← So Money with Farnoosh Torabi
So Money with Farnoosh Torabi
1856: Proven Ways to Climb the Wealth Ladder and Level Up Your Net Worth
00:26:13
Loading summary
Transcript57 lines
- [00:00]
Capital One Bank Guy
Banking with Capital One helps you keep more money in your wallet with no fees or minimums on checking accounts and no overdraft fees. Just ask the Capital One Bank Guy. It's pretty much all he talks about in a good way. He'd also tell you that this podcast is his favorite podcast too. Ah really? Thanks Capital One Bank Guy. What's in your wallet? Term supply See CapitalOne.com Bank Capital One NA Member FDIC.
- [00:28]
Annabe Furniture Advertiser
Time for a sofa upgrade? Visit WashablesOfAs.com and discover Annabe where designer style meets budget friendly prices with sofas starting at $699, Annabe brings you the ultimate in furniture innovation with a modular design that allows you to rearrange your space effortlessly. Perfect for both small and large spaces, Annabe is the only machine washable sofa inside and out. Say goodbye to stains and messes with liquid and stain resistant fabrics that make cleaning easy. Liquid simply slides right off designed custom comfort. Our high resilience foam lets you choose between a sink in feel or a supportive memory foam blend. Plus our pet friendly stain resistant fabrics ensure your sofa stays beautiful for years. Don't compromise quality for price. Visit washablesofas.com to upgrade your living space today with no risk returns and a 30 day money back guarantee. Get up to 60% off plus free shipping and free returns. Shop now@washablesofas.com Authors are subject to change and certain restrictions may apply.
- [01:29]
Farnoosh Tarabi
Is your AI built for everyone or is it built to work with the.
- [01:33]
Nick Magiulli
Tools your business relies on?
- [01:35]
Farnoosh Tarabi
IBM's AI agents are tailored to your.
- [01:38]
Nick Magiulli
Business and can easily integrate with the.
- [01:40]
Farnoosh Tarabi
Tools you're already using so they can work across your business, not just some parts of it. Get started with AI agents@IBM.com the AI Built for Business IBM so Money Episode 1856 Proven Ways to climb the wealth ladder and level up your net worth.
- [02:08]
Nick Magiulli
You're listening to so Money with award.
- [02:10]
Farnoosh Tarabi
Winning money guru Farnoosh Kharabi.
- [02:13]
Nick Magiulli
Each day get a 30 minute dose.
- [02:15]
Farnoosh Tarabi
Of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh yourself.
- [02:22]
Nick Magiulli
Looking for ways to save on gas.
- [02:24]
Farnoosh Tarabi
Or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life.
- [02:31]
Nick Magiulli
Welcome to SO money. I just need to take care of my family and so whatever that means. That's how I'm thinking about my career and my future. So I have no real desire to get to level 5. If it happens, great, but I'm not going to go out of my way and say yes to every single thing and work myself to the bone to do that. I don't think it's going to improve my life and if anything, it could detract from my life. And I talk about a lot of these things. I know it's like very first world problems. What do you mean having $10 million would detract from your life? How? And talk about this in the book because there's so many stories about this type of stuff that people don't know about. And just chasing money for money's sake has led to many more bad outcomes than good outcomes.
- [03:09]
Farnoosh Tarabi
Welcome to SO Money, everyone. I'm Farnoosh Tarabi. Question for you, where do you think you are on the wealth ladder? You know, when we were growing up, it was, were you middle class, upper middle class? Today we're talking about the wealth ladder. Whether you're just starting out and struggling to save, sitting on six figures and wondering what's next, or maybe you've hit a financial milestone. But it doesn't feel as life changing as you expected. Today's episode is all about understanding what changes and what should change as you move up the financial ladder. My guest is Nick Magiulli, author of the Wealth Ladder, a new book that introduces a six level framework for wealth building and financial strategy. We dive into the key questions we all face on the journey to financial independence, such as how do you break out of level one when you're living paycheck to paycheck? Is the side hustle actually worth your time or just another distraction? And how should your mindset and money strategy evolve as your net worth grows? Here's Nick Magiulli. Nick Magiullie, welcome back to SO money. Congratulations on your new book, the Wealth Ladder, which I've been starting to read and I love it. I think it really offers some important reframes and mental reframes that often can make a real difference in our financial lives.
