#132 Making Money Simple & Smart - Nick Maggiulli on blogging into a new career, writing for smart people, building relationships in the finance world, the lifestyle creep myth, dying with too much money, and money emotions

[00:59] Paul: Welcome to The Pathless Path. I'm Paul Millerd, and in this podcast, we examine the invisible scripts that run our lives and dare to imagine new stories for work and life. Today I am talking to Nick Maggiulli, a friend who is a fellow writer and creator on the internet who has taken a really interesting path. Excited to dive into a number of the things he does He writes the awesome blog Dollars and Data. He also is COO of Ritholtz Wealth Management and wrote the amazing book, my now number one personal finance recommendation, and I am completely sincere about that, Just Keep Buying. Welcome to the podcast, Nick.

[01:42] Nick Maggiulli: Thank you for having me on. I appreciate it so much. Appreciate the love.

[01:46] Paul: First question I like to ask people to kick off the podcast, and I've heard a bit about your story and I think it's great framing for your own personal journey through finance, but what are some of the stories and scripts in relation to work that you grew up with?

[02:03] Nick Maggiulli: Yeah, so growing up, everything was about, you know, work hard and you'll be rewarded, you know, kind of follow the steps, you know, go down the path, you know, and I did that. I did it really well. Like I had straight A's all through, or straight O's, I guess, in elementary school, right? They didn't give A's, they gave O's for outstanding, straight O's. And then I got to middle school, had straight A's through was valedictorian in my high school class, had 4.0, you know, unweighted, 4-point-something weighted, whatever it was, you know, went to Stanford University, same thing, just doing really well. And it was just a lot of that.

Just keep following the path, keep following the path, went into consulting, right? You can, you can, the whole story, like your story, it's very similar, right? In many ways, like it's that same story of like, just go through, jump through the hoops and you'll do well. And it's right to some extent, like you, I don't disagree with that path. I don't think it's the worst thing in the world, but I don't think it's right for everyone. And a lot of people wake up at some point and say, hey, actually this isn't right for me.

And so at some point you start to realize like, what do I really care about? So I think for scripts, there's always just like work hard and you'll be rewarded, work hard, you'll be rewarded. And then you realize a lot of areas of life that's not necessarily true. Like for example, in like relationships, like if I work harder to try and get some girl to like me or something, that's not going to actually produce the result that you want, actually could produce the opposite result because you'll seem too needy or something, right? So you start to realize that a lot of the things you were taught in school about like, you know, rewards and how you kind of succeed in life don't translate into everything else. Right.

And so a lot of things they do, like if you work hard, I think for a lot of things you will generally succeed at them. However, you know, there's a lot more to success than just, you know, putting in effort. So I think those are the big scripts that I saw. And like in terms of what I heard from family, what I heard from other people, it's like hard work, hard work, hard work. And that was just reemphasized a lot. And I just followed that.

I was very obedient to the system and, you know, in many ways. And that's like even the little things I think about, like You know, like I'm very like, you know, a stickler on rules and not because I'm trying to be, but just because I think that's been so ingrained in my mind that like it's really hard for me to kind of not see it that way, you know? Yeah.

[04:03] Paul: It's interesting you started in consulting because I think the issue— I always say the issue is not these careers early on, it's that there aren't many socially acceptable off-ramps. Right. And I think that is often the hardest part. I imagine when you started consulting, you were pretty excited about working in consulting. Was that similar for you?

[04:26] Nick Maggiulli: Yeah. Oh, it was. I was super excited. Like, and I in particular— so I know you did management. Management's like the most popular one people know about, you know, McKinsey, Bain, BCG, etc. I worked in something called economics consulting or litigation consulting, which is lesser known, but it's far more analytical and data heavy.

And so, you know, if management consulting is looking to the future, like how do we improve the profitability of a business, etc., economics and litigation consulting is looking to the past. It's saying something happened in the past. Let's analyze what happened. Let's figure out, let's figure out what the damages are, etc. We're trying to remedy a past situation, not trying to project growth into the future or something like that. So those are the differences between those approaches.

And one of them obviously relies on much more data, right? Because you have a lot more historical data. And so that's— and I kind of love— realized I love programming and love data. And so I wanted to stay within that, that area. And so for me, it was great. And I don't regret going into consulting whatsoever.

It gave me the skills I have today. But at some point I was like, hey, you know, I want to do something else. I think I can use this data thing and do it in other things that I really care about or I find interesting.

[05:24] Paul: Yeah. When did this sort of— I call it the pebble in your shoe, stealing this from Kay. He's framing. When did that pebble in your shoe— when did you start to notice it?

[05:35] Nick Maggiulli: I think at some point I just realized like I didn't have a future in consulting. Like there's like a cap unless I went and got an MBA or went and got a PhD or something. I didn't want to do a PhD. It takes too long. Didn't think it was worth it. And then same with the MBA.

It's like MBA, I'm going to lose 2 years of earnings plus I was going to spend however much, $100,000, $200,000, whatever it is. I'm like, I'm looking at half a million bucks in cost, right? And I'm not someone, you know, I came from like a lower middle class family. So I'm like, I'm not someone who's going to be like, oh yeah, just spend half a million dollars, no big deal. Like that was a significant amount of money for me. And so like I couldn't, I didn't want to do that, right?

I couldn't give that up. So I was like, I got to find a path that makes more sense for me and kind of uses my skills and You know what I really care about and what I cared about was personal finance and investing. I'm just like, what can I write about in this space that's different than what everyone said 50 times before? You know, like that, that was my big question, right? When I was like, the pebble in my shoe was like, there's something here and I think I have a skill I can use to like address a lot of this stuff, but I have to do it in a way that no one's done it before. Otherwise it's just going to be boring, right?

[06:34] Paul: Were you reading blogs like The Big Picture? I was reading that back in like '08, '09. I remember reading that right after college.

[06:44] Nick Maggiulli: It's funny, I actually never read blogs before I started blogging, but I read books. I read a lot of books. So for me, the only way— like, that's what I thought about when I was like writing my book. Like, how would I reach myself? Like, let's say I could go back to when I was reading this stuff, you know, early 2010s, right? Like, how would I get to myself?

A blog post wasn't going to do it, but a book would. A book could get to somebody, right? And so that's like the thing. And not— most people don't read blogs, right? So once you're in this, once you're in the blog space, like it's like now it's like all I do is like read blog posts, right? And but like, that's because I'm in it, right?

I'm like in the space. But before I was in it, it was never something I spent time on. And that's what that means is most people who are even interested in finance aren't probably spending a lot of time on that. And I understand why in some ways, you know, blog posts are great, they can be good, but like it just doesn't compare to the amount of work that goes into a book, a published product, right? Because you spend so much more time crafting the idea, crafting the narrative. Triple checking the data, stuff like that.

Little mistakes that could slip through on a blog post just are far less likely in a book, right? So I think that's why I didn't realize it at the time, but I was reading books. I was really getting the highest return per unit time I was spending.

[07:48] Paul: Yeah, one of the biggest books that had an impact on me was A Random Walk Down Wall Street. I read this in college and was sort of blown away by the gap between what people were saying, especially smart people about finance, and what the data was telling me. Did you read that book? And I'm guessing based on your current writing, you noticed this gap as well.

[08:15] Nick Maggiulli: Yeah, I think data for me is a huge piece of a lot of this stuff because, and I actually took it differently. So like in investing, there's already a lot of data that's been put out there. For example, one of my favorite books is You know, The Intelligent Asset Allocator by William Bernstein. That's like my go-to book, tons of data. So it's not like data hasn't been used before, but it wasn't necessarily used on the personal finance side. It was always just like, oh, max your 401(k), you know, buy whatever different things that we hear a lot and no one's actually checked if they actually make sense.

Right. And so I was like, why don't I attack those things? Because I think a lot of people haven't done it or at least haven't done a thorough job of doing that. So yeah, I read, read some of these books. I was like really fascinated with them. I had no idea that I would end up writing about this stuff, but I think I started writing about this and slowly, like, these just— these things just came about, right?

And like, I— a lot of it was just answering questions. I think a lot of it, even how I structured, you know, Just Keep Buying, is just every chapter is a question. And so someone asked me a question, well, is that true or should I max my 401(k)? And I'm like, everyone just assumed, yeah, just do it. That's what everyone else says. So like, I'd never question it.

