213: 10 Financial Habits Keeping You Poor

Ever feel like your money just seems to vanish no matter how hard you try to save? We’ve all been there! Sometimes, it’s those sneaky little habits we don’t even realize we’re doing that are keeping our wallets empty. In this week’s episode, Josh and Austin will share the 10 financial habits keeping you poor!

 

Main Talking Points

[1:32] – Habit #1: Making Car Payments

[5:22] – Habit #2: Using ‘Buy Now, Pay Later’ Options

[7:46] – Habit #3: Not Taking Advantage of the 401(k) Match

[10:07] – Habit #4: Subscription Overload

[12:43] – Habit #5: Not Working with a Financial Advisor

[14:44] – Dad Joke of the Week

[15:20] – Habit #6: Timeshares

[20:00] – Habit #7: Gambling

[21:51] – Habit #8: Whole Life Insurance

[23:33] – Habit #9: Impulse Buying

[26:52] – Habit #10: Lifestyle Creep

 

Links & Resources

Full Transcript

Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts Josh Robb and Austin Wilson.

Austin Wilson:

All right. Hey, hey, hey welcome back to The Invested Dads Podcast, a podcast where we take you on a journey to better your financial future. I’m Austin Wilson. Co-Portfolio Manager at Hixon Zuercher Capital Management.

Josh Robb:

And I’m Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. Austin, how can people help us with our podcast?

Austin Wilson:

We’d love it if you’d subscribe. If you’re not subscribed just hit that plus, follow. Whatever that icon is we’d love it if you’d hit it. We’d also love it if you’d leave us a review on Apple Podcasts or Spotify, that really helps us to be found by more people. And always remember, you can reach out to us on our website, or you can email us at hello@theinvesteddads.com. We’d love to hear from you, just chat with you, catch up with you. And if you have any podcast ideas send them our way. So today, Josh, we got a –

Josh Robb:

A list.

Austin Wilson:

List of 10 financial habits that are keeping you poor.

Josh Robb:

Yes.

Austin Wilson:

That’s not good.

Josh Robb:

No. And these are habits, not decisions.

Austin Wilson:

Correct.

Josh Robb:

Because we were talking about that. We’ve had an episode on pets, and that’s a decision-

Austin Wilson:

That’s a decision.

Josh Robb:

It’s not a habit. But that’s a decision that could affect your cash flow.

Austin Wilson:

It does.

Josh Robb:

But we’re talking about habits. They’re decisions but they tend to be a-

Austin Wilson:

Longer term.

Josh Robb:

Not a one-off type of thing.

Austin Wilson:

So, let’s just start. We’re going to do five and we’re going to take a break.

Josh Robb:

Okay.

Austin Wilson:

Got to hit you up with the dad joke, then we’re going to do five more. Josh loves a round number.

Josh Robb:

I do.

Austin Wilson:

Nice and even.

Josh Robb:

10 is good.

 

[1:32] – Habit #1: Making Car Payments 

Austin Wilson:

10 is great. The first one. A habit that keeps people poor is car payments. Car payments drain wealth over time, mostly because, at the most simplistic level, you’re taking on debt to buy a depreciating asset. So you’re paying interest so your cost is more than it actually costs on an asset that’s actually worth less instantaneously.

Josh Robb:

And it continues to decrease.

Austin Wilson:

Decrease over time in terms of value depreciate.

Josh Robb:

And depreciation, that’s just the word meaning that it-

Austin Wilson:

It’s worthless.

Josh Robb:

Goes down in value. What you’re saying is if you buy a car, it’s $10,000 and it’s brand new, if you drive off the lot-

Austin Wilson:

It’s worth nine.

Josh Robb:

It’s probably worth nine just because it’s no longer a new car. And then when you go, let’s say, five years from there to sell it, it may be worth seven. And so the idea is it doesn’t go up in value like other assets like a home, over the long term, tends to appreciate. Those type of cars, especially because they wear down.

Austin Wilson:

And if you took out a loan on that car you were not paying 10-

Josh Robb:

Yes.

Austin Wilson:

You’re probably going to end up paying 12 or something like that.

Josh Robb:

Yes, because you’re paying interest.

Austin Wilson:

That is one way that hurts you on both ends if you can avoid it to not do that because you’re paying interest on an asset that’s actually going down in value. Here’s a couple of statistics that I found pretty eye-opening.

Josh Robb:

Yes.

Austin Wilson:

In 2023, the average US monthly car payment was $738.

Josh Robb:

Wow.

Austin Wilson:

That’s a lot.

Josh Robb:

They all have Rolls-Royces or what?

