Seth Godin's Hidden Money Rules: How to Play to Win | Ep 56

James: Welcome to the Furlo Capital, Real Estate Podcast, where we dive into the interest intricacies, man, I can do this of passive real estate investing. And our mission is to equip people to invest wisely in both residents and properties so that together we can build our wealth while improving housing.

I'm James and this is my wife, Jessi.

Jessi: Yep. I'm here. And I, I was chatting with a little girl this week and it was just so funny. She, kids are funny in general, but she was telling me this story about She loves snowboarding. It was so great. She actually even has a hill like outside her house. She takes her snowboard out and takes it down.

I was like, wow, that's impressive. And then like mid story, just instantly, her whole mood changes. She goes, except when you get snow in your glove. Oh yeah. That's the worst. That is the worst. She's like. Whoa, okay, that was like a very dynamic story and wow, that makes you very mad.

James: So it's interesting, I've, I just finished reading this book by Seth Godin and it's all about strategy.

It's like doodle stuff and then around chapter 268 out of 299. Chapters or pages? Chapters. He suddenly, which each chapter is like a page and a half,

Jessi: but

James: he suddenly switches to talking about money, like right in the middle of it. He's like. I know we're talking strategy, but I have some thoughts on money.

Timeout.

Jessi: I'm going to share

James: them real quick. All right. And so like, similar to this girl where it was like, yeah, we're heading this direction and then you go, okay. And then it was like, okay, now back to your regularly scheduled strategy. So I thought there were interesting thoughts and I wanted to run them by you.

So this chapter is called thinking about money. Okay. That's creatively, whatever it is. So

Jessi: this doesn't have to do with. It's like the whole premise of the rest of the book. No,

James: no. It's, it's, it's like just in the side.

Jessi: Okay. I don't

James: know why he was like, I feel like it was so good that you,

Jessi: you drew that piece of it.

James: It was thought provoking.

Jessi: Yeah. Yeah. Okay.

James: Yeah. I highlighted five of the 14, but we're doing all 14. I can't help myself. So here

Jessi: we

James: go.

Jessi: Of course.

James: They'll be good. We may do some of them quickly. So number one is the amount of money you have has nothing to do with whether or not you are a good person.

Being good with money is a little like being good with cards. People who are good at playing cards aren't better or worse than anyone else. They're simply better at playing crazy eights. Yeah. Which I thought was interesting. A total side note. I've been talking with my kids about like, Hey, what hobby should I take up?

And just the other night I was like, dad, you should. Like your hobby should be betting people. It's like that actually, that is a hobby. Yes.

Jessi: Gambling is a hobby.

James: Don't think we're going to do that. You're usually really good at math. Like, yeah, I'm good enough at math to know I shouldn't do that.

Jessi: Yeah.

You're like, that is not a wise choice. Yeah.

James: Super funny. It's

Jessi: super interesting to me because it's like, yes, I agree with the sentiment that the amount of money that you have doesn't make you a better person, but. You can have better strategies or better money management skills. Yeah. You know, and, and therefore, But that's his point, right?

Like, you gain the benefits of it.

James: They're not, like, they're not inherent. His point is you, his point

Jessi: is you can learn it. Yeah. Okay.

James: Yeah, and I think it's also pushing back a little bit like money is evil. No, it's not. It's just it's it's neutral

Jessi: Interesting, you

James: can be good at acquiring it at managing it Okay.

Jessi: Yeah

James: number two money spent on one thing is still the same as money spent on something else so he gives an example a 500 needless fee on a million dollar mortgage closing is exactly the same as Or the exactly as much money as a 500 tip at McDonald's, except the latter might change the recipient's life.

Yeah. And so again, he's just like, wherever you spend it, like, which I don't know if I fully agree with a hundred percent, but outside of just like, yeah, the pure mathematics of it is if you spend it. And so I think he's like, you're, I'm assuming his goal is like, the goal is to minimize that or to be intentional about it, no matter what it is, or don't be upset about a certain expense.

It's there. I would argue again, like, like the mortgage fee does nothing to help your life. Right. The McDonald's one, you get a benefit out of that too.

Jessi: Yeah. I mean, I think, It's more about the perspective that you have on money and it's like the relative worth of money is, does matter, you know, to someone who makes a certain amount of money, 500 of a lot to another person.

It's not, you know, it is the same amount, but the inherent value of it is seen differently. Okay. Yeah, I agree

James: with that.

Jessi: Yeah.

James: Number three. If you borrow money to make money, you've done something magical, which is true. I do this all the time.

Jessi: Yep.

James: On the other hand, if you go into debt to pay your bills or buy something you want but don't need , you've done something shortsighted , and it will exact a toll for a long time to come.

