00:00

We are so willing to auto draft a car payment. We are so happy for the federal government to just take our money out of our paychecks. Like, is it going to be 1000? Is it going to be 2000? I don’t know. But like, just go ahead and take it or health insurance premiums, we will allow so much of our lives to be painted. Why can’t we payment ourselves first? pay yourself first.

00:26

Hey, it’s Nate Disarro and welcome to titans of industry the podcast where I talk to industry leaders and innovators who are at the top of their game and leading the pack in their fields uncovering some of the best stories in today’s business landscape. In today’s episode, I sit down with Sarah Catherine Gutierrez, a money guru, owner of financial planning company aptus financial and the mind behind Lady splaining money. Sara Catherine is passionate about helping women build wealth, and she has been featured in Time Magazine, Forbes better investing, and she and her husband own a salsa dancing business on the side. Sara flips the narrative on how women can save money by being proactive rather than passive defines just in time financial education, how to pay yourself first, and how savings accounts can enhance your happiness. Now let’s get to the episode. But before we do our team at content Titan wants you to know that we understand the challenges business leaders and marketers are facing right now, with moving to a more virtual world. We are experts in taking human connections and turning them digital. From virtual Events and Video presentations to promotional content and advertising. We are here to help guide you through the process of staying in front of your audience and making your life a little bit easier. People tell us all the time that they are lost and don’t know what to say or do and we exist to help your business continue to move forward, virtual. So if you’re ready to take your business and content strategy, virtual, we’re ready to help. Let’s get your business back to business. Now, here’s my conversation with Sarah Catherine Gutierrez. Well, Sara, Catherine, thank you so much for taking the time to sit down and talk about all things finance. It’s one of those one of those topics that I think everybody wants to know about, but nobody really dives into. And then one day you wake up and realize I wish I would have learned this stuff sooner. So I’m excited to have this conversation. I know I have a lot to learn. But why don’t you just give us a quick background? How did you end up in this world of finance and personal finance?

02:31

Well, first of all, thank you for letting me be on your amazing podcast. I love it. I mean, there are so many that I could discuss to that have really been inspirational to me and, and it’s a real resource for our community. And it’s a huge honor to be on it. You know, my background is not the most exciting background in the world. But you know, I was born and raised here in Little Rock. And you know, the the main, the main piece of my story that landed me into the world of finance, I think it’s such a teachable moment is the people in my life who inspired me and encouraged me to pursue finance, I think so many women don’t see a seat at the table, and they’re not encouraged to take one. And I have one particular stories I went to college in Salem College in North Carolina. And and I had some amazing people who were encouraging me to take a finance class, but there wasn’t one that fit into my schedule at my campus that could cross register to Wake Forest. Now Wake Forest is ranked higher, you know, tier wise is a school that my than the than the women’s college I was at. And there’s an intimidation factor of just all these really smart students over there. And this was also finance. So I walk into this 8am class in finance. And here are all these guys. Now, there probably are a couple women in this auditorium, but I don’t remember them. I just remember being a lot of guys. And you know that fight or flight thing? I definitely fly. So I was ready to fly. And a woman walked in the room and went to the front of the room. And I realized that was the professor I didn’t know because it said Kay Rogowski on this, you know, is the professor. So, I didn’t know that k was Karen. And so I sat down. And that was why I stayed in finance, because I took the class and one thing led to the other.

04:24

Yeah, you’re right. I think historically, the world has been controlled on the financial level, typically by men and I think just in the household in a business people would just assume it’s the man’s role because, you know, historically speaking, the man made the money so the man was controlling the money or controlling the finances. And obviously over the last several years that’s changed quite a bit. Luckily, but I’m glad there’s people like you out there. Really kind of pushing and turning the tide to say look, everybody, women included, should be in control your own finances and and be educated on it. So, talk to me about sort of your, your Crusade, if you will, cuz I don’t know if that’s what you consider it, but I feel like you’re out there helping people left and right, understand finances better. Why is it so important?

05:11

Yes. And I am a crusader. That is exactly right. Maybe an overexposed one, but I’m not going to stop until we’ve accomplished this. You know, to your point, if you look, there was a study done by UBS last year that well over 80% of single millennial women, when asked if they plan to after they get married, or in a long term partnership plan to be part of long term financial decision making said yes, of course, I would do that. But then the same year survey of married millennial women, less than half were involved in long term financial decision making. And I think what’s happening is it’s that it’s that bias that we’re not even seeing, it’s it’s that, you know, everybody’s really busy. Let’s divvy up duties. Oh, you know, you seem to know more about that you take it on? Well, let’s be clear why that might be. So you can have a boy growing up in a household where dad sits you down explain stocks to you. And, you know, people are just informally, you know, reinforcing that, yes, you belong here at the table. Now, I was one of the lucky people. I didn’t know any different. But my dad used to sit down with me with the paper. And we’d look he helped me pick out, he’d asked me to pick out a stock ticker and track the performance of a stock. That was very normal to me. And so I think that’s what’s happening is we are so reinforcing the normalization of women not feeling like they belong at the table. And then it feels, you know, like a unique decision. But it’s not unique to have your if it’s your male spouse take on that role.

