Climbing The Wealth Ladder With Nick Maggiulli

[02:29] Paul: Without further ado, let's jump into the episode. So I wanted to dive in today talking a bit about your personal story. At the end of this book, you share a bit about growing up with some financial challenges. You said you felt comfortable, like your basic needs were taken care of, but there was a sense of scarcity. Your parents declared bankruptcy when you were young. How did those feelings manifest in sort of early adulthood?

[03:00] Nick Maggiulli: I think I was always very cognizant of prices. Like, you know, when you go out, like every time I went to a fast food restaurant, I was ordering off the dollar menu, which is now a thing of the past. We don't really have— I guess there's a value menu, but it's like $1.49 or $2 or whatever. And so that was like when I would, when I go out with friends and they, they'd order like a $5 sandwich, I'm like, what are they doing? Like they should be ordering off the value menu. Right.

And so that was like these little things in my head. Like I thought Sizzler was a really high-end restaurant. And you know, when you, you know, from like the lower middle class, it is a nice place, but you don't realize, oh, this is a massive chain.

[03:35] Paul: Right.

[03:35] Nick Maggiulli: You don't realize it's like a Red Lobster is not like a, Michelin star, you know, there's levels to this, so to speak. And so that was kind of a lot of it. It was mostly through, you know, food, dining, going out and stuff because that's all we did. I didn't know anything about travel. I had never, you know, I went on an airplane once when I was 12. And then after that, the only time I got on an airplane when I was flying back and forth to school.

But that was it. I never traveled anywhere, you know, until I was actually, you know, in my 20s and could save money and do it on my own.

[04:00] Paul: Yeah, it— there's no real training for sort of updating where you are in your life. I think I've actually gone through quite a bit of this, like after I did my own thing and sort of realized, oh, when I was in consulting, I had actually like saved a bunch of money and earned more, but I had never updated my habits. Like I was making $150 grand and spending $850 a month on rent and living in the bottom of like a super rundown place in Boston. And looking back, it's like I probably could have like squeezed out a couple hundred more, but I didn't know how to spend money and I didn't realize like mostly it was emotional. I was scared to feel those feelings of like not having enough. How you don't really explicitly touch on like how you got through this.

I mean, was it literally just making more money? I mean, like, how did you process those fears?

[05:05] Nick Maggiulli: I think it was just a process. I think you're right. It was literally making more money and starting to feel more secure and not worrying. And then, and eventually I also started reading a lot more about personal finance and investing, and I started writing about it eventually much later, right? I started writing about when I was 27 that I was talking about stuff that happened. I was 22, 23.

So it took— it was a few years where I was saving money. And I started writing about it. And then my philosophy, even from then, has changed a lot. Like, even my philosophy now about spending has changed. And I've tried to come up with different frameworks to allow people to, like, give them the freedom to spend more based on different metrics and things. And so that's kind of my new way of looking at it is, like, when we think about spending money, like, how can we do that in a way that allows a little bit more of that freedom over time?

[05:50] Paul: What are some of the rules? What's like the most interesting recent one?

[05:54] Nick Maggiulli: Yeah, so the most recent one, I mean, I'll give you the first— the first one I came up with in Just Keep Buying was called the 2x rule, which people really liked, which is like, hey, if you want to buy something, like, say, like, oh, I don't know if I can afford this thing, save up 2x for it and then take the other amount. So let's say it's a $500 item. You save up $1,000 and then you take $500, you buy the item, and then you take the other $500 and you invest it in your portfolio or you donate it to a charity whatever you want. The other $500 has to go to something else. And so if it's like, if you really want it, you'll save double for that, that thing. And so that was called the 2x rule.

People like that. But it's also like, it's— I like throwing out a bunch of different rules. I'm like very like, hey, if you don't like that, try this. If you don't like that, try this. I don't think there's one correct path for everybody. And so now in The Wealth Ladder, in the new book, I have this rule called the 0.01% rule.

And the idea behind— the idea behind that is that 0.01% only 0.1% of your wealth or 1/10,000th. So just take your net worth, divide by 10,000. That's the amount of money you can spend basically every day without having to worry about it, right? And that's not going to be a large amount, right? If you have $100,000 in wealth, that's only $10 a day. And so you're like, Nick, I can't live on $10 a day.

I know you probably have income and you're living off other stuff, but it's that marginal decision. It's that, oh, can I buy this thing? Can I buy this extra thing or can I upgrade this thing? Right. And so you make these marginal decisions like in different spending categories, right? Like if you're at the grocery store, you're like, oh, do I want to get the standard, the cheapest eggs, or do I want to get the cage-free eggs?

Right. In the United States, like, oh, the cage-free are like a dollar more. And so like that marginal decision is $1. Like at that moment, that's the marginal decision. And so my argument in— if we use this rule, if you had over $10,000 in wealth, that $1 is trivial to you. Just get the cage-free eggs, right?

And as your wealth goes up, that the size of that marginal decision gets bigger, right? So by the time you have $1 million in wealth, that marginal decision is about $100 a day. And where does this assumption, the 0.01%, come from? There's a few different areas I got it from, but I just assume that your wealth grows by that daily. And so over the course of a year, if you do 0.01% every single day for a year, that's about 3.7% a year, which is, I say, a very conservative return. No one— that's almost like— that's what Treasuries are basically paying now.

And so you're like, hey, if we assume that's true, your wealth's throwing that off every day. It's a trivial amount of money. Where I actually came up with the rule, though, there's a Jay-Z lyric. I'm not going to repeat the whole lyric, but he says, you know, what's $50 grand to someone like me? Can you please remind me? That's paraphrasing the quote.

But at the time, at the time, Jay-Z was worth $450 million. So let's just say $500 million to make the math easy. $50,000 over $500 million is 0.01%. That's actually where I got the number from. And he's like, hey, 50 grand to Jay-Z, right? It's like 50 grand to Jay-Z at the time was a trivial amount.

And so guess what? 1/10,000th of your wealth is also a trivial amount. So you would be saying, hey, what's $10 to someone like me? Can you please remind me if you had 100 grand?

[08:48] Paul: So it's the same type of joke, you know, but it's like, that's, that's—

[08:53] Nick Maggiulli: I think people say things they don't realize it. And then it's like, wow, there's actually some depth within this random thing that somebody threw out. It's like, yeah, that is a trivial amount of money. So that's how I like to help people spending now. And why I really like the rule is it allows for a lifestyle creep over time. You can spend more, but only after you've built wealth, only after you've shown financial discipline.

This is very different than a lot of the spending rules are based on income. Income can fluctuate. You know, in the creator space, you could have a really big year and then, you know, that income dries up because you don't like, hey, this may not go on forever, right? Like anyone who has lumpy income especially, I think wealth is a more you know, stable thing. And because of that, I, I would say let's spend— marginal spend is based on wealth, not income.

[09:35] Paul: I love that. Yeah, my, uh, income dropped 50% in the last year, but that wasn't a bad thing because the, the bump the previous year was such a surprise and an upside, um, that it enabled me to invest a lot and make a lot of savings and stuff. But if I had anchored to income as my metric of like success and how I spend and how I make decisions, it would have been like devastated last year. Granted, there still are people that think like that, but I'm a bit more conservative than most. What I sense that, uh, too many people who have moved up the wealth ladder, as you deem it, and you have levels Don't switch to thinking about net worth instead of income, right? I've talked to people who are like, like I've literally talked to retired people who are perfectly financially free, right?

Millions of dollars in the bank, but they only calculate spending based on income. And this is why in the first episode we talked about like most people die with lots of money. When is the right time to start thinking about wealth versus net income? I basically did it because like I didn't know if I was going to make more money and I was like, well, I need to meme myself into thinking this way, otherwise I'm going to go crazy. But yeah, talk to me about making that shift because I think this is so important.

[11:09] Nick Maggiulli: Yeah. So I think focusing on wealth, I think most people should do that in general because income can fluctuate a lot and it really depends on where you get your income from. If you're like in a very— I would say something like a very safe government job, but everything that's happened in the US recently, even government jobs aren't safe anymore. So let's imagine you're an athlete and you spend based on your income. Athletes tend to have shorter careers and they get most of their earnings over their entire life within, let's say, a 5-year span. Right.

So if you're spending based on income those first few years, even if you're saving 20 or 30% of your income, you're saving a lot of money because you're probably making millions of dollars. So you're saving a lot, but what happens in year 6 when you no longer have that income and you're still spending like you do? That's a, a wake-up call that a lot of people don't realize is going to happen. And so I say spend based on your wealth because it's a— as I said, it's a little bit more stable. Income fluctuates a bit more. And so where does that happen?

I don't know. I can't give you the exact moment, but I think people should start thinking about that a little bit more. That doesn't mean, of course, you have to spend based on your income. Like, it your income, of course, matters. But I'm talking about, oh, can I go? And so what I did with the wealth ladder is every level has a different spending freedom.

