“It [living beneath my means] was never about deprivation. It was about spending my money on the single most important, most valuable thing I could think of to spend it on, which was my freedom.”
— JL Collins
“We’d probably be better financially off, but we’d probably be a lot happier and have a lot more self love if we just didn’t listen to the noise.”
— Jess Collins
In this Art of Allowance Podcast episode, host John Lanza welcomes JL Collins and his daughter, Jess, for a conversation about financial independence and family money lessons. They discuss the principles of JL’s bestseller, The Simple Path to Wealth, the process of writing and updating the book and the importance of teaching kids about money from a young age. John, JL and Jess also explore investing in index funds, navigating stock market fluctuations and why JL feels homeownership is misunderstood as an investment. Additionally, they address the challenges of maintaining smart money habits, the evolving perspective of Jess’s financial journey and the power of values-based spending.
JL Collins, often called the “Godfather of Financial Independence,” has been investing in the stock market for five decades. He developed a worldwide following through his popular blog and his first book, The Simple Path to Wealth. This title has sold over a million copies across twenty languages and is now a New York Times bestseller.
Jess Collins is known as the “little girl who wouldn’t listen,” a nickname given to her by JL in his blog and books. From a young age, Jess began learning (perhaps against her will) about index funds, dividends and investments at the Collins family’s kitchen table. Now in her 30s, she uses The Simple Path to Wealth to pave her way to financial freedom and her own fulfilled life.
Visit our YouTube channel for selected snippets from this and other podcast episodes.
Links (From the Show)
- Collins Connections
- Money-Smart Mentions
- Morgan Housel’s book, The Psychology of Money
- David Owen’s book, The First National Bank of Dad
- John’s short essay on student loan debt, “Help Your Kids Avoid the ‘Envelope Surprise'”
- John’s controlled consumption slider
- Jillian Johnsrud’s book, Retire Often
- John’s newsletter on portionsaving, meansliving and longinvesting
- Harry Browne’s book, How I Found Freedom in an Unfree World
- John Bogel’s book, Enough
- Morgan Housel’s book, Same as Ever
- Kristy Shen and Bryce Leung’s book, Quit Like a Millionaire
- Hans Rosling’s book, Factfulness
- The Our World in Data website
Show Notes (Find what’s most interesting to you!)
- How Jess inspired The Simple Path to Wealth [3:07]
- Jess’s in utero introduction to money [5:48]
- The Collins envelope allowance system [8:13]
- How Jess’s perspective of her money-smart journey changed [15:35]
- Debt as the “tyranny of must-haves” [18:26]
- Values-based spending [21:35]
- The basic formula of The Simple Path to Wealth [25:08]
- The challenge of habits [31:05]
- How following The Simple Path to Wealth is like going to the gym [34:46]
- Tabasco sauce on eggs: JL’s preference for total stock market index funds [36:11]
- Market volatility as an opportunity [42:37]
- Why building a portfolio around disasters isn’t practical [46:25]
- How investing can benefit young adults [50:09]
- Are houses investments or indulgences? [56:27]
- JL’s thoughts on house hacking and investment properties [1:00:40]
- Musings on music, meditation and martial arts [1:03:15]
- JL’s money-smart influences [1:07:18]
- Money empowerment and financial independence [1:10:03]
- Travel and time as investments [1:10:47]
- Advice on worrying [1:14:08]
- VTSAX and chill [1:17:11]
- Money-smart book recs from both JL and Jess [1:19:29]
- JL on the web [1:25:46]
- Discover how others have implemented The Simple Path to Wealth [1:26:27]
Click here for the full transcript.
If you liked this episode …
Looking for another allowance system perspective? Author and New Yorker staff writer David Owen makes the case for more autonomy in his podcast episode. David’s daughter even came to the same conclusion as Jess that she was being “swindled,” which led him to ponder if parents are unwittingly teaching kids to spend the money they receive as quickly as possible. Tune in at 5:24 for his thoughts.
Need more information on values-based spending? Returning podcast guest and cohost Robin Taub offers strategies for incorporating family values into money conversations. Be sure to check out her second appearance on the show for charitable giving (11:11) and enhanced interest (19:06) suggestions.
Want a counterpoint to JL’s affinity for VTSAX? Investor and two-time podcast guest Evan Wilson explains why you might want to think beyond index funds. Listen to his solo episode at 42:18 for his reasoning on adding individual stocks to your portfolio.
Please Subscribe
If you liked this episode, then please leave a review and subscribe to the show. The Art of Allowance Podcast is available on Apple Podcasts, Spotify, Podchaser and now Amazon Music. Subscribing is free, and it will help our team produce more enriching content for you to enjoy.
Full Transcript
This transcript is from The Art of Allowance Podcast, Episode 80, featuring host John Lanza and guests JL and Jess Collins.
00:00:00,219 [John Lanza]
Hello, and welcome to Episode 80 of The Art of Allowance podcast. I’m your host, John Lanza.
00:00:09,059 [Jess Collins]
It’s what buys your freedom so that you can do what’s important to you, whether it’s
00:00:14,739 [Jess Collins]
finally be able to chase that dream of living your passion, but your passion doesn’t necessarily make a lot of money, so you’ve invested enough so that you can live off of the 4% rule and you can do what you love. Or maybe it’s the freedom to take a break from work, walk away from a job that you’re uncomfortable with because you have a few money. Maybe you just want to spend time with your family. Maybe you wanna try something new. And I think that is the most important because at the end of the day, you will create the habit if you care enough about what the destination is, and you decide that that’s the priority because the habit’s pretty straightforward, I think. [instrumental music]
00:00:54,559 [John Lanza]
In this episode, I speak with JL Collins and his daughter, Jess, about financial independence and family money lessons. We discuss the principles of JL’s bestseller, The Simple Path to Wealth, the process of writing and updating the book, and the importance of teaching kids about money from a young age. We also explore investing in index funds, navigating stock market fluctuations, and why JL feels home ownership is misunderstood as an investment. Additionally, they address the challenges of maintaining smart money habits, the evolving perspective of Jess’s financial journey, and the power of values-based spending. JL Collins is often called The Godfather of Financial Independence, and he has been investing in the stock market for over five decades. He developed a worldwide following through his popular blog and his first book, The Simple Path to Wealth. And this title has sold over a million copies across 20 languages, and is now a New York Times bestseller. Jess Collins is known as The Little Girl Who Wouldn’t Listen, a nickname given to her by JL in his blog and his books. And from a young age, Jess began learning, perhaps against her will, about index funds and dividends and investments at the Collins family’s kitchen table. Now in her 30s, Jess uses The Simple Path to Wealth to pave her way to financial freedom and her own fulfilled life. I hope you enjoy my conversation with JL and Jess Collins. [instrumental music]
00:02:38,239 [John Lanza]
Today, I am speaking with JL and Jess Collins. Welcome both of you.
00:02:44,919 [Jess Collins]
Hi, John. Thank you.
00:02:46,099 [JL Collins]
Hey, John, great to be back with you.
00:02:48,939 [John Lanza]
Well, JL, I’m glad you were both able to make it, and, uh, Jess is JL’s daughter, and we will be talking a lot about her role in his life and his role in her life. But I wanted to start by just saying that my, my wife first introduced me to your book, The Simple Path to Wealth, and I loved it. And I want you to start by kind of telling us a little bit about yourself, why you’re releasing this new updated Simple Path to Wealth after selling, selling was it a million copies of your first one. And the new edition, you just, we just found out is a, already a New York Times bestseller. So congratulations on all of that. And give us a little intro to yourself, and then we’ll turn things over to Jess.
00:03:30,259 [JL Collins]
So, well, thank you. Uh, uh, first of all, uh, you know, the whole reason I wrote this book was for Jess. I had started putting this stuff down in a, in a blog in 2011, and that’s what morphed into the book. And the original Simple Path to Wealth, uh, when it was published in 2016, there was really no market for financial independence books. I think it was one of the very first, uh, in the space. And so I self-published it. I don’t think any publisher would have been interested. Now, now publishers are very interested. And, uh, so last year, I began looking around as to what to do with this, uh, with this property, uh, uh, that was ultimately gonna fall into Jessica’s hands to, to manage as, you know, part of my, uh, estate. And I actually never intended to do a new edition, but we found a, a great publisher in Authors Equity, and they had some wonderful ideas. And kind of s- to my surprise, Jessica had really embraced the work to a degree that I had not really understood, and she was kind of the one who pushed the idea. She said, “You know, Dad, I think we should do this and bring out the new edition. We’re gonna update all the numbers. We’re gonna add some new content to it.” And she was very actively involved in that, in that process. And I have to tell you, for me at least, it was a very difficult and stressful process that I was not particularly enjoying going through. And in January, when we were in the throes of it, a quick story. I was talking to a friend of mine, and, and he didn’t know that I was doing this. And at one point he said, “You know, the great thing about The Simple Path to Wealth is you’ll never have to update it. It’s timeless.” And I heard that, and I thought, “What am I doing?” But I’m glad we did it. I think it’s a, it’s a better book. We’re very proud of it. And as you were kind enough to mention, it’s already a New York Times bestseller, which people tell me is a very big deal. Yeah, I think we feel good about it.
00:05:30,379 [John Lanza]
Very nice. I mean, uh, personally for me, I think the two most important financial books that I’ve read are The Psychology of Money and The Simple Path to Wealth. And both of them have that kind of similar, that distilling down complexity to better understand what money is all about. So Jess, I will assume that you’re following The Simple Path. But because this is… We’ll get into the specifics-
00:05:53,439 [Jess Collins]
[laughs]
00:05:53,899 [John Lanza]
… but this is The Art of Allowance podcast, so we love to, I love to start at the beginning of the money smart journey. And I’d love you to just tell us kind of how your dad first introduced, uh, you to money.
00:06:07,039 [JL Collins]
I would say that-
00:06:08,059 [Jess Collins]
How did he introduce me to money? Very hard and very strong and very forceful. [laughs] The joke amongst-… myself, my dad, and my mom, even before the blog and before the book came out was that he quite literally started when I was
00:06:24,759 [Jess Collins]
a child, probably around two or three. And we were talking from the beginning about VTSAX, about investing in index funds. I did have an allowance, so we talked a lot about an allowance and what you should do
00:06:41,939 [Jess Collins]
with your weekly allowance; separating into different piles, saving for the future, having a fun pile as well. So,
00:06:50,699 [Jess Collins]
we… He started young. He started really young. And then as soon as we started, it just kept going.
00:06:56,639 [John Lanza]
Okay, so we have to go back. So first, when did he introduce [laughs] VTSAX? First of all why don’t you tell us what VTSAX is, just so everybody knows, ’cause it’s gonna come up again.
