8 Ways We *Think* About Money

DANO WEIR: Hey guys, do you want to see me make Daren's skin crawl? Watch this. Ready?

DANO WEIR: Mom, no. Mom, my phone was slowing down, so I had to get the new phone. It was okay though. Mom, it's fine. I put it on my credit card and I got points for it. It's not a big deal. I have an old 401k I never rolled over and I can just take a loan against that 401k and then pay off the credit card.

DANO WEIR: Mom, I bought some Mudang coin. And when it goes up, I will pay back the 401k. And then the other half I'll give to you to get that annuity. It's fine. You don't even have to pay me back for a while.

DAREN BLONSKI CFP®: That's like everything you shouldn't do in one paragraph. Well done, Dan. Well done.

DANO WEIR: Financial confidence for your pocket.

DAREN BLONSKI CFP®: Money is really just energy.

DANO WEIR: If you're checking out, it's all money.

DANO WEIR: Hey, welcome inside the Sonoma Wealth Conference Room on the Sonoma Square. My name is Dan O'Weir. I'm the Marketing Director for Sonoma Wealth Advisors. I'm also a podcast host, and I'm joined by our Managing Principal, Daren Blonski, CFP AIF.

DANO WEIR: And today we are talking about the ways in which we think about money here at Sonoma Wealth. Because one thing is very different. I think about Sonoma Wealth is one of our founders is a psychology major.

DAREN BLONSKI CFP®: That's true. I actually am. And people ask me like, how did you end up doing money, but in psychology? And I said, well, the good news and the bad news for you is most of it's psychology.

DANO WEIR: And that's something that's been, I started here as a client before I worked here and it was immediately refreshing and different in my experience with Sonoma Wealth is that it's not just about. Where your money is placed and how it's invested, but it's the way in which you think about the entire process.

DANO WEIR: And when you're one of our clients, which you can be, learnmoreatsonowalwealth.com, when you're one of our clients or when you're in our orbit, you sort of soak it up through osmosis. But if you're just meeting us for the first time today, I wanted to do an episode to try to collect a few of those thoughts.

DANO WEIR: So we have eight ways that we think about money. And I'll start with... Maybe the most important. These aren't necessarily a ranked order, but I'll start with one that's very important. Telling your money where to go. Daren, I can't do that. Everybody's telling me what to do with my money. I just have to do what they say, right?

DAREN BLONSKI CFP®: Yeah, it's funny because there's lots of internet sites out there and websites that have...

DAREN BLONSKI CFP®: I'm trying to say, how do I say this without saying something that's proprietary? One-click buy. I don't know if that's a trademarked phrase at all. But the websites and everything in modern day economy is designed to create velocity of money in our wallet. So what do I do? Reduce friction. Reduce friction.

DAREN BLONSKI CFP®: Make it easy to buy. One click. Two clicks. Just look at your retina. Put your palm on the palm reader and you can spend money. And so there's this concept in investing called money velocity, right? And so money velocity is simply measured by how fast money comes in your accounts and out of your accounts.

DAREN BLONSKI CFP®: And one of the tricks to becoming wealthy is learning to create a higher inflow than outflow. It's really not rocket science, but a lot of people get it wrong. And so teaching and creating systems to slow the velocity of money down. Part of that is telling your money where to go because you're getting control of the velocity of money.

DAREN BLONSKI CFP®: If you can slow the velocity down, then you can build up over time. More money and that's how you become wealthy. And so lots of entrepreneurs, et cetera, the reason they become wealthy is because they found a way to increase the velocity of inflow, even when they're not working.

DANO WEIR: And that's such a key concept. I mean, put simply, and you've heard this a million times, it's an old adage, spend less than you make. That's what you're saying, spend less than you make.

DANO WEIR: But specifically with velocity, if you keep that in mind, You'll see someone, maybe they'll get a new job, maybe they'll be really successful, maybe you had a sports bet that hit and you finally did that big thing and here comes all the money and all of a sudden it's like, great, here comes all the spending.

DANO WEIR: And it's like now you really haven't moved the needle at all when it comes to your wealth building. And what you're advocating for is saying, let's slow it down, let's put systems in place and I'm in charge of what's happening here. I'm not just a pawn in what has happened to me.

DAREN BLONSKI CFP®: Yeah, we have this concept that often we run into people who are very wealthy and they look wealthy because they're driving the Lamborghini or they're staying at really Fancy hotels and their jewelry is beautiful, whatever, they use to demonstrate their wealth.

DAREN BLONSKI CFP®: A huge, huge portion of those people are just broke at a higher level. They just have more money coming in and more money going out. Most of these social media influencers you see on whatever social media and they try to look rich, they're not rich. They're the money flowing in and out so fast. Right.

DAREN BLONSKI CFP®: And so the problem is when I say save more than you spend, that's not dealing with the root. The root issue is velocity. And the issue is that that person hasn't learned to control their money and tell it where to go and slowed the velocity. Then you will spend less than you make.

