NICK MAGGIULLI, successful author of “Just Keep Buying” has a new book out called “THE WEALTH LADDER.” It’s a well done framework on how one’s relationship with money has to change as they move up the different strata of money and spending. We get into the book, how major life changes can shape our views, and the writing process.
OUTLINE
- What does this book seek to accomplish?
- How was the experience different from the last book?
- Surprises in your findings?
- Has getting engaged and married change your lens on any of these topics?
THE SIX LEVELS OF THE WEALTH LADDER
- Level 1: Less Than $10,000
- Level 2: $10,000 – $100,000
- Level 3: $100,000- $1M
- Level 4: $1M-$10M
- Level 5: $10M-$100M
- Level 6: $100M and beyond
TRANSCRIPT
Frazer Rice (00:02.178)
Welcome aboard, Nick.
Nick Maggiulli (00:04.138)
Thanks for having me back, Frazer. Appreciate it.
Frazer Rice (00:04.911)
Easy to have you back and congratulations on two fronts. You just got married and you’ve also in a sense given birth to a new publication here. Tell us about the last few months and what it’s been like.
Nick Maggiulli (00:14.41)
It’s just been very busy, lots of things. We were doing wedding planning. We got engaged late last year and so wedding planning did that, had a few small celebrations. And now it’s book launch time. We’re delaying our honeymoon until the end of August because the book’s coming out now and the book’s out, so going from there. So it’s been fun.
Frazer Rice (00:38.094)
Big things happen in three, so it’s all coming together in a couple of months there. So I’ve been watching this book getting written over the course of last, I guess, two years now. What was the gist of the book for the audience here? What got you into the wealth ladder concept, having written Just Keep Buying?
Nick Maggiulli (00:41.374)
Yeah. So the gist of the book is that your financial strategy needs to change over time. I think it’s very easy to get caught in a certain set of habits and you can follow those to their logical conclusion. But if you’re trying to kind of go to the next level, so to speak, as I say in the wealth ladder, you might need to change your strategy. And there’s a ton of examples of this and it really depends where you want to go, how much wealth you want to accumulate, etc. Knowing all those things will help you better determine which strategy you should follow. That’s the high level of the wealth ladder.
Frazer Rice (01:30.574)
So as you were sort of getting into the research on it and you take a lot from your personal experiences, you’ve moved up the wealth ladder and have had to have a little self-discovery on that. What would have been the interesting findings in your own experience and in the research that you’ve had and maybe things that were surprising?
Nick Maggiulli (01:51.338) the Origins of the Wealth Ladder
I think this is something that I’m hoping a lot of people who have built wealth have come to the same conclusions, which is like as you build more wealth and have more money, like money doesn’t mean the same thing to you anymore. It doesn’t have the same value. Like I remember still being a, you know, semi-broke college student, you know, and then being a, you know, semi-broke just graduated college student, just started earning money and stuff. And I remember not wanting to pay for a beer at a festival because it was $9. And now that beer is probably 15 or 20 bucks.
But at the time I was like, this is crazy. I can’t pay for this. But looking back now, it was because I just didn’t have a lot of money and I was trying to be very careful about my spending today. Looking back, if I had known everything I know now, I’d be like, I can, I can buy the beer. I’ll be okay. Right. I don’t have to sneak these little mini liquor bottles and all the crazy stuff I used to do. Right. That’s like an example of like over time, just money changes.
Because of that, you’re like, yeah, I shouldn’t have been as, you know, I shouldn’t have cut back as much when I was younger. also just how you view it. I view it more as a tool now and less from like as a scarce resource. Like it’s a tool I can use to do things. I can help my family with it or travel with it. I can donate.
There’s all sorts of different things you can do with your money. And I think seeing it as a tool is really the important part. And lastly, it’s just how like the amount of money I need to change my lifestyle just keeps getting bigger and bigger. Right. We’re like, you know, ten thousand dollars back when I was 22 would have been like, wow, that’s like a ton of safety. I wouldn’t worry as much about money.
