Deborah Owens:
When model and actress Victoria Summer got her big break first in Saving Mr. Banks, which starred Tom Hanks, playing Julie Andrews, and then in Transformers 4, she was happy about the big upfront paycheck- but got really excited when she learned about residuals aka passive income.
In Victoria’s money story you will learn:
-About her first big breaks as a hollywood actress
-How the pay system in Hollywood works
-The similarities between acting and modeling and other “gig” economy jobs
-How Victoria manages to balance one-time paychecks and residual income
-What her one big spurge was after that big paycheck
In Victoria’s money lesson you will learn:
-How Victoria creates multiple income streams
-Why Victoria organizes her money in different bank accounts
-Her philosophy of acting like she is broke as a budget motivator
-Her goals to start a skin care line, a vegan handbag line and grow her production company
-Her strategies to promote herself as a brand
-The importance of top line income
In Victoria’s money tip you will learn:
-The danger of taking advice from the wrong people
-The warning signs to look for in advisors
-Why well-intentioned advice can often be off-base
In my take you will learn:
-The importance of choosing side hustles that complement, not contradict your primary career
-Why taking advice from well-meaning friends and relatives should be taken in context.
-The best way to find the right people to give you career and business advice.
Follow Victoria!
VictoriaSummer.com
Twitter: @VictoriaSummer
Instagram: @VictoriaSummer
Facebook: Victoria Summer Entertainment
Transcription
Victoria Summer:
Us as actors, we are personal brands. And all actors have to realize that you really are selling yourself. So for me it's work on promoting myself as a brand, and also, increasing the amount of income I can have from multiple streams.
Bobbi Rebell:
You're listening to financial grownup with me, certified financial planner, Bobbi Rebell. Author of How to Be a Financial Grownup but you know what, being a grownup is really hard especially when it comes to money.
Bobbi Rebell:
But it's okay. We're going to get there together. I'm going to bring you one money story from a financial grownup, one lesson, and then, my take on how you can make it your own. We got this.
Bobbi Rebell:
Hey everyone. So if you were to do a social media post about the gig economy, what kind of image would you use? Probably maybe an Uber driver, a millennial doing graphic design or coding or someone running errands at services like Task Rabbit.
Bobbi Rebell:
But take a minute to think about the business of acting. After the studio system ended, actors were in many ways pioneers in the gig economy. My guest today is a rising star. She is actress Victoria Summer, and she got her big break playing Julie Andrews in Saving Mr. Banks which starred, Tom Hanks.
Bobbi Rebell:
But the movie that gave her first really big payday, and key here is that it was more than just an upfront paycheck, was Transformers four. Here is Victoria Summer.
Bobbi Rebell:
Victoria Summer, you are a financial grownup. So great to have you on the podcast.
Victoria Summer:
Thank you. Great [inaudible 00:01:43] to be here.
Bobbi Rebell:
For those of you who don't know her work you will soon. She is a rising star, actually you've really risen, what am I saying. You were Julie Andrews in Saving Mr. Banks, you've been in Transformers Four, and you've also been with me on Bold TV, that's how I met you in New York City recently. And I'm so glad we're connecting on the podcast now.
Victoria Summer:
Me too, yes.
Bobbi Rebell:
And speaking of those roles, even though your big breakout hit was in that phenomenal role in Saving Mr Banks, your big money story actually has to do with really your biggest paycheck to date came from Transformers Four, and it was a big lesson to you, very eyeopening in something that is very relatable in what is becoming more and more of a gig economy, where we get sudden spikes of income. Tell us more.
Victoria Summer:
I actually remember when I booked that job, it was for me ... Even though I didn't say it in Mr Banks, it was the biggest job I'd ever booked, because it was such a big franchise, it was Michael Bay. I was going to be on set for three weeks with all these huge actors. And of course I knew, I was going to get residuals on that job. I was very excited about the passive income that I could make, not just the money that I got up front from being on set, but the passive income.
Victoria Summer:
At the time, I was living in a guesthouse, I'd not really been settled in LA that long, and it was just a big deal for me. So I thought, oh my God, wow, this big check upfront, three weeks of work which is a big deal for me at the time.
Victoria Summer:
So yeah, my lesson really was working out, how was I going to actually manage that money.
Bobbi Rebell:
Right. Well tell me a little bit more about how it works, because people may not understand how the payments work in Hollywood, you get paid very sporadically, really only when you work right. So most movies you just get a set paycheck and then they're done, at least that had been your experience up to this point.
Victoria Summer:
Yeah, but what happened to me on Transformers was they wanted me to be on set specifically for three weeks, so they bought me out for a three week period. And that was my deal, and then after that, once the movie aired, then I got residual income. So you get that four times a year. You get it quarterly.
