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  • Hey, it’s Marie Forleo and you are watching MarieTV, the place to be to create a business

  • and life you love. And today I’m so excited because were talking about one of my favorite

  • topics of all time: money. You know this if youve been watching the show. I love money.

  • I love what it can help you do in the world and obviously it touches every aspect of our

  • lives. So I think that no matter where you are economically and where I am, we always

  • have room for growth. Right? Not only in terms of our net worth, but, more importantly, our

  • relationship to money and how it impacts every decision that we make. My guest today has

  • made a huge impact on my financial life and my hope is he’s gonna help you do the same.

  • David Bach has helped millions of people around the world take action to live and finish rich.

  • He’s one of the most prolific financial authors of our time with 11 consecutive national

  • bestsellers, 9 consecutive New York Times bestsellers, with more than 7 million books

  • in print in 18 languages. His most popular book, The Automatic Millionaire, spent 31

  • weeks on the New York Times bestseller list. He’s a media favorite, having done thousands

  • of appearances on television, radio, and print, being on the Today Show over 100 times, and

  • Oprah 6 times. He’s also an entrepreneur as the founder of Finish Rich Media. His programs

  • have done over 100 million in sales and he comes to the table of financial education

  • with a lifetime of investment experience. What he’s most proud of , though, are his

  • sons Jack and James. David is married and lives with his family in New York City.

  • David, thank you so much for coming onto MarieTV.

  • It’s… I’m thrilled to be here, Marie. It’s great to see you.

  • It’s great to see you. And I wanted to just say publicly, years ago when I first picked

  • Smart Women Finish Rich it was such a lifechanger for me and ever since I’ve read so many

  • of your books. I’ve followed you for years and years and years. So this is like such

  • a beautiful, full circle moment because you were such a huge part of me getting my financial

  • life together and it’s just really an honor to sit here with you today because there’s

  • even more to discuss and money is one of my favorite topics in the whole wide world.

  • Little high five, give me that high five. Look, I… I’m so excited to be here. And,

  • you know, weve known each otherwhen did we meet? Like 10 years ago?

  • Yes.

  • And youve come so far. So I know now I’m here excited to be on your stage and I’m

  • so proud of you because youve accomplished so much.

  • Thank you.

  • So thank you for having me.

  • Absolutely. Well, one of the first places I think most people think of when they want

  • to get their financial life together is let’s go to the numbers. Let’s break out the checkbook,

  • let’s get the spreadsheet open, let’s start adding things up, and you have a different

  • approach. You say that’s… that’s not where we should start and it’s kind of counterintuitive.

  • In fact, you write, “We need to start with our values because your values can determine

  • how hard youre willing to work to achieve your financial goals…”

  • Right.

  • “...how much money you currently spend, and how much money you will actually need

  • for retirement.” So walk us through the importance of starting with our values and

  • how we can do this.

  • Ok, well, so I love the fact that you started with the hardest thing that I teach. But it’s…

  • it is the most important thing because when your values are clear, your financial decisions

  • become easy. Andand the biggest thing that holds us back, we all know what we should

  • do. I mean, most of what I’ll talk about today, people know they should do it. Everybody

  • knows you should save more money and they should pay down their debt, all these things

  • that we know we should do. We should have a will, we should have life insurance. We

  • should ourselves to death. Wewe don't do what we know we should do and that’s

  • because there’s a disconnect. So the way you break through the disconnect is by being

  • clear on your values. So this is hard to explain, like, with sound bytes but I’ll give you

  • an example from, like, being onwhen I teach this stuff on stage.

  • Yeah.

  • Or with my clients one on one. You know, youve got a friend of ours, Tony Robbins was here

  • recently. He did thehis new book and Tony and I and Donald Trump did this tour together

  • for a while where we toured all over North America, the US, and Canada. This was before

  • the recession. And we would have these huge venues, you know, between 15 to 30 thousand

  • people. Unbelievable. So much fun. And I would come out on stage and the first question,

  • you know, everybody’s fired up. Right? Youve got 30 thousand people in a room and I’d

  • come out and I’d say, you know, “I… I have a question for you. And my first question

  • is, do you wanna be rich?” And youlleverybody’s all fired up, right? So theyre

  • like, “Yeah! We wanna be rich!” I’m like, “Turn to your neighbor, tell him how

  • rich you wanna be.” “I wanna be rich!” Everybody’s all excited, right? And then

  • I let the room get quiet, which if it’s a big room that’s pretty, you know, like

  • take the… I just stand on stage and let the room quiet down. And I’d say, “Really?

  • You want to be rich? Why?” And everybody would start looking at me like... “Why do

  • you wanna be rich? Some of you, by the way, you said you wanted to be rich. Some of you

  • just want to be financially secure. Right? Like, some of you are here just to be secure.

  • By the way, some of you are here to just get back to even. Youre like, ‘I just don't

  • wanna be in debt anymore.’” So I said, “But my question is, why?” Now, the way

  • were programmed and the way were marketed to, your brain startsyou ask a question

  • and your brain starts looking for answers. People then think that their answer is supposed

  • to be a goal. It’s supposed to be a numerical money goal. Like, “Well, I want a million

  • dollars or I want a bigger home or I want a bigger car.” And goals are really important,

  • but theyre not where you start. Because what happens is people get all motivated and

  • excited about a goal, but then the real world hits them and as soon as it gets hard they

  • get off track. So what I’ve taught for, God, almost 20 something years, and it started

  • with my clients in Morgan Stanley, is, yes. Weve got financial goals, but were gonna

  • look at values first. And when you get clear on your values, youll be unstoppable. And

  • then we can take your values, what you just said is most important to you, and we can

  • align them with your goals so that they come together and theyre not in conflict. And

  • then nothing can hold you back.

