Here’s a transcript of our June 6, 2017 finance and budgeting 101 class we teach for our clients. I’ve edited the transcript to make it more readable (we all use too many words when we talk). Hope this helps you get your finances in order during your Utah divorce.

Marco:          [laughter] Thanks for coming in and doing this. This is something we’ve started doing recently. The reason I’ve started doing it is because people come in all the time and their lives are just kind of in shambles. It’s really tough with divorce and child custody cases. And that’s all we do. People, just have real hard times with money during that period of time, and I talk to people about it, but I wanted to get people together and say, “Okay, here’s a plan for you to actually succeed with cash and with money.” So, paying off debt, investing, and doing all these things.

So, tonight won’t be anything earth-shattering. It’s all pretty simple stuff. And we’re not going to go real in-depth, but it gives you kind of an idea of what to do and a basic plan of what to do with your money going forward. So, like I said, thanks for doing this. Here’s kind of the why you would want to get a handle on your money. You tend to spend less when you have a handle on your money, right? Because when you don’t have a budget, when you don’t do these things, your money just kind of walks off and you’re like, “Where the hell did that go?” You know, at the end of the month, right? So –

Man:              Oh. Oh, that Brown’s got it.

Marco:          Yeah. [laughter] I wish. [laughter]

Everyone:    [laughter]

Marco:          So, what we’ve found in our family is that when we started doing this, we spent about 25% less off the top, because it’s just random crap you buy that you never knew about. And when you make a budget, then you give every dollar a job and spend less of them. So, that’s one of the reasons why you really feel like you got a raise when you do this, because you buy that random stuff and it all just goes away and you never know it. So, when you budget, you really will feel like, “Oh my goodness, I got – there’s so many things I can spend this money on and it’s not just random stuff anymore.”

Another reason why we do this is if you build a house, you have to have a blueprint, right? I mean, there aren’t very many people that can just go build a house. You have a blueprint to build stuff. So, if you want to succeed with money, if you want to have that kind of life and you want to get out of debt, you have to have a blueprint for that. And really what we’re going to talk about tonight is that blueprint.

On a religious level — because I look at this from a religious point of view, too — there’s no place in the Bible where it says, “Yeah, debt’s good,” right? It always says, “Debt’s bad.” It also says “the debtor is slave to the lender.” Nowhere in our religious tradition is it a great thing to be in super amounts of debt, because I just don’t think God wants us to do that. So, from a religious point of view, not great.

And then, the last why is control. When we don’t have control of our money, we feel out of control in our lives. And when people are going through divorce or child custody cases, they always feel out of control, because you’re putting your life in somebody else’s hands, and that’s not comfortable. If you can exercise control over your cash and your money, then it helps you feel like your life is in control much more than it used to be.

Those are some of the reasons why we’re doing this tonight. I wanted to start by talking about the steps and specifically how to get out of debt and how to budget. I’m going to introduce the concept of the debt snowball. Most everything we talk about here comes from a guy named Dave Ramsey.

Man:              Oh, I’ve heard that name.

Marco:          Yeah, you can hear him on the radio. I listen to him all the time because I’m a dork about stuff like that, but he really has super simple stuff to help people do this. His big thing is — his number one thing is — , “Okay, you’ve got to get out of debt, because when you’re in debt, you’re paying all sorts of money to a bank. And we all hate banks. So, let’s stop paying banks.

His first step is “get out of debt.” Let’s look at the first sheet here. It’s called The Baby Steps. There are seven Baby Steps. And the first baby step is to set aside $1000 as an emergency fund. So, we all know that crap happens, right? I mean, your car breaks down, your kid has –

Man:              Break a window.

Marco:          What’s that? [laughter]

Everyone:    [laughter]

Marco:          Your kid breaks a finger or a leg or something like that and you have to go to the doctor. And when you don’t have some money set aside to deal with those things, you tend to go off the rails and not get back on the rails with your budget. So, set aside $1000 as the very first thing.

Then, the second step is to pay off your debt. And Dave Ramsey’s going to tell you, and I’m going tell you — I’ve got a personal experience, and I’ll talk about my experience here in a minute. I call it my, “Journey with debt,” and we’ll talk about that. But you take all of the other money and you just throw it at your debt. And the way you do it though is you take all of your debts, so all of your little credit card things, or your car, or whatever it is, and you put it all together. You figure out exactly what they are and then you list them, smallest — so, principal payment, not your payment per month, but principal balance, right, where you’re actually owing the debt — smallest to largest.

