This one we go over financial independence vs security and cover some very basics of finances. Do you know what your net worth is? Assets-Liability= Net Worth... Do you know how much you spent last month? Remember your net worth and personal worth aren't a direct result for each other. However, at times we do understand how we assume they are! Great discussion on the first steps of finance. Keep us posted on any questions!
Find our contact info and blogs on our website! adultingdecrypted.com
This one we go over financial independence vs security and cover some very basics of finances. Do you know what your net worth is? Assets-Liability= Net Worth... Do you know how much you spent last month? Remember your net worth and personal worth aren't a direct result for each other. However, at times we do understand how we assume they are! Great discussion on the first steps of finance. Keep us posted on any questions!
Find our contact info and blogs on our website! adultingdecrypted.com
According to a 2023 survey by USA Today, 28 percent of Americans say they are completely financial secure. That's an interesting concept. Completely financial secure. What's
Gid:the definition of financially secure? Like in their opinion, they're like, I'm safe or what?
Dad:It's a great question Gideon Jean Ashton any thoughts on that My guess
Gene:would be to give it like a common team or Bar I guess to it I'd say maybe would you be good for three months without any income how far you could go with that? Okay, I'm secure. I have this much wiggle room. I guess is
Dad:how I'd Define it. Okay. Interesting.
Welcome to Adulting Decrypted. We are your hosts. I'm Gene, and I'm starting my first year of college. I'm Ashton. I'm a music performer, composer, and educator. I'm Dean, a high school senior. I'm Roscoe, the dad. Those are my three sons, and this is Adulting Decrypted, where we discuss ways to become adults and the things we need to know to be successful in life.
Dad:Today. We're going to talk about financial literacy. This is going to be the one on one course. So we've talked about finances at different times in different areas. We've talked about budgets. We've talked about, high level insurance and health insurance and car insurance. This is going to take more of a straightforward. You're sitting in a class concept. We're going to walk through financial. What that means what that looks like and then we're going to take some time and we'll deep dive that in like 102 103 our next episodes. We'll go in a little bit more detail. Not necessarily in series. But listener, you can always look at our website and see where it's broken down in financials. This will be financial basics 101. So this is sitting around the table. I'm going to ask the question, what is financial independence mean to you? Gene, you mentioned it was one or two months worth of savings where you didn't have to work. Yeah. I was saying, if all
Gene:of a sudden you lost your job or something happened, you'd be good for
Dad:Three or four months.
Gene:And be able to have enough time to get back on your feet or get back healthy to where you need it to be so you're
Ashton:secure in
Dad:that area. It's kind of like a safety net. Okay. Interesting. Good. Ashton Gideon. I think,
Ashton:A good definition of security could also be just seen as a place where you're able to build everything, your month to month is a net positive on average. So you don't have like there's paycheck to paycheck But then there's paycheck to paycheck with just a little enough left over to Put stuff aside like it's just a constant building. I think is what I'd
Dad:I'd think of Thank you
Ashton:Gideon, I
Gid:mean when you say to the question you said that it's an opinion based question our answers our opinions and I think that also as part of the financial stability is what you think it is I think it could be defined as not being worried about your financial state and being comfortable, whatever that
Dad:means for you. So it's awesome that I asked the question. Do you guys remember what my actual initial first question was? What is financial independence and where did we take it from there as a group? Stability. Financial security. Interesting, isn't it? We, I asked what financial independence was and we turned it to security and it's not wrong. But it's the way I've raised us and it might be wrong. I want you to step back and think of financial independence is a little bit different than that. Financial independence still is a emotion based decision. For example, it might be for one, finding financial independence means I don't have to work a day in my life. I can go sit on a beach somewhere drinking virgin daiquiris or virgin pina coladas. Maybe it's diet coke. Virgin olive oil. Yeah, exactly. Whatever you want to drink as long as it's not alcoholic for me You guys choose you you do you like action would say but the financial Independence could mean that I want to retire and have thirty six thousand dollars a year that comes in and I don't ever have to Work it just shows up in my in my bank account and I'm able to live off that now thirty six thousand dollars a year What does that lifestyle look like? Probably not the same as somebody who has, let's say 150, 000 coming in every month. They're not every month as well, which is possible.
Ashton:I think that's okay. I mean, I would, I think I'd feel a little stable.
Dad:Yeah. I mean, 150 a month is close. Well, the reality of that action is some people probably think that's not enough. Yes.
