Hey, it’s Marie Forleo and you are watching MarieTV, the place to be to create a business
and life you love.
And today I’m so excited because we’re talking about one of my favorite topics of
all time: money.
You know this if you’ve been watching the show.
I love money.
I love what it can help you do in the world and obviously it touches every aspect of our
lives.
So I think that no matter where you are economically and where I am, we always have room for growth.
Right?
Not only in terms of our net worth, but, more importantly, our relationship to money and
how it impacts every decision that we make.
My guest today has made a huge impact on my financial life and my hope is he’s gonna
help you do the same.
David Bach has helped millions of people around the world take action to live and finish rich.
He’s one of the most prolific financial authors of our time with 11 consecutive national
bestsellers, 9 consecutive New York Times bestsellers, with more than 7 million books
in print in 18 languages.
His most popular book, The Automatic Millionaire, spent 31 weeks on the New York Times bestseller
list.
He’s a media favorite, having done thousands of appearances on television, radio, and print,
being on the Today Show over 100 times, and Oprah 6 times.
He’s also an entrepreneur as the founder of Finish Rich Media.
His programs have done over 100 million in sales and he comes to the table of financial
education with a lifetime of investment experience.
What he’s most proud of , though, are his sons Jack and James.
David is married and lives with his family in New York City.
David, thank you so much for coming onto MarieTV.
It’s…
I’m thrilled to be here, Marie.
It’s great to see you.
And I wanted to just say publicly, years ago when I first picked Smart Women Finish Rich
it was such a lifechanger for me and ever since I’ve read so many of your books.
I’ve followed you for years and years and years.
So this is like such a beautiful, full circle moment because you were such a huge part of
me getting my financial life together and it’s just really an honor to sit here with
you today because there’s even more to discuss and money is one of my favorite topics in
the whole wide world.
Little high five, give me that high five.
Look, I…
I’m so excited to be here.
And, you know, we’ve known each other…
when did we meet?
Like 10 years ago?
Yes.
And you’ve come so far.
So I know now I’m here excited to be on your stage and I’m so proud of you because
you’ve accomplished so much.
Thank you.
So thank you for having me.
Absolutely.
Well, one of the first places I think most people think of when they want to get their
financial life together is let’s go to the numbers.
Let’s break out the checkbook, let’s get the spreadsheet open, let’s start adding
things up, and you have a different approach.
You say that’s… that’s not where we should start and it’s kind of counterintuitive.
In fact, you write, “We need to start with our values because your values can determine
how hard you’re willing to work to achieve your financial goals…”
Right.
“...how much money you currently spend, and how much money you will actually need
for retirement.”
So walk us through the importance of starting with our values and how we can do this.
Ok, well, so I love the fact that you started with the hardest thing that I teach.
But it’s… it is the most important thing because when your values are clear, your financial
decisions become easy.
And… and the biggest thing that holds us back, we all know what we should do.
I mean, most of what I’ll talk about today, people know they should do it.
Everybody knows you should save more money and they should pay down their debt, all these
things that we know we should do.
We should have a will, we should have life insurance.
We should ourselves to death.
We…
we don't do what we know we should do and that’s because there’s a disconnect.
So the way you break through the disconnect is by being clear on your values.
So this is hard to explain, like, with sound bytes but I’ll give you an example from,
like, being on… when I teach this stuff on stage.
Yeah.
Or with my clients one on one.
You know, you’ve got a friend of ours, Tony Robbins was here recently.
He did the… his new book and Tony and I and Donald Trump did this tour together for
a while where we toured all over North America, the US, and Canada.
This was before the recession.
And we would have these huge venues, you know, between 15 to 30 thousand people.
Unbelievable.
So much fun.
And I would come out on stage and the first question, you know, everybody’s fired up.
Right?
You’ve got 30 thousand people in a room and I’d come out and I’d say, you know,
“I…
I have a question for you.
And my first question is, do you wanna be rich?”
And you’ll… everybody’s all fired up, right?
So they’re like, “Yeah!
We wanna be rich!”
I’m like, “Turn to your neighbor, tell him how rich you wanna be.”
“I wanna be rich!”
Everybody’s all excited, right?
And then I let the room get quiet, which if it’s a big room that’s pretty, you know,
like take the…
I just stand on stage and let the room quiet down.
And I’d say, “Really?
You want to be rich?
Why?”
And everybody would start looking at me like...
“Why do you wanna be rich?
Some of you, by the way, you said you wanted to be rich.
Some of you just want to be financially secure.
Right?
Like, some of you are here just to be secure.
By the way, some of you are here to just get back to even.
You’re like, ‘I just don't wanna be in debt anymore.’”
So I said, “But my question is, why?”
Now, the way we’re programmed and the way we’re marketed to, your brain starts…
you ask a question and your brain starts looking for answers.
People then think that their answer is supposed to be a goal.
It’s supposed to be a numerical money goal.
Like, “Well, I want a million dollars or I want a bigger home or I want a bigger car.”
And goals are really important, but they’re not where you start.
