Jeff Kreisler is a lawyer turned comedian, author and champion for behavioral economics. His first book, Get Rich Cheating, was a satirical look at cheating. His second book, Dollars And Sense: How We Misthink Money and How To Spend Smarter – was co-authored with a previous guest Dan Ariely. Jeff is also Editor-in-Chief of PeopleScience.com, a thought-leadership platform for applying behavioral science to the marketplace.
Listen to Episode #87 here
Things Are Gonna Get Easier with Jeff Kreisler
Our guest is Jeff Kreisler. Jeff is a lawyer turned comedian, author and champion for behavioral economics. His first book, Get Rich Cheating, was a satirical look at dishonesty. His second book, Dollars and Sense: How We Misthink Big Money and How to Spend Smarter, was co-authored with the previous guest, Dan Ariely. Jeff is also Editor-in-Chief of PeopleScience.Maritz.com, a thought leadership platform for applying Behavioral Science to the marketplace. Welcome, Jeff.
It’s good to be here. It’s nice to finally meet you.
We’ve been in touch via phone and email for years.
I was working with a healthcare app company and they hired me because they wanted to have humor in their AI interface. They wanted me to see if there was any real proof that humor worked. I look to you and you told me, “Maybe.”
As spoken by a true academic, “It depends.”
“In the right context and person.”
If you weren’t working as a comedian, writer or champion of behavioral economics, what would you be doing?
I would probably have to fall back on the law degree to pay some bills, but I wouldn’t be happy about it. There are people for whom the law works. I’m not one of those people but I tried a lot of things. I did everything that all the comedians and creatives did and you probably have. I did the bartending and waiting tables and burning of my law degree. All the traditional stuff.
Did you do the waiting tables after law school or before after so law school?
I did it after. I went to law school right after college and the weekend deciding whether or not to go to law school has its own next book. It’s the day Jerry Garcia died was the day I arrived in San Francisco and they said, “You have two days to decide.” My girlfriend visited and my mom didn’t talk to me. I went to law school, took some time off the middle. I moved to San Francisco after finishing, I took the bar and I had opportunities to practice law. I went to Virginia Law School. I’ve had all the big firm offers but I didn’t want to do that to give away my life. I cobbled together my day job. Sometimes it was document review, which is great because it paid better and I didn’t have to work too hard. Sometimes it was the traditional service industry stuff that people do, bartending and waiting tables. More bartending than waiting tables and cater waitering and I dressed up a giant potato for a food network, which is funny. Do you know Eugene Mirman?
Yes, I do.
He also did that and I didn’t know him at the time. That campaign, that the food network was running, he also did that at some point. I’m like, “We’re so close. Can I get on the show?
You’re potato brothers. I once saw Eugene Mirman crossing the street on Sunset and stopped him in the middle of the street to say, “Hello.” We had met once before. He didn’t remember me. You’re not a lawyer congrats for that. Do you find that your lawyerly skills training or otherwise has served you in any way?
In a lot of ways. The way that it least serves me and people think that was the most is, about handling contracts. I know how to read a contract. The way that it’s helped me and influenced me the most is the way that I analyze situations both as a lawyer and a comedian or a lawyer and a storyteller. More broadly, they will look at a situation and they want to repurpose it to tell their tale. A lawyer looks at it as a car accident and breaks down all the elements of what’s going on, the lights, the type of car and the driver and tells a story to convince a jury, in this case, what he or she wants them to understand. A comedian looks at people that know a social situation or even the same accident and retells that story in a way that they want the audience to have a certain emotional reaction. They’ll laugh. It’s the same with a storyteller, etc. The law helped me understand about breaking things down into elements and then reshaping something to essentially make an argument.
I’ve never thought of it quite this way. This comes up in Hannah Gadsby’s Nanette, wherein the second half of her special she stops telling jokes and then retells the stories that the first half of jokes were based on. She tells you what she omitted in order to make the joke funny. I suspect that comedy and law have that in common is what as a lawyer or comedian, do you omit in order to get your goal? What you get exaggerated and what do you omit for different purposes. Comedians don’t have the check but lawyers say, “That’s what the adversarial systems are for.”
There are rules that lawyers are supposed to adhere to. Where the comedian’s rules are to be funny and essentially that’s it. In some ways, that was probably what attracted me to it. I started thinking about comedy in law school when I was consuming a lot of new ideas and my mind was spinning. The only outlet for it was boring law stuff. That’s when I started being the guy that carried on a notepad and wrote down things, had a tape recorder and had spare thoughts. I was drawn to comedy because you could talk about anything, the only rule was, you have to be funny. Whereas, the law, I wanted to be Thurgood Marshall or Thomas Jefferson. I want to save the world but it was so rule-bound, at least at the initial stage that I felt stifled. In comedy, it was like, “Do whatever to get the laughs.” I was the youngest kid, so that’s easy.
You care about rules because you wouldn’t write a book called Get Rich Cheating if you didn’t care about rules or breaking them.
It’s interesting because thinking about caring about them, is open to interpretation.
You notice them.
