Making a Million Dollars for My Friend in an Hour

Everyone is scared of dentists, medical tests, and financial planning. I get the first two. But financial planning? Done right, it can uncover a gold mind. Yet, only one in three Americans has a concrete, as in written down out, financial plan. This assessment comes by way of a 2021 Charles Schwab survey.

People have lots of rationales for not planning. Roughly two in five say they don’t have enough money to bother planning. One in five claim they are too busy. And almost one quarter say it’s too complicated. Only 15 percent use financial planners. This means over 15 percent are DIYers. They’re the ones with a concrete plan they produced on their own — presumably using Excel, which is a highly dangerous tool for this purpose as I’ll explain.

Back in 2022, I set out to change this. I wrote a book called Money Magic — an Economist’s Secrets to More Money, Less Risk, and a Better Life. I figured it would sell like hot cakes and start a financial-planning craze with everyone using my company’s super user-friendly lifetime planning software, MaxiFi Planner.

Whither my confidence? My prior, co-authored book, Get What’s Yours — the Secrets to Maxing Out Your Social Security, was a #1 best seller for 10 days and a top-10 best seller for most of 2015. And Money Magic is chockfull of examples for using MaxiFi to safely and dramatically raise your household’s living standard. But the book isn’t just about more money, it’s about the power of economics to make informed lifestyle decisions. This includes deciding whether you hate your spouse enough to get divorced.

Alas, the book didn’t sell. I’m not sure why. It’s a lot more entertaining than a book about Social Security’s hundreds of thousands of clarifying rules about its 2728 primary rules about its 12 benefits. But when Get What’s Yours came out, the media went nuts for unclear reasons and, boy, were we proud when the book finally overtook our competition — The Life-Changing Magic of Tidying Up.

A best seller about folding clothes followed by another about Byzantine bureaucratic rules — this was a clear sign that having a hit book about anything is ordained by the gods. But that wasn’t my takeaway. Instead, my ID told my ego, or vice versa, that I was the second coming of Stephen King. And off I went to write my next best seller.

To be clear, a best seller these days doesn’t necessarily mean selling millions of books or getting rich. It just means selling more than books about not using your floor as a closet. My friend in grad school carpeted his apartment with his wardrobe — two feet of smelly clothes everywhere you stepped. He got married and, well, one could quickly eat off the floor.

Anyway, a best seller, Money Magic, was not to be. Social Security, well, you have to make decisions and the System is so screwed up that everyone needs outside counsel. Sitting down and planning your finances? Gee that sounds as much fun as eating a bowl of horseflesh ice cream. Readers of Money Magic know this is a Japanese delicacy.

But here’s the deal. Financial planning can truly be fun, truly magical. Chapter 1 of Money Magic is about doing the same job in a different city and earning dramatically more. All it takes is looking at a government website. That’s financial planning that people with no money, as in no savings, should be dying to do.

The point here is that financial planning encompasses a lot of ground. It’s not just about whether to invest in stocks, bonds, or crypto (please don’t!). Let me give you an example from yesterday’s Zoom with my friend Russell.

Russell’s in his early 60’s. He’s been around the financial world for decades. He can tell you everything you want to know about financial markets and exotic financial instruments. He’s also an expert on company-sponsored retirement plans. In short, he’s extremely financially literature.

What he couldn’t tell you, until yesterday, is whether buying a part-vacation, part-rental home in northern New Hampshire made sense. Russel and his wife, Sue, had their eye on a $650K cottage in the White Mountains. With another $100K investment, they were sure they could easily rent it most of the year.

I gave Russel my company’s MaxiFi software a year ago. It does, as many of your know, economics-based lifetime financial planning. Russell’s still working and I figured I better demo it for him. So, I showed him a few hypothetical cases. Over the next 12 months, we’d talk and he’d tell me about different cottages they were considering.

Then he’d say he wasn’t sure it made financial sense. I kept asking him whether he’d run the option of buying a second home in NH through MaxiFi. Yesterday he came clean.

No. I’ve been hesitant to do this by myself. I’m worried I might miss something. Could we Zoom and check it out together in MaxiFi?

Sure, no problem.

Why, really, did Russell want me to run MaxiFi for him? Yes, he was short on time. But everyone’s short on time. The truth was he was nervous and wanted to have someone with him at the financial Cat Scan. What if his wife was right and the numbers didn’t work? Yes, he’d been poking at things with Excel. But he worried he was missing something important.

He was right about Excel. You can’t make a major financial move, like buying and renting a vacation/rental home, without changing all of the rest of your finances. All your future federal and state taxes, even your path of Medicare Part B premiums, will be different. Russell’s every future year of discretionary spending would be different — higher if the cottage paid for itself, lower if it didn’t. This would mean an entirely different path of assets, asset incomes, and taxes. But taxes feed back to impact what discretionary spending is affordable, and on and on. Plus, making a big, one-time purchase would potentially disrupt Russell’s cash flow, leaving him cash-flow constrained. This would require Russell to lower his living standard in the near term compare to the future.

Getting all this straight in Excel requires iterating back and forth between one’s spending path and tax path (life insurance path as well), each time adjusting for the new path of taxes and cash-flow constraints. Doing so literally requires an infinite number of guesses as to the right solution, writing miles of Excel macros, and, well, I’m about to nerd out.

MaxiFi makes these calculations in a half second and one can see from the results that they are all internally consistent and precisely correct. That’s because it has a special algorithm. It’s not AI/machine learning, which predicts the right answer. It’s iterative dynamic programming, for which we received a patent, which finds the right answer.

Anyway, yesterday morning we did the deed — ran Russsell’s potential cottage purchase through MaxiFi . We spent a half hour entering his data and then hit Run Report. A half second later the picture was clear. The NH cottage would, under highly conservative assumptions, raise Russell's and his wife’s combined lifetime spending by over $150K.

Russell was super relieved, actually thrilled. He was also amazed that MaxiFi could get it all right at light speed. Then he told me about his and his wife’s bigger question. Would selling their Connecticut home and moving to Tennessee also raise their lifetime spending?

As MaxiFi showed, Russell and his wife were house poor. They were allocating as much of their resources to housing as they were to discretionary spending. Their CT house was worth $1.5 million on which they were carrying a $500K mortgage. Selling it and buying a $600K house in TN would mean a) more space, b) no state income taxes, c) lower property, insurance, and maintenance costs, and d) no mortgages payments as they would buy their new home with cash.

We set up the alternative profile, hit Compare Reports. One second later MaxiFi explained that this would produce over $850K in additional lifetime discretionary spending. Yes, it also showed a lower equity bequest to Russell’s children, but most of the saving was from lower annual housing costs and reduced holding costs — having money tied up in housing on which one earns zero return. And Russell’s kids are all doing well financially.

In short, MaxiFi made Russell and his wife $1 million in the course of an hour! This was a big deal as they are very close with their friends in the area and the improvement had to be large to justify moving. But, as we discussed, they’d have plenty of extra money to visit periodically or fly their buddies down to TN in the winter.

Over the years, I’ve become increasingly aware that many people want to have an expert at their financial CAT scan. This is why we’ve just introduced a new service at It’s called Plan with Larry. It’s not as cheap as using MaxiFi on your own, as thousands have done, and the service doesn’t come with investment advice. But after having my team enter your data, I zoom with you and go over your plan and help you evaluated alternatives. Give it a try or hop in the CT scan on your own. It can be a blast.

Related: Robert Akerlof's Societal Perspectives on Shaping Behaviors through Economics