2023-01-25_Five_Intelligent_Financial_Goals
00:00:00.000 | With Kroger Brand products from Ralphs, you can make all your favorite things this holiday season.
00:00:05.240 | Because Kroger Brand's proven quality products come at exceptionally low prices.
00:00:09.920 | And with a money-back quality guarantee, every dish is sure to be a favorite.
00:00:14.760 | ♪ These are a few of my favorite things ♪
00:00:18.180 | Whether you shop delivery, pickup, or in-store, Kroger Brand has all your favorite things.
00:00:24.900 | Ralphs. Fresh for everyone.
00:00:27.360 | ♪
00:00:30.060 | ♪ Get in zone, AutoZone ♪
00:00:32.860 | Welcome to AutoZone. What are you working on today?
00:00:35.260 | I think my battery's dead.
00:00:37.160 | With free battery testing and charging, we can help you get back on the road.
00:00:41.100 | ♪ Get in zone ♪
00:00:42.100 | So, what if I need a new one?
00:00:44.200 | No problem. We have the right battery for your car, starting at only $89.99.
00:00:49.040 | ♪ Get in zone, AutoZone ♪
00:00:50.420 | And what about my old battery?
00:00:52.540 | We can recycle it right here at America's #1 battery destination.
00:00:56.480 | ♪ Get in zone, AutoZone ♪
00:00:59.020 | Restrictions apply.
00:01:00.560 | Hey, Radicals, remember, less than five days remaining before a major price increase on my newest course,
00:01:05.920 | HackProof, how to beat fraudsters, prevent identity theft, and say goodbye to cybercrime.
00:01:10.600 | Sign up today at HackProofCourse.com before the increase.
00:01:14.360 | HackProofCourse.com.
00:01:16.640 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills,
00:01:19.880 | insight, and encouragement you need to live a rich and meaningful life now,
00:01:23.780 | while building a plan for financial freedom in 10 years or less.
00:01:26.880 | My name is Joshua Sheets. I'm your host.
00:01:28.680 | Today, I want to share with you some good and useful and productive financial goals
00:01:33.860 | that you can establish for the new year.
00:01:37.160 | Now, clearly, recording and releasing this on Wednesday, January 25, 2023, I'm a little bit late.
00:01:44.460 | Thank you for your patience. My wife and I have been a little busy
00:01:48.600 | welcoming our fifth child to our household.
00:01:52.280 | Thankfully, we want you to rejoice with us.
00:01:54.280 | Thankfully, very happy to report that childbirth went well.
00:01:57.040 | Mom and baby are doing well. Everyone's doing perfectly.
00:01:59.980 | And settling into our new, larger, expanded family, and everything is going swimmingly.
00:02:05.120 | So we're doing really well, but obviously, it's a very important time.
00:02:10.260 | And so I've been off the microphone to be caring for my wife and our children, etc.
00:02:16.500 | And so forgive me for being just a little bit late.
00:02:18.840 | But in some ways, and by the way, I was often when we have a baby,
00:02:22.500 | I come back and I do a podcast about something related to childbirth.
00:02:26.380 | And I actually spent the last hour sitting here working on one,
00:02:29.380 | but I couldn't, not childbirth, but having children, I couldn't get the tone right.
00:02:33.720 | So I'm canning that episode and doing this episode instead.
00:02:38.820 | Anyway, it could turn out to be a good thing that I'm creating this podcast
00:02:44.160 | about intelligent goals for the new year, because this is a good time to be thinking about it.
00:02:50.660 | Yes, maybe it would have been better if it were before January 1.
00:02:53.200 | But here are some things that I want to give you these ideas,
00:02:55.800 | because these are intelligent goals to do anytime.
00:02:58.600 | And there's some things that now that we're well in the swing of the new year,
00:03:02.100 | the holiday season is behind us.
00:03:03.980 | This is prime work time. Middle to end of January, February, March.
00:03:09.340 | This is just the best work time.
00:03:11.680 | There's no hassle. You're focused, you're motivated, you're clear on what you're doing,
00:03:15.680 | and this is a good time to work.
00:03:17.280 | So I want to give you some good and useful goals for you to consider.
00:03:23.460 | Perspective goal number one, build an intelligent, workable, useful financial tracking system.
00:03:33.740 | Now, this one I wish I had gotten to you before, but again, it's fine.
00:03:38.000 | I'm glad to get it to you now.
00:03:39.940 | All of us need some kind of intelligent, workable financial tracking system.
00:03:46.980 | You need to know how much you're making, how much you're spending, and what you're spending it on.
00:03:53.380 | The system that is right for you is going to be different than the system that is right for me.
00:04:02.600 | More importantly, the system that is right for you today is going to be different
00:04:09.100 | than the system that was right for you five or ten years ago.
00:04:13.300 | And the system that is right for you today is going to be different
00:04:17.340 | than the system that is right for you five or ten years from now.
00:04:23.020 | I've recorded many podcasts about budgeting, budgeting systems, etc.
00:04:28.180 | This is an area in which I think people labor under the delusion that there is a right way to do it.
00:04:36.020 | They think, "I have to budget every cent of my money, every penny of my money.
00:04:39.220 | I need to know where every dollar goes."
00:04:40.700 | No, you don't.
00:04:42.780 | But you must have some kind of intelligent system if you're going to win with money.
00:04:50.740 | That intelligent system will look different based upon the circumstances of your life,
00:04:57.980 | where you are financially, and what you're doing.
00:05:01.940 | If you're a hard-working single dad raising three children on $3,000 a month,
00:05:09.780 | you're going to need a budgeting system that accounts for every dollar.
00:05:16.140 | If you're a hard-working man who is paying off his debt and has a goal of paying off $150,000
00:05:23.620 | of student loan debt this year on your $200,000 income,
00:05:27.420 | you're going to need a hard-working budgeting system that accounts for most of your dollars.