I do notice them and I notice how people consciously and unconsciously break them or are led astray by people. I also admit readily to coming from privilege. I was a prep school, Ivy League law school, kid. My ability to roll the dice and take a chance in comedy was because I had a law degree. If all else fails, that’s my safety net. Part of my privilege, what I saw is, how certain groups that sometimes take advantage and bend the rules. Get Rich Cheating is about everything from steroids to Donald Trump was in there. The book came out years ago, to Enron and how certain forces take advantage of the gray area at least. I certainly noticed the rules. I notice how people get around and manipulate them. The latest book and the latest work in behavioral science is the flipside of that. If Get Rich Cheating was how other people trick you out of your money so they can get rich, behavioral science is often about how we can fool ourselves and what unconscious forces guide us to poor decisions. They both come together in a way. Sometimes you’re tricked by others, sometimes by ourselves and sometimes a lawyer comes in and cleans up.
[bctt tweet=”A lot of comedians look at what they do and what they are good at, but it doesn’t apply anywhere else. ” via=”no”]
How is it that you learned to follow the rules in order to build wealth? That’s something that the average person is not well educated as to what the rules are. The natural way that they go about reasoning and emoting in the world makes it difficult to be utility maximizers, to use the economist term for this and having some utility-maximizing tendencies is useful if you want to be old and wealthy versus old and poor.
What you said was my first joke on stage, “Everyone, welcome the utility maximizers. How are you? Are your emotions on check today, sir?” I will share with you now my big image of behavioral science and comedy working together. That is, I think of comedians, I don’t know if they fall into the Seinfeld Larry David style, but as an easy example. That style says, “Do you ever notice that people do the stupid thing?” The behavioral scientists and psychologist says, “Yes and this is why.” It’s probably a lot of self-justification for my career choices, but I felt like that fits together. It’s like a yin-yang. It’s looking at the same, “Why do people do stupid things?” Things are irrational or stupid.
You point out the stupid thing then you explain the stupid thing.
In an ideal world.
That lends itself better to pop-science books though than to stand-up comedy.
It does. When I did the cheating book which then became a tour in character and I also had a recurring segment on MSNBC in character which is crazy that I did that.
What was the character’s name?
It was me, Jeff Kreisler, the cheater. It was a Stephen Colbert meets Jim Cramer and Tony Robbins, “You should cheat because of cost-benefit analysis. No one gets caught. The benefit is millions of dollars. Don’t steal a loaf of bread like stealing a bread factory.” Think big. What I found interesting to your point was, in the context of talking about cheating it was this gray area between the two. Between comedy and more psychology because it struck a nerve at people’s core about what they were dealing with and what they saw in society, the unfairness. Income inequality is a bigger deal now than it was years ago, but it was still a big deal.
CEOs making 2 billion times than everybody else. It struck a nerve in the sense of psychology, but I tried to do it in a way that was humorous and satirical. To make it more comfortable for people. I’m sure you’ve discussed numerous times here to digest that. It had its moments but what’s interesting is, that’s how I met Dan Ariely who you mentioned was another guest. He’s brilliant and he and I both had this experience. He wrote a book about dishonesty, which is more straightforward than my cheating. People connected to it, but people weren’t excited to go learn about their flaws.
Dan has a number of books. The ones that made him famous were focused on irrationality. Why do people make mistakes essentially? Besides them being good books, they were timed perfectly in the marketplace. He was early enough to capitalize on that brilliance but the dishonesty book hasn’t caught the same way.
I don’t want to speak for him.
I could say it. It’s fair to say.
The insights are well-founded.
It’s more of an organizational lesson than it is, “I need to make my life better, more personal development and self-help,” motivation for a book like that.
Maybe it’s framed. Even the stuff that is predictably irrational in our book that points out the flaws it tries to frame it in positively, “Here’s what you can do about it.” Whereas in dishonesty, there maybe is a lesson but it feels a lot more negative.
The critique of my own first book was that it solved a curiosity, it didn’t solve a problem, or it satisfies the curiosity, it didn’t solve a problem. I’m going to write that down because I’m working on my second book. I’m talking about the flaws in my first book. Was it working on Get Rich Cheating that started to expose you to behavioral economics?
I wasn’t working on it, but when it came out and I met Dan. I researched Get Rich Cheating based upon the traditional tools. What did Enron do? How did the steroids play out? What was Donald Trump doing? I looked at all that and there were a couple of books about cheating culture. I got the name from David Callahan who wrote it. I never stumbled across behavioral science. I published the book and Dan got a copy.
What year was this?
It was in 2009 that it came out.
It was when his stuff was starting to catch.
His book, Nudge, were all from 2008 to 2009. I went and spoke to his class and I did it in character. Dan and I give major credit for trying stuff. He introduced me as someone with unique wealth-building ideas. He didn’t say, comedian. I scrubbed it, so it wasn’t obvious that I’m kidding. It was still humorous. I would tell these Duke graduate business students, “You should cheat. What’s the big deal? Don’t have morality and you can make a fortune.” I did it 3 to 4 times. I was about twenty minutes in when someone raised their hand and said, “Are you full of crap? What are you doing?”
