AAR64 - The Personal Finance Time Machine

0:00I'd like you to picture yourself in the past. You're just out of the pimple phase, just starting to feel like an adult while simultaneously having no freaking clue what that means. And that is the questionable time of your early 20s. Congratulations. And today, Andrew and I want to go over what advice we would give our early 20s selves if we suddenly found ourselves in a random DeLorean someday. So go ahead and sit back, enjoy, and let the good times roll. Evening, buyer's remorse. Buy a new car? I'll be moving in. Let's get started. Uh, sorry, I think there's been a mistake. I bought it from Carvana.

0:31You what? Yeah, great price. I even have seven days to love it or return it. So there's no... No, no buyer's remorse. More like buyers rejoice. Ugh, I guess I'll let myself out. Congratulations. I mean it. Buyers rejoice. Buy your car today on Carvana. Limitations and exclusions may apply. See our seven-day return policy at Carvana.com. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes.

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1:32good morning everyone and welcome back to at any rate my name is evan rate and we are here to help you make sustainable financial changes without breaking a sweat and i'd like to welcome back today not an early 20s investor andrew sather and that is not that is not meant to be offensive it is just a fact he's not in his early 20s neither am i but how are you doing this morning not early 20s Andrew. Thanks for reminding me so nicely. It is good to see you once again. Are you feeling nostalgic today? It seems like you're feeling nostalgic. You're a back to the future kind of guy. Yeah. I don't think some people might leave this episode right when I say this but I don't think I've ever finished any of Back to the Future but I've watched some of it at some point.

2:18What? The first one? just she just no didn't i don't know there's there's there's a lot of movies like that i am i am a i will admit that i am one of those like gen z people that doesn't love to watch movies that were made before like 95 or something it just and any any older quote-unquote for me old movie just doesn't doesn't hit that much i i get that my timeline's a little bit shifted to that but I feel similarly yeah I feel like everybody has not everybody but unless you're like a film buff and that's like your hobby you usually have some sort of a cutoff line where like before that not only does it just not look as good as I'm used to and there's no cgi or whatever it is but it's also just kind of like story themes that don't necessarily resonate with me and like my generation and it just it just doesn't it feels like I'm watching something just because I had a coworker tell me to watch it what's your favorite movie oh come on you're gonna throw that in here i'm gonna judge i'm gonna judge what you're saying about story and if it's a movie with a terrible storyline i truly okay my memory is not great i am not going to be able to tell you my favorite movie of all time so i will substitute it with my favorite movie of like the last couple years or something like that which is which was very recent which was the invite okay i have no idea okay well would recommend very very good movie but how about you what's your favorite movie of all time uh interstellar last two years interstellar for some reason interstellar didn't it was it was an amazing movie for some reason it just didn't click with me that hard i don't know no shade to it whatsoever it's a fantastic movie but i just i walked away everybody was freaking out with how amazing it is and i was like it was good i just think it it went over my head you know when i watch a movie i'm kind of i'm kind of just watching it and enjoying it and going along with the ride and i feel like other people are much better like my wife is much better at paying attention to everything and linking things and connecting dots a lot more than i am um i got one for you you should check out it's called coco melon that might be more your your level i don't have all the info i need to have but i have a bad feeling I have a very bad feeling about it.

4:38I'm totally making for that. I think this is going to be the opposite of me saying that you're in your early 20s, but it's going to still hit just the same. You're not in your early 20s. Just as offensive. All right, so today what we want to do, as you might have picked up, is we want to cover what we would tell our 22-year-old selves about money. So, you know, in a general age range, it doesn't have to be exactly 22, but we're kind of picturing somebody who are our ages when we basically right after graduating college. You could also substitute this very similarly if you decide not to go to college right after high school or right after graduate school.