- [04:28]
Nick Magiulli
Yeah, thanks for having me on. I appreciate that.
- [04:30]
Farnoosh Tarabi
Let's start with the first few pages of the book where you talk about how so many of us have been thinking about wealth in the wrong way. So break it down. What is the big misconception that we all have around wealth and how your book essentially, in your framework, the wealth ladder, support us in reframing that.
- [04:51]
Nick Magiulli
Yeah. So I think over time, as you gain more wealth, money becomes less and less useful. You need even more of it to see a big change in your life. And the simple example I give is imagine someone with no money and you give them $10,000 that could be life changing. Right. You even saw what Covid stimulus checks did in 2020 and that, you know, life changing for some people. But someone with a million bucks, you give them ten grand, it's not going to do a thing. Right. And so that's very simple. Example kind of explains how money isn't really like a linear function where every additional dollar brings the same amount of happiness. It's more like a step function where you need big jumps and big steps. And that's where I came up with the wealth ladder framework. It has six unique levels, and we can walk through those, what those levels are and how they map onto economic classes in the United States, et cetera.
- [05:34]
Farnoosh Tarabi
Yeah. And just to stay with this for a little bit more time, the risk of having that mindset of a dollar is a dollar more is more, chasing the money. What is the risk of that? Right. Because I think that's important to not have this wealth ladder mindset, to be thinking, okay, my net worth is $10 million, but I definitely want to make that 10,000 over there. What are we trading off in that pursuit?
- [06:01]
Nick Magiulli
I think it's just over time, as you build more wealth, like your strategy should change in terms of how you view different parts of your life. And so for the person with $10 million, it's like, at some point it's not worth their time to go in, I'm going to drive across town to save $3 on gas or something like that. Obviously doesn't make sense for someone worth 10 million. It's just not worth their time at all. That's just a simple example of this, but I think it happens throughout all of our financial lives where we might get into a certain set of habits. We keep doing the same thing over time, and we can get to a certain place, but to go to the next level, so to speak, you really might need to change your strategy. And that's what the book's about. It's like, hey, oh, are you. Do you feel like you're stuck in a given level? Do you feel like it's hard to break out of that? Let's reframe how you're thinking about this and, you know, change your strategy as a result.
- [06:44]
Farnoosh Tarabi
Yeah. Let's go through the levels. There are six levels, and at each level, when you go up the ladder, it's sort of a 10x jump. Why did you do it that way? Why go from 10k to then 100k to a million to 10 million and so on. What. What is the rationale behind that?
- [07:02]
Nick Magiulli
So the idea here is that this is the amount of money that. And this is based on what I've seen in the data. Like, this was the amount of money you need to see a large lifestyle change. And so the levels. Let me just walk through the levels, right?
- [07:14]
Farnoosh Tarabi
We're talking about net.
- [07:14]
Nick Magiulli
Well, we're talking about net worth. You take your net worth, which is all your assets minus all your liabilities. So that's everything you own your, the cash in your bank account, your car, your home, any stocks, all that. That's all your assets. You subtract out your liabilities, your mortgage debt, you know, credit card debt, student loans. Then you get your net worth. Hopefully it's a positive number. Right? You have that number, and that puts you somewhere on the wealth ladder. Level one, I say, is less than $10,000 in net worth. Level two is 10,000 to $100,000. Level three is 100,000 to $1 million. Level four is 1 million to $10 million. Level five is 10 million to $100 million. And finally level six is over $100 million. Now, these map really well onto the US economic classes because around 20% of households are in level one. That's less than 10,000. Around 20% are in level two. That's 10,000 to 100,000. That's what I would say, like lower middle class. Around 40% of households are in level three. That's like your actual middle class. So that's 100,000 to a million dollars in wealth. And then 18% of households are in level four. That's 1 million to $10 million in wealth. And then the top 2% is level five and six, and there's only 11,000 households in level six. So it's very rare to get into a hundred million plus. But you can see that long tail and the, you know, when the data moved around this, and I also noticed that these big 10x changes were what correlated with pretty big lifestyle changes. I think going from $100,000 to $200,000, you're not going to really change your lifestyle all that much. It's not like you can go and start, you know, living a completely different life because of that, you know, but going from 100,000 to a million, you probably could, right? And so I think that's. That's why you need these big jumps. And that's where the 10X came from.
