The Savings Expert: Passive Income Is A Scam! Post-Traumatic Broke Syndrome Is Controlling Millions!

In this engaging discussion, financial expert Morgan Hel debunks the myth of passive income and emphasizes the complex psychology behind spending. He argues that happiness isn't directly tied to wealth but rather how money is spent, highlighting the importance of spending aligned with personal values rather than societal pressures. Hel explores the idea that much of spending is driven by psychological needs like social competition and self-worth, and warns against both excessive spending and hoarding money due to past traumas. He suggests a focus on achieving financial independence and finding purpose as keys to a fulfilling life.

• Passive income is often discussed as a path to wealth, but it's not a primary method for becoming wealthier.
• Spending money wisely is crucial for happiness, not just accumulating wealth.

"People talk a lot about passive income. This is not a thing. Look, there's two ways to get wealthier, and passive income is not part of that equation."

• Passive income is not a reliable or primary strategy for wealth accumulation.

• Spending money is often driven by psychological needs, such as competition and social signaling.
• Material possessions are often used to measure success relative to others.

"If you're unhappy with your life, it is a very easy assumption to make that if you had more money, a bigger house, a better car, whatever it might be, things would be better."

• The belief that more money will solve personal dissatisfaction is often misleading.

• Social comparison leads to increased spending to match or surpass peers.
• Material possessions are used as a tangible measure of success.

"Life is a competition. It doesn't matter how well I'm doing, it matters how well I'm doing relative to you."

• Success and happiness are often measured relative to others, not by objective standards.

• There is a lack of literature on the philosophy of spending, despite its importance.
• Spending habits can reveal much about personal values and insecurities.

"So I've written about money and finance and investing for 20 years and almost never had I myself said what is my spending philosophy?"

• Understanding personal spending philosophy is essential for financial well-being.

• Spending is often a reflection of personal trauma and psychological needs.
• The concept of "post-traumatic broke syndrome" illustrates fear-driven spending habits.

"There's a great financial writer named Tiffany Alish and she calls it post-traumatic broke syndrome."

• Financial habits are deeply intertwined with personal history and psychological states.

• Status symbols like luxury cars and watches are not inherently wrong but can control behavior.
• The desire for status often stems from a lack of other personal attributes to offer.

"My own personal desire to show off mater, but the reason why is because I had nothing else to offer the world."

• The pursuit of material status can be a substitute for other personal achievements.

• Social media amplifies awareness of others' wealth, increasing the pressure to compete materially.
• The democratization of attention and audience through the internet has made extreme wealth more visible.

"The competition, the arms race for bigger nicer things is extraordinary. And it's way more powerful and potent today than it's ever been for two reasons. One is social media."

• Social media intensifies the pressure to display wealth and success.

• Success often requires significant trade-offs, such as personal relationships and health.
• Admiring someone's success without understanding the sacrifices involved can be misleading.

"Everyone is jealous of what you've got. Nobody's jealous of how you got it."

• Recognizing the trade-offs behind success is crucial for setting realistic personal goals.

• Money can contribute to happiness, but it amplifies existing personality traits.
• A balanced approach to spending involves using money as a tool for independence and purpose.

"The formula for a pretty good life is independence plus purpose."

• Achieving happiness involves balancing financial independence with a sense of purpose.

• Independence allows individuals to live according to their values and desires.
• Purpose provides meaning beyond material wealth, contributing to overall happiness.

"Independence exists on a spectrum. And literally every dollar that you save is a little bit more independent than you were before."

• Financial independence and a sense of purpose are key components of a fulfilling life.

• True wealth and success are not solely defined by material possessions or financial status.
• Personal relationships and fulfillment play a crucial role in defining a successful life.

"Show off the inside of your house, not the outside."

• The essence of wealth lies in personal fulfillment and meaningful relationships, not just external appearances.

• Financial independence is not an all-or-nothing concept; it exists on a spectrum where each dollar saved increases one's autonomy.
• Savings provide a buffer against life's uncertainties, allowing individuals to seek fulfilling employment rather than settling out of necessity.
• The ability to save and accumulate a financial cushion contributes to a sense of security and confidence.

"If you don't have any savings, you're going to have to by default pick the very first job that you can come across, even if it's a terrible job in a location that you hate, doing something you hate, working with people you don't like."

• Without savings, individuals are forced to make hasty employment decisions that may not align with their preferences or values.

"Every dollar that you save is a piece of your future that you own, that you control, that is yours."

• Savings empower individuals by granting them control over their future and reducing reliance on external factors.

• Jealousy can lead to reckless financial decisions as individuals attempt to match the perceived success of others.
• The definition of success is often influenced by one's social circle and environment, leading to different standards and expectations.

"So much of what we think is normal. Our definition of success is what other people around us have."

• Social comparison shapes perceptions of success, often leading individuals to pursue goals that may not align with their true values.

