Dan Thompson has Justin Walker and Jeremiah Vickery with him on this podcast. We talk about some of the financial mistakes we made when we were younger.
Dan: Hi everyone! And welcome to our Wealthy and Wise Wednesday podcast and video. Today, I brought Justin Walker.
Justin: Hi guys!
Dan: And Jeremiah Vickery.
Jeremiah: Hi everyone!
Dan: On the podcast and video today, these guys head up the financial planning arm of our team and they do awesome job. But it is fun to talk about the old times and mistakes that we’ve made so I thought this will be a good opportunity to get a sense that not everybody goes through life making the right financial decisions even quote and quote…
Justin: Including us.
Justin: Including us.
Dan: Financial advisors. So we’re going to talk about some of the mistakes that we’ve made and I’m going to let Justin start it off. Tell us a little bit about maybe some of the financial mistakes that you’ve made early on in life.
Justin: Well, I remember when I got into this business, I literally had like fifteen hundred bucks to my name and I had some people tell me, you’re young, take advantage of these opportunities and if you fail, it’s okay. There were several times where I was living on credit cards, just trying to make ends meet just so that we could pay for school, clothes or food or whatever for our young family. There was a time that I looked at my wife and I said, “We have like $70,000 of credit card debt.”
Justin: Yes. 70. I either got to make it in this business or we’re going to have to go find something else and it was really stressful at that time, but my wife said, “Just buckle down and go to it.” That was wise counsel because instead of worrying about it and almost letting it debilitate me I was able to focus on it and work on that debt and get it paid off within a shorter time frame.
Dan: So moral of the story. Don’t live off credit card debt.
Justin: Don’t live off credit card debt. I actually made a living, I didn’t really make a living on it but I moved credit card from one credit card to the next, keeping zero percent on those credit cards for a year or two.
Dan: As often as you could.
Justin: Yeah, until I was able to pay them off.
Justin: Yeah, not a fun time.
Dan: This thing over your head, huh?
Dan: How about you Jeremiah?
Jeremiah: Well, to add to Justin’s story and I think all of our clients come to us because they eventually realized that they don’t know everything there is to know about money. And the reality is how did we get really good at our jobs?
Well, we’ve made mistakes that a lot of people out there have made and we’re trying to help clients get out of those mistakes and just like Justin’s story with the credit card debt and then coming up with a balance transfer idea.
All of those are strategies that came on the fly, that are now part of our criteria when working with clients that are in a debt consolidation mode. Our goal is to try to help clients get to more financial freedom, have more control over their finances and eventually their time. And I think one of the stories that I would like to share is just becoming over-extended in a specific market area.
For me, that was about a decade ago with real estate. The real estate boom through the early two thousands I had just come out of college. I had a great paying job and I didn’t know anything about the markets. I mean I had a Scottrade account. I had a few people talk to me about insurance but the one person that we trusted in our family was a real estate professional and she had advised us that we need to put all of our money into real estate.
And so, that’s what we did. We started buying a real estate. And that worked really, really well until 2008.
Justin: I was going to say that’s a decade ago. That’s 2008!
Jeremiah: And then things got really hard when we decided that, you know what? We want to try to get some of that cash back and we went from what looked like on paper and you guys we’ll learn this as you listen to more podcasts about realized gains and unrealized gains or realized losses and unrealized losses.
We had a lot of unrealized gains. Have you ever thought about all of the profit that was sitting in the house, the equity that you have in a business venture or something like that? Well, none of it is real until you sell it. And we found out that the hard way, that when we wanted to go to sell our real estate in 2008 and 2009, no one wanted to buy it. So my lesson in life was don’t become too overextended in any one area.
Dan: And that’s funny that you mentioned that because so many people look at their statements from month to month, no matter if it’s real estate or the stock market or whatever, and once they see that high, that’s what they think they’re worth.
Dan: And that’s what they think they can grab and then a market correction comes along and those losses set in or like you, you could sell that real estate and all of a sudden, because nobody typically gets out at the absolute height and times perfectly, all the profit they could have gleaned out of that investment. But if you see it on paper at any given time, you think that’s what it should be worth. Sadly, most people just ride their roller coasters up and down.