5:11Basically right on that bridge of you're going from school to the quote unquote real world and what that transition is like and what we will go back and tell ourselves with a couple of topics. Sound all good, Andrew? Love it. Beautiful. All right. Well, why don't you go ahead and kick us off with personal finance? What would you go back and tell your 22 year old self about regarding personal finance? Yeah, I mean, I think a lot of my early 20s, I didn't, I didn't even register. I wasn't even thinking about it. Like personal finance just meant, do I have money in my checking account? and then when I grew up really quickly and then maybe grew up too quick because I dove into my career and then looking at getting my finances in order I remember feeling really overwhelmed after the point of you've called it like the financial awakening I remember feeling really overwhelmed and almost like in a hurry to get to all the milestones that everybody talks about buying a house, being debt-free, or having no credit card debt, paying off student loan debt.

6:23I was in such a hurry, and I missed out on a lot because I took it too seriously and got discouraged that the progress didn't happen as fast as I liked. So it was like, for me personally, it was like an extreme of, I am paying no attention to this, to now, this is a huge priority for me. And I guess that's my personality. Maybe people don't resonate with that. But I think patience is a great thing to have if you're getting serious with your personal finances. It's not something you just figure out. It's not like watching a YouTube tutorial and fixing your dishwasher. It's quite different. And I don't know.

7:08I think YouTube and Google are great. I love them. I use them probably every day, but it can also give us this mentality that, oh, I can get this figured out so quickly. And personal finances is just not one of those areas. But I'm curious for you, how did you approach your personal finance journey back then? And was there anything you could have done better? Yeah, for me, it was very similar where when I was in college, thankfully, I had gotten a scholarship that would give me a relatively small refund, but just enough to kind of float me for a little while while I was in college. And I was working part-time at the student union.

7:46Those were kind of the, my two income streams that kind of just floated me along. And for me in that it was similar where personal finance while I was in college, so maybe like 21 or so meant just getting by as long as I have enough money to, you know, float me to the next semester and then can use that amount of money to float me to the next one and so on and so forth, then I'm doing okay. And I wouldn't change anything about that period of time because I don't know if I, I don't think I realistically could have done any more than that. I'm not going to go back and expect myself to, you know, work some full-time job while I'm in school just to be able to save some of that.

8:21Um, but that was really all personal finance meant to me. And then 22 moving into a full job, the idea of personal finance kind of felt like, okay, well now I have an income kind of felt like, well, now I have an income, so I should be saving some of this. And so I will save some this, but what that number is, is meaningless to me. I have no clue what that should be or how to decide it. And I wasn't even looking into personal finance content at all. It would have just been anything I stumbled across maybe on social media, but I was putting no thought into it other than the fact that I should be saving some.

8:53And I think that that led me to not save as much as I could have and also just have no clue where I was heading or where I could head or where I wanted to head or anything like that. I didn't, I hadn't had my financial awakening yet for another couple years or year and a half or something like that. Um, and so I would, I would go back and just tell myself to look into it a bit, try to figure out what, you know, what, what do you want? It doesn't have, you don't have to solidify it for the rest of your life and know exactly what it's going to be. But like for me, you know, I always wanted a Tesla.

9:27I've talked about that before. If you want that Tesla, then let's do the math on what it would take again, approximately, and start setting some goals to save up for that and have something to save up towards. And I would also, you know, try and talk about things like just basic retirement is kind of like a Roth IRA, because I had a 401k through my employer. And so that was kind of handed to me, so to speak. But a Roth IRA, I think is just as powerful. And so I would have set up something like that. And again, doesn't have to be a large sum of money, but just put 50 bucks a month, 100 bucks a month towards that just something in there um and start building that habit of saving towards other things and putting money elsewhere because for me at the time savings definitely felt like just pile up money somewhere it could be in your checking account it could be in your savings account but just go ahead and pile up money and that's what savings is and i would have i i'd like to have pushed myself to put that money somewhere intentionally knowing it would grow or intending for it to grow instead of just intending for it to kind of just build up hopefully i think it was way too blind of me now thankfully it didn't have some horrible impact on me i still did okay and that's and that's great and i'm thankful for that but i definitely think that i could have optimized it a bit more without changing anything about my lifestyle or spending habits or anything like that but i'm curious how did you how did you go about teaching yourself patience and maybe it's something that you still struggle with a bit but how did you teach yourself to look at those goals like buying a house like you know having x net worth or whatever it is and teach yourself to look at those and understand it's okay that you're not there yet but that you're working in that direction uh i think i don't know if i ever learned it back then yeah which is is frustrating right i remember and i know this is something that you relate with is like the the hustle culture of i'm going to spend every waking moment, whether it's working on a side business or, um, maybe you're working three jobs so you can stack money and then feel like you're going to enjoy life at some other time.

