MI Rewind: Take Control of Your Financial Future w/ Brennan Schlagbaum

23:57Do you understand how to do this skill at work? Because I came into the workforce not knowing anything on my actual job, but I felt like I knew a lot from the books. So online education, I think, could have a huge, huge change in the near time future. Honestly, I've been looking at my child's education, which we don't have yet, but eventually is, do I want to invest into a 529 or do I want to invest into a UTMA? And so I've been considering the differences because of will the traditional education still be around? Will 529s be grandfathered in? Will there be changes? And so there's been a deep conversation with my wife and I on those topics because of that.

24:40On your point of 529 versus UTMA, I have a two and a half year old son. I chose UTMA because of exactly what you just said. I don't want him to feel like he has to go to college because he has this huge lump sum of money sitting aside for him that can only be used for college. And I don't personally believe that college is going to be what it is today in 15, 16 years when he's ready to go to college. Truthfully, if I could go back, I probably wouldn't go to college. And I have an MBA, so I've done grad school. I've done it all. I was in school for a while, a long time. I don't know if I'd go back and do it again.

25:12So for me personally, I chose a UTMA for my actual son. Robert Leonard And I would like to think that the 529s would be tailored or there would be restrictions lifted if things do change. But I don't really want to rely on that. And I think a UTMA is an awesome alternative to the 529. So we've been heavily considering the UTMA because of that. Robert Leonard I saw an interesting video from Elon Musk the other day, and it kind of touches on this dynamic that you talked about of taking courses and having a skillset that you can bring to the workforce rather than just a degree. And in this video, Elon basically said, I told everybody that any job description we have, it cannot say that it requires a degree.

25:51It says it needs to require exceptional ability and not a required degree. And what he went on to say was that you need to be able to demonstrate that you have exceptional ability. And that's how I feel the future of getting jobs is going to be because right now, I think that's the big disconnect. You can just put that you have a degree on your resume and everybody knows what that means. Everybody assumes that means that you have a certain level of education. Whereas you could have a higher education than somebody with a degree because you've studied more from books and podcasts, but you're not being able to show that to them.

26:25So I think what's going to happen is if you're studying in untraditional ways and have this knowledge, you're going to need to also learn the skillset of being able to present that information to a potential employer and get them to understand the value in you not having a degree and how you obtain that education. Yeah, that's a really good point. And that's why I talk about the skill-based economy is like, as a self-employed person in the potential of being self-employed is if I were to go hire somebody, I would not look for certifications. I would not look for degrees because I would want somebody that I could go pick out of the workforce and say, hey, go do this task or go do this task.

27:00And I want you to be self-sustainable. I don't want to have to sit there and onboard you and teach you. I want you to be able to pick up the skill because you've learned it elsewhere and take it, even adapt it, even build and be creative with it. I feel like a lot of traditional education puts you in the workforce. And I think the workforce has a box around you. I don't think it allows for adaptability and creativity. It's like, hey, you're going to do X, Y, and Z every single month, especially in the accounting field that I'm in. And there's no other thing that you're going to do. That's what we're going to pay you for.

27:29And I think that shuts a lot of people's minds down. They become every single day, they're going to the same place, doing the same thing. Their brain and their creativity is closing down. They're tired when they get home because they're tired of the same thing they're doing every day. They're losing interest and they're losing that faith. They get home, they just want to rest and hang out. And I think a lot of dreams go to die when that happens. And I've realized that with myself is I need to find the kid in me again, the dreamer and somebody that's actually believing that I could take this and create this versus it is what it is and that's what it's going to be.

28:01And I think that's a huge thing. And I think a lot of people are starting to realize that, especially with the engagement online. The engagement online has been incredible. People can talk across the world in seconds. I mean, think about where you are and where I am. We're sitting here talking almost as if we're in the same room. I think that's invaluable, really. The only thing I'd add is that I can't really speak for other majors, but I've been through finance, economics, and accounting. What I learned in all of those courses and through those degrees and even my, I'm a CMA, your CPA, very little of that was actually applicable to what I actually did in my day-to-day job.

28:36And I've scaled the corporate ladder. I started at the very bottom. I didn't get to the CFO spot, but I got pretty high. And throughout that whole thing, there was very, very, very, very little that I used from my traditional education in my day-to-day job. There were some times where I'd lean on some theory that I learned in school. But I mean, this tactical stuff, even to get into the nitty gritty of accounting, even they teach you debits and credits and all the accounting in school. But when you're going to do that in an accounting software in the real world, it's so different. It's so, so different.

29:07It's almost like it was useless even to learn. The concept and the fundamentals are there, but the way you actually work and do it in the real world doesn't even matter if you almost even know that theory. There's no point. And I think a lot of traditional education teaches that theory-based learning. And while that's beneficial to some extent, I don't think we should be paying to do that to get a job. It should almost be reversed, whereas the online skills, the entrepreneur-type skills that you're trying to learn should be the ones we're paying for. And hey, if we want to go learn some theory, be a deep thinker, and think different things like Aristotle back in the day, we can do that.

