We talk to content creators who share their ideas on money matters online.
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00:00Money makes the world go around, but what if you are stuck without any?
00:05I'm Annelies Borges, and on this episode of The Stream, we look into social media as a learning ground for financial literacy.
00:13Stop acting rich. You don't have any stinking money. Act like a broke person. Why? It's easy. You're a broke person.
00:26In 5, 6, 7, 8, I am ready to give up.
00:38So my total income from my two jobs would be $2,800 roughly.
00:41Did you know that once you reach your first $100K, you're actually one third of the way to a million dollars?
00:4750% of your income towards needs, 20% towards savings, and 30% towards wants.
00:53No spent September update. Not doing well so far.
00:57Today my kids' rent is due, so let's collect their payment.
01:00Each week they get paid £5 for the chores they do around the house.
01:04As this is something schools don't teach kids, and we wanted our kids to learn about expenses and bills in a safe environment, and this has worked amazingly.
01:12What does financial independence mean to you?
01:17While millions of people worldwide are struggling with a global cost-of-living crisis,
01:21many are working towards getting their money sourced, becoming debt-free, and maybe even building some wealth.
01:28And like with most things these days, people are turning to social media for help.
01:32But is it safe to share so much online, or follow strangers' advice?
01:38To discuss, we're joined today by Leila Cardfrush, a YouTube content creator and consultant joining us from Atlanta, Georgia.
01:45Michael Herron, a musician who's also sharing his financial decisions on YouTube.
01:50He's joining us from New York.
01:52And Joe Woodhouse, a financial advisor and the managing director of Family Wealth 101.
01:58He joins us today from South Yorkshire in the UK.
02:01Thank you all so much for your time.
02:03I'd like to start the show by getting your personal story here.
02:07I mean, Leila, you've shared your journey to become debt-free online.
02:11What made you decide to publish that information, your financial information, on YouTube?
02:17And how did it feel?
02:21Yeah, so I saw other people doing it, and it was really motivating for me.
02:27So I was thinking, I'm doing it anyway, so I might as well document it and help to educate other people.
02:33Kind of break that barrier around the taboo of finances.
02:36And it really held me accountable and motivated me too.
02:40So it was just a win-win altogether.
02:42And Michael, I believe you were following Leila, or at least you learned some things from her, which I found very interesting.
02:50You started organizing your personal finance with the help of social media as well.
02:55Can you share with us where you are right now?
02:59Where do things stand for you at the moment?
03:04It's really interesting because from this standpoint, they don't sound great, but they're much better than they were before.
03:11I just finished bankruptcy because I had so much debt that I've been budgeting and following people like Leila on social media and then sharing my own journey.
03:23I found myself realizing if I'm going to get any financial, have anything ready to go for retirement, I needed to take some big steps.
03:32So bankruptcy became what I wound up doing.
03:35And we will ask you more about that.
03:38But I also want to get Joe in here because Joe, you've been advising people on precisely that, how to get their finances in order, amongst other things.
03:47Why did you decide to do that online and on social media?
03:53So it started about six years ago when my twin boys were born.
03:57And I've been in this industry 20 years.
03:59So I knew then was the time to increase my life insurance.
04:02I knew then was the time to start planning for their education.
04:05But I just thought, what will new parents sort of search for at that time?
04:10And everything I found either took me to a little bit of information and then the sales page to put your information into or a 30-page document full of jargon.
04:21And I've always been very passionate about taking...
04:25Someone said to me when I was 18, if you can't explain something to an eight-year-old, you don't really understand it yourself.
04:31And it's a philosophy that I've continued throughout my entire career.
04:35So I just thought that there needs to be somewhere where people can sort of gain this information because finance isn't as complicated.
04:44A lot of the things aren't as complicated as people in my industry.
04:47People like me like to make you believe.
04:50And we're not many friends when I say this, but in my opinion, the financial service industry is built that way.
04:57It's full of jargon, it's full of noise, it's full of BS in a way to make people like me sound more important, more intelligent than we actually are and keep the consumer at arm's reach.
