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This is episode 43. Although this is actually a blast from the past, I am recording this on Wednesday the 13th, as I'll be out of town on Friday. But I wanted to make sure I left you with a show. And today's show is going to be my attempt to answer this question.

How would I become a millionaire on a minimum wage job at Walmart? I think I've got a plan that'll work. I hope you like it. And I'm kind of excited about this show today. I know that's probably a bit of an edgy introduction, or at least an edgy title, hopefully got your attention.

I have been thinking about this question for an entire week now, and I have just been thoroughly enjoying preparing for this show. It has really been an opportunity for me. Let me explain kind of where this show came from and what it's going to be about. And I promise there is going to be a lot of meat in today's show.

But I read an article last week on the Matt Walsh blog, and his article was entitled, "I'm Spoiled and Lazy, but Walmart Should Pay Me More Money Anyway." It's linked in the show notes, by the way, and I would encourage you to pause and go read it, because I think that you would enjoy it.

But if you are driving, then I will go ahead and summarize it for you so that you can understand the background for how today's show has come about. So basically, Matt Walsh was shopping at Walmart. He tweeted a couple of things. One of his tweets says, "My trips to Walmart leave me admiring the company for being so charitable as to keep folks employed, even though they put in no effort at all.

It gets a bad rap. It gives jobs to people who, in some cases, don't appear to deserve them. Liberals should be singing Walmart's praises." So Matt Walsh, in case you're not familiar with him, he's very good at raising and enjoying and poking the pot of controversy. So he gets an email back from a Walmart employee that says, basically, "Hey, I can't believe how awful you are." Lots of profanity inserted here.

"I can't believe how awful you are. How can you possibly say that? I want to do better, but you know, I don't really give any effort to my job, and you should think a little bit differently." So Matt Walsh writes this blog post saying, essentially, "Try these things. Try going to work.

Try showing up. Try smiling. Try doing these things, because look, you really can do it, and there are many other jobs, many other places to work." So I thoroughly enjoyed the essay. And that essay just got me thinking. I was thinking, "What would I do if I were working at Walmart?" It's a challenging question.

I've never worked at Walmart. I've never worked in retail. I have worked a minimum-wage job, but it was a challenging question. So I've been thinking about it for a week and preparing for this show, and I've got a plan. And to me, this is a really useful exercise to go through in thinking.

I found it incredibly stimulating. Now to be clear up front, this is not a stunt. This show can be approached in a couple of ways. It can be approached with the idea of a mental thought experiment, thinking, "Okay, if I were there, what could I do?" But frankly, I'm doing it out of a desire to help somebody.

My hope and my dream is that one person who's working a minimum-wage job at Walmart will stumble into this podcast, and will find it inspiring. And maybe it'll help them find my show, and maybe I'll be able to help somebody who's currently working a minimum-wage job at Walmart to transform themselves into a millionaire.

That's my dream. And I think I've got a plan that can work. Now up front here, I also want to say I'm not associated with Walmart in any way. I never worked there. I don't even particularly enjoy shopping there. I usually find it to be a fairly unpleasant experience.

I find, much like Matt was talking about, I find many of the employees to be generally unpleasant to be around. I find the service to be slow. I can't find anybody when I need somebody to talk to, and it's just—and usually the lines are horrendous. So I found it to be a—again, I find it to be a generally unpleasant experience, and usually I would rather shop someone else, even if it means not getting the lowest price.

That being said, if I do want something and I just want to go and get it low price, I do go to Walmart. I was there just this week. So this is not really a Walmart example. This is an example I think that can be applied to any store, but I'm going to use Walmart specifically because I get so tired of them, you know, taking flack in the press for just being a, you know, people beating up on them and everything.

I'm also going to use them because I want to use this show to illustrate how all aspects of finance interlap. So I'm going to use Walmart's benefits package specifically for their associates and for all of the people that are working in their stores. I'm going to use the benefits package as a way to show how the formal financial planning knowledge that we usually consider about—consider, you know, financial planning, interacts with all of the rest of the planning topics and methodology.

It interacts with career planning, with life planning, with goal planning, with success, with every aspect. So that's why I'm choosing to use Walmart as an example. Although again, this can be put into any company. Now, I hope you listen to the whole show and hear me out because I recognize that in my example there are some weaknesses, and I will point those weaknesses out at the end of the show, but I'm going to do everything I can to give a really balanced, grounded perspective that is not anchored in extremism or just waving my hand and dismissing certain things.

I'm going to invite you to consider this same scenario. Feel free to consider it. Stop the show and think about what you would say to somebody, or listen to my show and then think how would you advise an 18-year-old friend of yours to proceed? In my mind, I was thinking of some friends of mine who are young people, recently graduated from college.

I was thinking of one person specific, excuse me, not from college, from high school. I'm thinking of one person specifically who's presently working in retail, and I'm thinking if I were going to encourage this person, how would I encourage them? What advice would I give this person to help them develop a strong financial plan?

I'm going to give myself certain advantages and disadvantages in my scenario, and I will point them out to you, my assumptions, and I understand that these are assumptions. I have to do this in order to create a scenario that's going to be interesting to listen to, but I am a realist.

I recognize that every situation is different, and there's not a single person that's going to fit exactly this situation. So don't think that just because I'm building an example here to use, doesn't mean I'm not aware of the weaknesses of my example. I am. I'm a rational person. I have a good bit of experience doing financial planning.

So I'm going to assume that I'm talking to a friend of mine, and my friend is 18 years old, and it's a male. I'm going to use Bob, which is the name that Matt Walsh assigned to the person that he wrote a letter to. I'm just going to pretend that I'm speaking to this person.

I'm assuming they're single, they're 18 years old, and I'm going to assume that they don't have any dependents, so no children. Now this does make for an easier solution. Now what if somebody is married and 18 years old, or has a child to support and is not married? Or what if, I mean there's so many what-ifs, and each of them can be tackled.

But I think you could still use this same thinking methodology, the same system of thought, to apply to all of those situations. I'm going to assume that Bob, my 18 year old male, is moderately intelligent. That Bob is mentally competent, and at least slightly academically capable. Now that might be my most challenging assumption.

Is it fair to assume academic capability? Is it fair to assume intelligence and mental competence? I think you have to, because I think just about most people in our society have some basic ability. Now whether it's suppressed or whether it's developed, most people have basic ability. And again, I'll try to get my disclaimers out and continue on, but disclaimers aside, if somebody is mentally incompetent, or if somebody is not capable, or if someone's intelligence is not of a sufficient level, I'm actually going to answer that question in a minute.

But the key is it's a different type of planning, and we'd have to look at that individual situation. I'm going to assume that Bob is willing to work hard. And it seems like this character quality of working hard is a character quality that seems less prevalent in the general population of Bob's than it has been in the past.

However, I believe that any of us can learn to work hard, and that working hard is simply a skill. It's a skill that can be developed just like any other skill. So I'm going to assume that Bob is willing to work hard. I'm going to assume that wealth is a priority for my example case.

Now, wealth is not a priority for most people, and that's okay. Most people just flat-out are not that interested in getting wealthy. Now, sure, if you ask them, if you say, "Hey, listen, do you want to be rich?" I think a majority of people that would be surveyed with a question like that, a vast majority would say yes.

