Mastering Money to Thrive in a Recession

23:24One person says that you need a 10-foot electrical riser. So we make it 10 feet. The next one comes, says, why is it 10 feet? It needs to be 13 feet. I'm like, your first person said 10. And now they start fighting with each other. And we have to keep paying for these inspectors to come back. They keep charging me permit fees for everything. If I want to paint the windowsills, it's$100 permit fee. Change the smoke detectors,$75 permit fee. So this goes on and on and on and on for months. Finally now, we're approved for rental. So I was like, oh my God, this is the biggest headache of my life. We get a tenant in the property.

23:57We get licensed. A tenant's in the property. And now we have the license. And the property inspector just decides to go back to the property. They don't tell us. They just go back there. Even though we're fully licensed, they had no reason to go there. They knock on the door. And apparently, we didn't know this, the tenant was having a babysitting operation in a property. So now the inspector sees this, that the tenant is running an illegal babysitting operation. He tells us, he finds us, tells us we need to evict the tenant. And now we have to start this process all over again. So at that point, I was like, you know what?

24:28Just sell this property. Wow. Because this is the biggest headache. And that was the only deal I ever lost money on. But I learned a lot. It was my tuition. So you have to be willing to learn, be willing to make mistakes, and then be willing to grow from those mistakes, go on and keep willing to go. What have you found are the top places that people should be investing? First, calculate how many days, weeks, months, or years you can live on your saving. Because when you do that, you'll gain security. You'll gain that. So look at how much you're spending, and then say, how much do I need? And whatever that number is, you're going to need more than that, because it may go down rather than go up.

25:20So, okay, now do I have a year spending? Okay, so I think you start there. Then you start to think, what are the things that are most important for me? Like, and then you start with your business or your residents that have a symbiotic relationship and that you know well. Let's say if you'd start with your business, okay you're closer to that investing in yourself with whatever that may end up being that may be your best investment not not real estate not stocks not the market well it depends if you're if you're not you know if you're doing something where you can do it yourself and that's the thing but if you're in a job and that that's not the thing right because you because you're in a different position.

26:15Okay. But anyway, if you, and then I really think there's something good about your home, a basic thing about your home, because it's nice forced savings. And it also means that you, you fix it up, you, you know, you're saving, you find out there's, oh, well, if I add this thing or that thing and you're enjoying it. So when you're enjoying it and you're controlling it and it's yours and so on, that's pretty good. And if they keep mortgage tax deductions and so on, there might be some benefits to it also. Okay. But that's not a black and white answer. So you could take a short pencil and say, is it better to rent or buy?

27:05Okay, that's a different question. Maybe yes. it. But by and large, am I going to move? You know, all of those other questions. But so when you start with, okay, what is it that's close to home? And how much you need a certain amount that's liquid. In other words, you got it in your house, you got to make a mortgage payment or something. And all of a sudden, you're, you know, it's not liquid, and you lose your job. Well, that can cause you trouble. So how much do I have that's liquid? How much do I have that's not liquid? Okay. And you start to get those things right. Okay. Oh, I've got enough liquid.

27:45I got enough. Okay. Not liquid in those other things. Okay. Pretty soon you're, you're getting yourself in good shape. Yeah. You do those things, you know, you're pretty much in good shape. And then you're also having some experiences and then you go beyond that you know and then so you start to okay what you know okay what's a stock what's a bond and then you know you learn through experiences I learned through my my experiences I started when I was a kid 12 I used to caddy and I took my caddying money and I put it in the stock market and I was lucky in what happened to me by the way is I took my catting money and I bought the only company that I ever heard of that was selling for less than$5 a share.

28:40And I thought that that, you know, well, I was really dumb. I thought I'll buy more shares. So if it goes up, I'll make more money. And it was the only company. It was a company that was about to go broke, but somebody, some other company acquired it and it tripled. And I thought, ah, this is an easy game. and I like it, easy money. So, but you know, you experiment and you learn. You're a very philanthropic individual, you and your wife, your foundation, your company, you give back in a lot of ways. Some might be through donations like computers, some might be through financial, some might be through just your work and your content on LinkedIn, which is amazing.

