Episode 183 - 3 Examples of How Personal Experiences with Money May Not Reflect The Real World

Transcript

00:00:02.270 --> 00:00:07.050

Alex Collins, ChFC, CFP: Hello, everybody, welcome back to beer and money. I am Ryan Burklo and I'm. Alex Collins.

00:00:07.340 --> 00:00:13.350

Ryan Burklo: And on today's episode we're going to be talking about a quote from Morgan Housel.

00:00:13.720 --> 00:00:18.020

Ryan Burklo: where he speaks into our personal experiences with money.

00:00:18.100 --> 00:00:19.849

Ryan Burklo: and how that may

00:00:19.880 --> 00:00:21.460

Ryan Burklo: or may not

00:00:21.960 --> 00:00:24.529

Ryan Burklo: be, how the real world actually works.

00:00:25.570 --> 00:00:30.389

Alex Collins, ChFC, CFP: And so specifically, when we talk about 3 examples of how personal experience with money

00:00:30.930 --> 00:00:34.429

Ryan Burklo: may not reflect how it actually works in real life.

00:00:34.980 --> 00:00:38.870

Alex Collins, ChFC, CFP: And for those you guys that are not familiar with it. Morgan Hausel wrote

00:00:38.920 --> 00:00:45.460

Alex Collins, ChFC, CFP: psychology of money. So this is definitely a topic that he is. He knows about and has written about

00:00:45.590 --> 00:00:46.500

Alex Collins, ChFC, CFP: quite a bit

00:00:46.690 --> 00:00:50.670

Alex Collins, ChFC, CFP: great. Great. Read, pick it up and and dig into it.

00:00:50.880 --> 00:00:57.179

Ryan Burklo: Yeah. So the quote that he has is your personal experiences with money make up maybe point

00:00:57.700 --> 00:01:02.040

Ryan Burklo: 0, 0, 0, 0, 0 1.

00:01:02.110 --> 00:01:03.980

Ryan Burklo: And I may have missed a 0 there

00:01:04.680 --> 00:01:07.110

Ryan Burklo: of what happened in the world.

00:01:07.670 --> 00:01:11.089

Ryan Burklo: But maybe 80% of how you think

00:01:11.140 --> 00:01:12.630

Ryan Burklo: the world works.

00:01:14.600 --> 00:01:16.769

Alex Collins, ChFC, CFP: What he's attempting to say here

00:01:17.150 --> 00:01:19.520

Alex Collins, ChFC, CFP: is your personal experience

00:01:19.580 --> 00:01:24.640

Alex Collins, ChFC, CFP: is a very, very, very small amount of the overall data.

00:01:24.980 --> 00:01:28.310

Alex Collins, ChFC, CFP: and it has a huge impact

00:01:28.440 --> 00:01:35.649

Alex Collins, ChFC, CFP: in how we perceive money, our relationship with money, how we make choices, etc.

00:01:36.110 --> 00:01:45.769

Ryan Burklo: So we're going to be talking about 3 examples of how that may or may not apply, or it definitely applies to certain people in America today. But before we dive into that out, so we're we drinking today?

00:01:46.150 --> 00:01:50.829

Alex Collins, ChFC, CFP: Well, so what you're drinking today is dragon's milk stout.

00:01:50.920 --> 00:02:05.130

Alex Collins, ChFC, CFP: I'm abstaining this week because i'm feeling a little bit under the weather. But this is a it's a stout, so it's a darker beer. It's from New Holland brewing. It clocks in at an impressive 11,

00:02:05.740 --> 00:02:10.410

Alex Collins, ChFC, CFP: and only has 30. Ibus. So, Ryan, what do you think?

00:02:10.810 --> 00:02:13.250

Ryan Burklo: Yeah. So it's a a Bourbon barrel, stout.

00:02:14.200 --> 00:02:19.070

Ryan Burklo: and you can taste the Bourbon in it. It's a little sweet for my taste.

00:02:19.840 --> 00:02:31.720

Ryan Burklo: I take the back I could drink, maybe a schooner. Of this I could not drink a full pint of this, is it? It's it tastes good something. It tastes bad. It's just a little bit too sweet for me to have a full pint.

00:02:33.410 --> 00:02:38.189

Ryan Burklo: My reading on that far to give this, you know if i'm it's probably 6 out of 10.

00:02:39.370 --> 00:02:43.849

Alex Collins, ChFC, CFP: Well, I look forward to to trying it. When i'm a little bit better and

00:02:43.880 --> 00:02:48.049

Alex Collins, ChFC, CFP: going we'll, we'll maybe we'll incorporate that into a later podcast here.

00:02:48.110 --> 00:02:49.100

Ryan Burklo: Absolutely.

00:02:49.910 --> 00:02:55.529

Ryan Burklo: Alright, so let's talk about today. So you know, I think you and I love this topic

00:02:55.980 --> 00:02:58.930

Ryan Burklo: mainly because i'll speak for myself

00:02:59.630 --> 00:03:03.350

Ryan Burklo: before I truly got into the financial world.

00:03:03.970 --> 00:03:06.160

Ryan Burklo: I was making financial decisions.

00:03:06.320 --> 00:03:09.389

Ryan Burklo: you know, just like every other American, and

00:03:09.760 --> 00:03:21.789

Ryan Burklo: I had certain perceptions or awareness or understanding of how it worked. Based on you know, experiences. This is what I heard my parents say, or my grandparents say, or I watched what they did.