You should hire that person. It’s a nice little test. Whoever finally raises her hand and goes, “Are you full of shit?” You should hire that person. That’s probably a strong candidate for whatever job you’re interested in hiring.
At the time my only job was someone to fold my clothes when I went to bus tables later. Comedy, big money. I asked that a question and I put to the class and usually, a quarter or a third of them were in a gray area. It wasn’t that they were bad people, it confirmed for me what my basis of the Get Rich Cheating was my uninformed basis, which was, money messes with our heads. It makes us do irrational things. That was a lightbulb moment for me and Dan and I worked on some other projects big and small. Some other ideas I learned about his work and his peers. I was like, “This is the thing.” I had gone to Princeton. I got an economics degree. I’ve gone to a top law school. I knew about that former decision making and in retrospect and maybe self-justifying retrospect, none of those systems for how people made decisions clicked with me because it’s not how humans interact. Humans don’t do supply and demand. We’re driven by this emotion and it feels cool.
We don’t reason Greek philosophers.
Not at all and the work of everyone in that field, as you well know is, I think of it as layering psychology on top of that traditional decision-making. Not ignoring but saying, “How does it work?” It wasn’t while I was researching Get Rich Cheating but it was a result of that.
When I got into the field, it was ten years before that. It was called judgment and decision-making back then and I was enamored with it. It was striking people in the field bemoaned that it didn’t have more of an effect in the world of policy, government, business, etc. I couldn’t have anticipated the change that’s happening. For example, I used to teach my business students how businesses don’t experiment enough. Now, I teach how good businesses do, how nimble they are, how they regularly make bets and how that’s become part of the culture. These CEOs have read these books and there are more people and they can understand the basics of random assignment. A/B Testing is not that crazy.
Especially when the big companies now are like Amazon or Uber, people that have these users that interact in a way where it’s easy to measure. Amazon can peel off one million users to A/B test something in a snap by the finger. You couldn’t necessarily do that so easily in the traditional economy. I see that myself and more and more are doing it. Sometimes I try to check myself to know whether or not it’s my blinders to think because I’m looking for behavioral science. It seems like it’s everywhere. As objectively as I can analyze it, it feels it’s more prevalent.
[bctt tweet=”Opportunity cost underlies every decision. ” via=”no”]
I’ve zeroed out about that. The issue is, it’s not as prevalent as we’d like it to be because it’s such a useful model and they’re such useful tools.
It needs more jokes.
Before we get to Dollars and Sense, I’m in the heavy editing phase for my next book.
On the other side, there is light at the end of the tunnel or whatever your metaphor is. Do you know Annie Duke?
I’ve never met her but I’ve read her book and I knew her from back when poker was popular.
I saw her and we were talking about book writing and she finished a chapter. I don’t know how you feel, but I hate writing. I love having written a book, but I hate writing. When you say you’re an editing stage, I get a little tense myself.
I understand why. I have to tell you this, I’m having a good experience.
That’s good. You have to roll with it.
I’m having a good experience. It helps that I’m writing about something that I know well, something that I’ve thought a lot about, it’s well researched, the topic is fun and I’m in LA doing it. The title of the book is called Shtick to Business. Depending on when this gets launched, the book might be available for pre-order. There will be a little teaser before this if that is indeed the case.
We’ll review it on People Science. That’s a huge boost and that’s going to change everything that’s going on.
Thank you so much. It’s serious business lessons from the masters of comedy. It’s essentially what can we learn from these misfits, these people who have this incredibly difficult job that they make look easy. It’s looking behind the scenes at their personality, practices and perspectives to see what makes them good. These folks may not be the pinnacles of utility maximization, but they actually do have useful skills. Translating them has been fun.
I’m fascinated to read it because one of the challenges that I faced in my career, as I have joked a couple of times and I’m sure you did too is, being a comedian, a writer or in showbiz in general in this town or any town, you can make it big but you can’t make a living. It’s hard to scrape together. I have a young family. If you don’t make it big, you’ll be on the road for 45 weeks a year and all that. Part of the process for me and how I ended up here was being able to think about my applicable skills and transferable skills, whatever the term is. A lot of us that are comedians we look at what we do, “We’re good at this,” but it doesn’t apply anywhere else. It sounds like what your book helps reveal and it’s probably good for both businesses and comedians is there’s a lot there.
I get to make the argument, for example, that Vaudeville was the first lean startup. If you think about lean startup principles, minimum viable products failing fast, etc. That is the stand-up comedian’s process and they’ve been doing it for years and doing it rather successfully. Limiting downside risk, having all this upside potential and so on. That’s an example. That’s one of the ideas that I call it a success by 1,000 cuts.
It sounds painful, but the pain is accurate.
That’s stand up, but it’s a cut. It’s a little cut you never have a gaping wound.
The resiliency you learn through stand-up is incredibly valuable throughout the rest of your life. I have a few theories about if I run the world, my version of Israel making their citizens serve in the army. One is we should make all our citizens work in the service industry because there are still jerks. The second might be some version of trying stand-up. I don’t want a lot of crappy stand-up up there.
