Americans seek answers to how they can save their money and make financial decisions as inflation soared past 9.1 percent. Bob Lotich is the author of “Simple Money, Rich Life:
Lotich talked with me about his financial history, how middle-class families can combat inflation and what advice he has for youth who want to be debt free. He has an optimistic outlook on money that focuses on helping others, giving a different perspective to current economic conditions.
Note that the interview has been edited for clarity, grammar, and length.
Cameron Arcand:Many personal finance books are available. This book is different.
Bob Lotich: I think the biggest thing that we try to do is we’re trying to make it simple because I worked in the financial industry for a long time, and I have found that so much of the financial world and industry tends to make us or lead us to believe that doing well financially has to be this really complicated thing. It is necessary to hold a finance degree. It is actually quite simple to grasp the basics.
They’re pretty simple to do, pretty simple to master. And really, if you just do the fundamentals, you can have a very successful financial life and that’s the goal of what we’re trying to lead people to.
CA:You have already mentioned some fundamentals. The book also discusses the idea of a financial formula that can help you transform your financial situation. Can you tell us your story and explain what this formula is.
BL:This helped me to frame my thoughts about money. The quote comes from John Wesley’s old sermon from 100 years ago. He said, “I earn as much money as I can. I save as much money as I can.”– by that he meant reducing expenses- “So that I can give as much as I can.” He saw his giftings in being able to speak and being able to write as a means to honor God with his giftings, and use that to earn money so that he could give and make an impact on the world.
That’s the framework that we are leading people through in the book, we’re helping them earn more money. We’re helping them reduce their expenses by being a little more strategic with their spending, you know, ultimately so that we can be in a position to be able to give more and impact the world around us. That’s the formula that we followed for all these years.
CA:A lot of middle class families find it difficult to survive, especially with the rise in inflation. Their ability to afford basic needs and various other items is taking its toll. What’s your message to people like that who were maybe once doing okay, but now they’re trying to make ends meet?
BL: There are a couple of different things you can do to fight back against what’s going on with inflation. One thing that I’m encouraging people to do is, if possible, stock up on items that you regularly use. Think about this: you can buy something at today’s prices that is likely to go up. When it comes to food or canned goods or even meats if you have a deep freezer if you can buy some of those items at today’s prices, and especially if you have the opportunity to buy them on sale, you can get them a whole lot cheaper, and it’s actually a pretty good investment. If you are just continuing to purchase things as they come out, […] it’s gonna be more expensive.
CA: What you did personally, that can translate to people who are in college, getting out of college, or maybe they’re already in the working field but are struggling to get out of debt?
BL:The debt-payoff journey we had was remarkable. We’ve had a couple of different iterations of it, but both times when we were paying off debt, the thing that we felt like we should do is actually give. Although it seems counterintuitive, in each instance when we paid off all of our car and credit card loans, we also worked on our mortgage. We began to give extra to help us not surrender to our debt. Not to be scared of debt and to focus on what was important to us: giving.
We were able to pay off our debts much faster than expected by doing this. It’s very counterintuitive where I’m not necessarily prescribing that for everyone to do, but for us, it’s been really interesting watching that and the results of that leading first with giving rather than leading with meeting our own needs and paying off our debts, you know?
CA: My last question for you is when people are starting to get their financial life in order a lot of people are like, “Okay, this has to be the most miserable experience ever.” But how can people have fun while doing this?
BL: So much of personal finance is about all these rules of what you shouldn’t do with your money. When you understand that personal finance is personal and there’s no one size fits all rule or approach for all of us- that’s when you begin to approach it that way you realize I should be able to design the financial life that I want.
You should be able to spend money on the things that are important to you, but what that requires, you know, and this is one of the things that we’re always trying to help people with, is that requires you to identify things that you don’t care about or the things that you even care about and cutting those in lieu of the things that are really important to you.
This will allow you to free up money for things that really matter. I’ll give you a quick example. We drive a little bit of an older car because I’d much rather be driving a car that’s five to seven years old and take my wife out on a nice dinner four times a month and spend four or five hundred dollars on eating out than I would on a brand new car payment. For some people, it might be, “I’d rather spend four or five hundred dollars a month and have a brand new car and eat macaroni and cheese every night”. This might not be true for everyone.
But for us, I don’t really care. Car is just “A to B.” I’m completely content with the paid-off five-year-old car. I would prefer to have a good meal. So whatever the things are important to you have to identify those and the things that aren’t important, just cut them out of your lives because they’re not needed.
“Simple Money, Rich Life,” is available for purchase on Amazon.