Cash Flow Stories

About this Episode

In this article, we will explore the fascinating world of cash flow, financial management, and the psychological factors that influence our spending habits. Join us on a journey that takes us from childhood disappointments to practical strategies for achieving financial freedom.

Key Takeaway Timeline

  • 01.07 How marketing shapes a world that encourages us to consume
  • 08:24 How your biological need for consumption is limiting your ability to save
  • 13:33 How your financial strategy can curve human behavior
  • 16:44 How the WV360 allows your to visualize you entire financial health in one place
  • 18:56 Is your cash flow net positive or net negative?

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Transcript

01.07 How marketing shapes a world that encourages us to consume

Patrick Donohoe: When I was younger as a wee little lad, I was given a subscription to this magazine called Boys Life. Invariably, I would go right to the classified section of the Boys Life magazine. Every time I got the magazine, in the classified section, you had these novelties, like a Rambo knife with a compass and matches inside, a screwdriver, a survival blanket, a go-kart kit, and a kit to make a pedal bicycle. But there was something I always wanted, and it was to see people. So on there, you had this makeshift sketch of a tank. I think they ended up being brain shrimp forever. So that was my first major purchase disappointment because obviously the $2 I’d make from cutting the lawn and doing my chores per week, I had to save up for a couple of months, and I bought the sea people, only to get the sea people, and they weren’t sea people.

Jennie Steed: Oh, yeah, Yeah.

Patrick Donohoe: Do you see how traumatized my childhood was?

Jennie Steed: Oh, yeah. It sounds horrific. Expecting to see people, and you get nothing but brine shrimp.

Patrick Donohoe: All right. So we’re going to talk about cash flow today. I have a wonderful, wonderful person joining me, Jenny Steed. Jenny, how are you doing?

Jennie Steed: I’m doing pretty good.

Patrick Donohoe: Now, we’re going to lighten it up a little bit. We’re going to give some stories that have formed part of our perspective when it comes to financial strategy, asset management, and cashflow management. I find that story intriguing too because I know for a reason, I just remember it like I remember it in a lot of detail. I ended up getting the Rambo knife; it wasn’t called the Rambo knife, but it was a survival knife with a detachable blade, and it wasn’t sharp. It was fascinating to me to see just how much stuff there is to buy, how intrigued we get by the novelty of it all, like sea people or Rambo knives. But now you have Amazon that has pretty much anything under the sun that you can buy. I think the modern world is essentially positioned to take our money, all of it. There’s an endless list of things to buy, right?

Jennie Steed: And with little effort.

Patrick Donohoe: Hardly any effort these days. Yeah, this one-click. They have social media and e-commerce. I mean, we’re going to get into it because I think there’s merit to it. When you start to become aware of the world designed to exchange with you, obviously, we’re going to exchange our stuff. We’re going to buy; it’s part of being fulfilled, part of partaking in modern society. At the same time, you can overdo it.

Jennie Steed: Always, always kind of over do it.

Patrick Donohoe: I remember one of the first jobs I had in school was at a credit repair company, a call center. I had been inspired by “Rich Dad, Poor Dad” and realized that sales and communication were important. But it terrified me. I lasted two weeks trying to set appointments for vinyl siding before that. I was committed to learning how to sell and having conversations with people. So I had a good time working with this company that helped people avoid bankruptcy and get out of debt. But I got to see how crazy the circumstances were that people got themselves into, succumbing to the irresistible pull of advertisements.

Jennie Steed: It’s always at you every minute, all the time, even with Alexa suggesting purchases.

Patrick Donohoe: But it does that without even Alexa saying it. Like, you’re talking about something, and it shows up in an advertisement on social media. Crazy.

Jennie Steed: And it shows up everywhere over and over again, that repetition in your mind. Pretty soon, you have to have it.

Patrick Donohoe: So creepy internet spying experiences are probably something you can resonate with, and impulsive buying, too. We found many studies, like the one by Credit Donkey, that says almost 90% of people admit to buying things they don’t need or didn’t plan for. That was in 2017. I don’t know if Credit Donkey is still around.

