The True Value of Money ft. Bob Simpson

When a life-altering, traumatic event plummeted Bob Simpson into poverty, his entire view on money shifted. The founder and CEO of the Multifamily Impact Council shares how digging out of a negative net worth taught him the true value of money and, more importantly, of being a good person.

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Transcript

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- You know, your value's not based on what you have. It's not based on what you don't have.- [Adam] Yeah.- Your value's based on how much value you provide to the world. Do you do good things? And are you happy? Are you a good dad? You know, who cares if you drive a crappy truck? Right? Or who cares if you drive a really nice truck?- Yeah.- Doesn't really matter.- [Adam] Welcome to Common Cents on the Prairie, a podcast dedicated to helping you demystify the sometimes complex topic of money. I'm Adam Cox, head of Wealth Management for The First National Bank in Sioux Falls. We're a community bank based out of South Dakota. In this podcast, we share expert insights from around the country and stories from our local community to arm you with the tools you need to make better financial decisions. Because the truth is, the more we talk about this stuff, the better off we're all going to be.[upbeat music] Bob Simpson is the founder and CEO of the Multifamily Impact Council, a national nonprofit organization responsible for establishing and maintaining the first common framework of impact principles and reporting metrics for the multifamily industry. Bob is a nationally recognized expert in affordable, green, healthy housing with more than 25 years' experience working in the highest levels of housing, finance, and public policy. In this conversation, Bob talks about his upbringing in a normal, middle class household until one day, when his whole life got turned upside down and changed forever. The lessons Bob learned from this experience are too good not to share. I hope you enjoy my conversation with Bob Simpson. Bob, welcome to the show.- Thanks, man. Thanks for having me.- Well, let's start with an icebreaker, okay. I know you're a big sports guy.- Yeah.- What is your best live sports memory?- Yeah, this is an easy one. Hands down. Last year... I went to Los Angeles. I'm a huge Dodger fan, as you know.- [Adam] Yep.- And I was at game one and game two of the World Series, and game one I'm sitting in the rightfield bleachers, Freddie Freeman, Grand Slam, walk-off home run to win the game lands within 10 feet of me,[Adam chuckles] and without a doubt, the best sports moment. I think it might have been one of the best sports moments that anyone has had in the last, like, 10 years.- [Adam] Yeah.- But it was just phenomenal. Everyone was standing. We didn't leave the stadium for 45 minutes after that. High-fiving strangers, you know, it was the coolest moment, I think, for me as a lifelong Dodger fan that I'll ever have. And-- Yeah.- It was pretty cool. But, yeah, I'll remember that one for the rest of my life. I actually have a picture. My wife took a screenshot of the television broadcast that showed me jumping up and down when the ball hit.- Really?- Yeah.- Oh, that's awesome.- It was a screenshot of my phone for about eight months.- That's a good one.- That's a good one.- Yeah, that is a good one. That was a good one. I certainly can't top that. Good on you. All right, so I think where I want to start the conversation today is just like around money and history. I think a lot of times our views on money are shaped by maybe what our parents' views on money are, or their experiences, or just some of the things that we live through or we're brought up believing. And so for you, I remember you telling me that your mom was always really, really worried or concerned about money.- Yeah.- Where did that concern come from?- You know, I think it really came from two areas. You know, my mom's a German immigrant. She grew up as a kid right in the middle of World War II. And, you know, had a childhood that was tougher than most people. You know, house was bombed out when she was younger. Her mom and her brothers and sisters literally walked across Germany in the middle of the war and had nothing. Right, I mean, they lost everything. And, you know, my mom didn't really have stability until when she was in her teens, when they were in a Marshall Plan, you know, refugee camp. And so I think that she'd always come from that real scarce environment of, you know, not having enough and would tell us stories about it. And so part of it came from that. And, you know, I always took a lot of strength from it because she always, the stories she told were always, like, good stories. Like, this is how we persevered, this is how we made do. It was never, you know, oh, I wish we would, there was never any regret in it. It was always her source of strength. I think, as she became older, and, you know, I think a part of it is, and I think anyone who deals with childhood trauma, the real issue is control.- Yeah.