The Mel Robbins PodcastThe #1 Money Habit That Sets You Up for Financial Freedom
EVERY SPOKEN WORD
70 min read · 14,233 words- 0:00 – 7:57
Meet the Guest
- DBDavid Bach
Seven out of 10 people are being left behind because they're living paycheck to paycheck.
- MRMel Robbins
Wait, seven out of 10 people in the United States live paycheck to paycheck?
- DBDavid Bach
So if you are living paycheck to paycheck, you are not alone. But what I know, because I've done this for 30 years, is that's a very hard way to live. I've been teaching people how to be smarter with money for 30 years, and my belief is no one should be left behind. And what's happening in our country right now is people are being left behind.
- MRMel Robbins
Our guest today is David Bach. He's one of the most respected voices in personal finance for over 30 years. His books have sold over seven million copies. He's taught millions of regular people just like you how to build wealth, starting exactly where you are right now.
- DBDavid Bach
Either you have a plan for your money, or someone else has a plan for your money. I want you to reduce the amount of credit cards you have as fast as you can. Stop taking credit cards out, okay? They're traps.
- MRMel Robbins
And this includes not just, like, Mastercard, and Visa, and Amex. This is, like, also store cards.
- DBDavid Bach
Oh, God! Don't... Please, please, please, please, please, please say no to these people for those cards. Do not do those cards. There's two escalators to wealth in America, 'cause the system's rigged. You need to hear this, especially young people. Two things get people typically to make a decision around money.
- MRMel Robbins
What are they?
- DBDavid Bach
One is [beep] people don't know. It c- it actually can make me cry sometimes because people just don't know. When you start the process of digging out, you start to feel better.
- MRMel Robbins
It's so true.
- DBDavid Bach
It actually doesn't take you being debt-free to feel better. It just takes you starting the process of working on getting debt-free. It's, it's never too late unless you give up. Let me tell you what's really going on in this economy, 'cause this is probably the most important thing you're gonna hear in this podcast.
- MRMel Robbins
David Bach, welcome to The Mel Robbins Podcast.
- DBDavid Bach
Mel, thank you for being here. It's fabulous to see you.
- MRMel Robbins
It is fabulous to see you, too. I love you as a friend.
- DBDavid Bach
Thank you.
- MRMel Robbins
I love your energy, and I love your work, and I am very excited about the conversation today, because so many of us are concerned about money. We're concerned about our future. We're concerned about how to support the people in our lives around their financial future. And where I wanna start is this: if I take everything to heart that you're about to teach us, how will my life be different if I apply what I learn from you today?
- DBDavid Bach
Well, first and foremost-
- MRMel Robbins
Yeah
- DBDavid Bach
... I'm gonna give you hope.
- MRMel Robbins
Oh.
- DBDavid Bach
A lot of people right now are missing hope when it comes to their money, which is impacting their life.
- MRMel Robbins
Mm.
- DBDavid Bach
So I believe that nobody should be left behind when it comes to money. That's why I've spent 30 years of my life teaching people about money, and so the challenge right now in this country, honestly, Mel, we're leaving people behind.
- MRMel Robbins
Mm.
- DBDavid Bach
In this country right now, seven out of 10 people are being left behind because they're living paycheck to paycheck.
- MRMel Robbins
Wait, seven out of 10 people in the United States live paycheck to paycheck?
- DBDavid Bach
Stop for a moment and take that in, because that means if you're driving down a street and there's 10 houses, seven of those 10 are living paycheck to paycheck. So if you're living paycheck to paycheck, if you've got credit card debt, you maybe have student loans, and you don't have hope, I promise you, at the end of these 90 minutes together or however long we are together, you will see the light at the end of the tunnel. So that's number one, okay? Number two, not everybody's living paycheck to paycheck, right? 'Cause there's three other people out there from the 10.
- MRMel Robbins
Okay.
- DBDavid Bach
So if you're starting on investing, maybe you've opened up your Roth IRA, you heard about that somewhere, or you're using your 401 [k] plan at work, or you've even bought your first home. You, you've... You're doing a lot of things right, but you're not sure, am I doing everything right?
- MRMel Robbins
Mm.
- 7:57 – 9:37
What Does Automatic Economy Mean?
- DBDavid Bach
We're living in what I call now an automatic economy.
- MRMel Robbins
Automatic economy?
