SPEAKERS

Clint Murphy, Anne Lester

Clint Murphy  00:00

Good morning, and welcome to the Growth Guide. Before we dive into conversation on your book, I’d like to go back in time, and have you maybe tell us about a trip to Japan, when you were 26. And now what happened at the ticketing gate, that later became ammunition for writing a book about personal finance. 

Anne Lester  00:20

Yeah, so I have lots of excuses. There’s a whole backstory, but I found myself had been living in Japan for a year and went to Japan with two suitcases and a carry on and left to Japan with two suitcases and carry on except when I went to check in, and I was told that I could get one piece of luggage checked on for free not to, and they were all overweight, and the carry on wasn’t going to fit in the carry on. So I had three overweight suitcases, and it was an appallingly large amount of money. And I maxed out my credit card, and I couldn’t pay and just found myself in tears, and just in utter failure was it was a terrible moment. 

Clint Murphy  00:58

And how did that later impact your research and dive into personal finance? 

Anne Lester  01:06

So maybe because I always struggled with money, I don’t know, I’ve always been interested in financial markets. And, you know, macro economics, I studied that in college and grad school. And so I really was interested in working somewhere in the financial services industry and ended up working just kind of by happenstance got a job at JP Morgan asset management, and was asked by my then boss in 2002, I guess, to start seeing what we could do to build out products for the sort of beginnings of JP Morgan’s 401k investment initiatives. And what I discovered then kind of rolling around with our 401k reps, and we had a record keeping platform at the time JP Morgan did. And what I discovered was that there was a lot of behavior that people did that wasn’t what you know, we all thought they should be doing. And I thought, well, I don’t behave like that, like save 10% of your income every month and never tap it and never take loans. And, you know, everybody was assuming that everybody behaved like this. And I think it’s, you know, easy for people in financial services, who are not working directly with retail clients to just assume that everybody knows this stuff. And, you know, I knew because of the various catastrophes in my financial life that, you know, I certainly didn’t behave like that. And I guess two things happened. One, I really began understanding how important it was to build products and communicate with people in ways that incorporated their own behavior. Because just because somebody somewhere sitting in office thinks that you ought to be doing this doesn’t mean you are. But secondly, and this was, I think, a key impetus for me wanting to write this book, I wasn’t able to start overcoming my own sort of feelings of shame and inadequacy and fear and guilt until I really started understanding some of the behavioral economics. And it was like, Oh, I’m not bad or stupid. I just, I’m a spender and I have really poor impulse control. And you know, I still do so knowing that about myself, it was just such a revelation and such a liberating feeling to go home. This is not my fault. And I can’t grit my teeth and Bootstrap my way through this, I’ve got to figure out a different system. Just like the 401k system, right takes money out of your paycheck before you see it, I’ve got to figure out what guardrails I need to put in my personal life, to keep me out of trouble.

Clint Murphy  03:29

 I love it. And we’re going to be talking about a lot of that today as we go through your book, your best financial life. And where I love to start with chats on this is looking at how the landscape has changed over time. So for example, one of the challenges clearly we don’t talk about money, and we don’t really educate people financially, about financial literacy. And you then have the further problem that I can say, hey, here’s what I did to become financially literate, or to start saving for retirement or build my financial wealth. But you have young people who say, Well, wait a second, like the playing field is stacked against us. And I have assumptions about the younger generation the same way the younger generation has assumptions about us. So where I always like to start is, how do we look at some of these differences in assumptions in differences in how generations treat saving, treat investing? And is there still a path when in my day wages were X and house prices were Y. Now wages have barely moved, and house prices can be 5x what they were and so how does that young person, how do I look at them and say hey, here’s a path for you, even though your situation is totally different than what I graduated. 

Anne Lester  04:58

Again, that’s a lot of what I tried to cover in the book. And I think there are a couple of sort of fundamental realities. One is the median price of housing, whether you’re looking at apartments or purchasing a home, versus the median salary are way different, as you just said, than they were. And it doesn’t help to know that the median house or apartment is, frankly, a lot nicer than what the median housing was like, when we were you know, in that first stage, like, it’s a lot nicer, let’s be honest. So some of that is not just price appreciation, but actually, they’re nicer, like, you would never dream of getting someplace in most parts of the country, like standard air conditioning is kind of becoming standard, right? It was certainly not when we were starting out, probably, you know, just you can go through the whole list.  But median to median, right? It’s definitely tougher. And I guess I throw out a couple of observations, one, I don’t think, you know, we might be in the middle of, and I’m going to use a little jargon here, like a secular shift. And you’ve seen it in countries all over the world, right, housing has gotten a little more expensive, but I don’t actually believe that’s permanent, right, interest rates will come down. I do think home builders are not immune to the law of making more money, right, I do think this is going to come into a bit better balance. So I would say if you’re thinking about trying to purchase a home now, it’s probably not a great decision. And maybe you should sit tight for a little longer. So that’s number one. Number two, I think it’s really easy to focus on a couple of super big ticket items, houses and cars and education, right? Those three huge big ticket items that are the biggest sort of financial investments that most people think about making and observe how much more expensive they are and lose sight of how much cheaper everything else is because electronics are cheaper clothes are cheaper. Food, maybe not right? But if you look at the amount of money that we’re spending on different things, we’re making really different choices with our money. So again, I think maybe because of social media, maybe because airfare is cheaper, right? People go on vacations now. And it’s, I think, a little normal for many people to consider a vacation like something you do. Again, that wasn’t true when I was growing up like so like, I think we went on three family vacations when I was growing up period. So again, some of this anchoring is like it actually we’re used to a better lifestyle. And we should be right. There’s nothing wrong with that we should expect our lifestyles to increase. But when we get caught up in these generational comparisons, it’s a little dangerous not to actually look at the whole picture, and just focus on a couple of things. All that said, right, I do think what’s uniquely different for people in their 20s and 30s today, or maybe what was uniquely different for us is that we were coming out of and I was born in 1964. Right? So I’m technically a boomer, but we were coming out of this just extraordinary period of growth and optimism and everything’s gonna get better all the time. And you know, today’s people in their 20s and 30s are coming out of kind of the opposite, right? It was the great financial crisis, maybe the.com crash, you know, COVID there’s a lot of reasons why I think there’s a little more pessimism and cynicism about sort of life in general than that I certainly might have felt. And I think that’s feeding through into coloring the way people look at the world. And also social media and the internet, right has made it so easy to spend your money. I’m not going to say mindlessly. But was there fewer guardrails towards spending your money like it used to be kind of hard to spend your money because you used to have to write a check. Like that everybody had credit cards, you couldn’t just go swipe. And even if you paid with a credit card, they pull up this little book and check to see the note like it was a slow, painful process. And if you forked over cash, which was really common, you felt it right. So spending money is easier. And social media, I think has normalized a much higher level of consumption. Right? The whole FOMO thing is real. And you know, when you see somebody else doing something, you think, Oh, I can do that too. Right. So I think it feeds into our worst impulses of just wanting to do stuff. And it’s taken away some of the natural brakes or guardrails that would have existed. So I do think for all those reasons, it is harder to be a 20 something 30 Something today financially. 