00:07:08,299 [Jess Collins]
Yes. It’s, uh, Vanguard Total Stock Market index fund. And I’m not being hyperbolic when I say I don’t remember when he first introduced that to me because I quite literally do not remember a time when that was not a part of my vocabulary. So maybe it wasn’t two, but if it wasn’t two, it was three years old. And if it wasn’t three, it was three and a half. I… It’s always just been-
00:07:32,959 [JL Collins]
I think it w-
00:07:33,319 [Jess Collins]
… an acronym that I knew.
00:07:34,559 [JL Collins]
It was when you were in the womb. I was whispering.
00:07:38,839 [Jess Collins]
Was, was index fund my first two words? Index fund.
00:07:42,339 [John Lanza]
So other, other parents are doing classical music. JL, you’re whispering VTSAX.
00:07:47,919 [JL Collins]
Yeah, right.
00:07:48,659 [Jess Collins]
Yeah.
00:07:51,239 [John Lanza]
Well, I think, I think this is incredible. So, before allowance, obviously, right? So tell me how… Okay, so you’re introducing… This is just the language of VTSAX, and I, I assume you probably have something set up there, but I do like to dig deep here. If there’s any kind of specifics you can give us on, on that, that would be great, beyond just talking about it. And then I would really like to know, JL or Jess, when you set up your allowance. So how did you set it up? Did you have jars? What, what type of jars did you have? Did you have requirements in terms of how much money you were giving? How did that change over time? I think that would be really useful to know, um, that background.
00:08:31,919 [Jess Collins]
Sure. I’ll go first. I think what’s gonna be interesting about this question is hearing how we both answer it, ’cause I think we both probably have very different perceptions of reality. Mine’s actually probably more of a perception, whereas Dad’s actually is reality. I remember having an allowance from… And again, we’ve been talking about this my whole life, so I apologize. I really don’t remember age specifics, but I remember being quite young, probably three or four, and it started with not a lot. Maybe it was a dollar. And I don’t even remember if it was on… At one point in my life as an adolescent, maybe when I was
00:09:11,799 [Jess Collins]
a little older, so maybe nine or 10, I had a more consistent allowance. But when I was really young, I don’t remember if it was consistent, but I remember it was a dollar, and I remember having exercises with my parents. I had envelopes and each envelope was for a different thing to put the money to. So for example, one envelope was fun, one envelope was savings, one envelope was college fund, and at one point we even included a bit where one point was that you were gonna donate some of this, and that’s something that came later on. But we had these pretty consistent envelopes, and I would sit down and we had dimes. And when I was young, I wasn’t the one saying how much of everything would go into every envelope. My dad was the one that was explaining, and it wasn’t even split 25/25/25/25. It was split with… And again, I don’t even remember the percentages. Maybe you do, Dad, and I’m sure they changed as I got older, but the majority was savings. The majority was, “This is you’re saving for the long haul. You’re not gonna touch this. This isn’t the, the candy that you’re gonna buy tomorrow. This is your savings.” And then the other three were divvied out more equally, so again, it was savings, it was fun, it was college, and it was charity. Those are the ones that I’m remembering. From a very young age, that’s what we started, but I’m curious if you [laughs] remember something different.
00:10:40,619 [JL Collins]
No, that’s actually pretty close to what I remember. I don’t think we started your allowances as young as three or four.
00:10:48,119 [JL Collins]
Uh, you were probably more like six or seven, something like that, where you could… You know, where you actually were aware of money and, and interested in spending it. The exact percentages, I… The only exact one I remember was charity, and that was 10%, and that was from the beginning. Um, but you’re right. We had, uh, uh… Part of it was for savings, and part of it was long-term savings, and part of it was short-term savings, so if you wanted to save up to buy something that cost more than your dollar allowance. And then there was money that was just for immediate spending, and I wanna say that was like 35 cents or something was the immediate spending, and then 10 cents went to charity. And so the other 55, or maybe it was 40 cents that was for immediate spending. But what [laughs] I really remember is when you were adult, an adult, we were talking about this at one point, is that you mentioned we had envelopes, right? And we did this with coins, so you could divide the money effectively. So I’d say, “Okay, Jess, you know, these coins are for your spending. This dime’s for the charity. You know, these…” And then we, they went in the individual envelopes. I remember you telling me when you were an adult, as far as I was concerned, you gave me a dollar, then you took most of it back [laughs] and left me with 40 cents. That way, (laughs] that was actually my allowance.
00:12:12,639 [Jess Collins]
Like…
00:12:14,099 [JL Collins]
That never occurred to me when… That you would… And I understand why you would see it that way, ’cause it’s, you know, that’s a perfectly logical [laughs] way to look at it, but that never occurred to me when you were… I thought that a six-year-old would be saying, “Oh, good long-term [laughs] savings.”
00:12:29,099 [Jess Collins]
Every six-year-old’s dream. [laughs]
00:12:32,100 [JL Collins]
As far as Jessica was… As far as I was concerned, Jessica got a dollar a week, and as far as she was concerned, she got 40 cents.
00:12:39,339 [John Lanza]
That, uh, you know- Did you… JL, I don’t know if you’re… There’s a book called The First National Bank of Dad, which was very impactful for me. It was by David Owen, who I also interviewed on the podcast. And he makes that exact point, which is that he gave control to his kids becau- to put them where they were. Now, we weren’t in between you guys because we did require money going into the account. But I actually didn’t ask them that question, and they probably felt the same way that Jess did, which is, “My allowance is everything in the spend jar.”
00:13:10,419 [JL Collins]
Right.
00:13:10,540 [John Lanza]
“And then nothing that’s in the donation, the save jar,” [laughs] right? I could see… Now, th- that probably, I would imagine though, that probably changed like on the short-term saving side, Jess, once you started saving for some goals, maybe, you got a better sense of… Like, did that change, your perspective change on it?
00:13:29,239 [Jess Collins]
My perspective on how we were divvying up my allowance?
00:13:33,139 [John Lanza]
Well, how… So let’s just say that you’re… So 40 cent- let’s say you’re putting in however much, let’s say 10 cents into this short-term savings, right? But then you decide to save up for a goal and that goal… So now that goal is… An- and you would… And you achieved something with it. Now maybe instead of thinking you’re getting 40 cents, you’re getting 50. You’re getting that additional, whatever money was going to save jar, because you can use it to get, like, slightly longer term items. You know, things that you can’t just go spend from the fun jar. And I’m, I’m re-… The fun jar, that was the spending jar, right? The fun jar?
00:14:07,579 [Jess Collins]
Yeah. Um, that’s-
00:14:08,639 [John Lanza]
Or the fund envelope?
00:14:10,079 [Jess Collins]
That’s an interesting question. Did it change? I’ve never thought about that. It must have, but the funny thing is, John, what you’re, what you’re saying, that’s interesting to me, is I never had a, a goal. It, I, it wasn’t as though I got to high school and I was thinking, “Yeah, I could finally go buy this pair of jeans.” I guess I never just had goals of things that I wanted to spend my money on. I wasn’t somebody who was trying to buy fashionable clothes. A lot of times [laughs] what I wanted was just to be able to go to the movies with friends or maybe get the snack at the mall. So, it actually took an embarrassingly [laughs] long time for me to understand that 100% of this was mine, and what was actually being, trying to be instilled in me was the muscle memory of
00:15:10,139 [Jess Collins]
putting money away, saving it. Wh- now whether it, whether it is saving for long term, investing in VTSAX, or saving for a goal like what you’re describing, both of that was just, “Let’s get in the habit of saving.” But it took me probably a, a really long time to actually click it, because I never,
00:15:30,519 [Jess Collins]
I never had things that I really wanted to buy.
00:15:34,239 [John Lanza]
Okay, well, th- tell me that, was there a moment where it did click, where you realized all this whispering in the womb to now made sense from, from this standpoint? Like, was there a moment or was it a series of moments?
00:15:50,059 [Jess Collins]
There was a moment. I tell this story… I’ve told this story before. And [laughs] like I said, I was… It was embarrassing how long it took for it all to click, but it did click. I was a senior in college and I was living with a bunch of girlfriends. And as one does in college, you’re very sentimental, you’re also really scared, so we’re having a lot of conversations of, “What are we gonna do next?”
00:16:14,479 [Jess Collins]
One of my friends made a comment about how she was mentally preparing herself to pay student loan debt for the rest of her life. And that was really interesting to me because I knew enough about her situation, her degree, what was coming next for her, to think, “Oh, that- that’s interesting.” And I, and I knew how much student loan she was gonna have to start paying off. So, I knew enough about it to think, “That’s really interesting. Why do you think you’re gonna have to be paying for the rest of your life?” And she shared the amount that she was gonna pay every month, and I remember thinking, “Well, why don’t you just…” ‘Cause to me it sounded really small. And again, remember, I know her situation, I know what her plan looks like after college. And I said, “You should, you should pay off more,” right? Like, “You could get that, you could get that taken care of real quick.” And that’s when the conversation started happening. “Oh, well, I can’t because I actually don’t wanna move in with my parents and save up. I wanna move in the city and I wanna get my own place and I need to get a new car.” And it was all of these things of, “Oh, I need this, I need this. I want this, I want this.” And that was a moment that has always stuck with me, I think because we were right on the cusp of being real adults, where I thought, “What I’ve been taught is not conventional knowledge. The way I’m thinking about this is clearly very different than how she’s thinking about it.” And yes, I was a legal adult and I was about to graduate college, but this is really what the culmination of all of these teachings since I was [laughs] in the womb have led up to, because fundamentally, I am looking at the situation very differently. And I think most people would have actually had the same reaction as my friend in her situation. And I was just… I thought about it very differently. And so, that’s the moment that’s always stuck with me of, it all clicked.
00:18:07,519 [John Lanza]
That’s interesting. I think for some context, JL, because for anybody who hasn’t yet read the book, and again, I’m, I’m going to shamelessly plug the book because it is a must-read from my [laughs] perspective, which is the reason I [laughs] was very excited to have you on the podcast, you and Jess, because it’s just such a meaningful book. So, talk to us a little bit about your perspective on debt and then perhaps, JL, how you started those conversations, ’cause it obviously had some kind of impact here, and I think that would be helpful to give us some context.
00:18:40,491 [JL Collins]
Yeah, so I don’t know that we ever had those specific conversations. I think Jess’s attitude around that probably came out of watching how her parents lived their lives. And this is the first time I’ve heard her tell that story in, in quite that way. And, and I think her girlfriend is an illustration of what I call the tyranny of must-haves, right? So the reason that her girlfriend was not gonna be a- able to pay off her student debt anytime soon was, “I must have this, I must have this, I must have this.”
00:19:18,792 [JL Collins]
And one of the things that I’ve noticed as I’ve talked to a lot of people about, about this and in this space
00:19:25,831 [JL Collins]
is that if you say to someone, “Would you like to be financially independent?” I don’t think anybody’s ever gonna say no to that. But then when you start talking about the steps that are gonna be needed to get there,
00:19:37,472 [JL Collins]
you know, which are living on less than you earn and devoting a significant amount of money to your earned income to buying what should be the most important thing to you, which is your freedom, well that’s when you start getting the, “Well, that sounds good, but, you know, I gotta live in this neighborhood. I have to have this house. My kids have to go to these schools. I have to have these two leased luxury cars. You know, I have to have this apartment.” Whatever, whatever it is.
