Rocket Your Dollar Ep. 25: Money Positivity

Why are people more comfortable discussing religion, politics, and personal lives as opposed to their finances? Lewis Weil, the founder of Money Positive, is trying to change that notion with his financial planning company.

Transcriptions:

Thomas Young: Today, I have Lewis Weil. And Lewis is the founder of Money Positive, a financial planning company based in Austin, Texas and working with clients across the country. Lewis has an interesting backstory in that he was a biologist for over a decade but was at the same time, a self-proclaimed money nerd on the side. When he realized that some of the smartest people he knew were clueless when it came to money management, he started dabbling with planning on the side. As he learned that the industry wasn't built to help most people, the average person, he started his own company, Money Positive. And what started as a side project turned into a full-time career very quickly. Lewis, thank you for being here today.

Lewis Weil: Thank you so much for having me. Excited to be here.

Thomas Young: So first off, it's a huge jump from scientist biologist.

Lewis Weil: What, it's a natural jump from biologist to a financial planner. I don't know what the question is. Yeah.

Thomas Young: How did you decide that you wanted to leave something that you had studied for and gone to school for?

Lewis Weil: I mean, yeah, it was a really hard decision. It had been in the back of my mind for a long time. And so, I grew up around financial planners. My father was one, my aunt was one, so I was kind of already steeped in it. I had self-studied. So, it wasn't completely out of the blue. And like you mentioned, I had noticed that I was surrounded by like geniuses and they didn't know how to open a 401k or how to make their portfolio. This idea that I had been playing with for a while. And the impetus finally came. Someone liquidated their 401k to fund a project and they didn't understand that there were going to be taxes and penalties. They liquidated it and they got like half of it back. And this was a very smart person.

I think, I don't know if it was the next day, but functionally the next day, I started courses with the original intention of it being a side project. I had had side projects before. Those are other tangents. I've always, always have things going except this. I decided, "This is my life." So I started as a side project. And when I launched, quickly realized... I launched in August of 2015 and by December, I decided to go full-time.

Thomas Young: Wow. Yeah. And I think that projects like this when you realize that you're solving a problem that people have, that people don't even know they have.

Lewis Weil: Yeah. Originally, I just wanted to help friends and family and then realized that most of the country needs this.

Thomas Young: Right. I agree. I mean, there's such a difference between being a high earner and a high saver or a good investor or... There's a lot of people that earn hundreds of thousands of dollars a year yet a month without income.

Lewis Weil: Yeah. And yeah, our focus is on people who are living month to month. And people who live month to month range, everything from making $30,000 a year to $300,000 a year. That group of people whose lives are governed by their next paycheck is most people, I think. I think there was a study that showed 79% of Americans live paycheck to paycheck.

Thomas Young: Wow. I mean that's shocking and sad because while there is a group of Americans that aren't making as much as they should or need to maybe, there's a lot of Americans that make good livings. I mean, the median income is not super high, but it's also not super low.

Lewis Weil: It's not, but things add up quickly. And one of my first clients, family in San Francisco making $300,000 a year, which biologists don't make a lot of money if anyone's wondering. So I saw that they're making $300,000 a year and I was like, "Oh, these people are rich. This is going to be easy." And by the end of adding it all up, they have a kid, student loans, it's like, "Oh, these people are scraping by."

Thomas Young: Right.

Lewis Weil: You can be making what people think are going to be, you're rich, and be scraping by. It adds up. They weren't doing, it wasn't extravagant. And I've just, the more I do it, the more I realize that a lot of people who you think are doing great are just barely holding it together.

Thomas Young: Right. I saw I think it was on Instagram, it was a meme. It was something stupid.

Lewis Weil: This meme needs a citation.

Thomas Young: Right? That it was like you can... The way someone looks, it's not what they earn or something. And lifestyle inflation and all these things play such a factor. And I think that we, as a country, are just completely lacking in personal financial knowledge, right? We don't learn in school. Parents say that it's rude to talk about money in front of their kids. And we're thrown out into the world when you're 18 and be like, "Hey, take on a hundred grand in student loans and have fun with your life."

Lewis Weil: Oh, yeah, yeah.

Thomas Young: And there's no prep work.

