Ever wondered how the subtle art of compound interest can revolutionize your financial destiny? Today's episode, featuring finance guru Aaron Banks, promises to equip you with the insights you need to turn your paycheck into a powerhouse of financial growth. We get personal about money management, sharing stories that shed light on the critical decisions that can lead to prosperity or peril. Our conversation ventures into the realm of young entrepreneurs, like a diligent house cleaner in Las Vegas, whose real-world dilemmas underscore the importance of making smart investment choices to avoid the traps that snare many budding business owners.
Debt doesn't have to be a dirty word if you know how to distinguish the good from the bad. Aaron and I dissect how savvy investments, like real estate, can transform what many view as a liability into a strategic asset. Conversely, we dissect the pitfalls of credit card debt, highlighting how it can escalate at an alarming rate. Our discussion isn't just theory; it's a practical guide on leveraging credit cards for cashback rewards and breaking free from living paycheck-to-paycheck. You'll walk away with actionable advice on how to manage your money with finesse and the confidence to use credit cards as tools for gain, not just spending.
Lastly, Aaron and I share personal journeys towards financial literacy and discipline, emphasizing the liberation that comes with a debt-free life. We also address the heavyweight champion in the ring of personal finance—protecting your assets. Listeners will come to understand why neglecting this can be as perilous as teetering on the edge of the Grand Canyon. The episode wraps up a comprehensive discussion on the psychological shifts necessary to prioritize needs over wants, driving home the importance of making informed financial decisions that safeguard your future and the well-being of your loved ones.
Don't forget to subscribe, like and share it with a friend or two!
Ever wondered how the subtle art of compound interest can revolutionize your financial destiny? Today's episode, featuring finance guru Aaron Banks, promises to equip you with the insights you need to turn your paycheck into a powerhouse of financial growth. We get personal about money management, sharing stories that shed light on the critical decisions that can lead to prosperity or peril. Our conversation ventures into the realm of young entrepreneurs, like a diligent house cleaner in Las Vegas, whose real-world dilemmas underscore the importance of making smart investment choices to avoid the traps that snare many budding business owners.
Debt doesn't have to be a dirty word if you know how to distinguish the good from the bad. Aaron and I dissect how savvy investments, like real estate, can transform what many view as a liability into a strategic asset. Conversely, we dissect the pitfalls of credit card debt, highlighting how it can escalate at an alarming rate. Our discussion isn't just theory; it's a practical guide on leveraging credit cards for cashback rewards and breaking free from living paycheck-to-paycheck. You'll walk away with actionable advice on how to manage your money with finesse and the confidence to use credit cards as tools for gain, not just spending.
Lastly, Aaron and I share personal journeys towards financial literacy and discipline, emphasizing the liberation that comes with a debt-free life. We also address the heavyweight champion in the ring of personal finance—protecting your assets. Listeners will come to understand why neglecting this can be as perilous as teetering on the edge of the Grand Canyon. The episode wraps up a comprehensive discussion on the psychological shifts necessary to prioritize needs over wants, driving home the importance of making informed financial decisions that safeguard your future and the well-being of your loved ones.
Don't forget to subscribe, like and share it with a friend or two!
Well, welcome back everybody. This is Money Conversations with KJ, your host. I'm your host, kj, and today we've got another session of the Money Talk series with Mr Banks. Mr Aaron Banks, welcome back to the show. You ready for a good conversation? I am Kevin, and thank you for welcoming me back. Oh no, it's always a pleasure to bring you in. So, guys, remember, money Conversations with KJ.
Speaker 1:Typically, my hope, my guests are people. We're going to hear their journeys with money, but Mr Banks and I, we're going to talk about different aspects of money and hopefully trigger some things in your head. Okay, so let's get this show on the road, all right? So what I thought we'd start with today, mr Banks, is you know, I'm a financial coach, so I like coaching people. We just met somebody here. You brought somebody over to take a look. Somebody cleaned my house, right, and that guy was interested when I told him what I, what I do here, and he had a bunch of questions and he's a young entrepreneur and I told him about the book and whatnot, and so it piques his interest, as it should with most people, don't you agree?
