Q&A: How to Invest in Your Community (by Finding the Third Option)

0:00Joe, before you started your first business, did you have limiting limiting beliefs? I was 16 years old and I was starting a disc jockey company with my brother. While I was very confident that we could be better than the DJ at the wedding I had recently attended, which is why we wanted to start it. Cause this DJ sucks so bad. I was like, I could do that better. Then my dad's like, well, maybe you guys should start a business. And you know, immediately you're like, I'm 16 years old. How can I do that? So yeah, tons of limiting beliefs. I'm too young. I'm too inexperienced. I don't have any money.

0:32I don't know what I'm doing. Don't know anybody who'd run their own business. So everything from imposter syndrome to lack of experience. Wow. Well, we are going to talk today to someone who is wondering if we can elaborate a little bit on limiting beliefs, but this is someone who has just had a big victory. We're also going to talk about community bonds and how to merge the way that you invest your money with your desire to support the community. and we are going to talk about ESOPs, employee stock ownership plans. All that in one episode? All in one episode. Welcome to the Afford Anything podcast, the show that knows you can afford anything, not everything.

1:11This show covers five pillars, financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double-I fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode-ish, I answer questions from you and I do so with my buddy, the former financial planner, Joe Salcii. What's up, Joe? I just got back from a run and feeling a little beat up, but ready to sit on my butt and answer some questions. You're training for a marathon, yeah? I am. I'm training for this thing about Disney World called the Dopey. And I think you got to be dopey to run it because, and I think that's why they call it the Dopey, because listen to this, On Thursday, you run the 5K.

1:53On Friday, you run the 10K. On Saturday, you run the half marathon. And on Sunday, you run the marathon. And I've wanted to do it for a long time. And yeah, coming in January. You lost me at you run. But with that said, our first question comes from Aisha. Hello, Paula and Joe. This is Aisha from episode 473. I thought that I would call in with an update and a new question. It's been a year and a half since my call to you, and your answer was just the thing I needed to get my mindset right and turn my experience around. So in the last year and a half, I have some really great news to share. Number one is that my original conundrum was thinking about a full-time MBA program at a top school versus a part-time MBA program at a lower-ranked school.

2:46that was kind of my initiating question. But really, my question was, how do I get to a place where I'm not necessarily experiencing such negative feedback in the sense of respect and some of the power dynamics that exist in the industry I was in? As a woman of color, I worked really hard and wasn't seeing some of that hard work paying off. And I was just curious about how to turn that around. Well, I actually found a situation that lives in between them. I think that Joe himself has said a lot about his work with clients and looking at a third way and maybe a fourth, even a fifth. So I did find that way.

3:25I am actually starting my MBA program this fall. It's a part-time program at a top school, a top 10 school, actually, and number one in my area. I thought that was a really cool solution. I would have never thought of it had I not listened to your advice. And so I'm really, really, really grateful that you all have really changed my life for the better. And I think that those of us in the financial independence world are super lucky to have you. I also decided to find my own people and switch industries. So I went from kind of a more media background and now I'm working on renewable energy where I get to make the world a better place.

4:03And I found a women's organization that is 20 years old where I'm surrounded by people who want to uplift me and celebrate me exactly the way that I am. So your advice was spot on. You all are really out here changing lives. Just know that I took your advice to heart and really turn things around. So I'm actually calling from New York City. I'm here for the 20th anniversary of my Women in Energy group that I am now a part of. It's just made me realize, you know, the sky is the limit. So I would love to hear from you all about what do you think are some limiting beliefs that you all have had to work through?

4:37How do you think about your journey as you have changed careers, maybe industries, maybe functions? I would just love to hear a little bit about how maybe transformation has worked in your life. I'll leave that open-ended. I hope that you know how impactful your work is and I look forward to many, many more episodes to come. Ayesha, thank you so much for calling with that update and congratulations on everything. I am so, right? So happy for you. So proud of you. That is so incredible. You're already in such a good place and you've got so many more great things to come. and a part-time MBA program, a top 10 program.

5:17That's incredible. Life-changing, absolutely life-changing. I'm so happy for you. Congratulations. I love that she found Paula the third thing. I mean, the choices she gave us were top program full-time or a middling program part-time. Why not find top program part-time? Right, exactly. And that way she got to balance a lot of the things that she wanted to balance and it just, it's perfect. It's absolutely perfect. I love this. So congratulations. Also, you know, we're going to talk a lot, I think today. It's so funny how we have these weird themes that we don't create on purpose. We just take the questions as they come.