Bobbi Rebell:
And one of are the challenges as an actress is that, you have income that is completely unpredictable. How do you manage that?
Victoria Summer:
Completely unpredictable, because for me, I'm doing auditions day in day out, and unfortunately, although I wish I did, I don't get paid for additions. And auditions take up a huge amount of my time. And when I'm working say on a movie like Transformers, you have a lot of money all at once and you tend to think, oh my God, I'm rich. What am I going to do with this money, oh my goodness.
Victoria Summer:
So for me, I've had to be careful and learn how to strategize in order to make sure that for the downsides and the down periods that I have with no work, that I have money set aside.
Bobbi Rebell:
One quick digression question. Did you buy anything, any little splurge Victoria?
Victoria Summer:
I bought a dog.
Bobbi Rebell:
You bought a dog. That's a necessity in life okay. That's not a [crosstalk 00:04:44] splurge. That's the best and I know you had your dog with you in New York, so that's not a splurge. That is always allowed. We advocate pet ownership here, they're the best.
Bobbi Rebell:
I want to get your lesson though because, it's important for our listeners to understand how ... You have ways that you manage having such sporadic income, and a lot of it is psychological. So share with us your lesson from that story and really from being an actress and learning to deal with what is it many cases 'cause you don't always get residuals. And even the residuals, you don't always know what they're going to be. These sort of spurts of unreliable income. Which again freelancers, the gig economy, we can all relate.
Victoria Summer:
Yeah, I mean with residuals you're absolutely right, you have no idea how much it's going to be. So whenever I get a check, it's always like oh, okay. But, you know, you can't predict that. So for me first and foremost is multiple streams of income, but also you know, when I do get these sort of big check windfalls, I make sure to put money aside. And honestly, from day to day, the best thing that works for me in my life particularly, is staying broke.
Victoria Summer:
I'm not saying poor, I'm saying convincing myself that I'm broke because I kind of ... For me as a person, I work very well on a highly necessity level. I tend to pull things in when I feel like I have to.
Victoria Summer:
So what I do is I have reserve bank accounts which are basically for future investments. So I move any money that's sitting around into these bank accounts to create passive income flows and also to use to set up other businesses. And so for me day to day, I do feel like I'm broke, and I work like I'm broke.
Bobbi Rebell:
And what kind of investments do you focus on?
Victoria Summer:
Well, for instance, I want to start my own skin care line, and I'm also wanting to start a vegan handbag line and that's important to me. Plus also my production company, I have to invest time in that. So that's really where my money goes is to start other businesses and to expand my brand really. I mean, honestly us as actors, we are personal brands, and all actors have to realize that, that you really are selling yourself.
Victoria Summer:
So for me it's work on promoting myself as a brand and also increasing the amount of income I can have from multiple streams.
Bobbi Rebell:
I think that's so smart and it's an interesting thing because, just like so many other businesses, the film business and the acting business has really evolved and is so much more driven by individuals and there's a lot of opportunity in that, but it also means that you have to be really smart about it. Yu have to be deliberate, as you are, and intentional, all those buzzwords.
Victoria Summer:
Yeah, you do. You have to be really smart and honestly, I focus on income. Every day I'm looking at okay, where's my money, where can I go and get money at this point, where is my next paycheck coming from, and how can I get more money from the different areas that I work in, and how can I expand? So I really do focus on income more than anything.
Bobbi Rebell:
Which is so smart, and that also brings us to the money tip that you brought because that really has to do with believing in yourself.
Victoria Summer:
Yes. Absolutely. To me, it's interesting. I didn't grow up in the kind of family where they were working in the theater or they were working on movies. My dad worked in the mail room of a bank, my mom worked in a school as a secretary, so I come from a prime middle class family, and I was always told, cut your cloth according to your means, never use credit cards, don't take any risks, that kind of thin.
Victoria Summer:
Honestly, I just had to get educated on the finance for myself. I think my money tip would be, don't take advice and don't listen to people close to you who really don't understand your business, or don't understand the actual area of money. They probably haven't had very much money, and they give you advice on money, but they really have given up on money themselves. So for me, just be careful of who you actually take advice from, and get educated.
Bobbi Rebell:
Yes, you have to own it yourself, which is what we're trying to do here at Financial grownup. So Victoria Summer, tell us where you can be found on social media, your website and what you're up to these days.
Victoria Summer:
Yes, you can find me on Instagram at Victoria Summer, on Twitter at Victoria Summer, and then on Facebook, Victoria Summer Entertainment. Then you can also, for more information go to my website victoriasummer.com.