This is the la this is interesting. Don't be surprised if you discover that many systems depend on us being shortsighted.

Jessi: Mm

James: Oh, that's it's true. I know so

Jessi: many things. Yeah. You need this now. This would be great now.

James: Yeah. And the system depends on that, right? That's, I mean, in some ways, like getting a home mortgage or a car loan, like the entire industry is propagated by that.

Now, again, one could argue you could buy a rental and you're making money. You can buy a car, which lets you go to your job or run a business, whatever, it's all good. But which is why, but yeah, it's super interesting. I thought that was, A good realization. Number four. Getting out of debt as fast as you possibly can may be the smartest thing you can do with your money.

If you need proof to confirm this, ask anyone with money to show you the math. Hint, credit card companies are likely to make more profit than any other kind of company in the world. Yeah. Yeah, I think that's right. Yeah. Getting out of debt should be a priority. And though I was recently, I was talking with a friend, he was like, Hey, I have a potential here.

I'm coming into a little bit of a windfall. He was like, how should I spend that? And he was like, I've got like, you know, should I be paying off debt? Like invested in something, blown on a fun vacation, like your thoughts, which I was like blown on fun vacation. Obviously I said, I would actually, no, I don't know.

And I'm in a serious answer. I was like a portion of it. Yeah, absolutely. And then I was like, and then it kind of depends, you know, like, do you have a lot of debt? Where is your spending relative to your expenses? Like if you're pretty tight there, yeah. Pay off some debt to increase that monthly margin.

Yeah. If you're good and not feeling it, like, yeah, go invest it. It's all good.

Jessi: Well, and the type of debt that you have matters, you know, if it's high interest.

James: Yeah, that's true.

Jessi: Like. Yeah, maybe pay some of that off if it's leveraged and you're actually getting cash flow from it. Like, okay. There's different ways to look at it.

That's right. That's good. It totally those last two points. Do remind me of a, an SNL skit from, from all a long time ago. Oh, yeah. Oh, I love that skit where it's like, yeah, the, I think Steve Martin is in it, Uhhuh. It's like, okay, there's this new revolutionary way to think about your money. Like if you, you know, step number one, don't spend, if you don't have, if you don't have the money, don't have the money.

It's just, it's so funny. Like that's the whole, that's it.

James: That is. Yeah. He's like, but there's like one page plan and people are just like,

Jessi: so wait, let me wrap my head around this. I don't have it. I don't spend it.

James: No, it's true.

Jessi: But why?

James: Yeah. But what if I really want it? I really

Jessi: want it.

James: I know, but what if I really want it and I have the money?

He's like, then you should get it. Cool. Yeah. It's great. All right. Number five, there is no difference in terms of the money you have. The, so there's no difference in terms of the money you have, like actual quantity amount between spending money and not earning money. And there's no difference between not spending money and getting a raise actually because of taxes.

You may be better off not spending. If you got cable TV and a cell phone, you're spending 4, 000 a year or 6, 000 before taxes. He's trying to make the, let me see if I can say it. He's saying like earning more and spending less from a net standpoint is exactly the same. And so for him, what he's, the point he's trying to make is don't necessarily focus on earning more focus on spending less, which I'll argue you can only do so much of that.

You can only cut so much before you're like, I'm no longer happy. But which I feel that way on the health standpoint where I'm like, I can only cut so many calories before I'm totally miserable. But in theory I could exercise.

Jessi: Sure.

James: I'm enough. It's just like those ratios don't work out the same, so I can't actually exercise enough to do it, but to eat whatever I want.

But but I, so I would argue like, no, there's something to be said about earning more, but I'm also like, yeah, there's probably some really, for a lot of people, there's some low hanging fruit in terms of the expenses that they can get rid of.

Jessi: Yep.

James: Which would be good. All right. Number six. If money is an emotional issue for you, you've put your finger on a big part of the problem.

No one who is good at building houses has an emotional problem with hammers. Place your emotional problems where they belong and focus on seeing money as a tool.

Jessi: That's good advice. You know, it is emotional, not the money in and of itself, but often the positions that puts you in when you have it or don't have it, you know?

And it's like,

James: I thought it was interesting. Dave Ramsey pointed out, he's a. He was like, most money problems are not actually math problems. There, there are like their emotional, psychological problems. Though there is actually a very strong correlation between someone's financial how will they do their wealth and their math skills.

So it was like, so it's a little bit, there's a little bit of correlation.

Jessi: So if you're good at math, you're going to make more money.

James: You tend to manage your money better.