Lewis Weil: Yeah. And this could be another tangent. Maybe we should go down that rabbit hole. But I have chips on my shoulders about that it's people spending, that's the problem. And the idea of financial literacy is saving the world. Financial literacy was invented to sell trucks. And if someone, their problem is spending, then that's a good problem because you can change your spending. What I've seen over and over and over is that more money, more problems. You just have to support kids. Kids are like, once you're paying for caretakers, life just gets more and more complicated and no one's doing it to and living this luxurious life. It's a struggle, and that everyone has this struggle, and they need help and organization. And the thing about financial literacy, it's like, for some reason, finances are the one place where people are kind of expected to do it themselves. 

It's weird. You don't go to the doctor and they say, "Well, what do you think's wrong with your heart?" You don't go to the restaurant and they're like, "Well, how would you cook this lobster?" But when it comes time to retire, they're like, "Well, how would you design a portfolio?" It's ridiculous. There are 300 million people and you can't... Expecting everyone to, and this was kind of my impetus was like, that this is ridiculous that people are supposed to have jobs, live their lives, raise families, pursue projects, start companies, and also know how to manage a portfolio that needs to last for 60 years.

Thomas Young: Right. No, and it's true. I mean, that the lack of help and when you look at it-

Lewis Weil: It's a systems problem.

Thomas Young: Right. I agree.

Lewis Weil: People should be informed but not be beating themselves up.

Thomas Young: Right. I like that. I mean, we all know that we should be saving something or whatever, but life gets in the way. And knowing how to, there's highs and lows of spending too, and knowing how to navigate those or be prepared for them or be confident in them can ease probably a lot of anxiety.

Lewis Weil: Yeah. Oh, and that's, I mean, that's our job at the end of the day is helping people's anxiety and optimism.

A little bit on the side. I want to talk about why the name Money Positive came about and what it means. And I also want to talk about how money is such a... I mean, before we started recording, money is... We were talking about this. We were talking about how money can be such a sensitive topic for a lot of people and people just shut down.

Lewis Weil: Absolutely.

Thomas Young: How did you clue in on the fact that people are just so bad at money management and that you needed to do this?

Lewis Weil: Well, that I was doing fine with my planning. And seeing that I was surrounded by these brilliant people who didn't know, like to go to the HR site and find their 401k, the level of knowledge you need, and much less how to design their portfolio. And that it took, and it takes almost a hobby level of interest to manage your finances. If you're wealthy enough to have.

For people who don't know, most financial planning works by someone, what's called asset management, they take your bundle of money and they invest it for you and they take a percentage, which is its problems, which is a different tangent, but most people don't have that. Even people, can have a lot of income, but they don't have those assets, so they don't have access to financial planning.

There's this model that wasn't even made to suit people, and the more I got involved in the industry, the more I saw that. I didn't even, I didn't plan on starting my project. That's insane to go from being a biologist to thinking you're going to run a financial planning company. But I took a lot of interviews, I got some offers. And no one was set up in a way that I felt comfortable giving my friends and family to. That was the ultimate impetus was like, in the lead up to it, I was having lots of conversations with people. Because there's what you learn in classes about investment strategies and trusts and insurance policies, and then there's what's actually going on in people's lives and they are completely... It's good tools that you learn in class, but what's going on in people's lives is completely different.

I had the fortune of having had some of those conversations. They're hard conversations to have, both in that people are getting really vulnerable and really real with you, but people don't want to talk about it. There's a lot of anxiety, there's a lot of shame around money, probably more than any other topic in our daily lives. So, getting people to that point is a task in itself. It's all about empathy and trust and getting people to open up to you. And I was lucky enough that people, for some reason, started opening up to me and I started seeing what the problems were in people's lives, and that there needed to be different solutions than what existed.

Thomas Young: What are some of the problems that you're coming across?

Lewis Weil: I mean, money's personal. A lot of it is... From a planning perspective, it's a lot of organizational issues. The biggest problem that I'm starting to catch on to, and this is a different macro topic, is student loans. 

Thomas Young: Of course.

Lewis Weil: People are graduating with a mortgage payment. But there are emotional issues, there's lack of understanding, there's lack of organization. The first thing we do with people is get everything organized because people don't understand interest rates and people don't understand compounding. Hopefully, people, if you're listening to this podcast, odds are good, you'll probably understand compounding but most people don't understand the effects of compounding and how it can hurt them. So oftentimes, when we're talking with somebody, one of the first things we do... Do you know the folding a piece of paper thing? So if you fold a piece of paper 42 times, it would reach the moon.

Thomas Young: Right.

Lewis Weil: And so, I always ask people, if I folded this piece of paper 42 times, how tall would it be? And people usually say a foot or two.

Thomas Young: Right.