Austin Wilson:

I know, my goodness.

Josh Robb:

What’s happening?

Austin Wilson:

Well, that long ago that would’ve been an obscene car payment.

Josh Robb:

Yes.

Austin Wilson:

Both used cars and new cars have gone up in price a lot since COVID. And haven’t necessarily come down, they’ve level off a bit. They haven’t necessarily directly come down. Very expensive cars in general-

Josh Robb:

And interest rate is higher.

Austin Wilson:

And the interest rate’s higher.

Josh Robb:

You’re getting a higher cost so then you got to finance it more, and then your financing cost, the interest, is higher. So you’re just doubling that increase in payments so the payments really moved along.

Austin Wilson:

And another factor that some people don’t think about is, what else is higher when you have a more expensive car?

Josh Robb:

Insurance.

Austin Wilson:

Insurance. You’re getting hit from all angles I feel like.

Josh Robb:

Hopefully, your car’s not getting hit from all angles-

Austin Wilson:

No, no.

Josh Robb:

Because you need to pay that off.

Austin Wilson:

You need to pay that.

Josh Robb:

Correct.

Austin Wilson:

Yeah, the bank owns your car if you don’t. Another statistic about this that I thought was interesting. Nearly 15% of new car buyers have a payment more than $1,000 a month.

Josh Robb:

Oh my goodness.

Austin Wilson:

That’s a lot.

Josh Robb:

Yes. I’m trying to remember what the average length of a loan was.

Austin Wilson:

It’s more than five years now. I think it’s six years now.

Josh Robb:

And that’s what I was thinking.

Austin Wilson:

84 months or something.

Josh Robb:

I was pretty sure it crossed five years, which not everybody keeps their car for that long.

Austin Wilson:

Most people don’t.

Josh Robb:

Right. You still owe when you’re there to trade in and adjust it.

Austin Wilson:

And that causes messes.

Josh Robb:

Well, that just compounds because they take the … What’s owed-

Austin Wilson:

You get a lower value.

Josh Robb:

Adds it … Well, and they just add it to your next loan too making a bigger loan on a vehicle that’s depreciating.

Austin Wilson:

Okay. I said we weren’t going to do a bonus here but-

Josh Robb:

Uh-oh.

Austin Wilson:

Here’s another bonus.

Josh Robb:

Okay.

Austin Wilson:

Don’t trade in your car.

Josh Robb:

Okay.

Austin Wilson:

This is going in with number one. Keep it forever is really an ideal situation. It’s very bad for you as the consumer in terms of the financial impact because while you-

Josh Robb:

They want to make money on it so they’ll offer less.

Austin Wilson:

You are getting convenience, okay? So yes, you are getting convenience and you might save a couple dollars on tax, but you are getting a much lower price than you would if you were selling it by yourself. Just pro tip, that’s like one A.

Josh Robb:

It comes to comfort level too.

Austin Wilson:

And I’ve done it too.

Josh Robb:

Yes. It’s not super hard. I do know there are probably some people who would not be comfortable having people maybe come to their house or be there alone when somebody’s looking at their car. Do I let them test drive it? Do I sit in the car with them? Talk with somebody who’s done it before, maybe get some help. But you’re right, there is a difference than what the dealer will offer you versus the fair value.

Austin Wilson:

The dealer’s looking at it like I got to make money on this-

Josh Robb:

Yes.

Austin Wilson:

So they’re going to legitimately offer you 25% less, at least, than you can get on the street.

 

[5:22] – Habit #2: Using ‘Buy Now, Pay Later’ Options 

Austin Wilson:

Number two. It’s a new thing, buy now, pay later.

Josh Robb:

Not new because they’ve had layaway for a long time.

Austin Wilson:

Right. But it’s like every single online checkout-

Josh Robb:

Yes, right.

Austin Wilson:

Has buy now, pay later and it’s not … So I shop on Amazon a lot. Not an investment recommendation but I’m very happy from Amazon stock because I use that service all the time. It’ll let you spread payments out for an $8 item.

Josh Robb:

Oh, wow.

Austin Wilson:

It’s like this $8.99-

Josh Robb:

20 cents per month for-

Austin Wilson:

You get this $8.99 widget you can spread out over 24 months.

Josh Robb:

Oh, man.

Austin Wilson:

I’m like nah, that doesn’t make any sense.

Josh Robb:

No, thank you.

Austin Wilson:

So anyway. Buy now, pay later. It seems convenient when you’re purchasing, right? You’re like oh, this is $500 but I … So I could pay $500 or I could pay $50 for 10 months.