00:20:07,031 [JL Collins]
I- I, you know, it’s… My reaction to that is always, “Well, it’s your life. It’s your money. You can spend it however you choose,
00:20:14,391 [JL Collins]
but unless I have to have financial independence as number one, you are probably never gonna get there.” And for most people, buying their freedom is just not that important to them, and to me that’s a little appalling, but it’s one of the reasons that…
00:20:32,691 [JL Collins]
Well, I- I’ll get the question fairly frequently. You know, “Wow, this is such a cool idea. What’s it gonna be like when everybody becomes financially independent?” And my reaction is, “Well, I don’t know, but I don’t worry about it ’cause that’s never gonna happen.”
00:20:47,651 [John Lanza]
[laughs]
00:20:48,491 [JL Collins]
Because the message that I deliver and that other people in the FI community deliver is a teas- teaspoon in the ocean of consumerism that surrounds us as a culture. So the vast majority of people are gonna be like Jessica’s friend, that they were first of all never raised to think differently. They were raised to think, “You know, the key to success is to buy all the stuff and if you can’t quite afford it, then that’s what credit’s for.” And unless you change that mindset, you’re never gonna be financially independent, and most people
00:21:25,611 [JL Collins]
are not gonna be willing to change that mindset, so most people walking this path are gonna… Destined to be unicorns.
00:21:34,811 [John Lanza]
You know, it makes me think, so at some point did you have… So you’re, obviously you’re, you’re, uh, modeling the behavior you want to see in Jess, but was there some point, say, or maybe multiple points where Jess would come home and say something like, you know, “Uh, why don’t we have this car?” Or, “Why can’t I have this thing?” Or did those conversations happen that you can think of or, or not? I’m just, I’m just… ‘Cause it’s the first thing that I think of is that there’s gotta be, ’cause you’ve got the power of the parents but then you’ve got the power of the friend group. And like you said, there’s gonna be a lot of people within that group, probably the majority of them, are gonna be in the must h- you know, the, uh, stuck in that kind of must, the tyrany- tyranny of the must-haves.
00:22:21,851 [JL Collins]
So, first of all, we didn’t set out to model a certain behavior for Jessica. It was just the way my wife and I lived. And of course, by definition, we were modeling that behavior, so that’s what she grew up with.
00:22:34,251 [JL Collins]
Uh, when she was in the second grade is when we moved to New Hampshire, and we moved to a fairly affluent town because of the school district. And we were probably every bit as affluent, maybe more so than most of our neighbors, but that’s not the way we lived. And so I d- I don’t remember Jessica coming home and saying, “Why don’t we drive a fancier car?” Or, “Why don’t we have this, that, or the other thing?” The only thing I really remember her pushing for was to get a car when she turned 16. And she campaigned for that for probably since starting when she was about 14.
00:23:12,991 [JL Collins]
And I remember at one point she said, uh, uh, and I was not gonna let her get it, I was not gonna buy her a car, and she said, “Well, you know, Dad, all of my friends are getting cars.”
00:23:23,771 [JL Collins]
Given the town we lived in, I absolutely believed that, but my reaction was, “Great. You’ll have no trouble getting rides.” [laughs] And, you know, so…
00:23:32,371 [Jess Collins]
He was right.
00:23:33,571 [JL Collins]
But now the other, the other thing I’ll say, too, is that, and I don’t know how this came to be, if it was modeling or something else, but
00:23:43,111 [JL Collins]
my wife and I always loved to travel, and so we spent money pretty freely on traveling. And
00:23:51,591 [JL Collins]
Jessa- you know, if Jessica had come home and said something like, “You know, Dad, I- I just have to have designer clothes,” that would not have happened.
00:24:01,611 [JL Collins]
But when Jessica came home with opportunities for travel, some of which were fairly expensive, like with People to People or the experiment in international living, the answer to th- to that spending was always yes. And I, uh, frequently thought, “You know, I…” Because what she wants to spend m- money on aligns with my values, you know, ’cause I think travel’s a, a good thing to spend money on, I was more than happy to say yes to those, those things, even though looking back on it, it was probably more expensive than if she’d wanted the designer clothes. But I would have said no to those, even though, you know, we could have afforded to buy her a car, but there was a principle involved for better or worse, you know? So ask me for, “Yo, G, can I, can I go to, uh, Fiji and Australia and New Zealand with this group for, you know, a month?” And, “Yeah, okay. No problem.”
00:24:54,671 [Jess Collins]
[laughs]
00:24:57,260 [JL Collins]
… [laughs] “Can I, can I wear designer clothes?” Yeah, no, that’s not gonna happen. [laughs]
00:25:01,179 [John Lanza]
Yeah.
00:25:01,199 [JL Collins]
If you never worked for it, you should never ask for that.
00:25:03,699 [John Lanza]
Yeah, I mean, that’s aligning, aligning what you’re doing with your values. That, that makes perfect sense. So I don’t think we’ve really talked about kind of the basics. We kinda delv- I- I kinda threw us right into the allowance side of things ’cause that’s what we do. So let’s talk a little bit about kind of The Simple Path to Wealth and, and I’d like, JL, if you just quickly say, like, what’s the easiest way to describe what The Simple Path to Wealth, what are the kind of key elements that you wanted to instill in Jessica’s… In terms of money smart habits? And the reason I bring it up as habits is because I think there’s a lot of time and effort spent on money, on helping people get money knowledge, but not really instilling the habits, and the habits are the things that really end up mattering. So, uh, I’ll, I’ll tee that up for, uh, both of you to talk about the Simple Path.
00:25:54,039 [JL Collins]
You wanna take it first, Jess, or you want me to?
00:25:56,259 [John Lanza]
I think there’s two points to the question. So, the question about what is it, I mean, as far as habits, I always think, and it’s stated in the book a couple of times, but just avoid debt, live below your means, invest a surplus. I think that’s probably the most straightforward way and, I don’t know if you wanna add or elaborate before we get to the second part, Dad, at all.
00:26:22,039 [JL Collins]
No, that’s, that’s, that’s the basic formula, is exactly that. Avoid debt, live below your means, invest a surplus. And then a large part of the book is talks about how exactly to invest that surplus.
00:26:34,959 [John Lanza]
And then the second part of the question was about instilling the habits, correct, John?
00:26:41,119 [John Lanza]
Yes. It is about habits versus just money knowledge, right? Versus, financial literacy versus kind of money smart habits. I, I shouldn’t say versus, I should say- Mm-hmm … financial literacy and money smart habits.
00:26:54,499 [John Lanza]
I’d be interesting to hear, I’d be interested, excuse me, to hear Dad’s perspective on this. My answer to that, and it’s interesting because the book does talk about the ideas and being financial literate and all of that. But I think the big thing about The Simple P- Path to Wealth and what Dad’s also talked about in his blog since before the book even came out about when it comes to thinking about habits and actually being on this path and getting to your final destination, is understanding what that destination is. And I think that’s actually the key is the bit of this investing
00:27:30,559 [John Lanza]
and this simple path to wealth is what gets you your F-you money. It’s what buys your freedom so that you can do what’s important to you, whether it’s
00:27:40,839 [John Lanza]
finally be able to chase that dream of living your passion, but your passion doesn’t necessarily make a lot of money, so you’ve invested enough so that you can live off of the 4% rule and you can do what you love. Or maybe it’s the freedom to take a break from work, walk away from a job that you’re uncomfortable with, because you have F-you money. Maybe you just wanna spend time with your family. Maybe you wanna try something new. And I think that is the most important because at the end of the day, you will create the habit if you care enough about what the destination is and you decide that that’s the priority. Because the habit’s pretty straightforward, I think. Just live below your means, invest the surplus. Avoid debt, or just chip at the debt that you already have, but if you don’t have a clear enough picture of what you want at the end of the journey, then building the habit almost doesn’t matter. But maybe that’s my perceptive, my perception because that’s what I’ve taken away from it.
00:28:37,559 [JL Collins]
And just to be clear, so the destination is financial freedom, right? That’s the destination?
00:28:42,839 [John Lanza]
Or more of, like, what does that mean to you? I think that’s actually an excellent clarification, John, of yeah, financial freedom, but that always feels really vague. What does that mean to the individual? And that can mean a lot of different things. Yeah. Yeah. That’s a very good point because, I mean, it’s the reason, like, uh, my, my book, I called it The Art of Allowance mainly because it, there is an art to it because every kid is different, um, every parent is different, and what the parent wants is gonna be different than what the kid wants. You know, it’s like, I’ll, I’ll, I’ve told my kids, I’m like, “You know, I tend towards minimalism. That’s not, my goal isn’t for you to be minimalists.” And it’s not even my goal to be a minimalist necessarily, but if you’re looking at the world, uh, slider, you’re better off being a little bit closer to minimalism than you are to what I like to call Kardashianism, you know? So it’s just-
00:29:35,639 [JL Collins]
[laughs]
00:29:35,999 [John Lanza]
… and that’s just, just moving that slider. But, but wherever you put that slider is gonna be very, I think that’s the point you’re making which is the term is, like, a slider. It’s all, that’s a little bit vague, just like financial freedom is a little bit vague. But that is the destination, it’s just, and they, th- they, what I think, and then what you’re trying to figure out is what is financial freedom for you, right? And that’s what’s d- what… Financial freedom for you is slightly different than financial freedom for your dad, uh, in terms of what you want out of it, I, I guess- Exactly … isn’t that the point? Yeah. I think-
00:30:10,299 [JL Collins]
How you use your financial freedom.
00:30:12,539 [John Lanza]
Yeah. Yeah. I mean, and the, when you describe it the way you describe it, I just, there’s, the question that obviously pops in my head is, why isn’t everybody following The Simple Path to Wealth? You know, why can’t we follow the simple path? And that is one of the big questions. I think it might be helpful context-wise, ’cause we touched on VTSAX, but JL, if you could talk about why you talk about VTS- and maybe address the issues of, that, that, that, you know, that, that critics will talk about. “You’re putting all your eggs in one basket,” and that, you know, it’s, it’s not diversified, it’s not international. All those things I think are worth addressing. So I’ll, again, tee that up for you for context.
