San Diego Financial Literacy Center - Brad Pagano

Seven out of ten San Diegans who are considered low-to-moderate income would not be able to afford a $400 emergency expense (Times of San Diego).

If they can’t afford an emergency expense, how in the world can they afford quality financial advice!?

Thankfully, Brad Pagano and the San Diego Financial Literacy Center (SDFLC) stepped in to solve this problem. Brad co-founded the non-profit in 2013 and joins us to share his journey and passion for helping underserved communities in San Diego get out of debt and enjoy financial freedom.

He discusses how he recognized the need for financial literacy and the difficulties they faced while getting the SDFLC started. He also emphasizes the importance of starting a non-profit that addresses a need others have ignored and why they merged with another similar non-profit early on.

This organization is near and dear to my heart and I’m really excited to share Brad’s story today. Every time I walk out of one of his events, I’m inspired by the motivation our community has to put themselves in the best possible position to succeed financially.

What You’ll Learn:

The need to help those who are underserved and at risk in the San Diego Community.
How he started working with military members and found ways to address their unique needs.
Why much of the information online makes financial literacy more confusing for many people.
How they get most of their clients through referrals.
The challenges presented when working as a non-profit.
How they got started finding support.
How you can get involved with helping out SDFLC.

Resources for this Episode:

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Full Transcript: San Diego Financial Literacy Center – Brad Pagano on Helping Underserved Communities

[New Book] Rock Retirement by Roger Whitney

Taylor: Hey, everyone. Taylor Schulte here. Quick note before the show. A friend of mine, fellow financial planner and podcaster, Roger Whitney has a new book out called Rock Retirement. Yes, the book is about retirement but what I really loved about it is that it goes beyond the numbers that most retirement experts focus on. It’s fun. It’s engaging, inspirational. Roger’s a really good writer and it’s just simply a really easy read for everyone. I really enjoyed it. Seeing that this episode is all about financial literacy and personal finance, I just thought I’d help Roger spread the word. You can find more info about the book at RogerWhitney.com/book, or simply go to Amazon.com and just search for Rock Retirement. Also, you might check out Roger’s longstanding podcast called The Retirement Answer Man. Now on to the show.

Welcome to the Stay Wealthy San Diego podcast. My guest on today’s show is Brad Pagano, managing director and co-founder of the San Diego Financial Literacy Center (SDLFC). This is an organization I’ve worked with for the last few years and I absolutely love what they do for our community. Get this. Nearly seven out of ten San Diegans who are considered low to moderate income would not be able to afford a $400 emergency expense. To top it off, quality financial advice, as you might guess, just isn’t accessible to everybody and that’s where the Literacy Center steps in. Their mission is to enhance the financial IQ of San Diego residents with a focus on youth, military, and low to moderate income persons.

They do an incredible job. They host workshops, seminars, clinics. They have a ton of resources. They leverage certified financial planners like myself who do pro bono work for them. It’s just an incredible organization and Brad is an incredible guy. He co-founded this company, this nonprofit back in 2013 and I think you’ll really enjoy his story and everything he has to share. With that, here’s my interview with Brad Pagano. Brad, welcome to the show. Thank you very much for joining me.

Brad: Thanks, Taylor. How are you doing, man?

Taylor: I’m doing really well. I’m really excited to talk to you today because the San Diego Financial Literacy Center is something that’s really near and dear to my heart. I’ve donated my time at several of your workshops and I just love to see people in our community taking charge of their finances and getting quality advice from certified financial planners that they may not always have access to, and through my work with you guys I’ve really recognized that financial planning isn’t just a job for me. I didn’t know this about myself years ago, but I really love teaching and educating and just helping people make these smart decisions with their money, so thank you for everything that you’ve done. Thanks for coming on the show, and I’m really looking forward to sharing your story today.

Brad: Thanks. The SDFLC is near and dear to my heart as you probably know and as the audience will find out I co-founded it, and so it’s something that when we started it it was designed to help those individuals that were underserved or at risk and really as it’s evolved and we’ve created these platforms, you find more and more people that just need a little bit of knowledge or just are completely bereft of knowledge, and either way that’s what we’re here for and I can’t thank you enough for taking time out on some Saturdays to volunteer at our clinics and really help some people get their finances and their financial direction in order. That’s really what we’re here for is to help people educate and empower people and create positive personal financial habits, so I’m excited about the future. I’m excited where we were, where we’re going, and everybody that’s been supporting us. It’s been a great ride thus far.

Taylor: Absolutely. You guys have put on some fantastic events. I love being a part of it. I always walk out of there just feeling really energized. Like you said, you helped launch the Literacy Center in 2013. I’d like to know over the course of the last four years, what’s been the most rewarding thing that’s happened? Is there a story or a situation that just stands out to you that is something you’ll never forget?

Brad: There’s so many. We see thousands and thousands of people a year and near and dear to my heart as obviously the program and platform, Boost for Our Heroes that assists our military personnel, and we’ve had the opportunity to come across over 10,000 individuals and families in our four years and there were a few that stand out. The Chapman family comes to mind as somebody who they were on pace to be lifers in the navy and there was a motorcycle accident where the husband lost both legs, and they ran into such bad financial situations and together with our partners both in the financial industry and throughout the county we were able to get them level, get them support, actually get them a new home, and work on providing them the type of resources and education they needed to make what is essentially a life-changing decision in their finances.