00:05:33.140 | If you're a well-paid executive earning $350,000 a year,
00:05:40.620 | and you don't have any debt except your mortgage, everything is in good shape, etc.,
00:05:45.980 | you don't need a budgeting system that's going to track every dollar.
00:05:49.860 | But you do need to have a system that tells you where you are financially.
00:05:56.860 | Business owners and entrepreneurs go bust when they don't track their company's performance.
00:06:07.380 | Individuals go bust when they don't track the performance of their individual financial enterprise.
00:06:15.220 | And so you need to have a system that works for you.
00:06:19.780 | So I want you to take a moment and ask yourself, "How well is my current system working for me?"
00:06:27.620 | Here are some ideas to help you judge it.
00:06:30.140 | Number one, if I'm talking to Joshua Sheets, my financial advisor,
00:06:34.260 | and Joshua Sheets asks me, "How much money do you spend?"
00:06:38.420 | Can I give him an answer?
00:06:41.820 | Can I give him an answer very, very quickly?
00:06:44.380 | By the way, it's fine with me if you need to open an app or check a spreadsheet or check something,
00:06:50.020 | but you need to have some kind of answer.
00:06:52.060 | How much money do I spend?
00:06:53.100 | Well, I spend $10,000 a month.
00:06:55.220 | I spend $18,000 a month, or I spend $150,000 a year.
00:06:59.340 | Whatever the number is, you need to have an answer.
00:07:01.580 | Here's about how much money I spend.
00:07:04.780 | That's a good thing to know.
00:07:06.700 | You also need to know how much money you make, etc.
00:07:09.980 | So you need to have some system that's going to tell you this data quickly and easily.
00:07:14.620 | This is easy for employees, right?
00:07:16.340 | You know your top-line salary number.
00:07:19.420 | If you have an idea of what your bills are, etc., you can have the number,
00:07:23.100 | but you need a system that's going to tell you how much you spend.
00:07:25.860 | Here's another question to analyze your current tracking system.
00:07:32.180 | Do I know if I'm on track to reach my goals?
00:07:36.180 | Is this system helping me to be on track to reach my goals?
00:07:41.180 | Am I confident that I'm on track to reach my goals?
00:07:46.460 | The reason we track money is so that we can know if we're on track,
00:07:52.500 | on course, towards our goals.
00:07:55.900 | The reason people all of a sudden start budgeting when they want to get out of debt
00:07:59.460 | is so that they can get out of debt.
00:08:01.740 | They set a goal, and you need a new system to know whether you're going to achieve that goal.
00:08:05.940 | And so your financial tracking system should tell you
00:08:10.300 | whether you are on track to reach your goals.
00:08:14.220 | Now, how you do this is up to you.
00:08:17.780 | There are many good apps that can help you.
00:08:20.740 | I'm not sure that you need a standalone app in many cases.
00:08:26.180 | First, let's talk about your income.
00:08:28.780 | If you are a wage earner, you probably have a fairly standard, consistent income.
00:08:34.380 | That's good enough.
00:08:36.220 | If you can just put down your top line W-2 income,
00:08:39.340 | that tells you how much money you make, great.
00:08:41.500 | If you're a business owner,
00:08:43.420 | you should be able to get your income from your bookkeeping system.
00:08:46.980 | If you don't have a bookkeeping system that's effective,
00:08:49.300 | that's a good sign that you're not doing as well with your business and management
00:08:53.300 | as you should be.
00:08:56.700 | If you're being coached as an entrepreneur,
00:08:58.980 | and your coach comes in and assesses your bookkeeping system
00:09:02.180 | and finds out that you don't have a dashboard of reports
00:09:04.980 | that's going to tell you on a daily, weekly, monthly, quarterly basis
00:09:10.180 | what your profit and loss is, how things are trending, etc.,
00:09:14.020 | your coach is going to tell you to fix that.
00:09:16.140 | So if you can't tell me how much money you're making, fix it.
00:09:19.660 | Find some kind of system that's going to work for you to fix it
00:09:22.460 | so you know how much money you're making.
00:09:25.460 | On expenses, a detailed spreadsheet of expenses
00:09:30.980 | can be helpful for some people, especially if you enjoy that.
00:09:36.180 | But for many of us, it's not necessary.
00:09:40.460 | What you want to think about is a system that allows you to control
00:09:43.700 | your expenses adequately.
00:09:47.140 | So you've heard of pay yourself first.
00:09:49.540 | The reason pay yourself first is so powerful,
00:09:54.140 | is it allows you to spend freely
00:09:59.580 | knowing that you've saved and invested.
00:10:02.420 | In a moment, I'll talk about setting a goal of maxing out your retirement accounts.
00:10:05.700 | It's a wonderful goal to set. It's a great goal to set.
00:10:08.500 | Here's what's especially great about it.
00:10:11.100 | If you earn wages and up front,
00:10:15.500 | you divert those wages into your retirement account,
00:10:18.580 | and if you're convinced that that's enough money for you,
00:10:20.620 | you don't need any more money for that,
00:10:22.580 | and all of the balance of your wages goes into your checking account,
00:10:27.380 | then you can just spend all the money that's in your checking account
00:10:30.980 | and you're in good shape.
00:10:32.940 | If you just set it up so that all your bills are paid on the same day
00:10:35.900 | that your paycheck hits your checking account,
00:10:40.380 | and you want to know if you can afford to buy something,
00:10:42.580 | you just pull out your phone, see what the balance is in your checking account,
00:10:45.260 | and either swipe your debit card or not swipe your debit card.
00:10:47.340 | That's a bulletproof system. It's a wonderful system.
00:10:50.820 | It's going to give you an appropriate dashboard
00:10:53.580 | as to whether or not you can afford to spend money.
