RPF0696-Seven_Rings_of_Freedom-Spending_Liberty_pt_2_of_2
00:00:00.000 | Don't just dream about paradise, live it with Fiji Airways.
00:00:05.000 | Escape the ordinary with Fiji Airways Global Beat the Rush Sale.
00:00:09.120 | Immerse yourself in white sandy beaches or dive deep into coral reefs.
00:00:14.040 | Fiji Airways has flights to Nadi starting at just $748 for light and just $798 for value.
00:00:21.160 | Discover your tropical dreams at FijiAirways.com.
00:00:24.920 | That's FijiAirways.com.
00:00:26.640 | From here to happy.
00:00:28.160 | Flying direct with Fiji Airways.
00:00:29.960 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,
00:00:35.800 | skills, insight, and encouragement you need to live a rich and meaningful life now while
00:00:40.240 | building a plan for financial freedom in 10 years or less.
00:00:43.720 | Today we continue our 7 Rings of Freedom series.
00:00:46.880 | We're on ring number 4, spending liberty.
00:00:50.040 | And in this series I'm talking to you about some specific things that you can do that
00:00:53.160 | will enhance your personal liberty.
00:00:56.000 | My goal is liberty, freedom, because when people start to pursue financial independence
00:01:01.680 | I'm convinced that a majority of the reasons why people are pursuing financial independence
00:01:07.780 | come down to some expression of freedom.
00:01:11.040 | Perhaps freedom over time, perhaps freedom over association, perhaps freedom over purpose,
00:01:16.440 | over direction.
00:01:17.800 | And there are some things that you can do while you're on the path to financial independence,
00:01:21.640 | which of course is going to take time, many times years if not decades, that will lead
00:01:26.720 | you to a lifestyle of freedom so that you enjoy the process.
00:01:31.000 | And today we're talking about spending liberty.
00:01:33.440 | Now this is part 2 of the show.
00:01:34.600 | In part 1 I talked about the value of being debt free.
00:01:38.800 | And today I want to talk about the value of having savings.
00:01:41.360 | And you would say, "Joshua, it's obvious, right?
00:01:43.920 | If having savings is valuable it's going to give you more freedom."
00:01:47.080 | But I want to point out to you that you can achieve freedom with less than a million dollars.
00:01:56.440 | And I've spoken about this before but I want it to be in one particular show where I want
00:02:00.800 | to talk to you about how even a small amount of savings, but savings that you can get your
00:02:05.840 | hand on, can open up to you freedom.
00:02:10.620 | Now I want to make sure that you're debt free because being debt free will give you huge
00:02:16.360 | amounts of freedom.
00:02:19.280 | But when I closed out the debt free show I made the statement that you also have to supplement
00:02:23.980 | being debt free with having a little bit of savings if you want personal freedom.
00:02:28.640 | I use this example.
00:02:29.640 | I said, "Let's assume that you have $10,000 of credit card debt and you have $10,000 of
00:02:35.200 | savings.
00:02:37.080 | Now are you more free if you take the $10,000 of savings and pay off the credit card debt?"
00:02:43.160 | My answer is you're probably not more free or at least you're not more free if you can't
00:02:48.960 | quickly replenish some of that savings.
00:02:51.500 | The example would be this.
00:02:52.800 | You're working in a job.
00:02:53.800 | The job is not a great fit for you but you get a job offer on the other side of the state
00:03:00.080 | in a place that you would enjoy living and it's a great job offer for you.
00:03:04.040 | You're renting an apartment and you need to move out of this apartment.
00:03:07.520 | But if you take the $10,000 and you pay off your credit card debt and you have no cash
00:03:12.760 | you can't make that move and you can't take the job offer.
00:03:16.960 | You might have to break your contract which means you may not get your security deposit
00:03:20.320 | back.
00:03:21.320 | You may wind up owing your current landlord an early termination fee on your contract
00:03:26.400 | of some kind.
00:03:27.840 | And now you're in a situation where you have no money to pay first, last and security on
00:03:34.200 | another apartment.
00:03:35.840 | So if you took your $10,000 and you paid off all your credit card debt, yeah, that's good
00:03:39.800 | and you're now debt free but that didn't actually get you much more freedom because now you
00:03:44.080 | can't move to take the new job offer.
00:03:46.760 | So you wind up going back into credit card debt in order to have money.
00:03:50.240 | So in that situation having $10,000 in the bank and simply having the obligation to pay
00:03:53.960 | $100 a month on your credit card gives you more freedom because now you have freedom
00:03:59.420 | of choice.
00:04:01.640 | So being debt free is something that you should set as a goal and should pursue.
00:04:06.400 | But along the way you're going to find that savings and having money saved is going to
00:04:11.080 | be extremely valuable for you.
00:04:13.720 | Now I can't tell you exactly the order that you should pursue this.
00:04:18.360 | If you're in a contented job, you feel like you're in a good living situation, etc. and
00:04:23.280 | you're paying off debt, I say pay it off.
00:04:26.120 | Do Dave Ramsey's plan.
00:04:27.320 | Save $1,000 in the bank and put everything else extra on the debt.
00:04:31.060 | Pay it off fast.
00:04:33.200 | But recognize that savings are going to give you additional levels of freedom.
00:04:39.720 | One of the things I have observed is that most people don't ever experience the joy
00:04:45.560 | of actually having money.
00:04:49.160 | There are surveys that are done and basically you'll find that about half of Americans can't
00:04:55.400 | put their hands on $1,000 if they needed to without borrowing money.
00:05:00.920 | Now what's silly is that that doesn't mean that half of Americans don't have a net worth
00:05:04.020 | of more than $1,000.
00:05:05.020 | It's that they can't put their hands on $1,000.
00:05:09.080 | And one of the weird things that has happened in the modern American society is that a lot
00:05:14.720 | of our money is tucked away where we can't get a hold of it.
00:05:17.760 | We can't have it.
00:05:21.000 | In some ways that's a good thing.
00:05:22.840 | I found over the years that in order to help me control my spending, it's a lot of times
00:05:28.280 | good for me to put a little distance between me and my money.
00:05:31.320 | That helps me to spend less money.
00:05:33.320 | There's a principle there that's really true.
00:05:36.420 | But when you don't ever have money, then you don't ever feel rich.
00:05:40.640 | You might have $100,000 in equity in your home, but that money's hard to access and
00:05:47.400 | hard to spend.
00:05:49.360 | You'll feel far richer as an individual and feel far more freedom about your future if
00:05:55.360 | you have $100,000 in your savings account and $0 of equity in your home than if you
00:06:00.040 | have $100,000 of equity in your home.
00:06:03.240 | Because what'll happen is if you try to get the money, the $100,000 out in a home equity
00:06:06.760 | line of credit, which you could do, you'll feel like you're going into debt.
00:06:09.160 | Whereas if you have the money in your savings account, you'll have access to the money.
00:06:13.200 | Things like retirement accounts come into play as well here.
00:06:15.920 | Where so many people have money in retirement accounts, but they don't think about it as
00:06:22.200 | part of their liquid assets.