- DBDavid Bach
Automatic economy.
- MRMel Robbins
Okay.
- DBDavid Bach
Okay, an automatic economy either makes you rich, or it keeps you poor, and there are a lot of people, Mel, right now becoming rich. In fact, we're going into a decade where I believe more wealth will be created in the next decade than in any time in our lifetime.
- MRMel Robbins
Really?
- DBDavid Bach
100%. There, there's two escalators to wealth in America, okay? 'Cause the system's rigged. You need to hear this, especially young people, okay? There's two escalators to wealth. They are real estate and stocks. You have to own real estate, and you have to own stocks, and this market's now more rigged than it's ever been. And when I say rigged, what I mean is everything in our country is designed for those two asset classes to go higher. All the tax laws, all the incentives, all the opportunities that exist are for p- for investors. If you're not an investor, you are being left behind faster than you've ever been left behind. Anyone who's in their 20s today can start investing their change.
- MRMel Robbins
That's true.
- DBDavid Bach
You can start investing literally today. You can open an app like Acorns and be investing your change. Every time you spend money, you can be investing a dollar at a time in diversified portfolios. You can click a button at almost no cost, and that was not true 20 years ago. Twenty years ago, it was hard to sometimes become an investor with a small amount of money. Today, with technology, the whole playing field's been democratized.
- MRMel Robbins
What are some of the biggest mistakes that people make when it comes to money that keep them stuck?
- 9:37 – 15:35
Financial Planning Basics
- DBDavid Bach
Okay. Number one, when it comes to money, you either have a plan for your money, or someone else has a plan for your money.
- MRMel Robbins
Ooh, [laughs] what do you mean?
- DBDavid Bach
So, so like-
- MRMel Robbins
Oh, boy
- DBDavid Bach
... like, let that sit for a second. Either you have a plan for your money, or someone else has a plan for your money. Lots of people have a plan for your money. The automatic economy is driven by your phone.
- MRMel Robbins
Uh-huh.
- DBDavid Bach
Okay, that phone that we hold all day long is a money magnet. Think about that as a money magnet. What do I mean by that? That means this tool is either helping you build wealth, or it's taking wealth away from you.
- MRMel Robbins
Oh, hold on. So the phone is either helping you build wealth-
- DBDavid Bach
Or it's taking money away from you. And by the way, in both cases, it's automatic. So what's happening today, there's never been greater technology ever in the history of our lifetime to separate you from your wealth, but nobody wants to separate you, Mel, from your wealth once. They wanna separate you from your wealth for your lifetime. They call it the lifetime value of a customer.
- MRMel Robbins
Okay.
- DBDavid Bach
So when I bring you into whatever I'm selling you, I don't want you to buy from me once. I want you to buy from me on a subscription level. I want you to be paying me, whether... Everybody, think about it. Netflix, the gym, every single service, your vitamins, your creams, your lotions and your potions, everyone's got you signed up to pay them automatically. If you go through, open up your credit cards or someone, one of your p- people in your office already told me they did this, use a system like Monarch-
- MRMel Robbins
Yep
- DBDavid Bach
... uh, or YNAB, right? These are different software systems where you can track all of your expenses, and you can see, who are you paying monthly? People have lost touch with how many people are attached to their paychecks. But you gotta have a, you gotta have a plan for, what am I putting away for the future? What am I putting away for emergencies? And what am I putting away for my dreams? That's called a plan.
- MRMel Robbins
Okay.
- DBDavid Bach
What most people have is what I call the no-plan plan. [laughs] Okay, did you catch that? It's the no-plan plan. So, like, if you're listening and you're like, "I don't really have a plan for my money-
- MRMel Robbins
I... I'm sitting here right now-
- DBDavid Bach
Yeah, yeah
- MRMel Robbins
... like, I don't think I have a plan for my money."
- DBDavid Bach
Yeah, actually, you have a no-plan plan. Most people are literally walking around with a no-plan plan, and so what happens is the only thing that's a part of their life financially is their paycheck comes in, and then it goes right out the freaking door. That's 'cause you got a no-plan plan. You need an automatic millionaire plan.
- MRMel Robbins
Okay.
- DBDavid Bach
You need [laughs] an automatic millionaire plan, where your money is automated to go into everything that is important for you financially. And, and what needs to happen is you, you almost... You take out a yellow pad of paper, and you go, "These are the things I have to have."
