The Golden Number: What’s Truly Life-Changing?
by SGL Financial
Our 2 Cents – Episode #232
The Golden Number: What’s Truly Life-Changing?
We’re back with another great episode of Our 2 Cents! On today’s show, we’re diving into life-changing money moments, emotions, and personal debt. Tune in now!
- *Steve’s* Quick Hits:
- Fed rate cut alert!
- U.S. national debt climbs — latest figures show continued growth.
- Life-Changing Money:
- What is “life-changing money”? Here’s what it means to these individuals.
- Emotions and Your Investments:
- Do your feelings belong in your financial plan?
- Personal Debt:
- The Lewits give you the inside scoop about debt and how to make it work for you.
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Podcast Transcript
Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the president of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest and financial news, trends, strategies, and more.
Gabriel Lewit: Welcome back everybody to Our 2 Cents. You’ve got Gabriel Lewit here and Stephen Lewit here with you. We hope you’re doing well today.
Steve Lewit: I’m in the mood to be the second penny this morning.
Gabriel Lewit: Well, good. You’re feeling rich today.
Steve Lewit: I’m feeling rich.
Gabriel Lewit: All right, great.
Steve Lewit: Even though pennies don’t exist anymore.
Gabriel Lewit: Well, good news is we’ve got some good sports actions happening this year, right? This fall, we’ve got the Bulls are 4-0, and they play your Knicks coming up this Friday.
Steve Lewit: They might beat them.
Gabriel Lewit: They’re going to, I think. I’m feeling pretty confident about that.
Steve Lewit: They might. Yeah.
Gabriel Lewit: I happened to watch a Blackhawks game the other day. They won seven to four. That was pretty exciting.
Steve Lewit: Yeah, and the Bears, oh, oh, oh.
Gabriel Lewit: I think the Chicago fire in the MLS playoff.
Steve Lewit: They are.
Gabriel Lewit: And the Bears are doing okay.
Steve Lewit: And the Bears, and the Bears, and the Bears, and the Giants.
Gabriel Lewit: Well, nobody… We have a predominantly Chicago audience, so I don’t know how much play your Giants are going to get here.
Steve Lewit: None.
Gabriel Lewit: But if you’re a Giants fan out there in the audience, shout out to Steve. He’d probably love to know that he’s not alone.
Steve Lewit: And we can go drinking together because they’re certainly not going to win.
Gabriel Lewit: Well, yeah, probably not.
Steve Lewit: Not.
Gabriel Lewit: So, anyways, yeah, great time for sports and of course, the holidays are coming up quick. So, lots going on in the world. Steve, what’s new with you?
Steve Lewit: Busy. Busy. I’m getting used to the fall weather. I wore my new Bears jacket, which is very fancy leather, and I wore it for the first time and I said, “Wow, it’s fall. It’s cold out there.” So, I’m adjusting.
Gabriel Lewit: There you go. Well, good.
Steve Lewit: When it gets cold, you know what I do, Gabriel? I eat a lot. Do you find that too? It’s the cold makes me want to eat.
Gabriel Lewit: Well, I don’t need it to be cold to do that.
Steve Lewit: Yeah, I won’t say what I told what I said a year ago.
Gabriel Lewit: Well, we’ve already talked about that on the show. You weren’t very nice to me, but that’s okay.
Steve Lewit: I was really not nice folks.
Gabriel Lewit: Well, we are ready to roll for you today. We’ve got a great show lined up. We’re going to talk to you about hopefully, a range of some nice and very interesting things.
Steve Lewit: Can we quickly mention the Fed cuts rates?
Gabriel Lewit: You could, if you’d like to take point on that.
Steve Lewit: Fed cut rates 25 basis points. A lot of people feel it should have been more, and a lot of people feel it should have been less, and I have nothing much more to say about it because it’s the same old, same old.
Gabriel Lewit: Yeah, we do tend to talk about that a lot, so we might circle back to that more in the future if you’ve got questions about it. But yeah, rates come down a little bit. Credit cards don’t really come down much. Your interest rates, pay a little less. Mortgages might come down a little, but nothing too crazy yet.
Steve Lewit: And the market didn’t react to it. Whether there’ll be more rate cuts in the future, we’ll see, but I’m just tired of talking about it. So, folks, if you have questions, let us know because both Gabriel and I want to move on.