00:03:23.170 --> 00:03:28.230

Ryan Burklo: or I listen to conversations that they are having with other friends.

00:03:28.660 --> 00:03:29.340

Ryan Burklo: right?

00:03:29.410 --> 00:03:34.900

Ryan Burklo: And then I get into. Then i'm actually in the world. And i'm like, okay.

00:03:35.080 --> 00:03:40.689

Ryan Burklo: I remember my parents saying X, and that's nowhere near how it works.

00:03:41.090 --> 00:03:41.940

Alex Collins, ChFC, CFP: but and

00:03:42.130 --> 00:03:45.470

Alex Collins, ChFC, CFP: like so much of it is that, like we take these

00:03:45.570 --> 00:03:49.719

Alex Collins, ChFC, CFP: these things that were taught and ingrained with at a young age.

00:03:50.430 --> 00:03:52.980

Alex Collins, ChFC, CFP: and we don't have the context.

00:03:53.320 --> 00:03:55.010

Alex Collins, ChFC, CFP: We don't like

00:03:55.250 --> 00:04:00.350

Alex Collins, ChFC, CFP: when you were 5 or 6 or 8 or 10 or 16, and hearing these things.

00:04:00.700 --> 00:04:03.959

Alex Collins, ChFC, CFP: did you have any ability to understand

00:04:04.280 --> 00:04:06.770

Alex Collins, ChFC, CFP: what was going on in the financial world.

00:04:06.890 --> 00:04:13.209

Alex Collins, ChFC, CFP: or like what like? What was? Why was it being? Why was what was said? Said

00:04:14.150 --> 00:04:15.689

Ryan Burklo: it it? No.

00:04:16.399 --> 00:04:28.069

Ryan Burklo: and I hate to be like Yes, you're right about that age group, and I would also argue you could be much older and still have a lack of context around everything you just said.

00:04:28.340 --> 00:04:31.409

Alex Collins, ChFC, CFP: Oh, a 100%. At the same time

00:04:31.540 --> 00:04:32.210

Alex Collins, ChFC, CFP: it

00:04:32.450 --> 00:04:34.169

Alex Collins, ChFC, CFP: think back to

00:04:34.790 --> 00:04:36.110

Alex Collins, ChFC, CFP: like. Now

00:04:36.560 --> 00:04:46.240

Alex Collins, ChFC, CFP: we live in a world where we've been through an incredibly low interest rate environment for a long period of time, and we've seen a spike in interest rates over the last

00:04:46.320 --> 00:04:48.079

Alex Collins, ChFC, CFP: call it 6 months to a year.

00:04:50.500 --> 00:04:51.370

Alex Collins, ChFC, CFP: Do you have it

00:04:51.690 --> 00:04:56.549

Alex Collins, ChFC, CFP: like without looking back, and, like you and I are in the industry, so we know.

00:04:57.380 --> 00:04:59.480

Alex Collins, ChFC, CFP: But at the same time, like

00:05:00.120 --> 00:05:07.819

Alex Collins, ChFC, CFP: most people, don't necessarily know what the world was like from an interest rate standpoint or an economic standpoint.

00:05:07.880 --> 00:05:12.890

Alex Collins, ChFC, CFP: When they were kids. It just wasn't something that the average person

00:05:13.130 --> 00:05:25.890

Ryan Burklo: paid any attention to when they were a kid

00:05:25.960 --> 00:05:31.310

Ryan Burklo: is when I was, this would have been 2,004. So when I bought my first house

00:05:31.580 --> 00:05:33.469

Ryan Burklo: i'm 24 years old.

00:05:34.620 --> 00:05:38.669

Ryan Burklo: the interest rate that I was paying on My mortgage was 5%,

00:05:40.490 --> 00:05:41.640

Ryan Burklo: and

00:05:42.510 --> 00:05:48.689

Ryan Burklo: I I didn't know any better. Right? I didn't know it was 5. No one thing I really cared about was really what was the monthly payment? Could I afford it?

00:05:51.210 --> 00:05:56.930

Ryan Burklo: I don't recall inflation. I don't really recall what was going on in the market a a ton at that point.

00:05:58.020 --> 00:06:02.219

Ryan Burklo: But what? As i'm talking about this, you brought up what's going on right now with the interest rates

00:06:02.590 --> 00:06:03.910

Ryan Burklo: I do

00:06:03.970 --> 00:06:07.430

Ryan Burklo: like when interest rates started going up, and it hit 5.

00:06:07.810 --> 00:06:18.380

Ryan Burklo: I would do recall saying, oh, this is what I hit, but this is what I was paying when I bought my first house, I haven't I haven't had that kind of interest rate in a very long time, and 2,004 is almost 20 years ago.

00:06:20.300 --> 00:06:26.470

Ryan Burklo: like they let that sink in, and 5 at the time was actually not like that wasn't crazy

00:06:26.500 --> 00:06:30.170

Alex Collins, ChFC, CFP: it was it? Was. It was crazy because it was crazy. Low.

00:06:30.720 --> 00:06:31.530

Alex Collins, ChFC, CFP: Bye bye.

00:06:31.600 --> 00:06:48.529

Alex Collins, ChFC, CFP: it was one of those things where, like they were talking about mortgage rates at close to historic lows, and it being a phenomenal buying opportunity like I was in the industry. Back in 2,004, I bought My first home was that 2,004, 2,005. I think it was 2,005 that I bought my first home.

