Are You Guilty of Bad Money Habits?

Our 2 Cents – Episode #142

Are You Guilty of Bad Money Habits?

On the Our 2 Cents podcast this week, hosts Steve and Gabriel Lewit are discussing the kind of impact bad money habits can have on someone’s financial life. Plus, they’re answering some more ‘Getting to Know You’ questions. Tune in now for the fun!

  1. Bad Money Habits:
    • Procrastinating financial decisions that need to be made.
    • Investing emotionally instead of analytically.
    • Living beyond your means and not willing to cut back.
    • Pretending like the nursing home is something that will only happen to other people, not you.
    • Constant over-saving, never spending and enjoying.
    • Inadequately diversifying your portfolio.
  2. Getting to Know Steve and Gabriel:
    • What is your go-to dance move?
    • Does your family have any traditions that seem normal to you but would be weird to everybody else?
    • What’s the worst movie you’ve ever seen?

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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 in financial news, trends, strategies, and more.

Gabriel Lewit: Hey, good morning, good afternoon, good evening. This is Gabriel and Steve, and we’re welcoming you to our show today, Our 2 Cents.

Steve Lewit: It’s going to be a great show.

Gabriel Lewit: It’s going to be a lovely day, a lovely night, a lovely year. We’re in a good mood this morning.

Steve Lewit: I was talking about the show is going to be a great show, not the weather.

Gabriel Lewit: No, I was just saying, I wasn’t even talking about the weather. I’m just saying in general-

Steve Lewit: Oh, in general. Okay.

Gabriel Lewit: … it’s going to be a great day.

Steve Lewit: I like that.

Gabriel Lewit: A great year.

Steve Lewit: I like that, yeah.

Gabriel Lewit: I’m feeling positive this morning.

Steve Lewit: Better than yesterday.

Gabriel Lewit: Well, that’s depressing.

Steve Lewit: No, no. It’s not. Better than yesterday. Every day is better-

Gabriel Lewit: How are you today? Better than yesterday.

Steve Lewit: Every day … No, but I didn’t say it that way. Every day should be better than yesterday.

Gabriel Lewit: That’s a little better.

Steve Lewit: Okay. Well, I said better than yesterday, but you-

Gabriel Lewit: That’s a high expectation though.

Steve Lewit: No, it’s not. It’s like, I’m going to make today better than yesterday.

Gabriel Lewit: Okay.

Steve Lewit: Yeah, just put your mind to it and do it.

Gabriel Lewit: There you go, folks.

Steve Lewit: There you go, folks.

Gabriel Lewit: Wisdom from Steve. Oh, that should be a new segment.

Steve Lewit: Yeah. Write that all down. Write it all down on-

Gabriel Lewit: Wisdom from Steve.

Steve Lewit: … on a napkin.

Gabriel Lewit: Little Zen bites of wisdom.

Steve Lewit: Zen Steve is here.

Gabriel Lewit: Well, we’ve got a good show lined up for you here today. Today, we’re going to talk about bad money habits.

Steve Lewit: Yeah.

Gabriel Lewit: As opposed to good money habits, which we oftentimes preach about on the show, we’re going to talk about some of the bad habits that we’ve seen from people that we’ve spoken with, that we’ve talked to, that we’ve helped, and helped overcome some of these bad habits. The goal of this is that if you have any of these, you can look in the mirror, you can assess a little bit further if you are treading in some murky waters, and maybe correct those bad habits.

Steve Lewit: Sometimes, folks, we don’t even know the bad habits we have because they are habits.

Gabriel Lewit: Exactly.

Steve Lewit: We just keep doing them.

Gabriel Lewit: You know what it reminds me of then?

Steve Lewit: What’s that?

Gabriel Lewit: The other day on the show, I was picking on you because you kept saying the word, surely.

Steve Lewit: Surely, yes.

Gabriel Lewit: Right? There’s been a time where, I think … What was the word that I used to say all the time? In theory, or something like … It was something like that. Anytime I was talking, I’d say, “In theory,” or-

Steve Lewit: Yep.

Gabriel Lewit: You just get used to these habits.

Steve Lewit: Yes.

Gabriel Lewit: You don’t even notice yourself saying the same word over, and over, and over. Your brain doesn’t recognize it. Your neural pathways just fire off that word automatically.

Steve Lewit: It’s like you’re on cruise control in your car, and it just does its thing.

Gabriel Lewit: If somebody doesn’t point it out to you, where I say, “Dad, you’re saying the word surely a lot.”

Steve Lewit: Yeah, and I’m saying, surely, I do.

Gabriel Lewit: Yeah. That’s the idea here. Calling some attention, bringing some light to these things, and if they have any meaning for you, maybe we can do a little bit of improvement to these.

Steve Lewit: Sure, sure.