Gabriel Lewit: Yeah. And I think you also wanted to briefly mention how the national debt had reached 38 trillion.
Steve Lewit: $38 trillion.
Gabriel Lewit: It was officially in the news the other day with a trillion dollars of interest being added per year.
Steve Lewit: Fastest growth in debt since…
Gabriel Lewit: Or more than that.
Steve Lewit: … COVID projected to be 52 trillion, I think, in 15 years? I forgot what the actual number was. Here’s the deal, folks, on the national debt, it’s there. The problem on the national debt is the interest that has to be paid. Right now, the interest is about just under 1 trillion. And the problem comes in, if and when the government cannot pay the interest, and that’s the big deal.
And the interest is about, I think, 13, if I remember the percentages, I’m into numbers, 13% of the GDP. Don’t quote me on that one folks, but the interest is the big deal. At some point, the interest becomes so high that we can’t afford to pay the interest and then the debt, then we get downgraded again as a credit-worthy country, and that’s a big problem.
Gabriel Lewit: Yes, man. It does seem to be one of those problems that gets kicked down the road.
Steve Lewit: Well, we were talking about it earlier, Gabriel, and you said to me, everybody talks about it and nobody does anything about it. So, what is there…?
Gabriel Lewit: Well, politicians, I know you and I can’t do anything about it.
Steve Lewit: Yeah, so-
Gabriel Lewit: But it’s like the social security thing, you keep hearing, the social security funds are going to run out, and nobody does anything. And then, you hear it again the next year and then you hear it again the next year, because that’s been on the news now, I think, for five, six years. Social security is going to run out of money, nobody does anything. National debt keeps going up, nobody does anything.
So, all these things are out there folks, I know you’re going to keep hearing about them, whether or not they’re going to impact you. They might at some point, but it’s a little hard to quantify exactly how and when because it’s also unpredictable.
Steve Lewit: So, as an economist, I can say to you, well, this is going to happen, and this is going to happen. This is going to happen. But you really don’t know.
Gabriel Lewit: Yeah. Look, people seem to think that taxes will go up eventually because of high national debt, but Trump just extended the tax cuts for indefinitely until they would get re-raised by somebody in the future. So yeah, where’s the revenue going to come from to pay down the debt? The DOGE cuts seem to have maybe not cut enough because the debt keeps rising.
Steve Lewit: Well, the DOGE cuts are 2% of the whole national…
Gabriel Lewit: Yeah. I mean, they made the news for a good month cycle or two-month cycle, but they really cut very little…
Steve Lewit: You’re right.
Gabriel Lewit: … all said and done. So, it is just something to keep an eye on folks.
Steve Lewit: So, Gabriel, if you are a person out there that’s not into finances or into economics, and you hear all this stuff going on, what do you do? What do you do?
Gabriel Lewit: You take a sip of water, as you asked me the exact question.
Steve Lewit: I got you in… Well, I didn’t know you were taking a sip of water. Folks, I got him right in the middle of a sip.
Gabriel Lewit: Well, I think that’s what I was trying to reference. It feels almost like, I don’t know, you do nothing different. You just keep going about your daily life because what can you do?
Steve Lewit: Invest wisely.
Gabriel Lewit: You can try to put more money in tax-free dollars so that if the tax rates do go up at some point because of the debt, you’ve repositioned yourself effectively.
Steve Lewit: Right. Build a sound plan, invest wisely.
Gabriel Lewit: But you could even Google this and it says, “Well, national debt rising could impact inflation.” Well, inflation’s still there, but it’s coming down. So, it never feels like it actually has a real meaningful impact other than people know in your personal life debt is bad, in your personal life, we’re actually going to talk about that today.
Steve Lewit: Might be bad. Yes.
Gabriel Lewit: It can be bad. You don’t want to have oodles and oodles of personal debt because you, as a person, can’t just print more money to pay for it.
Steve Lewit: The companies have debt all the time. Big companies have lots of debt. In fact, there’s a whole group of economists that say the US national debt is not, you can just keep having it. So, it’s really a very difficult subject.
Gabriel Lewit: It is. It’s complicated.
Steve Lewit: And emotional because people get afraid of it. They hear debt and it’s like, “Oh, that’s bad.”
