Paul Ebisch on the Net Worth Principle
This podcast episode features a profound discussion on the intricacies of financial planning, particularly tailored for missionaries. We are privileged to welcome Paul Ebisch, whose extensive experience in finance provides invaluable insights into effective financial management. Central to our conversation is the concept of Net Worth, which Paul elucidates as a critical metric for assessing one’s financial health and guiding future decisions. He emphasizes the importance of strategic planning to foster long-term financial stability, especially in the context of missionary work. Listeners will glean practical advice on how to navigate financial challenges, make informed investment choices, and ultimately enhance their net worth while fulfilling their mission-driven lives.
Takeaways:
- The podcast emphasizes the importance of financial planning for missionaries, particularly in securing their future.
- Paul Ebisch shares effective strategies for calculating Net Worth to improve financial stability.
- Listeners are encouraged to approach finances differently by focusing on net worth rather than strict budgeting.
- The discussion highlights the significance of being content with one's financial situation to foster long-term wealth.
- The podcast underscores the necessity of patience and careful decision-making in financial matters to avoid detrimental choices.
Transcript
Hey there and welcome back to the Clarity Podcast.
Speaker A:This podcast is all about providing clarity and life in mission.
Speaker A:And my name is Aaron Sandemier and I get to be your host.
Speaker A:Today we have the phenomenal opportunity to have with us on the podcast Paul Ibisch.
Speaker A:And Paul, it was a great conversation with him just to sit down and learn about finance and planning.
Speaker A:And, you know, one of the things I get, people suggest episodes or people to interview for the podcast and finances is something that comes up rather frequently and specifically in the life of a missionary.
Speaker A:How do you plan?
Speaker A:How do you plan for the future?
Speaker A:And Paul lays out a plan that we can use.
Speaker A:And he has got a lot of wisdom, has a lot of experience, has a lot of tried and tested methods that will work, and really appreciated him taking his time out of his busy schedule to sit down with me to have this conversation to help encourage missionaries to begin and maybe they begin and maybe think again about the future and planning and financial planning and the importance of that.
Speaker A:And so it was great, great having Paul here with us on the podcast.
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Speaker A:That's where we get to sit down with Dick Foth, get to learn from his wisdom, his insight and experience.
Speaker A:And it's always great just to spend some time with him and learn from him.
Speaker A:Well, there's no time better than now to get started.
Speaker A:So here we go.
Speaker A:Greetings and welcome back to the Clarity podcast.
Speaker A:So excited to be here with a new friend of the podcast, Paul.
Speaker A:Welcome to the podcast today.
Speaker B:Hey, it's good to be with you, Paul.
Speaker A:Will you go ahead and just share a little bit about yourself?
Speaker A:We just came out of my office.
Speaker A:We had an opportunity to chat and get to know each other a little bit face to face.
Speaker A:But for those who didn't have that opportunity, will you share a little bit about Yourself.
Speaker A:Before we jump into some of the questions I have for you today.
Speaker B:Sure.
Speaker B:Yeah.
Speaker B:I'm Paul Ebisch.
Speaker B:I'm originally from Oklahoma and then I came to Springfield, Missouri to go to school.
Speaker B:I got a background in finance and I actually got a master of divinity here.
Speaker B:And then I got me involved in the finances of the Assemblies of God.
Speaker B:I was director of the retirement plan for many years and then eventually cfo, president of the credit union.
Speaker B:Worked in a lot of places there.
Speaker B:Along that way I met my wife Lisa, and she's worked around Springfield, worked for missions for a while and we have three boys and it's been a great journey.
Speaker B:And the one thing I found is that I really enjoy managing money both in corporate places, both for individuals.
Speaker B:So the finance side and then the other thing is I also, that's a little unique is I'm also very interested in running companies and being a part of those.
Speaker B:So in private equity.
Speaker B:So I've been a part.
Speaker B:I'm a partner in software companies and beauty schools and different things.
Speaker B:So.
Speaker B:But the key ingredient is I am.
Speaker B:I like to invest.
Speaker B:I like to put invest today for something for return in the future, both in financial means, but also my favorite of all is actually mentoring great people along the way in life.
Speaker B:Those are probably my most joy comes from.
Speaker B:Yeah.
Speaker B:And so yeah, that's a bit about me.
Speaker B:And, and then yeah, my history has been at the, the Assembly, God Credit Union, AG Financial, and then of course Oxon Capital.
Speaker B:And then I'm also, I also have a pretty good sized software company I run to.
Speaker A:Wow.
Speaker A:Well, excited to talk today about investing and just learning, learning from your wisdom and experience.
Speaker A:So you, you share about net worth when you talk about net worth, Paul?
Speaker A:What?
Speaker B:Yeah, so one of the things traveling the country trying to convince people to save and you know, be good with their money.
Speaker B:And back in the day it was Larry Burkett and I was certified and I was trying to teach people to budget.
Speaker B:I noticed like every time I did these classes, like there'd be a couple few people in there and they were just perfect.
Speaker B:Like they did everything right in the first place.
Speaker B:They didn't need to be there.
Speaker B:And then the rest is just a really big struggle.
Speaker B:And But I noticed as I traveled all over the country, I saw all kinds of people.
Speaker B:I saw school administrators and secretaries and pastors and different ones.