- MRMel Robbins
Okay.
- DBDavid Bach
I have to have rent.... I, I gotta live somewhere.
- MRMel Robbins
Yep.
- DBDavid Bach
I have to have a car payment. Now, a lot of car payments are way higher than they need to be, but there, there are certain things you have to have. You have to have healthcare. Then you make another list. These are nice to have. [chuckles] So, like, when you go back to you having $800,000 in debt, you had to cut things out.
- MRMel Robbins
Oh, my God, we didn't go on a vacation for, like, a decade.
- DBDavid Bach
See, people-
- MRMel Robbins
We didn't go out to dinner. We d- we, we cut subscriptions. Like, we had to pull the kids out of town soccer for a year. Like, they... We just couldn't afford it.
- DBDavid Bach
People have to, like, really hear that because they want it to be fixed often in 12 months, and you just said you spent a decade, but your whole life's different. The other thing is when you start the process of digging out, you start to feel better.
- MRMel Robbins
It's so true.
- 15:35 – 26:38
What is a 401(k)?
- DBDavid Bach
So for 20 years, I've been teaching people to pay themselves first, automatically, one hour a day of their income. That means if you have a job with a 401 [k] plan-
- MRMel Robbins
Yep
- DBDavid Bach
... the first hour a day of your income goes right into your 401 [k] plan.
- MRMel Robbins
I don't even understand what that means. What's the first hour of the day of your income?
- DBDavid Bach
Okay, great question. So most people come to work at 9:00. I came here at 9:00.
- MRMel Robbins
Okay.
- DBDavid Bach
Right?
- MRMel Robbins
Yep.
- DBDavid Bach
And they work until 5:00.
- MRMel Robbins
Okay.
- DBDavid Bach
And they're getting a paycheck from you.
- MRMel Robbins
Yes. Okay.
- DBDavid Bach
Right? They're being paid from 9:00 to 5:00.
- MRMel Robbins
Yes.
- DBDavid Bach
That first hour a day, whatever you make, some people make $20 an hour, some people make $30 an hour, some people make $50 an hour, some people make $100 an hour, whatever-
- MRMel Robbins
Some people make minimum wage. Yes.
- DBDavid Bach
Some people make minimum wage. Whatever it is-
- MRMel Robbins
Right
- DBDavid Bach
... that first hour a day of your income has to go into a pre-tax deductible retirement account.
- MRMel Robbins
Okay.
- DBDavid Bach
Yeah, so that could be an IRA account, or if the company has a 401 [k] plan, that's where it goes.
- MRMel Robbins
Okay.
- DBDavid Bach
Now, one hour a day of your income equals 12 and a half percent of your gross revenue.
- MRMel Robbins
Okay, so 12 and a half percent of your salary-
- DBDavid Bach
Yep
- MRMel Robbins
... is what you wanna be automatically putting into, like, out of sight, out of mind, and at work.
- DBDavid Bach
So now here's the thing, people are gonna like, "Did he just say I'm supposed to save 12 and a half percent of my gross income? Are you freaking kidding me?"
- MRMel Robbins
Yes, that's what I'm thinking-
- DBDavid Bach
And-
- MRMel Robbins
... 'cause I'm like, "I'm, I'm living paycheck to paycheck."
- 26:38 – 33:33
How to Save for Retirement Without a 401(k)
- MRMel Robbins
What does somebody in that situation do if they don't work somewhere with a 401 [k] ? What are you making automatic?
- DBDavid Bach
So, so actually, the single biggest problem is we don't have automatic retirement accounts for people who don't have 401 [k] plans.
- MRMel Robbins
Oh.
- DBDavid Bach
However-
- MRMel Robbins
Yeah
- DBDavid Bach
... she can make it automatic.
- MRMel Robbins
How?
- DBDavid Bach
She just has, she just has to do the work, right?
- MRMel Robbins
Right.
- DBDavid Bach
So what does she do? She can go to, like in the book, [chuckles] Fidelity, Schwab, Vanguard. I'm just listing firms here.
- MRMel Robbins
Yeah.
- DBDavid Bach
Coinbase, Robinhood, Acorns. She needs to pick a firm.
- MRMel Robbins
Yep.
- DBDavid Bach
In her case, I don't know how much money she's making, but she could start with an IRA account.
- MRMel Robbins
Okay.