Gabriel Lewit: Yeah, yeah. Well, it’s definitely not good, let’s put it that way. I mean, I don’t think there’s a lot of people out there saying, “Hey, it’s great that we’re $38 trillion in debt. But yeah, how this will definitively impact you, still remains to be seen, again, because I think that can keeps getting kicked further down the road here.
Steve Lewit: Absolutely. That can is all bent up from being kicked.
Gabriel Lewit: Sure. It sure is. It sure is.
Steve Lewit: It doesn’t even look like a can anymore.
Gabriel Lewit: Oh, man. Well, let’s switch some gears to something different. We’re going to talk about, I thought this was a fun study. It was a fun article that I read. What does life-changing money mean to you? Okay.
Steve Lewit: Yes. Yes.
Gabriel Lewit: And in fact, the article asks 10 people that same question, what does life-changing money mean to you? And I like this question because the answer was very different for everybody. And you think everyone would just answer, “Oh, I need $10 million to win the lottery.” But that’s not what a lot of people wrote.
And so, I think it actually, it’s a good question because it gets people thinking, how much money do I really need? What am I really trying to accomplish with my money? What would be most valuable for me? And it helps you quantify a little bit of what’s important for you when it comes to money.
Steve Lewit: Sure. Gabriel, explain what you mean by life-changing money.
Gabriel Lewit: Well, I think that’s purposefully vague in the sense that it’s not trying to imply that what’s life-changing for you is life-changing for me. It could be different for everybody.
Steve Lewit: So, it’s an amount of money that we suddenly get, that would be life-changing for us. And for some people, that might be 50 grand and for some people it might be 500 grand. We don’t know.
Gabriel Lewit: For some, it might be 5 million.
Steve Lewit: Right.
Gabriel Lewit: Okay. And that’s really that question. So, Steve, what would be life-changing money for you?
Steve Lewit: I want to win… What was the lottery? I bought a lottery ticket. How much was it? 300 million?
Gabriel Lewit: It’s like 800 million.
Steve Lewit: Yeah, that would be life-changing.
Gabriel Lewit: So, you wouldn’t be happy with 100 million?
Steve Lewit: I might be. I’d be happy with a million.
Gabriel Lewit: An extra million? Well, that’s the idea, just to get you a little prompt, right? That’s sort of the idea. You could start off with big numbers, but then you could cut it in half and be like, “So, that wouldn’t be life-changing?” So, it gets you thinking what would be truly a life-changing amount.
So, we’ve got some people here. I think these are their actual real names in the article. I’m not going to say their full names. I’m just going to say their first names. So, we had Mike in Illinois, Homer Glen, Illinois, he said, “150,000 would eliminate all his debt and make his retirement more comfortable.” He said, “It would ripe,” ripe out, “wipe out the remainder of his mortgage and it would clear the debt for him and allow him to be able to spend his pension and his other money a little bit more liberally and give him some breathing room.”
Steve Lewit: So, that’s very practical. It’s saying, “Look, I’ve got this mortgage, it’s impinging my expenses. I’d like to spend more, have a higher quality life. So, $150,000, very meaningful.
Gabriel Lewit: Indeed. Yes. Then, we had Chris from Georgia. Chris’s number was 3.2 million. Now, Chris owned a mulch company. How do you get into the… By the way, how do you become the owner of a mulch company?
Steve Lewit: Well, you take-
Gabriel Lewit: Any ideas?
Steve Lewit: Yeah. Yeah. You take mulch as a college major.
Gabriel Lewit: Mulching 101?
Steve Lewit: Mulching.
Gabriel Lewit: Field trips to the farm?
Steve Lewit: I don’t know. He’s a farmer. He’s probably-
Gabriel Lewit: Well, no, a mulch company may not be a farmer.
Steve Lewit: He probably lives in the middle of the nowhere.
Gabriel Lewit: Anyways, yeah. So, he said 3.2 million would be his number. He said that that would be enough to buy a lake house…
Steve Lewit: Nice.
Gabriel Lewit: … that he would like, and he could rent out on Vrbo when his family wasn’t there. They could get better, University of Georgia football season tickets with better seats. And he would buy a second fancier classic car for around $100,000 dollars and invest in flying lessons.
Steve Lewit: This is $3.2 million. What kind of house is he buying?
Gabriel Lewit: I don’t know. I don’t know.
Steve Lewit: It’s got to be a mansion.