  • And so what are some of the most common values that you have seen that people either have

  • not articulated, like is it freedom, is it family, is it, you know… I don't know. What

  • are some of the things that people…?

  • Well, so, like, you know, in the book I give you, like, a list of values. Right?

  • Yeah.

  • But don't… you don't just have to copy them. Right?

  • Right.

  • Like, people have pretty common values. You know, family, security, freedom, making a

  • difference. Thehere’s what you do, because it’s not that complicated. You take out

  • a pad of paper, you can do this in 5 minutes, and you write out all your values. All the

  • values you can think about. And then what I recommend you do is you circle 5 of them.

  • You come up with your 5 favorite values and I… in the book, Smart Couples Finish Rich,

  • it’s a value circle. In Smart Women Finish Rich it was a values ladder and I’ll just

  • explain the difference for a sec.

  • Sure.

  • Because in Smart Women Finish Rich I taught people a hierarchy system which was identifying

  • your highest value. And, by the way, for some people that was tough. So I started realizing,

  • like, it’s not just about your highest value. Let’s look at your 5 most important values,

  • get them down on paper, if youre in a marriage or relationship have your partner do this.

  • Once the value is down on paper, then let’s look at your money. And let’s look at are

  • you spending money in a way that is getting you closer to your values or are you spending

  • money in a way that’s getting your further from your values? And so what I really find

  • when I work with clients or coaching people one on one, a lot of people’s lives are

  • in complete conflict with their values and they don't realize it. Once they see it on

  • paper, it’s like a huge wakeup call.

  • Wow.

  • That can apply to everything, that can apply to your business, that can apply to your health.

  • So I don't thinkand also the key about values is it’s likeit’s God given.

  • Right? Like, people are basically born perfect. Right? Like, there’s… youre good the

  • way you are. It’s inside of you. The magic pill that were all looking for, it’s

  • already in you. You just have to get clear about it.

  • Yeah. I love that. And it gets us in touch too, for me, there’s such a sickness in

  • what I see in society with more, more, more, more, more. Just like that question, “Well,

  • why do you want to be rich? Do you really want those things?” And I’ve had several

  • points in my career where I feel like there was a lot of external noise to go bigger and

  • go for a TV show and do this and you should want…” and I really always had to stop

  • and check myself because it felt so out of alignment with who I genuinely am and what

  • I want. And this great question of, like, well, how hard are you willing to work? And

  • is it really worth it? So I love this idea of starting off with our values and getting

  • some alignment between what we say is important and how we demonstrate that through

  • It’s really being authentic. Right? Like, what you're talking about is who’s your

  • authentic self.

  • Yeah.

  • And also, another thing that holds people back sometimes with money is that they think

  • that money is bad.

  • Oh, goodness gracious. Yes.

  • A lot of people have all kinds of mental issues about money because they were raised, “Well,

  • money. Those people over there, theyre bad people.” When youre authentic yourself,

  • there’s nothing bad with building wealth. Building wealth can free you to live your

  • most authentic self. So to me that’s about living rich.

  • Yeah. And in my own life, money has been such a tool for healing and for good and so I have

  • a really powerful association that it’s a beautiful thing and that’s actually one

  • of the things I’d love to talk about is is so many people there’s a lot of conflict

  • around that. I want it but I shouldn’t want it and it makes me an unspiritual person or

  • it makes me greedy and all this stuff. So great stuff. There’s one big mistake that

  • you say that many of us make with our financial life and fixing it can take less than an hour.

  • We like quick fixes, especially this one that’s this powerful. Tell us about automation.

  • Ok, so I wrote this book called The Automatic Millionaire.

  • Brilliant.

  • And the purpose of that book was everybody coming to me saying, “David, just tell me

  • the one thing I need to do because I don't wanna go through the 9 steps or the 7 steps.

  • I wanna know the one thing.” And I found myself telling people over and over again,

  • There’s this one thing you need to do, and that’s make it automatic.” And they,

  • Well, what does that mean?” So I had to break it down and here’s where it starts.

  • Let me tell you what doesn't work. Ok, so what doesn't work, this is gonna piss some

  • people off but I’m gonna just say it. Budgeting is what doesn't work. So most experts for

  • years come out and say, “Well, you know what you need is a budget. You need to, you

  • know, you need to put the money into different categories and then were gonna figure out

  • where the savings is gonna come from and then were gonnaat the end, you know, take

  • this money here and put it over here.” It doesn't work. Budgeting doesn't work and youve

  • been told to have a budget and use discipline. And the reason it doesn't work is because

  • out in the real world people hate budgeting. They do. It’s like dieting.

  • Yeah.