Gabriel Lewit: Sure, surely.

Steve Lewit: I just said sure.

Gabriel Lewit: Sure.

Steve Lewit: Sure.

Gabriel Lewit: Okay. Let’s talk about some of these. We’re going to pick and choose a few. There’s probably too many to talk about here. Otherwise, it would take up the whole show.

Steve Lewit: I like the list though.

Gabriel Lewit: Yeah, we’ve got a good list.

Steve Lewit: It’s a good list.

Gabriel Lewit: I just started typing. I Googled some. I just put a short, long list together. It was going to be a short list. Turned into a long list.

Steve Lewit: This is a long list, folks.

Gabriel Lewit: Okay. This is one where, okay, we talk about this a lot, but procrastinating on financial decisions that should be made.

Steve Lewit: Yes.

Gabriel Lewit: Okay. Is this a bad habit, Mr. Steve Lewit?

Steve Lewit: Yes.

Gabriel Lewit: Yes.

Steve Lewit: Yeah.

Gabriel Lewit: Share more with our listeners.

Steve Lewit: Well, if you know there’s something … It’s like you’ve got a cold and ignore it, and it becomes something deeper. If you recognize … We’re built to recognize problems. If we recognize problems in our portfolio and just ignore them, they’re not going to go away and they’re not going to get better. They’re only going to get worse, and as we get older, we have less time to fix them, so procrastinating in financial decisions is … Like folks that-

Gabriel Lewit: Is risky.

Steve Lewit: Is risky. Like folks don’t do their trusts, just can’t seem to get to it. Or have no powers of attorney, and then their spouse is in a coma and the wife or husband can’t make a health decision for them.

Gabriel Lewit: Yup.

Steve Lewit: Stuff happens, and when you procrastinate, you are taking a risk.

Gabriel Lewit: Yup, yup.

Steve Lewit: Sometimes a big risk.

Gabriel Lewit: Yeah, so there’s obviously dozens of ways you could be procrastinating. It’s from just convincing yourself you’re busier than you are. Maybe you really are busy and just can’t carve out the time. You convince yourself there’s other things that are more important, or you say … You minimize the risks in your own mind. You say, “This isn’t as risky as I thought it was. Why do I need a trust? I’m not going to pass away this year.”

Steve Lewit: Mm-hmm.

Gabriel Lewit: Right? There’s so many reasons in our brains that we make up for procrastinating, and so if we can identify that bad habit, we can sometimes kick it to the side and take that step, book an appointment with an estate planning attorney, with your advisor, do your budgets. Whatever that item is that you’re procrastinating on, just put it on the calendar, and take some direction, take the bull by the horns, and get it done.

Steve Lewit: Yeah. I would suggest everybody make a list, I’ve done this, of things that I’ve got to get to that I can’t seem to get to. You’ll be amazed-

Gabriel Lewit: I don’t have time to make that list.

Steve Lewit: Right. You’ll be amazed that … I need to clean my garage. I just can’t seem to. I need to replant my garden. I just can’t seem to get enough time to do that. I need a power of attorney. I can’t … Make a list of that, all those things because it’s going to be a long list, and all those-

Gabriel Lewit: Might be, yeah.

Steve Lewit: All those things are a weight in your mind that weighs you down. It’s like carrying a bundle of-

Gabriel Lewit: You’re saying it’s time to clean the mind.

Steve Lewit: Clean the mind.

Gabriel Lewit: Get the-

Steve Lewit: Zen Steve-

Gabriel Lewit: Zen Steve says clean-

Steve Lewit: Zen Steve says.

Gabriel Lewit: Sensei. Sensei Steve.

Steve Lewit: No, no.

Gabriel Lewit: That’s got some alliteration to it. I like that.

Steve Lewit: It does have a little bit.

Gabriel Lewit: Sensei Steve.

Steve Lewit: Yeah, I like it. Kind of like it.

Gabriel Lewit: Okay. Well, let’s see. The next one on the list here … Dad, do you see any that you like more than others here? Obviously, I can keep reading them off to you, but like to get you involved here.

Steve Lewit: I was just waiting for you to pick one. I like emotionally, investing emotionally instead of analytically.

Gabriel Lewit: Yes.

Steve Lewit: This is really, really hard.

Gabriel Lewit: It is a hard habit to break.

Steve Lewit: Yes.

Gabriel Lewit: It, in many cases, is a bad habit. The reason for that is our emotions maybe run counter to data, logic, statistics, research.

Steve Lewit: Well, emotions-

Gabriel Lewit: All these things that are designed to help you in long-term investing, our emotions can sometimes override those.

Steve Lewit: Sensei Steve says … I’m getting to like this. I don’t know-

Gabriel Lewit: How about-

Steve Lewit: I don’t know if we’ll keep using it.