Jennie Steed: I would imagine that statistic is probably way more robust now with everything that’s gone on in the last couple of years where people are seeking fulfillment and believe that those items will provide it, even if it’s just a moment.

Patrick Donohoe: What’s interesting is that I don’t know if there’s a rational process. Our bodies are designed to want to consume things. Food, obviously, to stay alive. But we have an impulse to consume everything else, too. Our bodies are really old, and part of it is still saying, “Here’s something to consume. If you don’t consume, you’re going to die.” A lot of the chemicals that compel us to behave in a certain way are still active.

08:16 How your biological need for consumption is limiting your ability to save

Patrick Donohoe: Right. I think people succumb to it, like the credit card debt that exists right now. Overspending, I think, is rampant. So as far as a healthy, holistic financial life, having a strategy with the idea that you can’t really change your DNA. I mean, I guess maybe in some future with what science is working on, maybe. But right now, it’s like you can’t. So you essentially try to resist it and budget and be cheap. Some financial celebrities advocate that, and I think there’s merit to it. Don’t get me wrong. At the same time, I think you could essentially use that pull to your advantage with a good strategic approach.

Jennie Steed: Oh, absolutely. I mean, something even as simple as before a purchase, asking yourself a question, does this add value to my life? And if so, in what way? If you can answer those questions. I mean, that’s super simple, super quick. Add it to your cart, let it marinate. If you forget about it, well, it clearly isn’t going to add value, which most of us would forget about it. And then if you do come back to it, in what way is this item going to add value to my life? But that’s just a super simple way to check in with those items that show up every day that are not even our own recommendations. Simple story. I bought a pair of drapes for my office. Really pretty drapes. And a couple of weeks later, my mom shows up and she goes, “Oh, wow, honey, those are pretty drapes. I bought those same drapes.” Well, it turns out those showed up in her suggestion list because she’s in my phone, and it shows up on her suggestions and it just shows that power of that emotional resonance of those items with your people.

Patrick Donohoe: Or however these marketers do it, they’re doing it. And I think e-commerce is just one of those fields that there’s tons of opportunity as an entrepreneur, especially like Etsy, where you have some creativity, you can make signs and jewelry and T-shirts. I think it’s incredible. At the same time, you as a consumer, you have to be aware that the world is trying to get your money and that a system, whether it’s a philosophy that you adopt, making rules for yourself, is this something that’s actually going to work?

Patrick Donohoe: So one thing that I realized with my two daughters is that we have a cool app, and there are others like Gravy Stack and Greenlight, which is the one that I use with my kids. They have to do chores to earn money. If they don’t do chores, they don’t get any money. It’s gamified because the money’s there, and they get to see that it’s there and it reminds them, like, hey, the money’s there, but you’ve got to do your chores to get the money. It’s really cool. It’s all in auto-transfer, really convenient. They have their own little debit card. I noticed every week, all the money is gone.

Jennie Steed: All the money, all of it.

Patrick Donohoe: You get this amount of money, all of it’s gone. The next week, all of it’s gone. Then these things started to appear in the mail, and they had Chinese lettering on there, just like crystals and jewelry and these things that piled up in my kids’ room. So I sort of have noticed that this is a tendency of just human beings, young people, and old people. And I want to prevent them from experiencing that. But what’s cool with Greenlight is that they have a mechanism where here’s the amount that they’re going to get every week if they do their chores. You can carve out a certain percentage that goes into a savings account. So it ended up so that’s what we did. And the savings just started to pile up and pile up. And then guess what happened? Then I get these requests from my kids, like, “Dad, can I transfer savings to spending?”

Jennie Steed: Of course.

Patrick Donohoe: And I’m like, “No” this was cool. It’s just sitting there and not doing anything? Then what you can do with Greenlight, which is cool, is you can add an interest rate, your own interest rate, so you can explain to them how interest works and interest compounds. So now there’s like, okay, if I buy this, I don’t get that gain.