Because what happens is people get all motivated and excited about a goal, but then the real
world hits them and as soon as it gets hard they get off track.
So what I’ve taught for, God, almost 20 something years, and it started with my clients
in Morgan Stanley, is, yes.
We’ve got financial goals, but we’re gonna look at values first.
And when you get clear on your values, you’ll be unstoppable.
And then we can take your values, what you just said is most important to you, and we
can align them with your goals so that they come together and they’re not in conflict.
And then nothing can hold you back.
And so what are some of the most common values that you have seen that people either have
not articulated, like is it freedom, is it family, is it, you know… I don't know.
What are some of the things that people…?
Well, so, like, you know, in the book I give you, like, a list of values.
Right?
Yeah.
But don't… you don't just have to copy them.
Right?
Right.
Like, people have pretty common values.
You know, family, security, freedom, making a difference.
The… here’s what you do, because it’s not that complicated.
You take out a pad of paper, you can do this in 5 minutes, and you write out all your values.
All the values you can think about.
And then what I recommend you do is you circle 5 of them.
You come up with your 5 favorite values and I… in the book, Smart Couples Finish Rich,
it’s a value circle.
In Smart Women Finish Rich it was a values ladder and I’ll just explain the difference
for a sec.
Sure.
Because in Smart Women Finish Rich I taught people a hierarchy system which was identifying
your highest value.
And, by the way, for some people that was tough.
So I started realizing, like, it’s not just about your highest value.
Let’s look at your 5 most important values, get them down on paper, if you’re in a marriage
or relationship have your partner do this.
Once the value is down on paper, then let’s look at your money.
And let’s look at are you spending money in a way that is getting you closer to your
values or are you spending money in a way that’s getting your further from your values?
And so what I really find when I work with clients or coaching people one on one, a lot
of people’s lives are in complete conflict with their values and they don't realize it.
Once they see it on paper, it’s like a huge wakeup call.
Wow.
That can apply to everything, that can apply to your business, that can apply to your health.
So I don't think… and also the key about values is it’s like… it’s God given.
Right?
Like, people are basically born perfect.
Right?
Like, there’s… you’re good the way you are.
It’s inside of you.
The magic pill that we’re all looking for, it’s already in you.
You just have to get clear about it.
Yeah.
I love that.
And it gets us in touch too, for me, there’s such a sickness in what I see in society with
more, more, more, more, more.
Just like that question, “Well, why do you want to be rich?
Do you really want those things?”
And I’ve had several points in my career where I feel like there was a lot of external
noise to go bigger and go for a TV show and do this and you should want…” and I really
always had to stop and check myself because it felt so out of alignment with who I genuinely
am and what I want.
And this great question of, like, well, how hard are you willing to work?
And is it really worth it?
So I love this idea of starting off with our values and getting some alignment between
what we say is important and how we demonstrate that through…
It’s really being authentic.
Right?
Like, what you're talking about is who’s your authentic self.
Yeah.
And also, another thing that holds people back sometimes with money is that they think
that money is bad.
Oh, goodness gracious.
Yes.
A lot of people have all kinds of mental issues about money because they were raised, “Well,
money.
Those people over there, they’re bad people.”
When you’re authentic yourself, there’s nothing bad with building wealth.
Building wealth can free you to live your most authentic self.
So to me that’s about living rich.
Yeah.
And in my own life, money has been such a tool for healing and for good and so I have
a really powerful association that it’s a beautiful thing and that’s actually one
of the things I’d love to talk about is is so many people there’s a lot of conflict
around that.
I want it but I shouldn’t want it and it makes me an unspiritual person or it makes
me greedy and all this stuff.
So great stuff.
There’s one big mistake that you say that many of us make with our financial life and
fixing it can take less than an hour.
We like quick fixes, especially this one that’s this powerful.
Tell us about automation.
Ok, so I wrote this book called The Automatic Millionaire.
Brilliant.
And the purpose of that book was everybody coming to me saying, “David, just tell me
the one thing I need to do because I don't wanna go through the 9 steps or the 7 steps.
I wanna know the one thing.”
And I found myself telling people over and over again, “There’s this one thing you
need to do, and that’s make it automatic.”
And they, “Well, what does that mean?”
So I had to break it down and here’s where it starts.
Let me tell you what doesn't work.
Ok, so what doesn't work, this is gonna piss some people off but I’m gonna just say it.
Budgeting is what doesn't work.
So most experts for years come out and say, “Well, you know what you need is a budget.
You need to, you know, you need to put the money into different categories and then we’re
gonna figure out where the savings is gonna come from and then we’re gonna… at the
end, you know, take this money here and put it over here.”
It doesn't work.
Budgeting doesn't work and you’ve been told to have a budget and use discipline.
And the reason it doesn't work is because out in the real world people hate budgeting.
They do.
It’s like dieting.
Yeah.
Even if they go on a budget, they will still break the budget later.
And in the real world most of us are wired one of two ways.
So some people are actually born to budget.