And once you start to actually question and dig in, you start to find surprising results. Not always, but sometimes. And that's what's important.

[09:20] Paul: Well, I think what's interesting is You're sort of stumbling upon similar things I did with questioning work, which is that there's sort of these scripts people follow, but they only sort of work if you look at the human as a robotic machine that sort of goes through life. Right. And I love your— how your writing brings alive these different parameters where you're saying, well, maybe it doesn't make sense to max your 401(k) if you can get an enormous return on your social capital or making, building personal relationships and doing all these things in the short term. And before we dive into that, I'd love to just like, I think it'd be great for listeners just to hear some framing because you've talked a lot about how you had this scarcity mindset of how you related to money and how that related to you discovering, oh, maybe it's not about just maximizing wealth.

You got to actually live your life too. Yeah.

[10:21] Nick Maggiulli: And I think I've only kind of realized that— and remember, I'm saying this as someone who's 33 years old who hasn't had an immense amount of wealth, but I've just like, you can read about other people's stories and like see the stuff that they go through and it's like, why? Like the problems you have are very minor in the grand scheme of things, yet like you overemphasize them, you kind of get in your head about them, all sorts of stuff, right? And so I started to see that a lot and just thinking about the scripts we tell ourselves, as you said, like for me, scarcity has always been one because like when I grew up, like Every time I went, you know, to get fast food as a kid, it was always like order off the value menu or whatever. At the time, a dollar menu was like the thing. Like that was the thing that everyone came out with, the dollar menu. So we always order off the dollar menu.

They still have the dollar menu, but now it's like $1.19 or $1.29. You know, inflation's eating it up. And so it's very interesting to me to think like even today I still have this feeling like I need to order off the dollar menu when I'm at a fast food restaurant. Like when I go to a— I go to a steakhouse, spend $70 on a steak, not no problem. But then when I go to a fast food restaurant, like I'm immediately back in that frame and back in that, that little childhood frame I'm in. I'm like, Wait, I can't be spending.

I have to get a McDouble. I can't get a Big Mac, you know? And so it's weird, but like, it's really ingrained in us in a lot of ways. And so you have to kind of like outthink that and kind of move past that over time. And, you know, you have to realize there's, there's more to life than, than money. And so like, you have to kind of break those scripts in a lot of ways and it takes time and there's no easy way to do it, but you have to like work on yourself internally to get past those things.

[11:45] Paul: I think the powerful thing about self-employment for me has been the constant uncertainty with money. And at first this drove me, I don't want to feel this feeling. I'm going to try and make a bunch of money. That's what I did in my first 6 months after leaving my job. But then you realize you sort of have to have a different kind of dance. And for me, it was basically learning how to exist with those uncomfortable emotions.

And now at this point, I can sort of say, okay, I have a strategy. I have extra savings because I care more about my runway than maximizing wealth. And then two, yeah, I do feel uncertain about money, but I'm just going to say, all right, I see you, Mr. Emotion. We can— you can stick around, but I'm not letting you take the wheel. How is— how has your relationship evolved over time?

[12:42] Nick Maggiulli: Yeah, when I think about that, like, I haven't been in the same place you're in in terms of self-employment where, like, your income is very variable. Like, I I do own a business that runs, you know, dollars a day and all that. And I can see that income is quite variable. Even year to year, things change, things come in. Now, for example, there was a new SEC marketing rule. My email business is basically shut down now because we can't link to anything that is hypothetical performance if we can't verify it.

So like the SEC has basically shut that stuff down. So like a lot of, a lot of people are using hypothetical performance, right? So that's a, that's a clear example of like, let's say I was, you know, self-employed and I was relying on that, right? You know, that's an example of where, oh gosh, that's something that could, you know, get you in trouble if you're not, you know, keeping up with the laws and regulations. So I haven't really had that same sense of had to deal with that emotion. And I'm guessing if I did, I'd have to— I would go through the same type of thinking that you did.

But a lot of things too is like, I think we, we like hide, like especially like as you start to gain more assets, if you just move them into another account, it's like they don't exist, right? So you forget, you're like, oh, I only have X dollars. Like, let's say I hypothetically keep like 10 grand in my checking account or something, right? Like I could have another, you know, $100,000 in a 401(k) or $1 million in a 401(k) or whatever. And if I'm not looking at it, I feel like I still only have $10,000, right? Even though, you know, like, you know, you have like, okay, these other assets, but like you mentally can push them off your radar and then you can get back into that mindset of like, I don't have any money when you really do.

Right. And so I think that's a lot of what we do is like a lot of mental accounting and how we use mental accounting. And so like For example, I don't really look at my retirement assets as things I can touch right now. So I really do think those things disappear into the void, right? Like they're gone, right? They exist in like a line on a, you know, in a balance sheet of like my net worth, but they don't really exist in terms of like, oh yeah, I can just pull that and go do whatever with it.

Like, so I think that's where, like, as I said, it really is mental accounting. It's how do you want to view your money? And once you kind of at least cognizantly, like, think about that and address like, what am I doing and why am I doing it? And then I think you can move toward you know, figuring out what works for you.

[14:41] Paul: Yeah, it's always fascinated with me observing people that will buy a house within 24 hours that will radically change their personal finances, but then they're still obsessing around, well, this gas station down the street, $0.03 cheaper. You got to go get your gas there. What's happening there?

[15:02] Nick Maggiulli: Just people. I think that's a personality thing. People love deals. They hate the feeling of getting ripped off, even if like But like, you're not— what they're not valuing is their convenience and their time, right? So that's why I think, for example, air travel, like one of the things I see with air travel, I see people that will take connections or 2 connections to save $100, right? And it's like, don't get me wrong, like if you don't have a lot of money, if you fly like once a year, like $100 probably is meaningful for you.

But for people that are flying often, they still do that like, you know, at least once a quarter or something like, you should not be taking connections for a $100 difference, right? I mean, just your time, the probability of something going wrong, losing a bag, the headache, the hassle. It's just, in my opinion, not worth it. But some people like, you know what, I value the $100 more than those, those downside events. And so this is where it's like, it's completely up to you and what you— it really matters what you feel like spending your money on. But I think that's an example where people end up valuing their time at zero, like with like connecting flights, like they basically value their time at zero.

And I don't think that's, that's accurate a lot of times, you know, and I think that's where people can make mistakes.

[16:05] Paul: Yeah. I also think people don't have a deep awareness of the broader culture, right? Our, our culture is a consumer culture and we're, we're probably so young when we first realize there are deals you can get taken advantage of. You should try to never get taken advantage of and all these things and they're similar to like work. There's no off-ramp to these. I've sort of been thinking around mentally.

I now with money, I'm, I try to take the stance of I want to graduate from these money concerns, right? So similar to what you're saying, I want to be able to spend $100 more on that flight because I know the day of and when I'm really frustrated in that connection, I'll probably be willing to pay $1,000 to get where I want to go. Yeah. How do you think about sort of graduating to new, do you like that framing?

[17:05] Nick Maggiulli: Yeah.

[17:07] Paul: Yeah.

[17:07] Nick Maggiulli: So I actually, there is a framework that I've kind of come up with a while ago that kind of tries to address this. I haven't fully fledged it out. I think I will write about this more. I've written a blog post on it. It's called Climbing the Wealth Ladder, but I might, I might actually write a book about this. But here's the idea.

It's basically, The idea is like your marginal spending decision, like that marginal amount of money you spend. So in this case, it's $100. I'm arguing that you should have a net worth that's like somewhere in the order of like, you know, that should be 0.01% or what we call 1 basis point of your total net worth. So in the case of like a $1 decision, which means like, oh, do I get like cage-free? Okay, eggs is a bad example because eggs are really high right now, but like normally it's like Cage-free eggs are like a dollar more than the standard eggs right now. It's probably like $3 more.

But that $1 decision, that question is like, okay, if I had $10,000 in net worth, right, or liquid net worth, that $1 is 1/10,000th of my net worth, right? So I can spend that dollar and it's not going to really affect me, right? So it's like, figure out how much money can you spend without it impacting your finances whatsoever. And so for someone who has $10,000, I would argue if you spend a dollar, it's like nothing to you, right? And so if you have $100,000, spending an extra $10 is nothing, etc. Right now, obviously it depends how often you spend.