06:52

Yeah, I think that’s absolutely right. I think the the normalcy and I don’t know, maybe you can explain this better than I can, what happens, from the time, we’ll just say a millennial woman goes from being single, and that 80% number drops to 50%. Essentially, once you get married, what, where’s that transition happening? That says, you know, all of a sudden, I don’t need to touch this. I mean, obviously, there’s the historical family, gender role that that probably happened growing up, but but what what do you think is triggered in the mind that says, pull back, like, don’t be in control of your own finances anymore? let somebody else even a spouse or partner like, I mean, that’s fine to trust that person to do that. But why did why do females specifically think they should pull back?

07:40

I think that it is just because we are not actively dealing with our money anyway. So it’s not like, Oh, I was making long term financial decisions in a clear, productive, analytical way. And then now I’m married, and I’m turning that over. I think we go into inertia autopilot. We make, we make passive financial decisions. So they’re still financial decisions, but we don’t make them with thought. And so it could be credit cards, using credit cards and going into credit card debt, or, you know, saving a very small amount in our retirement plan are not joining at all. So we’re just not making these proactive decisions. And then, you know, and then we just assume someone, we assume someone else can do it better than us. Now, can I give you the flip side Now, of course, okay, this is the vision. And you’re gonna just not even believe this. So I do retirement plans in my company, and a woman walks in, she’s 23 years old. She’s making $40,000 a year, she’s single. How much should I save? 10%. Okay. And she does it. She doesn’t know what her paychecks gonna be. She does it. Even if she says to me, I’ve never saved in my life. I’ve never been a good saver. That’s okay. Because she wakes up a year later. And she sees that she has maybe 4500 or $5,000, because her $4,000 has grown in the market. And she says, I am a saver. What’s the next thing I can do? Because now that’s on autopilot. We want inertia. I mean, this is a great example of inertia being a great thing because we get to inertia, our 10% great savings habit. That means we’ll be able to retire on time. So then you have that momentum. That confidence. You say what’s the next thing? Okay, you really need an emergency fund. Okay, remember, I’m not a good saver. Well, yes, you are. Let’s Let’s re wire that thinking, Oh, yeah, you’re right. I can do that. So let’s payroll, deduct 50 100 bucks every pay period into a savings account that you promise you’re not going to touch. That’s your emergency fund. Okay, let’s do it. The next year. What The next thing, that is how we turn this around, we turn it around by getting people it’s called Justin time, financial literacy. Now a lot of people have issues with the word financial literacy. And I do too. But unfortunately, it’s the accepted term for financial education.

10:18

So if we were to be less PC about it, what would we call it? I mean, what’s a more appropriate way to describe the financial

10:24

education is better. So just in time, financial education, so just getting you so like, think about it. You’re in high school, and someone wants to talk to you about an amortization table for buying a home? is that relevant information to you

10:36

know, and it’s not the in high school? I don’t, I don’t care, right. Home Buying is so far in the future that it just doesn’t resonate.

10:45

Now. You’re mowing lawns on the weekend? Now someone wants to come in and talk to you about how to save for a car, are you interested? That’s just in time financial education. So if we can get people just in time, financial education, this is how we change it. So remember, our woman who is signing up for her retirement plan, and she happens to sit in front of someone who cares about educating you, most people when they’re signing up for their retirement plans, they’re in front of a computer screen. I mean, that’s it, they have to make the decision on their own. So here’s an idea. The Women’s Foundation of Arkansas says we want to promote women’s financial empowerment, how do we do it? What if every single woman graduating from college can learn one important thing, which is to save 10% for retirement, they’re about to get their first jobs. And we can get them and make sure that they know it’s so when they’re alone in front of their computer screen that’s asking them how much to save, they know to put 10%. So we have hit. We’re hitting eight colleges right now to sororities at University of Arkansas, and hundreds of women. We are getting them a save 10 talk right now. So we’ve completed six out or seven out of eight of these talks at this point. The last one is next Monday.

12:00

That’s all so what’s the benefit? What’s the impact that this makes? So if I’m 22 years old, and I get this just in time, financial literacy, education, and I start saving 10%, my first paycheck after I graduate? What’s the difference in my future outlook and retirement age versus somebody who even puts that off five years, maybe 10 years, which is probably closer to the average when people realize they wake up one day and say, Well, maybe that 2% I was saving should have actually been 10%?

12:28

What a fantastic, sophisticated important question. Okay, I have from experience asking for a friend. Okay. So I happen to have these numbers in my head, which is miraculous, because I am not a math person. Okay, I can add and subtract with the best of them. But that’s about it. So here is the math. If you are 25 years old, and you make $40,000 a year, and you save 10%, assuming just normal cost of living increases in your pay, and about a five to 6% rate of return, you know, over over a 30 year period,

13:09

which is fairly conservative, right?