Speaker 2:Well, especially in his case, because he's just getting started. I mean gotta be in his early 30s.
Speaker 1:Yeah.
Speaker 2:And he's new to Las Vegas, and so he's here and he was just, you know, doing a job at my place and we got into a conversation and next thing you know what, he can also clean your house, kevin.
Speaker 1:Right, so came over, took a look and I told him, I invited him to come be on the podcast. So you know, hopefully in the next couple of weeks or something that we'll get him out here. But you know, he asked me. He asked me a couple of questions that had to do with me giving him financial advice. And so all you guys out there who listen to me regularly, no, I'm not a financial advisor. I don't give financial advice. I'm teaching what I call the rules of the game. We're all playing the money game. There are rules, just like in any game we play, and the more you know the rules, the better you can play, the further you're going to go.
Speaker 2:Right and we're looking for success in the money game, as you, as you appropriately said to me one time, you got to put those soldiers to work, kevin Got to put them to work Right, and so what I wanted, the topics I want to start with today is about compound interest.
Speaker 1:Right, because there was a young entrepreneur right, and, as most young entrepreneurs, all they want to do is what they want to go make money Period. That's all their mindset. Is telling them. I'll trade X for Y and in his case, he'll clean my house for a dollar amount Right Now, what he does with that money, that's when the game really starts. It's not about what you do to make a living, it's what we do after rights, and compound interest is such a vital part of the decision making Once you truly understand how it works, would you agree?
Speaker 2:I would agree with that, especially in the case of the youth, those who are looking for financial advice, looking for direction. They're looking for a roadmap, a way to get and grow their money so that they, at some point, can do the things that they've always wanted to do without having to stress over it.
Speaker 1:Kevin, Right Now, I would imagine I remember being a young entrepreneur and you're out there making money and you want to grow your company, so to speak. Right For him he's a one man show now, but ultimately he may want to grow and bring on you know, some staff, and then he'll have to invest in his company, with you know, equipment and materials and things of sorts for the houses or businesses that he wants to clean. That's investing in himself. That's to be able to make more money Right the side of the coin he needs to learn and I love talking to young entrepreneurs is listen, you're, you're let's just say he's 30, you're 30 years old. You got at least another 30 to up to 40 years to actually make money. And it's the vitally important that you understand it's not what you do to make money, because we all out there doing whatever to do or to make a living. It's what we do with it after and compound interest, understanding how it really works.
Speaker 1:So let's say, in his example, he's got to go buy $2,000 worth of equipment. Does he need to? And he needs to finance it because he doesn't have $2,000. He's got like $500, but he just maybe land some contracts. He's like man I got to hire two people. I've got to go get two of everything, because each person needs everything. I got to spend two. So now he has to, he has to go out there and finance it.
Speaker 2:Well, he's investing in his business, starting with himself, and it's interesting the questions that he asked you, because as he goes through, we're just peeling back the first layers of the orange, and he made a comment about debt and financial debt and things and I'm thinking we're just learning about him. So, as he goes through this process and hopefully he'll dial in, do money conversations with KJ. Take a look at the web page and all of the advantages that come in with reading your roadmap and studying it. If he listens to this podcast and understands the power of compounding, what is he going to do with the money he's earning today? You have to invest it in your business, into yourself, and hopefully he'll get out of that.
Speaker 1:Right and not the trap that most people fall into. When I say most, let's talk. We're talking about entrepreneurs at this point. But this works even if you have a JLB, which is you. You traded your time or services for money and you grab that money and then you feel that you deserve certain things in life, and I do believe everybody deserves whatever they want. The thing is is they're not patient and waiting until you have the money to pay for something cash, so they go out there and finance right Too many things and not understanding compound interest meaning when you're paying right, because compounding just works on both sides of the coin. Meaning you were either earning money on through whatever interest rate or we're paying money through an interest rate number and typically and you know this share with people, which is usually on the number, the higher numbers on which side of that coin.