Speaker B:And there was something that I saw started to be the same throughout all of them that had plenty to be able to take care of their needs as they got older.
Speaker B:And when I actually Started working in the credit union, saw people doing loans, actually mortgage loans.
Speaker B:I found that they would put all their assets down and all their liabilities in like five minutes because they had to fill out that application.
Speaker A:Yeah.
Speaker B:I was like, wow.
Speaker B:They actually, you can calculate your net worth really fast.
Speaker B:Pretty good, pretty good sense of it.
Speaker B:We're doing a budget is like, takes like many meetings, lots of probably struggles and fights and you still don't get it right.
Speaker B:And you realize you missed these things and those things, you know, six months down the road.
Speaker B:But with your net worth, it was an objective thing that you could calculate and you could see and like you could find out, oh, it's negative.
Speaker B:Like, you know, I, I'm early in life and I like, I took out loans to go to school or I, you know, maybe I bought a TV.
Speaker B:Back then, TVs were 3,000.
Speaker B:So literally, you know, you bought it in your credit card, you went down 3,000 on your net worth.
Speaker B:But, but I noticed if, if people could focus on that and they could calculate that number and they could pay attention, that that's something that people could say, is it going forward?
Speaker B:Am I going backwards?
Speaker B:Because it's just as important to, even if you make a lot of money and you try and like you save some, there's a lot of other things.
Speaker B:If you don't pay attention, you could be harming your net worth.
Speaker B:But at the end of the day, you need that to build so that you have that nest egg in the future, you know, 20, 30, 40 years in the future to take care of your needs and just to be, and not to be rich or anything, it's just care of basic things.
Speaker B:But if you focused on it, it kept you from making lots of bad financial decisions.
Speaker A:Wow.
Speaker B:Wow.
Speaker A:So Paul, how, how does someone figure out their net worth?
Speaker A:And then you, you talk about that, the, the decisions we make.
Speaker A:So once we, how do we find out what our net worth is?
Speaker A:And then how does that help us when we're making this?
Speaker A:Those small decisions that could end or small or big decisions that could end up impacting that.
Speaker B:Yeah.
Speaker B:So, you know, collect all your bank statements and any investment, 401k, IRA, whatever.
Speaker B:You, you have money, you're.
Speaker B:And you know, list those amounts.
Speaker B:You can list the value of your house, approximate value.
Speaker B:You can go on Zillow and it'll tell you some number that's somewhat close.
Speaker B:And then, and then you just go through and list your loans.
Speaker B:Most people know their loans because they get a, you know, they get a notice every month.
Speaker B:Hey, you got a loan.
Speaker B:Pay me right on your, on the investment side, nobody says, hey, send me some money.
Speaker B:But the, the loan side they do.
Speaker B:And, and so you list those and then you, you know, add them up, you know, and subtract your liabilities from the asset side and then you have your net worth number and you'll find, you know, how it keeps guiding you is that, that there's, there's multiple ways and in the book net worth principle, you know, there's, each chapter's on something like cars.
Speaker B:Like people don't realize I go buy a car and when you buy a brand new car and you drive it off the lot, it you started at whatever the number, let's say 40,000.
Speaker B:Of course that's probably really low for a brand new car anymore, it feels like, but you drive off the parking lot and immediately it's worth 35,000 and you have a loan maybe tied to that and then you're going to pay on that.
Speaker B:But what that will do is guide you to be better when you go buy cars or maybe hold the car that you have for a couple years longer instead of trying to trade it.
Speaker B:Because literally salesmen, all those, they may be really friendly but they are not your friend.
Speaker B:They're there to get food for their family and you know, they're, they're not looking out for your good.
Speaker B:And the reality is most time drive the car a little longer like so that you go another year.
Speaker B:You know, I'm a big fan of, you know, Ramsey and stuff.
Speaker B:He's like, pay off everything.
Speaker B:And that's true.
Speaker B:If you can do it, that's great.
Speaker B:But most people need a loan.
Speaker B:But drive your car twice as long as the term of your car loan.
Speaker B:So that will either say, oh, go get a three year loan if you want to have cars, not that old, you know, and that will kind of curb your appetite.
Speaker B:But then you get three years where you're driving a car and you don't have a loan and then you have that money that you could save and that will increase your net worth, but your net worth grows by little.
Speaker B:It starts out as like a few hundred dollars and then maybe a few thousand.
Speaker B:But people make choices like on a car or they like, oh, let's trade homes.
Speaker B:Every time you trade a home, you're going to pay a sales commission 6%.
Speaker B:So 6% of however many hundred thousand that is.
Speaker B:And then you're going to buy curtains and all kinds of stuff that's going to be, I don't know how many More thousands.
Speaker B:Sure.
Speaker B:But you're swapping in.
Speaker B:When you do a home, you're swapping tens of thousands literally every time you swap a home.
Speaker B:Well, did you kill your net worth?
Speaker B:You maybe only had a $30,000 net worth and you're swapping home and you just still get to zero.
Speaker B:You may still want to do it, but at least you knew.
Speaker B:And those are the decisions because as your net worth grows, it takes so long.
Speaker B:It feels like in the early days to get to where it's like feels bigger that then your net worth could be used to maybe invest in a business or invest in something else or buy another property, which will only multiply your net worth.
