Why Everyone Is Drowning In Debt (and how to get out) - Caleb Hammer - #1123

25:31Caleb Hammer:If you don't have that discipline for the long term, it's difficult. It really is. What does debt do to someone's identity? Well, unfortunately, it turns a lot of people into victims that they're really not. A lot of people have more control than they're really willing to admit. What does it do to their identity? That's interesting. Some people use debt to improve their identity more than anything. You know, pulling up, you really care what the person next to you at the stoplight thinks about your car. I don't know why people care about that. I've never cared about that. A lot of people use debt to get the clothes that make them look good, the jewelry that makes them look good.

26:11Caleb Hammer:Unfortunately, actually, that quality tends to come from lower income communities anyway. It's kind of crazy how that works. But people use debt to change their identity. But then people also use their identity of debt to put themselves in a place of victimhood and like, oh, I'm in debt. I can't do anything. I may as well just spend the money. I already have the credit card debt. Let me just put it on a credit card again. What's an extra$10 going to do to$5 ,000? And the answer is not much, but it's a death of a thousand cuts. They just think that over and over again. Yeah, it's a very strange sort of death-debt spiral where the sunk cost fallacy, if this is already bad, what does it matter if it's a bit worse?

26:50Yeah. And also, if you're stressed with finances, you probably want something that makes you feel a bit less shitty. That could be food. I'm going to sedate myself from my financial troubles by further ingraining myself into my financial troubles, which also becomes a spiral of itself.

27:07Caleb Hammer:Yeah, and that was totally me in college. You know, when I had a lot of bad debt, car debt, student loans, private student loans, multiple credit cards and family debt. I absolutely went to McDonald's, swiped the Chase Freedom card, getting it close to maxing out constantly. And because it felt good. What did it matter is basically maxed out anyway. What's an actual maxed out credit card going to do? Do you think lifestyle inflation has become a bigger problem than inflation itself? Oh, bigger problem. I wouldn't say, oh, that's a good question. you're a professional podcast host that's nice damn um i would say inflation is worse overall i'd say worse overall because that impacts everyone that's not your choice right such a choice but i'd say on a personal level yeah no that's bad that's bad that's gonna that's gonna fuck you over when someone gets the 20 no no one gets a 20 raise okay when someone gets a 5 raise but increases their spending 6%.

28:06Caleb Hammer:That is very common on our show. You know what's interesting? People on financial audit that are doing worse are the highest income earning episodes. People often, you open the show with getting death threats and stuff. Death threats is kind of minimal, but we do get lots of complaints and stuff about the show. One of our biggest complaints is, I'm yelling and making fun of poor people. Those are actually the people I usually make fun of and yell at the least. It is the high income earners that if they just fix a couple things, they can get out of debt pretty quickly, but they also get into worse debt because they have a higher income, so they get approved for more debt.

28:40Caleb Hammer:They're always the worst off. They lifestyle inflate. I swear, the closer they get from$100 to$200 to even a half a million dollars a year, the worse debt, the more credit cards, the more timeshares, the more cars, the more bullshit they have. It's impressive. It's so bad. It feels, I think, probably incredible to a lot of people that you could earn half a million a year and have a bad financial situation. Which I wouldn't be surprised if the majority in the United States did. Who make that much? Why? Have a half a million. Go get yourself the nice house. Go get yourself the nice car, the nice clothes.

29:19Caleb Hammer:Why not? You worked hard. Deserve it. It's in our culture. We want, we're consumers. Do you think that the things that richer people waste money on different to the things that poorer people waste money on? Absolutely. I'm trying to get over my fear of flights and I guess I'm rich now, so that's nice. I'm knock on wood with all that. Does that help you get over your fear of flights? I rented a PJ to help me. That's a waste of money. Is that easier or harder? So it's a control thing for me. I don't like being stuck in a situation that I can't control. Do you know how to fly the PJ? No, but I can say, let's land.

29:56Caleb Hammer:I can't do that with a commercial. Well, you can. you could make a big enough fuss that you would like but it would be a real headache and bad for my career too so that would be a real headache yeah but like um so what was your first pause yeah what was the first time with your travel anxiety getting on a pj like um it was for oh the pj itself it was actually really bad when we filmed it we filmed that it's on the internet i burst down in tears it's really bad i'm sorry man oh it was it was anxiety like it's not i don't think that you should dismiss it like that so but it's not like something bad happened to me right like anxieties make belief it's like it's not real my brain thinks it's real but it's not so i was crying i was sad but you know what was actually making me more sad and crying a lot of people thought it was out of pure terror it was remembering a lot of the things that i haven't done a lot of the family I haven't visited because of my fear of travel.

30:54Caleb Hammer:It was grief, as much grief as it was anxiety. So interesting point here, there's a guy called Vinny Shorman, who's a hypnotist in the UK. I have a friend, my friend's name is Sky King, Sky King, right? This guy lived in Hawaii while he was a kid, flies all around the world, loves Asia, been to Japan a bunch of times, out of nowhere, just developed travel anxiety, bad travel anxiety, tried to get on a plane, couldn't bailed out tried to get on a plane couldn't bail i think this happened maybe six eight maybe ten times and i put him in touch with vinnie now some people have better results with hypnotism some people have worse in a single session vinnie fixes travel anxiety and i don't know what the full story is but i know that the simpsons theme tune is an integral part of the anchoring for how he gets over his travel anxiety.

31:48Interesting. And that was real interesting. That was like, it's a fucking cool gift to give somebody to unlock that. But I know what you mean. There is nothing wrong. Rationally, in terms of the utilitarian approach view of the universe, there is nothing happening. But your felt experience of I'm getting on this jet that I've paid money for that's kind of a momentous occasion for me it's this landmark as a person who talks about money doing something that's kind of canonical in everybody that has money's life and my experience of that has been tarnished by the fact that i've got this thing that isn't me that i don't want in me and is kind of behind the steering wheel a little bit i think that's

32:28Caleb Hammer:i think that makes sense but it was nice because i was working with a panic therapist at the time and just started working with him again thank goodness because i need to get over this thing uh he didn't let me get off like like is he with you of course i yes so i brought him you brought your panic therapist on the jet with you it was our plan you know we kind of oh it wasn't like an intervention or something well actually technically i heard him the day before so we already decided but yeah um so we brought him with us he's really cool and i'm working with him now again and we have we have a game plan uh to get over it but um yeah it was it was really simple it was austin to san antonio so it was nothing i just i wanted to get on a plane again because i was just preventing myself from getting on a plane so that's a very quick flight how long had it been since you were on the decade at least yeah so mostly road trips places but even that still gives me kind of anxiety um which is just i hate it um uh but you know we have a game plan we're doing some things i want to go be on some more shows i mean dude if some people's exposure therapy is we just need to get a spider and put it in the corner of the room your exposure therapy requires a private jet exactly it's a slightly higher bar it's just as well that you're rich because if you won you'd be fucked exactly exactly what really sucks is the same exact model private jet i was in just crashed in laredo texas yesterday and a ceo in austin texas died on it so that's like kind of fucking with me that plus all of a tree there aren't many forms yes air transport that are feeling pretty safe right now the next one's a commercial we're doing a commercial next we're doing some long road trips to kind of i would book if i was you i would try and get maybe your row and then one behind one in front i was thinking that just in case there's a you know one of those i just didn't want to be around people but yeah that's also nice that's also nice uh so you've got some anxious panicky tendencies yeah really just that one thing you built you built a show which is essentially high stakes live confrontation right with strangers about their most shameful secrets yeah you're someone who has panic attacks you run a show that gives other people panic attacks yep is that a coincidence or is this just like the most elaborate exposure therapy ever it's great i mean that's what people have to go through they have to go through it what's actually nice is because of mine and I'm, you know, working with my guy for a while now.

34:53Caleb Hammer:Like, I can actually work through them pretty well. And now, if someone actually does have a legitimate panic attack on the show, I can help them, which is pretty nice. Oh, cool. So we just pause the cameras and do that real quick. This episode is brought to you by Whoop. According to my Whoop, I've tracked nearly 2 ,000 days of my life. And the thing that still gets me is that I could have predicted almost every bad day before it happens. That's because Whoop gives you a complete picture of your health every single day. your sleep, your workouts, your recovery, your breathing, your heart rate, even your steps.

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35:54And there's a 30-day money-back guarantee. So you can buy it for free, try it for free. If you don't like it after 29 days, they just give you your money back. Right now, you can get the brand new Whoop 5.0 and that 30-day free trial by going to the link in the description below or heading to join.whoop.com slash modernwisdom. That's join.whoop.com slash modernwisdom. what is your process somebody is sitting opposite you you're pushing you're pushing you're pushing they're realizing how actually just explain to me what you think is happening inside of them inside of their mind somebody's got a lot of debt maybe they've been hiding from it like what's their emotion before what do they get to and then i'm interested in what you do to bring them back into

36:37Caleb Hammer:land as well usually i can tell they kind of just go flat-faced in that moment like they they disengage their eyes is kind of go blank and maybe even like a little bluish um and i'm like oh shit okay so we just literally pause i'm like hey you okay you know i go from the crazy voice to like just down to like hey you okay remember you know it's like of course they know it's like real and everything but i'm like yeah we can take a pause you know you can take a break and then i help them if they're like actually having anxiety attack i'll do like a breathing exercise real quick it's like three and six out and um that's pretty rare these days but uh and we definitely have people that need to do like a lap around the building a producer will take them or they need to go outside and hit a vape is that red yeah hit a vape that's good that's why jared i need a fucking e-pipe for the people that are listening i require i want to be able to come up with i want to be able to pontificate uh but i want to be able to do it with nicotine so if anyone can find me a pipe that looks legitimate like this but i can have some nicotine and that would be able to um I wonder whether part of the reason that you're not inducing as many panic attacks is because you're getting soft in your old age.