Josh Robb:

Now if they’re not charging interest, that actually doesn’t hurt you in any way as long as you’re … Have the money there to make the payments.

Austin Wilson:

Correct.

Josh Robb:

Because a 0% interest means, in a sense, if it costs 8.99 for that widget, and they spread it out 24 months and don’t charge you interest, you end up only paying $8.99.

Austin Wilson:

See, the caveat being-

Josh Robb:

Yes.

Austin Wilson:

That people tend to, statistically, overspend when they have this option.

Josh Robb:

Because the money’s still there.

Austin Wilson:

You’re actually going to feel like it’s okay to spend more money than you would otherwise if you were paying for it upfront. And actually, nearly 40% of consumers in the US have used buy now, pay later very recently. That’s a lot. I’ve done it too like the iPhone. Well, I could pay $1,000 for my iPhone-

Josh Robb:

Or just add it to your monthly bill.

Austin Wilson:

Or my monthly bill is another $23 more a month. I get it. It’s convenient. Now, that’s an example of something where it’s a big … That’s a big chunk and zero interest is nice. But the statistics would say that you are more likely to spend more money in terms of absolute dollars using buy now, pay later, therefore, it’s a wealth trend.

Josh Robb:

So really what it comes down to is, only utilize that option if you are comfortable that you are good at budgeting, and will have the cash flow to do that, and will not spend or allocate that money for something else.

Austin Wilson:

I would also say, if you were willing to pay it upfront, and you can do it for zero interest for 24 months or whatever-

Josh Robb:

Just put the money in a savings account.

Austin Wilson:

It’s the same thing. If you had the money to do it upfront it’s really not a bad thing for zero interest. If you didn’t and you’re trying to … You can’t afford a new TV but you want a new TV.

Josh Robb:

That’s the problem.

Austin Wilson:

You just can’t afford a new TV-

Josh Robb:

Yes.

 

[7:46] – Habit #3: Not Taking Advantage of the 401(k) Match 

Austin Wilson:

That’s okay. All right, number three. This is a big one. Not taking advantage of the 401(k) match. Woo. This is a habit keeping people poor for sure. So if you’re not maximizing your 401(k) match, you’re missing out on the free money-

Josh Robb:

Free money.

Austin Wilson:

Component of your 401(k). If you think about how 401(k)s usually work you elect, usually pre-tax although there are Roth options but usually pre-tax. You elect a percentage of your salary to go into your retirement plan, your 401(k). And then based on where you work, there are different policies, but a certain percentage of that your company will also put in to match that, right?

Josh Robb:

Yes.

Austin Wilson:

So this is what the 401(k) match is. A statistic around this is that around 25% of Americans fail to take advantage of this benefit. And this is something that blows my mind because that is actually free money. You don’t have to do anything. You’re not putting in more money to get the match. You’re putting in just your maximum amount and your company’s giving you a free match up to some point on that. That’s amazing.

Josh Robb:

And there’s no other way to get this money. It’s not like you can ask for it. “Well, just add it to my paycheck.” No. They only give it to you if you are setting up and contributing to your 401(k). It’s a lost benefit for people who don’t take advantage of it. And we know people historically under save for retirement.

Austin Wilson:

True.

Josh Robb:

Let’s just use simple numbers. Let’s say you have to put in 4% to get a 4% match, right, just simple math. That’s an 8% contribution where you’re only giving up 4% of your money.

Austin Wilson:

That’s pretty good.

Josh Robb:

You’re doubling it, right? You’re getting 100% return on your investment just by getting the match.

Austin Wilson:

You need to put in what? 15, 20%, statistically.

Josh Robb:

That 20 is the new target for-

Austin Wilson:

It used to be 15. That gets you a lot closer than not being there.

Josh Robb:

Yes.

Austin Wilson:

My dad taught me when I was very young, starting to look at jobs and all this stuff, he said, “Obviously, you need to take advantage of your 401k match.” Think about it this way. Josh, if you and I are working the same job-

Josh Robb:

Yes, right next to each other.

Austin Wilson:

And we make the same money. We’re elbows to elbows in the weeds every day and we make the same money, we work the same hours, I take advantage of the 401(k) match and you don’t, guess what? I make more money than you.

Josh Robb:

Yes, that’s right.

Austin Wilson:

So take advantage of it. It’s a no-brainer.

Josh Robb:

For sure.

 

[10:07] – Habit #4: Subscription Overload 

Austin Wilson:

Number four, subscriptions. I feel like as Americans, especially, we are overloaded, we’re inundated with subscriptions, and new options, and packages all the time and it can really add up. It really eats away at budgets. The average American, get this, spends over $1,600 annually on subscriptions.