Speaker 2:Always is going to be on you paying the interest on money that you've borrowed or money that you owe something on, such as revolving charge or things like that, and that is not a pretty picture, kevin.
Speaker 1:Nowadays. It's not, it's not right, and they hear this on the news. Interest rates are going up, interest rates are going down. What does that mean for me? Right, what does that mean for me? And even if you're someone that's not financing things, it means a lot to you because the products and services that you're buying out there in the real world whether it's gas, food, having lunch or dinner somewhere those interest rates affect everything, because the guy let's say a restaurant, you're going to go out to dinner or whatever right, and we all know now that the dinner that you pay for today, this is the February of 24, versus the dinner you paid February of 2020, just four years ago. How much more money is that dinner today? Banks?
Speaker 2:They have a word for that, kevin's called inflation, and when inflation starts rising, it's usually driven by using the manufacturer or the farmer or whatever. Because their cost has gone up, they have to recoup that cost, and so therefore they charge more for their product.
Speaker 1:Right, and so it goes up because interest rates move right. So therefore it does matter when you hear it on the news, even though maybe you're like well, I didn't go finance anything, so it doesn't really matter to me what the rate is.
Speaker 1:Well, yes, it does, it affects you Now almost any, and everything that you spend money on it's affecting you. And if you're in the position of, hey, I want to buy a house or I want to buy a car, maybe now's not the exact right time, depending. Now I'm in real estate. I tell people right now is the best time to buy a house Because the interest rate has an inverse reaction to the price of a home. So if the rates are going to go down by the end of the era, speculation says what is that going to do to the price of the home?
Speaker 2:It goes up.
Speaker 1:Now, once you purchase a house for $1x, does that number going to move? No, that's a fixed dollar amount you've agreed to pay. Well, these just round numbers, $500,000. So if you go buy a house in February 2024 for $500,000, but all of a sudden people around you tell you no, no, no, you got to wait till the rates come down and then go buy Okay, wait a minute.
Speaker 1:And let's say November of 24, the rates went down by, let's say, a half a point, maybe three quarters, even. I'll say by November they might go down, but the price of the house went from $500,000 to $540,000. What we can do if you paid the higher rate today, you can always refinance, but you can't reset the price of the house. You've already agreed to pay. You waited and now you're paying $540,000. So when we hear that the rates are moving on the news and you're deciding to buy whatever right, people aren't telling you on the news well, buy now and when the rates go down, refinance and save money again, because you're saving money buying a house today, right now, in the first quarter of 24, versus in the last quarter of 24 or first quarter of 25, they're going to be more money, so it's going to cost you more money. So that's what you have.
Speaker 1:the what to say they call that the cost of time the cost of time right and times are biggest asset. So, as we go through it, understanding it's called compound interest, it's called the rule of 72. And I remember years and years ago when I heard about that, I'm like why, what's with the number 72? Why do they use that? Right? And people you know, and some people will call it the bankers rule, so it's called a few different things, but at the end of the day it's compound interest, and so the rule of 72 is the math on figuring out how much you're paying or how much you're earning. And it's just simple math. It's division. You divide the interest rate into 72 tells you how long it takes to double your money, or that's how long it takes to pay that piece of debt off.
Speaker 1:Right, if that's what you're doing. So let's just take a house, for example, or saving. Let's go to saving money. I put $5,000 in the bank account and the bank's giving me 1% on my money, which they think is really good. Right, if the bank gives you 1%, they think great, divided by 72 is 72. That means it takes 72 years to double your money. Think about that, kevin 72 years. But now if you look at the credit card companies who are charging, say 24, 26, 28%, how many times is 24 going to 72? It goes in there four times, three times, no, like 3.2 times. Yeah, three times. So you're telling me that they're doubling their money every 3.2 years?
Speaker 2:Wow, and you look at the duration that you're gonna be paying on that debt and you start telling yourself did I really make a wise decision?