13:10

Yeah, very conservative, especially when you look at what’s happened in the last 10 years. So you would have just short of a million dollars, which would be enough money, because people ask me like how much is do I need to save for retirement? retirement is definitely it is there is no set retirement formula, it’s your numerator. numerator is how much money you have saved, divided by how much you need to live on. And it should be about 25 times so. So we know that that almost a million dollars, would spin off enough money that someone making $40,000. Now between a little bit of social security, and how much they can draw safely from that money, they can retire by the time they’re 65. We do not know a lot of people who can retire at 65 right now on their own terms. So that is miraculous. If you waited 10 years, you’re 35 now and you’ve decided, oh, I’ve heard this save 10 movement, I need to start saving 10% if you started saving 10% at 35 you would have about 560,000 at 65. So about 40% less money just waiting that one decade saving the same amount. It is it is insane. And what this is it’s the power of time and compounding. So you’re putting money in that money is growing. And then that money keeps growing and you put more money in and it grows. So this is compound interest. And and what’s interesting is when I talk to people, so I am for sure, a spender, right? I’ve done the credit card debt thing. I’ve done the under saving thing in my early 20s. Like I don’t care about retirement. I’m not inspired by it. So so I am definitely of the people Okay, when I think about this, and so I’ll tell you the way my brain functions of how I have convinced myself to part with money that I urgently need right now. I urgently need a Tesla this moment. need it? Okay, here’s what I tell myself. If I am 40 years old, and I save this much right now, then in 10 years, I don’t have to save even that much more. So I’m basically telling my future self, you’re welcome. I took one for the team right now for you. So that when you want to upgrade your lifestyle, you want to take nicer vacations, you want to drive a nice you wanted, I’ll give you that Tesla and your 50s, like, you’re gonna get one I promise, like, I’m taking one for the team now so that you can have that. That is my best recommendation is, it’s not delayed gratification to 65. So if you’re in your 20s, God be broke in your 20s. Right? Like, this is the time to be broke. Be as broke as you can, like I was talking to a kid who graduated from PA, he’s not kid, he’s 21 young adult, a young adult. Yeah. And he’s 21 years old, he’s at Columbia. And he gets in all his friends business, and he tells them, save 40% of your money, don’t save 10, save 40 be broke now be broke, everyone expects you to be broke. So do it. And and then when you’re in your 30s, you can pursue other things, because you’ve gotten a head start. I think a lot of people associate saving, with negativity, with deprivation, with all kinds of stuff. But if they can experience what it’s like to feel the fruits of even one saving reward, then they see Wait a minute, like I can still be a spender and a committed one at that like I am. But I can also see that’s really gratifying to see my money grow. And you know, you asked me my personal story. You know, I gotta tell you, I worked the long hours. And my husband did too. And one chance decision to save, which is a long story. But I’m telling you, it was a hard fought battle, Depart with money and put it in a savings account. And I didn’t even know why I was doing it. I got the idea. Just like you as an entrepreneur, you get that idea. You can’t let it go, right. I think a lot of people get that idea. They can’t let it go. But they have to, because they don’t have the ability, or the audacity to pursue owning a financial services firm. I had money in the bank, which was my audacity to go out and do it.

17:46

I love that. I had a conversation yesterday afternoon with someone that most people, I think, don’t become, quote unquote, as successful as they want to be or think they can be because they have too many things that they want to do. But the people that are the most successful find the one thing that they’re really passionate about, and they just are able to forget everything else. And they go hard after that one thing. And I think, on the financial side, if you can, at 22 years old, determined that I want to save, and that’s what I’m going to focus my 20s on and forget about everything else, when people go out to eat or take trips or buy fancy things. When you hit 3035 40, all of a sudden, you’ve got significantly more money in the bank and you’re living free, you’re happy with where you’re at. Whereas the people that didn’t do that, they’re catching up, and all of a sudden, they’re scattered. They’re like, how do I get to that place where I can relax and realize that I’ve got enough money that I can comfortably see myself in 20 years retiring. Whereas, you know, the person who’s got $10,000 in the bank, or investments, because they just never started. But they’ve got all these fun memories and all these things that happen. And now they’re worried about the future. I mean, how do we how do we transition from that mindset as a young adult, going from? I’m making a paycheck, now I’m going to go spend it to I’m making a paycheck, I’m going to go save it, like there’s a huge gap in a mental process of how we make that transaction transaction. How do we, how do we do that? How do we convince ourselves it’s very much like fitness, right? How do I get myself in shape?

19:31

So imagine if you want to go into fitness, and you’re on social media, and every single thing on social media was burgers and fries, and pizza was every single thing. That’s what all your friends were talking about. That was every single ad was burgers, fries and pizza. How easy would it be to to get excited about fitness if that’s all you saw?

19:57

I feel like you’ve been looking at my social media. But no, but I completely hear you. I think that’s exactly right. Yeah, the visual assimilation and the things we consume. Yeah, we’re watching our friends out spending money having a good time. That’s

20:13

okay. So let me ask you this question. Could you post right now, if you went and got a new Tesla, could you post that on social media right now? Sure. Absolutely. And what would people do? They would like, like, like, comment, I mean, they write whatever. Yeah, okay. Could you post? You know, let’s say you hit a big milestone in your retirement account. Could you post that?

20:34

I sure could. But I probably wouldn’t. Why? It’s not sexy. It’s not cool. It’s not fun.

20:38

Right. You’re buzzkill. This is our problem. We cannot we can only talk about money in unhealthy ways. We cannot talk about money in healthy ways. We have made it absolutely acceptable to talk about the new house we bought. I mean, look at it, like look at the humble brags on Facebook. We can humble brag about expensive vacations, European vacations about standing in front of our new house that we just bought, you know, you know, I’m so thankful I was able to get this new car, right? Like That is all acceptable that we have made it taboo to say I save 10% into retirement and so glad, like I mean, I can imagine like the humble brag. Wouldn’t it be so great if we could humble brag about our retirement and saving, because then you would have peer pressure, then you would have all these people feeling axed? And that is a good thing. We need the opportunity, we deserve the opportunity to feel peer pressure to save money.

21:41

So what we should be doing right now is encouraging people to take their bank app, make a transaction into their retirement accounts, screenshot it, and post that on social media. Yeah, and say, hey, check out what I did today.