05:07So I just started sharing sort of little tips and hacks online of what people can do to get themselves in a position before they really need to employ anyone like myself.
05:17And it sort of just grew from there.
05:2030-page documents full of jargons is exactly how I feel.
05:24Every single time I try to read anything about financial decisions or investments and stuff, that's exactly what I find.
05:32And Joe, would you say that the Internet is today the number one source for people looking for finance literacy and especially social media?
05:42Yeah, I would say so.
05:45But at the same time, you need to be careful what you consume because everyone's an expert.
05:50And I'm far from perfect.
05:52I've made my own mistakes along the way.
05:54And that's something I've always been very open in sharing, especially in my 20s.
05:58I did some very stupid things with money, as most of us do.
06:01But everyone seems to be an expert at everything these days.
06:05And I suppose that's the danger of social media, that you have all these armchair experts.
06:09So things like trading and people selling trading courses online, people telling you to put your life savings in a certain cryptocurrency and things like that.
06:19I do think a lot of it you have to take a common sense approach with and you have to filter through a lot of the rubbish out there to find, one, someone that you can resonate with.
06:29And two, someone that actually knows what they're talking about and that's experienced it and done the role themselves.
06:35I'm really glad you're bringing this here from the start, because indeed the finance literacy community online is quite huge.
06:45And one of the best known names in this corner of the Internet is American radio host Dave Ramsey.
06:53He has a YouTube show where he accepts calls from people in financial trouble and gives them advice.
06:58His Baby Steps and Financial Peace University program have become very popular over the years.
07:03Here's what he suggests for building wealth. Take a look.
07:07If you have a thousand dollars already, great. Just set that aside. That's your baby step one.
07:12Baby step two, you should be debt free but your house.
07:15Now you may have to sell a stupid boat. You may have to take an extra job.
07:19But most people that have followed the Total Money Makeover Baby Steps in Financial Peace University are debt free inside of two years.
07:27And then we can move on to baby step three, where we save three to six months of expenses in a fully funded emergency fund.
07:35Now you're ready to build wealth. But you just now have gotten up to ground zero.
07:39You've just now gotten up to even when you have that emergency fund and you're debt free.
07:43Now you're ready to build wealth. And in baby step four, you put 15 percent of your income aside into good growth stock mutual funds in retirement plans.
07:55Leila, your thoughts on Dave Ramsey's steps or methods here for saving money and building wealth for the future.
08:06Sure. So I think Dave Ramsey is good for certain people.
08:12His content is a bit dramatic, I would say, and kind of just black and white and finance is not black and white.
08:20So there's no one size fits all when it comes to finances.
08:23So, yes, his program definitely works for a certain amount of people.
08:27If you follow it, you probably will have some financial success with that.
08:31But it does not fit for everybody. And I know even speaking for myself, I did listen to Dave Ramsey when I was first starting my debt free journey.
08:39That was very motivating for me. And I learned a lot. And it was kind of just educational slash entertainment content for me.
08:46But at the same time, I really wanted to still enjoy my life while I was paying off my debt.
08:51And, you know, certain things came up while I was on my debt free journey, different emergencies that a thousand dollars wouldn't have covered.
08:57I still wanted to travel. I still wanted to, you know, he's always like no restaurants unless you're working in one, only eating rice and beans.
09:05Like that's not something I was comfortable with.
09:08You know, I didn't want to go that extreme, but I think he's he's he makes good content for certain people.
09:14If you if you want to follow that. And I must say, I mean, I agree with you.
09:19The one thousand dollar emergency fund. I was like, wow, one thousand dollars doesn't doesn't sound like a lot.
09:25But but there is a lot of very interesting aspects there in his method.
09:31Of course, there's there's a whole list of steps that you need to follow and people can find more information about that.
09:36But something else that I must be very open here.
09:41I was not very familiar with so many of the acronyms that are talked about and used in these conversations.
09:48And here's one that kept coming up when we started researching for this show.
09:53OK, so for those of us who don't know, FIRE stands for financial independence, retire early.