But the reality is that you don't just get rich. It doesn't happen by accident. It only happens... It's a product of certain decisions, certain choices, certain skills, certain habits that are developed, and then sometimes certain serendipitous events. That's how wealth is created. So I'm going to assume, however, that Bob is interested in wealth, and that this is a priority.

Because to focus and make wealth a priority requires that you make other things a lower priority. And I'll give a very simple example that I think will be accurate, but will make sense. If the focus is on wealth, if you're focused on wealth, that means you cannot be focused on laziness.

Because laziness and wealth generally do not come in the same place. You can't simply say, "Well, I have no money. I have no skills. I have no job, but I'm going to sit here and hope that money shows up." It doesn't happen. So we have to prioritize wealth. Now, there is a spot at which wealth has less of an attraction.

Maybe you reach a certain level of wealth. Most people do. Maybe you reach and want to attain a certain level of lifestyle. Most people do. Maybe you choose to prioritize consumption over wealth building. Most people do. But in my example, I'm assuming that Bob is interested in wealth, and he's looking for a plan that is going to work for him.

I'm assuming that Bob is starting with nothing. No money, no assets, and no debt. He doesn't have any financial capital to work with. The only thing that he has is some human capital. Again, his hard work, his intelligence, and his willingness to work. And I'm going to assume that Bob is willing to make sacrifices in the present in order to have a better future.

All successful people have developed some sort of longer-term time consciousness and a willingness to think with a long-term time horizon, willing to make sacrifices in the short term, in the present, in order to have a better future. What if these assumptions aren't true? Well, if these assumptions aren't true, if I have a different scenario, let's say that Bob is not Bob.

It's Bobby Joe if we're in the South. I don't know. Or Sarah. Let's say this is a girl named Sarah. Or Lydia. Or Maria. Or Shaniqua. Or whatever the name is that makes sense if the situation changes. If any of those situations, any of those assumptions change, we would have to develop a plan.

But those are the assumptions that I'm making. So where do we start? And by the way, I'm going to go through in detail some technical financial planning, budgeting, cash flow analysis, and I'm going to go through some technical financial planning content in this show. But you can't start there.

You've got to start in a different place, talking about maybe the softer things of life. And the place that I would start is I would encourage my friend to say, listen, you've got to take responsibility for your life. You have no other choice. You must take complete responsibility for where you are.

That doesn't mean that everything is your fault. There have been I'm certain there have been a variety of circumstances that happened that were outside of your control. But you must take responsibility for where you are. Because there's no one else other than you that's going to take responsibility. So if you don't take responsibility, who will?

So you've got to start with that. And you've got to say, I'm willing to take responsibility for where I am. You've got to recognize that you're going to have to learn new skills. If you're earning minimum wage, the reason that you're earning a minimum wage is that your skills are not sufficient for you to earn a higher wage.

So you need to develop those skills. And you have to recognize that in general, our educational system has probably failed you. Because most of the education, I assume that you're a high school graduate, but most of our educational system is not focused on the things that will ultimately lead to success in life.

We may spend a substantial amount of time talking about English composition, but we spend far less time talking about communication one-on-one and how to have a crucial conversation in a safe manner. By the way, a book recommendation for you is a book called Crucial Conversations, very well written as far as how to have an outline in the back of your mind when a situation, when you have a challenging conversation needs to happen.

There are two books, Crucial Conversations and Crucial Confrontations, book recommendations for you. But you have to recognize that we don't spend a lot of time talking about that. We study English poetry, but we don't spend a lot of time saying, "How can you write compelling, right? How can you write a compelling sales letter?" And I'll give you some more practical examples.

I'll give an example. Has anyone taught you any relationship skills in high school? The thing that I always observe and to pick on Walmart, I often have experienced it there, is that many of the associates who are working at Walmart seem sullen and unhappy. Are you sullen and unhappy?

Do you smile? I would start with, that would be my first lesson in high school is, let me teach you how to smile. Here's how you smile. Because that could point to study after study after study of the importance of smiling, both on your own personal sense of well-being, your own personal happiness, and also the effect on the other person.

Or something as simple as, do you wear your pants off your butt? I mean, isn't that not going to work? Thankfully, Walmart has a dress code that doesn't allow you to wear your pants off your butt. But I went in preparation for the show, I was just thinking about how that to me is such a big deal, as far as just this simple thing that could be done to ensure more success.

And I was thinking, where would I go to find a successful person that wears their pants off their butt? And I was considering, well, I guess I could go and I could find a rap star that probably does that. Then I thought, well, who makes the pants? And I don't know any ethnic brands.

Usually, these would be, you know, but I thought, oh, Sean John. So I went and googled Sean John and looked at the founder. And then I thought, I remembered a brand called Phat, P-H-A-T, was, you know, big, big pants and whatnot. So I went and it was Russell Simmons.

And I looked at it, I googled, I just went on Google Images. I said, I wonder if I can find any pictures of Sean John and Russell Simmons wearing their pants off their butt. And I couldn't find it. So something as simple as learning how to dress, learning how to look presentable, learning how to dress in a way that that will imply that you are of a different social class is so important.

I think we ought to dress for success. Another book recommendation, it's pretty dated as far as the content, but it's very good as far as the, it's dated as far as the specific recommendations, but it's very good about proving that the way that you dress affects your results. So, I mean, if you want different results, you got to, you got to, you got to learn differently.

Take responsibility for your life. Figure out where you're starting from. So for example, I assumed that you have a high school degree, a high school diploma, but do you not? Do you not speak English? If you don't speak English or if you don't speak English well, then if you're in the United States of America, a good place to start would be learning English.

Guess what? Walmart will pay for that. If you go and look in your employee benefits package, Walmart, Walmart will pay for you to have English classes. Do you need a high school diploma? Do you need a GED? Guess what? Walmart will pay for that. I'm going to talk a little bit about their, their college tuition program as part of their employee benefits package.

But if you don't have a high school diploma, start with that. Go to work and get that GED done. I would suggest that you focus on finding a source of hope and inspiration for yourself. So on today's show, we're talking about money and wealth. I would consider that you consider that you look at the story behind the CEO of Walmart, Doug McDillon.

Now, I had no idea until I read Matt Walsh's blog, just because I don't pay much attention to Walmart as a company. I had no idea. But the CEO of Walmart is actually a man named Doug McDillon. And he's a relatively young guy, and he actually started at Walmart as a guy, a seasonal guy working, I think, in the summer in one of the warehouses.

I would while he was in college, he worked there for a little bit. And then he, according to what I was able to find, I read a couple of Wall Street Journal articles on his life. He worked there for a bit. He left. And then while he was in school, I don't remember if it was college, if it was undergrad or graduate degree with his MBA, he went back to Walmart, Walmart, and he started working on the corporate side.

What an amazing story that is, that somebody could start, you know, working in the warehouse and ultimately wind up to be the CEO. He's not the only one, though. There have been many, many people. So no matter where you, no matter where you start, you can always wind up in a much higher place with a lot more of the joy of life.

So find a source of hope and inspiration and cultivate that sense of hope and inspiration. A lot of times if we don't know what we can do, we're not thinking about it. I would say I would recommend also that you work and focus on cultivating a sense of gratitude and think about how good life is.

This will make a major difference in your in your experience with life. If you cultivate a sense of gratitude about how awesome life is. And by the way, finances do not dictate how awesome life is. I've been thinking today as I record the show again today as I'm recording it, it's Wednesday.