Today, $10,000 just doesn’t mean as much as it used to. And so it’s great. would still be, used, hand me a $10,000 check. That’s great. I’d be happy, but not even close to as happy or wouldn’t have as, as big of an impact on my life as it would have when I was 23. Right. I think everyone understands that, you know, what’s $10,000 to someone with a million. It’s not as big of a deal compared to someone with close to nothing. And so, yeah.
Frazer Rice (03:36.14)
Yeah, one of the things that, you know, as was reading the book, super interesting is the idea that as you move up the wealth ladder and more and more people become involved and are part of your responsibility umbrella in many ways. And it gets back to something I wrote in mind where I talk about how the liabilities increase geometrically even though the assets may increase linearly. Is there a process around when you start thinking less about yourself and wealth than you start thinking about a family unit and then… intergenerationally and beyond. It’s something that I think gets lost in many times in the sort of the financial planning shuffle, but it’s something that I think your book covers well.
Nick Maggiulli (04:23.454)
Yeah, I think the big error that people make in that front is thinking too much about the monetary and the financial piece of that and not the non-financial piece of it. So it’s like, Hey, my gosh, I accumulated, say $20 million and I’m going to have this for three generations and I’m planning this and I’ve trust and all this stuff. And you can set up all these structures and do everything perfectly right. But if you don’t have the right relationship with your kids, if you guys don’t have a shared set of values to build off of going forward,
It’s going to derail as soon as you’re gone because you know, maybe they’re just following your wishes while you’re here and as soon as you’ve passed, how do you know that those things are going to live on? You don’t at all, right?
At the end of the day, I think what’s more important is having a stronger relationship with your children so that you can talk about these things and listen to them, get their feedback and then plan your money more together instead of just doing it completely on your own and trying to create this control beyond the grave, right? And I think that’s what can create other issues within the family.
It’s the thing that people overlook because I think everyone’s just like, if I just get the wealth and it’ll last. And I don’t think the second part is true unless you have the value set up. You’ve thought about all these other things that people tend to overlook.
Frazer Rice (05:35.883) the Wealth Ladder and Couples
Joelle and Doug Bonaparte have come out with a book about wealth and marriage and money and you’re going through it right now having just been married. What’s been sort of the first takeaway in getting married and sort of the principles of the wealth ladder? And I guess another different way of asking that is how do you merge your way of thinking about these wealth concepts with what your wife is thinking about?
It’s not pinning you down specifically, you’ve been buried above. But at the same time, I’m sure you saw that where when you’re merging different views on wealth and as you sort of put a timeframe and a ladder frame to it, what have you found interesting in your research on
Nick Maggiulli (06:22.25)
Yeah, so I haven’t done too much research on couples in particular. I can tell you that my wife and I are very aligned on a of our finances. She’s actually more frugal than I am. I try and I even use, you she’s read the book at this point, right? Cause I, you know, I was writing in and I gave it to her.
Frazer Rice (06:34.526)
You forced her!
Nick Maggiulli (06:51.69)
Yeah. And for no, she wants, she wanted to read it on her own. So she wrote like a EPUB version of it and read it and stuff. She really enjoyed it. But I think for her, like she still has trouble spending money. And so I like came up with this spending framework using the 0.01 % rule, which is like, Hey, take your net worth multiplied by point zero one percent or divide by 10,000. It’s the same thing.
That’s the amount of money that your wealth is like generating daily in like a very conservative sense. Right. If you point zero one percent do that, you know, let’s say 365 days in a row. That’s about three point seven percent a year. It’s a very conservative return. And so if we assume that like you could spend that in theory every day and it’s like a trivial amount of money to you
So she’ll be like, oh, I don’t know if I want to spend 50 bucks on this thing. I’m like, baby, our net worth is over 500 K. So we don’t need to worry about that. Right. Because at 500 K, the point zero one percent rule would say you’re spending about 50 bucks a day on these like marginal purchases. So I’m trying to get her to not think through that. like, yes, obviously, your spending depends on your income. That’s obvious. But I think the marginal spending decision, hey, can I afford this thing? I like to think of it using this spending rule because it does scale very well with wealth. Right. And so
I have these six levels of the Wealth Ladder and I can walk through those and then talk through the spending real quick. So level one is less than $10,000 in net worth. Level two is 10,000 to $100,000. Level three is a hundred thousand to a million. That’s like your typical middle class level four is 1 million to 10 million level five is 10 million to a hundred million. And finally level six is over a hundred million dollars.