5:51People are going to hear this theme of community all day today. And the fact that she was able to find her community to really define an area of work that spoke to her more, that's a powerful thing and something that we shouldn't overlook. I think a lot of the time when we are feeling lost at our job, we think the only option is to drop out and retire. And often it's just finding work that suits us better. Right. So let's talk about her question, limiting beliefs, because I think that this is something that's going to apply to a lot of people in the audience. Before I had ever heard of the framework, the term, the phrase limiting beliefs, I wasn't even consciously aware that there are a set of unconscious beliefs that all of us are walking around with that we accept as true without challenging and use it unconsciously to hold ourselves back.

6:46The reason that we buy into them is because there are kernels of truth in them, but wisdom is the ability to hold multiple seemingly contradictory ideas simultaneously. And so it can sometimes be true that X obstacles exist or X barriers exist and also Y opportunities exist and ways to overcome those exist. We often have these rule sets that we picked up and internalized over time. And to your point, Paula, these so often conflict with each other. I was working on a minor in philosophy while I was in college. I had a minor in philosophy. Did you really? Yeah. Do you know what the big question is, is why?

7:32But seriously, my goal as a budding writer was I was interested in motivation and I thought that was psychology. It turned out it's far more philosophy. Living in the United States, no matter what your background is, if you live here, there's a strong Judeo-Christian outlook of the world and that's going to enter your philosophy. And then whatever your parents and your upbringing, what you had there, and then people that you met. And it's funny how, as you see these philosophies conflict with each other, we're carrying around half truths all over the place, which create problems for us when we think, do I believe that?

8:10Do I not believe that? Or how some people rub you the wrong way or some things people say rub you the wrong way is often because of this mixed up belief system that we're carrying around subconsciously. Right. Exactly. So in terms of limiting beliefs, I very much for a long time believed that people who were successful were much smarter than me and much harder working than I am and more focused and more disciplined and that they were just better in all of these different regards. And what I don't think that I realized is that they took certain risks that I was too scared to take, that they bet on themselves in ways that I was not willing to do so, or when I was younger, in ways that I was not at the time able to do so.

8:58And I think one of the things that really broke me of that was when I went to grad school, because I had heard stories about students who come into the Ivy Leagues and get depressed because at their high school, they were always at the top of their class. And then they go to college at some elite institution and everybody was at the top of their class. Yeah. And so then all of a sudden, for the first time in their life, they're in the middle or the bottom of their class. They're trying as hard as they can, but they're like middle to bottom of their class because they're in just a much more competitive classroom setting.

9:33They get really, really stressed out and depressed. You know, I'd heard stories of that. I think that might happen at the undergraduate level. But I mean, at least for me, when I went to grad school, I kind of looked around and went, wow, this is what I was so intimidated of? This is not intimidating. Granted, I was in a cohort of people who were predominantly in their 30s or even early 40s. So I was in a cohort of people who had more experience. And so we weren't just competing on grades. Well, we weren't competing. We were bringing a huge variety of professional backgrounds. Some people had been lawyers.

10:10Some people had worked in business. I mean, there was this huge mix of professional backgrounds. And so I think that kind of rounds out the picture because when you're younger and the only thing that you and your age cohort have ever competed on is grades, then you really don't have any life experience to anchor you. All you have is your report card. But I think that when you get into your 30s, like when you get a little bit older and you have professional experiences, something beyond just the report card. I think that creates more confidence and a much healthier outlook because you're not just comparing GPAs anymore.

10:49Now you're collaborating on professional experiences. My biggest limiting belief, and it's not even really a limiting belief, it's just a limiter, has always been fear, Paula. I am very afraid of everything, everything, every step that I take professionally is staring fear in the face. I think there's no way what I'm thinking of is going to work. I think that I'm not the person to do it. I think, why do I think that I'm so special that I would get this done when so many other people have failed to do this thing? It is just this general fear, much more than a specific thing. But I've also found that staring that fear in the face has always proven very, very valuable and has yielded huge rewards to just look at the fear and feel the fear and do it anyway.

11:46Just do the thing. What was amazing for me was when I made the first really huge decision in my life, which was when I was just drowning in debt and I was horrible with money, even though I'm teaching other people how to be great with money. And I realized that the laws of the universe did apply to me too. I remember that day staring into the void and going, it just has to change. But the confidence I got from how much easier it was to turn around my financial situation than I thought it was going to be, where even weeks into it, Paula, nothing had really changed on the balance sheet, but just the fact that my overall attitude had changed toward the debt, the fact that I had mapped it all out, all of a sudden it became this fantastic game when I looked at it.