- Right. And so, you know, my mom, growing up in the seventies didn't have as much control over the finances. Never knew how much money was in the bank. You know, we'd go to the grocery store, she'd bring a check that was signed by my dad and blank, right, you know, so if you wrote a check out for $50 bucks, she never knew how, if we had 50 bucks in the account. And so there was a lot of stress built up around that as well. So I think coming from that scarce environment, but also coming into an environment where you don't have control was tough. And also, you know, my dad wasn't great with money.- Sure.- You know, we never talked about money when we were kids. I had no idea how it got made. My dad never talked about it, you know, I think, and we oftentimes didn't have it. And so, you know, my mom would go to the grocery store out, one of my favorite memories of her would be to write the checkout for like$10 extra in cash every time.- [Adam] Oh.- And she'd keep it, I never really knew why. I just, you know, because you don't think, everything was normalized.- Yep.- Right? And later on, she said that she would keep that money because eventually a check would bounce.- [Adam] Yep.- And then she would use that cash to pay for stuff, right? Clothes, groceries, what have you.- Yep.- But I think that's how it shaped it. I mean, you know, clearly, knowing where my mom came from always really gave me a good perspective. I think gave all of our, you know, my brother and sister and I, the same sort of perspective that you really have to be thoughtful and, you know, be thankful for what you have.- Yeah, so quite a bit of her experience got imprinted on you, obviously through stories.- Yeah.- But then also through the things that you observed.- Yeah, I mean, I think the way she approached life was, you know, I will tell anyone this, my mom's my hero. She always has been and it's always been through her actions and her approach to life. Very no nonsense, very rational. You know, my mom, one of the things I always remember her telling us is that life is hard. Go figure it out. And I think that's how she approached life. I think that's how I think about it. I think that, you know, throughout my journey, whether it's through finances or through my career or through relationships, you know, everything is something to be figured out. And everything can be figured out, and you don't complain about it. You don't spend a lot of time worrying about it. You just keep on moving forward, and I will always appreciate the fact that she left that with me and-- Yep.- And hopefully I can leave that with my kid as well.- Yeah, so, growing up, your experience with money, would you consider a fairly middle class, lower middle class? Like how would you classify it, I guess?- You know, it's funny, I always thought we were upper middle class.- Yeah.- Middle class. But we never really knew. You know, my experience with money up until I was 19 years old is I did not know what it was. I had no idea. We never talked about it. It was never something we valued. You know, in my growing up, we never talked about money. I had a part-time job, but that was really, you know, everything I made, I spent, right?- [Adam] Yep.- We valued other things, you know, hunting, fishing, reading, music, you know. I grew up in a family that, you had to read, right. You had to be able to have a conversation. We never talked about money.- Okay.- Ever.- Yeah.- And so I always thought we were maybe upper middle class. We were probably middle class, lower middle class. We didn't have a ton of money.- [Adam] Yeah.- But I also grew up in an area that just didn't have a lot of money. I mean, you know, Western South Dakota, you know, middle class is not as much as it would be in Sioux Falls, right?- Sure, yep.- And so I didn't really know. I just knew that there was always food on the table. I always woke up in a house, and there was always gas in the car.- Yep.- I didn't know how hard that was for my parents to put that on, you know, to make that available until much later.- Yeah, you said until age 19?- Yeah.- What happened when you were 19?- Yeah, so when I was a freshman in college, first semester, you know, being just a typical dumb college kid, I got a call from my dad. And, you know, he told me that, you know, he had been arrested on, I think, 52 counts of... federal tax fraud and sales tax fraud, and all of this sort of stuff. And he said, you know, this will hit the papers tomorrow, and, you know, I'll call your brother and sister, and we'll do all that sort of stuff. But literally, I hung up the phone, and all of a sudden we had no money. And so this idea that I always thought that we were, you know, upper middle class, I didn't really think about money. It was just always there. I had this sense of security that really just got destroyed in 30 minutes. I didn't even know how long the call went, and so that was really what happened. And all of a sudden, you know, we went from being, here's who I thought I was to, like, oh crap. You know, how am I going to pay for the next semester of school?- Yeah.