Michael Kitces: Investing in Stocks vs. Skills [GREATEST HITS WEEK]

26:36But I think at a minimum, it is pursuing your interests. It's pursuing things that you're passionate about and enjoy. I'm always even a little bit wary of people that come and say, this is my passion. Because again, just having sat across from so many clients who go down this road for so many years. First of all, we rarely even really know what our passion is going to be when we're young. We think we know what the thing is. Then we get down the road and find that we may or may not like it. I imagine a lot of listeners here, either for themselves or a good friend that they know, you know someone that went to college is absolutely convinced that they were going to pursue this particular major.

27:18That was their passion, in air quotes. Now they're a couple of years out of college and they're doing work that has nothing to do with what they studied in college. Right. Like, you know, we, we thought it was our passion. Then we went and did it for a while. We're like, yeah, this actually isn't really doing it for me. And that's okay. That's okay to make those changes. It just means don't make the stakes so high for yourself. And like, I have to find today the thing I'm going to do. That's going to be awesome and amazing for the next 30 years. Like find a thing that you can do that will make you slightly more excited to get out of bed next month.

27:50Keep the stakes low. Because if you find something that's positive and starts building you in a positive direction, the more energized you get, the more you tend to take the steps to keep moving yourself forward. And I've watched that kind of formula play out for people over and over again over the years. Right. So let's say that you, and I'm asking this question because I know there are a lot of nerds who love to analyze the returns that they are getting on every dollar that they've put in. So, you know, let's say that you invest, I don't know,$5 ,000 a year into starting small online businesses or taking classes, taking some online classes.

28:33You know, you invest this money into developing a side hustle or a side business that you're interested in. And that kind of leads you on a sideways meandering path, that might go from A to B to C to D to E. And ultimately, maybe in the long run, you end up better than you were before, but you had a lot of diversions along the way. Is there any way to evaluate the ROI on the money that you spent? Or is it all just part of the narrative? You know, there's a blend. I think a lot of it is just realistically as part of the narrative. But I think there are a couple of things that you can do to at least, to try to protect yourself from not unwittingly digging a bigger hole and kind of going down this journey and pursuing the narrative.

29:23So step one to that is it is about investing yourself and kind of upgrading your opportunities. It doesn't mean you need to do this giant like go big or go home. Like, hey, I heard on this podcast that I should invest in myself. So I'm going to quit my job and go back to school and get a master's degree and spend three years earning no money and hope that I earn that back again, five or six years from now, like, you don't have to make the stakes quite that high for yourself. You know, when I look at a lot of folks that I interact with, even within our field, you know, one of the number ones that that I end up telling people when they're coming out of school is go take a writing class.

30:04Not not like creative ring, like how to write emails that make you sound intelligent when you communicate with people. And I know that's kind of hurtful for some folks that like their shorthand emails and their quick notes. But if you want to climb a ladder in the business world in most places, the reality is first impressions do matter. And in a digital world now, for so many people, your first impression is an email that you send out or some kind of written communication. And if it's sloppy and poorly punctuated and bad spelling and all that, it sets a poor impression for people. And again, I can only imagine a couple of folks that are probably screaming at the podcast right now as they're listening to it.

30:51But just having watched people play this out as someone who actually is a business owner of multiple businesses that screens way more resumes than I frankly wish to screen, it's a factual reality. When you're applying for a job with a whole bunch of other people that are applying for a job. The sad truth is the person who's got to make a hiring decision and has 57 resumes and has to at least get it down to like a dozen that's workable are looking for pretty much any reasonable excuse to call the initial resumes and badly written cover letter that uses terrible grammar and punctuation and says, you know, hire me.

31:32I have great attention to detail. Like if your attention to detail isn't good enough to actually put that much work into a cover letter you sent me, I'm probably not going to give you an interview. And it sucks and it's unfair and it's life and it's reality. And so, you know, the, to me, the starting point is things like that. What can we do to improve writing skills? What can we do to improve basic public speaking skills? I'm a huge fan of telling people, go try out Toastmasters. Basically, well, you know, it started with like teaching people how to do toasts, you know, at a party. But essentially it teaches you how to do public speaking and prompt to public speaking skills.