Ashton:Grant Cardone, you're making 500, 000. It's not
Dad:enough. Yeah. No, you're not wrong. And so that financial independence really comes down to an individual based of what you want. But financial security is also based upon what you want. So the big difference for me as financial independent means I've hit a spot where it's not a security metrics. It becomes a repetitive metrics. And I think that that is the biggest differences, financial independent, it's going to happen no matter what financial security might be more of what you talked about earlier, Jean, for your definition is I've got an emergency fund. I could quit work and I'd still be okay for a little bit. You know, that's a security based, but financial independence is more non investing and how it's going to come back and how it's going to be there. Regardless of what's happening. So here's the question. Maybe it's a two part because I would be very curious to see where you guys feel like you're at. And I asked you before we started the episode, if you had access to your bank accounts. And so this is just something for you to open up and look at, not necessarily to share with the listener, but where are you currently at? And do you know where you're financially, where you're currently at? Are you financially secure? Are you financially independent? Are you financially a mess or are you just financially confused? Anybody willing to venture a comment or a thought on that? I
Gene:would say for me currently, I'm financially secure. Cause right now I don't have anything else coming back. I have stuff that I. Have to work with but it's
Dad:not like what's the money's making money. Oh, okay And so when you say you have stuff to work with you haven't find you have cash What we'd call cash like in a bank account, correct or a CD.
Gene:Yeah, I think my CD closed but
Dad:could open up Need to or want to. Yes. Okay. Okay. So, so you've got a little bit, so you're saying you're secure based on your definition. I think,
Ashton:If we're going off of off of genes descriptor, I'd say I'm, no, I would say I'm financially wanting, I think. So, it's like, I'm fortunate in a situation where I'm not in trouble, but I don't feel comfortable where I'm at, if that makes sense. Like, in the sense that, there's more that I want to be able to do, there's more that I think that I am capable of getting in the essence of security, stability, what have you. So, I think financially wanting is fair for me. Gideon?
Gid:Yeah, I think I stand in the same boat as Ashton where it's boat buddy. Yay. Boat buddies. Who's going to carry the boat? So I think that like, I guess you said financially confused. Cause it's like you can always make work with what you have, but you always want more. So financially wanting, I guess.
Dad:Well, I don't know that you always can make do with where you're at. And we'll talk about that in a little bit. But, but your point is valid saying where you're at, you can always make do with where you're at, but you're saying I want more than what I currently have. Is that a fair statement? Because, and the reason why I'm asking that Gideon, you're 17. Ashton, if he stopped working tomorrow, stop bringing in money, what would happen? I'd run out of money. Fairly fast, right? And so it comes a point where you can't feed yourself and can't take care of yourself. So I'm not trying to pick on you Gideon. I'm just thinking sometimes you don't have, not you, Sometimes the listener might not have anything, right? They might be negative, right? And that's a real place people find themselves at for whatever reason whether it be life You guys were born fortunate in a household where I made enough which is a debatable term and given you some opportunities Well, I would say
Ashton:that, like, just recently in college I was just about as close to zero or beyond as you could get when I was at college, and so, right now, I feel better about where I'm at but, like, if you had asked me this same question a year, a year and a half ago, I probably would just be like, no, it sucks, I hate this, this is awful. But then, you know, a couple of crazy long shifts and, you know, actually finishing college later and not having to pay tuition every month, you know, that
Dad:helps. Good. So then this is, this is that your definition, I, as the dad, I'm going to own this a hundred percent. I don't think I've taught you guys to dream big enough and what I mean is financial independence and financial freedom is so Different to so many different people, I think there's times. And I just said it, what did I say? Just a second ago, you're fortunate to be born in a house that what we made enough, enough, what does that really mean? Well, we always had food, right? Never once have we relied on, we, as a family relied on anybody else to bell us out on any of my screw ups. It's always been me and mom, right? And I say, right, a lot, does that make sense?
Ashton:Right. Right.
Dad:Thank you. I got you. But some of the parts that I haven't dreamt big enough on is, how do I want to travel? My father in law retired at 55 and he's happy to tell everybody that, but the other day when I was talking to him on his phone for his 85th birthday, he said, you know, I've never traveled anywhere. I didn't do much. I retired at 55 and stayed in a small town in Southern Utah. Because I'm pretty happy with my life. Gideon, I think you and I had this conversation, didn't we? Yeah, we did. What did we talk about?
Gid:It's actually from a video that I was watching. It was a episode recap of the show Wife Swap.
