The LA Kings holiday pack is back. The perfect gift for the hockey fan in your life. A three game pack starts at just $159 and includes a holiday blanket. Buy today and you'll receive an additional game for free. Don't miss out, visit lakings.com/holiday today. - Welcome to Radical Personal Finance, the show dedicated to providing you with knowledge, skills, insight, and encouragement.

You need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. Yesterday we talked about goal setting for 2017. Today we continue on that theme with a discussion of your wage. Here's the deal. If you followed my advice, or if you're following my advice, very likely you are going to write down some income goals.

You're gonna write down an amount of money that you want to make in the next year. Great, it's a good place to start. Many people don't start there. You'd be shocked at how few people have a goal for an amount of money that they wanna make. Now, hopefully that income goal is tied to something else because income goals that are just round numbers are probably not gonna have the teeth required to get you through the hard times.

I know for me in years past when I would set an income goal that wasn't connected to something that mattered, beyond money, I've never hit one of 'em. But if an income goal was connected to something that mattered to me, I've done pretty well. So you set an income goal.

Well, that's great. So what's your next step? Do you sit around and hang out in your easy chair, close your eyes, and imagine that amount of money in your bank account? Well, I guess you can do that. Some people do that. But the next step that I'm gonna suggest you take is, I believe, far more effective than you're sitting around and imagining that amount of money in your bank account.

And that's to make a plan. You've gotta make an actual plan for how you are going to earn the income. And in today's show, I'm gonna share with you how to make that plan, and it might surprise you because what you need to get to is an actual hourly wage that you're going to earn.

Because you get paid when you work. So you need to figure out how to transform your income goal into something tangible that you can put onto your to-do list and do. It's the topic of today's show. Before we get into that, couple of quick announcements for you. Announcement number one, I think many of you will be very happy to hear, and that is this.

I am making major changes all around here at Radical Personal Finance in an effort to change my own personal business here to achieve my own personal goals and also to serve you effectively, because I'm only gonna be able to achieve my goals as I can serve you effectively. And so one of those changes, I'm announcing them little by little here and there over the next few weeks, but one of those major changes is that I am disconnecting our Radical Personal Finance Facebook group from patronage.

A major way that I focus on earning money from the show is through the use of the patron program that's set up on a website called Patreon, which is a crowdfunding program where individual listeners of the show voluntarily go and sign up for it. They go and sign up and say, hey, Josh, we like what you're doing, we like the content you're putting out, so please, here's a few bucks just to support what you're doing.

And that's super, super helpful. Right now, I have about 2,000 bucks a month coming in from that. Now, one of the challenges I face with the Patreon program is figuring out how to actually set it up, and there's been great successes with it and there's been major failures with it.

And one of the ideas that I had in the past was to make access to a Facebook group dependent upon patronage at a certain level. A lot of reasons for that, I'll talk about that another time, probably when I talk more about Patreon. I've still got to do some updates around there, but lots of reasons for that.

But at the moment, I am canceling that. And what that means is that you can come and join the Radical Personal Finance Facebook community. The idea is this, as you are working your way through your own personal planning process, as you're working on building your knowledge and your skills in order to live a rich life now, while also working on your plan for financial freedom in 10 years or less, which is the goal of that topic, as you're doing that, I want to make sure that you have the ability to connect with other people who are like-minded.

Now, there are many communities of people out there on the internet. There is a very active Reddit financial independence boards where people are interacting on Reddit. There are a few different forums, the early retirement forums. For Jacob Lundfisker has his early retirement extreme forums. Mr. Money Mustache forums on his websites are very active, and there are others as well, different forums.

I'm sure there are some Facebook groups, but I don't want to try to compete with any of those because Radical Personal Finance is a little bit unique. I have a different approach than many other people do. And so I'd like to provide for you a way to interact with other members of the audience in a way that's more interactive than commenting on the blog posts.

So oftentimes that comes down to either a forum or a Facebook group. Now, forums have many unique advantages. They also have significant disadvantages. Probably my biggest beef with various forums is that they're simply difficult to use. They're not particularly well integrated into the modern world. Most forums have this antiquated look where they wind up with threads and many different posts and et cetera.

They're very non-multimedia friendly, they're text only, et cetera. And that, again, there are some major advantages to forums. There's huge advantages from someone like me as a content creator. It's many, many pages of relevant content, which helps tremendously with the search engine optimization of my site and the findability.

