The Thing We Never Talk About

Timothy Iseler, CFP®: Hello there.

How are you today?

Welcome to The Thing We Never
Talk About, a podcast about

personal finance for weirdos.

My name is Tim Iseler.

I'm a Certified Financial Planner™ and I
run my own independent financial advisory

business helping musicians, artists,
and other people with weird jobs make

smarter decisions with their money.

You can learn more at Iselerfinancial.com.

And if you enjoy this podcast, please
check out my Keep It Easy Newsletter.

I write about exactly this kind of
stuff and I share it there weekly ish.

You can subscribe at
Iselerfinancial.com/newsletter.

I've done a handful of public
speaking gigs and webinars, et

cetera, since becoming a financial
advisor a little over six years ago.

And one thing that I've learned is
that the best part is always when

I stop talking at people and start
answering questions from people.

No matter how great I think my ideas are,
and I'll, I'll be crystal clear: I'm not

bashful about sharing my great ideas;
nevertheless, the part that I enjoy the

most is when I can directly address the
things that people want to know instead

of what I think they want to know.

So it was really important to me when
I started this podcast that there

would be a way to answer questions both
from the people I interview and also

the people listening just like you.

Today I am very happy to present
the first of what I hope are

many listener mailbag episodes.

My thanks to everyone who
wrote in with a question.

And if you'd like to have your question
about money or personal finance

answered in a future episode, please
visit iselerfinancial.com/podcast.

Okay, question number one comes
from my old pal, Patrick McKinney.

Here is his question: can you
recommend ways to invest ethically?

Meaning banks, the stock market, et
cetera, all have a pretty dark shadow.

Thanks for that question, Patrick.

Let's start with the practical
side first and then I'll share

some more philosophical ideas.

Historically, the general thinking was
that you had to give up performance if you

wanted to invest according to your values.

And even up to say 10 to 15 years ago,
that sort of values based investing

was typically only available to
people who already had a lot of money.

That has changed a lot over
the years though, and now it's

easier than ever to invest your
money according to your ethics.

Lots of big funded companies now
offer what are essentially index funds

that are screened for things like
fossil fuels, weapons manufacturing,

mining, tobacco, et cetera.

Sometimes these are called ESG funds,
which stands for environment, social, and

governance, meaning corporate governance
and not government, and sometimes they

are called SRI funds, which stands
for socially responsible investing.

So often the funds will have words like
sustainable or green or abbreviations

like ESG or SRI in the names.

Many of these companies charge management
fees, which are called expense ratios,

that are only slightly higher than
ordinary index funds, meaning the

expense ratio fees are very small.

So it's now possible for ordinary
people to invest more ethically without

compromising too much on the bottom line.

FYI, I often use these types
of funds with my clients.

I like that they are filtered for
those kinds of factors and I like

that they have low built-in fees.

I don't want to endorse any
particular fund company here, though.

But they're fairly easy to find, and
here's what I look for: does the fund

cover a sector or an asset class that
I want to invest in, for example,

US corporate bonds or international
stocks; and is the expense ratio in

line with what I would expect from
mostly passive index fund management?

Again, this information is all
widely available, so I'm not gonna

drop any specific fund names here.

Okay.

Now we get into some of the
trickier sides of this question.

The truth is that in almost every
situation, the more money you have,

the more options are available to you.

Everybody knows that, right?

I don't think I'm breaking any news here.

So that means that people with more
money can get products and services

tailored specifically to them.

And the same applies to investing
according to your values.

So I just wanna acknowledge that there
are more sophisticated, customized options

out there, but access can be limited on
the amount of money you have to invest.

And for that reason, I don't want
to go too deep into those more

bespoke options because a lot of
people just can't access them.

If you would like to talk about
some of those options, give

me a call, shoot me an email.

I'll be happy to discuss what
those options are and whether

any of them would work for you.

And now I wanna make a more
philosophical point for this question.

There's a quote attributed to Lorne
Michaels, the longtime producer

of Saturday Night Live, that goes
like this: we don't start the show

because it's ready; we start the show
because it's Saturday at 11:30 PM.

The point being that if you're waiting
for things to be perfect before you

get started, you will wait forever.

It will never be the perfect
time with the perfect conditions,

with the perfect options.

There are obvious ethical concerns
about how banks and companies

and countries use their money.

And by the way, that's true regardless of
what your particular beliefs are or what

political affiliation you subscribe to.

There's always room to find fault with
the way other people conduct business.

And in general, money is sort
of a tainted medium, sort of

inherently a tainted medium.

For example, it's believed that
something like 70 to 80% of all hundred

dollars bills printed in the US go
directly into black market business.