Bobbi Rebell:
This has wonderful. Amazing advice, you are such a smart cookie my dear. I am so impressed with so many different things going on, and you're so smart with your money. I truly appreciate you joining us.
Victoria Summer:
Thank you very much for having me, it's great taking to you.
Bobbi Rebell:
So I think we all learned a lot about the acting business and how erratic the paychecks can be, so it's definitely part of the gig economy. So here is my take, financial grownup tip number one, Victoria talked about her multiple income streams and her business aspirations, which at first had me a little bit concerned about whether she was really focused enough on acting. But then when I really thought about what she was saying, it did start to make a lot of sense, because she was looking towards businesses that were complimentary to her skill set, and her primary career as a model and actress.
Bobbi Rebell:
So for example, she wants to have a skincare line. That makes sense. she's got a background in modeling and she's beautiful. She also wants a vegan handbag line, and she of course has a production company. As a model and actress, that can make sense. If she were an accountant who wanted to start a skincare line, maybe it makes less sense. Not that it couldn't be done, but you don't really have the same kind of synergies.
Bobbi Rebell:
Financial grownup tip number two, Victoria talks about being wary of advisors that aren't successful in your field. Basically she's talking about well meaning friends and family that don't really understand the nuances of the business that you're in. Because, they have ties to us, sometimes the people closest to us have complicated motivations. For example, and it's well meaning, but a parent may advise a child to be more cautious in their career because the parent may prioritize security over risk, when maybe it takes risk to be successful in some careers, many careers. But especially something like acting.
Bobbi Rebell:
Instead, maybe try to find a mentor that is in the business that you are in or aspire to be in, and then get advice from them. You'll get a more experienced vantage point, and maybe without the baggage of being a stakeholder in your life. Now we want to ask something of you. If you liked this show, help us get the word out. Tell a friend, write a review on Apple podcast, i Tunes or wherever you want, or just share this episode on social media. Be sure to tag me and then I can share it on that platform as well, and I love it by the way. A lot of you guys have been DMming me and, telling me how much you like different episodes. That's awesome.
Bobbi Rebell:
Victoria maybe a glamorous Hollywood actress but I found a lot of her story actually pretty relatable, and very relevant to a lot of the universal themes in our lives, and I hope you got a lot of value out of the conversation as well, and that we all got one step closer to being financial grownups.
Bobbi Rebell:
Financial grownup with Bobbi Rebell is edited and produced by Steve Stewart and is a BRK media production.
Trade Bodge and her partners set out to build a business- that they knew was challenging before they even started. But they focused on funding, building a strong foundation, and learning from the past mistakes.
In Trae’s money story you will learn:
-The market opportunity Trae and her partners saw when they created ThreeCustom.com
-The challenges the new business faced, including the difficulty of scaling up
-The creative way they funded the business
-Why Trae left the business
In Trae’s lesson you will learn:
-The challenge in finding the balance between waiting until a business is “ready” and moving forward while there is the most excitement
-Why she believes entrepreneurs should pay as much attention to how time their launch, as how they spend their funds
-Specific ways to research markets ahead of time, and during the early stages of a business launch including trade shows and how to get competitor insights.
-How to use time to your advantage
In Trae’s money tip you will learn
-Where to find money, that is already yours, to fund your startup
-How they each saved $25,000 to put towards their business
-How to avoid feeling deprived when saving for a goal
In my take you will learn:
-The realities of start-up life
-What to do when you just aren’t that into your startup
-Tips to make sure you remain financially solvent even as an entrepreneur with a startup
Episode Links
Threecustom.com on Twitter: https://twitter.com/ThreeCustom
Traebodge.com
Follow Trae!
Twitter https://twitter.com/truetrae
Instagram https://www.instagram.com/traebodge/
Facebook https://www.facebook.com/Truetrae/
Transcription
Trae Bodge:
We had the best intentions. We wanted to get out there and start this business. We found out that customization is very difficult to scale, and so any business who has attempted to do bespoke or customized products can attest to this. It's very, very difficult to grow a business like that.
Bobbi Rebell:
You're listening to Financial Grownup with me, certified financial planner, Bobbi Rebell, author of How to Be a Financial Grownup, but you know what? Being a grownup is really hard, especially when it comes to money. But it's okay. We're going to get there together. I'm going to bring you one money story from a financial grownup, one lesson, and then my take on how you can make it your own. We got this.