37:45You think so? Yeah. I wonder whether it's because you've taken your foot off the gas.

37:49Caleb Hammer:I just threw something at someone the other day.

37:54You'd be fucked here. There's so many projectiles. There's so many potential projectiles. Some of them are heavy as well.

37:58Caleb Hammer:No, honestly, I am proud of it. I think our onboarding process is so thorough. we've had people that have come to work with us or people that interviewed with us that have worked for like dr phil and a lot of other type shows dr phil's close in dallas so that's why him specifically but they go through our process and they're like this is crazy i've never seen an onboarding process like the process like this at all because usually for like i'm not speaking dr phil at all don't sue me but many shows like that daytime tv they don't give a fuck about their guests but we actually really care because one they're members of our audience so a little selfish there okay a little selfish i want members of the audience to do well you're going to reduce the audience size yes exactly and i want them to do well whether that's you know you could look at it from two perspectives pretend like you hate me and i'm the selfish most piece of shit ever fine take that obviously i want them to do well because it proves it in spite of me or do it because of me it shows that it works it shows that the show works so i don't care about how what the mechanism is it can be because you don't like me i'm an asshole you want to prove me wrong saying that i don't think that you're going to be able to turn it around or because you love me and you think that my advice is worth listening to.

39:02How do you turn it around?

39:04Caleb Hammer:Yeah. And or there's the second option where it's and that's the real option that I actually really do care about how they succeed. So I really want them to do well. And the average guest pays off. It's just over like twenty thousand dollars and twelve months of debt after coming on financial audit. That's our most recent annual report. We do one every December. How much of that impact that you have on people's debt do you think is because of the knowledge that you give to them? And how much do you think is because of the intensity of the emotional discomfort that you put them through yeah it's a mixture of both there is the that tough love crazy and fun approach of it like i think oftentimes 90 of the time they're having a good time too like they know the craziness of the show so but they have fun and uh that's not for everyone but i'll don't come on the show if it's not for you so it's like a show i would actually personally go on when i was in debt it would have worked for me someone screaming at me that works for me it worked for me when i played sports you You know, it's whatever.

40:00Caleb Hammer:It works for me. And then we set them up with lots of tools afterwards. They get DollarWise for free forever, no matter what. They get all of our personal finance courses. They get a certification through course careers to help with their jobs. They get access. Any kind of resource that we're working with, third party, they get access to. So we try to give them everything. And then we check in with them. I don't remember the exact dates, but it's like the day their episode goes live, a week after that, a month after that, and then three months after that. And we do two updates a week with former guests in our Hammer Elite membership.

40:34Caleb Hammer:And we're endlessly checking in with them with surveys. And we tell them to reach out anytime they want. So there's the mixture of the show and that lights a fire under their ass. And the post-filming support as well. Post-coital care process. Yeah. I did Love Island 11 years ago. And famously, the UK series. I don't know whether it's happened in America yet. but the uk series of love island has killed more people than any other tv show like two past stars took their own lives one of whom was a really good friend of mine that's crazy then the fucking host took her own life caroline going on caroline flack yeah i just i'd once uh that's strange twice you're like three times including the host you're like there's a fucking pattern here uh but one of the issues and this was something that i saw especially i think love island broke the app store when it came out it was the number one app in the world above chat gpt above fucking claude uh and like there was shutdowns on servers and shit like 300 000 concurrent downloads at a moment like downloading the app to watch i don't know what i don't know what you do voting on it or something maybe and um the post-show care routine thing because i did the first i was the first person through the doors of the first ever episode.

41:48Wow. Right? Of the first season. So they were, we were the guinea pig. We were the first child where you make all of the mistakes, you drink when you're pregnant, you smoke in, like you fucking forget to feed it for 12 hours, like all of that stuff. And once you finish up, you should have a support system as you get thrust back out into the world. Now, the first season that I did was like way smaller. It was 10 times smaller than season two, which was 10 times smaller than season three, which it really sort of took off on that exponential but had it have been even a bit more exposed there was the least amount of post-show support uh even though it was that much smaller the post-show support was basically non-existent and then each time that one of those incidents occurred you could tell that uh itv which is the the company in the uk that was but it's channel three in the uk right they have channel three and channel seven and um every single time that one of these horrible horrible situations happened everybody got an email just reminding you that you have access to the safety and care team whenever i'm like dude fucking too late man you know like something about the horse bolting and the door being closed but the fact

43:00Caleb Hammer:that also probably didn't get the opportunity when walking out of the island to be like hey if i do this make sure it's not in the episode so it's like you you were like no You don't control the edit. Exactly. You do not control the edit. And the entire universe is watching you and commenting on you. And then what's mad is you come out because it's recorded and published live, but you only enter back into the world once it's happened. You have no idea what's made the edit. You have no idea what people think of you. You could come out and be the hero or the most hated person in your country. It's fucking crazy.

43:34Caleb Hammer:Should I get into that? Everyone's doing that. Everyone's doing these pouches. uh like would i be like so locked in dude no that's scary i'm asking for advice first before i go full those are mine so those ones are that's just caffeine that's just 50 50 milligrams of caffeine these these are very healthy for you better for you nicotine those are knickknacks so that's like everyone in the world is doing pouches right now like how locked in would i be i have a bit of an oral fixation which i'm sure that the uh people that think i'm gay on the internet are going to love to hear me say um have we got any toothpicks jb can you get if you're outside jonathan can you bring some toothpicks in from the cupboard please i want to show those just something to fucking dick about with while you're working i think is very important so you've got a pen or whatever sometimes you try i could get the pipe yeah by my fingernails that's my thing that'll do you um what what income level do people's financial problems fundamentally change I'm not saying it's behavior.

44:34Caleb Hammer:It's fully behavior. Again, like I said, the worst situations I've seen in the entire show are high income earners. Absolutely horrible. So I'd say never. It gives you more opportunity to get out of a bad situation. but I wouldn't say the income levels. Everyone thinks when they make the next$10 ,000 in their income, their entire life's going to change. Their spending changes, but if their behavior is the same, if their inclinations are the same, their lack of discipline is the same, they're actually just going to be in a worse situation. So I would actually argue that if behavior doesn't change at the more income level, your situation might actually get worse.

45:11Because you now are playing with bigger chips on the table. And if you're fucking it up, you've got more access i didn't never thought about that such a good point that you've got more access to credit people think uh banks credit cards think that you are a safer bet because of that you can fuck yourself harder yeah and i guess i'll put an asterisk on my statement

45:30Caleb Hammer:there is like you gotta hit a base basic minimum level right like if you can't pay for like the cheapest rent in the area put food on the table utilities then obviously anyone that's not making up to that point, yeah, that's a threshold where it's like game changer because you're just like surviving. But if you can't even hit the survival, that's not even in the conversation. But typically we don't really allow for that that much in this country and Western society. I mean, you'll see it, but we have lots of child support services for low income, food support, housing support. It's not perfect.

46:06Caleb Hammer:No one's going to argue it's perfect, but we do have a lot of social programs to help those people that are in those lower uh friend of the show ice coffee hour boys had kevin o 'leary on and he gave some insight about where he thinks different levels of income impact your lifestyle you pull that up for me jared look at this what would you say are the main four tiers of wealth where if you hit a certain amount life will i tell everybody this you should strive very hard if you're an entrepreneur to have$5 million in T-bills, not in anything else, just T-bills, making 3.82 % this morning. You know you've made it and you've safeguarded your family for the rest of your life if you can get$5 million liquid in T-bills.

46:52Caleb Hammer:Most people that consider themselves very successful entrepreneurs do not have$5 million liquid in T-bills. They don't. But what net worth should you be at to justify 5 million in T-bills? Well, you should be, the first thing you should do is get to 5 million liquid, be worth$5 million liquid. That's far more valuable than anything else. Liquidity with wealth is actually a superpower. Most people say I'm very wealthy, but they couldn't raise a million dollars by 2 o 'clock in the afternoon if they tried. It's tied up in all kinds of things they think are worth a lot until the shit hits the fan.

47:26Caleb Hammer:The plan is, if you're an entrepreneur, the hardest thing is to make the first million, really hard. And when you make the first million, put it in T-bills. Just as hard, but not as hard, is to get to 2 million. Two to three is actually quite easy because you've figured something out. But where you get undisciplined is you start buying shit you don't need because your manatee is to get to 5 million liquid. You have to have 5 million liquid to call yourself a successful entrepreneur. And I don't care who disagrees with me, they're wrong. I guess I'll be wrong. I mean, no, I agree. One of the first goals I had was to get to$5 million as quick as I could, but invested in the stock market.

48:08Caleb Hammer:I don't really understand get your first million, put it in low indexing T-bills. What's the T-bill? Like treasury. Right. So I'm not really understanding like putting it in bonds or something. It just makes sense. If you make your first million and you're young, let it grow in the marketplace at an average of 8 % to 10%. That makes more sense. I mean, I guess if you're approaching like 60 and you make your first million off of a business being successful, yeah, put it in something more conservative. But if you have time on your side, unless America collapses, like the stock market is going to do over a long enough time horizon, you'll weather any of the little wobbles.