00:06:48.540 --> 00:07:01.540

Alex Collins, ChFC, CFP: and I I remember I had like 2 folks that I I both work. I worked with 2 different mortgage brokers, was having a hard time figuring out who I was going to get my mortgage from, and one of them had a homework. We want to credit

00:07:01.570 --> 00:07:06.149

Alex Collins, ChFC, CFP: that was different or better than the other one, and that so that wound up being the deciding factor.

00:07:06.330 --> 00:07:07.350

Alex Collins, ChFC, CFP: Yep. And like

00:07:07.450 --> 00:07:09.019

Alex Collins, ChFC, CFP: 2 3 years later.

00:07:09.040 --> 00:07:13.520

Alex Collins, ChFC, CFP: during the start of the financial meltdown, when interest rates started rising

00:07:14.280 --> 00:07:20.039

Alex Collins, ChFC, CFP: like, I then went back to the other one, and refinanced out of that structure

00:07:20.120 --> 00:07:26.300

Alex Collins, ChFC, CFP: or or refinance; the the second, the second mortgage component of it.

00:07:26.360 --> 00:07:37.869

Alex Collins, ChFC, CFP: and, like the mortgage poker that I went with at the time was was fairly fairly annoyed and upset because he's like man. I lost out on this deal because of this product that i'm now

00:07:38.280 --> 00:07:39.990

Alex Collins, ChFC, CFP: refinancing.

00:07:40.080 --> 00:07:48.470

Alex Collins, ChFC, CFP: And so it's. It was just interesting to walk back through, like what happened the last time we went through a rise in interest rates, and like

00:07:48.510 --> 00:07:51.489

Alex Collins, ChFC, CFP: thinking about it from a standpoint of like when I was

00:07:51.700 --> 00:07:53.720

Alex Collins, ChFC, CFP: just learning how to adult.

00:07:53.760 --> 00:07:54.400

Ryan Burklo: Yep.

00:07:54.880 --> 00:08:02.259

Ryan Burklo: So so let's get into our 3 examples here, Alex. We. We already started kind of going down this path. You know our our first example.

00:08:02.300 --> 00:08:06.939

Ryan Burklo: and this is, I think, a big one, and I started to hint at it was

00:08:07.330 --> 00:08:09.200

Ryan Burklo: relationship with money.

00:08:09.690 --> 00:08:12.020

Ryan Burklo: like all your view.

00:08:12.140 --> 00:08:14.229

Ryan Burklo: how you perceive money.

100

00:08:15.590 --> 00:08:18.310

Ryan Burklo: and the the primary example of this is

101

00:08:18.590 --> 00:08:26.399

Ryan Burklo: I mean, I mean, there's tons of examples of this. But think about it. If you were raised in a household where they viewed money as evil, like they constantly said.

102

00:08:26.430 --> 00:08:28.019

Ryan Burklo: We don't have any.

103

00:08:28.080 --> 00:08:31.249

Alex Collins, ChFC, CFP: It's the root of all evil. It's the root of all evil like

104

00:08:32.020 --> 00:08:34.390

Ryan Burklo: that Experience

105

00:08:34.549 --> 00:08:35.450

Ryan Burklo: can

106

00:08:35.549 --> 00:08:41.360

Ryan Burklo: can derail your relationship with money. If, when you get to an adult.

107

00:08:41.590 --> 00:08:47.359

Ryan Burklo: because if you kept you kept that same mindset, and might have you not like money to the standpoint of

108

00:08:47.560 --> 00:08:50.609

Ryan Burklo: you? Don't do anything good with it. You just spend it

109

00:08:51.670 --> 00:08:55.749

Alex Collins, ChFC, CFP: right, or having that mentality of like

110

00:08:57.100 --> 00:09:00.050

Alex Collins, ChFC, CFP: borrowing from Peter to pay Paul

111

00:09:00.800 --> 00:09:08.499

Alex Collins, ChFC, CFP: constantly like being like month to month, and the stress and the anxiety that money brings.

112

00:09:09.660 --> 00:09:15.170

Alex Collins, ChFC, CFP: and just thinking about talking about it, dealing with it, whether you've got a lot of it or a little of it

113

00:09:15.320 --> 00:09:17.780

Alex Collins, ChFC, CFP: like just talking about money

114

00:09:17.920 --> 00:09:23.549

Alex Collins, ChFC, CFP: for some people that brings on a tremendous amount of stress and anxiety. You can actually see them

115

00:09:24.180 --> 00:09:28.600

Alex Collins, ChFC, CFP: physically get tight when we start talking about money.

116

00:09:29.270 --> 00:09:32.829

Alex Collins, ChFC, CFP: and they're actually in a really good position.

117

00:09:33.510 --> 00:09:37.040

Alex Collins, ChFC, CFP: But it's their relationship with money that has them tighten up.

118

00:09:38.260 --> 00:09:43.160

Ryan Burklo: and that can both go both ways, and that was learned

119

00:09:43.300 --> 00:09:45.450

Ryan Burklo: through some experience.

120

00:09:47.020 --> 00:09:49.960

Ryan Burklo: So your your viewpoint of money is is X.

121

00:09:50.310 --> 00:09:52.090

Ryan Burklo: But in the real world.