Speaker B:And so that's why you want to start.
Speaker B:Don't buy things that are tied to as far as lending and loans.
Speaker B:Make sure, you know, I'm not anti loan.
Speaker B:You know, I ran a, you know, credit union for a long time.
Speaker B:But don't take out loans for things that are unsecured.
Speaker B:So credit cards, unsecured lines of credit that don't have an asset tied to them.
Speaker B:So at least if you take a $10,000 loan out, you have a 10,000 asset.
Speaker B:And if you're looking on your net worth, it didn't move.
Speaker B:But if you just go like back then when I did the book is, you know, it was literally 3,000 for a TV.
Speaker B:Now they're cheap, but you know, literally it's worth way less the moment you take it home.
Speaker B:You can't ever get it back.
Speaker B:Take it back, really?
Speaker B:And you were $3,000 worse off on your net worth.
Speaker B:And when you're in your 20s, your 30s, that's a very big percentage of your net worth.
Speaker A:Yeah, that's good word, Good word.
Speaker A:And so you talked a little bit about budgeting.
Speaker A:You said it was a little bit challenging with budget budgeting, just trying to figure it all out.
Speaker A:And so you offer this different approach when you're looking at net worth.
Speaker A:So what would be some of the differences in looking at net worth versus looking at budgeting?
Speaker B:Yeah, so if you are in really, really bad shape, like you don't know how you're going to pay any bills and you're struggling, budgeting is the best way because you got to track every single penny.
Speaker B:And that's hard because most people aren't accountants.
Speaker B:Actually, a lot of people who had come into my sessions back then, they, you know, they were accountants, like they live to track every penny.
Speaker B:And so that's the hard part of it is.
Speaker B:But most people are not in that Position.
Speaker B:Most people in life are the other 80% of people who they're just, okay, things are fine, they're making ends meet.
Speaker B:And then the budget, it just creates lots of tension.
Speaker B:And so I'm like, how can you move in the direction that you want to go without experiencing so much pain that you don't do anything?
Speaker B:And I think that's what happens.
Speaker B:People can't get a budget done, so they just don't do anything hardly.
Speaker B:They just are stuck.
Speaker B:The net worth allows you to calculate that.
Speaker B:And that's something.
Speaker B:If you're married, you can, like, look at it together.
Speaker B:You could set goals together.
Speaker B:You could say, you know what, this year, how could we increase our net worth by $5,000 or $10,000, whatever the number is for your income level or where you're at.
Speaker B:And it's something you work together and it's more enjoyable.
Speaker B:And you do it as a team, where the budget is pretty much a struggle and fight.
Speaker B:Everybody's going to be like, you know, you can't spend on that, but I need to spend on this.
Speaker B:We're human.
Speaker B:But that's where the net worth can do that.
Speaker B:And as long as you're pushing it forward year after year, over a long period of time, all of a sudden you're going to end up in the end of your life and, you know, in your 60s.
Speaker B:That's not the end of your life anymore.
Speaker B:It's really young anymore.
Speaker B:It's gotten really young, actually, is that you're going to have something that you can use to take care of your needs and it also your net worth.
Speaker B:So in life, people are always like, how do I take advantage of this opportunity?
Speaker B:My dad would say, man, if I only had enough money, I could have bought that or I could have done that.
Speaker B:And now it's worth a fortune.
Speaker B:Some of you may know that, but hear somebody like that.
Speaker B:But if you have net worth, you actually can walk into a bank and like, can I buy that?
Speaker B:There was a day when I called my banker, and I was a banker, but called my banker and I was like, you know, can I buy this?
Speaker B:Can I get approval letter to do this?
Speaker B:And they're like, yeah, send it on over.
Speaker B:I'll send you an approval.
Speaker B:Last time I'm like, whoa, maybe I'm rich.
Speaker A:Wow.
Speaker B:I feel rich today because, like, they will give me a loan.
Speaker B:Really.
Speaker B:You know, I was more conservative on myself and.
Speaker B:But that's because I didn't count all this value in all the things that I've invested in over time.
Speaker B:But those are valuable and they enable you to take advantage of opportunities that may come along in life.
Speaker B:I had a client, and he would always tell me about the stories.
Speaker B:Yeah, I used to sell throughout Arkansas, and this guy tried to get me to invest in his company, and I just couldn't bring myself to do it.
Speaker B:That was Sam Walton.
Speaker B:I was like, oh, my, he missed it.
Speaker B:But they do come along to just average people actually come across things all the time and opportunities, but we want to make sure we have our, our, our ducks in a row.
Speaker B:And having savings, having a net worth can enable you to actually participate in business opportunities and things that you may not even feel like you have the money to do in various ways.
Speaker A:Good, good, good suggestions.
Speaker A:So you also talk in the book about being content.
Speaker A:And so what role does being content impact your net worth?
Speaker B:Yeah, so the fun part of being in banking is you literally get to see the inside guts of all kinds of people's finances because they're all coming to you to get a loan or put some money for something.
Speaker B:And being content is one of the key things, because actually my wealthiest clients were always a guy in jeans and a T shirt.
Speaker B:They weren't necessarily the ones with all the fancy things because they learned to be content at a certain level and then save and put things aside instead of spend.