- And so that was a big thing. And at that point, really, it's a big moment in my life. I think it's an understatement to say that, but that's really where things started to change for me.- Sure. So what did change? Like what about you changed in that moment, and how did you figure it out?- You know, I think the most important thing that changed is I suddenly realized that I had no relationship with money, and the sense of security that I thought I had was really built on a lie, right? Well, it wasn't a built on a lie. It was built on something that didn't exist in the first place.- Yep.- And so I really had to rebuild it, and it took me a long time, but it really forced me to think about, you know, number one is what is that sense of security based on? Like, what's the foundation? And, you know, the great thing about not having money is that you never, you know, like associate it with your sense of worth.- Mm, that's right.- So, you know, it was really helpful for me because it never defined who I was.- Yep.- You know, when you have zero, you don't want to define yourself as a zero. So that helped. And then I would always just be, it helped me to be rational about it.- Yeah.- You know, for me, security meant, you know, I wanted to be able to, you know, sleep at night.- Yep.- And I wanted to be able to, you know, eat, have a place to live, and I wanted to have the freedom to do what I wanted to do. You know, it's the one thing I remember when I was a senior in college, so I ended up getting a lot of jobs in college, got a lot of scholarships, got a lot of grants, got a lot of loans, like figured it out.- Yep.- I had a job where I worked at a call center in Yankton, and I had to go there, and it was an evening job. And I'll never forget, I love playing intramural softball, and I played for our house team, and I couldn't play my senior year because I had to go to this stupid call center job. And it was a soul-sucking job.- Yep.- And I remember just sitting there and thinking, okay, I'm going to figure out a way to get enough financial security, make enough money where I can have a job where I can do what I want, right? Now, that doesn't mean I'm going to have a job that makes a lot of money. It means I'm going to have a job where I can do what I want. You know, I'm very blessed in that I have a job where I get to do interesting things with people that I like, and those things happen to matter to me. And so the path to that wasn't to make more money; it was to have more money leftover. And that's really what I learned is that, you know, if you need less, you make more.- [Adam] Yep.- And so, you know, for me it was always about keep your cost basis low. The more money you have left over at the end of the day means the more freedom you have to do what you want. Means you're probably going to get a better night's sleep. And then as I got older, it became really a pathway to making sure that my family could be secure, right?- [Adam] Yep.- And that they could also pursue things that they wanted to do versus things that they had to do. But yeah, I just learned not to spend money. I'm really fortunate in that very few of my vices cost a lot of money. And so, you know, it was really easy for me.- Yep.- You know, I don't know what it's like to, you know, enjoy... I enjoy a good bottle of wine.- [Adam] Yep.- I can't tell the difference between a good bottle of wine and an okay bottle of wine.- Yep.- And I'm really happy about that. So for me it was an easy thing to do because I never did it because I was trying to save money. It just so happened that, you know, I'm a cheap date.- Yep.- Yep.- Well, I bet you learned to be very scrappy.- Yeah.- And have a lot of grit.- Yeah, I mean, it helps, right?- [Adam] Yep.- But, you know, I think I had that before. You know, I was fortunate to have an older brother, and we beat up on each other all the time, and, you know, I don't like to lose.- [Adam] Yep.- You know, I would not let my son win at some games once he reached a certain age.- Yep.- I think that helps. Yeah, but, you know, I think it definitely becomes magnified. The stakes are higher.- [Adam] Yep.- You know, I mean, you have to win when you don't have a lot of money sometimes, and you also, you know, you're not very idealistic at some point. You get very pragmatic about life.- Yep.- And you realize that sometimes it really is a binary game.- Yep.- And there are winners, and there are losers. And I want to be a winner, right? And I'll feel bad for the person that lost, but I'm sure as hell aren't going to, you know, trade places with them.- Yep.- And I think you kind of get that edge with you. And when you go through a period of trauma or you end up not having a lot of money, that edge gets really, really sharp.- Yep.- And it's taken me a long time to kind of know when to blunt that a little bit, because it's still pretty sharp.- Is it?- Yeah.- Okay, well, you know, one thing I think is a good lesson here from your story too is, it's not overnight where you fix the issue. And I mean, I know, so you wrote about this, and that's kind of what led to this conversation. And there's a couple things that stuck out to me. One, was the fact that it took you a long time to get even back to zero. So was it, you were about 30 years old?