00:30:55,679 [JL Collins]
So, ha- happy to do that. But before I do, I, I, I don’t wanna leave our, our previous subject.Uh, talking about habits,
00:31:05,895 [JL Collins]
I think the challenge with habits in a lot of people’s minds is that
00:31:12,435 [JL Collins]
they are hard. And the reason they’re hard is you’re trying to force yourself to do something that maybe fundamentally you don’t wanna do. So in this context, a lot of times when you talk to people about pursuing financial freedom and living below your means, it’s like, “Oh, okay. So that means that I have to give stuff up. That means I can’t spend my money on all the fun stuff.” And that feels like deprivation, right? And so now I have to develop this habit of saving money and it’s, you know, to force myself to go through this deprivation for some elusive thing in the, in the future. And I always cringe at that. Sometimes I hear this, this deprivation thing, even from people in the FI community talking about this. And for me, it was never about deprivation. It was about spending my money on the single most important, most valuable thing I could think of to spend it on, which was my freedom, right? I- I just personally,
00:32:17,095 [JL Collins]
that’s where I wanted to spend my money. So it wasn’t like, “Gee, I don’t get to buy the fancier car.” It’s like, “I could buy the fancier car or I could buy this much cooler thing.”
00:32:29,795 [John Lanza]
[laughs]
00:32:30,735 [JL Collins]
Now that’s me and I, and I understand that not everybody thinks their freedom is the much cooler thing, but that’s the way to think about it. I never… I just cringe at this idea that it’s deprivation. It’s a matter of choosing to spend your money on what you think is the coolest thing.
00:32:48,195 [John Lanza]
But you also wouldn’t just spend… But you’re not just talking about, um… Like, you’re not gonna spend money on a car, but like you said before, it’s not entirely deprivation because you are gonna spend your money on a decent vacation or a decent trip. Like, you’re going, you’re gonna have this kind of compartmentalized… Luxury’s not necessarily the right word, but that’s… You’re not gonna have a problem spending that kind of money. Correct?
00:33:10,315 [JL Collins]
Correct. When, when you can spend it from a position of power, as I put it. So right, if you’re going into debt to take a trip, yeah, you’re spending from a position of weakness. If you’ve built up your, your financial strength and going on there or sending your daughter in, in this case, on a, on a month-long trip to the South, South Pacific, well, I could do that from a position of strength because I had bought what was most important to me. And when, and when you buy your financial freedom, it just keeps generating more and more money for you, right? So that’s… I think that’s one of the reasons that people who follow the simple path to wealth are gonna be unicorns. Because as I said earlier, the culture around us just pushes constantly a very different narrative, which is the instant gratification. Do it now, and if you have to borrow money to do it, then you only live once, so go ahead and borrow that money.
00:34:10,535 [JL Collins]
And to me, that’s insanity. So I… You know, I think the tragedy is for somebody to come into their elder years broke because they lived that way, maybe even in debt because they lived that way, and they didn’t know there was another option.
00:34:27,735 [JL Collins]
And so I hope that people who read my work,
00:34:32,255 [JL Collins]
even if they don’t deciled- decide to follow the path, and that’s, you know, it’s your life, you can decide or not, at least you will have known.
00:34:40,575 [John Lanza]
Yeah, yeah.
00:34:40,795 [JL Collins]
Out of all the things your money can buy, there is this thing called financial freedom. And the other thing I’ll, I’ll say on this is it’s not an on-off switch, which I think is the other thing that intimidates people, right? Is, you know, this idea that, “Well, yeah, that sounds great, but man, it’s gonna take me a long time to get there. And that doesn’t sound like fun.” It’s like going to the gym, right? The moment… The first day you go to the gym, you’re not gonna bench press 300 pounds, but you’re gonna be a little bit stronger than you were the day before. And day by day, you get stronger and stronger. It’s the same thing following the simple path. You’re not gonna be financially independent right away, but you are gonna slowly but surely build what I call your FU money. And every step of the way, your FU money grows and that you become more and more fiscally strong, and that allows you to buy the things, the other kinds of things you want, like travel, for instance, from that position of strength that I had talked about. So for instance, Jessica stepped away from her corporate job last fall. I don’t think she’s fully financially independent, but she has enough FU money that she can afford to do that, and she can do some other fun things to pay the rent and put food on the table while the FU money she’s accumulated grows for her in the background. Uh, so that’s the power. And now, if you want, want me to, I’ll get into the weeds on VTSAX.
00:36:11,215 [John Lanza]
Yes, I would love to have you talk a little bit about VTSAX just to give every… I wanna give our listeners an idea of what you’re talking about behind it, fundamentally why you make the recommendations that… recommendation that you do.
00:36:25,335 [JL Collins]
Sure. So as Jess said earlier, the basic formula is avoid debt or get out of it if you have debt. That should be job one. Live on less than you earn and invest the surplus to buy your financial freedom. And you do that in broad-based, low-cost index funds. The one that I prefer and the one that Jessica is in is VTSAX, which is Vanguard’s total stock market index fund. It also has an ETF version, ETF being exchange-traded fund. Question I get a lot is… And that’s VTI. Question I get a lot is, “Well, can I… Can I buy VTI?” Absolutely. It is the same portfolio…. and that’s fine. I happen to own VTSAX and Jessica’s in, in it because when I started, there were no ETFs. But the ETF version is fine. The other question then becomes is, “Well, you know, that’s at Vanguard,” and I have a preference for Vanguard we can get into if you’d like. But there are other brokerages out there. And so people say to me, “Gee, I’m at Fidelity or I’m at Schwab and I kinda like those guys. I like their website, I like this,” or whatever it is, and they also have a broad-based low-cost total stock market index fund. “Is that okay or does it have to be VTSAX?” And the answer to that question is no, those are fine. A total stock market index fund is a total stock market in- index fund. So you can own Fidelities or Schwabs or whoever if that’s where you prefer to be, and that’s no problem. And then the other common question along this same theme is people will… Typically this comes up when they’re looking at their 401[k] options. And they’ll say, “You know, I’m scanning my 401[k] options and there is no total stock market index fund available, but I do this, I do see this thing called an S&P 500 fund. Is that okay?” And the answer to that question is yes. Vanguard offers one, so does Fidelity. Same thing from any source. So that’s a good way to look at w- what are these things, and why is the Index 500 fund okay? Well, if you own a total stock market index fund like VTSAX, you now own a piece of every publicly traded company in the United States, and everyone from the factory floor to the CEO is working to make you richer.
00:38:52,599 [JL Collins]
If you own an S&P 500 fund, that same thing is true but you’re owning the top 500 companies.
00:39:00,939 [JL Collins]
But because these things are cap weighted, which simply means the largest, most successful companies make up the larger percentage of the fund, the S&P 500 makes up the lion’s share of the total stock market index, okay? And I want to say those 500 companies are about probably 80, probably 85% of the total.
00:39:27,759 [JL Collins]
Uh, if you track their performance over time, those lines move in clock- in lockstep. So that’s why the S&P 500 fund is, is, uh, perfectly good. Jack Bogle, who created these things, th- that was the fund, his first one, and that was the fund he held to, to his dying day. If it’s good enough for him, it’s good enough for all the rest. Then the question becomes, well, okay, then why the total stock market? And I say the answer to that is the same reason I put Tabasco on my eggs. It’s just a little bit of spice. It, it gives me some, some small cap and mid-cap boxes, a little bit of, of spice and I, I kind of like that. So you asked, you wrote a lot of questions into one. One of your others was about international.
00:40:14,439 [JL Collins]
One of the ways that I am out of step with virtually everybody else who writes about this is I don’t feel the need for international. Uh, the reason I don’t feel the need for it is because those top 500 companies that dominate our fund are international companies. So I fully expect the rest of the world, as it has since World War II, to continue to grow and prosper, as I expect the United States to do. But I don’t have to own companies in those countries for to benefit from that. These US companies are very active in international markets, and I will benefit from that. It also allows me to own stock in the single best regulated stock market in the world, which is the US. And this has become, this third point has become a little less important over time, but it is simply cheaper. The index, the total stock market index fund has an ER of I think.04% at the moment. And Vanguard’s Total World Fund, and I can’t remember the ticker for that, is at about.07. So that’s not a big difference. It used to be a much wider gap, and so they’ve been bringing the cost of those down so that factor is kind of going away. So that’s why I don’t personally see the need. Having said all of that,
00:41:39,579 [JL Collins]
frequently I’ll have people say to me, “You know, JL, I hear you. I understand what you’re saying.
00:41:45,039 [JL Collins]
I still would feel more comfortable owning some international.” I’m like, “You’ll get no great pushback from me. It’s not like-
00:41:51,679 [John Lanza]
[laughs]
00:41:51,699 [JL Collins]
… you’re doing some terrible thing.” And if you want to go that route, I would go with a world fund and just do it all in one fund. And
00:42:00,059 [JL Collins]
world funds today and Vanguards, and I’m sure the others are the same, is gonna be about 60% US, because the US accounts for about 60% of the publicly traded companies in the world. And then you’ll get the same percentage out of Europe, out of Asia. China, for instance, is a huge economy, uh, that currently rivals the US, but a very small percent of publicly traded companies in the world. So that’ll be reflected in your, in your world fund. So I think now I’ve covered everything you asked. [laughs]
00:42:37,259 [John Lanza]
You make this point, you say the market always recovers. This is a direct quote. You say, “The market always recovers, always, and if someday it really doesn’t, no investment will be safe, and none of this financial stuff will matter anyway.” And one thing we do know is that history is replete with events that we never saw coming and that will have effects that we cannot predict, things like COVID, the Great Depession- the [laughs] Depession- the Great Depression.
00:43:01,379 [John Lanza]
[laughs]
00:43:01,819 [John Lanza]
I mean, you just, we don’t, we don’t see these things coming. So how can we, how can you feel so confident that this simple path will be still a simple path without some kind of diversification of what we own?
00:43:19,835 [JL Collins]
So, to be clear when you own VTSAX, you own about 3,600 different companies. So, extraordinarily diversified stock portfolio. I mean, it’s- it’s as diversified as you can possibly get. Now, what you don’t own is diversification among assets and the reason for that is that stocks, over time, are the most powerful engine of wealth building. They’re more powerful than anything else. And so when you add other things, like bonds, which I do recommend when you’re living on the portfolio, and Jessica’s living on her portfolio now, so last fall we shifted some of hers into bonds, that’s gonna be a drag on your performance. It’s gonna have the effect of smoothing the ride, but it’s gonna be a drag on your performance. As far as I’m concerned, the fact that stocks are volatile is not a- not a problem. It allows a buying opportunity, right? So, if you’re putting money in every month out of your earned income, which is the essence, one of the essences of Simple Path to Wealth, when the market plunges as it does on a regular basis, that’s a-
00:44:32,795 [JL Collins]
that’s a fundamental part of it. That’s not the end of the world. It’s not an anomaly. That’s just the way the market is. Well, now you’re picking up shares at bargain prices. So, if you have the right attitude, that volatility doesn’t scare you. You embrace it as the gift that it truly is. So, let’s take a period of time, the most recent period of time when the market really performed poorly for an extended period, and that would have been the first decade of this century. So, at the start of this decade, we had the tech crash, right? The tech crash took stocks down, I think, 46% as I remember. And then the market went nowhere for a decade. I think for that 10 year, for that first 10-year period of this century, the market returned, I don’t know, about a negative 0.63%. It wasn’t terrible, but it- there was no real gain.
