Unlock the secrets to transforming your financial mindset with Thomas Blottenberger, who dives into how our personal money stories shape our wealth-building journey. From understanding the psychology of abundance to designing flexible cash flow strategies, Thomas reveals how small shifts can lead to big changes in financial success. This episode offers insights to redefine your approach to money, so don’t miss the chance to learn tools that could change your financial future!

Key takeaways to listen for

• [9:26] Reasons you need to understand market efficiency and asset pricing
• [13:57] An easy way to understand and quantify investment risk
• [18:53] How re-evaluating your financial beliefs can unlock the door to greater wealth and stability
• [23:52] How keeping cash accessible can lead to new, life-changing opportunities compared to rigid financial structures
• [38:18] Why budgeting isn’t enough to help you gain financial independence

Resources mentioned in this episode

• [38:08] Current
• [40:26] Matson Money

About Thomas Blottenberger

Thomas Blottenberger is a dedicated financial coach and co-founder of Paradigm Shift Financial, who entered the industry in 2010 with a mission to transform clients’ relationships with money. Initially disillusioned by the traditional financial industry’s focus on sales quotas over client needs, Thomas sought a more client-centered approach. His journey led him to Matson Money’s science-based investment methods, inspiring him and co-founder Shauna to launch Paradigm Shift Financial. Through his work, Thomas guides clients from stress and scarcity toward a mindset of abundance and purpose, helping them make meaningful, impactful financial decisions based on Nobel Prize-winning investment principles. His ultimate goal is to create lasting positive change in the world through financial empowerment.

Connect with Thomas

• Website: Paradigm Shift Financial 
• LinkedIn: Thomas Blottenberger 

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Thomas Blottenberger: 00:00:42

The way we think about money is probably the most important thing that can be dealt with before the pursuit of money.

Because if I'm approaching money from a scarcity perspective, like, if I'm operating out of scarcity, it's only if I can switch to having an abundance mindset that I can make strategies out of abundance.

Neil Henderson: 00:00:58

Welcome to Truly Passive Income. I'm Neil Henderson.

Clint Harris: 00:01:01

And I'm Clint Harris. And today's guest is Thomas Blottenberger, co founder of Paradigm Shift Financial.

It's a firm that focuses on helping clients master their financial behaviors, take control of their money. He's got 15 years of experience as a certified financial planner.

Thomas is passionate about guiding people through the emotional and psychological aspects of wealth building. He's here to share his unique approach to financial success and how to shift from a scarcity to abundance mindset. Thomas, how are you today?

Thomas Blottenberger: 00:01:28

I'm doing really good, guys. Good to be here. Thanks for having me.

Clint Harris: 00:01:32

Great. Absolutely excited to have you here. So the name of the podcast is Truly Passive Income.

You are in the industry, and so we're all smart enough to know that there really is no such thing as truly passive income, even if it requires setting up a savings account or putting money into a mutual fund or finding an operator that you want to invest with. But it all does happen on a spectrum, right? Something is the most labor intensive and something is the most passive. And so that's our listener base.

That's what we talk about. And we actually have not had many financial planners on here.

Surprisingly, it's a lot of real estate operators or limited partner investors and things like that. So excited to have you on. Tell us a little bit about yourself and kind of what your strategy is and what you feel about.

I really want to get into the psychological aspects of wealth building, but give us your background. Tell us about yourself.

Thomas Blottenberger: 00:02:19

Yeah, awesome. Thank you for asking.

First off, thank you for starting like that, because what was in the background for me was, man, there really isn't, like, a truly passive investing approach. So what if they ask me about it? Like, I don't want to blow up the name of the podcast. Right, sorry.

Clint Harris: 00:02:34

We blow it up every episode. It's okay.

Thomas Blottenberger: 00:02:40

No, but the way you said it was perfect. It's on a spectrum. And.

And I would imagine that you haven't had a lot of financial people or financial advisors on this, because the financial advising world tends to be on the spectrum of more active and active participation. So my background, like you said, I've been in the industry for 15 years, 8 years. Of it.

I was with an insurance company and I was with an insurance company predominantly because I watched my dad do day trading, very, very active stock picking and watched him not really have a. When he was doing well, you would know because his demeanor would show it. And he.