29:44But we don't need to necessarily pay for that. Let's take a quick break and hear from today's sponsors. Hey, it's Sean O'Malley, just popping in with a quick message. If you like this podcast, well, I've got great news for you. We've got a handful of other shows for you to explore, from learning about Bitcoin to embracing a richer, wiser, happier lifestyle. Just go into your podcast app and type in We Study Billionaires to find our collection of shows. We Study Billionaires is our flagship podcast, and we've made a name for ourselves over the years by interviewing the best investors in the world, including Ray Dalio, Howard Marks, Joel Greenblatt, and many, many more.

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33:27But if somebody can replicate the networking value from traditional education on an online platform, I think it's game over. I think that that is going to be the future. Totally. Networking is a skill of mine. I love it. I love networking with people. I love talking to people. But it's funny because you say that, and I think of traditional education, not traditional education, but the workforce, right? When you have a corporate event that you're supposed to go network at, how many people actually get excited for that because they're not passionate about what they're doing. So they're not really looking for business.

33:58They're not really caring about it. It's more of a requirement. Whereas when I think about networking with my online account, meeting people, I seek that out. I get excited. I light up when I meet somebody new and I'm like, hey, we could work together in this capacity or whatnot. And it's really exciting. So I agree with you. I think people that are going to learn to take the networking game from corporate and bring it to the online world. And I think it's already happening, right? I think some social medias are starting to do that. Discord is a new platform. Flubhouse is more engaged. I think those are really good platforms that are starting to take that basic fundamental strategy and bring it into the real world.

34:34And I think we're seeing a lot of change with that. Yeah. I've been forced to go to some of those networking events. Even in traditional education, you're forced to go to these networking events or in the corporate world, you're forced to go to them. And like you said, you're not excited. But where I did get crazy value from networking was playing on the company softball team. You're playing with all these guys and girls that they're from engineering or legal or whatever. And that's networking. That's the valuable networking that I got. Even in college, you go to these and you're expected to talk about work.

35:06Whereas you go to these other things and you're talking about... You eventually end up talking about work because that's what you all have in common, but it doesn't start out that way. It's all more personal. You build real relationships. And it was the same for me in college when I played sports. That's how I made a lot of networking connections. It's not going to these financial networking events that you were told you were supposed to go to. It's playing flag football with 20 other dudes and just getting to meet them all. That's how the networking comes about. I meet so many people at the gym on a daily basis, new faces that walk in.

35:35I'll just go talk to anybody. But when I go to a corporate event, I'll leave that event. And all those business cards I got, I've already written them off. I've already forgotten about them because I'm calling my wife saying, hey, that was horrible. I'm on my way home. And that's just the truth of it. It's forced, awkward engagement that nobody really wants to have. So there's not true growth with it. Whereas something that's fun, organic, like a sports or an event, out and about, like at a grocery store, you could run into somebody and it could be the CFO of Kroger and you could be starting to have a conversation.

36:03You would get to know them better during that environment than a forced engagement through a corporate event. Robert Leonard As part of the financial education that you offer, you talk about how a budget isn't restrictive and you're not cheap for having a budget. What do you mean by this? Why doesn't a budget have to be restrictive? Robert Leonard So I make the case that Jeff Bezos needs a budget. A lot of people would disagree with that, but I think of a budget as somewhere to tell you where your money's going. So if I have$100 or if I have$100 million, dollars, I want to know where all those dollars are going because I can optimize in my life better.

36:42And so I think it's a tool. I call my template a budget tool because I want the connotation behind budgets to change. I think a lot of people look at it as, well, if I have a budget, I'm going to have to take all these expenses away every single month. I can't go get my nails done. A lot of women would think that, right? I can't do all these different things that for when I didn't have a budget I could do. That's not the case. You can add a line item for that, but you have to come to the realization, it's being an adult. It's taking accountability and realizing, hey, money, whether we like it or not, it's a big part of our lives.

37:14If we can say all this money is going here, here, and here, our life is going to be a lot more simpler than if we're like, I don't really remember where that dollar went or that$300 went. And you start to get overwhelmed when you don't know where things are. So I think a budget is a huge tool that everyone needs, no matter if you make$20 ,000 or$200 ,000. A budget doesn't change how much money you're making. It doesn't change how much money you have to spend. It's just telling you, like you said, where it's going. And that's the point I try to make all the time. People instantly, I have friends that say, oh, is that in the budget?