Man:              So, $200 credit card to $1000 credit card.

Marco:          Exactly. A $200 credit card will go on the bottom, $1000 credit card will go onto that, your car would go on top of that, your house would be the last thing. You’re going to worry about that a little later, because that mortgage fricking massive, right? But all the other consumer debt, you list it smallest to largest.

And then, you just attack the crap out of it. I mean, all your money goes to paying off that one smallest debt first. Don’t worry about interest rates, don’t worry about any of that sort of stuff. If you have a $200 debt you owe your mom that there’s no interest on, and your next debt is a $500 dollar credit card and you owe 26% on it, pay off the $200 debt to your mom first, then you pay off the credit card.

So, I don’t care about interest rates, and the reason is because what you want to do is build momentum. Ramsey calls it the debt snowball for a reason, because when you throw a snowball down the hill, it goes along and it just gets bigger and bigger and bigger and bigger, right? It’s because of that momentum it increases in size. And it’s super hard to stop, if you’ve ever done that. I grew up in Alaska, so we do this all the time.

Man:              [laughter]

Marco:          We’d throw the snowballs down there, and by the time we got to the bottom of the hill, the thing’s literally this big? And it’s super hard to stop it at that point. So, you have that momentum. And that’s what this is about. This isn’t about interest rates. It’s not about math, really. It’s about gaining momentum, so knock out that smallest one first, and then go onto the next one and the next one and the next one.

Say you have your smallest one is a $1000 credit card payment. And your monthly payment is $50 a month on it. When you pay that smallest debt off, you take that $50 dollars a month that you normally would pay, and then you go put that toward the next debt. The snowball increases in size. It’s that debt snowball idea. Now, of course, you make your minimum payments on all the other stuff. Don’t go into default on these other thing. But everything gets thrown into that first debt. Then everything that got thrown into that first one plus that payment goes to the second, and it just goes on and on and on until you get done. And what they’ve found is that people who do this, really make a concerted effort to do this, get out of debt on average in about two years.

Man:              Whew! Is that house an all?

Marco:          No, not that house, no. [laughter]

Everyone:    [laughter]

Man:              I was going to say, “Holy, hell, that’s a pretty extreme average!”

Marco:          I wish! No, they get done with consumer debt. Their cards and everything else. The house usually takes longer because, I don’t know how expensive your homes are, but they’re expensive.

Man:              What did we say, six years?

Woman:        Mm-hmm.

Man:              Yeah, six years. It takes about six years.

Marco:          To get the house paid off? Yeah.

Man:              If I had $2000 extra a month, after everything’s paid off and everything’s done and everything else, you know, that $2000 to $3000 extra a month and just throw that in your balance.

Marco:          Just throw it at it?

Man:              Yeah.

Marco:          I mean, think about that. Say you paid off all your debt and you get an extra $2000 a month, and you throw it at your house. Six years from now, you have a paid off house and you have no debt. You have more money than probably 80% of people in America at that point. That’s massive, right? And then, you invest it and you do all these things. You’re going to be fricking rich. So, that’s what –

Man:              “Fricking rich.” [laughter]

Everyone:    [laughter]

Marco:          That’s what debt does: debt keeps you from getting rich. When you pay it off and you invest and you do these things, you accumulate wealth and you get wealthy, and then more money.

Man:              That’s right. That’s right. It’s hard to spend all that money when you’ve got everything you need.

Marco:          I want to talk a second about my, “Journey with debt.” My parents were always pretty good about debt. They made a lot of money in the ’80s. We grew up in Alaska, and when you’re in Alaska and you have good jobs, you get paid more than everybody else because you have to live in Alaska. So, they got paid a lot. And every once in a while, they’d take out loans for things, like their car or something like that. They probably shouldn’t have, but they were pretty good about it. And I was always pretty good about it. I didn’t spend a ton of cash. And I worked a lot in college, so I always had extra money. And I invested in college and did this things that I shouldn’t have, and then it all went to hell.

Everyone:    [laughter]

Marco:          And I decided to go to law school and incurred a mountain of debt in law school, and while I was going to law school, I put my wife through her master’s degree, and then we worked for a little bit after that and adopted our son and then came back to Utah. We came back here because she wanted to get her doctorate. That’s when I opened Brown Law: 2010.