DANO WEIR: Yeah. And I think that's the key word there, control. Stepping into a role of control with yourself and with your money and saying, I'm going to make decisions. Decisions aren't going to happen to me. There are things that maybe are foist upon you. There are things that happen in life we all have to deal with, but.

DANO WEIR: At the end of the day, even if it's something you don't like, or even if something you feel quote forced to do, you're still deciding, no, I'm going to allow that to happen, right? It's, it's that, it's that level of presence. I think that is just a little shift that I think can help maybe get you out from under the thumb feeling.

DAREN BLONSKI CFP®: Well, and the marketeers, as you call them of the economy, they learn to teach us to the, the, they've developed systems and processes to move our money fast. And so now more than any other period in history, you have to be on guard not to spend money. I mean, think about it. My dad used to write out his checks every month. And just the religious process of writing the checks out every month.

DANO WEIR: You mean balancing the checkbook?

DAREN BLONSKI CFP®: Balancing the checkbook, for those who don't know what that means, is actually when you try to make sure what's going out equals what's in the bank account.

DAREN BLONSKI CFP®: But if you balance your checkbook, and there was like a religious thing he had to it, and he was a really good saver. And I've thought a lot about that because I'm like... I'm like, dad, I don't balance my checkbook anymore. Like, you know, you don't have to waste an hour a month doing that. Right.

DAREN BLONSKI CFP®: And he's like, no, I do this because it's important. And he would balance it all out. But what that was doing for him was slowing his velocity. Right. And watching each of those dollars go out of his bank account, he was able to control that. Nowadays, all our phones, everything's just one click one.

DAREN BLONSKI CFP®: And it just, it's gone. And so it's very, very difficult to, to fight back. The marketeers and control how you spend money. And so one way we like to think about it is get control of your money, slow the velocity of your money. That's going to change your long-term wealth trajectory.

DANO WEIR: Talking about eight things, eight ways that we at Sonoma Wealth think about money onto the next one, which is understanding trade-offs.

DANO WEIR: And this one was a really hard thing for me because especially as you're coming into your own, you know, you're making your way into your twenties, maybe you get your first job, you kind of want it all. And You know, there are a few people in the world who can have it all. Congratulations. We wish you well.

DANO WEIR: Not most people can't have it all. And so what are the trade-offs and what are, when it comes to your finances, how have you helped coach people to understand what trade-offs are all about?

DAREN BLONSKI CFP®: You know, right before we were filming this, I was talking to a client and I said, if you're not careful, wealth is a curse.

DAREN BLONSKI CFP®: And it really is that. Some of the most miserable. People I know are people who just inherited or won a bunch of money and they lose that drive of self-actualization. We all think like, heck, if I won a million bucks, I'd be great. I'm happy. It's not true, right? You just get broke at a higher level and then your relationships change around money with everyone in your life.

DAREN BLONSKI CFP®: And it can really be a curse. So you've got to be really thoughtful about it in order to not destroy your life because it will destroy your life and your family's life. And how that relates to this understanding tradeoffs is… Money itself has a trade-off, right? And having money is a trade-off.

DAREN BLONSKI CFP®: And what we try to do is help clients think about money in terms of not good and bad, but in terms of trade-offs.

DAREN BLONSKI CFP®: I could do this, and then this is the impact. I could do that, and this is the impact. And that's when it comes to investments. Like, we look at risk for reward, right? If you're not willing to take the risk, you can't assume the reward that will come with it. If you want more volatility in your portfolio, then you should expect more return over time.

DAREN BLONSKI CFP®: If you want less volatility, you have to be okay with the trade-off of less potential return. And if we can understand in trade-offs, and I think we get out of that good, if we can understand money in terms of trade-offs, we get out of that thinking of things are bad or good, which then often leads us to make a judgmental bad decision.

DANO WEIR: And I think it's such an important concept to wrap your brain around because On this podcast, our podcast, It's All Money, one of our most successful episodes was one of our first episodes, which was an episode I did with Chris, which at the time, money markets and CDs were paying 5%. As we record this today in January, 2024, no longer the case.

DANO WEIR: But the deadline said, should I put everything in a 5% money market? And it got a ton of views. And they didn't tell me specifically, the viewers, but I have to think that people are drawn to those sure things, right? Because it seems like, oh, I want to make the right choice and I always make right choices and it's all good and I keep doing good things and good things always happen.

DANO WEIR: But in my experience, especially with money, it's more like what you're describing, trade-offs. Oh, I want to make a bunch of money with this investment. Okay, then you have to take a... A bunch of risk with this investment. Oh, I don't want to lose this investment. Okay. Then you can't expect a huge return on it out of nowhere.

DANO WEIR: And it's understanding those toss-ups that for me helped kind of wrap my brain around it. Because if there was a massive return for no risk, then everyone would do that. You're not special. Everyone would do that. That's right. There has to be trade-offs. Otherwise, this wouldn't work. The whole system wouldn't work. That's right.

