensure you’re paying off your debt and saving for your dreams, all while you’re out there living your best life. Talk about confidence and peace of mind! All the important things are getting done in the background and you have the freedom to spend guilt-free.

Ready? Let's go!

INGREDIENTS

Income

• Paystubs of your recent income. Note the frequency of your paychecks (e.g., biweekly, monthly)

Monthly Spending

Estimated amounts for your regular monthly spending. For example:

• Charitable Giving

• Utilities: Water, Electric, Gas

• Credit Cards

• Subscriptions

• Mortgage/Rent

• Loans: Student, Car, Medical, Other

• Internet/Cable

• Phone

• Insurance: Home/Renters, Health, Life, Disability, etc.

Annual Spending

A copy (or guess) of all your spending that occurs at some point each year. For example:

• Medical Expenses: Co-pays & Deductibles

• Property Tax

• Gifts

• Car Registration

• Car Insurance

• Pets

Savings Goals

Make a list and take a guess at how much you’ll need to accomplish your goals. For example:

• Short-Term Savings Goals (less than 5 years away)

• Mid-Term Savings Goals (5-10 years away)

• Long-Term Savings Goals (10+ years away)

• Car

• Vacation

• Home Improvements

• Kids' College Education

• House Down Payment

• (You will save for your long-term savings goals on step 5 of the Systems Spreadsheet below)

Logins to all your financial accounts (e.g., checking, savings, brokerage, etc).

• You need two checking accounts.

• One could be a local institution.

• The other could be online (like Capital One). The key here is to have a bank account that has no fees and lets you open multiple savings accounts easily. If you don't have two checking accounts, you'll need to open a new one. This is critical.

Now that you’ve gathered up all your ingredients, pat yourself on the back, give yourself a high five and let’s build your robot.

INSTRUCTIONS

[1] Fill out theSystem Spreadsheet [<--click me]

This is where all the ingredients you gathered earlier will be organized. Follow the directions in the upper left corner of the spreadsheet to create your very own copy.

[2] Open an “Automatic” Checking Account

Ideally select an online bank, like Capital One 360, that has no fees and allows you to open multiple savings accounts under one name. 

[3] Open “Automatic” Savings Accounts for Each of Your Annual Spending Items and Every One of Your Short-Term Savings Goals

Reference Step 3 in your System Spreadsheet. Your Automatic Bank Account could look something like this...

[4] Create Your “Spending” Checking Account

Ideally, use your local bank. This is your guilt-free "Spending" checking account. Whatever money comes into this account can be freely used for things like groceries, eating out, gas, clothes, and entertainment. Just be mindful, once it’s all used up, that’s it for the month.

[5] And now, without further ado… It's time to make your robot!

This step covers all the automatic transfers you need to set up.

A) If your employer offers any sort of matching for retirement, you've got to do your best to take advantage of it. This will come out of your paycheck before it gets deposited.

B) Reference your take-home pay in cell C7 on your System Spreadsheet. This is the amount that’s yours after taxes, insurance, and 401k contributions are taken out of your paycheck. 

C) Direct deposit your paychecks into the “Automatic” checking account.

D) Create automatic transfers to each savings sub-account based on the frequency of your paycheck.

• For example, if you get paid every two weeks, you’ll have 26 paychecks throughout the year. Take whatever savings goal amount you have (say $124 for car registration) and divide by 26. Then, every two weeks, create an automatic transfer for $5 to the car registration sub account. ($124/26 = $4.75. Round up to the next whole dollar.)

E) Create monthly automatic transfers to a brokerage account for long-term savings goals like retirement.

• Want more detail about the stock market and saving for retirement? You’re in luck! Look out for a future intro email on this topic.

F) Set up each monthly bill, loan or giving contribution to be automatically paid from your “Automatic” checking account.

• All your recurring bills will be paid in one of two ways. If your bill allows you to pay it directly from the company website, set up automatic payments to come from your “Automatic” checking account. For example, log into Netflix, go under Settings, and link your “Automatic” checking account to auto pay your Netflix.

• If there isn’t a website to set up automatic payments, use the “Bill Pay” feature on your “Automatic” checking’s website. For example, if your rent needs to be submitted with a check, set up the Name, Address, and Amount of your rent check in the “Automatic” checking’s Bill Pay. Then, schedule it to be sent every month. Your bank will automatically write, cut, and mail a physical check on time, every time.

G) Calculate what you will have leftover each month after giving, saving, investing, and paying bills. If you have margin, leave an extra $500-$1,000 in your "Automatic" checking account. Then, create an automatic transfer of the leftover amount to the “Spending” checking account.

And now, my friends, your finances have finally entered the 21st century! Consider this your brand, spankin new money robot that’s going to put you in control of your money.