Clint Murphy  09:04

Yeah, and so much to focus in on there. And we’re gonna come back to the keeping up with the Kardashian challenge that drives a lot of this. But let’s focus in on. So you mentioned that you’re technically a boomer, so I’ll use the boomer label. But you know, let’s talk about how, you know, boomers look at this young generation and say, well, they spend all their money on artisanal coffee and avocado toast, right. And, you know, you point out the stats actually show that they save more than the boomers did but they keep roughly 65% of their assets in cash and so 1) why and 2)how is that the enemy of compounding and can we talk about the power of compounding and how that’s a big focus of the conversation we’re going to have today because really, that’s what drives our ability to invest and  grow our wealth in the fullness of time.

Anne Lester  10:01

Absolutely! So, I think I think latte shaming is bad. Like, I think everybody gets to decide what brings them joy and how to think about how they’re spending their money and have that correlate with their values. I do think, though, that some of the boomers, you know, finger wagging about avocado toast munching, latte sipping, you know, whatever snowflakes is, again, back to the ubiquity and the absolute normalization of a lot of this spending, which again, just didn’t exist in my world, right? You couldn’t go out and get coffee because there weren’t any coffee shops, like that became a thing in the very early 80s. Right? They just you just couldn’t spend your money that way. So again, it’s like there’s more temptation. I do think it’s interesting that the Gen Z’s in particular, and to a lesser extent Millennials are saving more than boomers did at the same age. I think there are a couple of reasons for that one. And again, I think it’s a bit of a shame. But I think there’s a lot more cynicism and assumption that the benefit system, right Social Security, won’t be there for people. I disagree with that. But I think that’s pervasive. And so I think there is a little more engagement and sense of personal responsibility. There’s more knowledge, frankly, about finances in this younger generation than I would have said was typical for mine. Secondly, I think a lot of people who are working for employers who offer 401 K plans have been automatically enrolled, and they might not have chosen to sign up a generation or two ago. In fact, boomers couldn’t sign up for 401 K’s because they didn’t exist until like the mid 70s. So like you couldn’t even do it. So there’s another avenue for this increased spending. But I do think the leaving so much of it in cash is a really worrying thing. Now you should have your emergency fund in cash, three to six months of living expenses. And by living expenses, I mean, non discretionary living expenses, not Uber Eats. But aside from that, it all should be invested. And I do think one of the reasons people, I think there are a couple of reasons, right? One is you grew up watching the markets crash with distressing regularity. And it was common, right? It happened a lot. And it’s in the news. And there’s this 24/7 news cycle, and it’s on Chirons is crawling across the bottom of your screen all the time. So you’re sort of being trained to pay attention to market volatility, I would argue if you’re in your 20s, you should just ignore it and just close your eyes and invest. Secondly, I do think that some people really get frozen with indecision because they’re afraid of doing the wrong thing. And not making a mistake, not making an investment because it’s hard to know what you’re supposed to do feel safer. And that to me is a really, really challenging place to be because, again, I go back to the feeling I think of shame and fear and uncertainty that so many people face around money, they feel like there’ll be still people will think they’re stupid if they ask questions. I don’t know how to do this. I can’t tell somebody, I don’t know how to do this, I should know how to do this. Better not to make a mistake, right?

Clint Murphy  12:53

Yeah, if I make a mistake, I lose money. If I do nothing, I have the same amount of money I already had. Which is true. But dangerous. 20 years from now, with inflation and costs going up and your money staying the same. You’ve mentioned a couple times their 401 K and as a Canadian, I always trusted we have the 401k we have the IRA. I think the 401k is like our RRSPs. And the IRA is like our TFSA. 

Anne Lester  13:24

That is my understanding. Yes, so the 401k is in workplaces. And the IRA is something you sign up for by yourself to supplement that. Or if your employer doesn’t offer one at all.

Clint Murphy  13:28

And the 401 K is tax advantaged in that you put in money and it’s not 10, you get the tax back. But ultimately, when you take it out, it’s taxed. 

Anne Lester  13:47

Correct. And then there’s a variation on that called the Roth, where you put it in after you pay tax on it, but then it grows tax free and you don’t pay any taxes when it comes out. So if you’re young, that’s actually a better thing to do. But not everybody offers that. It’s a little complicated. So you know, that’s technically a more optimal thing to do. But like, again, that’s the place people can get hung up and making a decision to not do anything, which is worse. 

 

Clint Murphy  14:09

Yeah. So for the listeners who may not know what the 401 K is, can you bring them up to speed on the 401 K and the IRA and why these are two of the tools that we really want them to zone in on for building their financial wealth.

Anne Lester  14:25

Yep, so a 401 K. And just to make things even more complicated if you work for a government agency, or not for profit, they may have something called a 403 B. They’re named after sections in the US tax code. And this is the section of the tax code that that sort of lays out how these are tax exempt. So in a regular 401k The money you put in gets, you don’t have to pay any income tax on the money that you put in. So let’s say super simple math. You’re earning $100,000 a year. Hopefully somebody is out there. Maybe let’s say $50,000 a year. Let’s not make it too crazy, right? You’re earning $50,000 a year you put in two 10% of what you’re earning $5,000, and you only pay income tax on $45,000. So that $5,000 goes in tax free. Most companies also do something called matching, most companies match 50%, typically of the first 6% You put in, so you also get a kicker, and they’ll chip in a couple $1,000 to. So your $5,000 gets supplemented by maybe $2,000 from your employer, right, which is free money, talk about doubling your money, right, that’s great. And then that grows tax free until you are at least 59 and a half. And some time after you turn 59 and a half. And before you turn, I think the new rules are 73, you have to start taking the money out. And that’s when the government gets their tax.

Clint Murphy  15:46

And for the average listener, anytime you have a match, we’re generally advocating that you take advantage of the match because you automatically get a 100% return.

Anne Lester  15:58

Yes, absolutely. I keep saying get the free money, like it’s free money, get the free money. 

Clint Murphy  16:03

Yeah, we have up here in Canada, we have a program called Registered Education Savings Plan in the government will match money you put into the account for your children’s future education. Now there are rules around how it’s taxed later, and how they have to use it. But for some reason, some of the people I talked to they say they were advised that it’s not advantageous to do it. And I always come back to at least put the 3500 bucks in, that gets 100% match because you’re automatically 100% return. Even if you do nothing, you just leave it in cash for five years, that’s 20% return a year like, why not? 

Anne Lester  16:40

It’s free. It’s free money, I just keep going back to free money. Free money is good. I guess the one caution I give people in my book and it may be applicable in this situation is you want to get up to that free money level, right. But if you are going to be running up credit card debt, because you don’t have enough money, you know, that’s right, that’s right, it has to be money that you’re able to save, and you can commit to leaving it there long enough to not hit be hit with any penalties for early withdrawal. But assuming that’s true, then you absolutely should be getting the free money

Clint Murphy  17:09

And talking about that. Because we talked a bit about compounding. But we didn’t necessarily get into the meat and potatoes of it. Because part of what you’re just saying there is you have to be able to leave it in long enough term. So we’re talking about the importance of time in the market versus timing the market. Can you take our listeners through that, because there’s a lot of popularization nowadays, of timing the market with, you know, we just had the release of the Gamestop movie that came out, right. So now, you know, a lot of people are looking at it, and they get excited about that they have FOMO about what’s happening with Bitcoin ETFs. And so people start trying to time all these trades versus just putting their money in and letting time do the work.

