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Everybody thinks they know how to reach financial success: Stay out of debt, save money, budget… 

But while some of it’s good, a lot of popular financial advice can actually ruin your financial future. If you follow it, you’ll be more stressed about your money without having more of it. 

In this episode, you’ll find out how to spot financial advice that actually hurts you—and how to build long-term wealth instead. 

Want to stop following bad financial advice and build a smart, stable financial future instead? Listen now! 

Show highlights include: 

  • Why your expenses won’t be lower in retirement—and how inflation could even raise them. (2:45)
  • The counter-intuitive reason why paying off debt before saving exposes you to massive risk (even if it feels safe). (6:24)
  • Why “no risk, no reward” can wreck your mental health (and the peaceful way to get returns without stressing out). (12:19)
  • Myths about investment fees, tax deferment and insurance that derail your financial growth (even though everyone believes them) (16:50)

Remember to download Grandma’s Top Tips for an Independent Financial Future by dropping into https://grandmaswealthwisdom.com/free/. It's time for YOU to break through to a smart, stable, financial future.

If you’d like to see how Grandma’s timeless wealth strategies can work in your life, schedule your free 15-minute coffee chat with us by visiting www.grandmaswealthwisdom.com/call … just like Grandma would want us to do. 

Links mentioned on the show: 

YouTube video about debts and savings: https://youtu.be/LtmJkJY06uM

A gift to filter all the “conventional thinking” and find your wealth wisdom: https://stillmethod.com

Our YouTube channel: https://www.youtube.com/c/grandmaswealthwisdom?sub_confirmation=1

Read Full Transcript

(00:04): Financial advice is dangerous. It's often given without context or thought to practical application. Plus most of it is downright dishonest. Not only are there hidden agendas, but there are also misconceptions and myths passed around. That can be easily dispelled. If you wanna find your unique financial wisdom, your wealth wisdom, we believe you gotta learn how to dispel the myths. And today we're gonna debunk three of them. Hi, I'm Amanda and welcome to wealth wisdom. Financial podcast, episode 1 0 7, foolish financial advice. Most Americans think are true, but they're not.

(00:44): Hey, and I'm Brandon. Now bad advice can be costly. So called quote unquote wisdom gets tossed around from neighbor to neighbor to go worker to coworker. When the share of the wisdom actually has no clue what the receiver's situation really is like, or if it's really true, right? The internet is full of free financial advice. Heck you might not even know if you can trust us on this podcast because there's so much information and maybe even wrong information out there.

(01:22): Well, and I have to say, we're not really even asking people to trust us anyway, because we're not giving financial advice. We're doing something I think is way more powerful. I hope you feel that every time you listen to an episode of the wealth wisdom, financial podcast, you feel like you're empowered with wisdom to give yourself your own advice, to find your own path, to know the right questions, to ask, to find your wealth wisdom.

(01:50): Yeah. And questioning some of those things that were said long ago. So we hope you'll go along with us today to question some big ideas that so many people assume are true because everyone says they are true. Now you decide for yourself how true they really are.

(02:09): Are you sick and tired of hearing the same old, conventional financial advice? We feel you we're fed up with the same old truisms that fall flat. When you get into the unique opportunities and challenges of specific situations. This show is all about bringing you historic wisdom around building wealth, with practical insights on how to apply it to your journey. When conventional financial thinking, doesn't get you where you wanna go. You need wealth wisdom. Let's master wealth building together.

(02:39): The first myth that we want to cover today is, and dispel is quote unquote, after you retire, your basic expenses will be much lower. Have you ever heard that your after you retire, your basic expenses will be much lower.

