The Darya Rose Show
Dec. 7, 2021

Adulting your finances with Chris Hutchins

Adulting your finances with Chris Hutchins

Financial optimizer and life hacker, Chris Hutchins, explains everything you need to know to started getting your finances under control today.

Chris Hutchins is an avid life hacker, financial optimizer and host of the top-ranked podcast All the Hacks, where he shares his quest to upgrade his life, money and travel, all while spending less and saving more. He's also the Head of New Product Strategy at Wealthfront where he's focused on helping people build wealth through investing. He's been featured in the New York Times, Wall Street Journal, CNBC and more. 

Previously, he was founder/CEO of Grove (acquired by Wealthfront), an investor at Google Ventures, and a co-founder of Milk (acquired by Google).


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Twitter @hutchins

Instagram @chrishutchins


Notice: Any purchases made through my links to Amazon will result in them sending us a few cents that will certainly not cover the cost of running this show.


Dr. Darya Rose: [00:00:00] I'm Dr. Darya Rose and you're listening to The Darya Rose Show, where we bring a fact-based perspective to answer all those confounding questions that come up in our day-to-day lives. From achieving optimal health, to making conscious choices about your purchases and raising kids that thrive. We are here to help you navigate your life with confidence.

Hello, and welcome back to The Darya Rose Show. Today we're gonna talk about all the hacks for what I call adulting your finances. Dealing with money is one of those essential life skills that similar to building healthy behaviors is something that most people would rather put off to another day. But there are a lot of reasons, but that's a terrible idea and you should get started on it now. I have my friend, Chris Hutchins, here to explain what you can do and how you can get started planning for your future.

Chris Hutchins is an avid life hacker, financial optimizer, and [00:01:00] host of the top ranked podcast, All the Hacks, where he shares his quest to upgrade his life, money, and travel all by spending less and saving more. He's also the head of new product strategy at Wealthfront, where he's focused on helping people build wealth through investing. He's been featured in the New York Times, Wall Street Journal, CNBC, and more. Previously, he's been the founder and CEO of Grove, which was acquired by Wealthfront, an investor at Google Ventures and co-founder of Milk, which was acquired by Google.

In this conversation, we talked about how money can and can't buy happiness, how, when, and where to start saving and investing, how to deal with debt, how to buy a home, cryptocurrency and so much more. Chris also happens to be my longtime personal favorite resource for optimizing credit cards and travel points. So basically he's gonna teach you everything you need to know to start getting your finances under control today. [00:02:00] Here is Chris Hutchins. Chris, welcome to the show.

Chris Hutchins: Thanks for having me.

Dr. Darya Rose: It's great to see you.

Chris Hutchins: Yeah. It's, you know, we don't get to see people as often, but I'm glad we're doing it. We got a little video here.

Dr. Darya Rose: Yeah. Well, you are the person that I think of when I think of doing adulting with money. [laughs]

Chris Hutchins: Okay.

Dr. Darya Rose: Because, well, first of all, I didn't learn anything growing up. My parents didn't teach me Jack. In fact, they didn't do anything. Like I'm fairly certain my dad didn't even have a bank account. There was no learning from anybody that was a mentor for me. But as I got older and I started teaching myself about this stuff, I realized that like very few people actually do all the things, do all the adult financing things, and that there are a lot of misconceptions and just bad practices out there that can be fixed pretty easily. And I thought who better to come on my [00:03:00] show and share all this with everyone than you?

Chris Hutchins: Yeah. I appreciate it. Yeah, I mean, I think it's, last I read, I think we're still millennials, but only 24% of millennials demonstrate basic financial literacy, which is like-

Dr. Darya Rose: Yeah. That's okay. [laughs]

Chris Hutchins: ... just a depressing, depressing stat and yeah. So I think there's just so many different places we could go, but like you said, money is the number one cause of stress, the number one cause of divorce in this country. And I feel like just getting a basic grasp can really change your outlook and hopefully make you a lot less stressed. So let's dive in wherever you want.

Dr. Darya Rose: Totally. Totally. Well, I wanted to start big picture because I feel like a lot of people sort of put this on the back burner as if it's something they can handle later or deal with later, but it's really important. And for reasons we'll get into later, it's important to start soon, but I wanted to talk more big picture like, what's our goal here? I mean, I, I feel like we have this vision where it's like super antiquated and I don't think anybody actually even believes it anymore.

But [00:04:00] they sort of believe that like, I have a job and one day I'll like somehow save enough money then I can retire. And that's the complete plan and like, what does that mean? Like you'll retire when you're 60? Like you stop working, like you have money in your savings account. And I don't think anybody, or some people have thought about the [laughs] the details of this, but I feel like a lot of people don't. And I wanna, I wanna just start by talking about why this is something we should be concerned about?

Chris Hutchins: Yeah. I mean, I think at the highest level, if you look at your life and you say, “Gosh, do I wanna work every day for the rest of my life?” It's like, “Well, no.” Like, you know, I look at my, my parents and I looked at my grandparents when they were in their last few years. I was like, no, they definitely weren't in a place where they wanted to go to work every single day. And, and in order to do that, you need some money because there's Social Security, but depending on where you live, it's almost certainly, probably not enough to support the average lifestyle. So you need to save some money.

And historically, there were lots of companies that everyone worked at and people worked there for 20, 30, 40, 50 [00:05:00] years, and that company had a pension and they kind of took care of you. And in the last few decades, we've kind of evolved the way we work, where the responsibility for funding your future is on our own shoulders. And we're changing companies often enough that companies aren't really gonna try to create a system for an employee that's gonna help fund their retirement because they're probably gonna be there for three or four years and so the, the pension program isn't common.

I haven't, I haven't heard of a startup or, or any new company doing that. And so it's really on our own, on our own problem to, to solve and make sure that we save enough that, I, I like to think of it more as independence, financial independence. Not necessarily the ability to stop working now at 30 something or 40 something, but really just to be able to live the life you want when you want to live.

Dr. Darya Rose: Yeah. So look, I wanted to get into that a little bit too. So it's almost, there's a mental state that's a goal, right? Like the goal, it's not necessarily a specific number of money to have in, uh, an account somewhere, so much as a [00:06:00] mindset where you're like, “I can do what I want, make the decisions I wanna make and feel like I'm in control of my own destiny.” Versus being stuck in a situation where you feel like you have to work and do things you don't wanna do at the ex- cost of your own happiness?

Chris Hutchins: Yeah. I mean, I think some people look at the numbers and are like, “Well, if I, if I have no money, no income, I've got to earn this massive amount of money to be able to live and not work.” But most people when they stop working, they find projects and those projects end up making money. And then if they do have savings or investments, those grow over time. So it's really hard to think of a specific number and say, if I have this much I'll be fine, because that number also changes every year. But yeah, for me, it's getting to a place that you feel like you're on track for the future where you're like, “Gosh, I feel like I'm, I'm saving enough that I'll, I'll be in a good place in the future.”

And that can give you the flexibility to make subtle changes that might make you happier. Maybe it's take the job that [00:07:00] pays slightly less, but makes you way more fulfilled. Maybe it's take, uh, unpaid sabbatical for three months to take a trip with your family. Like things like that, that aren't as crazy as quit my job at 30 and never work again, but are things that give you a little bit of freedom to live the life you want. And, and you get that by kind of building up enough of a financial cushion that you feel like you're moving in the right path.

Dr. Darya Rose: I love that. I love that. Because I'm not sure people know this or not, but the, the neuroscience is pretty clear that money doesn't create happiness. It can like relieve suffering at like some level, obviously if you're, obviously, if you're in severe poverty, to some level like having actual money will improve your quality of life and make you happier, but that stops at a pretty low number. Uh, I, I don't know what it is in today's dollars, but do you happen to know?

Chris Hutchins: I don't know the number. I know there's, uh, a book I enjoyed called Happy Money, which is, like goes into a bunch of research studies about what you can use your [00:08:00] money on to actually kind of buy happiness and the, the spoiler is that you can't buy things and be happier. So like that, that is, I think we all know that yet we still do it and they break down. They're only five things that you can, at, at, at least according to this book, that you can spend money on to buy happiness. But there are things we know, like buying experiences that are memorable with people you care about and, and then like little tricks. I think some of them are tricks.

If you go on a vacation, use your money to buy something before you leave so that you don't have a bill at the end, because if you prepay your hotel, your, you know, your partying moment isn't seeing the bill. So it's not really buying happiness as much as like optimizing the way you spend the money you're already spending to have a happier experience. Best I understand there's not, uh, a magic bullet for just, let me deposit money in this place and I will live a more fulfilling life.

Dr. Darya Rose: Right. For people [inaudible 00:08:51], I think it's around like 60 or $70,000 a year. Up to that point it, it definitely helps to [laughs] to have some more money, but then after that it just sort of tapers [00:09:00] off. So like a billionaire is not happier than a hundred thousandaire. [laughs]

Chris Hutchins: No. And everyone's always chasing it, right?

