In Episode 1, I’ll share why I started Hack Your Wealth, my personal story, how I once lost 1/3 of my savings, what change my thinking afterward, how that motivated me to became a financial expert, how much wealth that expertise has created for me today, what I now teach on HYW and what makes HYW different from other personal finance podcasts.
What you’ll learn in this episode:
- My origin story – the personal struggles/setbacks that motivated me to become a financial expert
- My credibility and credentials
- What motivated me to become a financial expert and how I did it
- Why financial literacy/proficiency is only half the story
- How my thinking changed after starting a family
- How my actions changed as a result
- Why I didn’t like about other personal finance sites
- What makes HYW different and worth following
- Why I’m starting this podcast
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All right, thanks for tuning into my new podcast.
This first episode is about context. I want to tell a little bit about my personal story so you know about my background, what my credibility and credentials are, and some of the personal struggles and life circumstances that motivated me to become a personal finance expert.
I’ll talk about why I’m starting this podcast and why I think it’s worth your time to follow me on this podcast and on the Hack Your Wealth blog.
Throughout the episode, this and other episodes, I may refer to resources or website links, or other things that I think are useful and interesting for you to check out.
You can always get access to those things at the show notes for each episode, which is just at my website, hackyourwealth.com slash show number. So this is the first episode. So it’s hackyourwealth.com/1. Next time, it would be hackyourwealth.com/2, and so on.
I also want to invite you to join my Facebook group. I recently created it and you can access it through a website short link I created at hackyourwealth.com/fb
And it’s a way for us to connect directly and have a two way dialogue and also for you to connect with other members of the Hack Your Wealth community.
I will be in there every single day responding to almost all questions that get surfaced there, and it’s a place for you to ask for advice and feedback about financial independence, early retirement, tax optimization strategies, all the things about diversifying your income, real estate investing strategy, side business income, online business income, as well as other topics like family finances, travel points, hacking, career transitions or even lifestyle topics related to personal finance.
So I definitely encourage you to check that out.
Okay, so I wanted to talk a little bit about why I started Hack Your Wealth in the first place. And it came from a place of wanting to get really disciplined and become an expert in all things related to personal finance.
There is a lot of bad information out there that I found at least that are written by people with strong opinions and seeming authority, but not a lot of actual deep understanding about how financial instruments work, why financial and economic markets behave the way they do and can affect your portfolio.
A lot of the blogs and online content I see out there are about personal debt journeys. Like follow me and see how I paid off six figures of debt in three years, which is, usually about cutting expenses to the bone and spending every last dollar to pay down debt, which you should do if it’s credit card debt.
But, you know, saving and just cutting expenses to me never felt like much of a strategy. It’s just willpower and discipline.
And it’s also not really the way to build long term, sustainable financial independence type of wealth. You’re not going to save your way to massive wealth.
So with that context, let me share a little bit about my background and some of the personal struggles I had, I encountered, especially in the early years, which I think will help set the stage for why I do what I do now.
I am from Houston, Texas. I grew up there, went to college at the University of Texas at Austin and then later graduated from Harvard Law School.
I had summer internships and jobs like most college students but my first real job where I started my career was after law school at McKinsey & Company in New York City.
And I started at a time when the financial crisis was just around the corner, the 2008 financial crisis was just around the corner.
And during the financial crisis, I lost a third of my wealth, like just completely wiped out.
I had saved for a decade or so up to that point working summer jobs and internships, and I think had like $40k or $50k, by that point, saved up in, I had a Roth IRA, I had a regular savings account and not much more, but I had about $40-50k.
And I’d always been disciplined about saving because I’d never had a strong desire for material things. I just don’t really buy a lot of material things, and have trained myself not to want or need most things. And so I always had this habit of saving 30%, 50%, or even more of what I earned.
So losing a third in a really short period of time during the financial crisis was really painful. Like, it’s like $15-20k.
I remember I had invested in some mutual funds that were like focused on Latin American oil. And in the summer of 2008, I remember oil was trading at something like $165 a barrel. And by the winter, it was trading at $50 a barrel.
And that drove the majority of the decline in my wealth during that time.
That was a really formative experience for me. I still remember walking home from work one evening. This was like, right during the height of the bloodbath, when talk of financial Armageddon was all over the news.
And I was still thinking, Well, no, I don’t want to sell because that would lock in my losses. And even though there were still more losses to come, and I didn’t have an understanding of the asset, I was buying on a fundamental level, I still held on and I rode that rock straight down.
And so I’d ask, have you ever had that experience at least once in your life?
If you’re listening to this, my bet is you’ve perhaps lost some money in the past investing in individual stocks, and maybe that made you fearful and anxious and uncertain about what to do.
When should you sell?
When should you buy more?
It’s very nerve racking to see your account shrink rapidly by the day.
And experiencing that during the 2008 financial crisis really motivated me to want to become an expert in finance so that I could understand how to manage and invest my money so that this kind of thing, I could avoid this kind of thing in the future.
I enrolled in the CFA program, the Chartered Financial Analyst program, which is probably the most widely recognized and respected finance training credential in the world.
