Zero to $1 Million in 60 minutes with Cashflow Cookbook Author, Gordon Stein
There is tremendous focus on Wellness today. Your members are stressed out like never before and as their leader, they need your help.
Many organizations focus on providing programs around mental health and stress reduction including yoga, counseling, and meditation.
But wouldn’t it make sense to help people with their number 1 stress directly? Money.
It impacts every aspect of their lives. It is the principle issue in 41% of divorces and 85% of Americans say that their financial stress affects their work. 65% of Americans with children live paycheck to paycheck. 50% of calls to Employee Assistance Programs are about financial issues. And 64% of Americans retire with less than $10,000. Those are all stresses that your members live every day. What can you do to help?
Gordon Stein wrote a book that shows exactly how to free up cash flow to pay down debt in a household to ease the pain. Or apply those freed-up funds to enable a bright financial future, give more to a charity or fund a college education. Simple, practical ideas that anyone can use, with nothing else to buy.
Gordon Stein is an international keynote speaker, blogger, personal finance expert, and author of Cashflow Cookbook – $2 Million of Financial Freedom in 60 Easy Recipes. He delivers transformational talks that help people crush their number one stress – their finances.
His mission is to improve financial wellness and help his audience regain focus, balance, and joy in their lives. Gordon combines his trademark wit and storytelling style to speak with employee and association groups, financial advisors, and the media about a breakthrough path to financial wellness with no risk, minimal effort, sacrifice, or budgeting.
In his spare time, he is an avid sailor, aging downhill ski racer, and not yet a great (or even good) guitar player.
Read the Interview Transcript
Hugh Ballou: Hey everyone, it’s Hugh Ballou, back for this episode of The Nonprofit Exchange. This is episode #303. We recently celebrated our 300th episode with the founder of this, who was the executive director of the SynerVision Leadership Foundation. I’m the founder and president. We help nonprofit leaders step up their bar to perform.
Today, we are going to take a giant step up. We have not had any guest like this before. He is a Canadian who has come to the United States. He is doing some good stuff in Cleveland, Ohio. My guest today is Gordon Stein. Gordon, tell people a little bit about who you are and what your passion is for the work that you’re doing.
Gordon Stein: Real pleasure to be here. I’m so excited about your enthusiasm for helping these nonprofits. My background began in engineering. I worked in a lot of high-tech firms, executive roles, sales, marketing, operations, companies like Capital and Dell.
I have always been interested and passionate about personal finance. I have been surprised at the challenges that people have with money. American Psychiatry Association says that money is our #1 stress. A few years ago, I wrote a book called Cash Flow Cookbook. More recently, I rewrote it. It’s the U.S. edition of that original Canadian book. The idea is some very concrete ways to help people with their finances, specifically how to free up to $13,000 that can then be put toward debt repayment or incremental investment.
The book’s quite timely now because people are stressed about money like never before. Inflation creeping up, value of our assets dropping. I find in employee groups or association groups or congregations, money is people’s #1 stress. I’m excited to help with that.
Hugh: Thank you for being here today. I understand people get divorced over money issues. People leave churches. People quit donating to their charity of choice because they don’t feel like we have been good stewards of their money. I shared with you that I grew up as a Scottish Presbyterian. The Presbyterians are the ones that say, “Forgive us our debts” in the Lord’s prayer. We have this frugality about money. Other people call it something else. We really have some issues around the whole thing of money. Right now, we are in this inflationary spiral. Our investments are going down. There is a lot of anxiety in the culture. Is that anxiety warranted? What do you think about that?
Gordon: I think it is. If you look at some of the statistics, 64% of Americans will retire with less than $10,000. $10,000 is not a bad chunk of money, but not if you have to live on it for 30 or 40 years. If you look across the board, car loans have stretched back. In my day, they were 36 or 48 months. Now they are 72 months on average, and 96-month car loans are becoming the norm. 70% of millennials are carrying a consistent credit card balance. Any way you look at the numbers in any aspect of our lives, even divorces, 41% of divorces would find that financial issues are at the root cause of that divorce.
This notion of presenteeism, where people are at their jobs, but they’re not mentally at their jobs because they are concerned about their money. Every aspect of our lives, it’s so critical. We talk about wellness, an $8 billion industry in the United States. We often miss financial wellness. It’s our #1 cause of stress. Let’s go back and fix that. Rather than putting so much focus on yoga and meditation to lower our stress, why not go back to the root cause?