00:06:26.160 | Is that a good thing?
00:06:27.160 | Yeah, I think so.
00:06:28.320 | Again, a lot of times you might have people who have problems with their spending and
00:06:34.000 | they put money in their 401k and that's good for them because otherwise they'd spend it
00:06:37.360 | all.
00:06:39.040 | In one sense, you could say it's good to have a little distance between you and your money.
00:06:42.600 | But then you find people who have 30, 50, 100, 300, a million dollars in their 401k
00:06:48.800 | who are doing things like working a job they don't like or living in a house they don't
00:06:52.640 | like.
00:06:53.640 | And you look at it and you say, "Why on earth do you have all this money saved up for retirement
00:06:58.440 | when you're living in a situation that you don't like?"
00:07:02.000 | Change your living situation.
00:07:03.000 | And many people don't stop to think about, "Hey, I could change this."
00:07:07.880 | That's silly.
00:07:09.460 | Is it good to save money for the future?
00:07:11.520 | 100%.
00:07:13.280 | But don't ignore the present either.
00:07:16.040 | Find a way to live a great life now in the present while also saving for the future.
00:07:25.360 | And don't sacrifice one excessively for the other.
00:07:32.960 | They're both important.
00:07:37.560 | What I've learned over the years is one of the best ways to feel rich is to have a little
00:07:42.300 | bit of money.
00:07:45.560 | It's silly, but it's true.
00:07:48.320 | Let me add the next part of that sentence that makes a difference.
00:07:51.400 | What I've found over the years is that one of the best ways to feel rich is to have a
00:07:55.960 | little bit of money that I can touch.
00:08:00.940 | Some money close to hand.
00:08:02.000 | Some money that's not locked away.
00:08:03.600 | And I want to encourage you to save some money.
00:08:08.640 | And not to save all of that money in a place where you can't get it, but to save it in
00:08:13.080 | a place where you can.
00:08:16.280 | In my opinion, there are three numbers that you should set as a savings target.
00:08:21.320 | You can put this on your goal list.
00:08:23.080 | Many people can do it, but there are three numbers that you should set as a savings target.
00:08:28.440 | These are round numbers.
00:08:29.440 | I can't scientifically prove them, but I think they're right.
00:08:32.440 | You judge for yourself.
00:08:33.440 | The first number is $1,000.
00:08:36.300 | You should save $1,000.
00:08:40.520 | If you are a young person just getting started, if you are only earning a low income, something
00:08:49.320 | you're in a difficult situation, what you will find is that having the ability to lay
00:08:55.960 | your hands on $1,000 will move you away from that base level of poverty.
00:09:04.660 | It will allow you to be insulated from a majority of those bad things that can just create a
00:09:09.540 | snowball wrecking effect in your life.
00:09:12.680 | $1,000 will fix most car problems.
00:09:19.320 | If $1,000 won't fix your car problem, $1,000 will get you a new car.
00:09:24.420 | Things like that are a big deal in many people's lives.
00:09:30.160 | What happens is most of us, we start to earn a little bit more and the wealth, the net
00:09:33.880 | worth and the earning level of the radical personal finance audience is astoundingly
00:09:38.380 | high, but it's not all astoundingly high.
00:09:42.320 | I just want to encourage you, for those of you who are not at a massive net worth or
00:09:47.840 | a very high income, set a goal to save $1,000 and make that a very high priority.
00:09:53.040 | Do whatever you have to do.
00:09:54.920 | Little bit of extra work, pick up an extra gig, decrease your expenses, be radically
00:10:00.600 | frugal for a time, do whatever you need to save $1,000 because $1,000 will be a useful
00:10:08.000 | buffer between most things that happen in life.
00:10:12.440 | Again, some of the most important ones would be things like a medical bill.
00:10:16.840 | Many people get sick, go to an urgent care place, $1,000 will solve the problem generally.
00:10:23.280 | Not everything, obviously not, but a lot of things.
00:10:26.240 | Go sick, $80, $100, $200.
00:10:28.960 | Those are the kinds of expenses when someone is just getting started that if they don't
00:10:31.880 | have them, they wind up starting to be in debt.
00:10:34.520 | They wind up owing medical debt.
00:10:36.200 | They wind up with credit card debt, and then they get behind in something else.
00:10:39.640 | Whereas having $1,000, always having $1,000 will start to save you hugely.
00:10:45.360 | $1,000 will allow you to live and to get by in most difficult situations.
00:10:54.400 | Let's say you only have $1,000, but you lose your job.
00:11:00.160 | If you've got $1,000, we can work out a plan.
00:11:04.880 | You may have to move, may have to abandon the apartment, et cetera, but if you've got
00:11:07.400 | $1,000, you can make a plan.
00:11:10.000 | I could live, even as a father of four children, I could live on $1,000 in a month if I had
00:11:16.960 | to.
00:11:17.960 | It'd be not so fun.
00:11:19.680 | It wouldn't be great.
00:11:21.000 | I may not be living in the house where I live in, but I could do it, and you could do it
00:11:25.200 | too.
00:11:26.200 | That $1,000 buys you time to get another job.
00:11:29.680 | What happens is often if you study people who are deeply in debt, who are stuck in poverty,
00:11:34.280 | there are little things that happen that a little bit of money would help them to avoid.
00:11:39.240 | They lose a job.
00:11:41.360 | Because they don't have a job, because they don't have any money, they can't put gas in
00:11:44.400 | a car and go to another job.
00:11:47.040 | Then they wind up going to a high-interest loan shark of some kind, where they wind up
00:11:52.560 | owing debt, and they have a credit card.
00:11:54.160 | They get behind, they get behind, and it starts to snowball.
00:11:57.680 | Because they have a bad credit score, then they can't rent a good apartment at a cheap
00:12:00.720 | rate, et cetera.
00:12:01.720 | It just goes on and on and on.
00:12:02.720 | I don't want to belabor the point too much, but simply to say that if you're just getting
00:12:06.520 | started, $1,000 should be your first goal.
00:12:11.360 | In addition, because there's two sides to savings, number one is the emergency buffer,
00:12:16.160 | $1,000 solves many problems in life, but also $1,000 starts to open up opportunities for
00:12:23.760 | you.
00:12:25.000 | It starts to allow you to do things that other people can't do.
00:12:29.800 | These opportunities allow you to take advantage of opportunities in life.
00:12:34.520 | Perhaps you're living in a place where you don't have a job, but yet you have a cousin
00:12:38.400 | or a friend who posts on Facebook.
00:12:41.280 | Maybe you just randomly come across on Facebook or on YouTube some video of a guy talking
00:12:44.960 | about how much money you can make in the Texas oil fields.
00:12:47.680 | If you got $1,000, you can get yourself to Texas.
00:12:51.320 | $1,000 will rent you a minivan for a couple of weeks.
00:12:55.760 | You can live in the minivan, and $1,000 will give you gas to put in the minivan so you
00:13:00.480 | can drive from, I don't know, Pittsburgh, Pennsylvania to Houston, Texas.
00:13:05.280 | If I were on the edge, that's exactly what I would do.