Bobbi Rebell:
Hey, everyone. This is an episode about starting something really big, being all-in, and then finding out maybe it's not for you and having the strength to, well, exit gracefully. My guest and her partners were off to the races with what seemed like a genius idea: blend customer colors to replace makeup products that were no longer available. But, while the business is still chugging along, Trae Bodge left and is now a smart shopping expert that you can see all over the media and with her column in Women's Day. Here is Trae Bodge.
Bobbi Rebell:
Trae Bodge, smart shopping expert, you are a financial grownup. Welcome.
Trae Bodge:
Thanks so much for having me.
Bobbi Rebell:
Congratulations, by the way, are in order for your new Women's Day column.
Trae Bodge:
Oh, thank you so much. I'm really excited to be partnering with Women's Day as their financial expert. I'm covering everything from best buys month-to-month, how to maximize your tax return, how to save on your Amazon purchases, all sorts of things that savvy shoppers need to know.
Bobbi Rebell:
Awesome. We will definitely put a link to it in the show notes. I'm excited to hear your money story because, first of all, it has to do with the beauty business, it has to do with being entrepreneur, and it has to do with how much money do you really need to start a business? Do tell.
Trae Bodge:
Many years ago, two friends and I thought that we wanted to start a beauty business that specialized in the reproduction of discontinued colors. This is something that one of my partners and I had done for another brand that came on to the scene, blew up really quickly, and then fizzled out really quickly. Because, we found out, is that customization is very difficult to scale, and so any business who has attempted to do bespoke or customized products can attest to this. It's very, very difficult to grow a business like that.
Trae Bodge:
But we had the best intentions. We wanted to get out there and start this business and custom-blend products for women, and men, of course, and makeup artists. We started, for the first couple of years, creating our plan, saving our tax returns, saving our bonuses very-
Bobbi Rebell:
Saving the refunds from the tax returns.
Trae Bodge:
Yes, yes. Saving our tax refunds, and planning along the way. What this business was about was really about answering a problem that many women had, which was when you have a favorite product, like your favorite eye shadow or your favorite lipstick, and then that product is continued, we set out to reproduce those products as close as we could to the original color and texture. Then we kept that formulation on file so you can reorder it any time. Now, I [crosstalk 00:03:33]-
Bobbi Rebell:
I love that.
Trae Bodge:
It's such a helpful process for so many people because you finally find that thing that works, and then suddenly, you can't get it anymore. Forgive me, I do sometimes speak about it in the past tense because I'm no longer with the business. The business is still alive and well. You can find it at threecustom.com. My two partners are still running the business, but about four years ago, I decided that I needed to move on and do new things, which is where I landed as a smart shopping expert.
Bobbi Rebell:
Tell me, what is the lesson from that story? What is the takeaway?
Trae Bodge:
For me, and in terms of being a financial grownup, when we set out to start our business, there's this excitement and energy about getting the business out there right away. My recommendation to all potential entrepreneurs out there is I know you want to get out there and you want to get out there now; however, the time that it takes to save the money or to crowd-fund, for instance, if you're going to do Kickstarter or Indiegogo, or if you're going to look for venture capital or money from family and friends, the time that it takes to gather that money is time that works for you. You need the time to do your market research, to attend trade shows, to interview people and really flush out what you want this business to be because there are so many brands out there. How are you going to differentiate and set yourselves apart from the competition?
Trae Bodge:
For me, I would say to people, just take your time. Don't get frustrated by how long it takes to start a business, and use that time to your advantage.
Bobbi Rebell:
Give us a money tip, something tangible that people can literally do today.
Trae Bodge:
This is a tip that I think can apply to many things, whether it's going to be starting a business or paying off your student loans or any other debt is to take money that may feel like a windfall, and rather than spending it and going on a luxurious trip or buying a fancy handbag or even doing a renovation in your apartment, save that money. Save that money towards your business.
Trae Bodge:
What my partners and I did over the course of about two years is every tax refund we got, every bonus that we received, and then any extra money from if we inherited a little bit of money or anything extra like that, we did not take that money for ourselves. We put it in the bank. The three of us each saved over two years. We were in our early 20s at the time. We each saved $25,000. For the three of us, we were able to start our business with $75,000 after couple of years.
Trae Bodge:
That would be my money tip is that money that feels like something extra, instead of going to town with it and spending it, put it away towards your goal.
Bobbi Rebell:
But it's hard because you feel like it's found money.
Trae Bodge:
Yeah. It does. It is hard. It almost feels like you're on a diet. It's like you have that diet and you have the rules in front of you and everything you're supposed to eat and not eat, and you really, really, really want to eat that thing that you're not supposed to eat. To me, it's the similar feeling. You see that money, cross your hands, and you so want to go out and enjoy it and treat yourself because especially with, say, a bonus from work, it's like that's being given to you as a congratulations for work well done, and you want to enjoy that, but instead, put that away. You'll save money so much faster than you think you can.
