PLP-134 Mindful Money: How To Make Better Money Decisions With Jonathan DeYoe

The Private Lender Podcast

How does the state of our mind affect the way we make money decisions? You came to the right place to find out. Keith Baker’s guest today is Jonathan DeYoe, founder and CEO of Mindful Money. Jonathan explains to Keith Baker how mindfulness creates a space between the external stimulus and your response. It’s that moment of calm you need to make the right decisions based on facts instead of emotions. When you adapt mindfulness in your finances, you start making better decisions. How can you practice mindfulness? Tune in to find out!

---

Mindful Money: How To Make Better Money Decisions With Jonathan DeYoe

Investing In Your Happiness

I'd like to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. If you want to learn from my mistakes so that you can both avoid and profit from them, then pull up a chair and pour yourself a drink because this show is just for you. I'm dedicated to giving people like you and me the knowledge and confidence for successful and profitable private lending.

[caption id="attachment_3155" align="alignleft" width="194"] Mindful Money: Simple Practices for Reaching Your Financial Goals and Increasing Your Happiness Dividend[/caption]

If you're looking to join a community of private lenders then head over to the Private Lender Podcast Facebook group to connect with other private lenders and to share experiences, stories and opinions. While you're at it, head on over to the PrivateLenderAcademy.com to learn more about the forthcoming course on private lending and click on Apply Now to register for pre-launch discounts and other goodies. I was a little skeptical when I first learned about our guest. I wasn't sure he'd be a good fit for the show at first because I didn't spend a whole lot of time digging too deep, but after speaking with him for a minute, I knew he had to be on the show so we booked it. I'm happy to share Jonathan DeYoe with you and hopefully introduce you to him.

As I've shared in previous episodes, I am on a bit of a mindfulness journey. I like to sign off wishing you mindfulness from every episode. Given that life has happened to me in the last few years, divorce, etc., I'm happy that someone has applied the mindfulness approach to money. As I look back, I wish I would have applied mindfulness years ago especially to money because at least in my case, with the relationship with my ex, money wasn't a huge issue but it was large enough. If we both had been mindful about it, maybe things would have been different, at least on the money front. I’m not saying I'd still be married but the awareness and the understanding would have been a lot better. Such an approach can eliminate a lot of the money pains and ill feelings that couples have. Let's go ahead and get down to the brass tacks of this episode and get straight to the interview with Jonathan DeYoe.

---

Lender nation, I am throwing a curveball to you because we're not going to talk about private lending and all but we will be talking about money. Our guest has an interesting approach to money, one that I certainly want to use this platform to get out into the world and more people to learn and that is mindfulness. Early on in my practice, unfortunately, mindfulness was not court-ordered for me so I'm doing this on my own little by little. Jonathan DeYoe, welcome to the show.

I'm excited to be here, Keith.

Jonathan has nothing but good reviews on Yelp and whatnot. He is in the Berkeley, San Francisco Bay Area if you want to get in touch with him. This whole mindfulness thing, I don't have the words but you do. This is what you do on a daily. Let's start with your practice, your financial advising and how you bring that mindfulness element to the complete lack of financial literacy that is taught or the vacuum that is teaching financial literacy in the United States. Jonathan, the floor is yours.

[bctt tweet="Mindfulness is when you create a space between the stimulus that the world gives and your response. " via="no"]

Maybe a little background makes a lot of sense. In a brief nutshell, I'm a seminarian. I came to California to study at the Lutheran Seminary, turned Buddhist academic, turned financial advisor. The concept of mindful money comes after a long journey of self-discovery, comparative religion, philosophy, psychology and trying to figure out how people work and the decisions we make. I started in 1996 and wrote the book in 2007. After 10 or 11 years in the business, I had this semi-epiphany that it's the decisions we make that create our problems or our successes. The question is how are you making your decisions?

If you have a space between “Oh my god,” or, “Yay,” and a decision where you can think, you can make a better decision. That's where mindfulness comes in. It’s creating that space between the stimulus that the world gives us and our response. Mindfulness has been studied and practiced for thousands of years, specifically to resolve this issue of our over-reactivity to the stuff that's coming at us from outside of us. It turns out in finance, there's a lot of that. Putting those two things together became exciting and became something that I was like, “I figured out. This is my mission. This is what I want to share with the world.”

Before we got on, I sat on my stairs for a few minutes. I didn't meditate but I started noticing my breath. I’m trying to bring it in and give some of that space. When ADD was going around and all the rage in the late ‘70s and early ‘80s, my father was convinced I didn't need any medicine. I just needed a good ass whooping. That's all. I missed out on that boat so to speak. Had I gone down that route, my life would have been a little different in terms of disidentifying the news media, Instagram hits and all the stimuli that are coming in and molding decisions.

