Afford Anything, Sept 2, 2025

Episode: Q&A: How to Invest in Your Community (by Finding the Third Option)
Host: Paula Pant | Co-Host: Joe Salsihai
Notable Topics: Limiting Beliefs, Community Bonds, Third-Path Problem Solving, ESOPs (Employee Stock Ownership Plans)

Overview

In this lively Q&A episode, Paula Pant and Joe Salsihai answer three listener questions that touch on themes of personal transformation, investing in the local community, and creative approaches to employee ownership. The unifying theme is “finding the third way”—looking beyond obvious binary choices to discover innovative solutions that balance personal growth, financial returns, social impact, and community well-being. The episode also explores challenging limiting beliefs, the mechanics and purpose of community bonds, and the realities of implementing an ESOP as a small business.

Limiting Beliefs & Personal Transformation

[00:00 – 18:16]

Discussion Overview

Listener Aisha calls with an inspiring update and a question about overcoming limiting beliefs, especially through career changes and finding a supportive professional community.

Key Points & Insights

• Aisha’s Journey:

  • Previously caught between choosing a full-time MBA at a top school or a part-time MBA at a lower-ranked school, Aisha found a “third option”: a part-time top-tier MBA program.
  • Switched industries, found community in renewable energy, and joined a women’s professional group, catalyzing transformation.

• On Limiting Beliefs:

  • Joe: Started his first business at 16 with self-doubt, impostor syndrome, and a sense of inexperience.

    “I'm too young, I'm too inexperienced. I don't know what I'm doing. Don't know anybody who'd run their own business. So everything from imposter syndrome to lack of experience.” [00:10]

  • Paula: Realized early in her career she assumed successful people were inherently smarter/harder working than her. Grad school shifted this perspective, revealing the role of risk and supportive peers.

    “I very much, for a long time believed that people who were successful were much smarter than me and much harder working than I am… what I don't think that I realized is that they took certain risks that I was too scared to take…” [08:21]

  • The concept of carrying “rule sets” from upbringing and environment, which often conflict and require conscious examination.
  • Wisdom is holding contradictory truths: barriers exist, but so do opportunities.

• Fear as a Limiter:

  • Joe shares that fear (not a specific limiting belief) is his consistent adversary, but “staring at fear” has brought great rewards.

    “Every step that I take professionally is staring fear in the face. I think there's no way what I'm thinking of is going to work...but staring that fear in the face has always proven very, very valuable.” [10:54]

  • Important transformation: Realizing “who I was yesterday does not have to define who I am tomorrow.” [13:44]
  • Changing one’s environment/community can catalyze dramatic changes in belief, behavior, and opportunity.

• Surroundings Shape Growth:

  • Being the “dumbest person in the room” is a powerful opportunity for growth, transforming the discomfort of new environments into excitement.

    “When you get a little bit of wisdom, you're like, that is exactly what I want.” [16:23]

  • “Ask who, not how” framework: Find people with the expertise you lack.

Notable Quotes

• Paula:

  “It's not your fault, but it is your responsibility.” [18:12]

• Joe:

  “Who I was yesterday does not have to define who I am tomorrow.” [13:44]

Investing in Your Community: Community Bonds and Beyond

[22:49 – 38:02]

Discussion Overview

Leslie asks about community bonds as a mechanism for building local wealth and social capital, and whether concerns about their financial efficacy apply at small/local scales.

Key Points & Insights

• What is a Community Bond?

  • A loan from individuals to fund a specific local project, often facilitated by non-profits or community groups.
  • In exchange, investors receive periodic payments (the "coupon") and can see a direct social impact.
  • Appeals to those who want their dollars to make a visible, local difference.

• Financial Characteristics:

  • Payment schedules vary: periodic interest or a lump sum at maturity.

    “What's the payment structure? Sometimes it's quarterly, sometimes it's monthly… sometimes it's just one big fat payment at the end.” [27:02]

  • Some may carry tax advantages; check with a tax advisor.

• Philosophical Approaches:

  1. Values-Oriented (Community Bond): Invest directly for social impact, accepting lower returns as the price for alignment with values.
  2. Maximizing Impact (Donor-Advised Funds): Invest for market-level returns, then make charitable contributions—possibly giving more overall.
     • Paula: “Given that money is a limited resource…would you rather allocate capital towards community bonds or would you rather allocate capital towards stocks that could appreciate that you could then move into a donor advised fund?” [28:38]
  • Both approaches are valid; resource constraints mean you may need to balance or prioritize.

• Risks & Downsides:

  • Increased risk: Community orgs often lack access to traditional financing and may carry higher default risk.
  • Returns may not compensate for risk.

    “You're going to get a lower return in exchange for a good feeling and social impact.” [29:37]

  • Lack of diversification and possibly large capital commitment relative to net worth.

• Alternative Third Paths:

  • Skill-Based Giving: Contributing expertise (e.g., marketing) may benefit organizations far more than cash.

    “If you have expertise in a specific area, giving that expertise to that group could be a much more significant donation.” [34:00]

  • Board Membership: Offer both expertise and some financial support.
  • Hybrid Models: Balance dollars and hours (“50/50,” etc.), considering impact and available resources.