- [08:52]
Farnoosh Tarabi
But just to be. Just to point out, I think it was California that did a study on what if we give everybody $500 a month. No. And they Took a cohort of Californians and they probably pre selected these folks based on their income and they probably were in level one or level two and they gave them $500 a month. And was it life changing? I don't know. That's I think very sort of personal definition. Right. Some of them said, well, this money I was able to hire a few extra more hours of childcare every month, which then allowed me to job hunt and find a better paying job. I think that there is something too that we should talk about, which is how to use the money to make it most worthwhile for someone who goes from 100 to a million. That on paper is a very big jump in net worth. But and probably this is now getting into your book a little bit. How they spend that money, how they invest that money, how they engage with that money is very important because the results can be very different. And whether it's life changing or not, it's up to that person at that point to make an impact with that money.
- [09:58]
Nick Magiulli
Yes, exactly. And so I think what you're getting at is in chapter three of the book, which looks at how people tend to invest their money across the wealth ladder. And so in like level one and level two, most of their assets are like either cash or cash in a bank account and their vehicle. And then as you go to level two, level three, it starts to shift to be their home. And then by the time you get to level four or five, that's where it starts to be their retirement account, their stocks, any other real estate they own. And then level five and six, it's mostly like their private business, like a business that they own. That's usually how they get to that level of wealth. Right. And so once you think about that, I kind of summarized it at the end, which is like the people in the lower on the wealth ladder. So levels, let's say 1, 2 and 3, less than 25% of their assets are in what I call income producing assets. So assets that are actually paying them money, like your car doesn't pay you money. Right. Something you use just like your home, I wouldn't say is an income producing asset, is an asset, but doesn't pay you any money. Compare that to people in levels 4, 5 and 6 where over half of their assets are income producing. They have stocks, they have bonds, they have retirement accounts, real estate, maybe even their own business that's paying them. And so that is the big shift we see. And so basically the further you go up the wealth ladder, the more income producing assets People have. So in the example you gave, you're like, oh, what happens when someone goes from 100k to a million? What you're generally going to see is as that's happening, you know, assuming they didn't just get a lottery win or something, what's most likely going on is that they're investing in some sort of income producing asset or they have a lot of that money in their home as well. So it's one of those two things specifically in that level where you're going to see that shift in.
- [11:26]
Farnoosh Tarabi
Well, do you think someone in level one should be investing? You know, I know that's hard with less than $10,000 in net worth, but what's your thought on that? Is the idea that you look at how levels 3, 4 and 5 are thinking about money or acting with their money and trying to replicate that to the best of your ability with the resources that you have?
- [11:45]
Nick Magiulli
Yeah, I think everyone should be investing. The issue I think for level one is just there's not enough money to do that yet and the impact isn't there. Like if I had to say, what should you be focusing on in level one? Investing is like not even the top five priorities. It's like get to some sense of safety, maybe have a network or have people you could rely on in case you get further behind or something like that. I think we always just look at wealth in terms of just dollars and cents and I think people in Level 1 may have a much, much more wealth than they think and it's through the connections they have, people they could rely on if they get into a tough spot financially, et cetera. So in level one, I would say no, you need to get to safety, you need to get out of level one. Right. I think that's getting rid of that stress, getting to a place where you don't have to worry about where your next meal is coming from, anything like that, that is the key. And of course that's not going to happen overnight. But that's one of those things where to move the ball in the right direction. You have to focus on that.