They’re somebody that when we came across them we didn’t know how it was going to turn out, and they’ve become one of our biggest advocates but just in general. Helping people, being in front of people, seeing that light bulb go on or having them come up and say, “What you’ve told me today is really going to impact me in the future.” That’s what it’s all about is helping people make those smart decisions and not believing everything they read on the Internet, so, unfortunately, we got a big hill to climb sometimes.

Taylor: Yeah, there’s definitely a lot of information out there. Maybe too much sometimes. How did you guys connect with the Chapman family? How did the Chapman family connect with you?

Brad: We have about 250 partners throughout San Diego in a variety of verticals as far as corporations, so financial, real estate, legal, accounting. Pretty much you run the gamut we’ve got a partner or three in there, and we’ve got partners with the military, with the county of San Diego, et cetera. I believe it was one of our real estate partners called us and a person, they were shipmates and something of that nature, but long story short they came to us through a referral of one of our corporate partners and also through a referral at the VA. We kind of got them simultaneously and when we started putting two and two together we realized that these were one and the same individuals, and by doing that we were able to really get a full snapshot of loss of income, how the medical bills were piling up. How everything was really taking a downward trend in their finances, and they went through a very robust counseling session and education platform.

We were actually able to award them one of our quarterly Boost awards where we give $3,000 no strings attached to help a military family with a financial hardship, and that along with some of the other support that they’ve received from our myriad partners whether it be Pentagon Federal Credit Union or whether it be somewhat of an educator like yourself, or real estate, or attorneys we were able to put the Band-Aid on a bullet wound so to speak to stop the bleeding, and then from there for the last 18 months we’ve been working with them to stabilize their financial picture but a lot of the people we deal with are referrals. We very rarely go out and recruit or seek individuals for our services. Almost everything is referral-based and we have so many partners that our phones in our referral lines are ringing off the hook so to speak and the idea is we help those that we can help, and for those that need more help we bring in as many people as possible, because it does take a village sometimes to help these individuals stabilize their financial picture.

Taylor: Very cool, and I’d love to dive deeper into the Boost for Heroes program. You guys do a ton there. Let’s just hold that thought and we’ll get to that in a few minutes here. Let’s keep talking about the Literacy Center just in general and your path there. I’d be curious, just over the last four years. I mean I can’t imagine starting and running a nonprofit is a walk in the park. What’s maybe one or two big challenges you’ve experienced over the last four years since starting this thing?

The Challenges of Running a Non-Profit

Brad: A big challenge throughout and that’s pervasive in all nonprofit throughout the United States but especially here in San Diego is there is a lot of us. Sometimes there’s a lot of crossover and duplication of effort, so the biggest challenge was finding our lane. Having been in the industry and been working in nonprofit for nearly two decades, I had great contacts where I could reach out and say, “Listen, we’re going to be doing this type of programming. The goal is not to step on toes. The goal is to be that mortar that helps solidify the brick wall, so how can we help you be a value add?” And like everything else when you’re starting out, what makes you an expert? What type of certifications do you have? Then obviously funding. The organization runs on about a $4.5 million budget, so outside of getting some administrative fees through our debt management program, we are responsible for raising over $2 million a year charitably, and that doesn’t stop. The charity never stops, and as more and more individuals come to our organization the need for more funding happens.

So when you start a nonprofit you’ve basically got to understand, is there a need in the community? Is it sustainable? Do you have support in the form of board members and donors? And most importantly, are you basically recreating the wheel or are you going to become another tool in the tool belt. You don’t need 15 hammers to build a house. You need a hammer, and a saw, and a screwdriver, et cetera so we wanted to tread very lightly to make sure we were entering the pool in a way that we weren’t just going to be another buoy in the ocean.
We wanted to be that person that was going to bridge the gap so to speak, so a lot of due diligence. A lot of time spent fretting whether or not we’re going to be able to get this off the ground, but with the support of individuals and corporations and community partners and then by engaging the Assistant Secretary of the Navy and getting a memorandum of understanding to do work with the military, and then by engaging the county of San Diego and becoming a Live Well partner our numbers shot up to where we’re serving about 44,000 people a year whether it’s face-to-face or over the phone.

It’s just amazing to hear some of the stories and do that but where we started to where we are. Mind-blowing. I had an idea of serving a couple thousand. In the first year I think we served 19, which was about 14,000 more than we planned and from there it’s just grown and grown and grown and now we’re just at a point where it seems like so far away that we started it, but we’re still babies. We’re still in our infancy and still learning, and there’s still more for us to do.

Taylor: That’s really incredible and it’s amazing the growth that you guys have had. We’ve talked a little bit about how the San Diego Literacy Center hosts workshops, clinics, educational programs and your mission is to help educate and empower individuals to make sound financial decisions. What I’d like to know is, why? Why is that the mission? Why did you decide to co-found this organization? Why does the Literacy Center exist?