Anne Lester  18:01

One of the greatest assets that people in their 20s and 30s have is time. And if your assets get a return, if your investments get a return of 7% a year, which I think is a touch on the conservative side, but maybe a realistic number to think about if you’re planning you know, we can debate whether it should be seven, or eight or nine or 10, or whatever. But seven is a number I like it’s a little conservative, so it’ll keep you out of trouble. If something does go a little bit wrong. At some point, your money will double every 10 years 7% Your Money, Money doubles every 10 years. So if you save money in your 20s, that’ll be worth, you know, more than five times that much in your 50s and 60s. I mean, it’s eight times that much. It’s crazy what compounding does, right? You make money on the money that you’re making. And it is literally like magic. But you have to wait a little while to see its effect start building right. So, you know, I said your money doubles every year you have 100 in the first, every decade you have 100 the first decade after two after a decade, it will be worth 200 Okay, that’s kind of exciting, but not really. Okay, the next ticket it’s worth 400. But that requires you to have been doing this for 20 years before you really see that incredible power. So it’s part of it, it’s just it takes a long time to see. So I think it can be kind of, you know, boring and gratifying. And then secondly, right all you hear about is how much money people made because they did the clever thing and got in at Bitcoin at exactly the right time and got out it exactly, no, nobody actually does that in real life. Like very, very, very, very few people time those things perfectly. And often when people make one great trade. They follow it up with three or four terrible trades. There are lots and lots of statistics out there, illustrating how much money people typically lose when they try to trade like this. And if you are ruthlessly honest looking at these things, it’s very rare to make money like the pros struggle to make consistent money year after year, my old investment team did this. And we had good years and bad years, right? I mean, it’s very, very hard to do well, and I think most people who talk about how well they’re doing are not actually showing you every trade they made. 

Clint Murphy  20:18

It’s the age old concept. And we’ll, we’ll talk later about the Kardashians and the Kardashian effect. And part of that is always putting your best foot forward. So when you’re seeing these people talking about their trades on whether it’s Twitter, LinkedIn, Instagram, whatever the social media site is, they’re only going to highlight their front of stage trades. They’re not highlighting the big red trades, they’re highlighting the green trades, like look how much money I made on Tesla. Well, did they sell it tell us they actually sold Tesla because it hasn’t been doing as well lately? Like, great, you had that good 10 next ride, but did you write it all the way back down, so it’s only a double, like, what happened there. And so love that point in the bring up, we’re talking a lot about this idea of people in their 20s and 30s. Because that’s who we really want to zone in on that. We want to educate them so that they can live their best financial life. One of the things that we already talked about is not taking advantage of time in the market not compounding is one of the greatest mistakes. What are a couple of the other mistakes that you so often see people in their 20s and 30s make that we want to highlight for them, so they can avoid them? 

Anne Lester  21:32

Well, I think we’ve touched on a couple of the big ones already, which is not saving, I mean, that to me, there are two big mistakes you can make. One is not saving anything, and the other one is not investing it and beyond that, it’s all kind of turning into a version of like a good Tibet best. Timing is a real one, I think allowing the fear of not doing it perfectly. I mean, you hear the saying that perfect is the enemy of the good, that is really true with investing because you I can make you a promise, you will never get it right, you will never look back and go oh, with perfect hindsight, I finally made these three decisions a little bit differently, I’d have more money, that will always be true, because you don’t know ahead of time what’s going to work the best. So I used to manage retirement portfolios that were diversified. And one of the painful things about buying a diversified portfolio, which means you have a mix of different kinds of stocks and bonds. And sometimes some other stuff like real estate is that it will never do as well as the thing that did the best. And so you can always look back at that and go, Oh, I could have done better. But guess what you also never do as badly as the thing that did the worst, right. So sometimes investing is really about deciding what your timeframe is. And then deciding how to think about the appropriate level of risk for that timeframe. And then checking in periodically, and I would advocate for rarely more than once a year, maybe twice a year, I think birthdays are a great day to do this, check in rebalance, right, make sure your portfolio is still nothing crazy has happened in there and just kind of let it go, especially if you’re younger. But I think those are the biggest mistakes I think people make, I’d say other mistakes can be getting over concentrated, right? Maybe only owning five stocks, because they’re fives, you know, you always hear the advice, buy things, you know, and I think that’s a great idea when you’re learning, and maybe to take a little bit of your portfolio, maybe 5% 10%, if you really want to dig deep into some companies and really understand how this works. And you will actually spend the time and do it. I think that’s a fabulous thing to do. But I really get worried when people do that with all their money. They have three big ideas, three big stocks, I think it could work out really well. But it could work out really badly too. And you just don’t know ahead of time which one it’s going to be.

Clint Murphy  23:43

And,  so one of the things you talked about there was the importance of saving. And we know that one of the things that gets in the way of that is debt. And so let’s talk a little bit about so we have this challenge where the system is slowly really getting stacked against people when it comes to savings. And I’m looking at a couple things, but we’ll zone in on one of them. The first one is social media and the ability of all these apps to really target you with things that you want to buy. So whether they are listening to our microphone, or it’s simply proximity to someone that Google searched that vacation and Aspen and now I’ve said that to you and I’m all of a sudden going to have vacation in Aspen in my Instagram feed. So that’s one thing. The second thing is they all seem to be offering because we know we’re supposed to avoid credit card debt. But now we have this Buy now pay later. And it allows everyone to essentially they think a Florida lifestyle they haven’t earned yet until they start to get hit with the bills. So can you talk a little bit about Buy now pay later and how it comes back to haunt you.

Anne Lester  25:01

It is so sneaky, right? It is so sneaky, I was shocked. And this all really started becoming a thing as I was writing the book, seeing this pop up, like when you’re buying fast food, like, like, I don’t need to split my lunch order into four payments, that’s crazy. 

Clint Murphy  25:18

Four easy payments of 11.99. 

Anne Lester  25:20

I know it’s like what there’s a story I tell of a young woman in my book, and you know, she knew credit cards were bad. So she wasn’t gonna use credit because that was bad. But now pay later isn’t credit, right. And this is like, oh, it’s worse than credit, right? It’s so much harder to keep track of like, you literally don’t know what you’ve signed up for, until it’s too late. And these bills start coming in. And then the interest rates even higher, I think credit used responsibly, and we can talk about that right can be a helpful tool in smoothing out cash flow. But you have to know you have the cash flow, like right now I don’t get a salary anymore. I’ve got really actually I never run up a credit card balance, I pay mine off every month. Now, that was a lesson I learned the hard way. But it is possible right to use it responsibly, right. But man, it’s dangerous. And I think that by now pay later is so sneaky because it’s, you know, at least with a credit card, you can see what your balance is. And they’ll tell you what the payoff is. And you’ll understand the interest that you’re paying, and you can at least get your arms around it more easily. I think the Buy Now pay later stuff is just, you know, they’re different platforms, I think it’s very, very dangerous. And it encourages splitting up routine things. I think this sort of concept behind credit and mortgages credit, right, there’s this enormous financial purchase, that would take you a very, very long time, if ever to be able to save up for so this idea that you can use some credit and spread it out. Right? Makes intellectual sense. Same thing, theoretically, for student loans, right? There’s this huge big ticket item, theoretically, you’re waiting, earnings will be higher. So you want to spread that out over those higher earnings maybe makes sense, depending on what you’re getting the degree and what you think your salary will be. But buy now pay later for your lunch, I really struggled to see the point like if you can’t afford it, eat lunch at home, open up a packet tuna. You know.

