Do you ever dream of financial freedom? In this episode, Lori and Jimmy share strategies, tactics and true stories of others who started with very little except desire and willpower to ultimately live a life of financial freedom.
Episode Keys:
- One of the easiest methods of accumulating assets for a lifetime of personal freedom.
- How a janitor accumulated more than $8MM throughout his lifetime to live life on his own terms!
- Why you find greater peace in life by defining what you wish to happen and willing it to existence.
- When you should prepare a budget to reach your goals and how often you should review it.
- It’s not a matter of how you start in life; it only matters that you start moving forward with intention and purpose.
Podcast Transcription
LF:
It’s another great day, and it’s another great episode here at Live a Life By Design. Welcome everyone. We’re hoping to give you some Monday motivation this morning. I am here with my fabulous co-creator -not co-host, but we’re gonna call him co-creator – of everything Live a Life By Design. Jimmy, are you there?
JW:
Hey, good morning, Lori. I don’t know if I can hold up my reputation to that title. How about you just say Lori’s minion. I’ll just be the one that carries the, the cables, hooks the computers up, maybe once in a while, says a few words. No. Hey, glad to be here, Lori. You know, I really wanna say something about our listeners. This thing has really taken off the new format. We’re getting more listeners per episode. Let us know. Go to our Facebook page at Live a Life By Design Community. Let us know what your thoughts are about the new episodes. Hey, good or bad, right, Lori And I wanna make sure we’re giving you what you are asking from us in terms of qualitative and quantitative information. But hey, Lori Few is in charge today, so I slowly took over her show there, didn’t I, Lori?
LF:
No, not at all. Well, and when you said that, good, we, you know, we do, we wanna know about the good and the bad, and we wanna know what you want to know. We wanna know what you wanna hear about. So I, I think today’s topic is a great way to segue into that. And it’s one of great interests for all of us, and that is the topic of financial freedom. So big double financial freedom. It just kind of rolls off the tongue, doesn’t it?
JW:
It just sounds good, doesn’t it? Financial freedom. love that.
LF:
I can’t roll my Rs. I was terrible in Spanish class, but I digress. Jimmy and I are gonna discuss some strategies and tactics to achieve freedom in your own life, on your own terms.
JW:
Ooh, you know, that’s just right up our alley. Right? Live a life by design in all aspects, right? Lori? You know, there’s one area of life though that impacts all others, and that is personal freedom, Lori. And that’s a little bit different than just financial freedom. So let’s explore financial freedom within the context of personal freedom today and help people live the life they desire.
LF:
Okay? But first we need to define what financial freedom is. So what is it, Jimmy?
JW:
It’s this panacea of the world. here you get to lay in the bank’s vo Oh, no, I’m sorry. I was giving you mine, wasn’t I? Okay, I’m sorry. Okay.
LF:
Yep. Yep. But the general popualation, we need to know the standard definition.
JW:
Yeah. I love that. And let me just digress for just a moment. I have this real crazy thing in life I do about visiting the state capitals of the United States. So I’ve gotten several of the men, and generally they’re located in areas I can drive or fly to rather quickly. And there’s a football game going on as well. Or there’s a presidential library, which is my other collection item. Yes, I like to do those, you know, I’ve mentioned that. Well, I’m in Arkansas and I went to President Clinton’s library, and lo and behold, in Little Rock, Arkansas is their capital, a beautiful capital building. Very adorned with all this ornate stuff. It just looks beautiful. It’s very old, but beautiful. And I walked into the state treasurer’s office, Lori, and guess what I saw.
LF:
In the treasurer’s office?
JW:
It was exciting. Guess what I saw? Not who, but what I saw.
LF:
Money?