I sat there, trying to find that space and not try to attach to any thought, which is hard. This interview was a guided meditation for me. You talked about that space and where this is all coming from. You are a seminarian which is awesome. It's funny because Friedrich Nietzsche was also studying to be a Lutheran minister before he went to the University of Bonn. You had a personal journey then you got to this point. You’ve been doing it for many years now. You have got to be the one lone voice in the darkness talking about mindful money. How do you convince people? How did you lead that horse to water?

[caption id="attachment_3156" align="aligncenter" width="600"] Mindful Money: Don't take from the ‘serious money’ to refill the 2% money.[/caption]

I almost didn't want to name the firm, Mindful Money. In 2001 when I started my own firm, I named it DeYoe Wealth Management until 2019. A couple of years ago, we changed the name. My book was published in 2017 and that's when I put it all together, mindfulness with money, why that's important and how to use those two things together. I was the only person talking about it and I thought that if I brought it out there, my peer group would say, “That's soft. That's silly. How can you say that? You're full of crap,” that kind of stuff and I would feel small.

I discovered how much I'm afraid of not being believed in. I need people to trust me and to believe in me. If I don't have that, I don't value myself as much. That's a deeply personal thing. I'm coming to realize some things about myself after years and years of working too hard, trying too hard and all kinds of stuff. The fear of not being accepted in my industry where this philosophy or this belief system drove me to turn away from it for years and years. Finally, I said to my team, “This is what I want to do.” I girded myself for the barbs and they're like, “That's what you believe. That makes a ton of sense. Let's do this thing.”

Now we're all together and doing this thing in the world. It's cool. We're not entirely alone. There are 3 or 4 books that are entitled Mindful Money. Years ago, somebody won a Nobel Prize for behavioral finance. Daniel Kahneman has a new book and I recommend this book, Noise. He used to talk about how we have all these biases and our biases are problematic. In my opinion, the benefit of mindfulness is it enables you to get over some of the biases. If you're aware of the biases and you're aware of your experience of the current environment, you can go, “I'm having an emotional response I don't need to have.”

His latest book is all about noise. In our social media world, there is so much noise and there's much overwhelm. Our amygdala doesn't know how to deal with it. There are lions coming out of the bushes every step and we don't know what to do with us. Our bodies and our minds are not designed for this continuous constant threat and stress so we just react. Mindfulness becomes more and more important. Because there's an academic saying, “The benefit of an advisor isn't stock selection or investment selection, market timing.” Planning, education and behavioral support to help you do the right thing at the right time, not do the wrong thing at any specific time, not react. Act based on a plan. Stop reacting based on markets or something somebody said on a peer set or on the water cooler or whatever. We act based on a plan. We don't react to what the world is doing to us.

The best illustration I have in my head for that is we ran out of toilet paper for a virus for the respiratory system. Not Kleenex. It’s not for sneezing and coughing. I was at the grocery store. There was a run on toilet paper. It’s herd mentality. I was right there. I'm one of the bad people. I admit it. I've instituted a par system so I don't have to worry about that. I used to work at a bar. Each bottle of liquor or each beer had a par. You always had to have ten bottles at any one time or the high-end scotch, you just had one. The cheap well vodka, you had twenty.

[bctt tweet="The benefit of mindfulness is it allows you to get over biases. " via="no"]

Being here on the Gulf Coast, we're used to hurricanes and being without things for a while. I keep updating my hurricane list. I don't do it just from June through November. It's a year-round thing. When Hurricane Harvey hit, my wife at the time was like, “How can you be so calm?” I'm an insurance adjuster so I deal with risks and bad things all the time. I told her, “This is an act of God. We've prepared as much as we can and we're fully insured. I confirmed all insurance premiums have been paid like flood and windstorm. We're good. We've done everything that we can.” She got mad at me when I threw a party to watch the pay-per-view fight right in the middle of Harvey because I was calm. I didn't have to react. I was prepared. It went a long way of trying to confirm. What you're saying resonates and hits home.

This is a story that my dad told me. This is the Cold War era. He's in the Navy. There was this guy on the plane that was always calm and he was very analytical. If there's ever an issue, turbulence or something was happening, my dad would look at the guy and he would say, “Is he calm? If he was calm, we're steady and we're good.” There was this period where they were to land in Iceland but an engine blew. They're like, “What's going to happen? Are we going to be able to make it back? Are we going to go into the ocean?” They’re not sure what's going to happen. They were doing reconnaissance. They were looking for submarines from the air.

That engine blows and they're trying to get back to Iceland. He's looking at the guy and the guy's like, “We got this. We're fine.” He's calculating and figuring it out. The other engine blows and they're like, “We have to start ditching stuff into the ocean. We have to start pushing stuff out the door so we have enough lift. We got to stay above so we can get to the coast and land this thing.” He keeps looking at the guy and the guy is calm. They pushed some things out the door and the guy is totally calm. He goes, “Now we get it. We have to lose another 300 pounds. If we can lose 300 pounds, we're going to make it all the way.” No engines. They're just soaring.