So, we did a JD degree a law degree, a master’s degree and a doctorate degree, and we had a mountain of debt. And I had opened up a new law firm. It killed me. It honestly just killed me. I gained weight. I’d have stress headaches almost every day. I never get headaches, and I had stress headaches every day. I would clench my jaw, because, apparently, I keep tension in my jaw. It got so bad that I actually cracked one of my back teeth, because I carried so much tension in my jaw when I slept. I had to get a crown back there. It was bad. I would get up in the morning, I’d take a shower, and my heart would race because I was just so stressed over the everything.

I finally said, “Okay, enough is enough, I got to get out of this. I got to stop, because I’m not going to live this long if I have this kind of stress and it manifests itself like this.”

My wife and I decided we were going to get out of debt, so we sat down and we did a budget. We didn’t go on vacations, we didn’t eat out at restaurants, we didn’t do all of these normal things. We decided, “Okay, we’re done. We’re getting out of this.” And it took us a year. We were super, super blessed. We made a lot of sacrifices and then at the firm things went well and we grew, and we were able to pay everything off in a year.

I still remember the day we did the electronic transfer to the last student loan. [laughter] I’m embarrassed to even say this. It was $40,000. That was the last student loan. It was just this incredible sense of relief. After that day, I’m said, “This is freaking awesome! We’re going to go out to dinner, we’re going to do all of these things that we haven’t been able to do for a long time.” And then, the next day, I actually sat down and thought, “What are we going to do with all this cash?” We didn’t have any debt anymore. And I didn’t have any idea how to spend it. So, we just started investing and doing these other things, but –

Man:              You just closed your eyes and gave it to your wife. [laughter]

Everyone:    [laughter]

Marco:          Well, there was some of that. There were some clothes bought after, and a vacation or two.

Woman:        [laughter]

Marco:          I literally didn’t know what to do with this cash. Eventually, I went through and I figured out how much we were paying a year in interest, which I had never done, because it would’ve made me sad. [laughter] It was $14,000 a year in interest. So, that was a $14,000 dollar raise by just paying off debt. That’s what this crap does to you? Now we’re able to put things aside and do the stuff we want to do. For example, my son goes to a private school and we’re able to afford that and do all these things because we made sacrifices.

That was my personal journey. And I’ve lost weight and I no longer, like, crack teeth when I sleep and I don’t feel like I’m going to have a heart attack in the shower. There are lots of good things that happen. So, from a personal experience, just get it done. So much less stress, so much of a better life, so much more money.

Man:              Right.

Marco:          I want to talk to you about the how of a monthly budget, because everything starts and ends with the budget. If you don’t have a budget, you’re not going to save the money, you’re not going to pay off your debt, you’re not going to invest, because, again, your money’s going to go wherever. I’m going to talk about the how of the budget.

Let’s go to the last piece of paper: monthly cash flow plan. Dave calls it a monthly cash flow plan. I’m not entirely sure why. It’s the monthly budget. This is the principle. You sit down and, if you have a spouse, sit down with the spouse, a significant other, sit down with the significant other. If it’s just you, sit down with you. Figure out all the things you pay on every month. Utilities, the stuff you save for, so if you save for Christmas, start saving for Christmas. Realize you’re going to pay these things for birthdays anyway, so you might as well save up for them.

But go through all that stuff and say, “Okay, these are the monies that I need to set aside for these things. These are the things I pay out every month.” Write them all down. This is going to be – the first time you do this, it’s going to suck. I mean, it took us hours and hours and hours to put this stuff together, but now that we’ve been doing it for a while, I think I spend, total, two hours a month thinking about money and our budget and paying stuff out.

The first time you budget is horrid. It gets easier. After about month three, you’re in the groove and you’ll love it. The first time is going to be tough, especially if you budget together with your significant other, because you’re going to have battles. You’re going to have battles about, “What do we spend money on? What don’t we spend our money on? How the hell did we spend that much money on this?” You’re going to have those battles, and that’s okay. You need to have them, because you’re going to work things out. But sit down and do that. Write it all out.

The principle is you give every dollar that comes in a job. If you have excess money, because you’ve already paid off debt or whatever, then it has a job. It goes somewhere. It doesn’t just go in the ether. It goes into a savings account. It goes into your investment account. It goes somewhere to make you money.

This budget sheet has tons of different categories, like all your housing stuff, so the mortgage, all your utilities, transportation, what do you spend on gas. Go through and figure all of those out. And realize that, when you do this the first time, you’re going to be wrong about the numbers.

Man:              Did you just average some of that stuff out? Is that what you were doing?