Josh Robb:

Wow.

Austin Wilson:

That’s a lot.

Josh Robb:

Yes.

Austin Wilson:

So you think about your Netflix, and your Hulu, and your Peacock, and your-

Josh Robb:

Disney+.

Austin Wilson:

Disney+, and your Apple Music, and your Spotify, and your yada, yada, yada. The list goes on and on and on. That adds up really, really fast.

Josh Robb:

I know there’s been times where I’ve reviewed our spending and I’ve said, “What is that?” And I don’t even know what that subscription is, right? But it all adds up. And there was one and it was an annual subscription … Because I just don’t usually see it and it popped in. And it was something I wanted but it took me a minute to remember what it was. I need to make sure I’m only paying for the things I’m going to use.

Austin Wilson:

And another way to think about it is, only subscribe to things you’re going to get as much value as you’re spending.

Josh Robb:

Correct.

Austin Wilson:

I specifically think about streaming services because just having one streaming service, say it’s Netflix it’s the most popular one … Again, not an investment recommendation but that stock’s been on fire. Just having just Netflix, there is more content on there than you can ever watch.

Josh Robb:

Right.

Austin Wilson:

But yet, does anyone just have one streaming service?

Josh Robb:

No.

Austin Wilson:

No, you have four or five at 10 or $15 a month each.

Josh Robb:

They all add Up.

Austin Wilson:

And it adds up. Another thing is look for redundancy. You can look for redundancy in your video streaming. Maybe you don’t need all of them you can have or two. There is no reason, I can see, for someone to have two cloud service providers or two music streamers. Look for redundancy you’ll save some money. But yeah, I think we’re at subscription overload.

Josh Robb:

And there’s things that are now moving to subscription that you just have to be aware … Like you said, am I using this enough to justify the cost? Whereas before maybe it was you paid when you used it, that made sense, but now there’s a subscription. Am I active enough to make … To justify this?

Austin Wilson:

Right.

Josh Robb:

And so you just have to make those decisions. There are apps out there that track your spending and then highlight subscriptions for you to review.

Austin Wilson:

Oh, and they’ll actually cancel them for you for a fee.

Josh Robb:

Yes.

Austin Wilson:

It’s a great business.

Josh Robb:

That’s a good idea. I bet they’re subscription-based.

Austin Wilson:

I bet they are. 5.99 a month.

Josh Robb:

That’s right.

Austin Wilson:

Number five, Josh. This is someone I’m going to want you to chime in on a little bit.

Josh Robb:

Yes.

 

[12:43] – Habit #5: Not Working with a Financial Advisor 

Austin Wilson:

A habit that keeps people poor, in my opinion, is not working with a financial advisor. This is really a way that you’re not maximizing all of your financial strategies over time, you’re not getting the best put together plan over time. And actually, there was a research done by Vanguard that said that working with an advisor can increase your returns by 3% annually. And that’s not from investment performance.

Josh Robb:

Right. I was going to point that out.

Austin Wilson:

Elaborate on that, please.

Josh Robb:

It’s not saying that advisors outperform-

Austin Wilson:

Benchmarks or whatever.

Josh Robb:

Yes. The market or whatever by 3% annually, it is saying that a person who works with an advisor sees a 3% better return than they had been experiencing. And again, not because investment choices, it’s old habits.

Austin Wilson:

Behaviors.

Josh Robb:

We’re all talking about habits right here. The advisor helps them reduce the bad habits, increase the good habits, and also adds a barrier between emotional decisions. What you see is that if you’re not working advisor and the market gets a little volatile, the average person reacts, and sells, and makes these decisions. Well, if you add an advisor who can hopefully talk you out of those or give you a better direction, and a plan, and a reason you avoid those mistakes. That 3% annual difference in results is really about avoiding mistakes. Again, you may get an advisor and they may not do much different than how you’re investing. You say, “What’s this point?” Down the road you’re going to realize hey, wow, it’s been a lot more consistent. They may, returns-wise, look pretty good but I’m not making those changes like I used to. I’m not chasing after that one stock that I heard about and it’s too late but I don’t realize it.

Austin Wilson:

Or selling low.

Josh Robb:

Yes. Avoiding mistakes is really the advisor’s value add. And that’s actually proven out in a lot of these surveys when they actually look at not just hey, how did my account do versus the markets? How did my account do versus how I historically reacted and managed? Because that’s really what you’re doing, you’re hiring somebody to help you manage your overall financial plan.

Austin Wilson:

Absolutely.