They literally came out of the womb with a calculator and they wanna track where all
the money goes and they’re like… they’re into this.
Right?
Then there’s the person who… who’s the opposite of that, which is the spender.
And typically we fall in love with our financial opposite.
And that… that creates a lot of fights.
So what you do is you go, “Look, budgeting doesn't work, discipline doesn't work.
You need to throw that nonsense out and you need to just make it foolproof and you need
to make it automatic.”
And so what I teach is this, there’s basically 6 or 7 things that you automate.
So I can break it out for you if you want.
Yeah, go for it.
So… and this is how my life is.
Right?
Like, my life takes 10 minutes a month to track the…
my financials…
all my finances.
10 minutes a month.
And this is… that’s about how long it should take for anybody.
So, first of all, if you’re… if you get a paycheck, this is obvious, but the first
thing is is that that paycheck gets deposited automatically.
Most people get a check manually still to this day.
Do you not get…?
Really.
Still to this day are getting checks.
Now, they may be taking a picture with their phone, although that… if it’s a big check
they can’t do it with their phone, they’ve got to bring it into a bank.
That’s why there’s bank branches everywhere.
So that’s insane.
So first your check should be deposited automatically.
If you’re self employed or you have your own business, smart businesses all the money
comes in automatically.
All my clients for the most part, like 95% of those checks are hitting my business account
automatically.
So that money is coming in automatically, now the question is where does the money go
next?
So there’s different buckets that the money goes into.
The first I call it a basket is pay yourself first.
So you’ve got a pay yourself first basket, and that’s usually… that’s your retirement
account.
And I recommend at a minimum you pull 10% from that automatic deposit right into a retirement
account.
Minimum 10%.
Ok, so now we’ve got 90 cents left.
And now we’re gonna pull some money off into a security account.
That security account is for emergencies.
People get confused on emergencies.
“I need to redo my kitchen.”
Not an emergency.
Right?
You know, like, “I want a new car.”
Not an emergency.
Yeah, subway tiles in the kitchen.
These new shoes just came out.
Not an emergency.
Right.
Emergencies are emergencies.
So that money gets put into a separate account with no checking, no ATM card.
Then money starts to go into all the expenses automatically.
So anything that can affect your credit score: your mortgage, automatically paid.
Always.
Your credit cards, minimum payments always paid automatically.
So, like, let’s say your minimum payment is 50 bucks a month, I would never want you
to only pay minimum payments, but that payment, that first payment, it’s automatically paid
then you pay extra.
Everything.
Utilities, all those bills automatically paid.
Then we get down to the fun stuff and that’s charity, we automatically give money to a
charity account, and then we automatically give money to a dream account.
And the dream account happens to be the one people love the most.
I think it’s the one you love the most too.
Well, it is the one I love the most because the dream account is like, look, people go…
everybody knows retirement for most people is far off, but between here and retirement
it’s like all the stuff you wanna do with your life.
Yeah.
So if you put money automatically from that deposit into the dream account, then you start
to have money for your dreams.
Because I always tell people, “The way you get to your dreams is you buy them.”
And then, of course, there’s taxes, which I didn't bring up because I’m assuming if
you’re employed taxes got pulled out.
If you’re self employed, the first thing you’re doing after you pay yourself first
is you’re pulling out tax money.
And, by the way, that’s where most self employed people blow themselves up.
Completely.
They don't pull their tax money out automatically, they’re bringing all this money in throughout
the year, they think they’re having a great year, they’re spending the money out, they
get to the end of the year and they have a huge tax bill and they have no money to pay
it.
It’s been my philosophy with the folks in my financial life, my accountant, bookkeeper,
everyone.
It’s always like, “Let’s pay, like…”
I just always wanna be safe because I remember one year I just, that’s what happened.
It was at the end of the year I’m like, “What is this surprise?”
And I said, “From this moment forward, no mas surprises.
No mas.”
That feeling that comes into your stomach when you realize that you didn't put enough
away for taxes.
Oh, yeah.
And the one person that you can’t get away with not paying is the government.
That’s right.
Probably one of my favorite things that you teach is how we can start to get a grip on
our spending.
And one of the most famous things is your latte factor.
Right.
Can you tell us about the latte factor and how we can put this into use?
Sure, so the latte factor is this metaphor I teach which is how we spend small amounts
of money on little things.
And… and it started because I was teaching a class and I had a young woman named Kim
telling me she couldn’t save anything.
And I’m like, “You can’t save 5 dollars a day?”
And she’s like, “No, I can’t.”
And meanwhile she’s, like, sipping a latte from Starbucks.
So, you know, this was back when Starbucks was, like, $2.50.
Today we’re here in Manhattan, you go into Starbucks and you have a latte and a muffin
and you’re walking out, like, 6, 7, 8 dollars poorer.
And I started showing people that if you took that small amount of money, 5 to 10 dollars
a day, and you redirected it towards savings, paying yourself first, or even paying down
your debt.
Like, if you redirected it towards paying down your debt, the average person who’s
in credit card debt, if they redirected 5 to 10 dollars a day to paying down that debt,
they’d be out of debt in 24 months.