And I guess it was Monday that Robin Williams, evidently according to the news sources, committed suicide. How many times have we heard tragic stories of people who seem to have everything? I had no idea that he was as loved as an actor as he seems to be. And I don't pay much attention to, you know, modern culture, pop culture.

I think I've seen one of his movies. I think he did one called Patch Adams, I think I saw. But I had no idea how loved he was as an actor. Oh, I also saw his The Night at the Museum and enjoyed his both one and two and enjoyed his performances in that.

But I had no idea how popular he was as an actor. And it seems that he was almost universally, almost universally beloved by everyone in our society. Seems that he had plenty of money, had plenty of access, had all of the things that supposedly make for a great life.

And yet it was clear that he was battling severe inner demons. And the outward trappings of success evidently were not enough to keep him engaged and to keep him for him to find a sense of joy. Finances do not dictate how good your life is. They may lead to a higher level of enjoyment, but you can have an amazing life.

You can have an amazing life in today's world. Starting with at the bare minimum of finance. Don't don't see yourself as underprivileged. Don't see yourself as a victim. Don't get rid of this minimum wage mentality and see yourself as incredibly privileged. Just privileged just to live in the year 2014 or whenever you're listening to this.

We live in a time, in a greater time than any time in human history. I love to think about I love to think about stories that I read when I was a kid in the past. And the story that comes to mind in this scenario is Abraham Lincoln. Abraham Lincoln is something of a cultural icon for us in our culture.

And but the story of him reading books by firelight when he was a young boy and he only had a small number of books, and yet he was able to raise himself up and educate himself with a small number of books. Compare the small number of books that he was desperate to get his hands on and the fact that he could only read them by firelight or by candlelight.

And today, books are free. There's millions of them available through the library system for free. Books are practically free online. They're cheaper than they've ever been in terms of the amount of your budget that has to go towards acquiring them. The knowledge is amazing. You can and we have we have light, we have air conditioning, we have heat, we have all these amazing, amazing just amenities of life.

So so cultivate that sense of gratitude, cultivate that hope, that inspiration and recognize that finances do not dictate the good life. You have to get your psychology right. If you don't get your psychology right, and it seems to me that this is a key factor in any aspect of finance.

If you if you don't get your psychology right, then it's very hard to I think it's very hard to build and achieve and maintain lasting financial success. I'm sure there are exceptions to that. But it just seems to me that it doesn't work. Get it get your psychology right.

Recognize how just be grateful to be alive. Be grateful for the fact that there's no one oppressing you. There are so many people throughout this world. So many people today that live in physical slavery, that live in virtual slavery, that are severely oppressed by other human beings. And the opportunity if you're listening to my voice, I guarantee that the opportunity that you have is so much greater than what billions of people around the world have.

And even if you are being oppressed, you still you still have to take responsibility for where you're at and work and you still need to develop skills to overcome that oppression. We always have a choice. How are we going to respond to the situation that we're in? Life's not fair.

So if you are being oppressed, if you're being oppressed, it doesn't really matter in the sense that you still have to deal with the situation you're in. Crying about it and whining about it continually is not going to make a difference. Picketing Walmart for a higher minimum wage is not going to make nearly as big of a difference as going and working somewhere else.

If you don't like Walmart, leave. No one is working at Walmart by force. But we have to develop the skills to overcome whatever the situation is. One of the key skills I would encourage you is acquire the skill and the habit of always doing more than you're paid to do.

Simple little rule of financial success. Always do more than you're paid to do. And the day will come when you're paid more for what you do. They didn't teach you that in high school, did they? But they should have. We should have. I should have. Well, I guess I don't know how to.

That doesn't make a lot of sense. We should be teaching that skill and that concept to all people who are going through our school system. What a valuable lesson to learn. Always do more than you're paid to do. And then someday, maybe soon, maybe later, the day will come when you're paid more for what you do.

Money is only a system of accounting for value. Money is only simply the way that we keep track of how much value somebody has provided society. That's it. So those with more money are those who are providing value. Now, what's really awful is when you don't agree with the value that others are providing.

I can't stand it some of the times when you see certain people who have built a fortune on certain things, because I completely disagree with some of the values that they're finding. But guess what? Or some of the values that they're promoting. But guess what? Somebody finds value in what they're doing.

And the money flows. And that is how we measure for the value that someone is providing. All wealth can be developed by developing skills and adding value. So let's talk about some specific financial skills, and let's get into some numbers of how I would think about approaching this from a financial perspective.

You have to develop financial skills. For example, you have to develop the skill and the habit of spending less than you earn and investing the difference wisely. There is no way to become wealthy if you spend all that you earn or spend more than you earn. So you have to develop the skill of spending less than you earn and investing the difference wisely.

That is the law of wealth. There is no way to become wealthy without doing that. You have to spend less than you earn, and you have to invest the difference wisely. There are three aspects to what I think of as the law of wealth. There's the amount of the inflows, the amount of the outflows, and the difference between them.

So how much are you earning? How much are you spending? And what can you earn on the difference, the savings that you're able to take out of those numbers? You have to learn the skills of increasing your earnings. So the good news is you don't make much money. The bad news is you don't make much money.

The good news is you don't make much money. So you can increase from there if you're earning a minimum wage, if you're earning a minimum wage salary. But you're going to have to learn the skills of how to increase your earning, how to increase the value that you're providing in the marketplace.

There's a reason why minimum wage is $7.25 an hour. And there's a reason why, you know, Doug McMillan probably started at whatever the minimum wage was back then. And now he's earning millions of dollars a year. I looked it up in preparation for the show, but I don't have it in front of me.

I can't remember the number. I think it was something like 10 million bucks last year or something was his total compensation package. But I could be completely off on that. Please don't quote me on that because I'm just going based on memory. The reason is because the value that he's bringing to the marketplace and the value that he's bringing to the owners of Walmart is substantially in excess of the value of one individual store associate.

Now, what should that number be? You can get into the whole political conversation. I don't care. I just think if I'm earning $7.25 an hour, I'd like to get closer to the $10 million mark than to the $7.25 an hour. So I'd be less interested in how big the gap is and more interested in what I need to do to close the gap.

I would consider what those things are. You have to learn the skills that are going to lead to increasing your earnings. So, for example, you have to learn the skills of building a social network. I guarantee that that was something that was important. You have to learn the skill of paying yourself first.

And that's where basically all wealth building starts. So let's talk through some budgets. And I'm going to try to do this in a way that's interesting and that works in an audio format. I'm going to go through some numbers and I'm going to try to give some numbers to the situation so you can see how the decisions that we make affect ultimately where we wind up financially.

If you look in the show notes, I'll try to put these budgets in there as a simplified version. But I'll try to walk you through the expenses that I did. And I had to make these budgets balance. So as I start with, I ran a budget here for minimum wage, seven dollars and twenty five cents an hour.

And I assumed here that my sample case, Bob, is working 40 hours per week and 52 weeks per year. Now, are those assumptions accurate? Well, depends. Walmart has lots of part time employees. There are lots of there are lots of people working part time at minimum wages. So some people say, well, I'm being kept at part time.

Guarantee you're not being kept a part time if you're good at your job. Doug McMillan does not work part time. He works 60, 70 hours a week. I guarantee it. There's no chance he doesn't. But so if you're good at your job, you're not being kept part kept a part time.