So the black market is
very good for our country.

That's fairly morally
compromised, wouldn't you say?

I would say so.

And it's not just banks or corporations
or countries that participate

in unethical money practices,
unethical businesses, et cetera.

For example, do you personally know
anyone who has used money to buy drugs?

I bet everyone listening to this can
answer that question in the affirmative.

And everybody knows that drugs
is a messy, unethical business.

Right?

It's morally compromised.

Everybody knows that.

And I'm not saying that those decisions
are right or wrong, but money gets

used for unethical things in unethical
ways all the time, including by

people we know and like and trust,
and we can't really avoid that.

That's sort of baked into
the world we live in.

So if a prerequisite of investing
your money is that everyone from

your bank to the companies you invest
in, to the government that prints

that money behaves according to your
beliefs, you will be waiting forever.

And the unfortunate truth is that there's
really no prize for sitting this one out.

Okay?

So the best you can do is to
use your money ethically and

choose the investments that most
closely line up with your values.

It doesn't have to be perfect,
because nothing is perfect, but more

aligned is better than not aligned.

And if all goes well, you will be more
prosperous and have better options

in the future, which means you will
have more opportunities to share that

prosperity and support causes and
institutions that align with your values.

So it's not a perfect world, and I
don't want to pretend that there are

perfect options, but there are options
that are better than the status quo.

So I want you to invest, I want you to
choose investments that most closely

align with your values, and I want
you to have a better life with more

and better options because of it.

I hope that helps, Patrick.

Question number two comes from John Coyne.

John writes: I'm chipping away at
student debt and am wondering how much

I should be saving while doing so?

How does that 50, 30, 20 rule apply
to somebody paying off a hefty loan?

What variables factor in?

Those are great questions,
John, thank you very much.

For those not familiar, the 50 30
20 budget is a very simple way to

manage cash flow that says 50% of
your income should go to essential

expenses, 30% to discretionary
expenses and 20% should be saved.

Essentials are the must-haves or
the things that you need to do,

discretionary are the nice to haves,
often the fun things to do, and saving

is using your income to pay yourself.

First things first, always pay
at least the minimum monthly

payment on every single debt
account and always pay it on time.

Failing to do so will fuck up your
credit score and it will cost you

a lot more in fees and interest.

So make sure you always
pay at least the minimum.

In answer to the first question, your
recurring debt payments like student

loans, auto loans, and mortgages,
those fit in the 50% category.

These are things you have to
pay every month, just like your

utilities or your insurance premiums.

Consumer debt, like credit cards
goes into the 30% category.

And if you are, in fact, saving
20%, I'm gonna go ahead and say

that you're already doing enough.

Keep up the good work and saving more
aggressively is fine if it's possible

for you, but it's not a priority.

20% is awesome.

And I don't know John, I
don't know your situation.

If you're just out of school and fairly
new to the workforce, it's okay if you

don't exactly hit that 50, 30, 20 target.

It's something to aim for, but it might
take a while until you get it right.

Now, if you're already established in your
career and you still can't manage to save

what you should, then you need to make
some harder decisions about your spending.

Which is not really what you're asking me
here, but I thought I would throw it in.

And again, this isn't specifically part of
your question, but it's worth noting: when

it comes to high interest consumer debt
like credit cards, there is literally no

amount of saving and investing that will
outpace those double digit interest fees.

So if you can't pay off your credit
cards each month, that needs to take

priority over saving and investing.

But when it comes to recurring debt
payments, it's a little different.

Student debt, auto loans, and
mortgages are designed such that

simply continuing to make the required
monthly payment means that you

will eventually wipe out the debt.

Granted, you will pay a lot in
interest along the way, but you'll

eventually pay those off just by
making those monthly payments.

So if your cashflow allows, that
kind of debt should not stop

you from saving extra money.

you can go ahead and do both.

And you know, interest rates aren't what
they used to be, but it's almost certain

that any student, auto, or home loan
comes with only a single digit annual

percentage rate, called APR, which means
it is possible to actually come out

ahead by investing some money while you
continue to pay those kinds of debts down.

For example, as of right now when
I'm recording this, mortgages are

somewhere in the ballpark of six and
a half to seven and a half percent

APR, but the S&P 500 is up in the
ballpark of 13 to 14% year to date.

So if you make those monthly payments
and also add to your investment

accounts each month, you should
come out ahead in the long run.

Right?

Your investments should outpace
those single digit APRs.

So in summary, you should always
make at least the minimum monthly

payment on every debt account.

If you have high interest consumer debt,
like credit cards, you should point

your extra cash flow at that first.