When he wasn't doing well, you would know because his demeanor would show it. And at some point it ended up being where more often than not it wasn't well.

And when I got in the industry, I thought, well, I don't want to be responsible for helping people have that experience. Because that's all my experience was, of the markets. It was basically the wild west.

And I thought, well, insurance people need that, that protects them. And at least there's a contractual element to it. There's a, if you understand the contract, you know what you're getting.

ed business. And one point in: 2016

Do you have any input? Do you have any insight? And I'm like, no, that's why I referred you out.

But that started to be the red flag of like, well, maybe, you know, I'm a certified financial planner. I'm helping people buy businesses, sell businesses. I'm helping them with real estate, mortgage decisions, insurance decisions.

And I don't understand investing in markets. That seems weird. And I started to. Actually, I think one of the most powerful things we're talking about the psychology, briefly.

I think one of the most powerful things people can do is start to ask themselves why they believe a certain thing or why they operate a certain way, just because that question alone can start to give some insight. So I realized, asking myself that question, that I just assumed all investing is gambling because of what I had seen.

And then the question that popped up from that was, is that actually the truth? Is it actually the case that all investing is gambling? I spent about a year and a half trying to learn as much as I could.

I went to conference after conference.

I talked to fund manager after fund manager, wholesaler after wholesaler, and I finally stumbled upon a strategy that I, in two days of conversation, I learned more about how markets actually work and the economic science of stock markets than I had learned in my entire career. It just blew my mind. And I brought that information back to my old company. And so we need to teach this, like people need to learn this.

And I basically discovered that they didn't like that because it would get in the way of our insurance product sales. You know, people aren't afraid of the markets. They're not going to buy the insurance products.

Clint Harris: 00:05:24

Yeah, you're cannibalizing, you know, you guys are selling a defensive product, right? So you're talking to people about being more offensively minded.

Then you're cannibalizing the capital that would have gone toward your insurance product. So.

Thomas Blottenberger: 00:05:35

Well, insurance products love nothing more than when markets go crazy. Like because that's the, that's the fuel, right? It's the, oh, see, look, the market's down 50% C. That's the evidence that our product's good.

They don't talk about what happens afterwards, which is when the market has a, you know, three year up streak. But they, they love those movements. And the more that that can happen, the better it is for trying to push the insurance contracts.

Neil Henderson: 00:06:01

I don't want to go brush past this because you said it. I want to hear the answer. What did you learn in that two day conference on how, what makes markets work?

Thomas Blottenberger: 00:06:09

Oh yeah, okay, well it's a two day conference, so I'll do.

Neil Henderson: 00:06:14

Yeah, yeah, in ten seconds explain to us how it all works.

Thomas Blottenberger: 00:06:19

Okay. The basics of it is this. Do we believe markets are efficient or are they inefficient?

In other words, does the free market do a better job at pricing goods and services than anything else? And if the answer is yes, then what also must be the case is that the risk associated with those goods and services are already baked into the price.

So therefore something risky, it's not a feeling of risk, it's actually quantifiable. Small company markets are riskier than large company markets as a function of pricing and as a function of efficiency.

That's why if I look at the history of long, you know, the 20 plus year history of small companies compared to large companies. Small companies are going to have higher returns most often. And it's things like that, just the economic science of it.

But the way our brains work is if I, when I look at most people's investment portfolios, they have all large companies because that's what all of the biases and the recency and the hurting and just all the things of our psychology push us towards.

But logically, if you think through that from an anecdotal standpoint, well, Facebook or Netflix, when it was a small company taking over the marketplace and becoming a large company, that's when it had all of its substantial growth. If I only own the companies at the tail end of the spectrum, I might own when it fluctuates because of buying and selling.

But I missed out on all the growth potential from when it was a small company to a large company. Just things like that of when you hear it, it's like, oh, crap, that makes sense.

But it's not taught anywhere and it's not adhered to because it's so much easier to, as a money manager, to try to gamble. I think it's an ego trip, like, oh, look, look at the returns I got you. It wasn't the market, it was my brilliance.