Gabriel Lewit: So, there you go. There’s an opposite end of the spectrum, right?
Steve Lewit: Sure.
Gabriel Lewit: One guy wanting to pay off his mortgage, another looking to buy a second home.
Steve Lewit: Totally different. But you know what? To each of those, that money is equally as meaningful.
Gabriel Lewit: Well, we could get philosophical talking about how much money is enough and when does it create more happiness, but that’s a topic for a different day. We got Josie in California said, 300,000. A 31-year-old Josie says, they feel like they would love to pay off graduate school debt, school loan debt, and need about $300,000 to do that, as well as use that to make a down payment on a home, because then, they feel they could build greater wealth through home equity as opposed through renting.
Steve Lewit: That’s well thought-out. Sure.
Gabriel Lewit: And so, you’re seeing their different stages of life. Money means different things to different people. For some it might be debt payoffs. For some it might be retirement visions. For others, it’s just peace of mind. We’ve got John in Kansas and he said, 500,000 would be his number. He says, John, I don’t know, no offense here.
Steve Lewit: I’m a little concerned about John.
Gabriel Lewit: He said, “I don’t like Kansas at all.” So, John-
Steve Lewit: John, move.
Gabriel Lewit: Yeah. But he says he feels stuck. And without some sort of financial miracle, he feels he won’t be able to move because he’s limited in how much he can work through to a disability and feels that moving costs are unattainable for him right now. So, that’s challenging, right?
Steve Lewit: Very challenging.
Gabriel Lewit: We’ll do one or two more here. We won’t do all 10. And in Oregon, also said 150,000, single parent, independent project manager and would like to buy some new furniture for the house, have a little bit of debt and emergency fund, and build up some savings that got depleted due to the pandemic and some unemployment that occurred during that time.
Steve Lewit: Yeah. Let’s do Corey.
Gabriel Lewit: You could do Corey.
Steve Lewit: You do Corey.
Gabriel Lewit: You want me to-
Steve Lewit: Yeah.
Gabriel Lewit: Okay.
Steve Lewit: You’re good at this.
Gabriel Lewit: Yes. Corey, Minnesota, the largest number we have on our list here said 5 million, a 5 million pot of money would allow them to retire early, according to them. So, they must have fairly high expenses and he could buy a little larger home and a more luxurious car. But he said he felt 1 million was not enough for him. And in his numbers or however he calculated it, 5 million would be the number for him.
Steve Lewit: So, Gabriel…
Gabriel Lewit: Mm-hmm?
Steve Lewit: … these are great because everybody has a different idea of what would impact their life financially. So, what-
Gabriel Lewit: Well, you know what this reminds me of?
Steve Lewit: No, I do. I not know what this reminds you of.
Gabriel Lewit: Sometimes, clients come in and they meet with us, and as you said, everybody is different. As you can see here, just from this quick snapshot, everybody’s financial situation is always different.
Steve Lewit: Totally. Totally.
Gabriel Lewit: And people come to me and say, “Well, what do you do for all your clients,” or the other one that’s not completely related, but somebody asked me the other day, “What’s your investment return?”
Steve Lewit: Yes.
Gabriel Lewit: And I was like, “well, that implies, they just have one investment.
Steve Lewit: Right.
Gabriel Lewit: But I said, I’ve got hundreds of different clients all invested in dozens of different things, all depending on what’s important to them and what’s meaningful. And so, that’s what’s interesting. There is no just one thing we do for our clients, we don’t just do 60/40 models for everybody. No matter where you are and what you do, we heavily customize things and we want to figure out for you what does money mean?
Our slogan here is Building Wealth for life, and that’s a two-parter. We want to help you build wealth, yes. Building money, creating money income, growing your asset base, but for life, for some benefit that that will bring to your life. And that’s what you’re seeing here when you think about this question, what would be a meaningful lump sum of money for you? It starts to help you think about what you really want your money to do for you. And I really like it because sometimes you ask people that question, “Hey, what do you want to spend your money on,” and they can’t it.
Steve Lewit: They do not have an answer. Yes.
Gabriel Lewit: But if you ask them this question, what would be a life-changing amount of money for you, you start thinking about what you want to do if money were no object, and all of a sudden, you realize you might still be able to do those things, even without these really large dollar amounts that people tend to think that they might need to have.