But with auto, student, and home
loans, if you can make the monthly

payment and you have money left over, I
encourage you to build up an emergency

savings account of at least three
months worth of expenses and then to

invest extra money for your future.

The next two questions come from
people who requested that I not use

their names, and that is totally fine.

There are lots of emotions mixed up with
money, and even though I want this show to

be a place where people can speak freely
about the things you're never supposed to

talk about, I understand why someone would
not want certain things shared publicly.

So question number three is somewhat
related to the previous question: what is

the best way to address credit card debt?

Should I pull from savings?

If you can pay off your credit
card balance every month out of

cash flow, go ahead and do that.

There's no reason to carry a
balance if you don't have to.

And if this month has been particularly
expensive for whatever reason, but you're

confident that you could pay it off over
two or three months, that's totally fine.

Don't sweat it too much.

If you can wipe it out in
the short term, that's okay.

If you can't pay off your credit
card debt from just your income,

from your cash flow, then the first
thing I would recommend is to stop

adding to your credit card debt.

That might be hard to do.

It is difficult for most people to pull
back on their spending, but if your credit

cards are starting to get outta control,
you need to take some drastic measures.

Okay, so it might be hard for
a while, but you need to do it.

Credit card interest is so high that even
a relatively small balance will grow to be

really large if you don't keep up with it.

So first things first, stop
adding to your credit card debt.

When it comes to pulling money from
your savings, I guess I would want

some more context before making
any specific recommendations.

For example, if your credit card
balance is $5,000 and you have

$30,000 in a savings account, then
by all means pay off that card.

That is not gonna put
you in a bad position.

But if your credit card balance is
close to or even more than your savings

account, then you are in a tough spot.

If you wipe out your savings to pay
down your credit card, then the next

time something comes up that you
can't pay out of your income, you'll

be right back where you started.

You'll have to put it on your credit
card, and you know you can't pay it

off, and now you have no savings.

So you're worse, you would be in a
worse position than when you started.

So it's, it's kind of
like a balancing act.

How can you pay down your debt faster and
still maintain some kind of a safety net?

But that doesn't mean
there's nothing you can do.

So here's a hypothetical example.

Let's say that you have $10,000 in
credit card debt and $10,000 in savings.

And let's say that you can manage to make
a $500 payment out of your current income.

If you match that with 500 from your
savings, that means you're making

a substantially bigger monthly
payment, but that still leaves you

with 9,500 in your savings account.

You see what I'm getting at there?

You can use your savings to
pay down your debt faster while

still leaving yourself a cushion.

It might take a little while longer,
but I think it's a better option than

wiping out all of your savings and having
no wiggle room for future surprises.

I hope that helps.

Thank you for that question.

And the final question for today
is a big one: what do you recommend

as a way to begin to change the
feelings of shame or anxiety so

many of us feel about our finances?

I feel deeply embarrassed
by my past mistakes and lack

of financial understanding.

Oh, brother, that's an important question.

That's a big one.

People treat money like it should
all be numbers and equations and

spreadsheets, but money is emotional.

So when certain things happen, we feel
happy or proud or accomplished, and

when other things happen, we might
feel sad or embarrassed or ashamed.

And this is not fair or right, but
society looks at people differently

based on how much money they have.

So shame around past financial
decisions is very common.

First and foremost, I wanna make
it perfectly clear that I'm not a

therapist or a psychologist or a
life coach or whatever, but I do

think about this kind of stuff a lot,
especially as it relates to money.

So take all this with a grain of salt,
but I think that my ideas are generally

pointed in the right direction.

the first thing I want to
point out is that shame is not

a useful, productive feeling.

There's no positive outcome from shame.

Guilt is what you feel when you
do something wrong, and when you

make a mistake, even if it's a big
mistake, you can learn from it.

Shame, on the other hand, is the feeling
that the thing that is wrong is you

or somehow inherently part of you.

And there's nothing to be
learned or gained from believing

that you are not good enough.

So if you want to change your life for
the better, we need to acknowledge that,

even though the feelings are real, you
have those feelings, that shame is not

helping you get where you wanna go.

And by the way, it's also not even real.

Shame is a story you tell
yourself about yourself.

And it might be based on real things
that happened to you or by you, but

shame itself is not a real thing.

It's a story.

It's a fiction.

So if you're gonna make up a story
about yourself or your future or

your ability to make decisions,
it might as well be a good one.

Right?

You can tell yourself a new better story
in which you're the hero that overcomes

adversity and goes on to do great things.

And that won't make the feeling go
away immediately, but the cool thing

is that, you know, just like with
every habit or belief, the more you

repeat it, the more you stick with
it, the more it becomes a part of you.