122

00:09:52.620 --> 00:09:56.080

Ryan Burklo: and to be successful, Financially speaking.

123

00:09:56.250 --> 00:09:59.149

Ryan Burklo: you're gonna have to like. You need to broaden your mind.

124

00:10:00.510 --> 00:10:06.630

Ryan Burklo: And those one decisions that one experience is having. You think about 80% of how to use your money.

125

00:10:07.200 --> 00:10:09.790

Ryan Burklo: and that's just on how the real world works.

126

00:10:10.690 --> 00:10:11.520

Alex Collins, ChFC, CFP: What

127

00:10:11.870 --> 00:10:13.680

Alex Collins, ChFC, CFP: think about it from this standpoint right?

128

00:10:13.780 --> 00:10:16.740

Alex Collins, ChFC, CFP: How many years in school do we spend

129

00:10:16.840 --> 00:10:18.320

Alex Collins, ChFC, CFP: learning about

130

00:10:18.790 --> 00:10:19.880

Alex Collins, ChFC, CFP: English

131

00:10:19.970 --> 00:10:20.910

Alex Collins, ChFC, CFP: writing.

132

00:10:20.970 --> 00:10:21.930

Alex Collins, ChFC, CFP: reading.

133

00:10:22.070 --> 00:10:23.110

Alex Collins, ChFC, CFP: math.

134

00:10:23.330 --> 00:10:24.160

Alex Collins, ChFC, CFP: art.

135

00:10:24.440 --> 00:10:25.650

Alex Collins, ChFC, CFP: science.

136

00:10:25.830 --> 00:10:27.060

Alex Collins, ChFC, CFP: geography.

137

00:10:28.630 --> 00:10:29.430

Alex Collins, ChFC, CFP: money.

138

00:10:30.390 --> 00:10:32.020

Alex Collins, ChFC, CFP: Which one of those things do we

139

00:10:32.200 --> 00:10:34.409

Alex Collins, ChFC, CFP: barely get taught in school?

140

00:10:35.310 --> 00:10:35.960

Yep.

141

00:10:36.610 --> 00:10:50.519

Ryan Burklo: it it No one talks about. Well, I take that back. I just found out that my my kid probably doesn't like it anymore, now that I know. But she actually has to take a personal finance. Course she's a freshman in high school, and she's like sure to warm me, dad. I don't want you to email the teacher.

142

00:10:50.950 --> 00:10:53.770

Ryan Burklo: I'm like, No, I'm coming in. I'm: a teacher Darn class.

143

00:10:54.690 --> 00:10:56.550

Alex Collins, ChFC, CFP: Yeah, yeah, i'm.

144

00:10:56.780 --> 00:11:12.269

Alex Collins, ChFC, CFP: I get a chance to volunteer in my daughter's class for for math, and like One of the things that the teacher learned was that I i'm in the finance industry, and she goes oh, great! At some point we'll have you come in and talk about what you do for a living, and how it involves math, because.

145

00:11:12.330 --> 00:11:15.200

Alex Collins, ChFC, CFP: like it's important for them to understand how

146

00:11:15.290 --> 00:11:17.619

Alex Collins, ChFC, CFP: how it relates to the real world.

147

00:11:17.690 --> 00:11:25.790

Ryan Burklo: which is awesome like. I wish more teachers would relate it to. This is, hey, what you just learned. This is how it this is how you actually use it

148

00:11:25.970 --> 00:11:28.039

Ryan Burklo: when you are an adult.

149

00:11:28.640 --> 00:11:31.130

Alex Collins, ChFC, CFP: Yeah, or maybe Prior.

150

00:11:32.160 --> 00:11:36.039

Ryan Burklo: So that that's the first example, right? Your Your relationship with money

151

00:11:37.380 --> 00:11:40.030

Ryan Burklo: number 2 is, you know

152

00:11:40.070 --> 00:11:43.060

Ryan Burklo: it, Experience with investment performance, Alex.

153

00:11:43.900 --> 00:11:47.889

Alex Collins, ChFC, CFP: This is such an incredibly loaded question.

154

00:11:48.010 --> 00:11:54.869

Alex Collins, ChFC, CFP: So much of it depends on when you first started investing how you first started investing

155

00:11:55.030 --> 00:11:57.230

Alex Collins, ChFC, CFP: the the timeframe

156

00:11:57.540 --> 00:11:59.600

Alex Collins, ChFC, CFP: Just there are so

157

00:11:59.880 --> 00:12:03.319

Alex Collins, ChFC, CFP: so many just incredible nuances to this question

158

00:12:03.710 --> 00:12:09.359

Alex Collins, ChFC, CFP: I i'll share a story from from my family, and that is

159

00:12:09.490 --> 00:12:13.900

Alex Collins, ChFC, CFP: that like my dad, when he first started investing in the stock market.

160

00:12:14.550 --> 00:12:17.220

Alex Collins, ChFC, CFP: he had some really bad experiences.

161

00:12:17.800 --> 00:12:18.900

Alex Collins, ChFC, CFP: and

162

00:12:19.080 --> 00:12:20.329

Alex Collins, ChFC, CFP: like this was

163

00:12:20.970 --> 00:12:27.380

Alex Collins, ChFC, CFP: quite a while ago, and we didn't have the access to information that we do now. We didn't have

164

00:12:27.430 --> 00:12:35.049

Alex Collins, ChFC, CFP: access to diversified portfolios and things of that nature. And so if you selected the wrong stocks.