Ashton:And part of it That's one of those conversations. No,
Dad:it's a different Different than what you and I thought.
Gid:One of the wives came from like this wealthy family that had this like military dad that was always super intense on everything and then the other one was your relaxed family and so the wealthy wife or Always pushing to be a better wife came over to the other family and she's like You guys need to make more money. You need to do all this stuff and he's like I'm poor and happy i'm not poor and sad You're wealthy and sad i'm poor and happy Like, I don't need money to be happy.
Dad:Yeah, thank you, Gideon. That was exactly a recap. And my statement on that is, I'm all for that guy. Makes sense to me. And he's pushing his kids in a different direction. In the sense that they're learning how to build crash up derby cars. They're doing some fun stuff. He actually is working pretty hard. To be, what did he say? He actually said fat. I think he said fat and, and, fat and happy or finance. You know, anyways, he, he also mentioned he's just happy. He's happy with where he's at. The only, the only caveat I have on that, as long as you're not taking from others, right? If I was on social relying on other people to take care of me, I would say, Hey, hold on a second. It's not enough just to be happy. Happy is okay. As long as you're taking care of yourself. And so what you have to do is you have to look at what we're going to get into next, which is where are you really currently at and what's your net worth. But one more thing I wanted to just bring up real quick is take this time, this next iteration between when we meet next and say, what do I want out of my life? Where do I want to be in five, 15, 25, 35 years from now, because what's weird. And it, and it's mind boggling to me. Ashton, how old are you? 25. How old am I? 50. Good math.
Ashton:And I, I wouldn't have been able to answer that question
Dad:a couple months ago. We're exactly 25 years apart. And so when I look at Ashton, I realized that 25 years ago I was where he was at. I had just barely graduated college. I was just barely starting to feel my own way about where am I at financially and what I didn't realize is some of the principles we'll teach about in investing. We're just going to do a real high level course, how much investing now affected me in the future. And by defining a little bit of what mom and I wanted, helped, I wish we would have spent the time to dig a little bit deeper. And we'll talk more about exactly how to open up accounts and different accounts in one Oh two. So just, bear with us until we get to 102, but, now's the time to dream, write down what you want. Gideon says, I want to be down by the van by the river. That's awesome. How long do you want to work? Do you want to work? And, and cause you can work really, really hard. I've worked with ski instructors and you work really, really hard to act like you're barely working at all. And, and you have to ask yourself, which one am I doing? Am I working really, really hard to look like I'm independent or am I truly independent? Am I really financially independent? So what, and I asked this question a little bit premature, but where are you at now? And you guys all kind of answered if I could, Ashton if I can recap what you said, you said you're financially. Want wanting Gideon said probably the same financially wanting gene said he's financially secure at this point in time So I just want to remember reiterate that we're gonna talk about financial independence Later and in more detail and some definitions in 102, but let's talk about currently where you're at And how do we really find out where we're at? Well, the first thing that to figure out is what's your net worth? Does everybody here know their net worth a real quick while you're thinking about this. I want to be real clear. Your net worth, which is a financial number is not, once again, I say is not correlated with your personal worth. Okay. Cause we get talking about this and sometimes we go into church area where we're like, what's your calling? Oh, you're not important enough. You know, what's your, you know, what's your degree and oh, you're, you didn't, you didn't graduate college. Your self worth is independent of any of this. Okay, you're loved and you're cared for you're important Does everybody get it? Okay. Now what's your net worth? This is is this rhetorical or is this? No, this is a this is a fact number. Okay, this is not an opinion. This is a fact number Do
Gid:I include bikes that I could sell?
Dad:Good question. Do you guys want to know how to figure this out? You take all your assets. That's, I would consider that a bike, right? Because you have mountain bikes. I would look at my computer equipment, Ashton, your recording equipment. And I would look at all my assets and then you take away all your liabilities. Who do I owe? What? Who do I owe a credit card? Do I own a house? Do I own a car? Do I own a, Oh get in 38 and 50 cents from get filling up my car. The answer is yes. You just bailed me out cause I left my wallet at home. So I'd look at, it's a good
Ashton:thing. The buggy is not running or you'd be even now.
Dad:No, these kids will never be even for how much hours I spent on that buggy. or for all the time I spent on keeping all these other cars running. Oh, mine would
Ashton:have just been one to one the amount of times I had to get saved without
Dad:gas. That's fair. Gideon, I don't think you ever got bailed out of gas once. Yeah.