Speaker 1:Did I make a wise decision. So for you guys out there, buying something or saving if you're saving, I gotta find the vehicle that's gonna give me the largest return. If I'm investing in, say, something in the stock market or a house, right, houses are an investment because, depending in history, time is shown. Let me see how I'll use. Yeah, 2019 to 2020. For two years, appreciation was double digits on your home. Your house was making you a lot of money. Now there's been some cycles where a house on average, typically over the last 80 years that the average, if we average everything out a house is gonna earn you between 4% to 6% a year. That's just a good, easy, calm and that's okay. Right, 6% is 12 years to double your money. If you bought a house for 500 and 12 years it's worth a million. Okay, I'll live with that. Right, I made $500,000 in 12 years. I'm not gonna complain about that. But in those two years that it was about, depending on zip codes upwards of 15 and 20%, these house appreciations were gone. People were really making some money getting in and out in two years and making five figures, even on investment properties, even on investment properties. So again, I just think, talking about compound interest, getting the folks that understand. Do some quick, simple math before you make a decision on whatever that is that you're either getting radio and best in, and or purchase. What is that gonna do for you? Right, where's my money best suited to? Be right? So keep that in mind, look, and if you wanna learn more about it, you can go on my website, moneymasterinstitutecom. There's a lesson in there on it and you can check that out.
Speaker 1:Let's roll into debt because, as my new book is breaking, the paycheck to paycheck cycle is because of people are in that cycle because of, typically, debt. They have too much debt and the wrong kind of debt. Well, we're gonna talk about that. Good debt, bad debt. Now, depending who you're talking to most well, some people out there. I'll use Dave Ramsey. He's probably the most popular when it comes to money coaching and Dave Ramsey's philosophy is one zero debt, absolutely no type of debt. Pay your house off as soon as you can. You do not carry any kind of debt whatsoever. Well, I'm a real estate investor. Do I carry debt On every transaction? I do, absolutely. It's leveraged good debt because it's short term right.
Speaker 1:I buy a home, I put money into it and then I resell it for a profit During that short timeline that has been as short as I've literally bought a property, rehabbed it and sold it. My best timeline 32 days and I think I made 32,000 on that deal. That was a pretty darn good return. I got to play the game with OPM other people's money. There was none of my money in that transaction. Did I pay? Did I have the cost of money that I had to return for the use of it? Absolutely I did. I look at the cost of money like I've gotta buy the flooring in this house. It's just a cost, it's a line item. So I don't worry about what the cost of money is and it didn't matter in that particular deal what I paid for the money. What mattered was I purchased a house, I rehabbed it and sold it in 32 days. So it was my time and I made 32,000. That's basically a thousand bucks a day.
Speaker 2:And let's think for a second. If you're doing that, kevin, and it pays that handsomely here's an opportunity for those who are listening to realize that if you can get the money to work for itself and you're just paying for the cost of the money and you're still making some money at the same time by closing the transaction, it's a winner. Winner.
Speaker 1:It's a winner. It was a win-win for both the. I have some private investors that want to make money on their money because once you get to a position in live, you'll like, hey, I'm sitting on a million, two million, five million, whatever the number is. Your job is to go make your money, make money, and so they're always looking for something and I gave double digit returns on that money, where it's hard to find double digit returns in most cases. So they thought that was really good and I only had their money for 30 days. So they did is better than I did. You know what I mean. So that's an example of good debt. Let's talk about examples of bad debt.
Speaker 2:Well, I can think of the number one bad example or example of bad debt is, without a doubt, the revolving charge. If you're going to Macy's and you're buying a set of pots or a set of dishes for the house and you realize, ah, you know I don't really have the money and you know I need to hold on to my cash and so your finance, are you putting on your credit card. That's the worst scenario you can get into. You look at the interest rates on those and you start saying to yourself, okay, I got these on sale over at the Macy's store, but wow, the money that I'm paying on the back end I'm losing this deal, all the sale on the dishes or the pots that I bought. I lost that sale.
