Financial Advisors React to Wild Money Advice ft. @ErinTalksMoney

Erin Talks Money Joins the Show (0:00)

Brian: We’ve got some wild and crazy clips. And as you can see, Erin Talks Money is here with us.

Erin: Hey guys, thanks for having me back.

Bo: I am so excited that you are here, Erin, and I can’t wait to see what the internet has in store for us this morning.

Clip #1: Kevin O’Leary’s Advice for Building Wealth (0:18)

[Clip] What’s the first piece of advice I give my kids about money? And the last piece of advice, and the advice I always give them: don’t spend it. Save it. Invest it. Let it compound. The market gives you 8 to 10%. Take 15% of every paycheck — I don’t care how big it is — or any gift granny gives you or anything you get on a side hustle, and invest it. And by the time you’re 65, you’ll have millions in the bank, even if you only have a salary of $65,000. This is what the market gives you. Just don’t buy crap you don’t need.

Erin: 100%.

Bo: I love it. All of it. Don’t buy stuff you don’t need to impress people whose opinions do not matter. Everything that comes in, save a little bit of that, put it to work, invest it. Building wealth is not all that complicated.

Erin: If you think other people are thinking about you, they’re not. They’re thinking about themselves and their stuff and what they’re doing with their money. And also, Mr. Wonderful — kudos to him. He has the best marketing. Who else can call themselves Mr. Wonderful?

Bo: I think it’s great.

Brian: I just appreciate that he put on pants for this video.

Video Clip: I don’t wear pants anymore. I don’t have any pants on right now. I have no pants on ever. Because I look spectacular with this tie and jacket on.

Brian: He’s like the mullet of his attire. Business up top, party down below.

Bo: I have not seen these.

Erin: Guys. That’s how I film.

Bo: Are you serious?

Erin: Yes. I’m dressed up from the waist up and that is sweatpants, bare feet.

Clip #2: Using a HELOC to Invest — Smart or Dangerous? (1:46)

[Clip] A HELOC, when used for things that create more income and wealth, can really produce far more profits for you, which you can then use down the road on items. The best rule of thumb when building wealth as quickly as possible is really to conserve your funds and availability of capital and delay gratification on lifestyle purchases.

Erin: I liked that part. He closed with gratification.

Bo: What was he suggesting? That the strategy ought to be to lever up as much as possible, borrow as much money as you can, and put that money to work in order to maximize your wealth-building potential? Was that the thing he was laying out?

Erin: Yes.

Brian: Using your HELOC to build wealth means you’re jeopardizing your shelter – the house that you live in. And that’s assuming you even have a house. If you have a low interest rate and you got in pre-2020, then you’ve already kind of won the housing game. Let’s not go and lever that up to your eyeballs so that you can get yourself into trouble and jeopardize this great opportunity that you have.

Erin: I want a place where I sleep. I can also say my dad has made every financial mistake under the sun. He’s done this. He pulled out money from his home equity to go invest, put it in the stock market. I mean, he had some times where it went well — early 2000s. But he also did it once to invest in an IPO and it went kaput. So I don’t recommend it. I wouldn’t jeopardize my shelter.

Bo: It’s all about risk. How much risk do you really want to take? And is the reward that you might potentially receive worth the risk that you’re taking on? I would argue that risking losing your home, losing your shelter, just is not worth it.

Brian: Hey, I’m in a good mood though. Can we just celebrate that he wasn’t talking about buying a car with your home equity?

Erin: That’s true. He was at least investing it.

Clip #3: Just Earn More Money (3:39)

[Clip] You look happier. Thanks. I’ve been spending beyond my means.

Erin: I think people are still living this way with their credit cards. No, don’t do that. Just go boost your income.

