Financially Alert Friends – Interview #3 with Dominic @ Gen Y Finance Guy

MichaelBeliefs, Education, How to, Interviews, Misc19 Comments

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So today’s interview is with a very special guest – Dominic, from Gen Y Finance Guy!  I’ve had the pleasure of meeting up with Dominic in person a couple of times since we both live in SoCal, and he’s been great at helping me out with my blog here.  He’s also got a fascinating personal story that people are really inspired by (have you watched Breaking Bad?).  I’m happy to call him my friend, fellow personal finance blogger, and fellow overachiever!  So, without further adieu…

Walk me through how and why you started your personal finance blog? Was the decision easy or hard, why?  What’s your core message you’re trying to share?

I started it for me as much as I did to help others. Finance has always just clicked and I found myself being the go to guy among my friends and family when it came to financial questions and advice. One day it just clicked that this was something I loved to talk about all day and every day.

I think there is a gap in our education when it comes to financial literacy. I honestly don’t believe it to be a generational gap…it’s been a real problem for a long, long, long time.

Financial literacy in this country and around the world is very low and that is just unacceptable to me. Think about this statistic for a second, two out of three adults around the world are financially illiterate. And even if you look at this statistic domestically in the US, we have almost 50% of the population that is illiterate when it comes to finances. The US has the largest and most robust economy in the world and we don’t even rank in the top 10 of the most financially literate countries (we are ranked 14th). This is a problem that needs to be rectified.

You see, I don’t think there’s enough time spent in school covering a topic that is going to affect us the rest of our lives. Whether you want to realize it or not, money is at the center of our livelihood.

That’s not to say that money is everything, because we all know that both the rich and the poor have problems. I don’t know about you, but I would just rather money not be one of the problems I have to worry about.
So, on September 25th of 2014, I decided to be the change that I wanted to see in the world (thank you Ghandi). With the creation of Gen Y Finance Guy, I would motivate and inspire others by sharing my own financial journey.

The Good. The Bad. The Ugly.

Of course there are lots of other personal finance blogs. But I wanted to bring something that most of those blogs lack (not this one of course)…FULL TRANSPARENCY!

I decided early on that in order to provide the right context for people, that I was going to have to share everything, including real numbers.

It was an easy decision to start the blog. Figuring out exactly how I was going to provide full transparency took a little more thought. In order to do this and protect my identity I had to make the decision to blog relatively anonymously. One day I may unveil the man behind the cartoon, but as long as I am gainfully employed, it is probably best that I remain anonymous due to the level of transparency on the blog. No one I work with knows about this blog and only a few close friends and family know.

At the core of everything I do I am trying to show people that Personal Finance can and should be fun. It doesn’t have to be dense and boring. I am not here to preach or sale sleazy financial products. Instead I believe it to be a part of my life’s purpose to inspire others through my own story. My hope is that people will be inspired to take the helm of their own financial life to build the life most only dream about.

Unlike a lot of blogs out there, you won’t find much about extreme frugality on my blog, instead I tend to focus on the income side of the equation.

It’s my mission “To Humanize Finance, Build Wealth, and Reach Financial Freedom,” together with my readers and the community at large!

At the end of the day it doesn’t have to take 40-50 years to build wealth to reach Financial Freedom, for those willing to put in the work, it is more than feasible to reach it in 10-20 years. The blog is a way for me to share my own story of reaching $10M in net worth by the time I am 48, to inspire, and to motivate as many people as I can along the way.

Michael here – $10M is a common goal we share together.  I have no doubt Dominic will achieve this one day.  Who will get there first though?!  😉

Describe your past relationship with money. How has it evolved into your present views today?  How do you want it to change in the future?

My relationship with money has always been a positive one. Money has always been a big motivator for me and that is largely due to the environment I was brought up in. I grew up on welfare, lived in government subsidized housing, and had parents that were horrible role models. My dad has spent more than a decade of his life in and out of prison for meth labs. And both my parents have suffered from drug addiction for as long as I can remember.

Early on I recognized that I wanted something more than my parents. I instinctively knew there was a better life out there. Through observations I saw that money gave you options, and I wanted all the options I could get.

Until recently it has been about what money could do for me and my family. More recently though, my wife and realized how fortunate we are, and have started to give back. We plan to continue to ramp this up over the years. I truly believe that with great fortune comes great responsibility.

My hope in the future is that I can be a good steward to the wealth I am working to build by leaving the world a bit better than I found it.

Describe 1 empowering belief you have about money and how it positively affected your life. On the flip side, describe 1 disempowering belief about money (past or present).  What has been the effect on your financial goals?

ABUNDANCE! I believe that money and the opportunities to earn it are limited only by your own self-limiting beliefs. There is a natural floor on the expense side of the equation, but there is no ceiling in how much money you can earn. I think you have a moral obligation to become Financially Independent.

In the past, I focused way too much on the expense side of the equation, embracing more of a scarcity mindset. Instead of being frugal I was just becoming cheap…and there’s a big difference. I missed out on things because I couldn’t allow myself to part with the money I had worked so hard to earn. But I was missing the point, as it isn’t about the money itself, it’s what the money allows you to do.