48:41Caleb Hammer:Yeah, exactly. So, but I do agree with that 5 million mark because that 5 million mark, if you do the 4 % rule, it's 4 % of 5 million. I think, what is that,$60 ,000 a year? Something like that. So, you live a good middle class income off of that using the 4 % rule. So that works. So that was one of my first big goals. It's, I don't like the idea of taking the first million you make and then literally just not letting it grow past inflation. That doesn't make any sense. If you're getting your first million, you should let it work, have it work for you in the stock market. I'm not saying reinvest it immediately into the business.

49:15Caleb Hammer:And certainly he's correct where people start getting money and they start blowing it. He's 100 % correct on that. It's just weird to take the first million and put it into something low index, especially if you're young. is there a financial milestone that creates the most happiness for people um yeah a lot of the happiness that can be achieved through wealth like you can't buy friends you can't buy family so a lot of the happiness that can actually be achieved through wealth i'd say if you can cover if you can weather practically any emergency including like a cancer diagnosis something really bad.

49:50Caleb Hammer:How much money is that? I mean, honestly, I think that$5 million is a good marker. That$5 million is a good marker. You can really start pulling into it for a few years if it's really aggressive, really bad, and you want to go to the best in the world. So with that, you know you can weather anything. Even if you blow through the five, hopefully you make it to the other side and you can start bouncing back. But that gives you unlimited flexibility. You don't get to do the crazy things that are super fun. You don't get to do the you can't buy a pj i can't buy a pj and i can rent a short little trip but um i don't think that's what drives happiness it's a fun thing moment of happiness but i think the true happiness that you actually can buy is security and five million is a really good number to get it sounds like a massive number for people to feel financially secure yeah but you know you can weather literally practically anything that's the question like you can weather almost everything with a few hundred thousand hours set aside.

50:46Caleb Hammer:You can, you know, take a while to find a new job if you have a few hundred thousand. But I'm saying, if I'm really thinking like you can weather anything, five million is a great number to have. Yeah, I totally didn't think about the fact that you can afford to invest in specifically the S &P, any kind of tracker, if you're younger, because there's going to be some movements, there's going to be periods of downturn, but over a long enough time horizon. And I mean, if the S &P goes to fucking zero, there's much bigger problems than what you're doing with your money. Yeah, we'll be killing each other.

51:18Yeah.

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51:58Plus, they offer free shipping in the US. Right now, you can get a free sample pack of Element's most popular flavors with your first purchase by going to the link in the description below or heading to drinklmnt.com slash modernwisdom. That's drinklmnt.com slash bottom wisdom. How much shame surrounds debt? And do you think that shame hurts people or helps people change?

52:22Caleb Hammer:I think it's pretty damaging that in our culture, talking about money is shameful in general and in debt. I mean, I think it's good to have a good laugh on a TikTok short, things like that. That's fine. But I think if we have a whole system where people feel shameful to even bring up their close friends, their family, or even their therapist, that they're in a bad financial situation, they're not going to get that emotional support. They're not going to get that encouragement that they actually need to change because they'll just be weathering it themselves. That's a very difficult thing. You don't want to, again, going back to even just the cancer thing, you don't want to be going through that yourself.

52:54Caleb Hammer:It's almost impossible. You need support. Anything you go through, any kind of support system is good. And if we have a massive level of shame around it, which I would say in our country, in our society, we definitely have. People aren't even willing to say what they make. You know, they're like embarrassed or they're afraid of making it too much and people look down on them for like, you'll be jealous, you know. So there's a lot of shame around personal finances in our society. And I think that's pretty damaging. It's interesting as a British person, we have shame, but in the opposite direction.

53:24We have shame about talking about how much we make. If we make a good wage. Because everyone's poor there? because there is such a strong tall poppy syndrome that if you're seen to be too big for your boots or doing too well that can often cause way more ire it's like an interesting i understand why people would feel personal shame around talking about being in a bad position financially what does this say about me as a human what does this say about my habits maybe people are going to think less of me but there is a a pro-social fuck that person's down bad hey man like i really want to help you as opposed to dude i just got this new job and i got a i got a 30 pay increase i can't believe it i've been working so hard for this for a long time if that's not someone that's got your best interests at heart that triggers in them not pity which is not an emotion that people want to feel, but it induces envy, which is way more active.

54:22That's the sort of thing that can get you ostracized from a friend group. And again, this isn't everybody. I've got amazing friends in the UK, but I met a million people running nightclubs. I had one of the biggest events companies in the UK for a long time. A million people in person with a tight pair of jeans on, holding a clipboard, giving out wristbands and free champagne. I had a handful of close friends that I could talk to openly about everything that was going on, successes, failures, all the rest of it. That's good. That's not a great friend exposure to conversion funnel, right? A million people, handful of friends.

54:57Oh, yeah. And that's why -

55:00Caleb Hammer:Well, if you had them though, you know? A lot of people don't. That's true. Yeah, and as an only child, that was like, fuck, like I've got some people that have got me and that's cool. just the UK is a very inhospitable environment for people that are trying to do things financially I've got this line I wonder whether you agree with it the UK is a great country to be poor in and a terrible country to be rich in and America is a terrible country to be poor in and a great country to be rich in yeah I mean a lot of poor people move to and stay in the UK a lot of wealthy people leave I'd say the analytics just follow that in general bingo fucking nailed it dude forget the pithy maxims i just dialed the entire financial industry um i there's there's a safety net in the uk which moving to america to me feels like quite brutal uh quite like why leave the council estate it's comfy it is national health service i've got this stat britain spends more on working age welfare every year than it collects in income tax.

56:09Yeah. Working age welfare. And the difference gets borrowed every single year.

56:14Caleb Hammer:Yeah, that's insane. And all the productive people that would actually contribute to the tax base are leaving. The wealth drain, the brain drain in the United Kingdom is. I feel bad for your country. That's honestly it's a place where, I mean, the majority of my life I wouldn't have considered moving there. But there was a part where I was like, ooh, this would be the best place to go living because you get the cool walkability of Europe and like the nice, you know, okay winter and nice summers. And it's your language. And it's your language, exactly. So I wanted to kind of go there for a bit.

56:43Caleb Hammer:It's gone. If the UK comes back, it'll be the biggest comeback story in the history of civilization. Yeah, we're like 9-0 down at the moment in the game of football. There are, you know, I mean, there is the conversation where it's like, yeah, GDP per capita, there'd be 51st state did you see that yep yeah i got a lot of shit for putting that well i mean that's true but there also i got a lot of shit from americans well americans are retarded i don't know americans are rich and retarded but there are some other true things the uk when it comes to safety and a lot of things you know ranks higher so there's not just like it's not all yeah it's not all shit but like no it is true i mean unfortunately it's going the same direction is Spain or southern Italy.

57:29Caleb Hammer:One of those places where it's... And people go there or are born there, get educated there, and then leave to somewhere where they can make double the income. And why wouldn't they? We're such a mobile world. dude if you're inhospitable and this is the thing that i understand some of my lefty leaning friends jimmy the giant is one of them and he thinks that taxing the rich he means like the ultra rich he means like 100 millions plus of liquid or whatever of held asset wealth um but that that is something that's justified that's something that would help to raise up the the underclass and people that are unemployed and need that.

58:09But I think the bottom 55 % of the population in both the UK and the US are net withdrawers from benefits as opposed to net contributors.

58:21Caleb Hammer:Just that statistic. Income tax in the United States, the bottom 50 % of earners contribute 1%. 50 % contribute 1%. That's crazy. We're a very progressive income tax society in the United States. United States is actually the most progressive Western major country for income tax. What we don't have is VAT tax, which usually funds like the National Health Service and whatnot. So in Americans, Americans, that's the fun thing about Americans, including especially populist Americans, either left or right. We want the Scandinavian social programs, but we want to do it on like a Florida tax system. Americans are not willing to pay the actual taxes required for the systems.

59:02Caleb Hammer:And it's never about the wealthy people paying a lot of taxes because that doesn't fund at all. It's all about the flat tax, the VAT tax, the national sales tax where everyone has to pay an extra one, two, three, four, five percent or whatever it is on everything they purchase. That's what funds those social programs. And the United States would never tolerate it at a national level. Have you ever seen what a set of accounts for a normal limited company that has to, that's within the VAT threshold? So I think it's$120 ,000 a year, 120 ,000, fuck, that was very unanglicized, 120 ,000 pounds a year or above that your limited company makes.

59:35And after that point, you're registered for VAT. Have you ever seen one of the accounts submissions? Dude, as somebody that had a limited company for a decade and a half in the UK, I still do. My rental properties go through that, although they don't breach the threshold, so it doesn't matter. It is a fucking nightmare. Each individual transaction, you charge the person who is getting the service from you, an additional 20%, that's what VAT is, 20%, and then you claim back that VAT up to an amount from the government. So it's this fucking Ouroboros, this endless financially, bureaucratically, in terms of paperwork, it's this huge overhead.

1:00:20And I understand what VAT is for. I understand that we have lots of services that you don't have in America. They need to be funded somehow. Now, national insurance, that's another type of tax that's not seen in America.

