Episode 102 - Don't Buy Shovels

 “Ever wonder why so many people chase success but end up stuck? In Don’t Buy Shovels, Paul unpacks the hidden cost of chasing quick wins and following the latest financial fads. Discover why the real path to freedom isn’t found in hype, but in slow, faithful progress and trust in God’s timing.” 

Transcript

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Paul, Welcome to Catholic money talk, where we talk about all things money and finance, and we try to do it through a lens of being Catholic, where our ultimate goal is to one day be in Heaven with the Lord. I am your host. Paul Scarfone, thank you for being here today. Welcome back to Catholic money talk today, I want to talk about not buying shovels and what the heck does that mean. But before we get into it, let's say a prayer in the name of the Father and of the Son and of the Holy Spirit. Amen, Heavenly Father. We thank you for this day. We thank you for all the ways you love and bless us. Lord. We know that you have an awesome plan for us. Just fill us with a great sense of hope and with great trust in You. Lord, send us Your holy spirit to strengthen us, to guard us, to guide us to you. Come O Holy Spirit. We ask this all in Jesus name, amen, in the name of the Father and of the Son and of the Holy Spirit, Amen. So today I want to talk about something that keeps coming up over and over again, and it's this, don't buy shovels. And I'm not talking about don't go into construction or don't have a reason to start gardening, right? But, but what do I mean by that? And let's just, let's start by just being honest about our human nature. We all want to accomplish things quickly, and maybe not just easy, but fast, right? We know our time is limited. So if there's a faster way to reach a goal, we typically want to find it, and because of that desire for speed or quickness, we'll often Chase shortcuts instead of building Steady Habits. And that's where this phrase is coming from, don't buy shovels. And here's the example. You know, I was thinking about this the other day. So the San Francisco Gold Rush, the famous 1849 gold rush. Gold Rush, where we get the name right, the football team, the 40 Niners. And it actually started a couple years earlier, and went until about 1852 and during that time, over 300,000 people went to California chasing gold, hoping to get rich quick. They came from everywhere, North America, Latin America, China, Australia, Europe. They all had the same dream, strike it rich. And here's the crazy part I was I was researching this the other day, historians, they estimate that only in the low 1000s made any significant wealth. So that's about 1% the rest. What happened to the rest? Well, many, they barely broke even. There were several that died from disease, from violence or accidents, and many people went home in debt. But where did all the money go? Because there was a lot of gold that they found in those days. In those dollars, it was estimated it's over 2 billion. So in today's money, that's 70 to $90 billion dollars. So if only 1% got rich, where'd all the money go? Who actually got rich? Well, it wasn't the miners. It was the merchants, traders, service providers, right? Hotels, bars, restaurants, they all jacked up their prices. Eggs were $1 each. That's in today's dollars, like 30 bucks an egg. I think a dozen eggs right now is about $3 right boots, 100 bucks today, that'd be 3000 and a hotel bed 10, $10 a night in today's dollars, that's 300 which is like hey, a nice hotel is about 300 but back then, it was probably a bunk house and an outhouse, right? A bunk house shared with many people, not a private room with a private bathroom. The point is that people selling the supplies made the money. The real winners, right? I don't even know if I should say the real winners. The people that made the money were selling shovels. Everyone else was just kind of their victim. Here's a couple examples of the shovel sellers. So this fella, Samuel Brannon, he bought up. He bought up all the mining supplies before announcing gold discovery. He sold pants right for panning for gold. He sold pans for 15 bucks. They only cost him 20 cents. We know the name Levi. Levi Strauss sold pants to miners, right? That's where the Levi's pants and jeans come from, right? Today, it's a billion dollar company. And then Henry wells, William. William Fargo, they started a way to transport and secure the gold that people found, the money they made they started Wells Fargo, right? Today, that's a massive financial institution. So 300,000 people chased a dream. 