32:14That's why they're called toastmasters. I'd always wondered that. Yeah. Yeah. Like, you know, it's like a wedding toast. Oh, I just thought they were really into carbs. I don't know. Yeah. Well, that would be taking them downhill these days. You know, Atkins almost put them under. again it's one of those things like you don't get a lot of opportunities necessarily in life to make big impacts that can change your trajectory if you know you're the one in a moment that's able to actually stand up and move some problem forward in your job or your or your career that can be a seminal pivot a moment for you and most people are terrified to step up to the challenge because because we hate public speaking you know we hate public speaking i mean there was a survey I'd seen because I do a lot of professional speaking.

33:03So we love to circulate these jokes. There was some survey that someone had done that we are actually more afraid of public speaking than we are of death. Right. Which basically means I'd rather be in the casket than giving the eulogy. Right. Right. That's how terrified we are of it. And so Toastmasters is just a group that's built to help you get over these fears. It's a whole bunch of folks. You You teach and learn how to give small impromptu speeches in front of small groups. Everybody else in the room is just as terrified as you. So you're all there together to support each other and get through it.

33:37And I've seen people where ultimately it was transformative to their business success and their career trajectory because they just became better able to speak up in meetings that ultimately got them noticed by their boss, which ultimately got them moving forward. And their whole career trajectory and financial capital was dramatically updated by what at the end of the day was just hanging out with Toastmasters and figuring out how to get more comfortable in speeches. And I think it's like a hundred bucks a year to join. Might even be cheaper than that. So a lot of what I'm talking about, about how we upgrade our skills.

34:20I mean, the reality is spending$100 to join Toastmasters and a couple hundred dollars to take a writing class and maybe a couple hundred dollars to learn advanced Excel skills. We're not talking about$50 ,000 tuition bills. We're talking about a couple hundred dollars here and a couple hundred dollars there at the most, but not trying to figure out just how do we save it and add another couple hundred dollars to our Roth IRA so it's going to grow tax free for the next 30 years. It's how do we apply this money in a way that gives us more upside potential, more bonus potential, more promotion potential?

34:55Because the reality is it becomes very uneven. Like, I don't know which of those hundred or$300 investments in yourself is going to be the one that pays off. But all you need is one of them ever to give you a five or$10 ,000 raise. And it's worth a couple hundred thousand dollars over your lifetime and will pay for itself literally 100 times over. You know, I think that's where a lot of people get stopped up is not knowing exactly, you know, is this going to pay off? And again, like the higher we make the stakes for ourselves, the more terrifying it becomes. I think justifiably so, because at some point you ramp it up, it's a lot of money.

35:31So start smaller scale. You don't have to be that intensive out of the gate. writing classes, Toastmasters for public speaking, Word or Excel, whatever it is, whatever office application it is that's relevant in your job and career, even that kind of stuff can be a path forward for making more dollars and moving up and lifting that human capital up. There's a lot of chatter about the idea of freeing yourself from domestic tasks so that you can focus on career development, on building an education for yourself, on building a side hustle. How do you evaluate that? I look at it in a similar way. And I'm one of those people that over the years has basically become obsessed with finding any way to let go of small tasks and things that just free my mind a little.

36:25So I wrote an article on the blog a couple months ago. is basically why I'll spend$100 on a tech tool that saves me a minute a day. Truly. And why would you? Here's basically how it boils down to me is saving a minute a day is five minutes a week, is 20 minutes a month, is about four hours a year. So at four hours a year, that's a half a day of cumulative productivity. So as long as I've got work that pays me more than about$25 an hour, I am technically making money every time I spend a hundred bucks on something that saves me a minute a day. While that's hard to quantify off of like the first one minute thing, the cumulative impact is where it really starts to add up.