And there's, there's a lot more to this, this framework. But the idea is like figuring out, okay, how often am I making this decision? If I'm doing a flight, you know, once a year, like maybe it's worth that $100 to save myself, you know, 4 or 5 hours of time, right? Especially if you can just look at this from the time perspective. Like if you make $20 an hour and you're going to save 5 hours of time, right there it is. 5, 5 hours of time, $20 an hour, that's $100.

There it is right there. Of course, that's on after taxes. We can get into the details, but you get my point right. So I think that's how you can do it. You have to come up with different frameworks to rethink how you view money. And so for me, I'm just saying like I'm at the point now where when I go to a restaurant, I don't like necessarily look at the menu prices on like an entree, right?

Of course, like the bottle of wine going from like, you know, $40 to $100 or $1,000. Yes, I would definitely care about that. But like, I'm not like, oh, should I get the salmon or the burger? Because it's like $8 more. Like, I'm just going to— if I want the burger, I want the burger. If I want the salmon, I get the salmon.

Right. And so I think that happens as you gain more assets. I think that will naturally happen, but for some people it doesn't. I think using this framework is a better way of saying, hey, okay, I've graduated past that. I can spend an extra $10 on this without, you know, breaking the bank.

[19:32] Paul: I love that. So January 2nd, 2017, you decide to write a blog post. Talk me through what led to that and why you decided to hit publish and put yourself out there.

[19:50] Nick Maggiulli: So it was late 2016. I would— I've been thinking, I had this notebook, all these blog post ideas, and I was like, you know what, I want to write about this. Like, I think it's time. And so I registered the domain. I got the Twitter account @dollarsanddata. Like, I think the day before, I think maybe December 31st or December 30th, 2016, I said this would be my New Year's resolution.

I'm going to put out one blog post a week. I'm just going to keep doing it, right? Told all my, like, coworkers and stuff. And then, like, it just— it was just crazy because, like, there was now a betting pool of when I was going to give up after, like, you know, after like 4 or 5 weeks, they started betting on when I was going to give up. It was crazy stuff. But I— my mindset at the time was like, hey, I want to write about this stuff.

And so my first post was called How Hedge Funds Get Rich, and it was just me attacking, you know, fees and how basically, like, the hedge fund will be richer than you within 20 years on average using a 2 and 20 fee structure, which was like at the time, like the standard. It's since come down. I think it's like 1.5% in '15 or something, or 1.5% in '17, whatever it is. But like, those fees are so like egregious that within, you know, a generation, the hedge fund is going to have more capital than you, right? Assuming they're reinvesting their capital and just getting market returns, right? You don't have to get anything crazy.

You have to beat the market whatsoever. But yeah, for me, it's just at the time that was like where I was at. My head was like, hey, I think I can do stuff with data. I can like have all my code publicly shown so people can see what I'm doing exactly and they can copy it, whatever. And to this day, every post I've ever written Every piece of code is on the internet freely available. You can literally go and copy me, like exactly what I do.

Like there's no secrets, not hiding anything. The only thing I can't publish is the data because a lot of times the data is private and I have a license to that and I cannot share it publicly outside of that, you know, and a lot of stuff is public, like all my S&P 500 data, you can get that, that's Shiller's data. So I'm just trying to like, you know, be open with it and show people like, hey, this is very doable and I'm being very transparent with everything I do.

[21:39] Paul: Did you write before that publicly or privately?

[21:43] Nick Maggiulli: Nope. Never. I mean, I mean, obviously in school I had to write essays about this or that. Like I've obviously had to have written in my life, but I actually hated writing. Honestly, I hate, I hated writing. And I think the reason I hated writing, and I've talked about David Perel, um, talked with David Perel about this a lot.

It's like, I hated writing because I had to write about what someone else wanted me to write about. I didn't get to pick the topic. It's like, oh, write me a 500-word essay on, you know, Boo Radley and, you know, or The Scarlet Letter or whatever. Like, I, it's like, I don't want to write it. Like, no offense. Like, these are decent books.

I'm not downplaying the books. But, you know, as a, as a teenager or something, like, I don't want to write about this stuff, but like, I had to write about this stuff. So I had to learn how to write, do all this stuff. And at some point I was like, you know, what if I got to write what I want to write about? And I want to write about how hedge funds get rich, right? Like, and how they— it's all about their fees, right?

And so for me, You know, that was the idea. And so even then, like, even if you read that blog post, it's decent. Don't get me wrong. The math's cool and all that, but like, I wasn't even that good of a writer. I improved on the job. Like, if you actually sort of read my blog posts, you'll just see like, yeah, these aren't even written that well.

And then over time, they just, I think they get better and better because I just become a better writer. So really you're seeing me write, become a better writer over time. And you can just read like, read like one of my more recent posts and then read like post 2 or 3. And you're like, this is the same person. Like you won't even, recognize the writer necessarily. The data stuff will be there, but like the actual good writing, the good mechanics, all that stuff I had to develop really.

So, and yeah, I hated it because it— I didn't get to write about what I wanted to.

[23:12] Paul: I think in 2017 though, like the quality of the writing didn't matter as much. The thing that comes through in that post, I just reread it, uh, yesterday, is the curiosity is there. And I think what people like you, people like me, other people have been writing on the internet are discovering is that there's a shortage of people who are just following sharing what they find. And it's still, crazily enough, early for this, I think. I think one thing I find is that there's just a shortage of people writing similar stuff to me. So people might look at what I'm writing about work and saying, well, Paul's already writing about that.

I want there to be 20, 25 more people because then I'll get more inflow of ideas, be more inspired. Who have been some of your biggest inspirations you sort of learned from after starting writing and connecting into the blog world?

[24:08] Nick Maggiulli: Yeah. So the obvious names in the financial world, Morgan Housel, Michael Batnick, who's my boss technically. Yeah. Ben Carlson, you know, Josh Brown, all these people who I like, those three I work with, right? But like, I just love their writing. I love what they're doing.

I kind of keeps me, you know, on top of my game and like every once in a while they'll put out something that's just so good. I'm just like, yeah, I just love that stuff. And so for me, it's like following people, finding new people in the space. You know, like I think one of the people I found in the last few years is, you know, Money with Katie. Katie, you know, so she's great. What she does is like Jack Raines is new.

Like there's a lot of people that are kind of new people that are coming out, getting their name out there. I love it. And I agree. I wish there were more finance bloggers. I wish more people use data at like a high level because there aren't that many, if I'm being honest. If I had to pick like who are the heavy data people, it's like, you know, Michael Batnick, Ben Carlson, myself, Jesse Livermore, who's a pseudonym blogger, et cetera.

And then like Charlie Bilello, or I don't even know how to say his last name properly, but he's also really good. But like, there's not that many of us that are like writing with a lot of data and writing like regularly. Right. And that's the thing. And I wish there were.

[25:12] Paul: Yeah. Do you like writing now?

[25:14] Nick Maggiulli: Yeah, I love it now because I get to, I get to choose what I write about and I enjoy it. And as long as I like have some passion for the topic, then it's great. I mean, at times it can be frustrating because you could, There have been times where I literally will sit on a sentence for like 40 minutes because I'm like going back and trying to read. I'm like, no, I'm trying to make these two clauses fit. And I'm just like, no. And I'll just sit there and I'm like, this is not right.

And at some point I have to either nuke it or do something else. But like, that's rare when I do that. But there are times when I will be on the same sentence for over half an hour because I want it to be perfect. I want everything to flow. I want it like when you're reading this thing, I want it just to be like butter melting on a page, like just natural, like just easy flow. I don't want it to be like, oh, there's any sort of, you know, grittiness.

And so it's funny when you read bad writing, it's so obvious, like within a couple sentences, you know, oh God, this blog post is going to suck. And then good writing within a couple of sentences, the same thing. I'm like, oh my gosh, this is just like, there's people when you read them, it's just, they just, they seduce you with their writing and it's so good. And so I'm trying to get to that level. I still think I'm pretty good at what I do, but I feel like I could get even better. And there's other people I read who I'm just like, my gosh, how do they do that?