Marco:          Yeah, we just averaged it out. Holidays are actually the easiest to average out. So, you say, “Oh, Christmas, what do we want to spend at Christmas?” And then you just work back from there. If you’re in December and a year from now you want to spend $2000 at Christmas, then you just divide that by 12 and it’s whatever it is. That’s actually the easiest way to do it.

The other stuff that you can standardize. You want to make everything as standardized as possible, so it’s the same every month. It makes it so much easier. With utilities, you can go through and get on the flat-rate plan. So, instead of in the winter paying $20 a month in electricity, and in the summer, you paid $150, they’ll average it out to $80 a month. All of the utility companies will do this nows. Call up the utilities and say, “I want to go on the flat-rate plan.” They’ll put you on the plan, and then you can budget that amount in every month. It’s super cool. But everything else you want to standardize as much as possible. But realize that, when you do this the first time, you’re going to be wrong about numbers, sometime really super wrong about numbers. Personal example, I didn’t realize how much my wife spent getting her hair done. I remember that. [laughter]

Everyone:    [laughter]

Man:              [laughter]

Woman:        That’s important, though. [laughter]

Everyone:    [laughter]

Marco:          It is, right? Yes, I just –

Woman:        That’s a necessity.

Man:              If it’s a necessity, it’s a necessity. You’ve got to budget it in.

Marco:          And I realized it was super important when I told her, “Really? You spend more than that?” And she almost bit my head off.

Everyone:    [laughter]

Marco:          I said, “Well, I think you can get along with less.” She said, “No!”

Woman:        [laughter]

Marco:          We had this argument about that.

Woman:        [laughter]

Marco:          You’re going to be wrong about numbers, and that’s okay. Just realize that as it goes on you’re going to adjust upward, or downward, or whatever it is, and that’s okay.

Let me see. The point of this is you make the budget, and when you have the budget, we’re going to talk about what you do with this money and the budget here in a second, realize that once you spend that money, you’re done. If you put side $500 a month for food, you need to actually only spend $500 for food. Don’t take money out of your gas to pay for food or anything. You’ve got to learn to live within the means with each one of these things. And that’s tough. Like I said, the first couple of months are going to be super hard, then you’re going to get into the flow of things. After about month three, that was a real turning point for us. And when you make this budget, you get to the end of the budget, it should be $0. So, it should be all of your income up top and all of the outflow. And you’ve given every dollar a job and the difference should be $0, so it should just say $0 at the end. If it doesn’t, then you messed up your math somewhere and you got to go back and figure that out. So, when you do that, when you get all of this stuff laid out, a couple different suggestions.

One is anything you can pay automatically out of your bank? So, utilities, you can, your mortgage, whatever. Get all that stuff automated so you don’t even have to think about it. The rest of it, you actually take the money out and put it in physical envelopes, so you have an envelope system. And the reason you do this is you spend less money. People spend less money when they have cash. And every time I do this, everybody says, “Well, I like to spend cash, and I spend more money when it’s cash.” You’re a freak.

Everyone:    [laughter]

Marco:          Most people, the average is they spend about 25% less when they have cash. Because if paying for –

Man:              I’m a freak, because if I was to have all my cash in my pocket, it would be gone.

Woman:        Mm-hmm.

Marco:          Yeah, there’s some people like that, but most people are –

Man:              Just go to the store. $300 extra is not a big deal! I got the cash! [laughter]

Everyone:    [laughter]

Marco:          It’s painful to actually spend cash as opposed to swipe a card. I mean, you can see -?

Man:              See, when I got cash in my pocket, I’ll use my card.

Marco:          Yeah.

Man:              So, that’s another dumb thing I do, so –

Marco:          Yeah, don’t do that. Don’t do that anymore.

Man:              [laughter] Yeah.

Marco:          But you’re going to take it out and you’re going to put it in physical envelopes and you’re going to keep those in your house. I’d say keep it in a safe, because you don’t want just somebody rolling in and taking cash out of the envelopes.

Woman:        Under the mattress is bad.

Marco:          Well, I – probably not. I wouldn’t look under there.

Everyone:    [laughter]

Marco:          So, [laughter] the point is, you get these envelopes, and when you need it, you take money out of the envelopes and then you can spend that money. Now, this, again, sucks. The one where it sucks the worst is when you get gas. No one likes to go inside the gas station, right?