1:00:32Caleb Hammer:But if you do the math, after everything that you get free in the United Kingdom, after people pay for it and the median income here, after the median taxes here, after the median paying for the private services here, we still end up with more money in our pocket in the end. No way. Yeah, it's pretty close, but it's still... Even with the healthcare is one of the biggest costs, even though healthcare is the single most common reason that people go bankrupt in America as well, I think. Yeah, which isn't surprising. And honestly, people make it sound more consequential than it is. So as we talked about earlier, bankruptcy is actually not that even big of a deal, really.

1:01:07Caleb Hammer:It's really not. It's overblown. I mean, it's not great. Don't just like go get bankrupt. Like that's not wonderful. But it's like people make it sound like the scariest thing in the world when it's really not. But I mean, I looked into that two years ago. Maybe the numbers have changed today. But two years ago, that's what it looked like. And we still have like out of a major nation, yes, you're going to have micro states where it's like Switzerland, you know, much smaller. Obviously, their GDP per capita and everything is going to be a lot higher in those kind of places or like Monaco, something like that.

1:01:35Caleb Hammer:But as far as like a major nation, large nation, the United States like destroys when it comes to disposable income. The income you have after all the important stuff, after you get taxed and everything, we just lead because we just encourage our system just encourages that. But what's interesting when talking about the United Kingdom and you talked about your more left wing friends that like want to raise taxes and stuff there. What's also interesting on the left right spectrum is during the Great Recession that 2008, 2009, 2007, the United Kingdom went more conservative where the United States went more liberal with their spending.

1:02:12Caleb Hammer:We pumped a lot of money into the economy. The United Kingdom, I had it in my austerity. They went austerity. And you can see what the outcomes were. We went into debt for it as a nation, but we recovered in a couple of years. The United Kingdom's GDP just recovered from 2007, I believe, like a year and a half ago, maybe two years ago. Yeah. So their more conservative approach of spending, raising taxes, cutting spending there in the recession, it failed. It objectively failed across Europe and the United States. You know, Donald Trump, COVID pumped a lot of money into the economy. We're very liberal with our spending.

1:02:47Caleb Hammer:Yeah, we chucked the money in. So it's, you know, we're pretty progressive. I mean, 50 % of our federal spending, yes, it's mandatory spending. It's not, you know, whatever. It's still social spending. So left versus right, it's not always, you know, one side's going to always be in the right. Because the more right wing running of their federal budget in the United Kingdom failed when it came to the Great Recession. It just, it destroyed the economy, destroyed productivity, destroyed spending. Well, even that now has kind of become quite squirrely because when you talk about conservative spending, a lot of the time that's more pro-capitalist, they're more prepared now to turn the money printer over.

1:03:26So it's the existing archetypes of what it even means to be left and right. Pick stuff about which races you do or don't like, which cultures you do or don't like, which religions you do or don't want inside of your country. The whole tectonic plate underneath what used to be stereotypes and cliches, that's all moved.

1:03:45Caleb Hammer:Oh, completely. I mean, you do see it in race. It was the more 90s liberal, which I'm probably more aligned with on this perspective of we wanted a colorblind society, you know, and it was the more right wing people that were like, well, no, we see, you know, they're different than us, you know, that kind of stuff. I don't know about the 90s at that point, but even still, that was the more 90s liberal perspective. Now it's the more centrist, even right-wing position, colorblind society. And people on the far left are like, no, we need black dorms. We need black graduations. We see race first, no matter what.

1:04:19Caleb Hammer:And it's very interesting how that shifted. And I don't think with bad intention, to be clear, I don't think they're evil for that. But I do think it's sometimes when people get to the extremist, they horseshoe around. Correct. Yeah. Yeah, far left and far right end up looking a lot closer than you'd think. Yeah. That, just going back to the bottom 50 % contribute 1 % of the taxes. But then when you net it down in terms of what's given all different types of aid and assistance, I think it's up to the bottom 55 % and net detractors from the economy. Yeah, it doesn't surprise me. And we have systems made for that.

1:04:55Caleb Hammer:The child tax credit is made for that. It is usually lower income people that have more kids. This is how it is. And lower income people pay less taxes, but they get the same child tax credit. So this is more money is going to go to them in the end. Do you think that would surprise most people to find out that the bottom 55 % of the population and net detractors from the benefit system as opposed to net contributors? Oh, of course. Absolutely. Listen, I can I every time I take a political compass test, I find myself on a centrist, you know, slightly leaning right economically and then decently left socially.

1:05:24Caleb Hammer:But I had like an extreme socialist on my show the other day. Episode's not out yet. And I was talking to her and I was like, how much is the top 1 % paying taxes? She says, nothing. They pay 0%. I'm like, no, it's like 30 % of all income taxes. Top 10 % pays like 50%. Top 50 % pays 99%. It blew her mind. She has no idea because we're in such misinformation, algorithmically defined places on the internet. There was a study done by some elite university on the East Coast where they were, researchers were going into TikTok and engaging with left-wing content. And then a different one would do right-wing content.

1:06:04And TikTok immediately found out in about three minutes whether you wanted, if you're anti-men or pro-left or anti-woman or pro-right.

1:06:13Caleb Hammer:And they would just put you into that camp where all of a sudden all the information you got, all the content you watched was the extreme version of that. and that's all you were getting. Because you show you engage with that and if you engage with that, they want to give you more so you stay on their platform. It makes sense from their business perspective. So it's not surprising at all that people wouldn't be aware of that information if it goes against their worldview. I've learned from over a thousand podcast episodes that the easier you make your health routine, the more consistent you'll be.

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1:07:15But if you're unsure about it, AG1's got a 90-day money-back guarantee, So you can try it every single day for three months. And if you do not like it, they will give you your money back. Right now, you can get a free AG1 welcome kit that includes a bottle of D3K2, an AG1 flavor sampler, and that 90-day money-back guarantee by going to the link in the description below. Or heading to drinkag1.com slash modern wisdom. I don't know, man. I don't know what financial education, what good financial education looks like because the incentives aren't necessarily aligned for somebody who feels like they're really struggling, who's comparing where they are financially to where they think their parents were at their age, where they think everybody else is at their age, what they think that they should have.

1:07:57So past generations, other people, and my idealized version of where I want to be, all of that bundled together, you saying, well, actually the top 1 % of earners, they contribute 30 % of the taxes and the bottom 50%, they're actually net detractors from the system. that doesn't make me feel any better like it's not a comfort to me to take a macro perspective

1:08:20Caleb Hammer:when my micro experience sucks yeah i mean that's that's why financial audits about the perspective of the individual and their responsibilities and what they can change because you know some people comment why aren't you talking about the systems that them in the first place and i'm like that's not what this show can change you can go vote So congratulations, you contributed to changing the system that you want to do. But the reality is on that show, only one person can change what's happening in that person's life immediately. And that's that individual. So you're right. Talking about the system, it doesn't help anyone on that personal level.

1:08:56Caleb Hammer:It's the actual choices. And there is good news. The United States is actually taking a pretty important step towards it. We're close to 40 states that now require a personal financial education course to graduate high school. It's close to 40 states. It wasn't even half of America just a couple of years ago. So they're really getting on. Have you ever looked at the syllabus? What do you think of the syllabus? I haven't looked at it, but I mean, the governor of Michigan came on the show and she wanted to talk about it. And, you know, she's Democrat. She's probably going to run for president. And I was very impressed with how much she actually cared about making sure people needed to learn about basic personal finances before graduating high school.

1:09:32Caleb Hammer:I think that's important. And I'm glad to see that we're doing that as a country. Now, I don't know about you. I don't know what the grade system is like out there in the United Kingdom. But I was a fucking retard who didn't give a shit about school. I would have done whatever the minimum thing required to pass that school or that class. And I wouldn't have learned anything if I was in school. I don't know. Other than the things I was actually interested in, which is mostly history classes and music classes at that time, I did the basic bare minimum to pass and I wouldn't have learned anything.

1:10:06Caleb Hammer:So there is that consequence, but at least we're trying. If you were to put together a syllabus of principles financially to teach young people, what would be the biggest ones? It would start with budgeting because if you can't budget, there's nothing else. So budgeting is that, you know, we talked about the discipline, personal responsibility. That's a little harder to teach in school, but at least learning how to budget a household. Starting with something like the 50-30-20 method, which is 50 % on needs, 30 % on wants, 20 % on investing. Smallest category is investing. You get to spend 30 % of your money on bullshit.

1:10:37Caleb Hammer:Obviously, that changes in places like New York, LA, San Francisco, but that's a good place to start from. So teach that concept. Teach what is a good car loan to get. I enjoy the money guy rule. You put 20 % down, no longer than a three-year term, and no more than 8 % of your income is the monthly payment. That equals a car you can afford. Actually teach the value of college and a degree instead of saying everyone needs to go to college and borrow as much as it takes to get whatever degree you want at any institution you want. Instead, teach, okay, a good general rule is don't get a degree of which you borrow more for than you'll get in your expected first year's salary.

1:11:16Caleb Hammer:So that's a good rule. Oh, that's nice. Yeah, it's a good rule to just not borrow more than you need. I don't know how America stacks up in terms of different courses at different universities. Can you give me some examples of low, medium, and high and what would be expected? Because there's no way. I've seen some of the fucking student debt bills. Oh, yeah, that's bad. There's no way that somebody's going to... Some people wouldn't even earn that back in five years of being at work if they had zero costs and all of the money went back to their student loan. Yeah, absolutely. I mean, so strictly thinking college, let's get rid of trades or anything like that, community college.