If they took instead the 5 to 10 dollars a day and they put it in their retirement account,
you know, yeah, a lot of people who watch this are in their 20s.
You start saving 10 dollars a day and you do that from your 20s until you reach the
age of retirement, at a decent rate of return, you’re gonna have hundreds of thousands
of dollars.
You start to earn a 9, 10, or 11% return, you could have over a million dollars by the
time you reach retirement.
Now, the key is it’s a metaphor.
Right?
So because people get all pissed off at me.
They’re like, “You know, the only thing I’ve got going for me, David Bach, are my
lattes.
This is…
God, it’s taking away my coffee.”
Look, I’m a coffee addict.
I love my coffee.
I just happen to make it at home for 20 cents.
Yeah.
But it’s… it could be bottled water, it could be cigarettes, it could be eating out,
it could be your martini at night.
I’m not trying to take away your fun stuff.
I’m not actually trying to do anything but get you to think about the money that you
have that you earn.
If you keep some of it, life gets a lot easier.
Yes.
And, you know, so many people’s lives have been changed because that metaphor has made
them go, “Ah ha.
He’s right and I can find that money,” and they’ve redirected that money towards
savings.
I was just showing you a second ago, I was on…
I… authors, we go on Amazon to look at reviews, but it’s been…
You’re brave.
So I haven’t done that in a long time, so I went on Amazon this morning ironically and
I was looking at The Automatic Millionaire and it was at 500 reviews and the last review
was this woman, I think it was a woman.
It was either a woman or a man, because… but she had… she said, you know, the title
of it was, “It seems too good to be true, but it’s not,” and she proceeded telling
this story about how her friends 10 years ago thought that she should go bankrupt.
It says right there, everybody told me to go bankrupt, I was in credit card debt, I
had no money, and she's like now I’m out of credit card debt, I have a home free and
clear, and I have a 7 figure net worth.
Wow.
And… and it…
I am…
I don't know for a fact, but I'm pretty sure the latte factor was probably a big trigger
for her.
Because that’s what gets people to go from, “Yeah, I should do it,” to actually doing
it.
So what’s the practice?
There’s… is there a 7 day challenge?
Ok, so let me just give you the history of this latte factor thing.
So I would teach this and I would tell people, “You need to track your expenses for 30
days.
For 30 days go track your expenses,” and like 2 people did it.
Right?
So then I was like, “Ok, you know what?
The 7 day challenge.”
In fact, I think we did this on… we did this on Oprah.
You know, for 7 days track your latte factor.
Oprah when I did that on the Oprah show, we showed the latte factor and she pulled off
a cloth and showed this woman’s latte factor and we had a quarter of a million dollars
in cash sitting on this table.
And we told people, for 7 days track your expenses.
A lot of people did that.
Like, tens of thousands of people tracked their expenses for 7 days.
So I would love it if people would go and take the challenge and for 7 days track where
their money is going.
Everything.
You know, people are like, “Well, does that include cash?”
Yes.
Does that include my ATM card?
Yes.
Checks?
Yes.
Visa?
Everywhere your money goes for 7 days, track it.
And then at the end of 7 days look at it and tell yourself, “What’s in here that could
be changed?”
Now, I will say this, some people can’t get through 7 days.
Really.
So a lot of times, and I could do it right now, I say, “You know what?
Just do it for one frickin’ day!”
One day!
One day, just take one day and take a pad of paper and just write down where your money
goes for one day.
And the only key here is don't change who you are during that day.
Don't go, you know, don't change your behavior, just spend money like you always do.
And, again, if you’re in a relationship, have your partner do this.
And then look at it and be honest with yourself.
You know, I always…
Benjamin Franklin was famous for saying, “A penny spent… a penny saved is a penny earned.”
Well, today I’d say 5 bucks saved is 5 bucks earned.
For some people the latte factor is not 5 bucks, it’s 100 bucks or it’s 100 thousand
dollars.
I’ve done speeches for people where the average liquid net worth in the room was 10
million dollars and I’d have the person say, “Don't talk about the latte factor,”
and I’d say, “Don't worry, I will.
I’m gonna bring it up to their jets and their 5th home that they don't use.”
And people would come up and be like, “He’s right!
I have a 5th home and I never use it.”
You know?
“That’s my latte factor.
We don't need the 5th home.”
And, you know, wherever that 5th home was.
So… but it’s a metaphor to look at where you spend money.
And you and I were talking before we started this that what people do, it’s fascinating.
They… they inflate what they earn in their mind and they underestimate what they spend.
So if someone’s making let’s say 55 thousand dollars a year.
If I ask them, “What do you make a year?”
They’re gonna tell me not 55, they’re gonna tell me 60.
People always do this, they all… and they mentally do it too.
A person who’s making 80 mentally puts it as they make 100.
And… but they don't.
And then they tell you, if somebody tells me they’re spending 70, I promise you they’re
not spending 70, they’re spending 80 or 90.