Dr. Darya Rose: Right.

Chris Hutchins: You know, you make a little money and you're like, “Well, I know this other person has more than me.” And I guess at like Bezos level, that stops, but I don't know. None-

Dr. Darya Rose: I hope so.

Chris Hutchins: ... I haven't [inaudible 00:09:16].

Dr. Darya Rose: Let's hope so. [laughs] Okay. Let's be smart. I feel like the, the smart savings and investing is a little bit counterintuitive and not super sexy, [laughs] but let's just kind of go over some basics. So I remember when I was like first learning about this stuff, I just thought, “You should have money in a savings account.” And the more I've learned about it, and I wonder why those even exist, are they just like a scam? Anyway, can you, can you talk about savings?

Chris Hutchins: Yeah. So in, in general, if we just go savings, right? Everybody that has a job or, or does something to earn money, there's money coming in and then there's money that you spend and all the money that comes in that you don't spend, you can save. And [00:10:00] there's lots of places you can save and we can get to that, but at its core, like the way to optimize how much you're able to save is really simple. There's only two levers. You can make more money or you can spend less money. And it sounds so simple.

Depending on where you are in your life, in your career, sometimes it seems like the easiest lever is to spend less money. And for, for many people that have never evaluated their spending, spending less money is easier, right? You don't have to make any major changes. You don't have to get a new job. So it might be a better move to go in and evaluate whether you are living in too expensive of a place, whether you drive too fancy of a car. But I also think that some people don't think about the longterm goal of making more money as being, uh, a kind of higher ceiling opportunity, which is investing in your career, investing in your skills, negotiating for that promotion at work and trying-

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: ... to set ambitious goals. So those two things kind of combined are what ultimately determines what you save. And then when you have to think about where to save that money, there's, you know, [00:11:00] a million different options, right? Checking account, you can do all these things. I like to think of it as there's this kind of spectrum of what savings returns. So if you were to say, you could put it in, under your mattress and you're gonna get nothing. You put a hundred dollars in your mattress and a year from now there's just gonna be a hundred dollars.

Dr. Darya Rose: I literally think that's what my dad did. [laughs]

Chris Hutchins: Yeah. And-

Dr. Darya Rose: Lucky him, he's not alive anymore [laughs] to suffer the consequences of his actions.

Chris Hutchins: Yeah. And I, I don't, I don't blame someone if you wanna keep a few hundred dollars at home in case you, you don't wanna have to run to the ATM at the last minute.

Dr. Darya Rose: Sure.

Chris Hutchins: But-

Dr. Darya Rose: Maybe get a safe, though. [laughs]

Chris Hutchins: Yeah. Maybe a safe.

Dr. Darya Rose: Maybe not your mattress.

Chris Hutchins: So the first thing is, do you have debt right now that costs money. Because if you had, let's say a credit card that you didn't pay off each month, it was 20% APR interest on your credit card. The best way to make your dollar go the farthest might not be to invest it or save it in a savings account. It might be to pay off your credit card.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: Because I can tell you most of the credit cards out there charge interest rates that are [00:12:00] far greater than any other place I know to put money in and earn a return that isn't incredibly risky. So the first thing I'm thinking, okay, well, what's the best thing to do with my money? Is it to invest it or is it actually to pay off debt? And, and so if you have high interest debt, which is often credit cards, medical loans, anything I kind of say like over 5%, those are like things to tackle right away.

Dr. Darya Rose: [inaudible 00:12:26].

Chris Hutchins: But after that, after that you get to compare, okay, what's the upside of doing something with my money to earn a return versus the upside of paying off some debt. So if you have a mortgage at 2% or 3%, well, the longterm kind of stock market returns have been in the anywhere from 5% to 10%. So you might be better off investing your money than paying off your mortgage.

And so I kind of stack rank all of these things and say, "Wow, credit card debt is 20%. That's the best use of money." Or if your company has a 401k where every dollar you put in, they'll match it, up until that [00:13:00] match, you're getting a hundred percent instant return. So what, the, where else on, on earth could you go put a hundred dollars somewhere and get a hundred free dollars? So like the 401k match, if your company offers that is like really high up on there in terms of the, one of the best things you can do with your money.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: Now, you can't access it for awhile. So if you put all your money there and you don't have any money in your bank account and you get a car accident, you have to pay a thousand dollar deductible. Well, that's a problem.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: But if, if you have kind of some emergency funds set aside, maybe a few months of, of cash, but that 401k match is high and, and you just kind of go through the list of all the options, which are either paying off debt, investing in cash or savings account or investing in investments like stocks and bonds and all kinds of other stuff.

Dr. Darya Rose: Right. I, I just think I heard somewhere that a very small proportion of Americans actually have $400 for an emergency situations.

Chris Hutchins: Yes. It's something around, I think like 44% of Americans couldn't cover an expense that costs $400 without selling something or [00:14:00] borrowing money-

Dr. Darya Rose: That's brutal.

Chris Hutchins: ... which is really, really brutal, right?

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: Some 78% of us workers live paycheck to paycheck and, and you think it's about income and, and it definitely is, but 25% of people who make six figures are also living paycheck to paycheck. So-

Dr. Darya Rose: Hmm. Interesting statistic.

Chris Hutchins: Yeah. So it's less, you know, 'cause obviously the number goes down as you make more money, but there are people out there who are not making six figures that I'm sure are thinking, “Gosh, if you made six figures, there's no way you could live paycheck to paycheck.” But still that's the case. And like you said, you don't learn this in school or the average American doesn't have financial literacy. And so this is a skill you can learn and that skill can help you not be in the other, I guess, it's 50%, 56% of people who can't cover an emergency. Hopefully you can get to the point where you can.

Dr. Darya Rose: Yeah. In my head right now, I'm trying to figure out. So it's gotta be like mortgages, childcare, those things are just such high bills that no matter how much money you're making, I could see why you would always just need that paycheck to cover those bills.

Chris Hutchins: [00:15:00] There are people who, you know, lease a car 'cause they wanna be in the cool car that their friends have and, and all that. And all of a sudden, you're spending a lot of money on your car payment. You're doing all these different things. You've just stacked up these expenses. And, you know, like you said early on, it's, it's easy to think that you can put off savings.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And, you know, I showed this chart once to someone where it's like, how many years the average person is working. You know, maybe you graduate from school, you get a job in your mid 20s and you wanna work till, people say, “I wanna work till I'm 60, 65.” So you're gonna work for 35, 40 years. And you say, “Well, how long do you wanna live?” And they're like, “Oh, maybe a hundred.” Okay, if you're gonna work from 20 to 60, you got 40 working years and if you're gonna live to a hundred, then you have 40 non-working years.

Dr. Darya Rose: Right.

Chris Hutchins: So you need to save enough in 40 years that you can live on 40 years, which is a really, really large amount of savings. Now, fortunately compound interest, which at, at its most basic terms, it's like, if you start with $10,000 and each year you are in 5%, you get $500. Now, if you just [00:16:00] think of it in a simple term, every year you're just earning $500.

But if you take that 500 and put it back in the bank, well then the next year you earn $525 and then the next year it goes up and up. And in 50 years, you'll have over a hundred thousand dollars, which is way more than the amount of money you put in because every time you're re contributing your earnings, the base that's earning interest each year or growing in, in the stock market is going up even more.

So that is your friend, which is why it's super advantageous to get started early. And why there are all these great stats of, if you started investing in your 20s, you would actually probably be better off, you, you could retire, I don't know how many years, but it's probably like a meaningful number of years earlier than if you quit.

Dr. Darya Rose: Yeah. It's 12 or something and it gets pretty big. [laughs]

Chris Hutchins: Yeah.

Dr. Darya Rose: Yeah.

Chris Hutchins: So look, it's never too late to start though. I, I don't wanna kind of say, oh, if you miss the boat, that's the, that's, I think the hardest thing about money is everyone's like-

Dr. Darya Rose: oh, well.

Chris Hutchins: ... “Well, I can do it tomorrow. I can do it tomorrow.” And, and then you're three years later. And so the easiest thing is to just start simple, right? Say, you know what? I don't know [00:17:00] what I can do. Why don't I just sign up for some automated savings product. There's so many other. And just say, let's put 1% of my money in there. Like almost anyone I think could get by with 1% of their money missing each month.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And then once you are like, “Oh, that was doable.” It adds up to two. Adds up to three. I think one of the easiest kind of hacks when it comes to financial planning, financial savings, investing, is to just automate things because we can get in our own way, just trying to think and optimize and figure it out. But if you can just say sweep out this money, every time I get paid, take a hundred dollars, take $50, whatever the number is for you, I think that's probably the fastest way to start saving and kind of reduce the cognitive overload that is trying to figure out the right amount and whether you can do it.