Ashton:Once is what we'll
Dad:remember on that one. So going back. So It's a real quick formula. I'm going to pause and let the listener think about it as well. Your asset minus any liability equals your net worth. So what are some more assets? Gideon, you mentioned bikes. I mentioned computer equipment. For me, it's a home, for me, it's my cars. What else would be an asset? Would my, would my, would the dune buggy be an asset? I think any sort of
Ashton:property that you could sell for any. I guess, an amount of
Dad:money. Yeah, I like this and I'll be real careful. Any accountant that's listening to this and I mean, somebody that's taking the series, your cars are liabilities. We understand that. Do you have to do something to keep them running? We understand that this is purely an exercise of net worth. This is not. Right. Because I would say a car is a liability 90 percent of the time, but in this equation. If you run your own
Ashton:business, that's that you can have, you know, stocks or investments that you could liquidate.
Dad:It have. Love
Ashton:it. I think that's kind of
Dad:it. Kids? No, I'm just kidding. I can't sell you, so. Those are liabilities. Well, the,
Ashton:That's just
Dad:harder to sell. And, and, and really. Especially if they're challenged. And so what is that asset worth, right? So if it's cash, what's an asset of the cash worth? It's a one to one. Yeah, cash equivalent, right? What about your bike? Mark it down a little bit. it's
Ashton:how much it's worth whatever someone's worth. Yeah, whatever someone's willing to pay
Dad:when when you sell it That's it. And and you guys I've hammered this probably into you way too much too But what's what's anything worth what somebody's willing to pay me when I want to sell it So yeah, I like your bike bike example is a great example if you're looking at it as a purely accounting number, you would say, okay the bike I paid four grand for And it depreciates over 10 years and it would take that number off and it would reduce it down to whatever that is at the end of 10 years. And that's how accountants look at it. For this math, you kind of have to decide with you and your significant other and maybe a financial planner if you have a lot of assets, what that's worth.
Ashton:Well, and yeah, and something like a bike is, is more of a ballpark, I bought it for, you know, a thousand dollars. I beat it pretty hard, but I kept it up to date. I think top dollar is probably about 800 right now. Oh, but I put new tires on some, you know, but like if something like a car, you can get Kelly blue book and that'll give you a pretty accurate representation of what the market is
Dad:saying about your vehicle. So then I go one step further. I get on like my local classifieds. Right. And I say, what would I, what could I really sell it for? Facebook marketplace. Yeah,
Ashton:exactly. But then you could also get with something like your home or your property, you can get an evaluator to come check it out.
Dad:Correct sort of stuff. Yep. So correct. So, so do you guys know what your net worth is? So asset we covered liabilities. What are some liabilities? We covered liabilities, I think. What's a debt? What do you owe on?
Ashton:So, go ahead. Loans, credit cards,
Dad:owing Gideon 38? Yeah. Yeah, we covered that pretty good, I think. Yeah. And then, the equal is your net worth. Okay, so let's pause and let's think about that real quick. Does everybody know their net worth? Have you done that exercise? I don't
Ashton:have an exact number off the top, but I know where it's at.
Dad:Yeah, I have generals. Do we want to pause and do that exercise or do you think it matters? Are you close enough? I've done it in the past year. I'm close
Ashton:enough. Yeah. I, I don't know what other assets
Gene:I'd have that is not put into account by my wonderful banking
Ashton:yet. You could probably sell a pretty good wig. Honestly,
Dad:I would not count that as something. Okay. And 20 bucks. So, so my question is, is who in here tracks what their net worth is? Regularly?