- DBDavid Bach
So she could do a Roth IRA. The... So Roth IRAs are after-tax money.
- MRMel Robbins
Okay.
- DBDavid Bach
The advantage is the money grows tax-free, and it comes out tax-free. For young people, if she's gonna save it, this year, it's gonna be $7,500-
- MRMel Robbins
Yep
- DBDavid Bach
... if sh- I would tell her to do a Roth IRA.
- MRMel Robbins
Okay.
- DBDavid Bach
Um, if she needs a tax deduction, she doesn't need the tax deduction-
- MRMel Robbins
No
- DBDavid Bach
... her age.
- MRMel Robbins
No. [chuckles]
- DBDavid Bach
So, so she, so, so she should do a Roth IRA.
- MRMel Robbins
Okay.
- DBDavid Bach
So I started-
- MRMel Robbins
So for somebody that's working a retail job, they're paycheck to paycheck, they're, like, minimum wage, you can still do a Roth IRA?
- DBDavid Bach
Everyone can do a Roth IRA.
- 33:33 – 34:10
Should You Invest in Individual Stocks?
- DBDavid Bach
stocks.
- MRMel Robbins
Now, uh, speaking of stocks, should you try to pick individual stocks?
- DBDavid Bach
Absolutely freaking not.
- MRMel Robbins
Really?
- DBDavid Bach
Absolutely. Even, even though I started by buying my first stock in McDonald's at age seven, and I bought my second stock at nine in Disney. And, okay, so I'm going to talk out of both sides of my mouth. I learned how to invest because my grandmother helped me buy my first stock-
- MRMel Robbins
Yep
- DBDavid Bach
... in McDonald's at age seven.
- MRMel Robbins
Okay.
- DBDavid Bach
At McDonald's, she said to me, "You know, there's three types of people in the world. This is how the world works. There's people like you who come to McDonald's, and you spend money. You're called a consumer." She goes, "There's people who work here. They're employees.
- 34:10 – 35:56
How to Start Investing
- DBDavid Bach
They make minimum wage. That's a lot of people in America. It's a tough way to make a living." And then she said, "And then there's owners, and the owners own this place, and I'm going to teach you today how to buy stock in McDonald's so that when you come here, you're an owner." And she took me home, and she took out The Wall Street Journal, and she circled MCD, which is a ticker, even back then, for McDonald's. It's crazy. That's a long time ago. And, uh, and she sat me in front of a TV screen with the, you know, the TV screen where the tickers go across the bottom.
- MRMel Robbins
Yeah, yeah.
- DBDavid Bach
You know, funny thing is, most people don't even know what those are. Those are stock symbols. And she's like, "When you see MCD, I want you to call out the price and write it down. And then you're going to come back here, and we're going to look at what prices is, and we're going to look in the newspaper, and then tomorrow, we're going to go down to the brokerage firm. We're going to buy you one share of McDonald's, and you're going to own a piece of this restaurant. And you'll now be in the American system of investing."
- MRMel Robbins
Mm.
- DBDavid Bach
I was seven years old. At nine years old, I'm with her at Disneyland. I'm like: "Can you buy this place?" She's like, "Yeah." So she, so she taught me at a young age to think like an investor. Now, I have done the same thing with my kids.
- MRMel Robbins
Okay.
- DBDavid Bach
My kids don't own McDonald's. They own things like Shake Shack, right? [chuckles] Been a great stock. Uh, but they own things that they're interested in. They own Amazon. They own Meta. Um, they got a handful of individual stocks. However, my kids also know I don't want them owning individual stocks. I want them owning index funds. So they got a few individual stocks, but they have a portfolio. I'm just giving you, like, behind the scenes of-
- MRMel Robbins
Let's go
- DBDavid Bach
... the Bach family.
- MRMel Robbins
Yeah, this is exactly what every parent wants to know: What are you doing with your kids?
- DBDavid Bach
I, I have my kids in portfolios almost identical to mine.
- 35:56 – 37:11
Index Funds 101: Best Simple Investing Strategy
- DBDavid Bach
So I have them... They're small portfolios, but I have my financial advisor built the same portfolio that I have, a little bit more aggressive because they're younger, and I have them in these portfolios of ETFs, exchange-traded mutual funds, because that's the best way to invest. That's, that's diversification, doesn't take time, low cost, tax efficient, and you won't screw it up.