To help write that new story, I recommend
that you start building up evidence that

disconfirms those negative emotions.

So every time you do something right
with your money, make a note of it.

And not a mental note that you're
gonna forget in an hour or the next

time you pick up your phone and,
whatever, scroll through Instagram.

Make it a physical, real,
pen to paper kind of a note.

So if you pay a bill
on time, write it down.

If you pay off a credit
card, write it down.

If you automate a transfer into
your savings account or your

investment account, write it down.

Start building up this list, this
tangible list that you can hold in

your hands, of disconfirming evidence.

And this does two things.

One, you're putting in the
reps on that new story.

Every time you write down something that
you did right, you're getting a little

extra practice at telling that story.

And second, you're getting
it out of your head.

You're building up tangible evidence
that is in direct opposition to the

negative story you want to leave behind.

And the next time those feelings of
shame or "I'm not good enough" come

up, you can pull out your list and
say, here's evidence that I actually

am good enough and I actually do the
right things with my money all the time.

You're not this person who always
fucks up with money, right?

Because you have this list
that shows that it's not true.

And it does take a long time to change
habits and your internal dialogue, but

having actual examples to reference will
help you rewrite that negative self-talk.

It will help you stick with it.

This next part requires a little
vulnerability, but it is super helpful.

Find one person, it can be more than one,
but at least one person you really trust

and tell them what you're trying to do.

There's lots of evidence that supports
the idea that when you share what you

want to do or what you're going through
with another person, that makes you

much more likely to stick with it.

This could be a best friend,
but it doesn't have to be.

The only real requirement is that
this person will take you seriously

and not betray your trust, basically.

You just need to be able to say,
"Hey, I'm trying something new.

I wanna share it with someone.

Can I share it with you?"

And if the person you've chosen
is any kind of decent human being

at all, they will be happy to
listen to you and support you.

And one important note that I wanna
make is that the role of this person

is not to be your task master,
and certainly not your savior.

They are not there to make you
better or to fix it for you.

This person only needs to
listen and take you seriously.

Okay?

That's the only requirement.

Then with this growing list of
disconfirming evidence and your

trusted person, I want you to
start celebrating your wins.

If you complete a big task or
cross a milestone, offer to take

that person out to coffee or
lunch or a drink to celebrate.

Say, you know, "Hey, I just
paid off my credit card and

that's a really big deal to me.

So, uh, as a thank you, I'd like
to take you out this weekend.

You know, we can have coffee, we can get
a glass of wine", whatever doesn't matter,

but make a point of celebrating it.

And again, this is a matter of getting
in the reps, because when you celebrate

that positive momentum and you get
it out of your head by sharing it

with someone else, you're putting
in the reps to build that new story.

And then like meditation or exercise
or every other hard, important

thing you wanna try in your life,
you just have to keep at it.

If you make a mistake, that's okay.

Everybody makes mistakes.

See if you can learn a lesson
and then just begin again.

Keep putting in those reps and keep
telling yourself a better story.

And over time, that new better
story will become a part of you.

And maybe that old story won't go away
forever, but it will shrink in importance.

It will shrink relative to this new
better story where you get to be the hero.

I hope that helps.

Thank you so much for that question.

It's an important one and I hope
I did a good job answering it.

That is gonna do it for
today's listener mailbag.

I hope you liked it.

I would love to do more
of these in the future.

So if you have a question about money or
personal finance, please send it to me

by visiting Iselerfinancial.com/podcast.

Next week I will be talking
with my old pal, John Dugan.

John is a content specialist in the
design industry, but he's also a drummer

and a former writer and journalist.

John and I played in a band together
in the early two thousands, called

Perfect Panther, and he was also
a member of Edsel and Chisel , who

reunited for some shows a couple of
years ago, and many, many other bands.

We'll talk about his career,
his bands, and how his financial

responsibilities have shifted over time.

I hope you'll tune in for that one.

And now it is time for some disclosures.

The Thing We Never Talk
About is for educational and

entertainment purposes only.

It is not legal, investment or tax advice.

People on the show, including myself,
may have interests for or against

any investments discussed, so do
yourself a favor and don't ever make

any investment decisions based on
what you hear on this or any podcast.

If you like what you hear, please
like and subscribe to this show

wherever you get your podcasts.

If you have a question about money
or personal finance you would like

answered in a future episode, please
visit Iselerfinancial.com/podcast.

And again, you can get my insights
on money and more delivered directly

to your inbox by subscribing to
my Keep It Easy newsletter at

Iselerfinancial.com/newsletter.

Thank you so much everyone.

Thanks for the questions.

I appreciate you.