DAREN BLONSKI CFP®: I love the phrase that the only thing certain is uncertainty. And you have to accept that it's all uncertain. And anyone who, our brains, if you think about it from a psychological perspective, cling to... Uh... Change and they cling to minimizing change in our life. We all like security the way things are. We will even endure great pain just not to create change in our lives.

DAREN BLONSKI CFP®: And when you think about what the mind is trying to do, it's trying to find certainty. And when it comes to money, it's trying to find the certain thing. And anytime you see a marketeer selling you some type of financial product wrapped in certainty. You have to know you're paying for that certainty. You're paying for that lack of risk in there.

DANO WEIR: Or they're lying.

DAREN BLONSKI CFP®: Or they're lying, correct. But we have a rule in our business, no G words, which is guaranteed for those who don't. Correct. There's no guarantee, nothing is certain. And it's hard, I think, for clients to accept that. They're like, wait, I'm paying you to tell me things are uncertain? I want you to make things certain. No, I operate in the world of probabilities. I can isolate probabilities.

DAREN BLONSKI CFP®: And help design plans to get you to point A to point B with the highest probable outcome. But there is no guarantee that that happens. There's no guarantee we got tomorrow. We just don't know, right? But we can isolate variables. And that's our job is to operate in probabilities, isolate variables for clients, and help them get from point A to point B. And understanding the trade-offs along the way, that's what's critical.

DANO WEIR: What is paying yourself first? That's the next bullet point here, number three.

DAREN BLONSKI CFP®: So this is related to the first bullet point that we talked about, which was to slow the velocity of money. But what a lot of people do, it's hand to mouth, hand to mouth, hand to mouth their whole life. Then their body breaks and they can't work. Now what? There's no hand to give the mouth. So what do you have to do? Well, you have to save money, right?

DAREN BLONSKI CFP®: Some people like to bet on social security. People of our age should not be doing that right now. I think it's supposed to run out like 2030 or something like that. Not going to be around for me.

DAREN BLONSKI CFP®: There's lots of rules of thumb about how much money you need to save in order to retire. And, someone say it's somewhere around 15% of everything you earn in your lifetime over your lifetime. You need to be saving to retire at the, the livelihood and standard of living that you're living at when you retire, for.

DAREN BLONSKI CFP®: Investors, it's important to be paying yourself first. So not pay your bills first, not hand to mouth, but take a little bit of money from the hand and put it over here and then feed yourself. And then later on, you can pull that money to feed yourself.

DANO WEIR: Because you can always find more bills, right? You can always, you know, you got it.

DAREN BLONSKI CFP®: There's always something else to buy.

DANO WEIR: There's always something else to buy. There's always else, another upgrade to make. There's always, always, always. And it can be extremely difficult. And again, we would all love to have the money that falls from the sky and not have to worry about it. But there are some of us that have to put the nose to the grindstone.

DANO WEIR: And this is a process in which if you're looking to retire, if you're looking to achieve that goal, it is possible. But it is about, you know, making hard decisions. And it is about that, that strength to be able to set it aside for yourself and be able to say, you know, I don't need that or If I want that, I want to work harder so that I can still pay myself.

DANO WEIR: It's a little payment to yourself in the future, I guess you could say.

DAREN BLONSKI CFP®: Yeah, and that's the trade-off, right? Give up a little bit of something now so you can have something in the future. It's a hard negotiation for anybody, right? But if you tend to do that, you'll be happier. A little caveat in working with people over the years I've noticed is that people who were good savers can't spend it.

DAREN BLONSKI CFP®: Even when they're on their deathbed. I can't tell you the number of times I've talked with clients when they're on their deathbed, they're approaching death, something's not going well for them, their bank account is full, and there's lots of money there, how we'll say, hey, go spend your money.

DAREN BLONSKI CFP®: Because whoever you give your money to, they're going to spend it statistically within 16 months. But it's so interesting to watch the psychology of that person of like, I can't spend that money, I've saved it my whole life. We literally have to give them permission.

DAREN BLONSKI CFP®: It's okay go spend your money and i'll never forget frank and frank was a client and frank was was given nine months to live and he had a brain tumor and frank had a lot of money saved up and i said frank you got to spend your money man like there's no point leaving this for everybody because they're going to spend it for you on their trucks and their cars he's like you know Darren i've always wanted a Raptor truck like good go buy one so he pulls up my office one day and this beautiful Raptor truck, this old guy driving a Raptor.

DAREN BLONSKI CFP®: It was hilarious, but he's such a good man. But so the point is, is like there does come a point in your life too, where you've got to switch and start spending that money. But the good savers that always paid themselves first, they struggle to spend it at the end. So have a plan in place.

DAREN BLONSKI CFP®: And so the other thing I tell clients all the time is take that money and go create memories. Like the things we have go to the dump. But the memories we have, we take forever. So spend your money on creating memories with people you love. Like that's the most important thing you can do with your money. Grandma, take all your kids on vacation. They'll never forget it.