Steve Lewit: Or you can say, “Gee, if I had another 5 million or 300, 150,000, well, getting a windfall like that is difficult, but that doesn’t mean we can’t build a plan to get you there.
Gabriel Lewit: A 100%, a 100%. Yep. Once you’ve identified what those goals are.
Steve Lewit: Once you know the numbers, then let’s figure out how to get you there.
Gabriel Lewit: Exactly. Yeah. Now, if you have a disability, you can’t work, these are challenging things. Those are hard. So, sometimes, there are more difficult cases to work with and sometimes it’s time, patience, hard work, some of these things that can help get you to where you want to be.
Steve Lewit: So, that would be a great exercise, folks, is to sit down with yourself or your partner and say, “Hey, if we could pick a number, that would be not a ridiculous number…”
Gabriel Lewit: Life-changing for us.
Steve Lewit: … if we had an extra 50 grand or 100 grand or 200, what is that number? And then, come on in, let’s figure out how we get it.”
Gabriel Lewit: Exactly, or you might already have it.
Steve Lewit: Or you might have it.
Gabriel Lewit: You just not think you do.
Steve Lewit: Yeah, definitely.
Gabriel Lewit: Now, I also want… With this, before we shift gears, there was a second article we almost talked about, and then I found this one, but it almost made me want to pick on the other article because it was asking this question to three potential advisors out there, I won’t list who they are, how would you invest a million dollars for a 40-year-old client? And what was funny is every single one of these advisors answer was a very specific investment strategy, which why do I want to pick on it, because I would say the true answer would be, I have no clue until I get to know my client.
Steve Lewit: Yeah. I have no idea.
Gabriel Lewit: So, one guy came here and said, “I would buy,” hold on, let me find it here. Okay. “I would put it in a 60/40 portfolio.”
Steve Lewit: Yeah, but why?
Gabriel Lewit: How could you answer that, right? I guess, knowing absolutely nothing, if you had to force someone in to pick a generic investment strategy for a generic 40-year-old, you could say, “I’ll do a generic 70/30 model,” but how can that possibly be a good strategy, if you have no… Maybe that person has way too little money, or maybe they’re going to work a long time, maybe they have more than they need, maybe they want to spend, right?
So, as you get to really know your goals, and I like to pick on these things where it’s a one-size-fits-all approach, because I’ve just found over the 21 years I’ve been doing this, as I know you have, there is no such thing as a one-size-fits-all approach to planning.
Steve Lewit: I honestly don’t know how you can, if you’re a fiduciary, especially, how you can say, okay, this person just got a million dollars without talking to them and getting to know them, like you were saying, without understanding their goals and who they are, how they approach risk. Do they want to leave money to their kids? Do they want to have a better lifestyle? I don’t know how you could even begin to answer that question.
Gabriel Lewit: Yeah, very difficult. Very difficult.
Steve Lewit: Yeah. You had three people gave answers.
Gabriel Lewit: They did. They sure did. Anyways, interesting stuff. So hopefully, you found that helpful. If you have goals in mind that you’d like us to help guide you too, if you want us to help you figure out how to get to life-changing wealth, whatever we can do to help you there, give us a call (847) 499-3330 or go to sglfinancial.com, or you can email us info@sglfinancial.com as well. Well, let’s see. I wanted to talk a little bit about debt, but I’m going to save that for last.
Steve Lewit: Okay.
Gabriel Lewit: Because we already talked about the national debt.
Steve Lewit: You mean personal debt?
Gabriel Lewit: Personal debt, yes. Yes, personal debt.
Steve Lewit: Personal debt.
Gabriel Lewit: Okay. So, I wanted to just talk briefly here about this interesting question that I found, do your feelings belong in your financial plan?
Steve Lewit: Oh my. Oh my.
Gabriel Lewit: Let me say this differently, do your emotions mix well with your investments?
Steve Lewit: Yeah. Yeah. That’s the Pandora’s box, man. Oh, well. No, I have no emotions regarding my investments. It’s just business.
Gabriel Lewit: Yeah. You think?
Steve Lewit: No.
Gabriel Lewit: You think that everybody’s just a…
Steve Lewit: No, I don’t think-
Gabriel Lewit: … AI robot, doesn’t think twice and just does all the things they should do without any feelings or emotions involved?
