Afford Anything Podcast Episode Summary

Title: Your Rich BFF, Vivian Tu: Wall Street's Dirty Little Secrets [GREATEST HITS WEEK]
Host: Paula Pant
Guest: Vivian Tu
Release Date: December 26, 2024

Introduction

In this episode of the Afford Anything podcast, host Paula Pant interviews Vivian Tu, renowned as "Your Rich BFF." Vivian, a former Wall Street trader and a Forbes 30 Under 30 honoree, shares her journey to financial literacy, the pitfalls she encountered on Wall Street, and invaluable insights into making smarter financial and life decisions. This episode, part of the "Greatest Hits Week" series, originally aired on March 13, 2024.

Personal Accident and the Importance of an Emergency Fund (00:00 - 05:33)

Vivian opens up about an unexpected accident where she accidentally sliced off a part of her finger while preparing a sandwich. This incident resulted in a $16,000 medical bill, of which she was personally responsible for $1,300 despite having good insurance.

Vivian Tu [05:33]: "Thankfully, I had an emergency fund set aside, but it still felt like an enormous amount of money for an accident that I certainly didn't plan on having."

This experience was a pivotal moment for Vivian, highlighting the critical importance of having an emergency fund to mitigate unforeseen expenses without derailing one's financial stability.

Financial Mentorship and Early Financial Education (07:26 - 10:02)

Vivian discusses her early interest in personal finance, initially driven by a desire for material wealth, such as designer bags and a luxurious lifestyle. Her perspective shifted significantly thanks to her mentor at work—a fellow woman and person of color—who guided her on essential financial practices like investing in retirement plans and the importance of not delaying financial decisions.

Vivian Tu [09:46]: "She was like, don't make the same mistakes I did. And really put me on a path to financial success, one that she was not given the opportunity to be on."

This mentorship was instrumental in Vivian's financial growth, emphasizing the value of having a knowledgeable guide to navigate personal finance effectively.

Observations from Wall Street and Behavioral Finance (11:07 - 17:15)

Vivian recounts a story from her early Wall Street career where a colleague took an extravagant approach to client entertainment by gambling and using a private jet. Despite breaking conventional work rules, his networking efforts paid off with substantial trade orders following the incident.

Vivian Tu [15:32]: "You're allowed to break the rules."

This anecdote underscores the idea that traditional wisdom in the corporate world isn't always absolute and that building strong networks can sometimes justify unconventional actions. It also highlights the gender dynamics in the workplace, where Vivian notes that similar behavior by a woman might be perceived differently than when performed by a man.

Negotiation vs. Entitlement in Personal Finance (19:41 - 22:37)

Vivian delves into the concept of entitlement, reframing it as confident negotiation rather than its traditionally negative connotation. She illustrates how wealthy individuals successfully negotiate to waive late fees by leveraging their value as long-term customers.

Vivian Tu [21:47]: "Everything in your life is negotiable. And the only time you are guaranteed to hear no is if you don't ask."

She advocates for everyone, not just the wealthy, to adopt a sense of entitlement in negotiations, asserting their value and worth in financial dealings.

Abundance Mindset vs. Scarcity Mindset (22:37 - 25:24)

Vivian contrasts the abundance mindset with the scarcity mindset, emphasizing the importance of believing in limitless opportunities for growth and wealth creation. She attributes her abundance mindset to having a solid financial foundation, including an emergency fund and investments.

Vivian Tu [24:45]: "An abundance mindset is the belief that you can take opportunities because that is going to actually be the way to provide yourself with growth and wealth."

This mindset encourages taking calculated risks and viewing challenges as opportunities, fostering resilience and proactive financial behavior.

Choosing the Right Side Hustle (30:20 - 35:00)

Vivian offers guidance on selecting side hustles, emphasizing the importance of aligning them with one's schedule, skills, and long-term goals. She advises opting for side hustles with low barriers to entry to minimize initial costs and ensure they are sustainable and enjoyable.

Vivian Tu [32:36]: "There are certain side hustles that have no startup costs and make it a lot easier for you to get."

She shares her personal experience of flipping sneakers in her early 20s as a means to supplement her income, illustrating how side hustles can provide financial flexibility without significant investment.

Debt as a Tool in Personal Finance (38:23 - 43:22)

Vivian challenges the negative stigma surrounding debt, advocating for a nuanced understanding of its role. She distinguishes between consumer debt and debt used for income-producing assets, such as leveraging low-interest mortgages to invest in the stock market.

Vivian Tu [42:15]: "Think about it like a bucket. The gains that you get... is the hose. That is water coming into the bucket. And then your debt... is like a hole at the bottom, a drip out."

This analogy illustrates how strategic use of debt can be beneficial if the "hose" (investments) adds more to the "bucket" (wealth) than the "drip" (debt interest) subtracts.

Value-Based Spending and Financial Agency (48:23 - 51:41)

Vivian introduces the concept of value-based spending, where purchases are evaluated based on the positive emotions they bring versus the negative feelings associated with the cost. She uses the example of a Prada bag to illustrate financial agency—buying something because it holds significant personal value rather than out of necessity or impulse.

Vivian Tu [47:46]: "A purchase has value when we have more positive feelings about having it than negative feelings about not having the money anymore."

This approach helps individuals make deliberate and meaningful financial decisions, enhancing their overall satisfaction and financial well-being.

Key Takeaways (55:34 - 60:49)

Paula and Vivian summarize the conversation with three key takeaways:

1. Learn by Observing Actions, Not Just Words:

   • Vivian Tu [56:11]: "Do as others do, who you look up to versus as you're told."

2. Embrace Confident Negotiation (Reframed Entitlement):

   • Vivian Tu [57:07]: "Everything in your life is negotiable. And the only time you are guaranteed to hear no is if you don't ask."

3. Choose Side Hustles Wisely:

   • Prioritize alignment with your schedule, skills, and long-term aspirations. Start with low barriers to entry to test viability before committing significant resources.
   • Vivian Tu [60:06]: "Make sure it's something that you can, you know, just dip your toe in. Try it out."

These takeaways encapsulate Vivian's philosophy on financial empowerment, strategic risk-taking, and intentional wealth-building.

Conclusion

Vivian Tu’s insights on financial literacy, strategic use of debt, value-based spending, and the importance of a supportive mentorship underscore the core philosophy of the Afford Anything podcast. Her experiences and lessons offer listeners practical strategies to enhance their financial decision-making and cultivate a mindset geared towards long-term wealth and personal fulfillment.

Notable Quotes:

• Vivian Tu [05:33]: "Not to underplay what the doctors had done for me that night, but they shot some lidocaine into my finger to numb it out. I was given a hospital grade level painkiller..."

• Vivian Tu [09:46]: "She said, don’t wait, because she waited. And she was like, you know, I was also young. I was silly..."

• Vivian Tu [21:47]: "Everything in your life is negotiable. And the only time you are guaranteed to hear no is if you don't ask."

• Vivian Tu [42:15]: "Think about it like a bucket. The gains that you get... is the hose. That is water coming into the bucket. And then your debt... is like a hole at the bottom, a drip out."

• Vivian Tu [48:45]: "A purchase has value when we have more positive feelings about having it than negative feelings about not having the money anymore."

This comprehensive summary captures the essence of Paula Pant and Vivian Tu’s engaging discussion on financial literacy, personal growth, and strategic wealth-building, providing valuable lessons for both newcomers and seasoned enthusiasts in personal finance.