DANO WEIR: Do the thing.

DAREN BLONSKI CFP®: Yeah.

DANO WEIR: Do that thing. Yeah. Because it's very easy to wake up and clean the house and do the laundry. That's right. I say it's very easy, but I mean, to do your routine. Yeah. It's very hard to say no for this is. We saw it in the movie. Somehow they made it happen in the movie. We're going to do it in real life too. We can do this. Let's get on the group thread. Let's do this. Texas, set this up.

DANO WEIR: I love this phrase because the word archaic in and of itself is archaic. And I love that.

DANO WEIR: Archaic mental models. And this is something I'm truly passionate about because speaking to what you're just talking about, both saving and spending. Archaic mental models is almost the same thing, which is clinging to old ideas because this is the way we've always done it.

DANO WEIR: I've always worked with X. My family is the type of family that always buys Y. We have always done it this way. I don't know why. I haven't looked at it recently.

DANO WEIR: Those types of ideas, archaic mental models can be holding you back.

DAREN BLONSKI CFP®: You know, and just, it feels like it's every other personal success book uses this analogy. So you'll have to excuse me if you've heard it before. So there was a mom, a daughter, and then the granddaughter. We're all in a room and they were cooking in the kitchen or whatever for Thanksgiving. And the granddaughter starts cutting the ham in a square.

DAREN BLONSKI CFP®: And then she gives the square ham to the grandma who then puts it in the oven. And she looks at the square ham and she goes, Grandma, Mom, why don't we cut the ham in a square? And they look at her and they go, Oh, that's just because the old oven, we had to cut it in a square so it should fit. Could fit that way. And this is so true about how often we do all this investing in our lives, in our financial lives.

DAREN BLONSKI CFP®: We learn these old mental models, these ways of doing things. They're absolutely wrong, right? That's why I love that book, Rich Dad, Poor Dad, right? There's parts about it I don't like, but generally I like it. Like there's right ways to learn, wrong ways to learn. There's bad habits that we all get and good habits that we all get. And we can be grateful for those lessons from wherever we got them.

DAREN BLONSKI CFP®: But at the end of the day, we always have to be adjusting our mental models. One, two, that we commonly see less so in the last five years, but clients would come in and they'd have these stock certificates and they'd be like, oh, I got my Coca-Cola stock certificates. And my late husband, he said never to sell Coca-Cola. And done. Done. Okay.

DANO WEIR: Don't have to think about that.

DAREN BLONSKI CFP®: Ever again and it's in paper form and i'm like look let's make this online in case there's a fire and that certificate burns and you don't have it anymore or the company's not accepting them anymore or whatever that's not not happening that's that won't generally happen something was weird with it though where it was like it's a pain to get them processed it is it's not it's not liquid very difficult who's worked with me for 12 years she will When she gets a stock certificate now, she like rolls her eyes.

DAREN BLONSKI CFP®: You have to get this thing called a medallion stamp guarantee to process it. It is the person who says it is. It's really annoying. But yeah, it's not a good idea to hold a stock certificate. We had one client come in once and she's like, my dad left me this stock certificate.

DAREN BLONSKI CFP®: Hands it over and it's like 500 000 shares of like i don't know it was a ton of shares of this real estate company in New York and i looked it up like wow this could be worth a ton of money and i looked it up and at the time this company went bankrupt that stock certificate was worth half a million dollars and the company went bankrupt and i'm like you can start the barbecue this weekend with it like it so like what happens is In this case, dad had bought the stock certificate.

DAREN BLONSKI CFP®: It sat in his closet for umpteen hundred years. And now she had it and she was trying to do something with it. But the old mental model was get the stock certificate, never sell it. Don't do anything.

DANO WEIR: Hide it in the dresser. That's right. Yeah.

DAREN BLONSKI CFP®: Which doesn't make sense anymore with the technology. And you need to always evaluate your positions and decide if they make sense to continue to own, even if grandpa told you don't ever sell Coca-Cola.

DANO WEIR: And key on that last part, decide if it makes sense to own. So the flip side of this is don't presume that everything that you inherited or everything that's old stinks and we need to burn it all the ground. We have to do it the opposite. You don't necessarily have to do it the opposite, but just look at it.

DANO WEIR: Yeah. Look at it again. Fresh set of eyes. Talk to a professional, whoever, whatever it is, whether it's how you operate, what you own, how you know, just look at it again. Say, am I good with this? And see if there's anything new you want to add.

DANO WEIR: If you want to make a change, make a change. If you don't, that's fine. But at least look at it. Yeah. We're talking about eight ways that we think about money here at Sonoma Wealth Advisors. You can learn more about us, by the way, at SonomaWealth. Com and take our free wealth analysis.

DANO WEIR: This one is one that I'm particularly passionate about as well. And I know you have a history with it. Debt is not an asset class.