Jessi: Okay. I mean, that kind of makes sense because accounting, It's like, it's math, so. Yeah. Yeah. But, but most of their, like,

James: most problems are emotional and like communication problems with spouses.

He's like, that's like 99 percent of it. Yeah. But, and that's what he's saying to just try to treat it as such. Number seven, like many important professional endeavors, money has its own vocabulary. It won't take you long to learn what opportunity cost investment, debt leverage basis points, and stuff costs mean, but it'll be worth your time.

Yeah. And a hundred percent agree. If you're listening to this podcast, you are investing in learning the language, the game of money, because that's what we talk about all the time on this. And yeah,

Jessi: we define terms all the time because often I don't know them. I'm like, wait, what is that?

James: Was there, were there any of those where you were like, Okay.

You rattled them off so fast, but I was like, okay, opportunity cost. You know what that is? That's a really important one. Actually.

Jessi: Yeah. I mean, it's like what you're giving up in order to do something. Yep.

James: Yep. And oftentimes we don't think about that. Right. Investment debt. You know what that is? Yeah.

You know, it's just investment. Sorry. Oh yeah.

Jessi: Putting your money into something that's going to

James: put debt. Give you back

Jessi: taking out a loan.

James: Yeah. Leverage sunk costs. Do you know what that one is?

Jessi: I feel like that's similar to opportunity cost except for it's like, you've already like you've already done something.

Yeah. You've already committed to it. It's a sunk cost. I like, you're not going to get it back. So you might as well like move forward. If you've

James: already invested in something in the past, in theory, it should not influence what you're doing in the future. Like for example, I remember the one that stuck me was when we were in college, they were talking about like, if you're writing a paper and you're like 20 pages in.

And you're just like, this paper is just not any good. Like we will tend to keep working on that paper and keep pushing forward because we go like, Oh, yeah, you're better off to just start all over and just trash it. It doesn't matter. Yep. Yep. It's sunk. It's gone. Yeah. What was the other one? I remember there was an example the very first time I learned it was about a tennis court.

It was like, if you are paying, like there's a, an indoor court and an outdoor court and you pay extra to play, like. You pay an extra fee to have the option to do the outdoor court. When the time comes, the question is, which court do you play on? They're like, you will always like people tend to go, well, I bias myself towards the outdoor court because that's what I paid for.

Like, well, the the weather's bad. No, you actually want to play on the indoor. And you just, you can't even think about the cost anymore. That's the sunk cost that like what you paid for that should not influence your decision. The only thing you should think about is like, well, which court is better right now, regardless of what I paid, all you did was you paid yourself, you paid to get the option to have the choice and I just take the choice as if you had paid nothing.

Which is like, it's so hard. That's so hard, yeah.

Jessi: Well yeah, we second guess ourselves all the time about, Oh man, I shouldn't have spent that much. It's not necessarily

James: second guessing, it's like we stick with things longer than we should. Yeah, that's true.

Jessi: Or we let it influence our decision because yeah, because it seems like it should.

James: Yeah. When in reality matters, but yeah, which is, that's like, again, that's like, you got to be a weirdo in order for that to like, to naturally do that, I think.

Jessi: Yeah.

James: Yeah. All right. Halfway there. And wait, never sign a contract or make an investment that you don't understand at least as well as the person on the other side of the transaction.

Jessi: Smart.

James: Yeah. Which I think is smart for passive investors. Like we don't, our contracts with them are super straightforward, so it's not a big deal, but usually just promissory notes and stuff like that. But yeah, I think that's good. That's an area that I'm not great at. I really have to focus and work hard to understand contracts and stuff.

Cause that's just not a natural thing for me. Yeah. It's a contractual lame, but it's partly that attitude that doesn't help me. Yeah.

Jessi: Well, and there's at this point, there's just so much like legal jargon and fine print and covering your butt that it's like. This is just, it's exhausting to read, you know, to get

James: through it all.

Do those like terms of services that you have to accept.

Jessi: Am I signing that contract? I

James: don't

Jessi: know. I know. It's probably bad to admit that, but I'm like, scroll down, click. I choose

James: to believe in you know, that we're all we're all acting in good faith.

Jessi: Yeah,

James: and every once in a while especially with car rentals for some reason they do not act in good faith Yeah, and I sign stuff and later go what which I don't know like what was I not gonna rent the car, you know Like yeah, I mean super long blame.

Yeah, there's not until something happens where I find out where they go Oh, wait, I also feel like insurance companies Oh, like that's insurance is what do you not acting to my but I don't care. I choose to live my life As if every single one of them is acting in good faith. That's

Jessi: right.

James: I'm okay with that.