So let me just explain the levels briefly and then we'll talk about the spending freedoms. And then, and once again, it's going to use the 0.01% rule, so it'll make sense. So level 1 is less than $10,000 in wealth. Level 2 is $10,000 to $100,000. Level 3 is $100,000 to $1 million. Level 4 is $1 million to $10 million.

Level 5 is $10 million to $100 million. And lastly, level 6 is over $100 million. And those levels, each one has what I call level of spending freedom. So level 2, that's called grocery freedom. I mean, level 1 is just paycheck to paycheck. You don't really have much spending freedom with less than $10K.

Level 2 is what I call grocery freedom. When you go to the grocery store, you can kind of buy what you want, especially by the end of level 2. Level 3, which is once again $100,000 to $1 million in net worth, is what I call restaurant freedom. You can start to, you know, buy what you want at restaurants, especially by the end of level 3. Level 4 is what I call travel freedom. So you can kind of start to upgrade your seat on an airplane, you can stay at a nicer hotel, etc.

Level 5 is what I call house freedom. You can start making— basically getting a house kind of where you want, but that's, you know, $10 million to $100 million. Very few people get there. And then level 6 is, you know, that's just like prices don't even matter anymore. Now you're talking about you can buy businesses and really I call that impact freedom because you can really change people's lives in a much bigger way there. So those are just a way of thinking about it.

And if you use the 0.01% rule, these kind of map onto those spending categories, right? So level 2 is $10,000 to $100,000 in wealth. If you divide by $10,000, right, on each one of those, that's anywhere from $1 to $10, right, on the marginal decision. That's about the difference in prices between items at a grocery store, between the standard item and the quality item is about $1 to $10, right? You're not looking at that much of a difference. Go to a restaurant, right?

What's the difference in prices there? It's gonna be somewhere between, you know, $10 and $100, which maps onto level 3, which is $100,000 to $1 million in wealth, right? So once again, each one of these spending categories is based on kind of like the range of values we see in terms of prices today in these different spending categories. So that's how I think about it. And that's the way I frame it for people when they're thinking about spending money in levels, et cetera.

[14:26] Paul: Yeah, it seems like there's a lot of opportunity to start thinking about wealth in that level 4. 4 or level 3 range, as you're saying. And I see many people in level 3 and level 4 still playing sort of this income mindset, which I think limits their freedom. So this is— I'm sort of writing a book about money too, as one does. It's like the final frontier of personal development. But I'm writing about— I'm writing to a very specific audience.

People who want to buy back their time freedom as soon as possible, like maniacs like me, very niche, very specialized. And one thing that really helped me was thinking about wealth. So 4 years into my path, 2021, I'm sitting and calculating up how much money I have. I hadn't looked at it because I was living like an artist. I was living like a freaking vagabond. I made about $30,000 to $35,000 a year.

And so the game I was playing before I quit my job was make more than I earn and save as much as possible for the future. I was crushing it. Like those consulting firms are putting like no questions asked investments in my retirement fund. It was delightful. And so after I felt immense shame that I was just like a bad irresponsible. And so finally I'm like, all right, I should like do the math, run the numbers.

And I'm like, holy shit, my net worth doubled.

[15:59] Nick Maggiulli: Oh, wow.

[16:00] Paul: And so I felt totally irresponsible. I felt like I was leaning into freedom in reckless ways. Like, okay, I probably can't do this forever. And then I was like, holy shit. So I wrote a blog post. I declared myself retired from work I don't want to do anymore.

And so this is, this kind of cured my like money fears. And then the frontier after that for me was learning how to spend because I realized like I was still playing like I was in college, like I was so scared to spend. And as I was getting married and starting a family, like you got to spend a little money. If you have money, you've got to make like your spouse comfortable and your kids comfortable. And so, yeah, that, that's sort of my journey. It's, it's a very interesting one.

I basically am taking level 3 and saying like, screw this, I'm going straight to level 4 freedom without the money.

[17:08] Nick Maggiulli: It depends where you live too. I think a lot of that too, when I talk about travel freedom, I don't think so.

[17:15] Paul: I did it in the US. I did it in Boston. I did it in New York. I did it in Austin. I did it paying $3,000 a month for rent. I traded off things that most Americans see as required for modern life.

[17:32] Nick Maggiulli: So I guess, yeah. So what's like one of these requirements that you would say? Like what's one of these things that's required for modern life as an example?

[17:39] Paul: Owning a house or a car. Okay. Or eating out at restaurants.

[17:44] Nick Maggiulli: Okay. So those are both fair things and those are very large spending categories for most people, right? So like, I don't own a home, I'm still renting, but that's because of the mortgage market and that's all separate combo. But I see if you're like, hey, I'm not going to eat out, I'm going to eat it. That's a massive amount of savings every single year that you can spend on the apartment or something else, right? So people can do it in the US.

I think it's just easy. Like, for example, like I talk about like how much is enough and like which level and where you could be. And so most people in the US, when they're talking about calculating their FIRE number, they're, oh, I need this much to be financially free. Most people are going to be in level 4 because just the cost of things in the US is generally a little bit higher. I think in, in Europe you could probably do it in level 3 because they have a bigger social safety net. Health care is cheaper.

Like there's a lot of things you can do it in other places at a much lower cost. I think that's why expats exist and why this happens.

[18:33] Paul: Yeah, for sure. Yeah, I don't know. I think it's far more possible in the US than you think. I just think you can't live in New York, SF, or like California.

[18:51] Nick Maggiulli: That's fair.

[18:52] Paul: Yeah.

[18:53] Nick Maggiulli: I mean, I'm saying this like coming from New York City and that's where I see it. That's my worldview. And so like, I agree. Like, yes, you could. If you're living in a more rural area, like, you know, That's why I say when I— it depends where you live. That's my little bit of a caveat.

And it really depends. I am kind of, you know, siphoning out. I grew up in California and then I went to New York. Like, I've been in like the most expensive areas in the country most of my life.

[19:15] Paul: So, yeah, you're, you're also in the finance industry and you guys are better at producing wealth than the other industries. I'm just saying from my— yeah, my— Exactly. My experience is basically just all my readers and listeners. Like, there it has blown me away how many people are creative about like pulling off like creative freedom at much lower wealth levels. But they're making a lot of sacrifices and they don't have paths. Like, I don't have a path to own a home.

That would be intolerable for like the median American, I think.

[19:55] Nick Maggiulli: I mean, I don't say there's no path. You're a creator and you have an audience. So like the path for you to own a home is like books, like keep putting out books and like that. I know, you know, it's possible.

[20:07] Paul: It's definitely possible.

[20:08] Nick Maggiulli: Yeah, for sure.

[20:09] Paul: Yeah. So I think this is something you talk about, which is like you were sort of pursuing building your own business by the blogging and stuff while you were doing your job. And so this is part of like how I'm thinking about things too is I see like the creator path as sort of betting on the fastest growing economy in the world, the internet. And so that's like a, just a smart way to invest my time and attention. Right. And so even if I'm having mediocre success, there may be some upside to that.

[20:41] Nick Maggiulli: Yeah, no, there's plenty of upside. Like there's so much upside to it. I think there's a lot of upside on the internet. That's why, I mean, we both are in agreement. We do this stuff. Like, that's why we do this stuff for a living, right?

Yeah.

[20:52] Paul: It's hard to feel that though. I think this is an edge for me. Like, I, I don't feel that. Like, I, I feel like I'm sort of like on the decline now. Like, okay, I have this—

[21:03] Nick Maggiulli: like, you had one, you just— because one year, like, it's so crazy to be like, oh my, you know, this changed or that changed from last year. It's like such a— I'm not trying to be rude, but it's like very short-sighted. Like, dude, you're a writer, people connect with you. The fact that you have a podcast and people come back, like, just because you had one good year one time doesn't mean like you're never like, oh, you peaked already. I think that's kind of a— writers have a much longer multi-decade career. You've got to keep putting stuff out.

Like, I, I wouldn't think that way at all, especially like, you know, if I'm a betting man, I, I bet you're going to far outpace the other stuff. It just takes time, man. It's like there's no way around it.

[21:37] Paul: Like, you know, well, this is a really interesting thing to explore is, um, Yeah, I think the reason I think that way is almost tied to my money beliefs. Right. And so I think I'm almost like auto-regulating by like defaulting to the assumption that I'm not going to have like up into the right success as a way to protect myself. That's fair, right? Yeah. This is basically something I'm interrogating through, like writing the book.

It's I hold both beliefs at the same time. Like, I'm very bullish on my writing career. And like, when I go to think about money, it's like, okay, I'm not going to bet on like income going like this. It's more like, yeah, there's probably opportunities in the future, but if I can like break even or save slightly more every year, that's like a perfect life for me. And I'm actually like very happy with that. But yeah, how do you think about like money scripts and thinking about the future?

I mean, you have a job too. Are you thinking about going solo eventually or?