That's one of the biggest benefits of forums. It's also benefits that on a forum, you can have a good deal of anonymity. You can just simply join with a username. You don't have to give out your personal name. That can help people to feel very comfortable doing things like publishing personal financial data.

Many people you'll see in personal finance forums do things like maintain a public journal of their personal finance progress, what they made, what they spend. And they can do that because there's some level of anonymity granted by the simple username from a forum. I think that's great. At the moment, I don't wanna manage and moderate a forum.

And the biggest downside of a forum, my opinion is simply it's not user-friendly. There's not really any good phone software. Most forums integrate with an app called Tap a Talk. If you are a user of forums, you probably have tried that app. I find it clunky and non-useful. And the Facebook is fantastic.

Facebook app is great. And the Facebook even has its own standalone groups app. So I've decided to just stay on the Facebook platform using the Facebook Radical Personal Finance group. So again, up till now, that group was behind, it was only available to patrons. And so the link was a little bit hidden.

I didn't advertise it here on the show. At this point in time, I'm opening it up. And I'm inviting any of you who would like to participate in the Radical Personal Finance Facebook community to come and to join the Facebook group. The Facebook group is a really great place for you to build some relationships and build some friendships with some of your fellow listeners, people who might enjoy similar things like you.

I know many of these relationships that have happened throughout the Radical Personal Finance community, some of them have led to in-person relationships. I'm aware of a number of community members who've built friendships based upon first getting connected through the Radical Personal Finance community. So that Facebook group is now open to any of you who would like to join.

And I hope that many of you will. Again, with it being right on your phone, it's fantastic. It's right there where you are anyway. And I'm pretty excited about it. It's easy, good multimedia integration. You can share pictures, you can share all the normal Facebook stuff, videos. I'll be doing some stuff in there, trying to keep it good.

I'll be involved in there to some extent, to some extent that I'm able. But it's a really, really great resource for you. And I want you to use that resource. If you'd like to ask questions of other people, there are some really smart people already in that Facebook group.

And I think there'll be even more smart people here now. In a multitude of counsel, there's great wisdom. That's what the Bible teaches, one of the Proverbs. And so you should always seek out as much input and as much diverse counsel as you can find on a question. The full quote of that Proverb is this, "Without counsel, plans fail, "but with many advisors, they succeed." And so it's always useful to gain from other people who've been in different situations, who've been in similar situations, who can help provide insight into your situation.

So come on over to Facebook and search for Radical Personal Finance. Remember that there's a Radical Personal Finance Facebook page, and then there's Radical Personal Finance now Facebook group. So the page you like, the group you request to join, and I will approve you to join that. One little tip for those of you who are properly wary of social media.

I think there are tremendous dangers in social media, tremendous dangers from a lack of privacy. I just think they're tremendous dangers. If I were not running Radical Personal Finance at this point in time, I don't think I would have any social media accounts because they are so invasive from the perspective of privacy and they're incredibly invasive to your life.

They add some, something to some people, but even just, you look at some of the data on social media use and social media use and its impact on depression, levels of dissatisfaction, you have to be very careful being an excessive consumer of social media because what you are seeing is a very carefully curated image that somebody wants you to gain.

We only post the positive stuff about us and that will lead you to the assumption that everybody else's life is just great. That's where, you know, sometimes I feel bad about how many of the negative things I tell you about my own personal challenges here on the show, but I do it because I want to break some of these misconceptions.

I want you to understand that no matter who you are, if you respect me and look up to me in some way, it ain't easy. There are very difficult times, there are difficult days. We all fail, we all make mistakes. And so I try to do that, but even me, just like we all do, I curate the things that I share.

I share the happy pictures. I post when I'm feeling exuberant about something. I don't post a note on Facebook and say this. So I think the benefit of social media is mixed. There are significant benefits and significant challenges. On the net, I think it's a win, but I think, anyway, be careful.

Point of that was to say that if you want to participate in something like the Radical Personal Finance Group, but you don't have a Facebook profile, set up a fake one. I strongly encourage you to do that because there's a lot of great info in Facebook communities where even if you don't want to have a personal profile, you can go in and set up a fake profile.

Now, Facebook will require you to use a real name. So you are welcome to be either John Smith or Susie Smith, and you can post any kind of picture that you want. The only requirement is that you have to post something that sounds like a name, but you can call yourself anything that you want to be.

So Susan Jones, John Smith works great, or whatever version of that you want to be. And that allows you to interact with other people, but still retain some degree of your privacy. So my hope is that by giving you that advice, we can mollify some of the concerns about the lack of privacy with a Facebook group as compared to a forum.

