AAR57 - What Does Your Perfect Day Cost?

21:53Andrew Sather:And it kind of turns, instead of where I'm currently at of everything being so hands-off, you have to build that by being much more hands-on initially. So I definitely think that's an important thing to do if you're in a situation where you're trying to currently build the budget or you're currently trying to break the habits or get to the good financial situation. Then just give yourself much more visibility and check on things much more often. and like you said you can break that habit much more quickly um partially because there'll be less to undo um and partially because you're you're kind of cutting those time frames down much more significantly so if you only make a small change each time you check on a small shift the more you do those the more small shifts are going to happen the more quickly you're going to reach reach your final end state.

22:45Evan:Do you have any, I don't know if like milestone markers or do you ever just kind of try to hack your motivation of like, if I hit this number on my spreadsheet, I'm going to celebrate by doing this. Or I know for me personally, an example of like, because sticking to a budget and telling yourself no can be very, very painful. And it's just like, there's no motivation to do something that's super painful with no payoff. And it takes a lot of discipline to do something like that. But for me, I know in the past, I've always envisioned this future where I am not trading time for money. You kind of mentioned the first point of decoupling your finances from time.

23:36Evan:And so it was like, in the back of my mind, I knew whatever sacrifices I was making was towards this far-off goal that I could envision. And I know we're talking about our five-year kind of ideal life, but do you have something like that just in the background of your mind long-term and that kind of keeps you motivated? Or do you have little milestone rewards that you give yourself? Just how do you stay motivated? How do you stay disciplined? Any ideas around that I think would be helpful.

24:09Andrew Sather:Yeah. A psychiatrist may say there's something wrong with me, but financial milestones for some reason don't hit very, very hard for me. At least if we're speaking in terms of, you know, save X amount or have X amount of wealth or whatever. Those have just never hit very, very hard for me. um what does hit hard for me is is two things the first thing is what you mentioned having that long-term goal so i think it fits perfectly in with the five-year question because the life that i want to achieve in five years or 10 years or 20 years is very different and it's a life that will take effort for me to reach and take in uh it will take intent for me to reach that that point so to speak.

24:57Andrew Sather:And so taking the actions like saying no to purchasing something or saying, you know, I'd like to be able to spend X amount on this, but instead I know that it's reasonable for me to spend this other amount and that'll allow me to continue staying on pace for whatever it is. That future life motivates me a lot. And that's why we talked in previous episodes about why is in long-term goals or why you want to earn more money and everything is because that just, that resonates very, very, very hard for me is wanting to build that a good future life. That's not, that's, that's not just, Oh, when I retire, I think I'll be happy.

25:35Andrew Sather:You know, I want to build a life that is, is not only achievable earlier, but also more, more certain than just, you know, when I retire, things will be easier or whatever. the other thing that motivates me is always building in some freedom in the short term to achieve those long-term goals and i know in some ways that's that's a privileged position to be in because basically i haven't you know enough income to have additional spending left over but if you're in a situation where you're able to save any any decent amount of your income i think that you should also be allowing to yourself to spend some of that income and i I mean, and not just in a way of like, obviously you have to, you know, pay for rent and pay for food or whatever, but in a way that you're able to buy fun things for yourself.

26:24Andrew Sather:They could be building towards your peace or towards your control, or sometimes they could just be silly, no nothing, meaningless stuff. But the fact that you're able to get it and give yourself the freedom is fantastic. And so that is one of the big motivators for me as well, um, to be able to, to, to set everything up, set up my budget in such a way that I know I'm building towards that, that life, that, that future life that I want while also nailing everything down so that I have the freedom to spend in the short term and enjoy life. because I know if I don't stick to things and say I just overspend or whatever, then now one of those things is going to be sacrificed.

27:02Andrew Sather:And either I'm going to continue spending and lose out on the future, or I'm going to prioritize the future, and I'm going to not be able to spend much of anything. And so it motivates me to stay on track because I've built a balanced budget for myself that's doing both of those things at once, and I don't want either of them to come out of whack. Does that kind of make sense?