37:48They'll make jokes in social gatherings. Is that in the budget? Is that in the budget? It's like, actually, it's not because I don't value it, but it's not because of that. And that's what they don't understand. I'm trying to teach that education. It's like my budget in the month of December, we invested$30 ,000, but we spent probably$100 in frivolous items because our budget said, hey, we have$100 extra to spend there. We have$30 ,000 to the investing side because we value the investing side better because we want freedom. We don't want to just go buy aimlessly. And so would you call me cheap if you found out I spent$30 ,000,$30 ,000 and$100, but I just allocated it differently than you?

38:25I would assume that you're saying, hey, they have some money, but it's where you put it is the important thing. And that's where I think a budget tells you your values. Yeah, that's a good point. Because if you tell your friend, hey, I spent 30 grand this month, and you don't tell them what it was on, they probably think, wow, they spent a lot of money. But then if you get into, hey, 25 of that went to investing, the other five went to snowboarding, they wouldn't think that you really spent that much money in comparison to the 30 ,000. Right. I get it all the time from family and friends. It's a value-based thing.

38:58And I think a lot of people are afraid to actually budget because it brings out what they're actually spending money on. It exposes that. It makes people uncomfortable and people don't want to be uncomfortable naturally. So they stray away from it. They're scared to see the reality. Robert Leonard Some guests on the show strongly oppose individual stock investing, recommending strictly index funds instead. Others believe individuals can beat the market by picking individual stocks. Where do you fall on this debate? Does it depend on the person? It does depend on the person. And for the vast majority of people listening, I'm going to say, go index fund investing until you are an expert.

39:37And even experts will get burned by the market. The market is not something to play with. I'm not saying you can't beat the market. There are people like my uncle specifically that has had 1 % better than the market since he's begun investing. And so he's an expert and that's 1%. 1 % is good in marketing and investing terms, but it's tough to do and it takes a lot of time. A lot of us would rather focus our time elsewhere by either making more money, income that we can invest in index funds, or it's just spending our time elsewhere. We don't want to be glued to our TV and our computers and phones, looking at the market, seeing the latest trends, what earnings have done what, because that's not really life.

40:17if we're sitting there glued to one specific thing, we're not really enjoying different aspects of life. Me as a family guy, I like to spend time with my family and friends. And if I was sitting there staring at my phone all day, wondering if Apple was going to release a new product or there was new a fraud allegation with NVIDIA, that would put me on edge and I would not be the same person. So I think it's easier to do passive investing through index fund investing and just let your money ride. Go focus on what matters, if that's making more money, if that's relationships, and then let your money ride.

40:49Because what people don't understand is, okay, if one person gets 1 % better, that's great. That's a better return long-term. But all that time and energy spent to do that 1%, was it worth it? And most times, you're not going to be the plus 1%, you're going to be that negative 5 % compared to the market. There was a study up to 2015, the average equity investor actually returned 5.69 % or something along the lines of that versus the market of returning about 9%. And that tells you that people are too active in the market. And most people, 95 % of people are going to get burned if they continually try to day trade, swing trade, options trading, all that kind of stuff.

41:28It's cute. It's exciting. But good investing, in my opinion, is boring investing. What do you think about there being a potential index fund bubble? I think it's bogus because if you know the core, what an investment or index fund investment is, is essentially you're buying the market. So if there's a index fund bubble and all these people are going into, let's say the S &P 500 and it's overvalued per se, okay, well, the market's going to crash eventually, but is it going to take that big of a toll? I think if you look at a market in general, there's going to be peaks and valleys. That's part of it.

42:02So if it does burst and it will at some point, people are going to sell, it's going to dip, the world's going to end, and then it's going to go right back up. So you're buying the entire, let's say, the total world stock market index with a Vanguard ETF with VT, the Vanguard total world. If the total world stock market collapses, well, I think there's bigger issues to worry about than your investments at that point because the whole world's unnoticed. Robert Leonard I think people often misuse the term bubble as well. I think bubble has become a catchword in the financial industry. Everybody wants to say everything's a bubble, whereas a lot of times, maybe the index funds aren't in a bubble.

42:43It's just a business cycle. Maybe it's a market cycle. Things pull back every seven to 10 years historically. That is a proven fact. That's how the market cycles work. Maybe index funds aren't in a bubble. They're just ready for a cycle and a retraction. Robert Leonard And that's another thing is people like to put valuations on these companies, right? And these index funds and all these kinds of things is you can only value so much. So this is why it goes back to the index fund investing versus individual stock picking is you can value a company at X, Y, and Z, but there's so many different metrics to look at that even if there's a hundred metrics and you pick the exact right one, other people could drive that stock price another way just based on human behavior.

43:20and you can't account for that. And so there's all these metrics and numbers to look at. I audit company financial statements for a living. I look at financial statements for big corporations day in and day out. I can go and value a company pretty easily, but one, is it worth my time? And two, are my metrics and numbers going to really help me in the long run? I would guess not because based on history, there's no telling based on what a company's valued at if it's going to really be that in the eyes of the public. Robert Leonard Your analysis has to be right, and the market has to agree with you.