Bobbi Rebell:
Trae Bodge, thank you so much. Wonderful story. Wonderful advice. We will all be checking out your column in Women's Day and visiting your website, which is traebodge.com, right?
Trae Bodge:
Yes, it's traebodge.com or truetrae.com, and definitely follow me on social. I'm truetrae or traebodge. I hope to see you all there as well.
Bobbi Rebell:
Wonderful. Thank you.
Trae Bodge:
Thank you.
Bobbi Rebell:
I loved Trae's story because it highlights the gray areas of startup life. Sometimes, a business is solid, but maybe not the future that you want. It's not a bad thing. It's just not your thing. Financial grownup tip number one: Leaving something that isn't right for you is like leaving a relationship with someone that you are just not that into. You could stay. It will probably be okay, but by staying with something that isn't for you, you're also not finding the business or career that is right for you. It's the missed opportunity cost. Don't get caught up in sticking something for fear people judging you or an idea that you are not a quitter. It's not about the exit. It's about what you find behind the door that you open as you leave.
Bobbi Rebell:
Financial grownup tip number two: As Trae says, whenever you start something new, don't rush in. Take the right amount of time to build yourself enough runway that you can be intentional when you do ramp up. You don't want to be scrambling for cash to fill an order. Be purposeful. Spend the time before you spend the money.
Bobbi Rebell:
Thank you all for your support. If you have not already, hit that subscribe button so you won't miss any episodes, and be in touch on Twitter @bobbirebell, Instagram @bobbirebell1, and of course, visit my website bobbirebell.com and sign up for our mailing list so we can keep you posted on what's going on at the show, and of course, spread the word. Tell a friend. Thank you also to Forbes for naming Financial Grownup as one of five podcasts that are getting it right. That was really cool. I hope you all enjoyed this episode with smart shopping expert Trae Bodge and that we all got one step closer to being financial grownups.
Bobbi Rebell:
Financial Grownup with Bobbi Rebell is edited and produced by Steve Stewart and is a BRK Media production.
John Schwartz, NY Times correspondent and author of the new book “This Is the Year I Put My Financial Life in Order” shares the story of his first home purchase, how it brought him to the brink of bankruptcy, and why he flosses every day.
In John’s money story you will learn:
-How John’s seemingly solid real estate investment went downhill
-How the rights of tenants can put owners in losing positions
-The specific financial steps John took ahead of a likely bankruptcy filing
-The factors that went into John’s decision about bankruptcy
In John’s lesson you will learn:
-Why John says failure is not the end of your financial life
-How John and his family rebuilt their life
-The specific steps John took to financially protect his second home
-What he would and would not have done differently in buying real estate
-The impact of a broad-economic downturn on individuals like John, and how you can create some protection as a home owner
In John’s money tip you will learn:
-The one health tip that John says will save you a ton of money
-The importance of daily health habits to avoid massive medical bills
-How his life informed his book “The is the Year I Put my Financial Life in Order” and how the book came together
-Why John did not have a will until his late 50’s
-John’s advice on retirement savings
In my take you will learn:
-Real Estate is a high stakes game, that should be entered into with eyes wide open
-My take on what John could have done differently
-The choice my family made to avoid investing in a property that would be hard to sell
-Why I still believe owning real estate is a great opportunity, despite the tax law changes
Follow John!
Twitter: @JSwatz
Facebook: This is the Year Schwartz
Buy John’s book!! : This is the Year I Put My Financial Life in Order !
Transcription
John Schwartz:
My father-in-law said, "You have to file for bankruptcy." I contacted a couple of bankruptcy lawyers and the one that I ended up with said, "You don't need to file for bankruptcy, you need to get out from under the single debt that's killing you."
Bobbi Rebell:
You're listening to Financial Grownup. With me, certified planner, Bobbi Rebell, author of How To be a Financial Grownup. You know what? Being a grownup is really hard, especially when it comes to money, but it's okay, we're going to get there together. I'm going to bring you one money story from a financial grownup, one lesson, and then my take on how you can make it your own. We got this.
Bobbi Rebell:
Hey everyone, before we get into today's interview, I want to do a quick thank you to all of you for supporting the show. Our numbers are going up, which is really cool. The show is being discovered and I have all of you to thank for it. I also want to thank some of our friends in the media that have highlighted Financial Grownup, including Forbes, which named Financial Grownup one of five podcasts that are getting it right. We were up there with some really big names like TheSkimm and Masters of Scale with Reid Hoffman and Powderkeg and a Rent the Runway related show, so it was pretty incredible to get that recognition.