So set that aside. But I'm assuming 40 hours a week. I'm assuming minimum wage. Evidently, Walmart does not only does not start people at minimum wage. I have looked at some studies that show that they're paying people more. But I wanted to keep this realistic. I'm assuming that you're working 52 weeks per year.

I'm not allowing for any vacation time. Why not? You're making minimum wage. You can't afford to take vacations. That's the sad reality of the fact you can't afford to take vacations because this money is so important. So once you get your your earnings up, then you can go ahead and take vacations.

But at this point, when you're starting, you're 18 years old. You've got loads of energy. You got to start. So seven dollars, 25 cents an hour, 40 hours a week, 52 weeks per year equals fifteen thousand eighty dollars of gross income. Let's take some taxes out of that. Well, first we have Social Security tax.

That's six point two percent of the first one hundred and thirteen thousand seven hundred dollars of your income. So that would take out nine hundred and thirty four dollars and ninety six cents out of your income. We also have to take out Medicare tax. That's one point four five percent of all of your income.

So that's two hundred and eighteen dollars and sixty six cents gone. And I've estimated an income tax number for you of four hundred and seventy eight dollars in this first year. I've done some very straightforward income tax planning in this scenario. I just assumed I'm not doing anything fancy, nothing sexy, nothing, nothing fancy whatsoever.

And I'm assuming that you earn fifteen thousand eighty dollars. We're taking out a three hundred dollar HSA contribution, which I'll go over in just a moment. Then I'm taking a six thousand one hundred dollar standard deduction, a three thousand nine hundred dollar one individual exemption, which leaves me with a taxable income of four thousand seven hundred eighty dollars.

And the amount of federal income tax on that money would be four hundred and seventy eight dollars based upon the IRS table. So don't worry too much about that. We took out one thousand six hundred and thirty one dollars of taxes. So that leaves me if we take out fifteen thousand eighty minus one thousand six hundred thirty one dollars and sixty two cents.

That leaves me with a total of thirteen thousand four hundred and forty eight dollars to work from. Now, where do we go from here? Well, I suggest we next go to savings. And at least in my budget categories, I always want to make sure that my savings and my investment numbers are written at the top of the page.

This is largely a mental construct, and I'm basically trying to develop the habit of paying myself first. If I take the thirteen thousand dollars that I have left over after the government has taken their cut, if I take that thirteen thousand dollars and I say, OK, what do I need to spend next?

I'm going to spend all thirteen thousand dollars. But if I start with the savings and investments, then I have an opportunity to do something a little bit better. I have an opportunity to build a life for myself. And I want to make sure that before I give any money to anybody else, that I set some aside for my future.

So I like to put my savings and investments first. And let me talk you through how I think through this. Now, obviously, this is all manufactured. I'm going to get to the expenses. And I'm going to prove to you that I have this money available to take care of expenses.

But I want to start with how much am I going to save? Remember, in my scenario, I'm starting with no money, no, no money, no assets. So there's going to be some things I'm going to need to buy first. So, for example, down in a minute, we're going to get to expenses like I need I need some form of transportation.

I'm going to suggest a bicycle and I'll prove that in a moment as to why. But I try to make this very realistic. First of all, I need to set aside some money just to build up some cash savings. So I've allocated in my budget, I've allocated saving a hundred dollars a month just to set aside as as a starting.

We'll call it an emergency fund. That would be the normal word that we would use for this. And basically, I don't know if I might get sick. Remember, I said I set up my scenario that I'm going to work 52 weeks a year. But what if I get sick as a minimum wage employee getting started?

It's unlikely that I'm going to have a large amount of sick time available to me where I'm going to get paid for that. So I need to be be planning for the fact where if I'm out for a week, I can still pay my bills. So I'm going to set aside one hundred dollars a month.

That would be a total of twelve hundred dollars. Next, I'm going to set aside what I call an invest in myself fund. And we'll get back to this in a moment as far as philosophy, but I'm going to set aside one hundred dollars a month. But this one hundred dollars a month has to be invested in my earning ability.

Here's a major question that you need to ask yourself. When you're building up, when you're earning minimum wage, if you're working 40 hours a week, you probably need more money than the 15,000, 80, 80 dollars that I have allocated here in my budget. You probably need more money. So should you work more hours?

Should we go from working 40 hours a week to 50 hours a week? Maybe we're working 32 hours a week at Walmart and another 30 hours a week at a second job. Should you work more hours or should you increase your hourly wage? Frankly, I don't think I would work more hours if I had to.

Let's say that I were supporting a family. Let's say that I had higher expenses. Let's say I wasn't able to figure out the numbers. I would work the hours that I needed to work. But I would sure work harder at increasing the hourly rate, because to go from seven dollars and twenty five cents an hour to fifteen dollars an hour is going to make a much bigger difference in my financial plan than is going from 40 hours a week at seven dollars and twenty five cents an hour to fifty five hours a week at seven dollars and twenty five cents an hour.

And there are a couple of reasons for that. The biggest reason is because if I can double my earning ability, I double that earning ability every year for the rest of my life. And that is huge as far as looking at my total lifetime income. So if I were in this situation, I would work what I had to work.

And if that's 80 hours, you got to make it 80 hours. But I would work the bare minimum that I had to work. And then I would focus on investing in myself. So what would I use that money for? Well, I may use it for classes if I needed to take some classes.

So do I need to finish out a high school diploma? Do I need a GED? Do I need to invest in college? We're going to get to college in my next year's budget. But for this year, I would focus. Do I need to buy a book? Do I need to focus on buying books that are going to help me?

Do I need to buy some sort of teaching program? Do I need to invest in some kind of course that I found online? What can I do to increase my earning ability? So I'm always going to want to make sure that I invest back into myself. Good rule of thumb, I don't know.

I would shoot for something like 10% of my income to invest 10% of my income back into myself to build my earning ability. But is that completely arbitrary? Yeah, it is. So I've budgeted twelve hundred dollars over the course of the first year for investing in myself. I've also put in here.

A three hundred dollar health savings account contribution. So in a moment, we'll get to my fixed outflows. And I found a story I was trying to figure out how much the Walmart health plan, which, by the way, I downloaded the found online the 2013 Walmart Associates Benefits Handbook. I'll link to it in the show notes.

And I read it. It's a 244 page document. I didn't read every paragraph, but I read all the parts that I needed to read because I wanted to make sure I got I understood this. And first of all, I'm going to assume that you need some health insurance. It's the law and law of the land now that you have to have health insurance.

Walmart will provide health insurance for you. I'm assuming you're a full time employee. So you're eligible immediately. If you were not a full time employee, then you would have to be working. At least you would be eligible after one year, as long as you're working an average of 30 hours a week.

So so I'm assuming that you're eligible. And I found one article in The Washington Examiner that talked about that Walmart's health insurance plan. Because I didn't know how much they cover. And I can't tell that from the associate benefits book. But I'm assuming for a young person here that the cost out of your pocket is about 40 bucks a month.

And I'm basing that number off of this Washington Examiner article where they checked out the they they had somebody go through and investigate the affordability of the health insurance coverage. If I were young and healthy, I would go with the cheapest option. And that would be the HSA account.

Now, the HSA account is called a health savings account. And this allows you to open up an extra side fund. The key here, however, is that Walmart will match the first three hundred dollars that you put into that account. And you need to get into the habit of taking advantage of any extra money that you can get.