When you apply this to the 0.01 % rule, that means, you know, let’s say you’re in level two, that marginal decision when you divide by 10,000 is going to be between $1 at the beginning of level two up to $10 by the end of level two. So I call that grocery freedom. Like when you’re at the grocery store and you’re trying to decide which brand of an item to get like eggs or cage free eggs, the difference in cost is going to be somewhere between one to $10, right? It’s a small difference. Level three, which is a hundred thousand to a million dollars in wealth. When you use the 0.01 % rule that ends up being 10 to a hundred dollars in the marginal spending decision.
So I call level three restaurant freedom because when you’re at a restaurant, when you’re deciding which item to purchase, the difference in the cost could be anywhere between you, let’s say 10 up to let’s say a hundred dollars at the extreme. If you’re getting like a nice steak versus, you know, just a, you know, a salad or something that’s much cheaper. And so you start thinking through this stuff and that rule I found is very helpful for spending. Lastly, in terms of how my wife and I do our finances, actually wrote a blog post about this recently. We kind of have a joint account where all our income and expenses go into.
Nick Maggiulli (09:11.644)
And then I’m sorry, all of our income goes into all of our expenses come out. And then if there’s like, if I’m assuming we’re, know, earning more than we’re spending. our, you know, there’s a growing balance in that account over time. We will then do like quarterly. We’ll take a distribution. We’ll say, Hey, okay. We have an extra 20 grand in the account. Okay.
You take 10, I take 10 and we take that as just like almost like a. dividend payment to ourselves, right? And then we do it again for another quarter and we’ll keep doing that. and obviously if we need to, let’s say we need to buy a house, then we need to take our, from our separate assets and we put money back into the joint account to buy something. So if we, we need to put down a hundred K on a home.
Okay. She puts in 50, I put in 50 and then we, know, into the joint and then we buy from there. So that’s just, it’s a simple, very easy way of doing it. It allows for separate assets throughout the marriage and it also, so can kind of have your own assets. At the same time, there is this joint component, is like everything’s pro rata in terms of income and expense splitting.
Frazer Rice (10:02.633)
uh… i’d really like to get the point of one percent rules of the general framework uh… great little rule from one of the things that you know as i get older uh… i i have a greater appreciation for cash and having comfort in the cash balance and is as you move up the ladder even for people who get in the ten million hundred million and center and certainly not that but the uh… would like to be but uh… not quite there
That cash component, which in some ways, there’s a comfort and safety aspect to it. It stitches interestingly with your last book where if you can keep buying assets that accumulate produce income over the course of time, that that’s a good outcome too. What did you think about in terms of that? Did that come across your authorship while you were going through?
Nick Maggiulli (10:55.508) on the Rungs of the Wealth Ladder
In general, like the whole idea of the Wealth Ladder is that every level has a different strategy you can focus on. And so in level three, the love, the strategy I talk about, and once again, level three is a hundred thousand to a million dollars in wealth, which is about 40 % of us households. I consider that like the middle class in the United States, that wealth level, the strategy there is just keep buying.
Right. The strategy for that is that book basically. And because it’s like every, you know, if I say, if I want to get from level three to level four, what do I need to do? You need to keep investing in income producing assets and just give it enough time. And, know, in theory, if you do that and you do it for, you know, 30, 40 years, you should be able to get into a million to 10 million. And of course that’s not going to be true of everyone.
Some people need to raise their income to make sure they can save enough to do that. But that’s a part of that. And so when I was thinking about. you know, income producing assets, all those types of things. It’s really a flywheel up the Wealth Ladder because the more income you have, it’s usually easier to save.
Then you can take that money and invest it in income producing assets, which create even more income, which makes it even easier to save. And so like you end up getting this flywheel where the amount of income in each wealth level just keeps kicking up. Like in level four, the median household incomes about $200,000 in level five, it’s closer to $750,000, which is, know, once again, level five is 10 million to 100 million. And by the time you’re in level six, which is over a hundred million in net worth, the median household income is $4.3 million annual income.