29:18I recommend everyone subscribe to on LinkedIn. The content there is amazing. You're giving back in lots of ways. I'm curious, what's the greatest gift? a rich person or someone with money can give someone who doesn't have money to give the knowledge i teach a man how to fish is better than to give him a fish i mean i think you can give them both you can give education and you can but ability the capacity to be productive because you know if i can give you the capacity to go out in the world it's like go into a jungle i give you a knife and can you live in the jungle okay if i give you that capacity that's the best thing i can give you that's why i wrote the book and you know pass it on i wrote those principles over years and i wrote them down and that's what i want to pass along that's the most important thing yeah but but if you but if you've got money you can help people a lot in a lot of different ways which is thrilling.

30:18What would you say then are the three greatest skills that people that aren't financially abundant or that are struggling financially should learn to master in order to be in a better position financially? Three skills, what would you say they should learn? Well, as I said before, I remember watching the movie, I was young, David Copperfield with W.C. Fields and he speaks to David Copperfield and he says, he said something like, and I'll put it in dollar terms, you earn a hundred dollars and you spend$105, that's misery. If you earn a hundred dollars and you spend$95, you'll have a good life. I mean, it wasn't exactly like that, but it But basically, I know so many people who don't earn much but are there.

31:17Because if you start to think about what it is that it costs you to live in terms of, let's say, the basics. You know, give me a bed to sleep and give me the food. Let me be educated and so on and so forth. I think most people can get themselves in a position where, you know, they're net positive. So if you can be net positive, and you could do that, that, you know, that's number one, you know, as I carry that. So that's, you know, that's number one. Then I guess it was the list that we went to, you know, the second is, you know, what do you do next? In terms of what do you need? What do you invest in?

32:03And then going beyond it. And then avoid the following mistake, the most common mistake of investing, thinking that the investment that did good is a good investment. People rather more expensive. The things that quite often, those markets that did really, really well, became more expensive. And everybody, smart money is all the time comparing them and competing. So what happens is the naive money buys the thing that was hot or is hot. The thing that has been terrible, which might be the thing that's beaten down. So I would say also an important element. Okay. So here's another one that's really important.

33:00Diversify. So don't put all your eggs in one basket. Right. Because what I learned about this is that, first of all, all investments compete. And it's not easy to tell whether one investment is better than the other. Because if people could do that, life would be easy and everybody would make a ton of money. um so and this is a competitive game that's very difficult to compete in so it's very difficult to say which one's better or worse you can take experts and you can and do all sorts of tests and you'll find out that they can pick that and you can't tell whether the worst ones are going to be better so because of that you understand that um even picking the best ones is difficult And particularly if you're naive, like we spend hundreds of millions of dollars each year on research to try to give us an edge.

33:54OK, now you've got to compete with us. So competing in the markets is more difficult than competing in the Olympics. You wouldn't think I'm going to compete in the Olympics, but there are more people who try harder in order to do that. So it's a zero sum game. So, but diversification, that they're different, will reduce your risk without reducing your return. So if you know how to diversify well, so that's critical. So I would say, again, get your savings right. And the reasons I say, I would say, have great humility about what you don't know. don't buy the thing that was hot just because you think it's hot why is it such a taboo topic in general yes i think for all classes all individuals i totally agree it's like you have it's so funny because and i wrote about this in my book like for women we have shame if we don't have enough money but we also have shame if we have quote unquote too much really yes why because it's like you know oh i have more than them and let me hide it because people are gonna think i'm showing off or they they have imposter syndrome right am i worthy of having this much money i've i've experienced that myself at different times right like you've worked hard for it but you think that you don't deserve it for some reason and i think that we just have i think society was sort of designed so that we wouldn't talk about money why because I think it's designed so that we have a few people at the top and a lot of people at the bottom.

35:39And so now, you know, then of course the middle class emerged and we've gone through different things as a middle class, as a collective. Right. But I think it's, I think that's part of the reason why it's like, don't tell, you know, employers saying, don't tell your coworkers how much you're making, because I'm paying you more than I'm paying this one. And I don't want y 'all to know right so it's like it comes from those places but it's reinforced everywhere you know right um everyone's reinforcing it exactly and i think not just corporations or yes and because there's so much mystery it's like i don't i don't know how much you make right you you don't know maybe you know how much i make because i talk about all the time but but i don't you know what i mean so like we we don't know and we're scared to make assumptions and we're sort of guessing and we're like well if i put mine out there i might be embarrassed because i discovered that like I'm actually either making too much related to my peers or too little and I think it goes back to belonging we just want to belong to a community to a group you know what I mean and so because of that it's like we don't want to do anything that's going to make us not belong it's such an inherent human need to belong and so I think that we don't talk about money because we think it's going to affect our ability to belong whether it means we're too broke or we have too much or somewhere in the middle.