Because when you're at a low income, many people look at their budget, say, I don't make a lot of money, I don't make a low, I make a low income. So therefore, I can't afford to save money. I look at it and say, you make a low income. So all these additional bumps on your money, these employer contributions are crucial that you take advantage of them because they form a dramatic number and a dramatic amount of your salary.

If you're making one hundred thousand dollars a year, a three hundred dollar HSA contribution is not that big a deal. But if you're making fifteen thousand dollars a year, this three hundred dollar HSA contribution is a big deal. So I'm going to have you contribute three hundred dollars into your HSA, and that'll get us a three hundred dollar match right from the beginning.

Because again, under my assumption, you're a full time employee. Now, Walmart has two other major options that they will match for you that I read in their in their employee benefits book. First of all, they have a 401k and they will match up to six percent of they'll match you dollar for dollar on this first six percent of your money that you put into that 401k.

So that's a valuable that's a valuable benefit, in my opinion, if you can get that if you can get that six percent match. But the thing is, is that remember, you just started at Walmart. You're not eligible yet. So for in the first year, I've not shown you putting any 401k contributions, but they also have a Walmart company stock purchase plan.

Now, this allows you to buy Walmart stock and they will give you a match, an employer match on the first one thousand eight hundred dollars of company stock that you buy. So that means that if you were to put in eighteen hundred dollars and that's the maximum that they will match, they would contribute two hundred and seventy dollars towards your purchase as well.

And this would allow you to buy Walmart stock. You would have to think through whether or not it's a good idea for you to buy Walmart stock or not. I don't know the answer to that. I know that I would certainly be very interested in it, but I don't know if you would be.

I would look at it and say, depending on the valuation, it's probably a pretty decent company that I'd like to own. And I want to get that free money now because of the limitations of my low income. I'm not able to take advantage of the full amount of the match.

I'm only able to take advantage of twelve hundred dollars. So I'm putting one hundred dollars a month into the Walmart stock purchase plan. So right off the top, I've decided how much I'm going to save now. Frankly, I had to run my expenses first and make sure that I could afford.

I wanted to save more than this, but this is what I could afford. But I'm always going to put it at the top of my budget to make sure that I'm prioritizing saving and building for my future. Back to my assumptions, I assume, Bob, that you're interested in building your wealth.

Most people aren't. So I'm going to save three thousand nine hundred dollars in this first year among my various funds. A hundred dollars a month into my emergency fund, which, by the way, I would if I if it were me, I would open a Roth IRA and I would use a Roth IRA as my primary emergency fund.

And the reason I would use it now, I'd probably want to make sure I had a hundred dollars or so in savings. But the reason I would use the Roth IRA is a you're in a in a negligible tax bracket. Your marginal bracket is 10 percent, but you're in a negligible tax bracket at this rate of earnings.

So Roth IRA is probably going to be the best thing that you're going to go for, because hopefully under my plan, you're not going to be in this tax bracket for very long. Number two is all of the contributions that you make to a Roth IRA. There's no there are no tax consequences for your taking those contributions out.

So if you contribute twelve hundred dollars to the account and then you need twelve hundred dollars back out of the account, as long as you don't take any of your interest out, there are no penalties or no reason why you can't do that. So I personally would do that.

I would I would use a Roth IRA for this account if I could. So I'm putting a hundred bucks a month into my emergency fund. I'm putting a hundred bucks a month into my invest in yourself fund. I'm putting three hundred dollars over the course of the year into my HSA account, which would be what would that be?

Three hundred. That'd be fifteen dollars a month, right? No, twenty five dollars a month, twenty five dollars a month. And then I'm investing a hundred dollars a month on my Walmart stock purchase plan. So over the course of the year, I am contributing three thousand nine hundred dollars to these accounts.

But remember that I'm getting those matches. And so I'm actually getting an actual contribution of four thousand three hundred eighty dollars because I'm putting some of Walmart's money in there, too. I'm getting a dollar for dollar match on my HSA, and I'm getting a 15 percent match on the twelve hundred dollar contribution.

So I'm saving four thousand three hundred eighty dollars. I'm going to stop for a moment. Can I become a millionaire if I'm saving four thousand three hundred eighty dollars? The answer is yes. I can. That's a lot of money. And I would guess that there are that there is probably I mean, who knows?

I would doubt that there are many Walmart associates earning minimum wage who are actually doing this, saving four thousand three hundred eighty dollars a year. I know for a fact that very few people do that over no matter of any of any income income level. But can I become wealthy on this?

Well, let's run some numbers. Let's say that I save four thousand three hundred eighty dollars per year. Let's say that I invest it. And my math is going to get a little fuzzy here, because remember, some of this money is an emergency fund. Some of this money I'm investing in myself.

Which you say, how is that going to pay off? I'll show you how it pays off. Some of this is a stock purchase plan and some of this is an HSA contribution. But let's just do some some some quick time value of money math. If I could contribute four thousand three hundred eighty dollars per year, let's put that in as my as my annual contribution.

Let's say I could do that for 40 years and let me pick an interest rate. Let's say I'm going to do eight percent. I'm going to is going to be a conservative rate of return on eight percent, just kind of as a plug number here, starting with nothing. And let's say I do this from the age of 18.

To the age of 58 over the course of 40 years. That would be worth over the course of the 40 years, one million two hundred and twenty five thousand four hundred and forty dollars and ninety six cents. I just achieved my goal of becoming a millionaire on a minimum wage.

Now, you haven't heard my expenses yet, so you may not believe me. And I admit it was challenging, but I could become a millionaire in 40 years. I'd be having one million two hundred twenty five thousand four hundred forty dollars and ninety six cents. What if I could invest the money at higher than eight percent?

So can you do that? Yes, you can. And the way that you do that is by not focusing so much on what specific stock to buy or what mutual fund to own and thinking about where your highest rate of investment is. My answer to that is in your income.

So I would invest that money into your income. Take Doug MacDillan, whatever he started at when he was throwing boxes on a Walmart loading dock to what he's earning now, I guarantee you it is a far in excess rate of return of whatever he had to invest into himself.

It's a far in excess of a rate of return of eight percent. So that's how you really do it. And that's what we're going to focus on as we get to the next year's contribution. What about my expenses? Well, let's talk about what my fixed outflows are. First of all, you can't afford a house.

But I'm not going to make you live in a car, although I did consider it. I really did. I read about three books written by van dwellers. I was so interested after last week's interview with Ken Ilgunis, who lived in a van while he was in graduate school so that he wouldn't borrow money on student loans.

I was so interested. I went on Amazon and I bought a couple of books written by people who live in a van full time. And I was it's just amazing to me what some of these people are doing. So interesting to read their books. But I didn't make you say live in a house.

I went on Craigslist and I picked a local Walmart. I picked the one in West Palm Beach, which is at the corner of a road called Belvedere Road and Military Trail. And I went on Craigslist and I said, let me find a room for rent. You can't afford an apartment.

You're making minimum wage. I said, let me find a room for rent. And I found a bunch of them. I found some for six hundred dollars for two for a studio apartment. I found some rooms in a house, found some rooms in a house, and I found one for four hundred dollars a month listed right on Craigslist.

I took a screenshot of it just to prove it. The reason I picked that one is because it was about, I think I would say about a mile from the Walmart center, maybe a mile and a half, which means that you can easily walk there so you don't have to have any transportation costs.