You can see like from 200 to 750 to 4.3 million, there’s just these massive jumps in income. And a lot of that is due to wealth, right? Once you have wealth, that wealth is usually kicking off income for you. And so it makes it a lot easier.
Frazer Rice (12:32.056)
The as you get up the ladder here and I guess this is some of the, know, where my day job kicks in and you have to start thinking about the spending that goes beyond you, beyond your family. And you’re worried about different constituencies, whether it’s charitable or generation two or three or even four. That the flywheel for income also turns into a flywheel for expense in many ways. And this is something that it’s easy to.
It’s easy to observe, sometimes different to experience. What did you see on that front when you were talking to various experts in that world and how people handle it?
Nick Maggiulli (13:14.004)
So I don’t know too much about generational planning and I didn’t focus on it too much in the book. I talked about it briefly but once again I focused on the non-financial aspects because thinking through the finances of a multi-tier strategy it’s not my area of expertise like a multi-generational like approach. I have no idea how you would even structure that. can start guessing at that but it’s not something that I’ve done for a long time or anything like that. So I didn’t focus on it too much. The one thing I did think it’s easy to overlook as I said earlier is
You’re probably not. need to make sure that the, you could set all that stuff up, but if you don’t have the right conversations and the right relationships with those family members, it’s very likely going to fail. Right. And so I think as much as I care about the math and the structures and all those things, which I don’t have the expertise in the other piece is like, wow. You need to think through how you actually approach this from a personal standpoint. Like how do you approach this with your children?
How do you how do they all make sure that we’re all on the same page and everyone feels like it’s fair you know and your will and you know the trust you set up etc. So when I’m thinking through that I am thinking through the non-financial piece because I think it’s the most overlooked right like you can pay someone if you’re if you’re in level five you can pay someone to do all the other hard stuff like all that expertise stuff that that the person in level five may not have any expertise and you can pay people to do that right.
The thing you can’t pay someone to do is to get your relationship with your children correct. That’s on you, right? So when I’m writing the book, I’m saying, what are the things that the person in level five actually need to do? They need to do this because the other pieces can be paid for. This piece can’t be paid for and that’s the difficulty.
Frazer Rice (14:50.758)
You know as I tell people that you know there are a lot of smart people that can help you get through the tax and finance and legal and all that that that’s beside the point but the communication aspect if you don’t get that right your your house is on us on a rickety foundation.
You know I to sort of flesh out the point a little bit differently I’m now in sort of a world where you know when people come to me asking my advice on this stuff yeah there’s the blocking and tackling but it’s really a citizenship exercise it’s defining the terms under which you living within the family and with living underneath all of these resources what are the rights and obligations that come with it.
Without a real firm understanding of what that looks like you know the rest of it, it’ll be in place and it’ll give you a chance of maintaining things from one generation to the next but It’s certainly not going to solve for everything and it probably won’t be flexible enough to deal with life as it intervenes and causes people to veer off in different directions.
Nick Maggiulli (15:55.604)
Yeah, that’s very true. so once again, it’s always difficult, even when the communication is set up properly, like things come up, the future’s hard to predict, like bad luck happens to people, right? All sorts of things can happen that derail these generational wealth planning ideas and concepts. But. At end of the day, you gotta just try your best and hope for it. And then once again, by the time you’re gone, you’re not gonna know the result anyways. It’s one of these, like you just imagine, you imagine all this stuff and it like doesn’t really matter. You’re gonna pass one day and that’s the end of it, right?
Frazer Rice (16:18.35)
Right. I was recently been dealing with a trust that was set up so long ago. was essentially electricity was recent. The airplane was recent. There’s no way any of the things that we worry about and stew over were even contemplated in terms of the different levels of spending, the different risks that were out there. so you do the best you can with what you’ve got.
The difference between this book and Just Keep Buying: was there any difference in writing it and the publishing process we talked about a little bit that was a little bit different? maybe take us through what it was like getting off the post high and I would describe it as sort of a nice slow burn in terms of sales with Just Keep Buying and how that fed into finding the topic that you were interested in and then getting through the process of doing it.