In making the transition, I probably allowed the pendulum to swing too far to the other side, but it was all a part of the journey.

Today I put 80% of my efforts in earning more money and only 20% of my time controlling expenses. My wife and I have adopted a very balanced approach by embracing the law of 50/50. We save 50% of our after tax income and we spend the other 50% guilt free.

These shifts that have taken place over the last three years have led to a substantial increase in our income (about 65% higher), which has allowed us to increase our net worth by over 600%. If we could do that in 3 years, I can only imagine the possibilities over the next 5, 10, and 15 years.

Michael here again – I love what Dominic says here about the earning upside.  It’s unlimited.  Yet, most of us spend a good amount of time focusing on the expense side of the equation.  It think we’ve got it backwards.  Of course we do need to save more than we make in order to build wealth over the long run, so managing expenses is still a useful strategy.

Who taught or influenced you about money when you were growing up? What was the impact?

As a kid, I mostly observed what not to do with money. Somehow I intrinsically knew that you should spend less than you make and acquired a natural interest in investing the difference to put that savings to work. Over the years I have had a lot of money mentors through the books I have read.

  • What is your favorite personal finance book? What’s the best actionable takeaway you got from it?

Nothing stands out as much as the book, The Slight Edge, by Jeff Olson. This has become the standard operating system in all aspects of my life, not just the finances. It’s the only book I reread every year (since 2011), and it is the book I recommend and gift the most. The graphic below really sums up the entire philosophy of the Slight Edge.

But if I had to put it into my own words: It’s the little things that seem insignificant and are easy to do, but also easy not to do, that if done consistently over time lead to SUCCESS.

If you take consistent action over time the results are exponential.

gen y finance guy - slight edge

What are your top 3 favorite personal finance blogs, and why?
  1. Financial Samurai
  2. 1500 Days
  3. Financial Mentor

And of course an honorable mention to this new blog that has already made it to the top 10 of the blogs I read.

The three I listed are my favorite because they are all written by guys that are where I want to be. Their writing really resonates with me, and although I may not always agree with their perspective, they always make me think.

Describe one investment type/class that excites you the most, and why?

I love investing with options. They are a very misunderstood asset class. Too many people have been led to believe that they are risky and weapons of mass destruction. When in reality they actually allow you to control your risk much better than any other asset class around. They can also be very powerful when combined with stocks.

Here are some of the reason’s they excite me so much:

a – they are very liquid

b – they give you more than one way to profit

c – they allow you to pick up stocks for less than current market value

d – they allow you more control over risk that you take

e – they allow you to increase your probability of success

f – they function as an effective tool to reduce cost basis in a stock you are already long

g – they allow you a way to get paid up front for taking risk

h – I love theta

Michael here, check out Dominic’s recent post on a cool options strategy here.

How much passive income would you need per month to live happily ever after? What would life look like for you at this level?

This will sound a bit absurd to many, but my number is $50,000/month. But I don’t expect that to all be passive income. Unlike many in the community my financial goals have nothing to do with early retirement. Honestly I don’t intend to ever stop working, rather I just want enough money that affords me that option. My best guess from my current vantage point is that half of that will be passive and the other half will be active by the time I reach my $10M goal by the time I am 48 (I am 29 today).

To me this is the level of income that would allow my wife (and future family) and I to both live well and give well. And there should still be plenty left over to continue investing in order to sustain a perpetual family wealth fund and legacy.

Along the way we will eventually realize our goal to live the 3/6/3 plan. The plan is to live 3 months in a foreign county (or of travel), 6 months at home (SoCal), and 3 months at the beach. We love dining out and that is probably one of our largest monthly expenses that I expect will continue to grow as our income grows.

The goal is to be able to work from anywhere. We won’t necessarily wait to do this until we hit our goal, rather this will be a gradual transition as we hit different milestones. I am not a big believer in decades of delayed gratification, because the reality is that none of us are promised a tomorrow. That is why the law of 50/50 is so critical in our plan. It allows us to live in the present and make grand plans for the future.

The details are an evolving work in progress.

Do you discuss money or financial matters with friends and family? Why, or why not?

I am very open about money with select friends and family. I tend to get very excited about financial ideas and breakthroughs and love sharing those with others. However, I do get pretty disappointed when most of them never take action. People can be really irrational when it comes to finances. You share ideas that are easy to execute, that the other person says they are going to do, but then there is never any action taken.

Worse yet are the “Ask Holes.” These are the friends and family that actually solicit advice, get excited by said advice, and then proceed to do absolutely nothing.

Tell us something about yourself that only your closest family and friends know about.

I do magic. Mostly card tricks.

 

Elective Questions (Choose 2 to Answer)

I am only going to answer one because it is going to be a longer response.

 

Imagine a poor kid that grew up with no advantages in life. Suddenly he walks up to you asking for your best financial advice, but you only have a few minutes.  What would you say?

I love this question because I was that poor kid. Below is actually an email I sent to my list that covers the things I have learned and adopted in my own wealth building journey. This is exactly what I would share with that kid (me).