- [12:33]
Farnoosh Tarabi
Yeah, I just want to go back to something you said, which I want to call it out and I don't even have a comment about this. I just want to highlight it where you said level three, 100k to a million in net worth is middle class. Let that sink in in 2025 in America.
- [12:50]
Nick Magiulli
Yeah. The reason why is because home equity values, that's a lot of it is home equity values, retirement accounts, and it also Depends where you live. Right. Like once again, I said 1 million to 10 million upper middle class. Obviously, if you have $8 million and you're a low cost of living area, you're not upper middle class. You're definitely upper class, but in a place like. Yeah, but if you're in New York City, you're in Miami, San Francisco, 8 to 10 million. Your life is amazing, but you can't fly private. You can't do a lot of the stuff that the actual upper class can do and that you don't start to see that until level five. And so that's where I say that the upper middle class and the middle class have very similar lifestyles. The only difference is upper middle class probably lives in a slightly nicer place. They're probably sitting on a nicer seat on the airplane. They probably eat maybe slightly nicer food. But like, outside of that, their lifestyles are pretty similar. Like, it's only once you get into level five, where it's like you're going to a different airport, you have you hire people to do things for you. And like, your life's very different in level five from let's say level four and level three. That's. That's the differentiation there.
- [13:46]
Farnoosh Tarabi
Yeah. Which I guess is why we love Warren Buffett a little bit, because there are these billionaires that. And I went to Penn State, Joe Paterno, who's passed away, but he also has. He was very wealthy. I don't know if he was a billionaire, but he was very, very wealthy. And Warren Buffett lived in the same house that he raised his kids in when he wasn't wealthy and drove like the same beat up car. I mean, I think that's an anomaly and maybe that's why we. It's an anecdote.
- [14:12]
Nick Magiulli
But Warren Buffett also does say, he, he does defend himself. He says, hey, I have one thing that I. Everything I do is in. My life's exactly the same as yours, except I fly privately. Yeah. I have the five, which he calls the indefensible. Yeah.
- [14:23]
Farnoosh Tarabi
Billionaires can't just be hanging out at the airport.
- [14:26]
Nick Magiulli
Yeah.
- [14:26]
Farnoosh Tarabi
Worry about getting stolen and ransoms. We joke. But that's actually, that does cross their minds. And they do have a lot of security detail for that.
- [14:33]
Nick Magiulli
Yeah. Yeah.
- [14:34]
Farnoosh Tarabi
All right, that's another episode, a fun one. I should probably start putting that together. All right, let's talk about this important rule that you introduced pretty early on in the book, which is the 0.1% rule. And the idea behind that, it's it's, it pertains to, like, spending decisions and how to think about spending. Can you walk us through that?
- [14:58]
Nick Magiulli
Yeah. So I think.01, not. Yes, yes, the 0.01% rule. And I will walk through the math on that in a second. But I think the main reason why I came up with this rule is because a lot of people in personal finance say, hey, don't let your lifestyle creep. And this is a fine rule. I think people can take it too far. And so my argument is, like, I think you should allow for some lifestyle creep. I've done math on this in my first book, Just Keep Buying. But in this case, I said, hey, I want to come up with the rule that people can use of, like, what's a trivial amount of money? What's like, amount of money that you could spend and it would impact you at all. And, like, where this came from, there's a Jay Z lyric where he says, I'm not going to say the actual lyric because he kind of curses and stuff, but I'll just say he said, what's 50 grand to someone like me? Can you please remind me? And that's all he says. And it's very, you know, subtle. And I was like, well, what was his net worth at the time? It was around 500 million. So $50,000 at the time for Jay Z was.01% of his net worth, or that's 1,10,000. So if you take your net worth and you divide by 10,000 or multiply by 0.01%, you get to some amount, right? Some amount of money. And to me, that's like a trivial amount of spend. And so that maps onto the wealth ladder in a neat way, because when you go, like, in every level, you have different levels of what I call spending freedom. So in level two, for example, I call that grocery freedom. So as you kind of get deeper and deeper into level two, you don't really have to worry about how much things cost at the grocery store, right? Because the marginal spend, once again, that net worth level is from $10,000 to $100,000. So if you divide by 10,000, your marginal spend is like one to $10. You can spend that extra one to $10, you know, every day and not really impact your wealth. That's the thinking