Well, that only works so long until, you know, you can't create consistency with that. So it's things like that.

Just actually looking at the efficiencies of markets, looking at pricing models of markets, looking at how markets actually bake in risk to the equation.

So if you hold something over a long period of time, it becomes really important what dynamics and what classes of assets you hold, because they've already got baked in risk.

Neil Henderson: 00:08:38

I love that. It's a point we talk about a lot here, which is we talk about it both from a passive standpoint.

You know, when you understand a projected return, you got to realize, like, the higher that projected return, oftentimes that means it comes with a higher chance of there's more risk.

It also comes with, typically, the further away you are from the manager, with the ultimate manager, being yourself, typically the lower return you're going to have, you know, you can put your money into a real estate reit. You know, we deal with real estate a lot. You know, it's going to. You could get good returns, typically with the lowest that there is.

Whereas, you know, if you're actively managing your own rental property, your return is probably going to be higher or, you know, when you get closer to the source, when you do, you know, like a private placement, Clint and I do a lot of private placements, you're closer to the source. You're still passive. So typically your return is going to be higher. And it's. It's always what I encourage people to do is like.

And we deal with this all the time of people essentially. Just all they're doing is they're comparing return metrics. That's all they do.

They just sit there and they come, okay, well, this has got a 19% return projection. This has got 11. Well, the one at 19 must be better. Okay, well, yeah, but you got to understand a little bit more about what is behind that number.

What you're saying is the efficiency of the market is baking that profile. End to return. Correct.

Thomas Blottenberger: 00:10:09

Yes. Well, on what you just said, it's beautiful because it's. One of the questions I ask people is, you know, how important is it for you to control risk?

And almost everybody will answer that question without actually understanding how to measure risk. And so the example I give them is, imagine you have portfolio A and portfolio B, and they're Both producing a 10% return without any other metrics.

Does it matter which you have? And people generally say no because they're producing the same return.

And then I say, okay, now let's add risk to the equation and assume portfolio A is three times as risky as portfolio B. Now, which one do you want? And they say, well, portfolio B. Risk can actually be metric like that, but you're not taught about it.

And most people don't know how to even look at it.

They look at a mutual fund in a 401k and they're looking at the inception to date return, looking at one that's got a 10% compared to one that's got a, you know, 8% and going, well, I want the 10%, but the risk factor might not make that 10% worth it. You might actually lose money on a high risky.

All things being equal, a higher return with more volatility could actually mean a lower portfolio dollar amount. It's ridiculous. And it's those kind of things people need to learn.

Clint Harris: 00:11:20

There's a couple different directions I want to go here.

shift financial when you had: 2016

There's something else that is recurrent in what you're saying and in what I've read about your bio, is that you're taking a very individualized approach to this. You're talking to people as individuals and you find out what their goals are.

And I think typically where people are in their life and their mentality is a reflection of what they've been through and what their perception of money is. You often emphasize the importance of understanding the emotional relationship that people have with their money.

So for people unfamiliar with the financial psychology, explain how our emotions and our background stories might influence the way that different people are going to approach their strategies.

Thomas Blottenberger: 00:12:17

Yeah, that's such a good question. The main piece of it is almost all of us have some kind of money story that we picked up from childhood that runs the show.

Subconsciously I was lucky enough to actually be able to identify mine. So I was like 8 years old and I was an only child and I had pretty much everything I wanted.

I had my own room, I had, you know, my, I went to a private school, I got pretty much any toy I wanted. My dad was a successful real estate professional in Hawaii.

And so, you know, as an eight year old I was having a good life and then he had made some investments that didn't end up working out well. And I went from that to staying in a room in my grandparents place, not having all the things that I wanted anymore and life kind of just shifting.

And I remember feeling pretty shaken about that.

And I asked what was going on and they said that they made some bad investments and I also needed to learn to live with less and you know, that I'd been spoiled and then I needed to learn to have less. It sounds weird when I say it, but I know at the time that they had meant it pretty innocently like trying to teach a lesson.

Well, as an 8 year old what I developed about that was that I better use my money, but when I get money, I better use it before someone takes it from me. And so for about six years before I learned this, I'm in the financial world. I'm teaching people how to budget, not budgeting.