How do they just, that slow seduction and it's so good. And so I'm trying to get to that level, but it just takes so much time to get that right. It's like it takes me 10 hours a week to write a post. So every single week is 10 hours. Some I've done less than 10, but like, someone's like, why don't you write like 3 or 4 posts a week like other people? It's like, because I don't have 40 hours a week to write.

I just can't produce it my, what I believe is my quality at that quantity.

[26:39] Paul: Yeah. I imagine you have the same response when you read some of Morgan Housel's posts. I read his posts and I, I'm just thinking to myself, this is not fair.

[26:50] Nick Maggiulli: Hey, just the ghost. I mean, he's been doing it so long. Yeah, he's been doing it for so long though. And that's literally all he does. I mean, he reads a lot obviously, but like he's literally just a writer. Like I still have a full-time day job and I love what I do.

Like I'm doing programming. I have to like solve these really complex technical problems, things that like I love doing and I get to use elsewhere. But I'm not a pure writer. Like I still don't like, yes, I write, but I don't consider myself like a writer, like as a huge piece of my identity. Like I have to write daily or I have to get these things out. I, so I don't, I don't let it be a big piece of my identity like it is for other people.

You know, I think I'm more of like a, I consider myself a data scientist who writes more than a writer who's a data scientist, if that makes sense. Right. And so, and even the data science I'm doing is not like that complex. A lot of this is like literally percentages. Like, can you do percentages? Like fractions?

Like that's it. Just do it a lot of times. Right. And that's, that's most of it.

[27:45] Paul: Yeah, I think, I think your writing though has sort of created, helped you create your path for you, right? I think what attracted the ritholes people to you is probably, oh, here's proof of work.

[27:57] Nick Maggiulli: This is amazing.

[27:58] Paul: I'm curious though, when did it shift from I'm just doing, trying to keep this streak going from, oh, this is something I want to do for a long time and this could be something bigger than me being a strategy consultant or economics research consultant.

[28:17] Nick Maggiulli: Yeah. So that transition, I just realized, like, because I met up with, with Josh and Michael at Ritholtz and we just started chatting and I basically was like, hey, like, could you guys use someone? Like, they're like, we have a lot of data and we don't know what to do with it. And I was like, I could analyze it for you. I can help you guys make better decisions, etc. And so that like most RIAs, you know, registered investment advisors, like they are not hiring data scientists, right?

I don't even think I know of a single data scientist in a single registered investment advisor in the United States. I bet there are some, but for them to hire me was a massive risk because like, why would we hire this technical person? Like, we don't need that. We need more assets. We need, you know, operations people to open the accounts, to trade the accounts, etc. So it's a very different model.

I said, let me come in and see what I can do. And so I came in, started doing, you know, business intelligence stuff, sort of help run the websites. And now I just do a lot of different stuff for the firm. So it's like mostly technical. It's very technical work. And so that's what I try to focus on.

But yeah, how did that transition happen? I met them and we basically hit it off and I said, let's do it. And so let's take it. And so they were willing to take the risk. They hired me and I think it's been a great thing for both of us. And it's a symbiotic relationship because I can write about my blog stuff.

I can do all this stuff and still be that person and still have a full-time job. Before, I was running, I was starting to run into compliance issues already with my old firm, even though I wasn't, I was technically anonymous for the first 7 months. So no one even knew it was me. So at some point it came out that it was me and then my compliance department, we were going back and forth. We had hedge fund clients, how could you post this hedge fund thing? And I'm like, oh God, I was like, oh, I was like, I'm not attacking any specific hedge fund, just talking fees in general, but it's not important, right?

So I finally got out of there and I didn't have to worry about that anymore. And so, you know, ever since then it's been smooth sailing basically. So, and yeah, and even now I don't, I don't look at it as like, oh, I'm just going to be a full-time creator. I don't really see myself as a full-time creator. And I don't think I could do that because I can't like, I just can't do it. I can't get on Instagram every day, post a post every morning, post a story.

Like, I tried doing that for a while and I just, I can't. I'm just, it's not, I'm not like that. I'm not wired to share my life. Yeah. I'm not wired to share my life like 24/7 with people. Like, I just don't care enough about doing that.

And I, I personally don't think it's that interesting. I'm like, why would you care about like what I'm doing all day? Like, it's just so weird. And maybe it's just my ego, like saying don't do that, or I don't know what it is, but I'm just, I don't think I'll ever be a full-time creator. I mean, I also said I would never write a book, and here we are. So I don't know.

[30:39] Paul: So, well, I think I love talking to people like you who are channeling this creative urge. Right. And I think I would say most of us are creators in today's world. And probably the best career strategy is also to create and share your ideas. You happen to move from a firm which didn't understand the future in the internet to a firm which had basically been blazing that path in the financial world. Like Barry was so early.

On this stuff. I've, I've read his stuff on Google Reader.

[31:11] Nick Maggiulli: He was on GeoCities.

[31:13] Paul: He was on GeoCities. So I don't know if he was a joke.

[31:16] Nick Maggiulli: He was, but like, probably he was back in the night. I think he honestly started the blog like in the '90s or early 2000s. Yeah. Like he was that far back. Yeah.

[31:24] Paul: Yeah. I remember he was in my Google Reader senior year of college. I'm not sure how I found him, but this was 2007 and there's just a shortage of good content. And I was always just fascinated. This person is a financial advisor and also just blogging and it, it's so common now. A lot of people do this, but it must have been really refreshing to see somebody value that side of you and say, yeah, this is actually going to help us, your writing, and keep going on it.

[31:58] Nick Maggiulli: Yeah, I think that The reason why blogging really took off, if you think about it, is like the traditional, you know, information ecosystem was, you know, the newspaper, right? And that's daily. You look at it, you throw it out, right? Maybe you keep a specific column you like a lot. You might keep that newspaper, but how many times are you going to do that? Imagine I had to keep a physical copy of every like Morgan Housel and like Michael Batnick blog post.

Like I would, my whole apartment would be full, right? You know, my 500 square foot apartment would be just filled to the top, right? So the information ecosystem didn't allow for long keeping long-form content. Now with blogs, you can kind of do that and you can kind of follow a writer and do it in different ways. And the fact that more, you know, Wall Street Journals of the world and Bloomers of the world haven't tried to lock up even more of these writers is shocking to me. I don't get it.

Like there is Matt Levine, you know, Morgan was at the Journal and stuff, but like he couldn't just write whatever he wanted, right? Like he had to see, there's still, you know, there's certain things you can't write about. They want it to be more topical like today. Then like he could write like one of his greatest posts ever that's like legendary around the world, but You know, that's not daily news, so they don't want to publish that. Right. So I just, I think about like, where is, you know, where's that going?

And I think the rise of Substack and all these types of things makes sense because now people can say, hey, here's my brand, here's my long-term ideas. And I think it's, it's taking off for a reason because there's value there. Yeah.

[33:13] Paul: And yeah, I think traditional media is radically underestimating this. I mean, you've seen it a little. You've seen people like Ezra Klein go go do his own thing. And it's mostly in politics and mainstream news, though there's all this long tail of all this interesting content worlds like yours. I think finance has probably done a better job than most other industries because you can sort of pair it with advice, advice in an interesting way. I'd love to hear more about how you think about building relationships.

I know from other people as well, you're really good at building relationships with people, especially in New York. I know writing online is a really easy way to do that. I've done that with people. Put your ideas out there. People are more willing to engage with you because they can dive into your thoughts before they meet you. But how have you thought about just connecting with people, especially in the New York finance scene?

[34:12] Nick Maggiulli: I think for me it's just about You know, finding people that you like for associated reasons, or even people when they reach out to me like, hey, do you want to, would you be willing to meet up for dinner sometime? Like fans, I've gone out and had dinner with people, you know, it's very, you know, I love meeting people, talking to them, hearing their stories. And, you know, I think you just have to like, you're just a human, right? You're like, there's all this ego of like, oh, you're a creator of all these followers and stuff. But it's like, that's all BS really. Like you just, you're still a person at the end of the day.

If I didn't have the followers, I would be the same person. Right. And that's, I never want to lose myself. And so for me, it's always about like, do I appreciate someone's craft or do I appreciate like if someone's like legitimately interested and wants to meet, I will definitely meet them. Like I'm not going to go fly somewhere, but like if someone's in my city and they're like, hey, I can meet and I'll say, hey, meet me here. They're willing to come to me, then I'm definitely down to sit down and talk with people.