JW:
Absolutely. But let me explain what I got to do. They let you walk into this very old vault, 18 hundreds and something vault that they have. It’s very cool. And you get to go in and they have bound up enough money to represent a cube. So if you can imagine, I’m describing this to our listeners, it’s about maybe two and a half feet by two and a half feet, and then tall, maybe two feet. And it’s money just soran wrapped money wrapped up, wrapped up and wrapped up. So obviously they couldn’t get your hands in there and grab any, it represented a million dollars of currency. So I got to take my picture with it. And so did anyone else that wanted to. And they had two security guards there with armed weapons. I mean guns loaded with shells, the whole bit, right? And I said, has anyone ever attempted to name maybe borrow this, you know? And they said, no, nobody’s borrowed it yet. But if they attempted to, they wouldn’t borrow it very long.
LF:
I was gonna say that’s probably-
JW:
Point made. Point made. Yeah. Point made. So, so, Lori, that was, and it’s in my Facebook feed, I probably put it in there. I had a very successful visit to Little Rock, is what I called that. But no, hey, financial freedom on a serious note, what is that to me? Basically financial freedom means I can live where I desire, I can live how I desire, and I can pursue the passions I wish without consideration of lifestyle change, because of finances, for example. I don’t have to say, well, I can’t do this because I don’t have that. It’s living the life you wish. Now, I do not mean you have to be ultra wealthy to be financially free. I’ve got a story for you as well. Would you like to hear it?
LF:
I would because I’m, I’m very curious. I’m at that phase of life where I don’t know that I can achieve financial freedom.
JW:
Oh yes. Everybody can achieve it. It just depends on when you start and how you consistently apply the process over time. Compounding, you know, we’ve talked about this compounding, or as Mr. Einstein, the great German physicist said it is maybe he’s Austrian, though, my apologies. I think he’s Austrian.
LF:
Sorry, I’m not sure.
JW:
You know, he was a great professor on the East coast when he came to America. But my point is, is he said that the eighth wonder of the world was compound interest, right? Hmm. So what I’m suggesting to you is, is that there have been some of our friends and clients who were, don’t laugh school teachers. Now they’re not known in the United States of being the highest compensated, although they should be, but they’re not known. I mean, anybody that puts up with me for 12 years of school, right? They should get hazard pay when I was a kid, right? That’s pay. Oh my gosh. You know, my teachers were all so cool, but I couldn’t tell who they were. A lot of times they wore a football helmet with a shield in front and a pad. It’s like a battle.
JW:
Yeah. But anyway, you know, these people, if done right, can save just enough money every month. And don’t laugh. We have a computation in our office. We’ve performed, and in it’s perfected, we have provided a 25 year old person, a simple way to become a millionaire by the time they’re 65. And it takes very little, but it takes consistency every month. So you put X dollars in, I’m not gonna go into the details because it could change based on the market and everything, but we have a system. You put X dollars in every month pre-tax in your retirement plan, and you do it every month for 40 years, you’re gonna have over a million dollars. Now let me explain how much it is. You’re gonna laugh. It’s a very small amount of money. It starts out at $100 a month. That’s it.
LF:
That’s it.
JW:
It’s the compounding Right. Over that period of time. Yeah. And I want you to know, school teachers can do this if they do their finances correctly. I wanna read you a story though of a janitor, if I may. Okay. Who died as a multimillionaire, a janitor. Let me tell you how he did it though. This is a true story of a gentleman in Vermont here in the United States, and his name was Ronald Reed. And Mr. Reed is a retired stay with me gas station attendant. Oh. And janitor turned out to have been nearly $8 million in net worth when he died. And he left. I love this part. This is financial freedom folks. He left, he was worth 8 million. He left 5 million to his local library and hospital. Nice, nice. The two places he loved to visit or had the need for healthcare, they took care of him. And so he lived to be age 92. He just died back in 2015. So I wanna give you a, a couple of points of what he said and how he did this. They asked him, I said, Mr. Reed, how on your salary as a gas station attendant and a janitor, did you amass this? And he said, well, it was really simple. I always lived below my means. What do you think of that comment?