There’s already enough.
[bctt tweet=”People in scarcity are much more aware of their financial decisions than people in abundance. ” via=”no”]
You get up and you bomb and you fail which everybody fails and you realize that life goes on. That resiliency is going to help you and everything else you do.
There’s always that joke about people’s worst fears is public speaking. It’s interesting, I don’t talk that much about oral communication in the book, but I have an entire chapter about writing. I buried it in the middle of the book because it would be the least popular chapter for a lot of people. The writing underlies good stand-up. The average person doesn’t recognize that. You were talking earlier about having your notebook or your recorder, that’s the tool that people are using.
For me, when I had those things before I even thought of stand-up comedy. My first exposure to it was, “What’s a stand-up comedian?” “Buy yourself a notebook and a recorder.”
I’ve got one and I use it for as a journal mostly.
The writing aspect of comedy has also helped me out and I know many others. I wrote a speech, someone gave it the 2012 Democratic National Convention as one extreme of the work and comedians at work on TV. Whether it’s comedy or serious. If you’re in a bar in West Virginia, you don’t have time for a long exposition. You got 2.5 seconds before they stop paying attention. If you want to get your idea across whether it’s about men and women dating or about politics, you got to refine your words to the syllable. It’s trial by fire and you do it when you’re suddenly are given a blank page in a book or an audience that is actually paying attention.
Marc Maron once told me, “It’s like being in the matrix.” I met Marc Maron when I started my comedy career in San Francisco. I come off the road for the first time and he was at The Punchline and I said, “I want to do smart stuff,” because I was a cocky little shit, “Like I see that you do.” I’m faced with going on the road and that’s not what you get to do. His face was like, “If you go on the road and you deal with all that crap, when you go to a good room,” we are in San Francisco Punchline, one of the great comedy rooms. “It’s like being on a matrix.” Everything that comes to you, so you can handle it so easily. I’m not suggesting that this is what your chapter on writing is, but when I think about what stand-up does for writing and communications or otherwise it’s like, “If you don’t stand-up, any other platform is easy.” There’re rooms to showcase those skills.
Let’s be honest, the average person who does stand-up never becomes a stand-up, because it’s a big funnel. I’m happy that it’s a big funnel because the people who come out at the end are incredibly good. As a result of the mouth being so wide, I wouldn’t encourage anyone to do it as a career. I might encourage them to do it as an experience. I did as an experience and I’m happy I did it.
It’s like improv. I wouldn’t pay to see people do improv except for the top, but everyone should do it.
The top is worth it.
I’m glad you said that and I hope I didn’t come across as critical of common. It’s great. When I started, I started in San Francisco as a comedian, not life. It was the turn of the century, which I love that I can say that 2000 to 2001. There was no industry. It was post-sitcom boom, it was post-club boom and the internet hadn’t taken off yet. The only people doing it were either geniuses and had no choice or insane people. I found a great because I was learning from the best. At the same time, because that funnel wasn’t as wide, it probably wasn’t producing as many diverse types of talent. Whereas now, I can’t even keep track of all the comedians that are doing great work because there’s so many in addition to those that are doing crappy work. It’s crazy.
I want to get into Dollars and Sense. Did it come out in 2018?
It was in 2017. It feels recent. We can lie the paperback came out in 2018 if you want to make it fresh.
I’m super interested in these topics because it’s related to work that I used to do. Not that I do now. I’m interested in it because they’re all personal and rather relevant. I’ve always been good at delaying gratification. It’s part of the reason why I’ve been successful in life. I have always tuned in to these issues of money and part of it is because of the way I’m wired. Also, because I grew up poor and I had to be rational. You combine with the need to be rational with the ability to delay gratification, I’ve been good about creating a set of automatic behaviors that I’m not going to be old and poor, thankfully, which is terrible. Young and poor is fine, old and poor is terrible.
You don’t have a chance to learn from your mistakes.
Being young and poor is useful. I want to talk to you about some of your favorite lessons. Let’s suppose the reader is dumb and won’t buy your book, but they need to learn something. What should they learn?
There are a few principles when it comes to the financial future.
Jeff is smiling when I said that.
“The ultimate lesson is don’t buy my book. Listen to the podcast and they’ll save $19.” I don’t want people to hear that. The book is laid out saying it ensured behavioral economics. It’s not for Dan Ariely fanatics.
They know about these stuff.
It’s refocused and repurposed for financial decision-making. The big thing is this idea of opportunity cost which may be a flashback for readers.
[bctt tweet=”Heartbreaking things are beautiful. If it didn’t break your heart, they wouldn’t be powerful. ” via=”no”]
I’m going to interrupt for a moment only because this is an incredibly important idea. It’s one that is not intuitive for the average person and it’s surprisingly understudied in the field.
It underlies ultimately every financial decision and often every decision. Essentially, if you decide to spend money on something, the opportunity costs are all those things you’re passing up. All the things that you could spend that money on now or anytime in the future.