Gabriel Lewit: What about guru Gabe?

Steve Lewit: Sensei Steve and Guru Gabe, yeah.

Gabriel Lewit: Our show nicknames.

Steve Lewit: That’ll be worth about two cents.

Gabriel Lewit: Yeah, exactly.

Steve Lewit: Look, emotions carry more energy than thoughts, they really do. The emotions will outweigh the thoughts and short-circuit them. You say to yourself, “I know I shouldn’t sell the markets down,” but the emotions say, “Man, this is terrible. It’s going to get worse. You’re going to go broke,” and all of a sudden, you sell when the market’s down.

Gabriel Lewit: Well, and another very common one is … I see it a lot right now because interest rates are higher, so people are very excited about their 5% in their money markets, and 5% one-year CDs. There’s an inverted yield curve, which means … I’m not going to get into this in detail, but three-year CDs, five-year MYGAs, which are fixed-rate annuities, very much like CDs, these all have, in some cases, lower rates than an 18-month CD.

Steve Lewit: That’s correct. Understand, folks, that for longer you lend money for, the higher rate should be.

Gabriel Lewit: People are saying, “I’m just going to stick with my 5% because I like it. It’s 5%, it’s safe, it’s liquid.” Then I’ll talk to them, I’ll say, “Well, by all accounts, everybody understands and agrees in the financial industry that interest rates are likely to drop tail end of this year, early parts of next year, so maybe at best you get a year of 5%, and then it might drop to four, or three, and a three-quarters, or three and a half.”

Steve Lewit: And five years later, you’re at two.

Gabriel Lewit: People are saying, “Well, I don’t care. I just like my 5% right now.”

Steve Lewit: Yeah. It’s like they’re taking the 5% and planning 20 years of it.

Gabriel Lewit: Yeah, and so sometimes, I think that’s more emotional because my brain would say, “Why would I get a 4.5% for five years when I’m getting 5% right now?”

Steve Lewit: Mm-hmm.

Gabriel Lewit: Well, because that 5% is going to turn into four and a quarter in a year, and then having that locked-in rate will give you better returns over five years than a floating variable rate that’s going to come down to much lower levels.

Steve Lewit: Exactly.

Gabriel Lewit: This is more emotional. It’s very hard to … People get sucked into this because they like that comfort of high, short term, safe, and liquid, which you’re currently getting in bank account-

Steve Lewit: Yeah. I don’t want to get too far off on a sidetrack here, but emotion, what’s behind that, Gabriel, I think, is fear. People-

Gabriel Lewit: Of course, yeah.

Steve Lewit: People don’t want to miss something. They fear they’re going to miss something, and we think short term, so in short term, 5% is like, “I’ll take that. I’ll take”-

Gabriel Lewit: We, when you say we, you mean not me and you as advisors, necessarily.

Steve Lewit: No, because we’re-

Gabriel Lewit: You mean like-

Steve Lewit: Gurus-

Gabriel Lewit: We as people-

Steve Lewit: Gurus-

Gabriel Lewit: … tend to think short term.

Steve Lewit: Yeah, yes. Gurus and sensei’s have-

Gabriel Lewit: But that tends to be more emotional than long-term analytical.

Steve Lewit: Absolutely.

Gabriel Lewit: That was my point there.

Steve Lewit: Most emotions are short term.

Gabriel Lewit: Yeah.

Steve Lewit: Yeah.

Gabriel Lewit: Okay. Next one on the list here is when you know you’re living beyond your means, but you’re not willing to cut back.

Steve Lewit: Been there, done that. Earlier in my life, that’s what I did.

Gabriel Lewit: I think lots of people have been there, done that.

Steve Lewit: Yeah.

Gabriel Lewit: What does this mean? It means we had a plan. You’re going to withdraw 100,000, $50,000 a year, and then we have it being set up to distribute to you as a client. Then you call us up, “I need another five grand.” Then we say, “Sure. Everything okay?” “Yeah, just bills are a little tight. Got to pay a few extra things,” so we send you five grand. Then you fast-forward three more months, “Gabe, Steve, I need another five grand.”

Steve Lewit: You bet.

Gabriel Lewit: Then, all of a sudden, we add it up and you’re $20,000 a month higher than we had originally budgeted for. A lot of times, people, you get sucked into this. Inflation is high right now, things are more expensive. We were cooped up for two years. You want to go on vacations, cars are breaking down, and car price … All these things are adding up where budgets are being busted, and in many cases, it’s hard to then cut back. It’s hard to cut back.

Steve Lewit: It absolutely is. I’m going to go down another small tangent here, Gabriel, because there’s an economist named Duesenberry. I don’t know I’ve ever told you this before.

Gabriel Lewit: That’s a good name.

Steve Lewit: Yeah.

Gabriel Lewit: Duesenberry.