Clint Murphy  27:12

You talked about using credit responsibly, what does that look like to you?

Anne Lester  27:17

So I think first and foremost, I always go back to cash flow, right? And what’s your cash flow? I think using credit responsibly means thinking long and hard about whether what you’re buying is a what I’m going to call an Appreciating asset. And I would argue that a house is a classic example of an asset whose value theoretically goes up over time, we can all look back at moments when it didn’t go up over time. But like theoretically long term, right, you can probably assume that your house will go up at least at the rate of inflation. And I know in many markets, it’s kind of way more than that. But like long term. And that means I think it may come down a little bit too at some point. But like long term, that’s right, rate of inflation is a reasonable assumption. So taking out debt and assuming your interest rate is kind of in the same place. Yeah, that makes sense. It makes sense. Also, if you’re in working in a kind of industry that you can reasonably expect to see your income increase as you gain more experience and you become more valuable. So you get in at a certain rate, you know, the payments are of a certain size, you have a reasonable expectation that your salary will stay the same or go up and you look at the cash flow right. There are all kinds of rules of thumb people use but you know, it’s a very personal decision. How much of my money can I afford to have committed to these repayments? I think an education and it’s another classic example of a often again, I struggle with people who get borrow a lot of money to get degrees and things like my son is doing it. He just not borrowing. He’s got some scholarships, but to get a degree in performing arts, right, like that’s a tough one to see getting the payback for if you’re borrowing 50 or $100,000 a year. Like that’s, that’s a little tougher, but let’s say broadly speaking, educations. Cars, like cars are going to be worth nothing in 15 or 20 years. So you’re borrowing money, you’re taking on debt to have something that you know, will be worth nothing in 20 years. That I struggle a little bit with, right? I think debt there is very dangerous. I would say the same thing about lunch. 

Clint Murphy  29:15

Or if you’re buying lunch on debt, maybe you need to but let’s reexamine that. What about the credit cards where someone says, Well, I’m getting the points for it.

Anne Lester  29:24

I think I just booked a vacation on credit card points from like, go to the grocery store. Are you paying that card off every month, then fine, then that’s just convenience right then but it but that only I think the points thing only makes sense if you truly are paying that thing off every month because the second you’re paying what are the rates now? 21 24% 25% Poof, go your points.

Clint Murphy  29:45

Points go to zero in seconds. Yeah, yeah. Yeah. So as long as you’re paying your balance, and if you do an audit what jumps out at me and I haven’t done this yet. Maybe I should. If I was carrying cash with me for a month. How much money would I spend on food and incidentals? And do that for three months? And then go three months with my credit card? How much extra money did I spend? Simply because it was easy. And I haven’t done that. But I have a feeling it’s an egregious number.

Anne Lester  30:19

There’s egregious daddy that I discussed in my book, and I can’t pull the fingers off to my head. But basically people I think the experiment was people being asked to buy basketball tickets or something like that. And you know, how much would they be willing to pay if they had to pay cash? And how much would they be willing if they could pay with a credit card, and it was like significantly higher on the credit card? That is an absolutely documented, there have been a number of studies on that specific point, it hurts when you pay cash, like your brain feels it differently. Like I’m using Apple Pay Now, which I love because I don’t have to fish my credit card out. Ting!. It’s like, even worse, right? Right. I mean, so I am very mindful of this. Let me tell you, after all these years of like, needing to be mindful, but it’s a thing, right? It’s fast. It’s easy. There’s I’m making it as frictionless as any of you. I don’t wear an Apple Watch. But like, imagine if you just like wave your hand at the register, right? Are those stories now where you’re just swiping and then you just walk out without paying, right? 

Clint Murphy  31:10

You just double click it and press it. It’s like, this is ridiculous. I might as well just give them my money.

Anne Lester  31:16

If you are somebody who knows that you run the risk of overspending. I have a girlfriend who’s a financial advisor, and she pays with cash for everything. Because that way she knows she can’t overspend.

Clint Murphy  31:29

What brings up so you talked earlier in the conversation about your money type, and which is similar to my money type, which are dangerous, and that we both liked to spend. And what I loved was you had a number of money types in the book. So it’s really good for people to go read and understand what they all are. I thought it might be nice just to share one or two. Yeah, and because for each money tight, there are some pros and cons to it. And you offer some hacks, or ideas for how that money type can shut off their weaknesses. So for you and I as spenders. And if someone’s listening, maybe they’re a spender, we can say, Hey, what are some things you can do to improve your financial life? And maybe another one that you see is really common? 

Anne Lester  32:16

Yep. So I actually didn’t write about this specific tip in a book. And I wish I put it in there. It’ll get into the second edition. But I’m a spender. And the specific kinds of spenders I highlighted one was an over subscriber. And I think that’s super common. Right now. I just was doing a little subscription plans and I thought, oh my gosh, I need to like put calendar, I just signed up for something that I know I’m going to cancel and I actually put a calendar note saying you have to cancel this by this day, otherwise the charge will hit so that’s sort of silly but one great tip and I have to caveat this with do not get a special credit card for this. Like only if you happen to have more than one credit card. If you do sign up for something sign up with a credit card with the shortest expiration date. 

Clint Murphy  32:56

Yeah, that was in the book. That was a good one. Yeah. 

Anne Lester  33:00

Which to me was I cannot tell you how often is like no, I don’t want to put that back and what I still use it No, I’m not like it but they sneak up on you. Right? It’s streaming. It’s diet apps, it’s subscriptions to magazines or you know websites that have you know, you can I mean music streaming, you know, it just goes on and on and on how many things you can subscribe to. I had a during the pandemic we started getting flash frozen seafood deliveries, which were phenomenal, I adored it right I was trying not to go to the grocery store mods much and I went down to the freezer one day in the basement and I was like we’ve got like three months efficient eating it that fast you know I cancelled the subscription. And now I just buy someone we want it like I don’t need this box showing up every month of you know salmon fillets, no matter how delicious they worked. It’s just the silliest things right? But you’ve got to figure out a way to get yourself on a. Again, I don’t want to lay everything on your birthday but figure out a good day to pick to do a periodic cleanse right of your subscriptions. If you are on an iPhone, you can go into subscriptions and apple and that’ll get some of the apps off there are others you have to go in and look at your credit card bill but they’re right there lurking and then the trap that you get into is oh well I still have another six months I don’t want to cancel it yet. I’ll wait till it runs out. Don’t do that if you know you’re not going to use it just cancel it you know the money is gone. But the risk is you forget and then you’re stuck for another year.