- [Bob] Yeah.- Before your net worth was even zero?- Zero, yeah.- Right. And so for those listening here that think it's a fast thing to get wealth and to dig out of holes, it's not. It's a long game.- Yeah, you know, I used to do the math, and it would always end up being like a negative number.- [Adam] Yep.- And that was horrible. But, you know, for me, I always thought, you know, I didn't want to end up working at a convenience store when I was 75. I just didn't want that. I didn't want to have to rely on my kids to support me. But, you know, the other thing, too, is like your twenties, you're not going to build a lot of wealth in your twenties. You set a foundation for wealth, right?- [Adam] Yep.- You know, most people who have a lot of money make all of their money between the hours

of 10:00 p.m. and 8: 16:47

00 a.m., right? When they're sleeping.- Yep.- And so, you know, what you make is really just setting that yourself up as a foundation. And I think if you're young and you make accumulating money your goal, you're probably going to be disappointed in your life, because you're never going to get paid what you're worth. You know, value and compensation are completely different things. And you know, you should be thinking about your life in terms of how do I create value for the world, and how do I create value for myself and the people around me? And sometimes that will make you money.- [Adam] Yep.- Sometimes it won't, but that's not you. You are your value. Like if you think about a teacher and you think about someone who works at a hedge fund, I guarantee you that teacher adds so much more value to the world than the dude who works at the hedge fund. Guy that works hedge fund just happens to make more money.- Yep.- And so, you know, that's the one thing I learned, you know, going through my twenties is I was going to do interesting things. I was going to do things that I thought were important. I was going to always be intellectually curious and hope that I could make enough money, right?- Mhm, yep.- And then eventually you do.- Yep. Did you have people in your life as a young adult to help give you good financial advice to kind of chart the course for the rest of your financial trajectory, I guess?- Yeah, I mean, I've been blessed that I have a couple friends that I've had since college, and they're sort of my, you know, these are folks that will jump on a plane and we could not see each other for six months and then they're your ride or die.- [Adam] Yep.- Right, and I had a couple friends like that who were very good at, you know, they weren't trying to give me financial advice. They would just say, you know, don't do this, right? Or I could model myself after that.- Yep.- Or their parents. Some of their parents, I would look at how they dealt with money or, like, just how they dealt with life, and they were really great role models, but yeah. One of my dear friends, I've told you this story, we won't share his name.- Yeah, we'll see if he's listening.- A mutual friend of ours, we were living together.- [Adam] Yeah.- I was renting a room from him after college, and I'd just gotten a job with Tom Daschle and was filling out these forms for the thrift savings plan, which is like a 401[k] plan. And I wasn't going to check it because I thought, well, that's like 20 bucks a week. I was like that's beer money, and he literally grabbed the pen and he checked it, and then he checked like the max contribution, and he says, "you will not miss that $20,"and you'll thank me later."- [Adam] Yep.- And, you know, over time, that turned out to be a lot of money.- [Adam] Yep.- You know, I mean, 10% of 18 grand a year wasn't much back then.- Right.- But wow. 30 years of compounding interest, it turned out pretty well for me.- [Adam] Yep.- I was always very fortunate that way. And, also it was always helpful for me. I always knew what I didn't know. I think it's really good to be very confident about what you're dumb at.- Yep.- And I didn't know anything about money. And so when I saw someone like my friend who did tell me, I never like says yeah, but. I was like, okay, I'll go do that and I never thought about it.- Love it. So one of the other things that you wrote that really stuck out to me that I want to get some more detail on is you said that, "once you've experienced poverty,"I don't think you ever escape it."It's just a stone that you carry"and it either becomes your personal superpower"or your kryptonite." Tell me more about that.- Yeah, I mean, you know, I think number one is when you had no money and when you've had to like, you know, I used to lay awake at night and go through my head which bill I wasn't going to pay. And you go through the math, right?$20 is always a lot of money. You know, if you've ever been poor, you'll know the difference between $20 in your bank account and $23 in the bank account, right? Because 23 means I can go to an ATM machine and get it out and still pay that fee, right?