here. And if you do that in level three, that's what I call restaurant freedom. So when you go to a restaurant, right, you can spend about ten to a hundred dollars more per day or per time you go to a restaurant. Won't really Impact you. Level four is what I call travel freedom. That's where you can start spending a hundred to a thousand by the time you get to the end of level 4, dollars more per day on things you like to when you're traveling or etc. So the whole point of this is you can think about the levels. I just like using the levels. So, oh, if I'm in level four, I can get what I want in a restaurant. I can do what I want at the grocery store. But when I travel, I kind of be a little bit more picky. I still mostly fly coach. Once in a while, I might get a window seat. I might upgrade to like the emergency exit row. That's where I'm at with my wealth journey. But hopefully one day I get to the point where I'm like, hey, I can go and spend this extra thousand dollars on this flight one day. So that's the thinking. That's because the theory, you know, I'm assuming your wealth will generate 0.01% per day. And so if you do that, if you take 0.01% and multiply 365 days. Yeah, percent, certainly that's only 3.7% a year. It's a conservative return. Says, hey, you're, well, throwing this off every day. It's a trivial amount of money. You can spend that every day. So when you get to $1 million in wealth, that's your wealth is generating about 100 bucks a day. When you get to 10 million, it's $1,000 a day. Which might not seem like a lot of money, but if you're like, hey, if you don't fly every day, but let's say you fly once a month or something, you don't spend any money on anything else. Like that thousand dollars a day, you can pound that into a month, and that's now. You can now basically fly first class every time.
- [17:51]
Farnoosh Tarabi
Hey, so, money friends, I know many of you are thinking about starting your own business or you're already in the trenches making smart, strategic money moves. If that's you, I want to personally recommend a podcast that can seriously help you get to that next level. This is small business. What I love about this new season is how real it gets about something. We talk about a lot here. Risk Every episode shares honest stories from founders who've faced tough financial decisions, taken bold but calculated risks, and made it through the highs and lows of building a business. Host Andrea Marquez breaks it all down in a way that's actionable and relatable. You'll hear exactly how these entrepreneurs tackled things like funding, pricing and knowing when it's worth betting on yourself. If you're looking for real, practical insights that can help you move forward with clarity and confidence, this podcast is it. Follow and listen to this is Small Business now on Apple Podcasts, Spotify, or wherever you get your podcasts. Don't wait to start making smarter money moves today. You know that moment when summer hits and suddenly nothing in your closet feels right. I had that recently and didn't want to waste money on clothes I'd only wear once. That's when I turned to Quince. Quince makes timeless, high quality summer staples. Think 100% European linen tops starting at just $30, washable silk dresses and soft cotton sweaters. The quality is so good, especially for the price, about half of what you'd pay elsewhere. And I'm not the only one in the house that's hooked. I've even started getting my kids into Quint. My daughter is in love with her new Flamingo print tankini and the softest pajamas she's ever owned. Quince works directly with top artisans and uses ethical factories so you get beautifully made pieces without the markup. I'm in love with Quince and you will be too. Give your summer closet an upgrade with quince. Go to quince.com sewmoney for free shipping and 365 day returns. That's Q-U-I-N C E.com somoney introducing the new Dell AI PC powered by the Intel Core Ultra processor. It's not just an AI computer, it's a computer built for AI. That means it's built to help do your busy work for you so so you can fast forward through editing images, designing presentations, generating code, debugging code, running lots of apps without lag, creating live translations and captions, summarizing meeting notes, extending battery life, enhancing security, finding that value you were looking for, managing your schedule, meeting your deadlines, responding to Jim's long emails, leaving all the time in the world for more you time and for the things you actually want to do. No offense Jim. Get a new Dell AI PC starting at 699.99@dell.comaipc how those ahead Stay ahead Is the state of the US making you want to escape? Take the first step and learn the language before you go. Babbel makes it easy. Start speaking a new language with confidence thanks to Babbel's conversation based technique that quickly teaches you useful words and phrases about the things you actually Talk about in the real world. There's over a