- MRMel Robbins
Everyone wants to know, what fund are you in?
- DBDavid Bach
Let me give you one fund.
- MRMel Robbins
Tell me.
- DBDavid Bach
Okay, because I've got all- I literally have all these funds listed in here.
- MRMel Robbins
All right, what page are you on?
- DBDavid Bach
But I'm on page 135. Um, so-... there's a fund by Vanguard.
- MRMel Robbins
Yep.
- DBDavid Bach
Okay, this fund is called the Vanguard-
- MRMel Robbins
I'm in that one
- DBDavid Bach
... Total Stock Market.
- MRMel Robbins
Yeah, I know I'm invested in that one.
- DBDavid Bach
So for those of you who aren't invested in this, the symbol is VTI if you buy the ETF. This fund has 3,600 stocks in it.
- MRMel Robbins
Meaning you're basically an owner in 3,600 companies.
- DBDavid Bach
You're, you're an owner of America.
- MRMel Robbins
Okay.
- DBDavid Bach
Right? So, so that stock- So, like, if a person's like, "I don't know what to start with," like you took your daughter, just stick the money in the Roth IRA in the VTI fund.
- MRMel Robbins
Okay.
- DBDavid Bach
She's got 3,500 stocks. So I list all the different index funds in here. Um, start with an index fund. It just makes your life
- 37:11 – 38:21
Why “High-Risk Investing” for Young People Backfires
- DBDavid Bach
easy. And also, I wanna say something. This is really important for young people. The greatest myth for young people is that that's the time to be aggressive with your money and take a risk. Let me explain that.
- MRMel Robbins
Wait, what? You're not supposed to take risk, and you're... What? Okay.
- DBDavid Bach
Let me, let me explain what I mean when I say this, okay? Because this is where I think people get led astray. Because people say all the time, "When you're young is when you should take the risk," and what happens with 20-year-olds, 20-somethings, and 30-somethings, because they see this on social media, and they hear this, they take the risk on crappy investments. They're buying meme stocks. They're buying meme coins. They're looking for the NFT. They're look- You know, they're, they're seeing all this garbage on social media that they're hoping to get this huge return on, and then they, they lose everything.
- MRMel Robbins
Mm.
- DBDavid Bach
And what happens is you get people who are... gets to their... You know, they save money, then they make- then they lose all the money, and then they save money, then they lose all the money, and they get to their late 20s or their early 30s, and they're like, "This game's rigged," and then they stop investing. Whereas, if they had just invested in an index fund, they'd have something to show
- 38:21 – 41:09
Compound Interest Explained
- DBDavid Bach
for it.
- MRMel Robbins
All right, so let's talk about compound interest.
- DBDavid Bach
Mel, I'm so glad you asked, 'cause compound interest is the eighth miracle of the world. That's what Einstein said. So I actually brought a prop for us.
- MRMel Robbins
Okay.
- DBDavid Bach
Okay. Went to the bank yesterday, kind of shocked them. [cash rustling]
- MRMel Robbins
Wow, wait, how much money is it?
- DBDavid Bach
For, for, for those of you who, who are listening, and you can't see me, how much money would you guess that is, by the way?
- MRMel Robbins
Uh, are... What are... Where... Are those-
- DBDavid Bach
This is real money.
- MRMel Robbins
That's real money?
- DBDavid Bach
Yeah.
- MRMel Robbins
I have no idea how much money. I mean, I don't know.
- DBDavid Bach
So, so-
- MRMel Robbins
That's a couple thousand dollars?
- DBDavid Bach
So interestingly, so I'm holding $10,000.
- MRMel Robbins
You're holding $10,000?
- DBDavid Bach
It's, it's $10,000 in real cash. This is a very important amount of money I'm holding here, for many reasons that people will probably understand. When we've done surveys, and we have asked people, "How much money would change your life?" the number one answer has been $10,000, which is fascinating, right? It's not 100,000. It's not a million. It's 10,000, and usually the reason is it would help them either pay off their credit card debt or give them enough financial freedom to leave their job or in a relationship they don't want to stay in.
- MRMel Robbins
Got it, so $10,000-
- DBDavid Bach
So-
- MRMel Robbins
... buys freedom from a job-
- DBDavid Bach
So $10,000-
- MRMel Robbins
... or a relationship
- DBDavid Bach
... for many people, buys freedom. Now, here's the really interesting question.