Steve Lewit: He had this thing called the Duesenberry hypothesis. What the Duesenberry hypothesis says is that once you reach a certain level of standard of living, it ratchets at that level.

Gabriel Lewit: It’s locked-in.

Steve Lewit: It’s hard to go back.

Gabriel Lewit: Yeah.

Steve Lewit: It’s locked-in. It’s called the ratchet effect. We get stuck in the ratchet effect. We need to cut … I admire people who are really frugal early in life because I certainly wasn’t. As I got more … My standard of living went up, and my income didn’t because I was an opera singer and a tennis player, that’s a tough way to live.

Gabriel Lewit: It is. It’s hard.

Steve Lewit: It’s all emotional.

Gabriel Lewit: I’m not going to sugarcoat it. It’s very hard to cut back on a budget.

Steve Lewit: Yeah.

Gabriel Lewit: It’s so much easier to say, “I should just make more money or take out more from my portfolio.” It doesn’t necessarily mean that you have to cut back, but it is a … If you’ve noticed that it’s not good for your financial planning, or there’s risk factors, you’re overspending, you’re not saving enough, that’s where it’s really critical to identify if that bad habit of overspending is going to impact you longer term so that you can really try to get out of that short-term cycle and think longer term a little bit more strategically.

Steve Lewit: Yeah. Take one, start with a day.

Gabriel Lewit: This another example of this emotional short term versus-

Steve Lewit: Absolutely.

Gabriel Lewit: … analytical long term, actually.

Steve Lewit: Absolutely, yup.

Gabriel Lewit: It really is. Okay. How about … Oh, here’s one. I’m just picking in random order here. Pretending like long-term care or nursing home costs is something that only happens to other people, but will never happen to you.

Steve Lewit: Yes, which is why 70% of … I think it’s 70 … If you’re a 65-year-old couple today … I think it’s 50 or 70. I’m not sure. You have 50% chance of one of you being in a nursing home.

Gabriel Lewit: Or needing some form of long-term care.

Steve Lewit: Or needing home healthcare in your lifetime.

Gabriel Lewit: Yeah. What’s interesting about this topic is when I bring it up, I broach it sort of gently. I’ll say, “What are your thoughts on long-term care?” I bring it up that way because everybody’s very different. Most response, I think I get 70% of the time, is, “Yeah, I’m not going to go into a nursing home. I don’t need that.”

Steve Lewit: “No, I’m never going to go.”

Gabriel Lewit: Yeah.

Steve Lewit: Yet we have story after story of our clients who had to put their parents-

Gabriel Lewit: Or relative, or help somebody.

Steve Lewit: Or relatives who never wanted to go into a nursing home.

Gabriel Lewit: If you could sit in our shoes, folks, and hear the stories from-

Steve Lewit: No, no, no, no, no. You can’t sit in shoes.

Gabriel Lewit: Stand? Sit in our seat?

Steve Lewit: Walk in our shoes.

Gabriel Lewit: Walk in our shoes?

Steve Lewit: Sit in our seat. You got to get these correct.

Gabriel Lewit: I do mix these up a lot.

Steve Lewit: Yeah, you do.

Gabriel Lewit: That’s my brain on autopilot.

Steve Lewit: That’s okay. It’s a bad habit.

Gabriel Lewit: Yeah, so when you stand in our shoes, and see what we see, and talk to the clients that understand the challenges of long-term care, or caring for aging parents that can’t take care of themselves, or a spouse that can’t, it’s so different because they get it. They say, “I want some coverage for me because I don’t want anybody else having to do what I had to do.” Or, “I don’t want to see myself in a poor Medicare, Medicaid facility that doesn’t have all the things that I want like my mom had to go into.” It’s just such a different conversation than people that have not had exposure to this, and just have this mindset, “Oh, that’ll never happen to me.”

Steve Lewit: Yeah. Look, my mother, God bless her, when she was older, I swore to her. She made … No, let me put it this way. She made me and my brother swear to her we would never put her in a nursing home.

Gabriel Lewit: Yeah.

Steve Lewit: We took that really seriously. My brother had to care for her because he was in New York, so he was in and out there all the time. He came in once and she was on the floor. He hadn’t talked to her in two days. Then guess what? She had to go to a nursing home.

Gabriel Lewit: Yeah.

Steve Lewit: She kicked and screamed about it, but it was the best thing for her. We broke our promise because we had no choice.

Gabriel Lewit: Mm-hmm. Well, again, we’re not going to get into the weeds on this topic here, but it’s interesting trying to figure out what the resistance is to exploring that concept. I think we don’t want to feel like we’re ever going to need to have someone take care of us maybe. It’s an emotional or psychological wall that we’re putting up and we say, “Ah, we won’t need that.” Just, I don’t know, make ourselves feel maybe like we’re-

Steve Lewit: Or that’s where procrastination comes in because some people tell me, “Well, I’ll cross that bridge when we come to it.”