Dr. Darya Rose: Yeah. Yeah. Let's look, let's unpack that a little bit. So you just need to start. That's like lesson number one is, is once you've paid off your 20% [laughs] APR credit card, then just start putting some amount of money. And I, and I love that, where you said, [00:18:00] it was like start small, because that's how you build any habit. One of the things about finances that has always interested me is that it's a lot like health in the sense that nobody really wants to deal with it right now.

Like it's one of those things that, yes, you wanna be healthy in the future. Yes, you wanna be financially secure in the future, but it's a pain, it's not fun to do, it's not sexy, like eating vegetables and putting money in your [laughs] your savings account, it's just like one of those things that it's easy to just put off, but you have to start and the best way to do it is to make it less daunting. And so you can do that by starting really small. So that's, that's huge.

And then automation. So that's, you know, in, in the health world, I always talk about automating your habits because something like 90 plus percentage of the food decisions we make every day are automatic. Like we don't even actually, they're not unconscious. Like we don't even realize it. We're doing it. And so that's why you [00:19:00] wanna like, make those things good. And if you can sort of [laughs] automate to good, then you're like 90% of the way there. And then if you wanna get shredded abs or something, then you, you like do a little program, but your baseline is gonna be healthy and good and solid.

And I feel like the finances are, are similar in that you can, you just, you just have to get the basics right. And you have to start early and you have to start small and you have to automate it and then you can get fancy [laughs] on top of that. So can you, let's talk a little bit about some of the ways that you can automate that, because I know this is more of a last, I don't know, 20, 30 years that this has sort of become popularized. And I feel like it's super easy, but who are like the big players in this game and, and what should people be looking out for when choosing one?

Chris Hutchins: Yeah. So I think there's kind of two broadly speaking general places to put your money. There's, I wanna keep it in cash and I wanna invest it. And any type of investment, whether that's some type of stock, whether that's an index fund, whether that's some crazy startup that your friend is [00:20:00] doing, like the, the game there is always there is risk. And, and with that risk, you're hoping to get a much higher return. And the alternative to that is to put your money in some bank account where unfortunately, when we're recording this, so you're probably gonna earn half a percent. Maybe in like the perfect bank account, I think like T-Mobile MONEY might earn 1%-

Dr. Darya Rose: Yeah.

Chris Hutchins: ... but like it's not a high, high amount of money that you'll earn, but there's no risk. So if I was thinking, wow, we've been saving up for a down payment for a house and we're gonna try to buy this house next year, I would rather not take the risk of having a little extra money with, with the possibility that the stock market could crash, it could be down and now I can't buy the house.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: So for me anything that I need my money for in the next three or four years, I'm keeping that money in cash. I know that it might not beat inflation. I might not earn a lot of interests, but for me, if I really need that money. Not, “Wow, I think it'd be really cool to go on a vacation next year.” And, and, you know, if I can't go on the vacation, my life is over kind of thing.

More like, you know, [00:21:00] I have, let's say you're expecting a child and you're like, I'm going to owe this many dollars to go through this entire delivery and all sorts, things like that, where it's like, there is money I need, I try to keep that. And for me, I like six months of expenses, just, no matter what happens, lose your job, decides something, you just have six months of expenses. So I put all that in cash. Everything else, and, and by the way, you can open up an online cash account at almost anywhere. Your bank will have a savings account.

Dr. Darya Rose: You just answered my question, this is why they exist. I thought they were just a scam, but okay. [laughs]

Chris Hutchins: Yeah. I mean, the funny thing is the reason savings accounts and checking accounts are separate at so many financial institutions is because they w- banks didn't wanna pay high interest on all the, all of your money. So they created some restrictions and said, “Hey, if you put your money in a savings account, you can't withdraw it all day, every day, there are restrictions.” And a lot of those restrictions actually got waived during the pandemic. But I think there was something like there's only six withdrawals from a savings account a month. And if you [00:22:00] cross six-

Dr. Darya Rose: Yeah.

Chris Hutchins: ... then they convert your savings account to a regular account, just a checking account. But any regular bank, Chase, Bank of America, Wells Fargo, all of these banks, they're gonna pay you almost nothing, whether it's checking or savings.

Dr. Darya Rose: Right.

Chris Hutchins: And so you need to go to some online bank, whether it's an online high yield savings bank, like Ally or Marcus, or it's kind of, uh, an online bank that's started by a bunch of tech companies. I work Wealthfront, we have an online savings product, Chime better, there's all these other companies out there that offer these things, but that's for cash. And right now the interest rates on cash are low enough that I would say you are far better to optimize whatever is easiest for your financial situation than you are for that.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: Where I think it really matters is when you say, okay, now I have enough cash set aside, where should I start putting my long-term savings? Things that I want five to 50 years from now that can really take advantage of compounding and that can grow far greater than half a percent. And that's where you're probably investing your money in the [00:23:00] stock market is, is kind of the primary place. There are a lot of things in the stock market. You can buy all kinds of index funds that are actually covering things outside of the stock market. Like you could buy gold or you could buy agricultural things. So-

Dr. Darya Rose: Emerging markets. [laughs]

Chris Hutchins: Yeah. Exactly. And so for me, I think there's really two approaches. There's I really wanna get hands on. I'm gonna go research all of these companies. And I wanna figure out which stocks are the best and I wanna pick them. And I wanna spend a lot of time here. If that's you, go for it. My approach has been, there are people who dedicate their lives to each individual company. If you think Apple, there's probably 20, 30, maybe even a hundred people on this earth whose sole job every day is to evaluate everything going with Apple. Looking at every bit of information they can get and deciding is now the time to buy or sell Apple with the billions of dollars I have access to, uh, at the giant financial institution I work at. My belief is I probably don't know more about Apple than [00:24:00] they do.

Dr. Darya Rose: Well, let's just like-

Chris Hutchins: Mm-hmm [affirmative].

Dr. Darya Rose: ... [inaudible 00:24:02]. Like nobody should do that. Don't be picking stocks, right?

Chris Hutchins: Yeah. I mean, I think, I think the argument I will give for it is if you need, you're investing and your financial situation to be fun, then I would say, great. Put 95% of it in a diverse, low-cost set of index funds that plays the market, but keep that 5% that you can play with and you can invest in things that you're excited about, because if that gets you involved and keeps you from having to bet with all of it, that's all the better. I think even I fall in this bucket.

Dr. Darya Rose: Totally. Yeah.

Chris Hutchins: Every now and then there's a company I'm like, “Ooh, let's invest in that company.” But it's a small piece.

Dr. Darya Rose: Totally. Kevin, my husband does that. I, I don't [inaudible 00:24:44]. He's in charge of all this business, but yeah, so we definitely do that. But obviously first and foremost, get your like ducks in a row and put money in an index fund that, what did you call them? Like a low-cost index fund?

Chris Hutchins: Low-cost index fund. And by the way, [00:25:00] there's, there's a couple things to note. There are lots of funds that invest in the markets, right? And if your money is at a financial institution, it's very possible that the person that opened that account for you recommended some funds that are in the market. And there are very, very different ones. There are some funds that invest in US stocks that might cost you 2% a year. And there are some that might cost you 0.05% a year.

Dr. Darya Rose: Hmm.

Chris Hutchins: And they might track the exact same things. It's just a matter of how much that fee gets taken and it goes into the hands of the person that sold it to you. And so I would say for almost anyone that isn't sitting on piles of millions and millions of dollars, this is probably not something where you need someone's help to invest in index funds. And if you do, there's this really simple test. You just ask whoever's trying to help you if they're a fiduciary.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: It's kind of a weird word, but it basically means anyone who's acting as a fiduciary is legally bound to act in your best interests, which is probably some, I, I don't know the exact number, but it's gotta be less than 15% of all, all kind of [00:26:00] financial advisors in America.

Dr. Darya Rose: Interesting.

Chris Hutchins: And the answer is not as simple as yes or no, because basically here's how it works. You ask someone, are you a fiduciary? And 15% of them say yes and 85% and say, well, listen, I really care about your family and your future. They don't say no, right? They're just-

Dr. Darya Rose: Right.

Chris Hutchins: ... they're, they're gonna tell you a story. The short answer is if they don't say yes, I would be worried about anything someone tells me is a good investment if the answer to the question, are you a fiduciary is not yes, but I think there are a lot of options. That if you, if you wanna kind of get a little hands-on, you could open up an account at Vanguard. You could do some research on some index funds and you could buy them. I don't wanna get that hands-on.

I work at a company called Wealthfront. I used it before I worked there. We just have a simple quiz where it says, Hey, let's ask you some questions. We'll figure out what your risk tolerance is. We'll build you a portfolio of low-cost diverse index funds, and then we'll manage it for you and you don't have to think about it. You can just automate your deposits [00:27:00] and we'll just automatically invest them for you.