Brad: It’s very simple. In 2003, my brother came back from Iraq after his second deployment and he was in some financial trouble, and so I came out here to help him and when I got here and dug deep into it I couldn’t figure out what was going on. I couldn’t figure out why, and I promised myself then that if I had the ability I would start a program that would benefit the military and financial education and then over the course of 10, 12 years while I was in San Diego I noticed that there was still a lot of issues with kids and there was a lot of issues with underserved and low income. So essentially it was a way to find a way to help … Not fix, but be a resource that individuals that need it could utilize and do so at no cost, because unfortunately many of the resources around town around financial literacy come at a cost and people that are in debt or that are struggling shouldn’t have to pay to figure out how to get out of debt or stop struggling, so that was the impetus and that’s where we’re at.

Taylor: Maybe you can share a little bit about what these financial clinics look like. What’s involved? How many people show up? Can anyone come?

Brad: Sure. The financial clinics are spun out of a grant that we received from the Foundation for Financial Planning and for the last couple of years we’ve held five or six of them throughout the year strategically placed throughout San Diego County on a Saturday, and what we found is that there is a high demand for these programs so the clinics are actually going to be held more frequently in 2018. Also during the week in a lot of short stints, so we’re going to expand the platform but the clinics are designed to provide for the public, anybody can attend, an opportunity for an individual to come and meet with a pro bono financial pro. A CFP, a ChFU, a JD, or anybody that has that designation or has been certified and knows what they’re talking about to come and ask a question, because you need to start the conversation somewhere and as we stated earlier there may or may not be an opportunity for someone to afford to come and speak to a CFP for two hours.

So this is a way not only for our financial professionals to give back and really get at that altruistic heart of the community, but it’s also a way for the SDFLC and its partners to provide the opportunity for those that normally wouldn’t get it. It’s really about, again, starting the conversation, helping people identify weaknesses and turn them into strengths, debunking myths that they may have heard or read or got from their cousin’s nephew’s uncle’s neighbor or whatever. The bottom line is these clinics are very important to make sure our community is making good decisions with their money, are getting themselves out of debt, staying out of debt, making smart decisions about future planning, and overall just being smart with their money and it’s something that has really become a cornerstone of our organization.

Taylor: Do you know off the top of your head when the next event is?

San Diego Financial Literacy Center Upcoming Events

Brad: We’re going to have I think ten events next year. Five or six of them are going to be held specifically at organizations. I believe our first big public one is going to be, and don’t quote me. It’s either March or May. We’re actually in negotiations right now with the Military Veteran Resource Centers and the county of San Diego to host them at locations in Escondido, National City, El Cajon, Midtown, but if you go to our website, SDFLC.org, and you click on Projects and then Financial Opportunity Clinics, our calendar will be there. It’s uploaded there. Also have videos there. There are also bios of some of our volunteers. I believe you’re actually on our website as a volunteer so you can see who’s there, the quality, and the credential of the people that are there, and again, they’re complementary.

You sign up online. You pick your time. You get an hour. We provide childcare. We provide refreshments. We try to conduct them on or near public transportation lines so those that may not have a vehicle can mitigate that need, and again we do some on the weekends. We’re going to start doing some in the evenings and some during the day so we can service more individuals. But the platform is up and growing and this will be I believe our third or fourth year doing the clinics.

Taylor: I have to think that one of the biggest challenges with these clinics, and correct me if I’m wrong here, but one of the biggest challenges might be holding people accountable to making changes in their financial life. If I volunteer at one of these clinics and give an attendee let’s say three action items to complete. Here are the three things you need to do to put yourself in a better financial position. There’s a good chance that real life hits them in the face as soon as they walk out of that room that day and they never get around to implementing them. Is this, in fact, a challenge you guys recognize? If so, what can we all do to help address this and get people to actually take action?

Brad: Absolutely. I think one of the big issues that we face is the cultural competency, because everybody looks, acts, thinks, feels, and reacts to finances and money differently, so based on all behavioral economic studies and what we know, there are certain demographics and certain people that regardless of what you tell them, they’re not going to act on it just because it’s cyclical. It could be generational.

But it is, in fact, a challenge when somebody shows up and they sit down with an individual like yourself and you say, “Here’s what you need to do. A, B, and C.” And we follow up and A, B, and C hasn’t been done and there’s a litany of excuses behind it. It’s the old adage, you can lead a horse to water but you can’t make them drink, so we at the SDFLC, we’ll continue to support that individual with newsletters and invitations and opportunities to attend, but it’s those individuals that truly take advantage of the free and high-level education, that want to make a difference that we really focus our efforts on tracking, that we focus our efforts on making sure that they’re receiving the level of support that we have.

By servicing over 40,000 individuals a year, we can’t hold hands and a lot of people look at us and say, “Well, that’s your job.” Well, we’re not a social service agency. We’re a financial education nonprofit that provides a variety of resources including debt management, so we have to be very cognizant of the fact that not everybody’s going to take the advice and if they don’t, okay, but you would be surprised how many people show up to a clinic, get advice from someone like yourself, don’t act upon it, and then they’re either back in another clinic or sitting in our office, “Oh, woe is me. Things are going wrong.” And sometimes it does take that slap in the face or that trigger event to get them to really act upon the wonderful advice they get or the wonderful planning that they get, so you’re right. You’ve hit a nail on the head. It is tough sometimes to get them to do what we ask them to do, but again, those people that are attending our clinics typically are there on their own volition.

