In this episode, Steve Fretzin and Rho Thomas discuss:
- The FIRE Movement.
- Managing the money you are bringing in and your lifestyle.
- Talk about the why, not just the what, when you’re trying to manage money with your partner.
- Gaining awareness around your spending to figure out how to get where you want to go.
- Budgeting is really important – how you spend your money determines how you will invest.
- Aligning your spending with what you really care about…and leaving a gap in which to build your wealth.
- Understanding what you’re spending and what you need to put away is vital for your financially independent future.
- Be compassionate with yourself for the decisions you’ve made in the past. You made the best decision that you could with the information you had.
“When you give every dollar something to do, then you don’t end up with money falling through the cracks.” — Rho Thomas
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Show notes by Podcastologist Chelsea Taylor-Sturkie
Audio production by Turnkey Podcast Productions. You’re the expert. Your podcast will prove it.
spending, financial independence, people, lawyers, money, investing, pay, income, mindset, thinking, personal finance, kinds, grow, listening, disagreements, successful law practice, life, person, important, check
Narrator, Rho Thomas, Steve Fretzin
Rho Thomas [00:00]
It’s about being really mindful of the way you’re spending what you care about aligning your spending with that, and making sure that you are leaving some margin there so that there is a gap between how much you’re bringing in and how much you’re spending out. And that gap is where your wealth is built.
You’re listening to be that lawyer, life changing strategies and resources for growing a successful law practice. Each episode, your host, author and lawyer, coach, Steve Fretzin, will take a deeper dive, helping you grow your law practice in less time, greater results. Now, here’s your host, Steve Fretzin.
Steve Fretzin [00:44]
Hey, everybody, welcome to be that lawyer. I hope you’re having a lovely day. I know I am. And part of that’s because I get to spend my day helping lawyers. Now that may sound strange to you, even as a lawyer, but it is true that I get tell lawyers what to do. And I’m not a judge. So that works out well. Anyway, listen, if you’ve been listening to this show for a while, or this is your first show, just to reiterate, you know, Fretzin is all about helping lawyers learn business development, best practices, whether you enter into one of our more formal programs, or you just read the books and watch the videos and listen to podcasts, lots of great ideas and ways to grow your book of business. And even more important to save what you make to invest what you make wisely. And to help with that. Today. I’ve got ro Thomas, who’s going to help explain how to live a better life through making smarter investments and decisions. And this is I think you’re the first person I’ve brought on the show row to, you know, to have this conversation, you know, would you mind giving a little background on yourself?
Rho Thomas [01:40]
Absolutely. And thank you for having me. And I’m honored to be the first person to talk about this topic. Yeah. So as you mentioned, my name is Raul Thomas. I am a lawyer and financial coach for lawyers. I host a podcast called wealthy ask where I teach lawyers how to regain control of their time, build wealth, and live the lives of freedom and choice they deserve. And the main topic that I love to teach lawyers about is financial independence. And like you said, it’s all about this, how we manage the money that we bring in, we’re saving, we’re investing, we’re making sure that we’re keeping our lifestyle in check and that kind of thing. So I am super excited to have this conversation.
Steve Fretzin [02:19]
I am as well. And you know, my job every day is to help lawyers live a better life, but mainly through driving up revenue driving up their salary driving up their bonus and how they get paid on originations. And I think I can’t speak for everyone, certainly, but I’m sure there’s a certain segment of the population that struggles with you know, hey, I’m making money, is it enough to get by or I’m making enough money is enough to pay for my kids college or to be able to retire at any kind of reasonable age. So I know that you practice and teach and work with people on something called financial independence. And you want to maybe talk a little bit more about what that is.
Rho Thomas [02:54]
Yes. So there is this movement, the financial independence movement, it’s actually called the Fire movement, for sure, and fires US financial independence retire early. I think the media picks up a lot on the retire early piece. And there are people who are retiring in their 40s and things like that. I like to focus on financial independence, which is the point at which you’re no longer dependent on a paycheck from work, you’ve got assets, whether that be investments, maybe you’ve got, you know, rental properties that you’re bringing in some income from or other passive streams of income. But the idea is that those other streams of income are enough to cover your living expenses. So that work is essentially optional for you.
Steve Fretzin [03:40]
Yeah, well, where do I sign? You know, I work is optional for me every day, but I choose to do it, because if you’d love what you do, right, that makes it super easy. But thankfully, alright, so people are out there, they’re making their hours every month, and they’re bringing in X amount of money. And how are they investing? And you’re not giving any direct, you know, tips or anything, but generally speaking, how are they diversifying? How are they investing to help ensure that they can get to that point of financial independence?