11:34Um, and that's never, that's never been like good for me because it works for a while and then you just kind of burn out or, you know, other areas of your life slip. Um, so I think, these days, one thing that helps me with patience is every Sunday I just take the day off as much as I can. And that can reset you. Because if you force yourself to take a day off, whether that's checking your checking account or I don't know, for me it's like working on the business, forcing yourself to take days off makes you realize that there's more of the life than money and more of the life than career. And it resets you.

12:21And then it gives you hope that like, you know, I can screw up or my, my journey can take five times longer, maybe not five times longer, but like, you know, I'm, I'm extra five years now on my journey because last week this happened or that happened, but you're like, you know what, but I'll have that day off again in a week and, and you still find ways to enjoy life. And that helps me be patient. Not to say, oh, I'm just waiting for the weekend kind of a mentality, but more so just like I'm going to have times where things are up and times when things are down. But if that's a constant and a priority to me, it helps me be more present.

13:03Because I got to yank myself out, man. I got caught up and things, and I have to literally pull myself out. And I'm always glad when I do. but um it's not always easy so that that's something that i do lately that's been helpful but what about you is it mindset is it a habit or um anything else for you yeah i feel like it's mindset and i kind of feel like what we're what we're kind of landing on here is that it's a good idea and feel free to correct me if you disagree but for me it's um for your early 20s like 22 years old, fresh out of college, whatever. It's all about finding a reasonable balance.

13:42And obviously a balance applies to the rest of your life as well. But I think especially at that kind of an age range, finding a good balance for yourself where you are pushing yourself to save some, invest some, work towards some goals like I was talking about, while also ensuring that you're not working yourself to the bone and that you have some kind of balance and understanding of what life is and like we talked about a lot what your financial whys are so like why do you want more money what's what's the point of it numbers are not going to bring you happiness and i think in your early 20s having a grasp of that as well so that okay i'm willing to work and want to earn and save and build wealth but i understand why i want to do it because i understand what life is and what happiness is and what joy is finding that balance is very important because i think it's very easy otherwise to if you lean too far to one of those sides in your early 20s then it can be very hard to undo over basically like the rest of your 20s you know you heard a lot of people just say to enjoy your 20s and so some people say screw it i'm not going to save anything this is way too early in life to worry about it or i'm hardly going to save anything let's just go enjoy the crap out of life and that might feel great in the short term but by the time you reach your late 20s or early 30s or whatever it is going to be an absolute slog to get back to any decent kind of place and then the opposite is also true if you just work yourself to the bone in your 20s and that kind of becomes who you are and what your core being is then again late 20s early 30s and past that you're going to struggle to ever go out with anybody or you know for many deep meaningful relationships whatever it is because you've just worked yourself towards nothing but a business or your wealth or whatever it is and so for me and again i want your opinion but for me starting off with a some sort of a middle ground it can lean one way or the other but some sort of a middle for yourself can let you experience the real world see both sides of the fence and lean a little bit one way or the other as you age and as you get experience but don't lean too hard up front initially would you agree with that sentiment yeah i just think it's hard depending on like some people know exactly what they want when they're like 11 years old kind of an idea Other people, I don't know.