37:11So you in practice, I probably spend one or$2 ,000 a year on a wide range of little one-off technology tools, you know, Dropbox Pro and Evernote and some social media tools because I do a lot of that for my business. And you just one thing after another, most of which are individually fairly small scale. But when you start adding them all up and it's like, wow, I'm saving 10 or 20 or 30 minutes a day of all these little things that each of which took a trivial minute or two, but add it up like half an hour a day is a lot of time. That's a couple hours a week. That's a day or two a month. That's a week or two a year.

37:48And also like that's the difference between whether I can find the time to take a extended vacation with my family or not comes down to did I spend a little bit of money on little miscellaneous tools that save me a minute or two here and there because it really does add up over time. And likewise, in part because we also are a family with three small children, me and Amazon Prime, we're tight. Amazon visits our house probably at least five days a week, occasionally six. Usually we manage to have one day where we accidentally fail to order something that also arrives from Amazon. And it just comes down to life is crazy and there's so much stuff going on between work and family and kids and all the rest that if I can save a little bit of time by getting something delivered.

38:34and not needing to go out to the store to pick something up. And that saves me a couple of minutes that I can spend with my kids. Like that's an easy, no brainer trade off to me. And again, I find that when you don't focus on your human capital and your earning potential first, everything about the money coming into your household feels scarce. It feels, you know, it's a limited pie. We can only carve up the pie. And so all of a sudden it's like, well, why would you spend a couple of dollars doing that when you could just do it yourself and save the money because we could literally save the money or do something else with it?

39:13And again, the way that I look at it is what can I do to generate more return on my time, to generate more value on my human capital? Because the numbers are actually so much bigger on the human capital. The first time I – well, for our world, it pretty much was getting my CFP certification. I went and got my CFP certification. That's Certified Financial Planner? Certified Financial Planner. And used that to get me a new job that got me a$10 ,000 promotion when I switched firms to a job I could have only gotten with my CFP. And at the point I got my$10 ,000 raise with my CFP, I still remember my basic personal commitment with myself was, you know, all that discussion we have about whether the Starbucks habit is worth it.

39:57I said, screw it. I'm never going to care about that again. Yeah. Because once you do a$10 ,000 raise for the next 30 years, all this, and granted, I don't even have that hardcore of a Starbucks habit, but like a daily Starbucks habit still does not add up to that much when you move the needle that much in your human capital. It might feel like a big number and often is a big number if you just look at it from the perspective of the money that comes in. But if you focus that you can also move the needle on how much is coming in in the first place, it takes the focus off a lot of the spending minutia and puts it frankly where I think it belongs, which is what you're earning and what you're doing to earn more in the first place.

40:37And so even in terms of how we live our lifestyle, there's basically three things I actually sweat I care about. how much I'm earning, what we're doing originally to build my salary. Now it's really to build my businesses because I kind of did the morph from employee to entrepreneur over the time. But what's happening with our income and what can we do to reinvest in ourselves to earn more? What are we spending on the house? Because the house is a really big line item. Do you mean mortgage or do you mean like decorating? What do you mean by spending on the house? Mortgage slash rent, whatever you're kind of put the roof over my head.

41:14So what's the fixed costs of your budget? Yep. Yeah. And what do we spend on a car? Because they're giant line items. And once you do a pretty good job on the income, the car and the house, and they see you make the car and the house reasonable to the income, a lot of the rest of it starts to melt away. You know, I don't sweat spending$50 here or$100 there because for the first 10 years of my career, my total combined rent plus car payments was hovered between six and eight percent of my income because I bought a cheap old beat up car and drove it to its grave and never had a never had a car payment.

41:56And even at the point I was making some pretty good money, I split an apartment with two of my buddies through the entire decade of my 20s so that I could just save and bank the money, which eventually became the cushion I used when I switched to make my side hustle my full-time business, and then ultimately became the down payment on the house where I'm raising my family. And so when you start with the big items, income and human capital, number one, and then the big two expenditures, house or shelter and car, if you do well on those, what you'll find is the stress around a lot of the other stuff really starts to melt away.