 

[14:44] – Dad Joke of the Week 

Josh Robb:

All right. We’ll take a break, and I’m going to do a dad joke. Then we’ll come back for the last five of those habits keeping you poor.

Austin Wilson:

That’s right.

Josh Robb:

All right. So this actually was a dad joke shared by one of our co-workers, Jessica Hinks. She is an honorary dad joke person-

Austin Wilson:

Oh, yeah.

Josh Robb:

Because she’s been on her podcast-

Austin Wilson:

She has.

Josh Robb:

And had a really good one then. But she sent us over a couple.

Austin Wilson:

We’ll also just plug The Everyday Advisor.

Josh Robb:

Yes, a great blog.

Austin Wilson:

So go subscribe if you’re not subscribed to that blog, it’s one of my favorites.

Josh Robb:

The other day a clown held the door open for me-

Austin Wilson:

Okay.

Josh Robb:

It was a nice jester.

Austin Wilson:

A nice jester. Get it, a jester.

Josh Robb:

Yes.

 

[15:20] – Habit #6: Timeshares 

Austin Wilson:

That’s good, classic. A good dad joke. All right. We’re five down we got five to go. Number six, a habit keeping you poor, timeshares.

Josh Robb:

Yeah.

Austin Wilson:

Think about this, you’re on vacation in Colonial Williamsburg with your family.

Josh Robb:

Do they have timeshares there?

Austin Wilson:

Yeah, I think so.

Josh Robb:

Okay, sure.

Austin Wilson:

And you get snagged at the hotel lobby and they say, “Hey, we’ll give you $500 of free stays and a free breakfast buffet, for you and your family, if you come sit through this timeshare presentation.”

Josh Robb:

Good times.

Austin Wilson:

“You don’t even have to sign up.”

Josh Robb:

Hang on, listen to what we have to say.

Austin Wilson:

That being said, this is a real story and I sat through a timeshare presentation as a child.

Josh Robb:

Oh, I’ve done it.

Austin Wilson:

For free food-

Josh Robb:

Yes.

Austin Wilson:

It was great. We did not buy a timeshare, we had no intention of buying a timeshare but we liked the free food. That’s how they get you.

Josh Robb:

Yes.

Austin Wilson:

But timeshares so-

Josh Robb:

It’s a game in numbers for them.

Austin Wilson:

Exactly. So think about what a timeshare is. You pay a fee and that fee can vary, but that fee is going to essentially give you, oftentimes, a first option at premier, premier scheduling of a vacation rental location at frequencies that are locked into your contract, right? They can be very expensive; they can be less expensive but they are an ongoing cost. And actually, according to the American Resort Development Association, maintenance fees alone on these things can cost $1,000 a year, and that’s tacked onto your actual timeshare.

Josh Robb:

Which you’ve already paid.

Austin Wilson:

Which you’ve already paid. If you look at the math and you think about the math of a timeshare, in most … This is just like another one we’re going to talk … Get to later. In 99.99% Of instances, it’s better to just book the hotel. You can use Priceline, use whatever, get a good deal on it but you’re going to come out probably ahead by not having an actual timeshare and just looking for the good deals when you can find them.

Josh Robb:

And that’s really what it comes down to. A similar story. This was actually just a couple years ago as an adult. We were at a resort, my wife and I, and when we were checking in, “Hey, would you guys like a free couples massage if you listen to this?” I said, “No.” And then I talked to my wife I’m like “Hey, you know what? We could go listen to that.”

Austin Wilson:

For free.

Josh Robb:

And they said, “We would do it over breakfast.” We were at a resort, it was all-inclusive so we were going to eat breakfast one way or another. They said, “We’ll eat breakfast and then it’ll be an hour for this day.” I’m like “Okay.” Part of it was a tour of the whole place. I said, “It’ll be fun we’ll do it.” So we signed up and we did it. Same thing. Met a very nice lady and she walked through and talked to us, gave us a tour.

Austin Wilson:

These people are good at their jobs.

Josh Robb:

Gave a tour, it was super nice. We sit down to talk and she’s like “What do you do?” And I said, “I’m a financial advisor.” She’s like “Okay.” So she started doing her thing. And they always do the math on paper, right?

Austin Wilson:

Oh, yeah.

Josh Robb:

They have these numbers memorized-

Austin Wilson:

It’s dramatic.