I'm teaching people how to save and invest money while I'm spending my money, while I'm literally every, you know, $20,000 check comes in from insurance sales and goes out the door.

You know, I couldn't ever figure out why, like I know more as a certified financial planner than like 90% of the populace about all the basic metrics of managing money. And yet here I am, I can't keep a dollar in my bank account.

And what it points to is, and I noticed this trend with clients too, that clients would be taught all these different metrics, all these different concepts, and then it wouldn't actually get applied. And I used to think, well, why does this happen? And then I had to actually look internally and go, well, you're doing it too.

And it was around that time I realized that the way we think about money is probably the most important thing that can be dealt with before the pursuit of money.

Because if I'm approaching money from a scarcity perspective, like if I'm operating out of scarcity, which that was, right, Like I better spend it before someone takes it from me, all I'm going to do is create more scarcity. It's only if I can switch to having an abundance mindset, which is very individualized because everybody's got different scarcity stories.

Clint Harris: 00:14:50

Right.

Thomas Blottenberger: 00:14:50

If I can switch to having an abundance mindset, then I can make strategies out of abundance, which produces more abundance.

Neil Henderson: 00:14:57

You and your partner, Shauna Price. Shawna Price, Correct Foundation.

Thomas Blottenberger: 00:15:01

She's an ex partner, but yes, ex partner.

Neil Henderson: 00:15:04

Okay. You and your ex partner walk us through some of the conversations you have with clients on how you help them develop that abundance mindset.

Thomas Blottenberger: 00:15:14

Yeah, probably the first piece is looking at and trying to help people discover what's the current conversation. So I'm going to call it the Socratic method, but it all revolves around questions and being curious. Tell us your current relationship to money.

When you get money, what do you think? When you have X amount in your bank account, what's your experience? And have them start to unpack it. How long has it been that way?

How long have you had this conversation? How long has it been that when your spouse asks you about the financial picture, you get upset. Right.

And have them start to identify, you know, where that originates. And then from identifying where it originates, the next conversation to really break it up is, okay, well, what do you want it to look like?

You know, what did you actually want life to look like? Most people, and this is an interesting thing. When I ask people what do they want? What most people give me an answer is what they don't want.

So if I say, what do you want? They'll say, well, I don't want to go broke, and I don't want to, you know, put my family in jeopardy, and I don't want to be a burden to my family.

And, you know, it's really hard for people to answer the question of what they want because we've been so conditioned to, I want to call it, struggle, but the brain is designed to survive. We're more busy looking at, well, I don't want that. I don't want that.

I don't want that versus what we actually want and giving ourselves permission to dream a little. And so that's the other part of it is really looking at, what do you want? And just in that alone can be breakthroughs for people.

Clint Harris: 00:16:41

I find this really interesting. So that in and of itself is going to help you establish a goal. Otherwise, what are we doing this for?

What's the purpose of this value that you're trying to create? So I love the fact that you're talking about what's the core root cause of the mentality that you have and what direction are we headed?

How do we establish a goal and a timeline? The two things that I want to talk about is the vehicle that you use and how you're guiding people. And then I want to talk about the types of.

It sounds to me like you're, you're looking for those smaller businesses and younger, you know, opportunities that have more room for that. You know, there's that hockey stick growth, right, that early on in the career is going to shoot up and then it'll level off.

And the longer play that most people have with mutual funds, you're investing after it's leveled off and that heavy value add has been there. So before we talk about the types of assets that you're putting into these accounts, I want to talk about the vehicle you've written before.

Things like financial plans, like a 529 plan or 401k. Right. Very traditional. That's typically sold as like that's the best solution, you know, based upon your specific goals.

We're going to lock this money up. You're going to touch it, you know, 30 years from now. You've actually advised people against locking money up in rigid structures like that.

Talk to me about what you're recommending and why do you think it's important for people to have access to that instead of locking that away?

Thomas Blottenberger: 00:17:58

Yeah, well, the first piece of that question to identify, right is well, why do I say locking it away is problematic? It's problematic because I can't predict the future. Nobody can predict the future.