For me, if I'm ever not working at Wealthfront, I'm still gonna be doing that to manage my money. It's like the simplest thing. I just recurringly set deposits in and it gets invested. And so you can look for platforms that do that for you or you can try to do it yourself, but I would say low-cost passive diverse index funds. There's so much data on the internet that shows that passive investing outperforms active investing.

Dr. Darya Rose: Yeah. It's not just data on the internet.

Chris Hutchins: Mm-hmm [affirmative].

Dr. Darya Rose: It's just like straight data. [laughs]

Chris Hutchins: Yes. Yeah. There's, it's not, there's sometimes where it's like-

Dr. Darya Rose: Science.

Chris Hutchins: ... depending on who you talk to, like all of the data shows that people are not good at picking what's going to win consistently.

Dr. Darya Rose: Right. So let's talk about that then. So what Wealthfront does and there are other competitors that do this or?

Chris Hutchins: Yeah. There's, there's a bunch of robo-advisors out there.

Dr. Darya Rose: Yeah. Robo-advisors, that's what they're called.

Chris Hutchins: Yeah. And the main difference is you basically, you build a portfolio that says, I wanna take this much risk. And that's usually some allocation of stocks, some allocation of bonds and other things. [00:28:00] If the stock market goes up a lot and the bond market goes down, then if you, you started at 70% stocks, you might be at 80% or 90% because of the way the markets have held. And so your, what you should do, if you wanna keep that same profile is sell some of your stocks and buy some more bonds or take all your new dollars and buy more bonds. So you get back to, let's say it was 70%, 30%, but you get back to that point. The difference between a brokerage account and robo-advisors is who's responsible for making those changes. It's do you need to go in and figure out what the right percentages are and make those trades or are you gonna let a piece of software that just monitors it, do it for you?

Dr. Darya Rose: Right. So that's what we're talking about here. We're talking about a computer doing it. And the computer is better because they can do it 24 hours a day, seven days a week, perfectly.

Chris Hutchins: Yes. And, and there's all these like really cool things. Things like tax loss harvesting, where if something's down, you could sell it, buy something almost the same, but like technically not exactly the same and, and capture those losses while it's down so [00:29:00] that you can use them to offset some of your income and pay less taxes each year. And so we, we at Wealthfront did a study and we found that on average the benefit of tax loss harvesting was like three times the fee of the product for, for the average client. So there are a lot of things that software just does so well, but who's gonna log in every morning and do a mathematical calculation, comparing the cost basis of everything you've ever bought in your brokerage account and decide if it makes sense to sell something right now.

Dr. Darya Rose: Right. And [inaudible 00:29:26] in the stock market it doesn't like, it's not only relevant in the morning. [laughs]

Chris Hutchins: Yeah. Yeah. Yeah.

Dr. Darya Rose: It's like up and down all day long.

Chris Hutchins: Yeah. So-

Dr. Darya Rose: Yeah. So you're talking about a computer like algorithms and math that does asset allocation. So that's what we were talking about earlier for people who aren't following. I just wanted to like slow down a little bit. The, that asset allocation is how much of your portfolio is in different types of assets and at which proportions-

Chris Hutchins: Yep.

Dr. Darya Rose: ... and you wanna keep that solid, right? You wanna keep the proportions the same, but if one really [00:30:00] grows and one doesn't perform as well, then you have to rebalance your allocation. And, and the robo-investing does that automatically. And another thing that it does is this tax loss harvesting, where you can get the tax benefits of losses that you acquire from the ups and downs of your investments and offset those-

Chris Hutchins: Your income tax.

Dr. Darya Rose: Yeah.

Chris Hutchins: You actually offset your income tax. Let's say it's up to $3,000 a year, but like you can offset, if you're in the 40 something percent tax bracket, you can offset that income each year with losses you get from your portfolio, which is, you know, pretty meaningful.

Dr. Darya Rose: That's amazing. Yeah. And, and like you said, it, it's such a big number. Like, like people don't do this, like you said, nobody's waking up in the morning and doing this [laughs] but the benefits you can reap from doing little things like that automatically is tremendous. And, and by far covers the cost. 'Cause also the cost of, of the robo-investing is way lower than hiring a human to do all this work anyway, right?

Chris Hutchins: Yeah. Mo- most humans charge somewhere around [00:31:00] 1% of your portfolio and most robo-advisors charge somewhere around 0.25%.

Dr. Darya Rose: Wow.

Chris Hutchins: And, and most of the research you can look at shows that the value of having someone to manage all this for you, and, and we've seen it just in the single feature of tax loss harvesting, but, but across everything is, is just more valuable than not. And if you factor in the fact that, you know, I'll take an example from my personal life before robo-advisors, I'd be like, “Okay, I have some money. I wanna invest it.” And now I'm like, “Okay, well I'm gonna transfer it to my brokerage account. And then I've got to log in. And then I got to go in and set up the trades.” Well, that takes some time of, “Oh, the market's closed. I'll do it tomorrow.” It's like, how many days are you gonna miss being just in the market-

Dr. Darya Rose: Right.

Chris Hutchins: ... by having to manually do all this yourself versus saying, I'm going to transfer $300 and I'm done. I worked on this product called autopilot where you could actually say, anytime my checking account goes over $12,000, just take the rest and, and just automatically do. So you don't even have to log in and [00:32:00] say, make the transfer.

Dr. Darya Rose: Wow.

Chris Hutchins: It'll just wait for it. So like that kind of automation, I think there's this, this phrase of, time in the market is, is better than timing the market.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And I think like your goal is time. And so the faster you can get money in the market without having to think about it, without having to slow you down, that's just gonna pay kind of returns in the long run when it comes to your portfolio.

Dr. Darya Rose: Amazing. Yeah. I just, I've been so impressed with Wealthfront and I should do like the full disclosure that I think, well, definitely like the vast majority of our money is in Wealthfront. And then also we are also investors in Wealthfront, for whatever that's worth, if you wanna think I'm a sellout, that's okay.

Chris Hutchins: But, but I'm not paying, well, Wealthfront is not paying you to say this.

Dr. Darya Rose: No. They're definitely not. They don't probably know who I am. [laughs]

Chris Hutchins: Perfect.

Dr. Darya Rose: And if they probably won't listen to this podcast, but maybe they will because you are on it, but anyway. So I wanted to back up a little bit to something you were saying earlier, 'cause earlier you were saying you wanted to have six months of your daily living expenses before starting to invest. Is that right? Or do you, would you recommend still putting and given the compound interest [00:33:00] we talked about earlier, would you split that up a little bit? People are kind of behind on the six month of disposable income [laughs] sort of thing.

Chris Hutchins: I think it really depends on your, your situation. How much of a buffer there is and how much you make and how much you spend. If you're in a single income household and one of you as a freelance designer, like it's very possible that maybe you can't find a client for a few months. And if that person might wanna keep a year of income there. If you're in sales and you, commissions are really kind of dependent on the, the state of the market, that could be tough. I know I, I have a family member in the oil and gas industry. And like at any given point in time, the entire market could change and half the industry could lose their jobs.

Dr. Darya Rose: Right.

Chris Hutchins: So the worst thing you wanna do, you do is be in a situation where you need to borrow money and you can't. And so if you lost your job, you might not qualify for a loan. And so what's your only option it's to live on your credit cards and pay 20% interest. And so how do you put yourself in a [00:34:00] situation where you're not gonna have to do one of two things, sell your stocks or your investments when they're down or borrow money at high interest rates.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And so if you have two jobs between you and, and your partner and you live on less than one person's salary, and you both work in the kind of industries where you feel like your jobs are very, very stable, well then maybe it's only a month or two, right? Like it-

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: ... it's really dependent on your own circumstances. But I think we've all had a time where it's like, gosh, something broke in the house and you have to replace the water heater or you, you're just ready to replace that couch. And these, these sound like small things, but if two or three of them happen in the same window, if you have a medical situation come up, you don't wanna be in a situation where you're like, gosh, these things all happened in the same month and now I've got to go borrow money on my credit card or now I've got to go sell my investments.

And sometimes it might be fine, but if all of those things happened last March, right in the middle of the pandemic, the market, your, your whole investment portfolio is down 30% [00:35:00] and you maybe lost your job and you don't have any money. Well, if you have to sell, like the whole expectation is that the stock market's gonna go down. Like over hi- historical times, it has crashed as much as 30%, 40%, but it's recovered every time after that.

Dr. Darya Rose: Right.

Chris Hutchins: But if you sell when it's down, you don't have the money in the market to, to recover.

Dr. Darya Rose: Right.

Chris Hutchins: If anything, like when the market's down 30%, it would be a great time to put money in. Not, not that I'm gonna endorse trying to time it, but if the market happens to be down, I would say now's a good time to invest. So that's, that's where the number comes from. And so it's really personal to your level of stability, your access to capital. If your uncle is a billionaire and he says, you know, anytime you need money, I'm happy to lend it to you. Well, maybe you don't need to keep any, uh, [laughs] any, any emergency funds or things like that or-

Dr. Darya Rose: I see.

