Financial Literacy - William Glass

financial fitness May 07, 2021
Mark Struczewski, William Glass

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William Glass is on a mission to improve global financial well-being by helping America gamify its financial future through his company Ostrich. In addition, he hosts a podcast on entrepreneurship called Silicon Alley, enjoys running marathons, loves reading books, and improving himself every day.

Mark Struczewski
We're going to talk about finances today. You are the co-founder of a company called Ostrich. We're going to get to that later in the show. But why don't you share with the audience for context; what do you do in the day-to-day?

William Glass
I'm CEO, and co-founder of Ostrich, as you said, and essentially, we are gamifying finance and financial success to be specific. So personally, I had some interesting experiences as a kid with finances and saw challenges that my parents and family went through. And that really affected me. And that's the focus; looking out on the marketplace saying, well, what's wrong right now with finances? There are all these cool apps, crypto and blockchain, and all these things. But if you look at the underlying wellness of society, it's not getting better. That's where Ostrich came from, and day to day is making that mission of improving financial wellness come to fruition.

Mark Struczewski
I remember the first time I was I don't know if I was in college, or I went to one of those mindless hockey games and, and I remember this pitch: Hey, would you like a free t-shirt? I said, yeah, I'd like a free t-shirt, and, of course, it had the bank logo on there. I just filled out this credit card application. So I'm thinking, oh seriously, didn't know anything about credit card applications. I fill it out. And a couple of weeks later, I got this credit card in the mail. This was the coolest thing. And I had a $1,000 limit, which to me was really cool. I had power. I remember going to Radio Shack (remember Radio Shack?), and I bought a boom box for around $150. And the next month I got a bill and it said $150, but you only have to pay $10. And I'm thinking, really? I want to pay $10. I didn't understand interest. You're laughing at this, but I didn't know. And I think a lot of people are like that. They think, well, I could pay $10 a month. But if you do the math with the interest, you didn't really pay $150 for the boom box, you paid a lot more. Talk to us about that.

William Glass
Yes, absolutely. It's definitely a common problem, right? It doesn't serve the financial services industry to actually educate you. They just want you to get products in your hand and use them. There's everything that's happened earlier this year. So we're recording this in May of 2021. But the whole GameStop issue and AMC with Robin Hood; even though Robin Hood has no trading fees, they make money when you trade. So they need you to trade in volume. At the end of the day, these financial services companies just want you to use their products because they've got it figured out where it'll make them money, but you don't necessarily know why, or how you should be using them. And obviously, we don't teach financial literacy in schools, you didn't have a class on how credit cards work. And they didn't tell you that when you're signing up for it. So as you know, it's terrible that we do that to people. And it seems like Gen Z as a generation is a little bit more focused on this, because of what happened to you, Mark. And what I've gone through and my parents have gone through, the same sort of challenges around money, that is starting to become a little bit more of a hot button topic, which is exciting, but it's just not happening quickly enough.

Mark Struczewski
I remember when my wife and I bought our first home. We're still in the home, and we signed a $150,000 mortgage for 30 years. And we thought this is a pretty good deal. But when you look at the amortization, you wind up paying almost $800,000 for the home. $150,000 if you wrote a check for it. But when you add in the interest, it's only 2.75%. But over 30 years, that adds up. And I think going to the point you just made, we're not trained in this. And I'll be honest, the first training my wife and I got, we went to Dave Ramsey's Financial Peace University. And I think everyone should go through something similar in order to graduate high school; not college, high school. Everyone should go through something like that to say, this is how interest works. This is how the 90 days same as cash scam works because I nobody knows that and you're laughing because if you're not familiar with that, 90 days, same as cash, it is 90 days, no interest, but on the 91st day, they charge you interest from day one. They tell you that in the tiny, small print, but they don't tell you that upfront when you're buying the stove or the TV, whatever it is. And so I really think there is a major problem in America and probably globally with financial literacy.

William Glass
Yeah, you're spot on Mark. And I think folks like Dave Ramsey and Suze Orman are some of the pioneers in this, this space of really opening up and talking about finances. And now, again, with the proliferation of podcasts and social media, there are more really good influencers out there that are spreading the word of how to be more financially literate. But yeah, I mean, the sad part is, is that it also targets people that are in a tough spot, to begin with. Rich people don't get charged bank fees because they don't have enough money in their accounts. People with no money are the ones who get charged or end up on payday loans. So not only are we not educating people, but the financial services industry is encouraging people to get whatever they want right now. And the exorbitant interest affects people that already can't afford it.