Bobbi Rebell:
I also want to thank Business Insider for highlighting our recent episode with The Muse's co-founder Kathryn Minshew. Her story is pretty incredible, so I'm glad more people got to learn about it. Thank you to all of you and I hope you guys are enjoying the show. Okay. Now to the show. Many of us bring our A game to our professional lives. I certainly try to, but then we don't always make the effort at home. Think of the chef that whips up these gourmet, amazing meals at their fancy restaurant, then they go home and they can barely scrounge together maybe a grilled cheese or some leftovers. Who knows? New York Times correspondent, John Schwartz, is that guy. No, he's not a cook. He's obviously a journalist, but he does research for a living.
Bobbi Rebell:
He's written four books and he's also been a journalist at a number of prestigious publications. Right now, as I mentioned, he's at The New York Times, but in his personal life, he messed up and it cost him, and it kept costing him for years. It was really bad. But, the story of the author of his new book, This is the Year I Put My Financial Life in Order. Sensing a theme here, he got it together. Does have a happy ending. Just maybe not what you were thinking. Here is John Schwartz. Hey John Schwartz, you are a financial grownup. Welcome to the podcast.
John Schwartz:
Well, thanks it's great to be with you.
Bobbi Rebell:
Congratulations. Your new book, This is The Year I Put My Financial Life in Order is coming out right now. I whipped through this book by the way in a day and a half, which is pretty amazing, cuz I can be a bit of a procrastinator, but I couldn't put this down. It was a great book.
John Schwartz:
God, I'm glad to hear that. Thank you so much.
Bobbi Rebell:
How long did it take you to write it, by the way?
John Schwartz:
It was a little more than one year.
Bobbi Rebell:
I brought that up, because within the book is this gem of a money story that, I don't know, at first when you told me it I was disappointed in you, but when I read it in the context of the book, I respected you and I felt like, wow, this could happen to anyone. Tell us your money story.
John Schwartz:
Well, we bought an apartment in New York, which is either a success story or the beginning of a horror story. In our case, it turned pretty bad, because I got a job in another city.
Bobbi Rebell:
Which should be good-
John Schwartz:
Which should be good. Again, career advancement? Exactly. But, we got there and not only could I not sell the apartment in New York, because we had bought at the top of the market, but when we had a tenant, which also seemed like a pretty good idea, that tenant decided to stop paying. And, knew his rights, as he told me over the phone. I was either gonna have to spend a tremendous amount of money on lawyers to get him out or as the super in the building suggested, kill him.
Bobbi Rebell:
Yeah, no.
John Schwartz:
No, exactly.
Bobbi Rebell:
He is alive and well. Let's just make that clear.
John Schwartz:
Right. Well, at least, last I checked. Then, over time all our savings were gone. We were faced with near bankruptcy and ended up defaulting on the apartment and losing it. As a little side note, that apartment's worth more than a million dollars today.
Bobbi Rebell:
Wow. Can you give us some of the numbers involved and how this happened?
John Schwartz:
Well, it was $136,000. I believe, it might have been 138, my memories not perfect. We were able to pull together the down payment in part, because my wife had a little inheritance from her grandfather and I'd been making pretty good money at Newsweek. We were able to make the payments, but we were not able to make those payments and pay our rent in Washington. That's where the money really started to kill us.
Bobbi Rebell:
And the tenants weren't paying.
John Schwartz:
And the tenants were paying nothing. Well, we have the first tenant, I finally got him out at the suggestion of a very kind lawyer who said, "Send him a letter telling him that you won't pursue him legally if he just leaves."
Bobbi Rebell:
So, you forfeited money.
John Schwartz:
He was never gonna pay. I was gonna spend more money pursuing this guy in court and the lawyer, very intelligently said, "Don't throw good money after bad. Just see if this is enough of an incentive to get him out." It was and he left. Then we got the next tenants in. Again, just as with the first guy, we did a credit check, looked good. We tried to do eyes open transactions here. The second couple was very nice, but a few months in the woman called me and said, "My husband's left and I can't pay." I said, "Okay. Get out." That's when my father-in-law said, "You have to file for bankruptcy."
John Schwartz:
I contacted a couple of bankruptcy lawyers and the one that I ended up with said, "You don't need to file for bankruptcy. You need to get out from under the single debt that's killing you. Everything else, you're banking all your other payment. You're living right, but you have this one unsustainable debt, this mortgage." He walked me through the default process.
Bobbi Rebell:
What is the lesson for our listeners here?