Lewis Weil: And it's all to illustrate that we are not equipped. And this was where I come in as a biologist. We, the human-animal, are not equipped to think about money. Really. We are not that far removed from, "Do I have enough acorns to feed myself through the winter? Will this fire last long enough to keep the tigers out of my cave?" We're not that far away from that. We're good at thinking about, "Okay, I need to leave at a certain time to beat I-35 traffic. The grocery store is on the right side, so I'm going to stop in there and pick up the milk. That's how we think. We're very linear creatures. And financial planning and money are logarithmic. They're exponential. And it's no one's fault. We just do not think that way. Someone rarely has an intuitive sense of compounding. I don't have an intuitive sense of compounding. I need to get out the calculator and do the math.

Thomas Young: Right.

Lewis Weil: So, that's kind of one of the biggest problems is that we're just, as a species, not adapted to this thing we built. Then, at the individual level, people always think it's their fault. And I blame-

Thomas Young: That's where the guilt comes in and the shame.

Lewis Weil: Yeah. And there's an infinite number of sources of that shame. But there's the whole, "if you didn't buy that cup of coffee, you would own a boat by now."

Thomas Young: Right.

Lewis Weil: So, people blame their little daily life indulgences for their problems. And what people don't realize is that 70% of their income is spoken for before they even spend it.

Thomas Young: Right.

Lewis Weil: So, that's one of the first things we do is, a lot of people know like, "My salary is $60,000" or whatever, but they don't know what their take-home is. And a lot of people don't even know their pay period.

Thomas Young: Really?

Lewis Weil: Oh yeah, yeah, super common.

Thomas Young: Wow.

Lewis Weil: Yeah, it's easy to lose track of. You have auto deposits. You've got other stuff going on.

Thomas Young: Right.

Lewis Weil: So the first thing we do is figure out what is their income and what is the money they have to spend. Oftentimes, when you add it all up, there's nothing left to work with. And that sucks to find out. Oftentimes, we have to show people like, "Hey, this is your reality." But at least it takes some of the guilt and shame out of it. Like, "Oh, it's not because I stop at Starbucks a couple of times a week." It's because, between rent in cities, car payments, student loan payments, if you have a kid like daycare, "Oh, all of my money is going to just exist." Yeah.

Thomas Young: Yeah. And that's crazy. I mean, what you said earlier about before you even spend it, 70% of your income is spoken for.

Lewis Weil: Yeah.

Thomas Young: But people aren't focused on that. They're focused on a $4 latte and feeling shame about it. When in reality, a 3% reduction in their fixed costs, let's call them, could buy you all the coffee you could drink.

Lewis Weil: Yeah, yeah. Yeah. And our approach to it is we don't tell you to stop drinking coffee. We figure out how much you can spend. And so we call it your flex number. We say like, it's usually if everything's going okay, around 30% of someone's income.

Thomas Young: Right.

Lewis Weil: We'll say like, "You can spend every dime of that. I don't care how you spend it, but try not to go over that." People don't know what that number is. And people hadn't even thought about that number.

Thomas Young: Right.

Lewis Weil: Because they just know, "I make X thousand dollars a month, I should be able to do things."

Thomas Young: Right. It looks like a big number.

Lewis Weil: Yeah.

Thomas Young: And then it's either, I mean, I see it two ways in my personal life. For me, it's more of a death by a thousand cuts than a... You have huge fixed costs because it's like, you don't realize how $5 every day or lunch every day, or $5 in the morning and $10 at lunch and how would that adds up? And then you look at it at the end of the month, it's like, whoa, I spent almost a thousand dollars on food, for example.

Lewis Weil: Yeah. And we don't even want... It's not even... You're right, you're right. And I do the same thing because we live in Austin, and Austin has the highest spending on food and drinks like in America.

Thomas Young: Is that proven?

Lewis Weil: Yeah, I think it's either us or New York.

Thomas Young: Really?

Lewis Weil: Yeah. It's between us and New York. I mean, we should Google this and make sure that it's accurate-

Thomas Young: Oh, I'm going to find this and put it in the show notes.

Lewis Weil: But it's definitely towards the top, that Austinites spend more on food and drink than nearly anywhere else. And definitely, for a city of our size.

Thomas Young: Well, talking about shame and guilt, I've always felt very guilty about the amount I spend on just social activities, going out with friends, going out to dinner, going out to lunch, and to know that it's not because, well, I mean it is because I choose to do these things, but it's also the social activity of Austin, it seems like. And so, it's enough.