The beauty of the automatic money robot is that your spending decisions are isolated from your fixed expenses, loan repayment, giving, and savings goals. By isolating your day-to-day spending decisions in your “Spending” checking account, you always have a real-time idea of your budget status. So, if you end up eating out too much, you may need to pull back on clothes or groceries. Or, if you go on a shopping spree, you may need to eat out a bit less. Whatever way it goes, if you only spend what is in your “Spending” checking account each month, you'll always be in budget AND have confidence that all your other financial goals are being met.

A Few Tips and Tricks

--> Ideally, your “Automatic” checking account would always have one month’s worth of expenses. At the very least, aim for an extra $500-$1,000 in your “Automatic” checking account the first few months if possible. This will ensure any automations that aren't quite calibrated don't cause late fees.

--> If things are tight and you can't create a buffer in your “Automatic” checking account, you need to sync up your bills to your expenses. Here's what Remit Sethi recommends, assuming your paycheck is direct deposited on the 1st of the month:

• 1ST // Get all your bills to be dated the 1st of the month. You just call each one and ask them to change the bill date. It's usually pretty simple and takes about 5 minutes per company. Note that it may take a month or two to see these changes completed.

• 5TH // Make your short and mid-term savings (in Savings sub-accounts) and long-term savings (in a traditional, Roth, or brokerage account) automatically come out the 5th of the month.

• 7TH // Pay all your bills. This can be through the company’s website or by setting up Bill Pay (for things like rent to your landlord), as described above.

• 3RD and 17TH // Calculate what you will have left over after you automate all your short and long-term savings and paying your bills. Move half this amount on the 3rd and the other half on the 17th. This is assuming you get paid twice a month on the 1st and 15th.

Closing

We just went through the gauntlet. It’s a ton of info, but it’s worth it! You may skim it over and conclude it’s just way too complicated. But here’s the deal: if you're struggling or frustrated that you never seem to meet your financial goals, you need to do this. Yeah, it will take some work on the front end. But once you have it set up, you are good to go! Make 2021 the year your finances pivot from being all over the place to finally being under control and humming along like a well-oiled….robot. :) You'll look back in 12 months and thank yourself.

Key Resources + Some Randomness

I'm indebted to the two articles below for much of what you see in this email. 

• "How to automate your finances and feel good about money" by Matty Sallin. The Systems Spreadsheet and the screenshot of the numerous savings accounts above come from this article. 

• "Automate your money: Build a system that saves while ou sleep and pays your bills for you" By Remit Sethi. This article lays out a detailed game plan to sync all your income and expenses.

• "Why a Hub Account is Key to Cash Flow" by Newleaf. The drawings were inspired by this article.

• This update was largely built listening to Fractioned Heart by Gable Price and Friends. Thanks for the recommendation, Dave!

I always love feedback and perspective. If you've got thoughts, just hit reply and let me know.

And, want to intro me to something that's really helped you? Drop me a note.

Thanks for reading!

Until next month,

Josh

PS Once again, Ruthie edited like crazy. 

PPS Did someone forward this to you? Subscribe here.

If this was forwarded to you, you can jump in by smashing the button below:

Subscribe now

intro exists to make your life better by introducing you to great things and helping you implement them. 

This week I want to introduce you to a way of approaching your money that will increase your confidence, ensure you're in control, provide a sense of peace knowing that all your bases are covered, and then give you the freedom to spend money without feeling guilty.

I’ll share the big idea with you today and give you the steps you’ll need to implement it later this week.

Here’s what we’ll cover:

1. The Challenge: Money is like Laundry

2. The Old-Fashioned, Manual Solution that's Rarely Used -- Budgets

3. A New Solution -- Your Automatic Money Robot

The Challenge: Money is like Laundry

Money is like laundry, whether you love it or hate it, you’ve got to deal with it. Everyone has an approach, habit, and way of relating to money. 

Ideally, our approach to money is planned, organized, and perfectly synced with our values and dreams. It could look something like this...

And when our money is perfectly in our control, right where it's suppossed to be, we can can feel like this...

But the reality is that our money is often all over the place, doing a million different things. Sometimes we're aware, but often we've got little clue of what's going on. Life happens, days get long, the vending machine starts calling our name, whatever it is, our money begins look like this...

And all that jumbled mess of money makes us feel uncertain, vulnerable, sometimes even like this...

The challenge is that most people handle money in a way that makes them feel vulnerable, not confident. Anxious, not peaceful. Guilty, not free. Aimless, not purposeful.

Unfortunately...

The Old-Fashioned, Manual Solution is Rarely Used -- Budgets

The old-fashioned, manual solution was (and still is) to make a budget and then keep it. Unfortunately, budgets haven't stepped into the 21st century.

My grandparents were born and raised in India. My late Ammachy (a.k.a. grandma) grew up gathering her family's laundry, putting it in a basket, taking a long trek down to a river, and manually washing each article of clothing. She would smack the clothes against rocks, scrub each one with soap, and wring out the water. Then, after another long trek back home, the wet clothes would be hung to dry in the hot sun. This was hard, labor-intensive, exhausting work.