And because you don't have to have any transportation costs, this allows you to avoid owning a car because guess what? You make a minimum wage. You can't afford a car. All the reason we were able to save the money was because I cut your expenses down. And so four hundred bucks a month to rent a room in a house that's a mile and a half from your work, that's forty eight hundred dollars a year.

So what I have to work with now, if I take fifteen thousand eighty dollars and I subtract out my sixteen thirty one and sixty two cents for taxes and then I subtract out my three thousand nine hundred dollars of savings, I got to figure out how to help you live on nine thousand five hundred and forty eight dollars per year.

And you can do it in West Palm Beach where I live. Other places you could do much cheaper than that. So I found four hundred dollars a month and that included rent and utilities. And that's important because by having the utilities included in that, then that just makes for easier budgeting.

You can't afford a house. You can't afford your own apartment. You're making minimum wage, but we can spend forty eight hundred dollars running a room. I have four hundred eighty dollars of I have a four hundred eighty dollar expense for health insurance, forty dollars a month to cover health insurance.

And then I have an additional one hundred and twenty dollars annual expense, ten dollars a month for disability insurance. The most important kind of disability insurance for young people to own is long term. Excuse me. The most important kind of insurance for young people to own is long term disability insurance.

And Walmart offers long term disability insurance. I don't know what the premiums are. I'm just purely guessing, but I'm guessing that I could get the basic life insurance that they tell me that they give me for free. And then the long term disability insurance for probably about ten bucks a month under their program.

If any Walmart employees know differently, that's that's you let me know. So my fixed expenses are five thousand four hundred dollars. What about my variable expenses? Well, I'm assuming that you need a phone. So I'm going to go ahead and make the easy solution, although you could do this if you listen to the shows that I've done with the tech machine on how to get your phone expenses for a couple of bucks a month.

But I'm going to go with Republic Wireless. So this is easy. It's twenty bucks a month with Republic Wireless. And that'll allow you to have a phone that allow you to have connections that also allow you to have Internet. Not a lot of Internet, but it'll allow you to have Internet so that you can keep track of things that you need.

That's twenty bucks a month. And then I've included a one time expense in my budget of three hundred. Excuse me. If you have one hundred and fifty dollars to buy the phone. Next, I've included about three hundred dollars a year, about twenty five dollars a month for bus costs, bus, taxi and miscellaneous bike repair costs, because I've got a number budgeted in here for you to buy a bicycle so that you can get a little bit farther than walking, although if you're just starting off with nothing, you're probably just going to be walking.

So I've included three hundred dollars over the course of the year for bus and taxi costs. Not going to go far if you're on taxis. It'll go farther if you need a bus cost cost. And I've included two hundred dollars a month for groceries and personal care items. You're going to have to make sure that you're skilled with with saving money on two hundred dollars a month, but you can do it.

I've found plenty of people that are doing it. You may be eating less expensive options, but you're going to have a Walmart associate discount card. You're going to know when the sales are. You're working at Walmart. You should be able to get by on two hundred dollars a month.

One time expenses. Three hundred dollars to buy a bicycle. I've allocated two hundred dollars for you to buy clothing. I've allocated five hundred dollars for a one time expense to buy a computer. Now, I would consider buying a cheaper one, something like a Chromebook, because you're going to need a computer to be able to access more of the educational materials on the Wi-Fi network at the library until you're able to save the five hundred dollars.

Go use the free library computer that you can get for free. But I've allocated five hundred dollars in my budget for a Chrome for a laptop, although you get a Chromebook for cheaper. And I've allocated one hundred and fifty bucks, like I said, for the cell phone. So now between those two levels of expenses, I've got four thousand and ninety dollars of variable expenses and five thousand four hundred dollars of fixed expenses.

There's my nine thousand four hundred ninety dollars. So I've got a difference between my inflows and my outflows of fifty eight dollars and thirty eight cents. That's how I would do it. Now, a couple of comments. Is this realistic? I think it's realistic. I went like I said, I went on Craigslist and looked right in the area.

Can somebody do this? Absolutely. Will most people choose to do this? Absolutely not. Because most people don't prize wealth building. But the fact is, you only make fifteen thousand dollars a year. And if you want to get rich, you've got to save money. And every single one of these things is a realistic thing that you could do.

But you would have to decide to do it. I think this is a realistic number of expenses. This doesn't include a gym membership. This doesn't include going to movies. This doesn't include dining out. You can't afford to do that stuff. You're broke. You're waking minimum wage. You can't afford to do that stuff.

If you do that stuff, you're going to wind up poor forever. I always I would say, so what are some things that you can't do? You can't you can't build any expensive hobbies. You can't drink. You don't have money to drink. You're poor. You can't do drugs. You can't go again.

You can't go to movies. You can't go to clubs. Look at what the immigrants in your area do and try to follow what some of them do. I have I have such a world of respect. Having traveled a good bit in Central America, I have such a world of respect for all the Spanish guys that come up to the US and earn an income and somehow figure out how to send a massive amount of their of their paycheck home.

You know how? Their hobby is playing soccer. Not a lot of expense when you're playing soccer in a public park. And I go down and I can't play soccer. I don't know. I'm not good at soccer, but I go down and talk to them sometimes and they'll spend an entire Saturday.

It doesn't cost you a thing except for the cost of a soccer ball, which you can probably borrow someone else's while you're while you're building in there. So my point is, it's a choice as far as what you spend your money on. And it's a choice which you don't.

I figured out a way on a minimum wage budget of 40 hours a week for you to save three thousand nine hundred dollars, which is actually a saving four thousand three hundred eighty dollars. But I had to cut out a lot of fluff. Now, is it really so bad?

I don't think so. You've got a comfortable air conditioned room with electricity to live in. You've got a library. The reason I picked that Wal-Mart, actually, instead of I've got three or four Wal-Marts here in my town, I picked that Wal-Mart because it's close to a library. And so the house that I picked to live in was a couple of miles away from the library, which is certainly walking distance and certainly biking distance.

Now, it's been most of my time in the library educating myself for free so that I could raise my income. So that would be my example of starting. What about the second year? And I'm going to go faster now because I feel like I've gone too slow. What about my second year?

Well, I'm actually still going to assume that I'm earning seven dollars and twenty five cents an hour still. Although I would say that's a bad assumption, because when I'm in the library, I'm going to spend time focusing on how can I develop skills, how can I learn skills of relationships?

How can I learn to smile so I can smile at people? I'm going to make sure I'm on time to work. I'm going to make sure that I'm asking my boss for more responsibility. And these are the skills that I'm going to be learning about in the library. So I'm going to be reading books on success, books on how to earn more money.

I'm going to be reading these things to understand what are the things that I need to do and then applying them, experimenting with what works and what doesn't. So I've kept fifteen thousand eighty dollars. I've kept the same level of Social Security tax, nine hundred thirty four bucks. I've kept the same Medicare tax, two hundred eighteen bucks.

I've kept four hundred seventy eight dollars of income tax in here, which is my fifteen thousand eighty dollars, less a three hundred dollar HSA contribution, and then I've dropped out my 401k contribution. Excuse me, I've got the math wrong on that one. It should be three hundred ninety three dollars of income tax because I've dropped out a 401k contribution now.