165

00:12:35.570 --> 00:12:38.470

Alex Collins, ChFC, CFP: it was very easy to have a negative experience.

166

00:12:38.940 --> 00:12:43.010

Alex Collins, ChFC, CFP: and once you have kind of a negative experience with investing.

167

00:12:43.930 --> 00:12:44.520

Alex Collins, ChFC, CFP: hey?

168

00:12:44.950 --> 00:12:47.179

Alex Collins, ChFC, CFP: It tends to like.

169

00:12:47.290 --> 00:12:50.450

Alex Collins, ChFC, CFP: solidify your view as like. Oh, this is

170

00:12:50.660 --> 00:13:01.079

Alex Collins, ChFC, CFP: dangerous or bad, or whatever else. Conversely, if you have a really good experience, it can solidify your view as oh, the market is

171

00:13:01.110 --> 00:13:04.150

Alex Collins, ChFC, CFP: awesome and amazing, and can't do wrong.

172

00:13:04.350 --> 00:13:06.259

Alex Collins, ChFC, CFP: and neither of these are accurate.

173

00:13:08.850 --> 00:13:15.919

Ryan Burklo: A again, right? So i'm going to go back to the quote, just to kind of remind everyone of what we're talking about here, because I think it's it's key.

174

00:13:15.980 --> 00:13:23.069

Ryan Burklo: Your person experience makes up, maybe the point 0, or however many Zeros point 0. Is there one

175

00:13:23.510 --> 00:13:25.289

Ryan Burklo: of what happened in the world?

176

00:13:25.360 --> 00:13:29.150

Ryan Burklo: But maybe 80% of how you think the world

177

00:13:29.490 --> 00:13:30.640

Ryan Burklo: works.

178

00:13:31.030 --> 00:13:35.419

Ryan Burklo: So what else was you saying is like? His father had this experience of of investing.

179

00:13:36.240 --> 00:13:42.419

Ryan Burklo: and he thought, and he thought, that that's how it was when, in and over time things change

180

00:13:43.100 --> 00:13:45.060

Ryan Burklo: what? That's not how it is anymore.

181

00:13:46.090 --> 00:13:49.930

Ryan Burklo: but because of that one experience. This is how it it, how is

182

00:13:50.110 --> 00:13:54.730

Ryan Burklo: it? It's how it is jaded or shaded, maybe how he thinks of investing

183

00:13:55.030 --> 00:13:59.239

Alex Collins, ChFC, CFP: what? And he doesn't even think about it from a standpoint of like what he was investing in.

184

00:13:59.410 --> 00:14:05.559

Alex Collins, ChFC, CFP: He just thinks of it as like. Oh, the first time I invested the market didn't do well

185

00:14:05.740 --> 00:14:06.400

Ryan Burklo: right

186

00:14:06.680 --> 00:14:08.370

Alex Collins, ChFC, CFP: and like you

187

00:14:08.630 --> 00:14:12.700

Alex Collins, ChFC, CFP: like. I'm not even a 100% sure. I know exactly when the timeframe was

188

00:14:13.050 --> 00:14:15.640

Alex Collins, ChFC, CFP: because he's been super vague on it with me.

189

00:14:16.120 --> 00:14:19.049

Alex Collins, ChFC, CFP: But at the same time it's one of those things where it's like.

190

00:14:19.900 --> 00:14:26.219

Alex Collins, ChFC, CFP: He could have simply selected or been sold the wrong investment vehicles or

191

00:14:26.390 --> 00:14:29.510

Alex Collins, ChFC, CFP: stocks that didn't perform well, or whatever else.

192

00:14:29.570 --> 00:14:32.469

Alex Collins, ChFC, CFP: and that personal experience

193

00:14:32.760 --> 00:14:37.119

Alex Collins, ChFC, CFP: wasn't reflective of what the market did Wasn't reflective of what

194

00:14:37.380 --> 00:14:40.950

Alex Collins, ChFC, CFP: you know was reality at the time, or maybe it was

195

00:14:41.040 --> 00:14:42.419

Alex Collins, ChFC, CFP: either way

196

00:14:43.070 --> 00:14:45.669

Alex Collins, ChFC, CFP: whenever he made up his mind.

197

00:14:45.750 --> 00:14:47.109

Alex Collins, ChFC, CFP: Since then

198

00:14:47.450 --> 00:14:50.590

Alex Collins, ChFC, CFP: the market has been a phenomenal place to put money.

199

00:14:50.820 --> 00:14:55.479

Alex Collins, ChFC, CFP: and by and large he's avoided it because of that first initial experience.

200

00:14:55.680 --> 00:14:58.149

Alex Collins, ChFC, CFP: good, better and different. We can debate that.

201

00:14:59.530 --> 00:15:01.490

Alex Collins, ChFC, CFP: But it that's been the reality.

202

00:15:01.730 --> 00:15:08.110

Ryan Burklo: Yeah. So like, you know, to our listeners, what have you experienced that as you think one way that might be actually different.

203

00:15:11.220 --> 00:15:27.710

Ryan Burklo: and you may not have a way of answering that question. You know part part of today's up. So we're going through these 3 examples is the prime reason to make sure you've got someone in your life that you can talk to about your different financial decisions, or talk about just finances in general that understands the financial world. That is an expert in that arena

204

00:15:29.410 --> 00:15:32.710

Alex Collins, ChFC, CFP: when there's I can't tell you the number of times, Ryan, where.