00:10:56.140 | Notice in what I've described, you're not using credit cards,
00:10:58.940 | you're not going into debt, you're saving money first
00:11:01.780 | by simply putting it into your retirement account,
00:11:04.460 | and then you are just spending money that's in your checking account,
00:11:08.980 | and if the money's there, you can spend it. If not, you can't.
00:11:11.900 | So that works really, really well.
00:11:13.940 | Now, the cool thing is most of our banks now can produce for you,
00:11:17.980 | just like our credit cards have been able to do for years,
00:11:20.900 | they can produce for you an end-of-year statement.
00:11:23.980 | Here at the end of January, with most of your major credit card issuers,
00:11:27.540 | you should be able to access your end-of-the-year spending breakdown.
00:11:31.260 | And a great way to track your money is just to use this.
00:11:36.940 | If you have one card that you spend all your money on, one credit card,
00:11:42.340 | and you just always swipe that card at the end of the year,
00:11:44.460 | now you can pull open that summary and you can see it there.
00:11:47.660 | Again, many banks will do this, many credit cards will do this,
00:11:51.340 | and you can get an idea of what you spend your money on.
00:11:53.420 | That works really, really well.
00:11:55.260 | And as long as there aren't many other systems that cause you problems,
00:12:00.580 | meaning as long as you're not spending on too many accounts,
00:12:03.820 | or as long as you don't have too many transactions that aren't recognized there,
00:12:07.500 | then I think this is a great system.
00:12:10.620 | In conclusion, goal number one is simply assess, or establish,
00:12:16.260 | or restructure your financial tracking system
00:12:20.140 | so that you can have accurate information about your expenses over the next year.
00:12:26.500 | Even if you just create the system, having it there as a dashboard
00:12:31.220 | will automatically start to move you into a better territory with your money.
00:12:37.300 | Pivot now to goal number two.
00:12:39.180 | What's goal number two?
00:12:40.220 | Well, goal number two is analyze your data and see if you are on track for your goals.
00:12:49.980 | Every person should sit down at least once a year
00:12:54.660 | and assess whether or not you are on track towards your financial goals.
00:12:59.540 | Again, the way that you did this 10 years ago
00:13:02.420 | is different than how you should do it today
00:13:04.140 | and is different than how you will do it 10 years from now.
00:13:07.060 | 10 years ago, you may have been just getting started
00:13:10.100 | and you're sitting down and you're crunching every category.
00:13:12.380 | Today, you may be much more comfortable
00:13:14.500 | and you just need to make a broad overview and make sure you're on track.
00:13:19.820 | 10 years from now, you may be mega wealthy
00:13:22.420 | and so your goal setting is going to be different,
00:13:24.820 | but you need to analyze how you're doing and whether or not you are on track.
00:13:30.660 | Now, the best tool of analysis that I know of is what I created,
00:13:34.980 | the Radical Personal Finance Framework for Wealth.
00:13:39.180 | Number one is increase income.
00:13:40.860 | Two is decrease expenses.
00:13:42.540 | Three is invest wisely.
00:13:44.020 | Four is optimize lifestyle.
00:13:46.500 | Excuse me, four is avoid catastrophe and five is optimize lifestyle.
00:13:50.220 | Here are your five ideas.
00:13:52.340 | And the way I do this and the way I encourage people to do this
00:13:55.260 | is to sit down and just ask yourself,
00:13:57.020 | "Where am I weakest right now?
00:13:59.100 | Is my income weak?
00:14:00.580 | Is my spending weak?
00:14:02.700 | Is my investing weak?"
00:14:04.740 | Et cetera.
00:14:05.260 | "Where am I weakest right now?"
00:14:07.300 | For most people, income is your biggest opportunity.
00:14:10.420 | So spend some time analyzing how you can increase your income.
00:14:14.020 | Maybe that means you go through your company's compensation package
00:14:18.300 | and make sure you really, really understand it and ask yourself,
00:14:20.940 | "Are there any bonuses that I'm missing out on?"
00:14:23.540 | For example, "Can I increase my income if I get a master's degree?
00:14:28.180 | Could I increase my income if I could lower the complaint reporting
00:14:33.460 | on our company's product or if I improve the efficiency by 5%?
00:14:36.780 | Could I earn a bonus?
00:14:38.220 | Or is there a career change I could start making a plan for?"
00:14:41.340 | Et cetera.
00:14:41.900 | Now, I've talked a lot about income.
00:14:43.860 | So I'm going to skip quickly to now expenses.
00:14:46.780 | With expenses, one of the reasons you need a tracking system
00:14:50.340 | is so that you can look at your expense categories on a category basis.
00:14:56.460 | So what I encourage you to do is you take your tracking system,
00:14:59.300 | you export the categories and put them all on a sheet
00:15:02.820 | and you order them from biggest category to littlest category.
00:15:06.460 | And then ask yourself, looking at each category,
00:15:08.780 | starting with the biggest number, "Is there a way I can reduce this?"
00:15:12.460 | My favorite question is this, "Can I cut this category by 50%
00:15:17.100 | and double my satisfaction with it?"
00:15:19.580 | So for most of us, the single biggest category is tax, income tax.
00:15:24.820 | The biggest expense in our lives is income tax or employment tax.
00:15:28.180 | So ask yourself, "Is there a way I can reduce this expense by 50%
00:15:33.300 | and increase my satisfaction?"
00:15:35.260 | And this is where you get into tax planning.
00:15:37.100 | And so simple things like, "This is the year I'm going to set up an S corporation
00:15:40.500 | in order to reduce my self-employment tax."
00:15:42.860 | Or, "This is the year I'm going to move from one side of town,
00:15:46.580 | which is in the high-tax state, to the other side of town,
00:15:48.780 | that's in the low-tax state."
00:15:49.820 | Or, "This is the year I'm going to change and move to a tax haven."