I'm okay. I will get burned every once in a while. It's okay. Totally cool. Majority of the time you don't. That's a choice that I have made. I'm alright with that. Number nine. If you've got a job, a steady day job, now's the time to figure out a way to earn extra income in your spare time. Hmm.

Freelancing, selling items on Etsy, building a side business, 200, 200 extra dollars every week for the next 20 years can create peace of mind for your family. For a lifetime.

Jessi: 200 a week is a lot.

James: Yeah, it is. 800 bucks a month. Yeah. That adds up. Exactly. That's his point, right? And he's like, yeah, if you got the study stuff don't necessarily spend your time on Netflix or surf on the web or the socials, you know, taking the talk for him.

I don't know. I got kicked off a tick talk. Yeah, that's right. I got kicked off so I don't know what the cool terms are for that anymore. Oh, Yeah, I was, I was too, I was too crazy. Cause you didn't

Jessi: read the terms of service.

James: Probably. I though, after I broke it, after I got banned, I actually, I tried to read them and I was like, I don't understand what I did wrong here.

There was absolutely no one to talk to to actually figure it out. And it's so lame. Oh, so sad. But yeah, I think that's, I think that's a great idea. You know, how you get involved in, I think there's a lot of things you can do in real estate to kind of kickstart that kind of stuff. But yeah, I Number 10, a small time investor will almost never get rich by timing the stock market or with other opaque investments.

Jessi: Okay. You have a firm game. The system that

James: we say, yeah, yeah, I think so. I think it's just like some of those systems are just so large. You'll never actually get an advantage. And so stop trying. Yeah. Said to the side hustle thing.

Jessi: Yeah. I mean, it makes sense. It's like any. , anything that is gonna be like worth the payout is gonna take some hard work.

Right. That's like, it's not gonna be a quick dollar, it's not gonna be easy. Yeah. It's

James: good takeaway. You're

Jessi: not gonna fi, you know, figure out the system and suddenly be like, oh yeah,

James: yeah,

Jessi: I just get money every week. It's like, no, most things take hard work. Yeah's. Right. That's okay. That's good. Yeah. Yeah. I like that.

Good

James: takeaway. Excellent. 11. The way you feel about giving money to good causes has a lot to do with the way you feel about money.

Jessi: Interesting. I

James: thought that was an interesting one too.

Jessi: What you feel about giving, giving away money to good causes says a lot of how you feel about money, like in general.

James: Yeah.

Jessi: Interesting.

James: It wasn't about the, yeah, it didn't necessarily specifically talk about the amount, but yeah, it's just kind of your heart.

Jessi: Yeah. Like the, the heart or the thought

James: behind it,

Jessi: which is super interesting to me because

I, there are different people who are like bent towards generosity or not, or, you know, so I'm like, I don't necessarily think that those people have a better handle on how they think about their money, you know, and maybe that's not what he's saying. He's just saying that how you feel about your money in that one area applies to everything

Or something.

James: I think maybe it's an idea of, I think it is back to that. Like, do you have an abundance mindset or not? Or are you greedy or are you generous? I think that's it. Like, if you're willing to give money away, like, yeah, it's not the most important thing to me.

Jessi: Yeah.

James: I think that's what I'm going for. That

Jessi: makes sense.

That would make sense to me. And yeah, yeah. You're, it goes along with his other, the other point that was in there about how money is a tool, It's like, we tend to be emotional about it or, or like, it affects our intent

James: to geez,

Jessi: it affects our, our mood and, and, you know, what we're thinking and we, we stress about things and it's like, okay, if I'm just looking at this, like the money, isn't the issue, like it's, I'm, I'm in control of how I respond to it.

Like how I, what choice I'm going to make later than the money is just a tool that I can use or not use. Yeah. In good ways.

James: Yeah. Related here is number 12. I think you're going to like this one. I liked it. Don't get caught confusing money with security. There are lots of ways to build a life that's more secure, starting with the stories you tell yourself, the people you surround yourself with, and the cost of living you embrace.

Money is one way to feel more secure, but money alone won't deliver this. Yeah. And I, you know, as we're Christians and I definitely, you know, that resonates with me. Like, yeah, our security isn't in money. It's not in things. It's not in this life. Our security is in Christ and in a life ever, you know, life afterwards from his promises and like, that's where I get my security from.

Yeah.

Jessi: We could lose absolutely everything in this world and it's okay. Yeah. And it'd be hard.

James: And I think there's other, just other regular things, right? Like he's talking about, yeah, the people you surround yourself with just your mindset in general is where you get security. And yeah, money's not going to deliver it.

So, I thought that was just, you know, good perspective.

Jessi: Yeah.