From my vantage point there are two ways to become wealthy:

1 – The Slow Way

OR

2 – The Fast Way

Which one do you prefer? This kind of seems like a no-brainer question right? Our natural unfiltered response is likely “The Fast Way.”

As my grandfather would say “we want to get there immediately, if not sooner.” There is no right or wrong answer and you may come to find out that “The Slow Way” is the right choice for you, and there is nothing wrong with that.

Before you answer, you need to know that “The Fast Way” is going to require more HUSTLE, DISCIPLINE, and FOCUS.

YOU need to ask yourself if you are willing to pay the price to ACHIEVE substantial wealth in 10-20 years instead of 40 years plus. Are you willing to be a non-conformist and go against the crowd?

Are you willing to live your life like most won’t for a couple of years, so that you can live the rest of your life like most can’t?

If you answer is YES, here are the 10 guidelines that will allow you to reach financial freedom in 10-20 years:

  1. Spend Less Than You Earn and Invest the Difference Wisely.
  2. Avoid Consumer Debt at All Costs. Never Carry a Credit Card Balance.
  3. Maximize Tax Deferral to Pay the Least Amount of Taxes Legally Permitted by Maxing out Tax-Favored Accounts (401k’s, IRA’s, HSA…)
  4. Aim to Save 50% or More of Your After-Tax Income.
  5. Buy a House That is Half the Price the Bank Says You Can Afford.
  6. Learn Two Basic Investment Strategies with Options: The Covered Call and Short Put. Use These Strategies to Invest in Index ETF’s and Dividend Paying Stocks.
  7. Start a business, Even if it is Not Your Full-Time Gig. #SideHustle
  8. Invest in Cash Flow Positive Real Estate. Take Advantage of Depreciation (people tend to miss this aspect of rental real estate).
  9. Never Stop Learning.
  10. Run From Investments that Sound Too Good to Be True.

Follow these guidelines and you will achieve Financial Freedom 50-75% faster than the financial guru’s that preach the “get rich slowly” method (over 40 – 50 years).

 

-Dominic @ Gen Y Finance Guy

(From “aha” to “oh shit”, I’m sharing everything on my journey to a $10M Net Worth.)

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Michael

Hi, I have been blessed to take an early retirement in my mid-30's so I can focus on becoming a better father, blogger, and investor.

My goal is to help you find your personal path to financial freedom, and to enjoy the entire journey.

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19 Comments on “Financially Alert Friends – Interview #3 with Dominic @ Gen Y Finance Guy”

  1. Hey Michael – Thank you so much for the opportunity to share with your tribe. It was fun reading through what I wrote, because I had honestly forgotten.

    Wishing you continued success…

    Onward & Upward!

  2. I love what you said about abundance. So often that is the limiting belief for people – they think they only can make what their job pays so the only control they gave is to cut expenses. First they have to fight off that belief before the real growth can happen.

  3. Michael and Dominic, Thanks for sharing your experiences and journey that have led to the development and desires to make a positive difference for others. I completely agree with the knowledge that exists in our world around these issues, we are way more connected than before and have access but finding a way to engage young people is key. These thoughts especially resonate with me as well, as i have started an initiative geared at delivering such topics to professional students and health professionals because the student debt management is key for a financial stress free or at the very manageable life.

    1. Thanks for the comment Joseph. Helping to bring light to financial topics to health professionals and students is a noble effort. I wish you all the best in that pursuit. And you’re absolutely right – engaging young minds around these topics is key. I’ll definitely check out your blog.

  4. I used to sell quite a few options. They can be very profitable, and can make for a nice income stream. Unfortunately, when you buy options, you have to make up for the spread, time value and commissions.

  5. Wow, inspiring stuff guys, Dom sure you’ll hit you 50k / month “passive” or what I’m not calling residual income..

    Looking forward to following you both on your journey and I’ll be there on the way too.
    If either or both of you guys ever head to Aus, hit me up, I’d be keen for a beer (my shout) would love to collaborate and hear your visions; which I feel are similar to mine & are:

    1. Improve financial literacy / education
    2. Eliminate poverty in as many places as I can (which for me means access to clean water / enough food)

    Cheers!

    1. Congrats mate! You’re finally all caught up. 🙂

      Would love to meet up if I’m ever in Aus. My next door neighbor just moved back to Aus last month.

      Love your visions. Thanks for sharing!

      1. Haha yes it didn’t take me too long to catch up ;)!
        For sure, if I’m in the states I’ll be sure to swing you a line as well and see if you’re around.. Where about’s was he from down here?

        You’re welcome, it’s inspired by people like yourself

        1. Yeah, let me know if your in the State ever. My neighbor moved back home to Canberra, NSW. Our kids Godmother is also an Aus native. She came from Brisbane. I’ve never been to Aus, but it’s definitely on the bucket list!

          1. Sorry man but Canberra is in the Australian Capital Territory 😉 ha.. It’s where our capital is although funnily enough a territory within NSW..

            For sure hit me up if you’re down under, what is the best place to connect with you (LinkedIn or Facebook?) and will do!

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