27:23Evan:Yeah. Yeah, and it can be easy to just kind of glaze over this, but I think it's really, really a lot more common than people might realize. Dave Ramsey talks about the idea of there's a spender and there's a saver in a relationship, and they usually tend to pair up somehow. And one of the problems with the saver is that they can be so caught up in, I got to save more, I got to save more, I got to save more, that you end up never, to your point, enjoying and spending all this money that you're spending all this time to accumulate. and I've heard on podcasts from multiple financial advisors who talk about how people struggle to spend their money like this idea of I'm just going to hang on because I just don't know what's going to happen and so your need to over control and over tighten prevents you from enjoying what you've built and people need help to actually spend and um it's it's going to be personal for everybody and we all have our our tendencies and things like that but um it it's sad i think that um it's hard it's so hard to spend for some

28:42Andrew Sather:people yeah i would say if any part of your finances is based around fear then you're probably going to be doing something wrong because fear in general in life usually leads you to do the wrong things. I'm not saying always you should probably run away from the tiger that you ran into in the jungle, but for some, for, for a lot of stuff in, you know, normal controlled, you know, the modern human life, if you're making decisions by fear, then you're probably doing something wrong. And so like, if you're, you know, for example, on the other side of things, if you don't have enough money and you're just afraid of your debt, then that, that fear of debt leads a lot of people to just ignore it.

29:22Andrew Sather:Just, you know, put it off, not deal with it. Cause it's really scary and it is really scary to confront and to deal with and to build a plan for if you build a plan for it and know you're making progress and know you're going to pay it off in say nine months you know that you've calculated it you're set there's not anything to be afraid of anymore it's handled you've seen it it's usually we're afraid of things that are that are just unknown and new and novel to us and if that debt for example is no longer new to you then you're not afraid of it um and the same goes for spending i think that's that's a that's actually a really good point um that it can be too easy to prioritize saving over everything else and just be afraid to spend any of it because now you feel like you're missing out on something or going to be missing out on progress and but if you you know build it again into your budget build that structure of i know i'm still making great progress i'm still saving great money that's fantastic like you know if you've you know if you're saving 30 % of your income, that's fantastic.

30:23Andrew Sather:Maybe if you're not spending anything, knock it down to 25 % and take 5 % and just go spend it on stuff. I don't care. I don't give a crap what it is. Just be willing to spend some of it. And that will make your short-term life much happier. And of course it'll sacrifice long-term progress. That's a fact. That's how the math works out. But it's, it's, it's just not that big of a deal. Like achieving that, that end goal life. If you are suffering, so to speak along the way is, I don't know. That's never worthwhile. For me, that's like putting everything off until retirement and again saying, oh, I'll be happy when I retire.

30:57Andrew Sather:That is a long ways off in the future. And if that is the only point in your life that you plan to be happy, then I think that you're missing out on so much. Yeah, absolutely. Speaking of budgeting, because you brought up billionaires and trillionaires earlier, do you think that the billionaires and trillionaires budget anything? Or do you think it's all just flying in and out and there's nothing they could possibly do that's going to screw it up.

31:20Evan:I'll throw another curveball out there, but a lot of the wealth isn't always liquid, so they might budget. I mean, I think they would. People who are good business people probably can handle a decent budget, right? How do you... Unless you're able to invent the best product that's ever been built. I think a lot of other businesses have to block and tackle and do things the boring. Yeah, that's true.

31:50Andrew Sather:I just can't imagine what the numbers on that budget look like because I don't think it's, you know, oh, I'm going to save $600. I don't think a number that small is showing up anywhere on those budgets.

32:03Evan:Well, hey, I'll throw this out there. You know about the Warren Buffett breakfast thing?

32:09Andrew Sather:I don't think I do. It rings a bell, but I don't think I do.

32:12Evan:Okay.

32:13Andrew Sather:Well, like we'll pretend that I do know when you're just repeating it for the listeners. even though that's not true.