dozen languages available to learn at your own pace, so you can achieve your goals with material tailored to your individual proficiency level, interests and time availability. Personally, after coming back from Paris in May, it's clear I need to revisit my French proficiency, so that's what I'll be learning. Handcrafted by over 200 language experts, Babbel's lessons are voiced by real native speakers and built with science backed cognitive tools like spaced repetition and interactive features to fit any learning style. I want you to learn another language. So I'm teaming up with Babbel to gift you 55% off subscriptions, but only for our listeners at Babbel.com somoney get up to 55% off at Babbel.com somONEY spelled B A B-B-E-L.com somoney Babbel.com somoney rules and restrictions may apply now in chapter two you introduce the 1% rule. And this is where if you can pursue a career opportunity or an income generating opportunity that can grow your net worth by 1%, you should pursue it. Why did you want to provide this lens through which we should look at income income generation?
- [22:00]
Nick Magiulli
I think people get caught in their habits and they keep doing the same things over and over and at some point they don't realize like, wait, this actually isn't worth my time anymore, right? And so at some point everyone can think of, oh yeah, back when I was younger I would do this for money or I'll drive across town to save a few dollars on gas and that's fine and all, but at some point if you can do other things that can generate more money, like you should be doing those other things, right? And so that's where I'm like, take 1% of your net worth as like this proxy. It's not perfect and of course you have to. It's really based on how much time something's going to take you as well. It's not just the value, but I think it's just a way of just comparing like, hey, I'm thinking about doing this, this project and this project is going to generate me, let's say five this side hustle and it's going to create $5,000 for me over the course of however many hours, right? And then you can say is that worth my time or should I be doing a different project that maybe offers more upside potential, etc. And so I don't know, I'm just trying to come up with something that's really as just a secondary check on, like, are my career actions making sense? Yes or no. And that's the big question.
- [22:59]
Farnoosh Tarabi
You know behavioral finance so well. And one of the tenets is that as humans we love a good rule of thumb. And if we can apply more of those into our financial lives. And I know they're rules of thumb, so it's just a starting place. Right. We want to know how much to save, how much to invest, how to think about wealth building. Let's start with this idea and then personalize it. So as you're speaking, you know this 1% rule, I think it gets a little bit more complex. The higher net worth you have. Right. So moving the needle 1%. At that point, you know, you're obviously not doing a side hustle. You might be investing in real estate, you might be taking out a personal loan or a business loan to do something which yes, if all works out, this could increase your net worth by 1% or more. But it could also not work out. And there's a risk to that where versus other person. Person who's like just doing the side hustle to earn an extra 1%. The downside is just making nothing or making 1% versus the other person over here in the higher rung, they're taking on some risk. So any advice for somebody who wants to make a bigger leap, which would require a little bit more risk essentially?
- [24:08]
Nick Magiulli
Yeah, no, you're exactly. As your net worth grows and that amount by the 1% rule gets larger, it's harder and harder for your, let's just say labor income, your work that you do to impact your wealth. So as a result, you're going to have to rely on other things like income producing assets. Right. And so if you're like, oh, I want to buy this property, it could eventually raise my net worth by over 1%. Okay, great, then it's an opportunity. Then you still have to think about the risk and everything outside of that. But I just wanted this rule as like a threshold amount. Like I don't want people spending a lot of times on very low income opportunities that aren't going to really help them when there's other opportunities out there that would be better for, for them. And obviously it depends where you are. Right. If you're in level one like you can, anything you can do to get money is probably going to be a good thing to like at least help you move out of level one. But as you move up the wealth ladder, you have to be a Little bit pickier with how you spend your time. And so that's just the thinking I have behind this and I hope it helps people. Just as another check, on top of all the other things you would think about risk and all that, this is just another check to say, hey, is this even in the ballpark of what I should be considering?