Steve Lewit: Everybody’s like Spock on Star Trek, perfectly logical, not emotionally involved. They lose money. They understand that the market goes up and down. They don’t react to it.
Gabriel Lewit: Well, sure. I’ll give you a perfect example, okay? I had a relatively new client the other week in a meeting, and we went through a risk tolerance questionnaire and came out to a maximum amount we want to lose for our money, 15%. Where they were in their life right now, “Hey, what’s the most, you’ve got X amount of dollars. If it dropped by 20%, would you be okay?” “Oh, no, no, no, no, no.”
Steve Lewit: No, no, no.
Gabriel Lewit: “We’d not be okay with that.” “Okay. So, what’s the maximum risk level you’d be okay with?” “Probably 15%.” So, okay, then we get to their portfolio and I plug the whole portfolio into Y-charts, which is our portfolio analysis tool, and it’s mostly all individual stocks. And we looked at the previous history of the risk in these stocks, and the collective portfolio at one point in 2022, was down about 35, 40%, which is that greater than 15?
Steve Lewit: Thirty, yeah.
Gabriel Lewit: It is?
Steve Lewit: Yeah. Yup.
Gabriel Lewit: Okay. You’re tracking along with me.
Steve Lewit: I’m tracking.
Gabriel Lewit: “So hey, let’s talk about making changes to this portfolio of stocks.” “Oh, no, no, I don’t want to change those.” Now, why? Because when we looked at the return, the return potential on these, they had done quite well, and especially in the last three to four years. I don’t want to sell these. They’re doing really well.
Steve Lewit: Yeah, they’re doing great.
Gabriel Lewit: But we had just done a risk tolerance questionnaire where someone said, this is where we say data numbers, spreadsheets, quizzes, you said their max risk level is 15, but they can’t seem to justify that or figure that out with their emotions that wants the higher return.
Steve Lewit: We all have selective emotions.
Gabriel Lewit: So, that’s a good example of that in action, and it’s really interesting. So, you could ask that question, so what do you do in this case, right? Your emotions telling you one thing, your logical brain, your numbers, your own self-assessments telling you another, what do you do to reconcile that?
Steve Lewit: Well, first you have to understand what you’re really saying. You have to hear it. At my seminars, I often do an exercise with folks in the audience and I say, “Hey, look, what’s your investment goal?” A person will raise their hand, say, “I want to make 20% a year, that’s my goal.” And another person will say, “I want to make 15, I want to make 10.”
And I say, “Okay. Now, if you’re investing for 20%, what’s the downside of that portfolio? What happened to that portfolio in 2008?” “Oh, I don’t know.” “Well, that portfolio, if you’re aiming for 20%, that portfolio was down more than 60% in 2008. So, what you’re telling me is you’re willing to take a 60% loss in your money at any point in time, and then, because that’s reverse of what you are doing.”
And then they say, and their wives are sitting there and you should see the glares. You better answer this question the right way. But that’s what they’re doing, but they don’t see it. And when they see it, the question is, will their emotions allow them to act on it, and I think that’s the question that you’re asking.
Gabriel Lewit: Well, some do. And here’s where the next emotion, we talked about fear. We’ve talked about greed, those are the reason, someone is fearful of losing money, so they set their maximum risk tolerance to minus 15, but then they don’t want to do it because of the greed emotion. I can see how much these have made. I could envision how much happier I’ll be if they make more, right? Continue at this pace, so maybe they decide not to make a change right now.
Steve Lewit: Yeah. It’s the FOMO.
Gabriel Lewit: Which leads us to our third, which is a combination of those, which is fear of missing out. And what’s interesting about investments is there is no one right best all investment. You can always, if you had a 60/40 portfolio for the last year because you were trying to balance your risk and return, you could look backwards and say, “Well, bonds went up 5 and stocks went up 15. Why in the world did I, I’d be kicking myself for having all those bonds in my portfolio?”
But you did that because you can’t predict the future in the market. And so, you’ve got to understand that and feel okay with the fact that you might leave some money on the table to keep your portfolio in line with risk that you’re going to be comfortable with if we have a really bad market period.
Steve Lewit: The other part of that, Gabriel, is a little-
Gabriel Lewit: So, you can’t be kicking yourself for missing out because nobody has that crystal ball.
