Money Myths Debunked: 3 Common Beliefs That Hold You Back

Some of the most common money beliefs are flat wrong, and they quietly hold people back. In this episode, Ryan and Aaron break down three of the biggest: that investing is just gambling, that you should always pay off debt as fast as possible, and that budgeting means restriction.

For each one, Ryan explains the kernel of truth, where the myth goes off the rails, and how to think about it more clearly. Investing and gambling are not the same thing. The fastest debt payoff is not always the smartest one. And a good budget is about freedom, not punishment. A myth-busting episode that can change how you handle your money.

Find "Your Fiscal Physical" the book on Amazon

If you have suggestions or feedback, please email us at: Podcast@AlchemyWealth.com

And, as always, Stay the Course!

Transcript

Welcome And What To Expect

SPEAKER_00 0:01

Welcome to the physical physical podcast. Join us today as we sit down with the founder of Alchemy Wealth Management and author of your physical physical, Ryan Nelson. Tune in to gain valuable insights and practical tips as we simplify complex financial concepts into digestible lessons. From budgeting to retirement planning, this podcast is your go-to resource for mastering financial literacy.

Aaron Hoisington 0:33

Welcome, buddy, everybody, to this week's episode of the Fiscal Physical Podcast. Happy to have you guys with us. My name is Aaron. I am here with uh Ryan Nelson, founder of Alchemy Wealth Management and uh uh one of the uh smartest financial gurus I know here. At least he comes off that way. And uh um I'm excited to dive into today's topic, Ryan. But before I do that, uh how is uh how's the day going today? Today's going well. How's your day going? Not too bad, man. Happy to happy to be here. Um so we're gonna go ahead and get jump

Myth One Investing Versus Gambling

Aaron Hoisington 1:04

into this one. I'm I'm excited for this episode because I I think it's based off of uh you know a really interesting show that I saw. Have you ever seen the show Mythbusters? Of course. Of course. I feel like most people have. Oh, it's a great show. It is a great show. Is it still on? Well, I haven't seen it. Don't be able to do that. I I honestly I was thinking, I was like, oh, I love that show. And I was like, I probably haven't seen an episode of that in like 10 years. Yeah, to be honest. And uh I remember I I you know they they have all sorts of episodes of like uh you know, uh if you drop a penny off a building, does it like if it's a really high building, could it kill somebody? Sure, of course. Um you know, those different ones about like, oh, like what uh I can't remember, like there's all sorts of ones that they've done, like as far as that goes. It's one of my one of my wife's favorite shows, too, so she she really enjoys it. But uh uh very interesting. So today we're gonna do a little myth busting here, potentially. Okay. Um so I'm gonna ask you some uh you know some some common myths in the financial world, or common, I guess uh I don't want to say that they're maybe they're myths, maybe they're not, because the whole thing about myth busters is like, is it a myth or is it actually true? So uh we're gonna see if these are actually uh um true or if you're going to debunk them. So uh you you ready, ready to dive in? Let's do it. All right. First one is investing is just like gambling. Break that down for me, would you? Sure.

Ryan Nelson 2:22

Um how do you define gambling? That's a good question. Um so um do you would you consider like Caesar's Palace was or like Caesar's Entertainment, whatever their parent company is? Do you think of their business? Uh so they're a multi, I don't know, obviously million, probably billion dollar organization. Do you consider what they do gambling?

Aaron Hoisington 2:47

I don't think so. I don't think they I I think when I think of gambling, I think of like, do I do I have the I guess the I don't know. I do I have the odds to like win, I guess. I d I don't know. Like if uh I but I wouldn't think of like the company as like I think I'm choosing to gamble. It's like they're providing like the service if if I want to choose to do that, I suppose. Yeah.