Speaker 2:And I can tell those who are listening right now a revolving debt is the worst thing you can do, especially if it's a department store credit card, because then that debt is only coming from that particular department store. I mean, there are some advantages. If you have a credit card that pays you cash back, there's another opportunity and if you had to do what you had to do, I could get it. But if you're just charging and they'll give you all kind of enticing I'd? Oh, we'll give you a free box of chocolates If you open up a charge account with us. Oh, they love that. And look at the interest rates on those things 23, 24, 25%. Kevin.
Speaker 1:Right, right, you know, as you're explaining, that when I was a young kid, my dad would take me fishing right, and there's a term in fishing called chumming. You ever hear that term, of course. And so for you guys out there that are fishing and you know what chumming is, and so for those of you that aren't fishing, you've never been fishing chumming is a way to attract the fish right. We used to chum with. We'd bring a couple of cans of corn, because fish love the corn right, and the corn kind of it starts at the top of the water and slowly sinks right and it attracts the fish.
Speaker 1:So my point is I thought the parallel to and that's how I would attract the fish, and we catch fish right A sale at any given store is chumming. They're chumming. You get the. You get the in the mail, you get the. You know the sale pamphlets, you see the TV commercials, the radio commercials, sale, sale, sale. And when is there a sale?
Speaker 2:Oh, usually around some big holiday or some big event or something that's gonna draw you in.
Speaker 1:Any and all holidays, right. There is a holiday literally two or three every month. So now there's major holidays and then there's a bunch of little ones like I'll give you a Columbus steak. Great Columbus Day. Where is Columbus? All right, but that's an I call it an excuse for sale. Hey guys, we gotta get him in the store. How many? It's Columbus.
Speaker 2:Day sale 20% off.
Speaker 1:Right, we just had President's Day sale.
Speaker 2:President's Day sale.
Speaker 1:I mean, it's just any and all little holidays that societies came up with. That all of these types of companies will use as an excuse for a sale chumming attracting you. Come over here, I'm gonna give you 10, 20, 30, 50, whatever the sale is, it doesn't matter and then they want you to buy it on their credit cards, pay it over time, and now they didn't lose any money. They made more money. That's correct. They make more money not just off the sale, because most people will finance those silly products. So I'm 100% online with Dave Ramsey on eliminating debt. No, eliminating debt, especially bad debt. I just rounded up into one word consumer debt. You're a consumer. Stop going out there buying stuff that you can't pay cash for Now. That being said, I'm a believer in credit cards because we can leverage the perks that they give us. I'll give you an example.
Speaker 1:A few years ago, someone explained this to me and it made so much sense and I do whatever sense. We all have what I call our anyway bills. I'm gonna pay my electric bill anyway. I'll pay my gas bill every month, for sure. I'm gonna put gas in my vehicles all the time. That's happening all the time. All these expenditures that we have all the time I do them anyway. I use my credit card because I'm gonna spend that money either way, right? So then I said, okay, let me leverage that Through my credit cards. They're gonna give me either cashbacks, points or miles. Those are the three things that you're gonna get with any given credit card. Right, cashback, right. So if you get 5% cashback now I'll just use the average household out there. Let's say you got $5,000 worth of bills and let's say 2,000, half of it's your mortgage. You get $2,500. You spend on everything else, from all your utilities to your groceries, to your gas, everything. So that's $2,500 a month times 12 months, that's $30,000. What is 5% of $30,000 banks?
Speaker 2:What's that $15,000?
Speaker 1:$15,000. $15,000, excuse me $15,000 free dollars because I'm paying my bills anyway that I get every year. How huge is that? What can $15,000 pay for?
Speaker 2:And let me step back. When I'm $15,000, kevin and that $15,000 is not a sign to anything that's $15,000 that can be put to work to double it. Is there a way you can take that money and double the $15,000 on your cash back, for example? I think that's what we're getting to here. Is that, for those who are listening, is that there's so many ways that you can have money work for you and even though you're taking on that debt by charging those items on your credit card, it's paying you back. So, like you said, the anyway expenses, those I gotta spend it anyway. Why don't I just spend it anyway and then pay myself with that money?
