The Dangers of Fast Money

Shawn (00:00): Are you tempted by the allure of quick riches? In today’s episode, we’ll uncover the dangers of fast money, exploring why sudden wealth can lead to reckless decisions and financial ruin. We’ll also discuss how to align your financial journey with Biblical wisdom. Let’s get some perspective. Welcome back to another episode of Christian Financial Perspectives. My name’s Shawn Peters. This is Bob Barber, and today we’re going to be covering the dangers of fast money. Now, in today’s podcast, we’re going to be focusing on this concept of fast money inspired by a CNBC program that we definitely don’t like very much. We despise it, but it often promotes greed and gambling in the markets. And we’ll discuss why this mindset can be harmful. Now, the phrase “fast money” suggests that it can disappear as quickly as it arrives. Unlike slow earned wealth, fast money can lead to reckless behavior and poor financial decisions. Bob (01:02): And this is interesting because it is nearly, like they say, “Welcome to fast money.” That’s what they always say on the CNBC and I’ll listen to it. Gosh, it is just so much about they even say, “Play this and play that. Just play with your money.” Luke 12:15 gives us a warning of this. “Then he said, ‘Watch out. Be on your guard against all kinds of greed. Life does not consist in an abundance of possessions.’” And I tell you, we’ve got to be very, very careful as Christians when it comes to this type of topic and trying to get rich quick. That can be based on greed. Shawn (01:41): How many Proverbs verses are there that talk about, “Little by little, how money that’s gained quickly or dishonestly fades away, but money that is gained little by little lasts?” Bob (01:54): It’s just throughout scripture. Shawn (01:56): That’s one of them. But I mean there’s just tons of scriptures on that on, “It’s not about get rich quick.” Bob (02:03): Yeah. Shawn (02:03): So fast money often leads to impulsive and unwise decisions. Bob (02:09): It does, sure does. And some of these examples that you just think about includes lottery winners and these young athletes that get these 10 million or even 50 million dollar contracts and then you go back to them 10 years later and many times they’re worse off financially then before it ever happened. Shawn (02:31): That’s right. Bob (02:32): And that’s a major pitfall, and it can create divorces, anger,, stress. If you don’t know how to handle a little money, how are you going to know how to handle a lot. Shawn (02:44): Exactly. Which takes us right into our second scripture, which is Luke 16:10, “Whoever can be trusted with very little can also be trusted with much. And whoever is dishonest with very little will also be dishonest with much.” Scripture says it right there. Bob (02:59): You can’t manage the small stuff. Shawn (03:02): Why do you think you’re going to be able to handle the large amount? And what ends up happening is when you come into that sudden wealth, which is also sudden wealth syndrome, I know we’ve done at least a couple episodes on that, right? Bob (03:10): We have. Shawn (03:10): But that sudden wealth syndrome, the reason why it’s so… can be so damaging is money amplifies our strengths and weaknesses. Bob (03:20): It does. Shawn (03:20): And so if you’ve not been able to manage what you already have well and you all of a sudden get a lot of money, then you end up making the same kind of mistakes but with larger dollar amounts. For example, what’s that one show where they renovate a house, like crazy renovations on a house, and they make it super, super nice? I remember reading an article about how the vast majority of those people end up being financially ruined and they don’t even have the house later because the taxes alone on this super nice, expensive house now, the families can’t afford it. Bob (03:53): Yeah. We’re going to go over seven common ways that you come about fast money. Now, this is not bad at all, these first two or three, because these are things a lot, many times, beyond your control, alright? But I think what we’re talking about today, we are talking about the dangers of fast money and that first one is inheritance. I’ve seen many times going from zero to a million dollars overnight in an inheritance and, “An inheritance gained too quickly will not be blessed in the end.” And that says that in Proverbs 20:21. And parents, grandparents, you must know if those children cannot handle that money well now, what makes you think they’re going to handle that much more well? Shawn (04:44): And I think again, this really goes into an inheritance can either bless or curse the next generation. And one of the things that I know we’ve helped people with, but you can set up your estate planning to where you have a certain dollar amount ratio. Let’s say you set it at a one to three or a one to two. Bob (05:07): Percent. Shawn (05:07): Well not a percent, no. I mean where the inheritor has to demonstrate that they’ve at least saved and invested a certain amount. And so it’s at a one to two or one to three, you have an extra $500,000 that’s going to go to one of the people inheriting it. Well, if they have at least $100,000 put into their