Speaker B:And it's that appetite.
Speaker B:And it doesn't matter if you make.
Speaker B:I remember this one minister.
Speaker B:The most he'd ever made in his life was 35,000 a year, the most at his peak of his ministry and career.
Speaker B:He had pastored for 40 years.
Speaker B:You know, he was older, so it went back in time, but.
Speaker B:But he had one point some million dollars in his retirement.
Speaker B:It didn't matter there.
Speaker B:But then I've seen people make hundreds and hundreds of thousands of years a year and have very little net worth.
Speaker B:They're up to their eyeballs in debt and struggling in the stress.
Speaker B:I think that is like if you, if you can be driven just to drive for your net worth.
Speaker B:But I guess the thing is, is learning to be content in your daily life will actually enable your net worth to grow because it'll naturally grow, and then it doesn't matter the amount of money.
Speaker B:And I can tell you it's not that.
Speaker B:Yale did a study decades ago and said, you know, once, once a household income, a person goes above like back then, I think it's like 126,000 a year.
Speaker B:That's the max peak.
Speaker B:Anything above that, it went downhill in satisfaction of life.
Speaker B:Wow.
Speaker B:You know, so and now in modern terms, that's kind of, you know, middle income, upper middle income.
Speaker B:There's a place where you have enough.
Speaker A:Yeah.
Speaker B:And it gives a good life.
Speaker B:And when you go above that, it just increases your appetite for more things.
Speaker B:And we don't want.
Speaker B:That's.
Speaker B:That's not what brings happiness and fulfillment.
Speaker A:Yeah, good word, good word.
Speaker B:So you.
Speaker A:You talk about making big purchases and like, knowing when, kind of when to make some big purchases.
Speaker A:And then.
Speaker A:And then I'm gonna ask you about owning a home and how that builds your net worth.
Speaker A:So let's, let's ask first about how do you know when to make.
Speaker A:Make big purchases?
Speaker B:Okay.
Speaker B:Yeah, it's.
Speaker B:It's really interesting.
Speaker B:A lot of people go out and do pretty big.
Speaker B:And what's the definition of big?
Speaker B:That's an interesting question to ask is what is big?
Speaker B:Because people think, oh, a house is big, but actually a whole lot of things are big.
Speaker B:You know, anything that's like a whole month's income.
Speaker B:Yeah, that's big.
Speaker B:That is a big purchase.
Speaker B:But people don't actually focus on that and think, oh, again, you know, maybe it's a living room set.
Speaker A:Yeah.
Speaker B:You know, read it.
Speaker B:Redecorating a room or.
Speaker B:Or ATV or.
Speaker B:I don't know.
Speaker B:There's so many things everybody has.
Speaker B:At the end of the day, we all have our thing that we like.
Speaker B:You know, some people it's, you know, sports or some.
Speaker B:It's boats.
Speaker B:Some it doesn't matter.
Speaker B:But those things, those are big purchases.
Speaker B:But we'll make them haphazardly in emotion.
Speaker B:Like, we'll see something like, oh, let's buy it.
Speaker B:Yeah, well, I mean, really, if you really want to pay attention, say, okay, well, how's this going to affect my net worth?
Speaker B:And can you take 30 days?
Speaker B:Like, can you wait 30 days and then look at buying it and making a purchase?
Speaker B:Because it's actually things of just like two or $3,000.
Speaker B:That's a big purchase.
Speaker A:Yeah.
Speaker B: ooked at studies in the early: Speaker B:I would challenge people.
Speaker B:So what is the average price of a car for a millionaire?
Speaker B: price back then in the early: Speaker B:For just anybody in America was about 24,000, 26,000.
Speaker B:That's the.
Speaker B:Anybody in America average price.
Speaker B:The average price for a millionaire was like 22,000.
Speaker B:So people with a million plus in net worth were spending a little bit less than the average American.
Speaker B:Yeah, they saw so.
Speaker B:So the thing that really helped them was that they see a Lot of different purchases as big.
Speaker B:And I think people who do not see lots of nominal, what they think may be normal in life purchases as big, they spend their money haphazardly and in that haphazard nature, it is killing their net worth, which has a longer term effect on them.
Speaker B:Because when you look at it, it takes time to build that net worth.
Speaker A:Yeah, for sure.
Speaker A:I said I was going to ask you one question, but I'm going to ask you another one because it kind of what you just said about building that worth.
Speaker A:So.
Speaker A:So a lot of people that listen into this podcast are missionaries.
Speaker A:What are some ways that missionaries, you know, obviously nobody gets into missions for become rich.
Speaker A:Nobody gets into missions do you know, to make a lot of money.
Speaker A:That's just not what the calling is about.
Speaker A:And we know that voluntarily.
Speaker A:Right when we get into it, we know, hey, this is what God's called us to do and we're not calling us to be rich.
Speaker A:But what are some things that missionaries can do to build net worth so that they're at a place when they get to an age where they want to retire or transition or maybe go part time that they're not such in a place that they financially, God's called them to make a change, but they don't feel like they can do it because there's so many financial, financial restrictions that they can't do in that season what God's asked them to do.
Speaker A:So may, maybe I'm not asking the.
Speaker B:Question really well, but that's great.
Speaker A:You're called into missions.