Gabriel Lewit: Right.

Steve Lewit: Then they get there and there’s no bridge to cross because they’re already in trouble. Yeah, it’s a tough one because you’re talking about your own illness, your own mortality, things that we don’t really like talking about, but the reality is that you and I have to address it because that’s our job.

Gabriel Lewit: Definitely, yeah.

Steve Lewit: For sure.

Gabriel Lewit: Okay. I’m going to throw you a curveball here, Mr. Steve.

Steve Lewit: All right. I’m fine.

Gabriel Lewit: I actually just thought of a new one. It’s not even on the list in front of you.

Steve Lewit: Okay.

Gabriel Lewit: It is a bad habit, I think. Well, I’ll get your opinion.

Steve Lewit: Yes.

Gabriel Lewit: What about somebody that over-saves?

Steve Lewit: Well, that’s-

Gabriel Lewit: So frugal that no matter what they do, they can’t … They have plenty of money. They have, their projections show them having plenty of money, but they just keep saving.

Steve Lewit: Yeah, that’s a tough one.

Gabriel Lewit: Bad habit, or not a bad habit?

Steve Lewit: I’m not sure. I’m not sure because I know people that are extraordinarily frugal and say they’re happy. They say, “Well, I don’t need this, and I don’t need that, and I don’t need this, and I don’t need that,” but they’ve never experienced this or that that they don’t need because they won’t spend the money. I always wonder if they ever spent … We have clients that have 3, $4 million saved, and they’ll spend 35, 40 grand a year. They fly cheap flights. I wonder what they would say if they ever flew first class, if they can get over that, “I don’t deserve to fly … Why should I spend all that money?” Because it’s a great experience. That’s what I wonder about.

Gabriel Lewit: It’s very interesting. It’s very, I think, safety-driven. Emotionally, you like having a best nest egg that makes you feel safe, but you’re also … The trade-off for that is you lose a little bit of some of the experiences, as you mentioned, that might be out there. I think it’s not a bad, bad habit. It’s a-

Steve Lewit: Well, you can’t say it’s bad because they’re happy.

Gabriel Lewit: Yeah.

Steve Lewit: If you have no money and you have to be frugal, tough luck.

Gabriel Lewit: Or if you feel like you’re not sure that you have to be frugal or not, and so by default you are being extra frugal and saving more, but you really would like to do other things. You’re just convincing yourself that you shouldn’t. Like you really want to take that vacation, so if you have … I think where it turns into a bad habit is if you have these wants, but you’re actively not doing anything about them because you feel like you can’t or you shouldn’t, that’s when it can cross into a little bit more of a bad habit.

Steve Lewit: I’ll take this one step further, Gabriel. Is getting into a comfort zone where you’re comfortable, is that a habit, a bad habit?

Gabriel Lewit: Well, if you’re comfortable, then you’re not wanting for those other things.

Steve Lewit: But then you don’t know anything about the other things to not want them. In other words-

Gabriel Lewit: Or maybe you do know, and you just still don’t want … All I’m saying is if you recognize that you do want something but you’re not allowing yourself those things because you’re worried about money, I think that’s when it can cross into a bad habit.

Steve Lewit: This is a deeper, more philosophical, psychological conversation that we’re going to have to continue in the future.

Gabriel Lewit: Yes, indeed.

Steve Lewit: Indeed.

Gabriel Lewit: Okay. How about one more here?

Steve Lewit: I’m going to pick this one.

Gabriel Lewit: Mr. Lewit’s going to pick for us.

Steve Lewit: Yes, I’m going to pick one here is, robbing your emergency fund for non-emergencies.

Gabriel Lewit: I wouldn’t have picked that one.

Steve Lewit: Okay. I’ll pick a different … Okay. You pick. I bow to Guru Gabe’s sense of propriety.

Gabriel Lewit: Like I said, I put together a large list, but if we had more time, we’d go through all these. I like inadequately diversifying your portfolio.

Steve Lewit: Oh, I like that too. I do.

Gabriel Lewit: Yeah.

Steve Lewit: I actually like that better because I’m meeting a lot of people recently, Gabriel, who have what we call a slightly diversified portfolio, and think they have a diversified portfolio.

Gabriel Lewit: Yeah, yeah. Inadequately diversifying could mean no diversification or it could mean what we call lightly diversified. You could have a single index fund and be lightly diversified, but that would be inadequately diversified, in our opinion as professional advisors. What is adequately diversified?

Steve Lewit: I got to stop you. What is the habit here that you were thinking of when you wrote that?

Gabriel Lewit: Well, it’s thinking that you’re more diversified than you are. I don’t know if that’s not really a bad habit, but it’s a mindset of … I’m not sure. Maybe not fully understanding things.