205

00:15:32.750 --> 00:15:35.139

Alex Collins, ChFC, CFP: like we've had conversations with folks.

206

00:15:35.630 --> 00:15:38.239

Alex Collins, ChFC, CFP: and like they come back, and they're like.

207

00:15:38.350 --> 00:15:40.650

Alex Collins, ChFC, CFP: Wow! I did not understand that.

208

00:15:40.930 --> 00:15:41.750

Alex Collins, ChFC, CFP: or

209

00:15:41.940 --> 00:15:45.690

Alex Collins, ChFC, CFP: I wish I would have met you 10 years ago 20 years ago, like

210

00:15:46.060 --> 00:15:49.179

Alex Collins, ChFC, CFP: depending on how old they are like what their timeframe is.

211

00:15:50.780 --> 00:15:54.099

Alex Collins, ChFC, CFP: and like the the response that we come back with is

212

00:15:54.340 --> 00:15:56.250

Alex Collins, ChFC, CFP: okay. Well, yeah, I mean.

213

00:15:56.440 --> 00:15:59.060

Alex Collins, ChFC, CFP: yeah, I wish I would have met you 20 years ago as well.

214

00:15:59.250 --> 00:16:00.200

Alex Collins, ChFC, CFP: And

215

00:16:00.960 --> 00:16:02.390

Alex Collins, ChFC, CFP: The only thing we can do is

216

00:16:02.460 --> 00:16:07.659

Alex Collins, ChFC, CFP: like make choices slightly differently from here. Moving forward.

217

00:16:07.850 --> 00:16:09.699

Alex Collins, ChFC, CFP: When you're looking into the past.

218

00:16:09.850 --> 00:16:12.999

Alex Collins, ChFC, CFP: you're going to constantly beat yourself up because

219

00:16:13.550 --> 00:16:17.060

Alex Collins, ChFC, CFP: it's easy to see what could have would have, and should have been done

220

00:16:17.830 --> 00:16:19.390

Alex Collins, ChFC, CFP: looking backwards

221

00:16:19.770 --> 00:16:23.319

Alex Collins, ChFC, CFP: and much, much more challenging to do so. Going forwards.

222

00:16:23.370 --> 00:16:24.000

Yep.

223

00:16:25.050 --> 00:16:30.310

Ryan Burklo: Present takes us to number 3 which might encompass a lot of what we've been talking about, and number 3 is.

224

00:16:30.520 --> 00:16:34.060

Ryan Burklo: you know, your personal experience has led you to think

225

00:16:35.380 --> 00:16:40.469

Ryan Burklo: how money works in a specific way is is our is our guess.

226

00:16:41.530 --> 00:16:50.689

Ryan Burklo: And this happens all the time to outs. Just brought it up like people will say to us: oh, I wish I would have met you 10 years earlier, because I wish I would have known it work that way, or should have looked at it a certain way.

227

00:16:51.370 --> 00:16:53.080

Ryan Burklo: And when we talk about how many works.

228

00:16:53.250 --> 00:16:59.360

Ryan Burklo: I I guess the key ingredient, the example that I can give to you is this: it's a another personal story.

229

00:16:59.860 --> 00:17:00.920

Ryan Burklo: When

230

00:17:01.450 --> 00:17:10.069

Ryan Burklo: when I was growing up, my my mother and father made certain financial decisions, and to this day they still make personal financial decisions. I without talking to me.

231

00:17:10.400 --> 00:17:18.519

Ryan Burklo: and my my father was talking to me one day about, you know, investing and interest rates.

232

00:17:18.550 --> 00:17:22.489

Ryan Burklo: and he was of the the impression that

233

00:17:23.430 --> 00:17:26.590

Ryan Burklo: all debt should get paid off as fast as possible.

234

00:17:27.800 --> 00:17:29.390

Alex Collins, ChFC, CFP: Something that we've heard

235

00:17:30.670 --> 00:17:32.050

Alex Collins, ChFC, CFP: quite a lot.

236

00:17:32.540 --> 00:17:38.450

Alex Collins, ChFC, CFP: and is not common to your father. It is not. It is not just your father that thinks that way

237

00:17:38.600 --> 00:17:39.870

Alex Collins, ChFC, CFP: even now

238

00:17:40.060 --> 00:17:45.110

Ryan Burklo: what it makes sense, and it. And actually in the book. He even describes this. Think about this for a second

239

00:17:45.510 --> 00:17:46.730

Ryan Burklo: interest. Rates

240

00:17:46.760 --> 00:17:56.479

Ryan Burklo: have not always been so low as as we've experienced in the last decade. Interest rates have been a lot higher like when used to buy home. It was double digit interest rates.

241

00:17:56.640 --> 00:17:58.289

Alex Collins, ChFC, CFP: if not into the twenties.

242

00:17:59.120 --> 00:18:05.749

Ryan Burklo: And so that generation that was purchasing home and paying a 15% mortgage interest rate

243

00:18:07.380 --> 00:18:08.809

Ryan Burklo: was taught

244

00:18:09.780 --> 00:18:20.760

Ryan Burklo: to pay down their mortgage quickly because it was at 15. And so really what was taken away from that is, and what they taught their children was that is bad. Pay it all off.