1:11:50Caleb Hammer:You can go there for two years. You can get your basics out of the way. In fact, a lot of community college, you can get your four-year degree now at like nursing and whatnot. Austin Community College here, you can go for like a thousand bucks a semester, 2000 bucks a semester, super affordable, super cheap. Many people can work their way through it. And that's in Austin. And it's similar in other areas. From there, you want to transfer, if you're going to transfer to an institution, more affordable, just standard, maybe directional school like western texas you know something like that i went to western michigan um university where it's a little more affordable and you complete your final two years there and you take federal student loans for that uh and the big question from well okay to finish your question so the for that more directional school finish your four years but beyond that then you're talking like you're going out of state at a four-year institution skipping community college out of States double the cost.

1:12:43Caleb Hammer:Then you can go beyond that. Then we're talking private institution. You actually go beyond that and think international, which is why people really care about rankings in the United States because that gets international students. They care about rankings and they'll pay an extra premium to go to schools in the United States. So that's why they really care. But I try to stay down here, try to stay in that community college for the first two years and then transfer to the in-state institution. Federal student loans subsidized or unsubsidized, at least you have the protections with federal student loans.

1:13:13Caleb Hammer:Really try not to go private. The only reason you'd be going private is because your family already makes a decent amount of money. So that's how I would approach it. And then is degree selection. That's the important one. You have to look at the fields you're going into. A lot of the... Unfortunately, there is a big gender division, and this isn't anti-women. I don't want to be on that fucking weird anti-women shit, but there is an actual reality that women are getting lower return on investment degrees in the United States. They tend to get more things like social services, psychology, sociology, things like that that don't return, where men tend to really think about the income post.

1:13:49Caleb Hammer:I don't know if it's ingrained societally or culture or to be the provider or whatever, but for whatever reason, they tend to go more engineer, things like that, and women more teachers. So that's really important to think about the degree and the return on investment. And now, honestly, a thing to probably consider is how AI resistant your career field is going to be. Who knows where that's going to go? I think, unfortunately, women are going to be hit hardest by that. So it's referred to as the lanyard class, people that wear lanyards to work. It's middle management, it's marketing, it's HR.

1:14:21And that is a big chunk, that sort of white collar lanyard people, that is going to be a big chunk of what AI comes for first, supposedly. and that is going to I tweeted this and I got people got very mad at me about it that

1:14:37Caleb Hammer:you're looking at your responses to tweets who cares if people are getting mad I go on that once every two days and I see what furor has occurred within the last 48 hours they don't matter I post some ghost but it's just interesting to see what the sentiment is how close to a third rail or beyond the Overton window is this thing that I just said the internet is not real life so it's just so hard to take in account what it said very true It's like this last election in midterms, I swear, it all went opposite of what you saw on Twitter. You're going to think all these like outsiders were going to win because they're so big on Twitter.

1:15:10Caleb Hammer:It was nothing. It was nothing. Don't look at your response. The sexy campaign on social media is not middle America who are voting and actually have the time and the preparedness to be able to go out and have registered and are fucking ready to go. Anyway, I said we've just got ourselves now. we've overshot it a little bit. I think women out-earn men up to the age of now about 32, 33, that's about 1 ,111 pounds more to 29. I don't know what it is after that. And only then does it, but that has grown. It was up to 29. Now it's up to 32, 33, I think for women out-earning men. Given that you've just about reached young people, gender parity between men and women in terms of earning, you are now about to see that what probably to women feels like we finally arrived economically.

1:16:02Okay. Majority of degrees. Yep. Two women for every one man completing a four-year US college degree by 2030, et cetera, et cetera.

1:16:10Caleb Hammer:Master's degrees even more. Correct. PhDs also more, but not more, more. That situation of parity is maybe going to be at risk. And I I think a lot of fingers are going to be pointed that we just arrived and now robots built by men have just taken our opportunity that is still so fucking green that we haven't settled into it away from us. That, I think, is going to be one of the biggest stories of the next decade. I mean, there's going to be many, but one of the ones that people are going to feel the most is more war between the sexes. Oh, yes. The gender wars are so extreme. The political division right now in the most recent federal election, the gender divide in the Generation Z is further than any other generation in American history.

1:17:03Caleb Hammer:It's scary. I'm actually scared. And it's impacting more things than that. It's impacting reproduction numbers, which impacts the overall economy. It impacts retirees, the retiree-to-worker ratio if people aren't fucking. And people aren't fucking. People hate each other. Now they have your swiping based on political affiliation on the dating apps, you know. So it is very scary and it's sad to see. And unfortunately, again, it is usually like the white women that are calling me fascist online for personal responsibility. You're in very good company with regards to that. Yeah, but it's like it's a it's really weird because I really just want the best.

1:17:41Caleb Hammer:And we're talking about statistics or anything isn't sexist. it's not right now you know i didn't even say it earlier because it shouldn't be about the sexes but when we talked about people struggling post-college degrees and not get a job it's actually not women they're they're getting uh jobs at the same rate as new degree holders is traditional it's men that have fallen off the cliff but i didn't want to focus on that because this shouldn't be a big gender war but the gender wars among gen z right now is insane and we're going to have massive consequences down the road, just as we've seen in South Korea and Japan.

1:18:14And

1:18:14Caleb Hammer:I'm terrified for that as a hopeful future retiree. Yeah. This was from my newsletter this week. Asian women now earn more on average than white men in the U.S., a finding that adds a wrinkle to common narratives about patriarchy and white supremacy. Asian women are winning. Yeah. Yeah, sure. Of course. And like I understand, there's the history, right? So you got to put many people feel burdened by history i get it victimhood's easier to have than you know saying like we're doing okay now um i think i think it's it's very there's two there's two sides on that more uh i guess if you have to put it in a camp right-wing perspective is like you know oh everything's good now so you know we don't even need to think about what came before right it's like okay but there is an actual history and then on the left-wing side that's just as bad is like they don't even recognize that there has been progress it's all victimhood it's all bad women are oppressed all this stuff it makes no sense have to acknowledge the realities of history and you have to also recognize when we're trying to change society that we actually have changed society and people are doing better than before the thing that's kind of an unseen cost of always looking with a historical context that forgets the present is that it actually denies people who are in a good situation from ever feeling like they're in a good situation.

1:19:34Yeah, absolutely. You go, hey, hey, you fucking arrived. I get it. Burdens from the past, things that need to be remembered so we don't fall back there. The main fear is if we don't keep talking about it, maybe we'll go back there, right? Keep a weather eye on that, make sure that that's happening. But if you make progress in the present always neutered by where it came from in the past you never actually give people the gift of feeling the opportunity for

1:20:03Caleb Hammer:celebration couldn't agree more but you're evil for saying that so i'm aware it's fine i've been called it a lot uh people aren't fucking caleb hammer like that's the i did i did a four-hour debate about the birth rate decline uh i could have just who uh it was uh steven jay shaw who did the birth gap documentary uh simone collins who they say people are fucking because they're not no no no it was a demographer a pronatalist and a statistician uh it was broadly broadly in agreement although the reasons were what was being debated it was kind of i've been deep down this rabbit hole for a while um which if anyone knew the actual reasons we would be able to fix it right and every country has tried to throw a lot of money at it and it's it worked in hungary for a year and then it fell back so correct there's there is a number so lyman stone would be an interesting one for you to talk to from a like economic implication he's like institute for family studies which you may have referenced at some point he's the man when it comes to these like tip of the fucking spear um there is a number that you can pay people to fix the birthright and it's not that much but it's fucking loads compared with what we spend it's like 10 of gdp it's a lot i mean it might be required at some point right because that's like collapse of human civilization at some point i don't think you know luckily the united states were like generally pro-immigration people want to move here so we'll be fine but places like uh south korea are done yeah for every hundred south koreans will be four great-grandchildren yeah 96 gone within a century what's this so have you looked at um the economic implications sort of macroeconomic implications of a declining population yeah i mean i'm more focused on the retirement when we were um these numbers i'm gonna have to be a little fuzzy on because it's remember exactly, but when we first started a social program called Social Security that has good intent, not an evil program, mismanaged, not smart in the end.

1:21:56Caleb Hammer:We had a worker to retiree ratio of 100 to 1. What are we at now? It's close to 10 to 1 or something? You could have these numbers, but the closer and closer we get, the more burden it is on the individual. If you have social systems that are solely reliant on a growing population, growing tax base, it doesn't work. They fail. So all the social programs are starting to fail. You're seeing them starting to buckle. Social security is going to have a mandatory 25 % cut in 2032 is what's projected. Why? So when there were more workers, we were contributing more money than was going out. So that money was starting to build.

1:22:35Caleb Hammer:Because old people don't work, but they do need caring for. Yeah, which makes sense. and that social security fund was starting to build. But where was it? Like around early 2000s or something, we started to take more out of it than was going in as the baby boomers started to retire. And also there's just less people replacing them. And by 2032, unless the retirement age changes, unless the cap on social security tax changes, unless we - The cap on social security would be brought down. Or we also cut benefits to those who are already high incoming. I mean, you know, all controversial for different reasons, whatever.

1:23:09Caleb Hammer:That's not the point. But unless something changes, the fund goes to zero. And then the only money that goes out is the money coming in. And that's projected to be a 25-ish percent cut by 2032. Fuck me. That's going to be unpopular. Oh, it's good. Whoever's president is going to get killed. I mean, it's going to be bad. We'll probably just, honestly, the copyrighted law will borrow the difference and our debt will just go even further. Probably what's going to happen. The last time we made a compromise was during the Reagan administration, if I'm not mistaken, where they barely raised their retirement.