12:34That gave me the confidence when I was 40 and seemingly getting into the gravy years when I'd already been a financial planner for 16 years and now things were going to get exceedingly easier. Money was going to flow. You ask anybody, 15 years into any career, that's when really you start reaping the rewards, right? Of all this, I decided instead to sell my business and become a high school teacher. But I looked that fear in the face because when I'd done it before, it had yielded so many cool results. And sure enough, that took me on this wild journey of thinking I was going to be a high school teacher, realizing that I like to teach and that wasn't going to be the thing.

13:15Relying back then on my media background to begin a blog, that blog became the podcast. Then I got to help out Paul on the Afford Anything podcast. That's pretty much the pinnacle of my life. But it's this weird winding road, but staring at the fear of, can I actually do something different than what I'd done before and stare that fear in the face? The big change in my life has been when I look in the face of fear, I realize time and again that who I was yesterday does not have to define who I am tomorrow. Those are two totally separate things. We don't live our lives that way. We live our lives.

13:57We wake up and I'm like, well, I'm Joe podcast, dude. I got to get up. I got to do the podcast. You know what? Every day I can go F this. I get to choose every day. I get to choose because I chose then to do this line of work. I started then interfacing more often with people like you who stare into the face of fear quite a bit, who own their own business, who do these wild, crazy adventures. People that live in a van, which is something I would have never done. People that decide to move to another country. People that decide to retire at 35 years old. People that do these crazy things, start new businesses when they're 70.

14:37I mean, all these inspirational people that you and I get to talk to all day also has changed my life. Surrounding myself with people that are doing these inspirational things were the reason why now I've run, this will be marathon number 14. Wow. I would have never run one marathon. It's the reason why Cheryl and I packed up all our stuff. We sold all our stuff in an estate sale and sold everything and decided we were going to become digital nomads. That was crazy. And for me, the cool thing about that, that sucked, which was awesome that I got to play test that. I think this idea that I learned way too late in life of ask who, not how that we've talked about here.

15:22Yeah. That even springs from that. I'm surrounded by so many smart, inspirational people. why would I ask how to do something when I can ask who's the resource that can at the very least teach me how to do it? Or if it's not my core talent that can do it for me. Yeah. Especially in running a business that has been a game changer to ask who not how. But it's funny for me, Paula, how that's been like a funnel. You know what I mean? It had to start at that top of just learning to stare fear in the face and then learning staring fear in the face is fun. And then realizing that who I was yesterday is not who I have to be tomorrow.

15:59And then that led to surround sound of these inspirational people and trying to be the dumbest person in the room. Like it's funny to your point, you get intimidated, you go to an Ivy league school and you're quote, the dumbest person in the class or maybe middle of the class. And when you're young, you think that's horrible. And when you get a little bit of wisdom, you're like, that is exactly what I want. Yeah, exactly. Exactly. The goal is to always be the dumbest person in the room. Yeah. If I could learn from all of you, like that is so kick-ass. So for me, fighting the limiting belief has been the worst thing and also the best thing of learning how to fight through the fear.

16:43I still feel the same fear. I just treat it differently now. Joe, that was a great circle back. Look at that. Like I had not connected what you were talking about with what I had said until you linked the two together. But yeah, absolutely. You know, the undergrads who suddenly feel like they're the dumbest kid in the room get really depressed because when you're 18 years old or when you're 19 years old and you're experiencing that for the first time, that is a common reaction. but then if you're in your 30s or 40s or when you're twice that age, when you're double that age, you might have that same experience of being the dumbest person in the room, but you welcome it.

17:25In fact, you intentionally sought out that room for that precise purpose. Which also then, Paula, brings up another thing because as you're saying that, I'm also realizing that in our basic day-to-day lives, it isn't what happens to us. It's how we respond that truly is going to change the game, which is kind of what Aisha is talking about. Yeah. It's a bias towards action and it's a bias towards asking, how can I, rather than I can't, how can I? There's that expression. It's, Joe, to what you said earlier about it's not what happens to us, it's how we respond, there's an expression that I really love, which is, it's not your fault, but it is your responsibility.

18:12That's fantastic. I think about that a lot. That is fantastic. There are a lot of things in life that it's not your fault, but it is your responsibility. And there's a lot of power that comes from embracing that. So Aisha, thank you for the question. And congratulations again on everything that you have created because you have created that. And you've come so far in a year and a half. I can't wait to see what happens in the next year and a half and the year and a half after that and the year and a half after that. We're going to take a moment to hear from the sponsors who make this show possible.