So we…
we inflate in our minds what we earn and we underestimate what we spend and it’s actually
the opposite.
You need to spend less than you earn and then you need to increase what you make.
If you… if you spend less than you earn and you increase what you make, it’s total
victory.
Yeah.
I feel like I have had such an advantage because I grew up and my mom knows how to stretch
a dollar bill around a block, like, 7 times, so that’s kind of in my DNA to be extraordinarily
frugal and to watch every penny.
And it’s served me well and, I’m telling you, I’m really, really grateful for that
upbringing.
You know, you mentioned relationships and that’s exactly where I want to go next.
You know, money can be such a tough issue between you and your partner, within a family
if you have kids.
So what are some things that we can do to empower ourselves and to open up those dialogues
with the people that we love about money so we can get on the same page?
So, first of all, it’s a really good question.
Right?
And I think fighting about money is the number one thing that breaks up couples.
So fighting about money actually just destroys families.
This is the thing that’s so sad to me because it’s so fixable.
And so it leads to divorce, it leads to alcoholism, it leads to drug addiction.
It is… money issues break apart the American family.
So how…
how do you fix this?
And here’s what I tell couples.
First of all, identify when you have your money fights.
So when do most people talk about money?
Across the board they talk about it typically when they’re paying the bills.
And so… and usually one person is paying the bills.
So that person is usually somewhat aggravated or pissed off and that…
they’re like, “Hey, I need to talk to you about what’s going on,” and you’re
like… you’re walking through the room you’re like, “What?
I didn't…” you’re not ready.
So it’s really important that what couples do is they identify when they’re talking
about money, don't talk about it when you pay the bills, don't talk about it when
you’re in bed.
You know?
Look, you wanna get some nookie, don't be talking about money in bed.
Damn right, absolutely.
People get in the car, they’re on a trip, they lock… they’re like, “Ok, let’s
talk about money now.”
No, wrong.
What you do is you create a money date.
And a money date is just we’re gonna set aside some time, it could be an hour, first
money date.
You’ve got kids, not with the kids, you know, get a babysitter for the kids.
Get out of the house and have a time that you’re both ready.
You’re like, “Look, we may not wanna even do this money conversation, but I wanna start.
And let’s have a date for an hour and let’s bring up whatever it is you wanna talk about.”
Now, I walk you through in Smart Couples how to have these money dates, but I’d recommend
what you do is, you know, maybe start off with the positive.
Like, talk about what’s working in your life instead of going like, “You know, you
suck.
You do everything wrong.”
Right?
Yeah.
You know, get yourself on the same page and the fastest way I think couples can align
together is that you start by getting organized.
Organizing all your financial documents.
I have this thing called the Finish Rich File Folder System.
Maybe we can put a couple of links underneath this.
Of course.
100%.
Right below the episode.
And, you know, like a little tool where you organize all your financial documents at home.
And the reason that’s really powerful is that you can work on it together.
A big thing happening right now is everybody’s cleaning out all, you know, simplifying their
lives and cleaning out all their junk and I always say the best thing you can do is
clean out your financial junk and organize all your little stuff because then you really
feel powerful over your money and you can start from there.
Josh and I have a great blessing in that we are very aligned with our values about money.
And it’s actually super fun.
Like, I love opening up that money conversation.
It’s not always easy, there’s definitely been times when we’ve had fireworks, I think
like any couple.
But I find those conversations to be so rich because in my experience, we always tie it
back to, “Well, what else do you wanna create?
Like, what else do we wanna experience?
And how do we wanna keep shifting our lives so that they’re really in alignment with
who we feel we really are?”
And what could be cooler?
Right?
You know, you’ve… you’ve found your soulmate, he’s lucky because he found you.
I haven’t met Josh, I’m sure he’s the most amazing guy.
He’s a really cool dude.
You guys are aligned with your values and you’re working as a team together.
That’s the whole key.
When you’re fighting over money you’re like 2 teams battling it out.
You can’t ultimately win.
And also if you have kids, if your kids see you fighting about money, they’re gonna
grow up to fight about money.
That’s why often we just perpetuate what we grow up with.
Right.
Love the suggestion.
I love the money date.
Let’s talk a little bit about people that maybe have been able to move past being tremendously
in debt and they’ve gotten themselves to a level of security where, like, things are
starting to be ok.
What are some of the mistakes that you see people make when they start to get to that
next level and… and everything’s kind of coasting?
Oh my God.
So I wish we…
do we have an hour for this part?
So… so, you know, I always say, like, “Look, the hardest thing to do is to make your first
million and then the easiest thing to do is lose it.”
So… so wherever you…
I see people, they… they do really well.
Right?
They grow their income.
And then they just blow it.
And one of the things that happens when you start to make a lot of money and have a lot
of money is that really sophisticated people come by to separate you from it.
So let me tell you… let me give you some… a handful of things that people… this
applies to anybody but this is what happens when people get a lot of money.
Or even just disposable money.
People come to you with what I would call a sophisticated investment.
Ok?