Ryan Nelson 3:08

So I di I have no idea what the actual definitions of these things are, but this is the way I think about it and the way I kind of talk about it with clients. So I might be uh taking some liberties with these definitions. In fact, I'm probably certain I am. Um, but hopefully it at least conveys the point. So the way I personally think about gambling is something where I have a negative expected return. So if I go into you know Caesars Palace this weekend and I go play basically any game in Caesars, um, my expected returns are gonna be negative, right? Um that being said, so if I go in and I play blackjack, uh my expected returns are negative. I might win a hand, I might win five hands. Heck, I might even win during that weekend and leave up a thousand bucks, right? Right. Um, but if I play enough times, enough hands on enough weekends, I'm gonna lose because my expected returns are negative, right? And the flip side of that equation, Caesars, their expected returns are positive. So they don't care, like, oh, Ryan comes in and he wins one hand. They say, Okay, we don't care. Like, yeah, 40 something percent of the time people are gonna win a hand. It's like, oh yeah, but I went and I won a thousand bucks this weekend. They're like, okay, yeah, good for you. Like, but 40% of the time people are not gonna live, or you know, or 40% of the time, yeah, people might leave with money, but most of the time they're not. Um, and so the way I kind of think about it is, yeah, gambling to me is when my expected returns are negative. Investing to me is when my expected returns are positive. So to me, like Caesars is not really gambling, they're entering in the same game with me, but they're on the other side of it where their expected returns are positive, and they know if enough people play enough hands, they're gonna come out on top. And so to me, that's like investing. They're basically investing in us, the fools who are gambling, right? Um, and they're getting positive expected returns. That's why they can build such big buildings and be so profitable, right? So investing is just like gambling. Uh, I would say that myth is, I guess, busted. Sure, busted. Yeah. Yeah. I I think that there are similarities in which you put money into something and you don't know exactly what you'll get out when you gamble or when you invest. Again, my definition though would be when I put money into a gambling endeavor, I would expect less money to come out. When I put money into an investing endeavor, I'd expect more money to come out. Um, so to me, that's sort of the big difference between um maybe gambling and investing to me. So, yeah, purpose of this, let's call it myth busted. Perfect. I like it. I like

Myth Two Paying Off Debt Fast

Ryan Nelson 5:32

it.

Aaron Hoisington 5:32

Uh, all right, second one. You should always pay off debt as fast as possible.

Ryan Nelson 5:38

Yeah, so um I would say there's probably some element of truth to this.

Aaron Hoisington 5:43

Um, I mean, what gets me is always um I was actually gonna say like a uh one of the things how I phrase this question. There's like a I I watched this YouTube video one time about like how to take like tests. Yeah, exactly. Like if you don't like know the subject, like this guy was like, hey, just use this strategy and you can you know get get a decent score on most tests because you think about how the questions are worded and such too. So anytime you normally see always in a question, you're like, that's probably not true. Yeah, like anyway, but I was just funny you picked that up on that too. I figured you would.

Ryan Nelson 6:14

Yeah, so yeah, I guess if the question was you should pay off debt as fast as possible. Oh, that seems interesting. Um always. I would say, of course, there's cases where you should not be paying off your debt as fast as possible. Um, again, we've talked about this in the past, but we talk about there being a spreadsheet answer and there being your answer, right? And so again, if you have a mortgage at 2.75% interest rate, um, and you have an extra, you know, and you and you owe a hundred thousand dollars on your mortgage at 2.75 and you just inherit $100,000, should you just go pay off that mortgage? That's a reasonable solution, right? Um, you'd avoid paying $2.75 for the next 20 years or however much longer you have on your mortgage. Um, the flip side is what if you took that $100,000 and you invested it at six or seven percent returns? And so for every hundred thousand dollars, well, you owe the bank another two and a half percent, so you owe them two thousand five hundred. But if you're able to generate six or seven thousand dollars from your investments, yeah, you don't really care that you have to pay out two, two and a half thousand, you're still coming out, you know, four and a half thousand dollars ahead or something, three and a half thousand dollars ahead. And so, you know, I think there are edge cases where, you know, yeah, so as far as you should always pay off your debt uh as fast as possible, I'd say that myth is busted as well. Um, now there are certain people um who are extraordinarily risk adverse, and that's why we say there's the spreadsheet answer. So the spreadsheet answer might be evaluate the interest rate of your debt, evaluate the potential returns of your investments, and then make an informed decision. That'd be the spreadsheet answer. Then there's your answer, and so there are certain people who are extremely debt adverse, and the debt gives them anxiety and it decreases the quality of their life. And the best move for them, even if it's not best in the spreadsheet, the best move for them as a human being would be to pay off their debt as fast as possible. And so, you know, I would say there's probably some people out there who maybe this actually does apply to and they should always pay off their debt as fast as possible because that would be their answer based on their sort of uh core beliefs and values, and it increases their own personal quality of life. But in general, no, most people shouldn't always pay off all debt as fast as possible.