Josh Robb:

They’re just writing it out. And here’s how much you’ll save and blah, blah, blah. So then I just asked a couple questions. And again, I was legitimately interested just to see what it was because I have not sat down in front of a timeshare thing. And I know about them and I’ve heard it all but I was just curious. And they laid it out. And honestly, I did the math. And I had my little calculator out and I did the math. And I told them and I said, “Look, I could see” … “There’s actually value in it if you’re going to utilize this a lot.” Really what you’re doing is locking in a price for the next X amount of years. Usually, a long time.

Austin Wilson:

And you have to go through a certain year or whatever.

Josh Robb:

The price you’re locking in. You’re paying a lump sum upfront, and then you get a certain amount of days as part of that, and then you have your maintenance fees on top. Again, we were sending out an all-inclusive resort. The idea is that maintenance fees covers your food costs really because your rooms are covered. So I get it. I did the math and I said, “Look, I got four kids at home, I’m not traveling internationally with my four kids three times a year to make this worthwhile there’s just no way.” We had a nice conversation, and we left, and then we got a nice couple’s massage which was good.

Austin Wilson:

Worth it.

Josh Robb:

So it was definitely worth listening to them. And honestly, it was just fun to hear and see what all they had to say. But I could definitely see how they used numbers in all the fun excitement and everything they show you and everything they offer you to try to grab you. But the craziness is, it’s a long commitment. This is the rest of your life.

Austin Wilson:

It’s a contract.

Josh Robb:

It’s the rest of your life.

Austin Wilson:

It’s a legally binding contract.

Josh Robb:

Avoid those. Or, at least, the very least completely understand what it is you’re getting into before you do that.

Austin Wilson:

Well, because most people don’t understand the … It is possible, in most cases, but very difficult to get out of the contract. That’s not good.

Josh Robb:

Yes.

Austin Wilson:

And there are clauses and all kinds of other breakup fees for the rule. It’s no bueno. Number seven, Josh.

Josh Robb:

Yes.

 

[20:00] – Habit #7: Gambling 

Austin Wilson:

Another habit keeping people poor, gambling.

Josh Robb:

Gambling, yes.

Austin Wilson:

Gambling can quickly deplete your saving.

Josh Robb:

Yes.

Austin Wilson:

The average American household spends over $500 a year on lottery tickets alone.

Josh Robb:

Wow.

Austin Wilson:

That’s just lottery tickets. And now that’s sports betting is legal-

Josh Robb:

That’s the average.

Austin Wilson:

That’s average.

Josh Robb:

Wow.

Austin Wilson:

And now that sports betting is legal, I bet that number is … I mean, all-inclusive off the gambling much more.

Josh Robb:

Now a lottery ticket is two bucks. On average.

Austin Wilson:

Well, I don’t know, I’ve never-

Josh Robb:

It’s two bucks. It’s two bucks.

Austin Wilson:

Bought a lottery ticket.

Josh Robb:

They just had the billion-dollar Powerball, and they had the commercials and they said $2.

Austin Wilson:

$2.

Josh Robb:

I’m sure there’s $10 tickets because they have all those different scratch off things. But let’s just say you’re just looking at the big ones, right, those big Mega Millions, Powerball. If they’re two bucks, you have to buy 250 tickets-

Austin Wilson:

That’s almost one a day.

Josh Robb:

A year.

Austin Wilson:

Yeah, I know.

Josh Robb:

My point, that’s a lot of lottery.

Austin Wilson:

So gambling, let’s just be real, unless you’re a professional, which not many people are, you don’t make money gambling.

Josh Robb:

Right. When we’re talking about gambling, these are habits keeping you poor. That’s not to say if somebody says, “Hey, that’s a fun hobby I do, and I do it in a reasonable way where I set some money aside for a trip to Vegas” or whatever they do. And they say, “I’m going to go with $100 dollars and when it’s done I’m done but I’m going to enjoy.” That’s not what we’re talking about. We’re talking about the recurring habit of consistently spending money on something that’s not really helping you further along.

Austin Wilson:

Correct. Knowing that this-

Josh Robb:

The probability of winning this is just minimal, very small. And it is true with all these things, right? They’re the habits, not just a one-off type of thing.

Austin Wilson:

Gambling, a habit keeping people poor.

Josh Robb:

Yes.

 

[21:51] – Habit #8: Whole Life Insurance 

Austin Wilson:

Another one. Number eight, whole life insurance.

Josh Robb:

Yes.

Austin Wilson:

Generally speaking, whole life is more expensive than term life. If you look at how the numbers work out and how it’s often sold to people, whole life’s viewed as more of a savings vehicle and an investment vehicle.

Josh Robb:

Correct.

Austin Wilson:

While it does have a death payout as well, we would say that in again, 99.99% of instances, term life policies are financially better for individuals. Again, I’m not saying it’s 100%, Josh, right?