1% actually struck it rich. The merchants, they were selling shovels. The shovel sellers, they built businesses, they built empires, and the miners were just chasing dreams and buying the shovels. And today, that modern the gold rush, it's everywhere, and this is why I was thinking about it. So I'll go on YouTube. And I like to look for videos great stories related to personal finance. I try to show when I teach the high schoolers personal finance, I try to find some videos that resonate with them. Sometimes they like to watch a video than just hearing me speak. And many times, because I'm looking for financial stuff, the suggested videos and the ads that find their way in front of me are full of get rich quick promises, right? And because I'm searching topics so the algorithm, it feeds me the ads build a real estate empire overnight, make millions with my system, buy my course and quit your job by Friday, right? So these people built success. Maybe they found some success by catching a break somewhere. And so now they're going to sell a book on how it's so easy for you to do this too, and they're not trying to help you build wealth, they're not trying to help you get rich. They're trying to sell you a shovel. I'm not just, I'm not saying they're all bad, but the vast majority of them right way, like, How can everyone have this easy playbook? Although, if it was that easy, everyone would be making so much money, right? These people found a way, and they're selling a book, or there's they're trying to sell the shovel. And it's the same hype with investments, right? A few years ago, crypto, there were certain stocks being shouted about everywhere, so people piled in hoping to hit it big. And most people lost money. Who made the money, the people who started the hype, the one selling the shovels. And the truth is we, we all want quick and easy, like we like that idea. One of my favorite quotes, I had to look up who said this? So it's a fella by the name of Eddie Cantor. He was an entertainer from the early 1900s he said it takes about 20 years to become an overnight success. That's real life success almost always comes from consistent habits, regular discipline and daily effort. I remember a leadership speaker talking about marathon training, and you know, on day one he could not run 26 miles. Six months later he could. And there was not one magic moment, right? There wasn't that one key day, whatever, 100 where it was like, Oh, I just got to do this. No, it was consistent effort, day after day, and slowly, the switch flips. Slow and steady wins the race. I love the story of the tortoise and the hare. I hope we all do right. Slow and steady wins the race. No matter how many times you read it, it always has the same outcome. The tortoise always wins. But many of us, we'd rather be fast and flashy. We want results without the work. When we say work smarter, not harder, we're actually saying, do the right, consistent activities. Sometimes people say work smarter, not harder, referencing like try to find a shortcut. That's not what we're suggesting. We're suggesting that good diligence and effort consistently will lead us to success, right? And if you're not familiar with the get rich quick schemes, maybe, maybe you're familiar with weight loss ads, those have the same trap, right? Lose 10 pounds in seven days. Look like this in 3060, 90 days, buy these pills, this program, this magic exercise, and people jump at these because they want quick results. But if you don't know your real goal, and you don't build new habits, you're going to fall for these marketing traps every single time. Don't buy shovels, you levels. A great example of this is the lottery, right? This is like, probably the most wide used shovel in our culture, okay, so about 50% of adults in the US, so that's approximately 130 million. People play the lottery at least once a year. Okay, so that's, you know, maybe the big, big jackpots, people are like, Oh, let me, let me pay some money. That's one, 30 million people. Now here, here's the crazy part. 50 million people play every week. Some people spend very little, but some people spend over $500 a month. As I was doing my research, I found that it's about 12 million people spend $150 a month on average, right? So if the 50 million that play every week, some little, some a lot of those regular spenders, there's about 12 million people that are spending at least $150 a month. Why? Because they think it's their only chance to make it. It's their shortcut to freedom. That's what they think. But here's the thing, if they invested that same $150 per month from age 25 to 65 that's 40 years, right? Like a vast majority of their adult life, at 65 they would have over $1 million and as I was looking this up, there's only about 60 to 100 people per year that win a million dollars or more in the lottery, right out of 130 million players. I, you know, I can't even do the I can't do those fractions. In my mind, it's the chance of you winning a million dollars or more in the lottery is so, so small, right? That's not a plan. That's a fantasy. But here's the deal, investing$150 a month long term, right? That same period from 25 to 65 gives you over a 99% chance of reaching a million dollars, right? And I'll say, you know, well diversified, right? But the lottery gives you, like no chance, slow and steady wins the race. Here's the other kicker, and this was something I was thinking about just just now, as we're talking actually, so 70% of lottery winners go bankrupt within five years, right? 