If the investment is complicated, if you can’t explain the investment with a crayon and one
piece of paper, there’s something wrong with that investment.
I don't care what the investment is.
Like, if it’s too complicated to explain it, you should never be investing in it.
Second thing I’ll tell you, if it’s not liquid, if someone says, “You…
I want you to invest in this,” the question you ask is, “When can I sell it?”
The answer you wanna hear typically, like, almost always is that you can sell it in less
than 5 days.
So I’ll give you an example.
Mutual funds.
You’re in and out in less than 5 days.
Money’s coming back to you.
Bonds.
In and out.
Gold, silver, commodities, stocks.
You can be in… those are liquid investments.
They maybe should be long term investments, but you can sell them.
If you buy a condo or a commercial condo, you own this commercial condo, you can’t
get out of it in 5 days.
But if you own it, really good chance you can be out of this in less than 120 days,
6 months maybe max.
That’s a liquid investment.
What’s not liquid?
Limited partnerships.
Ok, you know, 9 years at Morgan Stanley, investment, you know, in front of a thousand individual
investors, I get to see everything, I get to see the statements.
I see where people lose their money.
You see an investment, they put in 250 thousand dollars and now it’s worth nothing.
What was it?
Limited partnership.
What’s the lesson?
Not liquid.
Those things are always patched up, they’re just typically crap products, and people get
burned.
The big thing right now non traded rates.
Like, I’m giving you examples of sophisticated investments that… or, not even sophisticated.
Where probably 10 billion dollars last year went into non traded rates.
Wow.
All the similar things that are with limited partnerships.
People are gonna get so burned.
So many people are gonna get…
they’re already getting burned by these investments.
But the thing is is that it’s a… it’s not a liquid investment.
So avoid non liquid investments.
What are other simple mistakes that people make who have money?
Ok, they don't have a will.
Alright, let’s just start with a will.
Now, people who… who have money don't have wills and people who don't have money don't
have wills.
But if you have money and you don't have a will, you have a business and you don't have
a will, shame on you.
Ok.
50% of people with money don't have wills.
I see people who work their whole life to build wealth for their family, their value’s
family.
You don't have a will the first thing that happens is that your family fights over that
money.
And it destroys families.
So if you’re watching this, don't tell me that you should get a will done.
Get your ass into an attorney’s office and get the will done.
Life insurance.
A lot of people candidly are underinsured.
Now, if you’re not rich you’re underinsured too probably.
For a hundred bucks a month the average family can protect their family in the case of if
someone dies early.
100 bucks could buy… for the average…
depends on your age.
30, 40, 50 if you’re healthy, 50 to 100 bucks a month a person can buy a term insurance
policy, family is totally protected.
So there’s so many of these things.
Yeah.
This one’s great and, I have to tell you, the will thing for me for a while it was one
of those things where… and mine’s done.
Everything’s all taken care of.
High five again.
I know.
It was really…
it was one of those relief things where it was on my mind and I’m like, “I just need
to get this done.”
And the moment I signed off on everything, there was such a sense of peace and relief.
Given the world that we live in today, and it’s not even just today.
Any moment, you know, you could walk down the street, hit by a bus.
Who knows what’s gonna happen.
But that sense of relief that I felt was unbelievable.
It was a new sense of freedom that, like, I can just create, I can do whatever.
And God forbid something happens, I know it’s… things are gonna go the way that hopefully
I intend them to.
Well, and, you know, there’s other parts of wills too.
Like the living health clause part of the will.
Yes.
But one thing I’ll say about wills, because they’re living, breathing documents.
So as someone’s watching, they’re having more and more success, that will may need
to be changed.
Yes.
As you obviously as you have kids or grandchildren, that will gets changed.
So what a lot of people do is they get a will done in their 20s or their 30s.
They get married, they have a child, and then by the time they’re in their 50s where they
have the wealth, that will is totally out of date.
So it’s just important to be cognizant of that.
And that’s something that a good financial advisor should be on top of too.
Your financial advisor should be making sure that all that stuff is updated.
Yeah.
I set calendar appointments for things like that because there’s so many things running
around in this crazy head of mine that I use Google Calendar to just update and update.
I wanna move on to what is something that you did a little while ago that I thought
was fascinating, your sabbatical and this idea of living rich now.
I mean, 11 books, I remember watching you on Oprah, as I shared in the beginning, made
a huge difference in my life.
And then I remember seeing you outside of a conference and you were like, “I’m not
working right now.”
Tell us about living rich now, your sabbatical, the whole shebang.
So in 2012, my radical sabbatical.
I took 18 months completely off.
So in 2013 I took the… really the entire year off.
And part of that came together because my wife made a fatal mistake.
I should say a fateful mistake.
She asked me in March 2012 what did I want for my birthday.
And I, you know, like, we so often get asked that.
I just said, “Oh, honey.
I don't know.”
And I wasn’t sleeping well at the time and we were in bed and I’m like, “You wanna
know what I want for my birthday?”
And the annoying thing about this question was that my birthday was in November.