Because we don’t charge, there is no skin in the game but we still get a very high attendance rate and a very low attrition rate, so we have found that those people that do attend those clinics are more likely than not to follow up on at least some of the advice, whereas people that attend workshops are really there sometimes just to get the free lunch, other times just to listen in, but you would be surprised after four years how many people we see that come to these clinics and either don’t do something and show up back here, but you’d also be surprised to see how many people come through and have made that positive change, have taken that step and are using the coaching and are really making those positive financial changes for the future.

Taylor: What kind of resources are available to them after they walk out of one of those clinics? You mentioned a couple things but maybe you can clarify. You go to a clinic. You talk to a certified financial planner. You get some advice. Then yeah, what’s available to you after that on an ongoing basis?

Brad: What we always want to do is we want to encourage anybody that attends to then subsequently take our assessment, our LifeCents. It’s called L-I-F, life, cents, C-E-N-T-S. That allows you to identify your financial IQ, your financial habits, and your financial outlook and it gives you a rating. Red, green, or yellow. Anything that’s in the red or yellow we have to address immediately, and then from there there’s a variety of different modules that we can open up based on progress, so after a clinic if you have continued questions we always encourage that you follow up with the SDFLC because we also have certified counselors here that can talk to you about debt and housing and bankruptcy and student loans, but most importantly is if you’ve developed a rapport with that planner, we encourage you to follow up with that planner too.

Because we want people to start to realize that there are resources out there and that there are resources out there that want to help, so there’s a variety of things we can do based on the information we receive not only from the client but back from the planner or the volunteer, but for the most part it starts with getting that aha moment and then realizing you need additional help, and then reaching out to the SDFLC, letting us triage you, figuring out what the best next steps are. Whether that is an assessment modeling and then further work in our workbooks, or whether that is a debt management profile, or whatever it may be because they call it personal finance for a reason, because it’s personal, so there really is not a cookie cutter way to address each individual so we really make sure that when we get somebody we have as much data as possible, and then we put them on their path to financial self-sufficiency but it’s very nonintrusive.

It’s very easy. You can do most of it online. Probably takes you anywhere from two to six hours after your initial consultation to get all of the stuff done, but think about investing six hours for a secure financial future. To me, that’s a no-brainer.

Taylor: Yeah. What does your guys’ staffing situation look like? I have to imagine there are hundreds and thousands of people using your services and following up and taking these assessment tests. What kind of staffing do you need or do you have in place to manage all these people?

Brad: Well on staff here we have certified credit counselors that work on our phones so people that call in, people that have sent in referrals, we can deal with them over the phone and that’s how a majority of our stuff gets done is just quite frankly, people coming and going with the pace of the world today and the advent of technology. It’s much easier and more cost-effective for a nonprofit to use that technology to its advantage, so we have forward facing staff that actually goes out and educates. There’s three of us. We rely heavily on volunteers to help us with our forward facing education workshops, clinics, and then we have again a gluttony or a myriad of partners and a variety of resources that if it’s not right in our lane, if it’s not debt management, if it’s not how to budget, how to spend, how to do student loans, et cetera, we basically refer them out to a partner that we’re working closely with that also has access to some of our data so we can accept as many people.

We kind of have an unlimited ceiling as the number of people we can talk to, but we have a limited ceiling as the number of people that we can track. And again, that’s why those individuals that are really taking this seriously is where we get it. I think on staff we have about 34 individuals from executives down through support staff, and we have probably over 250 volunteers that work with us so it’s a delicate balance. It’s like a ballet of craziness at times, but again with the advent of technology and the assessment tool and online and the ability to community en masse via newsletter and social media, it’s made it a little bit easier because believe me.

If somebody’s got a question, other persons have got the same question and sometimes people get their question answered without picking up the phone because they’ve read our newsletter or they’ve looked at LinkedIn or they’ve gone through the assessment and got it done, and it’s really easy. Everything for us is open source. Everything we have is on our website or on our social media and we want everybody to use it, because if you don’t use it, like I say, a tool unused is a useless tool.

Teaching Kids About Money – Wave of the Future Program

Taylor: Let’s switch gears a little bit here. You probably already know this, but our behavior and attitude towards money starts around the age of seven, but we aren’t typically taught personal finance and good money habits at a young age in the traditional school system, and in fact there was an article a few months ago that said California schools get an F in financial literacy instruction. So I’d like to use this as a transition into talking about your Wave of the Future program, and maybe you can just give a quick summary of what it is and we can dig through that a little bit.

Brad: Wave of the Future is essentially our program that focuses on children or youth. Our main focus is typically high school through college but we do have partnerships with school districts that allow us to go in as young as kindergarten, and it’s designed to bring real, relevant, and topical information that’s going to impact the youth starting today, and as you said, getting in young is important and there is no determined qualification or necessary requirement for California schools. I actually sit on the California JumpStart Coalition Board and we’re working on legislation and advocacy work that will mandate that consumer science to be put back into schools so that people can graduate, because we’re turning out a bunch of individuals that lack the basic knowledge on how to budget and how to balance a checkbook. I’ve said the word “checkbook” in a class and people look at me like I have four heads. Like, “What’s a checkbook?”