Mark Struczewski
We do live in an instant gratification society. My grandparents bought their house with cash way back in the 50s. They didn't there weren't mortgages back then. I mean, there probably were, but most people paid cash. The first time I heard this was from Dave Ramsey. No one ever asks how much it costs, they ask how much down and how much per month, they don't care what the term of the loan is, which is scary because people can manipulate the numbers. Well, if you do it for 10 years, this is the price, 20 years, this is the price, 30 years, this is the price, and you're watching the monthly payment go down, like oh, we can afford that. But you really can't afford it, because now you're stretching over the 10, 20, or 30 years.

William Glass
Yeah, 10, 20, or 30 years plus, no one tells you that you have to fix a roof, you have to replace the AC, you have to replace the hot water heater, and no one tells you those are going to be 5, 10, or even 30 grand a pop when you have to fix a roof. So there are all these other expenses that are not factored into that nice little number.

Mark Struczewski
Yeah, I remember when our hot water heater went out, and we had no preparation for it. We did fix it ourselves. We went to this website called YouTube. And we found out the parts to get because when you hire somebody, they want to get paid. So my wife and I, who are not really mechanically savvy, learned to do it ourselves. Obviously, we can't replace the air conditioner or heater. We didn't have to replace the actual tank, we had to replace the guts outside the tank. So the parts only cost like $25. It's actually the knowledge, and thankfully for YouTube, we realized we could do this. Now I'm sure that the plumber would like us to pay him $300 to come out. But when you're just buying a house as you said, you have taxes, taxes, and a lot of taxes you're not even aware of, so you learn how to fix things yourself.

William Glass
Yeah, no, it's a great tool to use YouTube. I've done that with cars as well. Like, something blows up on a car or something goes out. And now you can figure out what it is. And you can watch someone replace it. And before I wasn't savvy when it comes to using tools and things like that. But with YouTube, you can figure things out, which is awesome.

Mark Struczewski
And what's really amazing about YouTube is you can find your exact water heater or your exact car, so it's not like, well most cars work like this. You can find someone replacing that item on your exact car model, which makes it easy to see what he's doing. It's really amazing. And you also talk about payday loans. I want people to think about payday loans. Where are the payday loan places? They're not in the rich part of town. They're in the part of town where people can't afford to go to payday loans. But because they haven't managed their, their finances? Well. They are really up against the wall and they're desperate. They have to pay their rent, they have to feed their kids, they have to put gas in the car to go to work, and the payday loan places are not your friends. I would call them sharks, really.

William Glass
Yes, absolutely. You're spot on and think about where do you typically learn information about finances; it's from your family, it's from parents, maybe you go do your own research, and you have someone that is interested in that. But typically, it's just what you grew up with. And so obviously, if you come from a wealthy family or someone knew how to manage money and has had success, you're going to end up in a different situation than in an instance where your family didn't have that and you don't have parents or you know, an uncle or aunt or someone that that understands these things. And so it's generational. So you look at the income inequality gap in the United States and it's only getting larger. The rich are getting richer, the poor are getting poorer and the middle class is falling behind. And, you know, there are so many things that tie into that. But financial literacy is a huge component of that for sure.

Mark Struczewski
Let's imagine somebody is listening to our conversation today, and they're thinking to themselves, I am in a world of hurt I have so many credit cards, they're maxed out. I hear what you guys are saying, but what do I do? I mean, I'm stuck right now. So what would you tell to someone who's really stuck? I mean, obviously, there is a way out, it won't be easy. Unless you win the lottery, please don't play the lottery. It's another scam. But there is a way out. It'll take you time. So what would you tell that person who's listening to us? Who is really in dire straits financially?

William Glass
You have to educate yourself. Because no matter what, whatever option you take, you have to know that you're going to the right place, so you don't end up at the payday loan place. Or you don't end up getting another credit card that has whatever, six months or 12 months of zero interest balance transfer, and you end up in the exact same situation. But now you run up even more debt. So you have to educate yourself. And again, go to Google go just type in whatever the problem that you're having, if it's credit card debt, if it's just debt in general. But then if you think about the basics - I don't want to say that it's easy, because it's definitely not easy to get out of that situation. But from the basics of how finances work, if you spend less than you earn, you will be in a good position. And that means that you either need to stop spending as much as you are, or you need to figure out a way to earn more. And those are kind of the two main levers that you have when you're first starting out, or you're in trouble, essentially. But there are ways to get out of high-interest credit card debt and things like that; there are loan consolidation services, bankruptcy is not a not necessarily a fun thing, but it is an option. And there are times where it does make sense. There are different types of bankruptcy. So there are plenty of pathways out of whatever situation you're in. And I can guarantee you that there are other people that have been through what you've been through and what you're going through. So take a deep breath, find those people that have gone through your situation and start to learn and figure out which path out is the best for you.