Speaker A:You, you follow that obedience.
Speaker A:But then there does come a point where you feel like God's saying, hey, it's a new season of life.
Speaker A:I want you to transition to this season of life.
Speaker A:But when you look around and you look at the finances, say, I just can't do it.
Speaker A:Any thoughts on how missionaries can, can build up net worth?
Speaker B:Yep.
Speaker B:So yeah, I've seen hundreds of them actually in their finances over time.
Speaker B:And, and there are, there's a couple things.
Speaker B:So if, if you do own a home, if you bought a home before you became a missionary, or maybe you're thinking maybe an opportunity arises, maybe inherit a home from a family member that's here in the States, you're offshore.
Speaker B:I do think that's a great way to try and hold on to that.
Speaker B:If you know you've got that and that loan.
Speaker B:A lot of times people are like, oh, but it's got a loan.
Speaker B:But if you can go through a little bit of effort, find a management company, somebody that can, you know, handle it for you, then that's great.
Speaker B:But while you're away on your, on, on your term, one, it will grow by inflation.
Speaker B:Okay?
Speaker B:It's not that you're buying a home because it's like some huge great investment.
Speaker B:It could be depending on the location.
Speaker B:Sometimes, you know, if you're in different spots, the neighborhood grows up around you.
Speaker B:And so you're on the field for 20 years and come back.
Speaker B:And a city where your little farm was, that, that will definitely increase your net worth.
Speaker B:Sure, because a piece of dirt turns into a lot, but just the nominal effect of the house going up by inflation, a few percent a year and the fact that somebody else is paying the loan for you.
Speaker B:Because one great thing is when you have a loan tied to an asset like a house is every month, the principal payment is increasing your net worth.
Speaker B:It's like putting money into your savings account.
Speaker B:If you look at your net worth, it just makes your net worth go up just as like if you put it into a savings account.
Speaker B:And so that's where that can work for.
Speaker B:And again, you're talking about years at a time.
Speaker B:And so if you can rent that.
Speaker B:So I would suggest if you come back to the States or you're buying a home, buy one.
Speaker B:I would go look for one.
Speaker B:Not for what you necessarily really want to live in, necessarily, but I would approach it from like, I wonder how well this would rent, you know, in 15 months from now when we go back to the field.
Speaker B:How could that work?
Speaker B:And that that will make a big difference.
Speaker B:I've seen that make a big difference because one, by the time you retire, that whole rent is going to be retirement income that's paying for living expenses for you.
Speaker B:So that's a phenomenal one.
Speaker B:That's an easy one in one sense.
Speaker B:Again, you get tax advantages when you get the foreign income exclusion.
Speaker B:So you know, anything you can do there and then put it into different assets stateside or that will help you and then of course, save for retirement.
Speaker B:Some people, a real.
Speaker B:A question that is asked all the time.
Speaker B:I have these loans and I have retirement.
Speaker B:Should I.
Speaker B:What should I do?
Speaker B:I need to just pay all the debt off first.
Speaker B:And of course, Ramsay would say, yes, pay all the debt off first.
Speaker B:You know, it's okay.
Speaker B:I do say do both.
Speaker B:Okay?
Speaker B:And the reason why is because there's always going to be someone knocking on your door to tell you to pay that loan.
Speaker B:On the saving side, nobody's there knocking on the door.
Speaker B:Nobody's going to Send you notices, nobody's going to call and say you didn't make your payment.
Speaker B:Hey, did you know you're five days past due?
Speaker B:And so getting in the discipline of that to just do both, even if it's a small amount, I think is a big deal so that you get money working for you.
Speaker B:Because what will happen is you'll come to a place in life that you feel comfortable having savings.
Speaker B:And you're like, you want to keep that, you don't want it, you'll keep it there.
Speaker B:And if you don't develop that habit, then going and getting loans is way too easy.
Speaker B:It's like, it's just way too easy in the US and so that will always pull you.
Speaker B:But getting to a place where you're like, no, I need to have this much money in my savings or in my retirement account, that will build a habit.
Speaker B:And the thing I'm talking about in these dynamics, life seems to go pretty quick.
Speaker B:We need to develop them for long term, multi decade habits in our life.
Speaker B:It's not about a one year, it's about making it to where.
Speaker B:And if you do start calculating your net worth, the exponential factor is assets grow exponentially in the future.
Speaker B:The bigger they get, it all of a sudden really shoots up.
Speaker B:And you need those extra doubles in the future.
Speaker A:Yeah.
Speaker A:Wow.
Speaker A:Very, very, very, very good.
Speaker A:Very, very good.
Speaker A:So you talked a little bit about retirement and I mentioned retirement there.
Speaker A:So when it comes for saving retirement, what are some basic principles that people should follow?
Speaker B:Okay.
Speaker B:Well, if you start really early.
Speaker A:Yeah.
Speaker B:In your 20s, you can save, you know, 4, 5, 6%.
Speaker A:Yeah.
Speaker B:And you're probably still going to end up with a lot.
Speaker A:Okay.
Speaker B:And then as you move forward and you go and wait till your 30s and you need to save more, maybe 9%.
Speaker B:Okay.
Speaker B:10%.
Speaker B:If you wait and save.