Steve Lewit: Is it a habit of, “I think I understand what diversification … I think I understand, but”-

Gabriel Lewit: Maybe it’s jumping to conclusions.

Steve Lewit: Jumping to conclusions.

Gabriel Lewit: Maybe that’s the habit.

Steve Lewit: I like that, yes.

Gabriel Lewit: Yeah.

Steve Lewit: All right. We got-

Gabriel Lewit: I love making random movie quotes, so if you’ve ever seen The Office, which is one of my favorite movies-

Steve Lewit: Yes.

Gabriel Lewit: There’s a guy in the movie that wants to build a jump to conclusions mat, and everyone’s just razzing on him because it’s a terrible idea.

Steve Lewit: I love it.

Gabriel Lewit: He’s like, “It’s a mat”-

Steve Lewit: It’s a mat.

Gabriel Lewit: ” … which has conclusions on it, and then you jump to them.”

Steve Lewit: Jump on it.

Gabriel Lewit: Everyone’s just staring at him like, “Are you serious?”

Steve Lewit: It’s a great idea.

Gabriel Lewit: Anyways, I digress. Yeah, so maybe the habit here is jumping to … “Oh, I know what diversification means. Yeah, I’m already … I’ve got an index fund.”

Steve Lewit: Yep.

Gabriel Lewit: There are things here when you jump to conclusions, you feel like you know something more than you do, that can be a big risk factor in making poor financial choices, so thus it being a bad potential habit if you tend to do that a lot.

Steve Lewit: Yeah, and it’s really, this is another difficult habit because a lot of our clients are very bright. They’re very savvy with money, and they do their diligence, and they get on the internet, and they study, and they do, and they come in and they tell us stuff. You and I, because of our experience, see beyond what they’re saying and they can’t see beyond what they’re saying.

Gabriel Lewit: Yeah, and so in the case of diversification, I think people sometimes think if they have 20 stocks, individual stocks-

Steve Lewit: “I’m diversified.”

Gabriel Lewit: Diversified. They are very, very lightly diversified. This won’t be an entire discussion on diversification here, but there are dozens of different asset classes, subclasses. There’s factors you can tilt towards. There’s different categories, completely, of money. Safe money, market money, stocks, bonds, speculative portfolios, diversified portfolios. There’s dozens of different things and tools you can use in your portfolio and oftentimes, people just have one or two funds and think that they’ve got a really well-diversified portfolio.

Steve Lewit: Well, here-

Gabriel Lewit: It doesn’t mean that they have a bad, bad portfolio, but there’s a little bit more risk there than they may be aware of.

Steve Lewit: The problem is, if you have 20 stocks and you think you’ve got a diversified portfolio and you go on the internet, you’re going to find somebody that says, “20 stocks is a diversified portfolio.”

Gabriel Lewit: Well, yeah. You could find anything online to support your opinion.

Steve Lewit: You’re going to find somebody to support what you’re doing, yeah.

Gabriel Lewit: Yeah. I’d say the sister of this bad habit would be sort of saying that … Not understanding diversification in the sense that of how it impacts your returns. In other words, there are sometimes people with a diversified portfolio that, at the end of the year, say, “Well, how come the S&P 500 beat me this year?”

Steve Lewit: Yup.

Gabriel Lewit: We say, “Well, it’s a single asset class that happened to have a better year,” or in the case of last year, they conveniently … Some of these folks will conveniently do the opposite in a bad year. “Oh, my diversified portfolio beat the S&P 500.” It doesn’t mean anything.

Steve Lewit: Well, that’s another habit. The habit is, “I’m going to get rid of my losers and only keep my winners,” except that next year, your winners will probably be losers, and then you lost your losers.

Gabriel Lewit: Not understanding diversification means understanding that when you own 10 different asset classes, for example, let’s say 10% of each, then your combination, your blend of all of those is going to be somewhere in the middle, and thus you’re going to have five of those are going to be better than the other five. Five are going to be worse than your average.

Steve Lewit: You’re going to have winners and losers.

Gabriel Lewit: You have winners and losers, and then you can look back in hindsight and say, “Well, I shouldn’t have had those losers.” That’s a misunderstanding of diversification because-

Steve Lewit: That hindsight is another bad habit.

Gabriel Lewit: Yeah. Hindsight. Well, like I said, we could talk forever on this topic here.

Steve Lewit: Yeah, it’s great.

Gabriel Lewit: Well, that was what we wanted to cover, folks. Certainly, there are more. If you think you have any bad habits that you’re familiar with, you can write into us. We’ll talk about them on the next show if you send us any bad habits you think we missed here that we should have discussed. Email us,, or go to and click the contact us form, or call us, 847-499-3330.