I wish there was a better term for it than opportunity costs.
The Suze Orman $5 latte bullcrap? Nothing against Suze Orman but her idea of, “Don’t get the $5 latte.” Instead, you can invest that and suddenly compound interest you’re going to retire at 25, which is another argument. I’d say, “Have a latte. Enjoy yourself. Don’t buy a $1 million house when you can’t afford it.” That’s a better thing to think about. Opportunity cost underlies every decision. They underlie again, it’s not only financial. A president had a quote about essentially spending on war. He’s like, “Every battleship that we build is 200 schools that we don’t build. It’s 40 homes.” It’s all this other investment in things That’s an opportunity cost. If you’re going to spend money, time and resources over here, you can’t spend it over to the other side. That underlies everything.
Especially because you’re connecting this to saving. A dollar spent is a dollar you can’t save or a dollar you spend on X is a dollar you’re not spending on Y.
Sneakers instead of healthcare.
It might be an asset or something.
That’s how you should think about money, but none of us even comes close. It’s understudied and one of the things I try to convey when I talk about this or in the book is, “That’s okay.” I often feel there’s shame around poor financial decision-making that people won’t even ask for help and they won’t talk about it. The truth is, all of us make mistakes. All of us fail to think about opportunity cost because that’s a giant cognitive lift to think about, “What else could this coffee be twenty years in the future.” That’s too much. That’s okay that we make that mistake. What we try to do in the book is, we explain the various traps we fall into and the various ways we don’t think about opportunity costs. Those of us that have particular spending problems can try to correct them.
What’s an example of that?
The relativity is the most common one or the one that resonates. That’s the idea of, why do we fall for sale prices? Why do we buy a sweater at $60 marked down from $100 more frequently than we buy a $60 sweater? It’s because we can look at that first one, the $100 sweater that’s now $60 and we can compare. We can use relativity to say, “The $60 sweater is a better deal than the $100 sweater, so it must be a good deal.” That’s a mental shortcut that feels good. It touches our emotions, “We’re making a smart choice.” Whereas, the $60 sweater on its own, in order to assess the value, we’d have to do some opportunity cost thinking. Instead of doing that hard though, we go to the easy thing which is a sale price or a comparable price. We fall for that all the time.
I had a previous guest, Donnie Lichtenstein, one of my colleagues who studies pricing, promotion and so on. He studies it and he admits that he loves a good sale. He loves a good deal. The man studies it but he’s still, “I love a good deal.” That’s that is how compelling it is because even the person with the cheat code still struggles.
It touches these emotions. We so often don’t think about emotions as having to do with money decisions. We think of money as spreadsheets, numbers, it’s to the decimal point and its raw calculation, but it’s not. Those decisions are also emotionally driven to feel good. We tell the story of JCPenney. JCPenney’s whole model was overpriced stuff that people could go and find discounts on and they feel good. They ended up paying the same as the other store. They changed the CEO and he priced them the regular prices and people went away. They went back to the old model people came back. They didn’t care that they were getting it. They loved that and it’s because it was all these emotional stuff. We could spin into the bleakness of the world, but it’s a beautiful sunny day.
I have Shtick to Business on the brain. One of the things that I talked about is how authentic comedians are. How they talk about the things that people aren’t willing to talk about and that makes for entertaining comedy and novelty which is necessary for good comedy. One of the things that the average person doesn’t do well is talk about money even among friends and family. I don’t know how much of this is an American thing, a cultural thing or a universal thing, but people’s unwillingness to talk about their financial situation is a problem. I want to get your opinion about that. For example, I have a couple of friends who are middle-aged. They’re getting a little too old to be in debt as they are. It’s not the classic “good debt.” It’s not mortgage debt or educational debt, it’s straight-up credit card debt.
These are people I’m close with and they know that I’d love and care about them, but I don’t know how much money they owe. They won’t tell me and I haven’t straight up asked. That’s a little bit of a problem because if anyone in the world could know or should know it’s probably me in the sense that we are close, confidants and I want to help. I’m judge free. I might tease them a little bit here there, but that comes from a place of love. For the most part, I want to talk about these things because I don’t want them to be 45-year-olds in this debt. We can handle that, but I don’t want them to be 65-year-olds with that much debt plus the 15% they’re paying on top of that. I’m curious, what is your reaction to that? Have you thought about this issue? Have you written about it?
It’s a great point and it’s one of the things that drives me to write the book but to also talk about these things is my previous delusions included, “I’m going to stop people from cheating by writing a cheating book.” One of my delusions now is, I and others can help people have conversations about money. That’s the biggest problem that we face. Whether it’s the shame or a sense that we think, “All our neighbors have saved for retirement.” We don’t talk about it. Whether it’s with neighbors our families. It’s religion, politics and money people don’t talk about.
[bctt tweet=”Higher pay doesn’t mean people are more engaged. ” via=”no”]
People talk about politics now.
They do now. We have to. It’s not always constructive but even then people are like, “You shouldn’t bring it up.” “Don’t bring it up at work.”