But the way financial products are structured are as if the future is certain. I'm going to put money into this 401k. I'm going to lock it up for the next 30 years. At 59 and a half, I'll have access.

By then I'll be ready to retire. Or I'm going to put money into this 529 plan. And you know, my kid's going to go to college in, you know, the United States.

They're not going to get a scholarship. All these different assumptions that if they don't play out will cause really big problems for the current moment. Financial picture.

One shift to make on the 529 is with the Secure Act 2.0. They did update the restrictions around that and they made it a little bit more user friendly. So I'm less aggressive about that.

But at the end of the day it's what's the purpose of money? And the purpose of money is for use.

It's to be used as a method of exchange it's to be circulated and ultimately it's to enrich ourselves and other people. So if I just lock it away, I miss out on opportunities in the moment, something that might come up that I could enrich myself or enrich someone else.

And it's all based on this predication of a prediction of the future.

So the first place I like to put money for myself and I recommend clients put money is if you're going to invest and you're going to invest it into mutual funds or stocks, is non qualified accounts. So accounts that have no restrictions. I can put $100,000 in, no one tells me I can't do that.

No one says, oh, there was too much, you got to recharacterize it, you know, blah blah, blah. And no one tells me when I can pull it out. There's no, oh, sorry buddy, I know you need it, but you got to wait another 30 years.

And then one other feature of a non qualified retirement account is then they can be treated like home equity. You get enough money in a non qualified retirement account, you can access something called an S block securities based line of credit.

One of the best funding methods I've found for life and strategies in life.

While you're letting your money grow and appreciate with marketing, or while you're letting market downturns happen and not accessing the principal and damaging it, you can't have that on, you know, an IRA or 529 or any of these other stringent vehicles. So again, not saying that you shouldn't do those vehicles, it's just the order of operations.

People are taught the first thing they do are these vehicles. And I'd say I don't think so.

I think the first thing you do is make sure you have liquidity, you have access, you have use of the money today for enrichment, for strategizing for money movements, for making a difference. And then you have enough in those buckets, then you can get creative with the more long term planning, like 401ks and 529s and all that stuff.

Clint Harris: 00:20:55

Interesting. So I think for some people, they're depending on the type of person, it's a know thyself moment.

And there probably are a lot of people that should have money locked up that they can't touch it for a very long time. And especially if there's something like an employee match, I think that comes into play too.

If you know that you tend to spend money, it might be a good idea to have some of it locked up. But what we're talking about is buckets, right? I'm talking about different buckets.

You've got short term buckets, the midterm bucket, which is what I would say this is, and then the long term, because you have access to it, right?

That's the beauty of, of what you're talking about is if something pops up in a few years and hopefully you're not using it for a boat or a vacation, right? It's opportunities to partner with, you know, syndication operators or in a business with family or something like that, that you have liquidity.

And I think that there's a significant value.

Obviously there's inherent value to liquidity, but in terms of the opportunity cost of what you would miss on certain opportunities in your life, it has potential to be very significant.

I have had this conversation a couple times recently that because of the networking that Neil and I have had, from hosting a podcast, from working in private placements in syndication, and having a network of people around us that are opening restaurants and franchises and doing big things, I'm seeing a lot of opportunity in my life. And it's one of those things that I understand the value, especially if you're living it and you're in that you're always going to find opportunity.

I'm also a real estate investor and I used to see a deal and like chase after it like it was the only one that was ever going to be. The reality is through your life there will always be more deals, there will always be more opportunities because of that.

I think you need to learn to have patience but also be fairly aggressive about tackling the ones that align with what your goals are for your life. And this actually plays into something.

I have what I think is a little bit of a controversial opinion, and I'm interested to get your opinion on, is that I think that my parents and my grandparents could save their way to retirement.

And I think that for the majority of my generation, I'm 41, I think that the ability to save our way to retirement has been taken away from a lot of people and a lot of people aren't going to figure that out until the end. I think that from my standpoint, you know, I grew up in a lower middle class family, one of six kids.

If I'm going to have anything in my life, I feel like I'm using that as motivation of I've got to go get it. And I don't think that I'm going to be able to save my way to where I want to be without trading away the vast majority of my life.