  • Even if they go on a budget, they will still break the budget later. And in the real world

  • most of us are wired one of two ways. So some people are actually born to budget. They literally

  • came out of the womb with a calculator and they wanna track where all the money goes

  • and theyre liketheyre into this. Right? Then there’s the person whowho’s

  • the opposite of that, which is the spender. And typically we fall in love with our financial

  • opposite. And thatthat creates a lot of fights. So what you do is you go, “Look,

  • budgeting doesn't work, discipline doesn't work. You need to throw that nonsense out

  • and you need to just make it foolproof and you need to make it automatic.” And so what

  • I teach is this, there’s basically 6 or 7 things that you automate. So I can break

  • it out for you if you want.

  • Yeah, go for it.

  • Soand this is how my life is. Right? Like, my life takes 10 minutes a month to track

  • themy financialsall my finances. 10 minutes a month. And this isthat’s about

  • how long it should take for anybody. So, first of all, if youreif you get a paycheck,

  • this is obvious, but the first thing is is that that paycheck gets deposited automatically.

  • Most people get a check manually still to this day. Do you not get…?

  • Really.

  • Still to this day are getting checks. Now, they may be taking a picture with their phone,

  • although thatif it’s a big check they can’t do it with their phone, theyve

  • got to bring it into a bank. That’s why there’s bank branches everywhere. So that’s

  • insane. So first your check should be deposited automatically. If youre self employed or

  • you have your own business, smart businesses all the money comes in automatically. All

  • my clients for the most part, like 95% of those checks are hitting my business account

  • automatically. So that money is coming in automatically, now the question is where does

  • the money go next? So there’s different buckets that the money goes into. The first

  • I call it a basket is pay yourself first. So youve got a pay yourself first basket,

  • and that’s usuallythat’s your retirement account. And I recommend at a minimum you

  • pull 10% from that automatic deposit right into a retirement account. Minimum 10%. Ok,

  • so now weve got 90 cents left. And now were gonna pull some money off into a security

  • account. That security account is for emergencies. People get confused on emergencies. “I need

  • to redo my kitchen.” Not an emergency. Right? You know, like, “I want a new car.” Not

  • an emergency.

  • Yeah, subway tiles in the kitchen.

  • These new shoes just came out. Not an emergency.

  • Not an emergency. Right.

  • Emergencies are emergencies. So that money gets put into a separate account with no checking,

  • no ATM card. Then money starts to go into all the expenses automatically. So anything

  • that can affect your credit score: your mortgage, automatically paid. Always. Your credit cards,

  • minimum payments always paid automatically. So, like, let’s say your minimum payment

  • is 50 bucks a month, I would never want you to only pay minimum payments, but that payment,

  • that first payment, it’s automatically paid then you pay extra. Everything. Utilities,

  • all those bills automatically paid. Then we get down to the fun stuff and that’s charity,

  • we automatically give money to a charity account, and then we automatically give money to a

  • dream account. And the dream account happens to be the one people love the most.

  • I think it’s the one you love the most too.

  • Well, it is the one I love the most because the dream account is like, look, people go

  • everybody knows retirement for most people is far off, but between here and retirement

  • it’s like all the stuff you wanna do with your life.

  • Yeah.

  • So if you put money automatically from that deposit into the dream account, then you start

  • to have money for your dreams. Because I always tell people, “The way you get to your dreams

  • is you buy them.” And then, of course, there’s taxes, which I didn't bring up because I’m

  • assuming if youre employed taxes got pulled out. If youre self employed, the first

  • thing youre doing after you pay yourself first is youre pulling out tax money. And,

  • by the way, that’s where most self employed people blow themselves up.

  • Completely.

  • They don't pull their tax money out automatically, theyre bringing all this money in throughout

  • the year, they think theyre having a great year, theyre spending the money out, they

  • get to the end of the year and they have a huge tax bill and they have no money to pay

  • it.

  • It’s been my philosophy with the folks in my financial life, my accountant, bookkeeper,

  • everyone. It’s always like, “Let’s pay, like…” I just always wanna be safe because

  • I remember one year I just, that’s what happened. It was at the end of the year I’m

  • like, “What is this surprise?” And I said, “From this moment forward, no mas surprises.

  • No mas.”

  • That feeling that comes into your stomach when you realize that you didn't put enough

  • away for taxes.

  • Oh, yeah.

  • And the one person that you can’t get away with not paying is the government.

  • That’s right. Probably one of my favorite things that you teach is how we can start

  • to get a grip on our spending. And one of the most famous things is your latte factor.

  • Right.

  • Can you tell us about the latte factor and how we can put this into use?

  • Sure, so the latte factor is this metaphor I teach which is how we spend small amounts

  • of money on little things. Andand it started because I was teaching a class and I had a

  • young woman named Kim telling me she couldn’t save anything. And I’m like, “You can’t

  • save 5 dollars a day?” And she’s like, “No, I can’t.” And meanwhile she’s,

  • like, sipping a latte from Starbucks. So, you know, this was back when Starbucks was,

  • like, $2.50. Today were here in Manhattan, you go into Starbucks and you have a latte

  • and a muffin and youre walking out, like, 6, 7, 8 dollars poorer. And I started showing

  • people that if you took that small amount of money, 5 to 10 dollars a day, and you redirected

  • it towards savings, paying yourself first, or even paying down your debt. Like, if you

  • redirected it towards paying down your debt, the average person who’s in credit card

  • debt, if they redirected 5 to 10 dollars a day to paying down that debt, they’d be

  • out of debt in 24 months. If they took instead the 5 to 10 dollars a day and they put it

  • in their retirement account, you know, yeah, a lot of people who watch this are in their

  • 20s. You start saving 10 dollars a day and you do that from your 20s until you reach

  • the age of retirement, at a decent rate of return, youre gonna have hundreds of thousands

  • of dollars. You start to earn a 9, 10, or 11% return, you could have over a million

  • dollars by the time you reach retirement. Now, the key is it’s a metaphor. Right?