00:15:53.020 | Or, "This is the year I'm going to start the side business
00:15:55.260 | and use the-- I'm going to convert my hobbies into a side business
00:15:58.140 | and use those side business expenses to offset the losses on my primary income."
00:16:04.540 | Or, "This is the year I'm going to start tracking my mileage more diligently
00:16:07.620 | or tracking my business meals more diligently."
00:16:09.420 | And you go through it, you know, all the stuff.
00:16:13.540 | Taxes, unfortunately, generally involves a lot of little things
00:16:17.660 | that when added up can often be a good bit of savings.
00:16:20.140 | There's no one thing that you can generally apply except often moving.
00:16:24.740 | And most people aren't going to move and shouldn't move
00:16:27.140 | because tax planning should not be your primary lifestyle driving goal.
00:16:31.620 | But you look at taxes.
00:16:32.660 | Then for many people, what next question is housing?
00:16:35.060 | "Well, am I happy with the money I'm spending on housing?" Et cetera.
00:16:37.980 | And go through each category and just ask yourself,
00:16:40.420 | "Am I satisfied with this or can I get more benefit from this category?"
00:16:46.220 | Not all categories should go down.
00:16:48.060 | The goal is not to always live in a cheaper house.
00:16:50.660 | The goal is not to always live in a cheaper tax situation.
00:16:53.740 | The goal is to maximize each category and be really confident
00:16:57.500 | that you're doing what is right for you.
00:17:00.420 | Now, on the investment perspective,
00:17:02.540 | we do talk quite a lot here at Radical Personal Finance about investing.
00:17:06.340 | And with investing, it's important that you recognize
00:17:08.900 | that your stages of life that you go through as an investor vary a lot.
00:17:13.900 | And there are different investments that are really, really smart at different times.
00:17:17.980 | So when you're very young, investing in education and credentialization
00:17:23.700 | is often your very best investment.
00:17:26.980 | Sometimes as you start to get into the workforce,
00:17:29.340 | especially if you have some control over a business,
00:17:31.940 | investing in marketing is your best investment.
00:17:34.420 | Investing in growing your brand and growing your customer base
00:17:37.180 | is your best investment.
00:17:38.860 | As you start to acquire money and capital,
00:17:42.540 | now your best investment comes from optimizing your investment returns.
00:17:48.180 | And if you got $1,000 in the bank
00:17:49.980 | and you can get a 20% rate of return on your money with some great investment,
00:17:54.220 | oh, big deal, you've made $200.
00:17:57.060 | On the other hand, if you got a million dollars in the bank,
00:18:00.500 | going from a 10% rate of return to a 20% rate of return
00:18:03.700 | would make a huge difference in your experience.
00:18:07.660 | And so as you get older and your capital grows,
00:18:10.300 | now you need to give more and more time and more and more attention to investing.
00:18:14.740 | You can't do the same thing all throughout your life.
00:18:17.180 | When you're 25, ignore investing.
00:18:19.260 | Focus on earning and keeping expenses low.
00:18:21.780 | When you're 55, earning and low expenses are not nearly as important
00:18:25.900 | as the rate of return that you make on your capital.
00:18:29.500 | Avoid catastrophe.
00:18:31.340 | Go through all the list of things that you can,
00:18:34.340 | the bad things that could happen to you.
00:18:35.900 | Review your coverages, right?
00:18:37.300 | Sit down with your property and casualty agent
00:18:39.500 | and make that your February goal.
00:18:41.620 | Let's review all my property and casualty coverages.
00:18:44.620 | In March, sit with your life insurance agent.
00:18:46.580 | Let's review my life insurance coverages.
00:18:48.540 | Ah, sorry.
00:18:50.220 | This is the perfect spot for my ad.
00:18:52.020 | In February, we all know what you're going to be doing.
00:18:54.020 | You're going to be taking the course that we're doing called Hack Proof.
00:18:57.900 | So let me just take a moment and do my ad.
00:18:59.980 | Gabriel Custodio and I have teamed up before for our Bitcoin course,
00:19:02.980 | which by the way, you can buy at bitcoinprivacycourse.com.
00:19:06.100 | But as we were talking about areas where we think there's a shortage of good information,
00:19:10.020 | where we can add good value,
00:19:11.980 | we decided to focus on this topic of Hack Proof,
00:19:14.500 | how to beat fraudsters, prevent identity theft, and say goodbye to cybercrime.
00:19:18.620 | Because, and this fits perfectly here as I talk about avoiding catastrophe,
00:19:21.980 | because one of the best things you can do to avoid catastrophe
00:19:24.780 | is eliminate your identity theft risk.
00:19:27.260 | So make this your February project.
00:19:29.380 | You're going to take our course in February.
00:19:31.220 | It's going to be a two-part live class where we talk about all the things that you can do
00:19:34.900 | to basically button down your document and your financial situation
00:19:38.540 | so that you can prevent identity theft and become hack proof
00:19:42.340 | and eliminate the huge risk of cybercrime.
00:19:44.860 | As we talked about in the standalone episode that we did with an ad for the show,
00:19:50.100 | it's a huge industry and it's a huge risk.
00:19:52.620 | And this is one of those things that a few simple things done in advance can protect you.
00:19:56.700 | So sign up today, go to hackproofcourse.com and sign up today, hackproofcourse.com.
00:20:02.300 | Now after the course, then in April, sit with a bankruptcy attorney
00:20:07.140 | and do pre-bankruptcy planning as part of your asset protection planning.
00:20:10.340 | In May, talk to a marriage counselor
00:20:13.580 | and ask him how you can bulletproof your marriage
00:20:15.580 | so that you don't wind up in divorce course.
00:20:18.020 | In June, take a seminar on child raising and how to keep your kid off drugs.
00:20:24.340 | In July, take July off and take your kids to the mountains.