So this psychological thing happened. This is several years ago. And I feel that all of us really succumbed to COVID, where it’s like nothing. You’re working, but there’s nothing else extracurricular. And so I imagine a lot of the money that people were saving started to get allocated to their Amazon budget and piles of boxes appearing on their doorstep magically. Yeah, here’s the deal. It’s like I think, hope you guys can resonate with this. The idea is strategy. When you have a strategy that you control, you influence, you set up, it helps curb human behavior, right? So instead of resisting it like you want to, you want to curb it. So curbing it is very similar to what I just explained with Greenlight, which is having a mechanism which you can control where your cash flow goes. We talked about in our previous episodes, but we have an app, a company we’ve partnered with and aligned with. They’re actually from our industry. We’ve done joint events together, and they just created this cash flow app where it helps redirect your cash flow.

14:24 How your financial strategy can curve human behavior

Patrick Donohoe: So pretty much all the money you make goes into this one account, this aggregated account, and then from there, it essentially has an auto transfer to a spending account. The idea is to spend it all, spend 100%. It helps leverage and use the momentum of this irresistible pull to spend to foster good behavior because you’re saving first instead of saving last. Behavioral economics has been gaining prominence, with experts like Richard Thaler winning the Nobel Prize in economics for their work in this field. Some professors at UCLA have partnered with this app to use their understanding of human behavior and finance to ensure that people have a good experience with their cash flow.

It’s magical. Many stories are coming up where people had no savings, and now they have significant savings. It’s a simple shift in perspective. I’ve had clients in the past and current clients who make a lot of money but have it scattered in different accounts. Some overspend, while others underspend. I remember a client who had assets and money everywhere but didn’t spend much until I showed him that he had enough for his life, his kids, and his grandkids. It was an awakening that made him realize he needed to start spending more.

Jennie Steed: That was their protection mechanism, putting it in different places so it wasn’t immediately visible. The lack mentality started to set in, and it spiraled from there.

16:58 How the WV360 allows your to visualize you entire financial health in one place

Patrick Donohoe: There were accounts everywhere, usually organized in a spreadsheet, which can be super confusing for the person managing them. This is why we’ve spent the last couple of years figuring out how to provide a better experience for Paradigm Life clients. That’s why we built the Paradigm client portal.

Again, this is free for all of my clients, but it gives you a one-page dashboard of your entire financial life. Most people use spreadsheets or tools built for the typical financial services world, which don’t account for various assets like insurance cash value, annuities, rental properties, and more. So we built this dashboard called Wealthy 360, where you can evaluate all your assets, from cryptocurrency to precious metals to rental real estate, all in one place, providing a clear financial overview.

Jennie Steed: It’s amazing because nowhere else is there a service that provides everything on one page. When everything is scattered, people often spread themselves too thin mentally, making it hard to focus. Wealthy 360 puts it all on one page, allowing you to see everything clearly. With this visibility, you can make better plans for your future, whether it’s starting a business, taking a family trip, or whatever matters most to you. When everything is visible in one area, you can focus on what’s most important, like family and business growth.

18:56 Is your cash flow net positive or net negative?

Patrick Donohoe: A big piece of this is the cash flow section. It measures the money coming in and out of your financial life, focusing on achieving a net positive cash flow. We provide tools to help you manage and improve your cash flow, ultimately contributing to a more meaningful life. One saying in business is, “You get what you measure, you manage, and what you manage, you improve.” Our tools aim to help you achieve that outcome.

The app we partnered with is called Currents, and it’s available at no cost to Paradigm Life clients. You can find instructions in your portal account if you haven’t signed up for Currents yet. These resources are designed to help you lead a more meaningful life by optimizing your financial situation, not just being frugal for the sake of it. It’s about responsibly managing your finances so you can enjoy the things you like, whether it’s buying novelties or pursuing your interests.

Jennie Steed: I couldn’t agree more. Simplifying even one small area of our lives can free up bandwidth to focus on other things. It’s a valuable addition that takes little time to set up and manage. The neat part is that you can track your progress, which is often lacking when your financial information is scattered all over the place. When you don’t see the progress, it can be disheartening and leave you feeling lost.