36:56So what conversations should we be having around money? How consistently should we be having them and with who? Yes. Okay. So in terms of the conversations I'm having, I'm telling people like, if I get a speaking gig, here's how much they paid me. And I asked them more and they gave it to me. So make sure you do that too. Or I negotiated for higher pay or I negotiated for profit sharing, or I asked for more vacation days. Right. Like we need to share our money earning strategies with each other, especially with, you know, women and people of color. Right. Like putting more money like that's what allyship is, in my opinion, is putting money in the in the pockets of the groups who need them.

37:35Right. And who, you know, we have this huge wealth chasm in this country. So like, how can we start to change that? And so that's why I share how much I got paid for a book deal, like all these things you're not supposed to share. I'm like, I'm gonna tell you this, how much I got this, how I got it, you know? And I think it's important. So I think sharing money making strategies is very important. I also think one of the things that has been so valuable to me with some of my my peers, especially I will say my white guy peers in particular have showed me like they have taught me things about like, you know, investing strategies or, you know, like, oh, here's a strategy that I'm doing with my money or I'm investing in real estate or I'm doing these different things.

38:18Like, what are people doing with money once you have some, right? Like once you have a little bit more than you need to live off of, what do you do with the excess and sharing those things, right? Sharing that information because it's usually hidden. And it's like, there's a small group of people that know and you don't know until you have peers who have done it. And then you find out, right? In those quiet conversations that aren't on, you know, on Facebook, right? Sure, sure, sure. So… Should people be talking with their friends, their family members, their spouses about money? Yes. Or what if someone's really uncomfortable and says, you know what, I don't want to talk about the money I make and what we should be doing.

38:55What conversation can you have to try to break the wall down? Well, I think you could say, here's why I want to talk about money. And here's why… Like, we have to be… I think if we're willing to be transparent, people will be transparent with us. That's what I've found in the conversations that I've had. and that's how I've learned a lot about money is by having conversations you know like um the friend that I was spending time with last night she's an investor and a financial advisor and so I was asking her like okay well what are you investing in and how are you thinking about it and what is an investment thesis like I don't even know what that means right like you know we were having conversations and she was teaching me all of this stuff because I was willing to tell her like okay here's how much money I want to invest but I don't know where to where best to put it you know that kind of thing.

39:38So I think you just got to be willing to put yourself out there first. And I find that people want to talk about it. So when I bring it up and I start sharing, they immediately start sharing because it's like they were like waiting for an opportunity to talk about this is what I find. So I think we just got to start doing it and create more transparency around it. And then, yeah, it creates it creates opportunity for all. And that's the other piece of it is like, I recognize that even someone who would be considered a direct competitor, maybe they sell the same thing I sell. I don't believe in competition in that way.

40:14I think there's more than enough money to go around. I think there's more than enough opportunity to go around. And I choose to be friendly with and support my competitors, quote unquote, and vice versa. And that just means that we all get better at what we're doing. We all can serve our clients better, right? We all can make more money. There are times where I'm too trusting and someone, you know, I don't know, I guess you could, for lack of a better phrase, steals from me, right? Or takes an opportunity or says one thing but does another behind my back or whatever. And that's going to happen too.

40:49But I'm like, but I don't want to be a person who's closed. So I'm just going to, I just got to be me and it is what it is, right? Like there's going to be some occupational hazards when you're being transparent. Absolutely. And you just got to navigate that as best you can. but I just choose to be who I want to be in the world instead of who I feel like I need to protect myself, you know? What was harder for you, making your first$100 ,000 in a year or making your first million dollars in a year? $100 ,000 for sure. Why is making$100 ,000 harder than making a million in a year? Because it's like, I think we're just figuring it out.

41:25I also think we're charging too little for our work at that point. Is this when you're working as a career or when you had your own business? or freelancing? I never made a hundred grand prior to starting my business. Got it. You know, I went from college to like, I had a job in between college and law school and then I went to law school and then I started my own practice. So - So you didn't work at a law firm after law school. So you started pretty much right away being an entrepreneur. Right. Which is really hard to do. Yes. My last salary before I became an entrepreneur was$41 ,000 a year and like really good health insurance.