Only on Twitter, Jeff.
Which of my feeds are you following? I have this safe feed for people that want to pay me and one that people that don’t. There is a survey that men in America were more willing to discuss whether or not they use Viagra then how much they say for retirement, “What’s more embarrassing, your teeny tiny little ineffective savings account or your other thing?” That’s a classic comedy structure by the way for those taking notes at home. Peter didn’t laugh at first because his face was covered amused.
I’m too detached. I’m dissecting the joke as you’re making it.
I am the dead frog that you are dissecting. The point being is that you’re right. It’s a huge problem that people don’t talk about money. It’s the number one cause of problem within marriages. It’s money and it’s often not necessarily disagreements about money. This is speculation not science-based that it’s the difficulty of talking about it within relationships and talking about with family, close friends, etc. I would love it if there’s a way to change that. One of the challenges and I was thinking of this as you were telling your story is, you say that you can give objective advice and I’ll be fine, but money, because it is emotional and it has to do with our future and ourselves. Often in particularly American culture, our self-worth.
There’s so much emotion there that it can be a challenge to talk about it with people that we know that are in the current. I’m not saying you shouldn’t, but that’s not about you. A piece of advice that Dan and I give people about working through their spending problems is to go through their monthly credit card bill with someone and explain why you made each purchase. Don’t do that with your spouse. Don’t do that with someone you connect it to you because there are other emotions there besides that financial thing. Here is the challenge is where do you turn for financial advice if it’s not with your friends and family? Do you go on the internet and look for Charles Schwab guy down the street? What do you do?
I’m certainly a big proponent of a fee-based financial planner, someone you pay by the hour. The idea to pay someone 1% is so crazy to me. First of all, it’s not a good value. Second of all, it doesn’t make any sense to me why two people who have 1% is half the amount of wealth and the other person pays half as much for the same advice. The whole model is complete bullshit. Paying someone by the hour in the same way that you may pay a therapist by the hour, to me is, if you could find the right person is an incredibly good value and probably the best person to sit and go through your finances.
The financial advising industry, I don’t want a blanket statement, I know a couple of people that are good. In general, it feels they don’t do a good job of presenting themselves as advisers. They seem more salespeople to that point you’re making about the model. There’s a knowledge of, “I know myself.” Life has changed and from comedy to now it’s all over the place. Who do I talk to? There’s no one in the same situation and all these other emotional things. I wish that there was someone easy.
I have someone for you. I’ll put you in touch with her. She’s the best
What’s your referral take on that?
It’s free. I’m happy to give her work. It’s interesting because I’ve been working with her for more than fifteen years when I got my job at a university in Colorado. I got her name through a referral. She’s guided me through a variety of decisions big and small, from death of a parent to purchasing a home and making retirement decisions, etc. Even still for as rational as I can be with money, I still have moments of irrationality. I’ll give you my example. Let’s say I’m making a big decision. I’m going to be doing a leave of absence. I’m going to be stepping away from academia for a year. I’m not going to be a professor and not to be collecting a paycheck. I’m calling it a mini-retirement. That is going to bring up a bunch of issues. You going to be without income for a year or on a certain income. I’ll do you doing speaking and so on. Oftentimes, when it comes to a decision this she’ll ask me, “What’s your burn rate? How much are you spending on average a month between all these things?” I’d say, “I don’t know and I’m not going to tell you. I’m not going to figure it out.”
Are you afraid of knowing?
I could have told you my burn rate for most of my life to the penny. I had so little money that I had to track every little purchase.
People in scarcity are much more aware of their financial decisions than the world of abundance.
I’ve been fortunate enough in life to earn a decent income and also not to have adjusted my consumption to commensurate fashion. To simply put it, throwing out all the jargon for the people reading, at the end of the year, I have money leftover in my checking account. At the end of every month on average, not every month, but let’s say eight out of the twelve months of the year I don’t outspend my income. How wonderful is that? I realized that I’m part of a small percentage of people in the world. It helps that I am a simple man. I bought everything I needed in my 30s and early 40s and the thing is, I don’t have children. You know how expensive they are.
If you want to experiment, you can borrow mine. I can send you the bills.
I’ve taken this personal emotional decision which is, I don’t want to track it anymore. I don’t want to do it. It complicates some of these decisions in that way. The point is that’s an emotional thing. It’s me being impish. It’s me being, “I don’t want to do that anymore. I had to do it so much. I didn’t like having to do it. I want to enjoy my life a little bit more.”
That strikes or speaks to an important balance that I always try to tell people. Our book talks about all these things and all these mistakes we make. It has all these suggestions for things you could do better but underlying it all, unless you have to budget to the penny, don’t ruin your life by being a stress case. Choose your spots. I spend too much on shoes to figure out why that is and set up a system to stop that. Don’t stress about everything. Don’t stress about the $5 latte because it is an emotional burden. It sounds like, for you, you had that burden for so long you want to enjoy your life essentially. You could be you or the generic you could be that person that pinches every pending and puts budget items.
I have good rules.