And I hope it will be a great resource to you. So come on by facebook.com or search on your phone, Radical Personal Finance. It's a group and request to join, and I will approve you for that. Those are enough of my announcements on that topic for today. Let's get to it.

With regard to Patreon, we'll talk about Patreon more another day, but for today, I would just welcome you, if you find value in this show, take a couple bucks a month and sign up as a patron. That's hugely influential to me as a creator of this project. You can find those details at radicalpersonalfinance.com/patron.

radicalpersonalfinance.com/patron. Now, your hourly wage. Here's the simple gist. In our world, in a capitalistic economy, you get paid what you're worth. So in order for you to get paid more, you have to become worth more. It's as simple as that. You say, well, I'm not getting paid what I'm worth.

Well, don't worry. You probably are, but if you're not, somebody along will come along and pay you what you're worth. That's how it works. If you're working a job and you're getting paid $10 an hour, but you're worth $20 an hour, one of your customers or a friend or a coworker will come and they will steal you away.

Or you can go out into the job market and go get yourself a job. So just for today, even if you disagree with me, just stick with the concept. You get paid what you're worth. So if you want to get paid more, you've got to become worth more. Well, what do you have to contribute to the world?

For most of you, it's primarily your human capital, your time and your energy. Whatever you do, you're going to be paid more. Whatever you can actually do, that's what you have to contribute. Your contributions are largely, for most of you, going to be related to your time. And so if you want to figure out how you're going to hit that income goal, you need to figure out what you're going to do with your time.

We all have the same 24 hours a day, the same 168 hours a week. So it's what you do with those 168 hours a week that will determine your results. Some people make a few pennies a day. Some people make millions in a day. And it's all based upon what you do with your 168 hours a week.

So to get some clarity around this, let me give you an example. Let's say that you set yourself a very excellent goal, which is to earn a six-figure income in 2017. You have a goal of earning $100,000 in 2017. That's a great goal. That will put you at about double the median wage in the United States of America.

And that'll move you into a great, that's a great goal, good round goal. Set that goal, $100,000. Well, what do you actually need to do per hour in order to earn $100,000? First thing you got to do is you got to ask, is it $100,000 gross or $100,000 net?

Is it $100,000 pre-tax or is it $100 post-tax? Always a big question. For today, let's just assume you actually wanna have $100,000 to spend, which is how most people actually mean it. That means you're gonna earn, you're gonna need to earn, let's say you're gonna pay about a 25% tax rate, $125,000.

Always calculate that in. Now, if you have a more specific knowledge of your tax rate, great. But for now, let's just say 25% of income tax. You're gonna earn $100,000. That means you actually have to earn $125,000 to net $100,000 to spend. Next, you calculate and ask, how many hours are you willing to work per week?

Let's say that number is 40. Standard 40-hour work week. You say, I'll work 40 hours a week. And then the next question is, how many weeks will you work per year? Let's say that's 50. 52 weeks in a year, you take two weeks off for vacation. Now you've gotta work 50 weeks per year.

That means that in a year, you will work 2,000 hours. 40 hours a week, 50 weeks a year is 2,000 hours. So if you take the number that you need to actually earn, which is $125,000, in order to net $100,000, you need to produce at least $62.50 of value per hour that you work.

Every single hour in a 40-hour work week, every single week for 50 weeks out of the year. $62.50. Now if we were just saying $100,000 gross, and you weren't accounting for the 25% of tax, the number would be $50 an hour. The people who are gonna earn $100,000 are those who produce at least $50 per hour of value.

$50 per hour of value. So if you are not earning $100,000, it's good to set a goal of earn $100,000. But you gotta go on to the next step and say, how can I produce at least $62.50 worth an hour of value? $62.50 worth an hour of value. And this concept is applicable whether or not you're an hourly employee, whether you're a salaried employee, whether you're a business owner, whether you're a professional, doesn't matter.

The point is that you need to produce value at this rate. So when you go into work on Monday morning, and you're sitting there, and as many times I do, and you're sitting in front of the computer, and you have the temptation to say, well, let me open that time-wasting website, all of a sudden, that's gonna make it much harder for you to earn your $50 an hour, or your $62 an hour.

Now let's say you wanna earn $100,000, but you don't wanna work 40 hours a week. Well, you can put in any number that you want. Let's say you wanna work 30 hours a week. And let's say instead of working 50 hours, excuse me, 50 weeks per year, you wanna work 40 weeks per year.