Right?
So…
She’s a planner.
I’m like, “You wanna know what I want for my birthday?
I want a year off.”
And she’s like, “Well, what do you mean?”
And she’s like, “You don't wanna write another book?”
I’m like, “I don't wanna write a book.”
She’s like, “Well, what about, you know, The Today Show?”
“Nope, no TV.”
“What about social media?”
“Nope.”
I’m like, “I want to do nothing for a year.
You know what I want to do?
I wanna be a dad.
I wanna take the kids to school, I wanna go have lunch with friends, I wanna go to the
gym, I wanna pick the kids up from school, I wanna go to the baseball game, I wanna go
to the football game.
I just wanna be a dad.”
And she looked at me and she’s like, “Well, don't you do the stuff that’s in these books?”
And I’m like, “Yeah,” and she’s like, “Well, can we afford for you to take a year
off?”
And then I start going, “Oh my God, do you know how much money we spend?”
And she’s like, “Well, how many years could you afford to not work?”
And I’m like…
I start running through the numbers and I said, “Well, God.
I don't know.
Even in Manhattan we could afford to not work for at least 20 years.
We could retire somewhere else.”
And she’s like, “Well, this is a dumb conversation.
Take a year off.”
So I have to interrupt you.
Did you have the FOMs?
Like, was there any part of you when you were considering this, because being in similar
industries, you know, there’s a lot of pressure that you have to keep going, you have to create
new things.
Was there any part in your mental kind of calculation of this like, “OMG, am I gonna
screw anything up?
Everything I’ve built?”
Or were you just like, “You know what?
David is burnt.
I wanna be a dad right now.”
Yeah, it was the most frickin’ terrifying that I have ever done in my life other than
when I left Morgan Stanley to move to New York on a wing and a prayer to go do all this.
Wow.
And, you know, I know you talk about how you walked away from a million dollars.
I walked away from a million dollar a year income to go on a wing and a prayer move to
New York to teach people about money because I wanted…
my…
my value was I wanted to make a difference.
I was terrified.
In fact, I was so afraid to do this in 2012 that I didn't tell anybody.
I mean, I told my wife and some close friends, but I was really scared.
And I didn't publicly go out and send out…
I didn't send out an email to my community, I didn't go on Facebook and be like, “I’m
gonna be gone for a year,” because quite honestly, I didn't know if I could do it.
If… you didn't know if you could last that long.
I didn't know if I could last a year off.
Ok.
And so I actually didn't tell anybody.
It was interesting how long it took for people to start being like, “Where are you?
Is he alive?”
And it took a while to decompress.
But I will tell you, like, let me tell you the benefit of it.
In a year… within 90 days of taking the sabbatical…
I did the sabbatical 2 years ago.
I was 46.
I felt 46.
I thought…
like, I was tired and I was dragging.
And I wasn’t jumping out of bed like I normally do.
I…
I had lost, you know, the charge, the motivation.
And I thought, you know, “I must just be getting older.”
Well, within 90 days I felt like my old self again.
I was sleeping like a rock, I lost 10 pounds, I was totally happy for no reason.
For no reason.
I’m like walking down the street just like, “Oh, my God.
I feel amazing.”
Like, what is… this is all I needed was a longer vacation to feel this good?
After a year, like, right now I feel like I’m 30.
Like, my energy is as high as it’s ever been.
All my passion is back.
It’s like a frickin’ miracle pill.
So one of the reasons I’m talking about this for the first time publicly is I wanna
start to inspire other people to take longer breaks.
And, you know, my thing is I think most people should consider taking a 6 week sabbatical.
That should be a goal.
Because I think 6 weeks, you can do so much with 6 weeks.
And, you know, Europeans watching this they’re like, “Whatever, 6 weeks.”
They take 6 weeks off all the time.
Totally.
But Americans watching this are like, “What is he saying 6 weeks?”
You know, like, we can’t…
people in America won’t even take 5 days off.
Yeah.
So unplugging, getting… that was, like, realizing it’s an addiction.
Yeah.
You know, Facebook, Twitter, all this stuff.
Sometimes it’s hard.
And… so, yes.
I was scared, I didn't know what it… you know, would I be able to go back and do what
I was doing?
But you know what?
It’s all… it’s all worked out.
It’s the best thing I’ve ever done for my life.
In fact, it’s probably gonna be my next book is gonna be on…
I’d be curious in comments if people would have interest in learning more about how to
take a sabbatical.
Oh, for sure.
Because I found that when I went out to take it I couldn’t find a lot of information
on it.
Yeah, I think it’s a fascinating topic.
I mean, we made a big change in our company last year.
I actually had a croissant craving and I was walking to a little French bakery and I walked
up and they were closed and they said, “Closed due to vacation.”
And I went home and I said, “That’s it.
We are closing the company down for 2 weeks, I want everybody off,” and now we take 4
group weeks off a year.
So we do 2 weeks in August where no one’s on email, the entire company is down.
Same thing in December, and we’re looking to different ways to expand that.