Speaker B:I don't know what the average age is now, but it used to be the average age that American would start saving for retirement was around 45.
Speaker A:Okay.
Speaker A:Okay.
Speaker B:Start way before then if you can.
Speaker B:45, you start now.
Speaker A:Okay.
Speaker B:And then what that means is then you need to be saving 15%.
Speaker B:If you wait until your 50s to start doing it, you're going to need to save, you know, 25, 30%.
Speaker B:So really the earlier, no matter the amount.
Speaker B:And that's why I say even if you have debts, start on that because it will keep that percent down and you can almost, almost always do the smaller percent throughout all your life through having kids, through ups and downs and changes, doing higher percents is not Necessarily always possible in life.
Speaker B:And so, yeah, I do encourage you to, you know, start as early as possible and with those percents.
Speaker B:And then also what can happen is you can pay attention to opportunities in life.
Speaker B:Sometimes people like, you know, grandmother left me $5,000.
Speaker B:You know, she named all the grandkids and gave them some money or, you know, you may come into inheritance or maybe something, you have some kind of windfall that comes your way.
Speaker B:When you're thinking in terms of net worth, when a windfall comes, you don't mean like, okay, let's go buy stuff.
Speaker B:You're like, okay, let's stack some over here for retirement and go spend some.
Speaker A:Yeah.
Speaker B:Because you're going to build on both sides of your balance sheet in that way.
Speaker B:It really will motivate you.
Speaker B:You will see.
Speaker B:And just you, maybe you're the one that's the saver and you don't need any motivation, but it will help the other spouse or person in your life to, to be motivated too and come along the journey.
Speaker A:Yeah, for sure, for sure.
Speaker A:So earlier the better.
Speaker A:And as you said, those percentages definitely do increase versus 20s, 30s, 40s, and by the time, by the time you get to the 50s.
Speaker A:So Paul, you, you help people with finances and have a lot of wisdom and expertise.
Speaker A:You shared about running your own business.
Speaker A:For somebody who's listening in and they're thinking, man, I'd really like to engage, but I don't even know where to start.
Speaker A:And I think sometimes in life those friction points and, and people don't necessarily want to admit, I don't know what, I don't know what questions to ask a financial advisor.
Speaker A:I, I wouldn't know where to start.
Speaker A:I wouldn't, you know, I'd feel maybe ashamed or embarrassed.
Speaker A:This is not my space to understand.
Speaker A:So are there some basic questions anybody, when they're engaging with a financial advisor, what they should ask to kind of take some of those friction points from them, even trying to get started.
Speaker B:Yeah.
Speaker B:So one off the start, most people don't know a lot about investments.
Speaker B:So you're, you're typical and common.
Speaker B:It's.
Speaker B:Don't feel like, oh, and ashamed that I should, should, I should know more.
Speaker B:It's great if you know more.
Speaker B:But you're, I mean, I, I've known multi millionaires like, and they don't know all these things.
Speaker B:They know how to run a business or they know how to raise cows.
Speaker B:They know something, they're skilled, but they don't know this stuff.
Speaker B:So that's normal.
Speaker B:So so one, set that aside.
Speaker B:You know, look for people that you can trust or look for people that you know, that you like.
Speaker B:Wow.
Speaker B:I wonder Jim, I wonder who he uses to manage his money.
Speaker B:So look for referrals.
Speaker B:I think that's a great way from people that you respect and think, man, they seem to have it together.
Speaker B:That's a great way to go about it.
Speaker B:I think when you go to a financial advisor, ask them, you know, how do they make money?
Speaker B:I'd say that's one of the starts is, you know, find out how they make money and they shouldn't be scared.
Speaker B:At the end of the day, you're, they're going to make money to do something and you want them to be an expert.
Speaker B:So my opinion is the financial advisor should be an expert.
Speaker B:They need to be an expert, and that's why they're making money off your money or your account.
Speaker B:So there's one, there's people who work on commissions.
Speaker B:They're going to make a fee up front and then they don't make money after that until they do another transaction.
Speaker B:I'm a fan of management fee style.
Speaker B:Okay.
Speaker B: I started this company in: Speaker B:If the account goes down, we make less money.
Speaker B:Okay.
Speaker B:So I wanted those to be aligned together.
Speaker B:And I hated the fact that people that they can make a bunch of money up front and then they didn't care about you for five years until they could have another opportunity to swap you to another mutual fund and make more money again.
Speaker B:And behind the scenes, do they make money?
Speaker B:Do they only make money from you?
Speaker B:Okay, and what do they have to disclose?
Speaker B:So there's different rules for people and financial advisors.
Speaker B:There's different licenses that you carry.
Speaker B:Some don't have to disclose, and some, like Oxon, we have to disclose.
Speaker B:If anybody else has given me any financial benefit it other than the client, I have to tell you, okay, that, you know, such and such company out there is going to give me a vacation to Hawaii if I sell you this thing.
Speaker B:And I think that's.
Speaker B:I, I just think those are big things to find out.
Speaker B:It'll help you understand and it really is a calling tale to guys that are just out to sell you something or guys who really do care about you and your future and want to move along that.
Speaker B:And I help you sort those two out.
Speaker B:Yeah, there are, there's plenty of both out there.
Speaker B:I think that will help the referral and then ask them, you know, you can find out how long have they been, you know, managing money?