Well, if you wanna earn $100,000, you need to produce $104.17 per, you know, I'm gonna, hold on a second. Built this little calculator, a little spreadsheet real quick on Google Sheets that I'm gonna share in the notes so you can go and put your own hours in. But I built it with this tax rate built in.

It's too confusing to talk about the taxes. We're gonna skip taxes for a moment. And from now on, we're just gonna use just the number, gross income, $100,000. So if you wanna earn $100,000 per year and you're willing to work 30 hours per week for 40 weeks a year, now you need to produce $83.33 per hour of work.

It's as simple as that. So you need to apply this just like I need to apply this. This is something that I am applying as I consider my 2017 financial goals and I put in my numbers of what I wanna earn because my numbers are connected, not to a big round number, none of anyone else's business what that number is.

I don't plan to tell anybody. My numbers are connected to specific goals, specific level of lifestyle that I wanna make for my family, specific amounts that I wanna earn for certain consumption goals, certain investment goals. As I put that number in there and then I think through how many hours I wanna work, how many weeks per year, it gives me a sobering reality.

Let's just make an example. Let's pretend that I wanna earn $250,000. Let's ignore taxes. And let's say that I'm willing to work 40 hours per week and I'm willing to work 40 weeks per year. One of my personal goals, I'm not there yet, but in the future, I don't know if, it's not gonna be 2017.

I'm not making this plan in 2017, but maybe 2018 I'll be in a position where I'm ready to go ahead and do it. But I wanna work three months at a time. Work three months, take a month off. I wanna work January, February, and March, and I wanna take April off.

I wanna work May, June, and July, I wanna take August off. I wanna work September, October, November, take December off. That's been for years a dream of mine. And I've taken a month off at various times, but I haven't gotten to the point where I've been able to have everything running smoothly enough that I could actually follow through with that.

But that's a goal of mine. So that means that I need to plan on about a 39-week work week under that schedule. It comes out to about 39 weeks. Well, let's say I wanna earn $250,000. I'm willing to work 40 hours per week for 39 weeks per year. That leaves me with 1,560 hours per year to work.

That means I need to produce for every hour I work at least $160 per hour of value. $160 per hour of value every single hour. That ain't easy. It's not easy for any of us. The reason it's not easy is not because it's hard to earn $160 hourly wage.

It's very doable to earn $160 an hour hourly wage. That's a, I mean, I don't have the data for someone like a billable rate for an entry-level attorney, but I wouldn't be surprised if $150, $200 an hour is a current rate there. You get up into an expert attorney and your billable rate turns into 500, 1,000 to plus dollars an hour.

So it's not hard to do that. What is hard to do is to do that 40 hours a week for 39 weeks of the year. It's the consistency. See, all of us have some things that we can do that produce at a very high level. And the higher you go in the income scale, the more likely it is that your income is not actually so consistently punched out.

Meaning you're not just getting paid on a strict hourly rate. Rather, you're getting paid for projects. You're getting paid for bursts of very high output productivity at very high rates. You're getting paid in bursts for work, doing work that's $1,000 an hour work for these 20 hours here, and then the next couple weeks just simply trimming up the pieces, et cetera.

But the way you move up the income scale is by constantly having this in the back of your mind. If I'm gonna be at work, I need to work. And I'm going to produce at a high hourly rate. Action step for today. Calculate your hourly rate that you need to produce based upon your numbers.

Figure out your income goal. Take that income goal. I'm gonna link a quick little Google sheet. I think it'll work for you. I've frozen two of the cells so that you can, I'm gonna simplify it, pull out this tax line just so it's simple. I've frozen just the result cell.

You can go in and you can change the numbers. That should work for you. I don't think there'll be a big problem. So I'll link that in the notes for today. But go in and put your number of how much you wanna earn. Go in and put in how many hours per week you're willing to work.

Put in how many weeks per year. Now here's the magic of this. Let's say that you wanted to earn $100,000, but you're not earning at a high hourly rate yet. Well, that's okay. Go ahead and put in 60 hours per week and put in that you're willing to work 50 weeks a year.

Or 50 weeks a year. If you're willing to work 60 hours a week for 50 weeks a year, you only need to earn $33.33 per hour in order to produce $100,000. So you can do this no matter what your numbers are, but go in there with your actual numbers.

And remember, if you wanna produce big numbers on the income side, it's gonna come down to consistent, highly productive, focused, high value work. That's how you earn your money.