70% of these big million dollars or more lottery winners go bankrupt in five years. Why? Well, because they never took the time to build the behaviors they need to manage money. But here's the deal, if you build wealth slowly, you grow with it, you mature. You've had practice handling it. When you see a million dollars in your investment account, it doesn't shock your system. You were growing towards it. When we talk about slow and steady, we talk about not falling for scams, not going after get rich quick, not buying shovels. A favorite scripture, verse of mine, Proverbs, 1311, it says wealth gained hastily will dwindle, but whoever gathers little by little will increase it. So God already told us, slow and steady wins the race. Back in episode 10, I talked about this. Go listen to it, if you haven't, it's title of the episode is slow and steady wins the race, right? So today's mantra, don't buy shovels. And at a young age, this starts to we start thinking about shovels, right? High schoolers, when I'm teaching them, they'll ask me, Mr. Scarfone, what stock should I buy? Mr. Scarfone, what do you think about crypto? I tell them, right now, the best investment you can make is in yourself. It's save for college or trade school. Avoid student loan debt. Build a smart post high school plan, because you want to move towards the Lord's will and towards your vocation, right, the plan that He has for you. Because here's the challenge, if God calls you to, you know, marriage or religious life, like so many times, I mean religious life in particular, they're not going to take if you're drowning in student loan debt. And many times, we delay getting married because we have all the student loan debt. So put yourself in a position where you can hear the Lord, and then you're free to respond to him. You say, Yes, Lord, you know if you're middle aged, or maybe you're older than middle aged, get your house in order. Adults devise a plan and stick to it. Children do what's easy. We can't have a plan if we don't have goals. So where are you going? What's your final destination? What are you moving towards? What are you trying to move towards? Ultimately, nice. Say this every podcast, I think in my opening intro, our ultimate goal is heaven. So how do we use our money in a way that helps us to know love and serve God so that we can be happy with him forever in the next life? We must prayerfully discern our financial goals. Ask the Lord to show you the path, use, virtue, prudence, faith, hope, charity, love. In your finances, there's no shortcut. Yes, sometimes God gives a big break, but even then, those who are prepared are the ones who can handle it. I have a very close friend who is working in a technology company that he started with a partner, and he started this years ago, but before he was there, he had started a different startup and a different one. He was part of different startups, and he had, he had a bit of a career in a technology company, then left to join some startups, and so many of them struggled and struggled and struggled, but now, the one he's in, it's thriving. Why? Well, in my assessment of it, when I look at him, why is he thriving now? Well, he's a man of deep prayer. He works hard. He always stays faithful to the Lord, and He was patient through the ups and the downs, and eventually the market was right. The connections aligned, the things clicked. Was it? Was it a little lock? I mean, maybe, but was he ready? Yes, and it took years. He didn't chase shortcuts. He steadily, slowly built 20 years and suddenly he's an overnight success. So work hard at the right things. You know, even those, those people buying $150 in lottery tickets every month, they are working hard. They're just working hard on the wrong thing. Let's work hard on the right things, pursuing the Lord daily, being diligent, being prudent, using wisdom in our finances, building the right habits over time, then one day, 20 years go by and boom, overnight success. So don't fall for the scam. Don't fall for get rich quick. Don't fall for the magic system. Don't fall for the hot stock tip. Don't fall for the crypto hype, the perfect side hustle. Don't fall for the shovel salesman. Don't buy shovels. Build plan, be faithful, stick with it and trust the Lord. Then slow and steady, little by little, through the Lord's faithfulness, you'll reach success. So I hope this has been helpful. I really, I pray this has been helpful. If something I said encourages you, awesome. If maybe there's something I said that you think might encourage someone else, share it with them. Please. Thank you for joining me today. God bless you. Thank you for listening to Catholic money talk. I hope you join us again next time, please click Subscribe on your podcast app to get notified of new episodes. God bless you and have a great day. Foreign you.