Whether you call it discretionary spending or you like the rainy day fund, whatever it is, don’t kill yourself over unless you have to.
The problem with a lot of advice, whether it be professional, fitness advice whatever it is, there’s almost never a one size fits all model. It should be tailored to the specific problems that people have. The issue though is that most people have the same problem. The average person is not saving enough. However, there’s a small group of people out there who are saving too much. That’s fine if they’re not missing out, but some of them are missing out. Some of them could be enjoying their life. What I’d like to say is, “We work so hard. If you can afford it, you might as well enjoy yourself a little bit more.” The average person can afford to live to enjoy their life a little bit more. The average person should be enjoying their life a little bit less in order to enjoy their life a little bit more 40 years from now.
If you do it right your cumulative in life enjoyment, I’m picturing some strange looking formula in my head. Over 65 years or whatever of being an adult will be greater, if you spread it evenly on others, that matter.
Let me run through my little checklist that I follow and I give when I talk to people about this stuff and you tell me what I’m missing. The first step is, pay off your credit cards and other similar debts. That’s number one. Number two, create an emergency fund. Let’s say a six-month salary that sits in a money market account. Number three, start investing in tax vehicles 401(k), IRA, etc. Number four is optional and that’s to buy a house if, you’re going to be in that house for more than five years and be settled down or you don’t have any real aspirations to be entrepreneurial.
You don’t need that cash, in other words.
The opportunity cost of buying a house is great. Number five is begin investing in post-tax dollars, equities, and other investments. That’s a long conversation which we won’t have, but the reason for that is after you retire you can minimize your tax hit by blending your withdrawals. That’s a complicated issue and we don’t have time for that. After that, almost no one ever gets there. That would probably be something like investing or lowering your tax rate, municipal bonds and other things.
I also think it’s important to find an author comedian to support an old patron model. It feels charitable and it improves the world if you could do that.
What do you think of that step-by-step review on this?
I feel I got into a podcast called Trolling Jeff Kreisler for all of the things that he’s done wrong. It’s valid and I don’t put myself in the business of that level of specificity. What I recognize in that is, it’s essentially looking at the absolute dollar amount as opposed to the percentages. Credit cards have this high-interest rate. It means that we’re losing a lot of money. When we’re thinking the long different term, one of the great things that have happened, I can remember when it was but when they started putting on credit card bills, “If you pay the minimum, this is how much you’ll pay.” You have a $1,000 credit card bill and you see if you pay the minimum, you’re going to end up paying $15,000 over however many years. That ability for everyone to see the impact of that percentage rate is huge.
It nudges people to that more rational set of behaviors.
You’ve seen that as you ranked it here that 15%, 70% credit card debt it matters and it adds up. You hear stories now as a student loan crisis goes on that the debts not that high, but people talk about how they’ve been paying their student loan for fifteen years and they see the same amount of due. The ability to think and put in absolute dollars over time what your debts and potential earnings are is the key. The prioritization that you’ve created looks at that and says, “Stop losing money quickly.” Make sure that you’re in a place where you don’t have to go back. The emergency fund is to make sure you don’t have to do a payday loan. If something happens you don’t lose the money and then once you hit that equilibrium zero level, you start building up in a way that’s responsible and gives you flexibility so that you can continue to do what you want. It begins by the automatic withdrawals from your job or the 401(k) at the start. You don’t have to think about it, you don’t have to research, essentially you can check a box at your HR department.
It’s hidden savings.
You get to the bidding. When you’re at a place where you could buy a home. You’re at the place where you can catch your breath and think about it. You’re not at a pressure point. In that way, the structure is great. It’s laid out in a way that you can look at where you are. If you’ve got $20,000 in credit card debt, a house and tax-free municipal bonds, you are not on the radar.
The house things are real problems. The average person should not be buying a home. Let’s switch over to People Science. How did that happen? What’s going on?
[bctt tweet=”You could talk about anything in comedy. The only rule is you have to be funny. ” via=”no”]
It’s interesting when you were talking about the one-size-fits-all and people often think about with advice. What People Science is about is, the future of applied behavioral sciences, broadly speaking. We have academics and researchers that write about their latest work. We have practitioners that have placed these ideas into practice successfully and unsuccessfully. Journalists and myself that write about what these principles are. It’s meant to be an accessible place for anyone that’s curious about what behavioral science is. Maybe they’ve read Dan’s book or maybe they haven’t and they heard about this buzz. It’s a place to get a 360-degree look at what it’s all about and what people have tried.
The big lesson that I keep reiterating both to my writers and the readers is, and it’s a challenge for Behavioral Science is, it’s grown and people are more involved with it is, there isn’t one size fits all. It’s the science thing, it’s contextual. You take this principle or this idea that maybe worked for Opower. You look at that what they did and you have to design an experiment and pilot it for your particular situation. I’m excited about that. My dad was a physicist and I don’t know if I explicitly thought of myself as a scientist, but that process of, “Let’s try something it might fail, but let’s see what we can learn.” I loved that.