Ashton:No, but like I've done the math. So
Dad:you've done the math. Yeah, I look at my bank account a lot. Okay, that's good. And do you know what your debt is? Yes. Do you mind sharing with the listener? Zero. Okay, just curious. Do you know what your net worth is? I do know what it is around and here's okay. We'll ask that question later, but thank you I just want to know if you're financially independent or financially secure You know, based on that, your number would say yes. Yes. Right. Because I never would say no, right. You say wanting, because you looked at your liabilities and said, I can live for three months without having a job. So I'm, I'm financially secure. So anyways, so net worth's a really interesting number. So about two and a half years ago, mom and I started tracking our net worth monthly. I love it. I used to say budget and I'm, I'm getting away from that. And I'm going to teach you about. A new principle that I learned from a financial guru that I started following next time in one Oh two and dig a little bit deeper so we can all build it out on our spreadsheets and spend some time. But mom and I would get confused. we would argue over the stupidest things, you know, of what our net worth was. So now in this sheet we can just look at it and I say I have 26, 000 worth of toys. Do we agree? Yes or no. And they're, they're in there and I'm like, yeah, I think so, but I depreciate it pretty rapidly. I depreciate it two and a half percent a month. And the reason I do that is because this is houses on fire and I need this money. I need to pay for food next week. I need to pay my health insurance. I need a, you know, it's a fire cell. So I want to look at it and say. That bike, I think I could get 800 for, I'm probably going to put it on my asset sheet at 300, you know, just because that makes me feel comfortable gives you a little cushion. Yeah. So I have a Google docs that I keep it in mom and I can both see it and we keep track of, and the way I've got it is I've got cash up top. I've got what I'd called semi liquid and we'll go into what that means later. And then I go into what my investments are, like my longterm investments, what my. Current real estate is just because I think that's a little bit harder to move. So I've got that down there as its own line item. Then I have my debt and I do have a small debt because we're paying off our cabin. And so I know what my net worth is. And if you told me at your age, Ashton, that I would have my net worth that I have today, I think you're full of garbage. I'd be like, there's no way. I'll be that close to my goal. When I was 17, sitting across the table, I thought if I had a million dollars, I would be rich. I thought, man I would not be lacking or wanting anything because it seemed like such a far outlandish number. That's why this is something that you have to evaluate always. Is that clear?
Ashton:Clear is rain.
Dad:Perfect. Okay, so now my next question is, or statement, three in five Americans don't know what they spent last month. That's a high percentage. Do you guys fall in that? Do you know what you spent last month? I do. The second? No, I mean, just something you could pull up. Yes, right now, but I can pull it up. Yeah, you could find it. Yeah.
Gene:I could find it, but like if you told me like, Oh yeah, how much did you spend last month? Like just in casual conversation, I
Dad:could not, but my question would be if somebody said, Jean, can you, could you tell me what you spent last month? Would you, how would you answer that question? I would open up
Gene:the banking app previously mentioned and look cause it has it broken down the month and then like, Oh, This is how much
Dad:I spent. Okay. And to me that, that, that's the question that's being asked, right? Do you know what you spent last month? Doesn't mean, do I know right here in the top of my head? Do I know what I spent last month, but do I, and do I check it regularly would probably be the second question. And a 2023 study found that 51 percent of Americans have no clue how to calculate their assets to get a true value of their money. And nearly a third of them believe they have a zero or negative net worth.
Gene:So, is that third the part of the 51 percent that don't know? You know, that's just 100 percent like
Dad:that's two different statements. Okay. So that third is, if you had a hundred people in here, 33 percent of them, 33 of them. Yeah. Thank you. Yeah. Not a percentage. 33 of them would actually say they have a zero or negative net worth. My question to you is, is there's four of us. Yeah. So that means that one of us has a negative net worth. Do you have a negative net worth? Yeah. You're pretty sure of that? Almost certain. Well, I mean, yes. Yeah, I do. But you don't believe it. You know it. Yes. Okay. I've
Ashton:done the math.
Dad:Okay. So this is good. This is where we get to our next step is the first thing we need to figure out then if we find ourselves in that scenario is what, what do you think your first step is?
Ashton:Well, I think the first step is the classic Gordon Ramsey,
Dad:snowball Dave Ramsey, or yeah. Oh, did I say Gordon?
Ashton:That's funny. I've, I've actually, I've been watching some of his stuff recently. He's a killer teacher. So it's Gordon or Dave
Dad:Gordon.
Ashton:Dave is cool too. I've been actually seeing some of his stuff too. Yeah. No, Dave Ramsey's debt. Snowball, I think is probably the first because like, well, that's assuming though that you've done all the math and you know the situation you're in. So then you've got to do the math of how to start moving in a positive direction. Which then includes, taking that equation that you've done and adding your income versus expenses over
Dad:time. So that would be, yeah, that's a good point. I like it. To say, am I making enough right over what my expenses are? Right? That's that same ease. It's a different equation, but it's easy, right? Yeah. Well, do you remember what I called that? And I called it earlier in a different financial episode income minus your expenses
Ashton:equals.