DAREN BLONSKI CFP®: Yeah, I was fortunate early on. So when I was 14, I had my first job and I started mowing lawns and pulling weeds and all that jazz. And so I'd turn on this radio station. I think it was KSRO 810 AM. KGO. KGO 810 AM.

DANO WEIR: KSRO is 1350.

DAREN BLONSKI CFP®: Duh. Okay. And I heard this guy named Dave Ramsey, right? And Dave Ramsey would be like, no, dad, no, dad. And preach it over and over. And I just heard this as a kid over and over. And then my dad was a really great example of. Not spending and putting stuff on debt. Like he had an aversion to spending money. And I learned through that, the importance of not using debt on sinking assets.

DAREN BLONSKI CFP®: So we have to be careful here because debt can be a really powerful tool to leverage up and to be successful. It's not, you shouldn't never leverage. There are situations where levering can make sense, but if you use debt to buy a sinking asset, what is a sinking asset? And sinking asset is statistically will be worth less.

DAREN BLONSKI CFP®: Tomorrow than it is today like a car a house could be considered an investment it's not necessarily a sinking asset unless you just trash the thing baseball cards could be worth more but could also be considered a sinking asset so it's it's it's a little bit gray but generally debt isn't an asset class so claiming i oh yeah i just have 30 000 my credit card and that's how i live like you need to adjust but i have 100 000 in the bank because it makes you feel good that's right yeah all right yeah.

DANO WEIR: Get rid of one.

DAREN BLONSKI CFP®: Yeah.

DANO WEIR: Well, and people already only have 70. Get rid of it.

DAREN BLONSKI CFP®: People make the mistake thinking that you, that, oh, if I have 30,000 credit card debt and 100,000 in the bank, well, at least I got my 100,000. But meanwhile, they're paying 29% on that 30,000.

DANO WEIR: You don't have 100,000. Right. If you owe 30 and you have 100, unless you're planning on going, like... I don't know, trying to go through bankruptcy court or something, which wouldn't work with 100.

DAREN BLONSKI CFP®: Yeah.

DANO WEIR: You don't have it. That's the thing is that it's not, it's not, the number is literally a negative on your balance sheet. That's right. And if, you know, maybe it helps your credit score, which only helps your ability to just borrow more and have that negative become a bigger number. And so there are different schools of thought on this. I do want to say this. There is the crowd out there that are borrowing people.

DANO WEIR: And as you said, in some scenarios, it can make sense. But certainly, racking up debt and then rolling that debt not only into a sinking asset, but maybe a potentially risky asset can really cause problems. So you're not borrowing 100 grand on the house to put it on a sports bet. Or something that is potentially going to blow you up, which is how some people think.

DAREN BLONSKI CFP®: Yeah. So the sixth one we were talking about, Dan, is getting organized, right? And the power of getting organized.

DAREN BLONSKI CFP®: I can't tell you how often I have run across clients over the years. When they come to us, they've got an IRA here and a trust here and this over here and that over here. And one of the first questions I ask them when they bring those statements into us to have us give them a second opinion is I said, what are you paying in fees?

DANO WEIR: No clue.

DAREN BLONSKI CFP®: No clue. And what they think they're paying, they're not. Because there's zero way you can be confident. That those fees are actually what you're paying in a brokered world, that the majority of investment advisors are brokers and where they literally design the systems to hide it from the consumer.

DAREN BLONSKI CFP®: So getting organized, knowing what you own, where you own it, how you own it, what you're paying, what your fees are, what your overall strategy is in allocation. Because if I ask fees and the next question I ask is, what's your allocation stocks to bond? I don't know what you're talking about.

DAREN BLONSKI CFP®: And there's no way they can own it. And do you have any overlapping stocks? I don't know. And the only way you can know those things is if you're organized. So what we do is we help get people organized first. And that's one of the most important things we can do with our finances is get organized.

DAREN BLONSKI CFP®: And staying organized, it's an actual duty and a job. So a lot of people say, hey, I can manage my own money. They absolutely can. But it's a choice because it's not something you, it's something you have to attend to. It doesn't attend to itself.

DANO WEIR: And we try to, on this show and at the firm, try to provide information and education for people all across the spectrum. High net worth, somebody just getting started. If you're just getting started, this is the simplest one you can do.

DANO WEIR: Know where it all is, even if it's not a large number.

DANO WEIR: It sounds so dumb, but my checking account is here.

DANO WEIR: My Roth is here. My 401k from work is here.

DANO WEIR: I know the balance of this, this, and this off the top of my head because I've checked it in the last week. I know all the passwords. I have the right phone number on there. This is seeming like total baseline. And yet, as you start to multiply and get more and more and more and more, you start to miss pieces of that puzzle. And then it ends up causing problems.

DANO WEIR: And then you forget about, oh, that's that 401k that's over there. And then this one's over there. And then I didn't roll that. I don't have the time to keep it super, super organized. And if you start organized, you can stay organized. And if you're unorganized, Start working with a professional. Start with someone in your family. Somebody say, help me figure this out because it can pay benefits to your wealth building.