Aaron Hoisington 8:17

Yeah, I remember I can't remember which episode it was that we've done when several of them when we when we talked about like, should I pay off my house? And like it's such a and you mentioned you're like, oh, that's one of the most common questions like I get.

Ryan Nelson 8:28

Yeah.

Aaron Hoisington 8:29

About like, oh, like, and it ultimately it comes down to like, cool, what are you trying to accomplish with that? Are you trying to, you know, be free of a house payment? Okay, cool. Like, or are you trying to save, you know, are you trying to do the financially smart thing about like, hey, cool, I just got a you know, my I owe $500,000 on my house. Do I I just got a $500,000 in you know uh life insurance payout or something like that? Like, do I just pay that off? Or do I, like you mentioned, like I maybe I have a four percent interest rate on my house? Like, do I think I can do we if we put that into a you know into the market, will that over the course of 30 years return more than 4%? Right. Probably. Uh, historical context would say so. So it's like, what are you trying to accomplish with this? Or but are you just trying to like liquidate, you know, that you know, say you have a four thousand dollar mortgage payment? Are you trying to just liquidate four thousand more per month? Like, what are you gonna do with that money kind of piece of it? So um, I think this is an interesting one because like you mentioned like I always think I was like, oh, we want to pay off debt. And it's like, well, strategically, I guess use your money as a better way to like look at that one for sure.

Ryan Nelson 9:36

So yeah, so yeah, so yeah, the kind of the note I put here is yeah, debt debt payoff should be strategic, not automatic.

Aaron Hoisington 9:42

Yep, yep. Oh, that's a good way to put it. Just strategic, not automatic. That's uh that's awesome. Yeah,

Myth Three Budgeting As Freedom

Aaron Hoisington 9:47

cool. Uh, third one, final one that I have for you here is uh uh budgeting means restricting your life.

Ryan Nelson 9:54

Yeah, so like we've talked about budgeting in in a number of episodes. I think that budgeting, you know, it it's tough. I'm not always the biggest fan of like conventional budgeting. Again, I've compared it in the past to like uh crash dieting, right? If you're just using willpower to eat healthy, like it's really hard. And maybe you'll follow a diet, a restriction diet for a while and then go back to your normal habits if you haven't changed your habits. So similarly, if you follow a budget and you uh are just using willpower to f like follow this budget and you don't change your core habits, you'll stick to that budget for a little while and then go back to your core habits eventually, right? Um, and so I think there's a pretty good parallel there between budgeting and dieting. Um, and so the reality is like, you know, I'm not the always the biggest fan of budgeting, but what I am a big fan of is being aware of where you're spending your money. You should have clarity and transparency. You know, most clients, when I ask them, almost every client I ask is how much do you spend to maintain your lifestyle? Almost nobody knows. Right. Right. And that is a problem. We should know how much we're spending and not only how much we're spending, we should know where we're spending it and how we're spending it, right? So being aware and like have some transparency into your finances is extraordinarily important. Applying budgeting like most people do, like that of a like a restriction crash diet, that I don't know. I have mixed emotions on. That being said, um, when we say budgeting means restriction restricting your life, um, I I, you know, as much as I'm maybe not the biggest fan of budgeting, I actually can't really agree with this statement. I think that budgeting um really the the idea of budgeting should create freedom, not this restriction. Um, so I don't think that creating a budget, and if you were to follow it, would restrict your life. It's actually creating more freedom and it's aligning your money with what you value. So yeah, you might not be buying the whatever Starbucks, but you're then freeing up that money to spend traveling, right? So I think most people say, like, oh, I can't go on this trip I want to go to on because I don't have enough money. Oh, I can't buy the car I want because I don't have enough money. Oh, I can't um, you know, buy the furniture I want because I don't have enough money. Oh, I can't go to that nice restaurant because I don't have enough money, right? Right. And it's like if you had the right budget that that that cut out the things you don't value, it creates freedom where now you can go to the restaurant you want because you can't afford it, or you could go on the vacation you want because you can't afford it, right? So what a budget does is it helps you get a grasp of aligning your funds with sort of your values. Um so I overall, again, I I would actually say, yeah, myth busted. I don't think budgeting does mean restricting your life. I would say that budgeting would create freedom, um, not restriction. It allows you to reallocate funds away from things you don't value towards things you do value more.