Lewis Weil: Yeah. It's always drinks. It's always dinner.

Thomas Young: It's always lab.

Lewis Weil: Yeah. And so, that was 100 bucks just to walk out your door. And the way we approach it is, we don't tell you to stop doing that. We just say like, "Here's how much it is and make sure you have visibility." Because if you're doing it on credit cards, you don't know until you go to pay it.

Thomas Young: Right.

Lewis Weil: So we have people get debit cards.

Thomas Young: Yeah. I have an interesting personally because, I mean, Rocket Dollar, we're finance nerds. We love to talk about personal finance and we all know to some extent, more or less, what everybody makes. And we know... I have conversations with my co-founders about what we spend on our mortgages or in my case, rent, what you spend on cars, what you spend on kids, and it's Rick who's been on the show, Rick is our co-founder and CTO. He and I just have these conversations about personal finance, and the difference between him with three kids and a mortgage and me as a single 27-year-old. And we have these conversations. To me, it's just the most natural thing in the world to talk about. Because that's what we like to do. That's what we like to talk about. And it's so natural. I don't care if anybody knows how much I make. I don't care if you know how much I save because it's-

Lewis Weil: That's cool and I appreciate that that's y'all's attitude. And that's because y'all understand that money is a tool. It's not a reflection of you, it's not your self-worth. It is just this tool that you have at your disposal. And it's no different than like hammers and screwdrivers, like knowing how to use it and like, "Oh, well, what wrench do you use?" "Oh, well, I drive this so I have this wrench." We have this interwoven thing in our psyche that our net worth equals our self-worth. And that's not true at all.

Thomas Young: No.

Lewis Weil: But even if you know that at some level, it can take a while to accept.

Thomas Young: Right. And even if you know it, right, I still get stressed when I spend more than I would have liked to on any given month, or when I go out and I spend a little more than I... It's still hard for me.

Lewis Weil: I know it. Same. Like, I know what to do.

Thomas Young: Right.

Lewis Weil: Right?

Thomas Young: Yeah.

Lewis Weil: Everybody, your financial planner is just as human as you are.

Thomas Young: Right. Right. It's like the doctor who smokes.

Lewis Weil: Yeah.

Thomas Young: But no, yeah, I mean, it is a fascinating thing and it's something that we come across in our day-to-day is, you were saying this earlier about your conversations with people, how they would be very vulnerable with you, with their lives around relationships or intimacy or whatever.

Lewis Weil: Yeah.

Thomas Young: But as soon as you start talking about money, they shut down.

Lewis Weil: Yeah.

Thomas Young: So, let's talk about it. I want you to tell the story of Money Positive and how you started talking to people. Because that is a good story.

Lewis Weil: Okay, okay. So, it's a little maybe risque. If you have kids in the car... Yeah. So, the name of my company is Money Positive. And wanted to have good associations with money. Our motto is Unscary Financial Planning because we're trying to get people to feel okay and talk to us. And I founded the company back in 2015 and did the thing that everyone does when they're trying to come up with the names, coming up with a play on words and things that rhyme or something with your name. At the time, I was helping one of the organizers of a show in town called Nerd Night, and there are Nerd Nights all over the world. We ran the Austin version and we have a sister show called Bedpost Confessions where people tell very intimate stories about their sex lives. And so, we would have crossover shows where they would come to give sex talks at Nerd Night and we would come into their show and do nerdy things for their audience.

One evening after one of their shows, I'm standing in a circle of strangers. And they are telling the most intimate things about their sex lives, which sex, religion, and politics, you don't talk about in polite company. 

Thomas Young: Well, money.

Lewis Weil: And money. That's a good point. That should be in that idiom. So, yeah, I'm standing in this circle with people I barely know, they're just strangers. And they're telling us the most intimate things about their sex lives, like what's happening in their bedroom. So, this show's part of what's called the sex-positive movement, where being open and just discussing it like it's normal, to make it normal. And it just struck me because I'd been having conversations with people informally about their money for a long time. And sometimes people tell you stuff. But if I asked somebody, like sometimes I would just try to strike up a conversation. It wasn't a big deal to me. But I would ask someone like, "What are you doing in your 401k?" And they would just shut down like, conversation over. They might not talk to me for the rest of the day.

Thomas Young: Right.

Lewis Weil: But then these people were telling me about what was happening in their bedrooms. And so, that inspired the idea of being sex-positive, inspired the name Money Positive, to try to have these conversations and make it okay to talk about money.