Woman:        [laughter]

Marco:          That is the worst of human activities, to have to go inside the gas station and pay for something. I can’t stand it. I just want to run a credit card and get out of there. But you’re going to spend less money if you pay in cash, so keep the gas envelope in the car, pull it out, go pay for it in cash. It’s going to be super annoying, but you’re just going to spend less money and get out of debt faster. Okay?

Let me find this real quick. There are going to be some envelopes that you’re going to want to carry around in the car. Okay, give me a sec, let me find it. The best way I found to do that is to buy something like this. It’s a little accordion thing. Do you know what I’m talking about here? Yeah. Dave Ramsey sells these things for his envelope system, but this is the one my wife and I bought years and years ago and it’s still going strong. So, what this has, it has little tabs in it, and these are actually for the months of the year. Not entirely sure why. But we just take those out and we just put in, like, “Gas, groceries,” whatever else that you normally use. So you have these things and you just take it with you and you leave it in the car. I’ll take it into the store when I’m buying groceries, so I’ve got this big pink accordion file that I’m pulling out. Everyone thinks I’m a freak. But it’s okay.

You have to be careful, right, about carrying around so much cash, because eventually you’re going to get to the point where you’re carrying thousands of dollars in there, [laughter] so you got to be careful about it. Our accordion is essentially like the nuclear football. It never leaves our side. We’ve never lost it, but it never leaves our side either. I know where that thing is at all times. This makes it way easier to walk around with cash and actually pay with stuff. So –

Man:              So, I’m assuming – I’m assuming the idea behind the cash part of it is so your – basically, your money is going into your bank account?

Marco:          Mm-hmm.

Man:              You’re pulling your cash out that you’re using, your budget money, and that money just kind of gets put aside, and whatever’s extra just keeps going in there? So, if you have a set amount every month of, like, let’s just pretend a number, $500.

Marco:          Mm-hmm?

Man:              So, you pull that $500 out of your bank account every single month and divide that up and then just pay off what you’re paying off?

Marco:          Yeah.

Man:              And then your other $500 stays in the bank and then it just stays there and stays there and grows? Is that kind of the idea of that?

Marco:          Yeah, I mean, that’s the idea. Usually, what’ll end up happening if you’ll go through a phrase where you pay off debt. So, there’s not going to be any money left over at the end of the month because you’re paying off all the debt. When you’re done with that and you’re investing in these things, it’s either being transferred to go into an investment account, or it’s going into a savings account to have, a really large emergency fund. Because one of the steps is, once you get done paying debt, you build up three to six months.

Man:              Three to six months, yeah.

Marco:          Yeah. And the reason for that is you get sick, right?

Man:              That job, something’s –

Marco:          Lose a job, anything like that, it’s going to cover 99% of the stuff that comes along. But yeah, it’s never just going to stay in there really. But you’re right in the sense that it can stay in there if you’re building up and emergency fund or something like that.

Man:              That’s kind of what I was talking to, after all your debts are paid, so –

Marco:          Yeah. Yeah, exactly. I think I’ve lost my train of thought.

Man:              Sorry.

Marco:          No, no, it’s okay. I lost my train just a little bit. Let’s see where we are.

Woman:        Yeah. I’m sure you wrote it down in time. [laughter]

Everyone:    [laughter]

Marco:          Oh, I was going to talk about how I do this. At the beginning of every month, we do our budget before the first of the month. On the first of the month, I go through the budget and I click off which of the categories are cash. And then, because the other ones just get paid automatically, I say, “Okay, groceries, I need cash for that. Gas, I need cash for that. Clothing, I need cash for that. Hair, whatever it is, I need cash for that.” So, I put that down on the budget. I print it off and I do that sort of thing and then I add it all up. And I go to the bank and I get out that amount of money. And then I go to the teller and I say, “Okay, I need this many $20s, this many $10s, and this many $5s.”

Woman:        [laughter]

Marco:          And they give it to me and I go home and I put all that money in the envelope. And that process takes about two hours, and then I never think about it again for the entire month.

I almost always do it on a Saturday morning. I get out and then I go over to the bank, it opens at 9:00. And then I’m done. But I think that’s the easiest way to do it. And, again, three months is going to be super tough, but you’re going to get that flow and then you’ll be amazed at how much money there is when you actually work it and you give every dollar a job.