Hugh: Yeah. I think I see a copy of your book behind you. You might have one handy. What was the inspiration for the book? What will people find inside the book?
Gordon: It started as a bit of a fluke. A friend of mine was in my car, and he plucked out a car wash receipt for $13. He said, “Why would you spend money on car washes?” At the time, I was an executive with a very solid six-figure income. Why would I care about this $13 car wash receipt? He showed me a trick to get car washes for free legally. I thought that was pretty slick. It was with a gas retailer. They have a keychain dongle that is connected to their points and your credit card. You tap it on the pump to pay for your gas. It charges your credit card, credits you with points, and those points can be redeemed for a car wash. It saved about $25 a month. I got one for my spouse. $50 a month. $50 a month isn’t going to make any difference at all of course. I was intrigued by thinking I didn’t have to give anything up. It was actually easier.
I then heard an ad on the radio for discounted home alarm monitoring. I signed up with them. It was indeed connected to the police, like a regular home alarm monitor. I saved another $25 a month. Then my engineering MBA mind ran amuck. I started to build a list of what else is there, things that could save significant money but take no extra effort. Minimal effort, minimal sacrifice. The list grew, and it got to $13,000 of monthly savings ideas.
I got really interested when I turned it into a spreadsheet. I did the future value calculations. If you invested these savings rather than spending them, how much money would you accumulate? The numbers were massive. I took the spreadsheet to my accountant. I asked for math errors. He pondered it and said, “The math is good. This would make a great book.”
I set out to write it. It was going to be a novel. I had the characters. It just didn’t fit as a novel. Under my breath one day, I said, “It’s more like a cookbook.” That’s it. It’s the Cash Flow Cookbook. It has some good alliteration, which I like. That was the original inspiration.
That is how the book got started, with this idea of financial recipes, easy to follow, minimal effort, minimal sacrifice, no budgeting, that could help people free up thousands of dollars a month. It’s really true.
Hugh: That is intriguing. I find that a lot of people either don’t understand cash flow or understand cash flow as what I would call the rearview mirror instead of looking at cash flow in the windshield. We have to forecast cash flow going forward, which is not the same as profitability in a business.
Gordon: That’s it exactly. Let me give you an example. I did a speaking engagement. Inspired this one gentleman from Kansas. He reached out to me and said, “I love your talk. I’m 45 years old. I have no savings. I earn six figures a year. What can I do?” That’s not uncommon whatsoever. Just as a favor, he was keen on the book and the talk, I said, “Send me your expenses.” We went through it. Simple things. We freed up about $500 a month, invested that with his wealth advisor. He sent me back a projection from his wealth advisor. He is on track to retire with half a million dollars. This isn’t massive, but it’s a lot better than nothing. He gave up absolutely nothing.
I would love all of your listeners to help their groups, their employees with this. There is such a huge need. We’re all in a position to help others with it. That is the principle behind the book.
Hugh: Is this the kind of book that a membership organization, a local charity, a religious organization would say, “Let’s get a group together. We’ll all buy the book and work through it together and see what we can share with each other?” Then create this accountability group, maybe a study cohort with an accountability culture. Is there any value in doing something like that?
Gordon: Yeah, that works well. Let’s reverse engineer that a little bit. Imagine you’re an employer or leader of a congregation. You have a member or employee come up to you and say, “Listen, I am in trouble. I am flustered about my finances. It’s tearing at my life, my marriage. What do I do?” What toolkit do you have? That’s the premise behind it. You can do it as a book club. I like the idea of an accountability group.
The idea is because it’s done as recipes, no one sits and reads a recipe book end to end, unless you’re a real foodie. If you want a salmon dish or a dessert or a chicken dish, you go right to that part. The book is carved up into housing, transportation, food and drink, household, lifestyle, and financial. 10 ideas in each of those categories. They are worked examples. Like a recipe, there is a yield table. How much could you save in different scenarios? What is it worth over 10, 20, or 30 years if you can invest it?
Hugh: It compounds, doesn’t it?
Gordon: It sure does.
Hugh: How can the average family reduce financial stress and reach some sort of level of financial freedom?
Gordon: I’ve read dozens of personal finance books. Frankly, they are often depressing. You have this notion of you need to give up things that you love. You need to do careful budgeting. You need to save 10% of what you earn. Most people don’t even know where to begin. They don’t want to give up things that they love. Why would you? That’s crazy.