21:53

And there was one day a year you can do that. So on October the 10th of every year, we have made it not taboo for everyone to post that they are saving 10% so 1010 get it, love it. Love it. 1010 every year I want, I want that to be a thing where everyone posts I am I save 10% You don’t have to post personal like account balances because maybe that is too private. But we can all post that we save 10% right? That’s not that doesn’t reveal how much money you make that doesn’t reveal how much money you have. It is simply saying I save 10%

22:33

What’s almost like back to the working out getting in shape thing and don’t post your weight. Just post the fact that you’re in the gym doing something 100% Yeah, yeah. Well, alright, everybody. So that’s, that’s your 1010? And why don’t we just make it a monthly thing the 10th of every month? I mean, doesn’t doesn’t have Why wait, why do we have to wait till October? You know, I think I think we can make this a monthly, you know, you’ve got Throwback Thursday. And all these little hashtags, why don’t we just make it 10% 10 on 10 or so? No. I love this. All right, we’re onto something here. Okay, so you’re passionate about this, you’ve you’ve kind of taken this, like we’ve said, you’ve you’ve kind of launched this Crusade, to the point that you wrote a book, tell me about the book, what what should I know about it?

23:19

I mean, it’s literally like I made a book where I was like, I want the title to tell sometimes I go through times where it’s, it’s a struggle to read a book. We’ve all been there, okay, like I’m reading a ton of them right now. But like there are stretches of your life where it is just not it is just not in the realm of possibilities. And when I was birthing all these babies, it seemed to be the time that was really hard to read books. So I was like, I want to make a book where you know, maybe a college student is not ready to read a financial book that the cover will tell them everything you need to know. So it’s called, but first save 10. So the idea of like, the book first is saying like, Hey, I’m with you. I want you I want you to spend, I want you to have good time, I want you to go out with your friends, I want you to go on vacations, like I want you to do these things. But first, save 10 and so I read a book literally for 23 year old women. That’s it. Like it’s it gives an example of a 23 year old woman it is it is literally saying you get out of college, you start your first job, here is what you need to know. Now I do make the case to save. I tell you why 10% I give the math for people who want to know the math. I give the emotional reasons for people who want to know like Why should I even bother, I give the feelings of freedom of security that people will feel I give them all the reasons that I find it interesting to save and, and other and other people find it interesting to save so that people of all emotional backgrounds, you know, financial background, they can connect with this idea of not just saving, but being proud of saving. So then in the book, I do offer a cash flow management system. We’re not taught it in school and I believe that we can use money to enhance our lives. This whole idea that money can’t bring happiness. That is absolutely patently wrong. My husband used to work 60 hour weeks driving to Jacksonville running a plant, no air conditioning and a hot summer. And I mean, because we saved because I started my business and we so we’ve always lived on one income. I started my business. And then when it got to a point where you know, it was, you know, solvent we could live on that. We own a salsa dancing nightclub. I don’t know if you know that. Oh, yeah, no idea. I guess podcasts just took a whole different turn. I’ll tell you, the only reason is interesting is so it was a hobby. And so I actually so people see my husband’s from Bogota, Colombia, they probably safely assume that he’s the one that started to actually I started it, okay. It’s when I moved here to Arkansas. 10 years ago, there was no salsa dancing. I’m passionate about salsa dancing, I salsa dance. All I like didn’t go to my classes in grad school, and I would salsa dancer camps obsessed with it. And there wasn’t any here. So I started it. And I haven’t turned into, you know, 10 people coming and 50 people joining and then 100 people joining and then 300 people joining. Okay, so like it became a thing. And so then my husband got that’s how we met. We met salsa dancing at the Red Room. I love it. Okay, we got married, had kids. And after our third baby, we’re tired. And we’ve we’ve been partnering with one he does. And then one eight is went under. And the landlord says, Do you want it? And my husband was like, Yes. And I was like, Are you insane? He ran the numbers and figure it out. He was able within nine months to replace his income. Because we paid in cash for everything we our savings, we invested our savings in this replaced his income working one night a week. That is objective, objective increase in happiness? Absolutely. If we had not saved, that never would have been in the realm of possibility.

27:05

So let’s let’s turn the table a little bit. I know a lot of people out there. They’ve got plans I’ve got, you know, things they want to do and accomplish. And of course, it takes money to do that. So similar to the story, but you know, I’ll take my business, you know, I had to invest a little bit to get a little bit of financing to get things off the ground. And of course, you know, it was luckily lucky to be in a position where I had enough savings to do that. Most people feel paralyzed because they can’t start their own business or do their own thing or or buy that next car or whatever it is. Because they feel like they’re always trying to save but they never can. So how do we how do we talk to people in a way that says you know, you want that thing? You want to start a business or you’ve got your your goals set on this, but you feel like you can never get there? How do we? How do we get there? How do we aggressively create the mindset that says, we actually can do that?