15:53What do I want to be? What do I want to do? Do you have any examples of reasonable financial whys that would be appropriate in your 20s? Obviously, becoming a billionaire swings on the other side of a financial why that maybe you might want to reconsider, but what kind of financial whys do you think fit with that idea? And that could be something that you had or something that you just think sounds like a great idea. Yeah, that's a good question. I think one kind of general why or group of why is that comes to mind because I don't want it to be too specific or complex, not because 23-year-olds are stupid, but because 23-year-olds haven't lived quite enough life or purchased as many things or saved up for as many things to understand the impact of some ideas.

16:43but I think that just having the why of do you want to be able to save up for a decent new car or save up for a home or save up to go on a big trip not because you're going to be doing that constantly or because that's all going to happen in your mid-20s or something like that but if you want to be able to do any of those things any or all of those things at some point within 10 or 15 years or whatever, then making some relatively small moves now will get you there. Like it's, it's, it's not, it's not a guarantee for everybody, but it, it, it is a very high percentage chance that if you are able to save and invest a, a, a decent portion, like maybe we'll say 15 % or something, just throwing a number out there.

17:27That's not 5%, but it's also not 40%, 15 % of your wealth at that point of your income and invest that and grow that and just build it up to the side and don't touch it. Those things that you see as impactful in a big part of life and our goals that pretty much everybody would have will become achievable for you. I think that that's a big mindset shift over a lot of people kind of assume that those will happen anyways. And so they don't really save or think anything because they just assume, well, my parents had all that kind of stuff. They were able to do that kind of stuff. And so I'll probably figure it out eventually.

18:02And so they don't worry about it whatsoever. and also not assuming, hey, you're going to have to work your absolute ass off to achieve any kind of stability in your financial life, that there is a middle ground there where if you just put a little bit to it, you're going to be able to achieve some of those things that we all see as important to some degree. How about you? Do any come to mind for you? That's awesome. I love that. It's tangible. It's achievable. And it can set you on a good path. Yeah. Yeah, because, you know, for me, my wives, like I've talked about before, much more sort of nuance, not to act like they're fancy or complicated, but they're nuanced in the way of I want to be able to spend time with people and have experiences with people.

18:45And when you're 22, you kind of just assume that that's what life is anyways. And so it doesn't feel new. But I think that that those other ideas feel like. Feel not quite as easy or given to achieve. And if you learn that early, then it'll be very, very helpful for you. August is National Wellness Month, but most health trends equal things like buying random gadgets and guessing at what actually works based on whatever's trendy at the time. And I wanted to stop guessing at things like that and actually look at the data behind my body. I've mentioned it before, but lately I've been taking time in the gym much more seriously, not just to build a bunch of, you know, aesthetic muscles, but to build a good, sustainable, long-term health plan for my future.

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21:22optional subscriptions to found plus for$35 a month or$315 per year or found pro for$80 a month or$720 a year there are no monthly account maintenance fees but other fees such as transactional fees for wires instant transfers and atm apply read found fee schedule what's the best way to get started in the market download my ebook for free at stockmarketpdf.com but we'll go ahead and move on to our second topic here we've got investing so what we would go back and tell our 22 year old self about investing um as the not professional investor i'll go ahead and go first on that um if i were to go back to my 20 year old 22 year old self and tell them about investing um i would tell them kind of similar idea in the way that uh you don't have to do anything crazy complicated or have a crazy money money set aside to make a significant change in your life and i would also try and show how all of the not all of but a lot of the investment content out there that makes it seem either super easy and super quick for changes to happen or also just like super exciting and overly complicated and you're going to you know need to be have a have a master's in mathematics to be able to understand anything that all of those sorts of extremes are completely false.