1:23:36Caleb Hammer:You have to remember, the average lifespan for - What is it now? 65? Yeah, right around there. And we raised like two years. The average lifespan for when we started Social Security was like, if you actually make Social Security, you're going to live for another two or three years. Now you're going to live a couple decades. So it just doesn't make sense anymore. Even though it's super unpopular among the highest voting base, the boomers, Social Security retirement age for what it was actually intended to when FDR signed it into law should have been raised to almost like 70 by now. which sounds evil.

1:24:09Yeah. Does anybody like the idea of working and working and working? This is, I've still not been able to thread this needle properly. I've done four hour fucking discussion with the best on the planet, as far as I could find to talk about this stuff. Endless episodes with Steve and I've had a Lyman on before. I've had Simone's husband on people that are skeptical, critical, all this stuff. I'm like, dude, like if you care about the quality of life of people, more people are going to be old in the future than ever before. We're going to have more old people than ever before. And where do you think the money to support them comes from?

1:24:40Like, do you want grandma? And nobody, I've said this a gazillion times, nobody should have kids that doesn't want to have kids. Nobody should have kids that doesn't want to have kids. There is a more extreme position than that, which is it's your duty to have kids to feed the economic engine. I don't subscribe to that view. but like just the fact that birth rate decline is not a problem is kind we shouldn't we shouldn't consider it especially from a left-leaning perspective we shouldn't consider it because it's good for the environment like i i've really i've really struggled to thread this needle

1:25:14Caleb Hammer:like properly it's a hard one the thing that disappoints me is you know before i was even born right around when i was born in the 90s they considered taking that social security fund and having that money get put into something like the S &P 500. At this point, it would be insanely large and we would have enough money to do whatever we want. We would have like a Norway level sovereign wealth fund. It would be incredible because Norway is actually capitalistic and smart with their money, apparently, via the government. But we said, no, let's tie it to the low-T bills like Mr. O 'Leary was talking about, which is another reason why I'm against low-T bills because guess what?

1:25:49Caleb Hammer:Didn't grow. Now it's being drained. I saw some stats around Sam Backman-Fried's investments with FTX. Anthropic was one of them. I think SpaceX was another one. And because during administration, bankruptcy, whatever the fuck it's called, what's it called? Liquidation. Like when we sell it all, sell everything, get the value of it right now and just give people the pennies on the dollar to what it is that they're owed by this bank that goes under that was run by a guy that played League of Legends while he was on Skype calls. If they'd held... to now everybody would have got their money back i mean you could have paid people probably double triple quadruple their investment in anthropic is worth like a fucking insane amount of money the same thing goes with spacex ipo that just occurred that's a question what do you make of having the world's first trillionaire in existence right now yeah it's interesting a lot of people are very angry about it um you know uh a lot of i i'm happy that you can get rewarded in this country for the things you do.

1:26:56Caleb Hammer:We're getting internet beamed from space. I love my Tesla. The self-driving is insane. If people haven't been in a recently updated self-driving Tesla, like you can read, eat, drink coffee, scroll on TikTok, and the car will get you somewhere perfectly fine without looking at the road. It's one of the crazy, that's technology no one would have even dreamed of 20 years ago. The things that we're doing, the private space, Like, I think you should be rewarded for it. Trillion's a lot. It's crazy. But even if the argument is you're against someone being a trillionaire, what's then the action? The action is you're forcing him to sell a position of his own company.

1:27:31Caleb Hammer:You're saying we're taking a gun and we're saying you must sell a position of your company to pay tax on it. I'm against that as a philosophy. That doesn't make sense. Should a trillionaire exist? I don't know. But if you decide the answer is no, the actual action that comes from it is world's worst than whether or not a trillionaire should exist. Forcing people to sell their companies crazy. It's a really interesting argument. I understand inequality is one of the craziest distorters of human behavior. So one example from Candice Blake, who's out in Australia, she looked at levels of self-sexualization and beautification of women and correlated posts on Instagram and Twitter at the time with the geolocation it came from and looked at the wealth inequality in that area.

1:28:16women that were in higher wealth inequality ecologies posted more sexy selfies did more self-beautification and more self-sexualization the reason for that her theory was when you see both how high you could climb and how low you could fall if you pick the right or wrong mate that on average will be at least contributing to the household or maybe the breadwinner and the primary provider for you and your future family you start to turn on the taps in terms of the way that you work. And that's one example in one very small niche of one very small study. When globally, everybody is now aware that there is a guy on the planet right now that could lose a trillion dollars and still be the richest man on the planet, that you and me and everybody is closest to the second richest man in the world than the second richest man in the world is to the first richest man in the world, that is deranging.

1:29:11It's deranging to the way that people see their place in society.

1:29:15Caleb Hammer:It is. I just try to put it in perspective. And if the thing, the thing is, I do well. And I'm okay with paying more in taxes if that's the argument. I'm not okay with it if we're not even able to investigate fraud, if we're not able to blah, blah, blah. You know, there's a lot of things. The bureaucracy is insane, fucking. So I'd rather not pay more in taxes until we actually get our shit figured out. But even still, I would be okay with paying taxes if we say it's going to fund something that's going to help people. But the conversation has gone away from that to saying that man has a lot of money.

1:29:43Caleb Hammer:That's evil. Let's take it. That's no longer the conversation. I want to fund something that's actually good if we're going to raise taxes. So they've lost me at that conversation. And also they think like where does him being a trillionaire affect you? For me, I think what actually affects someone's personal life is they have to call a cashier to unlock a toothbrush at a corner shop. That's actually impacting you on a daily life. Zoning laws is impacting you because it's preventing houses and higher rises being built, which impacts your housing costs. Student loans being tied basically to hiring more administrators.

1:30:19Caleb Hammer:That impacts you. There's so many more things impacting you than someone whose companies that he owns, you know, large stakes in went public and they're being valued high, which made his net worth go exponential. There's so many more things to address first than freaking out about that. but something in the human nature especially of the more extremists i will say and more populist is like that person has a lot of money i don't let's take it but even if they took all of his money i think everyone gets like what is it like a thousand or two thousand bucks it's something it's something that it would actually be really nice and for a lot of people could be life-changing but that's one time it would drive inflation extreme and uh it would actually just be damaging in the end because then we don't have life-changing technology why would it drive inflation extreme speak to me as if I'm five.

1:31:01Well, you know... Talking to you like you're a fucking LLM here. Can you imagine if you had a Caleb LLM just shouting and screaming at you all the whole time?

1:31:10Caleb Hammer:A rapid supply of 350 million Americans spending a couple thousand bucks just out of the gate, like a trillion dollars just pumped into the economy like that. I mean, that'd be brutal. Just look what we did during the pandemic pumping hundreds of billions. So it'd be pretty brutal. Whilst also sounding like the sort of thing that we would want, but not. Yeah, you need people to spend money. want in the micro but not in the macro yeah not so much that it drives insane hiring sprees that pushes everyone's incomes to insane levels that pushes inflation higher what are the biggest financial red flags in dating uh high car debt would be absolutely horrible if i pull up to that tiktok girl we saw earlier in 50 000 car financing a 50 000 debt on a car like we'll hook up but we're not staying for a second

1:32:00okay it's a big red flag high car debt what else um i think it's nice for people to off

1:32:07Caleb Hammer:offer like splitting the bill on a first day you know i like being i guess the man and like paying for it but i think it's actually it's a green flag when people you know if they expect you to pay for it i think is a bit of a red flag you know if they're thinking like they're that special thing and that's why entitlements i don't know it just kind of turns me off specifically if when people have that main character syndrome and it gets tied into the financial situation of like expecting things you know that's kind of gross to me a bullshit degree i mean less less bullshit just toss that out to the side yeah what did you degree in yeah no sorry i dropped out this is not gonna work no you meet me on an imaginary imaginary would you date me i dropped out uh How much debt you got?

1:32:50Caleb Hammer:$25 ,000. That's all right. I'd debt you. Okay. Nice tits. Thank you.

1:33:02Car payment? Bullshit degree?

1:33:04Caleb Hammer:Yeah. In that entitlement of expectation around spending. Okay. Anything else? Low ambition. I know that's kind of tied to finances in general, but if someone's that ambitious, I don't need someone to be ambitious to want to go make a million bucks a year. But if someone isn't driven in their career or even just hobbies, if they're not driven, what a turnoff. I think going low ambition, high materialism is the perfect cocktail. It's like, hey, you're allowed to be materialistic as long as you've got the conscientiousness to know where the limit is and to be able to keep the front of the funnel pouring in.

1:33:41Caleb Hammer:Yes, you've described the gold digger. We've had lots of them on the show. they're the oh i love a couple with a gold digger i can just i can just verbally punch all day why so much fun it's just so much fun because i see the person the typically unfortunately a man but i've actually had the reverse a few times but usually the man's actually working making a lot of money and she's over there feeling entitled and i see all the spending in their own statements i see proof in front of me i've heard just spending all this money and feeling like they should do all this well this guy over here is struggling working two jobs it is just it is a brutal thing And the nice thing, the thing that I love about it is seeing that light bulb go off in his head when he notices this person is using me.

1:34:20How many couples have broken up because of what you revealed financially?