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45:41With the emphasis on human capital and earning and boosting your earnings potential in whichever way you choose to do so, whether it's through advancing in your primary career, building a side hustle or whatever. The one point where I keep getting hung up is that then to me, it becomes hard to justify not working because if you value your time at X per hour, then every hour that you're taking a shower is costing you, you know, it's an expensive shower. Yeah, I'll admit, I mean, it does, when you do this well, it does become a challenge from the other end. If you actually get really, really good at monetizing your time and you get your time up to a pretty valuable point, it becomes very difficult to actually figure out when and how to say yes or say no to things or when to cut it off.

46:31And the irony is the more the income potential climbs, the more your time per hour climbs, however you sort of carve up the value of your time, the harder it gets to say no to things because just the dollars get bigger. I mean at some point it's like, well, I didn't really want to do this, but hey, I could spend a couple hours on it over the weekend and it's a material amount of money for my household, so I kind of want to do that. Right. And it can become a slippery slope for people. Right, right. You're struggling to figure out when you ultimately say no. I talk about it with some of the folks that I work with as saying, what's the filter you use to decide whether you're going to keep doing work or take that next client or do that next thing?

47:17In the early stages, the filter usually is money. Is this a bigger client, a better opportunity, a gig that can pay me more, whatever that side hustle thing looks like? and, you know, as long as this is a bigger opportunity than some of the other ones, then I'm going to say it's worthwhile, and you can keep inching up the threshold. I'm not going to take any gigs that pay me at least, unless I make at least$20 an hour, $30 an hour,$50 an hour,$100 an hour, and you just keep moving the needle up. Eventually, the challenge becomes, if it goes well, there are lots of opportunities coming in, they're all coming in at that number, and it gets really hard to figure out how you're going to say know.

47:56You have to find new filters to figure out what are you going to say yes to and what are you going to say no to. What are some of the filters that you've either you've used or that you know other people have used? So we come at it a couple of different ways. I've ended up developing a few filters for what I use in ScreenBuy. Number one is just does it move the business forward in the grand scheme of things? There's a fascinating book I highly recommend called Essentialism by Greg McKeown. Yeah. And a fantastic book. The idea of it is for people that are successful and even for whole businesses that are successful, often the thing that makes them successful is they find a thing they do that they do very well.

48:42They do it a whole bunch. They build a reputation for doing it really well. And it turns into a successful career or income or business. the more successful that you become the more people start to notice and the more people that start to notice it the more opportunities come to you the challenges the opportunities come in is if you're not careful about what you say yes to and what you say no to eventually all this stuff is coming in and you actually lose the focus that made you successful in the first place and so uh you know greg has a number of fantastic sayings in the book but one that that for a long time has resonated with me is that the difference between successful people and very successful people is that very successful people are better at saying no.

49:28And it's a really kind of interesting and counterintuitive phenomenon, but it really is a dynamic that happens when if you're successful, if you can get that snowball starting to roll down the hill, you know, the challenge of snowballs journey and turn into giant avalanches is that what starts out really focused eventually just gobbles up anything in its path and becomes unmanageable and you lose the focus that made you successful in the first place. So for me, one of the big filters is just, it does this still ultimately stick towards the core of what I'm doing. And the core of what I'm doing is, you know, my focus is primarily working with financial advisors and trying to help them be more successful in their businesses and help more of their clients with better solutions.

50:13And so I do very, very little that does not directly fit that and anything that's going to go outside of that. I mean, I literally give myself an allowance of, you know, I will do one or two unrelated things every month of, you know, maybe it's an outside engagement or an outside podcast or something of that nature. And beyond that, I'm just going to say no, because it's not part of the core focus. The second filter for me, frankly, once I got married and had kids was, you know, I'm just going to push that weekends are more sacred time for me. Uh, when I was single and on my own, then even the early years when my wife and I were, we're married, but there were no kids yet.

50:50And our, our lives and worlds were much more flexible. Like, you know, Hey, if there's a gig opportunity that's on the weekend, like whatever, uh, I'll, I'll travel. Maybe it's to a cool city. It's fine. Now that we've got kids, you know, for me, one of the filters, just, Hey, this is a cool engagement and a great opportunity. I'd love to work with you, but I'm, I'm sorry. I just, I don't, I don't travel for engagements on Saturday. It's family time for me. You know, they become kind of arbitrary lines because the reality is at some point, if that success flywheel starts rolling, you have to come up some ways to introduce constraints, even if they're arbitrary or, or the business can start to consume you or your career can start to consume you.