You’d be surprised, and you’d be surprised at how much bad information is out there because again, environment and experience predicate your education so if you were brought up in a household or in a community or in a culture that doesn’t value saving or doesn’t understand savings or is a paycheck to paycheck, the likelihood of you breaking that cycle without some type of education or knowledge is very low so we are huge advocates, huge advocates of working collaboratively with the County Office Of Education with Junior Achievement and with other entities to get into schools early and we’re huge advocates of making sure Sacramento and DC understand that this is kind of an epidemic. We’re turning out a bunch of financial nonsense and the youth of today really have a very low grasp of basic fundamental concepts. They can do math and calculus but they’re afraid of finance, which is bizarre to me because when I was coming up and I’m sure as you were coming up, finance was not a taboo subject and today it’s more taboo than politics, sex, or religion. So we need to start the conversation. The conversation needs to start early.

Taylor: What age are you guys starting that program at?

Brad: We have it as young as kindergarten. We’ve done kindergarten over here in the Tierrasanta cluster with some of our military kids, but what we have found also is that Junior Achievement has a wonderful program so we work very closely with JA when there are opportunities because they have an existing program in the schools so as to not duplicate or step on each other’s toes. We do a lot of work with them and again, we start as young as kindergarten. We work through pretty much graduation of college and depending on where we are or where we’re educating will dictate what type of platform we’re going in to talk about, and sometimes we talk about the easy stuff. How to set up a spending and savings plan. Other times we talk about what student loans look like, and then we talk about avoiding the debt trap.

When we went to college, I’m not sure when you went to college but you walk on campus and there are 45 credit card companies trying to get you to sign up for a credit card for a free T-shirt, and then all of a sudden you got a bunch of 18-year-olds running around buying pizzas for the dorms and they’re $1,000 in credit card debt and they don’t understand how it got there. So it’s also teaching about the negative implications.

We never tell people what to do. We make recommendations, and our focus is not on the how. It’s on the why. It’s rooted in behavioral economics. It’s about why you need to consider doing it this way, because this is the way we know that will work and there’s a sign in my office and it’s very simple. Math don’t lie. The universal language is mathematics and no matter how you twist them, the numbers are going to come out the same so if you don’t understand personal finance you need to take control of yourself. Be the CEO of self and do that, and the younger to do that the more likely you are to succeed and the more likely you are to be able to help those people behind you or with you, so that’s really what the impetus is for our Wave of the Future program is helping those that need the help and doing it in a way that they’re going to understand it and be able to take that knowledge and utilize it for the rest of their lives.

Taylor: Very cool, and you have some statistics on your website around this program. I just want to make sure that I’m understanding them correctly. One of them is 50% of these people have a savings plan and use a budget. Are those people that have gone through the Wave of the Future program that now has a savings plan and uses a budget?

Brad: No. Well, it could be. Essentially what we do is when we do a program we actually survey individuals before and after our education, so individuals that were surveyed before are going to tell us whether or not they have a budget or not. Typically what we find is that it’s right down the middle those that do have a budget or don’t have a budget. It’s typically right down the middle those that do have credit card debt or don’t have credit card debt. What we’re tracking is the behavioral change.

If you do have debt, are you working to get out of it? If you don’t have savings, are you working to save? If you do have a budget, are you working to modify your budget every single day or did you do your budget three years ago and you’re still working off 2015 numbers? The data that we have is pulled regularly via surveys and assessment tools and my data scientist, the guy that pulls all of our numbers, has mountains and mountains of data but for the most part a lot of the information you see on the website is either initial or post surveys, and that basically shows what is good for funders about there’s still a need out there for this type of education because until everybody’s budgeting or planning or using the tools available, we still have more work to do.

Taylor: Great. I’d like to talk really quickly about budgeting. In our practice, one of the hardest things is to get people to track their expenses and build a budget. I’m going to put you on the spot here, but is there anything that you guys teach in this program or maybe other programs that really helps people monitor their cash flow, track their expenses, and create a budget? Because it just seems to be that one thing that everybody gets stuck on.

Tips for Building a Budget and Sticking to It

Brad: Right. Well, a lot of what we do is we try to change the terminology. The word “budget,” what we say is that’s what you can afford. That’s your max. What we really need to work on is a spending plan, and that spending plan needs to be less than what you have max so that you have a gap which should be your savings, and obviously we work on paying yourself first, etcetera, etcetera, etcetera. A lot of people don’t have that knowledge or they vastly underestimate, so we do have a tracking mechanism where they can go in and they track their actual, and you’d be surprised how many people underestimate or when they track their actual they really don’t have any idea how much money’s going out. They know how much money’s coming in. They know how much the paychecks are for, but they have no idea how much is going out, and that’s a combination I believe of people moving to a cashless society and just using their card all the time and not really understanding that you have to set limitations for yourself.