245

00:18:21.480 --> 00:18:25.310

Alex Collins, ChFC, CFP: Well, i'll take it one step further, Ryan. A couple of generations before that

246

00:18:26.920 --> 00:18:29.539

Alex Collins, ChFC, CFP: we had mortgages that were callable.

247

00:18:29.740 --> 00:18:30.460

Ryan Burklo: Hmm.

248

00:18:30.790 --> 00:18:33.490

Alex Collins, ChFC, CFP: And so like. Imagine.

249

00:18:33.540 --> 00:18:40.960

Alex Collins, ChFC, CFP: you know, you got buy a house for a 1 million dollars, you plunk down 150,000, so you owe 8 50 on it.

250

00:18:41.210 --> 00:18:43.490

Alex Collins, ChFC, CFP: and like 3 years later

251

00:18:43.750 --> 00:18:46.020

Alex Collins, ChFC, CFP: you get a message from the bank going.

252

00:18:46.040 --> 00:18:54.539

Alex Collins, ChFC, CFP: Hey? You've got 90 days to pay us the $835,000, or or whatever the current balances that's unpaid off

253

00:18:55.620 --> 00:18:56.370

Alex Collins, ChFC, CFP: like

254

00:18:57.620 --> 00:18:59.890

Alex Collins, ChFC, CFP: What's the likelihood that you're going to be able to do that?

255

00:19:00.200 --> 00:19:00.790

Ryan Burklo: Yep.

256

00:19:01.350 --> 00:19:06.169

Alex Collins, ChFC, CFP: The average person today likelihood of about 0

257

00:19:06.700 --> 00:19:14.309

Alex Collins, ChFC, CFP: likelihood of like you and I, Some of our clients. Sure, we might be able to like scrape together enough to like

258

00:19:14.500 --> 00:19:19.949

Alex Collins, ChFC, CFP: figure out like other versions of financing, or some other way of coming up with the funds.

259

00:19:21.760 --> 00:19:26.080

Alex Collins, ChFC, CFP: But what wound up happening was a ton of these people wound up, getting foreclosed upon.

260

00:19:26.280 --> 00:19:34.589

Alex Collins, ChFC, CFP: and therefore one of the things that stuck with them was, Pay off your mortgage, pay off your mortgage, pay off your mortgage because it is

261

00:19:35.150 --> 00:19:38.379

Alex Collins, ChFC, CFP: an axe hanging over your head. That is callable.

262

00:19:38.740 --> 00:19:39.390

Alex Collins, ChFC, CFP: Well.

263

00:19:39.890 --> 00:19:43.489

Alex Collins, ChFC, CFP: loans today. Aren't callable. So it does like. There's this

264

00:19:43.510 --> 00:19:49.499

Alex Collins, ChFC, CFP: ethos that's been handed down from one generation to the next of you. Got to pay off your mortgage

265

00:19:49.900 --> 00:19:52.229

Alex Collins, ChFC, CFP: for something that no longer exists.

266

00:19:53.200 --> 00:19:54.120

Ryan Burklo: Yeah, and

267

00:19:54.700 --> 00:19:56.200

Ryan Burklo: we're not saying that

268

00:19:56.250 --> 00:19:59.040

Ryan Burklo: you should not pay off high interest rate debt.

269

00:19:59.070 --> 00:20:05.070

Ryan Burklo: I want to make sure that it's gonna come across clearly, like if you have double digit interest rate, that yeah, you should probably be paying that off.

270

00:20:05.570 --> 00:20:07.859

Alex Collins, ChFC, CFP: We're not even saying don't pay your mortgage off.

271

00:20:08.310 --> 00:20:18.009

Ryan Burklo: Yeah, no, we're not saying that either. It's more of a blanket statement of all that is bad paid off, and that may or may not make sense depending on your personal situation

272

00:20:18.580 --> 00:20:19.540

Alex Collins, ChFC, CFP: correct.

273

00:20:20.130 --> 00:20:21.319

Ryan Burklo: So I want.

274

00:20:21.470 --> 00:20:33.359

Ryan Burklo: you know the grand message today is like, Look your person, Experience doesn't make up a lot of what's actually happened in the world. Financially speaking, a lot of other stuff has happened.

275

00:20:34.090 --> 00:20:41.859

Ryan Burklo: and you're using your personal experience, or you may be using your personal experience to make the bulk of your financial decisions.

276

00:20:41.920 --> 00:20:43.410

Alex Collins, ChFC, CFP: and whether or not that is.

277

00:20:44.040 --> 00:20:47.630

Ryan Burklo: whether or not that is right or wrong.

278

00:20:48.770 --> 00:20:51.190

Ryan Burklo: we don't know we're just having you just

279

00:20:51.270 --> 00:20:54.659

Ryan Burklo: double check and have someone to bounce that idea off of.

280

00:20:55.280 --> 00:20:58.320

Alex Collins, ChFC, CFP: and we all have a bias towards

281

00:20:58.660 --> 00:20:59.810

Alex Collins, ChFC, CFP: our

282

00:21:00.170 --> 00:21:01.160

Alex Collins, ChFC, CFP: own.

283

00:21:01.230 --> 00:21:03.789

Alex Collins, ChFC, CFP: like experiences in our own views.