  • So because people get all pissed off at me. Theyre like, “You know, the only thing

  • I’ve got going for me, David Bach, are my lattes. This isGod, it’s taking away

  • my coffee.” Look, I’m a coffee addict. I love my coffee. I just happen to make it

  • at home for 20 cents.

  • Yeah.

  • But it’s… it could be bottled water, it could be cigarettes, it could be eating out,

  • it could be your martini at night. I’m not trying to take away your fun stuff. I’m

  • not actually trying to do anything but get you to think about the money that you have

  • that you earn. If you keep some of it, life gets a lot easier.

  • Yes.

  • And, you know, so many people’s lives have been changed because that metaphor has made

  • them go, “Ah ha. He’s right and I can find that money,” and theyve redirected

  • that money towards savings. I was just showing you a second ago, I was on… I… authors,

  • we go on Amazon to look at reviews, but it’s been

  • Youre brave. Youre brave.

  • So I haven’t done that in a long time, so I went on Amazon this morning ironically and

  • I was looking at The Automatic Millionaire and it was at 500 reviews and the last review

  • was this woman, I think it was a woman. It was either a woman or a man, becausebut

  • she hadshe said, you know, the title of it was, “It seems too good to be true, but

  • it’s not,” and she proceeded telling this story about how her friends 10 years ago thought

  • that she should go bankrupt. It says right there, everybody told me to go bankrupt, I

  • was in credit card debt, I had no money, and she's like now I’m out of credit card debt,

  • I have a home free and clear, and I have a 7 figure net worth.

  • Wow.

  • Andand it… I am… I don't know for a fact, but I'm pretty sure the latte factor

  • was probably a big trigger for her. Because that’s what gets people to go from, “Yeah,

  • I should do it,” to actually doing it.

  • So what’s the practice? There’s… is there a 7 day challenge?

  • Ok, so let me just give you the history of this latte factor thing. So I would teach

  • this and I would tell people, “You need to track your expenses for 30 days. For 30

  • days go track your expenses,” and like 2 people did it. Right? So then I was like,

  • Ok, you know what? The 7 day challenge.” In fact, I think we did this onwe did

  • this on Oprah. You know, for 7 days track your latte factor. Oprah when I did that on

  • the Oprah show, we showed the latte factor and she pulled off a cloth and showed this

  • woman’s latte factor and we had a quarter of a million dollars in cash sitting on this

  • table. And we told people, for 7 days track your expenses. A lot of people did that. Like,

  • tens of thousands of people tracked their expenses for 7 days. So I would love it if

  • people would go and take the challenge and for 7 days track where their money is going.

  • Everything. You know, people are like, “Well, does that include cash?” Yes. Does that

  • include my ATM card? Yes. Checks? Yes. Visa? Everywhere your money goes for 7 days, track

  • it. And then at the end of 7 days look at it and tell yourself, “What’s in here

  • that could be changed?” Now, I will say this, some people can’t get through 7 days.

  • Really.

  • Really. So a lot of times, and I could do it right now, I say, “You know what? Just

  • do it for one frickinday!” One day! One day, just take one day and take a pad

  • of paper and just write down where your money goes for one day. And the only key here is

  • don't change who you are during that day. Don't go, you know, don't change your behavior,

  • just spend money like you always do. And, again, if youre in a relationship, have

  • your partner do this. And then look at it and be honest with yourself. You know, I always

  • Benjamin Franklin was famous for saying, “A penny spent… a penny saved is a penny earned.”

  • Well, today I’d say 5 bucks saved is 5 bucks earned. For some people the latte factor is

  • not 5 bucks, it’s 100 bucks or it’s 100 thousand dollars. I’ve done speeches for

  • people where the average liquid net worth in the room was 10 million dollars and I’d

  • have the person say, “Don't talk about the latte factor,” and I’d say, “Don't worry,

  • I will. I’m gonna bring it up to their jets and their 5th home that they don't use.”

  • And people would come up and be like, “He’s right! I have a 5th home and I never use it.”

  • You know? “That’s my latte factor. We don't need the 5th home.” And, you know,

  • wherever that 5th home was. Sobut it’s a metaphor to look at where you spend money.

  • And you and I were talking before we started this that what people do, it’s fascinating.

  • Theythey inflate what they earn in their mind and they underestimate what they spend.

  • So if someone’s making let’s say 55 thousand dollars a year. If I ask them, “What do

  • you make a year?” Theyre gonna tell me not 55, theyre gonna tell me 60. People

  • always do this, they alland they mentally do it too. A person who’s making 80 mentally

  • puts it as they make 100. Andbut they don't. And then they tell you, if somebody

  • tells me theyre spending 70, I promise you theyre not spending 70, theyre spending

  • 80 or 90. So wewe inflate in our minds what we earn and we underestimate what we

  • spend and it’s actually the opposite. You need to spend less than you earn and then

  • you need to increase what you make. If youif you spend less than you earn and you increase

  • what you make, it’s total victory.