I do it all the time. So I think for me, it's just about like, you know, you have to put in a lot to get stuff out of relationships. That's how it works. And I think a lot of people, you know, let those fall by the wayside. So I try not to. You have to work at it.

It's active work, right, to keep relationships alive. You know, it's easy to say like, For example, when I sent books out to people, most people, when you send advanced copies to like people, friends, people in the industry, like they just send the advanced copy. I signed all of them, right? Like I signed them to people. I said like, hey, you know, like appreciate, you know, you know, our relationship or whatever, whatever specific thing, you know.

[35:29] Paul: Tell them the truth.

[35:30] Nick Maggiulli: Yeah. So it's like whatever specific thing I like, I wrote like stuff about like my relationship with that person. And like, that's like, it's the small little touches like that. It's almost like, you know, telling people happy birthday on their birthday. Now, obviously I don't know everyone's birthdays, but you get the point, right? It's like you really have to show that that you actually care and you do, right?

That's the thing. That's really what matters. And so, it's not about like, oh, what tactics can I use to improve my relationship? It's like, just actually care. And if you actually do, like, you'll see that will come back to you in a lot of ways. And so, people have helped me out so much, just having me on podcasts, you know, talking about my work.

Like, I've just been, you know, I'm so grateful for that. I truly appreciate people like you, Paul, and others that have, you know, done that for me. And so, you know, I'm willing to help out others as much as I can. So, like, the invitation's open. Like, everyone's helped me. Like, please, if you need anything, like, let me know, right?

[36:12] Paul: So I love that. Yeah, you, you have such a generous spirit. And I like to think of creating and sharing ideas as a generous act, right? Because the selfish thing is not to share your wisdom with the world and just keep buying is so good.

[36:30] Nick Maggiulli: Thank you.

[36:30] Paul: I appreciate that. I'm an unofficial hype man for this because there is so much bullshit in the world about finance. And it's actually pretty simple, right? Like, that's why I like your book. One, it talks to you like a human. And two, it's— there's no pretension or, oh, you need to be smart to understand finance.

It's simple rules like just keep buying, right? Yeah, that's one of them.

[37:02] Nick Maggiulli: It's— yeah, I try to—

[37:03] Paul: basically all I do with finance, though.

[37:06] Nick Maggiulli: Yeah, I appreciate that. I appreciate being a hype man. But yeah, I mean, because I think people always think like, oh, you have to like just really dumb it down for people. I'm like, no, people are pretty smart, but like, just don't use jargon. Like, people understand ideas. You just have to explain it.

If I say like, for example, anytime I talk about basis points, if I just talk basis points, like, what is that? I don't know what a basis point is. Oh, it's 1/100th of a percent, right? So 100 basis points is 1%. It's very easy now. Oh, the Fed's going to raise by 50 basis points.

They're raising by half a percent, 0.5%. Right. So I'll make sure I explain that. I won't just go straight into jargon. Right. Because otherwise you lose people right away.

And so you have to make sure people can understand what a basis point is. And so if you think they can't, you're like trying to like that. That's where you start to lose people. Right. Because that's— it's a very simple concept, right? This is, you know, division, right?

It's like I said, everything's division, multiplication in the book mostly, but just done a lot of times. That's what compounding is, right?

[37:57] Paul: So yeah, I wish more people in the finance industry would do this. I'm a relatively intelligent person, but I'm like Googling basis points every time I hear it. It's just I don't work in finance, so it's not intuitive for my brain for some reason.

[38:15] Nick Maggiulli: But yeah, and but people get it though over time, right? You'll, you'll do it enough and you'll be like, oh yeah, that makes sense. You know, 10 bps, okay, 0.1%. Okay. Like 100 bps, 1%. Yeah.

[38:25] Paul: Bips is basis points for people that don't know, because I didn't know this at one point. Yes.

[38:30] Nick Maggiulli: Yes. For people who aren't following along.

[38:32] Paul: So one of the cool things in the book, you basically debunked lifestyle creep, which I don't think is intuitive for people. I think lifestyle creep is this idea that people sort of believe it while also not actually having it play out in their own life. So why, like, spending doesn't increase with income, even though we say things like that, we reinforce this idea, we sort of believe in lifestyle creep. What's the gap there?

[39:02] Nick Maggiulli: Well, I think just the story is very compelling and all you have to do is find a few examples where this is true. And then therefore in your mind it's like a law, like, oh yeah, they just got a big raise, they got a big car, they got this. Most people, when their income goes up, they don't spend that much more. I mean, generally spending does rise with income, but it doesn't rise, you know, like linearly. It's not like, oh, I got a dollar more, I'm going to spend a dollar more or whatever, even doesn't even match. Like, let's say you're spending 50% of your income every year, your after-tax income.

It's not like, oh, if I double my after-tax income, I would double my after-tax spending. Some people would double it. Some people would do more than double, maybe spend even more of their money. Right. But most people don't. Right.

And so I think the simplest analogy for this is what I call the law of the stomach. Right. Like, if I increased your income by 10x, would you eat 10 times more? Like, no, you wouldn't. Right. I'd argue you'd probably spend a little bit more on food, maybe get higher quality ingredients.

I mean, if you made 100 times more, maybe you'd have your own personal chef or something, but you're not going to spend, you know, in commensurate with the raise in income. Right. And so I think that's the— that's what doesn't— what makes more sense to people. Like, oh yeah, that's— and so just because of that, like, yes, lifestyle creep does happen. And I think it's a little bit of it is okay. And I show in the book mathematically how much you could creep.

It's roughly half like that. Just for the punchline for people, it's roughly half. So if you got a raise of, let's say, $10,000 after tax a year, you could spend roughly half of that and the other half you would have to save in order to stay on track for retirement. So yeah, that's the, that's the big punchline there. But it goes to show like the answer isn't don't lifestyle creep at all or lifestyle creep all you want. It's somewhere in the middle.

In this case, it literally is 50%. So it's just the numbers came out that way. But yeah, that's, that's what I thought was interesting.

[40:40] Paul: Yeah, I, I've had a lot of lifestyle creep in the last 3 months. I've gone from 2 suitcases for 4 and a half years to now we have a full 2-bedroom apartment. We just acquired an air fryer and we have all sorts of baby stuff that we needed to acquire. But this is good lifestyle creep because we're sort of entering into a new chapter. So I'm excited for it.

[41:08] Nick Maggiulli: Yeah, I wouldn't even, I wouldn't even call that lifestyle creep if it's like required. Like, I'm like, oh, I had to buy a crib. Lifestyle creep. Like, no, you need the crib. Or like, I need like, oh, I have to feed my child, lifestyle creep. Like, no, that's not lifestyle creep.

That's like literally like living your life. Lifestyle creep would be like, yeah, oh, we have a baby. Oh, now that I have a baby, I'm going to get myself a Porsche. Like that. That doesn't make any sense, right? Like that's lifestyle creep.

[41:30] Paul: Yeah. It's interesting that I even labeled it that, right? I, I definitely have some insecurity about spending money because early on in my path and you read this in my book, like I have this line, I was obsessed with like just minimizing spend and it was actually great because it gave me permission to stay on the path longer and my runway extended, but I was playing accountant, not living my life. And the past year I've started making a little more money. I've been really lucky with some of my things taking off and I've actually tried to practice spending to lean into that discomfort. I just, I love biking.

I'm biking all the time, but I'm using the Metro Bike, like bike share, and half the bikes are dead sometimes. I just purchased an electric bike, which was $1,400. Now I have the money for this, but I couldn't do it for 2 months until my wife was like, buy the damn e-bike, reward yourself with something. And this stuff is just so hard and it's a constant learning journey. What are some of the things maybe money-wise you've sort of tried to lean into with spending more or investing a little more in yourself in the past couple of years?

[42:53] Nick Maggiulli: Yeah, so there's a lot of tricks you can use. Like, for example, with that e-bike example, like you could like try and do it as a per-use cost, right? Like let's say, you know, you do, you ride your e-bike.

[43:04] Paul: I don't want to do it 100 times a year.