Nick Maggiulli (17:25.034) on The Wealth Ladder
Yeah, so we just keep buying the writing process was, you know, 70% old blog posts that I stitched together. I created a structure and then kind of cleaned it up a little bit with the wealth flatter. It was based on a blog post I did in December 2019, but I had to take this one little, know, I spent five to 10 hours on this one blog post and then I had to take it and expand it and just dig deep onto every single sub concept and come up with new concepts and really clarify.
A lot of my ideas. I remember when I posted the Wealth Ladder blog post in December 2019. It was on the front page of hacker news for like eight hours, which is like crazy. And so I read every comment in there. People had all these comments about the post. this post doesn’t address this doesn’t do this. I addressed every single one of those in the book. I went through every comment and I addressed all of them. So if someone’s going to read this book, they never heard the idea was like kind of getting a site. It was getting a insight into the hive mind.
What do people think about this. Someone’s going to start reading this and say, wait, what about this? keep reading. It’s addressed. It’s going to come up later in the chapter. Right. And so all those types of things, I think that for me was very helpful because it gave me this insight of like, Hey, here’s the pushback I’m going to get. As soon as I address it in the text, people are like, wow, this person thought this through. And it’s like, I tried to do my best with that.
So in terms of the Wealth Ladder writing process, they both took about the same amount of time to write. obviously the wealth letter is far more new material. Like I would say it’s like, you know, 70 to 80 % new material and the old blog post that became it was like you know 20 percent of it if that and then I expanded from there so I’d it’s mostly new material versus my old book was you know mostly old blog post and so that’s the big difference here in terms of the writing process I still think
Even though this was new material, I had done it before. So I kind of know how to write a book. You know, the most important thing is the beginning and just getting the structure set up. And once you have the structure, the writing is not as difficult. As long as you know kind of what you want to say roughly in these chapter, the writing isn’t the hard part. The hard part is, in my opinion, is the structure. Right. And I think that’s where a lot of books go wrong because they just put a bunch of stuff together. They don’t think about the structure and that structure is the planning. It’s like the plot of the book in some ways. And so that is very important. And I think it’s probably the most important thing when writing.
Frazer Rice (19:31.237)
I’m fascinated that the Wealth Ladder Reddit subheadings and so on where people went in and had the different questions for you almost, you workshopped it before you even workshopped it. And also you almost had a focus group in place to kind of help steer it correctly. When you were doing Just Keep Buying, you didn’t have any of that really. We were just sort of writing and some things were popular and some weren’t and you sort of picked and choose between them.
Nick Maggiulli (20:01.298)
Yeah, it was more like that. And so I did have some feedback from people telling me about different ideas and different things. So there was some but it was more just like what I remembered I didn’t have. I can still go right now. I can search it on hacker news find that article click on it and go and see every single Comment that’s ever been posted on it, right? Patrick O’Shaughnessy said something or he talked to someone on one of his podcasts one time. He said a lot of things that succeed usually succeed like right out the gate.
That’s not true of everything. Some things take a very long time. Compounding all the stuff, but you get like a, an insight that this could succeed, right? There’s always a possibility. Usually get some feedback. The fact that this blog post did so well said, Hey, there’s something more here.
I would have written it sooner, but just given the timing of everything I started writing, just keep buying in 2021. So I had to kind of go through that cycle, let that play out. And then I said, Hey, In late 23, I was like, I need to start thinking about the next book. I started thinking through that. Go through the agent process, talk to the publishers, et cetera, and go from there. It all worked out in the end. I had let that process kind of finish before I could get back to the wealth ladder. That’s when I knew I was going to write it.
After I wrote Just Keep Binding, I knew I was going to write this book. I just didn’t know when or when the timing was right. And late 23 was the time to start. And I had the manuscript done by August, by October. I didn’t really start writing it until really April ish I kind of had just ideas But then we signed the contract in April and then I really started writing in April and got it done by October. So
Frazer Rice (21:28.727)
Sometimes being obligated by a piece of paper like that can create focus for you. Those people who are writers out there, just keep buying with one publisher and wealth ladders with a different one. There’s pluses and minuses with everything. Was there anything particularly helpful about the new publisher? That sort of helped get things pushed forward or create some focus where maybe…
Nick Maggiulli (21:32.233)
Yeah. Mm-hmm.