28:02

Nate, you’re asking the best questions. And I don’t say that all the time. This is exactly the question we need to ask is why can’t we do that? So what’s happening is, and I see this, because we see these people in our offices, exactly what you just described, and it’s people that are operationally breakeven. So here’s the scenario. So you, maybe you’re saving for retirement 10%. But then what happens is you’re breaking even on your income on your paycheck coming in, and everything’s working out. And so then you’re like, well, I’m gonna save a little bit. So you open up a savings account and you save, then what happens. So your operation break breaking even right? So you can pay your bills, you can pay your rent your mortgage, you can pay all those things, what happens that sets you back, vacation, breaks in the house, something breaks in the house, need that new mattress, the new mattress, you nailed it, like I hope you will go into financial planning, your insight is exactly what we don’t understand. And so then what happens is, they have to raid their savings account, they’re back to square one, or they’re even in some credit card debt. And they say, See, I can’t do it. So the the book, that’s why I teach a cash flow management system. I have seven savings accounts. I teach people to open up savings accounts for travel, for home repairs for their next car, for health expenses, all of those things, gifts. Oh my gosh, people don’t realize how much they spend on gifts. Okay, so you open up all these savings accounts, and you automate savings into them. So here you have your emergency fund, and you have defined your emergency fund. What is an emergency if you are in a situation and you’re asking yourself, Is this an emergency that is by default, not you’re not in an emergent situation? Okay. COVID in emergency Okay, like when, when when you own a salsa dancing nightclub during a global pandemic, that is by definition Emergency, okay, we had to pull out the red folder of lifestyle cuts because that indeed was an emergency. And that’s where we dusted off our emergency fund. So you can have this emergency fund, or call it what you want. Some people call it a walk away fund, some call it a nephew, fund, whatever you want to call it, you have a pile of money that is accumulating cash, for that big moment in your life, you’ll know it when you see it, and you never touch it. And so the other savings accounts, enhance security, enhance happiness, like vacations literally had been proven to make you absolutely happy, like the happiness hypothesis, a great book on like, what statistically will make you happier vacations is one of those. So put money into your happy bucket. Right? So put them into all these buckets. And then you can be operationally breakeven from there, then you can literally spend everything in your account and get ahead.

30:54

It’s so funny that it seems so simple. And I mean, you know, we can automate our social media, we’ll spend time creating posts, putting them into a planner and making them so that on next Monday, it just automatically populate. And we know how to do that. And we see the value in that. But yet, banks have apps, they have online portals, it’s easy to do that. But we don’t. What I mean, what’s the barrier? Why, and we talked about this before we started recording. Money is one of the simplest things, it’s it’s literally $1 is a piece of paper that has a one on it, or, you know, few numbers on a screen. It’s so simple. But yet, it’s so complicated. And we in our mind, I think make it even more complicated on how we can use it. And so why don’t we just all graduate college or even in high school, create these bank accounts with all these savings accounts, and automate everything? Why? Why do we make it so difficult?

31:58

That is exactly right, because I believe we don’t learn how to do it. We don’t learn how to do it when it’s relevant. So you are right, you can be in high school. And if you have a steady job of any kind, you can automate that contribution. Or you can just have a rule that you live by that 10% of everything I make goes into this thing. And then when you do have a steady paycheck, you can set up whatever savings accounts are relevant, maybe it’s only three. But you learn how to do it. The reason people don’t do it midstream, that are my age, is because it might actually require you to cut your lifestyle. So then you’re not just doing this intellectual process, which you described, it is exactly the analogy of scheduling out social media. That is the best analogy. When you are doing this and you’re doing it with your first paycheck. It is that unemotional. When you are doing it at 40. For the first time, it’s emotional, because you are probably having to take a step back. You might have to sell your house, you might be in houses too big, you might have to downsize, how many times you eat out. I mean, you might have to do those things. But I will tell you this. I’ve seen people downsize. I’ve seen people make extremely aggressive cuts in spending. And not one time, have I ever heard anyone say, I wish I hadn’t done it. Because if you regret making spending cuts, you know what you can always do? spend more money, you

33:31

just spent more money. It’s just that easy. That’s very true. And I think the anxiety that we build up in our heads of making these lifestyle changes, and the older we get, the harder it is, right? So I like the unemotional piece of doing it when you’re young and you don’t know better. Like, it’s literally I’ve got this paycheck, I don’t know what to do with it might as well throw some in savings. And if you automate that, and you never think about it, I mean, I’ll say this too. I’ve moved a few times in my adult life. And every time I move, you got to change your electric bill, you got to change your this, your that. The one thing I never want to change is my bank account, because things get tied to it. And it’s so hard to undo the things you’ve done and, you know, the auto drafts for certain things. And once you set those things up, you don’t want to touch it. And and I think there’s so much to be said that if we can just automate this, this cycle of saving, just like we automate an auto draft to the electric company or to the insurance company or whoever, why don’t we do that to ourselves? I

34:29

mean, I’m telling you, it’s like literally, like you can’t have that, like your insights are spot on. What you are describing is pay yourself first. And so this is the same anecdote. Sometimes I’ll open up when I speak to groups and I say, we are so willing to auto draft a car payment. We are so happy for the federal government to just take our money out of our paychecks like, Is it going to be 1000 is it going to be 2000? I don’t know but like just go ahead and take it or health insurance. rents premiums, we will allow so much of our lives to be painted. Why can’t we payment ourselves first? pay yourself first.

35:11

So maybe, in maybe there is a resource like this, where we can get a bill every month that comes in, right before all the other bills. And we just, it’s a bill to us. I mean, does that system exist? If not, let’s start.