Mark Struczewski
You know, as a productivity expert, one of the things that I hear is, I don't have a lot of time, and I'm thinking, okay, well, what are you doing, after dinner and before bedtime? Sitting in front of the TV? So let's bring that to financial literacy. Are you paying for a lot of streaming TV services? You say you have no money, yet you're getting a hit of Starbucks every day. Or you're downloading a movie on iTunes every weekend. So you can start cutting things. Yeah, it's gonna be a little uncomfortable for a while; you won't have your movie night, or you won't be able to play your games. But you know, if you're willing to sacrifice now, then down the road, you'll be able to have more freedom. I think Dave Ramsey says, if you live like no one else now, then, later on, you can live like no one else. But you have to be willing to make the sacrifice and say, okay, I am not going to have Hulu. My wife and I, our Direct TV box died like five years ago. And we said you know what, we're not going to do cable or satellite anymore. We live in Houston, Texas, we're 12 miles from all the antennas. So we went out and got a TiVo, which we own. We pay TiVo $11 a month, we get all the main channels for free and TiVo records for us. So there are options. You don't have to have cable or satellite or Hulu Live TV or YouTube Live TV. There are ways you can cut back so you can get ahead financially.

William Glass
Yeah, no, I love that. Prioritize what's important to you, and focus on the things that aren't which you're spending money on. So if you don't really value cars, don't go out and buy a new car or maybe downgrade to something that gets you around town. But if you love cars, and you have your dream car, maybe that's fine, but focus on something else that you can cut out that you spend money on that maybe society values or other people in your network think is cool, but you don't really value. That's when you can really win and it becomes a lot easier to live frugally because you're still doing the things that you love, or getting enjoyment out of the things that are important to you while you're still also saving money and making progress towards your financial goals.

Mark Struczewski
I'm glad my wife and I are not big fans of cars; we have a car that 16 years old, it's leaking oil, and a lot of things don't work on it and the shocks are gone. And recently, my wife got rear-ended and so the trunk won't open. And you know, so they have to total the car. Because even though the car is still driveable, the cost to fix it is more than the car is worth. This car has served us well, but we don't drive far with it anymore. We know she's an old lady; we're not going to drive from Houston to San Antonio. But when we replace the car, which we have to do in the next couple of months, we're not going to buy a brand new car, because the worst car tragedies happen when you drive the car off the lot, because it depreciates so much once you take it off the lot. And I'm going to buy a used car for us. Because to your point, we only need it to get us around town to go grocery stores, the doctor's, or whatever. We don't need to go on long trips. If we're going on a trip there are these things called airplanes. I will take an airplane. I don't like road trips. I'm past that now.

William Glass
Yeah, no, exactly. That's, that's a great perspective. And I think, you know, buying used cars, especially if you buy a quality one that runs forever, that in the US people can fix easily. Hondas, Toyotas, those cars tend to run for a very, very long time.

Mark Struczewski
You don't have to deal with rust either. I'm originally from Rochester, New York, my wife moved here from Grand Rapids, Michigan. And she had to deal with the salt and the rust but down here, there's no rust on our car. So if you live in California, Arizona, New Mexico, Texas, Louisiana, Alabama, Georgia, Florida, there are all the southern states, you know, you don't have to worry about that. So your car will last a lot longer. I think our car has 167,000 miles on it and is still going.

William Glass
You're using it the right way. And that's a great way to save money and focus on the things that you do enjoy. So maybe you guys enjoy going out to dinner more or whatever that is.

Mark Struczewski
For us it is iPhones and Apple watches. That's our kryptonite. We buy a new phone every other year and we buy a new watch in the off-year, that's our kryptonite. But when you look at that, it's a lot cheaper to buy. Apple iPhones cost two grand for two of them. A brand new car, costs like $25K -$30K or more. We each have to pick our poison. We like Apple products. Some people like cars, some people like mansions. And I'll never forget when I worked delivering pizzas, I delivered this $200 order to somebody in a gated community The mansion had a boat in the yard and an expensive car. And he gave me a $2 tip. And I remember telling my wife. I said this is ridiculous. And she said, they're probably house-poor, which means all their money is tied up into their things. And they may have no liquid assets, probably put the pizza on credit cards. Who knows?

William Glass
Yeah, exactly. You can't. And that's the thing, you can't judge people based on the things that they have in their life, right? Because you don't know what the bank account is, someone could be in a ton of debt or have been really frugal with their money. And we don't talk about finances. So you just don't know. So it's really important not to as you said, like think of just put someone in a box because they have an expensive car or a nice iPhone, it doesn't mean that that person necessarily is really financially secure and successful. And you know, it's just a status symbol.