LF:
It’s so true. You know, we, we live in such a different world because I, I feel like we are constantly looking for the next biggest, best, greatest, newest. And that statement, living below your means, it is powerful. It’s so truth. It, it’s, it’s so truthful. And I feel, especially people my age who are in the middle of raising their kids and going through life, you know, trying to figure it out. We don’t understand that concept. The majority of people don’t. And and what do you mean I have to live below my means? I want this and I want the fancy car and I want the big house, and then I’m not happy with that house and I want this, you know, it just, it snowballs into this idea that we’re constantly chasing something bigger, better, faster, stronger, smarter, newer, shinier.
JW:
Yeah. You just described my wife’s next boyfriend, I think, oh if something happens to me, the younger, smarter, faster. Is that what you’re saying? Okay.
LF:
No, no, no. Not at all.
JW:
So you’re gonna love this. Now, he did some things that I would consider almost austerity. I’m talking about this as kind of the dirt floor thing. You won’t spend any money cuz you’re afraid. You’re, you come through the depression era, so you don’t do anything new or you don’t get your floors fixed. But Mr. Reed says he drove an old, inexpensive car and he kept his old coat together with safety pins. Now that’s going a little too far for me. So maybe my financial freedom might, might have to develop a little differently than that. But here’s the catch. He didn’t dine out frequently except for inexpensive breakfast at where it wasn’t the five Star Park Hotel in New York. It was at his local hospital’s cafe.
LF:
The food must have been really good.
JW:
He left 5 million or a portion of it to them, right? Yeah. And it was so funny, they said that people in town were so shocked when he died and these gifts were given to the library and the hospital that they thought he was a down on your luck ne’er-do-well.
LF:
But there’s so much in that story to kind of unpack. You know, we talk a lot about perspective. We talk a lot about, you know, how we perceive other people to be and what a great testament to him. He didn’t have the frills, he didn’t have the lavish, outspoken loud, if you will for, you know, lack of a term. But he just made such an impact, even in his passing, that people were shocked. And shouldn’t it be the other way around? Shouldn’t it be that more people are doing that?
JW:
I, I’m with you. And here’s what I love though. It says, one neighbor lady was so taken back by his down on his luck appearance and look that she knit him a hat one winter and another paid for his meal one day at the hospital.
LF:
Not knowing what he had in That’s funny store. Wow. Wow. Yeah.
JW:
Isn’t that funny? Now here’s another one that tickles me though. This is folks called Financial Freedom in the how Mr. Reed defined not judging him. You know, everybody’s different. Everybody does their own thing. But it says when he visited his lawyer, Lori, which was downtown in Vermont, I’m guessing Burlington or somewhere there, when he was downtown, he parked his car a long ways away from the building because he didn’t want to have to pay for parking at a meter.
LF:
Oh.
JW:
That’s pennies, man. Or Dimes or reporters, right? That’s incredible.
LF:
Well, I don’t know. The last time I paid to park in a metropolitan area, I had to use an app and a debit card. And it was not pennies or nickels or quarters. It was a whole lot more than
JW:
That. Hey, let me just tell you, it’s like three bucks in Norman, Oklahoma where OU is located. Cause they make you use that on Campus corner. And I learned quickly just because you put your tag number in and you paid for it. Cuz you have to put on your card, your debit card or something right on your app that you got to pick the area you’re supposed to be closest to when you do it. Cuz I, I apparently paid for someone else’s and got myself a ticket one day. Now they gave me, oh, they took my ticket away cuz they can see where I paid for it. They go, here, lemme show you how to use the app. I’m like, you know, I need a 10 year old to teach me how to do this.
LF:
User error.
JW:
Now you and I like to play sports and things of that nature. Now I know you’re not big into golf, but you know, sports like golf or tennis or basketball or something like that. Well, Mr. Reed enjoyed sports as well, but it wasn’t tennis or travel or anything of that nature as a pastime. His recreation was, are you ready?
LF:
I’m ready.
JW:
Chopping wood. And so he also saved him money for heating. So apparently he had a wood burning stove or fireplace.
LF:
Yeah, as many people on the East coast do, because fuel is so expensive. So good for him.