Dad:Your ability to save or your ability to grow because net worth is to Ashton's point over time. But if you did your monthly, if you knew your monthly number, okay. You should be able to say, let's keep it real simple for the listener. I make 1, 500 a month. My cash outlay, I have to spend every month is 2, 000. Am I going to be saving or losing money? Losing money by how much? 500. And if you don't have a safety net, what happens? You lose. You go into debt, right? Yeah. I mean, that's the only place you can do it. So what is that snowball effect Ashton? You were talking about snowball. Well, so so Gordon
Ashton:Ramsay's debt snowball. So you're in debt I'm gonna keep doing that too. I know it's gonna you're gonna have to get like an AI voice and edit it in just like Dave So my good friend Dave
Dad:Or mr. Ramsey.
Ashton:Yeah, see then everyone will assume the chef. So funny Don't feel scared so Dave Ramsey talks about the debt snowball, so once you've figured out what you've got to do once you've figured out all this math, when you get to the debt stuff, the first thing that you do is you look at all the debts you owe, you find the one with the highest interest rate, You pay off the minimums for everything and then with your budget, with any spare room you have, take what you're willing to put into the largest amount of money that you owe or the one with the highest interest rate, excluding something like a house payment you pay that off first. And then what happens is then once that debt's paid off, you have the monthly payment that you owe plus the extra that you've been paying with that, you then take those and put those towards the next one. And then once that one's paid off, you put that to the next one. And in theory, those all start accumulating. So then once you're out of the debt snowball, you can keep moving forward then into a positive financial state.
Dad:Perfect. That's a great explanation of, of the debt snowball from Dave Ramsey. Yes. Yep. And so my question to you, listener. And maybe it's Ashton. Have you done that math? Do you know where all your debt lies? Where all the bodies are? Like, do I
Ashton:know all of the places that I owe debt to?
Dad:Correct. Yes. And do you know your interest rate on all of them? Yes. Ish. Yeah. So what I would ask you to do for the next episode, and this is for the listener, not just Ashton, right? Because we know that there's at least a third in here that will be in your situation. Probably more because of where we're at. Right. You guys are just. Starting life and school. It could be a student loan. It could be a car loan because you started your car. It could be other, it could be credit card debt. It could be, let's hope it's not, let's hope it's a student loan, you know, just cause they're more forgiving. It's, it's a little bit lower interest rate, but find out where they're at and have it on a spreadsheet. So the next time you're, we're doing this, you can step back and look at where my money is. And then the other thing I'd challenge you as the listener is to know. What your monthly expenses now, Ashton, you're in a unique situation and you're probably not the only one you're in this gig economy gig economy. For those who don't know what that means. It just means you, you
Ashton:gig or you, you contract, you find work and you do all these odd jobs maybe as another way to think
Dad:of it too. I like that. And so what does that do to your income? Makes it really freaking weird. It is weird versus just showing up at a job. Nine to five job, I know that I'm going to make 15 an hour after taxes. It's going to be like eight 50. And I know that that's where I can start planning on all my money and where it goes and how to divide it up as a gig economy. We're going to have to look at that a little bit different. So we'll build that into the episode. So thank you for, for sharing that. And how do we account for that? Thanks for being so candid with the listener. Kate, so then let's say that we can get our debt figured out. Then you have this decision you're going to have to make. And this is where I wanted to go with the next is you build this emergency fund. An emergency fund is what, what have we talked about in the past about emergency fund besides necessary? Is that the
Gene:how much you need to pay for a certain amount of time? Is that what I was kind of referring to before
Dad:Yeah. Gene would call that financial security, right? Because to you, you've got something that can cover you through a gap for me as an independent Contractor and have been for a lot of times. My emergency fund looked very different than other people's my emergency fund I've been out of work almost for for a real year and then I found some other work So it really isn't like five months of truly out of work And then I've been underemployed for a while as I'm launching my new business And so that emergency fund is what's built bridge this gap so that I haven't had to go into debt And so that's that's what that emergency fund But if I was a college student, I'd say, Hey, 500 bucks is for an emergency. Well, what kind of emergency? I blew a tire, got a rock in the windshield. Teacher said I needed new books. The hot girl finally said yes on a date. That is an emergency. I know I've had these. I'm trying to think of more. Yeah, you've had a lot of emergencies, right? Oh, you got to go to the doctor all of a sudden. Yeah. Out of nowhere. You know, you weren't planning on. You needed to do an extra trip somewhere that you weren't planning on. You know, like even home gas, you know, all the emergency is truly you build it above and beyond. Okay. Sorry, go ahead. Just, I think