- [25:06]
Farnoosh Tarabi
Yeah. A couple more questions and then I want everyone to just buy your book because it has so many great thresholds and frameworks and you do this so well in your work. And speaking of how you got here, you didn't grow up with financial role models, as you write in your book. You had parents that went through cycles of debt and bankruptcy. How did you go about acquiring the knowledge that you have? Obviously your industry helps, but I think you have a curiosity for it and you went towards the learning and the literacy and what has helped you along the way mostly than anything else, Curiosity.
- [25:46]
Nick Magiulli
Is a piece of it, if I'm going to be honest. I'm very fortunate that I had a very good education. I went to Stanford University. That helped a lot coming from a, I would say, level two background, even though my parents technically declared bankruptcy twice before I was 18. And that would have put us in level one. I see through family and friends and resources and et cetera, like, we were never really in level one. I don't know what it's like in actual poverty. I do know what it's like in the lower middle class though. And so because of that, as you said, I didn't really have the best financial role models. I had great role models on how to be have a loving flea. And that's amazing and I use that. But the financial piece, I just didn't have any of that. I had to kind of learn that on my own. I learned that through friends, people I met. I talk about my story a little bit in the book and over time I just used that and I just followed my curiosity. I started in like data science. So I was mostly a data person that happen to love investing in personal finance. And so I use kind of that skill, start writing about this stuff in a different way. Because having the data, being able to crunch the numbers and everything and then explain it to people, I think is something that's not too many people can do. And so that's. I've been very fortunate to use that.
- [26:47]
Farnoosh Tarabi
You write that your book is both a guide and a cautionary tale. And the caution is that you need to know when enough is enough, that the idea behind the wealth ladder isn't that level six is the ultimate goal or should be the ultimate goal. It's more of a here's how they're doing it, if you're curious and if you want to achieve that, all power to you. But it's not to say that more is more. And I know this is such a difficult question to answer, so I guess I would just want you to tell us how you, Nick, are sort of identifying enough for you and now you're a husband. Congratulations, you're a couple now. And I think, you know, probably there are new conversations to be had about money in your relationship, but how are you navigating that enough stuff?
- [27:38]
Nick Magiulli
Yeah, I think so. Yeah. I just got married. Thank you for that. And so my wife and I, we've talked about these things. Obviously we're still, like, in the process of, you know, starting a family, doing all that. Hopefully that happens, God willing, the next year or so. But just not thinking about that. Those are. That's a lot of new expenses that I'm not thinking about even right now. And all those are going to come up. But there's that my parents are aging and so they're gonna. Some of them may need some financial support at some point or another. So I'm thinking about those two big variables. But in terms of enough and what that means, I think how I'm viewing my future is like, I really think this is gonna. I don't know if you got. If you've talked about Coast Fire too much on. On the podcast, but for those that know about Coast Fire, it's this idea that you get to. You're not completely financially independent, but you get to a spot where you're like, hey, my retirement's basically taken care of, and so now I just need to take care of myself and my family. Right. And if I can do that, then that's kind of where I could see my career going, where I'm not like, oh, I just need to accumulate as much money as I can get. I'm going to move more towards, hey, I have enough where I'm going to be okay. I just need to take care of my family. And so whatever that means, that's how I'm thinking about my career and my future. So I have no real desire to get to level 5. If it happens, great. But I'm not going to go out of my way and say yes to every single thing and work myself to the bone to do that. I don't think it's going to improve my life. And if anything, it could detract from my life. And I talk about a lot of these things. I know it's like very first world problems. What do you mean having $10 million would detract from your life? How? And I talk about this in the book because there's so many stories about this type of stuff that people don't know about. And just chasing money for money's sake has led to many more bad outcomes than good outcomes, in my opinion.