James: 13. Oh man, two more rich guys busted for insider trading, weren't risking everything to make more money for the security that money can bring. In fact, the very opposite is starkly on display. The insatiable need for more money is directly and ironically related to not being clear about what will ultimately bring security like many on this path.

Now they have neither money nor security. Yeah. So It's kind of an interesting one to throw in there. Yeah. But essentially he's saying like, if you are, if you're just chasing after money, because you think it's going to, again, he's like saying, if you think it'll bring you more security, which by the way, this is his entire book, how he writes, it's kind of, it's an iterative type of thing.

He'll like, he'll say like three quarters of an idea and then he'll overlap that idea with another one and extend it a little bit further and then overlap. And so each one individually, you're like, Full thought, but I see how they're all kind of together. By the time we get to the end, you're like, I think there was a full thought in there, but but yeah but yeah, so anyways, I think that's what he's getting at.

Jessi: Yeah. Well, I'm thinking, thinking about the motivation behind why you're pursuing this. A higher income or, or even saving, you know, it's, it's, it all, it really does all go together, you know, because it's kind of like, what's your perspective on money and how do I view it? Do I view it as a tool? Do I hold it loosely?

Do I emotionally involved in it? You know, and then what's my motivation? Like why, why? It's what I be pursuing a higher income or why am I pursuing paying off my debt? You know, it's like, is it to feel that security? Is it to look good? Is it?

James: Yeah. And I think it's good to ask yourself those kinds of questions and really like, what am I doing here?

Why am I doing it? I think that's good. Yeah. And being honest and, and it's probably even healthy to say, I'm going to start from a negative view of this. I'm going to assume the worst of myself. Just to, to, to game that out. Mm-hmm. You know, am I, why am I pursuing a business? Mm-hmm . Oh, is it because, you know, is it because I'm insecure?

Is it because I'm afraid of something? Mm-hmm . Is it because I don't feel like I have enough, you know, like, really, or even to look at both extremes, , you know? Yeah. Okay. To

Jessi: be like, okay, what's the super altruistic way to look at this? Right. And what's the worst case scenario? And it's like, okay, I'm somewhere in between.

Where do I, where do I fall here? Yeah.

James: And just really being truthful about it. Yeah. I think is probably the biggest thing you can do because you know, then you can actually move forward. Yeah. Yeah. Last one. All right. In our culture, making more money feels like winning, and winning feels like the point.

Yet, within very wide bands, more money doesn't make people happier. Learning how to think about money, though, usually does. So he's saying in our culture, making more money is like, yeah, that's how you win. But, In reality, like that may not necessarily be true because, you know, once you kind of hit a certain threshold, like you're actually happier, but if you understand these 14 principles, plus just other really good basic ones.

That will actually make you more happier if anything, it's because you just better understand the rules of the game and you can play it better. Yeah. Yeah, yeah. So these are they're not your normal, like spend less than you earn. Yeah. They're not Dave Ramsey, baby steps. They're just more like more conceptual.

Yeah. Yeah. Which again, that's how he writes all of this stuff. And just kind of, so that's why I thought there were interesting thoughts because you don't normally. Right. You don't normally you don't normally dissect that. It's, it's. Yeah. Yeah. So if I had to boil it down to very simple terms, he would go, money is a tool.

Learn how to wield the tool, whether that's like learning how it works, learning the language around it. Yeah, the rules of that game. I think that's a big one. And don't make it more important than it is. Like, again, it's kind of like, don't, don't, don't, Relying on it for your happiness, for your security, for your own worth.

There's other more important things. And at the same time, again, like learn how it works so you can play the game.

Jessi: Yeah. Yeah. Cause the reality is money does provide good things, you know, and comfort, and it does provide certain amounts of security for your family and taking care of them and, but, but if you make it your ultimate thing,

James: you'll ultimately crumble and it becomes a problem.

So it's, it's that balance. Yeah. You

Jessi: Is it caring for your family that's most important or is it making the dollar amount that's most important?

James: And that's why I like working with a lot of our passive investors because I feel like we, we kind of, we strike that balance of, yeah, you know what? Building my wealth is important and I do want to help out society, but I also don't want to devote my entire life to doing this because I have other stuff that's more important.

Like, sweet, here's where I can come in and help out with that. Yeah. And yeah. So. I like it anyways. Those are some thoughts. I thought they were interesting. It's good. We'd love to hear your thoughts in the comments about how they, you know, if any of them resonated with you from this, and if you would like to learn more about investing with us and what it looks like to pursue some of these money goals and how to do it, we would love to do that with you.

You can check us out at furlo.com. So with that, thanks for listening. Have a great day.