  • Yeah. I feel like I have had such an advantage because I grew up and my mom knows how to

  • stretch a dollar bill around a block, like, 7 times, so that’s kind of in my DNA to

  • be extraordinarily frugal and to watch every penny. And it’s served me well and, I’m

  • telling you, I’m really, really grateful for that upbringing. You know, you mentioned

  • relationships and that’s exactly where I want to go next. You know, money can be such

  • a tough issue between you and your partner, within a family if you have kids. So what

  • are some things that we can do to empower ourselves and to open up those dialogues with

  • the people that we love about money so we can get on the same page?

  • So, first of all, it’s a really good question. Right? And I think fighting about money is

  • the number one thing that breaks up couples. So fighting about money actually just destroys

  • families. This is the thing that’s so sad to me because it’s so fixable. And so it

  • leads to divorce, it leads to alcoholism, it leads to drug addiction. It ismoney

  • issues break apart the American family. So howhow do you fix this? And here’s what

  • I tell couples. First of all, identify when you have your money fights. So when do most

  • people talk about money? Across the board they talk about it typically when theyre

  • paying the bills. And soand usually one person is paying the bills. So that person

  • is usually somewhat aggravated or pissed off and thattheyre like, “Hey, I need

  • to talk to you about what’s going on,” and youre likeyoure walking through

  • the room youre like, “What? I didn't…” youre not ready. So it’s really important

  • that what couples do is they identify when theyre talking about money, don't talk

  • about it when you pay the bills, don't talk about it  when youre in bed. You know?

  • Look, you wanna get some nookie, don't be talking about money in bed.

  • Damn right, absolutely.

  • People get in the car, theyre on a trip, they locktheyre like, “Ok, let’s

  • talk about money now.” No, wrong. What you do is you create a money date. And a money

  • date is just were gonna set aside some time, it could be an hour, first money date.

  • Youve got kids, not with the kids, you know, get a babysitter for the kids. Get out

  • of the house and have a time that youre both ready. Youre like, “Look, we may

  • not wanna even do this money conversation, but I wanna start. And let’s have a date

  • for an hour and let’s bring up whatever it is you wanna talk about.” Now, I walk

  • you through in Smart Couples how to have these money dates, but I’d recommend what you

  • do is, you know, maybe start off with the positive. Like, talk about what’s working

  • in your life instead of going like, “You know, you suck. You do everything wrong.”

  • Right?

  • Yeah.

  • You know, get yourself on the same page and the fastest way I think couples can align

  • together is that you start by getting organized. Organizing all your financial documents. I

  • have this thing called the Finish Rich File Folder System. Maybe we can put a couple of

  • links underneath this.

  • Of course. 100%. Right below the episode.

  • And, you know, like a little tool where you organize all your financial documents at home.

  • And the reason that’s really powerful is that you can work on it together. A big thing

  • happening right now is everybody’s cleaning out all, you know, simplifying their lives

  • and cleaning out all their junk and I always say the best thing you can do is clean out

  • your financial junk and organize all your little stuff because then you really feel

  • powerful over your money and you can start from there.

  • Josh and I have a great blessing in that we are very aligned with our values about money.

  • And it’s actually super fun. Like, I love opening up that money conversation. It’s

  • not always easy, there’s definitely been times when weve had fireworks, I think

  • like any couple. But I find those conversations to be so rich because in my experience, we

  • always tie it back to, “Well, what else do you wanna create? Like, what else do we

  • wanna experience? And how do we wanna keep shifting our lives so that theyre really

  • in alignment with who we feel we really are?”

  • And what could be cooler?

  • Right?

  • Right? You know, youveyouve found your soulmate, he’s lucky because he found

  • you. I haven’t met Josh, I’m sure he’s the most amazing guy.

  • He’s a really cool dude.

  • You guys are aligned with your values and youre working as a team together. That’s

  • the whole key. When youre fighting over money youre like 2 teams battling it out.

  • You can’t ultimately win. And also if you have kids, if your kids see you fighting about

  • money, theyre gonna grow up to fight about money. That’s why often we just perpetuate

  • what we grow up with.

  • Right. Love the suggestion. I love the money date. Let’s talk a little bit about people

  • that maybe have been able to move past being tremendously in debt and theyve gotten

  • themselves to a level of security where, like, things are starting to be ok. What are some

  • of the mistakes that you see people make when they start to get to that next level and

  • and everything’s kind of coasting?

  • Oh my God. So I wish wedo we have an hour for this part? Soso, you know, I always

  • say, like, “Look, the hardest thing to do is to make your first million and then the

  • easiest thing to do is lose it.” Soso wherever you… I see people, theythey

  • do really well. Right? They grow their income. And then they just blow it. And one of the

  • things that happens when you start to make a lot of money and have a lot of money is

  • that really sophisticated people come by to separate you from it. So let me tell you

  • let me give you some… a handful of things that people…  this applies to anybody but

  • this is what happens when people get a lot of money. Or even just disposable money. People

  • come to you with what I would call a sophisticated investment. Ok? If the investment is complicated,

  • if you can’t explain the investment with a crayon and one piece of paper, there’s

  • something wrong with that investment. I don't care what the investment is. Like, if it’s

  • too complicated to explain it, you should never be investing in it. Second thing I’ll

  • tell you, if it’s not liquid, if someone says, “You… I want you to invest in this,”

  • the question you ask is, “When can I sell it?” The answer you wanna hear typically,

  • like, almost always is that you can sell it in less than 5 days. So I’ll give you an

  • example. Mutual funds. Youre in and out in less than 5 days. Money’s coming back

  • to you. Bonds. In and out. Gold, silver, commodities, stocks. You can be inthose are liquid

  • investments. They maybe should be long term investments, but you can sell them. If you

  • buy a condo or a commercial condo, you own this commercial condo, you can’t get out

  • of it in 5 days. But if you own it, really good chance you can be out of this in less

  • than 120 days, 6 months maybe max. That’s a liquid investment. What’s not liquid?