35:29

Great. Um, you know, there are some apps that, that that do that there’s a Canadian one, that you can, that you can write checks or savings to yourself, essentially. And what they do is, however much you have in savings, they will do these random cash giveaways. So it’s like playing the lottery. So you can so there are some technologies that are trying to get around the wiring in our brains that trip us up, that make us so I’ll tell you, you want to, you know, the two wirings that really get in our way? Absolutely. Okay, so one is adaptation level phenomenon. So our, our beings are adaptive. So we know that one year after a horrifying injury that someone could be acquired, that makes someone a quadriplegic, that they can have the same level of happiness one year later, that is the incredible power of adaptation of our human brain. Unfortunately, our human brain will adapt to our checking account. And that is why so we are going to adapt. So even though, so when people think like, oh, I’ll save if I make more money. Yeah, we’ve seen people chase that. So we work mostly with physicians, we have two sides of the business. And one side is financial planning. So we work with mostly physicians around the country. So we have physicians that come to us living paycheck to paycheck, on $800,000, a year, two years after residency, where they’re making 60,000 a year. And we don’t blink an eye because of course, they do it without a plan without a structure. Like we’re no matter how much money we’re gonna we make, we’re gonna spend it It’s funny, when I talk to people about that in groups are like, Well, let me try an 800,000. I mean, would you want to experiment with that, I wouldn’t want to experiment with that, I would rather make $60,000 a year and have a plan to make $800,000 a year with no plan, because I would spend it all. So that is a really important thing that we do not appreciate. And so if anybody listening to this hasn’t gotten on to the savings train yet and thinks I’ll save when I make more money, I call Bs, I should temper that a little bit. There are people who do not make enough money in this world, in this country, and there is a line. Now I don’t know where to draw that line. But I have seen people save in ways I would never be able to save so. So you know, people, people have to define that line for themselves. The second thing is hyperbolic discounting. And so what that is, is we so urgently live in the now. So presently live in the immediate needs of the now that we don’t have an appropriate discount rate for the future. So, so $1, you know, you should be benign to the fact that you can have $1 now or $1.06, you know, in in a year, right? Like that should be at, or $1.10, even whatever that appropriate discount rate is. But you might say no $1 an hour or $2 in a year, right? This is what our brains are doing is we can’t even, we can’t even appreciate this trade off, and value our future enough for it. And so this, so people have different levels of hyperbolic discounting. And there are some people that have it so well, they’re able to save because they see a compound interest chart, and they’re like, sign me up. I saw plenty of compound interest charts in my finance classes, yet I wasn’t a saver. And a lot of people assume financial advisors are all Savers, that bankers are all savers. I am here to tell you, that is not the case, they might be interested in investing, they might put a little investing, that doesn’t mean they’re putting enough in it for their future. And so those are the two pieces of brain wiring that we have to get around. And so what I love is technology doing what you’re saying. So for instance, acorns app will actually round up. So if you spend $1.50, they will say we’ll round up to the next dollar. And so if you spend $1.50, we’re going to put 50 cents into your savings account, rounding up to $2. So you see I spent $2 on something, it doesn’t even matter because we don’t really compute actually how much we’re paying for things. Like for instance, cash. We can talk about that in a minute. Oh, yeah. Well You say this as an owner of a bar? Do you know how much you pay for a mixed drink in taxes? A lot? Do you know the number? 30%? Yeah. 28%? Yeah. Do you think most people when they’re ordering, one of the most delicious mohito? is in town club? 27? Do you think that they are calculating?

40:24

You have no clue. Whoa, $5 is $5.

40:26

Right? We’re not even calculating it. So if we’re not doing that, again, why not do that to ourselves like it. So we’re willing to do it against ourselves, do it for ourselves, I love roundup apps. And you can have them round up like, not just to the dollar, but to the second dollar. So if you spend $1.50, they put a buck 50 into your savings. So that’s a great way of sneaking savings. Now, I would say that’s a savings enhancement. That’s more like, I’d like to reach a really lofty vacation goal, I would not use that for my core savings, my core savings, get it out, get it out of the account before you even see it. And then you’re a lot less likely to disrupt meaningful savings,

41:12

which is ironic, because you know, businesses do that for employees, right? with taxes. When when you make $5,000 a month, the business is automatically going to take $1,000 out of that, and send it to the government for you, right? We don’t miss it, we don’t know it’s gone, we just know that we get $4,000 a month instead of five, and that some of that had to go to taxes. So why do we not do that for ourselves? I love that. I think there’s so many ways to do it. There’s so many valuable ways to do it. But I do want to hit on cash for a second. Because I feel like when I pull a $20 bill out and pay somebody a $20 bill, and I get back $4.58 I realize how quickly, money can go. But yet we’re in a digital world, we’re in a credit card world, we hardly ever spend cash anymore. Do you feel like there’s there’s a big disconnect from the way things were probably 30 years ago, 40 years ago, to the way they are now where we don’t see money in its physical form. All it ever is, is an electronic transaction that we don’t we don’t really ever pay attention to Yes. So how do we how do we kind of almost create this cash mindset of Wow, I spent 15 bucks. And that went real quick. Cuz we could do that with paper money. Like, I mean, I’m baffled every time I pay cash for something like, I don’t I don’t like this, I don’t want to spend as much money. But when I swipe the card, like 100 bucks gone, don’t even blink an eye. How do we kind of transition that mindset?