DAREN BLONSKI CFP®: I don't know. You've got kids, Dan. So you know the state of a toy room at some times, right?

DANO WEIR: Don't. You don't want to see mine.

DAREN BLONSKI CFP®: You will.

DANO WEIR: Our whole downstairs. Our whole downstairs. People come to our house.

DAREN BLONSKI CFP®: It's a toy room? It's a toy room. Oh, yeah.

DANO WEIR: It's a toy room. It's organized, but it's a toy room.

DAREN BLONSKI CFP®: So you walk into the toy room and you're like, I got to clean up this mess. And it is absolutely nauseating. Like there's just crap everywhere. And kids are amazing. I love my kids to death. But they find the way to make the biggest messes out of nothing. Like it's how they can just take a box and completely strew it across the room, blow it up, put this there and that there.

DANO WEIR: And it's almost beautiful to see you can like reverse engineer. Like the crime scene of like, okay, that's where this piece of this toy set crossed over into this different toy set. And then that got on top of it.

DAREN BLONSKI CFP®: It was like this imaginary game had this part. And then, you know, this character became part of this imaginary game. Anyway, I love it. But when I'm going to clean it up, I have to play a mental game with myself because it's too overwhelming. To look at all together. It's like, where do I even start with this method? And I just find a corner of the room and say, I'm just going to do this corner.

DAREN BLONSKI CFP®: And then I'm going to do this corner and this corner. And that's what you have to do with finances too. What's one thing you can do today to clean up your room when it comes to finances? Just one thing. Maybe it's get that old IRA moved over or old IRA moved to the new IRA. Get the 401k into the IRA. Maybe it's just check your balances in your bank that day.

DAREN BLONSKI CFP®: Whatever it is, just do one thing a day and start in the corner and work from there. Because what we know psychologically is that momentum leads to momentum. And the most important thing you can do, whether it's saving money, getting organized, is just start. There's no perfect time. A dollar today, $2 tomorrow. $3 the day after, that adds up over time.

DANO WEIR: I'm so glad you brought up kids too. Just one more thing on this point, which is that...

DANO WEIR: As you start to practice some of these habits, as you maybe start to either start with your wealth building journey, start cleaning things up, your kids are going to start noticing. And these are things you can pass along to your kids.

DANO WEIR: And specifically with this organization point, my kids get money for Christmas. They get money for a birthday, a little bit of cash. And it was strewn all over the place. And I got them both wallets. And I said, this is my mistake. I should have gotten you wallets.

DANO WEIR: And we're going to take all this cash. We're going to arrange it all in the same way. And we're going to put it in numerical order. And you're going to know how much is in here. And this has nothing to do with actually arranging your money because it doesn't particularly matter. It has everything to do with the idea of I'm organized with my money no matter the value, no matter the total.

DANO WEIR: And starting that at an early age.

DAREN BLONSKI CFP®: Yeah, I think starting at an early age is so important.

DAREN BLONSKI CFP®: One of the things I do with my kids is when they get some money, I say, okay, what stock are you going to buy to them? And they'll be like, oh, I'm going to buy this stock. And I was so proud I had a dad moment last week because my daughter was babysitting some cats, and she got like 80 bucks for babysitting the cats.

DAREN BLONSKI CFP®: Wow. That's pretty good, man. And she's like, dad, I'm not going to spend this money. I want to invest it so I make more. And I was like. Whoa, check you out. And like, that's what you want. Right. And you get there and like, she's thinking about that and like, I don't want to spend this because I can make more money with it.

DAREN BLONSKI CFP®: And what she's doing and she's done a really good job of our next point, which is the emotional intelligence for needs versus wants, realizing that she doesn't need to take that money and spend it. Just because she has a want for something, right? But her want is to sacrifice some things now so that she can have more later.

DAREN BLONSKI CFP®: And having that emotional intelligence between needs and wants is so critical. And developing that muscle, because it is a muscle at an early age, is critical. How do you help them understand what a need is and what a want is? And delineating that line because it's super gray.

DANO WEIR: Emotional intelligence, very difficult. It might be something you need to invest in.

DANO WEIR: You know, it could be something you could learn in talk therapy, right? It could be something that you learn, in getting to know yourself, whether it's meditation or exercise or whatever it is.

DANO WEIR: When you can understand why you're feeling a certain way or why something makes you feel a certain way, it can change the hold that it has on you and it can change your relationship with it. And, and.

DANO WEIR: That is such a key component when it comes to your money, because the whole point of this conversation is about stepping into the power role with your money, regardless of where you're at on the spectrum. If you're always beholden to, Oh, I'm a 49Ers fan. I have to buy these tickets. Right. And you just feel like cursed to buy these tickets and they just keep missing the playoffs. No.

DANO WEIR: Yeah. Whatever it is, but we all.