00:13:07.280 | I would go and I would rent a minivan, possibly buy one for $500, but maybe you need a little
00:13:12.440 | bit more than that.
00:13:13.440 | I would rent a minivan, and you can rent a minivan as long as you rent it in a place
00:13:15.960 | that's not a tourist destination.
00:13:17.760 | You could rent a minivan for a couple of weeks for a few hundred dollars.
00:13:20.920 | I'd go to—if I were that broke, I wouldn't go buy an air mattress.
00:13:25.520 | I'm going to say go buy a $10 air mattress, but if I were that broke, I'd just get some
00:13:28.380 | cushions from a couch that somebody threw away on the side of the road, put the cushions
00:13:31.920 | in the back of the minivan, fold all the seats down, and I'd drive to Texas, pick up some
00:13:37.160 | cheap food along the way at the grocery store, grab a little stove with a little butane stove
00:13:42.820 | that I can cook on and a frying pan from Goodwill or something like that that I can cook on,
00:13:48.040 | and I'd go get myself a job in Texas in the oil fields.
00:13:51.200 | A thousand dollars means you can always do that.
00:13:54.080 | Those are the kinds of things that when I think about it, especially as a father, I
00:13:57.040 | think, "Okay, what if I lost my job?
00:13:59.280 | What if I were out on the street?"
00:14:01.520 | I'd send my wife and children to go live with family.
00:14:04.320 | I'd rent a minivan or I'd borrow a minivan or I'd buy a minivan.
00:14:07.680 | If I could find a $500 one and I'd drive to Texas and I'd go get a job in the oil fields
00:14:11.640 | or some other version of that.
00:14:14.440 | You have opportunities to increase your income through good employment.
00:14:18.920 | That's life-changing for a lot of people.
00:14:21.440 | Thousand dollars will start to allow you to take opportunities of buying things that you
00:14:25.520 | need that are a good deal.
00:14:28.480 | Number of years ago, I bought a car, a Toyota Corolla, paid $500 for it.
00:14:33.240 | It was owned by a little old lady that I knew.
00:14:35.840 | She drove it for a lot of years, but she didn't like driving the manual transmission.
00:14:39.560 | She was getting a little older and she wanted to buy a car with an automatic transmission.
00:14:42.920 | The car was worth about $1,000, but it was in terrible shape.
00:14:47.880 | She was happy for me to pay her $500.
00:14:49.680 | I fixed a couple of things on it and cleaned it up.
00:14:52.280 | She was happy.
00:14:53.280 | I was happy.
00:14:54.280 | I paid $500 for that car.
00:14:55.280 | That car is still going strong.
00:14:57.360 | I sold it after a few years for $1,000, but the car is still going strong.
00:15:01.000 | It's the kind of thing that's perfectly reliable transportation.
00:15:03.680 | 1998 Toyota Corolla, four-cylinder, manual everything.
00:15:08.280 | I love that.
00:15:09.680 | If I didn't travel so much, I'd still have it just as a car around, an extra car.
00:15:14.480 | It had zero repairs, nothing.
00:15:18.200 | Nothing has gone wrong with it because there's nothing to go wrong with it.
00:15:20.600 | That's why I bought it.
00:15:22.920 | The reason I'm saying that, the point is, when you look at people who are really just
00:15:26.640 | getting started, a lot of times they make short-sighted decisions.
00:15:32.600 | Things like buying cars that are not reliable just because it was available.
00:15:36.680 | A lot of times it's done to financing.
00:15:38.640 | You go down and you go to the buy here, pay here lot, and you buy a car for $3,500 that
00:15:44.360 | the dealer paid $600 for on a trade-in, but you finance it through the dealer.
00:15:49.640 | Then you wind up buying a car that's just simply not reliable.
00:15:52.120 | A lot of the cheap cars are not reliable.
00:15:55.260 | The problem is that you can't predict when those inexpensive little cars come along.
00:16:00.100 | It's one thing to buy a car from somebody that you know, a little old lady that you
00:16:04.160 | know who is getting rid of this car that she's had for 12 years, and you know everything's
00:16:07.720 | going to be fine on it except for the stuff that I can clearly see.
00:16:10.120 | I see that this is broken, this is dirty, et cetera, and you can just simply buy it
00:16:13.800 | confidently.
00:16:14.840 | That's very different than going to a car lot and buying that same car that you know
00:16:18.880 | nothing about the history of it.
00:16:20.840 | It's not nearly as safe of a bet.
00:16:22.840 | You can't make those things be produced all the time.
00:16:25.200 | When you see a deal like that, it's kind of like Costco.
00:16:28.160 | When you see a deal at Costco, you got to buy it now because you know they're going
00:16:31.500 | to get rid of it in two weeks and that's their whole scheme.
00:16:35.200 | Deals like that, you got to buy them now.
00:16:37.080 | When you come across somebody who's selling a boat and they need the money this weekend,
00:16:41.120 | you got to buy it now.
00:16:42.160 | You can't wait, you can't think about it, you got to buy it now, which means you need
00:16:44.960 | money.
00:16:47.040 | Having a thousand dollars can help somebody to have a backup car or it can help somebody
00:16:50.920 | to have reliable transportation so they can get out of a bad car alone, something like
00:16:55.120 | that.
00:16:56.120 | A thousand dollars starts to get you to those opportunities.
00:16:58.000 | Now, I want you to have more, but I want you to understand a thousand dollars gets you
00:17:02.680 | options.
00:17:04.280 | A thousand dollars starts to allow you to take advantage of bulk buying.
00:17:09.440 | One of your biggest cost-saving measures is to be able to do bulk buying.
00:17:16.360 | Instead of buying small packages of things at high retail prices, you buy large packages
00:17:20.780 | of things.
00:17:23.680 | If you eat candy bars, get a friend who has a Costco membership to allow you to go into
00:17:27.980 | Costco with them and buy a box of them instead of buying them at the convenience store.
00:17:31.920 | If you need food, go and buy big bags of rice and beans and a big box of chicken and set
00:17:39.200 | it aside.
00:17:40.360 | If you look at the way that many people run their finances, because of limited available
00:17:46.080 | money, limited cash flow, often they're paying the most expensive price for food.
00:17:52.000 | One of the basic skills that you have to learn to develop in your financial journey is to
00:17:55.920 | lower all of the costs in your life.
00:17:58.720 | I used to do construction.
00:18:00.080 | I've worked construction.
00:18:01.480 | I've worked on a farm.
00:18:04.200 | I've done lawn maintenance.
00:18:05.840 | I've worked with a lot of blue collar and sometimes low income workers.
00:18:14.160 | One of the most astounding things to me is how somebody who's making $10 an hour can
00:18:18.620 | afford to buy gas station coffee, can afford to buy gas station drinks.
00:18:25.060 | If you go to most places during lawn care season, if you go to most fast food restaurants,
00:18:33.380 | you'll see landscaping trucks and whatnot parked there.
00:18:36.300 | Usually the Spanish guys, all the Latino guys are usually a little smarter.
00:18:39.860 | They've got tacos and beans and rice and whatnot from home.