- MRMel Robbins
Okay.
- DBDavid Bach
How much money does it take to blow $10,000 in a year, a day?
- MRMel Robbins
I don't know.
- DBDavid Bach
How much money do you have to spend a day to blow $10,000? So I'm holding a brick here of 10 grand.
- MRMel Robbins
Okay.
- DBDavid Bach
A lot of people would like this brick.
- MRMel Robbins
Yes.
- 41:09 – 47:07
How to Save More Money
- MRMel Robbins
that money because, because I think when you feel... Having been somebody that not only was in paycheck to paycheck for a decade but then was in a situation where I had no money and was in massive amounts of debt, but when you're in paycheck to paycheck, where can you find the 20? Give me some examples of where it's hidden.
- DBDavid Bach
You, you've gotta go through your lifestyle, right? I mean, everything today is about convenience, right? So people are getting food delivered to them every single day. They're, they're not really paying attention to what that's costing. People are taking Ubers every single day. I, I mean, they're just... You've gotta look at your own lifestyle. Everybody's got something that they're wasting small amounts of money on. People don't think, like, "If I spend $5 a day on something, that's $150 a month. That's well over $1,000 a year. It's five bucks," right? But if you're spending, again, $27.40, it's 10 grand. I've done podcasts in the pa- in the past where I've talked about 100-day savings challenge.
- MRMel Robbins
All right, let's do 100-day savings challenge. What is that?
- DBDavid Bach
The 100-day financial challenge that I have for people is this, especially people who do not have $1,000 in savings, 'cause there's a lot of people who don't have $1,000 in savings, so for 100 days, save $10 a day.
- MRMel Robbins
Where am I putting it? In a savings account.
- DBDavid Bach
Literally, you, for... You could just start off by putting it in a jar in your house, but you could put it in a savings account, right? Save... Like my grandmother would always put the money in a, in a coffee can. Save it for 100 days.
- MRMel Robbins
And what-
- DBDavid Bach
Pick anything. It could be a dollar, just to prove to yourself-
- MRMel Robbins
... I actually like the idea of putting it in a jar, 'cause you can see it, and then you're like, "Oh, I'm doing it."
- DBDavid Bach
Yeah. So go and think about your life and see, is- am I s- is it- am I wasting $27 a day, $27.40 a day on something?
- MRMel Robbins
I guarantee you I am, because I guarantee you there are subscriptions I don't even know about that are draining out of my bank account every month that probably add up to $27 a day.
- DBDavid Bach
So let's talk about people, though, who are listening, and they're not in their 20s, they're in their 50s.
- MRMel Robbins
Yeah, okay, so let's pretend I'm in my 50s. I'm in a situation where I've heard this podcast, and now I'm like, "Oh, God, uh, how do I get going? What do I do? I didn't do it early enough. I've missed the window on compounding interest. Where do I start, David?"
- DBDavid Bach
Yeah. So I'll tell you a classic story. This is, this is a really funny story, actually. One of my first book signings I did for The Automatic Millionaire was in New York City at Barnes & Noble. So I do the book s- I do the book event, right?
- MRMel Robbins
Uh-huh.
- DBDavid Bach
And then, and then I take questions from my audience. And this woman stands up, and she's like, "David, I love you. I've read all your books. I've read Smart Women Finish Rich, Smart Couples Finish Rich. I got The Finisher's Workbook, and I'm gonna get The Automatic Millionaire." And she says, "But you haven't written the book that I need." And I go, "Oh, well, all my book titles, for the most part, have come from readers. What do you need?" And she goes, "I need Start Late, Finish Rich."
- MRMel Robbins
Ooh.
- DBDavid Bach
And the room cracked up. And I'm like, "Okay, I hadn't thought about that, but how old are you?" And she says, "I'm..." I think, I think she was in her 50s.
- MRMel Robbins
Okay.
- DBDavid Bach
And I said, "Okay, well, let me ask you a question," and I go, "Are you married?" She said, "Yes, I am." I said, "So my question to you would be, could you save $20 a day? Heck, more than what you're saving, could you save $20 a day more?" She's like, "Yeah, I could." I said, "Could your husband save $20 a day?" She goes, "I would make him." [laughing]
- MRMel Robbins
[laughing]
- DBDavid Bach
Everybody laugh, right? I go, "All right, so that's a lot of money, actually. That's $40 a day between the two of you. If you just put that in..." I gave her an example of a mutual fund, " ... and invested that for the next 15 years, here's what it could be worth." And the answer is, "It could be worth close to a half a million dollars."