[22:50] Nick Maggiulli: Not anytime soon. I think I would just change my responsibilities at my job before I left. I love working with them. I love a lot of the stuff I do, but every job, everyone that's ever had a job, you know, there's that 20% of your job that you just can't stand. I have that. I'm like, hey, if I could just move this off my plate, this would be even more perfect, right?

And so I love the job. There's pieces of my job that I, I probably should be delegating to other people, and I will get to that, and it's slowly happening. But that's kind of how I imagine it playing out. I don't want to leave the firm. I enjoy working with the people I work with. Um, and it's just like being a part of the culture is another piece of it too.

So maybe I want a little bit more time freedom, and so I might lower my pay and go, you know, go through that conversation where, hey, why don't I change my role? And we kind of work through that. And I think they would be open to that too. I just have to figure out what's the best, you know, uh, role for me at the firm, basically. And so that, that's going to change over time. Right now I'm the COO.

I don't expect myself to be the COO when the firm's twice or three times the size, just because it's a different firm, it's a different scale, and you kind of need someone with that can give that your all. And I love writing books and doing content, doing that as well. And I don't want to be outside of the wealth management side, but I also don't think that's my thing. I'm the best COO in America. All right, like, that's not my thing at all. I can tell you that with 100% certainty.

And so obviously, you know, I give it, you know, my best shot at everything I can do, but I can tell you it's not my highest interest. And so figuring out that path as we went, you know, I was the perfect COO to get us from, you know, 20 employees to 70 employees, but am I the perfect CEO to get us from 70 to 500? That's a different question, right? And so thinking through that and how we scale and change, I think that's more open. And I do have the content, all the stuff I do on the side, the books. And so I think it's a perfect balance for me because I have a little bit of both.

But thinking about the future, I have no clue what's going to happen. Like, it's so unpredictable. And I think I just have a— I've had a lot of good positive upside surprises that I wouldn't have expected. Like, you know, you had a lot of success, you said, last year. Like, you probably didn't expect that to happen, right? I've had the same thing, man.

Like, my book has sold more in Taiwan than in the United States. Like how I never would have predicted that, right? That's an example of like, I can't predict what's going to happen next. Like, I, you know, this new book, there's an advance in Mongolia. Like, I didn't even know Mongolia had, you know, that they're buying a bunch of financial books.

[25:06] Paul: Yeah.

[25:07] Nick Maggiulli: So it's like I'm learning about like, what the heck? Like, so it's like there's all these weird upside things that happen that I never could have predicted back when I started writing in 2017. And so it's, you know, it's been almost 9 years now and I think when I think about these things, like there's just so much more upside potential on the internet that you just can't predict. Some person reads you and they share with their audience and now you're popular in another country, right? Like I had the biggest podcast in Italy have me on. My last name is Majuli, so I'm not going to lie, that probably helped me a bit.

But the biggest financial podcast in Italy had me on for his like 2-year anniversary and it like kind of went viral in the, you know, in Italy, LinkedIn. And now all these people are buying Just Keep Buying, right? The new— which just dropped at that time. So it's like You know, that's just upside I can't predict. I'm obviously very fortunate and lucky, but like, you just got to keep putting your stuff out there. And so that's how I think about it.

I'm not like, oh, I'm borrowing against my future. I know I'm going to have way more money. I don't know. Maybe I will, maybe I won't. I have no clue. But I just kind of keep at the work and focus on the work and the rest kind of takes care of itself.

[26:08] Paul: Yeah, that's— I love that. It's— there are weird properties of money, though. Like I just did my 8-year review of being independently employed. And before that I was on the default path for 10 years, but 8 years employed. The amount of income I made was almost exactly the same.

[26:30] Nick Maggiulli: That's cool. That's what's crazy. In 8 years you made what you made in 10 years, right?

[26:33] Paul: Yeah. No, 8 years, 8 and 8, same, same.

[26:36] Nick Maggiulli: Oh, oh, oh, I didn't realize. I thought you said 8 versus 10. I'm sorry, I didn't, I didn't hear that. But yeah, so 8 and 8, that's crazy. That's even, that's even crazier. Yeah.

[26:43] Paul: And so it's more exponential on the current path with the like current dip. But yeah, it's, it's got me thinking like I often hear people leave $500,000 jobs and then within a few years they're making $500,000 working on their own. Like I think there is sort of this gravitational pull of either one, like what you think you're supposed to be making or who you're surrounded by. Like everyone I know who works in finance makes tons of money because everyone else is making it and it's like expected. And I was doing some consulting work and encountered people in the tech industry consulting, and I realized their rates were like 3x mine. Oh, wow.

And so I just 2 to 3x my rates and like people just started paying them, but I didn't even know like that's what people were charging. It's so true. If you don't know, like Yeah, it, it's such a weird thing. Has, do you have any experiences with that or?

[27:44] Nick Maggiulli: I had this experience where I was, someone asked me to speak virtually and I was like, oh, usually I'll charge this. And then my wife was like, no, you should charge this just 'cause they really want you. They're really asking for you. And then I asked ChatGPT, you know, hey, here's my background. Like, here's how much my book sold in this country, blah, blah, blah. And it was like, you should be charging this.

And it was like 3 times higher than what I was gonna charge. And I was like, there's no way they're gonna say yes. I sent it and they sent it and they said yes. And I was like, what the heck? And so ChatGPT just 3x my speaking rate, right? Just because I didn't know any better.

So I'm like, that's, that's an example of me paying $20 a month to this stupid information machine and it's a genius and it helped me 3x my rate. It's going to pay. I paid for all my ChatGPT for the rest of my life from one conversation I had with it. Right. That was like crazy. But it's like, that's an example of like, wow.

Like if you don't know any better, like there's so much information out there you don't know about, even in like foreign markets especially. Like, I don't know what speakers get paid in Taiwan or Japan or all these other places. And, you know, and that's like one of those examples where, yeah, what, how much should I be charging for this? And there's information out there for that.

[28:48] Paul: Nick, we, we have to do an event in Taiwan at some point. Uh, I just, I just published my book there. My wife's putting a book out there. We're like building a lot of, uh, connections. Um, there's probably some Taiwanese listeners to this. Let's, let's get Nick to Taiwan.

We, we gotta do this.

[29:04] Nick Maggiulli: Yeah, give me some, give me some time. I got to see how this book does and everything. Give me like 6 months or something, then maybe 2026 we can kind of plan this out because I know there's— if I go back to Japan, I can do both, right? Because I know there's, I know there's going to be some events there I'm going to have to do. But yeah, it's going to be very exciting.

[29:18] Paul: So I— this could be like your own Pathless Path. Like you just make it enough readers that like you just become like a Taiwanese financial manager. Yeah, who knows?

[29:31] Nick Maggiulli: It's very funny because it's hard to predict ahead of time. And obviously, like, if, if my demands for my time got so big and I had to, like, talk to the firm, like, guys, like, what am I supposed to do? Like, I want to work for you guys and do this, but like, I also have these— like, I need to sit there and have a very frank conversation if I ever get there. Right. And I'm hoping that doesn't happen. I'm hoping, like, you know, things go well enough and I don't get all these demands on my time.

And so I keep doing my thing. But, you know, we have to see because I love working with these people. I love what I do. I love helping people and like being— I want to be a part of the wealth management industry as well because people are having conversations and like when you're talking about money and money management, I don't want to be so removed from it that I'm like writing in a silo. Like I want to be around talking to advisors that are talking to clients and hear the types of things that are coming up and what are, what are wealthy people actually worried about? What are they not as concerned about?

Like all those things matter because when you're trying to write to that audience, you need to know. And so being on the inside does help that a little bit.

[30:25] Paul: Yeah. And I love that you're in the industry. You're, you're one of the most like grounded and like data-backed people in the space. Like you combine like great writing with information almost better than anyone. And so maybe a place to take this conversation now is there's so much nonsense out there with finance. Like these popular headlines get repeated over and over again and they're, they're almost always fake or just totally lacking the nuance.

Like, I don't know, 60% of Americans are living paycheck to paycheck. Not really true. Like there's people making $250,000 a year that are saying they live paycheck to paycheck, but they're paying off their credit card every month. Right.

[31:15] Nick Maggiulli: And they're maxing their 401k every month and they're like, right, they're building wealth.

[31:19] Paul: And the other one is millennials are much poorer than previous generations, though there's some interesting nuance there. And then, yeah. And then income inequality is getting worse than ever. So I don't know which one of these you want to explore. I actually think we talked about the millennial one on the Blast podcast. I think the final one is really interesting.

More Americans are getting richer. And you break this down really well with your levels. Can you talk a bit about this? Because it sort of goes against what people believe.

[31:57] Nick Maggiulli: Yeah. So in 1989, 7% of households— and this is inflation-adjusted wealth. So once again, we're adjusting for inflation. You have to assume CPI does a generally good job of doing this. In 1989, 7% of households were in the $1 to $10 million range, inflation adjusted. As of 2022/2023, that is 18%.

