When Money Isn't Real The $10 000 Experiment
The Money Is Real But It Has Been Shredded

When Erik approached me about helping to create Budget Bros, I was excited to share my thoughts on the money problems plaguing Americans today. Consumer and student debt is a multi-trillion dollar problem in the United States, and it is because money is becoming “fake”.

Providing answers to life's money questions. ‘The house is filthy and odorous’: My mom, 89, is a hoarder. My brother, 60, siphons money from her. Money isn’t real, it’s what we agree it is. These businesses agree that $1000 is worth a 10x, 20x, 30x ROI on their money. If I’ve got a roofer and he’s paying me 1000 bucks a month and he’s in a 100000 population area, I’ve only got to get him one or two extra deals. The earnest money may be held by the seller’s real estate broker, but the money may also be held in escrow by a third-party title company, lawyer, or bank. The purchase and sale contract.

But adding or expanding a room isn't much easier than moving. You have contractors to hire, important decisions to make and a lot of money to spend. If you decide to add a room to your home, it will soon be filled with dust, plaster, nails and other construction materials. If your site becomes popular and gains a lot of traffic, you can make a lot of money by selling advertising space. If writing isn't your thing, you can also create video content. If you are knowledgeable about any topic whatsoever, you can try selling informative content, like ebooks, webinars, or instructional videos.

Keep reading. You’ll see what I mean.

I’ve thought about making a post like this for a long time. I never quite had the right way to say it, though.

I work selling cars, which means I have gotten an insider look at hundreds of financial decisions that all kinds of families make. Some are good, some are just awful, most are just fine.

While selling cars, I also wear the hat of a college student, and I see plenty of financial decisions all over the spectrum every day. I’ve seen how the trap of credit card debt and student loans have negatively affected those close to me.

Most of the time, the financial decisions that fall on the more questionable end of the spectrum happen because the money being “spent” isn’t real. We live in a buy now pay later society where draws like 0% financing and no payments for 90 days matter almost more than the item itself.

Companies like Affirm prove this point. You can’t shop online today without being prompted to finance the balance. They even literally use the phrase “Get it now, pay for it later”.

I have spent time recently thinking about this topic. I’ll go over my experience later, but I believe that this concept is best illustrated by TEDx speaker Adam Carroll in his speech to the London Business School.

I know, I know. It’s 15 minutes long. Put it on 2x speed and it’ll be done in like seven. You have seven minutes.

For those of you who really didn’t watch, what the guy basically did is this. He observed his kids being reckless with debt and spending in Monopoly with the fake game money. So, he went to the bank and got $10,000 so they could play Monopoly with real money.

As his hypothesis suggested, his kids played much more conservatively when there was real money at stake. Even though the winner only got to keep $20 of the $10k (the rest was returned to the bank), the principle of being more fiscally responsible when you can see, feel, and smell the money you spend was evidenced.

Why do you think Amazon encourages saving your card and one-click payments? Why do casinos use chips? Why are stores encouraging us to pay digitally, for school with loans, for cars on payments, the list goes on. When the money isn’t in front of you, it’s not real.

At least, that’s what our brains tell us.

Now for my anecdote. I mentioned in my college budget post that I took out some student loans to pay for a portion of my schooling. Thankfully, the amount is less than the national average, but it’s still there.

As a 17-year-old senior in high school, the dollar value didn’t seem like anything to me. I was a couple of clicks away from being able to pay for the school I had decided on. I have always been a financially conscious kid who was raised by a fiscally conservative family and I fell into the buy now, pay later trap.

It’s that easy.

Fast forward to about a week ago. As I near graduation with dreams of owning a home, investing heavily, and being overly generous to causes I believe in, the thought of student loan debt around my neck has begun to stress me out immensely.

In short, the money had become real.

I had worked on building up my savings over the last few years. In sales, your pay is directly tied to your performance, and I had become proud of the reasonably hefty (for a college kid) savings account I had been able to build while living a pretty nice lifestyle.

Humbled by the balance of the loans I had racked up by not being careful, I painfully reached into my savings and pulled out nearly $8,000 to pay off the largest of my student loans. Talk about money becoming real.

While my logical brain knows I did the right thing, my emotional brain felt like it got punched. As Dave Ramsey always says, personal finance is just that – it’s personal.

In the end, I’m not trying to really make a point with this article. I’m not trying to stand on a soapbox and claim that I’ve seen the light and that I’m a financial genius.

When Money Isn't Real The $10 000 Experiment

All I invite you to do is consider the $10,000 Monopoly game when you make money decisions. If you had the full $40,000 laying on the table and you could do ANYTHING with it, would you allocate 100% of that to a car, a year of college, etc?

Consider what it feels like when you tap your phone to pay versus when you take out your wallet and count out bills. This article explains the psychology behind that.

The Money Is Real But It Has Been Shredded

I’m not trying to argue that student loans are evil or that debt is awful. I’m not even trying to get you to change your spending behavior because in truth, I would probably have made the same decision again as a 17-year-old (albeit with a more calculated execution). I use Apple pay and one-click pay on Amazon, too.

Just know that the numbers on your screen are the same as bills in your wallet.

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The Money Isn't Real