1:34:24Caleb Hammer:Very rare on the show. We've had a couple. I had one divorce. It wasn't from the show. And it was a couple of years ago, which is a bad marriage. But it's actually pretty rare for people to break up. Should couples merge finances? At some point, it's nice to have a joint account that incomes go in and then bills come out of. and then we can send fund money to our own accounts from there. I think after marriage makes a little more sense, at least common law marriage, because then you have some of those protections in the case of death or whatnot. But yeah, I mean, it's fine. It's fine if people want to keep it separate as long as they can actually budget the household.

1:34:57Caleb Hammer:People just usually fail at that without getting insight on the full thing. What's your perspective on prenups? Yeah, it's fine. If there's like a big wealth divide. Yeah, a big wealth divide, it makes sense. I think if you're both making 100, it's a bit weird. Do you often see financial infidelity, like hiding purchases or debt or accounts? All the time. So common. And most people don't think it's actually much of anything, but the other person feels really hurt in the end. They just don't realize it because spending is just one of those things. Or it's not viewed as extreme as cheating. It's not as extreme as cheating, but it does impact the other person that they're hiding it from more than they think.

1:35:28Caleb Hammer:And the moment it's exposed on the show, you can see the pain in their face. It's still trust, right? Yeah, it's trust. It's exactly. Trust, not talking to the person. And it's a lot of things and it hurts them personally. If you're not being honest with me about this, how can I be certain that you're being honest with me about anything else? Oh, yeah. Absolutely. It's a vicious cycle with that stuff. What a, is there a like sex difference in what men and women go broke doing? Honestly, no, not really. I mean, I'll get a little. You're able to be equally retarded in similar directions. Equally retarded.

1:36:05Caleb Hammer:I mean, everyone loves collectibles. They just get like different. and I got little booboos on the women and I got Pokemon cards on the men. Everyone loves collectibles. No, no, no. But like, you know, it's like split down the genders. Like both genders love it. Does everyone love it? One's obsessed with Warhammer 40K and others obsessed with Beanie Babies. Exactly. So, I mean, you'll get some more frivolous spending. Maybe a guy will put some more into his car. A girl will get more extensions. But it's similar levels of bullshit. What's actually interesting is, you know, talk about young men gambling issues, but it's actually pretty similar in terms of percentage young men and young women.

1:36:35Caleb Hammer:This is not talked about. No way. Men is higher, but it's pretty close. It's pretty close. What do you think of prediction markets? It's fun. Just like drinking, just like smoking weed, anything like that. I think it's cool if you can control it. If you know you have an addiction or an addictive personality, you need to keep yourself away from shit like that. Yeah, mental health issues impacting spending. Is that true? Like shopping addictions and stuff? Yeah, or if you're depressed, it feels good to get that dopamine spike of a quick purchase. Absolutely. yeah mental health affects everything in the end it's kind of that discipline thing right everything stems from the discipline when it comes to personal finances if your mental health is bad usually your discipline is going to be bad I can't remember where it was I read this I think it might have been the UBI test study there was two that were done in 2024 and one of the points there was if you're poor you can only really get small doses of pleasure from small things but that means that you're more likely to spend frivolously because you need to relieve the stress it's that point that we made before like if you have not that much pleasure in your life and you're burdened with worry and you don't know what the future has in store for you yeah you're going to go and buy cigarettes because the cigarettes alleviate your suffering it's the certain things i remember there's this example from sam harris fucking years ago it was during the some of the more crazy race conversations around mid 2020 and i was struggling to see uh philosophically consistent arguments about um white privilege and he came up with one that i thought was so fucking cool and he said if i've ever gone through tsa and i've had my bag pulled i've never once thought that it's because of my race interesting not an interesting kind of white privilege i've never once thought that like i i've fucked up like i left water in the water bottle or it's a random check by tsa because they've got to do it like this is what they do yeah that is not true if you're of a different race yeah it's just straight up not true and the same thing the same thing to a degree is also true when it comes to being poor that there are these sort of secret psychological loops that people go through about what their financial position means to their identity, how they then cope with that identity, with their behavior, which feeds back into the financial position.

1:39:02That seems to be one of the very unseen death spirals. And it's too complex to put on a billboard. It doesn't sound sexy. What fucking intervention are you going to have as a politician or as a potential president going, and we are going to teach people how to intervene in their conscientiousness when they begin the downward death spiral of sedating themselves from feeling bad about their financial position, doing things that makes a financial position was no, it's way too complex, despite the fact that it might be one of the key driving forces. Okay. How can we, how can we give people, I mean, we do, we give people fucking social media, which is some of the freest dopamine that you can get on the planet.

1:39:43But I think all that that really does is raise the waterline of minimum dopamine that you now need an even bigger dose to be able to break out the top of it. I wonder whether we would be in better financial positions without social media.

1:39:57Caleb Hammer:Oh, probably. I mean, we see things, we see the lifestyles that people pretend they have all the time. We like to chase lifestyles. We're jealous. We're jealous people, jealous species. It makes sense. I think that's one of the drivers of lifestyle inflation. And unfortunately, poor people will go broke trying to look rich. Oh yeah. The car, especially. Absolutely. Is that what's the dumbest purchase category that people constantly overspend on constantly in America? It's certainly the car. Well, and it's baked into our infrastructure. You have to drive. You have to drive to have a job to have to drive like that is the reality.

1:40:33Caleb Hammer:But people will over justify how much car they need needing the new car because of the new safety rating. Like cars would literally kill you five years ago or something. I don't really get that. But fuel efficiency, you can make some arguments and stuff, especially in times like now where gas is up. But people will justify the heck, again, like her, out of getting a$50 ,000 car loan for a car that you do not need. What is the rough rule of how to work out what price of car you're able to afford? It comes down to the monthly payment if you get a debt. As long as you put 20 % down, it is a three-year term.

1:41:10Caleb Hammer:the minimum monthly payment should be no more than 8 % of your income. If it is, then you're getting a car that's likely too much out of your affordability range. Seems like a pretty simple formula. Yeah, it's easy. And it gets most people a pretty good car. What does that get an average earner making 50 grand a year? Oh, I don't know. Should we do the math? I can do the math. Do the math. Okay. Well, shit, then I have to understand what 20 % down would be. So it would have to be post 20%. Okay, okay, okay. $50 ,000 because it is gross income. So talking eight, so that's$40 ,000. You can do$40 ,000 and divide that by 12.

1:41:48Caleb Hammer:So, I mean, that's pretty chunky. No, no, no. Sorry, that's not eighth. I did 80%. Okay, so$4 ,000 divided by 12. That's$333, but you have to come. So as long as you put 20 % down, it's a three-year, your car payment,$333. You can probably get a good bit of car for that money. Decent. Decent. I mean, interest rates, depends on your credit score. You might have to go a little higher, then you just need to pay it down quicker, and I'm okay with that. You just got to put extra towards it. You just don't have to freak out about it if you're doing that, if you're following that rule. I guess a lot of people need credit to build a financial future whilst also struggling to build credit to qualify for it because they lack credit history.

1:42:29Caleb Hammer:Yeah, but there's credit builders now, there's charge cards now where you put the money on there to spend, but it's building credit. so there's a lot more resources today than before if people are just willing to look can someone become obsessed with financial optimization to the point where they make their life worse i mean our friend our friend graham stefan i think a little right i mean i don't know is uh i don't think he needs to i love the dude i love the dude but everything you see on camera is actually what you get in reality and he will micro freak out about just a little penny he's gonna spend on lunch or something and he'd make more money if you use that mental effort on producing a piece of content.

1:43:05Caleb Hammer:Isn't that a hidden cost? A strange kind of hidden cost of obsessing over finances too much. But you know what? He has fun with this. So it's actually probably not making his life worse. Well, yeah, because his enjoyment from scrutinizing and saving is greater than the enjoyment he would get from the spending. It's this weird. I mean, he was built to be a saving engine. Yes. He's like the fucking LeBron James of saving money. But I think for some people, if you get to that way and it's not actually your passion and it's more coming from like, let's say, I don't want to overuse the word trauma, but trauma of like growing up poor.

1:43:37Caleb Hammer:So now you're just freaking out about it constantly. I think that could, you know, hurt your lifestyle. Interesting archetypes of people that grew up without money. I grew up without money. And some people grow up to, I've never had this before. Fuck it, wee ball. Or I've never had this before. It might be taken away. I'm not going to spend it. That's us. Yeah. You read Die With Zero by Bill Perkins? Oh, dude. I know, but I haven't read it. Really fun. It's a three-hour read or listen or whatever. And he's just got some interesting ideas that I would be... I know you're doing financial audit. Are you sitting down with other people that are Morgan Housels of the world, the Bill Perkins of the world?

1:44:17Have you got any desire to do that? Because I would love for you to scrutinize financial philosophies from people that have got popular financial books.

1:44:24Caleb Hammer:It'd be fun, but I also have to acknowledge, even though there's some topics that I'm interested in learning from experts from, I'm no different from just a dude off the street. I'm not a fucking expert. I'll listen to people, but it's hard for me to push back against a true expert in their position. That's why I keep into what I do. It's basic. Personal finances is so basic until you get to the crazy shit. It's so basic until you get to the top 0.1%. It's just budgeting, control, discipline, low-index funds, low-cost index funds, target date retirement funds, emergency fund. That's the shit I'm into.