So I think, personally, I think it’s a fantastic topic.
I think that the culture of overwork is a sickness and I actually wanna see that change
and I’d love to be a part of the voices to change that.
Yes, there’s a lot of life that happens outside.
As much as I love technology and I know it’s a little ironic for me to say this as a digital
entrepreneur, but our audience will tell you.
Like, I’m not on social media 24/7.
I love our show, I love our team, I love what we do, but I spend the majority of my time
actually offline.
As much as humanly possible.
Because that’s also where real life takes place.
It’s real life.
And, you know, one of the things you said on the phone when we were chatting is you
don't have to be rich to live rich.
That’s right.
And I loved that.
And I love this idea as well, you know, kind of tying back to where we started.
Sometimes people are like, “Oh, I want a million dollars,” or, “I want a billion
dollars.”
But, you know, bigger dreams financially aren’t necessarily better dreams.
And small, simple lives where things…
you have time, you can be a dad, you can be a mom, and you can just enjoy your life as
it is, is beautiful and the beauty of what you teach is that you give us the tools to
create the life that we want, whatever size of those aspirations.
Well, thank you.
I think what you just described for your company, your company will continue to impact, you
will, impact so many more people and this company will grow so much faster.
Because, first of all, people are gonna be attracted to wanna come here because of that
lifestyle.
I was just vice chairman of a company where every 7 years you have to take 6 weeks off.
It’s a forced 6 week sabbatical.
And so at this company, people would talk about their sabbatical like… like they had
a child.
You know, like, they tell you their 6 week sabbatical and they’re… they just lit
up.
And then people like, “Oh, I’m only a year away from my next sabbatical.”
We need to get more life in our lives.
We really do.
I mean, this morning, like, going back to values, I was asked to do a morning TV show
today.
And I’m like, “No, I wanna take my son Jack…
James to school.”
James is 5 and a half, I walk him to…
I walked him to his kindergarten class, you know, he’s still holding my hand, I got
like 15 hugs and kisses.
That’s not gonna last.
It’s not gonna… it’s not gonna last.
My 6th grader is like, “See ya, Dad.”
You know?
So I’m like, I want to be present in my life for those experiences.
And I want more people to be present in their life for those experiences.
And, by the way, you don't have to have a lot of money to do these things a lot of times.
It’s just a decision process.
Especially for the entrepreneurs that are watching.
You know, I…
I’m now addicted to this idea of sabbaticals, so I’m gonna like, you know, even though…
we’re gonna start cranking everything back up again.
I’m taking 6 weeks off this summer and, this coming summer, and I’m taking 3 weeks
off in the ski season and I’m… like, I’m…
I’m… this is something I wanna do for the rest of my life.
Because I want the feeling that is inside of me now that wasn’t there before my break
and that… the primary feeling is presence.
It’s being right here, right now.
Yeah.
And it’s something that money can’t buy.
David, thank you so much.
I adore you and I will tell you right now, I’ll be happy to talk to you any time.
You can call me if you wanna chat about sabbatical stuff.
I’ll be an… an ear to bend on… on all this stuff.
Thank you so much.
This was so fun.
Thank you.
So you know on MarieTV we like to give challenges to our audience.
Yeah.
So let’s talk about it.
What do we want to challenge our audience to do in the comments below?
So you said you had, like, a 2 part challenge.
Right?
Do we wanna think about the latte factor?
So… so let’s give them the latte factor only for you let’s make yours different.
Alright?
Oh, ok.
Let’s do the 2 day latte factor challenge.
Ok.
Alright?
So I told you, like, 30 days, 7 days, and one day.
Let’s do the… for 2 days, just for MarieTV, for your people, track your expenses for 2
days.
Excellent.
Look at where the money is going, then go… go… you know, we’ll post a link where
they can run a calculation on what it’s worth.
Take a look at where the money is going and then come back to MarieTV and tell us what
your latte factor was.
Just be… just be honest.
Tell us what it was so that we can get people sharing, “You know, this is where I’m
wasting money.”
Then here’s my second part of the challenge, if you’ve got a 401k plan or an IRA account,
401k plan would be the easiest, whatever you’re saving, I want you to increase it.
So if you’re saving 4%, like the average American, I want you to increase it.
If you increase it to 5%, which is a 1% increase, it’s gonna change the outcome of your life.
I want you to do more than that, but whatever you do, I wanna hear… have them tell us…
tell us what they did.
So that people can start getting inspired by other people.
And if you’re not using your 401k plan or you’re not using an IRA account, I want
you to go pay yourself first.
And so if you do, then post that.
Awesome.
Let’s get people talking about the action they’re taking.
I love it.
David, thank you so much for being here today.
This was a pleasure.
Marie, thank you.
This was a blast.
I really appreciate it.
So you got the two part challenge from David and I.
We want you to leave a comment below.
Now, as always, the best discussions happen after the episode over at MarieForleo.com,
so make sure you go there and leave a comment now.
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Thank you so much for watching and I’ll catch you next time on MarieTV.