The idea of Cash Flow Cookbook is let’s start with these mundane bills that we all pay every month. Car insurance, house insurance, life insurance, telecommunications, utilities, property taxes. If we can reduce those bills, your change in lifestyle is nothing whatsoever. You’re able to free up cash, and you’re not giving up anything. if I reduce my electricity bill by 50%, which I’ve done through my home improvement, or my gas bill, which I have also done, my lifestyle doesn’t change at all other than freeing up that much more cash, which could go to lifestyle or charitable contributions or investments, which could reduce debt.
Hugh: If you help your members, regardless of what kind of organization you have, get control of their finances, that should be worth something in the reciprocity of donations to the cause. In this part of life, it feels good to be able to donate money to charitable causes and still have some money to live on and not worry about.
Say you want to go on a financial journey. What is the first step for me to take?
Gordon: Cash Flow Cookbook is full of bad cooking puns. I will warn everyone up front. Step #1 is what I call broil a bill. You take one of these bills that you’re paying every month. There are detailed instructions in the recipes. Maybe it’s your cable TV bill, car insurance, house insurance. I tell you exactly how to lower that bill. There is no yelling, screaming, or haggling. Nothing nasty involved. Mostly you do this online now.
Let’s say you go after your car insurance. With two cars and two drivers, not unusual to free up $200 a month. That’s the first step right there.
Now we are going to take that and do something meaningful with it. Some people say, “I don’t care about money. I don’t want a fancy car.” No problem. Do you want to give that to your church or increase your charitable contributions by $200 a month? You can do it without giving anything up. That is the place to start for people: go after these more mundane things. Let’s lower those bills and use that cash for something productive.
Hugh: As far as owing money on depreciating assets, any thoughts about that?
Gordon: That’s about as bad as it gets. That gets even worse now with rising interest rates. Someone taking out a car loan for a vehicle that they can’t afford, that vehicle is depreciating. A third of the trade-ins now are underwater. Not unusual to have a 96-month car loan. You’re trading it, and bringing in is worth less than what you owe on it. That debt gets tacked on top of it. But that’s the reality. That’s why it’s such a big concern. Now we’re really going backwards. Young people in particular don’t understand the implications of the 96-month car loan, the underwater equity. The marketing machine gets more sophisticated. Functional MRIs to figure out how we buy. As humans, we have not gotten any more sophisticated in our buying. These temptations are massive. That’s why we need the help.
Hugh: We need a club for purchases like Buyers Anonymous, where we can confess and realize we’re addicts. I went to my doctor, and I said, “I had high blood pressure.” He said, “Stop watching the news.” I always said God created economists to make the meteorologists look good. Thomas Sowell, who is now 91 I believe. They make all these predictions, which may or may not come true. We’re huddling down, thinking we are going to be hit with this massive recession and food shortage. There is a shortage of used cars. What advice do you have for people to stay calm and prudent? You can pull in your resources, but don’t give up everything in life.
Gordon: I think the key thing is not to give up anything. That’s the whole premise of the book. As you might tell, I can play a little bit of guitar. I don’t skimp on my guitars. I have lots of fabulous guitars. I bought some kayaks recently. I get great kayaks. I went to see The Eagles, and I got great seats. You want to live a great life. What you want to do is lower these expenses that don’t change anything. Can I give you an example that might be helpful?
Hugh: Absolutely. I want several examples.
Gordon: We can do that. Here’s one that is a personal example, happened recently. You mentioned your doctor and the high blood pressure. My cholesterol is a little elevated, so I got prescribed some Crestor, which is probably the most common drug prescribed in America, to lower that cholesterol. I get the prescription in hand. Most people, you get a prescription, and you go to the nearest drug store. You don’t think about how much it’s going to cost.
I took it into one of the big box drug stores and got the prescription filled for $107 a month, forever. It’s not millions, but that’s material. I said to the pharmacist, “That seems expensive.” She said, “You can get one of our drug cards.” “How much are the pills if I get one of those?” “$63 a month.” We go from $107 to $63. “How much is the drug card?” “$20 a year.” There’s a no-brainer, saving $480 a year. “Give me the drug card.”
I tell my brother-in-law this story, and I am quite pleased with myself. He said, “No, you want to go to one of the online drug stores.” He mentioned the one that he uses. I looked up my prescription on this thing. $13 a month. I thought if it went from $107 to $63 to $13, we’re not done yet. I looked around some more online and found another online pharmacy. I get my pills delivered to my home for $7 a month. I did a blog post on CashFlowCookbook.com, “How I Saved 94% on My Prescription Drugs.” Most people don’t know about it. I see the people lined up at Walgreens and CVS to get their prescriptions, and my head is in my hands. They are probably overspending by about 90%, all of them. All in Cash Flow Cookbook.