43:54Robert Leonard Yes. That's a lot of time. Robert Leonard What are the most common mistakes you see new investors making? What mistakes do you see amongst your friends that are your age, and maybe your family and those in your community? Robert Leonard Yeah. So I think the number one thing is chasing returns, past returns. I think that's the biggest thing. Dividend investing is a huge thing. And I think when people chase a yield because they pay a high dividend, they're not even looking at the company. They're seeing a number and they're saying, hey, this pays 8%. That's a really high dividend.

44:26I want to invest in that. But what if they're on the verge of bankruptcy? Or what if they're going downhill? Well, is still investing in that company long term going to make sense? Because that 8 % is going to probably recoil and probably go, well, hey, eventually if they go bankrupt or something happens to the company. And so I think a lot of people see the GameStops, the AMCs, and they say, I need to be a part of that. And so they experience FOMO, fear of missing out, and they get in at the bubble or the top per se, and it collapses, and they forget what they're actually invested in and why.

44:56And so then they sell at the bottom. And so as most people would say, buy low, sell high. Well, they're doing exactly the opposite. And so people always preach that buy low, sell high, but instead they actually buy high and sell low a lot of times because they don't know what they're invested in. So FOMO, fear of missing out, chasing returns. I think those are the three biggest things, especially with millennial investors that have access to the internet and they see all this information flowing everywhere nonstop. When you look back to when you just started investing, what do you know now that would have helped you grow your wealth quicker if you had known it back then?

45:34Starting earlier would always be my answer to that. And I started when I was 21 years old, 22 years old. So if I would have started three years earlier, that would have been awesome. And I think that would have been my biggest thing is I wish I would have known more now. And I think that's most people in life as they go on, they say, I wish I would have known more at 38, at 48, at 58. It's always going to be the case. But if anybody is listening to this, and let's say they're 18 years old, start investing today. Learn about it. It's not that complicated. Download an ebook, read Common Sense and Mutual Funds, an easy book to read, and start investing because that's all it takes.

46:11And once you start investing, you'll understand the power of time. Time is absolutely the most important thing of investing in general. The more time, the more compound interest, the better the returns. And so I often say, start now. Another thing I want to mention though, for others that are listening that are later in the game, and they're like, well, time's not really on my side. Invest now. Just because you haven't invested up to this point doesn't mean you can't take advantage of investing in the future. A lot of people get bummed out or they get down on themselves and think, I'm 50, I'm 48, I can't invest.

46:43You have a lot of time, relatively speaking. Get in the market. The best time to invest was 20 years ago. The second best time is now. And that's always going to hold true. So that's what my, in general, my answer would be to that. Being worried that it's too late doesn't make anything any better. What are you going to do? Wait longer? Yeah. Yeah. What's the alternative? You're going to sit there and hold cash for the next 10 years, 15 years? It doesn't make sense. So just start investing. Learn, learn. Self-education is key. Going back to the online education conversation, you can learn within a week, honestly, with how much knowledge is at our fingertips.

47:18Robert Leonard I'm a big proponent of actually taking action on the information that you learn, not just learning loads of information. So when someone is done listening to this episode, maybe they log off the Instagram Live or they're listening to the podcast or watching the YouTube video. I want them to go take action. What is that one action they should go take when they're done? The number one thing is get a budget and really sit down with your spouse. If you're single, do it yourself. If you have a spouse, involve them in this process. Sit down and create a budget. A budget is the single most foundational part of personal finance.

47:54It is the snapshot, it's understanding where everything's going. And if you do that, you're going to be so much better off just by knowing where things are. A CEO of a company could not direct a company without understanding where their funds are being spent, where they're making their most money. And if you don't do that on a personal level, then how are you going to succeed as an individual, just like as a company would not exceed as a company? So download a budget template. I have a free budget template in my LinkedIn bio that is awesome with analysis built into it for you guys to use. Use that, do that today.

48:25I promise you, you're going to be better off. Trey Lockerbie Brennan, thanks for joining me on the show today. For those listening that want to learn more and connect with you, where's the best place for them to go? So at BudgetDog is my Instagram. I have Twitter at BudgetDog as well. And I also have Facebook. So connect me with any one of those, go to my link in bio and all my other links are within there, and you will be connected everywhere. Trey Lockerbie I will put a link to Brennan's resources as well as a couple of different books and other resources that we talked about throughout out the show in the show notes below, whether you're listening on YouTube or in your favorite podcast player, you can check those out below in the show notes.

49:02Brennan, thanks so much. Brennan Breedtik Appreciate you having me, man. Brennan Breedtik All right, guys. That's all I had for this week's episode of Millennial Investing. I'll see you again next week.

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