22:48And it's just to get clicks, get content, whatever it is. And that there's a middle ground of it. Um, it is a risk and it does take some understanding, especially if you want to do individual stock picking it, it is, uh, an art and a craft that you have to gain experience on over time and learn about. Um, and, and basically treat as a hobby that you want to continue getting better at, but that, that you don't have to dive into the deep end to be able to make significant change in your life and i would also express to myself that if there's anybody that you probably look up to financially who seems to have done well it could be your family it could be a friend's family i mean we all have you know rich friends that we grew up around that it's like man their family is a lot wealthier than anybody else around here if you look at those people in those families every single one of them i could pretty much guarantee you is investing in some way they it could be it could be real estate it could be stocks it's probably more than likely stocks for the vast majority of them but they are putting their money that their excess funds somewhere that is growing at significant rate and that rate may not feel life-changing within two or three years but by the time you reach your 30s 40s or whatever and you're now the age that those parents were when you met them that money has absolutely skyrocketed and compounded like absolute mad especially if you're able to increase that rate over time yada yada that's beyond what i would tell my 22 year old self but those kinds of people that you look up to and are impressed by they have invested and they have grown their wealth in that way um well yeah that'd be kind of my big topic to press how about you so now you're helping me have a little blast from the past because I'm remembering some of those ideas and coming across them and getting really excited about them.

24:36This idea that not only do you need to work for your money, but now you can have your money work for you and make you money. That is one of the most exciting parts of investing your money. It's just this idea that, man, the things I've worked hard for are going to compound and multiply and become even greater and greater and it can work while I sleep kind of an idea. And I like that you brought up like kind of comparing yourself to others. There's a book, which, you know, if you're going to dive deep into the investing world, you probably need to read if you're going to take like a very hands-on approach.

25:17So you'll need to read books because all the best, frankly, all the best principles and everything are in books, especially the books that have stood the test of time. But there's a book called The Millionaire Next Door. And they basically went around and interviewed a bunch of millionaires. They went to all these riches of codes and interviewed a bunch of people. A lot of them, actually, you'd be surprised, didn't necessarily have the highest income, but they did exactly what you're saying, Evan, of being able to save and compound and just that slow and steady, the habits that you're constantly putting money in and you're letting that money grow and you're not piling a bunch in and then taking a bunch out.

25:59Just this steady compounding. One of the smartest investors of our time, if not of all time, Warren Buffett has talked about the power of compound interest. And Albert Einstein, if you ever heard of that guy, he called compound interest the eighth wonder of the world. When you really wrap your head around what compound interest means and the impacts it has to your finances, it could change everything. So going back to having patience or having the right mindset, if you can understand why that patience pays off, the reason why it pays off is because of compound interest. It's like a snowball that just really grows to extreme amounts like you wouldn't even believe.

26:50It's crazy how easy it is to make $10 ,000 with a million dollar portfolio. You know what I mean? Or$100 ,000 from a million dollar portfolio. Once you have something like that, it's just the way the math is. We're talking about percentages. And it can take you years and years and years to get to even like a hundred thousand. So the math just is weird. Compounding is weird. Um, but when you wrap your head around it and honestly, like I think I'm still discovering just how powerful compound interest is because if you've held a stock for a really long time, you'll see that effect to just what seems like small swings or huge swings to you.

27:38If, if you've let the power compound interest work its magic over time. So yeah. Um, compound interest is a crazy thing. If you want to learn one thing about investing, I would say learn compound interest because it is simultaneously amazing and also inspiring. Cause then it's like, I can do it because yeah, I can harness the power of compound interest. Anybody can harness the power of compound interest. And hopefully that's something that encourages you. And how do you think you would go about sort of conceptualizing that to your 22 year old self? Cause I know that you, like you said, at that point you hadn't had your financial awakening.

28:18You hadn't kind of, everything had clicked for you yet. Do you think that that idea of compounding or the snowball rolling down the hill or whatever would help that click for you? Or do you feel like you would hear that and still think, well, that's just way too long in the future. It's meaningless. Or, you know, would you still discount it somehow? Or do you think that would be enough for it to click? Yeah, I just, I go back to like what made it click for me. It was the visual chart of seeing what compound interest does. And you can just plug numbers into a compound interest calculator and really see it.