  • Limited partnerships. Ok, you know, 9 years at Morgan Stanley, investment, you know, in

  • front of a thousand individual investors, I get to see everything, I get to see the

  • statements. I see where people lose their money. You see an investment, they put in

  • 250 thousand dollars and now it’s worth nothing. What was it? Limited partnership.

  • What’s the lesson? Not liquid. Those things are always patched up, theyre just typically

  • crap products, and people get burned. The big thing right now non traded rates. Like,

  • I’m giving you examples of sophisticated investments thator, not even sophisticated.

  • Where probably 10 billion dollars last year went into non traded rates.

  • Wow.

  • All the similar things that are with limited partnerships. People are gonna get so burned.

  • So many people are gonna gettheyre already getting burned by these investments.

  • But the thing is is that it’s a… it’s not a liquid investment. So avoid non liquid

  • investments. What are other simple mistakes that people make who have money? Ok, they

  • don't have a will. Alright, let’s just start with a will. Now, people whowho have money

  • don't have wills and people who don't have money don't have wills. But if you have money

  • and you don't have a will, you have a business and you don't have a will, shame on you. Ok.

  • 50% of people with money don't have wills. I see people who work their whole life to

  • build wealth for their family, their value’s family. You don't have a will the first thing

  • that happens is that your family fights over that money. And it destroys families. So if

  • youre watching this, don't tell me that you should get a will done. Get your ass into

  • an attorney’s office and get the will done. Life insurance. A lot of people candidly are

  • underinsured. Now, if youre not rich youre underinsured too probably. For a hundred bucks

  • a month the average family can protect their family in the case of if someone dies early.

  • 100 bucks could buyfor the averagedepends on your age. 30, 40, 50 if youre

  • healthy, 50 to 100 bucks a month a person can buy a term insurance policy, family is

  • totally protected. So there’s so many of these things.

  • Yeah. This one’s great and, I have to tell you, the will thing for me for a while it

  • was one of those things whereand mine’s done. Everything’s all taken care of.

  • High five again.

  • I know. It was reallyit was one of those relief things where it was on my mind and

  • I’m like, “I just need to get this done.” And the moment I signed off on everything,

  • there was such a sense of peace and relief. Given the world that we live in today, and

  • it’s not even just today. Any moment, you know, you could walk down the street, hit

  • by a bus. Who knows what’s gonna happen. But that sense of relief that I felt was unbelievable.

  • It was a new sense of freedom that, like, I can just create, I can do whatever. And

  • God forbid something happens, I know it’s… things are gonna go the way that hopefully

  • I intend them to.

  • Well, and, you know, there’s other parts of wills too. Like the living health clause

  • part of the will.

  • Yes.

  • But one thing I’ll say about wills, because theyre living, breathing documents. So

  • as someone’s watching, theyre having more and more success, that will may need

  • to be changed.

  • Yes.

  • As you obviously as you have kids or grandchildren, that will gets changed. So what a lot of people

  • do is they get a will done in their 20s or their 30s. They get married, they have a child,

  • and then by the time theyre in their 50s where they have the wealth, that will is totally

  • out of date. So it’s just important to be cognizant of that. And that’s something

  • that a good financial advisor should be on top of too. Your financial advisor should

  • be making sure that all that stuff is updated.

  • Yeah. I set calendar appointments for things like that because there’s so many things

  • running around in this crazy head of mine that I use Google Calendar to just update

  • and update. I wanna move on to what is something that you did a little while ago that I thought

  • was fascinating, your sabbatical and this idea of living rich now. I mean, 11 books,

  • I remember watching you on Oprah, as I shared in the beginning, made a huge difference in

  • my life. And then I remember seeing you outside of a conference and you were like, “I’m

  • not working right now.” Tell us about living rich now, your sabbatical, the whole shebang.

  • So in 2012, my radical sabbatical. I took 18 months completely off. So in 2013 I took

  • thereally the entire year off. And part of that came together because my wife made

  • a fatal mistake. I should say a fateful mistake. She asked me in March 2012 what did I want

  • for my birthday. And I, you know, like, we so often get asked that. I just said, “Oh,

  • honey. I don't know.” And I wasn’t sleeping well at the time and we were in bed and I’m

  • like, “You wanna know what I want for my birthday?” And the annoying thing about

  • this question was that my birthday was in November. Right? So

  • She’s a planner.

  • I’m like, “You wanna know what I want for my birthday? I want a year off.” And

  • she’s like, “Well, what do you mean?” And she’s like, “You don't wanna write

  • another book?” I’m like, “I don't wanna write a book.” She’s like, “Well, what

  • about, you know, The Today Show?” “Nope, no TV.” “What about social media?” “Nope.”