Clint Murphy  34:26

Well a lot of them let you cancel the renewal. So you still get to use it for that six months but you cancel the renew and I love the idea of the subscription audit. My wife will regularly maybe once a quarter, I get an email asking me Hey, here’s seven subscriptions, which ones do you want to keep? Like which ones do you really need? And it’s you know, I’ll look at the list and two of them to your point I’ll jump out at you and say like, no like, oh geez, I signed up for that for one day to do one thing because I like I needed to convert a PDF to x. And it told me I needed to pay a subscription. I had no idea that when I did, that I was actually setting up a lifelong payment plan for that company. Right? So such a big point is to just audit your subscriptions, and especially if you’re an iPhone user, yeah. 100%.

Anne Lester  35:24

And then I guess another one that I find very helpful. And this is for spenders in general, but also for splurge errs, right who find a deal, or they can’t resist, you know, lists are so important. And I you know, it’s as simple as a grocery list, when you go to the grocery store to not get lured into stuff that’s not on your list. Like, occasionally, you genuinely have forgotten something. But often, it’s like, oh, I want to try those five things. I mean, this is another tip like, don’t go to the store hungry, like don’t go when you’re in the wrong frame of mind to manage your own desire to consume whatever it is, whether it’s food or clothing, something I have become much better at is literally not allowing myself to go into a store. Unless I know I need something from it close to my downfall. I literally will not let myself go in. Just to check it out. Right? Because guess what, if I check it out, unlikely to see something unlikely to try it on. And then boom, there I am. Well, it looks so cute. How could I not? Yeah, you don’t need it. Don’t do it. Don’t go in. To me, it’s what I’m really trying to hope people do when they look at those spending types of actually on my website. Now you can go and take a quiz. And it’ll show you some of your spending types and then give you a few tips from the book. But it really is to help you start reflecting and back to that comment at the beginning about lattes, shame shaming, or avocado toast munching, like, what if purchases that you find are giving you meaning and dare I say joy, and that one thing is the thing you must most look for like effect, that’s your morning cup of coffee. And it’s going to the local coffee shop and getting the smile from the barista who’s there every day and seeing three people that you say good morning to, and then you have this ritual of sitting and like doing your first round of emails sitting in like, that’s your day, like, I’m not gonna mess with that. But now that you’re spending that money, and then find something else in your day that you’re doing equally, you know, ritually, that doesn’t give you that same sense of pleasure and cut that one out. 

Clint Murphy  37:14

I love that. And first vendors and I often find part of it, there’s like a deep seated, emotional need sometimes to spend on something nice. And so I use the I call it the 48 hour rule, like I’ll go on the website, like I’ll even go regularly, once in a while, build your car, on our Tesla website or a BMW website, and I’ll throw it in the cart, I’ll build it out, I’ll look at it. And then I just leave it, I let the car go or, or I fill up an Amazon cart and come back in 48 hours, if I still want it. 48 hours later, I’ll buy that book. If I don’t, I’ll let it go. So it’s just that, get that dopamine release of putting it in the cart, but not checking it. 

Anne Lester  37:57

I think that’s brilliant. And I think right, find the ways that you put the brakes on yourself, whatever, whatever that is, I think that 48 Hour Rule is terrific. For me lists work, I think in a very similar way. Like when you feel that emotional need to buy something it’s not because it’s on a very sensible list that you have of I needed a new pair of snow boots, that was not a huge dopamine rush associated with that. But you know, it’s like, Okay, I’m gonna do some research, I’m gonna find a good pair, like, you know, I’ll like buy them and it was still like, I like shopping, right? It was fun to buy and get a new pair of boots. But that that did not go in the Fun Bucket. But like that was on my list of like, I really need to do this this season, because my old ones are cracked and leaking and like no fun.

Clint Murphy  38:34

What’s one other money type, you see quite common that has something that really gets in their way that we can help them solve. 

Anne Lester  38:41

Well, so we talked a little bit earlier, I call them the crypto bros. Right? It’s this temptation to think that everybody else is on to the next big thing and I’m gonna get rich quick, right? I want my it’s kind of a you know, when we’re little kids like three and four and five things that are normal seem magical to us. It’s called magical thinking. And there’s a perfectly rational explanation for it. But because we’re so little we don’t understand. And I think for some people, they fall into a little bit of Magical Thinking with the way people become wealthy by investing in the markets, and they assume that it’s only from the quick hit. Right? It’s that that quick crypto, and a lot of it is on these online platforms. And one thing I think is really important for people to do is to stop and think a little bit about why the person who’s telling you all about this amazing thing is actually telling you about it like what’s their Why is it because they have a financial model as an influencer? That involves getting you to click Yeah, okay. I hear some people say they’d rather trust peer influencers on finance, then, you know, financial institutions because they can’t trust financial institutions because they’re just trying to make money and I’m like, Whoa, what do you think those influencers are doing anyway? Sometimes they’re sharing tips because As it’s a classic, it’s called pumping and dumping, right? And you tuck it up, and then you sell and then you fade away and everybody else is left holding the bag. Gamestop was a classic example. Maybe not on purpose of that, but that’s what it turned into. So I think there’s a real temptation, right to want to believe that it’s that easy, right. And I think people who tend to make a lot of money early as windfalls are much more likely to have built something that other people want to buy, than to find some trading thing that’s going to double or triple overnight, right. So I think that is a really dangerous plan. Like, again, if you want to take two or three or 5% of your money and treat it like you treat it if you’re going to Vegas, right? Fine. If that gives you joy, and it’s part of your entertainment budget, then go for it. Like just make sure you put some really tight rings around that amount of money and be prepared to lose it all. And if you don’t, then great. Just be honest with yourself as you do the accounting.

Clint Murphy  41:03

Yeah, have a hypothesis. It’s either zero or it’s 500 grand, like whatever it is, it’s you know that one side of the equation is zero. Yep. And you’re okay, that the amount of money you’re putting into it, zero is okay with you. 

Anne Lester  41:14

Yeah. And to me, that’s entertainment. It’s entertainment. It’s like sports betting, which I hope people don’t betting in general is dangerous. I know people talk about the financial markets as betting, if you are investing in a broadly diversified index type portfolio that represents the market, the global stock market, you’re not betting, you’re going to see that go up. Maybe not every year, but year over year, over time, not every time over time, it’s going to go up and up and up and up. And that’s not a gamble, right? Buying one stock, because somebody told you that it was going to go up to the moon, you know, it’s going to jump in the next two months is gambling.  

Clint Murphy  41:51

Yes. So let’s pivot direction, what is the heart attack score? And why should we be paying attention to it?