- MRMel Robbins
Wow.
- DBDavid Bach
And she's like, "Okay, so I could- so you're telling me that I could catch up a little, like, that I could catch up a little bit, right?" I go, "Let's just play this out. At 65, is it better to have a half a million dollars or have nothing?" She's like, "It's much better to have half a million dollars."
- MRMel Robbins
Mm-hmm.
- DBDavid Bach
I said, "Great, so start with the $20 a day." She's like, "Okay, I can do that." Right, 'cause that's the whole thing. You gotta s- figure out what can you do?
- MRMel Robbins
Yes.
- DBDavid Bach
Some people who are listening to me right now can do more than $20 a day.
- MRMel Robbins
Yes.
- DBDavid Bach
You gotta come up with what can you do? But you... But here's a big thing. Your 50s are a beautiful time to save and invest and catch up, and the reason is, your kids hopefully are finally gone, right? The kids are gone, in many cases, by their late 50s, these kids are out of college.
- 47:07 – 59:03
Credit Card Debt Payoff Plan
- MRMel Robbins
up. And so I'd love to have you talk to somebody who's listening right now, who's really in debt and just overwhelmed by the idea of digging yourself out. Because I remember, David, like, there, it, it was, like, six months that I didn't know about our bills. Like, I just-
- DBDavid Bach
Oh, I know, yes
- MRMel Robbins
... could not even open the bills.
- DBDavid Bach
Total denial.
- MRMel Robbins
Yes.
- DBDavid Bach
I always say, this happens all the time, "If you don't look at it, it's not real," right? So a lot of people don't actually look at their bills, because they're like, "I can't, I can't face to look at them."
- MRMel Robbins
Yes.
- DBDavid Bach
By the way, I didn't even talk... I got into credit card debt at, in college, so I've made multiple mistakes. I remember having so much credit card debt junior year, that, like you, I would open my bills, but I would open my bills... This is so stupid, Mel. I would open my bills and cover my eyes. [laughing]
- MRMel Robbins
[laughing]
- DBDavid Bach
Okay, so, so I'd be like, I'd be like this, and then I would-
- MRMel Robbins
That's so relatable
- DBDavid Bach
... and then, and then I would open the bill, and I remember once, sitting in my apartment, I'm a junior, I've got, like, $12,000 in credit card debt, which w- was all on stupid shit I didn't need to buy.
- MRMel Robbins
Yeah.
- DBDavid Bach
And I remember opening my bill and the room spinning [laughing] because I was so sick that I had done this to myself.
- MRMel Robbins
Yes, and you don't even remember what the hell you spent it on.
- DBDavid Bach
I'm not even talking about, like, medical debt, right? Like, this... Some people get hit with things that they can't control, and I will tell you, it took me three years to dig out of that credit card debt after college, and I carried a charge card for 30 years and a debit card. I did not have a credit card, literally, until maybe, I don't even know, six, seven, eight years ago. And I have never carried credit card debt since I got out. But I got into credit card debt twice, because I got into credit card debt sophomore year with to $5,000.... 'cause, 'cause most people don't get into debt once, [chuckles] by the way. If you've gotten into debt, and you've gotten out, and then you got back into debt, that's totally typical.
- MRMel Robbins
So why is that typical?
- DBDavid Bach
'Cause it's a habit.
- MRMel Robbins
Hmm.
- DBDavid Bach
So the habit I had was spending money that I didn't have on things I didn't need to impress people I didn't know, right? You've heard that phrase before.
- MRMel Robbins
Talk to me about how you do it.
- DBDavid Bach
All right.
- MRMel Robbins
You've maxed out your card. You've missed the payments. Your credit score is in the gutter.
- DBDavid Bach
Oh, no.
- MRMel Robbins
How do we turn this around?
- DBDavid Bach
Credit card. If you're in credit card debt, how do you get out?
- MRMel Robbins
Yep.
- DBDavid Bach
I have a system I call DOLP.
- MRMel Robbins
DOLP?
- DBDavid Bach
DOLP. It's, it's in the Automatic-
- 59:03 – 1:09:51
Estate Planning Checklist: Will, Passwords, Accounts
- MRMel Robbins
too late? And what's the first thing to do if you feel like you're in that moment where life has smacked you across the face, and you did not expect to be in this position?