00:20:28.940 | Just go through and ask yourself all the catastrophes that could happen, right?
00:20:33.020 | Maybe July, buy prepping items or something.
00:20:35.460 | Go through and think regularly, how can I avoid catastrophe?
00:20:39.100 | What are the hazards that could face me?
00:20:41.740 | And then optimize lifestyle, regularly getting in touch with your vision for the future,
00:20:46.260 | your plans and your dreams for your life one year from now,
00:20:48.980 | five years from now, ten years from now,
00:20:51.100 | and making sure that you're optimizing how you earn your income,
00:20:53.860 | how you spend your money, how you invest your money, etc.,
00:20:56.660 | how you live your family life, etc., and thinking those things through.
00:21:01.580 | So goal number two is just analyze your data, look at it.
00:21:05.540 | You often, one of the reasons I try to give so many ideas
00:21:08.060 | is just to inspire you to think creatively.
00:21:11.380 | At the end of the day, at some point, you got to pull out your own numbers,
00:21:14.380 | look at them and analyze them and find opportunities for improving.
00:21:18.300 | And if you do that aggressively, you'll find that your life can change very, very quickly.
00:21:23.380 | Goal number three that I want you to consider making for this year is very simple.
00:21:31.220 | Pay off all non-mortgage debt.
00:21:35.620 | Pay off all non-mortgage debt.
00:21:39.260 | Some cases, some people want to consider paying off mortgages too,
00:21:41.740 | but at the very least, pay off all non-mortgage debt.
00:21:45.220 | Why do I say this as a potential goal?
00:21:48.220 | It's quite simply this.
00:21:49.660 | In my years of financial planning, I have observed that persons who live their life free of debt
00:21:58.060 | are able to adapt and respond, react quickly and easily to the changing desires that they have.
00:22:06.340 | And they're not burdened by the commitments and mistakes of the past.
00:22:10.740 | Folks who use debt never get to respond and pivot to how they want to live today
00:22:16.380 | because they're often beholden to the past.
00:22:19.660 | They're tied to their past decisions.
00:22:22.540 | So just simply getting free of all non-mortgage debt
00:22:26.220 | and making a goal to pay off all non-mortgage debt
00:22:28.940 | can be one of the most rewarding things that you can do.
00:22:32.100 | And it's a wonderful financial goal for you to set.
00:22:35.620 | In most cases, you can accomplish this in less than a year.
00:22:41.940 | The reason I'm confident in that assertion is very simple.
00:22:47.340 | You're generally not going to be lent more money
00:22:52.060 | under the kind of American system of credit scores, etc.,
00:22:56.500 | than what you could pay off in a year of focused effort.
00:23:00.580 | Most people, you have to go through financial underwriting when you borrow money.
00:23:04.300 | And if you sit down and you decide, "I'm going to get out of debt.
00:23:07.020 | I'm going to pay off all my non-mortgage debt."
00:23:08.780 | You can sit down and you can get that done in less than a year in most cases.
00:23:12.580 | Maybe for some it's a year and a half, but probably maximum 18 months.
00:23:17.820 | So set a goal. Get debt-free.
00:23:21.580 | I want you to imagine how simple and productive your life would be if you had no debt.
00:23:29.620 | How simple, how stress-free your life would be if you had no debt.
00:23:33.980 | Remember that example I said earlier about making sure that
00:23:39.820 | if the guy who just saves money in his retirement accounts
00:23:42.460 | then spends all the rest of his money,
00:23:44.460 | you can do that when you're debt-free
00:23:47.980 | because you don't have to worry about paying anybody else off.
00:23:51.620 | So at some point in time, set a goal and say, "I'm going to get out of debt."
00:23:56.060 | And make it this year.
00:23:57.100 | If you have non-mortgage debt, make it this year that I'm going to get out of debt.
00:24:01.740 | Just pay off all of your non-mortgage debt.
00:24:06.220 | If you can't do it easily in a year,
00:24:09.260 | then do the things that are necessary for you to accomplish it.
00:24:13.300 | So most of my listening audience can just decide to do it,
00:24:16.940 | start putting extra money at it and get after it.
00:24:19.380 | Some people need to sell a car,
00:24:20.860 | some people need to sell a badly performing investment,
00:24:23.540 | some people need to get rid of some stuff.
00:24:25.180 | But just set a goal of this year being free of all debt
00:24:30.060 | and then resolve not to go into debt again in the future
00:24:32.820 | because then you'll be free.
00:24:35.700 | Every year you'll be free.
00:24:38.460 | Debt-free is awesome.
00:24:41.540 | Debt-free is awesome.
00:24:46.140 | Make this be the year that you set a goal
00:24:49.660 | of getting rid of all of your non-mortgage debt
00:24:55.100 | and make it happen
00:24:56.420 | so that for the rest of your life you can live financially free,
00:25:00.420 | knowing that if you wanted to spend all of your money,
00:25:02.540 | you could responsibly do that
00:25:05.180 | because at least you're not beholden to the mistakes of the past
00:25:07.980 | or the overspending of the past, which is what debt is.
00:25:12.180 | Quick comment on my distinction of non-mortgage debt versus mortgage debt.
00:25:16.300 | I think for many people, paying off mortgage debt is a smart idea.
00:25:20.180 | But mortgage debt can always be paid off by the sale of an asset.
00:25:24.340 | And so it doesn't cause you the same degree of lack of freedom
00:25:29.140 | as non-mortgage debt.
00:25:30.900 | If you're living in Nashville, Tennessee,
00:25:33.580 | and you have a $400,000 mortgage on an $800,000 house
00:25:38.380 | and you decide you want to sell and move,
00:25:40.420 | you can sell the house, pay off the mortgage and move.
00:25:43.340 | That's different than if you're living in Nashville, Tennessee,
00:25:45.660 | and you've got $80,000 of credit card debt.