Steve Lewit: Yeah, but there’s another layer to that, that if bad things happen to us, we bury that in the past in our memory. We don’t want to bring that up again. And what many people have done, they’ve forgotten what it felt like to lose money in 2001 and 2002 and 2008 and 2022, they bury that pain. They don’t remember it. And so, when you say to them, “You could lose 40%,” some people, they don’t want to go back there and relive that feeling. So, they just say, “Yeah, I’m willing to do that,” until it happens.
Gabriel Lewit: Exactly. Well, we might talk more about emotions and investing, because there’s a lot here we could talk about and not just investing, maybe planning, making decisions about your future based on emotional feelings. And maybe you don’t like to talk about feelings, so we don’t have to, we could talk more numbers, but sometimes, we do have to get into those feelings because they do drive a lot of things in your planning.
Steve Lewit: Most things, numbers are just numbers until you apply a judgment on them. And part of the judgment is do they feel good or do they not feel good?
Gabriel Lewit: Yeah, exactly.
Steve Lewit: I could say the market went down 15%. Some people say, “Oh, that’s okay.” And other people say, “Oh my God, it’s the end of the world.” So, everything has a layer of emotion or reaction to it, and it’s a matter of finding a balance between logic and emotions, which is what we try to do in a financial plan.
Gabriel Lewit: Indeed. Indeed. All right, well hopefully, you found that interesting. Again, there’ll probably be more to come. I just didn’t want that to be our sole focus for the rest of today’s show. I wanted to talk a little bit about personal debt, not national debt of the country, but personal debt.
Steve Lewit: Especially with the holiday season coming up, this is a very important subject.
Gabriel Lewit: Yeah. So, the first question is this one, because you’re seeing debt all over the place more and more, right? Your college debt. Now, when you go to buy something on Amazon, it’s like, do you want to pay this over time? Which is a form of a loan, which is debt, right? It’s really easy with credit cards and holiday spending, and you’re starting to see things on the shelves to get yourself into personal debt. The first question is, that I always like to ask, is all debt bad?
Steve Lewit: No.
Gabriel Lewit: Okay.
Steve Lewit: Gosh, no.
Gabriel Lewit: You want to elaborate on that a little bit?
Steve Lewit: Yeah. There are times that you need debt, you need like for school financing. You may not have kids going to an Ivy League school. It’s 100 grand a year or a state school with 40, 50,000, you don’t have it. Well, that’s a good investment, and debt is good debt.
Gabriel Lewit: Well, that was a key word you said, an investment. So, some debt can be an investment in future earnings potential or future wealth accumulation like a mortgage is in some ways, an investment into an asset that will be worth more in the future. A college loan for a school, education may.
Steve Lewit: May pay off.
Gabriel Lewit: If you’re in mulch 101 and don’t go into mulching.
Steve Lewit: And you don’t become a mulcher.
Gabriel Lewit: Yeah, maybe not. Then, you want to go into finance. I’m not sure it’s going to help you. So yeah, we can get into that. And I’ve actually had a lot of clients lately saying, “I think I’m going to tell-”
Steve Lewit: I want to be a mulcher.
Gabriel Lewit: No, “I think I want to tell my kids to go into the trades where it’s only 10, 12 months of education or schooling, and they can go out there and be an electrician or a plumber and make 150 grand, 200 grand a year.”
Steve Lewit: And they can. And there are a lot of kids that are not going to college because that’s what they want to do.
Gabriel Lewit: So, that’s a little off-topic, but very interesting. But then, we get into the types of debt that perhaps you do want to avoid. I have a client that recently, well, it wasn’t their fault, but they got into a lot of debt through a business venture that didn’t go as planned, which there’s a lot of entrepreneurs out there that attempt to open businesses and take on some debt, which on the surface, could be a good debt, if the business works out, it can certainly pay for itself, but it’s also risky.
Steve Lewit: But at least it’s debt with the intention of making it productive, which is different from debt that I got to buy, what was that thing you, a Babalu or?
Steve Lewit: Labubu. I got to buy a Labubu.
Gabriel Lewit: The hottest Labubu?
Steve Lewit: The hottest Labubu.
Gabriel Lewit: For $55,000?
Steve Lewit: For 55,000 bucks, that is not that with good intention.
Gabriel Lewit: Well, maybe you could sell it down the road. Who knows? Probably not.
Steve Lewit: No.