Aaron Hoisington 12:48

Awesome. I love it, man. I love that you how you broke that down too. And and honestly, like I these I I I took from, you know, I I just plugged it into Google and said, hey, like what are the top top three like financial myths? And these are some of the ones that popped up that I was also like, I feel like we've covered some of these previously on podcast episodes too. So I was like, oh, that's fun. Like, let's see if we can kind of I like it when we can kind of wrap things full circle. So if you guys are just just joining us for the first time, or maybe you're you're a little bit in here, definitely go check out our other episodes because we do talk about like what budgeting is, what budgeting isn't, like you know, how to how to you know save uh these different things or different strategies when it comes to that. It's specifically paying off debt as well, too. That's one of the episodes that I really really liked with the different methods you can use for that. So um some good good things out there for sure. But uh um awesome, Ryan. You uh got anything else for this one here? No, I think that sounds good. Awesome. Well, there's uh three myths uh relatively busted for you there. We'll call them busted. Yeah, we'll call them busted. Yeah. Uh but if you guys have any things you want us to break down, maybe something you've seen, like please let us know. Happy to happy to check it out. And uh um everybody hang tight with us here while we uh come back on the other side of this for some personal stuff.

Personal Segment Stress And Even-Keel Living

SPEAKER_00 13:59

And now to put the personal in personal finance.

Aaron Hoisington 14:06

Welcome back, everybody, this side of the physical physical podcast. We've got uh Ryan still here with us, and uh uh Ryan, we're gonna dive into this week's uh question here for you, and I'm uh really curious what the answer is, and uh probably something most people can relate to uh is stress. So I'm gonna ask you, and you're pretty for the most part, at least how you come off, Ryan. You're a pretty laid-back, chill guy, it seems like, uh for the most part. Doesn't seem like a lot bothers you for the most part, but you know, hard to say if that's just a facade you put on there. But uh, I'm curious, what is the most stressed out you have been in your life? And uh, you know, what or or what stresses you out the most? However, you want to answer that question there.

Ryan Nelson 14:46

Yeah, I don't know. I I just kind of struggled to think of something here. I do think like overall I'm a little more even keeled. I don't have the highest uh highs and the or the lowest lows, um, or the stressiest stresses, I guess you could say. Um I I think that um I was kind of struggling to think of something here. What I will say, uh uh I I yeah, I really can't think of a good, good, a good answer, but um, you know, going back in hindsight when I got my MBA, um, so I was working full time. I was back, that's when I was still doing engineering. So I was working full-time, eight to five. And then if I remember right, I think the MBA classes started at 5 30 and went to 10. Is it 10 45? God, that seems so late. Maybe 9 45, 10 40. I don't know. Let's call it just 10 o'clock at night. Um, it must be 10 for it must be 9 45. Um, so you know, you you're just showing up to work from 8 to 5 and driving literally straight to class and staying there until, you know, let's call it 10 o'clock. So you're getting back home at a little after 10 o'clock. Um, basically just gives you enough time to kind of start the day over. And so not a lot of time to go to the gym or get a run-in or do groceries. Yeah. Yeah. So um, you know, I think kind of just doing like a master's degree program full-time in person and working full time, um, you know, was there were stresses associated with that for sure.