Speaker B:How did they learn, how did they learn about doing what they do?
Speaker B:I think that's a big deal that, that can help you get somebody that has more experience or more knowledge.
Speaker B:Because in the financial world there are people who sell investments and there are people who recommend and make investment decisions.
Speaker B:Those are two different types.
Speaker B:And people don't realize that.
Speaker B:And I think a lot of people would probably like to get somebody who, you know, actually knows more than they do, because I've found most people, they want me to make the decision, okay, I'll go and paint the picture and say, here's the things.
Speaker B:But at the end of the day, people like an advisor to say, you know, with all your knowledge and your experience, what would you do in this situation?
Speaker B:Knowing mine.
Speaker A:Yeah.
Speaker B:And, and I, I don't have a problem with that because that's why, that's how, why we get paid.
Speaker A:Yeah.
Speaker A:So.
Speaker A:So, Paul, what you just described there is that what a fiduciary is, that what a fiduciary is versus somebody who's selling.
Speaker A:What's.
Speaker A:What's the difference in that?
Speaker B:Yeah.
Speaker B:So, yeah, a fiduciary is out and they have to look out for your good.
Speaker B:They have to be in very intent on that.
Speaker B:And so I think most people are expecting a fiduciary type of relationship when they go to a financial advisor.
Speaker B:Some don't have that.
Speaker B:But most of us, when we're going to an expert, we're wanting somebody that actually looking out for our good.
Speaker A:Yeah.
Speaker B:And so I do think pushing into those questions and seeing, are they, or can they come up to answers quickly?
Speaker B:Do they really know what's there?
Speaker B:Or like, I don't know, that'll give you some idea.
Speaker B:And, and I say that, and that is reality that I've met people out that I've like, I'm like, you're a financial advisor.
Speaker B:Like, what, what did you, how did you, what did you do to learn anything?
Speaker B:Yeah.
Speaker B:Like, I knew these people.
Speaker B:I'm like, how can you be doing that?
Speaker B:You know, I had to go to years of study and read lots of books and all these things.
Speaker B:And I think that's important because when we talk about our net worth, you can make.
Speaker B:I've seen people making bad investment decisions because you could build a net worth.
Speaker B:You could have a great one and you could invest horribly and cut it in half.
Speaker A:Okay.
Speaker B:Okay.
Speaker B:So that's the flip side.
Speaker B:Once you start building a net worth it's about, okay, how do I invest this money and invest wisely so that I grow it and I don't, you know, take crazy risk and do things that I could lose a big chunk.
Speaker B:Because you, when you're paying attention to net worth, you don't want to see it fall by some X amount.
Speaker B:And I'm not talking about the ups and downs of, you know, equities and stocks in the market and things like that because they're, you know, those values go up and down daily.
Speaker B:That's not what I'm talking about.
Speaker B:But over time, we want that going up.
Speaker B:And like, if somebody presents you an investment opportunity, probe into it.
Speaker B:I mean there's, there's crazy people come up with all kinds of things to make money for themselves.
Speaker A:Yeah.
Speaker B:Make sure it's a great investment, you know, push through it a little bit and if you don't know, hold off and, and get a referral or you don't have to do it.
Speaker B:Those are important though.
Speaker A:Yeah, yeah.
Speaker A:And I think it's, it's, yeah.
Speaker A:Very important.
Speaker B:So.
Speaker A:Last question I got for you, then I'm going to ask you to, if you'll pray for us.
Speaker A:I might think of another question as I'm asking this one.
Speaker A:But anyway, the plan.
Speaker A:Last question would be this.
Speaker A:You mentioned in your book about bombs to, to your net worth.
Speaker A:What are some of these bombs and, and the reason you label them as bomb.
Speaker B:Yeah.
Speaker B:So they stem from making decisions fast and off the cuff.
Speaker A:Okay.
Speaker B:Instead of taking time.
Speaker B:Bomb could be, you know, you're bored for the weekend so you go looking at cars at the dealership.
Speaker A:Okay.
Speaker B:You are going to bomb your net worth if you do that.
Speaker B:I mean, it's bad.
Speaker B:Like, it's just bad.
Speaker B:Don't go like go for walks or do something else.
Speaker B:But like if you make a decision, big financial decisions off the cuff in the spur of the moment and don't take like something that you're planning for and thinking through it will end up being a bomb.
Speaker B:You will lose money.
Speaker B:You'll lose money like in the car scenario or you'll spend money, you know, go on a vacation and then like they want to sell you the timeshare.
Speaker B:That's going to be a big bomb.
Speaker B:I can tell you this, you know, I don't care.
Speaker B:It's a bomb.
Speaker B:I see people trying to sell them back all the time.
Speaker B:It hurts your net worth.
Speaker B:If you're love it and want to spend on it, then go for it.
Speaker B:But it's not going to build your net Worth.
Speaker B:And then.
Speaker B:And then also on the investment side, don't do fly by night investments and just look at things that, like, you know, I remember once.
Speaker B:Oh, I hate to bring it up because some people in this podcast will hear, remember, like, there was on the West Coast, a bunch of ministers started investing, and this thing in the morning was to triple, like.
Speaker B:Like it was going up, like every 30 to 90 days.