Rho Thomas [04:10]
So on a pullback before we get to the point of investing, how are we managing the money that we’re bringing in what is our lifestyle, like, because there are a lot of people who are bringing in a lot of money, but also spending it all? So you know, if you bring in 500,000 and you spend 500,000, does it really matter that you made or you brought in 500,000? Right? Yeah. So looking at the budget, which I know people hate is like the B word of personal finance, the financial
Steve Fretzin [04:38]
D word I think,
Rho Thomas [04:40]
exactly. But you know, your budget is really important because the way that you spend your money is going to determine how you’re able to do things like invest. And that’s not to say that you’ve got to cut everything you know, I mentioned that the media like to pick up on things like people who are you know, walking everywhere and all only eating ramen noodles. And he’s really, you know, extreme sensational cases. But it’s about being intentional with your spending, I think a lot of us are spending just on autopilot, we are not paying attention to what we actually care about what we truly value, there is a lot, especially in the legal profession of, well, that person has it. So I should have that too. And so it’s about being really mindful of the way you’re spending what you care about aligning your spending with that, and making sure that you are leaving some margin there. So that there is a gap between how much you’re bringing in and how much you’re spending out in that gap is where your wealth is built.
Steve Fretzin [05:39]
And I’m assuming there’s some help that needs to be given to people about communication in the household and the family. Because if one person is on board with what you’re saying, and the other person’s not paying attention, or intentionally, you know, spending shopping, you know, filling that void of the stuff that we need in our lives that can cause I’m sure some frustration confusion.
Rho Thomas [06:00]
Oh, yeah, absolutely. And I think often it will be one partner and a couple who stumbles upon this concept first, and they’re like really gung ho about it, we got to do all these things. And the issue that I see a lot of my clients who are in, you know, couples, or in pairs that they run into is being very much about what we should do, oh, we should not spend this or why are we spending that or, you know, if we do x, y, and z, then we could pay this off, as opposed to talking about why they are interested in this concept and what life could look like down the line. So I always tell people, like when you are trying to manage your money with a spouse or a partner, that you dream together, and talk about what the other person wants, what you want what you see for your future. And then from there, you can make decisions about how you’re going to manage your money as opposed to oh, no, you can’t spend on that. Why are you spending so much look an example from my own life before I learned this, my husband and I would often have disagreements about like, he spent a lot of money at Starbucks, he loves to go to Starbucks. He was in school at the time, and he was study and spending like $150 a year at Starbucks, and I’m like, Yeah, I think I don’t drink coffee. But then on the flip side, Steve, I would spend about the same on makeup. Okay, yeah. And he didn’t really value the makeup. Right? Okay. And so learning what your spouse or your partner cares about, and you to dreaming together about what you want your life to look like, in that situation where we had the disagreements on you know, him spending on this and me spending on that, we decided to have like a set almost an allowance, we don’t call it an allowance, but you know, we each get a couple $100. So we can spend however we want to each month, no questions asked, you know, goes into a separate account in that stem some of those kinds of disagreements. Yeah. But as opposed to saying, you can’t buy that you can’t do this, then you can talk about your shared dreams, your shared goals.
Steve Fretzin [08:00]
Okay. So part of shared dreams and goals, is that also looking at what you’re taking in as a group or individually, and then what you’re spending and like doing some form of a T chart or something. Kind of see the pros and cons, the ups and downs?
Rho Thomas [08:12]
Yeah, I don’t think that it has to be so formulaic as like, what are the pros and cons of this?
Steve Fretzin [08:17]
Cons, maybe I’m spoke, but maybe it’s something where you’re looking at what’s coming in? And what’s going out, essentially, and things are getting out of hand.
Rho Thomas [08:24]
Exactly. So looking at what’s coming in what’s going out? And do we like that, right? Like, what are the categories where we’re spending our money, maybe you don’t realize that you’re spending so much in X category. So you want to dial that back, or, you know, maybe why category isn’t important to you at all. So you just had to cut it out altogether. But a lot of times, we don’t have that awareness at all. And so it’s a matter of like figuring out where you are, like where you’re starting from, so that you can figure out how to get where you want to go.
Steve Fretzin [08:53]
So here’s I’m gonna give you a tough question. Hopefully you’re okay with it. But people that are spending more than they’re making, and they dig out of it, where they get even, or they get a little ahead, but it’s really not where they can put away a lot. So how do you help people that are just trying to get, you know, above water? And then take them further on that?