Set aside some time to do that, go to the bank, realize that the process is going to be difficult, but it’s supposed to be difficult. It’s supposed to make it kind of hard to spend your money, because we’ve all gotten in trouble when it’s easy to spend money, right? I’m the exact same way. When I don’t think about it and I just have some slush fund somewhere, I overspend,

Man:              You spent your slush fund already? [laughter]

Everyone:    [laughter]

Marco:          But it – [laughter]

Everyone:    [laughter]

Man:              It’s the 5th of the month.

Everyone:    [laughter]

Marco:          And keep in mind, when you make your budget, this is a really important thing, when you make your budget, have something in there. I call it walking around money, but it’s just throwaway money. It’s stuff you have in your wallet and you can spend it on whatever you want for whatever you feel.

Man:              Just impulse buys.

Marco:          Yeah, exactly. Because everybody needs that kind of stuff, right? If I want to go to Café Rio, because I want to, then I want to have something there. If I want to buy a Snickers bar or whatever it is. I’ll of mine are food, to be honest with you. [laughter]

Man:              I like all those good chocolates here, don’t go buy Snickers.

Marco:          That’s true. [laughter]

Woman:        That’s true. [laughter]

Everyone:    [laughter]

Marco:          But whatever it is, you’ve got to have some money to kind of play around with, but just contain it, okay? And then, once you get past this part where you paid off the debt and you’ve done all these things, then there’s investing going on and, you know, we can definitely talk about that. If anybody is interested in talking to me about that, kind of my ideas on how we do it, I try to set it up where it’s really super simple and I don’t have to go pay some guy, like, 2% of all my earnings to invest in –

Woman:        That’s something I was going to think about right now, the investing. What do you – how do you start investing? What, you know, where and how to invest in a good idea?

Marco:          Yeah.

Man:              Well, Marco Brown Law Firm, actually, they have some pretty good investments there!

Woman:        [laughter]

Marco:          [laughter] I wish we gave money back for –

Man:              [laughter]

Woman:        That’s – [laughter]

Marco:          I wish we paid out in tips.

Woman:        I’ll get him the – good, something. [laughter]

Marco:          Yeah.

Woman:        But after – you know, after the fact of getting some money, how do you invest it? Because I don’t just want it to sit in a bank and get a small percentage.

Marco:          Yeah, you don’t want to do that, right?

Woman:        No.

Marco:          That sucks.

Woman:        Yeah.

Marco:          Yeah.

Woman:        It’s like, “What? Our dollars?” [laughter]

Man:              Yeah, we want that rich part you were talking about earlier.

Woman:        Yeah.

Marco:          [laughter] Exactly. So, this is the way I do it. You’re supposed to pay off debt, and then you’re supposed to put together a really good emergency fund, and then you’re supposed to throw money at your house and get that paid off. But you’re also supposed to save 15% toward retirement at the beginning.

The way we do that, we have a 401K here, for me and all the employees as well. So, we max out the 401K, and shove as much money in that as possible. We also do Roth IRAs. And the nice thing about a Roth IRA is that it grows tax-free, so you pay taxes on the front end of it, right, because it’s income, and then you put the money in the Roth and it grows tax-free forever.

Say, you can do up to $5500 a year until you’re 60, and then you can do $6500. But say, $5500 a year, you do that for like 20 years, you’re going to have a lot of money in there. I mean, a ton. Say, it’s $500,000 or whatever it is, you’re going to take that money out, you’re not going to pay taxes on that ever again. So, with anything that has Roth before it that’s what we max out. And we have a Roth 401K here at the office, so we max that out, then we do the Roth IRA. So, those are the first two things, I think.

And when you’re doing it, there are going to be, like, 1000 different options for funds, for mutual funds and these sorts of things you can do. When I do it, I keep it really simple. There are things called index funds, and what they do is they index a part of the stock market. So, an S&P index fund would be an index or a cross-section of the Standard & Poor’s 500. The best 500 companies, right? The nice thing about those is that you’re not paying some guy to actively manage the fund. And when you do that, when it’s actively managed, when there’s some guy overseeing it, they usually charge, like, 2% to 2.5%. So, if you make a 7% a year, 2.5% of it’s gone right off the top because some shmuck did this. An index fund will be 0.05% instead of 2.5%. They’re so low cost that that’s what we do. Because I’m not that bright a guy, so I’m not really going to try to beat the market, because I don’t know how to do that sort of stuff, so I thing, “Well, the market goes up over time, so I’m just going to do that.”

Woman:        So, that’s how we do it.

Marco:          And I just keep it super, super simple. And then, once you get past that retirement stuff, there are other things you can do, other kind of – you know, other kind of funds you can invest in, but do the retirement first, because that’s what you’re going to take care of, in the –

Woman:       Mm-hmm.