DAREN BLONSKI CFP®: We all point, Dan, you just have to accept failure.

DANO WEIR: But it could be anything, you know, everybody has that one thing. It's their Achilles heel. It's there, you know, that, that thing that they feel, you know, that is, they're going to give into every time.

DANO WEIR: If you can't have your emotional intelligence around it, then you're always going to lose to it. And then that, you know, just causes a cascade effect. So it can be maybe the most difficult, but it can, I think have some of the biggest emotional and, you know, maybe wealth dividends.

DAREN BLONSKI CFP®: It's like me and jelly bellies. So Fairfield, California milkshakes, I'm jelly bellies. You give me a bowl of jelly bellies. I will overeat that entire bowl of jelly bellies and learning what I've learned over time is I just don't buy jelly bellies because I can't control myself.

DAREN BLONSKI CFP®: There's something about the different tastes that just like, Oh, I want more of them. And so the what helps me in the needs versus wants area is you have to set up rails for yourself, right? Like these, and that's why like budgeting works, telling your money where to go works, but being really clear so that you don't put yourself in a situation to want a lot of things is really helpful, to figuring that out.

DAREN BLONSKI CFP®: The same is true with like a dieting, right? Like it's overwhelming to think that I'm going to go from where I am physically now to here. But if I just say, Hey, I don't know how I'm ever going to become a marathon runner, but I'm going to run a mile today.

DAREN BLONSKI CFP®: And it's the same thing with needs versus wants. Just make one money decision this week, today, where you can say, yeah, that's a want. It's not a need and don't buy it. And you develop that muscle over time. It's going to help you out financially over the years.

DANO WEIR: And if you can really flip it.

DANO WEIR: This is just a personal opinion. This is not based on data.

DANO WEIR: When you give in to a need, there's almost a guilt.

DAREN BLONSKI CFP®: A want. When you give in to a want.

DANO WEIR: There's a guilt. When you give in to a want, sorry, thank you. When you give in to a want, there's almost a guilt.

DANO WEIR: You know, like, ah, you know you shouldn't have done it, but I did it. And I guess there's like, it's almost like a burnout after versus if you really feel like you've got that muscle built up and you allowed this to happen. And it's within your means, then it just feels different and just feels ultimately more satisfying, I think.

DAREN BLONSKI CFP®: You know, it's funny.

DAREN BLONSKI CFP®: A little bit ago, I was just parking my car, and I parked next to this other car, and this other car was a Mercedes-Benz, and it was probably a, you know. Early 2000s Mercedes-Benz. And when this individual, and I don't know the guy who drives it, but I've seen him. And when he bought this car, you know, he bought this car and he was like, dude, I made it in life. Like this is my car. This is so cool.

DAREN BLONSKI CFP®: And now the thing would probably sell for less than 10,000 bucks, right? It's an older car. And I thought to myself, I wonder how often, cause I know who this real estate agent is and I'm pretty sure he's pretty successful. And I said to myself, I wonder how often he has a debate in his mind. Like this car works perfectly fine. It drives him from point A to point B. He probably works just here in Sonoma 99% of the time.

DAREN BLONSKI CFP®: He doesn't have to drive far to sell his real estate, etc. And how often does he debate in his mind, I deserve a better car. I should have a better car. But this car works perfectly fine, A to B. And I was just like playing this whole game in my head. Like, I wonder what the psychology of him thinking about that is. And then at what... Point do you say, I want the Ford Raptor?

DAREN BLONSKI CFP®: And is that on your deathbed? Or is it like, I deserve this? One thing I like to do is identify wants I want, and then I set up rewards with the wants.

DAREN BLONSKI CFP®: So I have a green thumb. I love doing plants. I always have since I was a little kid. And when we achieved a certain milestone to manage a billion dollars at this firm, my want for myself was a greenhouse. So I built this beautiful greenhouse and it's amazing. And I love it. It gives me joy.

DAREN BLONSKI CFP®: And I would generally say I'm a pretty frugal guy. But when we hit that Mark, I'm like, I want that want. So wants are meant to be rewards and needs are meant to just serve your day-to-day life. So for me, I say, okay, here's my want. When we hit that demarcation line, I'm buying that want.

DANO WEIR: And you grow tomatoes in there.

DAREN BLONSKI CFP®: I've got. Two types of carrots, two types of peas right now. I've got bok choy. I've got a whole garlic. I got it all, man. I grow all these stuff I love eating. That's awesome.

DANO WEIR: All right. Last one. And this is all you. This is the one I've only learned recently since I've worked here at the firm. What is Barbell thinking?

DAREN BLONSKI CFP®: It's actually probably one of the most common behavioral finance mistakes people make. And the way to think about it is really safe and really risky. And so you've got two different. And so you've got your really risky stuff and your really safe stuff.

DANO WEIR: And a thin line between.