(02:57): So when I think about this, uh, myth, the underlying assumption that's often here, well, at least you won't have a mortgage payment. So I was like, well, let's think about this. If I look up the average monthly mortgage, it's about $1,500. Of course you can't count your escrow. You're still gonna have to pay your property taxes and insurance, even though you've paid off your mortgage. So let's just go with principle and interest. 1500 is average. And if you're following the rule of thumb, that you wanna put 30% of your income toward your living cost. So you're currently spending about 30% of your income on your mortgage when you take the other 70%. So right. When you retire, you might be, you might have that go down to 70% because you're, let's say you pay off your mortgage. You retire the next day. Now you're at 70%. It only takes 12 years of inflation for a 3% inflation for your cost to grow, to be more than they were before you paid off your mortgage, the 70% to become more than a hundred and percent with that included in your mortgage. So that means if, even if your expenses are lower at the beginning of retirement, inflation alone is gonna increase them to equal or more than preretirement levels. And we all know that inflation can be way more than 3%.

(04:16): Yeah, definitely. Right now we are feeling that right. And on top of that travel hobbies and other things to keep you active and maybe gifts for the grandkids. And now you need more income and retirement, not Less plus we have to add, there's no guarantee you're gonna pay off your mortgage. We found that about 20%, one in five, current 65 and older homeowners still have a mortgage. That means you're. You could be one of those one in five that have a mortgage when you're 65 or older.

(04:52): And then if you're thinking, well, at least I won't have my kids on the payroll anymore. Uh, I can't wait till that, uh, happens right about one in 10 grandkids. One out of 10 grandkids are living with their grandparents and more than one in 10, 24 to 35 year olds still live with their parents. So that's still a cost there that you are experiencing if you're retired there. And on top of that, that healthcare cost, which tends to go up as you age. I mean, seriously, I hear people talking all the time about the cost of healthcare and I've even heard doctors say, well, um, cut that medicine in half so you can afford it. Like literally I've, I've heard that many times and I I'm not even at that age.

(05:47): Yeah. Talking with older clients or family members, we definitely hear that. So that's the first myth we wanted. Topel hopefully you're questioning this idea that after you retire, your basic expenses will be much lower. And why not aim for having the ability to spend freely and carelessly in retirement? You know, with knowing that you've got plenty to go around, why not aim for that? Why, why assume that things are gonna be lower? So, um, hopefully we've kind of opened up that box for you next. We wanna go after a powerful myth. That's told to a lot of, uh, younger folks in their twenties and thirties, but still, maybe applies to older folks as well. It's this one pay off your debt first and then save, don't start saving until you pay off your debt. You gotta pay off your debt first and then save.

(06:39): This is often said with the concession, of course, to at least create that $1,000 emergency fund because you know, we need to have that. There's also the point that getting the interest paid off more quickly saves you real money and gives you more freedom to save later. And again, maybe getting rid of some of those high interest credit cards, maybe a good point, right? Yeah. But

(07:07): We have two points here for what you might wanna reconsider. First of all, they've been using the same $1,000 emergency fund since the 1980s. Now there's fun. Inflation calculators out there on the interwebs. And we found one, we put in a thousand dollars in 1980, and it's the equivalent of over $3,000 in 2022. But we'd ask if $3,000 is even enough for a true emergency.

(07:37): All right. So, so think first about your deductibles and copays for property and health insurance, are the, are those more or less than 3000 plus? Not everything is covered in our firsthand experience and Overland flood of our basement, not covered by our homeowner's insurance cost us way more than $3,000. And that happened how many times Amanda?

(08:09): Yeah. We've lived in our home for a little over two years now and it's happened twice and we're not in a flood plane or at least not considered. So getting flood insurance is not a thing. Anytime our basement floods, it's not covered by our homeowner's insurance. And yes, it costs more than $3,000. Yeah.

(08:26): So we know those, uh, deductibles copays. And then the things that aren't covered can really add up. Also think about the main cause for a lot of people, why they go into debt, things like job loss, major home repairs, moving to a new home. Wouldn't those eat through a $3,000 emergency fund rather quickly, especially a job loss.