- Yep.- It's a huge difference. That never leaves you. The question is, does it hold you back, right? Or does it, you know, make you better? And that's, I think, you know, the idea of is this a kryptonite or is this like your superpower? I mean, that is a choice you make, and I think that when you grow up with something or a traumatic event in your life, once you realize that it's having an impact on you, then it's a choice. Right? Then you actually can make a choice. Is this something that is going to, am I always going to go back to this? Am I always going to blame everything on the fact that, you know, I had this thing happen to me, or am I going to use it to do better?- Yep.- And for me it was never a choice. I was like, why wouldn't you? I mean, I've got this great thing that no one else has that I can use to make myself better. Why wouldn't I use it? Right.- Yep. If some, you know, if I was born with a million dollars, that could clearly become my kryptonite. Right? But I wouldn't use it like that. I would sure as hell use it.- Yep.- So I've got this great life experience. It made me a better person. It took me a long time to kind of talk about it. Did I wish it didn't happen? Yeah.- [Adam] Right.- But it happened, so I'm going to make it work.- Yeah.- And that's pretty cool.- [Adam] Yeah.- I'm glad it happened, because I like who I am today.- Yeah. So between your mom and your experiences, you've kind of had some money stories and some history there. How much of that have you talked about with your son, and how has that kind of translated into his relationship with money?- You know, that's a really good question. I think the way I've always thought about it is one of the gifts I think I had growing up is that we didn't really think about money. I mean, I really do mean that. I mean, I think we should have known more. Do I wish I had financial education? Yes. But it was never something that was seen as a value. It was not something that was seen as important. It was obviously necessary.- Yeah.- Right, it's like water and air. And so what I've always, you know, wanted him to know, number one, I've always wanted him to know that he's secure. I don't want him thinking, oh my God, we don't have enough money. But I also want him to know that whatever he chooses to do in life, I want you to do what you feel is going to add value in the world. Right, I don't want you to just go and have fun, and do nothing.- [Adam] Yeah.- I want you to add value in the world, but I want it to be because of the value you're adding. I don't want you to think that you have to do something to make money. I think you need to understand that sometimes you have to make money to pay rent, all of those sort of things. But really understanding, have that healthy relationship with money that it took me a while to get.- Yep.- And part of it is not thinking about it much. Right, and not placing too much of a, you know, not thinking it's the end all be all. I mean, it really is a byproduct of the work that you do. It's not the work that you do. And so that's the way I've always tried to have him think about it. And then little things like, you know, pay your debts on time. Don't take out too much debt.- Yep.- Why buy a new car if you don't need a new car? You know, those sort of things that I think, you know, any good parent should teach their kid.- Yep.- You know, I try to teach him, but it's really just have a healthy relationship with money. Don't let it dominate your life, but don't let it ruin your life.- Yeah, you told me once that money never seemed real to you.- Yeah.- What do you mean by that?- Money is math.- Yeah.- Right? I've always, you know, money's never real until I need it. And so, you know, if I need to buy something tomorrow, one of the great things when you grow up without a lot of money is you always know what your obligations are.- Yep.- I don't know how much I have in the bank. I don't know how much I have in my investment account. I know what my mortgage payment is, I know what my monthly insurance payments are. I know what that one amount is that I need to just do all the stuff, right?- [Adam] Yeah.- So it's real when I need it. So I know every month there's a certain amount of my bank account that becomes real the minute I pay my mortgage.- Yep.- That's real. When it's in an investment account, it's just a number. It's math. You know, if I've invested in a company, I don't look at cap tables. I have no idea what they're worth because to me it's worthless, right?- Yep.- Until I can spend it. So my approach has always been, it's great. It's a number. It makes me happy, but I'm not going to change my behavior because the number gets bigger or smaller.- [Adam] Yep.- You know, I'm only going to change my behavior when I actually have that cash in my account, and then I'll think about spending it and I'm only going to spend it if I need to.- [Adam] Yep.- But other than that, it's just a math equation. And then, and math is easy. You know, math has no opinion. Math has no self-esteem. Math doesn't care about the neighbors and what the neighbors have, you know. It's just a number. And you take it times another number, and it grows. That's it.