So the number that, that shift, that, that's what I would call the upper middle class. You know, if I'm, I'm putting, I'm putting a label on it, of course you're saying, well, $8 million upper middle class in most places? No. But in places like certain place in California and New York, yes. But let's just put a label on it. That's upper middle class because I need to have some sort of label.

If we assume that's true, that, that cohort has over doubled in the last, you know, 30 years, basically 35 years almost. And looking at the data, I just wrote a blog post on this called The Death of the Amex Lounge. And the idea was, what's going on? Like, why is the Amex Lounge overrun? Why are like people— like when people go to resorts, like they're getting up at 7 a.m. to go get pool chairs.

Like, what's going on there? Like, why are housing prices not coming down? Like, they're crazy. Like, there's so many— there's more million-dollar homes than ever. It's like, and even in places like Dallas and like all these different areas are seeing million-dollar properties. Like, what's going on here?

It doesn't really add up to me, right? Especially with mortgage rates as high as they are. So it's like, there's all these things that are happening, and I'm starting to see like the upper middle class is getting very crowded. Like, there's a lot of people in that area, in that space now, in that level 4 space. And there's over 20 million millionaire households in the United in the States right now. I think it's like 23 million based on the 2022-23 data.

And obviously we had 2024 was a big up year and then this year has been kind of a semi-up year, right? So overall, like there's even more wealth, like this data is even lagging a little bit. So on top of that, like you think about all this, there's all this competition for not as many resources. So these prices are going up specifically in this, in this area, right, where the upper middle class is competing, right, for like airport lounges, hotels, travel. And what's that? What did I say?

Level 4 travel freedom. And that's where we're seeing most of the competition happening, right? And so when I think about this, like, there's more people with money than ever before, at least in the United States. I can't speak for the world. I know that it is improving on a— on a world base, but I think it's even more in Asia. Yeah, there's a lot.

And then guess what? They're buying a lot of US financial assets and there's all sorts of stuff happening there where like there's just a lot of wealth being built, which is a good thing. But now we haven't built enough of these scarce resources to accommodate that. So prices are going up, right? And once people own these expensive homes, they don't want to see the price of their house go down. So they try and block new construction.

They do things that are in their self-interest, right? They're like, hey, well, I spent $1 million on this property. Why the heck am I going to allow them to build another 500 of them that drops the price of my home by $200K, right? So they don't want to see that. And so the more you think through all these steps, you start to realize like, yeah, it's getting crowded near the, near the top. And so this upper middle class, kind of cohort is just bigger than ever.

And the data is pretty strong on that. And I'm just— this is just a survey of consumer finances looking over time. And there's just fewer people in the lower levels and it's just— it's shifting upward. So people say, oh, the middle class doesn't exist anymore. No, it still does. Like the $100,000 to $1 million is about 40% of US households.

And right now, the, you know, $1 million to $10 million is about 18% of US households. So that the vast majority of people have anywhere from $100,000 to let's say $10 million. I know it's a big range, but that's, you know, roughly 60% of households are in that bucket, you know, and then 40% are in the bottom bucket and there's like 2% at the top.

[35:34] Paul: So yeah, so the middle class shrunk and people got richer and then people don't like it because they want more of what they imagine their life to be.

[35:43] Nick Maggiulli: It's—

[35:44] Paul: this is honestly part of like what motivated me to leave my path, like I was in this world where I felt like I had made it, but everyone around me just seemed like miserable. Like you'd hear the bizarrest things, especially like when I was in New York before I'd leave. It's like, well, like $300 grand isn't really enough to raise a family. And it's like, what assumptions are— can we unpack the assumptions here? Because I could certainly—

[36:15] Nick Maggiulli: daycare, right? Like you start going through a private daycare. Okay, that's going to get— that's already But that's probably half of the $300 grand right there. Right. And then you go through the other ones. Yeah.

[36:25] Paul: Yeah. And so it's— yeah, it's sort of sad, I think. I mean, Bertrand Russell was writing about this 100 years ago. He's like, I think we could actually meet all our needs with, like, far less work. And then he adds a qualifier at the end of the essay. He's like, but human desire does seem insatiable.

So we'll have to like check in on that.

[36:49] Nick Maggiulli: Well, that little ending was perfect.

[36:53] Paul: Yeah, exactly. And everyone's always talking about his projections of like, oh, no one will be working, but everyone misses that one line about like the insatiable desire. Yeah, I mean, the way out of this is just building more stuff. I think one of the biggest challenges is travel. Like travel is leading to all sorts of crises. Like, in Asia, the biggest people traveling are Chinese.

Like, the amount of people entered the Chinese middle class in the last 30 years is like bigger than the United States. And it's far cheaper to travel in Asia too. It's, it's pretty wild. Like, I don't really meet many Americans here in Thailand. It's mostly people from other Asian countries traveling.

[37:44] Nick Maggiulli: Yeah. Well, 'cause it's, it's closer, right? That's one piece of it.

[37:47] Paul: Yeah.

[37:47] Nick Maggiulli: And I think when we, like, people talk about like, oh, is it worse for millennials today or this or that? Like, yes, housing is harder to get. There's no debate there with rates where they are and prices. It's definitely harder. I'm not gonna debate that. Incomes, there's more competition now.

Like, you know, back in the day you just had to compete with people in your local economy, right? And you know, even you go back to the '50s, it was mostly men competing with men and then women enter the workforce. So now you have, That's half the— imagine playing a game where half the population can't even play against you, right? Like, it's a pretty nice edge right now. They can. And now imagine playing a game where you only have to play with your local economy and now the whole world's playing against you, right?

So you can just see. And now guess what the next, the next step is going to be? I don't have to compete with people. I have to compete with computers. I have to compete with an AI, right? So it's like that's what's going on is like there's just more and more and more competition over time.

And so like incomes are being a little bit stagnant. And I think it makes sense. It makes logical sense why that's happening. Real incomes have not grown as quickly as wealth has, right? For example. And in terms of the travel stuff, so like, I think that's also a big thing.

Like we talk about the American dream. It's like, well, no one, no one can own a house anymore and all this stuff. I think a piece of it is the American dream has changed. Like a lot of younger people want to travel. They want to do stuff like go talk to your parents, ask them how many times, unless you grew up like kind of wealthy, your parents did not travel a lot when they were younger. Like they did not get on airplanes.

If they traveled, they drove. They did not get on airplanes and, oh yeah, I went to Thailand. I went to— unless they're very particular. Most people didn't do that. My parents didn't do that. Most of my friends' parents didn't do that.

But most of my friends and their friends, a lot of people in my young— my sister went to Japan before I did. And she— I'm not trying to say anything bad about my sister, but she does not make a ton of money, you know. And so people are traveling and they're taking what money they have. They say, I want to see the world. They'd rather do that than buy a house. They're opting out of the old dream and they're saying, hey, I can just rent.

I'd rather rent and go travel the world than own a home and then I never leave. And so I think those are the tradeoffs that people are thinking about and they're willing to make those tradeoffs. So I don't think it's as bad as it seems. Yes, housing affordability is a problem, but people are getting other things which I think they want more than housing.

[39:49] Paul: Yeah, I agree. I'm far happier. Yeah, we, we just got rid of all our stuff again. 7 months.

[39:58] Nick Maggiulli: Again, I love this. Like, we just accumulate over the course of 8 years and then get rid of it and you kind of go back.

[40:04] Paul: Oh, no. We only had our suitcases for like 3 years, but when we— when Angie got pregnant and then we had like the first year of her life, we like accumulated a bunch of stuff in the American tradition and it doesn't suit us.

[40:19] Nick Maggiulli: It's not—

[40:19] Paul: it doesn't suit our nature. But yeah, the— so square this with— there's a really interesting chart in your book which talks about the wealth level change. Over 20 years. And what really blew me away with this chart, I have the data, so I'll just read it. People that either had— so no change was 51%, but down one level or down two levels was 10% and 2%. So that's 63% of people whose wealth is stable or down.

Like, is there an age effect happening here? Like, what— how do we square that with, like, the median wealth is going up over time, but 70% of people or 63% of people are seeing their wealth decline over 20 years?

[41:12] Nick Maggiulli: So this is wealth level change.

[41:15] Paul: And I do address this because I say it's a wealth level change because someone could be level 3 million to 870 might not be that big of a deal. Yeah.

[41:24] Nick Maggiulli: Yeah. Or let's say you go not even— no, not even just that. Let's say you start with $200,000 and this is over 20 years, by the way. So let's say we start with $200,000. 20 years later, you have $500,000. You're inflation adjusted.

You're still in level 3. You have not changed your level. So 51% of U.S. households stayed in the same level over 20 years. Right. So that 10% fell down a level.