Gabriel Lewit: But yeah, so the debt that’s not great is you don’t have the money to pay, say your credit card off, but you need holiday gifts. So, you go out and you throw more of that on your credit card, and you get into this credit card spiral because then, that creates higher minimums, which if you didn’t have the money to pay for, it gets you into further debt as an interest accrues.
And then, you can create these real bad negative debt cycles, which there are ways to break, and these would be topics for a different show. Maybe we have something about debt elimination, because this client that I was talking with, they also had credit card debt in addition to business debt. And so, we went through this entire exercise of debt payoffs, which ultimately, turned back into nobody’s generally favorite subject, which is budgeting, because the question that came up was, how do I avoid getting back into debt…
Steve Lewit: Can’t wait to do my budget.
Gabriel Lewit: … next time.
Steve Lewit: I love budgeting.
Gabriel Lewit: And oftentimes, that comes back to budgeting.
Steve Lewit: Have a budgeting weekend.
Gabriel Lewit: A whole retreat on it.
Steve Lewit: A budgeting retreat.
Gabriel Lewit: Well, I do, in fact, as you may not be surprised to hear, have an entire system for budgeting…
Steve Lewit: I’m not surprised.
Gabriel Lewit: … that I use, that I teach.
Steve Lewit: Hopefully, over a glass of wine.
Gabriel Lewit: It is. So, surprisingly, it’s semi-complicated, but it does work very, very well. And so, we could talk about that at some point. Maybe that would be fun or maybe not. Interesting?
Steve Lewit: Something, we’ll think about it.
Gabriel Lewit: Intriguing?
Steve Lewit: We’ll think about it, Gabriel.
Gabriel Lewit: Mildly curious?
Steve Lewit: No, maybe not.
Gabriel Lewit: Yeah, I will actually probably talk about that on the show sometime. But yeah, so yeah, we want to take away this notion that all debt’s bad, but we do want to be careful of some debt.
Steve Lewit: That is the point is just because you have mortgages, you have credit card debt, it doesn’t mean it’s bad. It’s how it got there and what you’re doing about it.
Gabriel Lewit: Yeah. Yep. Exactly. So yeah, more to come on that topic here. More to talk about investment emotions, maybe more to talk about the national debt. I don’t know what the next update there will be, but probably when we reach 39 trillion, we’ll let you know.
Steve Lewit: Yep.
Gabriel Lewit: And we’ll see what’s changed.
Steve Lewit: It might be next week.
Gabriel Lewit: Who knows? We could talk a little bit more about the success of the Bears, Bulls and Hawks. We’ll keep tabs on that for you, if you’re a local Chicago sports fan. It’s a good time.
Steve Lewit: And folks, if there’s something that you would like us to talk about, because mine and Gabriel’s mind reading capabilities are limited, if there’s something is on your mind that you would like us to talk about, please write us in. Let us know.
Gabriel Lewit: Well, we have a few that we’ve collected here that we’re preparing to respond to on future shows. So, if you’ve sent one in and we haven’t talked about it yet, never fear.
Steve Lewit: We’re not ignoring it.
Gabriel Lewit: You’re on the radar.
Steve Lewit: Yes.
Gabriel Lewit: And we’re going to get to you. So, keep that in mind. But yes, any questions for us, big or small, let us know. You can reach us here, (847) 499-3330 or email us info@sglfinancial.com, or of course, go to our website, sglfinancial.com, click contact us. Schedule a free complimentary review If you’re not currently a client. If you are a client and you want to catch up with us for any reason, let us know.
Steve Lewit: Yeah. Write us.
Gabriel Lewit: Yes. Otherwise, the next time we’ll talk to you. We’re going to see you in November.
Steve Lewit: Oh my gosh.
Gabriel Lewit: Because it’s that time of the year.
Steve Lewit: Football season is halfway over.
Gabriel Lewit: And we hope you have a wonderful week and weekend in the meantime.
Steve Lewit: The leaves are falling from the trees.
Gabriel Lewit: Sure are.
Steve Lewit: Stay well everybody.
Gabriel Lewit: Stay well everybody. Talk to you soon.
Steve Lewit: See you.
Gabriel Lewit: Bye.
Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at (847) 499-3330 or visit us on the web at sglfinancial.com and be sure to subscribe to join us on next week’s episode.
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