(08:46): And you might argue that emergencies are less likely to happen. We'd ask you if your next vacation, which is definitely not an emergency is gonna cost more than what you keep in savings. If so, then you're likely gonna go further into debt because of that vacation. If you didn't save for it,

(09:09): What often happens is people see their debts go down temporarily and then back up and then down and then back up the debts never get paid off because the bad and the good of life just keep happening. The kids keep doing the sports and the music lessons, the car keeps needing repairs or new tires. There's always something to do around the house. There's birthdays, holidays, vacations, baby showers, weddings, all the things. Life doesn't stop to give us space to pay off those debts. And without savings that vicious cycle continues up and down and up and down.

(09:44): So, so yesterday, Amanda, I don't know if you know this. I was talking to our son and we were walking around the park that has, although the people playing baseball and softball and he said, Ooh, I wanna take a lesson in softball. I said, well, um, you're already gonna do a lesson for swimming. And he's like, well, I wanna do both. And I'm like, oh, there goes more money going out. So I'm already seeing that with the four year old telling us, you know, the other things he's going to be adding to our expenses, which leads to the second point. What happens when the debts are paid? Do people really start savings?

(10:28): Well, unfortunately the answer is no. If the debts ever get paid in full many, spend the money that was gonna go to debts, they've never built this habit of saving and habits are really hard to build. So if you've never built it, it's going to be really hard to build. And even those who do end up scrolling away, something, some form of savings, they often spend those savings, right? They see their savings, go do the same thing that the debt was doing, going up and down and up and down as life continues to happen. As the kids keep asking for more lessons or, uh, the car keeps needing repairs or whatever, and it's very difficult to ever get ahead.

(11:06): So hopefully we've moved you in the direction of questioning, whether you should pay off debt before starting to save. And I think maybe you could do both for more about your options of getting out of debt and staying there. Check out episode 45 from way back in the beginning of this podcast in 2020, it was the first episode of the year. So go back to the first episode of the year in 2020. And you'll learn more about our thoughts on savings and paying off debt and how to do both at the same time. We, Which is kind of fun to go back and remember life before pandemic.

(11:48): Right? Crazy. We never thought we'd be doing some of the episodes we did now. We've also got a great YouTube video with visuals and everything. So we're gonna put that link in the show notes for the visual learners who want to actually look at some of the math behind whether paying off debt or, you know, um, saving how that actually plays out

(12:13): Now onto the third myth, which we believe is the most powerful. It actually comes in two forms, no risk, no reward or it's twin. You've gotta speculate to accumulate.

(12:25): Our biggest problem with this conventional thinking is assuming everyone wants the same reward. Have you ever stopped to think that seeking a high rate of return might be harmful actually to your health?

(12:40): Now on the one hand risk taking in small doses is almost universally beneficial for your brain and your mental health, having experiences outside of your norm. You know, doing something a little risky that can help word off depression. It can be a powerful antidote to boredom. We all need a little risk.

(12:58): Yeah. On the other hand, risk taking can be addictive too. It's effect on the brain is similar to drug use and just like drugs, a higher and higher dose of risk is needed to feel the same high.

(13:14): We could go into the apps out there that almost gamify risk taking investing, and this whole idea, you've gotta speculate to accumulate no risk to no reward, but let's, let's stick to, what's been studied so far in 2014. Some researchers at the university of California at San Diego published some very interesting findings. They looked back from 1983 to 2011. So what is that? 28 years of data of individual patient records from every hospital in the state of California. And they compared hospital admissions with stock market returns. And these researchers found a strong inverse link between daily stock returns and hospital admissions, particularly for psychological conditions, such as anxiety, panic disorder or major depression. And they found that the effect that inverse relationship was instantaneous. It happened immediately when the stock market would go down the admission hospital admissions that go up.

(14:21): In other words, they've found that when the stock market goes down this very same day, more people end up in the hospital for anxiety, panic or major depression. They point out that the vast majority of stress induced illnesses do not result in hospitalizations, but they couldn't evaluate non-hospital related stress induced illnesses as easily, right. Because they weren't going to the hospital. Right. So there was no data to analyze to see.