Yeah, 10% fell down one level, which could happen for a variety of reasons. Maybe you're a retiree, you're drawing down your assets. Maybe you had a medical condition. Maybe you had a lot of money in an overconcentrated position and it dropped a lot and you lost a lot of your wealth. And then 2% fell down 2 levels. So those are much more dramatic and that is much rarer.

Right. But still, if you look at the other ones, 32% were up 1 level and 5% were up 2 levels. So, you know, 1 in 20 people really saw a 100x jump in their wealth over some period and or at least, at least a 10, probably more than 10 or more. Right. But let's say 100x average. And then 32% of people saw a 10x jump in their wealth.

And of course, You could start at level 1 going to level 2. That's an example. Or 1 to 3, that's a 2-level jump, right? But it's interesting to look at that. And as I say, like, even if people don't jump levels, they're still building wealth. So on average, people are building wealth over time.

It's just how big— how likely is it to have a large jump in levels over time? And now that was the purpose of that table showing that. So I love that.

[42:47] Paul: I feel like there would be a good article on this because I talk to people with literally millions of dollars who will claim that their biggest fear is going broke. And so you can just say the odds of that are 2% and probably zero given your like network and connections.

[43:06] Nick Maggiulli: Yeah. How are you invested too?

[43:08] Paul: Yeah, it's like it's more socially acceptable for like millionaires to talk about like their fears of going broke. Than like telling people how much they actually have.

[43:24] Nick Maggiulli: Yeah, I mean, Michael Kitces did this study where it was a retirement study where he said, hey, looking at history, if you use the 4% rule and a 60/40 portfolio over 30 years, you are equally as likely to end up with 4 times your wealth as you are to end up below where you started. So if you start, let's say, $1 million and you start just using the 4% rule and do it for the next 30 years throughout, you know, US history, and then 60/40 stock/bond, you are equally as likely to end up with $4 million as you are to end up below $1 million. Like, that's how rare those two— most people end up with 2 to 3 times their wealth while they're pulling money out of their portfolio and spending and doing all this stuff. And of course, this is historically. Maybe the future is going to be different, but I doubt it's going to be that different.

But it's just kind of so incredible that like this actually happens. And it's like people think, oh, I'm going to run out of my money and even in the worst-case scenarios, it's like, oh, I just ended— I died after 30 years. I died with a little bit less than where I started, inflation adjusted, right? It's like, it's absolutely bonkers.

[44:23] Paul: So I've showed some people these models and some people's emotions are incredibly strong and they don't care about the data. They're going to tell you that they're emotionally correct. Like, do you Do you have ways of like communicating emotionally with money? I feel like this could be the next book, like the emotions of money.

[44:46] Nick Maggiulli: Yeah, I don't know. It's a great question because you have to really get at where is that coming from? And it's a lot of times there you have to dig deep into someone's history and really get into like, where is that coming from? Like, well, I don't care about the data. This time is different because AI or this time is different because of this or that. And they might be right.

I can't say with— I can't say with certainty they're wrong. I can't tell them. AI is not going to eat the entire job market and there's no more white-collar jobs and it's just creatives with these machines creating trillion-dollar companies and all that. I doubt that's going to happen, but of course it could happen. I don't know the future. Right.

And so I can't— there's no thing I can say, but I guarantee that's not going to happen because I don't know. And that's the truth.

[45:26] Paul: Yeah. People say to me, like, what if the global economy like crashes in a catastrophic event? And I'm like, well, We'll both be fucked and you'll be the, you'll be the one that called it. So maybe there'll still be a market for that, but like, I don't think it will matter.

[45:43] Nick Maggiulli: It's like, okay, do you have guns and canned goods and medicine? And like, like at some point you can see where this is going. It's like, okay, if you're worried about that, just be a prepper. Like just take 1% of your net worth and be a prepper. Like I'm, I'm completely for that. I 100% support it.

Take 1% of your net worth. Have it in canned goods, honey, things that just don't go bad, right? Have it in all these different things and store it somewhere. Keep it under lock and key and have some sort of ways of protecting it and wait for the end times if you think that might happen. Like it's a hedge on civilization collapse. I doubt that would happen, but if it does happen, you'll be covered.

[46:19] Paul: Yeah, it's almost— the prepper is almost more sane than the person who claims they're going to go broke that has millions of dollars.

[46:26] Nick Maggiulli: I agree. I mean, if you're going to— if you are that worried, hedge, do something.

[46:30] Paul: Take action.

[46:31] Nick Maggiulli: Yeah, exactly.

[46:35] Paul: Coast Fire. You've written you think it's the best fire.

[46:38] Nick Maggiulli: Oh, it is.

[46:39] Paul: I happen to agree, though. I tried writing a book about it and I realized I have to like repackage everything. And I think I'm going to create Pathless Fire because I don't think Coast Fire perfectly fits That's my approach. But yeah, why do you think Coast FIRE is so good? And maybe give people an intro to it.

[46:58] Nick Maggiulli: Yeah. So, the FIRE movement, I'm guessing many of your listeners have heard, but I'll just recap, is financial independence, retire early. And the idea is once you have enough assets that it's throwing off enough income to cover your spending, then you never have to work again. You're financially independent. You can retire early. So, very simple example.

Let's say you spend $100,000 a year. right? And your portfolio can throw off— as soon as you can throw off $100,000 a year, let's say after tax, right? To keep everything right, then you're good. And so what most people do, they just say, hey, let's use the 4% rule, or AKA take my annual spending, multiply by 25. That's the same as the 4% rule, right?

You take a number, divide by 0.04%, or divide by 0.04, and that's the same thing. $100,000 divided by 0.04 is going to equal $2.5 million, which is 25 times $100,000. So basically, as fast as you can get to $2.5 million, then check out. You never have to work again. That's FIRE. That's the most extreme version of FIRE.

There's something called Fat FIRE, which is like, hey, you want to have even more of a buffer. You want to be able to spend way more than you could ever imagine. So Fat FIRE, you need 3x of that. So you're going to need $7.5 million. So you want to get to Fat FIRE, right? And then there's Lean FIRE, which is, you know, there's all these different variations.

The one that I like is called Coast FIRE because it says, hey, Save up enough money to the point where your retirement's taken care of. So let's say you saved up. I'm just going to make— these numbers aren't going to make sense. I'm just going to make the math easy just to run through this. Let's say we know you need $1 million for retirement, and let's say we know you have $500,000 now saved for retirement. And the idea is like, hey, I know when I'm 65— let's say I'm 35 now, so 30 years from now, I'm going to need $1 million, right, in for my retirement.

I have $500,000 now. As long as the growth rate— you can calculate, hey, if I assume it grows at this rate and you come up with a conservative assumption, let's say 4% a year. If it grows at 4% a year for the next 30 years, it's going to get me there. Perfect. So now I calculate what that number is to get to $1 million in 30 years. And let's just pretend it's $500,000.

Bam. I have my money. I can now coast fire. What does coast fire mean? You leave that $500,000 alone. You let it grow over time.

So by the time you get to retirement, you have that money. Then all you have to do, you don't have to save any more money the rest of your life. You just have to cover your current living expenses. So if your income is very high, you're like, hey, I can go get a lower income job. I can go work on what I want. I can go write books, do whatever, as I just need to make enough income to cover my current spending.

I don't have to worry about saving for retirement. I don't have to worry about saving for anything else because my nest egg is there and it's going to grow. I can never touch it, though. That has to go all the way to retirement before I can touch it. So that's the only assumption in Coast FIRE. But the reason I like it is because what I think happens is people get into, let's say, level 4, maybe low level 4.

They have $1 million, maybe $1.5 million, $2 million, whatever. And they're like, hey, I don't have enough to be financially free. I don't have like, let's say, $3 million or $4 million, but I have enough where I can say, hey, I can take my foot off the gas. I can go work on projects I care about and I'm going to be fine. I'm going to get to retirement without an issue. And you don't even need $1 million or $1.5 million.

[50:01] Paul: You can be at like $500,000, $1 million easily.

[50:03] Nick Maggiulli: Yeah, yeah. You can be in $500,000. Let me actually run the math here. I'm going to do this, this little calculator.

[50:07] Paul: I mean, I did it with less than—

[50:10] Nick Maggiulli: oh, you have it already. So yeah, if you do 1.04 to the 30th, let's say, how much is that to the 30th?

[50:16] Paul: And that's very—

[50:17] Nick Maggiulli: it's 3x. Yeah. Yeah.

[50:18] Paul: So, and it doesn't need Social Security. So I add in Social Security and just pretend like that's going to be perfectly sound.

[50:26] Nick Maggiulli: We're just— if you say, hey, inflation adjusted, it's going to be the same amount, which is about $1,500 a month.

[50:31] Paul: That—

[50:31] Nick Maggiulli: just assume that's true. I know you probably earn more than the average person, but let's just assume it's $1,500 a month, which is what it is now. Take that out of your expected spending. Yeah, you can run that back. But 4% a year for 30 years— I just did the calculation— is like a 3x return. So if you're like, hey, I need $1 million when I retire, then you only need, you know, roughly $333,000 today, you know, over— and— or 30 years before retirement, and you just let that grow.