JW:
Isn’t that funny? Now let me give you another couple items. So Mr. Reed was pretty smart. He invested in stocks. Now I’m not gonna tell people which ones to invest in, but in the story it gave some particular value-based stocks that paid good dividends and so forth. And he was a buy and hold strategy. So he would buy good stocks, hang on to ’em, let ’em grow, as well as let ’em pay the dividends to him. And it was pretty funny. He when he got started on this, it was just a few dollars here and there, and basically he did reinvestment of dividends. So it compounded on top of that. And, and any just basically said, I didn’t retire early, now I’m gonna shock you here. He didn’t retire till age 76.
LF:
Wow.
JW:
Now it said that he died at age 92, so he only lived 16 years in retirement. So with 8 million Lori, I can suggest to you, he probably lived with financial freedom. He could have bought a new coat, but didn’t. I don’t know that I’m going that far with today’s podcast. My point to this comment is, is we all have a way of doing it. We can do things the way we wish, right? And the last thing I wanna bring up about that is he was always learning. So never stop learning in life because that’s how you win the game of life is always be learning something new. So that’s my story about financial freedom for Mr. Reed. so at the end of the day though, Lori, as long as you’re living life on your terms, that’s the philosophy I would like to impart today to our listeners. So let me ask you a question. Hey there’s other ways out there that people say, well, how is this different than that philosophy and so forth? Have you got any people you know that might be debt free and high income, but aren’t happy in life?
LF:
Gosh, I mean, no, not personally, but I’m sure there’s probably a celebrity or two out there that if you really, you know, just to think that they have it all, but sometimes you think, oh, does that really make them happy?
JW:
You know, I always say it this way, there are couples out there that clients of mine, even, I won’t mention any names, of course, there are clients of mine who were divorcing in their sixties, had all the money they need, had wealth, they had everything they need. They didn’t know a dime to anybody. The kids are all raised and they’re getting divorced just because they’ve been so unhappy in life. Mm. So what I’m trying to say is never equate wealth and material things to giving you true happiness in life in your brain and your heart. Right?
LF:
Right. So, okay, with that being said, what are some areas that need to be considered when you’re working towards financial freedom?
JW:
Great question. First of all, always every Monday morning, listen to this podcast. Yes. That’s one area. Okay. Check, check. Oh, that check. Okay, good. We got that out. No, on a, on a serious note, that that is a really good question. No budgeting, having an emergency fund for those days that come on rainy times. And I will tell you those days will come in life, right? It’s just like Mr. Reed I’m sure had some difficult days in life, right? You know, the other thing is, is learning how to invest your hard-earned money without emotion. Now, our economy’s going a little bit crazy in this since the covid started, and we’ve talked about that many times on the podcast. I’m not gonna go into details, but I’m just saying it’s been a little bit crazy. Markets went up, markets went down, then they went way down.
JW:
Now interest rates are, are going up and inflation’s going up and it just seemed like a crazy world. But if you invest without emotion and you do it on a consistent basis for with the appropriate type of investments, life is a lot better. And that’s financial freedom, understanding taxation and its impact on your income and your assets, that is vital. You know, I I will say if you have a wealth plan on how to develop and grow wealth and retaining it is just another plan that you have. But it always helps, and I’m gonna kind of toot a little bit on my own horn. It always helps to have someone that’s a disinterested party from the standpoint it’s not their money, but they’re giving you advice that has a fiduciary capacity in their mindset. In other words, your best interest first. And that’s what we do as a certified financial planner, professionals and CPAs, is just put your client’s interest first and help them get a plan. And then my job really reverts to coaching and keeping you on track.
LF:
That’s a big list. I mean, that, that’s, that’s, that’s a lot. And on top of that, one of the other things that I, I think that you probably talked to your clients a lot about is emergency fund. You know, you mentioned how those times will come. I know from just personal experience of a close friend of mine that one medical emergency completely devastated, decimated everything that they had worked so hard to, to, you know, obtain. And it was so just out of the blue. And those are types of things that most people probably don’t think about. So if I had one caveat to what you, that long lengthy list of yours of, of trying to be financially free I definitely think that emergency funds and emergency planning is probably at the top of that list because you just never know. And it seems it’s kind of like paying your insurance premiums every month. You never think that you’re gonna need it. But when you do need it, it’s there.