00:25:48.580 | That's harder to deal with.
00:25:50.140 | So that's why I make the distinction between mortgage debt and non-mortgage debt
00:25:53.740 | is when you have debt backed by an asset,
00:25:56.500 | then anytime you want to get rid of the debt, you could just sell the asset.
00:25:59.660 | And so that is an option.
00:26:01.020 | It doesn't keep you as tied down as non-mortgage debt.
00:26:05.740 | Now for a limited time at Delamo Motorsports.
00:26:08.460 | Get financing as low as 1.99% for 36 months on Select 2023 Can-Am Maverick X3.
00:26:15.380 | Considering the Mavericks taking home trophies everywhere
00:26:18.020 | from King of the Hammers to Uncle Ned's Backcountry Rally,
00:26:21.500 | you're not going to find a better deal on front row seats to a championship winner.
00:26:26.300 | Don't lose out on your chance to get a Maverick X3.
00:26:29.420 | Visit Delamo Motorsports in Redondo Beach and get yours.
00:26:32.980 | Offer in soon. See dealer for details.
00:26:37.460 | Goal number four I want you to set for 2023 is this.
00:26:42.300 | I want you to fully fund all available retirement accounts.
00:26:50.020 | I repeat, I want you to fully fund, also known as max out,
00:26:55.220 | all available retirement accounts.
00:26:58.860 | I want you to set that as your goal and I want you to accomplish it
00:27:02.180 | regardless of the effort of what it takes you to accomplish it.
00:27:08.100 | I want you to max out every one of your retirement accounts this year in the year 2023.
00:27:15.620 | Let me explain why this is so important.
00:27:18.820 | If you only do this, this one thing of maxing out all available retirement accounts,
00:27:26.660 | if you only do this in virtually all circumstances,
00:27:31.940 | you will be set for your long-term wealth accumulation needs.
00:27:39.820 | The 2023 401k contribution limit in the United States of America is $22,500 for 2023.
00:27:51.940 | When you start running a financial calculator,
00:27:54.020 | let's just assume you're say 35 years old and let's assume we've got 30 years to invest.
00:27:59.340 | Let's assume you make 7%. We start with no money.
00:28:02.380 | Let's just pretend we start with no money and we just put in $22,500 per year.
00:28:07.500 | By the way, I'm putting this in as level, no inflation adjustment, etc.
00:28:11.180 | At 65 years old, you would have $2 million.
00:28:16.020 | $2 million. That is a lot of money, a huge amount of money.
00:28:20.300 | Now, it would actually be higher because if you maxed out your 401k,
00:28:25.140 | in most cases, you would have an employer match.
00:28:27.380 | So your total contribution would probably be more like something like $28,000 or $30,000 or more.
00:28:32.740 | And every year, this contribution limit is going to adjust.
00:28:36.820 | And so you're going to set a goal every year of maxing
00:28:40.940 | based upon that current calendar year contribution limit.
00:28:44.740 | And oh, by the way, when you get to the catch-up contributions,
00:28:47.140 | now you get an extra, was it $6,500 that you can contribute.
00:28:51.620 | So now you're up to almost $30,000 going in.
00:28:53.780 | So you can have more and more and more.
00:28:56.140 | Even if you start late, right?
00:28:58.380 | Let's say that you are 50 years old and you have nothing saved for retirement.
00:29:02.700 | Well, guess what? My answer is still going to be the same.
00:29:05.700 | Just set a goal of maxing out your retirement accounts.
00:29:09.300 | Because if you start late and you have nothing saved and you start saving at age 50,
00:29:13.740 | you're not going to retire at age 65.
00:29:16.100 | You're going to retire at 70 or 75, something longer.
00:29:19.660 | But you'll get there very quickly by saving.
00:29:21.500 | And now you get the opportunity to do so-called catch-up contributions, right?
00:29:24.980 | You have a larger contribution limit.
00:29:27.540 | Now, what if you also have access to something like a Roth IRA
00:29:31.780 | or a spousal traditional IRA or something like that?
00:29:35.060 | Well, now you have even more.
00:29:36.780 | So set yourself a goal of maxing out every available retirement account.
00:29:42.700 | Set that as a goal.
00:29:44.140 | And then make it happen.
00:29:46.220 | In order to make it happen, you might need to increase your income.
00:29:49.100 | In order to make it happen, you might need to decrease your expenses.
00:29:52.300 | But make it happen and do it every year.
00:29:56.580 | If that were all the money you saved
00:29:59.220 | and that were the only thing you did for wealth building,
00:30:03.020 | if you just do that, you will be on track to be very rich in the fullness of time.
00:30:10.620 | It's such a clear, simple, tangible goal.
00:30:14.020 | Set it as a goal and make it happen.
00:30:16.980 | Set a goal to max out every retirement account that is available to you.
00:30:24.140 | I want to emphasize again, these things scale to size, right?
00:30:28.900 | Let's say that you have a dual income family.
00:30:31.340 | Well, you might have two 401ks.
00:30:33.660 | You may be able to put money in two Roth IRAs.
00:30:38.660 | That would be $55,000-ish going into retirement accounts.
00:30:44.340 | You can save more.
00:30:45.700 | Maybe you have a single income family.
00:30:47.900 | Well, guess what?
00:30:48.900 | You max out one 401k or you max out one
00:30:53.380 | and then you do one traditional IRA for your spouse.
00:30:57.420 | What if you don't have access to a 401k?
00:30:59.980 | Well, usually, the reason you don't have access to a 401k
00:31:04.020 | is usually because you work in an industry
00:31:06.340 | where you have a lower earning threshold.
00:31:08.620 | So maybe you have an account you could put in $5,000
00:31:11.300 | or all you can do is do Roth IRAs.
00:31:13.660 | Whatever is available to you, do what you can do.
00:31:17.500 | Max out all available retirement accounts.