As behavioral science is being more looked at for solutions and often off-the-rack solutions, that’s a conflict. Businesses except for the Netflix of the world that can carve off 1 million people to experiment, they don’t want pilots to fail. There’s often a push to make sure it works. I’m getting a little astray of what People Science is about, but for me, we call a dinner conversation with some of your smart friends. For me, every time I talk to a potential contributor or reader I’d say, “Underlying it all is this responsible science of we’re not listing off the silver bullets or telling you what people are doing what’s going on. It’s up to you then to find a PhD to work with whatever the next step is.”
What’s an example of a successful article that you like from People Science?
There are a ton. We have a series called Know Your Nuggets, which is about these little nuggets in behavioral principles, relativity or the IKEA effect. It explains what it is and provides some context. People love that as a quick explainer. I’m doing a thing which I love to do with you which I’m calling Origin Stories. It’s like superheroes, how do people that are working in behavioral science get there? I would say everybody above age 30, let’s use a cut-off. When we went to college or school, there were none. How did we wander around to get them?
My route was crazy. I was a lawyer and a comedian now. That’s a series that we’re launching and some articles that are surprising stuff. The impact, the incentivizing or lack thereof of money as a motivating force. That is fascinating to me as we learn particularly within organizations that higher pay doesn’t mean people are more engaged. There’s a level you have to hit in being able to survive. Purpose and meaning in these things that in the past we may have thought of as soft science or woo-woo whatever your term. We’re seeing more and more and that does matter.
I’ve always been a person who hasn’t done the work for the money. When I started caring about the money my life got worse.
That was me with law. That was the reason for me when I was in law school was to take a job that paid $150,000 at age 24 and nothing else. My privilege was knowing that I didn’t need to take and that I’d be okay. I recognize that, but I saw my future of being miserable because there wasn’t another reason to do it.
On day one of my MBA course, I teach the PERMA model of well-being. It’s a model of the different paths to living a good life and it’s surprising. Good health underlies most paths but having lots of money doesn’t. It underlies some, but not all of those paths. You can live a good life with a pretty low burn rate if you’re so inclined. I want to wrap up and I ask this of everyone and you can give more people science answers if you want. What are you reading, watching or listening to that’s great and it always stands out?
It’s a challenge for me in my entire career/adult life is, I don’t consume enough.
That’s not a problem. This has been a theme in this podcast is the average person consumes too much and doesn’t create enough. If you’re a little out of whack in the opposite way that you’re creating and not consuming enough, that’s a minor problem to have. It’s a problem in the sense that it’s not feeding you enough.
Thank you for that permission to not be consuming. My challenge is, it’s not that I don’t believe there’s great value in all the comedians, music and everything. It’s not like I don’t get into shows. You’re a bad person because you watch Game of Thrones, because I don’t have time.
I watched one episode of Game of Thrones and it didn’t make any sense to me.
It might be fun. I haven’t jumped in. Part of the issue is also I’m a Scorpio and I don’t do stuff half-ass. If I get to start Game of Thrones, I’m going to be gone for a week. I’ve always been into jazz. If I could have had my fingers match my mind, I played jazz saxophone for many years, I would still be doing that. I’ve gotten back into Motown.
Is there a particular artist that you listen to?
It’s often a Pandora-type mix and it’s whatever comes along I feel like, “I love that song,” even if I never heard it before.
The music holds up.
[bctt tweet=”The resiliency you learn through stand-up is incredibly valuable throughout the rest of your life. ” via=”no”]
Some of that is an age and a personal situation. My oldest kid was turning eight. He was seven at that time. We listen to music and I’ll sing it. We had this one moment, which I can’t decide it was awesome or not. In the morning, we listened to Ooh Child by The Five Stairsteps. It’s a beautiful song and I often listen to it in the morning. He and I listened to it oftentimes throughout the day or later in the day. He might sing a line or two. As it happened on this day, he had some stuff going on in school that was bothering him. We had this tough talk about friends.
This is shaping up to be an after-school special story.
We have this tough emotional thing as such as seven-year-old to do. I closed his bedroom door and I hear a quiet, “Child, things are going to get easier.” I don’t know that he connected it to, “I need this music to fix me.” It was so heartbreaking and beautiful. Heartbreaking things are beautiful. If it didn’t break your heart, they wouldn’t be powerful.
I’m not sure we can top that story. With that, I’ll say, Jeff, I finally got to meet you. It’s been almost as good as I expected. It would be.
It’s the same. It’s almost as good.
- Get Rich Cheating
- Dollars and Sense: How We Misthink Big Money and How to Spend Smarter
- Dan Ariely – Previous episode
- Donnie Lichtenstein – Previous Episode
- Know Your Nuggets
About Jeff Kreisler
Jeff Kreisler is a lawyer turned comedian, author and champion for behavioral economics. His first book, Get Rich Cheating, was a satirical look at cheating.
His second book, Dollars And Sense: How We Misthink Money and How To Spend Smarter – was co-authored with a previous guest Dan Ariely. Jeff is also Editor-in-Chief of PeopleScience.com, a thought-leadership platform for applying behavioral science to the marketplace.
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