Chris Hutchins: Yeah. But I, I just like to have a couple of months in cash because I just never know what's gonna happen. If there are things we, we have an AU pair, uh, for childcare and the agency fee gets paid entirely upfront for the year. So half of your childcare expenses for the year have to be paid the [00:36:00] month you start.

Dr. Darya Rose: Hmm.

Chris Hutchins: So the last thing I wanna do is have to go and sell something or put money on my credit card and not, not take two months to pay it back and that kind of stuff. So for me, it's just like nice to have that little cushion, but you know, it's, it's personal.

Dr. Darya Rose: Got it. Got it. Thank you for explaining that. So what about buying a home? So I feel like a lot of people that I know, especially like high school friends, [laughs] like they think that buying a home is sort of the pinnacle of financial responsibility. How true is that?

Chris Hutchins: Yeah. So it's funny. The, the, there's a great thing about homes, which is that you are forced each month by the bank, if, if you get a standard kind of 30 year fixed mortgage, you're forced each month to pay off the mo- mortgage over 30 years. And so if you don't have a home and you rent almost, and, and I'm not gonna say always, but many times, your monthly expenses renting a home are lower than your monthly [00:37:00] expenses buying a home, but after 30 years, you, you own the home.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And so it, it's not fair to compare the two, unless you factor in the fact that you're going to save the same amount of money. But if your mortgage expenses with everything, insurance, property tax, maintenance, everything let's say is like $2,500 a month and your rent is $2000. If you don't save the $500 a month, then 30 years from now, you're gonna be in a way better place, owning a home than having not saved any money.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: So I think there are a lot of people that maybe didn't have the best savings habits, but bought a house and the bank effectively said, you have to save enough money over 30 years to pay off this house. And so I will say it's like a forced savings vehicle-

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: ... has been really valuable to people, but there are so many reasons, I think that buying a home is like not the best thing in the world. The long-term home appreciation rates are not better than long-term stock market [00:38:00] appreciation rates. So in terms of an investment, I personally don't think, um, you know, real estate is like the best investment in the world. I'm sure you'll have a friend who would argue differently and there are plenty of people who've made lots of money in lots of different ways, but the flexibility of renting, uh, is, is huge, right?

Dr. Darya Rose: Right.

Chris Hutchins: If you decide, I don't wanna live in the city, you can move. When you wanna move when you own a home, you've got to hire a real estate agent. You've got to pay two sets of real estate commissions. It usually ends up being somewhere around 6% to 7% every time you sell a home. And so if you buy a home and decide a year later you wanna sell, there's almost no chance you've made up for all of the costs that you've spent to buy it, close on it, sell it, paid all the agents commission, stage it, all that kind of stuff. So there's a lot of flexibility that comes with renting that I think is underappreciated and there are just a lot of costs that come with ownership that aren't the mortgage payment.

Dr. Darya Rose: Right. That's, that was the big shocker for me. It's just never ends with the [00:39:00] maintenance. It's just-

Chris Hutchins: Never.

Dr. Darya Rose: ... never ends with the maintenance and shocking what it costs to have your yard done every week or two or things like that. And then-

Chris Hutchins: Yeah. We need a new furnace now. I've had to replace a water heater.

Dr. Darya Rose: Yeah. And just stuff constantly breaks. Like I actually, we actually built our home and so it's brand new. I mean, it's three years old and still stuff constantly breaks. I mean, [laughs] it's just, it's a full-time job basically. And every single one of those things just cost so much money. And, and even then there's the stress and the headache of the contractors are hard to find right now and dealing with all that is just people aren't necessarily ready for that.

Chris Hutchins: Yeah. I mean, I would have loved when our water heater broke to just be like, hi, person whose responsibility it is that's not me, fix the water heater, please.

Dr. Darya Rose: Right.

Chris Hutchins: Instead, it was like, “Oh, do we have a home warranty? Will that cover it? Oh, no, it doesn't cover anything here.” How do I find a person? What's the right water heater? Now do I have to become an expert in water heaters just to be able to take a hot shower? Yeah. So, so all of that's there. And then one that I don't think it's talked about a lot [00:40:00] that I really think is, is kind of a strong pitch for renting, especially when you're younger, is that because of this idea of, the general rule of thumb is if you're not gonna live somewhere for five years, it's probably gonna be pretty hard to recoup all of the costs that you know, to buy and sell a property.

And so obviously there are plenty of examples of cities that appreciated very quickly, and that wasn't true, but in general, to, to make back all of the costs of your home, when you buy a home, by the way, the mortgage payments for the first few years mostly go to interest. So you're not actually really paying the house off that quickly in the first few years. It's really back-loaded.

And so the real crazy thing to me is that I see people who say, “Well, I wanna, I'm trying to decide if I should rent or buy.” And they say, “well, buying where, we can't buy something where we're gonna move in three or four years and, and by five, 10 years from now, we want a family. So if we buy, we're gonna have to buy a three or four bedroom house.” And then I'm like, “Okay.” [00:41:00] And then they're doing the rent buy calculation. And they're putting in the rent side, they're putting a four bedroom rental. And I'm like, “Do you have a four bedroom rental?” They're like, “No, we live in a one bedroom.” And I'm like-

Dr. Darya Rose: RIGHT.

Chris Hutchins: ... “Well, how long would you keep living in your one bedroom?” They're like, “Well, we're probably not gonna have kids for three or four years. So we could stay in one or two bedrooms for three or four years.” And I'm like, “Well, in that world, the math never makes sense.”

Dr. Darya Rose: Right.

Chris Hutchins: Because if you could rent a one or two bedroom place, but in order to buy a place, you'll be at for more than five years.

Dr. Darya Rose: Oh, it's a fraction. Yeah.

Chris Hutchins: Yeah. So people end up pre-buying space. And so Ramit Sethi who wrote a book called, I Will Teach You to Be Rich, has this concept of invisible scripts.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And they're like, things we've always talked about and heard that practically don't always make sense. And I think the need to buy a home in America is one of these things that if you can get over it, depending on your circumstances, it might be a great financial move. And I always laughed at my co-founder of my last company, which is a financial planning startup, but he was the person people went to for advice. And he was like, "Yeah, I just, I don't wanna own, I love renting."

Dr. Darya Rose: Yeah.

Chris Hutchins: And they're like, "But you're the smartest person I know when it comes to personal finances." "Yeah, I don't wanna [00:42:00] own. For me I like the flexibility, I like being able to go wherever I want, I like all these different things." For him it was just not, it didn't make sense, financially. It, it was like not an emotional decision. He's like, math on a spreadsheet, it was not a better deal.

Dr. Darya Rose: Amazing. For me too. I mean, that's fantastic. What about the kind of properties that are like rental properties?

Chris Hutchins: Yeah. I mean, for me running a rental property is-

Dr. Darya Rose: is that just, is that passive income?

Chris Hutchins: I think a passive income is something that you don't have to do any work. We just talked about the hassle of having to replace a water heater in your own house. The, like that's stressful, but at least there, the resolution is I don't have hot water. I need hot water. But if you're a landlord, it's like, “Hey, do you, can you come fix my water heater?” And now that's your problem. And I think it always looks good on paper when you say, “Oh, I'm gonna pay this much. The renter, the renters are gonna pay this much. It always kind of works out well.” You're like, “Well, but when that renter's gone, how many, how many weeks is the place vacant? What if there's maintenance issues? [00:43:00] What if the renter doesn't wanna pay?”

I've, we've rented, uh, a room in our house for years in our old home. And we didn't have that many problems, but there were definitely a couple scenarios where someone said they were gonna move in. And at the last minute and didn't and we were out a month. And like, when you're out a month, that's like almost 10% of your income for the property for the year. So if you think this rental property is gonna make a 5% or 7% annual return and you have an empty month, you're done. Like you didn't, like you'd lost money that year.

And so for me, we wrote a blog post on the Wealthfront blog about why rental properties aren't good investments. And I personally have not purchased a rental property, bought a rental property. My exposure to real estate is investing in REITs, real estate investment trusts.

Dr. Darya Rose: Yeah.

Chris Hutchins: Which is like, you could buy real estate. You could just buy it as an index fund in your portfolio-

Dr. Darya Rose: So much easier.

Chris Hutchins: ... and completely hands-off.

Dr. Darya Rose: Yeah.

Chris Hutchins: So, but there are a lot of people that made a lot of money with real estate. And, and there's this kind of feeling that [00:44:00] that's kind of like the greatest way in America to own land and own a home. I, I do own a home, but it, it was only a home that I was fairly confident was the same size I would rent otherwise. And I would be in for many years and yeah, for me, I, I don't own any real rental properties, but, you know, I know there are people that love them.