- DBDavid Bach
Yeah. When you go on boats, they do, you know, they do those fire drills, right? Those drills where they put you in the, you know, "Here's where you go."
- MRMel Robbins
Yes, yes.
- DBDavid Bach
You know, you put the life vest on. "Here's where the boats are." You get on a plane, "Here's how the- here's the air mask." The drill you should run, this is a horrible drill, and I'm sorry to give it this way, but it's the truth. You should run a drill if you're married, which is, "If my husband or my sp- wife dies tomorrow, what would I need to know?" And the answer is everything. You would need to know everything. You'd need to know where all the accounts are. You would need to know the passwords. You would need to know if your spouse has left 401 [k] plans behind. You would need to know if there's an insurance policy. You would need to know where the will is. You would need... Do you have a will, right? Like, six out of 10 people who are listening don't have wills. A lot of people who have wills, their wills are woefully out of date. If you have a will that's 10 years old, it's completely out of date. If people get their wills done, they also hide their wills. [laughs] Then the person can't find the will. People put their wills in safety deposit boxes. People still have safe deposit boxes. Then they hide the key. Now, the will's really missing because it's very hard to get into a safe deposit box if you can't find your key. So all this stuff, people sit in my seminars and they're like, "Oh, my God, he's... [laughs] There's a big checklist here." You're right.
- MRMel Robbins
Yeah.
- DBDavid Bach
That's called real world. So you wanna get this all done before that day happens. By the way, you wanna get this done before you-- if you're thinking about divorce, 'cause gray divorce is a huge issue right now. Lots of people getting divorced after the age of 50 and 60.... most of those divorces are actually from women. The women are choosing the divorce.
- MRMel Robbins
Really?
- DBDavid Bach
Yeah. And I will tell you this, you do not want to go out and suggest divorce until you know where all the money is. If you don't know where all the mo- sorry, guys. Guys, it's true for you, too, by the way. Uh, if you don't know where all the money is when you go to get divorced, you don't get half the money.
- MRMel Robbins
Wait, if you don't know where all the money is before-
- DBDavid Bach
You-
- MRMel Robbins
-divorce comes up, you will not get half the money?
- DBDavid Bach
There's no way.
- MRMel Robbins
Because people will hide it.
- DBDavid Bach
Totally.
- MRMel Robbins
V- wow!
- DBDavid Bach
[chuckles] You're looking at me like, "Yes, this is what goes on in the real world." So, like, don't just randomly pop off and say you want a divorce. You need to know where all the finances are.
- MRMel Robbins
Wow, I'm sorry. I'm sitting here like-
- DBDavid Bach
Yeah
- MRMel Robbins
... I got a lot to do. Like, I'm not thinking about divorce, but I, I, I, I'm not sure I know where everything is.
- DBDavid Bach
Okay, so now, now we'll go to the part that I didn't answer. Um-
- MRMel Robbins
The... Now, it's hit.
- DBDavid Bach
Mm-hmm.
- MRMel Robbins
You are now a widower. You are financially in trouble.
- DBDavid Bach
Yeah.
- MRMel Robbins
You are really... Now, you don't-- like, you're paycheck to paycheck, or you're devastated in terms of your savings?
- DBDavid Bach
By the way, this is-
- MRMel Robbins
It's not too late?
- DBDavid Bach
It's, it's not too late, and let's just be honest here. This is not always because you're devastated. Like, the, this is also just because you're left in a mess.
- MRMel Robbins
Ah.
- DBDavid Bach
You know, I've just lived through this tragically. Um, my dad just died. My dad died in August, and my dad was in charge of all the money. My dad managed money his entire life. My mom was not involved, looking at the bills. She wasn't involved. You know, God bless my mother, she's amazing. She's my biggest fan, my biggest supporter, but my dad handled everything. And my dad would be like, "Bobby, I've got this." And, and we would say to my dad in the last couple years of his life, "Please, Dad, let's automate these credit card bills. Let's automate everything, so if something happens to you, Mom's okay. W- and we don't have to step in here and start figuring all this stuff out." And he'd say, "Oh, it's all fine. Don't worry about it." Well, my mom's lucky. She's got two kids in the business-
Episode duration: 1:09:51
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