John Schwartz:
The first lesson is failure, really crushing failure, as much as it hurts, is not the end of your life. It's not even the end of your financial life. We went through this, more than 20 years ago. You gotta imagine I was devastated by it, but over time we were able to rebuild. Before doing the default, I had been able to get a mortgage on a place in Maryland. So, we had a home that we could not lose.
Bobbi Rebell:
So you were smart with your timing. You did this very thoughtfully. You didn't just let it default. You thought, "Okay, before we let this happen, what financial things can we put in order?"
John Schwartz:
Right. How can I fix this to the extent that I can fix it? So, we were in the house. We went through the process on the other place. It was our new beginning and that's the message. That you can take failure and turn it into the next step of your life. In fact, when we sold that house five or six years later, we were able to sell it at twice the purchase price. Now, we bought it, it was a wreck and we really had to fix it up. That's-
Bobbi Rebell:
You put in the work.
John Schwartz:
... sort of the way we do things. We put in the work and we found a place that was seriously underpriced in the market. Largely, because it was such a wreck, but that turned around everything for us. We went from total failure to in a house, to a pretty good success.
Bobbi Rebell:
I love a happy ending. Looking back though are there things that you would have done differently or looking back, it just happened. Would you have not taken the job in Washington had you known what a debacle the New York apartment would be or really, it just happened and this is the way your life is?
John Schwartz:
I think I could have done things more intelligently. The way that I was looking for an apartment was more about feel than really working through the numbers and understanding what I was up against. I didn't know and might have been able to figure out that this apartment, which was part of a co-op conversion was happening in a building where the for rent apartments were not shifting to co-ops quickly enough.
John Schwartz:
One of our big problems was that we couldn't sell it, because banks didn't want to lend money in a down market in an undersubscribed co-op. Now, those were things I only learned after the fact, but wouldn't it have been smart to learn them before putting money down? Research counts. I mean, I do research for a living, right? I do the research and I type.
Bobbi Rebell:
Your job, but not your personal life sometimes. That's what happens to all of us, right?
John Schwartz:
That's right and that's the story of this book. Learning to do for myself what I do in my job.
Bobbi Rebell:
Part of my enjoyment in reading this book was getting some of your little tips in life. Tell me the money tip that you are gonna share with us that everyone can put in place. Hopefully, they're already doing it, but it actually is a money tip even though people may not think of it that way.
John Schwartz:
Okay. If you're ready for this, it's flossing. Now I sound like that dentist from Sesame Street. Could I just say a few words about flossing? Flossing's important not just because it helps keep your gums healthy and all that stuff, it is something that I started to do in my late-20s regularly, after I had a bout with a periodontal condition. I needed a procedure. After that, there was not a day I missed flossing.
John Schwartz:
What flossing does, more than helping your gums, but I'll get back to that. Is that it establishes a daily habit. Establishing daily habits is the foundation stone for all sorts of good things. If you can floss every day, then you can exercise every day, if you can find the time. Then you find how to make the time. If you can exercise every day, maybe you can save a little money.
John Schwartz:
You can show discipline in other parts of your life, but even more than that, your teeth and gums are gonna be healthy. You're gonna have a much smaller chance of running into the kind of mouth problems that I had in my late-20s, which are expensive. Even if you've got insurance, you've got deductible and everything else. It's part of using good habits to prevent, preventable problems.
Bobbi Rebell:
It all goes together. The book, This is The Year I Put My Financial Life in Order. I love it. Tell our listeners a little bit more about it.
John Schwartz:
Well, it's coming out on April 3rd. It is part guide and part memoir, which is a sort of weird blend, but you know. Reese's put together chocolate and peanut butter and that worked. The idea is that I put my financial life in order by applying research to the problems of my life and the issues that were still undone. Like, I was in my late-50s and I didn't have a will, which is idiotic. I hadn't looked at my retirement to understand whether I was gonna live comfortably, or whether I needed to do more, whether it was a disaster.
Bobbi Rebell:
But you are okay, by the way.
John Schwartz:
Yes.
Bobbi Rebell:
Spoiler alert. You're fine.
John Schwartz:
Yes, spoiler alert.
Bobbi Rebell:
Good to hear.
John Schwartz:
Largely because I started putting money away in my 20s. The first time I got a significant raise, I opened a 401k and put the money in. There are no financial secrets in this book, but there are a lot of fundamentals like, start early and make your contributions. These were the lessons that got me through. The idea behind the book is, I would hope that by reading what I went through, people could figure out what they can do too.
Bobbi Rebell:
Where can people find you, John?
John Schwartz:
I am on Twitter at @jswatz, J-S-W-A-T-Z. There's a Facebook page for the book, This is The Year Schwartz.