investment accounts, then you can kind see that as say as a one to five. Okay, well they’ve earned the inheritance, at least they’ve been faithful and wise with what they have. The other thing like you were kind of alluding to is maybe instead of the entire inheritance goes to your kids or the grandkids, but you said it as, “Alright, you can get 3% per year. Period. That’s the most that can be taken out.” Bob (05:50): And as you know, that’s the way we’ve set ours up because I’ve shared it with you. And if it makes 5% then that’s great because they get 3% and 2% goes back in and it just grows and grows. And that can go for multi-generations. And there’s other things that you can put around that. But we’ll mention that on a… Shawn (06:05): Yeah, we’ll more depth on another episode. Bob (06:07): We’ll have an entire other podcast, an episode for YouTube, on and inheritance and how to wisely hand that off. Shawn (06:14): Number two is a retirement lump sum payout. Bob (06:17): We see this a lot, don’t we? Shawn (06:18): Yeah. Where people have the option to either get a certain amount per year for the rest of their life for X number of years, or they get that big lump sum. With the right kind of planning, that lump sum can be more beneficial in the long run, but we also have seen many times where that ends up, it gets spent really fast. Bob (06:40): Or it gets invested in a wrong way. We had a client inherit a lump sum. We put them – not inherit – I mean they got a retirement lump sum. We put them into a very diversified portfolio. They started getting impatient, they wanted to make more of a return. They started looking at aggressive growth and what that was doing. They started coveting and they took the entire lump sum out and went and put it in one asset class. That was very, very dangerous. And this asset class has not even kept rate with inflation over the past 30 to 40 years. Number three is life insurance payout. We’ve seen this happen before many times. I mean, not a lot of times, but unfortunately this is something that’s not fun, but that’s got to be handled with wisdom and there’s dangers behind getting a life insurance payout if you don’t know how to handle it. The unfortunate thing, I’ve seen too with widows, is for some reason family members start coming out of the woodwork and needing a loan. Shawn (07:42): It could be kids, cousins, nieces, nephews, brothers, sister, whoever, all of a sudden and then they have a sob story. And if you don’t want to give them the money, then they give you the guilt trip. And it’s honestly a shame on the people that are trying to take advantage of the widow at that point. Bob (07:59): But we’ve had a lot of widows that we’ve helped here for the last 25, 30 years that we’ve helped them to slowly not overspend. And it’s still here today and even more so today than it was when the life insurance payout. But we’ve done another podcast on that. Shawn (08:15): Number four, and this is going to be the last one of the, not necessarily something wrong with it, but it is one of the most common ways. Hang on. So number four is oil and gas discovery. And then we’re going to do the last three are we would overall probably say just maybe avoid them, but oil and gas and I mean Bob, how many times did you deal with this from the Eagle Ford Shale around our area in Texas and had all these ranchers and other families that they might’ve gone from $40,000 – $50,000 a year income and all of a sudden they’re making a $100,000 or more a month. But also, over time, it started dropping pretty fast, too. And people started to get used to a lifestyle that they could spend a million dollars a year and then all of a sudden their income is a $100,000 or $150,000 a year, and they can’t maintain it. Bob (09:06): It’s the old 80/20 rule here. And I think I unfortunately saw about 80% of those that did get quite a oil and gas discovery on their land. They spent it all, and it’s kind of a sad thing. That was about 10 or 15 years ago when we had this huge oil strike in South Texas that was one of the largest in the world at the time. It really created boom towns in South Texas, but that’s all kind of gone away now. It’s still there, but you’ve got to understand when you get that kind of fast money, it’s got to be done with wisdom. Shawn (09:44): That’s right. And so then number five is gambling. Bob (09:47): So these are the last three are… Shawn (09:49): Exactly. Bob (09:50): Okay. Shawn (09:50): These are more or less, we would probably overall recommend you avoid these, but gambling, we’ve got 1 Corinthians 15;33, “Do not be misled. Bad company corrupts good character. Gambling fosters reckless behavior and can be incredibly addictive.” We’re not talking about just going to Vegas, but now there’s the stuff you can do online and on your phone. There’s the, I am sorry if I step on some toes, but the fantasy sports league, whatever football or whatever sport it is, that is gambling if you’re throwing money at it. So just be careful with it. And the old school gambling, I guess I would say, is definitely just avoid that. Period. Bob (10:30): And then this next one, lottery. The lottery wins are just so far and few between or the stats of that are, as