32:20Evan:He was featured in, I don't know if it was like Forbes or something. And they were showing his daily routine. And I guess his wife would leave some change on the counter, like a dollar and some change, and leave exact change. And then based on what she left is what he would buy for breakfast. And so I might be butchering the story, but like yeah the exact change thing is is 100 % of fact like he would go buy his breakfast from mcdonald's based on what dollar and cent that might be hard these days right like the way

32:58Andrew Sather:exact dollar bills might be feasible but not not change so it's big not coin yeah get a couple gumballs right but yeah i mean the the often usually you get to that point by by building the right habits. I mean, you're just not going to achieve that long-term success if you don't have the right habits and mindset to get to that point, which points to the whole your control in the short term might be nothing, but your control in the long term can be a lot, a lot more, and that gives you a lot more leverage. But kind of speaking of that, one thing that comes to mind with trying to build more peace and control financially, I mean, if you just, again, And we talked about it a good bit, but if you just look online, you know, on YouTube or on TikTok or Instagram or whatever, usually people are going to just be talking about optimizing their net worth over anything else.

33:50Andrew Sather:What is your viewpoint on that? I know that you kind of talked a bit about if you just prioritize saving everything and you're not spending anything and you're scared to spend, then that can be an issue. But do you see any other issues with just optimizing net worth over kind of the end goals behind the money being peace and control?

34:11Evan:Yeah, that's a huge problem. When we talk about things that are out of our control, your net worth is totally up there. Because you have the illusion of control when things are going up and to the right, when the economy is booming, when you haven't had any tragedy in your life. you could run into something medical something with your house, something with your car and lose your job and your dog also needs 30 ,000 in vet bills or whatever it is and this can all happen in a very short time and so if you're so focused on your net worth and just hitting whatever optimizing over net worth and how that's going you're going to be super discouraged when that happens to you not to say that you won't be discouraged anyway, you will but you could put undue pressure on yourself if you have this view of where's my net worth where's it going all of those things and like you were saying making decisions out of fear you could also make decisions out of feeling like you're losing that game and then you can start to make bad decisions like let's say you lose a job and now you're looking for work and you find something that will help you optimize your net worth really quickly, but something inside you is telling you this isn't a good fit.

35:38Evan:So there's so many ways this could play out, but I agree with you. It's not a good way to go about trying to optimize for net worth because you really don't know what's going to happen. And if your whole identity and life's purpose is around the net worth, then you're going to feel so disappointed if you're not living up to that. And how much time can you waste of not appreciating where you're at, what you've done, by optimizing for that? Obviously, you agree because you brought up this topic, but what are your thoughts on some of this?

36:23Andrew Sather:yes yeah yeah for for me and i'm sure there's i guarantee you there's some catchy saying in here and somebody's probably already quoted it um but if you're tying your net worth to your self-worth then there's there's going to be an issue like you said it's it's in a lot of ways it's out of control it's going to fluctuate drastically at different times in your life and if you're tying who you are and what what you as a person are worth to that that fluctuation then it's just never going to go well you know same as if you were if if you were an investor and you you know tied your your self-worth to how well your investments do especially in the short term then that's that's just incredibly dangerous and you're setting yourself up to be to be disappointed and to look down on yourself no matter what because things are going to go down at some point no matter what and i was actually talking to a friend pretty recently about this about they them trying to make uh financial progress and just being frustrated at times but they're still doing the right things they're still making progress in the right direction but the kind of overall picture like net worth for example is is struggling in the short term and even though it as with everything it's easier said than done i was just talking about how the fact that you're making progress in the right direction is already something to be proud of.

37:45Andrew Sather:And that's already a way to view yourself as, so to speak, a way to frame who you see yourself as. Because there's a lot of people out there that don't make progress in the right direction. I'm not trying to put down anybody specific or anything, but there are people that just don't work to make progress. And if you are somebody that's working to make progress and do better, be better, achieve something you want to achieve. Just working towards it, making progress towards it is already a huge step to make. And that's already by itself something to be proud of. And kind of back to what you were talking about before with financial milestones and staying motivated with everything, just being aware that I am making progress within reason, no matter what I do financially, because I've set up those systems for myself and because I know where everything is.