Aaron Hoisington 16:08

Yeah. Um, what about you? Yeah, I uh it's funny. I I also consider myself relatively even keeled, but uh, you know, gosh, I do get uh, you know, I I like the highs of life. I really like to celebrate those ones. I'm quite boisterous when it comes to those. But um, you know, I I think about the the lows and the stress piece of it. And over my life, and I feel like as I get older, like I'm just like, nah, not that big a deal. Like I'm able to kind of just compartmentalize things about it. Yeah, yeah, I got a plan for that, like it. But um, I do think the most stressed I've been is when uh um, you know, when my wife gave birth to my our son and like those first like three months, I just it was it was terrible. Like I was just like I was always stressed about something, whether it was like when was the next feeding, when was the next diaper change? Sure. Are we is is my wife producing enough milk? Are we, you know, is he sleeping safely? Are we doing these different things? And and being a first-time parent, like I actually went into that feeling relatively like prepared. I had read the books, I'd watched the videos and such, and then it was like got in there and I was like, oh my gosh, my son is completely different than everything I've read. Like uh so I I feel like just that that that unknown aspect of it, and maybe that's just part of like you know, uh being a parent or something like that, that you're just like consistently stressed with, and it gets easier, obviously, otherwise people wouldn't continue to do it. Right. Um, but I I do think that those those like first three months of after my my son was born, I was like, yeah, I was pretty high strung for like uh about 90 days there. And then my son started sleeping through the night, and that was awesome. And then it was like, oh, game changer when it came to that.

Ryan Nelson 17:43

But no, I think that's yeah, that's that's a perfect example. I think I I I do think uh, you know, it's it's I'm cognizant. So I don't have any kids, as you know. Uh, and uh I'm cognizant. So so I have a dog, yeah. Uh, and I'm understand I shouldn't compare my dog to people's kids. More more comparisons than you think in that regard. Yeah, um it is it you know, it is like stressful when my dog gets hurt and then you take him to the vet. It's like you can't communicate with this thing. Right. So it's like, does your leg hurt? Like, or why are you limping? I don't know. Like, does your leg hurt? Like, does your shoulder hurt? Like, does your stomach hurt? Like, what, you know, and uh so there's some element of stress of like, hey, what's going on? So I can only imagine, you know, an infant is the same way where you like at least when the child gets old enough to be able to communicate, you can at least have conversations and be like, hey, help me understand like what's wrong. Um, which that still in itself has to be extremely stressful having a hurt or injured child, but uh having like a hurt or injured infant or something that you can't communicate with, I have to imagine being even more stressful.

Aaron Hoisington 18:44

Yeah, no, it's a that's a good comparison, and maybe I'll get drugged for this or whatever, but I do think there are more compar more similarities than like some people like to let on with like the dogs and kids piece of it. Like the the the lack of like being able to communicate with like a baby and then like communicate, like why are you crying? Kind of why are you barking? Like kind of like there, there are you ask similar kind of questions and I just usually shake my dog, is that what you do? Uh well, no, yeah. But that is, I guess, an option out there, I suppose. Like oh gloss over that one, but but no, I I think it that it's a it's a good piece of like that stressful nature of things that you love and you don't know how to like solve the issues. I think that they're that's kind of where you're you feel like helpless. Exactly. The helpless nature of it, like I think is pretty universal. If like people don't like that, like that. That's not really something people seek out, yeah, for sure. For sure. So um awesome. Well, appreciate it, Ryan, as always, uh checking in. Uh uh, you know, always a pleasure to hang out with you here, man. And uh

Listener Prompts And How To Reach Us

Aaron Hoisington 19:46

we'll go ahead and uh close this one down. But before we do, I'd like to hear the listeners' uh most stressful times. I'm sure we got some fun ones out there, but uh uh also love to hear the topics you'd like to cover. Text us, email us, podcast at alchemywealth.com, and uh or just let us know next time you see us uh out and about. So uh with that in mind, Ryan, that will be it for me, and I'll turn it over to you. As always, stay the course.

SPEAKER_00 20:10

Thank you for joining us for the Fiscal Physical Podcast. Until next time, happy listening. And as always, stay the course. If you have a question or topic suggestions, please email us at podcast at alchemywealth.com. If you enjoyed today's discussion, subscribe to the podcast to ensure you never miss an episode. And consider leaving us a rating and review on your favorite platform. This helps other listeners like you find the channel. For more resources, you can visit Alchemy Wealth Management's website at www.alchemywealth.com or find your physical physical book on Amazon. We'd be remiss if we didn't mention the personal finances just now. First of all, please don't take anything we say as advised. The pre-titting content is for informational and entertainment purposes only. It's not an offer or a solicitation, nor should it be construed or relied upon for tax, legal, or investment advice. It doesn't consider your personal financial situation or objectives and may not be suitable for you.