Paying for somebody else's days off and hoping that I have health span as well as lifespan to enjoy it later on. So it resonates to me the idea of liquidity early. But I also think that for most people, the ability to save our way there has been taken away.

And if you know that you can't just play defense, you have to play offense, which means investment strategies. And you have to, you can't just out save any more what you're going to spend when we have 9% inflation every few years or things like that. Right.

So you're hoping to save enough and hoping that the cost of goods and services don't continue to go up. And we all know that they're going to.

I tend to think that we need to have a more aggressive investment strategy because the traditional pension, Social Security and 401k is not going to be there in a meaningful way the way it was for my grandparents. Right. Who could work in a factory or something like that, save their way to retirement, get the gold, wash and cruise. I don't think we can do that.

So I'm curious to know what you think about. You know, obviously with your strategy you have liquidity early, which gives you options for a different opportunity.

And now I want to talk about the assets that you're having people invest in to get a better return and be more of an active investor. That's my opinion. I'm curious to hear what you think about that and how that aligns with what your strategy is.

Thomas Blottenberger: 00:24:44

Well, the first question is, do you think that that's really controversial?

Clint Harris: 00:24:49

I think it's controversial for people that don't. There's a lot of people that don't want to hear that.

I've had, we've gone to networking dinners with 20 people and there's people in there that are like, no, just put, you know, percentage away into your 401k, just save and then you can retire on the 4% rule, which is now the 3% rule, probably needs to be the 2 1/2% rule. I don't think it's necessarily controversial, but there's a lot of people that don't want to hear that.

Thomas Blottenberger: 00:25:13

Yeah. Because especially financial advisors. Yeah.

Clint Harris: 00:25:16

Because if I'm right, it exposes their strategy and what they're banking on. Right. And I think people are going to learn the hard way. So it depends on who you're talking to. It certainly can be.

Thomas Blottenberger: 00:25:25

There's a lot to unpack in everything that you said.

Clint Harris: 00:25:28

Right.

Thomas Blottenberger: 00:25:30

One of the first things I want to just Briefly touch back on something where you were saying that there are people that should lock money up or that need to lock money up. Right. Because they can't be trusted or they can't trust themselves. The only thing I'll say about that is the advice that I give.

I guess if we were to put it with a disclaimer. The advice I give assumes people are willing to have someone that coaches them on the mindset. Could be me, could be someone like me.

It could be around investing in real estate, it could be around investing in the stock market. But that's the people that this advice is for are people willing to challenge their own behavior.

The people that aren't willing to challenge that probably aren't even listening to the podcast, let's be honest. Right?

So that's just the first piece, is I don't deal with people with the mindset of needing to lock up money because I believe behavior can be shifted. And if someone hires me, it's my job to discover how to support them or to do the diligence required to realize they're not coachable.

What else you said in there? So I think the traditional method, I don't think that what you said is controversial.

I think that it's a hard pill to swallow, is that things are more expensive, inflation continues to rise, governments continue to print more dollars. They continue to bloat, use resources ineffectively, which then has them print more dollars.

You know, one of the interesting things, not to get political, but just looking at politics from an economic standpoint, there's an economic principle called the Laffer Curve developed by Art Laffer, the president, you know, economic advisor to Reagan. And it says, given our progressive tax system, as tax rates rise, tax revenues decrease because people do things to get out of it.

As tax rates decrease, tax revenues rise because people just pay it.

And so it's a really interesting debate and conversation that exists in the political world right now when there's actual economic truths that refute most of what's being said, makes me think that a lot of the people in charge need to take some economics class. But as you said, with how things are currently going, I don't think that. That it's a controversial point.

What it does do, and it's one of the things that I talk to people about, is it makes the case for designing your cash flow so much more important. Because there's two sides of the spectrum, right? There's the first side, which is.

And what most of us focus on is the, okay, how do I invest the money? That I have saved. What do I do with it, how do I build it, how do I grow it?

But something that's kind of missed and we're taken for granted is, well, how do I design the way money comes in, by the way? I don't know if you can hear that in the background. I apologize. They just started doing renovations on the house. That's all right.

Clint Harris: 00:28:20

The world we live in these days.