Then, they immigrated to the U.S. and eventually got a washing machine and dryer. Gone were the long, hard days of manual laundry. In was the easy, automatic life of a washing machine. Throw in dirty laundry, hang out for an hour, switch it to the dryer, and out comes clean, warm clothes.

Laundry (at least in the U.S.) has left the world of manual labor and has embraced automation...for the last 100 years.

Budgets, unfortunately, are stuck in the past.

Budgets are a really good solution to our money woes. Dave Ramsey has built an empire on it. Simply stated: You figure out how much money you make and then give every dollar a job. But there's just one problem: most people don't have the discipline, motivation, time or whatever to actually stick to a budget. Making a budget is relatively straight forward. Keeping a budget is a ton of work: organizing receipts, categorizing them correctly, ensuring the right transactions are made every month, and on and on it goes. Like a New Year's resolution, people wanting to stick to a budget start off at a sprint but usually fizzle out in a few months.

Most people fall into one of three camps when it comes to budgeting:

• The Budget Committed: these folks are on top of it. They’ve got a budget, they use some method to ensure they’re staying in budget, and they follow it to a “T.” If you’re one of these folks, no need for you to read any longer. I’ll be back with another email in a few weeks. Thanks for stopping by.

• The Budget Hopeful: these folks want to keep a budget. They think it’s a good idea. But once life starts happening, and the kids start throwing food and the work day extends a few hours past what was expected, the hopes of keeping a budget get tossed aside for a relaxing episode of The Office.

• The Budget Haters: these folks won’t touch a budget with a ten-foot pole. They think that a budget is a good way to suck all the fun out of a room. They’d rather live their lives and allow the cards to fall where they may.

If you're in either one of those last two categories, let me introduce you to...

The New, Automatic Solution: Your Personal Money Robot

There's a better way: an automatic money robot.

Imagine a budget that’s always working for you in the background. And it's not just a budget on paper or in a spreadsheet, it's an actual money machine. Think of it as your own personal financial assistant that automatically ensures all your bills are paid, all your savings goals met, and all your generous hopes accomplished.

This money robot is yours for the taking. The cost? Free. Of course, it takes some time at the beginning to set everything up. (Imagine buying a washer and dryer and the process of hauling it to your house, wrestling it into your laundry area, taking it out of the box, and hooking it up.) The money robot has a setup at the beginning. But once set, it's automatic. No need for constant tracking and entering and finding receipts. It automatically puts everything in the right place and gives you a real-time indicator of what you have left to spend in key areas.

Here's what's even better, you can set the whole thing up from your house with an internet connection and a few hours. That’s it.

Convinced?

What is an Automatic Money Robot?

An automatic money robot takes the plan you create for your money and makes sure it’s accomplished. You set it up at the beginning, and it essentially works on it's own from that point on (with a few tweaks along the way).

Most people's money currently looks like this:

Money flows in and out of one checking account.  Since most people don’t keep up with their budgeting, their point of reference is the balance in their checking account. But, so much goes in and out of the account that it's virtually impossible to keep up with it all. 

That leaves people feeling overly confident when they first get their paycheck and surprised later when their bills are due and they don't have much left.

The automatic money robot is better. It looks like this:

All your money flows into the "Automatic" checking account. Big, important things like giving, saving, investing, and paying recurring bills automatically get done right from there. Then, with what's leftover, a "new" paycheck is transferred to the "Spending" checking account. All the money in this second checking account can be spent guilt-free on things like groceries, eating out, clothes, gas, and entertainment.

Later this week, I’ll send you step-by-step instructions to make your own automatic money robot.

A Better Future: Living Free and Confident with Money

When you've got a solid plan for money and a mechanism to keep your plan, the result is confidence and peace. And all this is happening automatically in the background as you go about your normal life.

Look out for another email this week with all the deets to make your life better with an automatic money robot. 

Key Resources + Some Randomness

I'm indebted to the two articles below for much of what you see in this email. 

• "Automate your money: Build a system that saves while out sleep and pays your bills for you" By Remit Sethi. This article introduced me to the idea of setting up your money flow to be automated. 

• "Why a Hub Account is Key to Cash Flow" by Newleaf. This article took the idea above and made it even better by adding a second checking account. 

• My sense is that automated money will be the future. The first company I see taking significant strides towards this future is Wealthfront with what they call "Self-Driving Money." For a deep dive, check out their CEO talking about it here. 

• Writing is often linked to music. This update was largely written listening to The Joy of Being by Citizens. Altogether Good was my favorite song.

I always love feedback and perspective. If you've got thoughts, just hit reply and let me know.

And, want to intro me to something that's really helped you? Drop me a note.

Until Friday (or so),

Josh

PS Thanks to Ruthie for editing like a boss.