So that's kind of the thinking behind that.

[50:59] Paul: Yeah, I love it too because it shifts the focus from money as— so FIRE positions money as both the problem and the solution, which I actually think is a mistake. For me, money is simply, um, it is a problem to be solved, but the solution is to orient your life in ways that make it easier to produce money in ways that feel good and sustainable. So that's sort of like my spin on it. And what I find is a lot of people are embracing this without like doing it as a FIRE thing, right? They just intuitively say like, okay, I have money saved, I have a kid now, I'm going to take a step back in my career. Like people have been doing this for a long time, right?

You have a kid, you turn down the promotion. Because you want to spend more time with your family or things like that. And yeah, I think my spin on it is actually like boldly go after work you actually care about and prioritize that above the paid work, right? So figure out how to get paid work to break even and do whatever you need to do to do the like actual work of your life. And the work of your life can be very broad of like taking care of your kids for 10 years, if that's, that's something like that's something I'm thinking about a lot is I don't, I'll probably be less productive over the next 10 years, but I want to like purchase, like buy the freedom of spending more time with my children. So yeah, it'd be fun to explore these, but Yeah.

How do you feel about coast fire? Would you do it?

[52:46] Nick Maggiulli: It's a question of when. And I, the only thing I think I could have coast, I could coast fire now, but that's under the assumption. I don't have no idea what kids are going to cost. If you had kids in that kind of changes things a little bit, especially in like New York, especially in New York City. I don't know. That's one piece of it.

Plus if I was coast firing, I could take care of them. I would be more of the labor for that. The other piece, which I think I'm more I don't— I know less about is like my mother. I'm going to have to like probably help take care of her and supplement her because her Social Security income by itself is not going to be enough. So I kind of have this like squeeze coming where like, you know, I just got married and I know we're going to start having kids, you know, God willing. And then this squeeze is coming where I have to pay for the next generation and the prior generation.

So I don't know. And that's the only unknown I have. Otherwise, I could probably coast fire today, but my goal is not to. I enjoy working. I enjoy doing the stuff that I do. Once again, there's still pieces of my job I'm trying to get rid of.

I don't want to do. Outside of that, I enjoy most other things. But I agree with you. I think the premise of FIRE is about money a little too much. And Coast FIRE shifts the conversation to like, what do you— okay, you need to get some money. Like, hey, you need some of that.

But after that, then it shifts the conversation to like, well, what do you really want to be doing? And you're saying no, shift it even before, even before you have that little nest egg built up. Maybe you have a little— you need some emergency money, but even like right after you get that first little out of level 1, now let's look towards the, the pathless fire, or however you're going to define it.

[54:12] Paul: So yeah, I don't know if I'll call it pathless fire, but it's, it's basically pricing in the fact that if you stay longer on a path you don't like, you are undermining the energy to work on the stuff you are. So for me, I actually wish I left earlier on my path and poorer because like those early 30 years were, I was just trapped in like not, I was making progress on a path I didn't want, right? That could have been time I started writing and like invested in those earlier years when I would have been more comfortable living on less and stuff. So yeah, like figuring out that trade-off is really hard.

[54:54] Nick Maggiulli: Yeah, I think it's, it's really tough to kind of go through that because like It's the fact you experience— you experience that pain, and that pain is what got you onto The Pathless. Like, if you hadn't done— like, I wish I'd never done that— you wouldn't be— like, you wouldn't have written The Pathless Path most likely. You'd have been like, oh yeah, I kind of jumped off and did my own thing. But like, you didn't have that depth of like, wow, this is really— I mean, you probably knew it wasn't great, but you kind of— you stuck with it maybe 1 or 2 years longer than you would have liked to, and that really solidified that, that feeling, that emotion, which is now driving you down this other Pathless Path, as we call it. So I think you gotta think about both sides, you know, when you're like, oh crap, I wouldn't have done this if I hadn't had that experience.

[55:32] Paul: That's actually something good to add is like, yeah, if you're gonna take your creative path, you might rack up a little more pain. Like the pain of my chapter 3 of Pathless Path, like wouldn't have happened if—

[55:44] Nick Maggiulli: Yeah, exactly.

[55:47] Paul: Do you have a definition of enough?

[55:50] Nick Maggiulli: It's a great question. Once again, it's always— I really think it's about living life on your own terms. Now, what does that mean? Does that mean you don't have to work? I don't think so. I don't think that means you never have to work again.

Some people say, oh, you have enough once, you can never work again. I don't think that's true.

[56:10] Paul: Yeah, I think, I think that you can have enough. Like, I think desiring to escape work is just a really terrible starting point. For thinking, because we all work. Like, even if you're not working paid work, you're gonna take care of your community and family.

[56:27] Nick Maggiulli: Yeah, you're gonna do something like that's productive. I mean, there are people out there like, oh, I don't want to do anything, I just want to sit on a beach all day. Great for them, but that is a very small percentage of the population that actually enjoys doing literally nothing for like the rest of their lives, right? Most people want to do something. They want to feel like they're doing— they have a purpose or something like that, whether that purpose, as you said, is childcare or taking care of your parents or, you know, writing books or whatever it is. And so figuring that out, I think, is more important and then working toward that.

So the definition of enough, I think it's a, it's a moving target a little bit depending on what your expectations are and what you want out of life. So I don't have like a per— here's my enough number. I don't know because the future is very uncertain. I'm trying to, you know, figure out where that place is. And I think within the next hopefully 5 to 10 years, I figure that out and then I prioritize that. My goal is not to be grinding away into my 50s and 60s and like working a corporate job and doing all that stuff.

That's definitely not my goal. I will definitely be taking a step back. I just don't know when. And I'm 35 now, so I've been very fortunate and I'm a bit younger, but I gotta figure out where that spot is in the next probably decade.

[57:37] Paul: Yeah, I think enough is really just a feeling. Um, I don't think of like a number. Though if my financial situation changed a lot, I would certainly do a lot less money-making work. But I really loved this one thing you wrote in your book, and it's something I resonate with really deeply, and I think is actually the key to like all these questions we're circling around, which is like the life you actually want to live. I love like, so you wrote, anytime my friends visit New York, I try to make time to see them. I plan a trip with my mother and sister every Mother's Day.

If my wife asks me to watch a movie after dinner, I don't tell her I can't because I need to work. It's like, these are literally the choices that really matter, I think. And no amount of money makes these like easier or harder. Right. And so this is actually something I've really embraced too. If my wife proposes going out, I go, it doesn't matter like what I have to do.

And I actually have a rule if anyone visits me, especially abroad, I don't work for the entirety of their trip and hang out with them as much as they want.

[58:52] Nick Maggiulli: Oh, that's awesome. That's really cool.

[58:55] Paul: But the key, the cool thing about this is that is actually motivation to then go back and design the life you want, right? So I create all these rules like I want to spend the morning till 9:30 with my daughter and like go come home at 4 every day. That then makes it really exciting to work backward and say, okay, how do I earn money in ways that actually make that happen? And I think a big thing missing with people when they're like struggling to find enough is they don't actually know like what they would do with more time if they were to purchase back some of their time or lean into freedom.

[59:35] Nick Maggiulli: That's fair. I think a lot of people if they don't have a hobby or their, let's say their kids are grown, they don't really have that anymore. Like what do you do with that time? And that's why I think a lot of, you know, it's very easy to get caught up in, you know, traveling, which is great and all, but you do that, you know, partying, this and that. It's very easy to get caught up in those, you know, consumption type habits. But you're right that not everyone knows that thing.

[01:00:00] Paul: Yeah. You say you don't have to believe me. You can climb the wealth ladder on your own.

[01:00:05] Nick Maggiulli: Yeah, that's the ending there is very, very interesting because it's like, hey, like you start to realize and pick up on stuff that you wouldn't have realized before. Like, I remember some of the money decisions I made very early on were very, you know, scarcity-based and stuff. And it's like looking back now, it's like, I guess I did that because I didn't know the future. I didn't know like, okay, I would have been okay. And it's not even like I didn't even have to be on this particular path. I could have still not had the books and all that.

I still would have been okay, right? Like, that's all like that's another piece of this is like you don't realize that, you know, but at the time, you know, I get it. You make certain sacrifices at a certain point in time and I don't think there's anything wrong with that, but just your money, you're thinking on money changes, especially as you build more of it.

[01:00:45] Paul: Yeah. What, um, how are you feeling about writing these days? I mean, writing's kind of weird with LLMs changing it. I think it's, um, it's definitely replaced some kinds of writing I would do in the past, which is more like, okay, I'm gonna like document how to do something, which is like done by LLMs. But I'm still feeling pretty energized about it, though I do have some fears about like, okay, is there even gonna be a market for like reading stuff in 30 years? Yeah, how are you thinking about it?