  • I’m like, “I want to do nothing for a year. You know what I want to do? I wanna

  • be a dad. I wanna take the kids to school, I wanna go have lunch with friends, I wanna

  • go to the gym, I wanna pick the kids up from school, I wanna go to the baseball game, I

  • wanna go to the football game. I just wanna be a dad.” And she looked at me and she’s

  • like, “Well, don't you do the stuff that’s in these books?” And I’m like, “Yeah,”

  • and she’s like, “Well, can we afford for you to take a year off?” And then I start

  • going, “Oh my God, do you know how much money we spend?” And she’s like, “Well,

  • how many years could you afford to not work?” And I’m like… I start running through

  • the numbers and I said, “Well, God. I don't know. Even in Manhattan we could afford to

  • not work for at least 20 years. We could retire somewhere else.” And she’s like, “Well,

  • this is a dumb conversation. Take a year off.”

  • So I have to interrupt you. Did you have the FOMs? Like, was there any part of you when

  • you were considering this, because being in similar industries, you know, there’s a

  • lot of pressure that you have to keep going, you have to create new things. Was there any

  • part in your mental kind of calculation of this like, “OMG, am I gonna screw anything

  • up? Everything I’ve built?” Or were you just like, “You know what? David is burnt.

  • I wanna be a dad right now.”

  • Yeah, it was the most frickinterrifying that I have ever done in my life other than

  • when I left Morgan Stanley to move to New York on a wing and a prayer to go do all this.

  • Wow.

  • And, you know, I know you talk about how you walked away from a million dollars. I walked

  • away from a million dollar a year income to go on a wing and a prayer move to New York

  • to teach people about money because I wantedmymy value was I wanted to make a difference.

  • I was terrified. In fact, I was so afraid to do this in 2012 that I didn't tell anybody.

  • I mean, I told my wife and some close friends, but I was really scared. And I didn't publicly

  • go out and send out… I didn't send out an email to my community, I didn't go on Facebook

  • and be like, “I’m gonna be gone for a year,” because quite honestly, I didn't

  • know if I could do it.

  • Ifyou didn't know if you could last that long.

  • I didn't know if I could last a year off.

  • Ok.

  • And so I actually didn't tell anybody. It was interesting how long it took for people

  • to start being like, “Where are you? Is he alive?” And it took a while to decompress.

  • But I will tell you, like, let me tell you the benefit of it. In a yearwithin 90

  • days of taking the sabbatical… I did the sabbatical 2 years ago. I was 46. I felt 46.

  • I thoughtlike, I was tired and I was dragging. And I wasn’t jumping out of bed like I normally

  • do. I… I had lost, you know, the charge, the motivation. And I thought, you know, “I

  • must just be getting older.” Well, within 90 days I felt like my old self again. I was

  • sleeping like a rock, I lost 10 pounds, I was totally happy for no reason. For no reason.

  • I’m like walking down the street just like, “Oh, my God. I feel amazing.” Like, what

  • isthis is all I needed was a longer vacation to feel this good? After a year, like, right

  • now I feel like I’m 30. Like, my energy is as high as it’s ever been. All my passion

  • is back. It’s like a frickinmiracle pill. So one of the reasons I’m talking

  • about this for the first time publicly is I wanna start to inspire other people to take

  • longer breaks. And, you know, my thing is I think most people should consider taking

  • a 6 week sabbatical. That should be a goal. Because I think 6 weeks, you can do so much

  • with 6 weeks. And, you know, Europeans watching this theyre like, “Whatever, 6 weeks.”

  • They take 6 weeks off all the time.

  • Totally.

  • But Americans watching this are like, “What is he saying 6 weeks?” You know, like, we

  • can’t… people in America won’t even take 5 days off.

  • Yeah.

  • So unplugging, gettingthat was, like, realizing it’s an addiction.

  • Yeah.

  • You know, Facebook, Twitter, all this stuff. Sometimes it’s hard. Andso, yes. I was

  • scared, I didn't know what ityou know, would I be able to go back and do what I was

  • doing? But you know what? It’s allit’s all worked out. It’s the best thing I’ve

  • ever done for my life. In fact, it’s probably gonna be my next book is gonna be on… I’d

  • be curious in comments if people would have interest in learning more about how to take

  • a sabbatical.

  • Oh, for sure.

  • Because I found that when I went out to take it I couldn’t find a lot of information

  • on it.

  • Yeah, I think it’s a fascinating topic. I mean, we made a big change in our company

  • last year. I actually had a croissant craving and I was walking to a little French bakery

  • and I walked up and they were closed and they said, “Closed due to vacation.” And I

  • went home and I said, “That’s it. We are closing the company down for 2 weeks, I want

  • everybody off,” and now we take 4 group weeks off a year. So we do 2 weeks in August

  • where no one’s on email, the entire company is down. Same thing in December, and were

  • looking to different ways to expand that. So I think, personally, I think it’s a fantastic

  • topic. I think that the culture of overwork is a sickness and I actually wanna see that

  • change and I’d love to be a part of the voices to change that. Yes, there’s a lot

  • of life that happens outside. As much as I love technology and I know it’s a little

  • ironic for me to say this as a digital entrepreneur, but our audience will tell you. Like, I’m

  • not on social media 24/7. I love our show, I love our team, I love what we do, but I

  • spend the majority of my time actually offline. As much as humanly possible.