00:45:29,995 [JL Collins]
Then it ended that decade with, uh, with the financial crisis, and that drove the market down 56%. So, a really, really bad decade. But if you’d been following the Simple Path to Wealth and you’d stayed the course, you would have had 10 years to pick up shares at bargain prices all along the way. And then beginning in- in 2010, well, we’ve had a unrelenting bull market since then. You would have benefited extraordinarily well. So, even extended down periods don’t trouble me. Now, let’s look at something, you know, what could really derail the Simple Path to Wealth? And I don’t worry about this, by the way, because in my world, you know, the famous, uh, I’m drawing a blank on the black, uh, the very rare event that, uh, black-
00:46:22,315 [John Lanza]
Oh, the black swan.
00:46:23,495 [JL Collins]
Yeah.
00:46:24,295 [John Lanza]
Yeah.
00:46:24,396 [JL Collins]
You know, the event… I- I- I think it’s a mistake to invest trying to anticipate a black swan that has maybe a 1% chance of- of happening. I’m going to construct my portfolio to prosper in the 99% of what’s likely to happen, okay? But there are such things as black swans. I think COVID’s very instructive. So, when COVID hit,
00:46:50,075 [JL Collins]
my social media and blog lit up with people saying, “JL, I understand the Simple Path to Wealth, and I understand that it’s for decades, but this time it’s truly different, JL. This time people are dying. This time countries are shutting down their entire economies.
00:47:12,055 [JL Collins]
This time truly it’s different.” And my response then and now is, “Yes and no.” This time it’s different in that we haven’t had a pandemic for 100 years, so that’s very different. But every time the market crashes, it’s something different and awful because that’s why the market crashes. It’s always awful. Now, it’s particularly tragic that people are dying and- but in terms of how the market’s gonna react, it’s going to be the same. The market’s going to panic, it’s going to plummet, and then over some period of time, and in the case of COVID, it was very brief, but nobody, including me, anticipated that. Over some period of time, the market will recover and resume its relentless rise up.
00:47:59,996 [JL Collins]
Now, let’s be clear. COVID killed a million people in the United States. Huge tragedy, obviously, for those people and for their families,
00:48:11,435 [JL Collins]
but not, to sound insensitive, a drop in the bucket against our population of 330 million. Didn’t move the needle. But let’s suppose that COVID had been like the Black Death
00:48:25,576 [JL Collins]
in the Middle Ages. Let’s suppose COVID killed 60% of the U.S. population. Let’s suppose instead of a million people, 170 million people died.
00:48:38,235 [JL Collins]
Well, now the Simple Path to Wealth probably isn’t gonna work.
00:48:41,996 [JL Collins]
Probably our civilization is going to collapse or take on an entirely different form, and that, of course, would have happened worldwide. There is no way you can invest to anticipate that. There is no investment that, other than canned goods, guns and ammunition, and a bunker maybe. There are, by the way, people who believe that that’s gonna happen and who are doing that. The Simple Path to Wealth, I think they’re wrong, I don’t think it’s gonna happen, but-
00:49:11,875 [John Lanza]
[laughs]
00:49:12,555 [JL Collins]
… but the Simple Path to Wealth is not gonna work for them. If it turns out to be right, this is not gonna work for- for any of us, but I don’t think you can construct a financial investment plan based on something like that happening, even though, of course, it’s possible.
00:49:28,755 [John Lanza]
Yeah, that’s true. I mean, there’s a, there seems to be either a show or a movie out every year and none of those people are talking about their 401ks. So, uh, that is a good point. [laughs]
00:49:39,215 [JL Collins]
Something about humans love the idea of disasters, of end of the world eve- I mean, you know, that’s, it’s a whole genre of movies. And so whenever something really bad happens, like COVID, you know,
00:49:53,676 [JL Collins]
collectively we tend to leap to the conclusion that this is it, this is the zombie apocalypse we’ve all been waiting for. I don’t think realistically it’s gonna happen. And if it does,
00:50:04,395 [JL Collins]
you know, and then none of this stuff matters.
00:50:06,455 [John Lanza]
Point taken. That makes, that makes perfect sense. I am curious though, because this is great, so this is useful because I think one of the other issues that comes up with younger folks is the, is the, the long term, this idea of saving for my retirement.
00:50:21,175 [John Lanza]
But I like… You brought up, I- I’d like to dig in a little bit on Jess’s current situation. So she left her corporate job and then you tweak things so now that she, now she has, um, more bond exposure to be, to protect, um, what she has. Uh, I don’t know if you wanna go a little bit deeper into that, because that might be useful for younger folks, um, understanding the power of this, not just longer term but even in the, you know, the slightly shorter term.
00:50:51,395 [JL Collins]
Yeah. You wanna take that one?
00:50:51,855 [Jess Collins]
Sure.
00:50:52,935 [JL Collins]
Yeah.
00:50:53,115 [Jess Collins]
Yeah, yeah. I can take it. So there’s not too much more to dig deep on. I think I made the decision in September to step away. I just had a job where I’d been with the company for a while and it was, I was burnt out. It was not a workplace [laughs] that I was my best, uh, mental health self in. And I had this moment where earlier you were asking about everything kinda clicking, this was also a moment. I had a moment where I
00:51:26,575 [Jess Collins]
don’t have to put up with it. I could step back if I want. I had a conversation. I actually had a lot of conversations with my dad about it. It was not an impulsive decision, it was something that I had spent probably… If I did it in September, I think I spent almost all of last year leading up to it. So nine months just talking about it, thinking about what it would look like, building up the courage, and then pulled the trigger. And then I didn’t have a plan. Maybe I’ll [laughs] go back to corporate America, maybe it’ll be the same capacity of what I was originally doing or maybe it’ll be something different, I don’t know. But that led in conversations of, well, what do I need to do to tweak my portfolio now, as Dad mentioned earlier, getting some bonds in there, ’cause before I was a 100% in, uh, stocks. And so now with the income drop, adding in some bonds. But I think there’s really nothing more to it than just that. I had spent all these years working and following the path, saving, accumulating FU money and got to a point where maybe I wanna walk away for a little bit, take a break. Can I do it? The answer was yes and then it was just a matter of building up the courage to do it and making it real.
00:52:36,955 [JL Collins]
Maybe it’d be useful to talk a little bit about the mechanics of it, if, what it actually looks like.
00:52:44,455 [JL Collins]
Um, when Jess and I sat down to do this, first of all when she was building her wealth while she was working and diverting income into it, she was having her dividends from VTSAX being reinvested. And the dividend on VTSAX is about 1.3%, I think, at this point.
00:53:04,975 [JL Collins]
And then when she stepped away and shifted into, a portion of that into bonds, and I think you went 20%, Jess, if I remember correctly, into bonds. Well, she went into VBTLX, which is Vanguard’s total bond market, and that pays a dividend of about 3.5%. So the first thing that
00:53:27,695 [JL Collins]
I had her do is, is tell Vanguard I don’t want m- my VTSAX dividends reinvested anymore. Send those to my checking account.
00:53:38,035 [JL Collins]
I don’t want the dividends of VBTLX reinvested, I want those to go to my checking account. So now she has a little bit of a cashflow coming in to help supplement the part-time work that she is doing that she enjoys, and you can describe what that is if you want, Jess. But, so she has some income coming in from part-time work that is a labor of love, so to speak. But it’s not enough to cover everything, but added to the
00:54:06,175 [JL Collins]
cashflow from the dividends and, and, uh, the interest on the bonds and the stocks, that’s kind of how you mechanically close the gap. The other thing I, I’d like to say on this is this is how I, I went through my career. I, I loved my career, I loved working. I didn’t want to have to do it all the time. So I frequently did what Jess, Jess did, stepping away from jobs, anywhere from three months to the longest was five years. And that allowed me to recharge and, and go back into, into work with fresh attitudes and, and feeling really good about it, and it allowed me to do some really cool things along the way. I was wandering in the wilderness figuring that out. My friend, Jillian Johnsrude, just came out with a book called Retire Often, which I wrote the forward to.
00:54:56,035 [John Lanza]
Mm-hmm.
00:54:56,175 [JL Collins]
And I love this book, because Jillian talks about how to do this effectively. I used to have to figure out, “Okay, how do I, how do I account for these gaps in my resume? Because this is not acceptable.”
00:55:08,715 [John Lanza]
Mm-hmm.
00:55:09,695 [JL Collins]
In this day and age it is acceptable, and Jillian talks about how to make it even more acceptable, and not only something you have to account for but something that’s an active advantage to you. So, uh, I love this book. I highly recommend it to anybody who’s thinking about doing what I did in my career and what Jess is doing in hers.
00:55:30,495 [John Lanza]
Well, we will definitely link to that in the show notes. It does sound very interesting. My oldest daughter is gonna be…… graduating in less than a week.
00:55:39,288 [JL Collins]
Congratulations to you both.
00:55:41,307 [John Lanza]
Thank you. And it’s… But she’s going into that scary world that, you know, you were talking about, Jess. And thinking about and- and, you know, it’s- it’s tougher for me to… Like, that perspective that you shared is useful, which is that… That’s why this book is of interest because, you know, if you can go into a world where you can take those, those little mini retirements, that could be really a- a great thing for more people to be able to do, to recharge and come back and be a better employee for the- for the next stage- stages of their career. And it comes down to having what you guys have been talking about, the F-U money, which for everybody out there, it is exactly what it sounds like [laughs].
00:56:21,687 [JL Collins]
[laughs].
00:56:22,948 [John Lanza]
It’s the ability to- to have the freedom to do what is good for you. One of the questions I did want to ask you, and this was because… So my- my wife was the one who introduced the book to me, is a realtor. Um, if most Americans believe their biggest investment is their home, why do you say houses are not investments, they are expensive indulgences?
00:56:44,068 [JL Collins]
Yeah. So first of all, that’s not in the book. That’s a…
00:56:46,667 [John Lanza]
[laughs].
00:56:47,467 [JL Collins]
That- that is- that’s a blog post that I wrote, and I… It’s turned out to be the- the most widely read post I’ve ever written. It’s garnered me the most love and the most hate. People fall on- on both sides.
00:57:03,907 [JL Collins]
But I think, in all due respect to your wife, who, if I understand correctly, is a realtor, I think realtors propagate this idea that your house is an investment. And of course, that comes from the fact that sometimes, maybe even commonly, houses do go up in value,
00:57:21,148 [JL Collins]
uh, but not always. I mean, you know, people always look to, uh, San Francisco and… Or California in general, and, “Gee, if I’d bought a house, you know, 20 years ago and then it’d be worse, I would have paid this little bit of money, it’d be worth this enormous amount of money.” And I always say, “Yeah, but in that same period, if you bought a house in Detroit, not so much, right?” And now, as I’m reading California and San Francisco in particular are having some real serious issues, I was just in Detroit last year and Detroit’s enjoying a renaissance. So it may very well be 20 years from now, people will be saying, “Yeah, houses are great. I bought in Detroit and I bought this little bitty…” And people in San Francisco are gonna be saying, “Not so much, man.” I… You know. So you… It’s… You never know where the real estate market is- is gonna go. And it’s dead money in the sense that your money’s tied up in that house and you can’t access it unless you sell the house, and then, you know, unless you don’t buy another house, and most people typically buy another more expensive house, it’s just… It’s not money that’s earning anything for you. It’s just- it’s just maybe keeping up with inflation. Jessica is able to do what she’s doing precisely ’cause she hasn’t made two big mistakes. She hasn’t bought a house, which is an ever ongoing onslaught of expenses that drain your bank account. You know, people say, “Well, I can buy a house and the mortgage is the same as my rent.” And well, what about the real estate taxes?