[43:07] Nick Maggiulli: Yeah, but I'm saying like, you know, you do this in your head, right? Let's say you do it 100 times a year, right? So take $1,400 divided by 100. That means every time you use it, you're spending $14, right? But it's not like after 100 uses it's going to disintegrate. Like maybe you use it 1,000 times in your life.

Now every time you use it, it's $140. How much do you spend on that, the Citi Bike or whatever, when you rent it, right? It's like if you start doing it per use, like maybe it's even more expensive than the Citi Bike, but it's your bike. It's like, you know what exactly, you can set it up. It's always going to be there. It's reliable.

There's no time cost, right? Like once you start valuing your time and stuff, you start to see that all this money stuff actually makes a lot more sense. And for example, I pay for someone to do my laundry every week. Probably the biggest value add I have. I spend about $20 a week and I take my laundry down to the laundromat. They do it all for me.

And then I even pick it up. It's right across the street. They could even deliver it, but I'm like, don't deliver. I'll just come pick it up. Right? So it's not a big hassle.

Me walking across the street is no big deal. But that's something that adds multiples to my life in terms of like having to match socks, having to fold everything. Comes folded, ready to go. I just put it away, right? So that saves me so much time for $20 a week. It's like, that's an example of where like you could drive yourself crazy with the amount of stuff you have to do.

And it's like, if you can find those little things where you can spend just a little bit of money to then end up saving yourself a ton of time and just annoyance, like I think it's worth it. And so in this case, you having to go find a bike every time, that's annoying, right? Like imagine just having your bike there ready every time. That's like, that's important. I think that's an example of like money well spent.

[44:27] Paul: So it's coming next week. Let's go, baby. I'm going to be a—

[44:32] Nick Maggiulli: I say focus on fulfillment.

[44:33] Paul: I'm going to be an e-bike influencer.

[44:35] Nick Maggiulli: I hope so. Off-road, off-road.

[44:38] Paul: Yeah.

[44:38] Nick Maggiulli: Pathless Pathing. Yeah, I love it.

[44:39] Paul: So every— this is the funny thing about writing a book called Pathless Path. Every time I posted a picture of me bike riding on a path yesterday and I got 7 comments back and they're like, that looks like a path, buddy.

[44:56] Nick Maggiulli: Yeah, there's an account on Twitter that anytime I post anything, they say, just keep, and they replace the last word with something else. Like every time, like, you know, like just keep uploading. Like I uploaded or I put that like every time. And it's like some little like burner account. And it's just, every time it's like, what are they going to say this week? You know, like if I'm, if you, there's a picture of me swimming, they're going to say, just keep swimming.

There's a picture of me dancing. Just keep dancing. I just know it. And I just waited for it. It happens every time. And it's so funny to me.

So.

[45:24] Paul: You brand yourself, right? Yeah. Yeah, for sure. What, uh, another thing that jumped out in your book that I really liked is most people, and I think this was the US, uh, most people die with far more money than they expect. Uh, and it, it was more than half, right? More than half.

I think I have the, actual thing, more than half die with more than $200,000 or something like that. I can pull up the exact numbers.

[46:00] Nick Maggiulli: Yeah, but that would be helpful because I'm— I know which chapter you're talking about, but there's like a bunch of different stats in there. I don't want to say the wrong one.

[46:07] Paul: So yeah, so the average retired adult who dies in their 60s leaves behind $296,000 in net wealth, $313,000 in their 70s, $315,000 in their 80s, and $238,000 $100,000 in their 90s. Yeah, I think two things. One, underestimating the power of compounding, and two, overestimating how much you'll need in your later decades because spending declines. You pointed out as well.

[46:37] Nick Maggiulli: Yeah, spending declines by about 1% a year in retirement. So after 10 years, you should be spending on average, you know, 10% less, all else equal.

[46:45] Paul: Right.

[46:45] Nick Maggiulli: The other thing too is like you know, because markets have generally done well over the long term, like people expect, I'm just going to spend out all my money. What happens is their wealth tends to increase over time. And like Michael Kitces did this study and this was— I still can't believe this is real, but it is like if you had a 60/40 portfolio and you just, you know, pulled off— use the 4% rule, pull out 4% a year of that portfolio. So let's just give a quick example. Let's say you had $1 million in a portfolio, you pull out $40,000 the first year. The next year, obviously, just for inflation, pull out a little bit more than $40,000 and keep doing that.

You do that for 30 years, you're more likely to have 4 times your beginning balance than be below your starting balance after 30 years. So if you start with $1 million, you're more likely to have $4 million after pulling money out for 30 years than you are to have less than $1 million, right? So like it goes to show the upside surprises are far more there than the downside surprise. So everyone worries about running out of money and there's just not a lot of evidence in the data that it's done. And I've done research since, and if I do a second edition, Just Keep Buying, I'll definitely throw this in there. If you actually look at how retirees spend their money, what they do is what I just call income matching.

So like they match their spending to their income. So if like they have, let's say right now the average benefit for like Social Security, something like I think it's maybe it's $1,500 a month. So what is that? It's like $18,000 a year for a single person. So like if you're getting $18,000 a year in Social Security income, let's say you pull out another, another you can, you have $18,000 there and let's say your dividends are paying you $10,000 a year. That means you have $28,000 a year, right, from your portfolio and Social Security.

You're going to spend $28,000 a year. And so what that means is most people literally just spend what their guaranteed income is, whether that's from dividends or whatever and Social Security, they just spend that. They never, almost never touch principal. I talk about that only 1 in 7 retirees with a portfolio is actually pulling principal. The other 6 out of 7 are either just spending like their investment, like their dividends and Social Security. Most of them are.

And then there's even a subset that aren't even spending that. So basically they get their dividends and then they don't know what to do with it. So they reinvest it. Like imagine being 70 years old, getting, you know, $10,000 in dividends for the year, and then you have your $18,000 from Social Security and then only spending $25,000. Right. So you have extra $3,000 that you put back into the market.

Right. And so that's it. That's an example where so many people, they like they pull— they have all this money, they don't do it. They just keep buying stuff. Right. And so it's super interesting to me that they— that that happens.

I mean, most RMDs, which are required minimum distributions, which is the government mandates once you get like age 72 or something like that, you have to start taking money out of these retirement accounts to get taxed. Most of that money ends up getting reinvested. People are not spending their RMDs. They're just taking it and then putting it back into the market. So if that doesn't tell you everything you need to know, then I don't know what will.

[49:30] Paul: Yeah, I think your book could be, Hey Retirees, Just Start Spending or something.

[49:36] Nick Maggiulli: But then again, like, if they keep buying assets, that's like in theory increasing asset prices, which is good for everyone else who's buying assets. So I'm kind of torn on like my selfishness versus like actually getting them to spend their money. So, you know, yeah.

[49:48] Paul: What's your personal take on sort of leaving behind an inheritance? Oh, inheritance.

[49:55] Nick Maggiulli: Bequest. Yeah.

[49:58] Paul: That seems to be like a certain amount of lifestyle creep. I sense like it could just be me. Like, I want to inject money into young people that are able to use it and people in my life that I can support and create good experiences in my life. Do you think a lot of inheritance or wanting to leave behind stuff— I mean, there's ego and legacy stuff, but Do you think a lot of it is just like unresolved scarcity mindset?

[50:27] Nick Maggiulli: Some of that. So I've since, you know, since publishing the book, a lot of these questions come up. I've been asked a lot of stuff and so I've dug into a lot of these things more so. And I will probably say if there's a second edition, I'll include this. But one of the things people do and they're really worried about, and I think this is a US-specific problem, they end up keeping a lot more money. And I think this is not necessarily irrational.

So as we said, there's all these people that die with all this extra money. It's like, why? That seems irrational. They could have spent it or used it or something, right? The real, the real reason, at least when we ask people, they're worried about a very adverse health outcome to the point where it would bankrupt them. Yeah.

So because they're worried about some really crazy health outcome, which for most people that never happens, right? Like, yes, everyone will eventually get sick or they'll die eventually, but like having a really bad health outcome where you're spending like, you know, a couple thousand dollars per day just to stay alive, like that is very rare for a lot of people. So because of that, like, they end up keeping all this as buffer. Like, they're like, I need $1 million in healthcare buffer just in case. Right. Which they— most of these people don't end up using.