you know, 1 in 500 million. I heard somebody say, well the odds of winning a lottery, or you’d have a better likelihood of getting struck by lightning if you live 37,000 lifetimes. When you do the math, it’d probably be more than that. Shawn (10:50): No, sorry. It’s something about the likelihood of being struck by lightning over thousands of lifetimes. So over and over and over and over. Thousands. Yeah. It’s crazy. The other way to look at it is when the odds are that high, you could say, okay, imagine trying to pick the address of a home somewhere between North America, Central America, and South America. You get one guess to guess the address. It’s basically the same thing. Bob (11:16): That’s like a needle in a haystack. Shawn (11:18): Yeah, we recommend avoiding that. The last one, lucky stock picks, which kind of goes right in with the gambling and lottery wins. Well, stocks can fall just as quickly as they rise. And many times, they typically fall at a faster rate than the actual rise. So, be careful. And what’s that phrase, Bob, that you’ve been telling me for years now? Bob (11:40): That’s a country boy phrase, “Pigs get fat and hogs get slaughtered.” Shawn (11:44): Okay, so what does that mean when it comes to stocks? Bob (11:48): Well, you think about it, if a stock’s gone up by a 100% or 200%, which we’ve seen some of these AI stocks do that, I think it’s time to get out of the way and move on. Shawn (12:01): Maybe diversify a little bit, rebalance, take some of your profits. Bob (12:04): Because like you say, the pigs are just fattening up. But once they become a hog and they get to a certain size, then they get slaughtered. I think you need to be very careful with that. That is kind of a country boy saying. It’s funny. Shawn (12:17): Yeah. So as you can see, many times it is just from pure luck or being at the right place at the perfect time. So as Christians, Bob, should we pursue fast money? Bob (12:27): I think we should not. I think we should absolutely try not to. Do not pursue fast money. I think it’s dangerous and scripture repeatedly warns us about the dangers of fast money or sudden wealth. Now, when fast money comes through an inheritance, lump sum, life insurance, or an oil and gas discovery, that’s different, but it’s crucial that… Shawn (12:50): It’s not bad in of itself, but it’s crucial to manage it wisely. Bob (12:54): There is a danger in it. Shawn (12:56): Yeah. In conclusion, the first step would be to consult with a fee-based, fiduciary financial advisor to create a comprehensive financial plan tailored to your short and long-term goals. This is important for a number of reasons, but one, it’s to make sure that however that money came in, you want it to last longer than you do, just like a normal retirement planning. We are looking at, okay, well do you have anybody that lived past age 90 in your family? Do we need to put 100 years as the potential age range for you? Or is 90 Okay? And then make sure in the planning that it’ll last at least as long as that. And the other part with that, I think is very helpful, Bob, is when you have a plan in place, it also helps you to avoid the mistake of coveting, “Well I heard so-and-so a friend of mine or a family member that they had this good stock pick or they had this whatever, and it’s up X amount where I’m only up less than that.” Well, if you’re on track for your short and long-term goals, why does it matter? Because is the goal to just get as big of a return as possible or is the goal to meet your actual financial goals? And personally, I think it’s a lot less stressful when you look at it that way, too. Bob (14:14): There’s a good program we made just recently called the “Financial Fear of Missing Out”. Shawn (14:18): That’s right. Bob (14:19): Sometimes, the last thing that’s said is the most important, and we look at the 10 Commandments and it says, “Do not covet.” And we have to be very careful of that, not to covet what other people have or the returns that they’re making. Like you say, if the returns are right there in line with your financial plan and your goals, short-term goals and long-term goals, you’re fine. Shawn (14:40): Yeah, exactly. It doesn’t matter. So at Christian Financial Advisors®, we are here to help guide you through this process. We’d love to hear from you. Whether you want some help with this or you just want to give us an idea for another podcast episode, visit us www.christianfinancialadvisors.com. You can also call or text us Monday through Friday from 9:00 AM to 5:00 PM Central Standard Time at 830-609-6986. Thank you so much for joining us and as always, God bless and hope to see you next time. [DISCLOSURES] * Investment advisory services offered through Christian Investment Advisors Inc dba Christian Financial Advisors®, a registered investment advisor registered with the SEC. Registration as an investment advisor does not imply a certain level of skill or training. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Shawn Peters, and their guests. Bob and Shawn do not provide tax advice and encourage you to seek guidance from a tax professional. While Christian Financial Advisors® believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.