00:58:55,327 [JL Collins]
What about the maintenance and repairs?
00:58:58,387 [JL Collins]
Are you gonna be the only person who ever bought a house and didn’t do any renovations? What about the new bathroom? What about the new kitchen? What about the furniture? What about the appliances? What about the new roof? I mean, it’s an ongoing drain on your wallet that hopefully at the end of some long period of time the house will have appreciated enough to cover. But if you really wanna build financial independence, you wanna go into- into stocks that are actively driving value higher and throwing off money in your direction at the same time. So I’ve owned… You know, people think I’m against owning houses. I’ve owned houses most of my adult life. I kind of wish that I hadn’t ur- owned those earlier ones, candidly, but I didn’t know then what I know now. But I’m not against owning houses. I’m against thinking that they are some wonderful investment. They’re not. They’re an expensive indulgence. And from that point of view, as I talked about earlier, I try to buy everything I buy from a position of strength. So my recommendation is if you want a house, and I understand the impulse, maybe you have kids, you want to be in a certain school district, I get it, buy the least house that meets your needs, not the most house your realtor and your bank is telling you you can afford. Because if you buy the most house you can afford, it will make you house poor. So buy the least house that meets your needs and- and go from there. It is an expensive indulgence. There’s nothing wrong with expensive indulgences if you can easily, comfortably afford them buying from a position of strength.
01:00:40,707 [John Lanza]
What about, say, investment properties where, you know, you’re doing it for an investment reason or house hacking, where you own a duplex or triplex or fourplex and you rent out parts of those? Do you have any thoughts on those?
01:00:53,307 [JL Collins]
Sure. So I like the idea… If you’re going to own, I like the idea of house hacking. If you’re willing to put up with the inconvenience of having roommates or whatever goes along with it, financially it makes a lot of sense. Investment real estate is different than homeownership, right? And a lot of people have made fortunes in investment real estate. So that’s certainly a valid thing to do. What you need to understand is if you’re going to do that, you’re starting a business. And like any business that you start, you had best educate yourself thoroughly in how that business works.
01:01:31,087 [JL Collins]
You know, what the parameters are for making successful investments, what it’s gonna take to own and manage that property.How you find good tenants that don’t damage the property and will actually pay you, it’s- it’s a skill set. And if you develop that skill set and you are effective in executing it, it can be a very lucrative way to build wealth. But make no mistake, you are now taking on at least a part-time, maybe even a full-time job. So when you compare it against something like VTSAX which takes none of your time,
01:02:06,175 [JL Collins]
you’re… What you really need to say is, “Okay, I’m gonna invest in real estate and it’s gonna be a part-time job for me.” And if that’s how you wanna spend your time, then you’ll get no pushback from me. But is that really… Do you really wanna spend your time managing property? Some people do. A lot of people get lured into investing in real estate because it’s presented as an… A easy path to wealth, easy money. And I think if you talk to anybody who invest in real estate, they will tell you it is not easy money. It can be
01:02:38,875 [Jess Collins]
Yeah.
01:02:39,035 [JL Collins]
But it is not easy money, right? So as long as you understand that, I have no problem with it. My second book by the way is very short.
01:02:48,035 [Jess Collins]
[laughs]
01:02:49,215 [JL Collins]
Personal story that is… I can laugh at now and it’s written humorously and I got a wonderful illustrator for it, but it’s called How I Lost Money in Real Estate Before it Was Fashionable. That allows me to give a- a book plug. If it was lying on my desk, I’d hold it up, but you-
01:03:04,355 [Jess Collins]
[laughs]
01:03:04,415 [JL Collins]
…can put that in the show notes too.
01:03:05,935 [John Lanza]
We’ll put that in the notes. There’s nothing wrong with a book plug on The Art of Allowance podcast.
01:03:10,215 [JL Collins]
[laughs]
01:03:10,375 [John Lanza]
It’s perfectly fine. That’s- that is a help- a very helpful perspective. I appreciate that, JL. So Jess, I wanna ask you, um… Have a little fun, what’s, uh, what’s one interesting fact about your dad that nobody would ever guess about him?
01:03:24,835 [JL Collins]
[laughs]
01:03:26,515 [Jess Collins]
Yeah, this one’s easy. He doesn’t like music.
01:03:29,535 [John Lanza]
Wow, okay.
01:03:30,555 [Jess Collins]
Yeah. Now, caveat, there’s a couple of artists that he- he does enjoy, but he doesn’t… He prefers silence. Yeah.
01:03:37,715 [JL Collins]
Yeah, that’s true. I- I- I don’t think I… I wouldn’t say that I don’t like music, but it plays a very small role in my life. There’s a handful of- of, you know, songs that I like. I mean, frequently there’s songs on here on the radio I like and I- I have no idea who’s performing them. Uh, you know, Taylor Swift, enormously popular. Yes, I love her song, Shake It Off, I just love the message and I- I’m… I don’t think I’m a Swifty, but you know, I… If I happen to hear that song, I’m gonna listen to it to the end ’cause I, you know, I- I just think that’s a great message and I- I like everything about it. I like the video on it. Uh, there’s a, uh, a rap song from, uh-
01:04:19,555 [Jess Collins]
Damn, It Feels Good to Be a Gangster.
01:04:21,735 [JL Collins]
Damn, It Feels Good to Be a Gangster from the movie Office Space which I- which I love. Jessica is a fan of rap. She tells me it’s a terrible rap song. It- it’s not a good… It’s not good rap music.
01:04:33,375 [Jess Collins]
[laughs]
01:04:34,875 [JL Collins]
Never claimed to know good music at all, let alone good rap music, but I love Damn, It Feels Good to Be a Gangster.
01:04:42,415 [John Lanza]
I can’t comment on, uh, that as a rap song, but I can… I will definitely concur that Office Space is one of the great movies. [laughs]
01:04:50,195 [JL Collins]
Great movie, and there’s a great song in it, right? That’s one of the-
01:04:53,015 [John Lanza]
It is a great song, isn’t it? [laughs]
01:04:56,575 [JL Collins]
Yeah. But yeah.
01:04:56,835 [John Lanza]
Very true.
01:04:57,595 [JL Collins]
It’s true, I- I… I’ll drive hours and with the radio off.
01:05:02,775 [John Lanza]
You… Do you meditate, JL?
01:05:05,495 [JL Collins]
Uh,
01:05:07,575 [JL Collins]
no.
01:05:07,935 [John Lanza]
Or is that… Is that your form of meditation?
01:05:10,475 [JL Collins]
No, I’ve tried… I’ve… Well, when I’m driving, I- I let my mind wander to different things and my understanding of meditation is you empty your mind, uh, or try to empty your mind and I have tried to do that and unsuccessfully. The closest I come is I put together a little
01:05:30,775 [JL Collins]
exercise routine that is part stretching, part tai chi, part some other martial art stuff that I’ve done. It’s about a half hour. I think of that as a meditation. It’s the primary focus is breathing.
01:05:45,215 [John Lanza]
Mm-hmm.
01:05:45,735 [JL Collins]
For everything, and then secondarily is the focus.
01:05:50,335 [JL Collins]
Stay very focused and not be distracted by things, and then third is the movements themselves. And so if I stay f… If I keep my focus on those things, my attention on those things, it’s a form of meditation. It’s not really emptying my mind like
01:06:08,215 [JL Collins]
traditional meditation is, I suppose, but it’s being very much in the moment.
01:06:14,175 [John Lanza]
Yeah.
01:06:14,975 [JL Collins]
Yeah.
01:06:15,275 [John Lanza]
I- I do meditate and I don’t wanna get too sidetracked on this.
01:06:18,435 [Jess Collins]
[laughs]
01:06:18,475 [John Lanza]
But less about emptying your mind and more what you’re talking about which is noticing how crowded your mind gets with thoughts.
01:06:26,035 [Jess Collins]
Mm-hmm.
01:06:26,055 [John Lanza]
‘Cause you know, you’re always gonna have thoughts coming in, it’s just having an awareness of those thoughts and you’re using another technique which is just being awareness of breath and awareness of your body in space. And then as the thoughts come in, they’re just another… They’re just another sensation that’s floating through.
01:06:43,555 [JL Collins]
Do you meditate?
01:06:45,055 [Jess Collins]
I think meditation probably means different things to people. I walk a lot and so maybe that… Well, that is a form of meditation, but
01:06:53,415 [Jess Collins]
I think it’s whatever-
01:06:54,195 [JL Collins]
But aren’t you listening to podcasts and music and things when you walk?
01:06:58,275 [Jess Collins]
Not always.
01:06:59,115 [JL Collins]
Okay.
01:07:00,095 [Jess Collins]
Not always.
01:07:02,075 [Jess Collins]
Sometimes, I-
01:07:02,095 [JL Collins]
Yeah, I- I never listen to anything when I’m walking either. I like to-
01:07:06,635 [Jess Collins]
Just-
01:07:06,755 [JL Collins]
You know.
01:07:07,055 [Jess Collins]
Yeah, walk.
01:07:08,435 [JL Collins]
Try to be in the moment and look, a squirrel. [laughs]
01:07:12,095 [John Lanza]
[laughs]
01:07:13,255 [John Lanza]
Well, before we hit the fast and fun round-
01:07:16,435 [Jess Collins]
Ooh
01:07:16,655 [John Lanza]
… JL, one more question. I wanted to know who has been the most influential person in your life that nobody would have known about? Someone new, someone that you haven’t necessarily talked to.
01:07:28,775 [JL Collins]
Well, so probably the one that everybody does know is Jack Bogle who was the guy who started Vanguard and came up with index funds. That’s- that fundamentally changed the ability for individuals like us to easily build wealth.Probably the single most influential book in my early years was a book, I don’t even know if it’s still in print, but it was called How I Found Freedom in an Unfree World by Harry Brown. And the reason that book was so influential to me is
01:08:05,631 [JL Collins]
I’ve always kinda walked to the beat of a different drummer. And, you know, when I was doing this, when I was saving 50% of my income, which I did from the very beginning of my first professional job, nobody else was doing this. And there was no internet that allowed you to connect from people worldwide who might be. So, it always just, it felt right to me, but it also was very, very uncomfortable. And I questioned, “Why am I doing this and nobody else is doing this? And how can this possibly be,” you know, and I- I just… But I kept doing it ’cause it just felt so right to me. And basically, this book, How I Found Freedom,
01:08:47,051 [JL Collins]
is a tome to why doing things differently, living your life the way you think it ought to be lived is not only acceptable, but it’s the right thing to do. You know, it is, it is how we should all be living. But that was not the way I was raised, and that was not the way it felt at the beginning. But it was, it was kinda like this huge, “No, you’re doing it right.” And nobody or nothing had ever suggested I was doing it right.