Josh Robb:

Yeah. There are reasons why you’d want a whole life insurance. We have a whole insurance policy-

Austin Wilson:

Or a state plan.

Josh Robb:

Because of the cash value, and loan options, and the ability to put lump sums in where you’re not paying monthly but you can fund a whole life policy, there are situations, especially when you’re talking to a financial planner, on reasons why you may need one of those. But, in general, if we’re just talking I need insurance to protect my family in case something happens to me, you get a better bang for your buck with term.

Austin Wilson:

Sure.

Josh Robb:

So yes, you’re right. If all I’m doing is trying to fund a protection because my … If something happened to me, my family would not have what they need to be taken care of, why would you spend more for it if that’s your goal is just to protect your family? The term insurance gives you that.

Austin Wilson:

And if you think about the returns that are published on whole life policies-

Josh Robb:

Oh, yeah, they’re a mess.

Austin Wilson:

And there’s a lot of big fees. And again, there’s rules, and clauses, and hard to get out of these policies. They’re contracts, right?

Josh Robb:

Yep.

Austin Wilson:

It’s an insurance contract. Very, very low return. In most instances, we would say get yourself as much term life insurance as you need and invest the difference. And therefore-

Josh Robb:

Because it’s yours.

 

[23:33] – Habit #9: Impulse Buying 

Austin Wilson:

You’re going to come out with more money at the other end. That is a habit that keeps some people poor. Number nine, impulse buying. Okay, I’m guilty of this, Josh-

Josh Robb:

Okay.

Austin Wilson:

Sometimes. I mean, I impulse buy. But think about things that you go to the store and come home with without going to the store for them.

Josh Robb:

Like chips, yep.

Austin Wilson:

Chips or candy-

Josh Robb:

A snack food.

Austin Wilson:

Or a snack food, in general. Don’t go to the store hungry.

Josh Robb:

Yeah, bad choice.

Austin Wilson:

That leads to impulse buying.

Josh Robb:

What store, Austin, do you tend to impulse buy the most at would you say?

Austin Wilson:

Amazon.

Josh Robb:

Amazon. If you’re shopping-

Austin Wilson:

Reverb is the guitar marketplace stuff.

Josh Robb:

Okay.

Austin Wilson:

Having the apps on your phone, this is impulse buying, it’s very bad. Most people should not have the apps on their phone. I have them on my phone right now.

Josh Robb:

Okay.

Austin Wilson:

What about you where’s your impulse buying?

Josh Robb:

I’m not as bad with it online, I like to see things. But I-

Austin Wilson:

Grocery store.

Josh Robb:

It’s Walmart is really what it is.

Austin Wilson:

Because it has everything.

Josh Robb:

Not only does it have everything, but I’ll walk by and be like oh, yeah, and then I grab it. Half of it is stuff I need, and it reminds me, but did I need it need it? Or was it just one of those, hey, if I see it I should grab it, right? And I probably need it, but I walk by, and I was going from the food section over to the other side, and they had shoe-shining stuff for my dress shoes. I need a new thing but did I need it right then? And so I was stopping and it was like … So yeah, it just catches your eye, right?

Austin Wilson:

I know.

Josh Robb:

And then the snack aisle. And for me, it’s salty stuff so chips and those things, that’s my … I should not go down those aisles at all.

Austin Wilson:

Yeah, they say stick to the perimeter.

Josh Robb:

Yes. But the perimeter, they put them on the edges now, they dragged me in.

Austin Wilson:

I know. They’ll try and hook you in. Here’s a statistic about impulse buying. The average American spends $5,400 annually on unplanned purchases. That’s almost $500 a month.

Josh Robb:

I almost bought a pair of shoes at Walmart. They were water-

Austin Wilson:

You were going to buy Walmart shoes though?

Josh Robb:

Let me tell you why, let me tell you why. They were just slide-on waterproof and I’m like those would be great for around the yard. Because all I do is I take my old tennis shoes and I continue to use those.

Austin Wilson:

Yeah, they’re mowing shoes.

Josh Robb:

But by the time I get to that point, because I keep my shoes way too long, is the soles falling out and it’s just useless. Because they were 15 bucks. I’m like if all I’d use them for is wandering around my yard mowing and pulling weeds, I could slip those on off and then wash them. I’m like-

Austin Wilson:

That’s what your Crocs are for.

Josh Robb:

Yeah, but I don’t want to ruin my Crocs, those are nice Crocs.

Austin Wilson:

Church Crocs.