38:36Andrew Sather:And so I have some of that control. It gives, it brings me a lot of, a lot of peace and a lot of happiness and fulfillment to know that I'm making progress towards where I want to head. And the progress could always be faster. I guarantee you there's something I could be optimizing to be, to be better, to be doing better. That's a fact as with everything. And same with, you know, exercise or working out, we've been trying to, to exercise a lot more and there's always something in the gym you could be doing better. You shouldn't be doing hammer curls. We should do preacher curls and you shouldn't be doing, you know, pull-ups with this grip.

39:06we should be doing this great there's always something to change and but the fact that we're going to the gym and the fact that we're progressing is is frankly all that matters

39:17Andrew Sather:and same financially you could always be saving more but if you're saving something investing something budgeting something then that progress is worth a lot more than we give ourselves credit

39:28Evan:for yeah um i think what you're talking about is controlling your actions controlling what you are doing rather than trying to control the outcome is what i'm hearing yeah but honestly that should

39:43Andrew Sather:probably be the takeaway the whole episode is just just control your actions yeah um so what

39:50Evan:are some ways that people get out of control um what are some ways that they can damage you know we have this five-year vision of where things could be, whether some ways that people kind of stop themselves from making that progress.

40:10Andrew Sather:One to kind of hark back to what we talked about before is, is living by fear, whether you're afraid to spend, you're maybe afraid to save, you're afraid to budget, you're afraid to look into things. If any decision financially or otherwise, but in this case financially, is decided by fear, then I would take a harder look at it and do something about it. Again, making progress on something, making a decision on something is already a very big step. And I guarantee you, if you look at that thing you're afraid of and go make a decision on it, you're going to feel better, you're going to do better, and you're going to start heading in the right direction.

40:49Andrew Sather:So look at everything you're doing and make sure that nothing is about fear. a couple more obvious ones based on what we've talked about before is just not spending erratically it's it's okay to spend it's okay to spend on you know seemingly silly stuff as long as that seemingly silly stuff of course isn't going over your budget and is is is just bringing you happiness it's not something that you're spending just to go spend money on but it's something that you're spending because it'll bring you happiness for some kind you know going and buying a house plant is not like these two bad boys back here.

41:24Andrew Sather:They're, they're never going to earn me. They're never going to earn me any money. They're never going to change that much about my life, but they bring me peace just to be there. And they bring me happiness to take care of, to have got to see whatever. And so I don't, you know, I'll spend money on it. It doesn't, it doesn't matter. A second is to, to never live blindly financially, or again, otherwise finances bleeds into so much of the rest of our lives, but financially don't live blindly, look into things, be aware of things. I guarantee you that just being aware is going to change the decisions you make, whether you realize it or not.

41:59Andrew Sather:And that's, that's one of the hardest steps to take, but probably the most powerful. And then the third and last thing that I would say is, and it's a little bit more tangible is avoid introducing ongoing expenses that are going to hamper your future too much. It can be difficult sometimes to figure out where that exact threshold is for yourself so i'm not going to pretend to you know have some magic number of like oh two percent of your net worth or something i'm not going to pretend that um you have to kind of figure that out for yourself a little bit based on your end goals current situation yada yada but introducing ongoing expenses that you feel like in the short term i can afford that quote unquote i have enough money for that quote unquote can really hurt you in the long run the biggest most obvious thing or i guess two sort of one is credit cards.

42:46Andrew Sather:Of course, you can afford it on a credit card right now because it's within your limit, but I can't afford to pay it off for three months. Now I'm paying interest on it for three months, on and on. That can really build up very quickly. Then another one that I've heard from multiple people is car payments, getting into a car payment and either saying, oh, I have enough for the down payment. This will be easy. Then now two years from now saying, oh my God, my car payment is so much. It's so hard to do anything because of it. Or the other one is, well, it's zero dollars down i don't even need to put anything down for this car and so this is super easy to afford and then again two years later down the road even a worst case scenario saying crap this car payment is so high i can't afford this so if you're going to spend on something you know go buy a house plant go buy a espresso machine go buy a 3d printer or whatever buy something that is a one-off expense more or less that you can afford at that moment and that's all that matters versus purchasing into something that you can afford at that moment, but you're maybe not taking as much into account as you should for whether you'll be able to afford that one, two, three, five years from now.