01:09:18,491 [John Lanza]
Yeah. What was the name of that book again? We definitely wanna put that in the show notes.
01:09:22,651 [JL Collins]
How I Lost… Or no, no, it was, that was [laughs] my real estate book. Yeah. How I Found, let’s see. How I Found Freedom in an Unfree World.
01:09:31,771 [John Lanza]
Okay. Great. We’ll definitely put that in the, uh, in the show notes.
01:09:35,392 [JL Collins]
Yeah. Again, I’m-
01:09:35,791 [John Lanza]
Thank you for that
01:09:36,371 [JL Collins]
… not sure you can even find it anymore, but it’s worth reading if you can.
01:09:41,931 [John Lanza]
Okay. Okay. Well, we have come to the Fast & Fun Round. And I-
01:09:46,911 [JL Collins]
Oh!
01:09:46,911 [John Lanza]
… just wanna make sure you’re, you’re, you’re all ready for the Fast & Fun Round.
01:09:50,591 [Jess Collins]
[laughs] Excited.
01:09:51,851 [JL Collins]
I thought that’s what we were doing was the fast-
01:09:54,391 [John Lanza]
No, that-
01:09:55,271 [JL Collins]
It’s gonna get faster and more fun now?
01:09:57,251 [Jess Collins]
[laughs]
01:09:57,891 [John Lanza]
I was, I was greasing the wheel- [laughs] I was greasing the wheels for the real Fast & Fun Round.
01:10:02,691 [JL Collins]
Okay.
01:10:03,971 [John Lanza]
So we’ll start with, uh, we’ll start with Jess. And, uh-
01:10:06,851 [Jess Collins]
Yes
01:10:06,891 [John Lanza]
… this question I will ask both of you. Uh, and this question is, what does the term money empowered mean to you, Jess?
01:10:15,811 [Jess Collins]
Money empowered? Money powered means to me that you can live the life that you want in the way that you want.
01:10:21,491 [John Lanza]
JL?
01:10:22,411 [JL Collins]
I don’t think I can improve on that. I think it’s living the life you want the way you want. And that seems, by the way, to confuse some people when they get to financial independence, which is being empowered by money. It’s kinda, “What do I do next?” I’ll have people say to me, “Well, I know I, I can quit my job, but I love my job. I don’t wanna quit.” And I feel like- [laughs] Doesn’t mean you have to quit. It means y- you can do whatever you wanna do.
01:10:46,411 [John Lanza]
Very nice. Okay, next one. We’ll start with you, JL. What is the best investment of time or money you’ve ever spent on Jess?
01:10:55,071 [JL Collins]
On Jess? Best investment of time and money. Well, I would say a couple of things. I think, uh, putting her through college was a great investment. And I think as we talked about earlier when she showed the impulse to travel when she was young and had these opportunities with People to People and Experiment in International Living that I was willing to fund those. And I think that broadened her horizons. I remember when she was 12, I mentioned my wife and I love to travel and we’ve been privileged to do a lot of it our life. When she was 12, she said to me one time, “Your dad is so unfair.” And I said, “What are you talking about?” She said, “Well, you’ve been more places than I have.” [laughs] I said, “Jess, you’re 12. In a little time, you will definitely go to more places than I…” And I think by the time she was 25, she’d been to more places than I had. So yeah, I think that was money well-spent.
01:11:52,031 [John Lanza]
Well, we’ll turn the tables on this one, Jess. And which is, what’s the best me- investment of time or money you’ve ever spent on your dad?
01:11:59,291 [Jess Collins]
Hmm. Can’t say money. [laughs] I don’t think I’ve ever spent any money, if I’m being honest and transparent. Time is…
01:12:07,291 [JL Collins]
When you bought me lunch trying to persuade me to get you a car. That’s gonna work.
01:12:10,051 [Jess Collins]
Yeah. Look how that worked out for me.
01:12:12,211 [JL Collins]
Best time investment. [laughs]
01:12:13,571 [Jess Collins]
Didn’t, didn’t work. The best time investment that I’ve ever spent in my dad, I think is just our time together. I think now we’re at a point where we don’t live close. So any time that I get to go over and see them, or they come down to see me, I think that’s the best time
01:12:31,331 [Jess Collins]
spent.
01:12:31,831 [John Lanza]
Makes sense.
01:12:32,951 [JL Collins]
I’ll second that. I think we’re very lucky that we have, we being the three of us, my wife and Jessica and myself, have the relationship that we do. And we- we all genuinely enjoy spending time with each other. So, uh, we were just talking, uh, before this call actually, Jessica’s gonna come up and hang out with us for a couple of weeks, uh, here at Gabanda in July. And yeah, I mean, we do- we have a great time when she does that. And I- I think there are not all that many people I know whose children enjoy hanging out with them the way she seems to enjoy hanging out with us and- and the way we enjoy hanging out with her. I- I do remember telling her at a fairly young age, uh, and you can
01:13:21,771 [JL Collins]
see if you remember this, Jess. But I remember saying, you know, “Jess, I will always love you unconditionally. There is nothing you can do to change that. Whether I like you or not is up to you.”
01:13:33,391 [John Lanza]
[laughs].
01:13:34,111 [Jess Collins]
[laughs].
01:13:35,551 [JL Collins]
And it turns out I- I have always loved her unconditionally, and I like her a lot.
01:13:42,631 [Jess Collins]
Right back atcha. I will say I am learning that we’re not very good at the whole fast part of this. Joe. [laughs].
01:13:50,191 [JL Collins]
[laughs].
01:13:50,251 [Jess Collins]
The whole fast and fun side, we are not good at that part.Yeah [laughs].
01:13:54,367 [John Lanza]
The- the fast is actually the least important part of it.
01:13:57,307 [Jess Collins]
Okay [laughs].
01:13:57,327 [John Lanza]
The fun part is the most important part.
01:14:00,067 [Jess Collins]
Good.
01:14:00,247 [John Lanza]
So, no problem.
01:14:00,707 [Jess Collins]
Well, we’ve got that part nailed.
01:14:03,527 [JL Collins]
Hey, at least we’re having fun.
01:14:05,047 [John Lanza]
[laughs] Good, I’m glad you’re having fun-
01:14:06,747 [Jess Collins]
[laughs]
01:14:06,768 [John Lanza]
… ’cause I’m having fun.
01:14:07,907 [Jess Collins]
Good [laughs].
01:14:08,767 [John Lanza]
All right, so, so JL, this one is just for you. Um, I mean, you’re welcome to take it too, Jess, but-
01:14:14,307 [Jess Collins]
[laughs]
01:14:15,108 [John Lanza]
… um, if you could go back and tell your younger self one thing, what might that be, JL?
01:14:22,127 [JL Collins]
Not to worry as much as I- I do. I, uh… or I have. I think that I’ve gotten better about it. I… My mother was a chronic worrier and I… So I don’t know if it’s genetic or if it’s just the way I was raised, and it kinda destroyed her life, and I saw that. So it’s… I’m very much inclined towards it, and I’ve spent a lot of my life candidly trying not to be my mother, at least on that score. And because Mark Twain famously said something along the lines of, “I’ve had a lotta trials and tribulations in my life, most of which never happened.”
01:14:57,627 [John Lanza]
[laughs] Right, that’s a great quote.
01:14:59,447 [JL Collins]
It- it is a great quote. And I- I say that certainly applied to my mother. It applies to me a little less so. I hope I’ve raised Jessica that it applies to her even less, uh, especially if it is the genetic part of it.
01:15:13,667 [Jess Collins]
Mm-hmm.
01:15:13,787 [JL Collins]
Because the stuff you worry about almost is never the stuff that bites you in the ass. The stuff that bites you in the ass is you don’t see it coming, right? So worrying is a colossal waste of time, and I’m gonna violate the- the short part of what we’re doing, but just a quick story along those lines. My older sister, uh, who’s passed away now, but she used to tell the story, when she was a young girl, and she was probably like 12, or 13, 14, somewhere in there, she got invited for the first time to a school dance and she was very excited about going. And our mother, with the best of intentions I’m sure was saying, “You know, Beth, don’t let yourself get too excited. It might not be that good. You don’t wanna build yourself up for disappointment,” blah, blah, blah. And
01:16:03,827 [JL Collins]
m- my sister in retrospect as an adult said, “You know, I look back on that and I say all she did was destroy
01:16:12,507 [JL Collins]
the joy of anticipation. Because even if the dance had been terrible,
01:16:18,087 [JL Collins]
at least I would have had the joy of anticipating it.” And then of course it turned out the dance was a lotta fun. And psychologists now tell us that a large part of the joy of travel for instance is the planning and anticipation.
01:16:31,487 [John Lanza]
Sure, yep.
01:16:32,567 [JL Collins]
So if you’re l- like, “Well, this isn’t gonna be that great. Now I don’t wanna get my hopes up,” [laughs], I mean, you just ruined [laughs] the larger part of the joy you could have from it.
01:16:43,007 [John Lanza]
Yeah, so true. I mean, it’s… It makes, it makes so much sense to just enjoy the lead-up and then hope that… hope for the best from that point.
01:16:53,187 [JL Collins]
So what about you, Jess? Do you worry or is there some other thing you’d tell your younger self?
01:16:57,927 [Jess Collins]
Do I worry? Yeah, all the time. That’s definitely genetic.
01:17:00,127 [John Lanza]
[laughs].
01:17:00,247 [Jess Collins]
If I could tell my younger self something, I mean, just that
01:17:05,207 [Jess Collins]
I’m proud of her, if that’s an acceptable answer?
01:17:09,747 [John Lanza]
Everything’s an acceptable answer, Jess.
01:17:11,567 [Jess Collins]
Okay [laughs].
01:17:12,167 [John Lanza]
All right. So next question, and we’ll, we’ll, uh, throw this one to you, Jess, which is, uh, if you could transmit a message that everyone would see, sky-written, on a billboard, wherever, what would that message say?
01:17:26,367 [Jess Collins]
Don’t listen to the noise. I think there’s… Again, we’re not making this fast, but… And I think you can apply that to everything in life. Just don’t listen to the noise. There’s so much noise out there of people trying to tell you what they think is best, what you should buy, what you should look like, how you should invest your money. And oh, my God, it’s just such a load, and it doesn’t matter, and just don’t listen to it. It’s just gonna cause you so much stress and I
01:17:52,687 [Jess Collins]
think we’d all be a lot more… We’d probably be better financially off, but we’d probably be a lot happier and have a lot more self-love if we [laughs] just didn’t listen to the noise.