JW:
You know, Lori, you brought up a very touchy subject because we believe, oh, I would say approximately by the time they get to us, most new clients, there’s probably 60 to 70% of ’em don’t have any emergency funds. They’ll have a little savings, but it’s not enough to ever resolve a problem that may arise of a detrimental nature. So let me give you a rule of thumb for all our listeners. This is just a rule of thumb. Now of course we sit down and co calculate this a little bit more detail for you. But at the end of the day, you’d need at least, and this is just our recommendation, at least as a rule of thumb, six months to a minimum of three months of total living expenses. Now, Lori, I’m not talking about just paying the house or the car or the utilities. I’m talking about everything, food, recreation, entertainment, clothing what gasoline, insurance, whatever it is, any out-of-pocket you need at least three minimum, perhaps better to have six months or even a year setting aside liquid funds. And to me, then you have confidence that no matter what comes at you, as in the instance you said the medical issue, oh goodness, help us. Right? one good trip to that emergency room. And if you don’t have proper insurance coverage, it is, as you say, decimating to your budget.
LF:
Well, and I think that’s another reason that people were so just not only emotionally shocked during covid, but the financial shock of Covid. You know, we are gonna see moving forward in the next just little bit that a lot of the programs that were available during covid to help offset costs that the, the government is gonna go, that’s all gonna go away. And people are gonna have a lot of hard decisions to make about, you know, what to pay for, how to pay for it, how to save, especially with inflation. I mean that’s another thing that we’ve had to deal with. And, and think about that, you know, normally people, especially my age you wanna go on vacation? Okay, let’s save the money, let’s go now. Food costs are more a fuel costs or more. Everything seems like it costs more. And so when you’re talking about budgeting and learning how to live below your means, you really have to kind of reevaluate what’s the most important thing to you at this point. Because maybe a vacation this year is not feasible. Maybe it’s gonna be a staycation year.
JW:
Let me blow your mind a little, if I may, Lori, which I know it’s hard to do with such a learned woman. But here it goes. Do you know Warren Buffett, bill Gates Elon Musk, Jeff Bezos, you know what they all have in common besides being ultra wealthy?
LF:
Are they all bald?
JW:
No, no, no, no.
LF:
Bill Gates has hair. Hang on.
JW:
He does, he has hair. I think Elon Musk has hair.
LF:
Oh, okay. That, no, maybe I was thinking Bezos, he doesn’t have hair.
JW:
I think by his own election, but go ahead.
LF:
I think he shaved it. No, I don’t know what, I don’t know what they have in common.
JW:
So what they have in common, and a lot of people don’t think about this, they go, well, they’re just so wealthy, didn’t do anything they want. Did you know they still have an annual budget? They develop an annual budget and it’s amazing. The reason why they do, that’s not because they have to to budget going on, you know, getting their own Gulf Stream jet and fly anywhere they wish to. They don’t have to budget that, but they budget it because they always wanna be accountable for what they raise in their revenue and life and where it goes. So they can cover that leakage, if you will. Things that where money just leaks out. These are very proprietary entrepreneurial people that didn’t get to where they are today by wasting money. And so they just carried on these habits as they’ve gotten their billions, you know, and it’s amazing if you stop and think about people like Warren Buffet, he started out with a little bit of nothing, but he had a great idea and a great mind. And he went to college and he learned about economics and he has made millionaires on top of millionaires and Omaha and other cities across his country cuz they believed in him, but they believed in him because he stayed consistent with those things that got him there.
LF:
Well, and saying that, so that’s kind of a, a interesting thought that just the light bulb went off in my mind about these gentlemen that have amassed all this wealth can, and they probably said, I mean, started from humble beginnings for the most part. So can you share a little bit, maybe obviously not specifics, but a success story of someone who came to you and decided that they needed to get on the path to financial freedom. What, what are some of the things that maybe you helped or directed or guided them? You know, cuz we’re talking about the average listener, not a Jeff Bezos type of budget.