Speaker 1:Exactly Now. Here's the caveat the reason that people get in trouble is because they're not responsible with their money. People get a credit card that comes in the mail $2,500 limit. Let's just say they think that's their money. It's free money. I can go shopping. Credit card company just gave me $2,500. Is that free money? Banks? Absolutely not. Is that your money? No, it isn't. It's not even your money. They're just letting you use it and then you gotta give it back. But why not play their own game, to your advantage instead of their advantage? But it takes responsibility to be able to play that game.
Speaker 1:And the problem is because people focus more on their wants than their needs and then they get in trouble. They'll get a $2,500 card and they'll go charge 200 bucks. The bill comes due. They're like oh man, I'm just gonna put 50 on it right now. And then that snowballs. Two months, three months, six months, maybe at the end of six months I've charged up the whole 2,500. And now my minimum payment's 125. And that's all I can afford. And now you're in bad debt. Now you gotta figure out-.
Speaker 2:I think that turned from good debt to bad debt.
Speaker 1:Kevin, Just that quick, or you get paid. You have your budgeting. You know what you're spending every month on. Your utilities has an average, because no utility's exactly the same every month, but we all budget an average dollar amount 300 bucks, whatever it is. You know approximately what you spend on gas every month. You know approximately what you spend on food every month. Right, these are all averages. So you know you normally pay all that cash, but I want to earn. I have $2,500 a month with those bills. I wanna earn $1,500. So I remember when I was on the road teaching these to the people and I would say what time of year do people get themselves in debt the most?
Speaker 2:How do these?
Speaker 1:Christmas time. So how would it be if you paid your bills all year long Using your credit card, paying it off, using it, paying it off, using it, paying it off because you have that money. Do that. At the end of the year you've got $1,500. For what Holidays? Holidays, your presence. You're not actually dipping into savings, you're not actually going into deeper debt to buy these gifts, boom. That's how you can do that. I'll take it a step further.
Speaker 1:So now, I haven't had kids in the house for a few years now, but I know some other people who have kids that are, let's say, they're teenage years, going into college, and they would use credit cards specifically designated for food, for household, for entertainment. All these cards are specifically meant for one thing or another. And as you go out there and you qualify for these cards to give you the money cash back and, as you guys will learn, money cash back comes anywhere from one to maybe 5%, depending on what you buy, depending on who's giving you that money. Cash back, like 99%, sure, I mean discover is the highest. That will give you 5% on whatever. But some of these other cards that they broke it down, whether it's if it's gas, you get this much cash back. If it's food, it's this much. If it's entertainment, it's this much, right.
Speaker 1:So what are you out there doing, right? The point is, if you can get that money cash back, one of a couple of things you could pay for. Maybe you got school tuition, maybe you're planning a vacation, right you do? You say, if you do all that money all year long and you make yourself money cash back 1500, 2000, 3000, $5,000 possibly, depending on what your bills are every month right, you could earn thousands of dollars a year and just wait till, you know, either spend it at Christmas time, because that's when we spend a lot of money, or, hey, your family vacations are every June when the kids get out of school. So that's the cycle you use, all right. Then July through May, all that money stacked up that's paying for next year's vacation. Why can't people have this mindset Banks?
Speaker 2:Well one of the things you mentioned. Really, that probably sets people away from doing that mindset is they don't understand it. And what's really good about this particular podcast that we're doing now is that it gives people an opportunity to listen to you, listen to me as we're talking, and then hopefully that'll trigger something in their mind that says you know, I'm looking for an opportunity to get free money because all of my money is for my anyway bills. I've gotta pay these bills anyway. But wait a minute, if I do it right, I handle this the proper way, my anyway bills get paid and I get out of that some money that I can spend on once Not needs, because your anyway bills are needs, but once. And then if you do that and you have a little success with it, then hopefully you can build upon it and at some point that is an educational tool for you to well the person to share with friends, share with family. But I can tell you right now I guess I understood the concept earlier in my later years of working, and the concept is this First of all, it feels good to not have debt.