Rho Thomas [09:14]
Yeah, I think again, it comes down to figuring out what you really care about, because a lot of times in those instances, people are spending on things that they don’t really care about. Yeah. And then often, too, I know, we talked a little bit about mindset before we hopped on, but a lot of times, it’s the money mindset piece, and there might be something that’s going on, you know, emotionally that you’re trying to cover for by spending. Right, yeah. So you know, those kinds of things that we want to look at and see like, what is the reason that you’re overspending that you’re spending more than you’re bringing in, we can address that as well. And then again, look at where you’re spending that you don’t really care about, or if we’re looking at like what you’re spending on now versus where you want to be like What is more Forget to you, if that makes sense, like,
Steve Fretzin [10:01]
Oh, no emotional spending, like that’s how right I want to make myself feel good. So I buy myself some new clothes or I buy myself a new car. Exactly. It might be beyond my, what I really should have done.
Rho Thomas [10:12]
And then sometimes I think we get into a loop almost right where you’re not feeling good. So you go and buy yourself new clothes and new car. And then you shame yourself because all of the Personal Finance says that you’re not supposed to do that, you know. And so then you’re feeling bad. So you want to go feel good again, go buy something to make yourself feel better.
Steve Fretzin [10:29]
Sounds like a vicious cycle there. Right, exactly. Well, anyway, I know that there’s people digging out. And there’s also people that have, you know, quite a bit extra right now, you know, for many lawyers, things are good. They’re having a record year it no one would have predicted that this would have happened, I don’t think but it did. And I’ve got, you know, real estate attorneys that are doing more in a month or two than they’ve done in a year. And what should they be thinking about with all that extra, all that excess money that they now have? What are you suggesting as far as how they can use it to get to that financial independence point.
Rho Thomas [11:01]
So the financial independence community talks a lot about investing in the stock market, and specifically, investing in low cost index funds. And those are like the broad funds that own whatever segment of the market, right, so they are typically lower costs than like an actively managed mutual fund, because they’re run by an algorithm, their job is just to match the composition of whatever index they’re tracking. So that is one area. Also, you’ve got real estate, you mentioned Real Estate Attorneys, maybe if they have their own real estate holdings, that’s another way that they can bring in income. And there are also like other ways, besides actually having real estate properties that you can invest in real estate. And as I mentioned, I am not wanting to give specific investment advice. But those are a few ideas for where they can invest. And then going back to what we talked about with just managing the money, I think, being mindful of what they’re doing with that money. Because again, if you’re bringing a lot more in, but you’re also spending a lot more than you’re not making the kind of progress that you could be making.
Steve Fretzin [12:08]
Do you have a specific story. And obviously, you can hold the names, but a story of someone that came to you for help. And you were able to be that financial coach and that friend to help them over, you know, through tough times. And then maybe they figured out a way to make it work. Do you have a specific story you could share?
Rho Thomas [12:25]
Yeah, I know, one client who I worked with, when we first started working together, she was in this cycle of kind of what we talked about of overspending. She wasn’t spending beyond her like income, but she was spending more than she wanted to and she was making, I can’t recall how much she had actually paid off. But she was making some progress on her debt. It just wasn’t as much as she wanted to. So let’s say that she paid off, you know, $40,000, the year before or something like that. But she knew that she could do more. And when we work together, we were able to get that up so that she was on track to pay off almost double by the end of that year that we worked together. And part of that was looking at her budget, seeing where she was spending a lot more on food than she realized. Yeah, and you know, you’re probably you might have experience with this where you’re like, oh, yeah, it’s probably about this much. I probably spend about this much. I know, for me, I’m like, oh, yeah, it’s probably this month, and then you look at as like one and a half or two times more than what you thought it was. Yeah, sure. That’s where she was. And so you were able to dial that back. There were a few other areas like an entertainment, some subscriptions that they were paying for, but not actually using those kinds of things where she was able to free up some income and then put that toward her debts. And so we got her on a plan where she was going to be able to pay off more.
Steve Fretzin [13:45]
Okay, got it went a little way. What got you so interested in passionate excited about helping people with Financials.
Rho Thomas [13:52]
So mine comes from my personal story, about four and a half years ago, my husband and I had our first child, and I was looking at, you know, headed back to work after my maternity leave. And thinking about I was the typical type a associate, you know, doing all the things. This is my minimum. So I’m going above that kind of thing in all of the committee’s, and I’m thinking about wanting to have a bit more balance as I raise my child, thinking about the way that always envisioned raising my kid, my husband had the same kinds of thoughts. And we looked at our finances, and we were over $670,000 in debt. Oh, hello. So we were going right back to work doing the same thing that we were doing. Oh, my, um, but we started researching and we were coming across, you know, all kinds of people who are paying off their debts quickly, and much more quickly than we had ever, you know, learned about like, we didn’t learn much about money growing up. But the way that I knew was you take out this loan and the bank tells you how much to pay for how long you pay that, right. I’m coming across people who are paying their debts off for two years and three years, and you know, that kind of thing, and so that opened window of possibility for us. And then from there stumbled upon this whole concept of financial independence, and the idea that we could be independent of our jobs, you know, maybe reduce those hours and that kind of thing. And so we’ve just been on that path ever since.