- [29:08]
Farnoosh Tarabi
Yeah. You've met a lot of rich people. I've met a lot of rich people. I've spent time with billionaires. What do you think is what drives them to that level of wealth? Because they all start many times in poverty. I know at least a couple billionaires I've spent time with. They grew up poor, living in their cars poor. So that I can understand. Maybe it's like that sort of appetite, the hustle. But have you thought about this much? Is there an archetype for the billionaire dollar pursuit? The person who pursues the billion dollar level?
- [29:45]
Nick Magiulli
Yeah. So in terms of the archetype, I think these people overwhelmingly are going to be entrepreneurs of some sort, especially billionaire. If you say billionaire specifically, yes. You have to have some sort of business ownership. Unless your legacy wealth, like you were just gifted and married into it, you basically have to have a business. And I don't. I think that's doesn't necessarily need to be true. In like level five, I think there's a lot of celebrities, athletes, entertainers that can make it into 10 to 100 million without having a business at all. I think to get over 100 million into Level 6, you need to have some sort of business that you sell or you still own and it's creating a lot of income for you. And so the archetype there I think is just they're very, you know, risk seeking. They want to take risks, they want to do these things. There's this story about Elon Musk playing poker where he doesn't really. I don't think he plays poker a lot, but he went all in on every hand until he won. He just kept buying back into the table. And then once he won, he quit. And so it's like, it's this weird, like, that's not it, by the way. That's like literally I have a friend that plays. It's like literally the worst strategy you can do. I think the other worst strategies, paying to see the flop, just not waiting and then going all in or something. But it's like one of the worst strategies you can do. And that goes to show. But like that strategy, it can work sometimes. And that's if that's just how certain people are wired. So in terms of thinking about money and enough and all that stuff, I think some people, why do they do that? I don't necessarily think it's money. For some of them it is. But for a lot of them I think it's more about the game and competition and ego. And you know, one of the quotes I have in the book is, you know, the most expensive thing some people own is their ego. And I think that's because they are trying to chase things and that can harm you everywhere on the wealth ladder, but especially in levels five and six.
- [31:12]
Farnoosh Tarabi
Oh my gosh. You could put that on some T shirts.
- [31:14]
Nick Magiulli
Yeah.
- [31:16]
Farnoosh Tarabi
Nick Magiulli, thank you so much. Your book is called the Wealth Ladder. Tell us about your work. You have the blog. Are you still doing the blog of dollars?
- [31:23]
Nick Magiulli
Of dollarsanddata.com it's almost been nine years. It'll be nine years at the end of this year. So congratulations once a week.
- [31:30]
Farnoosh Tarabi
You're so prolific. Thank you so much for coming on. Congrats on your book and I really appreciate all this insight.
- [31:36]
Nick Magiulli
Thank you. Yeah, thank you so much for having me on. I truly appreciate it.
- [31:41]
Farnoosh Tarabi
Thanks to Nick Magiulli for joining us. His book is called the Wealth Ladder and it's out this week. I'll see you back here on Friday for AskFarnouche. And I hope your day is so Money.
- [32:04]
Capital One Bank Guy
Banking with Capital One helps you keep more money in your wallet with no fees or minimums on checking accounts and no overdraft fees. Just ask the Capital One bank guy. It's pretty much all he talks about in a good way. He'd also tell you that this podcast is his favorite podcast too. Ah, really? Thanks. Capital One Bank Guy. What's in your wallet? Terms apply. See capitalone.com bank capital1na member FDIC checking.
- [32:31]
Farnoosh Tarabi
Off the boxes on your to do list is a great feeling. That's why a State Farm agent is there to help you choose a coverage option that's right for you. Whether you're getting a new house, car, boat or rv, helping protected is important. And State Farm is there to help you choose the coverage you need. Whether you prefer talking in person on the phone or using the award winning app. And with so many coverage options, it's nice knowing you have helped finding coverage that best fits your needs so you can continue to focus on what's most important to you. Like a good neighbor, State Farm is there.