Steve Lewit: It is our habit to take these calls seriously and to talk to you.

Gabriel Lewit: It is.

Steve Lewit: Yes.

Gabriel Lewit: Yes.

Steve Lewit: See.

Gabriel Lewit: Okay. While we’ve got a little bit of time left here, we’re going to do a short getting to know Mr. Steve Lewit and Mr. Gabriel Lewit.

Steve Lewit: That wasn’t on the list.

Gabriel Lewit: Guru Gabe and Sensei Steve.

Steve Lewit: I thought we were talking about wealthy people. I’ve been surprised here, folks.

Gabriel Lewit: Yes, okay. I’m going to say, Steve.

Steve Lewit: Yes, sir.

Gabriel Lewit: What is your go-to dance move?

Steve Lewit: Yes, sir. I don’t know if it has a name.

Gabriel Lewit: Well, describe it for us. How do you boogie down on the dance floor?

Steve Lewit: You wiggle your hips left and right. You move your feet in and out. You bounce your-

Gabriel Lewit: Left foot in, and your right … What is that?

Steve Lewit: You bounce your-

Gabriel Lewit: Do the Hokey Pokey? Are you doing the Hokey Pokey?

Steve Lewit: You bounce your head up and down. That’s interesting, because I was looking at … I’m going to a wedding next week out in California, so I said, “I haven’t danced in years.” Really, I haven’t, so I was looking at the, how do you do break dancing?

Gabriel Lewit: You do the shimmy shake?

Steve Lewit: The shimmy shake, or something.

Gabriel Lewit: Break dancing is hard.

Steve Lewit: Yeah, it is.

Gabriel Lewit: That’s not for many.

Steve Lewit: Yes, no, you got to be athletically fit. Yeah, so mine is just to wiggle my body to the music.

Gabriel Lewit: There you go.

Steve Lewit: That is my move.

Gabriel Lewit: Mm-hmm, mm-hmm.

Steve Lewit: Whatever it looks like, it looks like.

Gabriel Lewit: There you go.

Steve Lewit: Yeah.

Gabriel Lewit: Yeah, okay. Next question for you.

Steve Lewit: Whoa, whoa, whoa, whoa, whoa, whoa. What about Guru Gabe?

Gabriel Lewit: I’m a terrible dancer.

Steve Lewit: Well, I didn’t ask you-

Gabriel Lewit: I mean, it’s-

Steve Lewit: We don’t care. What’s your best move?

Gabriel Lewit: I’m not as bad as Elaine on Seinfeld, if you’ve ever seen that episode.

Steve Lewit: That’s pretty bad.

Gabriel Lewit: I don’t think it’s … It’s a little bit better than that, but yeah, I wouldn’t say I had a go-to move either, although if-

Steve Lewit: I know what your move is.

Gabriel Lewit: If I’m messing around on the dance floor with people just having a good time, you do the wheelbarrow, and the Q-tip, all these-

Steve Lewit: Yeah, that’s a good one. Your move-

Gabriel Lewit: The sprinkler. The sprinkler.

Steve Lewit: Are those real? Are those real moves, Katie?

Gabriel Lewit: Yeah. They’re pretend moves.

Steve Lewit: I need a lesson.

Gabriel Lewit: Nobody actually does them. They’re just pretend moves.

Steve Lewit: Katie’s giving me dance lessons this afternoon. Your best move is sitting on the chair.

Gabriel Lewit: The what?

Steve Lewit: Sitting out on the chair. Sitting-

Gabriel Lewit: Oh, on the side?

Steve Lewit: On the side, right.

Gabriel Lewit: Yes, that is my best move, for sure.

Steve Lewit: What do you got next?

Gabriel Lewit: Okay. Let’s see. Do you, or does your family have any traditions that seem normal to you but would be weird to other people?

Steve Lewit: We have traditions that are normal to us, but weird to other people.

Gabriel Lewit: Mm-hmm.

Steve Lewit: I have a tradition that is kind of weird to other people, I think.

Gabriel Lewit: Okay. What is it?

Steve Lewit: I go off into … It’s not that weird though. Going off into the woods, and just hanging out, and meditating, and stuff like that. It’s not that weird.

Gabriel Lewit: Not that weird.

Steve Lewit: Yeah. It used to be weird. It used to be weird.

Gabriel Lewit: It’s moderately weird, but not that weird.

Steve Lewit: It’s moderately. That’s a tough one. Why don’t you? Do you have one? Because I need time to think.

Gabriel Lewit: Do I have any? I don’t-

Steve Lewit: Katie, you got any?

Gabriel Lewit: I consider myself, I think, fairly normal, like not super weird. I don’t think I have a ton of weird traditions, to be honest with you. Hmm, hmm.

Steve Lewit: Yeah, we got a lot of silence here, folks.