1:44:55Caleb Hammer:Bread and butter. You've exited all of your rental properties. Exiting, yeah. Why? exciting um better return on investment in the stock market all day every day no hassle either i mean i'm not the one fielding the calls when something breaks but you know it's just every month is up and down depending on what needs to be repaired and just even if nothing needed to be repaired the only thing you take advantage of is some leverage there which can be nice especially if the market booms but in general real estate has lost now to the s &p 500 just consistently i'd love to own a piece of commercial like you do that's great you know you get some some uh quick depreciations on there which is really nice uh so that's something i'd be willing to get into at some point i'm unwinding all of the houses i have in the uk except for the one that i i still live in that's like still my my place of well that's a collapsing country so that's true that is that is true but i mean i there was a period and this was sort of what i grew up with i was very fortunate that when I started doing business, the guy that was my partner was five years older than me in the exact same industry and very, very financially responsible.

1:46:04And I only child, so didn't have anybody that was entrepreneurial, understanding the UK system and working in the same industry with the kind of cashflow and the sort of pacing that we would get. So I just followed the same path that he was on. And his was every time that you get to about 30 ,000 pounds of spare cash, deposit on a buy-to-let, student property between two and five bedrooms in a good student area, hand it off to a management company. They'll take between 10 and 20 % and await you just - 20 % too. Rinse and repeat. I managed to negotiate it to 12, but rinse and repeat. Okay. That's pretty good.

1:46:38And let's say, I never talk about money. This is my Britishism, but I've got you here. So let's say the best purchase that I made was£150 ,000, a five-bed student property in Heaton in Newcastle, and I would have put 25 % down. So I think all in with stamp duty and fees and all the rest of this stuff, I think I put somewhere in the region of like 50 grand down. And that would make after everything 1800 pounds a month and then there would be maybe some repairs that we needed so let's say 1500 so that's like 18 grand 18 grand a year great cash vehicle yeah but what you were really doing it for was to tie because it's an interest-only mortgage so you were just tiding over hoping that everything would be kept in maybe it would spew out a little bit of cash and that would be lovely but you were waiting for the capital gains that was what you wanted i'm going to hold this for 10 years and it's going to go from 150 to 200 to 250 and then it's going to be and i'm unwinding all of these properties and like the future that i promised myself has not come to fruition it's they've all appreciated hooray but kia starmer's changed the capital gains tax i'm getting fist fucked off that and the gains that i thought that was going to make didn't occur and i'm in the exact same position as you i also now this is my fault i have to pull the fucking money across from pounds to USD.

1:48:09So I'm going to get fist fucked on the exchange and I'm going to have to do something creative in order to be able to, it's company to company. So it's relatively linear to do limited company in the US, the UK to an LLC over here. But like, I was thinking this is going to be, you know, retirement fund stuff. And maybe if I'd held it for the rest of time and never left the UK, that would have been it. But it, when I started and I is behind Dave, business partner, that was sort of laying this groundwork for, hey, this is how you get to a financial level of real comfortability. That route is not the same anymore at all.

1:48:45And everybody fucking hates landlords. So something that used to be, hey, you're holding on to this property. You're making sure that it's kept to a high standard. You're making sure that we're well looked after. You're a good landlord, even if there's a management company in between you and us. there's no prestige really associated with it now in the same way no it's kind of interesting i mean

1:49:09Caleb Hammer:i got shit from the landlord thing too i mean i don't really care because it's usually coming from people that have no impact on anything in society but a couple of the places i bought were basically unlivable and i brought them up to be a place for people to live in and people like literally they were on the market people were not buying them to bring it up to live in because it It was in the student area of Western Michigan University. No one was going to live in the student section. No one was buying a house to live there. So it was places that just weren't being lived in that I made livable and actually benefited.

1:49:40There was a period in the UK, and I came in after this, which is, it does make sense. One of the big criticisms, you took a two bed or three bed classic family home and you rejig all of the walls and the construction to turn it into five or six or seven beds. student properties. There's no fucking family in Newcastle that needs a seven bed house in Heaton. That is basically locked in for the rest of time that this is going to be a student property. And now if you ever stop, it's called an HMO, it's a house of multiple occupancy. If you ever take it out of that, you can never get the license back.

1:50:18So they're now trying to reverse that back to try and encourage families to buy these houses. But the problem is I'm never going to sell one of my houses well that's not i would sell it to whoever wants to pay the price but no family is going to pay the price that i can get from somebody that wants it as an investment property because they are going to have to knock all of these fucking walls down and turn it back into what it was before it was turned into a student house which i didn't do governments will

1:50:43Caleb Hammer:do any rule regulation tax whatever to think they're trying to encourage something other than literally just make zoning laws better for people to just build what people are demanding. I will never understand it. That's why I love this town. I love Austin. Because we let people build more houses on units now, on lots. We let people build higher houses. We got rid of parking minimums where the government forced you to have a certain amount of parking spots. It's so stupid. They'll do every policy besides just letting developers build what the market demands. Dude, there is a lot near Zilka that I drive past sometimes.

1:51:20And it used to have one old style ranch house that probably had two beds. It was up on sticks, walk up a little set of wooden stairs to get to it. Classic wooden ranchy house. And it had a trailer thing that was for some pancakes. It must have been a business that the person had started at some point. And there was a bit of a yard outside or whatever. and then one day no house no trailer just flattened like there'd been a miniature atomic bomb that went off there are now three ground floor first floor second store story houses

1:51:54Caleb Hammer:built on this one fucking plot of land yeah and they look nice they've i mean it's still all green and insulation and wooden shit at the moment but and that's nice that's due to literally texas and the city of Austin just a couple of years ago, like passing those kind of reforms. I heard that the housing problem in America would be fixed if the zoning laws were changed, that there's enough demand and enough capital to be able to make the houses. The only issue is that the NIMBY problem. Yeah, it's the NIMBYs. Yeah. Which makes sense. I mean, if you're thinking about your own interest in California and LA, you want the cost of your house to continue going up forever.

1:52:30Caleb Hammer:That's usually where the majority of your wealth is. You can borrow against that. So of course, you don't want more development coming in, housing prices to fall. It's economically against you. And you're usually a big voting block. You're a big, uh, important part of local elections and you can be a loud voice at the city council meeting. So it makes sense that people are against it, but I don't know. I'm Yimby all the way. Build with the market demands. I think a couple of restrictions make sense. I don't want it like a, uh, you shouldn't be drilling for oil in someone's backyard. You know, I don't know.

1:52:57Caleb Hammer:I I'm overall pro data centers because the information around it is a lot of misinformation, but do I want a data center in my exact backyard? No, build them in the middle of fucking nowhere. That's what I like. So it's just like, yeah, some restrictions make sense, but let the market build what the market demands. I wonder how many people are eat the rich. They're taking the money that young people need in order to be able to buy houses whilst also being, I don't want any houses built near me. Oh yeah, usually the biggest NIMBYs are the ones that say in this neighborhood, you know, the signs, what is it?

1:53:31in this neighborhood we accept science is real women are women yes yes women are people black people are i there's i know the exact sign that you mean and usually the nimbys yeah yeah interesting how much money do you need to raise a kid um well uh definitely less than people think for sure

1:53:50Caleb Hammer:because i mean forever throughout human existence you know we're just having kids and it was fine it is a little harder today but going through public school um getting them on your insurance all that good stuff, if you're not thinking about having to get parent plus loans, like you could, you can do it on just a normal middle-class salary for sure. You can have quite a few kids, but an exact number, I don't have that. I think people believe that it's more expensive than it actually might be. But again, a lot of that is what do I think I need? And what do I think that my kid would need versus what, what is actually needed?

1:54:27This is an interesting part of that birth rate debate that we had, where in order to have the kid realistically, assuming that you don't have some huge windfall of money, the total pie of money that you have to spend is not going to change all that much. In fact, it might go down as one partner needs to take time off work in order to raise them, and then childcare costs and all the rest of it. That means that your lifestyle needs to take a hit. You need to, I'm not going to be able to go for dinner as much. I'm not going to be able to upgrade the car as frequently. And that feels like getting poorer.

1:55:04Yeah. Where what you've done is you've just reportioned the money from what would have been car to now what now is child.

1:55:11Caleb Hammer:Which I empathize with. It makes sense. So if you don't want to have kids, don't have kids. That's kind of what you said earlier, right? You know, we shouldn't force people to have kids, but we also shouldn't be doing misinformation of people thinking they need to have an endless supply of money to have kids like we're richer than ever before and people have had kids when we were poorer than ever before like you do need money you need school supplies you do need to make sure they can be on your health insurance like there are a lot of things you need money for but we overemphasize it for sure forcing people to have kids is horrendous but scaring people out of not having kids when they could because of misinformation is also something that never gets spoken about oh yeah yeah caleb hammer ladies and gentlemen dude you're awesome i appreciate you i think what you do is great where should people go to check out all of the shit you've got going on caleb hammer on youtube and i recommend everyone download dollwise change their lives unreal until next time man appreciate you thank you goodbye my beauties dude that was fun if you're wanting to read more you probably want some good books to read that are going to be easy and enjoyable and not bore you and make you feel despondent at the fact that you can only get through half a page without bowing out.

1:56:22And that is why I made the Modern Wisdom Reading List, a list of 100 of the best books, the most interesting, impactful, and entertaining that I've ever found. Fiction and nonfiction, and there's real life stories, and there's a description about why I like it, and there's links to go and buy it, and it's completely free. You can get it right now by going to chriswillx.com slash books. That's chriswillx.com slash books.