00:18:42.720 | But you'll often see, especially the native born Americans that are working in those kinds
00:18:48.000 | of jobs, buying fast food.
00:18:49.740 | You can't afford it.
00:18:50.740 | It's too expensive.
00:18:53.900 | The first skill you have to learn is to change away from that.
00:18:58.340 | You start to save some money and you put together your food.
00:19:02.540 | You go and you buy a 20 pound bag of chicken.
00:19:05.580 | You put that in the freezer.
00:19:06.580 | It'll keep fine for months in the freezer.
00:19:08.380 | Then you cook some up in advance.
00:19:09.660 | Then it lowers your per meal cost.
00:19:11.180 | Instead of spending $5 to $8 a day on gas station food, coffee, etc., it drops your
00:19:16.820 | total daily food cost to $1.50 a day.
00:19:19.800 | Those savings add up big time.
00:19:21.160 | But the $1,000 gives you the flexibility to start to spend it on that.
00:19:25.060 | The very basic level, the first goal should be $1,000.
00:19:29.120 | Save $1,000.
00:19:30.360 | Then always keep that $1,000 available.
00:19:33.720 | That'll give you more freedom.
00:19:35.520 | What about other freedom oriented things?
00:19:37.640 | Things like changing jobs.
00:19:39.680 | Many people don't change jobs because they can't even go a few days without a paycheck.
00:19:44.360 | Sometimes people can't even go a week without a paycheck.
00:19:46.360 | $1,000 gets you the freedom to change jobs.
00:19:48.680 | And so when the pay periods don't line up, you have the ability to still cover what you
00:19:52.460 | need to cover.
00:19:53.980 | If you don't have $1,000 right now to your name that you can get your hands on without
00:19:59.400 | borrowing it, it's a full emergency.
00:20:03.580 | You should not eat.
00:20:06.140 | Or you should not eat anything except rice.
00:20:09.220 | Whatever the tortilla, corn tortillas, or rice, or flour.
00:20:15.920 | You shouldn't eat until you get $1,000.
00:20:19.540 | Don't do anything until you have $1,000.
00:20:22.960 | And then resolve to never have less than that.
00:20:25.920 | If you have to spend it, if you have an emergency, immediately replace it.
00:20:30.100 | And go to full stop everything.
00:20:31.860 | Turn off the air conditioner.
00:20:32.860 | Cancel the cable.
00:20:34.740 | Do everything to get you back to that $1,000.
00:20:40.580 | Life below that number is simply far too risky.
00:20:48.920 | It's too much uncertainty and you have no freedom whatsoever.
00:20:51.940 | So save $1,000.
00:20:54.880 | Now my only addendum to this would be if you don't have $1,000 on your person right now
00:21:00.860 | and/or within your ability to go among your belongings, your house somewhere, and get
00:21:06.720 | the $1,000.
00:21:07.720 | It doesn't have to all be on your person, but it probably should be.
00:21:09.920 | If you don't have $1,000 on your person, then stop and do that.
00:21:14.680 | So many people say, "I've got plenty of money in the savings account," but they don't have
00:21:18.600 | any money where they can touch their hands on.
00:21:21.560 | And so for an adult of a decent earning, not at poverty level, et cetera, to not have $1,000
00:21:27.040 | on your person and/or in your effects, some in your car, some in your house, et cetera,
00:21:34.200 | it's irresponsible.
00:21:35.420 | It's crazy.
00:21:37.240 | And yet in a credit card driven world like most of us live in, that's where most of us
00:21:41.400 | are.
00:21:42.400 | So you're behaving irresponsibly if you can't put your hands on $1,000 right now and you
00:21:47.520 | have it.
00:21:49.700 | The only exception I'll make to that is somebody who's living in a very vulnerable situation,
00:21:54.760 | multiple roommates, high chance of theft, minimal personal belongings, very transient
00:21:59.800 | situation.
00:22:00.800 | In that situation, bury the $1,000 in a jar and put it in a flower bed somewhere.
00:22:06.480 | Conceal it at a public park or something like that.
00:22:09.400 | But make sure you can always lay your hands on $1,000 of cash.
00:22:13.200 | Now what's the next number?
00:22:14.200 | Well, for me, one of the things that no one told me about was $10,000.
00:22:20.400 | And I had $10,000 saved for a very long time from a very early age.
00:22:28.340 | But what I didn't have was $10,000 saved in a place where I could have it because I prioritized
00:22:34.680 | so much investment accounts.
00:22:37.520 | And I was always setting the money aside, setting the money aside, and investing, investing,
00:22:41.920 | investing.
00:22:42.920 | And it wasn't until I was old, I don't know the exact age or I'd tell you, but it wasn't
00:22:45.440 | until I was older where I finally had $10,000 and I was like, "Wow, this is pretty cool."
00:22:50.120 | Because when I got $10,000 available to me in a savings account where I can just simply
00:22:54.040 | swipe my debit card and get it out, all of a sudden I felt rich.
00:22:59.600 | And what I came to realize was that the majority of life-changing decisions that I wanted to
00:23:05.760 | make were within my grasp.
00:23:11.200 | Now when you have $10,000, you are of course insulated from the vast majority of problems
00:23:18.120 | in life.
00:23:19.120 | Not all, but the vast majority.
00:23:22.240 | It's hard for me to think of a problem that can't be solved and/or at least deferred for
00:23:29.320 | $10,000.
00:23:32.120 | For most people, $10,000 would represent, especially people without debt or with minimal
00:23:38.080 | debt, for most people $10,000 would represent at least a few months of living expenses.
00:23:43.520 | And if it doesn't represent a few months of living expenses for you, it could.
00:23:46.920 | You might spend $10,000 a month because you have the money, but if you had to spend less,
00:23:51.980 | you could do that.
00:23:53.360 | You could live on $10,000 for a few months, especially if you don't have any debt or you
00:23:57.800 | have modest debt.
00:23:59.640 | If you've got $5,000 a month student loan payments, can't help you.
00:24:02.360 | That's what the last show was for.
00:24:03.920 | But $10,000 represents at least a few months of expenses.
00:24:08.480 | That's powerful because that starts to give people a sense of certainty and security that
00:24:15.080 | is really life-changing.
00:24:19.840 | Now it doesn't represent six months of living expenses for all people, even necessarily
00:24:25.200 | for most people.
00:24:27.080 | But there are so many people who are earning six figures, who are so deeply in debt just
00:24:31.600 | because they committed to a debt lifestyle, who when they first have $10,000, it's changing.
00:24:37.240 | And there's so many people who are earning $30,000, $40,000 per year, who if they could
00:24:40.640 | save $10,000 would help them to start to feel rich.
00:24:45.240 | So from a security perspective, it's fantastic security.
00:24:48.920 | Again, what about those things that happen in life?
00:24:52.400 | The unexpected illness that somebody misses some work and misses some paychecks, $10,000
00:24:58.320 | protects against that.
00:25:00.000 | Unexpected medical expenses, $10,000 protects against a lot of those.
00:25:04.200 | All of them?
00:25:05.200 | No, of course not.