Mark Struczewski
It is. Now I remember there was a show on CNBC called High Net Worth. And I used to be fascinated with all these people with high net worth. But then I learned the truth of net worth. If you have $1 million in your bank account, and you owe $1 million, your net worth is zero. When I first understood that it blew me away. And even worse, if you have a million dollars in the bank account and you owe 2 million, you have a negative net worth. And to your point, just because you have a Lamborghini doesn't mean you have cash that you can go take out of the bank and use to help somebody.

William Glass
Yes. This is something that I'll see in the financial influencer space as well; you'll see someone who says, oh, a million-dollar real estate portfolio or multi-million dollar real estate portfolio. It doesn't mean much if they owe more than the property is worth. You have to be really careful with the language because that will actually tell you a lot if you really notice those details of how people frame money or finances. That's another key kind of trigger to look for.

Mark Struczewski
So how did you get into the financial space? ,

William Glass
My parents got divorced because of money. Okay, in 2008, when the financial crisis blew up, their relationship blew up along with it. They weren't on the same page, they didn't have great conversations about finances, over-leveraged, got kind of caught up in the big real estate boom, never had a plan to get out of it. And their relationship blew up along with their finances. And to this day, they're still digging themselves out of those holes. And so I saw that, and kind of experienced that where, you know, the excitement and building up in the early 2000s. And then, where things ended by the end of that decade. And I just got really interested in money and finances, I'm also an only child and only grandchild on both sides of the family. And at the end of the day, I got to essentially take care of everyone. I've just been very, very focused on how can I put myself in the best position to support the people that I love, and also not make some of the same mistakes that they did.

Mark Struczewski
Excellent. So you created Ostrich. What is Ostrich? Besides a funny-looking bird?

William Glass
Fastest bird on two legs. So it's a free mobile app. We're gamifying finances, giving people a place to set and achieve their financial goals. We use the best from behavioral economics and psychology to help people actually make progress and achieve their financial goals. We use social accountability. There's a statistic, I think it's from Harvard that shows that if you combine a regular weekly check-in with a social accountability partner, you have a 95% higher likelihood of achieving a goal. And so we've taken that and applied that to money and finances. And one of the unique things about us is that we don't tie into bank accounts. So I don't want you to link all of your bank accounts to our app. And I don't want your social security number when we are not a financial services company. We'll make recommendations if you don't know what to use, but use whatever tools that you prefer. We're really just focused on the behaviors and the actions that lead to success.

Mark Struczewski
I love the gamification part of it. Because I always tell people, if you want to be more productive, compete with somebody. It makes it interesting just to compete with people. So I love that. Is the ostrich, your mascot?

William Glass
Yes, it is. We are trying to get people to pull their heads out of the sand when it comes to finances, to build a nest egg. If you look at the word ostrich, rich is at the end of the word. So we're helping people to live a rich life.

Mark Struczewski
Is this available on the App Store and on Google Play?

William Glass
Yes, it's available on both Apple and Android. So you know, feel free to download it, and play around with it.

Mark Struczewski
How do you make money then, since it is a free app?

William Glass
We're not a financial services company. But say you join an investing challenge, and if you do not have a brokerage account, we'll make a recommendation of three that we like. We vet all of the partners. But if you do sign up for a product through our app, that's how we make money. We're not incentivized for you to use things to your disadvantage. We're focused on the overall goals. And if you need a new product, then we'll make recommendations and help you get there. So that's really our focus is; on what tools you need to achieve your goals, so our challenges are focused around all areas of finance, and then also, how you can get there quickly, So to your point of debt pay down that we talked about earlier with credit cards; a consolidation loan probably makes sense if you're overwhelmed, and you can't afford all of the credit card bills that you have. So we'll make a recommendation that will help you get out of debt quicker.

Mark Struczewski
Excellent. Well, William, I want to thank you for being on the show. I was financially illiterate, but now I'm financially literate because I went to Financial Peace University. I read finance books by Suze Orman, Tony Robbins, and Dave Ramsey, and I just want the listener to get educated. It's your responsibility to get educated. It's not someone else's responsibility to take care of you. A lot of information and tools are free. This podcast was free to you. You can go to the library, use your money to buy a book, but don't go into debt. Don't get a credit card to go buy books; go to the library and borrow books. See if a friend has one. But get yourself educated; go to YouTube. There are lots of free resources out there. You need to take control of your finances. Because when you take control of your finances, you're going to have more freedom.

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