Anne Lester  41:58

Okay, so the heart attack chart. Back when I worked at JP Morgan, my team, we called it this chart was basically a very dense chart full of lots and lots of numbers based on your salary and your age, and how much, how many times your current income you should have saved, assuming you wanted to retire at age 65 and replace 80% of your current income. So it was just a way to see are you on track or not? It’s official title was your on track score. And somebody said, actually everybody says, oh, my gosh, I’m having a heart attack, every time they saw it. I had a heart attack the first time I saw it, because let’s be honest, a lot of people, maybe most people are not quite at the numbers they need to be. And so what I did in my book, using my former employers information plus a whole bunch of other information is trying to come up with a slightly more simplified version of that, that comes up with a score of one to five, one being good. Five being that you need to save more and basically saying, you know, based on your age, you should have saved up x times your income. So if you’re 30, you should have already saved a year’s worth of your salary in your retirement account. Now, I am confident that almost no 30 year olds in the world have done that. And if you have a score of one, you can keep or do this, you could save 10% of your income, and you’re going to be on track to retire at age 65 with 80% of your salary. Most people haven’t saved that much. So they might be in zone two. And that means they should be saving, you know, 12% of their salary. And if they’ve saved even less, they’re in zone three, and they should be saving 15% of their salary. And then in zone five, depending on your age, you might need to look at saving 20% of your salary. Right. So that is tough to hear if you are starting out with zero to low savings rate, because if and again, I’m making a couple of assumptions, if you want to retire at 65, with 80% of your pre retirement income, that’s what you’ll need to save. So you know, we can talk about a whole bunch of ways that you can modify that or make it a little easier for yourself. But that’s where people get the heart attack, which is, uhhh, I should have done this by now. I was chatting with a young woman who’s helping me launch my book, actually at the publisher, she said, You know, it’s crazy. I’m in zone four. And I’m actually not panicking because I know what to do. And I was like, yes.

Clint Murphy  44:20

Where should I be at 45?

Anne Lester  44:22

I cannot remember off the top of my head, but probably at four, four to five times probably I mean, basically, again, the more you make, the more you need to have saved. So depending on what your income level is, this goes crazy high, but assuming you’re kind of median ish, average, right? By the time you retire, you should have at least 10 times your income and it kind of goes from there. Right? So I’d say four to five probably off the top of my head.

Clint Murphy  44:46

No heart attack, no heart attack. I’m good. I’m a sucker for acronyms. And you’ve got a great one when it comes to our financial life which is STASH. Who wouldn’t like that? Can you take people through what STASH means at a high level and then we’ll dive into a couple of them. Yep. And then leave them to read the rest. 

Anne Lester  45:03

Yeah great. Well, STASH stands for number one, Save for a rainy day. That’s the first thing you do –  emergency savings. Second is Tax advantaged savings. So however you can make your money grow, do it. The third is Assess your budget. And that really talks about navigating paying down debt with all the other things that you can be doing with your money, including saving for retirement. The fourth, that second S is Stay the course which means you need to be getting to that target savings rate, depending on where you landed with your on track score. And then the last one H stands for have fun. How do you save for all the other stuff in life you want to be doing? 

Clint Murphy  45:46

So let’s start with the what you call the emergency or an oh shit fund? Yes, you know what people want to do? And how should they be going about determining what their number is? And then I will admit, I’ve always been a contrarian on this one, I’ve never done what probably any financial advisor has done, I’ve always treated my emergency funds, or had my emergency funds as he locks or lines of credits, and never cash very little cash maintained in my financial planning. So why is that wrong? Why do I want it to be cash? But we can come to that after we say, well, here’s how you should build it.

Anne Lester  46:30

Yep. So standard advice, right is three to six months of your non discretionary, like what you live on. And by non discretionary. We mean, if you pair it back to literally making sure you have housing, so your mortgage payment, your rent, your insurance, your property taxes, right, whatever that number is monthly to keep your house or your apartment, food, and then any other and buy food, I don’t mean continuing to get DoorDash. I mean, like if you really had to strip back, what would you be eating? And then third, keeping up the minimum payments on whatever debt you have. We’ve already talked about the mortgage as housing. But if you’ve got credit card debt, if you’ve got student loans, keeping up on your health insurance, right, if you’re an American, right, that’s really important. You need to be able to keep yourself insured, because that is a catastrophe if that strikes and you don’t have insurance. So when you think about you know, what minimum level of cash flow three months, and these numbers come from basically what happens if you lose your job? How long will it take you to find a new job. So that three months number is probably in some economies like fine, you know, their economies, you need to look at six months. And so when you’re asking yourself, like what that number is for me? Are you’re married? Are you married to yours? Does your spouse work? Like how much of your household income are you generating? That’s one number. Maybe both of you get laid off? Are you in the same industry? Do you work for the same employer? Like there are lots of risks that might tip you towards the higher end of that scale? Other things I think that can factor into it? Are you in an industry where layoffs are common financial services? You bet they’re common teacher with a union? Maybe less common, right. So maybe that tipped you towards the lower end of the scale. If you are self employed, you really want to think about being maybe over that six months because self employed income is a little tenuous, right. So you know, how some of that how much do you save is really based on like your own assessment of how risky your income is. And then I think it’s also based on assessment. Let’s say you don’t lose your job, what are the other things that can just go wrong in your life like in my book, I talk about a woman poor thing, who just had this horrendous run of luck and had to replace a phone and get a new passport and like change your airplane tickets three times and it was just like, that was a lot of money. Let’s say you’re driving a beat up old car, like you really should be assuming you’re going to have to replace that and it’d be budgeting for that new car but if you’re not your emergency fund is going to be where you go if it you throw a rod or something unexpected happens or you get some bottle and your axle breaks or you know, make up a terrible thing that happens to cars, right? It could happen to you a medical emergency, right? Not everything is always covered by insurance. So you can go through what’s tempting, you know, the literal name of that chapter came from what we said when we woke up one morning with it raining on our faces, which is Oh shit, like, right after we bought the house, the Inspector said the roof was good for another three to five years. And guess what it was like four months. 

Clint Murphy  49:32

It’s probably a situation where I’ve always been in very steady income. High earner no expectation that I can’t reasonably replace my job. But I have made the decision recently that I will be within the next five months, self employed, and that completely changes the game so I’ll have to really reexamine Hmm, how we look at everything financially, because there may be a period of time with zero income.

Anne Lester  50:06

Yep. And when you talked about using a HELOC or a home equity line of credit, right and credit cards right, so those are sources of emergency spending. Right. And I have used credit cards in the past as emergency sending, I have used a HELOC. You know, in other times, like if I’d had a HELOC in place, I wouldn’t have borrowed from my 401k. That’s for sure. But the trouble with tapping those sources is that you need to pay them back and make immediate cash flow drag. So that’s your monthly spending immediately goes up because you have to start paying them back immediately. So you’re borrowing extra so that you can make your debt payments, right? Well, that’s like just your viral confidant that’s only going to last for a month or two, maybe but like when you’re in that jam. This is how people go bankrupt, right? I made it you know, your two bad things away from happening. I’m not saying you personally, but like, so those are reasonable. So maybe you have a three month and not a six month and then you know, you’ve got these sources of cash, you can tap as well. I do think that that’s not irresponsible. But I do think it is a little bit risky.

Clint Murphy  51:08

A little bit risky, the heart attack score is going up by the second the view like that? No, no, no, I feel good. Once we set up our emergency fund, we’ve started investing in our 401 K match. What are the next things that you know, one or two things the listeners should think about from an investment standpoint, to get that ball rolling? 