So the trick we use showing everybody here’s what a budget or a spending plan looks like, then here’s what an actual spending plan looks like. If people come in and all their numbers end in zeros and they’re all round lots, we know that they’re off because I don’t know the last time you went to the grocery store but every time I go to the grocery store there’s always pennies and nickels and dimes left over, so for us it’s about imparting on them that we’re talking about cents to make dollars, not dollars to make cents because every single penny that you have going out is going to impact your net and your ability to save, and we just show them examples and we prove to them that tracking is very simple and it’s become a habit, and again, it’s also the use of technology.

You have to make it very easy for people to want to do something they don’t want to do, and most people don’t want to track their expenses, so when we initially set up their budget we basically are saying, “What is it that you can afford?” Basically, your budget should equal your revenue. Now let’s start backing that out and let’s start living within our means, and there’s a great trick that we use. It’s a bubble trick, and once we do the bubble trick, which is essentially put on a whiteboard, put a square full of bubbles and then put three bubbles outside and say, “How do you get these bubbles in there?” It’s the equivalent of the jar of marbles and the professor fills it with sand. Everything may look full, but you can always add more, but if you add too much it’s going to break.

So again, we also sometimes have to let people make that mistake. And again, that’s sometimes the best way: let them learn from the mistake and then they come back and they say, “Well you were right,” because believe it or not people sometimes are very much rooted in financial knowledge that they think is correct and it sometimes takes something to go wrong for them to understand that they do need the help of a professional or they do need to attend a workshop or something, so we don’t really have any tricks or tools but it’s mandated if you want to continue working with us, we need to see tracking every 30, 60, and 90 days and if you don’t do that then again you’re really not interested in the help. You’re just basically looking for a handout, not a hand up.

Taylor: That’s awesome. Those are some really, really good tips. I like that. I like changing some of the verbiage around the word “budget” can mean so many different things to so many different people and it kind of has a negative connotation sometimes, so I really like that.

Brad: Yeah, “budget” can be a four-letter word for a lot of people, and I tell people, “look, when I put my budget together for the nonprofit, this is what I can afford to spend. I can spend up to this. My goal is not to spend my budget. If I have a $4 million budget, I want to spend $3 million and make $4 million”.

So if you have a $100,000 budget a year, you need to be able to save as much as you can so that there’s a profit. It’s very simple. I equate it to business terms. If a business opened up and every year they spent every dollar they made and they had nothing in reserve, and then all their customers went away, they’d be dead. If you as an individual don’t save anything you go away and all of a sudden your business goes away or somebody gets sick, what are you going to do? You’re going to rely on high-interest lending or in predatory lending and you’re going to get yourself in more trouble.

Again, the term “CEO of self.” First word to come out of our mouth. You are the only person that can take control of your personal finance, and if you’re not going to do it, no one’s going to do it for you, and it’s not a square peg into a square hole. It’s not a square peg into a round hole. It’s not a cookie cutter. It’s basically an amoeba, and we look at it and we equate it to two things. You can either be a lion or an ostrich. You can attack your personal finance and you can take control of it, or you can put your head in the sand and hope that you don’t get eaten. Most people want to be the latter and not the former, and those that do the former are the ones we like to work with.

SDFLC Boost for Heroes Program

Taylor: Great advice. I love what you guys are doing with the Wave of the Future program. There’s a ton more information on your website. It’s something that I’m really passionate about so thank you very much for all of your work there. There’s another program that we touched on in the beginning of this interview that you guys are working hard on, and that’s the Boost for Heroes program. Doing my homework before this interview, you guys mention that there are some obstacles that our military is faced with that you guys are trying to address, and a few of those obstacles are low pay rates for enlisted military members. Transition into civilian life can lead to long periods of unemployment. There are predatory lending techniques geared toward military personnel. Talk to me about what you guys are doing through this Boost of Heroes program to address some of these obstacles our military is faced with.

Brad: There was just an obstacle last week when they shut the government down and these boys weren’t getting paid, so you basically had what is the equivalent of almost a million individuals that were active duty across the United States in the five branches and in reserves not getting paid. How in the hell are they supposed to make ends meet if they’re not getting paid? So that’s a huge obstacle is that their pay is predicated on other people, which we need to figure that out, but that aside. Off my soapbox.

A little bit of what they do is they don’t get paid a lot. The prevailing wage in San Diego County is $72,000. An E6 which is a sergeant, if you take away his allowance for housing, he gets paid less than $40,000. You tell me how to survive in San Diego on $40,000 with a family of four, so that’s a big issue. So we need to bring awareness to that and we need to create opportunities for employment and education when they transition out. That they’re not underemployed or unemployed. Many of these young men and women that stay less than 20 years or 25 years that aren’t “lifers,” they don’t have a lot in the bank. They want to stay in San Diego but they can’t afford to stay in San Diego so they move out to East County or they move all the way to Temecula and they’re commuting down to San Diego every day for a job that only pays them $40,000.

So again, there are a lot of challenges in the military and a lot of it is predicated on the simple fact that we feel that there’s more that can be done in educating them on their transition as soon as they enlist or they enroll or they get involved and that more can be done on how to increase the pay to meet the standards of the community in which they live.