01:18:01,007 [John Lanza]
Makes sense.
01:18:02,127 [Jess Collins]
Your turn, Dad.
01:18:02,927 [John Lanza]
Simple.
01:18:03,167 [JL Collins]
Th- that’s hard to top, so I would, I would second your responses, e- especially when it comes to investing. You know, you need to ignore the noise and just stay the course. But in terms of, you know, written high in the sky, the answer I was hoping you would give, Jess, was, “New York Times Bestseller-“
01:18:20,387 [John Lanza]
[laughs].
01:18:23,207 [JL Collins]
Yeah, well, mine would probably be VTSAX and, and chill.
01:18:26,967 [Jess Collins]
[laughs] Oh, my gosh.
01:18:27,667 [John Lanza]
I thought yours might be V- I thought you’d be, um… JL would be, uh, “Nobody Can Beat The Market”.
01:18:33,527 [JL Collins]
Well, that would be a good one, too.
01:18:34,907 [Jess Collins]
That’s a good one.
01:18:36,467 [JL Collins]
That would be a good one, too.
01:18:38,267 [John Lanza]
Um, I do wanna plug, uh, Bogle’s book Enough because, uh… Actually, I think, I think… I don’t know if you had mentioned it, but I read that after I, uh, read Simple Path to Wealth, and, uh, definitely worth a read because he is-
01:18:50,827 [JL Collins]
Great book
01:18:50,847 [John Lanza]
… yeah, singular guy. He’s kind of like the financial Lincoln of our… of, of, uh, the US.
01:18:56,847 [JL Collins]
Well, he, he’s, he’s a, he’s a fiscal saint.
01:18:59,267 [John Lanza]
Yeah.
01:18:59,647 [JL Collins]
Jack Bogle did more for us than any other… It’s stunning how, how, how significant he is for us individual investors and how much easier it is to create our F-U money and ultimately become financially independent if we just follow the- that, that gift that he gave us, that basic broad-based index fund.
01:19:23,647 [John Lanza]
Yes.
01:19:24,207 [JL Collins]
Yeah, no question.
01:19:25,987 [John Lanza]
Yeah. Impressive, very impressive guy.
01:19:29,127 [John Lanza]
All right, JL, other than your own materials, what’s the one money smarts book, or podcast, or any media that you go back to or that you gift the most often?
01:19:42,047 [JL Collins]
So i- it’s hard to nail it down one, but very early in the conversation you mentioned The Simple Path to Wealth, my book, alongside of The Psychology of Money, and I love that pairing.I think they, you know, it’s- it’s like peanut butter and jelly. I mean, they just-
01:20:00,371 [John Lanza]
[laughs]
01:20:00,791 [JL Collins]
… go t- they just go well together. And so I would start there. I also like, uh, Morgan Housel’s second book a whole lot, maybe even slightly more, and that’s, uh, Same as Ever. We do live in a time of rapid change. But Same as Ever is- is a discussion of the things that are timeless that don’t change.
01:20:23,251 [JL Collins]
Uh, and a great example I- I can give you is… And I think Housel quotes Jeff Bezos in this. And- and Bezos said at one point something along the lines of, “You know, I don’t know what the future holds, but I do know a couple things. I know my customers are never gonna come to me and say, ‘I wanna pay more for this.’ “
01:20:42,451 [John Lanza]
Mm-hmm.
01:20:42,472 [JL Collins]
“I know my customers are never gonna come to me and say, ‘I want you to take longer to deliver it to me.'” Right? So those are the kinds of things that are, that are timeless, and I think it’s important to- to know that. I already mentioned Retire Often for people who think that taking sabbaticals in their career is a good idea. And boy, I highly recommend that. And that’s why I was so, so supportive of Jessica. My friends Christie and Bryce wrote Quit Like a Millionaire. There are a lot of things that I love about that book. One of it is there is this trope out there that you can’t do this unless you have a high income. And Christie came from where she was born and raised in Communist China. And, you know, she just- just a h- horrific
01:21:28,791 [JL Collins]
and poverty-stricken beginning of- to her life, back in the days of- of Mao. Um, and yet she’s a millionaire today. I- I just, I- I love that book. And there’s no, uh… There’s so many wonderful books out there these days. There’s so much great information to guide you that wasn’t there when I was starting. So yeah, I envy people, uh, the wealth of information they have. But that’s- that’s a good start.
01:21:53,611 [John Lanza]
But Jess, do you wanna, uh, anything you wanna add in terms of materials, podcasts, or other media that you share with folks on a- on a regular basis?
01:22:04,471 [Jess Collins]
Sure. Candidly, I don’t really share a lot of podcasts or books around investing with most people. But a book that I read, and at this point I think they have an updated version, but it absolutely changed my life. It was called Factfulness by Hans… I cannot remember his last name.
01:22:20,791 [Jess Collins]
But I think it came out in the 2010s, and I think there is an updated version.
01:22:27,351 [Jess Collins]
It changed my life because it’s a story. It’s not a story. Excuse me. It is a book just about how the world is better than we think it is. And what I really loved was the author says multiple times throughout the book that he’s not an optimist. In fact, he is a pessimist. And the reason that he’s able to share all of these ways in which the world is doing better than we think is because there is hard data to confirm that the world is doing better than we think. So not about finance, not about investing, but it is a book that I constantly recommend. It’s a book that changed my outlook on the life. And it’s also a book that really helped me
01:23:04,151 [Jess Collins]
understand the power of maybe questioning and second guessing some of the things we see. And let’s do a little bit more research and understand some things before we take it at face value. But I can’t remember his last name.
01:23:15,731 [John Lanza]
It’s, uh, l- I looked it up. It’s Hans Rosling.
01:23:18,831 [Jess Collins]
Yep.
01:23:19,251 [John Lanza]
And, uh, I believe he’s the guy who has, uh, Our World in Data. Isn’t that, isn’t he the same guy? Isn’t that where Factfulness, which is-
01:23:25,851 [Jess Collins]
That sounds correct.
01:23:27,931 [John Lanza]
Yeah. Well, we’ll look that up.
01:23:29,871 [Jess Collins]
Yeah.
01:23:30,031 [John Lanza]
But it’s, uh, a great- great resource for data that- that supports that, the thesis of the book, and talks about the process.
01:23:37,751 [JL Collins]
Yeah, let me- let me look at that. Because I think it’s, uh, it’s a really important book. He is, he’s passed away now. And I think you’re right, Jess, it was published I think sometime around the same time I published the original Simple Path to Wealth. And it’s very data-driven. And, you know, it’s factfulness is… I mean, perfect title, title for the book. And there’s so much out there constantly in the media about how terrible things are today. And certainly there are challenges in the world today. There are always challenges. But things have never, never been better. It has never been a better time to be born almost anywhere in the world. It has never been a better or easier time to build your wealth. You know, I- I say to people, “If you could pick any time in history to be born, if you don’t pick right now, you need to read more history.” Because if you look back just 100 years, and how much worse things were. Just a- a quick example. 100 years ago, maybe a little more, maybe 120 years ago, 90% of the world’s population was living in abject poverty.
01:24:54,251 [JL Collins]
Today, it’s less than 10%. Now, it’s terrible that 10%, which would be 800 million people, are living in abject poverty, but it’s such a huge improvement
01:25:08,571 [JL Collins]
and- and the- and it’s continuing. That alone, that one benchmark, you went from 90% in abject poverty to less than 10 in 100 years.
01:25:20,591 [John Lanza]
Well, this has been a wonderful conversation. I appreciate your, all the time you have given me to have this conversation, Jess and JL. Thank you for coming on The Art of Allowance podcast to discuss… Really, it’s one of the books that is a must-read, The Simple Path to Wealth. I’ll put it up here again. Uh, and congrats, again, on the revised and updated edition. The, you know, New York Times best-seller. The- the fact that you sold a million copies. To the extent that you want them to, how can people find either of you on the interwebs?
01:25:51,751 [JL Collins]
Uh, Jess, you go first.
01:25:53,071 [Jess Collins]
I don’t really have much of a…… Platform around this or the book or anything, uh, that people would actually be interested in. I think Dad’s the one that has the, the handles that everyone wants.
01:26:06,579 [JL Collins]
So for me, probably the place to start is the blog which is jlcollinsnh.com. And you can find me on Facebook and Twitter and, and now, uh, you know, the book’s available wherever books are sold. So
01:26:20,999 [JL Collins]
it’s not hard to find me if you want to find me.
01:26:24,980 [John Lanza]
Very nice. And uh-
01:26:26,900 [Jess Collins]
Yeah
01:26:26,920 [John Lanza]
… What is, is there, uh, any action that you’d want, uh, people to take that would be helpful for you both?
01:26:32,039 [JL Collins]
If people listen to this conversation and it resonates, then, you know, the next stop is probably the book. And by the way, if, if you listen to it and you think, “Yeah, that sounds great, but is it really,
01:26:44,159 [JL Collins]
can it really be done by normal people?” I have a… My third book is called Pathfinders and that’s a collection of 100 stories from people around the world who read The Simple Path to Wealth and have adapted it to their unique circumstances with great success. And so if you’re wondering, “Yeah, is this… Yeah, this sounds great, but does it really work? You know, could it work for me?” I think that maybe that’s the first place you go.
01:27:12,399 [John Lanza]
Yeah, the one thing I will say about it, that you do not get at… I mean there’s plenty in the book that we have not covered, but one of the biggest takeaways from the book is you realize how much of an expert JL is as an investor, right? What he’s talking about in The Simple Path, it’s from having come at it from this, “I can beat the market,” mentality over many, many years and realizing that that’s just not the way that the world works. So this discussion, people are gonna have questions about it, especially if it’s the first time they’ve thought about it. Anything that sounds this simple sounds like it sounds like someone might be trying to sell you something. But the reality is that it’s, it’s that background that makes you feel much more comfortable about the final takeaways, and you get that out of reading the book.
01:27:59,339 [JL Collins]
Thank you. I mean, I, I hope that’s, I hope that’s the case and, and, uh, you know, you can also get the book from the library.
01:28:05,939 [John Lanza]
Well, thank you again to both of you. This was a great conversation. I, I learned a lot and I appreciate all the time you took, so thanks again.
01:28:13,859 [JL Collins]
You’re welcome.
01:28:13,899 [Jess Collins]
John, thank you so much. This was fun. [instrumental music]
01:28:21,819 [John Lanza]
Thank you for listening to The Art of Allowance podcast. If you liked this podcast, I think you’ll really like my Money Smart Mondays email newsletter. There’s no cost, and you’ll find out all about the Money Mammals to help get your kids excited about money smarts, and ideas from The Art of Allowance to help empower parents just like you. Just swing on over to themoneymammals.com. Click on that green button on the bottom right of the screen and become a subscriber today. I hope you’ll join me on the money smart journey. [instrumental music]