Dr. Darya Rose: Yeah. That's great. I, I love the framing that you're putting around all this, because it really helps to put stuff in perspective because I feel like people think they're failing if they haven't bought a house yet. And it's like, Nope, you know, you could put that money in IVS and just have [laughs] [inaudible 00:44:32] like, I've, I've heard people make, make, arguing with themselves about this choice. So they really want kids and they're getting older and they wanna buy a home and, just have the kid, man. [laughs] You can figure, figure the house later.

Chris Hutchins: Yeah. I, I think there's so many options. I mean, down payments are big thing to save for. And if, if I would love to do the math, if, in advance and I could have shared it, but I didn't. But, you know, if you work at a company that offers you a hundred percent match on your 401k and you're foregoing this a hundred percent [00:45:00] return on your investment so that you can save cash so that you could buy a home, like it tell you that that's not gonna be a good outcome economically at the end.

If you have enough money to do all of the things, congratulations, but a lot of us are, are in a situation where I remember when we first said, “Oh, can we buy a home?” We were like, “Oh, we have a 2% down payment.” And that didn't do anything when we were looking to buy a home. So it took a while to get to that point. And so you can get there eventually, but I wouldn't feel the pressure to be financially stable. I know multiple people Ramit actually is one of them who like doesn't own a home and he's very financially successful. And so I think some of the smartest people I know, kind of have the ability to say, "Everyone says, I should do this, but maybe I don't have to and, and I can live my life the way I want and be responsible in other ways."

Dr. Darya Rose: Amazing. So we should all buy Dogecoin, right?

Chris Hutchins: [laughs] The cryptocurrency explosion over the last few years has been fascinating. And I think one of the coolest things is if you've invested in [00:46:00] cryptocurrency, you've watched, at least for a couple of years, you've watched your money go up tremendously and then you've watched it go down tremendously. So I think it's at least a great lesson for people to see that things are very volatile. And I know that-

Dr. Darya Rose: Oh, you're right. It's 40 years of stock market and like a year and a half. [laughs]

Chris Hutchins: Exactly. And so, in, in three years of Bitcoin, we've watched like three market crashes. So look, so Bitcoin is an interesting and, and all cryptocurrencies are an interesting thing to think about from an investment perspective. Because on one hand, I, I've, I've heard from many people that they don't like to use long-term savings to speculate. And a speculative investment is one that doesn't have a cashflow, right? It's if, if you think about a business, you invest in a business, that business generates revenue. You invest in a rental property, generates, you know, rent.

When you invest in things like gold or Bitcoin, there, there's no money coming in. You're purely buying something that you think will be worth more in the future. And its worth is determined by a market of people that think something.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And if all of a sudden people don't think it's worth anything, [00:47:00] it could just be worth nothing. And so I think there's kind of two perspectives here. There's that perspective. And then the perspective that it's a really important technology that is changing the way, so many things on the internet work. So my approach has kind of been great. I, I don't think it's the whole investment portfolio, but it's a piece of it. And so you can allocate a small percentage, whatever, you know, you're comfortable with to that.

There have actually been some recent studies, not decades of studies, right? We don't have that much history on crypto, but there've been some recent studies of adding something like a one to 3% portion of your investment portfolio over the last decade to Bitcoin.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: Kind of added to the returns without adding to the risk or volatility. We're not talking adding 30%, 40%, but adding a couple percent to your portfolio-

Dr. Darya Rose: Right.

Chris Hutchins: ... actually had a pretty good impact. Now, all of these studies about building a diverse passive portfolio in the stock market have, you know, decades of research. This might have a decade of research or maybe not even-

Dr. Darya Rose: Not even [inaudible 00:47:54]. [laughs]

Chris Hutchins: ... maybe seven years of research, but I, I do think that anyone should be able to take a [00:48:00] small portion of the money they've saved and invested in things they're excited about. If only, just to be excited about investing, because maybe that'll help you save more because you're getting to do things that you can kind of tangibly feel. So if that keeps you excited great, but I just keep it to a small percent because of the volatility.

Dr. Darya Rose: Yeah. Super risky. Yeah. You know, it's funny. I actually, so for those of people who don't know, my husband, Kevin Rose has a podcast like all about cryptocurrency. We're, we're kind of famous for it. [laughs] It's called Modern Finance if you're interested. And so definitely we are, everybody knows we pretty neck deep in crypto and have been for years, but it was funny actually, Ramit Sethi was over at my house the other day and Kevin, and he's like super traditional finance guy. Like he just, he goes, does it the old fashioned way and he's doing a very good job of it. And he's incredibly smart. And Kevin is just like, he, he does everything Ramit says not to do [laughs] and, and, and [00:49:00] succeeds at it.

So they're both right in that sense, but it was really interesting to hear them talk about crypto, because for me, it's like, no, I don't, I don't get it. I don't need it. It's just not my jam. I'm like, I'm too traditional. And Kevin's argument was, he's, that's great and you're right. Like obviously like the smart thing to do is do it the boring way 'cause that's how, like it's the least risk and the, and pretty much guaranteed to create financial security at some point in your life. He said, but, he said, if you have a little bit of playing money, he does, he says, Kevin said kind of exactly what you're saying, take a tiny chunk and just use it.

And he's not, he's not assuming you're make, you're gonna make money, but you might, but just to learn because this technology is so transformative and, and kind of complicated right now. So you kind of do have to sort of dip your toes in and get your hands dirty and play around in order to, to really know what people are talking about 'cause one day it's gonna do something. And what that, which exact coin or which exact [00:50:00] use case, it ends up doing something interesting. Obviously there'll probably be several, you won't understand what's going on unless you play around with it.

And the earlier you start playing around with it, the more fun it is. And like you were saying, it is kind of fun to sort of get into these different coins and see what they're doing. And like we have, [laughs] I got, I got a couple of my friends, like mining Chia, like farm- it's like farming Chia [laughs] On there, like random laptops sitting around their house. And there's, there's definitely something to be said about using a little bit of money IF, if you have it to, to learn something new.

Chris Hutchins: Yeah. I'm super supportive of that in whatever area it is. I think the same thing can be said about taking some of your savings and investing in a business you wanna start or taking other, other kinds of risky approaches to things. Investing in education, right? Like investing in a course that might make you better at your job. All of these things are things where you're putting money out there. You're hoping they'll have an outsized impact on your future, um, [00:51:00] but there's risks. There's risks that you might not actually even be in that career. There, I, I know plenty of stories of people who went on to get degrees and, and not pursue a career in that field.

And so I think it, it's important to take risks, bet on things you're passionate about, bet on yourself, but it's also important to realize that those things all come with risk. And if you can't build kind of a solid foundation for the less risky side of your future, but we probably all assume that we will be older and wanna not work every day. And, and some people never wanna stop working.

And I think a common assumption is that I wanna stop working and then people retire and they're like, "Well, like maybe I still wanna advise some companies or do some consulting here or do this other thing." And so it's, it's a nice surprise that I think lots of people stop working and then end up doing something with their time that generates some income.

Dr. Darya Rose: Right.

Chris Hutchins: Um, but not having to plan for that is, is certainly a luxury that starting to save early and, [00:52:00] and being kind of more aggressive as you, as you can kind of gives you that luxury.

Dr. Darya Rose: Yeah, absolutely. So what I actually know you for the best [laughs] is helping us optimize our credit card points and our travel plans, because you are just, you're like a savant at this. [laughs] Like, you're just, I don't know how and why you had spent so much time learning this, but it's amazing. And I was wondering, I mean, so just quick example. Like we have never been great at it. We bought, we know we have our Amex card, we have our Chase credit card, the Sapphire, and we just go about our lives buying stuff.

And at some point we were like, "Oh, we've got all these points." And, and we're like, "what do we do?" And, you know, a lot of people get like specific airline credit cards and really, really get in, but like, that's not me. Kevin and I are just not the people that are gonna do that. But you were [00:53:00] able to take our points and move them all around and get us the most insane free flights that I've ever experienced in my life. Like just first class, like champagne and caviar on these planes. And I like for free. [laughs] It's just so insane. So I was just wondering, you know, I know we can't like, that's a whole other podcast to go deep on that stuff, but, you know, just high level tips and hacks for credit card point optimization and people should be doing it, right? Like that's just free money.

Chris Hutchins: Yeah. I mean, when you said that's a whole other podcast and I'm like, "Yeah, it is. I have it." [laughs] So like-

Dr. Darya Rose: Everybody [inaudible 00:53:35] Christmas podcast. [laughs]

Chris Hutchins: Yeah. So feel free to check it out. It's called, all the hacks. Yeah. I mean, what happened was, you know, I learned this formula early on where it's like, the amount of money you can save is how much you spend versus how much you make. And I was like, well, I'm in a job right now where I don't know how I could make more money, but I don't really wanna spend less money because I enjoy my life. So I went down this crazy path of are there ways that I could actually do [00:54:00] a lot of the same things in life without spending the money?