51:29And I'm sure, you know, almost everyone can think of people they know where their businesses or jobs started to consume them. One other direction I'd maybe encourage people to think about as well as as you look at some of these dynamics of how do we move down the path towards financial independence, kind of recognizing this balance between human capital and our earning ability and then what we spend and what we save. The other area that I probably see people get in trouble with the most is the phenomenon called lifestyle creep. So this effect that if you're successful and you do reinvest in yourself, you get that job, you get that raise, you get that something that moves you forward.

52:15And you say like, wow, I'm feeling less stressed about my money. Things are going a little better. I saved a little more last year. I'm going to reward numero uno here a little, and I'm going to do something nice for myself. And not that it's bad to do something nice for yourself. It's actually very healthy to do something nice for yourself. But the trouble that people get into is that they don't just do something for themselves that's a nice one-time thing. They do something for themselves that permanently changes their lifestyle in a way that makes it harder to move forward in the future. Just the reality of how we seem to be hardwired.

52:48We have a couple of sort of problematic forces that hit us at the same time. Number one is that we're very, very quick to adjust and adapt to our current circumstances. So, you know, the new house seems amazing. And then after a year or two, it's just another house that I got to repair and deal with it. The new car seems amazing. I love the new car smell. But then the next X years, I'm going to own it. It's just the car I drive around and loses its newness and specialness. And, you know, we do this across the board from the cars we buy to the computers and technology toys we buy and almost everything in between.

53:21And the problem that crops up for people is they make what amount to permanent lifestyle decisions. And in the near term, it's, you know, they feel happy and elated and it's kind of neat to have a new thing. But relatively quickly, the joy of the new thing wears off. And the only thing that's left is the cost of it that you have to bear for a long time. because the second cruel thing that goes with this is while we adapt very quickly to the upside, you know, things get better, but then we lift up our standard of living and then it's just our standard of living. It's not a new thing anymore. Uh, most of us horrifically hate going backwards.

53:55Uh, we hate feeling like we're going backwards. We hate losing and giving anything up. You know, I, I may have gotten relatively bored with it, but if you take it away, then I'm going to be pissed. So we, we get ourselves into, into trouble and I see this all over the place. It's, you know, I got a raise and then I go and get a fancy new apartment. And it's really cool to have the new apartment. It's really fun to socialize in. But now you're actually not any closer to financial independence than you were before because you lifted your expenses up by as much or more than you lifted your savings up.

54:24And now you're not actually making any progress. And I've watched so many people dig a hole for themselves. One of the biggest problems we actually see, our firm does actually a lot of work with people who are retiring or in kind of the final five to 10 year stretch before retirement. And one of the biggest pinch that we commonly see for most of them is they have all sorts of regrets about the lifestyle, the things that crept up into their lifestyle through I find particularly their 30s and 40s, because that tends to be when some of our biggest income raises and career advancements come. And so those are sort of the big opportunity moments where we can make these decisions because we get stuck in these traps.

55:05You know, the car feels cool when I buy it, but the new feeling wears off. But the car payments keep going for five years. And, you know, the big new mortgage, the new house feels really cool for the first year or two, but the big mortgage is going to be with you for 30. And people get themselves into trouble with allowing their lifestyle to creep upwards. And sometimes we don't even realize we're doing it. You know, it's the time that you finally decide you're going to stop mowing the lawn. you're going to have someone else mow the lawn for you. And the first time you pay someone else to mow your lawn for most people is like the last time they ever want to mow their own lawn.