[01:01:23] Nick Maggiulli: I think if you're doing anything that's just purely informational, you're done. Like, you were just like, hey, here's the update. Here's the updated tax rates. Like, no, sorry. That's like Google, basically. Like, someone's gonna say, hey, what changed in the tax law?

The LLM's gonna summarize that from— it's gonna steal the content from the people that actually summarize the thing, or it's gonna read the thing itself and summarize it, right? So if you're just doing purely informational stuff, like traditional SEO, here's how to bake a cake stuff, You're done. If you have a differentiated opinion on stuff, you're completely fine. I think that's the only bastion of truth or, you know, forward vision we have as writers is differentiated opinions, right? Because think about, like, I used to say this about SEO, like, you know why Morgan, Morgan Housel is such a great writer? I'm assuming most of your, you know, audience has heard of him, Psychology of Money, et cetera.

Do you know why he, he was such an amazing writer and he was so bad at SEO? Now what do I mean by bad at SEO? When people are searching stuff like, should I buy now or should I wait? Like, should I dollar cost average or lump sum? That is a question that people have asked before, right? When people are— Morgan Housel was writing things for people, for questions people had never thought about even asking.

And that's what made him, quote, bad at SEO. But that's what makes an incredible writer, right? Because he's saying you're not going to search this thing. If you say like, hey, tell me, like, tell me about tail risk, what is tail risk? Like, you'll get a definition, but you just got to read his post called Tails You Win, and it's a much better understanding of tail risk than reading the dictionary definition of tail risk, right? So you can't SEO that story about Disney and all this stuff, right?

You can't do that, right? And so what LLMs are, they're just advanced SEO. And so they're just going to go out there, steal all this content and put, you know, any general informational stuff's going to be there. But if you have a differentiated opinion on anything, SEO's done. Because SEO— I'm not SEO— the LLMs are done. For example, max out your 401(k).

I am very against some of that advice because that's what everyone else says. All the financial advice people, basically 10 out of 10 financial experts will say, oh yeah, you always got to max out your 401(k). I don't recommend that. So like, you have to have differentiated opinions. Otherwise, don't even write the post. That's my new thing now.

If I don't have a differentiated opinion, I don't even think I should be writing about it.

[01:03:38] Paul: So I think this will be some, this might be something worth covering quickly because I actually have this regret probably for the reason you would point out. A lot of people who are thinking about taking an alternative path like probably should put their money in a brokerage over a retirement fund, right? I mean, max the match, right?

[01:03:59] Nick Maggiulli: If you need to access it, max the match because that's free money. Yeah, you get the match. But after the match, it's like that money is going to sit. And if you don't know, especially like in your case, like if you know, hey, I think I'm going to probably leave this behind, like what you could do is you could roll it. If you had a Roth, you could roll into a Roth and pull the contributions. Like there's a lot of ways to get some of this money, but I don't like thinking about it like that.

I kind of regret putting too much into my retirement accounts for like 5 years. And it's not a bad— oh my gosh, you did such a bad— like in the grand scheme of things, it doesn't matter. But I do think because it's the default advice, you don't question it. And because you don't question it, you end up following advice and saying, wait, What if I wanted to retire earlier? What if I wanted to go do something else with my money? I can't access it because I locked it up in this box that I can't touch until I'm 59 and a half.

So that's just an example of that.

[01:04:45] Paul: Yeah, yeah. There's assumptions behind all advice, right? Which I think is the key point. The assumption behind that advice is you're never going to stop working.

[01:04:54] Nick Maggiulli: Yep.

[01:04:55] Paul: Right. And so, um, if you're following this podcast and you still have that assumption, I don't know why you're listening to me. But I have a differentiated opinion.

[01:05:08] Nick Maggiulli: I can survive. They're listening every week because they want you to convince them to jump off the standard path. They're not there yet, Paul, but they're getting there.

[01:05:16] Paul: No, I think most people are already like solidly defined. Be interesting. Leave comments on the Spotify podcast for this. Like most people already know the direction they're headed or are on. They just want to feel like slightly better. About what they're doing.

And so a lot of people over to channel, they're like, oh, Paul's even more nuts than me and he's figuring it out. So I'm not that crazy. And that is the service I offer here.

[01:05:45] Nick Maggiulli: Yeah, that's great.

[01:05:46] Paul: Awesome. This is a really fun combo. Any other topics you wanted to explore with me?

[01:05:54] Nick Maggiulli: Whatever. It's whatever you want, man. I think that I think we could even talk about the publishing industry, but I know you've spoken about that a lot. Very interesting, like how that's going to even evolve. I, I'm very— I just watched something recently, but I think it was the CEO of Cloudflare and he's talking about how like, yeah, all of our content is being— all of our content for, you know, bloggers, all that, it's being sucked in by all the LLMs. And then someone asks a question, it just spits out our stuff.

Sometimes it'll source us, but a lot of times it won't. And if it does source us, very few people actually click to that end link. They just read and say, okay, that's the answer and that's the end of it. So they don't click to the end link. And if we're running web ads, you don't get monetization and The LLMs aren't paying us for using our content. So it's like we're giving up our content for free, right?

And so what does that mean? It's either I have— I either have to lock up my content, which I don't want to do. I want people to consume it, but then I get— how do I get compensated? There's either a web ad or people hear about me and they buy my book. I think through the LLM, it removes all that branding and removes any chance of that happening. And so now I am losing that benefit.

And this is true of all content creators, by the way. It's not just me, obviously.

[01:06:55] Paul: Right.

[01:06:55] Nick Maggiulli: And so the question is like, is the future going to be we lock up all our content or is the future that the LLMs come to us, you know, OpenAI comes to us and says, hey, every time someone calls one of your articles, we'll pay you, you know, some, it'll be like a Spotify thing where you're getting, you know, a fraction of a cent. But like still, if you do that across, you know, thousands of queries, I'm willing to be like, hey, let's do that. I'm happy to take that. I would sign that contract and be like, okay, I'd rather do that than like I have to either do that or lock up all my content and say, sorry guys, like the LLM screwed me. You know how, and I don't know what to do. I don't know what's the correct approach.

[01:07:29] Paul: Yeah, I think it's a wild west right now. It's definitely going to change. What have your Google ads like revenues gone down noticeably?

[01:07:39] Nick Maggiulli: I think they've gone down a little, but not as much because I don't have a lot of SEO on my content. Once again, I'm trying to put out differentiated opinions. I don't do a ton of SEO. Half of my page views though are to my S&P 500 calculator, like a historical calculator set. So for example, if you say what did the S&P 500 return from January 1980 to December 1989? Like what was the— if I put a dollar in, what would my final—

[01:08:00] Paul: half your traffic?

[01:08:01] Nick Maggiulli: Half my traffic is that. And you know why? Because— and an LLM can't automate that because an LLM, if you ask it that, it's going to like— it'll give you price, but it can't do dividends reinvestment. It can't do the inflation adjustment, even if it had the data set, it's going to screw that up. I'm telling you, the math is not advanced enough. It's not smart enough where you ask, it's going to do all that calculation in an instant.

It just can't do it yet. Maybe one day it'll get there, but mine does it every single month. It's backed, it shows everything. And so that's roughly half my traffic comes from that.

[01:08:30] Paul: So Sam Altman, if you're listening to this podcast, just throw Nick $5 million for the calculator. It's win-win for us all.

[01:08:41] Nick Maggiulli: The calculator is easy to do. The problem is you have to build that logic ahead of time. It's not something that's very simple because you have to make sure to adjust for inflation and do dividends. Oh, also, and you want to include bonds sometimes because, you know, sometimes some people want a stock bond calculator. I have one of those too, right? So there's all these different calculators that like an LLM can't just create on the fly and it's going to be that accurate.

And I think that's a big piece of it.

[01:09:05] Paul: So publishing, you did hybrid publishing and then traditional publishing. Yeah. How are you thinking about it? I mean, I think you're, you're in an interesting role because I think you're sort of approaching it like me. I have other stuff that does fund my creative life. I want to be fully unleashed creatively and explore all options.

I am not worried about building a creative career. I don't want to be dependent on it. So yeah, you can experiment a little more. How are you thinking about either future books or like lessons you've learned from the two different publishing experiences?

[01:09:41] Nick Maggiulli: Yes. The first one was with Harriman House, which is like a joint venture. You don't get paid in advance or anything. I kind of went through it. I had no idea what I was doing. I did it.

If I'm being honest, I modeled most of my career based on Morgan Housel. He went to Harriman. I was like, yeah, I'll go to Harriman too. A lot of people in FinTwit, financial Twitter, went to Harriman. So I was like, okay, I'll go to Harriman. It was great, great experience.

Love working with them. Nothing wrong with it, but it's like, okay, like I now know that I have an audience. I kind of have this stuff. I had to do most of the marketing. I had to do most of the stuff. That's true of every publisher.