And that took me down this like obsessive kind of optimization path of, okay, are there ways to do this with credit card points? Are there ways to do this with deals and shopping online? Are there ways to do this with tax optimizations? And go down a number of paths of ways to optimize your day. At one point, I considered that crazy like sleep thing where you like sleep for an hour-

Dr. Darya Rose: Yeah.

Chris Hutchins: ... or six times that Uber van or whatever, you sleep for 20 minutes-

Dr. Darya Rose: It's a terrible idea.

Chris Hutchins: ... polyphasic sleep. Yeah. I learned later is not a good idea. I never got that far, but I was like, I was willing to experiment with anything if it gave me back money or time-

Dr. Darya Rose: Amazing.

Chris Hutchins: ... but I could still live like an exciting and interesting life. And so credit card points were just an interesting place because two things were true. One every time you swipe your card, the bank was making money. And if you use the right card, you could get a higher amount of that money. So if you use your debit card, you get like nothing. And if you're buying a [00:55:00] flight, so depending on where you buy it and which card you use, you could get an effective value back of anywhere from zero to 20% back. And it may be 20 times, maybe 24 hotels. Maybe-

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: ... maybe we're at like 12" or 13% back on flights. But I was like, "Wow, you can get all of this money back by doing all of these things with credit cards. Why don't I play that game?" And then the other big one was that banks were so excited to get new people to use their cards that opening a new card would get you like a few thousand dollars of value in bonus points.

Dr. Darya Rose: Wow.

Chris Hutchins: So right now in November, 2021 Capital One just launched a new version of their venture card called the Venture X. And the signup bonus is a hundred thousand points. And if you look at a lot of the points blogs on the internet, they value the points at one and a half to 1.80 cents. So we're talking $15 to $1,800 for opening up a credit card.

Dr. Darya Rose: Crazy.

Chris Hutchins: And between the travel credits they give you, meaning, yes, the card [00:56:00] has a $395 annual fee. However, every year, the first $300 you spend on travel, they reimburse you and you get 11,000 points a year, which is kind of roughly worth somewhere around a hundred to $200 or something.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: So like the fee is covered as long as you use the card for a few things travel related.

Dr. Darya Rose: Yeah. Yeah.

Chris Hutchins: So for me, I was like, "Okay, well, if there's ever these awesome deals, I'm just gonna go sign up for them." And so I just keep a running list, by the way, at, it's here are the best sign up bonuses.

Dr. Darya Rose: Oh, cool. That's a great idea.

Chris Hutchins: Yeah.

Dr. Darya Rose: Put that link in the show notes.

Chris Hutchins: Yeah. And, and so that was one and then just spending optimization. So I don't think it makes sense if I go to office supply stores and spend $200 a year to go open up a special card just to get a bonus on office supply stores.

Dr. Darya Rose: Right.

Chris Hutchins: But if I look at the categories I spend on it's, okay, I spend a lot of money on groceries and in a normal year on travel and, you know, dining. So let's at least optimize the big ones.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And that, that's what I tell [00:57:00] everyone to do. Go look and see, where do you spend most of your money? And is there a card that would give you a lot more benefit for spending in the categories you're already spending on? And so, for example, with flights, there are some cards that you can get five points for flights and there are some cards that you get one.

Dr. Darya Rose: Yeah.

Chris Hutchins: So I, I just have, uh, probably obsessively large arsenal of cards so that I'm maximizing every possible purchase.

Dr. Darya Rose: I'm curious, what was the first time, whether it was your first flight or, or just the most memorable one that like where you were able to accomplish something like so ridiculous that it really blew your mind? Can you tell us the, the story?

Chris Hutchins: It's funny because the first, there's two, I'll tell two. So one was in college. I met some kids. They're all like a year older than me. And they were all gonna Cabo and I was like, "I wanna go to Cabo." I was like, "This is really expensive flight." And my parents fortunately had signed me up for all the Frequent Flyer, Flyer programs since I was a kid. And by the way, if you have kids, they can start accruing miles from two months old, or however old they are and they're on a plane.

Dr. Darya Rose: Huh?

Chris Hutchins: And so [00:58:00] I, I already have six Frequent Flyer miles open for my daughter.

Dr. Darya Rose: So the apple doesn't [laughs] fall fall far from the tree. Okay.

Chris Hutchins: Yeah, yeah. Exactly. But I wasn't really as exposed to all the optimization as much as just that you could do it. And I remember, I was like, "gosh, how do I do this?" And I looked, I was like, "I have enough American airlines miles to go for free." Like I, otherwise wouldn't go on this trip to Cabo. And it was like a big house that was kind of gross, but we all, there was room for everyone in this house. And it was not that expensive once you were there.

Dr. Darya Rose: Right.

Chris Hutchins: So for me that was like a free trip to Mexico when I was a broke college student was like, incredible.

Dr. Darya Rose: Yeah.

Chris Hutchins: Now, it was like, it was like a free coach seat in the back of the plane on American. So that was like, cool trip emotionally. But, you know, one of the best was, you know, using miles to fly on Emirates, which is, you know, the Middle Eastern carriers are like, just unbelievable in terms of-

Dr. Darya Rose: Unbelievable.

Chris Hutchins: ... service, experience, everything. And, and one of the flights on our honeymoon, my wife and I, we have, you have a door. Like where you're sitting on the plane has its own door that you [00:59:00] can open and close.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And the waitress or the flight attendants coming in, and it's like, "Do you want any of this $400 bottle of champagne?" And you're like, "Yes, I do. I would love that."

Dr. Darya Rose: And that's a matter of fact.

Chris Hutchins: [inaudible 00:59:11].

Dr. Darya Rose: How much is it? Oh, wait, it's free?

Chris Hutchins: Yeah. It's all free and I still, I've still yet to take one of the flights that has a shower and I still think it'd be cool to shower.

Dr. Darya Rose: I did that.

Chris Hutchins: I don't know why.

Dr. Darya Rose: It is cool because after a long flight, you're all kind of get a shower.

Chris Hutchins: Yeah. I had Brian Kelly, The Points Guy, on my podcast a couple of weeks ago. And he said, he actually asked if he could take the bottle of Dom into the shower so you can take a selfie.

Dr. Darya Rose: They just like said no, right?

Chris Hutchins: No. They definitely said, yes.

Dr. Darya Rose: Oh, they did. [laughs]

Chris Hutchins: Yeah. I took the Dom in the shower.

Dr. Darya Rose: That's amazing.

Chris Hutchins: Yeah. So flying on a Middle Eastern carrier in first class is like hands down the most, you know, ridiculous flying experience you could possibly imagine that that's gotta be at the time.

Dr. Darya Rose: Amazing. I think my best, I did that shower flight and that was cool, but I think the best one was the one you got helped Kevin and I get totally free on Singapore Air to Japan. God damn [01:00:00] it. That was such a good flight. [laughs]

Chris Hutchins: I know it's crazy. Because back in, when I was broke and I was like, "Oh, okay, we're gonna go to Europe. We're gonna just shell out, adjust enough dollars to get the last seat in the plane." And you're on there and you're all cramped and you're just like dying to get off the plane. And then you play the game and you're on these flights for free and it's like, 13 hours in and you're like, well, I've had three wonderful meals. I've had a bed to take a nice rest in. I've watched a movie that hasn't come out yet. And you're like, if, if they say, "Hey, we're gonna be delayed another hour." You're like, "Okay, that's fine. Keep going."

Dr. Darya Rose: It's fine.

Chris Hutchins: It's just a whole different flying experience that personally I would just never pay for. I'm looking for a flight to Europe-

Dr. Darya Rose: Your stupid expense.

Chris Hutchins: ... and I'm like, do I wanna spend $8,000? No. Like I would never spend eight times as much, but the, the hack, I guess, if you summed it up in a, in a tiny phrase is that most of the airlines charge twice as much, twice as many miles to fly in business or first class than they do for coach, but when it comes to dollars, it's seven to 10 times as [01:01:00] much.

Dr. Darya Rose: Hmm.

Chris Hutchins: So the, the way that you get the most out of your miles is you use them for business class, because you're, instead of getting 50,000 miles for a flight that was $800, you're spending a hundred thousand miles for a flight that was $8,000 and there's just nothing better. And, and if you have a reluctant partner, play the game just enough to take a trip and then tell them after you're sitting on this like luxurious first-class seat, taking a nap on your way to an amazing five star vacation say, "Hey, guess what? Remember how we talked about how this trip might be expensive? Well, this was totally free. Now, can you please use this card at the grocery store so we can get four points per dollar." [laughs]

Dr. Darya Rose: Nice, amazing. So I think the other huge financial decision and burden that you'll face as an adult, most people will face at some point as adults is raising kids. I mean, I am just, I don't know how anyone does it. [laughs] Like I, like it is so expensive. And when people [01:02:00] tell me like what they're paying for childcare, when I lay out what I'm paying for childcare, like when I look at what schools costs, even just having the baby, like, we were fortunate to have good insurance when, when I had my daughter and I looked at the bill and I just, I almost passed out at how much it costs to have a baby.