  • Because that’s also where real life takes place.

  • It’s real life. And, you know, one of the things you said on the phone when we were

  • chatting is you don't have to be rich to live rich.

  • That’s right.

  • And I loved that. And I love this idea as well, you know, kind of tying back to where

  • we started. Sometimes people are like, “Oh, I want a million dollars,” or, “I want

  • a billion dollars.” But, you know, bigger dreams financially aren’t necessarily better

  • dreams. And small, simple lives where thingsyou have time, you can be a dad, you can be

  • a mom, and you can just enjoy your life as it is, is beautiful and the beauty of what

  • you teach is that you give us the tools to create the life that we want, whatever size

  • of those aspirations.

  • Well, thank you. I think what you just described for your company, your company will continue

  • to impact, you will, impact so many more people and this company will grow so much faster.

  • Because, first of all, people are gonna be attracted to wanna come here because of that

  • lifestyle. I was just vice chairman of a company where every 7 years you have to take 6 weeks

  • off. It’s a forced 6 week sabbatical. And so at this company, people would talk about

  • their sabbatical likelike they had a child. You know, like, they tell you their 6 week

  • sabbatical and theyrethey just lit up. And then people like, “Oh, I’m only

  • a year away from my next sabbatical.” We need to get more life in our lives. We really

  • do. I mean, this morning, like, going back to values, I was asked to do a morning TV

  • show today. And I’m like, “No, I wanna take my son JackJames to school.” James

  • is 5 and a half, I walk him to… I walked him to his kindergarten class, you know, he’s

  • still holding my hand, I got like 15 hugs and kisses.

  • That’s not gonna last.

  • It’s not gonnait’s not gonna last. My 6th grader is like, “See ya, Dad.”

  • You know? So I’m like, I want to be present in my life for those experiences. And I want

  • more people to be present in their life for those experiences. And, by the way, you don't

  • have to have a lot of money to do these things a lot of times. It’s just a decision process.

  • Especially for the entrepreneurs that are watching. You know, I… I’m now addicted

  • to this idea of sabbaticals, so I’m gonna like, you know, even thoughwere gonna

  • start cranking everything back up again. I’m taking 6 weeks off this summer and, this coming

  • summer, and I’m taking 3 weeks off in the ski season and I’m… like, I’m… I’m…

  • this is something I wanna do for the rest of my life. Because I want the feeling that

  • is inside of me now that wasn’t there before my break and thatthe primary feeling is

  • presence. It’s being right here, right now.

  • Yeah. And it’s something that money can’t buy. David, thank you so much. I adore you

  • and I will tell you right now, I’ll be happy to talk to you any time. You can call me if

  • you wanna chat about sabbatical stuff. I’ll be anan ear to bend onon all this

  • stuff.

  • Thank you so much. This was so fun.

  • Thank you. So you know on MarieTV we like to give challenges to our audience.

  • Yeah.

  • So let’s talk about it. What do we want to challenge our audience to do in the comments

  • below? So you said you had, like, a 2 part challenge. Right? Do we wanna think about

  • the latte factor?

  • Soso let’s give them the latte factor only for you let’s make yours different.

  • Alright?

  • Oh, ok.

  • Let’s do the 2 day latte factor challenge.

  • Ok.

  • Alright? So I told you, like, 30 days, 7 days, and one day. Let’s do thefor 2 days,

  • just for MarieTV, for your people, track your expenses for 2 days.

  • Excellent.

  • Look at where the money is going, then gogoyou know, well post a link where

  • they can run a calculation on what it’s worth. Take a look at where the money is going

  • and then come back to MarieTV and tell us what your latte factor was. Just bejust

  • be honest. Tell us what it was so that we can get people sharing, “You know, this

  • is where I’m wasting money.” Then here’s my second part of the challenge, if youve

  • got a 401k plan or an IRA account, 401k plan would be the easiest, whatever youre saving,

  • I want you to increase it. So if youre saving 4%, like the average American, I want

  • you to increase it. If you increase it to 5%, which is a 1% increase, it’s gonna change

  • the outcome of your life. I want you to do more than that, but whatever you do, I wanna

  • hearhave them tell ustell us what they did. So that people can start getting

  • inspired by other people. And if youre not using your 401k plan or youre not using

  • an IRA account, I want you to go pay yourself first. And so if you do, then post that.

  • Awesome.

  • Let’s get people talking about the action theyre taking.

  • I love it. David, thank you so much for being here today. This was a pleasure.

  • Marie, thank you. This was a blast. I really appreciate it.

  • So you got the two part challenge from David and I. We want you to leave a comment below.

  • Now, as always, the best discussions happen after the episode over at MarieForleo.com,

  • so make sure you go there and leave a comment now. Did you like this video? I loved it.

  • If you loved it, subscribe to our channel and I would be so grateful if you shared it

  • with your friends. And if you want even more resources to create a business and life that

  • you love plus some personal insights from me that I only talk about in email, come on

  • over to MarieForleo.com and sign up for email updates.

  • Stay on your game and keep going for your dreams because the world needs that special

  • gift that only you have. Thank you so much for watching and I’ll catch you next time

  • on MarieTV.

Hey, it’s Marie Forleo and you are watching MarieTV, the place to be to create a business

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