00:25:06.200 | A lot of them.
00:25:07.200 | $10,000 protects against the car accident that breaks down your primary vehicle.
00:25:12.840 | Let's say that you're a tile setter, a construction worker for a living in some way.
00:25:19.160 | And so you need a truck to carry your tools and all of a sudden you get hit this Thursday
00:25:24.280 | morning sitting at a stoplight by an uninsured motorist who runs away.
00:25:28.840 | And now your truck is broken and you've got no insurance payout for it and you can't get
00:25:32.760 | to work on Monday.
00:25:34.320 | $10,000?
00:25:35.960 | Give me one day in any city in America and for $2,000 to $5,000 we'll have a reliable
00:25:41.000 | pickup truck or a reliable minivan or a reliable big van or a reliable station wagon, something
00:25:46.920 | that can carry your tools and you can be back at work on Monday morning earning an income.
00:25:52.200 | That's so powerful.
00:25:54.640 | $10,000 will bail you out of prison in most situations.
00:26:01.080 | $10,000 allows you, your grandma dies and you've got to buy a last minute plane ticket.
00:26:07.960 | $10,000 flies you across the country or across the world to go to grandma's funeral or to
00:26:13.560 | go and help an ailing parent, et cetera.
00:26:16.800 | $10,000 allows you to be covered from most of those emergencies.
00:26:22.360 | $10,000 also opens the door to any, I have to qualify that, to almost any, basically
00:26:31.800 | to almost any life change that I can think of.
00:26:37.000 | Need to move from Miami, Florida to Seattle, Washington?
00:26:40.360 | $10,000 will do it.
00:26:42.720 | So if you're just done with Miami, Florida and you want to go to Seattle, you can do
00:26:46.600 | it.
00:26:47.600 | $10,000 is enough to drive you there, cover the cost of gas, maybe a hotel if you need
00:26:52.680 | one.
00:26:53.680 | $10,000 is enough to pay first class and security on an apartment.
00:26:56.520 | $10,000 is enough to float you for a couple of weeks while you find a job.
00:26:59.840 | And so if you're trying to escape life in sunny South Florida and you want to move to
00:27:03.800 | Seattle, Washington, you can do it.
00:27:06.360 | $10,000.
00:27:07.360 | $10,000 allows you to start so many businesses.
00:27:11.960 | Not all, but so many businesses.
00:27:15.080 | $10,000 will finance tools, equipment.
00:27:19.920 | You want to leave your soul crushing corporate job and start a pressure washing business
00:27:26.600 | or a catering business or something like that, $10,000 is enough to get you in business.
00:27:32.280 | And this goes on and on.
00:27:33.280 | I don't want to give too many examples, but almost any decision can be done for $10,000.
00:27:39.240 | Even some of the big ones, you're stuck in Chicago, Illinois, you got a house, you got
00:27:42.760 | a mortgage, but all of a sudden you hear about an exciting opportunity in another state.
00:27:48.240 | Again, $10,000 moves your family there, covers the mortgage for a month or two, allows you
00:27:55.280 | to paint the place, replace the carpet and get a tenant in there to cover your mortgage
00:28:00.320 | or it covers your mortgage for a few months while you get it on the market and try to
00:28:03.080 | get it sold quickly so you can move.
00:28:05.440 | This is the kinds of freedom and opportunities that are opened up by having money.
00:28:11.680 | But it's got to be money that you can touch, that you can get your hands on.
00:28:17.000 | In addition, $10,000 allows you to take advantage of buying opportunities.
00:28:22.600 | Now here of course the buying opportunities get a little bigger.
00:28:24.840 | We're not worried about buying a 25 pound of chicken, pound bag of chicken at Costco
00:28:29.480 | to save money on lunches.
00:28:31.240 | But you want to buy a boat?
00:28:33.280 | Well $10,000 and somebody who's watching Craigslist will create a great family boat for you anytime
00:28:38.600 | you want.
00:28:40.440 | You can move down, move with cash, they got it listed for $10,000, you offer them $6,000,
00:28:44.680 | here's cash, you might drive away with a boat.
00:28:47.680 | $10,000 gets you great cars.
00:28:50.080 | $10,000 allows you to buy an RV, use it for a while, sell it when you're done with it.
00:28:55.960 | $10,000 opens up so much entertainment and fun and those kinds of things.
00:29:01.320 | And what happens is that middle income people often have the money stuck in a retirement
00:29:07.880 | account, but they're stuck in the expensive middle income world.
00:29:12.440 | So instead of going and buying a cheap boat on Craigslist to use for a few years and then
00:29:16.320 | flip it for net cost of a very little amount, they go and they buy a new boat with payments.
00:29:23.640 | And that new boat they pay $25,000 or $35,000 or $135,000, whatever it is, and it depreciates
00:29:29.280 | drastically.
00:29:31.040 | Instead of buying a reliable minivan for $8,000 or $7,000 or $5,000 or whatever, and then
00:29:38.160 | from time to time just simply replacing it every few years and going ahead and buying
00:29:41.400 | another one so they never wind up with an old one, they go out and buy a brand new one.
00:29:48.480 | Depreciates quickly and wind up without any money.
00:29:51.160 | Those are the kinds of decisions people make all the time.
00:29:53.120 | Instead of figuring out a...
00:29:56.440 | I don't need to give any more examples.
00:30:00.120 | With $10,000, it's hard for me to think of the thing that can't be done, especially if
00:30:05.680 | it's accompanied by debtlessness.
00:30:08.520 | It provides dramatic safety, resiliency, a buffer from the majority of things that happen
00:30:14.800 | in life.
00:30:15.800 | You die, you don't have any life insurance, you leave behind a wife and five children,
00:30:19.960 | $10,000, it's enough to buy a casket at Walmart, stick you in the ground in the family cemetery
00:30:27.080 | plot, it's enough to allow her a few months to figure out who's going to watch the kids,
00:30:33.080 | it's allowed her to update her resume and go and get a job.
00:30:36.960 | It's a buffer.
00:30:37.960 | It's a really, really important buffer.
00:30:41.200 | As I close out and move on to the next number, I would emphasize to you that probably, unless
00:30:49.800 | $10,000 is the only money that you have, $10,000 is probably the kind of number of cash that
00:30:58.480 | you should be able to lay your hands on in a relatively short period of time.
00:31:04.360 | Now maybe you walk around with $10,000 in your boot, some people do, but more likely,
00:31:12.480 | it's just an amount of money that needs to be in your home safe.
00:31:15.880 | It's an amount of money that needs to be in safety deposit box at the bank or split out
00:31:20.680 | in a number of different situations.
00:31:22.760 | Again, I sometimes feel like I'm the number one advocate for cash, but I see so many people
00:31:29.840 | who have so much money who can't actually lay their hands on it if they want to.
00:31:34.760 | And so your brother is, you know, your brother gets put in prison, you can go bail him out,
00:31:40.960 | but you don't have the cash to do it, or your car breaks and you need a replacement this
00:31:47.920 | weekend, but you can't get any money out, so you wind up not being able to buy the cheap
00:31:53.400 | one on Craigslist.