And with our insurance, like our, our copay was like a thousand dollars or something and I think that bill was like 60 grand. I mean, it was like ridiculous. And I was just like, how do, I don't, I don't understand. [laughs] I don't understand how people do this. I know that you've recently had a little sweetie and you've probably optimize this somehow. Do you have, [laughs] do you have any daunting tips for, for parents, like thinking about planning for having a family?

Chris Hutchins: Yeah. I would say a big one is, you know, look at which insurance plan you're on, right? There's, there's kind of like three, three or four tiers of plans. There's the high deductible health plan, which in a year you're not having a kid or any major medical problems. I love because you're eligible for an HSA. [01:03:00] HSA is like the coolest account in the world because you can put tax-free money in. You can let it grow tax-free and then you can take it out tax-free. It's like the super retirement account.

Dr. Darya Rose: So What is the HSA?

Chris Hutchins: It's a health savings account.

Dr. Darya Rose: Oh, okay.

Chris Hutchins: And only if you have a high deductible health plan, are you eligible, but you could basically put money in this account, invested in the stock market, let it grow for 40 years and never pay any tax, put pre-tax money in, let it grow tax-free and then take it out without paying taxes. Now, caveat is you only can use it for medical expenses, but, you know, I'm pretty sure that when I'm older, I'm gonna have medical expenses. Like it's just the reality of it. Now the downside is that to use that you need a high deductible health plan, which, you know, usually means the first few thousand dollars of expenses are on you other than like primary care visits.

And so one thing I tell people is if you're thinking about having a kid, it's important, important to consider what plan you're gonna be on when you have that. And so we actually switched so that we were on what's called an [01:04:00] EPO, which only lets you go in network, but unlike an HMO, which is also similar, you can only go network, but EPO doesn't require you to go get a referral for every visit. Whereas HMO usually requires you to get a referral. And then the other type is a PPO where you can go anywhere, but you usually have a copay. So in your case, you had to pay probably 10% or 20% with some cap, which is why it was a thousand or something dollars to have your pregnancy. But with the EPO, we were able to go to UCF in San Francisco and the whole thing was like $150. So-

Dr. Darya Rose: That was where I got the crazy bill. It was at UCSF. So [laughs] [inaudible 01:04:34].

Chris Hutchins: And so one big thing is to just think about, “Okay, we're gonna have a kid. Let's try to make sure we're on the right health plan for this.” I wouldn't say it's the easiest thing to optimize, but you usually know about nine, eight or nine months before. So there's probably, you know, only a couple of months of the year where you won't hit, open enrollment before the child comes. And so that's a big one. Another thing is no matter, I, I think you could go buy [01:05:00] everything brand new, but it is unbelievable how many things there are to buy for a child. Some that you don't know you need, some that you think you need and you don't need. So, and, and almost all of them, someone else has. And-

Dr. Darya Rose: Right. And is three times.

Chris Hutchins: Yes. And know that we have stuff in our house. And as soon as we're done with it, it's like, I can't tell you how happy it would make me if someone would come and pick this up and use this. I do not want this. And I know this very well because there are things that Darya has put in a box and mailed to me [laughs] because she's, “We don't need these anymore and I'd like them out of my house.”

Dr. Darya Rose: Not only that, but there are good things and I feel bad just tossing stuff out or throwing it in a donation bin where God knows where it's gonna end.

Chris Hutchins: Yeah. So, so between Nextdoor, Facebook Marketplace, sometimes Craigslist, But, but I really like Nextdoor and Facebook Marketplace more and there's a bunch of Facebook groups called buy nothing groups. There's like local ones in every neighborhood. And through all of those things, we've managed to find tons of stuff. And half the stuff was [01:06:00] never used because there are various things you buy for a kid, they were like, “Oh, we're really gonna need this.” And they're, "Oh, we never use this thing. We didn't need it."

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And so we've managed to get a lot of the stuff from friends, from people online, at, you know, much cheaper prices. And then we turned around and he gave them to other people. We bought a SNOO, which is like the most overpriced bassinet on earth because it's connected to the internet and it sooth your child and helps them sleep.

Dr. Darya Rose: And that go.

Chris Hutchins: It was, we had such like, it was fantastic. It's now been, I have five friends that have now used it.

Dr. Darya Rose: Wow.

Chris Hutchins: Like it's basically gone from house to house to house. Right now it is somewhere in Alameda [laughs] and, and just waiting for like another person to pick it up from another person. And so I think there's no group of people that even without knowing each other will stick together, then parents.

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: And so if you need something, I assure you that you don't have to buy it brand new on Amazon. And I also assure you that like almost everything. There are a few things that you like can't run out of. You don't wanna run out of diapers or not have them. I [01:07:00] promise. [laughs] But there are a lot of things like, you might think you want this certain bouncy thing or something, you could just buy it and it'll probably get there in a day or two on Amazon.

So I would say there are a lot of things that you don't have the buy in advance. Yeah. So, so that's one big thing that we did to, to save a lot of money was, was using all these groups and Facebook Marketplace stuff to try to find lower costs, cheaper things. You have a lot of lead time also, right? It's not-

Dr. Darya Rose: Right.

Chris Hutchins: ... a lot of times it's like, I need to buy something next week and here you're like, well, I kinda got like six months and I can kind of plan in advance and just wait. I was like, gosh, this thing ranges from three to $400. I'm just gonna wait until it's 300 'cause I have all the time in the world or wait till there's some sale or there's all these sites where if you go build a registry on the site, they give you like a 20% off coupon to complete your registry. And you can open a registry on all the sites. Like you don't have to just have one registry. So we have [crosstalk 01:07:52] baby registry. We had an Amazon registry, and we had all the registries, those things.

And when it comes to childcare, I think there are a lot of [01:08:00] options. I'm just kind of exploring the differences between them. I know that some people really don't want people living in their house and some people have four extra bedrooms and no, are not renting them out. And so if, if you're interested in having somebody in your house and you're interested in getting to host someone from another country, I can tell you that in, in high cost of living areas, having an AU pair is, you know, a much less expensive option than a nanny.

Dr. Darya Rose: Yeah.

Chris Hutchins: In some places, daycare is significantly cheaper. Some places it's even sometimes subsidized by-

Dr. Darya Rose: Mm-hmm [affirmative].

Chris Hutchins: ... the city or by different places. So just like trying all of the options, trying to figure out what you want and, and being creative and just ask other parents. They're like, I guarantee you, there's a parent out there that has, has thought about all of these decisions. So if you need a stroller spreadsheet, I've built a crazy spreadsheet of every possible stroller to try to optimize for that. And I'm sure-

Dr. Darya Rose: Amazing.

Chris Hutchins: ... there's another parent that's done the same for everything else. [laughs]

Dr. Darya Rose: I never use strollers. Isn't that so weird. I used them like twice. I'm such a weirdo.

Chris Hutchins: Yeah. I don't understand. How did you move, you just carry, did you use [01:09:00] baby carrier?

Dr. Darya Rose: I did.

Chris Hutchins: Okay.

Dr. Darya Rose: Yeah. Usually. And then, 'cause that's like a workout for me [laughs] and then, and then it was COVID.

Chris Hutchins: Yeah.

Dr. Darya Rose: So I just never left the house again with my kids. Awesome. Chris, well, thank you so much. I learned so much. Can you tell us more about where we can learn about you and find all your hacks?

Chris Hutchins: Yeah. I mean, so I started a podcast called All the Hacks to chronicle all of my experiences. Basically, I, all I do each week is I find someone who knows more about something than I do and I dig in. And sometimes that's about points. Sometimes that's about travel. Sometimes that's about the psychology of money. Sometimes it's about time management. It's basically like how to-

Dr. Darya Rose: Sometimes it's about healthy eating.

Chris Hutchins: Yeah. Yeah. Sorry. I was, I wish I remember the episode number. Yeah, Darya, we did an awesome episode about dinning, food and just like living a healthier, better life. That was a great one. Check that out and yeah, that's what we do each week. And you can find it wherever you're listening to this podcast, uh, if you just search All the Hacks and subscribe and, you know, I'm, I'm always open to other [01:10:00] ideas and feedback and anything. So you can always find me at

Dr. Darya Rose: Fantastic. Well, Chris, thank you so much for your time. I feel smarter and slightly wealthier. [laughs]

Chris Hutchins: That's how, I love it.

Dr. Darya Rose: Awesome. Well, take care.

Chris Hutchins: Thank you for having me and have a great day.

Dr. Darya Rose: I learned so much from this conversation with Chris and I hope you did too. As always, you can find the links to all these resources in the show notes at Thank you and I'll see you next time.