00:31:21.980 | Set that as a goal and make it happen.
00:31:24.020 | And if that were the only thing you do for your long-term wealth production,
00:31:29.220 | it's good enough.
00:31:30.700 | You don't need to save any more money.
00:31:32.820 | Let me extol the virtues of these accounts for just a moment.
00:31:35.980 | Number one, these accounts are very tax efficient.
00:31:38.940 | Having the ability to put money into an account pre-tax is incredible.
00:31:44.700 | For a wage earner, it is the thing you can do to lower your taxes.
00:31:49.300 | So maximize it.
00:31:51.380 | More importantly, these accounts have great investment options,
00:31:56.180 | wonderful investment options.
00:31:57.660 | It's so easy to go to Vanguard or Fidelity or T. Rowe Price
00:32:02.780 | or really almost anywhere and just open an account.
00:32:06.020 | If you have a 401k, undoubtedly you've got great investment options.
00:32:09.300 | The market is so competitive that it's hard to find an account
00:32:12.420 | that doesn't have good options in it now.
00:32:14.780 | And mutual funds that are locked up in a 401k where you can't touch them
00:32:18.580 | are some of the best managed mutual funds out there
00:32:20.740 | because you're not tempted to buy and sell
00:32:22.820 | and you're not tempted to tie in the market.
00:32:24.460 | It can just sit there and grow as the economy grows over time.
00:32:28.340 | In addition, these accounts are completely protected
00:32:30.940 | from the claims of creditors with a few variations depending on states,
00:32:34.580 | depending on if you're talking about IRAs, 401ks, etc.
00:32:37.620 | But money that's in your 401k or in your pension plan is just golden.
00:32:41.620 | It is protected from all but the super creditors of IRS or divorcing spouse.
00:32:47.100 | It is protected so it's really solid or really, really safe.
00:32:51.700 | So max out all available retirement accounts.
00:32:54.980 | Set that as a goal.
00:32:56.220 | If you have to rejigger your budget to make it happen,
00:32:59.260 | well, that's why we have the data.
00:33:00.420 | That was goal number one.
00:33:01.380 | Collect the data.
00:33:02.100 | Goal number two is analyze it, right?
00:33:04.220 | Rejigger your data, rejigger your expenses, change something,
00:33:07.340 | move to a cheaper house, drive a cheaper car, something.
00:33:11.100 | Just set it as a non-negotiable.
00:33:13.020 | I'm the guy who maxes out my retirement accounts every year and do it.
00:33:18.700 | Goal number five.
00:33:21.020 | Goal number five is this.
00:33:23.220 | I want you to set a goal to increase your income by 20%.
00:33:29.540 | Increase your income by 20%.
00:33:33.420 | There's nothing magical about my 20% number.
00:33:36.060 | In thinking about it, I just chose this and I'll explain why I chose it.
00:33:39.300 | But if you have a slightly different number, that's fine.
00:33:42.940 | The key thing is I want you to be focused on increasing your income.
00:33:46.420 | But I think 20% is a useful way of thinking.
00:33:49.780 | As you know, I often use larger numbers.
00:33:52.900 | I talk about doubling your income, tripling your income, 10x-ing your income.
00:33:57.460 | I think those ways of thinking are really powerful because you can't just do more
00:34:04.380 | and 5x your income or 10x your income.
00:34:06.780 | You have to transform.
00:34:08.180 | You have to redesign.
00:34:09.780 | And sometimes that's easier.
00:34:11.700 | But I also know there's a significant portion of my listening audience that
00:34:17.060 | is a little overwhelmed by thinking of how do I triple my income.
00:34:21.540 | You can't triple your income at a job.
00:34:23.500 | It's not going to happen.
00:34:24.500 | You're going to have to get a different job or retrain for another job
00:34:27.500 | in your company, et cetera.
00:34:29.260 | You can't do it.
00:34:30.820 | But that doesn't mean you have to just sit back and just accept a cost of living
00:34:34.300 | raise.
00:34:35.500 | Remember, with high inflation, your wages need to be keeping up with inflation
00:34:39.420 | significantly.
00:34:40.740 | So let's say 7%, 10%, depending on the inflation rate where you live.
00:34:45.100 | So you need at least to keep up with inflation if at all possible.
00:34:48.900 | But set a goal of a 20% increase and then ask yourself, how can I be worth a 20%
00:34:54.060 | increase in pay?
00:34:55.780 | 20% is feasible, I think, for many people, especially when you look at it over the
00:35:01.340 | course of a year, a one-year project.
00:35:04.620 | How can I produce more?
00:35:06.100 | How can I make my company more money?
00:35:08.180 | How can I connect more?
00:35:09.580 | How can I shore up my weaknesses and really enhance my strengths?
00:35:13.980 | Set yourself a goal of increasing your income by 20% and then brainstorm how you
00:35:20.300 | can do it in your specific opportunity.
00:35:25.100 | Increasing your income is not always feasible.
00:35:30.220 | It's not always even the right move.
00:35:32.140 | Frequently, I'll work with private consulting clients and I'll say, "You shouldn't be
00:35:37.500 | worried about increasing your income.
00:35:38.860 | It's not there right now."
00:35:41.140 | So it's not always the right move, but it is almost always the right thing to focus
00:35:49.180 | on in financial planning first and foremost.
00:35:52.240 | So many people in financial planning live in a world of scarcity.
00:35:54.660 | I have to budget more.
00:35:55.860 | I have to save more, etc.
00:35:57.860 | That's fine.
00:35:58.860 | It's good.
00:36:00.220 | But the secret path to having a richer and more enjoyable life now while also building
00:36:07.420 | your plan for financial freedom faster is increasing your income.
00:36:12.500 | That's where you have the best of both worlds.
00:36:14.220 | If you could increase your income by 20%, you could save half, spend half, wind up getting
00:36:20.460 | richer faster while also living better now.