55:40And then you get stuck. It's like, it's not just, hey, I'm going to have someone come out and mow my lawn for a couple of bucks. It's no, no, you're going to have someone come out and mow your lawn for the next 30 years. Because once you do it, you almost never go backwards. So that is really where the crux of my question lies. Because with a McMansion or a fancy car, it's easy to see that that has no value on your earning potential. But with something like, say, mowing the lawn, cleaning your house, you know, ways in which you trade money for time. Those do have an impact or at least arguably do have an impact on your ability to earn.

56:17And, you know, kind of goes back to that human capital investing in yourself piece of it. You know, Amazon Prime, another good example. And that to me is basically the distinction. Like, are you buying time for pleasure or are you buying time for business and earnings. And I think there's a difference between the two. And not to say that buying time for your business is good and buying time for yourself is bad, because frankly, a lot of the research now that's coming forth on how to spend money in ways that makes you happy, one of the biggest ways you can actually spend money that makes you happy is spending in ways that give you time.

56:50It's actually spending money on time is much better correlated to happiness than spending money on objects and things. But I think the crux of that question really comes back to what is the purpose of how you're spending the money on time? Is it for pleasure or is it for business and work and earnings potential? But I mean, you yourself said the reason, we'll use Amazon Prime as an example, the reason that you'd pay for an Amazon Prime account and then also not even bother shopping around, just, you know, buy the item on Amazon without looking at without price comparing toothpaste across five different stores is because you would rather spend that time with your kids, which is pleasure and not business.

57:33But I look at those decisions very deliberately. And in our household, like we spend time actually thinking about when we're going to introduce some some new expense, whether it's as directly related to time savings is that or not, when we're going to use any kind of regular expense that's going to be ongoing, it is actually a conversation, a conscious thought. Like, what am I doing this for? Why am I doing it? And do I want to saddle myself with this forever? Because Lord knows after a couple of years of Amazon Prime delivery, like I have no tolerance to go to a store anymore. It's kind of bad.

58:09It's a little unhealthy. Oh, it's great. I love it. I personally am very, very happy with it. Have you found Google Express, by the way? It's my new obsession. No, we haven't looked at Google Express, but I am based in the D.C. area. So we are now getting two-hour delivery ramp-ups on Amazon Prime. And there's really nothing quite so special as just deciding one morning you want a thing and Amazon drops off to your house that afternoon. I figure within a couple of years, we'll just hit a button on a phone and a little drone will drop it on a helipad out behind the house. So I love it. I love the progress on it.

58:47But again, we look at those things very deliberately about, okay, this is a thing we're going to introduce in our lives that once we do it, we're going to have trouble going back. So just make sure you actually want to pull the trigger on that. And I found for us, I mean, it was a progression over time. You know, frankly, if I do the math on my income, the income per dollar hour is good enough that I can justify almost any of those tradeoffs at this point. I couldn't do that years ago, but I can now that my income has grown. But the progression along the way that we were giving conscious thought to throughout was, is this a dollars for time thing or is this dollars for object?

59:28and if it's dollars for time thing am i doing it for myself or am i doing it for trading off business and work and earnings opportunity and and honestly like early on most of them were trading off for business opportunity time you know it was hey it would be nice if i didn't need to mow the lawn so that i could actually spend time doing a little bit more client stuff because that's what brings the money in and puts food on the table and and uh uh shoes for my children. Over time, that started to morph a little to the point where he said, okay, we've got kind of the work stuff figured out now that's going well.

1:00:05Now it becomes a question of trading time for sort of personal stuff or family time or the rest. But our starting point without just recognizing those dynamics was, you know, be very careful about introducing expenses into your life that are recurring. That to me is probably the single biggest kind of warning slash takeaway for people to bear in mind, like spending money on time because you take a vacation. That's great. You can have a wonderful time, even lots of research that validates a wonderful way to literally enjoy your money and find some happiness. But you take a vacation and then next year, you'll see how things are going and decide whether or what kind of vacation you're going to want to take.

1:00:46That's very different from I got a raise. I'm not taking a vacation. I got a raise. I'm going to go buy myself a new car where no matter what happens with your job and your income and the rest next year and the year after and the year after that, you're going to have the car payment. It's going to be sticking around. So number one, I think is just giving thought to any, when you introduce new expenses into your life, be cognizant of that lifestyle creep effect that when you add them in, it's really hard to subtract them later. So, so be cognizant about what you're spending on. And then likewise, be, be cognizant of just why are you doing it?