- [Adam] Yep.- So, yeah.- Probably gets back to, it seems like one of your philosophies is to keep your bases low.- Bases low.- [Adam] Yep.- Make things simple.- Yep.- And also, don't, you know, your value's not based on what you have, not based on what you don't have.- [Adam] Yep.- Your value's based on how much value you provide to the world.- [Adam] Yeah.- Like, do you do good things? And are you happy? Are you a good dad? You know, who cares if you drive a crappy truck, right? Or who cares if you drive a really nice truck?- Doesn't really matter.- Yep.- Yeah.- Let's, let's finish by opening up the advice line. So, you know, I know we get a lot of younger people who listen to this show, and the reality is a lot of people have a hard time balancing, you know, spending on the things they need today versus trying to save for their retirement and thinking about that, and that can be really difficult for people. And obviously you were in the same position once upon a time, and you had a good friend who just checked the box for you.- Yeah.- But for those who don't have that friend who might be listening to say, what advice do you have for them? How do you balance the two, and how do you set those good principles and foundations for the rest of your financial life?- Yeah, I mean, I think it's, the first thing is to think about, like, what do you need and what do you want? I think that's something we talk about, but I think it's something you really need to do. Everyone can talk about needs and wants, right? And then everything suddenly becomes a need.- [Adam] Yeah.- But boil it down, and most of what you need is not really material right? Beyond shelter, beyond food, beyond transportation, your needs really aren't material. Your needs are, you know, freedom, right? You know, the freedom to change jobs if you're unhappy, right? Or start a business if you want to. A good night's sleep. The best thing money can buy is a good night's sleep. And so that's a need. And then financial security for your kids, and that's a need. All of those things happen over time. So number one is, really be critical, and not everything's a need. It doesn't mean it's not important. But, man, those three things really are. I think the other thing is, when I said it was math, I really meant it. Don't overthink money. You know, if you want to save money and, you know, don't worry about spending five bucks on the latte. If you go out and keep buying the brand new iPhone every year, right? The math doesn't add up, right? That's a $5 latte 200 times a year. That's a new freaking phone, right? So do the math.- [Adam] Yep.- Don't lie to yourself. Don't justify it. It's okay to go out and buy that beer. It's okay to buy that latte. It's the big purchases that kill you, right? And don't fall into that trap. And you know what? Enjoy not having stuff. You know, I love to fish. I don't own a boat. I love not having a boat. I love having friends that own boats, but the joy of fishing for me is sitting on the side of a lake, throwing a line in the water, right? That's what joy is to me. It costs nothing. I'm really happy it costs nothing. I'm really happy I don't like having boats, but think about what really makes you happy. Spending the money ain't going to make you happy. And so I think that those are the things I would say. I think the best advice I would ever give to someone who's looking to, like, is have a good relationship with money. The thing about good relationships always last, bad relationships never end, right, until you make them end. So if you start out with a bad relationship with money, it is going to get worse, and worse, and worse, and worse. And it's going to take an intervention to stop it. So start by having a good relationship with it, and then just let it grow. Because, you know, $10 a month when you're 20 is a lot of money when you're 50. But if you think about it every day, it's going to be really hard. It's going to be a long 30 years.- [Adam] Yep.- So try to forget it, and then, you know, be a good human being, you know, be a good person. That's far more valuable than anything else.- Can't think of a better way to end it. Bob, thanks so much for being on the show.- Thanks, man. I appreciate it.- Yep.- You're my favorite podcast.[Adam chuckles] So now.- Now.[Adam and Bob laugh] Thanks so much. I hope you found this helpful. If you did, please subscribe and share with your family or friends. If you have a topic you want us to cover in future episodes, send us a note through our website. And if you're at the point where you want an expert opinion on your finances, reach out and we'd be happy to start a conversation. And remember, any comments, insights, or strategies discussed on this podcast are intended to be general in nature and, therefore, may not be suitable for you and your situation, whatever that may be. Before acting on anything we discuss, please consult with your attorney, CPA, and/or your financial advisor.