42:42

I mean, again, like we’re trying to hire a new financial planner right now. I don’t know if what you’ve got going on. But that’s exactly right. Like, and I’ll tell you exactly how we do this. So I’ll tell you how my husband and I do it. And and I’m telling you, it will change the way people look at money. Because that is exactly right. We have completely lost our ability to track many people will tell me all the time, I don’t know there was a lot of money in there. And then all of a sudden it was gone. That is what people say to me over and over and over. So here’s what you do. So you pay yourself first. So here’s your formula. Get that. So So that’s how you pay your taxes and benefits that’s out you have your net check, okay, you start there, then you subtract your savings accounts, deposits, now that’s gone, then you subtract your bills, then what that number is, is how much you can spend.

43:37

So let’s use real numbers for a second and easy numbers. God you’re gonna make me do math. Really easy. Okay, who combined household income $10,000 a month? Okay, we’re saving 10% Yeah, off the top. That’s $1,000 that goes straight in to a savings account. I don’t even see it. So now I’ve got $9,000 Where do I go from there? So I took my 10% put in savings. I got $9,000 What’s my next so then we got to get our taxes out. So let’s get a real simple. So let’s say 5%. taxes on $10,000. We’re taking another 2500 our

44:10

30% 30% Okay, so that’s okay, so so yeah. 10,000. So 10% for savings. 30% for taxes, that’s 3%. We’re down to 6000 $6,000. Okay, so let’s say the savings are another $1,000. Now we’re down to 5000. And then let’s say we spend 10% on our house, on our housing, which by the way, banks will tell you

44:42

Yeah, you don’t so much.

44:47

Were you studying and cramming for this? Okay, so 10% then, so So are you keeping track so now we’re at 4000?

44:54

Well, if we’re only spending 10% your house Yeah, we’re down

44:58

down to 4000. And we got some other bills. Let’s say it’s 500. And so then it’s probably more than that, because people are gonna have student loans car payment, so we’ll get us down to $2,000

45:09

in debt. So now we’re down to what 3500?

45:12

Yeah, and I would say probably with, with, with the reality of people’s situations, and that I would probably take us down to 2500 that we can spend,

45:20

okay. And when you say spend, because we’re spending money on house, and we’re spending Is this our like, I can go out to eat, I can go to this, I can go buy some

45:28

fuel in my car, I can go buy some clothes, I can go get a manicure. That’s what I’m talking about.

45:34

So to do it the right way. What you’re saying is basically, I mean, again, everybody’s situation is going to be different. But we’re really living on a disposable income of about 25%.

45:45

Right, so So do you see what we’ve done here? So we had someone who had who was thinking, Oh, my gosh, I make $10,000 a month. And we have just shrunk that down to 2500. But wait, there’s more. Okay. So what if we isolated that money? So what if we like, we know there’s noise in our check the timing of bills, and when they happen? And you know, our account? Could that very account could fluctuate by $6,000? swing in one day? So what if we took that 20 $500 and put it into another account, another checking account? And we did something even more precise? How easy Do you think it would be to budget that 2500 in spending over a 30 day period?

46:34

depends on if I have the right tools, the right education to but you have no tools, no tools, and you’re walking around? It’s day one of your 30 days. How much can you spend on lunch and dinner? No, I have no idea. Right? What if you can you do some math on your phone? I would be happy to can you divide 25? So take 2500 and multiply it by 12 2500 times 12. Now divide that $1,000. Okay, divide that by 52.

47:02

All right, we’re $576 rounding up 577.

47:06

Now, it’s Monday, in $577. hits this checking account. Are you gonna go real big on dining out for lunch and dinner? If you know that you’ve got this for seven days? Probably not? No. That is what my husband and I do. So my husband and I, when we first got married, I was using this Excel spreadsheet, and I was tracking everything. And we were watching our spending and we were saving. And we at that point, we’re spending 500 I think it was 550 a week. Now, with two people, three little humans and a dog. We are spending $430 a week.

47:54

How do you live on that? How do you make that happen? How does that work?

47:57

Because over time, we were realizing that we were gamifying our account? Have you ever heard of gamification of money? You make it a game? When you do this process of putting $570 on a Monday into your account? Whereas before you were like, well, it’s gonna blow Anyway, why not just go out to dinner? What happens is you learn the rhythm of your money you learn if I don’t go if I brown bag today, and tomorrow, we can go on a huge date night Friday. And what ends up happening is you do without you do without and it’s not because you’re deprived. You’re just like so excited about what you’re going to have. And then you do this thing where my husband’s the saver? I’m the spender. I am the one who does the majority of the cooking therefore, because groceries and food are a big piece of a discretionary budget. So we have this very appropriate deal that if there is money leftover in that account, it goes to me. I mean, that is reasonable, of course. Okay. So I have every incentive to crock pot a few days, right like tonight, guess what we’re having for dinner. beans and rice. There we go. Dad is super cheap, but $1.25 will feed a family of four. Right? And we love beans, right? beans and rice. If you ask my four year old daughter, her favorite meal, she would say beans and rice. It is not depriving It is a great healthy meal and you throw some veggies in there. Point is, is that in a very undescribed way we have learned to cook more at home. We have learned that we can not eat out so much at lunch and eat healthier, it’s healthier for our bodies. And we are saving more and spending less without even realizing it. And the power is in budgets that our brains can actually do mental accounting. We can’t mental account 20 $500 over 30 days but we can mental account 570 over seven days. And guess what am I using a credit card or a debit card? I would hope a debit card. Yes. Because of Credit Card, all those points, all those incentives? Yeah, they want you to spend more money. And they know our brains, we think we know we think we’re in charge on those credit card point, we are not in charge. So true. And so the account balance is going up on a credit card, which does not trigger a warning in our brain, our debit card is going down, which triggers a warning in our brain, our brains are working without us consciously knowing these things. And that is why if you set your, if you set your budget your system up in a way that works best with your brain, then you can save and spend in ways that you don’t feel are depriving.