Marco:          You know, if it gets more sophisticated, then there are some other ways to do it, but that’s how I think about it. I just try to keep it as simple as humanly possible.

Man:              Yeah, that is pretty easy. I got to learn about that kind of stuff too. I am really dumb about that.

Marco:          Yeah. Let me tell you though, don’t feel bad. I just had, last week, I went to this big meeting of divorce attorneys. There were about 300 of us around, and I’m talking with one of my friends and I’m telling him about out investments. And he’s a super bright guy. He invests, he’s super bright. And I told him one of the things we do here, and he said, “Holy crap! I didn’t know you could do that.” So, even guys that, like, sit around and think about this stuff all the time, we – you still don’t know, like, what’s going on and you still don’t know all the kind of tricks of the trade, so I don’t feel bad at all. But the one thing is anything that says Roth before it, like, do that first, man. [laughter]

Man:              Okay. Yeah, absolutely.

Woman:        [laughter]

Marco:          Yeah. That’ll get you more money over time than anything else.

Man:              Yeah, this is – this is good stuff. I’m going to definitely get that done. It’s just – it’s easy. I do mine a lot similar to that, like my budgeting and stuff like that, but I don’t really have a budget, because I’ve been, like, paycheck to paycheck for the few months or whatever, with the whole divorces and stuff like that.

Marco:          Yeah.

Man:              So, yeah, that’s going to be kind of nice to be able to kind of put some of that money away and just pay all that crap off, so –

Marco:          Yeah. And –

Man:              It’s exciting.

Marco:          Just go do it. If you have, literally, any questions about how to do it, how to do the envelopes, how to do any of that stuff, like, you can just call me and I’ll talk you through it. E-mail me, I’ll talk you through it. Whatever. Like, I just want to see people success with money.

Man:              Yeah, this is smart. It’s smart. We were kind of talking about that the other night too. I was trying to help him, because he’s a lot of dumb little things he’s got to pay off.

Marco:          Mm-hmm?

Man:              “Did you pay those little ones off first, then just, you know, work your way up.”

Marco:          Yeah. And don’t take out some consolidation loan or any of that kind of crap.

Man:              Yeah. [laughter]

Marco:          They try to sell you on that stuff, right?

Man:              Yeah. [laughter] Don’t do that gain, right?

Everyone:    [laughter]

Marco:          Yeah, don’t be doing that stuff. Just put it all together and you realize – because when it gets bad is when you’re afraid of it, right? And when you’re afraid, you don’t deal with it, so it just gets worse and worse. So, don’t do that. Just put it all together and face your fear, and you’ll realize when you do that, it’s not nearly as bad as you think unless you really screwed up, it’s not. [laughter]

Everyone:    [laughter]

Marco:          It was bad for me. I remember when I put together all of our debt from school and everything. All of ours was all school, but we’d taken out so many loans for school, that I didn’t even know what they were, so I’m putting them together and I put all them together and I thought, “Okay, here we go.” And then, I found another one like three months later. It was $25 000. I wanted to die.

Man:              Whew!

Marco:          It was terrible. So, don’t feel bad if you have that kind of situation. But you won’t. If you put all the stuff together, you’ll realize, “Oh, that’s pretty manageable. Let’s do that.

Man:              So, you know, you would think that a consolidation loan is kind of a waste of time then? Is that what you’re thinking?

Marco:          Yeah, it doesn’t solve the problem. The problem isn’t an interest rate, it’s not in any of that kind of crap. The problem is you’re not organized and you’re not throwing your money at debt.

Woman:        Because they’re doing what you’re doing right now, they’re just organizing what you have right in front of you and telling you what to pay.

Marco:          Yeah.

Woman:        So, it’s pretty much what they’re doing.

Marco:          What you’re doing with a consolidation loan is moving your debt around, right? And moving stuff around doesn’t get it gone, it just moves it around.

Woman:        Passes the same debt around. You’ve still got to pay it.

Marco:          Yeah, so I wouldn’t worry about it. I mean, there are some things where your interest rate is so high, so astronomically high, like, payday loans. If you have a whole bunch of payday loans and your interest rate is 200%, which is they charge. It’s usurious, but they charge it. And you can get a consolidation loan at 5% or 6% or something like that. Sure, go ahead and do that, because that’s going to make a big difference. But almost never does it actually make a difference. You’re talking about, like, $50 or $100 a year. So, it’s going to be way better just to go attack that debt, and you’ll get it done way quicker and save more money.