It’s a master’s in finance equivalent, it’s recognized worldwide. The CFA designation is held by virtually every fund and portfolio manager in the world. And there are other investment related designations like CPA and CFP, but the CFA is the one that all fund managers have because it is the most rigorous and prestigious.
Takes three years to pass all the exams. The pass rate is, I think less than half on each level and decreases with each level. I took all the exams and passed them all on the first try, finishing the program in about three years.
I think maybe it was even a little bit less because you can take the first and second levels during the same year.
It’s a lot of work and you learn about pretty much every concept in finance and investment management and I’ll just kind of rattle rattle off a quick list here. Just so you have a sense: includes accounting, financial planning and analysis, corporate finance, equity and stock analysis, fixed income and bond analysis, taxes, valuation, balance sheet and income statement analysis, derivatives, real estate, private equity, commodity markets, portfolio management, and wealth planning, statistics, probability, and quantitative methods, macro economics, government economic policy and ethics, and professional responsibility.
So it’s pretty extensive. But I didn’t have all of that background at the time the markets were in freefall in 2008. And I didn’t really know what to invest in, or really even how to invest.
And so in that situation, you end up trying like lots of things, chasing after new things or just doing nothing when you don’t have clarity on what to do.
And the truth is all the technical finance knowledge that you might learn in the CFA program, or in a banking job on Wall Street, or whatever, is only one part of the money management equation.
Another really critical part is simply developing the confidence to follow and trust classic investing principles, and not letting your emotions take over.
And there are specific trainable ways to detach your emotions from your investing.
For example, physically writing down an investment policy statement of your goals and your decision making criteria, and doing that when you’re thinking calmly and rationally while the markets are, are stable, so that you can simply follow it like a playbook when the markets are actually volatile and gyrating.
Another example: just having a clear asset allocation strategy that you define when things are calm, and then rigorously and methodically applying that asset allocation, even when markets turn volatile.
Because the truth is, CFA or not, there will be times when your portfolio takes a hit. And it is very difficult to consistently pick stocks over the long run that generates superior returns.
Countless studies have shown that. There’s maybe 100 people in the world who can do that successfully.
The CFA actually teaches you to take a portfolio approach and figure out how to limit risk while not sacrificing returns too much. And doing that part well is what helps me with the emotion and confidence part.
Because with solid portfolio management principles in place, simple ones, good asset allocation, periodic rebalancing, you can get reasonably close to market matching returns for less risk than investing in individual stocks. Just by diversifying a bit strategically.
And really investing for the average retail investor, like you or me, should not be about trying to beat the market.
You can’t do it.
It’s really about getting market matching returns, returns with as little risk as possible. That is how you successfully compound over time: by minimizing your risk.
And it’s a big part of developing investment confidence: earning reasonable returns while reducing as much risk as possible.
You know, the scientist Albert Einstein, who everybody knows, smart person last I checked, said compound interest is the eighth wonder of the world. He who understands it earns it. He who doesn’t pays it.
And unless you’re one of the 100 or so, investment oracle’s in the world, like Warren Buffett, your job is really just to get market matching returns with as little risk as possible. That’s it.
So, if I fast forward now to a few years ago, I got married a few years ago. And I’m very fortunate that my wife and I have similar financial values, but we were we came into the marriage at very different places in terms of knowledge.
Finance and investment management just wasn’t her world. She works in healthcare.
But now that I was married, I actually had someone sort of depending on me for that. But then the real motivator is when we learned we were going to have a kid.
Because then the shit got real.
My daughter was born in the spring of 2018. And that really changed me when you have a baby’s eyes looking up at you, totally dependent on you, and now you’re responsible for caring for someone, that will light a fire under you, as it did for me.
And so when you find yourself in a rut, you look over at your family and all the wealth building that you’re doing, and all the struggles that you’re going through, really matter for them.
And that’s what’s going to keep you motivated. And it has for me.
Now with my wife, she has a job and she can earn an income. So like she doesn’t strictly depend on me for survival.
But with a kid in the picture, like I said, I literally have someone depending on me for their survival.
And so on the one hand, even before I got married, I knew I wanted to be able to retire early, to be in a position at least to retire early, even if I continue to work, because then I would be able to work and do things because I am really truly and deeply interested in them, and not simply for a paycheck.
But I also knew that having a kid would complicate that.
And so I constantly was thinking, how can I actually have it both ways? How can I have a family, have a kid, but also massively and rapidly build up my wealth so that I can become financially independent and retire early?
And that is the thing that really lit a fire under my ass and got me super motivated to really be efficient with my finances, my taxes, investing so that I could one day have it both ways.
So I started doing all kinds of adult things.
I had bought a condo a couple years earlier. But now we bought a real home.
And it was actually partly a primary residence and partly an investment property.
It was a four unit, small apartment building, where we were essentially house hacking living in one unit, and renting out the others so that our tenants would help subsidize the mortgage.
And the idea being that eventually when we retire for real, or move away from that home, we still manage it totally self sufficient. And when we’re older, it becomes basically like a retirement ATM machine.