Steve Fretzin [15:21]
That’s wonderful. You know, I think I came up very disorganized, in just in the last maybe 20 years being married, coming up on 17, you know, pretty organized, I mean, I’ve got a financial advisor who, you know, has all my stuff lined up in a row and explains to me what’s going on, I’m not a detail person. So, you know, anytime we start, you know, Give me specifics, I go, Oh, just give me the highlights, man, it’s so helpful to have a mindset of what you’re spending and understand what you need to put away. And then the diversification is sort of the tricky part, because I think people just want to go with one thing, versus having maybe four or five different buckets that they can put money into. So any other like tips or tricks or ideas that you’re willing and open to share and people how to just be better managers of money? Or to get that mindset, right.
Rho Thomas [16:08]
Yeah, I will say, the main thing is being compassionate with yourself for the decisions that you made in the past, I think a lot of us beat ourselves up over things that we’ve done before, maybe it wasn’t a decision that we would have made now. But remember, you made the best decision that you could with the information that you had. So I think that mindset is huge. I also say with your budget, if you do decide to get on a budget, hopefully I have convinced you, I really like the zero based budget, which is where you allocate every dollar that you bring in to some category. And it doesn’t necessarily have to be an expense. It could be you know, an expense, but it could also be your financial goals. But when you give every dollar something to do, then you don’t end up with money falling through the cracks, or, you know, spending money, you know, spending twice as much as you thought you were on food or whatever. Yeah, those are the two big things that I would give for your audience.
Steve Fretzin [17:05]
And I don’t know how many people are coming up the way I mean, I came up with a My father grew up in the projects in Chicago. So, you know, they came from nothing had nothing. And he worked his way through college and everything else in law school. And I think coming up in I’m old, so the 70s and 80s. You know, he really made sure I knew the value of $1. I mean, I worked since I was you know, 1211 12 years old mowing, lawns, babysitting eventually, you know, even at 14, I was at a McDonald’s, you know, may take your order. I mean, this is back when they had registers with pads of paper, we were taking orders on pads of paper, thing that happened, okay. And so I had a really understood and wanted to always, you know, kind of take care of myself and square things away. But I don’t think I knew anything about and I know, I didn’t know anything about saving. I mean, if I hadn’t it was being spent, it’s really good to kind of, you know, hear your thoughts about it. And, you know, some people that don’t have that understanding of the value of $1, or how to save or how to diversify, you know, could probably learn a lot from you, and you have a website, something you’d like to promote or some way to, for people to get educated on this kind of information.
Rho Thomas [18:05]
Yeah, thank you very much. First, I would say this has been a really fun conversation, I appreciate the opportunity to speak with you and I completely relate to your story. But if you would like to connect with me, please come find me over on my website, it’s Ro thomas.com. And RO is spelled R H O and that has links to all my social media and that kind of thing.
Steve Fretzin [18:28]
Just from knowing your short amount of time, you’re very empathetic, you’ve got just a very kind sort of manner about you and a caring manner. And I think when you’re talking to someone about money, and that can be a very sensitive issue, it’s important to have someone that can be understanding and be a good listener. And I think you’re all of those things. So appreciate you and and taking the time, you know, this evening, by the way, this is an evening podcast and you’re my first evening podcast so you’ve got a couple of things going on for you. Evening podcast first one and also first time I’ve interviewed someone about specifically about financials.
Rho Thomas [19:02]
I am the first and I love it. Well, thank you thank you for your kind words and thank you again for having me.
Steve Fretzin [19:09]
It’s my pleasure and Hey everybody, thank you for tuning in and checking us out and hopefully you know if you’re smart and thinking about the future you’ve taken a couple notes and please check out the show notes. Do you have questions or want to connect with bro Hey Everybody, please keep the date open August 20. Me and superstar marketing expert Frank Ramos are going to be doing a two hour two time event coming up on everything sales and marketing related to grow your law practice, check it email@example.com programs and you’ll see what it’s all about and you can register right there from my website. I hope to see you there. I will also say that you know this show is blowing up and I’m having a blast doing it and I hope that you guys are sharing it liking it, you know writing some kind words on platform that you’re listening to this and you know, hopefully see you again a few days with the next episode. So until then work on being that lawyer someone who’s confident organized In the skilled Rainmaker, take care of the well.
Thanks for listening to be that lawyer, life changing strategies and resources for grilling a successful law practice. Visit Steve’s website fretzin.com For additional information, and to stay up to date on the latest legal business development and marketing trends. For more information and important links about today’s episode, check out today’s show notes