Clip #4: You’re Crazy to Just Invest in the Stock Market? (3:54)

[Clip] You are crazy if you think that the way you are going to get rich is from making the money that you have right now and just investing it in the stock market. That’s insane. Why? Because what you are actually doing is letting other people get rich. Who gets rich? The asset managers who manage your money, the banks that hold your capital. Why do they get rich instead of you? Because they take your money and they do something with it proactively. They take your money and they take real risk with it. And I think unless you take risk with your money – but also with yourself – you’re never going to get wealthy. You and I could go very viral on the internet every single day if we talked about how to invest your first $10,000 to get to $100,000. You could get a lot of views on that, except it’s totally pointless. If what we really want to do is elevate people to real wealth where they have enough money for all the things they want in life, it’s not done through investing. It is done through earning. That is the only way you make real money. Once you make real money, you can make more of it through investing. But in the beginning, you’ve got to earn. That’s it.

Bo: Okay. There were glimmers of truth in the things that she said, but she was kind of wandering around in the woods. The very first thing she said was if you are investing money, you’re not making money, someone else is making money. That’s true if all you’re doing is parking your money in a bank. We do see people do that. They put money in a savings account or a checking account, and the bank then goes and lends that money out, takes on risk, and gets a rate of return. That’s true, but that’s not the way that investing works. She’s way off on how investing actually works.

Brian: Yeah, if you’re broke, she’s right. You have to sell your time for wages, go start a business, or something. And then hopefully, if you live on less than you make, you can turn that into wealth over the long term. But more than likely, you’re going to want to invest the money so it can start working harder than you do with your brain and your hands. I like index funds because then instead of trying to beat the market, you are the market. All this great innovation that we see around us you capitalize off of that.

Erin: Making your money, growing your income that’s going to be the best thing you can do, but put it in the market. Let investment compounding take over, because otherwise you’re never going to be able to retire. That is how 99% of the people make it.

Clip #5: Does Your College Major Determine Your Wealth? (6:02)

[Clip] People ask me all the time what they should study in college. What they’re really asking is how do they make a lot of money, because they are terrified about the impending affordability crisis. And I feel like I have to remind everyone that the reason we’re at an affordability crisis is not that we can’t do things inexpensively it’s a policy failure. We need to put incredible pressure on policymakers to fix that. But when I tell kids that, I also have bad news, which is that what you study doesn’t matter. There is a very low likelihood that your major will define your economic outcome unless you study math at Harvard or Stanford. If you’re going to go to a random college, study something you love. Study something that you are willing to be excited about not because that thing will get you a good job, but because that thing is intrinsically exciting to you, so that you can taste mastery.

Brian: I disliked about everything they said.

Bo: Well, I was on a roller coaster. I was with him and then I was not with him and then I was with him and then I was not with him.

Erin: I’m going to be generous here because I am in a career field that did not exist when I was in high school or in college, and I didn’t know where I was going to end up. So I’ve been out of high school 21 years now and I don’t think you’re defined by the major you get. Granted, I went to school for business and then ultimately finance, but I do think it’s important that you like what you do and that you approach it with passion. But with that said, liberal arts versus engineering or liberal arts versus nursing there’s a big difference.

Brian: He started this thing by basically wanting to empower the mob. He told us everything we all want to hear — hey, it’s not your fault, it’s the government’s fault. And that’s the stuff that is going to put you in a situation where you don’t feel like you have control. Yeah, there are things like housing and the cost of education that are way more expensive than they should be. But I’m also here to tell you that we are living in the greatest time to build wealth right now.

Bo: I think if all you do is follow your passion, you’re going to find yourself in the same affordability crisis he’s talking about. I went and got this degree, racked up tens of thousands if not hundreds of thousands in debt for a job that I couldn’t find or that couldn’t pay me what I thought I was going to earn or what would justify the degree that I got. And now because I’m in this passionate low-pay job, I can’t afford a house either. It’s a vicious cycle that is going to repeat itself if you carry out his advice exactly the way that he said.

Erin: I have a flip for that. You should find what you love about the job you have.

Bo: There you go. And go into engineering, finance, or accounting.

Brian: Yes.

Clip #6: Reasons You Shouldn’t Feel Guilty Spending Money (8:48)

[Clip] Reasons you shouldn’t feel guilty about spending money. It’s your money, isn’t it? That’s the first reason, and that means you can spend it how you want without guilt. What does your future self think? There are loads of things to buy, aren’t there? You spend money on other people all the time, so why not spend a little bit on yourself? You deserve it. And that’s why the next slide says you deserve it, because you do.