• Broader Point: Community is Critical (recommended documentary: Join or Die)

  • Local engagement positively impacts personal happiness and longevity.

    “If you are in an organization and you're working in your community...you have a 50% smaller chance of dying this year than you have if you don't. Longevity is tied to community.” [36:50]

Notable Quotes

• Joe:

  “This truly is a gift. And in that case, if you think about it that way, then…just donating the money might be an even more significant contribution to them versus the bond.” [31:43]

• Paula:

  “You don’t have infinite money, so you can’t infinitely do both. And so at a certain point you do have to decide if you’re going to do both, is it going to be 50/50, is it going to be 60/40?” [32:21]

ESOPs and Small Business Exit Strategies

[39:46 – 50:33]

Discussion Overview

A business owner (“Martha”) asks about Employee Stock Ownership Plans for a small (10-person) company: are they feasible, what are the pros and cons, and what alternatives exist to reward employees and prepare for partner retirement?

Key Points & Insights

• What is an ESOP?

  • An Employee Stock Ownership Plan lets employees buy stock in the company, ideally aligning incentives and rewards.

• Complexities for Small Businesses:

  • Annual valuations, legal/admin costs are disproportionately high for small firms.

    “ESOPs are going to require annual valuations, they're going to require administrative fees, they're going to require huge legal costs, huge setup costs…those costs are going to be disproportionate relative to payroll.” [43:20]

  • Feasibility study by an experienced tax attorney is a crucial first step (not free).

• Pros

  • Strongly aligns employee and company interests (“show me the incentives and I'll show you the outcome”).
  • May improve loyalty and engagement.

• Cons

  • High ongoing administrative and legal costs.
  • Requires significant cash flow and reserves.
  • May not be feasible for a very small company.

• Alternatives and Modifications:

  • Profit-Sharing Plans: Easier to implement, can directly tie employee rewards to company performance.

    “Without all of the administrative overhead, the less administrative way to go about this is to implement some type of a profit share plan. And that's something that you could do right now.” [46:19]

  • Professional Development: Invest in employees’ skills, improving engagement and retention.

    “I found that investing in your people so that they are better at what they do pays huge dividends.” [47:14]

  • Hybrid Approaches: ESOP as “icing on the cake,” with other rewards and development strategies as the core.

• Practical Tips:

  • Seek out a CPA/tax attorney with ESOP experience.
  • Ask up front about the costs of any initial consultations.
  • Be realistic: sometimes a profit-sharing approach or professional development yields better ROI and impact.

• Big Picture:

  • Consider “third options” rather than only the traditional paths.

    “Is there a way to incentivize your people which isn’t as expensive to the company?” [48:40]

  • The episode circles back to Aisha’s original story: creative third-way thinking can resolve dilemmas and produce optimal outcomes.

Notable Quotes

• Joe:

  “Who is it who said, show me the incentives and I'll show you the outcome?” [45:42]

  • On having a profit/sharing or ESOP:

    “If you could actually make people a part owner of the company, you're not telling them to act like an owner. They are an owner.” [45:54]

• Paula:

  “The administrative burden, the administrative cost of an ESOP is going to be astronomical in…a 10 person company.” [48:42]

  • On seeking alternatives:

    “There are also third options if this is too expensive of a route to pursue.” [50:08]

Episode Highlights & Memorable Moments

• Recurring Theme:
  “The Third Option”—not settling for either/or, but looking for hybrids, alternatives, or creative solutions that fit your specific situation.
• Community Matters:
  Local engagement isn't just about impact—it's linked to your own health and happiness.
• Candid Honesty:
  Joe and Paula both share real stories of fear, transformation, and learning from being uncomfortable.
• Notable Listener Successes:
  Aisha’s update embodies the “Afford Anything” ethos: crafting your own path, finding supportive communities, and making bold decisions.

Timestamps - Key Segments

• [00:00] – Joe’s story of starting a business and limiting beliefs
• [02:11] – Aisha’s update and her experience finding a "third path"
• [06:19] – Paula/ Joe on unconscious beliefs and wisdom
• [08:21] – Paula on how grad school changed her perspective
• [10:54] – Joe on fear and personal transformation
• [18:12] – Paula’s “not your fault, your responsibility” philosophy
• [22:49] – Definition and mechanics of community bonds
• [27:44] – Investment philosophies: values-driven vs maximize and donate
• [29:37] – Risks of community bonds, including lack of diversification
• [34:01] – Using one’s expertise as a more significant contribution than cash
• [36:50] – Importance of community for longevity and happiness
• [39:51] – Question on ESOPs for small businesses
• [43:20] – Administrative and financial complexities of ESOPs
• [46:19] – Simpler alternatives: profit sharing, professional development
• [48:40] – The power of third options and hybrid solutions

Closing Thoughts

This episode of Afford Anything exemplifies creative problem-solving, community focus, and authentic self-examination. Whether evaluating career moves, channeling resources for local good, or planning for a business succession, Paula and Joe consistently advocate looking beyond binary options—searching for that “third path” that best fits your unique goals and values.

“Who I was yesterday does not have to define who I am tomorrow…every day, I get to choose.” – Joe Salsihai [13:44]