Speaker 2:I gotta be honest with you, kevin, it feels good to not have debt and you know I might have drove and driven a eight to 10 year old car because I didn't believe in trying to, you know, have the latest vehicle. I knew I could afford it, even with the monthly payment, the additional, the additional debt on my monthly payout. But once you understand and right now I bank with Chase and Chase gives me 5% cash back. But they also offer some specials, because what they'll say is you know, for the months of January through March, if you make any expenditures on certain stores, certain items, they'll give you an additional 1%. So now you start saying to yourself well, hold a second, you're gonna give me an additional 1%, I spend this money.
Speaker 2:But here's the caveat, here's the trick at the end of the month I pay the card off. So my anyway expenses, if I use that card, I have made those expenses, charged them on the card, at the end of the month paid the card back. But because I accumulated so many points or so many dollars through expenditures, I'm reaching that 5%, 6% threshold. And it's very, very nice that every three months or every six months I go and look at how much I've accumulated and I take that money and for me, I use it for my emergency fund. I have certain amount of cash that I keep for emergencies or for something fun, like maybe going on a golf trip to Torrey Pines or something.
Speaker 2:I have access to that money and I don't have to search for it or borrow or do anything like that. I've built up this kind of slush account or this cash account and for those out there that wanna pay themselves, to fill the joy and excitement of having yourself paid, paying yourself, and it's just a feeling that's indescribable when you're working with your finances and you realize, you know this can be burdensome, kevin, you know it can be very challenging. But if you don't have the tools, you know, if you're going into this whole battle and you got a revolving charged car for $2,500, and you're not using it to pay your any way of expenses, and next thing, you know the card is close to maxed out and you're looking at yourself going well, you know now I need about $500, but my card is maxed out. I don't even have room in my card to pay for these items. And then you realize I'm in a quandary. What do I do next? How do I get rid of this debt? That's what Dave Ramsey's been talking about with the bad debt, kevin.
Speaker 1:Right, exactly.
Speaker 1:And, like you said, I remember having that conversation with my youngest daughter when she turned 18, and I shared with her I says Faith the whole reason I'm teaching you about money is because I never want you to experience the feeling of being broke, right, being in debt and being broke, that comes with a very gut wrenching feeling and you guys out there you know if you've been broke and in debt, you know that feeling. It's a horrible feeling. It's called stress. Stress will affect you physically and mentally, and so when I shared that with her, I says I don't ever. That's the one thing I'm totally trying to get you to understand and wish for you that you'll never understand or feel that I want you to be 30, 40 years old and say I don't know what it's like to be broke. I've never been broke in my life. I don't have a boatload of money, but I've never been broke. And so here she is today, 24, gonna be 25 this summer and she's never experienced that and she likely never will, because now she has really good money habits. So picture and imagine you guys thinking about, think about if you've never felt that, how would your life experience be? It would be like you're in Disneyland every day, right, well, put, feeling that and especially you have that. And then you have kids and now you got this expense and you know. But you know you get yourself some big dad and you're like, man, how's this gonna happen? It's not a good feeling. It's the reason I teach financial literacy. I've been there.
Speaker 1:I remember in my 20s and 30s that, yes, lots of debt felt that anxiety, that stress, and that's what most people are feeling today, with 62% of Americans leaving paycheck to paycheck. It's an anxiety, stress, feeling they don't want to think about it. They don't want to talk about it. It all happened because nobody sat you down and taught you financial literacy. Right, we must learn how to play the game because you are playing. The minute you start earning an income, you're playing the game. Whether you realize it or not, whether you want to or not, you are in the game. So, man, I could just talk about that for longer and longer debt, good debt, bad debt, okay. So I mean you guys can follow the path if you're real conservative and Zero credit cards, don't do them. For those of you that are very responsible, like my daughter grew up responsible, she has hers. This is how she's paying for her vacations. Right, I'll tell you right now. She's going out of the country and to to out of the country vacations this year, and there are one of those paid for because of money, cash back.
Speaker 1:But my point is Try to get to the point. Learn some financial literacy, the basic rules of the game. Get yourself. If you're off track, get back on track. If you're on track, want to. I want you to stay on track and learn how to make money.