284

00:21:03.920 --> 00:21:14.849

Alex Collins, ChFC, CFP: and in the absence of being open and learning and absorbing additional viewpoints, and really studying how finance works.

285

00:21:15.920 --> 00:21:19.319

Alex Collins, ChFC, CFP: we're really going to default to the things that we were taught by our parents

286

00:21:19.440 --> 00:21:22.629

Alex Collins, ChFC, CFP: that we have known for the longest period of time.

287

00:21:22.860 --> 00:21:25.080

Alex Collins, ChFC, CFP: And so one of the things that

288

00:21:25.550 --> 00:21:28.490

Alex Collins, ChFC, CFP: R. And I are suggesting. Here is.

289

00:21:29.120 --> 00:21:30.599

Alex Collins, ChFC, CFP: Be open.

290

00:21:30.700 --> 00:21:35.790

Alex Collins, ChFC, CFP: Be students, and learn about how finances work.

291

00:21:35.930 --> 00:21:38.030

Alex Collins, ChFC, CFP: because your experience

292

00:21:38.270 --> 00:21:40.360

Alex Collins, ChFC, CFP: is different from

293

00:21:41.000 --> 00:21:43.380

Alex Collins, ChFC, CFP: just about everybody else's on the planet.

294

00:21:43.540 --> 00:21:44.630

Alex Collins, ChFC, CFP: and

295

00:21:45.750 --> 00:21:48.100

Alex Collins, ChFC, CFP: it may be creating a bias for you.

296

00:21:48.230 --> 00:21:48.860

Ryan Burklo: Yep.

297

00:21:49.070 --> 00:21:51.270

Ryan Burklo: which takes us to the question of the day ox.

298

00:21:51.510 --> 00:21:54.840

Alex Collins, ChFC, CFP: Our question today is, how has he has

299

00:21:54.870 --> 00:21:55.649

Alex Collins, ChFC, CFP: do that?

300

00:21:55.720 --> 00:21:58.300

Alex Collins, ChFC, CFP: How have your personal experiences

301

00:21:58.880 --> 00:22:02.879

Alex Collins, ChFC, CFP: skewed your view, and the decisions that you make

302

00:22:03.110 --> 00:22:04.760

Alex Collins, ChFC, CFP: around money?

303

00:22:05.820 --> 00:22:12.240

Ryan Burklo: So head over to beer and money.net, and at the top of that page there is a spot that says, contact us.

304

00:22:12.450 --> 00:22:18.619

Ryan Burklo: and that's where you can either answer that question. Now this might be a question more so for you to to really internalize.

305

00:22:18.790 --> 00:22:23.510

Ryan Burklo: But if anything came up from this episode, and you're like man, I wish they would have spoken more into X.

306

00:22:24.170 --> 00:22:27.160

Ryan Burklo: That's a great place for you to reach out to us, and let us know

307

00:22:27.270 --> 00:22:30.129

Ryan Burklo: that you have an idea for us that you would like for us to talk about.

308

00:22:30.520 --> 00:22:32.410

Alex Collins, ChFC, CFP: or

309

00:22:33.010 --> 00:22:34.559

Ryan Burklo: if you had. If

310

00:22:34.720 --> 00:22:44.800

Ryan Burklo: you want to talk to us about that, that's a great spot, like if you want to talk to us personally and say, hey, maybe Ryan and Alex might be able to help me in my personal situation. It's a great spot to it. Reach out to us as well.

311

00:22:45.570 --> 00:22:52.030

Ryan Burklo: Look this episode. We started bearing money to talk about money in a simplistic, hopefully fun

312

00:22:52.120 --> 00:22:56.899

Ryan Burklo: and engaging way, so that you can make financial decisions and act upon them.

313

00:22:57.370 --> 00:23:00.670

Ryan Burklo: If you got any value out of this share with a friend, share with the comrade.

314

00:23:00.970 --> 00:23:02.349

Ryan Burklo: share with your parents

315

00:23:02.680 --> 00:23:05.129

Ryan Burklo: right, because that's the whole purpose of this podcast.

316

00:23:06.450 --> 00:23:09.649

Ryan Burklo: We hope this episode was valuable, and it's always Mr. Collins

317

00:23:10.220 --> 00:23:11.230

Alex Collins, ChFC, CFP: cheers.

This podcast is for informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. Guest speakers and their firms are not affiliated with or endorsed by PAS, Guardian, or Quantified Financial Partners and opinions stated are their own. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. All investments and investment strategies contain risk and may lose value. This material is intended for general public use. By providing this content, Park Avenue Securities LLC is not undertaking to provide investment advice or a recommendation for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact a financial representative for guidance and information that is specific to your individual situation.

Ryan & Alex are Registered Representatives and Financial Advisors of Park Avenue Securities LLC (PAS). OSJ: 200 Market Street Ste. 1850, Portland OR 97201 Ph 503-221-1226. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representatives of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly-owned subsidiary of Guardian. Quantified Financial Partners is not an affiliate or subsidiary of PAS or Guardian. Ryan Burklo, AR Insurance License # 15319412, CA Insurance License # 0K24924, Alexander Collins AR Insurance License # 7264699, CA Insurance License # 0H24806. #2023-149114 Exp 01/2025

Episode 183 - 3 Examples of How Personal Experiences with Money May Not Reflect The Real World

finance

financial planning

Follow:

finance Episodes

money Episodes

personal financial planning Episodes

Recent Episodes