00:31:56.160 | That was one of the places where I first started to pay attention.
00:31:58.800 | I needed a minivan.
00:32:00.800 | My wife and I were in an accident.
00:32:02.000 | I wrecked one of our cars.
00:32:03.240 | We needed a car.
00:32:04.240 | I was searching for a minivan.
00:32:05.920 | I got a deal on one, went to look at it on Saturday morning.
00:32:09.760 | It was a great deal.
00:32:10.760 | I think I paid, it was going to be like five or $5,500.
00:32:13.560 | It was what I was looking for, but it was a few thousand dollars under market.
00:32:18.200 | But it was hard for me to get my hands on the $5,000 that I needed.
00:32:22.760 | And so I called the bank and was able to work it out.
00:32:24.720 | They increased my ATM limits.
00:32:25.960 | I went to half a dozen different ATMs and made all the ATM distributions, and I was
00:32:30.200 | able to get the money out.
00:32:31.760 | But it made me realize how ridiculous that was.
00:32:34.460 | How ridiculous is it that I can't just go and buy a minivan on Saturday morning because
00:32:38.280 | I don't have the cash, and I resolved, never going to happen again.
00:32:40.920 | I'm never going to have all my money stuck in a bank account and not be able to buy a
00:32:44.920 | minivan.
00:32:46.400 | And so things like that are so valuable to be able to do.
00:32:50.840 | And so you should have probably at least $10,000 secured in a way where it's protected from
00:32:56.880 | theft, protected from damage, et cetera, but it's available to you.
00:33:02.480 | You never know when you might need it.
00:33:04.520 | Never know when your accounts get frozen.
00:33:05.900 | Never know when you might have bank errors.
00:33:07.840 | I find more and more that I'm having more and more problems with my banks.
00:33:11.080 | Now, it might be due to some of the weird things that I do and my weird travels and
00:33:16.440 | whatnot, but the amount of trust that I have in my banking institutions to release my money
00:33:22.560 | to me when I need it has substantially diminished.
00:33:26.280 | And I've realized how vulnerable I am if I don't have cash.
00:33:31.160 | Sat there and you're trying card after card after card, and something is flagged, but
00:33:36.280 | I can't get the message and I can't release it.
00:33:39.600 | And so it's important.
00:33:42.440 | Pay attention.
00:33:43.440 | Now, the third number in my list is $100,000.
00:33:49.840 | And I can't defend that number again scientifically.
00:33:53.680 | All I can tell you is, of course, it's a round number, but round numbers work for me.
00:34:02.840 | But when I hit $100,000 in savings, not locked away from me, I experienced something that
00:34:11.320 | I never expected.
00:34:14.000 | I experienced a sense of freedom.
00:34:18.680 | And that freedom is something that I would never trade.
00:34:22.840 | Because what I realized is, I have the ability to make the choices that I believe are in
00:34:29.320 | my best interest and my family's best interest without worrying about what anybody else says
00:34:35.040 | or does.
00:34:37.880 | I have the ability to go anywhere in the world that I want to go.
00:34:42.720 | I have the ability to do almost anything in the world that I want to do.
00:34:49.120 | I have the ability to live in almost any way that I want to live.
00:34:53.480 | Now, am I financially independent?
00:34:56.360 | Could I just stop working and never earn an income?
00:34:59.720 | No, I'm not.
00:35:01.480 | But I never have to worry, as long as I have $100,000, I never have to worry about being
00:35:07.960 | destitute.
00:35:09.120 | I never have to worry about being stuck.
00:35:13.040 | I can't imagine the situation that I couldn't get out of in that circumstance.
00:35:21.920 | I will concede that the $100,000 needs to be mixed with some frugal living skills and
00:35:27.200 | some flexibility of mind.
00:35:30.160 | There are many people who, their mindsets are so rigid and so inflexible, they're not
00:35:35.200 | willing to ever make any sacrifices and they're stuck even with $100,000.
00:35:39.520 | But for me, a man who possesses a fairly flexible mindset, who's fairly adept at thriving in
00:35:48.480 | different situations, the $100,000 means total liberty.
00:35:54.760 | Can I go and buy a house in Miami, Florida for $100,000?
00:36:00.640 | No.
00:36:01.760 | But if I need a roof over my head, I can go to Youngstown, Ohio, or I can go to Biloxi,
00:36:10.240 | Mississippi.
00:36:11.240 | I can pay $50,000 cash for a house, own a house, no mortgage, ready to go.
00:36:15.800 | Perfectly good.
00:36:16.800 | Suitable.
00:36:17.800 | I'm not abusing my children by making them sleep in a minivan on the streets.
00:36:22.440 | I'm in a good situation.
00:36:25.280 | I can have a stable situation.
00:36:28.200 | I can start all kinds of businesses.
00:36:29.760 | And so if this business fails or another business fails or et cetera, as long as I've got money,
00:36:35.680 | got $100,000, I can pivot.
00:36:38.220 | I can pay personal expenses for years if I'm living frugally.
00:36:43.280 | Six months, a year if I'm not.
00:36:44.920 | But years if I'm living frugally and still have the ability to acquire equipment.
00:36:50.960 | And what happens is you move into much more profitable businesses.
00:36:55.600 | You buy a food truck trailer or you buy a snow cone equipment or I go and I start buying
00:37:01.960 | bounce houses to rent out, et cetera, or I do something online.
00:37:06.800 | The world is open to you.
00:37:08.520 | And so when you've got investment capital, is it enough to make you financially independent
00:37:13.640 | on the 4% rule?
00:37:15.120 | No, it's nothing.
00:37:16.760 | It's nowhere near enough.
00:37:18.680 | Obviously not.
00:37:19.680 | I can't live on the 4% rule on $100,000.
00:37:22.760 | But what I can do with $100,000 is I can start a bounce house business that makes me $3,000
00:37:29.120 | on a weekend.
00:37:30.120 | It's fully or $2,000 on a weekend.
00:37:31.680 | It's fully rented out because I'm running 10 bounce houses or 20 bounce houses depending.
00:37:36.800 | And I can supplement that with somewhat something else, right?
00:37:41.840 | Electric cleaning business or something like that that's available to me, low barrier of
00:37:45.120 | entry but I just got to have some equipment and then I can make money quickly.
00:37:48.080 | Now I can still be the master of my time.
00:37:50.280 | I can still be in control of my schedule.
00:37:54.680 | It's enough money that if I want to pivot and go and become educated for something new,
00:37:59.720 | I can go and re-educate for something new.
00:38:02.280 | I can cover my living expenses for a period of time while I go back to school.
00:38:07.280 | I can do whatever I need to do.
00:38:11.000 | So there's a famous quote where Warren Buffett when he's talked about how much money he was
00:38:17.320 | going to leave to his children, he said, "I want to leave them enough money that they
00:38:21.120 | can do anything but not enough money that they can do nothing."
00:38:25.760 | And that quote is lauded as being very wise.
00:38:27.600 | I like it.
00:38:28.600 | I don't have a problem with it.