Jeremiah: Well, where the value in working with advisors like us and Dan come from is, we have that non-emotional connection to the decisions that we help clients make and I think that’s one of the key differentiating factors when dealing with clients—is that every decision that you make with your money is an emotionally charged decision—that sometimes why it’s so hard to make a decision. Having us help clients through that process, help guide them, really gives them the confidence to pull the trigger.
Dan: Well, we all live off of the two main emotions, greed and fear, right? We either do things because of…And greed is probably the wrong word but desire for gain, let’s just say.
Dan: Those two driving emotions can make as make a lot of bad decisions a lot of times. So you’re right, we got to do some of this stuff unemotionally.
Wait, so when I’m a young guy, I’m just married. I need a car, right? And I hate to beg on my dad’s especially since he’s passed away. He is a great dad but didn’t know much about money. And we were never taught anything about finances. So he says, “Oh, you need a car. Well, let’s just go buy one.” And instead of looking for something that was just really inexpensive that we could maybe pay cash for, he says, “I’ll even cosign.”
Dan: So we go buy this car that’s way out of our league especially that I don’t even have a job. I mean, we’re just barely married. I’m trying to figure out what I’m going to do in life. And we go sign up for this 5-year note on a car that’s something we shouldn’t even be driving just it’s a nice sports car, it’s kind of fun. He’s a cosigner and I’m strapped with this payment now for five years. And oh my gosh! It was just the most horrible decision that we could have made. That could have been a car, but sadly, I see it now with student debt.
Justin: Oh yeah.
Dan: These kids that are just strapping themselves down with tens of thousands of dollars in debt not really knowing what they’re going to do and how they’re going to get done with that debt.
Dan: I think it’s just kind of a crime but whether it’s cars or credit cards, I didn’t even have good enough credit to get a credit card.
Justin: Well, I was surprised, I did too honestly.
Dan: So I could not have lived off a credit card if I wanted to but we just lived on rice and beans.
Justin: Barely made my credit better because I kept transferring them back and forth. Who knows? I don’t know.
Dan: Oh man! Well, so than fast forward a few more years and I’m finally making fifty bucks a month or something. I don’t know, not much. I’m barely making enough…
Jeremiah: Don’t thank yourself, Dan. Don’t thank yourself.
Dan: Yeah. That’s right. Yeah. And I’m really struggling and I’m behind on car payments, right?
Dan: So I go over to my in-laws and I say, “Hey! I’m pretty sure the repo man is coming after my car. Can I hide it in your garage for a few days? Until I can muster up the money to catch up on some payments. So we did that for a few weeks. Drove it in the day and then hit it at night. Oh my gosh!
Justin: That’s stressful Dan.
Dan: It’s very stressful.
Dan: So moral story in my case, don’t. First of all, cars are the biggest waste of money. But if you have to have one, get something you can just get it done with. Buy a $2,000 car if you have to and just get it done with quick and don’t strap yourself with five or six years of payments. No matter who’s going to cosign.
You know what’s funny? Because you think we learned our lesson on the car right? Go a few years forward and now I’m really going to date myself because we were VCR people.
Dan: We didn’t have DVDs. So we the VCR. And there was one portable one that you could pull it apart and you could carry it around and you could hook up this monster camera and then you can record at family get-togethers and all that. So I wanted this VCR. It was a thousand dollars. And a thousand dollars than would have been ten thousand, right?
Justin: Big payments on that back then.
Dan: So I made payments.
Dan: Fifteen bucks a month. And sad to say, I got behind on those a few times. I had to refinance that.
Justin: You know what? I think they created layaway for guys like you Dan.
Justin: No, that’s why layaway doesn’t exist anymore.
Dan: Oh man! The thought that I bought a thousand dollar VCR on payments and had to refinance that with a 35% interest guys, as we went along. I mean it was just some bad financial decisions.
Justin: We all do it, right? We all do it. The emotion gets the better of us and we find ourselves a little bit of a fickle sometimes. It’s good to remember those things I think in the long term.
Dan: And to teach your kids.