09:58The FIRE movement was born in 1992 and requires users to save money aggressively, like 70 percent of their income.
10:05Once their savings reach about 30 times their yearly expenses, about a million bucks.
10:09They may quit their jobs and retire earlier than traditionally possible by living off of the investment income from the savings.
10:14These are often regular people far from the highest tax bracket who do things like live in RVs and never go on vacation and cut all discretionary spending.
10:22I don't fire personally because it's not a sustainable solution for me.
10:25But there is something that we can all learn from the FIRE movement.
10:27Save as much as possible and invest it so your money can work hard for you because you'll hit your financial goals a lot faster than just working a nine to five.
10:35Right. Michael, your thoughts on the FIRE movement.
10:39I mean, living in an RV and never going on vacation sounds like a lot of fun.
10:44Are you a fan of that method? And is it sustainable?
10:50It's from my point of view, it's kind of tough for me to even consider that because I mean, I'm 55 and I'm trying to get like trying to get to a place where I can retire at like a regular age.
11:04But even like as a younger person, I don't think that was something that would have been sustainable for me just because it's I'm a person.
11:12I really have a challenge with like managing my finances to make things work.
11:18Lately, I've been like checking my bank accounts, balancing everything on a daily basis because I have a habit of spending outside of my means and impulsive spending.
11:28So for me, I don't feel like it would be sustainable and it'd be something that would cause me to give up and just go the other direction and just, you know, just do whatever I want.
11:39Just run, basically.
11:41Thank you for being so candid, you know, because even that I think I don't know, maybe it's because you guys have been sharing your journey online.
11:51But it's kind of hard to say I spend beyond my means, like just kind of put that sentence out there and be open about it.
11:59It's not something that people do it very easily.
12:03I feel like I try to be especially open about it because part of what my journey was was realizing that I had so much shame about my financial mistakes over the years.
12:15And it was making me continue to make them and being open and honest about where I'm at.
12:21I hope, well, like it empowers me and I hope it empowers other people to sort of start getting honest and learning how to do things differently.
12:29Joe, I wanted your take on whether this is for everyone.
12:36I mean, in this current economic climate where we see so much wealth, but also so much poverty.
12:44There's so much inequality in the world.
12:47Would you say is still something that is possible and virtually accessible to anyone?
12:53Let's consider that under brackets here to to just retire early and lift off some kind of passive or dividend income.
13:03I don't think it's possible, but you need to put a structured plan in place.
13:07And as Michael said himself, the buyer movement is just a buzzword that were born on the Internet.
13:12And from my experience, I've been helping families for 20 years with financial planning.
13:17And the two biggest mistakes I see are one people overspending or two people trying to over save.
13:27And ultimately, what happens if you restrict everything else in your life at some point is going to pop.
13:34And it's all good and well put in 60, 70 percent of your income away for 12 months.
13:38But then if you hit the if you if you then come down with a crash landing after that, you'll end up taking 10 steps back.
13:48So I've seen this happen before, especially in the Middle East.
13:51I've got a lot of clients out there where they don't do anything.
13:55They don't they don't live. Everything's put away for tomorrow, which, again, I respect that completely.
14:01But those sort of people tend to leave after a year, 18 months, two years, and then the back to square one again.
14:07So I do think you need to find a balance of one. And I always say save and then spend.
14:13So have a structured amount. Leave your bank accounts the day after payday towards your savings, towards your investments for the future.
14:19And then live off what rest live off what what's remaining there.
14:23And that's your spending money for the month. So pay yourself first.
14:27But still, you need to live for today. Otherwise, it's not going to last.
14:30And also, I guess you need to put numbers on what you're trying to aim. Right.
14:35You need to define what you're trying to achieve here.
14:38For example, what does it mean to be financially independent and then how much you're trying to make and how far is that goal kind of thing?
14:47I mean, and I don't understand anything about money, but that sounds like just getting organized and planning life.
14:53But even when people are trying to get organized in some countries like in the US, Canada and the UK,
15:00young people are dealt a really bad hand in the sense that they get in huge debt before they even enter the workforce.