Thomas Young: Yeah. And I love that. Because I mean, when someone has such an emotional response to something, you know you've got something there because there are few things as emotional as money. I mean, maybe your family, your relationships, but money is such an emotional subject.

Lewis Weil: Yeah. And it's almost always shaming.

Thomas Young: There's a couple of more things that I want to touch on. One is, you mentioned earlier that you have a lot of problems with people that charge fees. And I mean, you have to make a living as well, right? As a business, but you build differently.

Lewis Weil: Yeah. So, we were what's called a registered investment advisory. So we get paid in exchange for specific investment advice. And I'm also my company's chief compliance officer. So I'd like to say that nothing I'm saying constitutes advice.

Thomas Young: Right.

Lewis Weil: This is all just our philosophizing and this is educational.

Thomas Young: Right.

Lewis Weil: Talk to your advisor if you have specific investment questions.

Thomas Young: Right.

Lewis Weil: Always preface that.

Thomas Young: Absolutely. Absolutely.

Lewis Weil: So, as I was saying, the financial planning industry was designed around asset management and commissions and product sales. And most places charge either commissions fees or percentages of assets. Instead, we want it to be accessible. So we are fiduciaries. Fiduciaries mean that you are always acting in people's best interests. And that is something that we revisit all the time. Are we acting in people's best interests? Not just good but best. And the idea that our fee would ever hurt someone's finances is counter to being a fiduciary. So, we tried to be at a price point where we don't hurt anyone's finances. So, we have just an ongoing monthly fee for couples or more, for households, 90 bucks a month for the first six months then it drops to 60 bucks a month after that. For individuals, 70 bucks a month for the first six months then 40 bucks a month after that. And so that's also counter, is that the fee goes down. Most places like...

Thomas Young: The fee goes up.

Lewis Weil: The fee goes up. And when I was first starting, that's where I started laughing because I have friends who are also... There's this phenomenon right now of younger people starting small financial planning practices. And the way that most people do it is, they start their practice, they call it a book of business, where they get assets to manage. They charge a fee, usually around 1% or so. And the idea is that they get these clients, these clients' portfolios get more valuable over time, and they go play golf.

Thomas Young: Right.

Lewis Weil: I didn't quit being a biologist to do that. Or I like... And I am still a biologist at heart. I'm still a scientist at heart. This was a mission. This was a thing that we needed to do. And a lot of experimentation and thought around the price point. All my peers think I'm a charity case, but we're not a charity. We are a business.

Thomas Young: Right.

Lewis Weil: And our idea, we are financial planners and we're trying to be very available as humans because that's the part that people need help with. At the end of the day, all this other stuff is arithmetic, man.

Thomas Young: Right.

Lewis Weil: But what they need is someone to tell them it's going to be okay. I give a lot of hugs.

Thomas Young: Well, I mean, it's like we said earlier, I mean, it's emotional. And I love that. I mean, you took a sort of the same approach as we did, sort of a subscription-based service, regardless of whether you have 10,000 or a million or negative $100,000. I mean, you know what you're paying.

Lewis Weil: Most people come to us when they're in debt.

Thomas Young: Right. And even if they argue, "Well, my financial advisor wasn't going to make me pay anything." It's like, well yeah, but they are. I mean, it's different. I'm sure that comes up a lot.

Lewis Weil: And you know what? I am not there to judge. There are lots of really wonderful advisors who add a lot of value to their clients. I looked into it because everyone was telling me how insane it was to not charge a fee based on assets, an AUM fee. And I did the math because the fee ends up compounding. By taking that money out of people's portfolios, you're not just taking money out, but you're causing money to never exist, by taking a percentage every time. So, it is counter to how we do it. So we see it as like, you do this, that gives you access to us, and we will solve, comprehensively solve all your problems. We're advice only.

Thomas Young: Right. Yeah. And I love that. I think that that's a great place to sort of leave it for today. But Lewis, what's the best way to get in touch with you?

Lewis Weil: Oh, our website is MoneyPositive.com and there are buttons there to reach out and say hi. Lewis@money-positive.com.

Thomas Young: Love it. Yeah, I love talking about this and we're for sure going to have you on...

Lewis Weil: Thanks a lot.

Thomas Young: Thank you for listening to this episode of Rocket Your Dollar. If you enjoyed this episode, please subscribe and share the podcast with your friends. To learn more about self-directed investing or to get started with your account, please visit us at RocketDollar.com. See you next week.