JW:
Sure, yeah, absolutely. This is our typical kind of client. So we don’t typically have the ultra wealthy come to our office. We have people that have the means to get there and we have to help them design what their goals are. They know what their goals are, always help them design them in a format that’s instilling in them that empowerment. They need to get there. So there, here’s a typical client. This gentleman has a high school diploma never attended any university, no trade schools, none of that stuff. He is just a wonderfully brilliant person and very, very driven in life to do better. Was raised with very little money. Parents didn’t have anything. Matter of fact, I’ll tell you this, he has built his parents a new home, paid cash for it as how well he’s done in life. And he started his first business, just him and no one else.
JW:
And he started his business doing things like that, working on automobile detail shops. So in other words, he would do window tenting aftermarket things like chrome rims and things like this. And just cuz he loved cars, he loved that type of business. Well then he got a business partner, happened to be his brother-in-law. He came in and then he bought his brother-in-law out cuz his brother-in-law wanted to move with his wife to a new city. Well, great. So that was fine. He grew and grew and grew this business. And then a young man came along that worked for him for many, many years and he said, Hey, if you ever sell this business, I wanna buy it. You’ve taught me how to do this. And so that young man, which was not raised with any money, but his parents has purchased the company is doing well and paying our client every month for this new company.
JW:
He just sold him. And our client went on to do something even bigger. He got a company and went from about 14 employees when he had his first company to over 600 employees with his second company very, very well. Millions of dollars of net worth. This guy is just done remarkable. And he is just so down to earth. And here’s his whole scheme to this. He understands two things that we all must learn and understand. First and foremost, know where my cash flow is and where it comes from is one. And the second one is know who I owe and the timeline for that. So just think about controlling your cash flow cycle in any business is critical to having a successful business. Businesses that overspend on administrative cost or they pay too high salaries to the owners without taking a consideration for the future.
JW:
They didn’t have the emergency fund when hard times come in recessions and so forth. And he was just so smart. And he always maintains a budget. It never fails. You know, he’ll come in and he’ll say, I’m projecting 30% growth this year and this company and I think I’ll have about 15 to 20% in this company and here’s how we’re gonna get there. Here’s my sources of income, here’s my uses, here’s what I think we’ll net at the end of the year and have saved. I mean, he’s just, you know, I’m not knocking a high school diploma only. I’m just saying though, it doesn’t take a PhD, Lori to get wealth in this country. It’s a matter of I will will it to happen if I want it to happen.
LF:
And I will work to make sure that it happens.
JW:
You know, we have a statement, Lori. Everybody always told me when I was a kid, my parents said, Hey, well there’s a will. There’s a way. Now I’ve changed that a little bit and you’ve heard me say it on this podcast. I use new statement now. I kind of modernized it where there’s a will. I want my name in it. But anyway,
LF:
Well you heard it first right here. There’s a will Jimmy wants his name in it.
JW:
That’s J-I-M-M-Y. Yes. Yes. Ok.
LF:
So this episode has been packed full of information. We’ve talked about defining your financial independence. We’ve talked about building a strong financial foundation and how to do that. Investing for your financial independence and maintaining your financial independence. All of these things are true and accurate stories of normal, regular, everyday people. And if they can do it, you can do it. So if you wanna achieve financial freedom, there are two resources we offer to our listeners. First, you can visit www.compasscapitalmgt.com and that contains a vast amount of financial information and goal setting information that can help you, which is easily and readily available to access. And the second is you can contact the office for a complimentary consultation by calling 918-423-3222. And in the great words of Jimmy Williams, “Don’t risk your future by chance. Claim your future by choice.” And that is what I leave you with this morning.
JW:
Thank you for joining us this week, Lori. You are fantastic, folks. This is why every Monday morning you need to show up. Lori brings it all to this show. Thank you, Lori!
LF:
Thank you Jimmy!
JW:
We’ll see you next week here on Live a Life By Design!