He keeps looking at a guy. The point of the whole story is we need the guy. In Hurricane Harvey, you were the guy. We need to have something to look at that is calm and collected because if we don't have that, we all lose our minds if we don’t have somebody that's like, “Wait. Back up a second. This is normal. It's an act of God. These things happen. We prepare the best we can and we go forward.” Be the guy.

Welcome to Houston. I don't know what to tell you. We do have good weather for about two weeks a year and it's not humid. It's pleasant. We get a lot of snowbirds coming down for the winter and whatnot. I don't want to throw my parents under the bus but a little peek inside of things. On a Sunday morning, I went to my mom's house. My dad passed away so we're going through the stuff. I'm making sure mom’s all right. My sister lives close to her and my nephew is with her so that's all good.

My dad had a Master's in Chemistry and I was like, “There's his thesis. I'd like to keep that.” That's a trinket that I'm cool with. I'll dust it every week. We got to this and mom started laughing. She's like, “From 1967, here’s a certificate of completion from a financial education class.” My dad was not the best with money so we started laughing about how funny it was that he took financial education literacy class. I started thinking, “He didn't die in debt. He was in the black. He wasn't in the red.” I started thinking about that and I was laughing about it.

You don't have to be good. You just have to be consistent. Having that background of money and being that middle-class aspiring like, “Do you want to be rich and famous?” “No. I want to be rich. I don't want to be famous. I don't want people to know I'm rich.” When it comes to being mindful with money and budgeting, I can definitely see where if you can give yourself a little bit of space and get quiet, you're budgeting your allocation to retirement, vacation fund and all that. I would imagine once people get into that, your job is easy at that point.

[caption id="attachment_3157" align="aligncenter" width="600"] Mindful Money: The first rule of investing is to manage your risk.[/caption]

The most difficult thing we have and we do this with all of our clients is we walk through the planning process. In the planning process, we remove the crazy. For example, like a Bitcoin. We remove the investment that would act like a GameStop or an options trader. We remove the expectation of the upside and the downside. We look at averages, long-term, cashflows, spending and making decisions based on things that give us higher probability outcomes. By removing the crazy, we create ground rules on how people work with money.

Whenever stress occurs, they’re like, “What is the plan you told me I’m supposed to do? I'm supposed to save this much every month, invest this way every month and rebalance on a regular basis. Keep it simple.” If you keep it simple, you end up getting the things that you want out of life. If you get sucked into the crazy, which there's plenty of crazy to get sucked into, you lose out on the higher probabilities that you're hoping for. You lose out on the probability of the kids going to school without debt, their retirement income you can't outlive and the legacy you want to live behind. By going into the crazy, you lose out on the higher probability path to get where you want to go.

We talk about the plan and the meditation. You sit down and you focus on your breath. You sat in the staircase before we got on here and you focused on your breath. You're in, out. That focuses and desensitizes you to everything's going on around you. In personal finance, your plan is your breath. It is the thing you focus on. When all the world is going crazy, you go, “What are those four simple things I'm supposed to do?” That's the benefit of planning. Once you have a plan in place and you have a portfolio that reflects the plan, we're not portfolio wizards, we admit it. No one's a portfolio wizard. Everyone is either lucky or unlucky. We are allocated and diversified.

Thank you for being the first in the industry to admit that.

There are no wizards. No one can predict the future. No one can guess what's going to happen next but there's still a way to build a portfolio. There's still a way to strategize on finance. We use those ways and then we're patient and we're disciplined and the plan enables that. When somebody says, “What about this thing?” I say, “Let's go look at the plan and see what the plan says about that.” Keep it simple. That's how we get from where we are to where we want to go.

My dad showed me a video on how Post-it Notes recreated at 3M and the research scientist had 3%, 5% or whatever their annual budget was supposed to be dedicated for whatever they want. This guy wanted something to mark pages in this hymnal when he's singing in the church choir. It’s simple things like that but I always think you should always have that gambling money. When Bitcoin does come along, it's like, “We got the fear of missing out,” which only puts you into a state of lack and wanting and is not great. If you still want to scratch that itch, I'm a firm believer in, “Fine. Take that 0.5% or 1% of whatever you've allocated in your plan and know that you're going to lose it anyway.” It's like going to Vegas. “I'm going to take $1,000 to Vegas and piss it away. I'm coming home.” To me, that mentality is a healthy part of what we call asset allocation.

[bctt tweet="When you keep it simple, you end up getting the things you want in life. " via="no"]

Back when Steve Jobs was accepting an investment from Microsoft in the late ‘90s or early 2000s, Apple’s on the ropes. Apple is dying. They are not going to survive. They need capital. We had a couple of clients that said, “It looks like Microsoft's going to make this investment. Apple's got great products.” If you're an Apple user, you are an Apple user. You've got the phone, the watch, computer, iPad or laptop. You've got...