21:10 Saturday Night Live skit: Don’t buy stuff you can’t afford

Patrick Donohoe: Okay, Jenny, thank you for being here. It’s an awesome conversation.

Jennie Steed: Thank you. This is awesome.

Patrick Donohoe: There’s something we want to end with, and it’s actually a video. We have a playlist on our YouTube channel, financial humor. We found a clip of humor related to the sea monkeys, but it may not be appropriate for the Paradigm Channel. 

 You can also find the link in the show notes of the podcast to watch the video itself. That’s it for today, and now to our concluding video/audio.

About Patrick Donohoe

Patrick H. Donohoe IAR, AIF®, RFC®

Over two decades of experience in the financial services industry, Patrick has seen the challenges people face in managing cash flow, risk, and investment performance – especially for business owners, real estate investors, and entrepreneurs. The struggles lead to continuous uncertainty and unease, – negatively impacting the areas of life where they have the most significant impact.

At Paradigm Life, where Patrick serves as CEO, he leads the company mission of helping Clients overcome these challenges through proven, economically sound, and time-tested strategies. Since 2007, Paradigm Life has guided over 8,000 clients nationwide to new levels of financial independence, helping them create and follow a path to thrive personally and professionally.

Patrick’s journey into the financial industry was unique. Growing up in a middle-class area in central Connecticut, the child of two teachers, he wasn’t taught much about money, investing, or business. His interest in finance was sparked by studying Economics & Statistics formally and reading Rich Dad Poor Dad in 2002, which opened his eyes to the financial potential of all human beings.

Patrick’s first real taste of personal finance came during college, where he worked in a call center that provided debt consolidation strategies as an alternative to bankruptcy and, later, in the mortgage industry.

He founded Paradigm Life in 2007 and, like many during the 2008-2009 financial crisis, learned firsthand about the unpredictability of the business environment and economy. That period tested him but also shaped him. Amidst the struggle, he worked tirelessly, providing consultations and webinars to help people navigate the financial storm. In 2011, those efforts started to bear fruit, allowing him to expand his team and build a strong company culture.

This journey compelled Patrick to write “Heads I Win Tails You Lose – A Financial Strategy to Reignite the American Dream” in 2018. The book encapsulates his financial philosophy and the wealth strategies Paradigm Life uses with Clients, rooted in his career experiences. To date, the book has sold over 60,000 copies.

Patrick also co-hosts several podcasts with over 1,000 episodes combined.

As a veteran of the industry, Patrick gets the challenges Clients face. His personal and professional experiences have equipped him to guide others through the complexities of personal finance. While he is passionate about numbers and objective analysis, he strives to prioritize making financial theories accessible and practical for Clients without getting lost in the complexity.

On a personal note, Patrick has been happily married since 2003 and has three children. He’s a Utah Jazz fan, plays Ice Hockey, and loves spending time in the mountains with his friends and family.

About Jennie Steed

I believe that people are capable of incredible things, if they have the proper systems and support they need. Every great vision is achieved one step at a time. I love being there every step of the way. I am at my best when I get to teach the principals of financial freedom and accountability as well as provide the support needed to help my clients achieve their goals. This is who I am.

Jennie specializes in assisting her clients to find a financial balance while creating their financial masterpiece – for both now and for the future. She is an entrepreneur. Prior to joining Paradigm Life, she worked in finance as a mortgage loan officer for 5 years. She also owned and operated an alarm installation and monitoring security business for over 10 years. Jennie is the mother of three children – each with three very different personalities – and has learned how to creatively adapt to each of their needs. With that experience, she loves to find creative ways to encourage clients and colleagues as well as family and friends to look outside of the box for possible solutions to problems. She has a unique ability to teach them how they can create their goals and dreams. To Jennie, the “Perpetual Wealth Strategy” is most definitely “out of the box” thinking.

A Wealth Maximization Account is the backbone of The Perpetual Wealth Strategy™