Ashton:this kind of applies to the situation. cause sometimes the issue, like one of the things I work at a school and they pay monthly, which sucks. But when it comes to running into emergencies, you're going to have that money and there's companies and businesses. That offer, they say, well just tell us how much you're going to make on your next paycheck. And you can just get it now. And when you get it, just, just give it to us. So you can live with that money. Would you advise individuals to go for that sort
Dad:of thing? Absolutely not. Right. Because? They're very predatory in nature. So if you go to somebody like that and you take out what they call a payday loan. They have a lot of fees and their interest compounds daily. And so if they say, Oh, look, but your credit card's at 18%, but we only charge 15 percent an 18 percent compounded monthly is very different than a 15 percent compounded daily. So daily, if it was a hundred dollars, it'd be, you know, a dollar 50 versus a dollar 80 at the end of this, this month. Well, that's 1. 15 or 1. 50 on the first day and then it's 3. 25 because they get to add that extra 3 that you owe them. So before you know it, before you get your paycheck, you're deeper in debt and then you go to try and pay that off. And the problem is your paycheck doesn't cover even sometimes, let's say they do compound up monthly and they're very fair with their interest because they've been, they've been looked at and scrutinized by the federal government. The problem is going to be the originate the origination fee. They're going to say, Hey, Ashton, yeah, that's great. I'll do that for you. I'll pay that, but it's a 25 percent origination fee. And so all of a sudden you've dropped your paycheck by 25%. Right. So that, that would be the last place I'd get money. The first place I'd get money would be, trying to pick up an extra job. Right. A little bit more of a hustle, right? So you're like, Oh crap, the school's not going to pay me now for another month. I'm going to go drive Uber, I'm going to go work at McDonald's for two weeks, or I'm going to, then the second place I would go ask family to, Hey, I'm in a tough spot. Here's my paper, can you help me get out of this trouble? Right? And then my third would be, you know, if you didn't have an asset, I need to think through that. Then I'd maybe use a credit card and then a fourth might be that option. Yeah, but I, but no, absolutely not. So. You're not in that trouble, are you? No. Okay. You scared me for a second. No, I was just thinking about it. Your face was a genuine question. I got concerned. No. It's a fair question. I'm glad you asked. Because it is advertised.
Ashton:Well, in like a lot of the businesses, like, like you'll drive past something like a Wendy's or McDonald's and on the sign it'll say when you get a job here, like this is different I guess, but it's like they do daily pay
Dad:now as well. And I would take daily pay in a heartbeat. So like, and that's
Ashton:just another version of it. And it made me think about businesses where it's like you can get, there, there was a while there where I was getting tons of ads for an app that you could install that was essentially like, like paying your money before you got it sort of stuff.
Dad:Oh, that's wild. Yeah. You know, and the other one just, and this is not that, but if you go to checkout. Oh, don't worry about paying the full price. It's four payments at 25, you know, and you're like, Oh really? And then you read the fine print. They're like, well, really the first two are 25 and then the interest kicks in and it's, you know, they'll, they'll break it down. I can't remember what the name of that company is.
Ashton:Those, some of those are honest though. Like I know there's a, there's a music audio company. Called Sweetwater and they know music gear is not cheap and it's not something you always want to pay for So like I've had times where I've wanted or needed gear to use but it's been I could buy this all out right now But I don't have to so I can space it out and I can subscribe to my purchase for three months and it'll be
Dad:fine Yeah, and if you pay on time and that's how it's written. It's great. It's just a risk, right? You need to make sure that paychecks gonna come So we've, we've hammered debt pretty hard. So emergency fund, what you fund next. And then you talked about long term investment and that's going to, we're going to talk a lot more about long term investment and why you need to start now. Get in and you should really do some before you leave. Gene, you should do it now. Ashton, as soon as we can right side that, you should do some. Go ahead. This isn't today's
Ashton:conversation, right? Correct. Are you planning on talking about investing apps
Dad:like Robin Hood and stuff? I'm going to talk about Robin Hood. I'm going to talk about Fidelity. I'm going to talk about 401ks and IRAs. Cool. And why if you had a real a big job like Sabrina, I'd say get into your 401k. And I shouldn't say a real job, just a government sponsored 401k. If if that's kind of teacher doing why you'd want to get into that. So we'll talk about investing and that's more like 1 0 3, but Robin hood will be 1 0 2. We'll cover that and some of the upsides and downsides and concerns of that. Okay. So let's, but, but let's just take, so the listener wants to come back. Let's look at some investing scenarios just for fun. So let's say that Gideon, you're getting ready to go on your mission, but you're like, Hey, I have 2000 bucks. I can throw into an investment. Okay. You're not going to contribute any more of that. You're sorry. You're just going to, and this is nerd wallet. com. We'll throw it in the description. Let's say that you're not going to put any more money into that. Like, that's all you're going to get that. That's all you're going to put in. You're going to re you're going to grow that until how old are you now? 17 you're going to retire at 67. How many years is that anybody? Okay. Quick math is 50. And let's say that that only grows at the 8%, which is pretty average. How much money do you think that 2, 000 gets you? 8 percent a year annually.