Right. So because of that, it is like kind of a hedging— they're hedging in some ways. But I do think it may be a little bit excessive. And I completely agree with you that we should be like, you know, you should be giving that money sooner to be like, if I have kids, I want to ideally give it to them once they're adults and say like, hey, use this now. It's better for you to use it now than for me to like just wait and let it compound and then I die. Then you get it when you're 60 or something.

Like, what's the point of that? Or 50? Like, you know, I just feel like the money's more useful, like, earlier in your career. And I even asked people, I said— I did a poll on Twitter. I said, would you rather have like this much money at age 30 or this much money at age 40, assuming I even compounded over 7% a year? And across the board, people would want the money earlier in time because like the 7% a year isn't worth it to them versus like just having the money now, right, that they can do and use it for different things.

So though most people say that, like people say, oh, I want the money earlier, but then when they're parents, they don't give the money earlier. It's such a weird thing. It's like, you know, your kids want it earlier, yet you won't give it to them. And just like you would want it earlier. But like, yeah, so I don't know what the, what the solution to that is. I mean, for me, like, I think a great book that really addresses this and really kind of changed my thinking a lot is Die With Zero.

So I highly recommend that one for people. Obviously, I don't agree with everything in the book. I don't think you have to die with zero, but I think the philosophy of dying with closer to zero is better than what we're currently doing. And so yes, there are a lot of retirees that are struggling that only have Social Security and they're not going to have anything to leave to anyone. But there's also a decent amount of retirees that just are just piling assets on top of assets to die, you know, richest person in the cemetery. And so I think moving somewhere toward the middle is for everyone, it would be a better, a better system.

[53:01] Paul: Yeah, I think one thing that has surprised me— I've been lucky to talk to hundreds of people about their relationship to work, and money is invariably a part of that relationship to work. And one thing that has shocked me is how different realities people can be in relation to money. So I can talk to a Google employee one day who has $5 million net worth and is like telling me with a straight face I am, I am poor. I, life is too hard. I need to hit 10. There's no way I could possibly leave my job.

And then I talked to somebody in Pakistan. These are real examples who has like $1,500 saved and he is outlining to me the boldest plan, how he has all these things he's going to do. He's going to quit his job and go on his own. How, what is How do the realities get so disconnected from the actual possibilities?

[54:00] Nick Maggiulli: Because, you know, feeling rich or feeling like you have money is always a relative concept. And I'll give you an example. So I have a good friend that worked at a tech company. I'm not going to name the tech company, but in 2021, he almost made $1 million. He was like very close to making $1 million, right? Because most of that's from stock compensation.

He got paid stock, the stock went up a lot, etc., right? And yet the only thing, like when we talk, like, I don't think he feels like he's poor, but we're not, he's not that delusional, but he doesn't feel like he's doing as well as he could because he knows people that started the company like a year or two before him and got way more stock grants and they made $5 million, $10 million, $7 million, whatever. Right. And so because of that, like, it's always like a thing of like, oh, am I really doing that well? When like on an absolute scale, you're crushing it. You're like in the E for your age, especially you're like in the probably the 0.1%, if not, I know he's in the 1%, maybe the 0.1%, right?

And so I can talk to people and like, if they feel like all the people around them are doing better than them, they can feel bad even though they're doing better than like basically everybody, right? So it's always just because it's a relative concept, right? And that's where I'm just like shocked by that. Like people like, oh, you're worried about money? Like, man, you're absolutely crushing it. Like I've not made anywhere near $1 million and I'm not worried about money like in the way that you are, right?

And so It's just funny to me, I think. But hey, that's—

[55:16] Paul: you can't—

[55:17] Nick Maggiulli: you have to think about how you define yourself, how you judge yourself, how you compare yourself, who you compare yourself to. They always say, oh, I don't compare myself to anyone. That's the best thing. But I don't think it's realistic. People do that. People are going to do that.

It's just natural. Like, why do you think Instagram exists and all this crap? Because like people do that. If they didn't do it, like we wouldn't have all these things that allow people to do it. So I'm not here to tell you don't do it. Of course, like I try to say, try to minimize how you compare people.

But like you have to think about things more holistically, right? You can't just say, oh, well, that person makes more money than me, like, okay, would you trade your entire life for their life? Like, if you would, then that's a different story. But most people wouldn't. Like, maybe you wouldn't like to look like them, or you wouldn't like to work in their job, or you wouldn't like their spouse, or who knows? I mean, when you really start getting into this stuff, a lot of it's psychology, and you have to really just address your own inner, like, feelings about a lot of this stuff.

And like, why do you feel this way? And then kind of address that and then go from there.

[56:08] Paul: One fascinating thing I did was actually log in to my Social Security site. And what I found shocked me. I found that I had already fully qualified for Social Security by working 40 quarters. That's all you need, 40 quarters of income in adult life and you are fully qualified. Now, the number you can get goes up, but it tells you the calculation. So I put, I put 67 years and 0 months.

And it calculated I would make about— where's the number— $1,800 a month in retirement. And then I calculated, okay, I have this retirement account and if I just break even, never invest any additional money for the next 30 years and then project a conservative 4% annual market return, I would essentially have $5,000 a month. For retirement starting at age 67, which was the craziest thing to me because I basically declared in this post I am officially retired in the sense that I no longer have to do work that I don't want to do, which was so freeing to me. And I think I just got a couple responses back that were like, you're insane if you think you can actually live on $5,000 a month, which just cracked me up because I had lived down $3,000 a month right after I quit my job in the US.

But yeah, have you gone through an exercise like this to actually just calculate like Social Security and things like this?

[57:47] Nick Maggiulli: Yeah, I mean, the, the problem, a lot of this you have to inflation adjust. So I'm assuming that $1,800 inflation adjusted amount, right? And so that once you adjust for inflation, that's probably a lot of this.

[57:57] Paul: So I think I'd probably have to move to Thailand or something, but still I'd probably be pretty happy in Thailand.

[58:04] Nick Maggiulli: Yeah, yeah. I mean, I have done some of these things before, but like, the issue is like the error bars on the future are so large that it's like, I think it's silly to do this type of stuff. Like, for all you know, like I could, I could get, you know, struck with some crazy illness in like 5 years and like all that retirement, none of that matters. All I'm going to care about is like surviving then, right? So it's like I'm not saying like you should never try and prepare for the future. That's not what I'm saying.

But I'm just saying like If you'd asked me, you know, 10 years ago whether I'd ever write a book, I'd say, what? I don't even write. Like, I would have said no. I said, that's the most ridiculous thing I've ever heard. And now that I'm here, you know, if you asked me 2 years or 3 years ago, do you think it's possible you would have wrote a book? I would have said, okay, yeah, maybe it's possible.

I don't think I will. But, you know, but as, as the future starts to unfold, things make more sense. But like the further you go back, the more like 67 years old, I mean, you know, that's like, you know, decades from now. So you're like, I have no clue what the world's going to be like. What costs will be like. Will the US still be a country in its current state?

Probably. But you never know, right? And so there's all these—

[59:02] Paul: no idea—

[59:02] Nick Maggiulli: so much error. There's so much error in the forecast that it's like really a difficult thing to like say, oh, I know I'm going to have this much income and all this. So I'm not saying not to do it. That's why we have planners, why there's all advisory industry. And I think it's useful. It's a useful guide to like see.

I think it's useful just to figure out like how much money you just have on a relative basis because you didn't know that, right? You're like, oh my gosh, I could use $5,000 a month. Once you know that, that's at least useful for you to like make decisions now. And so I think it's useful to realize like, oh my God, maybe you have more money than you realize. I think that's, that's a good thing to do. But like trying to figure out your exact retirement income, how much you're going to have, I think that is difficult.

But we can try and plan like obviously if you're 60 years old or 62 years old, 67 is not that far. You can probably plan pretty well. But if you're like, you know, in your 30s and 40s and stuff like that, it's, it's really tough because your career could take off in a way where it's not going to even matter. I mean, what if you sold another— you know, I heard you sold just 10,000 books. What if you sold 100,000 more books or, you know, another 200,000 books or something? It would completely change your life.

All that retirement crap wouldn't matter, right? It's like that's the thing. It's like you, you're picking all these things. We have no idea how the future is going to unfold.