00:36:24.900 | And you can do it again.
00:36:25.900 | And you can do it again.
00:36:26.900 | And you can do it again.
00:36:28.180 | And recognize if you increase your income by 20%, you'll have doubled your income very,
00:36:34.980 | very quickly.
00:36:36.380 | If you increase your income by 20%, in five years, you'll have doubled your income.
00:36:43.060 | And in 10 years, you will have 5x'd your income if you could repeat it every single year.
00:36:50.340 | So focus on this.
00:36:51.340 | I know there are a very small subset of listeners saying, "Joshua, Joshua, it's too much.
00:36:56.300 | It's too much.
00:36:57.300 | It's too much."
00:36:58.300 | Okay, maybe it is.
00:36:59.300 | Maybe you can't accomplish it.
00:37:01.440 | Maybe you can't.
00:37:03.420 | But if you target increasing your income by 20% and you hit increasing your income by
00:37:10.860 | 13%, isn't that better than what you would if you weren't thinking about it?
00:37:16.460 | If you target your income, increasing your income by 20%, and you recognize you can't
00:37:21.180 | do it at your current company, you can't do it in your current job, and you spend the
00:37:24.460 | next two years job hunting and retraining and recredentialing and whatnot, and you find
00:37:28.920 | up getting a job where you do have the chance of doing it, hopefully a job that you like
00:37:34.020 | better than the one you're not doing, then you don't...
00:37:36.460 | Excuse me, I'm getting tongue-tied.
00:37:38.780 | The point is, work for it.
00:37:44.100 | Imagine it.
00:37:45.100 | Set it as a goal.
00:37:46.100 | Write it out every day.
00:37:49.060 | Exactly how much you earned is 20% higher than where you are.
00:37:52.220 | It's going to put you on the track for success.
00:37:55.700 | There are many other goals that you could set, but I wanted to give you five simple
00:37:59.100 | ones that I think are applicable to everyone.
00:38:04.460 | By way of review, goal number one, build an intelligent financial tracking system.
00:38:10.360 | Make sure that you build for yourself an intelligent, simple financial tracking system that will
00:38:15.260 | give you the data that you need to know about your life.
00:38:18.340 | Goal number two, analyze your data.
00:38:21.300 | Set yourself a goal of actually sitting down and looking at your numbers.
00:38:24.180 | Where am I?
00:38:25.180 | Plug some numbers into an online retirement calculator.
00:38:28.540 | Figure out, just look at some stuff.
00:38:31.020 | Analyze it.
00:38:32.020 | I like to do it monthly.
00:38:33.140 | Make yourself a monthly financial planning meeting.
00:38:36.220 | Sit down on maybe a Sunday afternoon in your home office, or maybe it's Monday morning,
00:38:41.300 | the first Monday of the work week.
00:38:42.820 | You go into the office an hour early or something, and pick one category to explore, one thing
00:38:48.460 | to think about, one thing to research, et cetera.
00:38:51.780 | Goal number three, set a goal to pay off all non-mortgage debt.
00:38:56.220 | If you have any non-mortgage debt, set a goal to pay off all non-mortgage debt.
00:39:01.300 | Goal number four, set a goal to fully fund your retirement accounts.
00:39:06.000 | If you just fully fund your retirement accounts, you're going to be rich.
00:39:12.500 | Then goal number five is set a goal to increase your income by 20%.
00:39:17.300 | Set a goal to increase your income by 20%.
00:39:21.020 | If you picked one of these, you're going to be in a better situation.
00:39:25.340 | Any one of them will massively improve your situation.
00:39:27.580 | If you did all five of these, a year from now, two years from now, three years from
00:39:33.420 | now, you'll be on the fast track to wealth.
00:39:37.180 | These are simple, doable, practicable, and practical goals that you can set.
00:39:43.940 | Thank you so much for listening.
00:39:44.940 | I hope that you have enjoyed this.
00:39:48.380 | Remember, price increase on January 31 at HackProofCourse.
00:39:52.940 | So go to HackProofCourse.com.
00:39:55.580 | Sign up.
00:39:56.580 | Make sure you're in the live cohort coming in February.
00:39:59.300 | HackProofCourse.com.
00:40:00.300 | I'll see you there.
00:40:01.300 | HackProofCourse.com.
00:40:02.300 | Sweet Hop is an online marketplace curating the best in premium seating at stadiums, arenas,
00:40:08.220 | and amphitheaters nationwide.
00:40:09.780 | With Sweet Hop's 100% ticket guarantee, no hidden fees, and the personal high-level service
00:40:14.860 | you expect with a premium purchase, you can relax knowing you'll receive the luxury experience
00:40:19.740 | you deserve.
00:40:20.740 | Visit SweetHop.com today to book your premium tickets to your favorite teams, artists, and
00:40:25.620 | all the must-see live events to Sweet Hop around LA.
00:40:29.700 | S-U-I-T-E-H-O-P.com.
00:40:31.700 | It's more than just a ticket.
00:40:33.260 | Hey, cricket customers.
00:40:34.900 | Max with ads is included with your cricket $60 unlimited plan at no additional cost.
00:40:40.460 | Max is the streaming platform where you can watch Scoob, Meg 2 The Trench, The Nightmare
00:40:44.340 | on Elm Street Collection, and so much more.
00:40:46.660 | Remember me.
00:40:47.660 | Just log in with your cricket username and password to experience Max on all your favorite
00:40:51.620 | devices.
00:40:52.620 | We've never seen this before.
00:40:53.620 | Max, the one to watch for a good scream with cricket.
00:40:56.980 | Phone plans, streams, and standard definition.
00:40:59.420 | Programming subject to change.
00:41:00.420 | Fees, terms, and restrictions apply.
00:41:01.900 | See cricketwireless.com for details.