Gabriel Lewit: Yeah, okay. Okay. I’ll give you an easy one. What’s the worst movie you’ve ever seen that you can think of off-

Steve Lewit: The worst.

Gabriel Lewit: … off the top of your head?

Steve Lewit: The worst movie I’ve ever seen.

Gabriel Lewit: Uh-uh.

Steve Lewit: Oh, gosh. These are hard questions. It requires memory and recall.

Gabriel Lewit: Yeah, of course.

Steve Lewit: Yeah. Oh, the worst movie I’ve ever seen. I just saw it and I can’t think of the name of it. It was just terrible. Um is the worst movie I’ve ever seen. I can’t think of … It’s just, I-

Gabriel Lewit: It is hard when you get put on the spot to think of things like this.

Steve Lewit: Yeah. What do you got?

Gabriel Lewit: For my worst movie?

Steve Lewit: Yeah.

Gabriel Lewit: Gosh. I should have known because I came up with the questions. I should have written down my answers.

Steve Lewit: Yeah. Like something to … Memory needs a thread to get there. I can remember like Seinfeld things because there’s a thread, so when you say, “What was the worst movie?” It’s like, I don’t know. I got so many, I can’t think of one.

Gabriel Lewit: Yeah, I can’t …

Steve Lewit: Okay. Let’s do this. What was the best movie you’ve ever seen?

Gabriel Lewit: Oh, I can do that one real easy. I have so many favorite movies. I’ve got, well, it’s not like a world-beater movie, but Passengers is one of my favorite movies.

Steve Lewit: Yeah. I like that movie, yeah.

Gabriel Lewit: I think we probably talked about this on the show before. Then I like tons of war movies. I’m a big war movie buff.

Steve Lewit: Yeah.

Gabriel Lewit: I just like history. I like seeing war movies. Braveheart was a great movie back in the day.

Steve Lewit: Yep.

Gabriel Lewit: Pretty much any really high-quality … Saving Private Ryan’s a great movie.

Steve Lewit: If you had to pick one movie, which is your all-time that you watch over, and over, and over again, what would that be?

Gabriel Lewit: Oh, gosh. There’s too many. I used to work … I don’t know if you guys know this about me, but I used to work, as a kid, at a Blockbuster Video.

Steve Lewit: Oh, yes. You did, yes.

Gabriel Lewit: I would get … For a whole summer actually, and I got … I watched like 200 movies that summer.

Steve Lewit: Was it before or after Subway?

Gabriel Lewit: That was after. Yeah, I worked at a Subway restaurant in high school.

Steve Lewit: What a guy.

Gabriel Lewit: My point is, I just love movies. I’ve seen hundreds, thousands of movies, so gosh, there’s way too many to list just one. The Office I know, because we were talking about that earlier, is one of my go-to favorites, yeah. Because it really is reflective of a corporate office, which is why I’m not in a corporate office. Because I was there for one summer at an internship in a corporate office and I couldn’t take it.

Steve Lewit: Yeah, I think The Matrix, for me, still remains my like-

Gabriel Lewit: Really?

Steve Lewit: Yeah. I love The Matrix.

Gabriel Lewit: You’re a Keanu fan, huh?

Steve Lewit: Yeah, I like … I just saw … Oh, this was a really bad movie. His last movie.

Gabriel Lewit: Oh, yeah. John Wick.

Steve Lewit: John Wick.

Gabriel Lewit: 4.

Steve Lewit: That was horrible.

Gabriel Lewit: There you go. See, look?

Steve Lewit: There we go.

Gabriel Lewit: There’s the thread.

Steve Lewit: There’s the thread. I couldn’t wait to watch it because I love the John Wick movies, and this one was just dumb.

Gabriel Lewit: I might get hit for this, and then we’ll end the show here. I tried to watch Avatar 2 like three times now and I keep falling asleep watching it.

Steve Lewit: I fell asleep too.

Gabriel Lewit: Three times. Three times I’ve fallen asleep trying to watch this thing.

Steve Lewit: Yep, yep, yep.

Gabriel Lewit: I’m not saying it’s bad, bad because it’s not.

Steve Lewit: It’s not bad, bad.

Gabriel Lewit: It’s obviously got good production values, but it just didn’t hook me.

Steve Lewit: Yeah, yeah.

Gabriel Lewit: Well, that’s what we’ve got for you today, folks. Thanks for tuning in. Send us your favorite movies, your worst movies. We’ll get some feedback from you. If anybody sends us any notes, we’ll talk about it on the show next time. Otherwise, we’ll see you on the next one, and have yourself a wonderful rest of your week or weekend.

Steve Lewit: You stay well, everybody.

Gabriel Lewit: Bye now.

Steve 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 Be sure to subscribe to join us on next week’s episode.

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