1:01:20I mean, is it is it because you just want a thing? Is it because you are trying to save time for work? Is it because you're trying to save time for family or personal life? And I mean any of those can be fine at least in moderation But just taking the pause even to ask the question about why you're doing it often helps to To avoid some problems because a lot of the time we just see these things out of impulse And we don't even realize the the trap we put ourselves in until after the fact When we think about having to give up something that we don't want to give up OK, well, let's say that you're faced with those decisions, right?

1:01:53So you're thinking about you've got$5 ,000 and you could either spend this money on a combination of buying more time for yourself via outsourcing some of your domestic household chores and errands slash, you know, taking classes like you can spend it on yourself that way or you can put it into a total stock market index fund. How do you make that comparison? I mean, particularly not given the ambiguity of the outcome. I guess that's what this whole conversation has been about. Yeah, I mean, some of it is. So I think there's a few ways that I look at that question. Number one is just, what's your time horizon?

1:02:35The reality is, if you're within five or even sometimes 10 years of retirement, unless you're on one amazing career trajectory, Like you can only move the needle so much on your career and your earnings power over just a couple of years So if your time horizon a couple of years until your retirement I'd probably just stuff it into the retirement account and you know Buy my total market index and hope the market cooperates for a few more years The longer your time horizon the more the the contributions towards human capital matter because just literally like It's such a bigger number right when I when I've still got a couple of decades left to work you know my total investment accounts are 20 grand and my total human capital is worth 1.5 million dollars so like which one would you invest into the you know you get you make 10 on your 20 grand you make two thousand dollars you make 10 on your one and a half million you make 150 grand like one of these has much better compounding potential it's just literally the better investment opportunity now where you go with it from there i think depends a lot on the nature of the work and the income earning opportunity you have.

1:03:42Things like, hey, I want to hire someone to do some domestic tasks so I can free up a little bit more time. My question for that immediately goes back to if you're going to buy some time, I think you got to have a pretty clear sense of where it's going. So if you're doing freelance work as a side gig and you're making X dollars an hour, like fantastic. If you got a side gig and you're making$30 an hour, technically anything you can let go of that costs you$25 an hour or less so that you can spend time doing the$30 an hour stuff, you are making money. You are minting money for yourself every time you pay to delegate.

1:04:15And the higher your income lifts up, the more it pays to delegate. If you can make $50 an hour, you should let go of anything that's$45 an hour or less, and you can keep moving the needle up. That works well if you've got some kind of freelance gig or business you own or hourly project, like something where you can actually trade your time for money that directly. Not everyone's in that position. If you're not, then frankly, I'm a little bit wary about telling people to trade time for money or money for time unless they just want to literally do it for their lifestyle. Because I can pretty much guarantee you, if you do that trade, you're not going to want to go backwards.

1:04:53And if you do that trade without a sense of where you're going with it, you may just end out having a more expensive lifestyle and find yourself in a deeper hole than you may be in now. What if you are making that trade for a business that is not profitable yet, but you're hoping will be profitable in the future? Or if you're making that trade so that you could go back to school to pursue a graduate degree? You know, if you're making the trade because you're trying to get to one of those breakthroughs, I think it's a reasonable trade. Again, with the caveat that and I say this ironically as someone that's got two master's degrees.

1:05:24One of the last things I put on that list is going back to school for graduate degrees. opportunities not that you don't get there at some point obviously i i literally did and i can definitely say it was very rewarding for my long-term career but it wasn't the first thing i went back for you know i graduated as an undergrad and i went and got a job and then i got a designation in my profession and i got another one and i got another one even when i ultimately went back to grad school i went to grad school at night part-time while i was working full-time so i did have to do a little bit of time for money kind of trades so that i could do grad school classes two nights a week for a long period of time.