18:46And when we come back, we're going to discuss more community. We're going to discuss it in the context of community bonds. The kids are back in school now and I finally have some extra time to plan a weekend getaway for just us. We've been wanting to visit Lancaster County, Pennsylvania for a while now because I've heard so many people rave about it. We love exploring new places, finding the cutest shops, and eating at restaurants that the locals love. DiscoverLancaster.com is the best place to learn about the unique things to do and upcoming events. Plan your trip alongside us at discoverlankaster.com slash amplified.

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21:40Welcome back. Our next question comes from Leslie. Hi, Paula and Joe. Leslie here again. I'm a long-time listener, second-time caller, and I make time to tune in regularly, even as a mom of soon-to-be four kids. And I wonder this time if you have any knowledge or perspective about wealth-building strategies that are enacted at local community levels. For example, community wealth building or rural wealth creation are two approaches that I'm interested in. And from what I understand and have read, sometimes strategies like community bonds are embedded in these broader approaches. And I think, Paula, in a recent episode, you had indicated some metrics that were a bit concerning for that asset class.

22:35And I'm just curious if you know much about community bonds and if those concerns apply in this context. I know you two are much about personal finance, not necessarily focused on the community level, but I'd love any perspective or knowledge that you may have. And yeah, personally, I enact a lot of wisdom espoused by you two. But the reason I'm asking about these approaches is they're just related to some work I'm doing with a community. Thanks, you too. Leslie, thank you for the question. Let's start by defining what a community bond is. And then we can talk through the pros and cons of if you want to invest in your community in this manner or if you want to reframe it in a different manner.

23:22Because there are a couple of competing philosophies. And as we often do on this show, I'm not going to tell you among these different competing philosophies. I'm not going to tell you which one to do, but I will present all of the competing philosophies so you can make that decision for yourself. But let's begin with the definition of a community bond. A community bond is actually really simply, there is a project in your backyard. Often this will be through a nonprofit or some community group and they need to raise funds for it. So in exchange for a set interest rate that you'll receive, you get to take part in putting something together in your backyard.

24:00You'll know the scope of the project. You know exactly what the money's going for. And this is truly the upside, right? Is that you know exactly what this money's being used for. Often you know the people that are involved in the organization that you're loaning the money to. So being able to hand off money to people that you know in your backyard where you live to do a thing where you can see the impact or non-impact of that often is attractive to people versus putting money into some faceless thing where the money ostensibly goes somewhere, helps somebody, but I'm really not sure who that person is.

24:45these loans, like any other loan and truly a bond is a loan. So anybody not familiar with bonds, when you hear the word bond, just think it's a loan. And like any loan that you'd take from a bank, you're now the bank and they're going to say, Hey, uh, we will pay you X interest rate, which like is a mortgage or, you know, a personal loan that you took out. There'll be a set payment plan. They're going to pay you X amount per year. In some of these loans, Paula, they don't pay you anything, a dime of it until the end where they'll pay it all off at once with interest. So you want to know what the payment terms are?

25:22They will call that payment the coupon on the loan. The way I think about a coupon, by the way, if you've ever seen these things at a a laundromat or a grocery store where somebody has created some type of offer and they have all these little tear off things at the bottom. Yeah. It's like a little coupon book. Right. That's the way I think of coupon is that they're going to use the coupon then to pay me every month back X amount. So the coupon is the amount that they're paying you on a monthly basis. Or you can just think of it as a payment, essentially. Well, yeah. Coupon equals payment. So what's the payment going to be?

26:01what's the payment structure. Sometimes it's quarterly, sometimes it's monthly. Like I said, sometimes it's just one big fat payment at the end. Sometimes it's two payments over a 10-year period, one at five years and one at 10 years. So you want to know though the coupon schedule of how they're going to repay you. That'll be important. And then of course, the interest rate and how that works. The last thing is something to check with your tax advisor on. Some of these projects might be tax deductible. So you'll want to check with your accountant, your tax team about, hey, in my situation, is this something I might be able to get interest from tax-free?

26:40Now, a couple of things that you want to think through, like philosophy number one, it's great to put your money towards community bonds because it's a way to give a loan to something that you care about. And if that is what you're pursuing, then know that that's what you're pursuing. This is not necessarily an investment, so to speak, in the conventional sense of a competitive investment that you make for the purpose of maximizing returns, but it is a hybrid method of generating some return while also putting your money towards something that you believe in. It's a values-oriented use of money that may generate some return.