Josh Robb:

They’re not dog poop Crocs, it’s that … They’re definitely not. So anyway. I almost did but then I-

Austin Wilson:

You almost bought Walmart shoes.

Josh Robb:

But my rule is usually-

Austin Wilson:

Don’t buy Walmart shoes.

Josh Robb:

No.

Austin Wilson:

Oh, that’s mine.

Josh Robb:

My rule is, I’ll come back if I really want them.

Austin Wilson:

Okay, that’s good. Put time between you and-

Josh Robb:

Yes. And get rid of the impulse of the impulse buying. I may still buy it.

Austin Wilson:

You just plan ahead on your $15 shoes.

Josh Robb:

I’ll come back if I really want them. And they’re still in my mind but I haven’t pulled the trigger-

Austin Wilson:

You haven’t committed yet.

Josh Robb:

And that’s been about three weeks.

Austin Wilson:

Maybe you don’t need them.

Josh Robb:

I might find a better pair is really where I’m at.

Austin Wilson:

It’s so funny, I feel like when it comes to purchases sometimes I will overthink-

Josh Robb:

Something simple.

Austin Wilson:

$20. It’s $20 and I’ll overthink it. And I’m like, can’t pull the trigger. I don’t know if I need it, I don’t know if we need it can’t pull the trigger. But then sometimes it’s really easy to spend 200.

Josh Robb:

Oh, for sure.

 

[26:52] – Habit #10: Lifestyle Creep 

Austin Wilson:

But I have very mixed thinking about money sometimes. All right, number 10. Our 10th-

Josh Robb:

Last one.

Austin Wilson:

And final one is a general habit.

Josh Robb:

Yes.

Austin Wilson:

And this habit is lifestyle creep. So, this is when you get a raise … Most people get a raise roughly every year or so, at least inflation-ish, hopefully is the goal. So, lifestyle creep is when your spending increases as much as your income increases.

Josh Robb:

Yes.

Austin Wilson:

And this really decreases your savings and your investment potential. And really we’ve talked about this many, many times with things like the 50/50 rule where you get a 4% raise, you invest half of it … You increase your savings, half of it, and you let your lifestyle only increase half of it. It helps you A, grow your savings more, and B, lower your lifestyle so that your pull … Your withdraws at the end are less. This is exactly why this works. Just being content where you are and what you have is really a way to help avoid lifestyle creep.

Josh Robb:

Contentment is a huge thing. If you can reach that mindset ideal it is huge. Our society is created to continue to entice us to want more. Everything around us, all the advertising, the thousands of ads we see every day is all about you need this to feel better, to be with … Like everybody else, those type of thing. And if you can be content, a lot of this list gets changed.

Austin Wilson:

Absolutely.

Josh Robb:

And so you’re right. That lifestyle creep is one that I think too is the hardest to recognize because you do have to increase your spending every year because inflation, right?

Austin Wilson:

It’s life, yeah.

Josh Robb:

Just think grocery store. My grocery store bill every year goes up because just things cost more. There’s nothing wrong with that. But I have to make sure that the amount I’m increasing my spending is proportionate with that cost, and I’m not just moving upwards and spending more to feel more comfortable or be at a higher level because that’s where you run into trouble. Because that extra spending probably is what you needed to save to better prepare for your future.

Austin Wilson:

Absolutely. I guess in summary, those are some things that we could just be conscious of as we’re living our financial lives. To try and put ourselves in a better situation than the average American which we’ve talked about time and time again over the last handful of years we’ve been making this podcast. The average American is in really poor financial shape. They have too much debt, they have too little savings, and too little investment, and they spend too much in general, right?

Josh Robb:

Their cash flow is really bad.

Austin Wilson:

Cash flow is really, really bad. If you just keep track of just these 10, this is a good start to keep your habits above average and hopefully keep you not poor. Josh, anything else at the end there?

Josh Robb:

That’s it. Mindful. Be mindful of what you’re doing. If you can just pause, think, don’t react you … A lot of these be adjusted to ask that question, is this really worth it? What will I give up for this? That’s it. Thanks for listening. We will definitely be keeping you in the loop. If you subscribe you will get an email every time we post a new podcast which is great. And if you have any ideas about a podcast email us at HelloAtTheInvestedDads.com. And we will talk to you next time.

Austin Wilson:

All right, have a good one.

Josh Robb:

Bye.

Austin Wilson:

Bye.

Thank you for listening to The Invested Dads Podcast. This episode has ended but your journey towards a better financial future doesn’t have to, head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode, and we had a positive impact on your life, leave us a review. Click subscribe and don’t miss the next episode. Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin, or any podcast guest are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions.

Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.