Now, there is some military personnel that is doing well. Not everybody is struggling, but there is a significant portion that is struggling. I think roughly 70% of the individuals in San Diego are junior enlisted and under the age of 25, and I remember when I was 25 I didn’t have as good a grasp on finances as I do now and I thought everything was going to be well and fine. But I also wasn’t married. I also didn’t have two kids. I also wasn’t out doing the work of a soldier every day and having to deal with moving every 18 months or being deployed for 9 months or this, that, and the other thing.

So there’s a lot of issues. Low pay compared to other jobs and other age brackets. There are some 25-year-olds that are making $100 grand, but again that’s on them, but as an all-volunteer force they signed up for it. They know what’s going on, and it’s our goal, it’s our mission, it’s our role as a civilian community to help them. And not basically glad-hand them and have pity, but help them understand the challenges that they’re facing and the challenges that they’re going to face when they’re a civilian because once they transition out, 90% of their stuff goes away.
So you’ve got now a whole big pool of veterans out here and everybody’s trying to access the same dollar, and it’s the same as a nonprofit. You got 9,900 nonprofits going after the same dollar in fundraising, so teaching them how to be above the fray is very important. Then secondarily, teaching them how to transition smartly is very important.

Then the predatory lending. I mean, let’s face it. My brother was a prime example of this. He used payday lenders and he was getting himself into payday lenders. It’s like 300% interest. Or he was using his credit cards to pay off a payday lender and then switching a credit card to do this just to survive. Or there are some financial institutions that will offer you a forward payment at an interest rate and then take your pay. There’s just a lot out there, and the biggest crooks are the ones that are the car dealers that say, “Military 0% down. Come buy a Mercedes,” and it’s always the ones that are kind of off the lot that have the biggest American flag that are the ones that we find to be the most advantageous toward predatory lending.

So our role along with our partners both on and off installation is to help protect these individuals, but also educate them. Educate them how to be smart with their money. Educate them how to take advantage of the resources like TSP and the blended retirement, and also let them understand that it’s a lot nicer to have money in the bank and not have to decide whether or not you keep the lights on or you put food on the table. There are so many resources out there to help, but we got to make them help themselves first, so that’s really what Boost is about and as I stated earlier with the Chapmans, we give away $3,000 a quarter.

If you’ve had a financial hardship and you’re either active veteran, you’re related to a military person, you’re a spouse, you’re a child, you can apply for our grant and in your own words tell us your story what you would do with that money, and then the winner is chosen and we give it away at our quarterly luncheon, so it’s very near and dear to my heart and the military program is something that we need to continue to work on and continue to work on, and work with our partners and work with the Pentagon and work with our local legislatures and our state legislatures, and we need to do more for these individuals because they’re doing everything they can to make it available for us to do what we do every day.

Thrift Savings Plan (TSP) for Retirement

Taylor: I want to point out two things. One, the SDFLC, the Literacy Center, has given $42,000 to veteran families since this program’s been around. Maybe you can correct me but that’s the statistic I saw, which is amazing so thank you for that. Two, you mentioned the TSP program, the Thrift Savings Plan that’s available to the military. The TSP program is one of the best retirement saving tools out there, so if you’re a military member listening to this, take advantage of your TSP because it is an incredible retirement savings tool.

Brad: Yeah, and the blended retirement just jumped off here beginning of the year, so individuals that are eligible can either stay in TSP or go to blended retirement, and then those that are joining are going to be in blended retirement which instead of a pension it’s kind of like a self-directed fund. So there are advantages to both but I will echo what Taylor said. If you are in the military, whether you’re single and you’re an E3 and you just got out of boot camp out of Paris or Great Lakes or out of San Diego or wherever you were, take advantage of the retirement plan. Even if it’s $10 every paycheck, that will add up over time and you will be surprised how much money you can leave with, and you’d be surprised how much people are leaving on the table when it comes to these retirement programs and there’s only one person that’s going to be responsible for your success or failure for your future financial self and that’s your current financial self.

Taylor: Yep, you nailed it. Again, thank you for everything that you’re doing in the Boost for Heroes program. We will link to all of this in the show notes but all of this information is on your website as well. I know we’re running out of time here. I’ve just got a few more questions for you. Next question is, where do you see the Literacy Center in let’s say 10 years from now and what do you hope to have accomplished by then?

Brad: Well, like every good nonprofit, I hope my doors are closed because I hope that we’ve done our job and everybody’s living in a very fortuitous and fruitful and surplus-bound financial life and that we’ve provided enough education and we’ve kicked in enough doors and harassed enough people that the things that need to happen are happening. In reality, we’re going to continue to grow. We’re going to continue to strategically look at our plans and modify to make sure we’re meeting the needs of the community. We hope to be able to continue to expand.

Even though we’re called the San Diego Financial Literacy Center we do provide education in 47 different states, so we do have the opportunity to visit you, talk to you on the phone, so even if you live in Poughkeepsie, New York, give us a call. Or you live in Texas or you’re based in Pensacola, Virginia Beach, or Bremerton or wherever it may be. Again, if you have a child in classes or a child in school and you want to talk to us about how to get programs like ours into your schools and you’re in South Dakota, give us a call. We can always talk you through those platforms. But most importantly, I want to be able to continue to help one person a day. One person a day, change their life, change their financial picture, and if we do that in 10 years that’ll be 3,650 people that we’ve helped and to me that’s a small step in a big journey but it’s a step regardless.