You know, you're gonna have to go do a lot of that. And so I didn't realize that going in. I thought they were gonna help a little bit more. And it's not that they were bad particularly, like that's just the whole industry. That's how it is. They are not there to, oh, we really gotta push this book.

'Cause they have another 20 books they're trying to push at the same, roughly the same time within a month or two. Right. So, Because of that, it kind of just changes the incentives. It's like, so I'm doing all the work and you're going to take half of the net, basically. It's like, it's kind of crazy to me, you know? And so I did that.

And then obviously I— my next one, Morgan went to portfolio. You know, I saw that and I said, maybe I should try and do a deal. Like, let's see. And so I went and spoke with some people, got an agent and walked through the whole process. And I found a deal that worked out and I really enjoyed the experience. There are pieces of it that were a little scary with production where like there's so many different teams, like, yeah, I'm sending stuff into the void.

I'm like, okay, like they say they're going to fix it, but I just— I'll wait and see the final draft. Like, it's not like I have someone I can talk to. Yeah, we made that edit. We made that edit. Like, I just put my stuff out there and I hope it gets done and then it comes back to me. And so it was a little more bureaucratic because it was a bigger company.

But there are certain things, like if I had self-published, I know, like this cover, I could not have come up with this cover if I self-published. Like, this is a great cover. Everyone's told me, oh my God, like the, the 6 levels. Okay, you got the 6. Yeah. Yeah.

So like there are certain things that worked out well and I, and we had to go back and forth on the COVID But this is an example where like I wouldn't have come up with as good of a cover as they had. So that's just one little piece where it can really pay off. And I know there are cover designers out there that can do this quality of work, but I wouldn't have been able to find them if I'm being honest. Future books, I don't know.

[01:11:38] Paul: Especially the first time. I think I got lucky with my cover the first time and it's so good. I love it. I went back to the same designer and his covers did not work. And then I had to hire 4 different designers and I'm teaching I'm learning Adobe myself. Yeah, but I think the advantage is I want to publish like 10 books.

So I just see everyone as sort of a rep and I'm just going to get like better and better at this. But yeah, how are you thinking about it going forward?

[01:12:10] Nick Maggiulli: Yeah, so I don't know. And I have to see how this— I mean, this book's coming out like basically now. By the time this podcast is published, it'll probably be out July 22nd. So seeing how that goes.

[01:12:19] Paul: I didn't know it wasn't out yet.

[01:12:21] Nick Maggiulli: Yeah, no, it's not. We're still in preorder phase right now, technically, as we're recording this. So it's going to be out next week. Yeah. So I just don't know. I have no clue, obviously, like if it does really well and then I like sometimes they're going to just write it, I'm like, how do I not take another deal on another book?

I don't know. You have to think about the tradeoffs of that. Is it just the money? Is it like I— at the end of the day, I care about putting out the best product I can. I think that's more important. I care more about like long-term sales than anything.

And so if I think I can do that without a publishing company, if I could self-publish and maybe work with another, you know, one of these other new, new age publishers, you know, there's a few of them out there, Author's Equity, there's, you know, Infinite Books, there's Scribe, right? These other different that are kind of saying, hey, we're different than the traditional publishing industry. I might be open to it. Obviously I need to think through that and we got to see how this one does. And I just have no clue. Maybe I'll never write another book.

I don't know. Of course I said, you know, 5, 7 years ago I said I'd never write a book and now I have 2. I don't know. I don't— I can't predict the future, to be honest with you. But when I wrote the first book, I knew I had this book. I knew that this book was an idea.

I knew I would eventually write it. I just didn't know when and when the timing was right and I got the data that I needed to make it happen. So that's kind of how that evolved.

[01:13:29] Paul: I love it. Just keep buying the wealth ladder. Trying to think what the next—

[01:13:34] Nick Maggiulli: like, who knows? Everyone thought my second one would be called Just Keep Selling, but we're still in a bull market, so not yet, folks.

[01:13:41] Paul: I just keep buying. It just seems to work. Yeah.

[01:13:44] Nick Maggiulli: And it's going to work. And obviously there's going to be a period where it's going to be— there's going to be a dark decade for the US stocks. It will happen eventually. It has happened a few times in history. It's going to happen again. Everyone's going to say I was an idiot and I'll say, okay, I will keep purchasing through that dark period.

[01:13:58] Paul: Yeah, same. Yeah. I'm like, I'm like old enough to remember that. Like, I went to college during that. I bought my first stocks in like '04, I think.

[01:14:08] Nick Maggiulli: Yeah, that's middle of the, middle of the bad. You got, at least you avoided the dot-com stuff, which was the first kind of rollover. That second rollover in '08 was, was brutal though.

[01:14:19] Paul: Awesome. Yeah, this, this is great. I love talking about this stuff with you. You're so, um, you have such strong opinions, but it's because you've basically like done the research and like really thought through what these things mean. It's awesome. It's great to have befriended you and see somebody do such awesome work out there.

I honestly haven't been replying to most other authors trying to come on podcasts and stuff, but I appreciate that, Paul. I just like, I can't play that game. That's another thing with the author thing. Everyone hyping everyone's books. Like, I literally don't have the time. I have a child now.

Yeah, I was just— Yeah, go ahead. Yeah, this is like a very live topic and I think money is such an important topic to really have a good foundation on if you are going to be on an unconventional path.

[01:15:23] Nick Maggiulli: Yeah, I appreciate that, Paul, and I appreciate you having me on. I know how protective you are of your time, so it's very valuable to me. You know, I know everything with that and It's just so interesting when I, when I first met you, like, in person and you're like, oh man, like, I was like, what? We were talking about— I can't remember. We brought up like, what's our worst fears or something? You're like, my worst fear is having to go to a meeting for a job.

I was like, this guy is like wired differently. Like, this guy is different. Like, I'm like, oh, that's not my worst fear. Maybe like, I don't know, a rattlesnake bite or I don't know, being killed. I don't— there's like all these other things I had. And you're like, dude, if I had to wake up for a meeting, if I knew I had like a 7 AM meeting tomorrow, I would just— it would scare the hell out of me.

I was like, okay. People. It's like this guy's wired differently. And so this is why I admire that. I admire that you are taking a bold step in a very different direction that is not on the default path. Obviously, it's— you built a brand off that, which is great.

But I, I think it's very cool, the, the people you inspire with that.

[01:16:15] Paul: So yeah, to be fair, this is not a meeting. I find this very generative. One of my reflections at the end of the year last year was I actually need to have more conversations like this because they're very, uh, life-giving for me. And so that's great. It's great. Yeah.

I was kind of like just writing with my free time and I was kind of going a little crazy because I didn't have a bunch of the like random combos and ideas flying around happening.

[01:16:40] Nick Maggiulli: Yeah. You need those inputs, right? Whether it's reading, whether it's talking to people, everything. I think the LLM stuff, we could riff on that for forever. I think there's a lot there, especially us as creators. We're like, there's a lot of stuff going on in that space and it's going to have to change because, you know, people paying for the thing is one thing.

I think the future of that is going to be ads. They're going to run ads in the LLMs. I don't know when, but it's just, that's the, that's the model that's worked on the been on the internet for so long, I, I can't see how it doesn't happen. I think it's just going to take time, just like there was no ads on things and then ads show up, and they always do. Even Netflix, like Netflix never ran ads, now there's the ad tier, right? It's like, oh, we're never gonna have ads, never have commercials, but now that the ad tier always comes, it always happens no matter what.

[01:17:17] Paul: The end of ZERP. I gotta get ads on this show.

[01:17:21] Nick Maggiulli: Yeah, this is—

[01:17:23] Paul: what am I doing? I'm running this for free. To it. Just if you're a sponsor and you want to give me, uh, $50 grand with no responsibilities, I am happy to, you know, just rename the podcast to like whatever.

[01:17:38] Nick Maggiulli: The McKinsey Path. What if they paid you $50 grand? Oh wow, that would be hilarious.

[01:17:42] Paul: $50 grand's not enough.

[01:17:44] Nick Maggiulli: I don't think it's not enough to rebrand yourself.

[01:17:46] Paul: Yeah, The McKinsey Path. That would be— man, that's like an April Fools' joke. All right.

[01:17:55] Nick Maggiulli: Good chatting. It's been good.

[01:17:56] Paul: We're going to wrap this up. Thank you for joining us in the Money Hour with Nick and Paul. And have a good night, everyone. Hope everyone has a good week. Definitely check out Just Keep Buying if you haven't bought it. Like, it is my go-to personal finance recommendation.

And all my new Taiwanese listeners, go buy Just Keep Buying. I'll learn that phrase in Chinese so I can hype it up a little more. But yeah, thanks again, Nick, and appreciate you as always.

[01:18:27] Nick Maggiulli: Thanks again, Paul, for having me on. Appreciate it.