Bobbi Rebell:
Love it.
John Schwartz:
It's fun, but the Facebook page is there to talk about the book and for people to talk about their own financial issues. The book is gonna be in stores or you can get it anywhere.
Bobbi Rebell:
Awesome. Well, I am a huge fan, John Schwartz. I highly recommend everybody read it. It is a page turner, which is not typical of personal finance books. So, definitely everyone check it out. Thank you so much, sir.
John Schwartz:
Thank you.
Bobbi Rebell:
Here is my take on what John had to say. Real estate investment glorified in our society, but make no mistake, it is a high stakes proposition and sometimes life and the macro economy gets in the way. Financial Grownup tip number one, buy what you can sell later on. Always think, how will this sell? You can read more in John's book, but in short, that apartment that he bought, because he could afford it, to be fair, was not in a great family neighborhood. He got a good deal, he thought, but when the apartment went for sale in tough times and he needed to sell, it just wasn't selling.
Bobbi Rebell:
Case in point, when my husband and I went to buy our current apartment, there were two identical apartments for sale in the same building, same layout. You get the idea. One was a lot cheaper, like 25% cheaper, a lot. We could have really used the savings, but there was a catch. A giant flashing orange neon parking sign right across the street. You could see it through what would be our son's bedroom window.
Bobbi Rebell:
We rationalized a little bit. Many apartments in New York face brick walls, so this at least was facing open air, just at night there would be this giant flashing parking sign. We could get blackout shades though, right? You know what? We ended up going for the other apartment on a higher floor, not a great view, but an okay view and no parking sign, because we knew that the pull of buyers when we went to sell would be limited even in an upmarket and it could be nonexistent in a downmarket, if we went to sell that apartment where people just would not buy it. Some people, no matter what, they are not buying the apartment with a flashing orange parking sign that would be in their child's room their whole childhood. So, John found out that sometimes an apartment that's a deal, is not really such a deal.
Bobbi Rebell:
Financial Grownup tip number two, don't give up on real estate. John kept at it and had a great experience the second time around. I'm a big believer in owning your own home. The tax breaks are not as good as they used to be, but you're not gonna live in fear of a landlord raising the rent, or simply asking you to leave.
Bobbi Rebell:
Friends, be sure to check out John's new book, This is The Year I Put My Financial Life in Order. You will learn from John, but you will also laugh along with John. It is a fun and readable memoirish personal finance guide well worth your time. Thank you all for spending a little bit of your day with us. Keep up the great feedback. I am on Twitter @bobbirebell, on Instagram @bobbirebell1. I hope you enjoy this episode with John Schwartz and that it brought us all one step closer to being Financial Grownups. Financial Grownup with Bobbi Rebell is edited and produced by Steve Stewart and is a BRK Media production.
Retire Inspired’s Chris Hogan had a taste for expensive food at the grocery store- and it was was thinning out his bank account. But when he saw the true cost of his weekly habit he quickly hit the brakes and kept the change.
In Chris’ money story you will learn
-How Chris Hogan had money wake up call
-Why his spending was spiraling out of control
-How he curbed his grocery spending bill from $1500 a month to close to nothing
-How routine and habit was hurting his wallet
-The specific strategy Chris and his wife used to get back on track with their spending
-The crazy meals the Hogans had while cleaning out their food stash!
In Chris’ lesson you will learn
-Chris’s strategy to avoid mixing up wants and needs
-The importance of being intentional with how you spend your money
-How to curb spending even when you think you can afford it
-Chris’ saying: interest you pay is a penalty but interest you earn is a reward
-How to get debt out of your life
In Chris’ money tip you will learn
-Why he believes cash is the best tool to control spending
-How electronic payments can confuse you and cause you to spend more than you intend
In my take you will learn:
-While eating out can be a budget killer, eating at home can be expensive as well
-Be deliberate at the grocery store- have a list and don’t buy those impulse items!
-Don’t shop hungry
-Use apps like Grocery IQ and Grocery pal to help stay on track in the store and to plan better
-Avoid routine spends. But on purpose, and with purpose!
EPISODE LINKS
Chris Hogan’s website https://www.chrishogan360.com/
Chris Hogan’s book Retire Inspired
Chris Hogan’s podcast Retire inspired https://www.chrishogan360.com/podcast/
Chris Hogan’s Retirement calculator https://www.chrishogan360.com/riq/
Follow Chris!
Instagram @ChrisHogan360
Twitter @ChrisHogan360
Facebook https://www.facebook.com/chrishogan360/
Grocery apps to check out:
Grocery IQ
Grocery Pal
Here are some stories about Grocery apps: