Michael & Matthew are the Grandchildren of Margaret & Mildred. Their parents were born just after World War Two in a time of great prosperity and economic growth.
Both grandchildren lived tightly knitted lives with their Grandparents and both saw a great contrast in how their grandparents’ lived their lives compared to how their parents’ lived – especially when it came down to personal finances.
Matthew has chosen to follow the conventional advice like the majority of Americans, whereas Michael decided to go with his Grandma Margeret’s advice and did things a lot differently.
This subtle change in their beliefs around money was enough to shape their entire lives.
Tune in to find out exactly what happened when both Grandchildren took completely different forks in the road when it came to their personal finance strategy.
Here Are The Show Highlights:
– The powerful drive that ignites human behavior and how to shift negative beliefs to create polar opposite results in your life ([6:00])
– Money on your mind: The importance of figuring out your philosophy about money ([11:30])
– Grandma was right after all! A practical wealth wisdom secret to long-term wealth and security ([12:30])
– An unmistakable sign you’ve been brainwashed with negative money habits and how to quickly replace them with positive ones ([15:40])
Remember to download Grandma’s free wholesome wealth recipes book by dropping into http://www.grandmaswealth.com. Time-honored wealth strategies served with a helping of balance and trust.
If you’d like to see how Grandma’s timeless wealth strategies can work in your life, schedule your free 15-minute coffee chat with us by visiting https://www.grandmaswealthwisdom.com/call…just like Grandma would want us to do.
A hearty welcome to Grandma’s Wealth Wisdom with your hospitable hosts, Brandon and Amanda Neely. This is the only podcast for strategies to grow your wealth simply and sustainably like grandma used to. Without further ado here are your hosts.
Brandon: Hey, I'm Brandon and welcome to Grandma's Wealth Wisdom where we work with you to build wealth grandma would be proud of.
Amanda: And howdy, I'm Amanda. Before we jump into our storytelling episode, a tale of two grandchildren, we wanted to read another five star review of the podcast.
Brandon: So this is a review written by Justin Boats and he says, "This is a great podcast hosted by great people. These two have street cred as business owners themselves. Some might call Brandon the safe money expert. I think of him as a financial magician. [0:01:04.3] He is helping make things possible in our life that we never thought possible. Thanks, Brandon." and thanks Justin for leaving this amazing review and allowing me to help you reach your financial goals.
Amanda: Yeah, as you may have heard, ratings, reviews and subscribers are super helpful. They help us know we are making an impact through our podcast and the reviews also help the podcast reach more people. We decided that we're not beyond bribing you. Here's the deal. If you write us an honest five star review we will share it on the podcast. Plus, if you take a picture of the review and send it to email@example.com we will send you a copy of the bestselling book by Pamela Yellen, The Bank on Yourself Revolution as long as you're in the U.S. we'll send you a copy in the mail or the Kindle version, your choice. So write an honest five star review and send it to firstname.lastname@example.org and then you'll get the book for free. [0:02:07.4]
Brandon: So take a second and write that review. Now we're going to go on to the story. A tale of two grandchildren. These grandchildren are Michael and Matthew; they are the grandchildren of the twins we talked about in the past, Mildred and Margaret.
Amanda: Yes. Michael and Matthew were both born in 1985. Michael is the grandson of Margaret and Matthew is the grandson of Mildred. Margaret and Mildred of course, they're from a tale of two grandmothers that we told in our last two episodes which we encourage you to go back and listen to as well.
Brandon: In their households Michael and Matthew's parents were very similar in how they did their money. Their parents were born just after World War II and grew up during a time of great prosperity and economic growth. [0:03:00.9] Both Michael and Matthew's parents filled their homes with cool things like a TV in every room and the latest gaming console starting with the Nintendo in the early 90's and upgraded each time a better gaming system came out. They drove SUVs and had a big house in a great neighborhood with a great school district.
Amanda: Yeah, Michael and Matthew were also very close with their grandmas. They both saw a great contrast in how their grandparents lived versus how their parents lived. While their parents' homes were cluttered with stuff, their grandma's homes had a few quality things. While their parents served precooked food that just needed to be warmed up, their grandmas cooked from scratch. While their parents seemed to always fight about money, their grandparents loved to give to their grandchildren extravagantly. Paying for experiences like summer camps and extracurriculars. [0:04:02.1] At least while we're in the 1990's when things are going well for both Margaret and Mildred and their money.
Brandon: So both Michael and Matthew went to college in 2003 and graduated in 2007. Both had about $20,000 in student loans when they graduated and both were able to land entry level jobs within a few months of graduation.
Amanda: Then about a year and a half later the financial crisis hit. Thankfully, Michael and Matthew weren't like some of the underclassman that they knew in college who had a really hard time finding jobs when they graduated and actually many of them couldn't find jobs at all. Michael and Matthew were able to stay at their current jobs, but pay increases ceased. They weren't to be seen, and there was no chance absolutely no chance of getting a promotion.
Brandon: So the years from 2008 through 2010 were skinny years. Then as the economy started to recover both Michael and Matthew started to see their pay increase slowly starting in 2011. [0:05:06.4] There weren't promotions though. In fact, as their companies had constricted during the downturn, more and more tasks were put on Michael and Matthew, even though they weren't being paid more.
Amanda: Yeah, it was tough. They had to work hard to keep their jobs and support their families. We didn't share this, but in 2012, both of them got married, they actually had a joint first cousins ceremony.
Brandon: They weren't twins but they acted like it.
Amanda: They were close, they were first cousins, they were getting engaged at the same time, so they had their
wedding as a joint ceremony. It was really fun. And then just so happened, a few years later both of their wives got pregnant at the same time, and within a few weeks of each other they had their first children in 2015.
Brandon: So far we've shared how similar Michael and Matthew's lives were. [0:06:01.7] Now let's look at the difference. They had very different philosophies on money. As philosophies work, their philosophies drove their beliefs. Then their beliefs drove their goals. Finally, their goals drove their actions.
Amanda: Let's take Matthew first. Matthew was a big fan of financial edutainers on the radio. Edutainers as an educational entertainers. Unlike his parents, Matthew decided to keep his expenses super low. Especially while the Great Recession played out. And living simply during those years allowed Matthew to do things very similarly to how his parents had done them, even though his income was stagnant during the Great Recession.
Brandon: So he did things like reduce his expenses, and that helped Matthew keep his debt to a minimum. He was able to keep contributing to his 401K and worked up to maxing it out as the economy recovered. [0:07:00.8] He was finally able to purchase a home in 2014 when his wife was pregnant with their first child. He purchased term insurance to take care of his family if something happened him. The term insurance could pay off his mortgage, but then would expire when the mortgage was paid off. Matthew believes a life insurance is necessary evil. He tries to pay as little as he can for it. One of Matthew's primary financial philosophies is buy term and invest the rest. In 2016 Matthews started a 529 plan to help pay for his kids' college. He's aware of the large fees for investing, so uses passive index funds to minimize the cost. He also enjoys the freedom of letting others manage his money for him. [0:07:52.6]
Grandma always said, “Eat your vegetables.” She loved making home-cooked meals with healthy food and from-scratch desserts. Would you create a diet of fast food or cookie cutter financial products that made you fat and bloated with fees or would you like wholesome time-honored wealth strategies served with balance and trust. Get started with your healthy money planning by downloading wholesome wealthy recipes; your moola cookbook is waiting for you at grandmaswealth.com.
Amanda: As life has played out since 2015 when Matthew's first kid was born, Matthew needed to make a few tough decisions. They suddenly needed a bigger car to fit a stroller and all the stuff that came with having a kid and he had to take out a car loan for purchasing that family car. Then his personal car broke down just shortly after and he ended up having to take out another loan for the car he needed to drive to and from work. This added a $1000 per month in car payments to their monthly budget, and that stung a lot. One thing he didn't expect when they bought their home is that three years after the purchase, the roof started to leak. [0:09:04.9] He had to replace the roof, and there was no money set aside for that. So he put it on a no interest credit card. With the car loan repayment already stressing their budget, he was only able to start with paying the minimums on the cards, but he was hoping to ramp up and pay more and more on them as soon as he could and hopefully pay it off before the zero interest expired. Yet, the stuff of life continues to come up and it seems like the credit card debt keeps climbing rather than going down, especially when that interest started kicking in. It's really tough, but he wants to continue saving for the future and his 401K and 529 plans and paying down his debt and making sure his family is living a good life. It's stressful, especially at the end of the month, but they make it work.
Brandon: Now remember, Michael is the same age as Matthew, and his career stalled due to the recession just like Matthew's did. [0:10:03.7] They had the same amount of student debt coming out of college. Michael got married and had kids in the same year as Matthew. Michael learned the same financial strategies from his parents; everything is the same except Michael had a different grandmother, Margaret.
Amanda: When Michael was 17 years old, his grandma Margaret invited him to stay that weekend with her with the intention of sharing her financial wisdom with him before he left for college. It was 2002, just after the .com crash and Margaret had seen what was happening and the huge difference in her financial strategy compared with her twin sister's strategies and what that difference is meaning for them in their later years. She'd seen of course over the last 22 years since they started their different financial paths in 1980 and she wanted to share what she had learned and seen with her grandson. [0:11:03.6]
Brandon: While Michael and Matthew's lives played out very similarly, Michael followed his grandma's financial philosophy instead of what had been conventional since the 1980. These main philosophies were only invest money you can afford to lose. Term insurance is like flushing money down the drain. Saving is still important; save 30% of your income.
Amanda: And here's how those philosophies worked out for Michael into his beliefs and into his actions. So Michael had a 401K at work but he only put in the bare minimum of 3% percent to get the 3% percent match offered by his employer. His thinking was about three factors. First he believed that taxes were going to go up in the future, secondly he believed in the power of having your money available in liquid for you and he knew that the money in his 401K would be locked up and he wouldn't have access to it without penalty except for a few specific things, and then also Michael had a strong belief about fees. [0:12:10.8] Michael did not like the excessive fees hidden in 401Ks and he didn't believe that there was much to protect him from market downturns, so he only wanted to put money there that he could afford to lose.
Brandon: And he also wanted to save for his kids' future, but didn't like the 529 plans for a lot of the same reasons. Too many gotchas and the same market risks as the 401K.
Amanda: So where did Michael save his money for the future, that 30% that his grandma taught him? The same place his Grandma Margaret saved hers. A high cash value dividend paying whole life insurance policy. Each month he saved between 20 and 30% of his income there and he knows his family's going to be taking care of if something happens to him, they'll be taken care of through the death benefit, but also that cash value building up within his policy is there for him primarily for retirement, but also as the stuff of life keeps happening he's able to access those funds and he's already used his policy a few times to purchase a larger family car when they needed one for strollers and all the stuff that happens when you have a kid, secondly to purchase the personal vehicle to get back and forth to work, third to cover a surprise roof repair on his home. [0:13:24.3]
Brandon: Unlike Matthew, Michael has no car payments or credit cards, but he does have a policy loans. With those loans, Michael and his wife got to set the amount of the repayment per month to fit within their budget.
Amanda: And this makes life a lot less stressful. There's no worry at the end of the month or if the market is volatile. Michael is able to save for the future and cover life as it happens while still giving his family a good life.
Brandon: So far, Matthew is following what became conventional since 1980. Michael is following what was traditional prior to 1980. [0:14:03.5] It's very similar to what his grandma Margaret did. Michael is resisting what he hears all around him. The mainstream advice. Some of his friends and family even think he's a little bit nuts.
Amanda: Yeah, actually at family gatherings Matthew keeps trying to convince Michael to cash out his life insurance policy and get in on the investment strategies he's following. And Matthew keeps saying everybody is doing this so it must be the secure way, and Michael keeps saying back to Matthew, "Matthew, it must feel nice and warm when you're in the middle of a pack of lemmings."
Brandon: Now Amanda, don't pack of lemmings commit mass suicide by going over cliffs together?
Amanda: So that is partial myth but there's some truth to it. I would invite anyone who doesn't understand this pack of lemmings thing that Michael talks about to just Google it. Lemmings is spelled LEMMING. [0:14:59.6]
Brandon: Yeah, no one wants to be one of those lemmings. We want to be different. So why does Michael then stick to his grandma's strategy as a posed to the other strategy?
Amanda: Well Michael is willing to think differently and look under the hood of the typical advice out there. He values real safety and predictability, but the biggest reason, the number one reason, he is willing to stick with his grandma's strategy as that he's seen how his grandma has been doing compared with Matthew's grandma, Mildred. And then the second biggest reason why he is sticking to his grandma's strategy is that he's starting to see how following the conventional advice is working out for his own parents. His own parents’ situation isn't so hot.
Brandon: So both Matthew and Michael have sat down, thought carefully and are trying to do everything right. How will things turn out for Michael and Matthew? What will happen to them in the future? [0:15:59.8] Join us for part two of a tale of two grandchildren, and this is where we go in to the future. In the next episode we time travel into the future to see what happens with Michael and Matthew and their families.
Amanda: Until next time, keep building your wealth simply and sustainably for your own future and the future of our grandchildren's generation.
The topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting or investment advice. On such matters place consult a professional who knows your specific situation.