00:38:29.600 | I think it's nice to leave, to provide for your children the opportunity that they can
00:38:34.440 | do anything but not so much that they can do nothing.
00:38:40.360 | But as I've thought about applying that to financial independence, I'm presently convinced
00:38:47.080 | that $100,000 is enough money to do anything but not enough money to do nothing.
00:38:58.760 | That's why I prioritize it so highly.
00:39:02.000 | It's enough money to do anything but not enough money to do nothing.
00:39:07.720 | Now I don't think doing nothing is anything to aspire to, which is why although I work
00:39:13.320 | towards financial independence and I want to encourage people to work towards financial
00:39:16.560 | independence, I think that the common goal of financial independence is this pivotal
00:39:20.720 | capstone thing is silly and short-sighted.
00:39:23.600 | I think that financial independence should be a point along a journey and that your goals
00:39:28.200 | should go beyond financial independence while you look forward to reaching that crossover
00:39:34.760 | point.
00:39:37.040 | If doing nothing is not the goal for Warren Buffett and his children, then why should
00:39:40.800 | doing nothing be the goal for you or for me?
00:39:46.280 | My opinion, $100,000 is the number.
00:39:50.040 | It's enough money to do anything but not enough money to do nothing.
00:39:56.560 | Now will I change my tune when I'm a millionaire and a decamillionaire and I don't know, centamillionaire
00:40:00.840 | and whatever it goes on beyond?
00:40:02.760 | Probably.
00:40:03.760 | You listen to rich people talk about things and you hear them say funny things that you
00:40:08.120 | can't even conceive of.
00:40:11.120 | How can you live on $100,000 a month and things like that?
00:40:14.200 | But I appreciate the bluster and the bravado and perhaps that's how they really feel, but
00:40:20.000 | I can't find any logical reasoning to it.
00:40:26.040 | If you've got $100,000 saved and maybe the income level is $100,000 a year, I don't know,
00:40:31.200 | but basically there's a crossover point at which you can basically do just about anything
00:40:36.920 | you want to do, just perhaps not with quite exactly the same luxury that you would do
00:40:42.920 | it otherwise.
00:40:46.200 | I don't know what I can't do at this point in life that I could do if I had $100,000,000
00:40:53.920 | except do everything that I do now with more fanciness around.
00:41:00.600 | There is a massive difference for somebody who's just starting out or somebody who is
00:41:05.120 | very broke.
00:41:06.120 | There's a massive difference between hand to mouth, paycheck to paycheck versus having
00:41:12.340 | some buffer and some margin and some safety.
00:41:15.680 | But once somebody has $100,000 in the bank and has a business that provides for their
00:41:19.400 | lifestyle, it's all just variations on the same theme.
00:41:26.120 | You can go on vacation.
00:41:27.360 | You can just go on fancier vacations when you're more, maybe longer, I don't know.
00:41:33.280 | I think that $100,000 number is so doable for so many people that it should be the first
00:41:41.120 | goal.
00:41:43.040 | It may take you 20 years to save $1,000,000, but it won't take you 20 years to save $100,000.
00:41:50.520 | Even on a modest income, you can save $100,000 quickly.
00:41:53.520 | I just want to encourage you, if you don't have $100,000, set it as a goal and achieve
00:42:00.120 | it quickly.
00:42:03.400 | One of the neat things about $100,000 is it can be achieved through a variety of means.
00:42:08.200 | Can you save your way to $100,000?
00:42:09.840 | Yes, you can.
00:42:11.680 | But you can also do something very simple like buy a house, live in it for a few years
00:42:17.160 | and sell it, have $100,000.
00:42:20.080 | You can possibly do it through some savings plus a little bit of part-time entrepreneurship.
00:42:25.080 | Pick up a side hustle gig that makes you $1,000 on the weekend and pretty quickly, you've
00:42:30.800 | got an extra $100,000.
00:42:33.560 | Can you do that?
00:42:34.560 | Of course you can do that.
00:42:35.560 | There's lots of things that you can do to do that.
00:42:39.640 | If you set it as a goal, you start seeing ways to achieve it.
00:42:42.600 | Now, back to savings.
00:42:45.240 | If you only have $100,000, should you save $100,000 in cash?
00:42:48.400 | No.
00:42:49.400 | That's far too risky.
00:42:51.440 | One of the major problems with cash, with physical currency that you have to be cautious
00:42:55.440 | of is through the risk of theft and the risk of destruction, loss through some other means,
00:43:01.640 | fire, flood, earthquake, etc., that kind of thing.
00:43:05.960 | You want to make sure that you don't put your currency at risk.
00:43:09.320 | There's a scale between $1,000 of cash versus $100,000 of cash where the risk that comes
00:43:16.360 | from not being able to put your hands on it versus the risk of loss, if that represents
00:43:21.800 | your life savings, is just simply far too substantial for you to turn the risk of having
00:43:25.600 | all that money in currency.
00:43:27.000 | Don't do that.
00:43:28.000 | The next thing is, does the $100,000 all have to be in your bank account?
00:43:33.000 | My answer is no.
00:43:34.980 | It doesn't.
00:43:36.720 | If you can put it in your bank account, you'll probably feel different.
00:43:40.240 | I'm not opposed to 401ks, IRAs, Roth IRAs.
00:43:44.520 | I think they should be used.
00:43:45.520 | I think they're useful tools.
00:43:47.000 | I especially like them as simply creditor protection tools, things like that.
00:43:51.920 | I would not go to an 18-year-old or a 22-year-old who is working at a job and say, "You should
00:43:59.240 | not put money in a 401k until you have $100,000."
00:44:02.120 | I think that's silly.
00:44:04.240 | I think you should put money in the 401k.
00:44:06.400 | I think you should put money in the Roth IRA.
00:44:10.160 | I'm being a little wishy-washy on this particular goal to try to account for some of those
00:44:15.080 | realities that I think need to be accounted for.
00:44:18.200 | My number one priority for you is that you set it as a goal and that you achieve it because
00:44:23.040 | it'll be a point of freedom for you.
00:44:25.560 | It'll mean that you can invest.
00:44:28.200 | I skipped over all the investment opportunities, but are there investment opportunities with
00:44:32.640 | $10,000?
00:44:33.640 | Yes.
00:44:34.640 | There's a lot more with 50.
00:44:35.640 | With 100, though, you get to the point where you can invest in almost anything.
00:44:39.860 | You can buy rental houses.
00:44:41.320 | You can invest in pretty cool businesses.
00:44:43.240 | You can buy franchises.
00:44:45.360 | You can buy in with other people.
00:44:47.000 | There's all kinds of things you can do that you can't do before.
00:44:52.620 | That money needs to be available to you is the point, but even if it's all in a 401k,
00:44:56.680 | I'm okay with that.
00:44:57.680 | I'm sorry.
00:44:58.680 | I'm not okay if it's all in a 401k, but I'm okay if you're funding a 401k, but you're
00:45:04.120 | mentally moving it to money that's available to you.
00:45:07.800 | The big point is for you to have money that's available to you, not money that's locked
00:45:11.760 | away in a mutual fund until you're 65.