So now that I've been at Walmart for a year, I'm assuming I haven't gotten a raise, which is a bad assumption. You should get a raise if you're doing this stuff. But I'm assuming that you haven't gotten a raise. And so now, however, I'm entitled for the 401k. And this is super important because I get a match on my 401k.

So I've got fifteen thousand eighty dollars of income, one thousand five hundred forty six dollars of taxes. And now I'm going to contribute six percent of my income into that 401k. Here's why this is so important. If you contribute six percent of your income, that's nine hundred and five dollars per year, you will get a dollar for dollar match contribution to your 401k by Walmart, which would be nine hundred and five dollars per year.

How long does it take you to earn nine hundred and five dollars? Well, nine hundred and five dollars divided by seven dollars and twenty five cents takes you one hundred and twenty four hours at minimum wage to earn nine hundred and five dollars. One hundred and twenty four hours.

That's three weeks of compensation. You must make that contribution because you cannot afford to walk away from that extra money. You've got to prioritize that and get that extra three weeks of compensation. Even if you left Walmart and took the money out of the 401k and paid your 10 percent penalty, you would still be in far better in a far better shape because at a minimum wage rate, this is so important.

It's even more. It's just as important when you get bigger. But I'm trying to change your thinking and try to give you some ideas about how to transform your thinking and focus on what actually matters. You can't afford to walk away from nine hundred and five dollars. You got to make that HSA contribution three hundred dollars and get your three hundred dollar match.

Then you got to continue putting money in the Walmart stock purchase plan. But I've had to lower that because guess what? We're going to go to college. And this is why I'm assuming that you are reasonably academically competent, that you can that you can do OK academically. Now, here'd be a question.

Is it OK if you don't if you're not academically competent? Yes, it is. But you probably should get to a business that's going to be a better fit for you. I gave an example, I'm a guy, so I think I think well, much I think a lot along these lines.

But if I were a guy and if I weren't academically competent, then I would find a skill that I were competent at. So maybe it would be something physical and manual. Maybe it would be something like construction. Maybe it would be something like, you know, laying tile or or, you know, pulling pipes or maybe it would be something like welding.

You're going to make far more if you develop those skills. Then working in retail. Because if you're working a minimum wage job, that means if you leave, they can just put some other teenager in there. So you got to focus on developing other skills. If you're a girl, I don't know, maybe you have a real gift for sales, maybe have a real gift to for just connecting with people.

Maybe you have a real gift of customer service and you can transition from retail at Walmart to retail at Nordstrom's and dramatically raise your your rate. But the point is, is that I'm going to put in here education, formal education expenses. Now, Walmart has a lot of educational opportunities.

They'll pay for you to go to English classes if you don't speak English. They'll pay for you to get your GED. They'll pay and contribute towards your college tuition. And they have a program with the university that will allow what will offer a discounted online tuition. So this university, check it out in your benefits book, but this university says that an annual tuition for an undergraduate tuition with the discount would be six thousand four hundred and thirteen dollars.

And I had to figure out how can we go to school full time? Well, I couldn't make it work because I didn't have the money. So I had to go to school halftime. Now, a little trick for you. There are other options other than the Walmart than the Walmart option for education.

So listen to my shows in the future when I go over education options. But today you can get an undergraduate degree for a total cost of four thousand dollars. And we'll do that in another show. But from an accredited university all online. But here I'm assuming that it's going to be six thousand four hundred thirteen dollars per year.

But you're working full time. So we're going to take a 50 percent course load. So I cut that number in half to three thousand two hundred and seven dollars. So I'm still going to include that in my savings category because I view this as a savings. I view this as an investment.

Because this is going to pay off big time in terms of helping me get out of minimum wage world. So I'm going to. So I had to lower my amounts to my Walmart stock purchase plan to make my budget balance. So now I've got nine hundred and five dollars of 401k contributions.

I've got three hundred dollars in my HSA. I've got six hundred bucks into my Walmart stock purchase plan. And I've got three thousand two hundred and seven dollars of tuition. Walmart buys all my books. I've got an Internet connection at my house because utilities are included. And I've got an Internet connection at the library.

So I'm saving five thousand eleven dollars and 80 cents of which thirty two hundred dollars is going to college tuition out of my budget. But that feels like six thousand three hundred and six dollars and 60 cents. Going towards my savings because I am getting an extra one thousand two hundred ninety four dollars and 80 cents by participating in those programs.

And again this is a big deal because that feels like one hundred and seventy eight dollars of additional excuse me one hundred seventy eight hours of additional work. I apologize I had to pause the whining you may have just heard with my dogs coming in and bothering me. So where I was with six thousand three hundred and six dollars of savings.

Now what if you invest six thousand three hundred six dollars over time. Can it grow to a lot of money. It can grow to a lot of money. I would not put six thousand three hundred six dollars into my 401k. That's probably the worst investment that you have. The best investment is that college tuition.

The best investment is into whatever you need to start a business of some kind. But and so this is where my math I'm kind of using slightly funny math but I'm using it to make a point. And I think it's an accurate point. But what if you got in the habit of spending six out of investing six thousand three hundred and six dollars and 60 cents.

It could grow to huge numbers. Let's put it in and the calculator six thousand three hundred six dollars annually invested over a 40 year investment time horizon. Let's use a 10 percent number for a plug number for annual growth starting with zero dollars. Any idea what that ends up being.

Three million seventy thousand three hundred seventy nine dollars and 63 cents. And can you earn an average 10 percent rate of return. Without question you can do that in stocks and you can do way more than that and in yourself and by investing in your income. And you can do way more than that.

So my point is that if you make it a priority look at the difference of understanding a little bit of financial planning of being able to save this five thousand dollars versus the sixty three hundred dollars. Even if you didn't do the college tuition the difference is between one thousand eight hundred and four dollars and 80 cents or the Wal-Mart contributions of an additional one thousand two hundred ninety four dollars and 80 cents.

So big money. All of my annual expenses were the same and my fixed outflows forty eight hundred dollars that year for housing rents and utilities you still can't afford a house. Four hundred eighty dollars for health insurance. Hundred twenty dollars for disability insurance. Two hundred forty dollars twenty dollars a month for for telephone.

Three hundred dollars fifty dollars a month for bus bus costs or in any bike repairs. Two thousand four hundred dollars for groceries. Now how is it that I figured out how to do this. Well A you might say well that's completely unrealistic. It's realistic. It's a difference of choice.

You cannot afford a car at this rate. You cannot afford you know an expensive house to live in. And that's the problem. Now is this realistic. Again I think it is. But my point is that it's decisions it's choices. You don't have to afford a car. You can live close to work.

You can choose different hobbies. All of this stuff is within your choice. Now is this going to change. Yes. And the point is get stop earning seven dollars and twenty five cents an hour and get to earning 15 or 20 or 30 or 50 or 100 or 500 dollars an hour.

And you can do that over time. Stop earning a low hourly rate. And if you'll stop earning a low hourly rate then you can go ahead and bring in some growth in your lifestyle as far as how much you're able to save. You probably should buy to wait to buy a car for as long as you can stand it.

At least if you're starting off at 18 years old at least get a couple years head start here with this kind of plan and don't buy a car right away. Just focus on building a lifestyle that's awesome within biking range. And I would say biking range is probably you know 10 miles five to 10 miles.