Speaker B:And then I asked, what are they?
Speaker B:How do they do that?
Speaker B:Yeah, and then they're like, oh, I don't know.
Speaker B:And I said, well, get me the stuff.
Speaker B:Send me the paperwork.
Speaker B:And I read through it, and of course, it was a.
Speaker B:It was a total mess.
Speaker B:I'm like, this is not real.
Speaker B:I'd say ask if you can withdraw any money.
Speaker B:Like, well, no, I don't want to draw money.
Speaker B:In the end, they all lost their money, so be careful.
Speaker B:Those are the bombs in life.
Speaker B:And I think if you create disciplined habits and maybe kind of like rules that you say, you know what, we're going to calculate our net worth and when we're going to do anything, that's a big financial decision, which might be set your limit.
Speaker B:Lisa and I, in the early days of our marriage, we had a limit.
Speaker B:If we were going to spend more than $25, we had to ask the other one.
Speaker B:And then I asked, you know, I asked this other couple who made way less money, and they said, oh, yeah, it's a thousand.
Speaker B:So he went out and bought a bike and got the guy to discount it to 900 and something to avoid the rule.
Speaker B:I'm like, that is a big decision.
Speaker B:You know, 25 bucks doesn't work anymore because I couldn't eat out after, you know, but set some rules there.
Speaker B:And if it's going to be a big decision, then you need to talk about it.
Speaker B:And maybe you have a rule that we're going to think on it for 30 days and you process that and that will keep you from the really silly, ridiculous bombs that you're going to have a lot of regret and you wish you wouldn't have done, and you'll find out, oh, I'm glad I didn't do that.
Speaker B:And you'll build good habits, but that will protect and so they don't come into your life.
Speaker B:It gives you an easy way out to say no.
Speaker B:Because, you know, we like to say yes to stuff at times, but it gives us an easy way out to say no and empower us when that.
Speaker B:That might be hard for, you know, some people, you know, we have some.
Speaker B:Some People are tight wads.
Speaker B:They're going to be fine.
Speaker B:They're always.
Speaker B:My grandfather, he's like, if we could go play golf, if we can afford it, we'll go play golf.
Speaker B:And he, you know, he's a retired officer in the military.
Speaker B:It was like $3 and he had plenty of money.
Speaker B:We can go play golf.
Speaker B:So.
Speaker B:But I don't want to be a tightwad, but we do need to, to put effort to it and avoid bombs because they literally will implode your net worth.
Speaker A:Yeah.
Speaker A:Paul, I said I only have one more question, but I got one.
Speaker A:That was it.
Speaker A:I got one more.
Speaker A:So where does giving and giving play into this?
Speaker B:Yeah, yeah.
Speaker B:And giving.
Speaker B:So the best way to be content and to curb appetite for money is to give and to give off the top.
Speaker B:To start off the top, Derek and I in the early days of Oxon were like, man, we're in this business and it seems like it's about making money.
Speaker B:And in Oxon, so we, we started off front and so we actually give 15% of our fees off the top.
Speaker A:Yeah.
Speaker B:Away.
Speaker B:And it was to put in place a curb.
Speaker B:And giving, again, it puts you in a place of contentment and fulfillment that is not tied to appetite and success.
Speaker B:And I'm not even touching the powerful and awesomeness of seeing the results of giving.
Speaker B:I'm just talking like, it's a good thing to make you a better disciplined person.
Speaker A:Yeah.
Speaker B:And then on top of it, the funding of giving and like, in, you know, me and giving, I, like, I'm an investor, so, like, I'm looking like, how can I give?
Speaker B:And, like, and it's going to multiply in a life or it's going to multiply in a thing.
Speaker B:So again, I like to, I like to, I bring my investment thinking to giving, but you don't have to do that, but it does make a difference in your life and it will keep you because again, at the end of the day, there's never enough money to satisfy a person.
Speaker B:I've seen people making so much money to not any money.
Speaker B:That is not what.
Speaker B:And it doesn't mean they're going to have a bigger net worth necessarily, and it does not bring fulfillment.
Speaker B:At the end of your days, you're going to sit, like, let's say you're at 65 and you're rocking on the, in the rocking chair, on the, on the porch.
Speaker B:You're going to talk about experience and things you've been able to be a part of in life.
Speaker B:They're not talking about your check checking account.
Speaker B:So do invest in that in the future and lives and making a difference in this world are definitely just as big a part and motivate our lives and keep us in good order.
Speaker A:Awesome.
Speaker A:Paul, it's been.
Speaker A:It's been an honor to spend time with you.
Speaker A:Will you pray for us today?
Speaker B:I will.
Speaker B:Lord, we thank you for your goodness.
Speaker B:We thank you that we can trust you to take care of our needs.
Speaker B:We can trust you when we don't have much and we can trust you when we have a lot.
Speaker B:And it's all about these different stages of our life that we build on that trust and that empowers it because at the end of the day, Lord, what we have is yours and.
Speaker B:And we're stewards of that.
Speaker B:And.
Speaker B:And I just pray for those out there that have decisions, are trying to figure out that you would lead them and guide them and help them to make choices that will empower their lives and bring them closer to you.
Speaker B:Ask this in Jesus name.
Speaker B:Amen.
Speaker A:Amen.