Anne Lester  51:34

Right? So we talked about S for saving for a rainy day T for tax advantaged savings, you know, we can talk a little bit more about how to think about investing. But if we go by my little rubric, right, A assesses your budget. And that’s actually reverse investing, which is making sure you’re paying off all your high interest rate debt. And that’s sort of like I say, reverse investing, because if you’re paying 25% On a high interest rate credit card, or have a private student loan at 18, or 20%. Right That money is I think it makes more sense. Once you’ve gotten the complete free money from your employer, or you’re putting some away for retirement, it really makes sense to getting rid of that high interest rate debt, because it’s growing faster than any investments that you make, let’s say you invest in your taxable investment account, and you’re earning again, seven, let’s be crazy and say 10%, right? If you’ve got 25% debt on the other side, that’s growing way faster than what you can possibly make with your investments. So. So that’s what I think about it is actually a kind of investing getting rid of interest, interest debt is actually strengthening your balance sheet.

Clint Murphy  52:38

So then the next thing you talked about stay the course. Yeah. And so the biggest challenge we see there, everyone tends to do things at the wrong time. So you know, you have Warren Buffett classic, buy when other people are fearful, sell when people are greedy, or you hear people say buy when there’s blood in the streets, which is my favorite maxim, that’s when I buy real estate is, but for the average person, they’re doing the opposite. They’re buying when they’re greedy, because they have FOMO. And they’re selling at the bottom because they’re scared. So how do you put systems and processes in place to take away your ability to screw up your plan.

Anne Lester  53:24

This is mildly self serving. Because I used to do this for a living, I used to manage target date funds, right, which are sort of one stop shopping, they’re balanced funds out there. They’re all kinds of asset allocation funds. But honestly, I think the best thing people can do if they are not 100% sure that they’re going to have a rigorous, disciplined process of investing and rebalancing, if they think they’re the least bit tempted to go in and meddle with things is to automate it, automate it by having the money going in from your paycheck, automate it going immediately to work and getting invested and automate it to be rebalanced every year, whether that’s a robo advisor, whether that’s a Balanced Fund, whether that’s a target date fund, because the second you have to start making decisions, even professional investors, right, and I did this for 20 years, 25 years, even professional investors start going good or no, it is way more powerful than we are. And you really need a very rigorous process and a lot of peer support to keep doing the right thing. And even professional investors have a lot of tools that help them. Maybe not automate decisions, but frame things so that it’s really easy for them to see if they’re starting to fall prey to some of these fear, greed challenges. So, you know, it’s really common to assume that whatever is happening right now is going to persist forever, whether it’s good or bad. It’s really common to be overconfident in your ability to make a good decision. While I know because I’m smart, right? Classic thing we used to do all the time and I love doing this with audiences ask people to raise their hands in the audience if they think they’re above average drivers. And you know what, every hand in the audience, you know, this is not statistically true right here, or even make it like, in this room are above average compared to each other, all the hands go up, right? And it’s like, not true. So, automation to me is the single best way to do this.  

Clint Murphy  55:23

You pay yourself first and automate it. 

Anne Lester  55:25

Yep. And it may not always be, like I said, the perfect thing that could have been done, but it will never be a terrible thing, either. 

Clint Murphy  55:34

Yeah, at least you’ll get something in there. And you’ll learn and return and you’ll compound it in the fullness of time. So the last step in the stash process is having fun. So what are two or three of the big areas that you see people having expenses for, whether it’s a house, a car, and what are some basic rules that people should be thinking about is they set up a plan, so that they can buy what they need, and have fun doing it, and not put their financial journey at risk.

Anne Lester  56:07

So we haven’t talked about something that I think is one of the most important parts of this whole journey, which is to acknowledge that, especially if you’re in your 20s. But even if you’re older, and looking at that heart attack chart, right, it’s not going to be easy, or maybe even possible to go, Whoa, I’m supposed to be saving 15% of my income, and I’m only saving 4%. Like, how do I get there, it’s a very rare person who can get there all at once. Because there’s generally not that much fluff in your budget, right? Or it may not feel like fluff, like you could really go really hardcore and like strip out some things, but you probably will struggle to find that much. And so one of the key concepts that I talk about is committing to yourself, however old you are, but ideally, when you’re very young, to never getting used to spending all of the extra money you start getting in every time you get a raise, if you commit to saving at least half of that money. That way, you know, let’s say you get a 10% You’re so lucky to get it, maybe you get a 5% Raise, Let’s not get crazy here, you get a 5% Raise, if you save two and a half percent of that, right, you’ve already pushed your savings rate up, you do that for five years in a row, your savings rates tend to pretend percent higher. Right? It doesn’t have to be Mount Everest, right? You do it a step at a time. So that’s concept number one is get used to increasing your savings rate when your income goes up. You’ve I’m a believer that you shouldn’t never allow yourself to get something a little nicer, right? Otherwise, we’d all still be living in group houses with 17 roommates. But you know, I do think being committing to saving future raises, right, as much less painful than stopping something now, right? So that’s one way to boost your savings rates. Once you start having these extra savings, you’ve maxed out or gotten to your target retirement savings, right? You’ve paid down all your high interest rate debt, right, then you can start thinking about Alright, well, maybe there’s room in my budget for a nice vacation or putting more money away towards my down payment, or having children or getting married, right. So there’s these other things that happen, right? I walk through how you should think about investing your money based on time horizons, right? So you don’t ever your investments won’t return anything, right? If you don’t take risk. So cash, right, leaving your money in a bank insured savings account is doesn’t pay you very much interest, because it’s very, very safe. If you buy government bonds, right, or put it in a in a money market fund, you’ll get a little more money, maybe four or 5% Right now, which is you know, actually not bad. And if you think you’re going to need the money in less than one or two years. So if you’re saving for that vacation, if you’re planning on popping the question in five months, and you’re saving up for an engagement ring, you know, your money should be there, because it’s very unlikely, if not impossible, that it can lose money. If it’s a guaranteed savings account, for instance, you can’t lose money there. So anything shorter, I think, then probably even two years, right? You really should have that money in a very, very safe investment that can’t go down. I’d say that’s true for housing downpayments. Once you think you’re getting close, you really want to be de risking that portfolio two to five years, right? Maybe that’s a blowout around the world cruise. Maybe that again, about buying a new car, right? There’s some things you can be planning for that I would argue you should and could take a little bit more investment risk on and that’s when you start building in some equities. Right? Some stocks, stocks go up more than bonds, they can also go down a lot more than bonds and cash. Right. So if you need that money in five years, maybe 20% in stocks, I think is prudent. It might go down a little bit but the other 80% of your portfolio, I think, again, notwithstanding what happened last year with interest rates but I think that’s a once in a maybe not once in a lifetime but once in a 20 or 30 year cycle, right? That’s very unusual. And I don’t think it’ll happen again in the near future. So that’s what I would say. And then longer term right. And I talked in the book about how my husband and I have this maybe someday future potential theoretical thing we’d like to do in Europe, my husband’s half Italian, we lived in Italy, like maybe we’d like to buy a place there someday, we’ve got a little bit of money invested in European stocks, just because why not? But that’s like a, we don’t even have a timeframe for that. So it’s just kind of sitting there ticking over growing.