"Be careful who you socialize with because you're going to anchor to their level of success."

• The company one keeps can significantly influence personal aspirations and definitions of success.

• Financial independence ranges from complete reliance on external support to total autonomy, with various stages in between.
• Achieving financial independence involves accumulating savings that allow for flexibility and choice in employment and lifestyle.

"A good level of independence as a good goal is enough savings so that if you lost your job, if your car broke down, if you needed to replace the roof on your house, you would be able to do it without losing that much sleep."

• A realistic goal for financial independence is having enough savings to handle unexpected expenses without significant stress.

• Happiness is often fleeting, whereas contentment is a more sustainable and desirable state of being.
• The pursuit of contentment involves aligning one's desires with their current circumstances and finding joy in non-material aspects of life.

"Happiness might be the wrong word here. The word that people want is content."

• Contentment, rather than happiness, is the enduring state that individuals should strive for.

"The feeling that we are aspiring to is just being content."

• The ultimate goal is to reach a state of contentment where desires are aligned with what one already has.

• Dopamine plays a significant role in driving desires and motivations, often leading to a continuous pursuit of more.
• Understanding the influence of dopamine can help individuals recognize and manage their desires more effectively.

"Dopamine is the chemical for wanting."

• Dopamine fuels the desire for more, often leading to a cycle of continuous pursuit without lasting satisfaction.

"What is going to make you happy is spending time with your kids, having a good relationship with your wife and your own physical health and laughing with your friends and having good times with people who you enjoy."

• True happiness and fulfillment come from relationships and experiences, not material possessions.

• Early retirement is not always the solution to achieving happiness; purpose and fulfillment are crucial components.
• Many who retire early find themselves lacking purpose and return to work to regain a sense of fulfillment.

"What actually makes you happy is purpose and for a lot of people their purpose can be their career."

• Purpose, often found in work or meaningful activities, is essential for sustained happiness and fulfillment.

• The concept of passive income is often misunderstood; true passive income is rare and usually requires initial sacrifice.
• Financial success involves either sacrificing more or wanting less, with passive income not being a straightforward solution.

"There's nothing passive about it. It is a constant chain of broken toilets and leaky roofs and tenants who don't pay you on time and there's nothing passive."

• Real estate investments, often seen as passive income, require active management and involvement.

"Sacrifice more or want less. Those are your two choices."

• Financial success comes down to either working harder or being content with less, without relying on elusive passive income streams.

• A deep understanding of macroeconomics is not necessary for personal financial success; basic financial discipline and emotional control are more critical.
• Overconfidence in financial knowledge can lead to risky behaviors that undermine financial stability.

"You don't need to know how this works. Just in the same way that in order to be healthy, you don't need a PhD in biology."

• Basic financial principles and emotional discipline are sufficient for achieving financial well-being without extensive economic knowledge.

• Index funds are a common investment choice for both novices and seasoned investors, emphasizing the importance of patience and long-term growth.
• The notion of "boring" investments, like index funds, contrasts with riskier ventures such as cryptocurrency and forex trading.
• The optimal level of intelligence for investing involves understanding the basics without being bored by them, avoiding the temptation to overcomplicate strategies.

"I think you'll see that in investing that like the absolute lay person will invest in index funds and the extremely experienced Wall Street veteran will invest in index funds as well."

• Index funds are favored by both beginners and experts, highlighting their reliability and effectiveness.

"Ultimately, the book, if there was one overarching lesson it taught me was that like patience and uh more boring investing is is the way to get to build my wealth over the long term."

• The key lesson from "The Psychology of Money" is that long-term patience and simple investment strategies are effective for wealth building.

• Economic growth over time is evident, but individual perceptions of wealth vary due to personal circumstances and rising expectations.
• Wage growth statistics may not reflect individual experiences, leading to dissatisfaction despite statistical improvement.
• Wealth inequality is a rising concern, with the rich getting richer while the poor remain stagnant, leading to social tensions.

"The average median family would probably disagree with that statement even if it is true statistically for several reasons."

• Individual experiences differ from statistical averages, affecting perceptions of economic well-being.

"The rich are getting richer. The poor I think are treading water by and large."

• While wealth increases for the rich, the poor are largely maintaining their status, contributing to perceived inequality.

• Social media amplifies existing divisions by making extreme views more visible and accessible.
• Dehumanization through media leads to increased polarization and societal tension.
• Personal interactions often reveal common ground and reduce hostility, unlike online engagements.

"Social media makes it a hundred times worse than it's ever been."

• Social media exacerbates societal divisions by amplifying extreme perspectives.

"Social media has turned all of life into road rage."

• The anonymity and detachment of social media fuel aggressive interactions similar to road rage.