1:05:59But, you know, I didn't walk away from full time job to go into full time grad school and do that that kind of big time for money shift, because frankly, to me, that that was a risky trade off. You know, I was reasonably confident investing in myself into the grad school program I was taking was going to be worthwhile. But that doesn't mean I want to go all in on it and risk coming out at the other end and not finding the income potential that I was expecting. So I deliberately hedge my bets by keeping the job, keeping the day job, doing the grad school at night. It took more than twice as long to get through it, but I had a steadier, less risky path going through it.

1:06:38And then ultimately at the end was able to find some new opportunities that move the career forward. I'd start again with the smaller scale stuff, which is, can I join Toastmasters? Can I take a writing skills class? Can I, you know, beef up my Excel and PowerPoint and Microsoft Word skills or whatever it is that you use at your company or your business or your industry? I'd start with the smaller scale stuff. I think we tend to, you know, I see a lot of people that go out and they try to buy a degree as a path to higher income. And it's not the degree that gets you the path to higher income. It's the skills.

1:07:16It's the training and experience. and frankly it's the confidence that you end out getting when you know you're good at what you do because you tend to sell yourself better and get negotiate better jobs and raises and gigs and all that stuff whatever whatever uh your business is when you've got that confidence so if you if you approach it you know don't approach it as i want to buy a degree to get a better job approach it as i want to buy some training to improve my skills to move down a better path and and just what you'll find is skills training is often actually much more reasonably priced than trying to buy degrees.

1:07:53And so I find it tends to be a more stable path and actually a less expensive one. Right, right. Absolutely. Taking classes, taking specific classes on specific topics that you want to learn about is much cheaper. Yeah. Cheaper and less time and arguably more effective. Yeah. And the other thing just to note to it, you know, a lot of these changes, I mean, You may also just have to go through a period of time where you got to buck up and put in a little more time for getting it done. You know, I've still seen people that are trying to make this transition or like, well, I'm really aggravated because, you know, I'm trying to take this training class to improve my job.

1:08:30My boss won't give me Friday afternoons off to study. So I'd say like you're trying to get a better career for the next 20 or 30 years. Spend a couple Sundays. Put in the time yourself. I mean, if you do it forever, eventually you're going to get grumpy about it because you're going to want your time back. But, you know, recognize that for some of these as well, like it's OK to put in an extra sprint for a stage as well. Sometimes the big reinvestment you make isn't buying time. It's just committing some time to try to get a breakthrough and move forward. Right. Absolutely. Well, thank you so much, Michael.

1:09:03My pleasure. I hope it's food for thought for people. We kind of ranged across a wide spectrum of financial and career topics. Yeah, I think this was excellent. Where can people find you if they'd like to know more about you? So you can find me in two places, kitsis.com, which is my own site and blog and kind of personal platform these days of the various businesses I'm involved with. And then I'm also a co-founder of a group called the XY Planning Network, which is actually a network of financial advisors, specifically that work with folks in their 20s, 30s, and 40s on these kinds of issues. So most financial advisors out there sell products or they manage assets.

1:09:43Kind of our champion mission at XY Planning Network is we just do financial planning for a monthly subscription fee. No products, no asset minimums, none of that stuff. Just if you want some advice and coaching, we have a network of a couple hundred advisors around the country that do that. So kidsis.com is the personal site and xyplanningnetwork.com is our advisor network. And that pretty much consumes my world these days. Nice. And I will link to both of those in the show notes. All right. Awesome. Well, thank you very much.

1:10:14I hope you enjoyed episode three out of five in this special five-part series in which we are casting light on episodes that originally aired during our earliest days. Tune in tomorrow and the day after for the next two episodes in this five-part series, all the episodes within this five-part series originally aired back in 2016 or 2017. Back then, our community was a lot smaller, and you might not have heard these episodes. And if you did, that was a long time ago, so you've probably forgotten them. So this is a chance to reflect back on some of our favorite episodes from the early days. And we're running this special five-day, five-part series as part of our lead up and celebration to the airing of episode 500.

1:11:06So I hope you enjoyed it. Today's episode is number three out of five and I will see you tomorrow for the next one.