15:07And I'm talking, of course, about student loans.
15:09Many are taking to social media to share their actual debt amount and plans on how to pay for it. Take a look.
15:17How much would you say you'll have towards the end of school?
15:20Like, yeah, probably like I have under 10,000, but I have friends that are 40,000.
15:25So I can't complain.
15:26After I finish my degree, I will most likely have to spend a lot of time trying to find money to settle my debt.
15:32And at the same time, I will also have to delay all my major life decisions.
15:36When I signed up for the loan, the interest rate was at 7 percent.
15:39So not only was 7 percent interest building while I was in school, but by the time I finished paying off the loan, which was only a year after I finished school, the interest rate was at 12 percent.
15:53The monthly installments that you pay back once you graduate, when you get a job, is actually less than the interest added on to the student finance loan.
16:00So essentially what this means is that the university debt that you gain actually goes up rather than going down, even though you paid money into making it going down, which was the original intention.
16:10Leila, I want your take here. Would you say student loans are the biggest challenge facing certain people, of course, that are affected by them?
16:19Or are they still considered good investment?
16:23What is your take here?
16:27I think student loans are a big challenge for a lot of people.
16:31But at the end of the day, ideally, you are taking out those loans for an education that will pay off.
16:38I think that's the problem is sometimes people take out too much student loan debt or a lot of people take out too much student loan debt and then struggle to find a job and pay back those student loans.
16:48I know speaking for myself, I had 49,000 or so of student loan debt after graduating.
16:53And that was very intimidating because when I finished my master's program, I was struggling to find a job.
17:01So I knew something had to change.
17:03And looking back, I can say confidently that it was a good investment.
17:07But I think I definitely took out more student loans than I needed to.
17:11And I know that that wasn't a smart thing to do.
17:15But sometimes it's necessary, depending on the path that you're going down.
17:18And that's for a lot of people.
17:20So I think it can be a smart decision.
17:22But is it the worst debt of everything?
17:25I don't think so at this point.
17:28I think more so credit cards and just careless spending is the major problem for most people here in the States anyway.
17:36Michael, what was the hardest thing for you in this journey?
17:40Was it trying to minimize the spending?
17:43Was it conveying everything online and being so open about it and facing that shame and all those emotions?
17:51What was the hardest thing in your journey?
17:55Honestly, I think the hardest thing for me was being able...
18:00I mean, there was a day probably like three years ago that I decided I need to figure out exactly what's going on with my money.
18:06And I made a list of all my debt.
18:08That was the hardest thing, like looking at the whole number.
18:13What did it look like? What was in there? And how hard was it?
18:18The biggest part for me was IRS debt.
18:21I work for myself as a piano teacher and a musician, a bunch of different things.
18:26And I just never learned how to put money aside for taxes.
18:31I mean, I always wish I had a better explanation for like, oh, I just didn't do it.
18:35But that's really what it is.
18:37And that number got up to like $60,000.
18:40Because once I did start paying off the old debt, it was too difficult because I didn't know how to budget to put money aside for the current debt.
18:48And the number just kept building and building and building.
18:50So that was the hardest thing to get out from under and to learn how to handle.
18:55Just like really, like Dave Ramsey was... I was thinking about it.
18:58Dave Ramsey talks about baby steps.
19:00But I feel like I really needed like fetus steps to just learn how to like look at my accounts and not mess it all up.
19:09It's actually learning how to face it as well, right?
19:12Because when you're writing everything down and you're putting all those numbers there, you're like, okay, this is the problem.
19:18Now I have to look at it and fix it.
19:21And while on one side, there are people sharing their actual budgets, talking about how many dollars and cents they spent for food, electricity that month.
19:30They also share their well-curated spreadsheets.
19:33They're tracking their debt payment and investment stats.
19:36On the other side, there are people who are giving tips on how to be more frugal, how to save money and what to do with the extra cash they might end up with, like these.
19:47To track your spending, knowing where your money is going is the very first step to being able to save more of it.
19:52And so the simple act of doing this is going to put you further than most people in this age group.