41:57Yeah, yeah. And I was thrilled. That was in between law school or in between school and law schools. Yes. No, in between, this was after law school because this was my clerkship. Okay, gotcha. Yeah. So, you know, you kind of sign on for a year. Your paycheck is not that big. And you're a lawyer, right? You're learning the ropes. You're getting reps. Exactly. And that's kind of why I decided to start my business at that time because I'm like, I already don't have a lot, right? Like, I already know how to live off of this amount of money. Yeah, so I'm like, if I can live off of this now, let me keep my expenses this way or lower them even more.

42:33Like I sold my car and we owned a house and we rented it out, moved into a smaller place. How many kids do you have at this time? I had none yet. Oh, actually, that's not true. I had my stepdaughter, but she didn't live with us full time. And so that's what I did at that stage is like I cut down my expenses as much as I could so that I could build this business. How old were you then? I was 27, I want to say. 2009 or yeah 2009 to 2010 okay cool is this was that year and then I clerked for the judge and I started my my practice and I was like you know I made like there were months where I made 500 bucks and months that I made two thousand dollars and that's why like linking together you know I was doing my friend bought a salon she was a style a hairstylist she wanted to buy her first salon I did the transaction she was purchasing an existing business and I charged her 500 bucks for that I I don't think I've actually ever told anybody that.

43:28That's cheap. And I, cause I was ashamed. I was ashamed that I didn't know what to charge for that. And that I undervalued my services so much that I like literally have never told anybody that I charged 500 bucks for that. And she's still a good friend of mine. And she - That's not her fault. No, it's not her fault. She made bank with that salon and she's since now sold it. But you also got experience doing that, you know, doing that transaction, that deal, which you'd probably never done at that level. yes seems like so you gained confidence from that yes so there was a win there for you as well it was a win and but when i saw how many hours of labor were involved you put like weeks probably right yes i'm negotiating with the other side dealing with like a difficult lawyer 500 is a steal i mean for the whole thing can i hire you for that i should i should have charged five thousand dollars minimum you know um but it was like but i learned from that oh i add value I can figure it out and I have a skill in that I'm trained in knowing how to figure it out.

44:26You know what I mean? And that was kind of like working on the job experience. Like you weren't fully probably experienced for that yet, it sounds like, but you learned, okay, I didn't need to do these 10 hours of calls that I did here. I could have done this in an email or whatever. I don't know how this works, but whatever it was, you learned your process to simplify it, to maximize it. Exactly. And back to that Hunter Grant question, I think that's why. It's like we're figuring it out. Usually we don't know exactly what we sell in those early stages of the business. So we're selling everything.

44:54Whatever people come to us with, we're like, yeah, we could do that. We just create a custom offer for them. Whatever money we can bring in, we'll do it. We will take it. And so you're very busy. I call this stage Busy Bee because you're very busy at this stage, but nothing's refined. Nothing's efficient. Everything is just sort of like your massive labor towards whatever you can make happen. And so that first hundred grand, I think you are hustling for that. But in order to get to a million, or at least to do it in a way that feels sustainable, you need systems, you need process, you need team, right?

45:29And so now you're starting to build a sustainable business. You're not just, you know, by brute force making money. And you need to clarify your offering and your audience and your niche and what your specialty is. Exactly. I'm not just a lawyer that can do anything you want me to do, but here's what I really specialize in. Exactly. Here are my three packages at these different levels. Yes. And you go all in on marketing that. Yes. And there's money that you're saying no to. Absolutely. You learn that lesson that not all money is good money. Isn't that crazy? Yes. It's so weird. I say this a lot to people.

45:58I go, it's weird that I'll turn down massive checks all the time. Yep. But I'm just like, that's not what I want to do. And it doesn't serve my mission. Yes. If it's not serving the mission and I don't need the money, then I shouldn't do something just to bring in more money. Exactly. For me. For me. It's a distraction. At different stages of my life, a different season, now that I said yes to everything, you know, when I'm broke, you say yes to all these things. Yes. But then when you're like, okay, I'm here for a mission and to serve at the highest level of my skills and abilities that brings me the most joy and brings others the most joy and benefits the most number of people, then you start saying no to money, which is crazy.