• Immigration is a contentious issue, often linked to economic concerns and cultural identity.
• Population decline without immigration negatively impacts GDP, highlighting the economic necessity of immigration.
• Cultural shifts and demographic changes contribute to social unrest and political debates.

"Unless you have immigration in the western world you have population decline and if you have and population decline sucks because you have a hit on GDP."

• Immigration is essential for maintaining economic growth in the face of declining birth rates.

• Historical cycles suggest that periods of extreme division can lead to eventual stability and improvement.
• The current political climate may represent a low point from which future generations can grow and improve.
• Social media's influence on division may be countered by future generations' awareness and adaptability.

"My optimistic my hope it's not even a forecast it's a hope is that 15 or 20 years from now we look back at this era as when things bottomed politically from which we grew out of."

• There is hope that the current political division will lead to future stability and growth.

"It's the older generation. It's the boomers today on social media who believe everything that they see."

• Younger generations may become more discerning of social media's influence, potentially reducing its divisive impact.

• Financial decisions should be reasonable rather than purely rational, accommodating personal circumstances and emotions.
• Money is a tool for enhancing life quality, and spending should align with personal values and happiness.
• Regret minimization is a guiding principle for life decisions, focusing on reducing future regrets rather than avoiding risks.

"As long as your financial decisions are merely reasonable, that's good."

• Financial decisions should be reasonable and aligned with personal goals, not strictly rational.

"The overarching goal in life. If you have like what is the base of the pyramid for how to live a good life, you want to have as few regrets as possible."

• Minimizing regrets is a fundamental goal, guiding decisions toward a fulfilling life.

• Trying new things prevents life from becoming monotonous and enhances personal growth.
• Routine can lead to a perception of time speeding up, while novelty keeps life engaging and memorable.
• Personal preferences in spending and activities vary, and discovering them requires experimentation.

"As we age we like routine more but intuitively everyone would say that routine makes them boring."

• Routine can dull life over time, while new experiences maintain interest and excitement.

"You have to try a million different kinds of spending before you're like, 'Oh, I like this. I don't like that.'"

• Discovering personal preferences requires experimentation with various experiences and spending habits.

• The speaker reflects on the societal pressure to travel and the personal realization that they do not enjoy it as much as others or as much as they used to.
• Emphasizes the importance of self-awareness and understanding personal preferences rather than conforming to societal norms.

"The most enjoyable part of the trip was coming home. And we were like, can we just admit that maybe we shouldn't be doing this as much as we do."

• This quote highlights the realization that personal preferences can differ from societal expectations, and it's important to acknowledge and act on them.

• Discusses the importance of understanding one's own desires and not blindly following others' lifestyles.
• Highlights the dangers of comparing oneself to others and the importance of finding personal happiness.

"A lot of what throws people off with money is chasing a lifestyle that is right for somebody else but not right for them."

• This emphasizes the need for self-awareness and personal authenticity in financial and lifestyle decisions.

• Explores the ongoing debate about work-life balance and how different people have different needs and definitions of happiness.
• Critiques the idea that there is a one-size-fits-all approach to work and life satisfaction.

"It's immature for people to say, I like this thing and therefore you should too."

• This quote underscores the individuality of preferences and the immaturity of expecting others to conform to one's own lifestyle choices.

• Discusses the tendency to perceive others' lives as better than they are due to the lack of visibility of their struggles.
• Encourages understanding that everyone has unseen challenges and complexities in their lives.

"It's very easy to look at other people's lives and have a sense of like, oh, well, theirs is better than mine because all you can see is what they are advertising."

• Highlights the importance of not comparing oneself to others based on incomplete information.

• Differentiates between happiness and contentment, suggesting that constant pursuit of happiness can lead to discontent.
• Suggests that true satisfaction comes from appreciating current circumstances and achievements.

"You're always trying to chase the next thing and I'm not sure why."

• This reflects the ongoing struggle between ambition and contentment and the challenge of finding a balance.

• Examines the limited role money plays in achieving happiness and the importance of relationships and personal fulfillment.
• References research indicating that people often regret not spending more time with loved ones rather than not earning more money.

"Not a single person looking back at their life said, 'I wish I made more money.'"

• This quote highlights the realization that money is not the primary source of life satisfaction.

• Discusses how unmet expectations can lead to dissatisfaction and how managing expectations can increase happiness.
• Encourages gratitude and appreciation for current circumstances as a path to contentment.

"Happiness is when your expectations of how your life is supposed to be going are met."

• This emphasizes the role of expectations in determining happiness and the importance of aligning them with reality.

• The book "The Art of Spending Money" is discussed, which focuses on the relationship between spending and happiness.
• The narrative suggests that happiness is not solely derived from wealth but from how money is used to enhance life experiences.

"It's a book about spending, but it's also more broadly a book about happiness and regret."

• This quote encapsulates the book's theme of using money as a tool for achieving happiness and avoiding regret.