If I take that money, what do I do with it? I could give it to a charity, pay down debt, or whatever. The compounding effect of that is terrific. That’s a simple example.
Hugh: What is your opinion on using a labeled credit card? I use one of the hotel chains, and I hardly ever pay for expensive hotel rooms because I get these points. I am paying the same price with using the credit card that I would be paying in cash.
Gordon: It’s a great idea. The first thing to do is take a look at what that monthly spend looks like. If you are doing a lot of travel, if you are a speaker or something, that’s fabulous. A lot of people get these points cards, thinking, “This is fabulous. Look at all the points you can save up.” People who don’t spend a lot of money, typically, the point value is about 2% of your spend. If you are only spending $1,000 a month, that 2% probably ends up being worth less than what you pay for the card in annual card fees. Worse still, if they are accruing interest on things, that will wipe out the savings. In the book, I talk about reward credit cards and how to do the math on them to make sure they make some sense.
Hugh: Drum roll please, it’s in the book. I personally opt for the highest interest that I can find because that’s the incentive to pay the whole thing off. I don’t care what the interest is. You put it on auto pay, so you don’t mess up.
Talk about banking. People say, “You shouldn’t keep a large amount of money in your bank account.”
Gordon: With banking, you can look at the FDIC insurance on the accounts. It’s not normally an issue for people. There is a great way to streamline banking that a lot of people don’t use. For most people, married folks, they have a big joint account, and all the income goes, and the expenses come out. It’s a mix of discretionary things, like going to a restaurant or buying a winter coat, as well as these preauthorized bills, like the cell phone bill, mortgage, taxes, etc. That can cause a lot of friction. It’s hard to keep track of what’s about to come out. It might be looking good toward the end of the month, so you’re thinking, “Great, I can get my new iPhone.” You forgot about the T-Mobile bill that comes out on the 29 or the mortgage coming out on the 28. You’re in trouble.
A really simple first step: I love the idea of having a bills account, out of which comes all these typical recurring monthly bills. Separate is a discretionary account. Do the math on what the bill account needs. All of those bills come out: cell phones, car insurance, home insurance, life insurance, etc. Much easier for the couple to manage just the discretionary amount. You can have a conversation and handle it. The two aren’t mixed in together.
The other thing is it puts some focus on that bill account. Let’s say the sum of that is $5,000 a month. Let’s go through and grind that down. We could lower it to $4,000 from $5,000; take that other $1,000; and get that working more to build wealth or give to charity.
Hugh: The book is the Cash Flow Cookbook. You can find it on Amazon or his website, CashFlowCookbook.com. I took a sneak peek at the Table of Contents. You have it broken down in recipes. There are quite a few recipes in this book. You obviously are very experienced in this. Connect this to the social entrepreneur. We are running a cause-based for-profit business or a cause-based for-purpose charity or a membership organization or a religious institution. Why is it important for the leader to be in control of their finances?
Gordon: From a leadership perspective, they all have the same benefits as everyone else. It reduces the stress on the marriage, reduces their own personal stress. There is something incredibly comforting when you see your wealth, which I would define as what you own minus what you owe. I like people to keep track of that monthly rising. You can be calm about your own personal finances. It lets people move up Maslow’s hierarchy. You can focus on your higher purpose. You are not as concerned with that day-to-day issue of your own personal finances. That would be the summary for the leader.
The members are really important. If you have a congregation or association or employees, those people aren’t doing their best work. 85% of Americans are so stressed out about their money that it actually impacts their jobs. If you think about employee assistance programs, what I know from them is that 50% of the calls into those programs are about money. People are stressed about money. We need to calm that. We need to help them with that. Then they can be more devoted and focused on their work in the organization.
Hugh: Good advice. You slid this comment by, and I am going to come back to it because I caught it. You said you have a better approach than monthly budgeting. What would that be?
Gordon: Monthly budgeting, there are a lot of finance people who are going to come after me for this probably, but I will tell you what I believe. Monthly budgeting, everyone talks about it. It’s chapter one of every personal finance book. I think it has a lot of flaws. You could follow a monthly budget for 40 years and still retire with no money. It doesn’t focus on wealth. It’s the monthly ins and outs, but it doesn’t give you the big picture of are you actually getting anywhere?