19:56And number three, work towards saving up at least one month of your living expenses.
20:00First, for every dollar that you earn, 75% or 75 cents of it will be the maximum amount you can use to spend to buy things.
20:08Housing, food, vacations, Mr. Magic Lamps.
20:11If you can spend less than 75% of your income, that's fantastic.
20:15You can use $1,000 to start investing.
20:17So $1,000 is a great way to buy into something like an index fund where you set up a well-diversified portfolio and you have started investing.
20:26I don't even know where to begin when it comes to talking about investments and stuff.
20:31So I'm going to turn to the professional here.
20:33Joe, you give a lot of advice to people today, these days, but what would be the one piece of advice you would give to everyone?
20:47So something that could actually fit pretty much everyone in the world.
20:51And we have a large audience in very different places, but it's a challenge.
20:55But what would be the one piece of advice in terms of saving the money or investing the money?
21:01How would you say that people should be protecting their future?
21:12First thing you need to do is actually work out what you're investing for.
21:16So get your goal and then work backwards from that.
21:20So whether that be your children's education, because you don't want them to leave university with all that debt, whether it be your retirement.
21:26So it's know what you want from life at that point and then put some numbers around it to work out what you need then and then funnel that back to today.
21:35So if you need X amount in 15, 20 years, we can work out today what that means you need to be investing, what you need to be putting aside each and every single month over the next 15, 20 years in order to get there.
21:48And then you'll know very quickly whether you're on track or not and whether something needs to give.
21:54And how easy would you say it is for people to set one goal?
21:59I mean, I feel like people want so many things in life, right?
22:02You want your kids to be debt free, but you also want to have very nice vacations until you retire and post that.
22:09And you also want a very nice house.
22:10So is it easy for people these days to set one goal and to stick to it?
22:15It's not easy. It's far from it.
22:18But if you want those nice holidays, if you want that nice new car every three years to continue, guess what?
22:24You need to pay your future self and that means investing for the future.
22:29And like I said, the first step with that really is working out what you want.
22:33So, again, most people need between 60 and 70 percent of their income in retirement.
22:39And a lot of people underestimate how much they will actually need.
22:43Because if you stop working at 60, 65 year old, potentially you're going to be on this planet for another 30, 35 years.
22:50Where's that money going to come from?
22:52And that is a long time.
22:53Leila, what advice would you give to people watching us today?
22:57Do you have one piece of advice that you feel was handed to you and it really worked well or something that you learned along the way?
23:07Yeah, what I always go to is tracking.
23:09I think tracking is very important.
23:11There may be a select few who don't need to track their spending.
23:14But I work with a lot of people and talk even just with peers who are like, oh, I think I spend, you know, 400 on food out or groceries, whatever it is that they could be spending on.
23:25But then when they look at their actual spending numbers, it is double that or sometimes triple that.
23:30So, if you're not paying attention to where your money is going, it's very easy to lose control.
23:36So, I know for me, it's worked well, budgeting, but also tracking is very, very important.
23:41I know it is, but it's for me the hardest thing to do.
23:44I hate tracking.
23:46I hate knowing how much I spend on things.
23:49Michael, final word from you.
23:50What is the most precious lesson you've learned in this journey that you'd like to share with us today before we end the show?
24:00I think for me, like the biggest thing is not to give up.
24:03Like, it'd be really easy for me at 55 with my, you know, paltry retirement savings to be like, you know what, it's too far gone, forget it.
24:11But I can always improve my situation if nothing else.
24:15So, don't give up.
24:16Keep trying.
24:17Don't give up.
24:18All right.
24:19I will get to it.
24:20I will get to tracking, I promise.
24:22And I'll look into those retirement plans, Joe.
24:25Thank you so, so much, Michael, Leila and Joe, for your time.
24:29Thank you for being part of the stream today.
24:32And thank you all for tuning in.
24:34If you have a comment about this show or any of our episodes, you can talk to us on social media.
24:39Use the hashtag or the handle AJStream and we will look into your questions and suggestions.
24:44Take care and I'll see you soon.