(14:51): And I might ask you listener, what do you think, you know, listening to this and looking at what's happening in the world right now in the anxiety and the stress and the market, do you think it's related or is it not related at all? What do you think?

(15:08): Well, and here's the, the real question is stress induced illness, anxiety, panic disorder, and major depression, really the reward we want for the risks that we take. Yeah. Regardless of if it's correlated or not, I don't know that I would want to, what do you call it? Uh, test that hypothesis with my own life. That's just Me. Well, and your own money too. Yeah. Yeah. And my own money don't Wanna test it and they're, and they're related, right?

(15:37): Yeah. I mean, I've had people say, oh, you know, lost all of this and now I'm, you know, have had a heart attack or something, you know, all kinds of crazy stuff we hear. So be sure to check out episode 1 0 3, that was just a couple episodes back. It's called financial portfolio construction for building wealth. Right. Where we talk about moving from no risk. Now reward to reliability is the reward.

(16:08): And then of course our last episode, 1 0 6, if we didn't check that out, it ha is really powerful to help make sure you are not one of those visiting the hospital the next time there's a stock market correction. The title of that episode is from financial stress to financial sanity.

(16:25): Yeah. We really, uh, again, are we wanna hit on this a lot because we do see the pain it's causing and, and we wanna help as many people as possible. This is, is actually another good segue to recapping our show today. We could list so many other foolish financial advice. Americans, believe that just aren't true. I mean, they include things like defer your taxes because they'll be lower later ever heard that one before Amanda investment fees are worth it for the high return. You know that I've heard that one, many times and insurance is simply a necessary evil, right? That one's another one that I've heard plenty of times. And there's plenty more you, if you want put 'em in the comments, I'd love to hear what you guys hear that you're like, oh my gosh, people really say that over and over again.

(17:21): Well, here's actually our main suggestion for making sure you debunk myths that may not apply to your specific situation, know yourself, know the self, and to get to know yourself, you have to take some time looking into alternate perspectives from the majority opinions before you start, you know, going, looking around the internet where you're gonna find the majority opinions, you know, spend some time thinking, well, how could I find some alternate perspectives maybe before you meet with you at the free financial advisor your wor employer provides, who's gonna tell you the majority opinions look for an alternate perspective. Heck before you even meet with one of us, spend some time away from the herd. You know, they say, if you follow the herd, you'll get slaughtered. So spend some time away from the herd, looking for contrary opinions, you're actually gonna find a lot of them in our past episodes. We love to be a little contrary in ourselves. And if you do have a hard time finding something, that's contrary to what you've always heard. We'd love for you to let us know. We might find it for you. Well, how to find that alternate perspective, or we might make an episode dedicated just to you. You can reach us at (513) 447-6501 call or text or hello at grandma's wealth, wisdom.com.

(18:40): And as you're learning new information or coming up with those fresh ideas, it's difficult to decide what to carry through with. And when, so we've developed a filter to use when deciding how to move forward towards your financial goals and dreams, or, you know, even personal goals and dreams, financial, and otherwise it's a free gift for you waiting@stillmethod.com. So go download it today and start connecting with your still center@stillmethod.com.

(19:09) While you're starting to question conventional thinking, hit that subscribe button, because next time we're gonna start a series of core beliefs we have about money, how it works and how we can make it work for us rather than our usual summer of interviews. We're gonna do a deep dive into some things we'd want our son and frankly, the whole world to know about how to think about money. If you were looking forward to interviews over the summer, head over to our YouTube channel, where we've got plenty waiting for you. And we publish a, uh, interview, or we do a live interview almost every Friday. We'll include a link to our YouTube channel in the show notes.

(19:50): So until next time continue a path of breakthrough to a smarter, more stable financial future. We hope you live long and profit, both personally and financially. The topics presented in this podcast are for general information only not for the purpose of providing legal accounting or investment advice on such matters. Please consult a professional who knows your specific situation.

(20:18): This is the podcastfactory.com.

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