Let’s say you allocate $650 a month for car payments in your budget. I am hoping you don’t go to the car dealership and say, “We have $650 a month to spend.” What will happen is you now are going to be in a 128-month loan with a Lamborghini. You will be paying that thing off forever. That’s not prudent. It’s not moving your finances forward.
If you took a wealth approach instead of a monthly budgeting approach, in other words, if you said, “We have some different options on our vehicle. What will help us accumulate wealth better?” That might be a two-year-old vehicle. It’s a model or two down from what you might want. It might be focused more on the interest cost of the loan. Very different than the monthly payment. In fact, only a quarter of people actually look at the total interest cost. Three quarters of people look at the monthly payment. They are focused on their $650 a month.
There is lots of reasons where it’s okay to have a monthly budget. I prefer we start by taking down one bill, getting it doing something productive. Part two is apply it to something that will be helpful. Part three is tracking that wealth. It’s a better way to go. If we split our bank accounts the way we talked about, now we will grind down that monthly account and get that money doing something productive. Then go have fun with the rest of your money. I think it’s a better approach.
Hugh: Don’t spend it all in one place, right? We are tracking good with our time. I have one more question for you, which I think is a key question. If a person was to only track one financial number, which should that be?
Gordon: It goes back to what we were saying before. Some people call it “net worth.” I don’t like the term. I sure hope our net worth is not just our money. Hopefully, people have lots more that they are bringing into our lives and the lives of others. It’s this idea of wealth.
I have a template on CashFlowCookbook.com under the Utensils section. Promised you lots of cooking puns. You can use a cocktail napkin or make an Excel spreadsheet. List out all of the things that you own that are of value, things you could actually sell. Good luck selling furniture. I’m talking about houses, 401K plans, deferred profit-sharing plans, IRAs, vehicles, etc. That is what you own. Add that up.
Create a section on what you owe: credit cards, mortgages, etc. Add that up. Subtract the two.
It sounds a little crazy, but I think it’s important. It’s worthwhile to track that monthly for one year. What happens is most people are surprised. They don’t know what their wealth is. When you have wealth, it’s important because it gives you opportunities. You could do a year sabbatical with your family. You could go work in the family business. You could go pursue your passion. You could pursue things that will be helpful to others rather than focusing on a career that is just there to help you carry on paycheck to paycheck.
When you do that, then take a look at what is happening month by month. Is it going up? Are we getting those debts paid down? Do we have assets that are growing in value versus ones that are depreciating in value? When you look at that, it’s going to change your outlook on money. When you see that wealth accumulating, now you have real options and possibilities for the rest of your life. Your money can now look after you.
Hugh: The leader has accountability and principles. They can apply those same principles to the enterprise that they lead, whether it’s a for-profit or tax-exempt or religious. If we are going to transform an organization, it’s important to transform ourselves first. Certainly, finances are a big piece of that and a big stressor for so many people.
Gordon Stein, you heard him say several times. His website is CashFlowCookbook.com. What can people find there?
Gordon: It’s broken into sections. There are blog posts, which I will be working on again soon. They talk about new ideas that I have, or ideas that didn’t make it into the book. Impact of credit score or how I saved big on drugs.
There is the Utensils section. There are scripts to use when you are calling to get your cell phone bill lowered; templates to use to calculate your wealth.
There is an Ingredients section. I add to it all the time. These are services or companies or things that can help. Car insurance comparison engines, home insurance comparison engines, those kinds of things. There are things you can buy that can help you save money. There is a bit more about me and the book as well. That’s the site.
Hugh: It has a five-star rating on Amazon. It’s $19.95 paperback and $7 on Kindle. Why in the world wouldn’t you want to buy that book?
Gordon Stein, a refreshing look at something different. It’s personal empowerment, personal freedom. That really accelerates our own leadership ability. We take in a huge emotional load off our plate. As a parting thought, what do you want to leave people with today?
Gordon: Organizations getting their own financial world straight is critical. You need some sort of method to help your group, congregation, employees with their financial wellness. I would ask them to take a look: Do you have a program for financial wellness for your people? Not just broad wellness, but financial wellness. I speak to groups. I’d be happy to come out and do something with your group. Get together on a speaking engagement.
Hugh: You can tell he has a great voice and the Canadian “eh” thing going on, too. Americans find that fascinating. We welcome you in our country. Thank you for bringing all the goodness with you. Gordon, thank you for being our guest today on The Nonprofit Exchange.
Gordon: Thanks so much, Hugh.