00:45:15.900 | What I would do if I were starting over at a young age, knowing what I know now, I would
00:45:22.360 | take advantage of things like 401ks, but I would put money in a Roth IRA.
00:45:28.080 | What I might do is I might be slow to invest the money in the Roth IRA, meaning I might
00:45:31.480 | put it into the Roth IRA, but I might keep it in a cash account for a time just so it's
00:45:37.120 | stable, so it's not wandering around with the stock market.
00:45:40.800 | I might mentally earmark that as my opportunity fund.
00:45:43.440 | If I see something that I think is a better opportunity than mutual funds, I'll go ahead
00:45:48.040 | and take the money out and spend it on that.
00:45:50.920 | Could be college education or college degree.
00:45:53.880 | That's one option.
00:45:54.960 | Could be a cheap little rental house for me to live in.
00:45:57.920 | Could be a new car.
00:45:59.200 | Could be anything, but I wouldn't mind using those accounts.
00:46:04.280 | I just don't want to prioritize those accounts and not have any excess money.
00:46:08.160 | So I think you need 10 grand in your savings account, and then you need to be increasing
00:46:12.220 | that number while you're also increasing the other accounts.
00:46:16.240 | I know that's a wishy-washy answer.
00:46:17.880 | I just want to be responsible with my language and drive home the point of saying $100,000
00:46:23.880 | should be a goal and that that money should be available to you, not locked away in your
00:46:27.240 | home equity, not locked away in your retirement accounts.
00:46:32.880 | That's what I believe, but there's a prudent path to get there.
00:46:37.600 | I don't think you should have $100,000 in cash and a bunch of debt.
00:46:40.120 | Pay off the debt, but move towards having some liquid money.
00:46:47.120 | And then you do need to think about where to store it safely.
00:46:50.160 | So where to store it?
00:46:51.640 | Retirement accounts are fine.
00:46:52.980 | Savings accounts are fine.
00:46:55.200 | Some amount of it in physical currency is fine as long as it's protected.
00:46:59.760 | I don't mind life insurance cash values being part of that.
00:47:03.840 | I don't mind even some conservative investments, but I just want to make sure that a lot of
00:47:08.160 | it is cash and that you reach the point where in your mind you say, "I can do anything that
00:47:14.640 | I want to do.
00:47:15.800 | I have the ability to do that."
00:47:18.100 | Then go back to your life from a place of financial independence, from a place of financial
00:47:22.640 | abundance and look at how you're living, where you're living, what you're doing, etc. and
00:47:27.840 | say, "Since I'm rich now, is there anything that now that I'm rich?
00:47:33.640 | I would do differently if I were doing this over again."
00:47:36.800 | And then start adjusting to that.
00:47:38.280 | Don't ratch up your expenses necessarily.
00:47:40.480 | That can be dangerous.
00:47:44.340 | If you are rich, you got $100,000 because you made frugal housing decisions and you
00:47:49.400 | bought a reasonable house in a nice neighborhood, but then all of a sudden you go and you buy
00:47:53.520 | an extravagant house, well very quickly you're not going to be rich anymore.
00:47:56.520 | You're just going to have a big extravagant house.
00:47:59.480 | To be thoughtful, but approach your life from that perspective of confidence.
00:48:04.640 | That's what savings gets you.
00:48:06.480 | The ability to be free.
00:48:11.240 | When I think of freedom, I'm not looking for the ability to not have to work.
00:48:17.320 | Someday, yeah, and I'll tell you what it's really like when I get there.
00:48:21.540 | Maybe I just don't know what it's like.
00:48:23.400 | But I value very highly things like freedom of time, freedom of association, freedom of
00:48:29.960 | choice.
00:48:32.600 | Those are some things that really make a big difference to me.
00:48:36.200 | And I found that they can be achieved with a lot less than a few million bucks.
00:48:43.200 | Thank you for listening to today's show.
00:48:44.940 | As we go, I want to ask you, if you've enjoyed today's content, do me two favors.
00:48:49.480 | Number one, tell a friend about the show.
00:48:53.720 | Share with them an episode that you have enjoyed and tell a friend about it.
00:48:57.800 | One of the things that I'd really like to do is I'd really like to be able to reach
00:49:00.700 | more people.
00:49:01.700 | And the number one way that people find podcasts, and well they find them through searching,
00:49:05.960 | but one of the most effective ways is they have a recommendation from a friend.
00:49:10.720 | And so tell a friend about the show.
00:49:11.720 | And then number two, if you would, it would be very helpful to me if you take a moment
00:49:16.560 | and just review the show on whatever platform you're using.
00:49:20.360 | If you're using an Apple device or iTunes, review the show on iTunes.
00:49:24.600 | If you're using an Android device, review the show on Google, whatever you're listening
00:49:28.280 | to.
00:49:29.280 | Just whatever the app is that you use to listen to the show, take a quick moment and look
00:49:33.000 | to see if it's got a way to rate it.
00:49:35.080 | If you're on Spotify, just give me a quick five star or whatever you can.
00:49:39.480 | And if there's a way to put in a sentence or two, that's so helpful.
00:49:42.880 | Just the ratings and the sentences make a big, big difference.
00:49:45.960 | Don't think that it needs to be very long.
00:49:47.440 | Of course, you're welcome to write as many paragraphs as you like, but just one sentence
00:49:51.760 | is super great.
00:49:53.200 | At this point in the growth of Radical Personal Finance, it's a fairly large show.
00:49:58.880 | And the most impactful thing to demonstrate that to new listeners is simply the number
00:50:03.680 | of reviews.
00:50:04.680 | That's why I say that one or two sentences is fine.
00:50:06.960 | I welcome, of course, multi-paragraph reviews.
00:50:10.480 | That's great.
00:50:11.480 | New listeners do find those.
00:50:12.560 | But at this point in time, a lot of those do get buried.
00:50:15.560 | And so just one sentence.
00:50:16.960 | So that would mean so much to me and be so helpful.
00:50:19.360 | If you would just take a moment right as you do this, the next traffic light or pull over
00:50:23.520 | right when you get to the office or just take out your phone and whatever you're listening
00:50:27.820 | to me on.
00:50:28.980 | Take a moment, look to see if there's a way to rate and review it and do it there.
00:50:33.440 | If not, if you have an iTunes account, that's the big daddy of podcasts still.
00:50:38.320 | So review me on iTunes.
00:50:39.320 | That'd be so helpful.
00:50:40.880 | Thank you for doing that.
00:50:41.880 | Thank you for telling a friend about the show.
00:50:43.360 | And I'll be back with you very soon for ring five, six and seven.
00:50:48.600 | We're going to talk about increasing freedom with rings five, six and seven.
00:50:55.160 | The LA Kings holiday pack is back.
00:50:57.160 | The perfect gift for the hockey fan in your life.
00:50:59.400 | A three game pack starts at just $159 and includes a holiday blanket.
00:51:04.040 | Buy today and you'll receive an additional game for free.
00:51:07.040 | Don't miss out.
00:51:08.040 | Visit lakings.com/holiday today.