Dan: That’s one thing I can say. My dad was a great daddy, just didn’t know much about money and he didn’t make much money. Almost everything I learned about money I had to learn the hard way.
Jeremiah: Well, I think most people do and I think the key strategy there that we’ve all maybe picked up on as faster than other people is just don’t make that same mistake twice, right? Fool me once.
Jeremiah: But don’t fool me twice. We’ve all learned our lessons from those mistakes in life but it’s not repeating them that has allowed us to become successful.
Dan: Yeah, I remember being new in the business. I was probably maybe a year into the business, things were finally starting to get moving and things were going well and I met with this couple. And he was 63, going to retire in a couple years. We sat down, looked at everything. Talking about a wakeup call, it’s almost heartbreaking for me as well because these people, you think $70,000, they had $90,000 in credit card debt.
Justin: That’s crazy.
Dan: Plus, their house, plus a couple of cars and they were going to retire in two years. And here’s a guy, we’re talking about the early eighties, he was making a hundred thousand dollars a year. Could not figure out a way to manage and save.
And I just looked at him and I said, “I’m only at this a year. I don’t know what to tell you. I don’t even know how to get you out of all that debt in two years so that you can retire.” But it actually was really good for me in the sense that I said, “Man, I don’t ever want to be in that situation.”
Justin: Yeah. Well, I had a similar situation, not about the debt but just not being able to keep track of their money. They’re moving from across the country and when they got here, they’d sold their home for around $150,000 probably of equity and across the country in their move they stopped and had vacation and they got here they only had $25,000 that they thought they had been robbed. They thought that they had literally somebody got into their account and took their money. We started looking into it a little bit more and they had spent every single penny of the 125,000 that was missing. They had spent on stuff.
Dan: Just not even knowing what’s going on.
Justin: Just not paying attention.
Justin: Yeah, so I mean, there are all kinds of those stories that we see and it happens to each of us in different ways but it’s important to keep track of that, to see where it’s at.
Dan: Well the other thing I wish I would have done early on, so if I could go back and rewind time, first of all, I wouldn’t have bought that car and I would have used some of that money for car payments and invested earlier even if it was twenty or twenty-five bucks a month. I wish I would have invested earlier into something.
So I think if there’s anything to come out of this, I would say that the biggest mistakes that more people make than not is they get into debt too early. It takes them too long to get it paid off before they can start investing.
And as a result, they missed sometimes 5, 10, 15, 20 years of compounding and growing their money because it’s all going to the bank or other financing institutions and credit cards. And that could be money they could be having in their pocket and in building their wealth.
Jeremiah: That’s true.
Dan: So anything else guys? Any other big glaring mistakes you made in life?
Justin: Oh there’s lots. I don’t know if I should share them here but I agree…
Jeremiah: We don’t have time.
Justin: Yeah, we don’t have time for all the mistakes that we make but I think it’s just important to realize that everybody’s in the same situation. On Facebook, on Instagram, you always see the best situations of every individual and you’re not seeing the despair and the hard times that they’re having in life and we all have them.
We’re all there and I think it’s good to realize that we’re not alone in anyone’s situation and we don’t have to be super secretive about our money. There are lots of people who have been through it and they can help you walk through those situations and make it easier.
Dan: Yeah. Well, do yourself a big favor. If debts a burden, we can even give you some really good ideas and some spreadsheets and some ways to knock that out as quickly as possible. Obviously, saving and investing early on in life is going to give you a leg up as you get out 10, 20, 30 years from now. So certainly, be thinking of that. But just take this time especially to begin the year to think about some of the objectives you want to accomplish this year and whether that would be to eliminate debt or just to be a better saver or to learn how to handle and manage your money and learn about different investments and investment tactics. All those things would be really good things to do for 2018.
Justin: Agree. Knowledge is power.
Dan: All right, perfect guys! Well, thanks for joining me. You guys are going to see and hear a lot more from these guys as we go along but is good to have them with me today. You guys have a great Wealthy and Wise Wednesday. And by the way, as always, any questions you have, shoot those to firstname.lastname@example.org and I’ll answer them just as quick as I can. Otherwise, have a great weekend. We’ll talk to you next week! Take care!