46:32Yes. It sounds crazy, doesn't it? It's delightful. It is. I love it. No, it's great. I feel like, to me, it lets me know that I'm not, it's like I've not made money my master. right like it's very important but it is a tool that's good you know what I mean and I'm not beholden to it and I won't trade anything for it there is plenty of things that I will not do and I don't care how much you pay me you know so I think that it's good to remember that and so when you're turning down opportunities it's it's just an example of like okay I'm I'm doing things right well I think you got to understand that just because you turn down money over here doesn't mean it's not gonna keep coming to you like just because you turn down something that's not right for you doesn't mean abundance of something that is right yeah they'll keep coming to you there's so much opportunity there's always more where that came from absolutely you know absolutely that's powerful okay so the first hundred thousand how long did it take you how many years until you made a hundred thousand in one year can you remember roughly um so my first year in business and it was like i started september 1st 2010 and so from that year till like september 2011 i made like 60 grand that first year that's great but i think the first full 12 month calendar year was like year two.

47:42So it wasn't, it didn't take too long. And then how long until you made seven figures in one year? Yeah, that took me seven years. After that, yeah. From starting business. From September 2010, I think it was, maybe it was six. It was like 2016, 2017. I think 2017 was my first seven figure year. And I had gotten close, but not, you know, like almost there, but not quite. And twice. And you know what, it was interesting. What happened is like, I had my business, my revenue was doubling in the beginning. It was like, I made a hundred grand, then I made two or 250. And then, you know, then I made 500.

48:19Then I was - But that's like - I plateaued. It's like, okay, 560, 620. Right, I know. It started making me mad. Like from 500 to 700 ,000, I think I was there for like three years. And there was all kinds of stuff going on in my life. One, there was a lawsuit that, one of my business partners. So like, this is one of the things where too trusting too quickly caused some issues. So that was a huge distraction for me at that time. I had had two babies back to back. Wow. So, you know, I was busy with them. And then there were just a lot of lessons I needed to learn. Like I had all these people working for me, but I didn't have good boundaries.

48:54And I didn't, I just kind of let them do whatever they wanted and didn't have, you know, like I was learning how to become a boss. I was learning how to become a leader and a manager. So much more challenging than just doing your skill. Like, let me just be good at the law thing, which is what people wanted me for. Yes. Now they want my business for that and me, but I've got to train the team and empower. To deliver. Right. Exactly. It's a different skill. It's totally different and it can be challenging. And I think that's why a lot of times we're like, well, I'm just going to go back to doing it myself.

49:24And it's like, you can, but it's going to keep you small. You have to say yes to those challenges and learn that new skill, right? And I think leadership skills are so valuable for everybody. So, yeah, I had to learn that and it took me a couple of years to figure out how to have stronger boundaries, figure out how to stop letting people waste my time, figure out how to charge for what my services are worth. All of those things, those were lessons that I was learning in that time. Who was wasting your time, like clients or employees? Clients were wasting my time, team were wasting my time, even family members.

50:02My desk was right in the front door. So like, it's like the door is here. My desk is right here. My husband would like be coming in and out. He's a stay at home dad at the time, taking care of the kids. And he just ran a tight ship with our household. It was amazing. Like I had so much support in that way. But he would like, every time he came through the door, what did he talk to me? I got to focus. Yes, exactly. It was like, I didn't know how to create boundaries around my work time. I hope today's episode inspired you on your journey towards greatness. Make sure to check out the show notes in the description for a rundown of today's show with all the important links.

50:37And if you want weekly exclusive bonus episodes with me as well as ad-free listening experience, make sure to subscribe to our Greatness Plus channel on Apple Podcast. If you enjoyed this, please share it with a friend over on social media or text a friend, leave us a review over on Apple Podcast and let me know what you learned over on our social media channels at Lewis Howes. I really love hearing the feedback from you and it helps us continue to make the show better. And if you want more inspiration from our world-class guests and content to learn how to improve the quality of your life, then make sure to sign up for the Greatness newsletter and get it delivered right to your inbox over at greatness.com slash newsletter.

51:16And if no one has told you today, I want to remind you that you are loved, you are worthy, and you matter. And now it's time to go out there and do something great.