[01:00:11] Paul: Yeah. Financial stuff, I think, is just a vessel for unprocessed emotions.

[01:00:18] Nick Maggiulli: I love that.

[01:00:19] Paul: For me, like, finding the number was, um, freeing, but I'm a little crazy already, and I'm sort of like very comfortable not making that much. Like, if I could sell 10,000 books a year, I told someone, I'm retired. Like, I don't— I can make that work, and I'm creative and savvy enough basically do things I like and keep it going. And I think what a lot of people struggle with that is there's this base level assumption in our society, especially the US, that you should always be aiming for more. And what if you just didn't? And it's, it's a really uncomfortable experiment for people.

But I think doing things like you and I are doing, I think just writing about money is powerful because you sort of have to challenge your assumptions. But yeah, what are some of the other assumptions you've uncovered that people don't really think about in terms of just like financial assumptions, things like that?

[01:01:25] Nick Maggiulli: Money? Yeah, yeah, money assumptions. Yeah. So we talked about like being rich is relative. I think that's a big thing that people need to process at some point. Another big idea is like, as I said, people are probably oversaving.

That's a crazy idea. Like, what do you mean I'm oversaving? Like, as you just said, you just found like when you run the retirement numbers, like, wow, I actually have enough to where I wouldn't have to even worry about retirement. So I don't need to save another dollar for that if I didn't want to, right? So that's another big point people miss. We've talked about, I think another thing which we kind of discussed this a little, but like I think how most people get rich is from their income.

It's not from like, you know, coupons and cutting their spending. Of course there are exceptions. There's people who probably spend way too much money and could cut back a lot and then start saving a ton. But that's not going to happen. Those people that spend a lot of money probably like doing that. It's really hard to, you know, change your lifestyle in extreme ways.

I think most people that get rich are, you know, or get wealthy are people who either have a very high income or able to just save, like you have a decent income and they're able to save a good chunk of that and compound it for a very long time. Right. So I think the thing is like focus on income. Like income is, I think, underrepresented in the personal finance literature. And that's why, like, if you focus on that more, I think you're going to have better outcomes than if you like sit and try and optimize every piece of your investments. So that's another big idea that I think is like, is probably under-discussed.

It's like, stop focusing so much on investments and really focus on income because that's what really builds the wealth that allows you to save and do all the other stuff.

[01:02:53] Paul: Well, and I think downstream of that, and I think it's so cool to see how much you're enjoying what you're doing in your full-time job. A lot of people are sort of aiming at what I call these escape scripts, and I sort of became victim of this after leaving my job. I just wanted to work less. I wanted to escape the responsibility of having to work. But then I found stuff I actually like doing.

[01:03:18] Nick Maggiulli: How—

[01:03:20] Paul: I mean, do you have thoughts on the financial independent retire early community? I mean, I, I think their philosophy is sound. A lot of what they talk about is what I talk about, but a lot of young people gravitate towards like, okay, X number, and then I can escape work forever. What do you know about liking your work that those people should probably consider a little more?

[01:03:45] Nick Maggiulli: I mean, I guess the question is, and the quote I say in the book is, before you figure out what you're going to retire from, figure out what you're going to retire to. And so what that means is like, I love that this isn't even necessarily a money question. It's more of a question about your lifestyle and what you actually want to do in quote retirement. So you want to do FIRE, that's fine. I have nothing against FIRE personally. I think where FIRE goes wrong is when people just optimize for the dollar figure and they have no clue what they're going to do once they get there.

Now, I'm not saying that's every FIRE blogger. No, there's a lot of people that do that, that hit FIRE and they go right off into the sunset and they're happy and they have a great life. But there's some people that do that and then they come to regret it. They're like, wait, I just, I've had some crazy, I had this guy write this, one of the biggest DMs I've ever had on Twitter and it was horrifying. I put some of it in the book. This guy's like, I'm just, traveling.

I have enough money where I can just travel wherever I want, but I don't have any purpose or work. I'm just like waiting to die, basically. Like, I go to a different place and it's really sad. That's like the— remember, as I said, there's like the FIRE people that are happy living their dream off somewhere, traveling the world. There's the other side of that, which is like the people who just feel depressed, like they have no purpose, but they're still traveling the world. So like, there's two sides of that spectrum.

I think the middle is probably more likely outcome for most FIRE people, but it really gets at a deeper question, like what is work and what does that mean in our purpose in society and how we view ourselves and There's a lot more to unpack there, but I said the quote is, you know, before you figure out what you want to retire from, figure out what you want to retire to. So you really have to solve that and then you can figure out everything else. And as you said, like, yeah, work sucks when it's stuff you don't want to do. Just like writing sucks when you have to write about stuff that you don't want to write about. But when you get to choose the topic, when you get to choose the type of work you're doing and it is productive, you can just be like, oh, I want to— you have to do something that someone values that can pay you so you can survive.

So you need to have a You need to work on something that is valued by the marketplace. So conditional on that, I think everyone can find something that they love that is also valued by the marketplace. I think it's very rare that there's someone out there that's just like, oh, all the things I love, no one, no one in the marketplace values any of the stuff I love. If you're— if that's you, then like you're in a tough spot and you need to kind of reassign, you know, what you're going to do for work. But most people, I think, should be able to find something that they love that also can you know, at least make a living off. I'm not saying you're going to be rich off of that, but you could at least make a living doing some of that stuff.

[01:06:05] Paul: Yeah, that— I think that is why some ways acquiring too much money before quitting your job can be a trap, because then you— your bar of what you're going to consider is so high. I think I got lucky in that I didn't have financial freedom before I left my job, so I, I always knew, all right, I have to make money. I need to figure it out. I discovered Coast FIRE, which is an interesting reframe, which is basically, okay, you quit, you have some money, but you're assuming you're going to have to make money doing what you like. And I sort of like that reframe. I got lucky because I didn't want a job.

I needed to make money otherwise, but I wasn't willing to create another job for myself. So I needed to split the middle. And it, it took a few years. It was definitely hard. But I do think more people could probably find work and find ways to make money than they imagine. It's just they've never taken a break from full-time work and actually bet on themselves.

[01:07:13] Nick Maggiulli: Yeah. So I'm a big fan of this. Like, I don't know what to call it. I bet someone's probably labeled this, but like the foot in the door technique, like you have your main foot is in your job, but you start a side thing and you start a side hustle while you're still doing your main thing. You kind of just do it and grow. And that's That's what I've done.

And I still keep that, but I don't want to leave the main thing. I like working with other people. I like having a community and like, you know, we go and we have parties. Like, it's just cool to like kind of have a group of people you can go and see and like that familiarity. And so I like, and especially if you like the people you work with, that's a huge plus. If you don't, that's very different.

But like, for me, it's like, I like having that community. And like, if I was a full-time creator, I'd be sitting here. Yes, I could, I'd probably be closer with other creators like you and I'd probably spend more time talking to more creators. And I don't do that as much now, but like, like it wouldn't feel the same as like people I go see in real life and sit down with and do that. So I think for me, like figuring out that balance of, okay, how much of do I want my foot in the side hustle versus my foot in the main thing and kind of figuring that out. That's the, that's the hard part, but that's the work that people have to do.

[01:08:12] Paul: Yeah, I definitely miss that. You probably just have to move to Austin like the rest of us.

[01:08:17] Nick Maggiulli: I mean, it is middle of the country. My family's in, my family's in California, so they would prefer the closer I am, but They would like that.

[01:08:26] Paul: Where can people read more about your stuff? Where can they follow you?

[01:08:31] Nick Maggiulli: Yeah, so you can find me on Twitter @dollarsanddata. You can read more of my stuff at ofdollarsanddata.com and you can find my book Just Keep Buying at Amazon. So, and by the way, if you want to reach out to me, I'm also on Instagram @NickMaggiulli. Feel free to DM me on Instagram or Twitter. I try to answer every single DM, so I'm usually pretty good about that. So if you have a question about something, whether you're reading my book, my blog, whatever, just a question about something I said, Feel free to reach out.

[01:08:56] Paul: I love it. Thank you so much for all your writing and all you do with sharing your ideas.

[01:09:03] Nick Maggiulli: Appreciate it, Paul. Thanks for having me on.