Thomas Blottenberger: 00:28:22

Yeah, yeah. So the other side of the equation, though, is how do we design what we are making to be saved effectively and capture more dollars?

So it's not a budget. Budgeting I don't think works. Generally, budgeting for the average person is a scarcity conversation. It's okay, I only have this much.

How do I parse it out versus how do I design how money flows in and out of my life such that as more comes in, it's automatically captured before I decide to spend it. So what was my point with that? I lost. Oh, my point with that was you're correct about it being a.

The controversial nature of people not being able to retire like normal. With the exception of shifting their mindset on cash flow and shifting their mindset on investments, it's not the same world it used to be.

And you gotta be way more intentional about both of those things.

Clint Harris: 00:29:17

Got it.

Neil Henderson: 00:29:18

We'll start wrapping this up. This was going to be my next question, so it was timely. You're not a big fan of budgeting.

Tell us what you mean by what you're saying about sort of designing the flow of the money as it comes into your life.

Thomas Blottenberger: 00:29:32

Well, if you think psychologically. So then this is what I'm always focused on, is how people think through and make decisions.

So for most people from young, you're trained that as money flows in, as you get a paycheck, as you get allowance, whatever it would be, it gets put into an account, usually called a checking account, that gets spent. Right. That's the whole point of a checking account is it's a hub for money movements, a hub for money being spent.

And so people enter adulthood, end up having more money, have more cash flow. It still hits the centralized hub that we've been conditioned get spent from.

Sometimes people get creative with it and they have, okay, well, this is my account for mortgage. This is my account for lifestyle. This is my account sometimes. But for most people, it's all centralized.

The mortgage comes out of the same place, the credit card payments come out of the same place, the savings moves from the same place. And so there's no Structure to it. It's all just boom comes in, boom flows out. As more comes in, it gets spent.

Which is why we have the adage of as you make more, you spend more. It's because we're conditioned to do that. It's how the brain actually works. The brain thrives on instant gratification.

So the budgeting as a structure, let's say first off, it's against most of human nature. Like if you can actually succeed at a budget, you should also be 6% body fat because the amount of effort it takes to do it.

Clint Harris: 00:30:54

Right. That's a great analogy. All three of my chips jiggled when you said that.

Thomas Blottenberger: 00:31:01

It's just again, the human nature. The amount of discipline required to turn every single variable expense into a fixed one and monitor it is beyond almost everybody's capabilities.

And then it's also based again on current cash flow. So if I get a 30% pay raise, the current budget doesn't factor that in.

And what most people do is when they factor that into the budget, it gets spent.

Clint Harris: 00:31:26

So you're talking about pulling capital off and automatically directing that into an account actually reversed.

Thomas Blottenberger: 00:31:32

So the most powerful psychological. So I actually use a tool, there's a tool called Currents that I use that's an automated process of this.

Its purpose is a little different than what I teach, but it works for what I teach. So the shift is I have my money first go into a holding tank, some place that nothing gets spent from.

From that holding tank, I have an automatic movement of what I design my spending to be. So I'm going to automatically move into a fixed expense bucket. How much fixed expenses I have, I automatically move into a lifestyle bucket.

What I am budgeting to be spent for life and what that does is it creates a unconscious spending, unconscious saving and conscious spending. If I have 7,000 go into the holding tank and 5,000 move into my expense buckets, I automatically capture 2,000 without thinking about it.

I have a commission based business and the next month I make 10,000. I captured five grand without thinking about it.

Now if I want to spend that money, I have to intentionally think through the use of it because I have to mentally exert effort to move it somewhere to spend it. That I believe. That alone, I believe would solve most of the concern that you had over people not being able to retire normally in today's age.

Clint Harris: 00:32:53

I'm so used to the opposite of it all goes into my checking account and 10% goes over here.

But you're right, that still creates that up and down Fluctuation of how much I think I can spend when I look at that account versus it being nice and stable.

And the idea is that over time your earnings go up, but your spending is stable because you know you're getting the same $5,000 a month paycheck or whatever it may be of that.

Thomas Blottenberger: 00:33:16

Well, you get control over it. Right. Because if you want to bump it up to 6,000, you can do that versus oh, my income went up to 10 grand and.