Even when you do buy a car the car should probably be probably be worth less than 10 percent of your annual income. So always try to have a car that's worth less than 10 percent of your annual income if you're interested in wealth. When you increase your lifestyle or when can you increase your lifestyle?

You can increase your lifestyle after you've invested in yourself and after you've invested in raising your earnings and raising your wages. And you can increase your lifestyle as long as it's slower as long as you increase it more slowly then you increase your consumption expenses. That's the formula for wealth.

The way I would say it is this. Let's say that you're able to get a 10 percent raise. Well if you get a 10 percent raise as long as you're saving half of that and spending half of it now you can afford to increase your lifestyle by 5 percent.

But you have to make sure that you're always increasing your lifestyle more slowly than you're increasing your income. That's the formula for wealth. The point would be in the next five years you're going to go somewhere. And the choice between continuing to work minimum wage and the choice to stop working minimum wage is yours.

If you are not qualified for anything other than minimum wage at this point that's okay. We all start somewhere. But you've got to focus on getting qualified for something else. I personally would not think it to be a great plan to say I'm going to work in retail and work at Walmart for me.

I personally wouldn't want to do that. But I think that my example here would show that it's possible. Are my examples rosy? I think they probably are. I think that they are realistic but I am being optimistic. For example I'm assuming that you don't have a major health expense.

So I'm assuming that we don't have to take that HSA contribution and put it towards a health expense. I'm assuming in my example of being a millionaire that you are able to save and invest that and take it out of retirement. Is that an assumption? Absolutely. Is it accurate?

Well you know I'm almost 30 years old and I've never had a major health expense that other than dental work. That's true. I did have to have a tooth removed and man that was like four thousand bucks. Okay so I stand corrected but I've not had major medical medical expenses other than that tooth and that was an expensive one.

But I think that would be an okay assumption. All of your preventive care is covered by your health insurance and in case of disaster you're still covered. My point is that it's a choice. Most of the things that we spend money on are a choice. Every single one of those budget categories is a choice.

It's a choice to live in a house instead of in a car. I know it sounds wacky but it is a choice to live in a house instead of in a car. There are people all around the world who live in tents full time. We could live in tents full time.

There are homeless people that live under trees. I don't recommend it. I don't want to necessarily live that lifestyle. But if it were between spending all of my money on expensive rent and never making any financial progress or living in a car or under a tree, I would choose in the car or under the tree myself because I want to make progress.

If I can't make progress, you've got to figure out a way to lower the expenses to a point. But I didn't assume that. I just went on Craigslist this morning and said, "Hey, what can I find that's within a couple miles, so it's walking distance?" And that's what I found.

A room and a house. And that's very comfortable. So I think I've covered most of the bases. The point is that you can start with the minimum wage and go from there. I did a show earlier this week on what we can learn from the people that have the 400 highest tax returns, highest income in any given year.

And the number for 2009, which was last year that the data was reported, the lowest of those people was earning about 80 million bucks. I guarantee that a majority of those 400—I can't prove this to you, but I've read enough of these kinds of studies to feel pretty strongly in this—a majority of those 400 people, whomever they were, a majority of them at one point in time worked an entry-level job.

But the difference between them staying in the entry-level job and at 53 years old still working an entry-level job, and them becoming one of the 400 highest—them submitting one of the 400 largest tax returns in 2009 was how much they invested in themselves and in their skills. We all have a choice, and you can choose.

If you're committed to wealth—that's a big if, by the way—if you're committed to wealth, you could do something like this, and it would work. Remember, there's an iron law of wealth. How much is coming in? How much is going out? And what's the rate of return that you're earning on the savings, under the difference?

That is what dictates wealth. But the cool thing is, is that we have a choice over all three of those factors. We have a choice about how much comes in. We choose whether to get a job or not. We choose what kind of job to get. We choose whether to choose a job that is in alignment with our skills, that we're naturally qualified for, whether it's something that is a difficult thing for us.

We choose how much that wage is within certain reason, within certain steps. We choose how many hours a week we work. We choose all of these things. We have a choice between what's coming in. We have a choice of how much is going out. We choose, do we buy a house?

Do we buy a car? Do we get pets? Do we get married? All of these things are choices. And we choose what the rate of return is on those investments. Do we invest the rate of return in a savings account, earning a small rate of return? Do we invest it into a CD, earning a small rate of return?

Do we invest it into a stock, earning a larger rate of return? Or do we invest it into a business that may grow well, may also fall apart, may grow well, may grow to be huge? Do we invest it in ourselves and building our own human capital so where we can command a higher price in the market?

This is how you have to think, because these are the only three variables that you can manipulate. But the cool thing is you can manipulate all of those variables. And there are an incredible array of options. You got to get mentally free. I would consider a lifestyle that I could thoroughly enjoy the lifestyle that I just described.

To me, it would be a lot like how I lived in college. You have a room, roof over your head, air conditioning, utilities paid. You have some place that you go for work that's pleasant, that you get to see people. And then the majority of the time of entertainment is spent learning.

To me, that's what college is like. I didn't give you much of a beer budget, but it's probably helpful for you to not have much of a beer budget. It's a bad habit that will lead to problems. Once you get past the mental hurdle of, "Ah, this is a crazy lifestyle, I couldn't do it," this would be possible.

And then the key variable, I want to go back to those assumptions. The key variable is don't stay stuck earning $7.25 an hour. Raise that income and then this whole thing goes better. So that is the majority of what I wanted to get across today. I hope that I've done a good job with it.

I worked hard at it and tried to make it realistic. I always second guess myself to see whether I was effective or not. I really wanted to make it realistic. And my hope is that if you are in this situation, I hope that you can take this and learn from it.

And I would love to hear from you if you're working a minimum wage job. And if this was helpful, that would be a really valuable payment to me. Send me an email at joshua@radicalpersonalfinance.com and let me know if it was helpful. And if you're not in that kind of situation, I would encourage you to think through what would you advise a friend of yours who was in this situation?

This is what I would say to them, assuming they're focused on building wealth. And wealth is not the only thing. But this is what I would say to them. But I really appreciated and benefited from thinking it through. And a lot of times it's easier to think through other people's situations than it is our own.

But once we think through how would I advise that 18 year old, I can go back and look at my budget and say, what am I doing? How am I investing in myself? How am I raising my earning ability? What am I choosing to do? What am I choosing to spend the money on?

So I think this is a realistic show, but I hope that it was a helpful resource. Thank you so much for listening. I really appreciate it. Thank you for hanging in there with me as I learn. Every day I feel like I have so much to learn to be able to do this more, more competently, to be a more interesting host, to be a more direct and concise host.

But I hope you enjoyed today's show. Give me some feedback on it. I would love to hear what you thought of it. Come by the blog and make a comment. You'll find the show at RadicalPersonalFinance.com. Leave a review in iTunes, please, if you haven't done so. Love those. Appreciate every single one of them.

And I want to wish you a wonderful weekend. Remember, this show is a Friday's show. What you do this weekend is going to make a difference in what you do next week. So invest your time this weekend into the things that are important to you. And don't see the financial hurdles as hurdles that you can't overcome.

See the financial hurdles. The financial parts of life is just one aspect of many aspects of life. Exercise is free. Reading is free. You can invest in yourself this weekend, and I hope you do. Cheers, everybody. >> Trying to find your happiness this winter? Let Fiji Airways fly you there direct.

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