Welcome to Money Talks with Keith

Jan 15, 2021

America is facing a serious financial crisis.

Right now, millions of people — including many you might otherwise assume to be wealthy and successful — are living with shame, anxiety, and fear as they struggle to make ends meet.

But this crisis has nothing to do with the economic fallout of the COVID-19 pandemic, at least not directly. This is a crisis of ignorance.

You see, most of us go through years and years of schooling. You may even have an advanced degree in business or finance. But unless you’re one of the lucky ones, you were likely never taught anything about how to properly manage your own finances.

The toll of this financial “illiteracy” can be devastating. I know — because I lived it.

For those who don’t know me, my name is Keith Kaplan. I’m the CEO of TradeSmith. And although I work in finance and am something of a “math whiz,” you may be surprised to learn that the first half of my financial life was a train wreck.

For me, it all began when I graduated college nearly 25 years ago. I earned my degree in computer science and was very skilled at building software, so I managed to land a great job right out of school.

That great job came with a hefty paycheck, especially for someone so young. In fact, I’ll never forget my mother telling me I’d be making more money that first year than she did. And she had been working as a public school teacher for nearly 30 years! (I also remember thinking it was criminal we don’t place a higher value on teaching our children, but that’s a story for another time.)

It didn’t take long for this good fortune to go to my head. I was going to be rich! So naturally, I bought myself a “toy.” I took out my first-ever loan to buy a brand-new Jeep Wrangler. I loved that Jeep… so much so that I ended up spending many thousands of dollars more on customizing it.

But after several months of driving nearly an hour to and from work each day, I decided my Jeep wasn’t ideal for commuting. I needed a “sensible” daily driver. So, I took out another loan — my second in two years — to buy a Volvo S40.

A year or two after that, my college sweetheart and I decided to move in together. But I didn’t want to rent, I wanted to “build equity” (not that I really knew what that meant). So, I took out a mortgage on a tiny, 900-square-foot house.

By the time we moved in, I was 25 and already carrying three substantial debts.

A couple years later, we got married. Now, let me be clear… Marrying my wife was the best decision I’ve ever made. But she brought loan number four along with her — a large graduate student loan equivalent to making a luxury car payment every month for the next 25 years.

Then along came the housing bubble. Suddenly, our tiny house — which until that point had very little equity value — was worth much more than I paid for it.

So, what did I do with that equity?

Naturally, I decided to become a house “flipper.” I took out two more loans — numbers five and six — to renovate our home, with the intention to quickly sell it and upgrade to a better one.

Unfortunately, things didn’t go quite according to plan…

Fast forward a couple more years, and now it’s my wife and I, two young children, two cats, and a dog living in that same cramped (yet nicely renovated) house. So, you can probably guess what we did next…

That’s right, even though we owed more on our current home than we could hope to pay off, we took out a seventh loan to buy a bigger house. (For the record, we did eventually sell that first house. But even after about 10 years of “equity building,” we ended up selling it for much less than we had put into it.)

At this point, I was 34 years old. And on paper, everything looked great. I had a wonderful young family and a rewarding career. I was making an enviable amount of money, year after year. By almost any measure, I was a “success.”

But in reality, I was lying awake most nights wondering how I was going to pay the bills.

Things got so bad one month, I actually had to borrow all $2,000 we’d saved for my little girl’s college fund just to pay our mortgage.

That was the lowest point of my life… But it ultimately became my wake-up call. I committed to changing my life — to stop robbing my future self by spending money I had not yet earned — so that my family and I would never have to be stressed out about money ever again.

Of course, this was easier said than done. Like so many others, in all my years of schooling, I had never learned a thing about financial literacy. I had to teach myself. And that meant making plenty of mistakes along the way. But I’m happy to tell you that I did achieve that goal.

Less than five years later, I had:

  • Paid off all but one of our loans (our mortgage)
  • Paid off 40% of our mortgage
  • Built up an entire year’s worth of expenses in our savings account
  • And made some significant investments toward our retirement.

If you (or someone you know) is currently in a situation like I was, this may sound too good to be true. But I promise you, if I can turn my financial life around, anyone can.

I’m not a trained expert or financial “guru.” I’m just a regular guy who made a ton of mistakes and learned a lot of lessons the hard way. And in this new weekly column for TradeSmith readers, I’m going to share the best of what I’ve learned along the way.

As I mentioned in my introductory email, Money Talks will be a little different than anything else we’ve published. It will be absolutely free for anyone who wants to read it, and it will contain no marketing.

That’s because my goal in writing these letters is not to sell you on our products, but simply to give back to those who may be struggling with the same issues I struggled with for years.

You’ll get to see everything I’ve learned about personal finance, hear about how I invest, learn alternative investment approaches, hear how to prepare yourself for bear and bull markets, and so much more.

I’ll even cover some behind-the-scenes aspects of TradeSmith, like how we build and launch products, the studies we perform, our data, etc.

This is something I’ve been wanting to do for years, and I’m grateful to be in a position to do so now.

I hope you’ll join me on this journey.