43:52Andrew Sather:But how about you? You got any other things in mind for people losing piece of control?

43:57Evan:I think the car thing is so huge and we can forget it so easily because it becomes just one of these bills that you just lump in with your other bills. People talk about like, oh, economic times are tough so i'm cutting my netflix and my hulu or something right right okay um good job you saved yourself like 30 bucks a month how about the 900 a month car that you're continuing to drive around you know what i mean like yeah like let's focus on things that are actually moving the needle rather than things i mean we all do it right like we all do things that make us feel like we're doing something and that's fine but if you really want to be serious about making progress maybe taking a harder look at things like your vehicle.

44:45Evan:I was watching a video the other day and I drive cars pretty... I'm pretty extreme with how long I'll drive a car. I drove a Mustang back in the day. I drove it so long that the odometer stopped tracking. The odometer just got tired of...

45:06Andrew Sather:There's no way he's still driving.

45:08Evan:I was driving it yeah I was a teenager so whatever but somebody in the video he was like the what was it the owner gets sick of a car like it's not the car that breaks down it's the owner who breaks down and gets tired of driving the car so like yeah like you pay for repairs and you pay for all these things to keep a car longer but I think if we can keep our cars a little bit longer or think about like a car that's beneath us or whatever um if that allows you to buy house plants and keep your netflix and keep your whatever makes you happy that might be worth considering um because those are real numbers and you might not even realize unless you're budgeting or using a spreadsheet and things like that yeah yeah saving i mean have Have you seen the videos on where people will go around car dealerships and ask the employees how much each of their car payments is?

46:15Evan:No.

46:16Andrew Sather:Yeah, they'll do what I said. So many people's car payments are$1 ,000 plus. That's crazy. $1 ,200,$1 ,400 car payments. And obviously, I'm sure that's a good bit skewed because they work at car dealerships and everything. But obviously those are still real people outside of the car dealership that have those kinds of car payments. And even, you know, cutting that in half, cutting a lot of people's car payments in half would give you so much more flexibility. It'd give you so much more spending money. It could give you so much more you're able to save. It could really change a lot for you financially.

46:53Andrew Sather:And so, like you said, if you focus on the big needle movers, your car payment doesn't necessarily have to go to zero. You can do whatever you want, but you don't have to go buy a$2 ,000 car for cash. But even just cutting whatever your car payment is in half can give you a lot more flexibility. And saving$1,$2,$3,$4,$500 a month on that, maybe cut it in half for yourself, half of it gets saved, half of it gets spent. That's a much different life in a lot of other aspects of your world. And the one thing that changed for doing that is the car that you drive.

47:29Evan:mm-hmm yeah you're just going to drive a car that people are going to get pissed at you on the road anyway so like what's the difference if you're yeah people are going to honk at a mercedes or

47:40Andrew Sather:they're going to honk at a toyota camry from 2001 it's not going to make a difference yeah you're still going to be unhappy yeah all right beautiful well i really appreciate today andrew hope that episode was helpful um for some people and like i mentioned before uh i want to hear everybody's answers who's listening today. So again, you can either comment below on whatever podcast platform you're listening on, or you can email us at Evan, not Ethan, not even, not whatever else. People think my name is E-V-A-N at einvestorforbeginners.com. And let me know what your perfect day five years from now would look like.

48:14Andrew Sather:And also feel free to let us know what maintaining your peace and control in your finances looks like for you. I know that's very different for a lot of people. and I think it would be very, very helpful to hear that from more and more people. And remember, as always, financial freedom is built one smart move at a time. Keep it simple. Keep it steady. And at any rate, I'll see you next time. Peace. The information contained is for general information and educational purposes only. It is not intended for a substitute for legal, commercial, and or financial advice from a licensed professional. Review our full disclaimer at einvestingforbeginners.com.

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