But where the income or the money go, I don't know what I spent it on.

Clint Harris: 00:33:27

Yep. Last thing for me, I want to talk a little bit more about the actual assets.

You talk about small businesses that are probably, some of them are higher risk. How are you picking these things? What do you like? What's your bread and butter product that you, you go after?

Thomas Blottenberger: 00:33:41

Yeah, so I use a particular fund company called Matson Money.

The reason I use Matson Money is they adhere to all the economic and scientific principles that I briefly mentioned in the 10 seconds that I talked about it. Right. Number two is they have a clean regulatory record that's super important.

Like people should be looking at companies they're working with and looking up what kind of fines and violations they've got and what they've got them for. Entities with trillions of dollars out there that have been fined for toxic abuses. And it's like, why are you trusting these people with your money?

Psychologically it's because they're big company and they feel safer with the big company. But it's not true. It's just not how it works.

And then the third is the investing in the money management, particularly stock and a mutual fund and ETF world. There is a performance calculation called gips, Global Investment Performance Standards.

It's a time weighted dollar weighted net of all costs return clients would have actually received being in the fund. Mattson has 30 years of that data and almost no one else has that data.

There's only two reasons I can think of why a fund company doesn't have GIPS audited returns or GIPS reviewed returns. It's too expensive to do. But if that's the case, why are you working with those cheapskates or actually doing.

The GIPS would showcase that their returns haven't been great. And so they hide them. Yeah, and so that's the fun strategy I use. So what do I mean when I say they adhere to the economics?

Well, the economics say, like I was mentioning, markets are efficient. So the pricing models of these things are efficient. And the risk is Already priced in. I don't know what next company is going to be Netflix.

Like, I don't know which one's going to be the next one because I can't predict the future. But I know what market it's going to come from. It's going to come from small company marketplaces.

So instead of owning all, like most funds and most strategies I evaluate are almost 100% s and P, our portfolio is the most aggressive portfolio is only 7.5% in the S and P. The rest is spread around small value micro emerging markets. I mean, 45% of the portfolio in that one's in international marketplaces.

The most aggressive portfolio they have with Matson is 25,000 holdings in 80 countries. And it adheres to the scientific principles. So here's the idea of the model, right?

Like if I were to sum up in a sentence, what's the purpose of the company Paradigm shift.

If I can teach someone to master their relationships with money and actually learn how to combat human nature, such as trying to predict the future and surviving money and instead thriving around it.

And I compare them when it comes to stock market investing, which is my expertise, if I compare them with the most scientifically rigorous strategy to follow all of economic theory around how markets work, and all they have to do is stay disciplined to it to produce results, it's not a question of if it'll work.

As long as capitalism exists, as long as innovation is rewarded, as long as entrepreneurs receive value from creating things, capitalism works, right?

So as long as that continues to be the case predominantly around the world, there's nothing that's going to impact, you know, it's the rising tide raises all ships at that point.

And that's the biggest difficulty for most people is actually staying disciplined to something sitting on their hands, not trying to predict the future, not chasing the shiny object and waiting for the rewards to come, that's great.

Clint Harris: 00:37:20

I think that's a great wrap up. Thomas Blottenberger, Paradigm Shift Financial thank you for coming on and educating us today, spending some time with us.

If our listeners want to find out more about you or find a way to connect with you, what would be the best way for them to do that?

Thomas Blottenberger: 00:37:33

Best way to do that? If they would like to attend a similar event to what I attended that blew my mind, you know, in two days they can go to my website.

It's Paradigm Shift P A R A D I g m shift.adxleader.com and there's a tab called the American Dream Experience, which is a version of that two day where they can learn way more in depth about how the science actually works. And if they just want to connect with me to ask questions, I think LinkedIn's probably a good place.

So it's just Search Thomas Blattenberger on LinkedIn.

Clint Harris: 00:38:08

That sounds great. Well, Thomas, thank you again. We really appreciate you coming on. And yeah, thanks for your time. We appreciate it.

Thomas Blottenberger: 00:38:14

Thanks for having me.

Neil Henderson: 00:38:15

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