Brian: Was that really the video?

Bo: I agree 100%. I agree with this. Full stop. Everything he said after you save 25% of your gross income for your future self. Once you do that, agree totally. Go spend. Do all the things. You deserve it. You put in the hard work after you save a little bit of today for tomorrow.

Erin: I would make one comment on the slide though “there’s loads of stuff to buy.” Most of us are buying way more stuff than we need. I just hate clutter. We don’t need as much stuff as we have.

Brian: I’m sitting here look, I’m the old guy sitting amongst you younger folks.

Bo: We agree.

Brian: I hear that there’s this new phenomenon where people get adult beverages and then make PowerPoint presentations for their friends. Is that what I just witnessed? If that was presented at a content meeting, I’d be like, “How did this guy make it through the hiring phase?”

Erin: I don’t think this is a thing.

The PowerPoint Party Debate (10:17)

Bo: What young people are you hanging out with? No, this is a thing.

Brian: Are you so old you don’t know this stuff either?

Bo: I’m just saying I don’t think it’s a thing.

Erin: I don’t think the younger generation is using PowerPoints.

Bo: Look, I can see Rebie, but she’s saying it’s a thing. This is not a thing. I hang out with people all the time. I’ve not seen one PowerPoint socially. It’s not a social thing that we do.

Clip #7: Index Funds vs. Trying to Time the Market (10:35)

[Clip] You work at Taco Bell and have some extra cash lying around. Here’s what not to do. Your friend tracks the stocks of different companies and tries to find the perfect time to invest. He sometimes makes money. He sometimes loses money. But in the long run, he goes broke because it’s impossible to time the market. But you make a smarter choice. You take your extra money and put some into a high-yield savings account and the rest into index funds. These funds split your money across tons of different stocks, which gives you diversification and lower risk. You stop your friend’s nonsense and make him follow good habits.

Brian: That was great. I love it. I want to see the setup. I wish there was a third camera that kind of showed you all the props and how he did that. Have y’all ever seen those kind of setup videos? I love that stuff.

Bo: I have no notes. And I think most young people screw this up. They start trying to either pick stocks, do sports betting, or participate in whatever the thing may be to try to get some edge to beat the market. When if you will just do it the way that he described, it’s almost inevitable to build wealth that way.

Brian: Be the market, don’t try to beat the market. I like the index funds.

Clip #8: Why Starting Early Matters for Retirement (11:43)

[Clip] The most common advice that we tend to hear is that you need to start saving for your future when you’re younger — start as early as possible. And I know in the financial space maybe it sounds like we’re beating a dead horse when we repeatedly say take a portion of every single paycheck, whether it’s $50 or 10% or 20% of your pay, and just set it aside, put it in investments, and let it grow for your future. But we have to say it because common sense isn’t always common practice. And a lot of times young people have the attitude of “I’ll just get to it eventually. I’ll save when I make more. I don’t have room in my budget right now.” But so often we end up putting things off too long and then someday comes way quicker than we ever imagined.

Erin: She’s great. I love her.

Bo: It was great. I have no notes because far too often people want to save what’s left over after they’ve spent. And if you practice that, you’re never going to have anything to save. That’s why we want people to pay yourself first save first, put the money in first, and then spend what’s left over. You find yourself in a much better position.

Brian: Erin, that B-roll is that you or did you find that B-roll of stuffing in the dollar?

Erin: That’s me. That’s what I’m doing, hanging out in the kitchen.

Brian: Because we’ve all been there where we’re trying we have so many dollar bills that we’re trying to stuff in and the zipper gets in the way. That was really we love your content. I think you can tell. If people want to know more about what you create, including that video, where can they go check you out?

Erin: I’m here on YouTube @Erin Talks Money. That’s the only place I am. I’m not on Facebook or Instagram. Don’t go there.

Brian: We believe there’s a better way to do money. And that’s why we always load you up. If you want to go check it out, head to moneyguy.com/resources and start this journey. We’ll give you as much free stuff as we can. Build your great big beautiful tomorrow. I’m your host Brian, joined by Bo, joined by Erin. Money Guy, out.