I bought all kinds of insurance, not just multiple homeowners policies now.
But I bought life insurance for the first time. Didn’t feel the need to do that before because I didn’t have anyone depending on me.
And I started to get really strategic and tactical about our retirement accounts: our 401K’s, our IRAs, etc, and how I could grow them as much as possible and as rapidly as possible, while shielding them from as much taxes as possible.
Our tax rate also went way up because our combined income was high. And that motivated me to look for better ways to just strategize my tax planning.
And the thing is earlier, when I had done the CFA program, I learned about investing principles and portfolio management, but there are all kinds of accounts with different tax implications that I hadn’t spent as much time strategizing about.
And I also hadn’t delved deeply into just figuring out how to be extremely, extremely tax efficient, which I learned to do after starting a family.
And the truth is all these things, learning the details and intricacies of how all these different financial and insurance instruments worked, investment vehicles, and the rules and regulations around them, and what you could do by combining things together – it felt overwhelming at times.
And what drove me really crazy about personal finance blogs out there that I that I saw many of them was that, outside of a handful that were truly insightful and that I still follow to this day, most of the ones I found were about, again, personal debt payoff journeys, or giving advice like spend less than you earn and don’t carry credit card debt, and learn how to make a budget.
And those really just weren’t applicable to me, because I was already saving over half my income, just from my super frugal lifestyle, and my relatively high income.
What I really wanted was strategies on how to grow my retirement portfolio massively so that I can retire early, like 10, 20, even 30 years early, and how I could do that while raising a family.
And also what I needed to do to put legal protections in place so that my family would be taken care of, should anything happen to me.
And what I really wanted was processes that I could follow, step by step, implement and see results. Just simple processes that I could follow step by step.
And as I began studying and learning and figuring out how to apply things to my own situation, I started writing what I was learning about. And I posted that stuff to Hack Your Wealth to share in plain language the most important financial, tax, retirement, investing, and estate planning strategies that I was learning and using.
And over time, these solidified into a framework for methodically and strategically building wealth, being efficient with taxes and setting up the right legal protections over everything.
So while I didn’t start out with so much intention or clarity, when I started, I was basically just feeling my way through things. Now, we are pretty much following a playbook and it has helped our focus massively
Because our entire investment portfolio, both liquid and real estate, is multiple millions. And if I’m really honest with myself, we don’t have to work if we don’t want to.
We are currently still because we’re building up an even bigger buffer. But right now, we are financially independent.
We work now to just build up buffer, not because of FI.
So what makes Hack Your Wealth different and worth following, both the blog and this podcast, is that I teach pretty advanced wealth building strategies and tax optimizations.
I help translate complex rules and frameworks into plain easy to understand terms, like the rules around home sale capital gains exclusions, or maximizing your Social Security benefits.
Hack Your Wealth is also much more quantitative than the vast majority of personal finance websites out there. And that’s because I actually compare financial strategies using side by side calculations to show you clearly which option is better under different circumstances.
Like my analysis on the Hack Your Wealth website that compares Roth versus traditional retirement account options, where I argued that you should always always use a traditional retirement account, not a Roth account, when you’re contributing, because you can actually convert to a Roth later.
But details right.
My point is that I showed those things quantitatively.
And in terms of the podcast, the reason why I started it is because I wanted to be able to release useful content more consistently and talk one to one in a more direct way.
And also, I think a lot of finance concepts are pretty dense to read through. But when you listen to somebody explain it to you, it will come across in just a more conversational easy to understand way.
And that’s really the motivation behind why I wanted to switch to this audio format.
So hopefully this gives you a better sense of where I’m coming from with this podcast and a bit about my background to help explain why I started Hack Your Wealth and the value that I hope you get out of it.
My plan is to release new episodes each week on Tuesdays. So be sure to hit that subscribe button to get new episodes automatically sent straight to your device.
And really appreciate you tuning in and hope you follow us along with his journey.
If you’re excited about this and want to support the show, could you help me out and take 30 seconds, go to iTunes, leave a podcast review for Hack Your Wealth.
It’s super useful for the podcast and really appreciate your support on that.
So if you can please take a minute leave a review, I’ll leave a link to this in the show notes. So you can write one on your device or on iTunes or Google Play or Spotify or wherever you’re listening from.
And going forward each week on the show, I’d like to call out a subscriber review and thank them personally for posting it.
So please write a review and I’d love to thank you on the air to my audience next time.
Alright, thanks for tuning in this week.
Next week I’m going to talk in detail about my personal finance framework, the actual overarching structure that I follow for my own wealth building strategies.
I alluded to this framework earlier in this episode and I’m going to share next week how I use that framework methodically and strategically to build wealth and how it guides me in my personal finance decisions.
So next week, I’m gonna deep dive on that.
So be sure not to miss that tune in next time to get the deets.
Bye for now.
Next up: Be sure to check out the next episode which goes into detail on my 4×4 FIRE framework for methodically planning, building, and protecting financial wealth/independence. This framework is simple and manageable yet comprehensive, so don’t miss it!