28:52That's what's powerful about the calculators is they'll chart it out for you. And so you can see how that number grows over time. Yeah, I think the chart's huge for sure. Yeah. Yeah, I think the chart is honestly, that calculator is something that I think would be a great idea for and or colleges to show to their students, um, even high school or high schools to show to their students and or for employers to show like new graduates or new hires or whatever. I think just touching that and having you know an HR rep or or a career development person at your school whatever have them sit down with you and just plug in okay you know you're probably expected to make this if would be very reasonable for you to save 100 bucks a month or something that that would be something feasible for you to do if we just plug that in here then just from that 100 bucks that could turn into you know x tens of thousands in the long run.

29:53and even though it might be kind of difficult to frame that that scale of you know your 40s or 50s still being important to a 22 year old i think that just seeing those larger numbers from such a small quote-unquote meaningless number to you at that point would be impactful enough and just being able to kind of mess with that yourself and see that in person instead of just hearing the concept and trying to apply it to yourself a couple other recommendations um there's a book recently that came out, The Psychology of Money by Morgan Housel. He focuses on how small choices can compound to massive results and why patients matter so much.

30:33And then there's another book. I remember reading it. I couldn't tell you what it says. I remember reading it and I remember enjoying it. It's called The Compound Effect by Darren Hardy. And again, Small Daily Habits Compounding to Great Success. Atomic Habits by James Clear is another one. Not money related, but just again, small habits becoming big things. One other quote I remember hearing was, I think it was Bill Gates. It was like, we overestimate how much progress we can make in a year and underestimate how much progress we can make in 10 years. I don't know if that's been true for you, but it's certainly been true for me.

31:16yeah i definitely think that's true for me i think i think anytime you try to think in a future further than maybe three years you just kind of lose a sense of scale it's like trying to think past the edge of the the milky way or something like that you just you lose a frame of reference you have no clue what to even fathom for it and a year feels like something you could maybe grasp and you look at all the negatives and kind of scale it down and then you look at 10 years and you're like well it's only that's only three years and so i don't want to be able to do so much but it's like 10 years if you're compounding stuff or working on your career whatever it is the world can change for you yes absolutely all right so moving on to our third topic we have retirement so andrew what would you go back and tell your 22 year old self about retirement the most the most fun topic to go back and tell yourself about well i remember simultaneously being super excited about investing and then getting so depressed when I learned about retirement and taxes.

32:20Retirement's great because when you save for it, you get all these tax benefits. But if you're trying to do it without retirement, I'm like, how am I going to get there? I can barely make whatever on the stock market. Then you want to take my taxes along the way too. So I remember being really discouraged about retirement, especially because it feels like, all right i'm gonna put this money away and i'm literally never gonna enjoy it because 40 years away you're 22 that means the average retirement 65 you are 43 years away from enjoying your retirement and you can't even figure out what's going to happen in 10 years right yeah 43 i mean that who knows if i'll even still be alive um but one of the things that to consider about retirement.

33:06Two, a couple of things, but one is through the act of saving through retirement, you build the exact same skills that you need to build wealth in general. So there's nothing that says you have to put all in into retirement and then leave nothing for your present self. You can, it's the same skillset. You can put some of it toward retirement, some of it toward active living. And that might sound obvious. It wasn't obvious to me at the time. So I would like pat myself on the back and be like, it's okay, buddy. Um, you can stop crying now. The other idea is that like, yes, it's never ideal to pull from your retirement early and all the numbers and all the people will tell you like, don't do it.

33:50Don't do it. Don't do it. Um, but it is an option if, if things get really bad for you and it's definitely, if you have a parallel life where in one life you saved nothing for retirement, in another life you had something for retirement, but you had to draw it early, you still did better in the other area because the parallel life probably gets really into credit card debt or does whatever those negative effects are. So there's the benefits to getting your retirement going that aren't immediately obvious, but can really have good ripple effects. So go for it. Like take advantages of a Roth IRA.