Man:              Okay.

Woman:        So, what’s the difference between putting all the debts, all the credit cards, debts, and paying off the smallest amount, versus a consolidation loan, where you’re just putting more money towards that?

Marco:          I think it’s the momentum. Because once you’ve –

Woman:        Because you see – you get it pecked off.

Marco:          Because you see it, yeah, exactly. You see –

Woman:        “Okay, that one’s paid off,” kind of thing?

Marco:          Yeah. You see it and you, like, throw it in a fire or whatever it is. And you have a little party, “Hey, I just paid off the debt!” And that builds your momentum. But when you’re paying, you’re –

Man:              Yeah. You’re out of money, you go like this, though, for your them. “Yay!”

Marco:          Yeah. [laughter]

Woman:        That’s your party. [laughter]

Man:              As your celebration. [laughter]

Marco:          [laughter] Exactly. We had – [laughter] we had a lot of that. We said, “Yeah, one’s done! Let’s go to the next one.”

Everyone:    [laughter]

Marco:          Nothing. But yeah, there’s a significant difference between paying something, paying the little thing off and paying a whole bunch of little things off as compared to, “Oh, hey, I’ve paid another $1000 on a $50 000 debt.” It just feels different. I’d say just leave the –

Woman:        That psychological thing?

Marco:          Yeah. And that’s what it is, really. This is psychological, so it’s behavior, right? 80% of this behavior, and 20% of this math. There are some things you can never get out of because you just don’t make enough money, and that’s the math. But other than that, it’s just your behavior and your psychology. And you’ve got to set yourself up, like, “Oh, hey, we’re winning,” you know, “We’re doing these things.”

Man:              Yeah.

Marco:          And it just keeps getting bigger and bigger.

Man:              That makes a lot of sense, actually. Absolutely.

Marco:          But like I said, any questions at all, please e-mail me, call, whatever. I’ll be able to help you through it. I just want to see everybody be successful. I mean, you’re not my clients. I don’t really care. If you want to call me and ask me questions about it, totally call me and ask me questions.

Man:              Sweet.

Marco:          Yeah. You got friends that you think are -?

Man:              They might be clients one day, you never know, right?

Marco:          [laughter]

Woman:        [laughter]

Marco:          [laughter] Yeah, yeah.

Man:              Right? We’re setting them up for the future, right?

Everyone:    [laughter]

Woman:        No, Dylan.

Man:              He just turned 18, so I’ve got to give him a little heck.

Woman:        [laughter]

Marco:          That’s okay, man. My parents embarrassed me too. [laughter]

Woman:        [laughter]

Marco:          Yeah, if you have friends you think that would benefit from this, by all means, let me know. I’d love to have them, I’m totally okay with that. They don’t have to be clients, I don’t really care about that. I just want to help people with this.

Man:              Yeah, it’s a big deal. That’s a big deal. It’s not – and it actually is a lot of – reason why a lot of people do get divorced, to be honest with you. Money’s a big problem in the house.

Marco:          Yeah. It’s humongous! And I didn’t talk about this today, but it’s a humungous problem. Debt creates stress, right? So, my stress, I held in my jaw and I cracked me teeth. I don’t fight with my wife. That’s not who I am. That’s not what I do. But when I’m stressed for money, I fight more with my wife. I argue with her more. And people that have debt, they have more tension, they have more arguments with their spouse, and that leads to divorce. There’s no way that that can lead to, like, better marriages, right? That leads to divorce. So, yeah, you –

Everyone:    [laughter]

Marco:          You’d be amazed at, when you get done with that, like, how much better your marriage feels and how much less you fight and these sorts of things.

Man               Absolutely.

Marco:          Yeah, I preach this gospel to all of our clients because of that stuff.

Man:              Alright.

Marco:          Alright.

Man:              You good?

Marco:          You got any questions, man?

Man:              I’m good, you guys good? You got any questions? No? Okay.

Marco:          Was this helpful?

Man:              Oh, absolutely.

Marco:          Was this alright?

Man:              Oh, absolutely, yeah, it was really good.

Woman:        It was good.

Marco:          Okay. Thanks so much for coming.

Man:              For sure. I’m stealing a couple of these chocolates, don’t get upset with me.

Marco:          No, go for it. We have more.

Woman:        He’ll bill you for it later.

Everyone:    [laughter]

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