DAREN BLONSKI CFP®: That's right, which means there's nothing there. So you have a Barbell. And we see this happen a lot where clients will be like, I've got my money in cash in the bank and put it all on NVIDIA.

DAREN BLONSKI CFP®: That's Barbell thinking.

DANO WEIR: Which has like, I think seven of the top 10 biggest market swings, single day swings ever, right? Well.

DAREN BLONSKI CFP®: Monday, so we're filming on, what's the date today? It is the 29th. Monday of this week, NVIDIA lost the single most market cap in history on one day.

DANO WEIR: Was it 450, 450 billion?

DAREN BLONSKI CFP®: I think it was 500 billion, but don't quote me on that. But I mean, just an insane amount of money in one day. And that tells you how much of a balloon. What's the date? It's the 29th today.

DANO WEIR: January 29th, 2025.

DAREN BLONSKI CFP®: That's right. So we are in a massive AI bubble right now. And there was some new data that came out called DeepSeek that then that data came out. And then all of a sudden, NVIDIA wasn't worth what it was worth, because actually, you don't need to do you don't need all the chips that NVIDIA says you do to do AI.

DAREN BLONSKI CFP®: So it just it could be a Sputnik moment, too, because it kind of said, well, maybe China has more going on with AI than the US. It's a freak out moment. Anyway, long story. We could do a whole episode on that one. But Barbell thinking is taking high risk with a chunk of money and then having no risk with the rest.

DAREN BLONSKI CFP®: Money and missing the entire middle of the risk curve that we have. So what we try to do is coach people to say, look, you need some no risk, some light risk, little risk, more risk, a lot of risk, and you have a well-diversified portfolio. In fact, the only way you really can tell behaviorally if you have a diversified portfolio, if you don't have something in your portfolio you hate, you're not diversified.

DAREN BLONSKI CFP®: And that's really hard for people to understand that like, I have to have something in my portfolio that hasn't been doing very good because when all that other stuff's doing good, that thing's not doing good. And when all those things aren't doing good. That thing will be doing good.

DANO WEIR: So what's some stuff that would be in the middle? So you're saying cash would be no risk. In prior episodes, we find cash actually has its own risk. Inflation risk and other things, opportunity risk. And then a single stock, single equity or crypto or something like that might be more high risk. What would be something in the middle?

DAREN BLONSKI CFP®: So like a dividend paying stock. You know, like a Johnson & Johnson, a Procter & Gamble, where these companies have been around forever. They're old as dirt. They pay a big dividend. That's going to be a less risky stock, or you could look at like a muni bond, for example, that's a, the debt on a city and take like a city like Irvine where there's tons of money.

DAREN BLONSKI CFP®: It's actually down on muni bonds cause it's a corporate city, but bad example. But like the chances of New York City going bankrupt are pretty low. So a muni bond for New York City versus like, don't hate me if you're in Vallejo, but like a muni bond in Vallejo, it's probably more risk on the muni bond side. Cause that town could go bankrupt.

DAREN BLONSKI CFP®: And in fact, Stockton went bankrupt in 2008, or a Puerto Rican bond, the Puerto Rico bonds went bankrupt. So depending on the tax base behind the bonds, there's more security in it. So you're buying stuff through the middle of that risk curve. And that can look in a lot of different ways. And that's where a financial professional comes in to help you.

DANO WEIR: So let's run through them again in reverse order. Barbell thinking, which is diversifying your investments. Emotional intelligence around needs and wants, being organized, debt is not an asset class, examining archaic mental models, paying yourself first, understanding trade-offs, and telling your money where to go are eight ways that we think about money here at Sonoma Wealth Advisors.

DANO WEIR: Perhaps this resonated with you. Perhaps this is your first time meeting us, or perhaps you've watched many episodes. You can learn a lot more about the many more ways that we think and work with money and work with you at SonomaWealth. Com.

DANO WEIR: We offer a free wealth analysis. And why is this important? Why does this matter? I mean, for someone who's starting at zero, right? As they listen to us to say these things, can people do these things for real?

DAREN BLONSKI CFP®: So there's two pieces of advice I would give you overall, and that is one, just start. It's never going to be the right time. Just start making incremental improvements. And then secondly, giving yourself grace. Like you're going to screw up. You're not going to do it right.

DAREN BLONSKI CFP®: You're not going to do it perfect. What's more important is the momentum of the trajectory and that you're moving in the right direction and how often you're working in these things. If you do that and stay consistent, you will come out on the other end and you will be successful with your money.

DANO WEIR: Sonomawallace.com. Thanks for checking out. It's all money.

DANO WEIR: This content was produced by Fermata Advisors, LLC, an SEC-registered investment advisor. DBA, Sonoma Wealth Advisors. The opinions expressed by Fermata Advisors, LLC on this show are their own. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice.

DANO WEIR: Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated are not guaranteed.

DANO WEIR: Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Viewers and listeners are encouraged to seek advice from a qualified tax advisor. Legal or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is non-indicative of future performance.