Frazer Rice (21:57.876)
You didn’t have the same type of thing with just keep buying.
Nick Maggiulli (22:02.026)
I think the there’s two things that a bigger publisher can offer you. One is money, obviously, like pay upfront, like nothing against Harriman, but they just have a different model. And the second is they’re just, they have a bigger marketing. They have like, you, have a publicist now I have a specific publicist for me, right? There’s a marketing person I work with, right? The design team, it’s everyone’s just hot.
Like this, if I had self published the Wealth Ladder, I wouldn’t have a cover this good. And I’m not just saying that, like people have told me like, my God, that’s a great cover. There’s six wealth levels or six, you know, everything kind of just fits very nicely. And so I wouldn’t have been able to come up with this stuff on my own. And of course we went through rounds with the cover and this and that, and I, you know, went back and forth and they came up with this. said, wow, this is great. I love this idea. Let’s kind of keep expanding on it. And so that’s an example where if I went self published or something, it just wouldn’t have come out as good. And so I think there are times in working with a publishing house.
There’s just a like a higher quality unless you know a good designer a good editor a good like you can go down the line unless you know all these people already you kind of want to go with a publishing house because they have this expertise and if it’s not I just want to focus on writing and doing the best writing I can do and like let the rest of the stuff up to the publishing house. That’s my goal. And so whatever I’m that may change in the future. I may not use a big publisher again. I’m not sure. I got to see how this does how the marketing does like all those different things or what’s really important to me.
Frazer Rice (23:19.244)
Cool. So, we’ll wind down here. The book launches when?
Nick Maggiulli (23:25.228)
July 22nd. So by the time this comes out it will be out. It should be out now. So
Frazer Rice (23:30.253)
be more thrilled for you on that front. Between that and the day job, what’s next? Being married, you’ve got a lot on your plate. You’ve got the next probably six plus months framed out in terms of making this a big success. Have you got any other projects in mind?
Nick Maggiulli (23:49.322)
I don’t have anything framed up for this. It’s like, let it release and see what happens. See what opportunities come up, which ones don’t, et cetera, and go from there. Next big thing, I mean, next big thing in my life is probably gonna be me, you know, if God willing having a child. hen that’s gonna happen, who knows? We have to kind of wait and go through that process. but yeah, so that’s about it. I don’t have any other big plans. Just kind of doing my thing, staying with Ritholtz, promoting this book. We’ll kind of see where it goes from there. It’s hard to know the future. Yeah.
Frazer Rice (24:15.98)
Well, I’m ecstatic for you, And we need to get dinner shortly. those, Wealth Ladder is here. And I got to read it and watch it through its gestation period. So it’s been a lot of fun and I’m thrilled that it’s coming out. Nick, how do people find the book Wealth Ladder? I assume it’s on all major platforms, that type of thing.
Nick Maggiulli (24:19.27)
I appreciate it, Frazer. Yeah, Amazon Barnes and Noble, Target bookshop.org anywhere you can everywhere books are sold. You’ll find it.
Frazer Rice (24:45.384)
and how do people find your blog?
Nick Maggiulli (24:48.162)
Ofdollarsanddata.com. You can also follow me at Twitter slash X at dollars and data. I’m also on LinkedIn at Nick Maggiulli or on Instagram at Nick Maggiulli. So, and I respond to every DM. So you have a question, feel free to send one to me. I may be a little delayed because this week is launch week. Whenever it just depending when you get to me, I can, I will definitely try and respond.
Frazer Rice (25:06.762)
Put up a big sign when you go on your honeymoon so you can enjoy that please. Nick, thanks for being on. I appreciate it.
Nick Maggiulli (25:10.492)
Yeah, of course I will. Something of that nature. Thanks for watching.
HEAR MY INTERVIEW WITH NICK FROM HIS FIRST BOOK: JUST KEEP BUYING.