Taylor: If you are listening to this and you are as inspired as I am listening to Brad, I want to point out that you don’t have to be a financial professional to help out. I have one idea, but before I share my idea, how can people get involved? How can people help you reach some of these goals?

Brad: Well, if you go to our website, SDFLC.org, there’s a link that says Help SDFLC. We’re always looking for new partners. We’re always looking for new volunteers and we’re always looking for new donors. Donors can be individuals, can be family funds, can be corporate partners. Can be anything, and we’ll take time, talent, or treasure. If you can help us in the office if you can help us at a clinic, if you have an expertise that you think would be advantageous to help us when we’re educating the members of the military who were incarcerated at the brig.

Whatever you may think of we’re always looking for people, we’re always looking for skills, and we’re always looking for money, so if you go to SDFLC.org, you go to Help SDFLC, there’s a bunch of buttons there. You click it. You fill out the form. It’ll come across our desks and someone will get back to you. Believe me. Our goal is to help thousands of people each year and we can only do it with the generosity of our business and our community and with individuals like you Taylor, so it’s very important for us to maintain those relationships and keep them going. It doesn’t matter if you can give us an hour a year or 100 hours a year, or $1 a year or $1 million a year, we still want to talk to you.

Help the San Diego Financial Literacy Center via Amazon Smile Program

Taylor: And if none of those things resonate with you, you don’t have the time, you don’t have the money, don’t have the resources, whatever it might be, I’ve got one idea for you. It’s something that I do to help out the Literacy Center. There’s something called Smile.Amazon.com and a lot of people don’t know about this but if you shop on Amazon.com, which I think everybody in this world does these days, you can help the Literacy Center. You can go to Smile.Amazon.com and you can choose. DebtWave Credit Counseling is the parent company, so you can choose DebtWave Credit Counseling as the company that you want to support through Smile.Amazon.com and every single time that you buy something on Amazon.com you’re helping out the San Diego Financial Literacy Center, so you don’t have to spend any extra time or any extra money. It just happens. So that’s my idea to help you guys out and something that I’ve started doing and I thought I’d just share that with everybody.

Brad: Yeah, the Smile is wonderful and again, every little penny helps because at the end of the day it is those piles of cents that turn into dollars.

Brad Pagano’s Favorite Company in San Diego Nobody Knows About

Taylor: Absolutely. Alright, my last two questions and I’ll get you out of here. San Diego is a fascinating city. There are tons of great companies. It’s what got me going on this podcast. I’m curious. Is there a favorite up and coming company here in San Diego that nobody knows about that you really enjoy, or is there a hidden gem that you and your family frequent that tends to fly under the radar?

Brad: As far as just what we enjoy doing?

Taylor: Yeah. It could be a restaurant that is a little hidden gem somewhere, or maybe just a fun company you’ve learned about recently that’s here in town that yeah, maybe nobody knows about.

Brad: Not many people know this but I used to run or own a microbrewery, so we’re big into that scene but there’s actually a couple of new distilleries. There’s a distillery in North County and the name is going to escape me but they use ocean water and things of that nature. They use recyclable things to make it. It’s got a very interesting name and I’ve been there once, so that’s good. I’m also a big fan of a place out in Lakeside that my family and I go to named FUNbelievable. If you haven’t been there, it’s an inside playground. It’s basically golden for kids and parents, so we like to do those two things. I like to take my daughter out to FUNbelievable and then stop at BNS over there at the Navy SEAL brewery and get a cool pop on the way home.

Taylor: I love it. That’s really interesting. I’ll have to find the name of that distillery up north. I’ve not heard of that.

Brad: There are about 5 or 10 distilleries. You & Yours is downtown. The Cutwater is over in Miramar. It’s up north and once you find it you’ll know it. It’s got such a unique name, but I’ve been there once and my friend Erin Seay was a person that turned me on to it. She’s tied into everything but it’s definitely something I like to do. I love to support those that are supporting San Diego so all the local little microbreweries and those individuals, and including the big ones like Coronado. I love Coronado. Brandon Richards and his team at Coronado are great, but I’m big into that industry and when I have to spend my free time, if I’m not reading or not with my daughter I tend to go visit some microbreweries with my buddies.

Taylor: Great. We’ll link to all of it. Last question. The name of this podcast is Stay Wealthy San Diego. Wealth means different things to different people so my last question is, what does living a wealthy life mean to you?

What Does Living a Wealthy Life Mean to You?

Brad: Living wealthy means don’t worry about what anybody else is doing. Stay focused, stay in your lane, and don’t measure it by money because the person that’s driving the car you want or lives in the house you want may be struggling worse than you are. Wealthy is a state of mind and if you’re living it every single day you’ll know it.

Taylor: Great. Brad, thank you very, very much for joining me. I loved hearing your story. I loved learning more about the programs you guys are implementing. I look forward to taking part in volunteering in some upcoming clinics this year, and yeah, thank you very much for your time.

Brad: Thank you, man. I really appreciated it and again, if you have any questions, SDFLC.org.