Clint Murphy  1:00:27

That would be beautiful. All right, we’re gonna pivot in a bit of a different direction. What is one book that you’ve read that said, a massive change in your life?

Anne Lester  1:00:36

Boy, so many, so many, I think books, and I’m gonna name a couple like Nudge, and Thinking Tast and Thinking Slow, right? They’re classic behavioral, my there in the bookshelf back there, right? Those had huge effects on I mean, I’m, I wish I’d known about this stuff when I was in college and grad school, because I would have studied that instead of what I did. But I’m a huge, huge, huge fan of those. And I know, there has been a little controversy lately over some of the experiments that have been done in these arenas that haven’t been replicated. And I think it’s because they’re trying to get too cute and like, get really, like, I can come up with the 782nd little thing that our brains does, the big picture stuff, right? Loss hurts more than gains. That’s true, right? We really don’t like losing money. And so people become irrational, right? When they’re thinking about winning versus losing, because losing hurts so much, right? Preferring something today over tomorrow is real. And so I really like learning about those things, and then trying to understand how I’m wired, because again, it just helps me both put those guardrails up that I think I like, but also helps me forgive myself when I do something that I know, I wish I hadn’t done afterwards. Oh, I should have known better. Well, you know, sorry. 

Clint Murphy  1:01:51

That’s how I’m wired.

Anne Lester  1:01:52

 Yeah, go crazy, beating yourself up. Like, it doesn’t mean you’re a bad person, it means you fell prey to this thing. And like, Okay,

Clint Murphy  1:01:58

And what are you reading right now that you really enjoy? 

Anne Lester  1:02:00

Well, I am reading a bunch of fiction. And I have to confess I’m a sucker for the young adult fantasy bestseller list stuff. So I’m reading series, which by Rebecca Euros, which everybody is reading, and then I’ve got some books that I know the authors of that I have really enjoyed. I’m also I’ll tell you what I have found incredibly interesting. And it’s a very dense book. So I’m going through it slowly. But given what I’m writing about this book on generations, I find really interesting to kind of decoding how we all think differently based on how we’ve interacted with the forces that have shaped our lives. So that’s a little bit of a slower reader kind of dip in and out of that book. But I’m liking that one, too. 

Clint Murphy  1:02:42

So I’ve been a fantasy geek for most of my life, so that we could go a long way into that. Yeah, so you had me at fantasy, I may also have written a fantasy novel with my sister, we just, we have to get back on getting it published. We’ve slept on that for two years now. And, and we’ve got to, we’ve got to find an agent. So I’m gonna, that’s great. As I retire, I’m going to resurrect that project pretty aggressively and start writing book two,

Anne Lester  1:03:08

I’ll share something with you. When I was in my late 20s. I wrote a thriller that is unpublished that I almost but not quite had an agent for back in the 80s. Right when it was a very different business. And we were I was mailing like physical manuscripts from Italy to people with the self addressed return membrane, which is still in a bottom drawer somewhere. But, you know, it turns into your best financial life. So I did, I did get my book done a very good guy in a different genre. But yeah. 

Clint Murphy  1:03:30

So what is one thing that Ann has bought in the last year for under $1,000? That you thought to yourself, I wish I’d bought that sooner?

Anne Lester  1:03:39

Oh, that I bought it sooner. Under $1,000, I was gonna say my new laptop, which was way overdue. I waited way too long to buy that as being cheap. And it was stupid, because but that was I think just over $1,000. But maybe, maybe can we let me round a little bit? Yeah, what type Did you buy? I’m a Mac user. And I downgraded and I had a MacBook Pro. And now I have a MacBook Air because I had a long chat with the guy and I didn’t need all the stuff I thought I needed. But I waited way too long, the battery wouldn’t hold a charge and it was getting very stupid. 

Clint Murphy  1:04:10

And he probably should have done the MacBook Air. I did the Pro and I did the 16 inch that is the biggest laptop I have ever lugged around with me. And it is not not light, but when I pop it open and start going on it. Oh, I love that thing. See, I’m a PC guy my whole life.

Anne Lester  1:04:29

I go for the smallest actually, because if I’m carrying it, I don’t want to weigh a lot and I haven’t docks the whole docking octopus thing and I just plug it in when I’m at my desk and then I have a big screen and all that and a keyboard. So but yeah, that was that was pennywise and pound foolish. I was saving. I was saving money and I you know I probably wasted 15 minutes a day just waiting for things to go over. That was being silly. 

Clint Murphy  1:04:51

So what is one behavior change mindset shift or habit you’ve adopted in your life that’s had an oversized impact. And in any area. 

Anne Lester  1:05:01

Yeah. Habit. I think it’s really, I said it earlier, getting a lot more comfortable saying no to myself and feeling the discomfort of saying no, whether that’s not letting myself go into a store, or not ordering something on a menu, but it’s just building this muscle and maybe it’s a habit of, and it’s a it’s a version of your 48 hour thing, right? Like, I want this thing. Let me say no, and this just live with the pain, right? Or the, you know, emotional like deprivation or then Einstein, it’s I’m still building it, right. But it’s, you know, I look back, you know, 20 years ago or 30 years ago, and I couldn’t do it at all right. So it just I had to have it. I had to eat it. I had to you know, I couldn’t it would distress me. And I think you know, true confessions time, it took me like three years to floss my teeth regularly every night. It’s been like 15 years. But literally that that was a three year habit for me to get into like of it. I was getting all kinds of cavities between my teeth. My dentists kept yelling at me and like, yeah, yeah, I’ll try. I’ll try and like three years, it took me to build that habit, but it stuck. Finally. So I think and I know most people say it should take you three weeks. Well, I guess I’m a slow learner. But that pause that if I can’t make myself say No, how do I learn not to put myself in a situation where I’ll say yes,

Clint Murphy  1:06:16

Beautiful. We went pretty deep and wide on your best financial life. Is there anything we didn’t cover that you want to make sure you get across to readers.

Anne Lester  1:06:23

I hope it’s been apparent as we’ve been chatting now. But the thing I most want readers to understand is that it’s going to be okay, it’s gonna get better, we can get better from wherever you are, it can be better, right? So no matter how far behind you think you are, no matter how out of control, this stuff feels right, it is possible to start making it better. And I also really, really want readers not to feel like they’re alone, or full of shame when they think about this, right? One of my chapters is called you suck at savings and it’s not your fault. And that kind of goes into these behavioral wirings about why it’s so hard to delay gratification. And I think making sure that we’re not finger wagging and Latte shaming right is gotta be part of the conversation because it’s really hard to change when you feel bad about yourself and where can people find you? They can find me online on my website is ann@lester.com and anniealester.com. There’s that great money type quiz you can take on my website, and I’m on all the social media. So @savesmartwn is my handle on everything. 

Clint Murphy  1:07:27

Excellent. Thank you for joining me on that was fun to have a conversation on money. 

Anne Lester  1:07:31

Thank you so much. I really enjoyed it.