50:44

Isn’t that amazing? That’s cool. And the reality is, it’s not that hard. No, it takes a little bit of discipline a little bit education, maybe call you and have a conversation. And before you know it, you’re going to be automated, you’re going to be doing things in a much simpler way, you’re going to be breaking your finances down into a very simple, approachable way of $570 a week instead of 20 $500 a month. It’s very difficult for the mind to comprehend. When when we think about you as a person you as like, I love the fact that you guys own the saucer club. I had no idea. And I love the personality that comes out from just just knowing that but I want to get to some quick questions, some kind of fun, personal little anecdotes. You mentioned books, what’s the best or latest book you’ve read that that really kind of made an impact on you?

51:31

fiction or nonfiction? Both? Okay, who is ma Dixon fiction will rock your world will make you suspicious of everything, including yourself, everyone. Okay. Best nonfiction that I have read recently. I love brock obama’s book, I just read that. And I just I love getting insight into politics and governing. And that was just fantastic book. And so I might choose those. I

52:00

love it. What is a daily routine that you have to do?

52:04

Wake up at 4am and meditate every morning?

52:08

That’s incredible. That takes a lot of discipline. I’m a morning person. Okay, well, good. Good. So you’re probably wearing down it’s four o’clock in the afternoon here. My bedtime is about four hours, right?

52:18

best piece of advice you’ve ever given or received. Don’t say save 10 then I don’t know what we’re doing here. Yeah,

52:27

so um, the best piece of advice I have ever been given. That is so good. And I hope you will trim down this long pause. I think the best advice I have ever been given is to be aware of the ego. That is really important. Because when you’re chasing success, there is true success. And then there’s the perception of people thinking you’re successful. And we can be happier people if we can be authentic. And I have learned that advice. And I I have been trying very hard to implement it. But yes, and then my best advice, save 10% from the very beginning. it’s painless. Love it.

53:35

Obviously the last year COVID-19 has been quite a lifestyle change for a lot of people. So what is a newly formed habit or routine that that you’ve picked up good or bad?

53:47

So I you know, the lucky thing of having to close down a business for 370 days is that we have had family dinners together. And you know how before COVID you would just so like easily sign away. So many dinner family dinner nights like you’re just so willing to give them up. Oh, you will have to fight for one of my evening times of family dinner

54:18

must be some really good rice and beans. Super good. If you wrote your own book, what you have, what would the title be another plug for the book here?

54:29

Well, the actual book I wrote is called but first save 10 but yes, I’m actually working on my next book. I don’t have a title yet.

54:39

Love it. Is it along the same lines? Are you going a different direction with it? Are you allowed to talk about it?

54:45

I’m afraid to talk about it because I don’t want to jinx it.

54:48

Understood. What is the best thing you’ve bought in the last year for under $100 as a spender but also as someone who preaches saving, I

54:58

can tell you what I want to buy movie. It’s $300 I really want to buy a Roomba. Wouldn’t that be life changing?

55:06

I’ve heard they are. Yeah, that would change my life. Okay, so you’ve got to save a little more. Yeah. favorite artists or music?

55:17

favorite artist or music? Um, gosh. Um, is this the point where I can like tell you? I’m a super big dork and like, I don’t know, cool musicians.

55:30

I mean, but are you like stuck in the 90s on music? Or do you just are you not a big music fan?

55:35

No, believe it or not like, I’m a salsa DJ. So I love like old 1970s Puerto Rican and Colombian salsa.

55:44

Fascinating and definitely a first on the podcast.

55:47

Yeah. So like, I love Ruben Blades or blood days, whoever is listening like you all in Latin America say it both ways. And so I’m gonna say it both ways to no one says you’re saying it wrong. Ruben Blades or Ruben blot is I love him.

56:06

Favorite food? If you when you get to go out to eat? Where are you going?

56:09

red moon Tavern? Oh, they’re gumbo. Wow. Incredible. Have you been there? You have to try it. They open it. Can you imagine opening? You’re set to open your restaurant in spring of 2020.

56:24

Yeah, I’ve seen several restaurants either delay their opening or went ahead and open and quickly pivoted their business model.

56:32

And I mean, they, they delayed the open. And every single week, they had a group of people come in and test and refine their menu that was already made. That made it just extraordinary. It is such a great restaurant, down Highway 10.

56:50

So good red moon time, and we’re gonna have to check it out. Last question, are you a fan of Netflix or the news?

56:58

Um, so I would definitely say my husband would accuse me of news and podcasts like politics pot like 538 podcast, he’s like, the angrier the better in my life. Like that’s when I’m cooking. Like I’m chopping my onions to to Charlie Sykes and the Bulwark, like that’s those are the kinds of things that I’m listening to. So I would like to move to more Netflix. That would be fantastic.

57:24

Love it. Well, Sara, Catherine, thank you so much. This was such a fun conversation. Hopefully people get tons of great advice and and go ahead and download all the apps right now automate that spending and saving and, and we’ll see what happens.

57:39

Well, thank you so much. And thank you for your own insights on this has been a really fun conversation.

57:46

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