Gid:Is it compounding?
Ashton:Yeah. Cause interest is based off of what's in the account. Yeah.
Gid:So that's why I was wondering if it was, yeah, I have no idea, but I'm going to guess like,
Ashton:Eight. Am I
Dad:allowed to do math? Can you tell, can you tell the listener what that number was?
Gid:171, 465. 40
Dad:Off a 2, 000 initial investment. And that's not including if you add stuff. Correct. So let's say that you throw that in there now. And, and let's say that you could only, let's say you could only come up with 50 a month to invest. But you are able to do that forever. Let's see if that will recalculate that. Do you want to, do you want to guess what 50 a month added to your 2000, your 2000
Gid:on top of the 2000, so 2000 initial, and then, and then you just 50 a month with an 8 percent
Dad:annual and you have 50 years to let it grow. You were at 170 just it's half a million. Is it really? Because 50 a month isn't a lot more money, it's, it's 600 more years all. But it's, but it's compounding. Yeah. So it's still, where do you get all your money is right there at the end. Right. That's where the growth. It's an exponential curve. I'm sharing this story is grandma Birch was the first one to ever tell me, Hey, you should look at investing grandma McReynolds, Birch, whatever, you know, her name was when you guys remember her by, you remember who, do you know who I'm talking about? Okay. Hmm. Hmm. We were sitting around talking one time and she goes, Roscoe, I had no clue what an IRA would do for me. Michelle and I just got married. We're just sitting there and I go, what do you mean, grandma? She goes, even if you have like a hundred dollars, just put it in there. You'll never miss it. I'm like, grandma, how can you say that? I'm a broke college student. I've, I felt a lot like Ashton probably does right now where I'm going, look, I didn't know where up is. I waited a little bit. I started my job with Ford at 26 at 26 and then I got there and they had a 401k and I was her grandma's voice in the back of my mind. Hey, put some money in there. So I thought 10%, I can live without 10 percent and I put it in there and I let it grow over time. And that little 26, 000 investment that I was with them has grown substantially. Now I need another 20 years. For it to really make to hit that tell right it's still in this the shallow part And it needs to grow because I just left it alone. I didn't know what to do with it So that's why we're going to talk about investing, but that's why I wanted to say we want to start early Okay, so the reality of it the reality of it is most Americans aren't willing to look at their finances why because it's It's scary. It's a little bit It's a little bit awkward to sit around and talk about finances. I think it's also
Gid:overwhelming.
Dad:Like you said Gideon, it's a little overwhelming. In 2023 CBS News did a thing that says some generations of American began saving much later in their careers. They, for instance, baby boomers, the generation that's retiring now, my dad, you know, in that group, they started saving. At 35 while generation x began to start saving at 30 The hope is that more millennials will start saving at age 25 Gen z it's time in your 20s to start saving and investing for the future And what i've done wrong As a dad and i'm just going to tell the listener i'm going to tell everybody I've talked way, way, way too much about savings. I've had a cash sitting in my safe for probably 20 years that if I would have thrown somewhere would have made me a lot of money, but I felt safe. I felt secure. Sometimes it's okay to feel insecure and have investments. And we'll talk about some of those options, but I challenge the listener to look at, take a hard look right now at the areas that we just covered. Look at what. Your financial independent looks like figure out where you're currently at. Do the numbers, do the math, figure out how to get out of debt. And we're going to talk a little bit about whether you go into debt or whether you, or you worry about your emergency fund. Cause I promise no matter how much avocado toast you cut out, I don't care how many monsters you don't drink. You're not going to be financially independent without investing for the future. And there's a way to get there.
Gid:Thanks, dad. And for the listener, if you ever have any questions or want to talk DMS on any of the social medias, or email us adult and encrypted at gmail. com, you can find all those on our website or just look us up adult and encrypted. We are always happy to talk and want to hear your stories. And if you need any help, we are here for you.
Dad:So thank you, Ashton financial payday loans. Great question. Thanks. That was fantastic. What do you guys think is a 101? Did that seem like it was basic enough, but you had enough detail?