Speaker 1:Make money that's the name of this game. You go, get educated Wherever however you want, but it's all. All that education is is for you to go out and make a dollar amount. Whatever your value to the marketplace is right and we all get paid on our value to the marketplace, and that range is huge. That range is anywhere from minimum wage in this in this country, the maximum CEOs getting $10 million bonuses, right. So it's the value you bring to the table. Do the right things with the money. Understand nothing makes more money than money. Period, right, all right, let's move along. We talked about the debt. We talked about the good and the bad of the credit cards. Now, once you get yourself on track, mr Banks, and you're on track, and at 55, retirement, it's time to protect what you built Assets, right, asset protection. How much, how much did you learn in those working years of 25 to 55? About asset protection?
Speaker 2:Well, most of my learning came from trial and error, unlike those who are listening to this podcast right now, where you offer the roadmap to financial freedom or you have, you know the. They can plug into your website and get information on how to Stay away from bad debt, how to, how to grow your money. For me, it was more of a trial and error issue. I just had a situation where I I had to how do I say this? Had to pay myself out of debt and I wanted to buy some investment properties. So what I did was I.
Speaker 2:One of my company's options was I was able to buy some stock, and when I bought the stock, I I sat on it for maybe a year or so. It appreciated, and as the stock appreciated, I began to realize, hmm, I can take that stock, sell it and get myself completely out of debt. And I made a decision that I was going to do that. And once I did that again we talk about the feeling of being financially free it wasn't so much that I was financially free or I had a whole bunch of money, but I got rid of my debt. And when I did that, an Epiphany happened I realized that I liked the feeling of being debt-free, and I spent rest of my Working years trying to figure out a way how to get through life. And that add any more debt.
Speaker 2:And Nobody said it's going to be easy. Everybody's situation is different, but in my particular situation it just you know, you just get to the point where you're just monitoring whether your expenditures are good expenditures or that. I was saying that we did that you and I talked about the last time we were talking is Putting once ahead of needs. Once you get that kind of strategy Right in your mind, the process itself will reward you, and the reward comes with Minimize debt. You're teaching yourself what's a good expenditure. You're questioning when you do have to make an expense, is it really necessary or do I have to finance it? Do I have to borrow money to to pay for it? Can I get by without even paying at all? So there's a lot of, I guess, scenarios that you can go through that help you make the right choices.
Speaker 2:But you know something my mom told me a long time ago. She said you know, son, there's a Good turn and as a bad turn. So as you go through life, you know life has its bumps in it. But when you make turns and you make turns based on solid financial knowledge and you have, you know, the opportunity to make choices that are going to be good for you, where your money is working, or if you do have to take on debt, you take on the right type of debt. Kevin, that, as you go through that, that's a 25-year period for me. I learned some things about myself that I can withhold on a lot of the wants and just focus on the needs and thank goodness, during that time I had a partner that understood that. You know, sometimes we're just not gonna have a new car, it's just gonna be.
Speaker 1:We're gonna maintain our status quo because our finances don't warrant the additional expenses well, I heard a very sound strategy about the wants just a few weeks ago, listening to a different podcast, and it never and it never hit me this way and I've never personally lived this way. But I think it's a very good strategy, so I'm gonna share it with you guys. And this may be a way to alleviate debt Silly, you know consumer debt from you guys. And so the strategy is this and I'll just use I'll use a car, for example. That's a big purchase, but this, this strategy can work on anything it could be.
Speaker 1:You're at the mall and you see a watch, or, for you, ladies, you see a purse. You know like I want to buy that right and you want it, but do you need it? And so the strategy is this if you see something that you want, whether it's spur of the moment You're at the mall or whatever you say to yourself, well, I'm not gonna buy it right now, let me see how I feel tomorrow, and then and then tomorrow comes do I still want it? Probably it's only been a day, but do I need it? I'm gonna wait a week. If Next week let's say you did this on a Saturday if the following Saturday, you ask yourself that same question again Do I really want that? In most cases, the little endorphin high that you wanted it a week ago is gone Now. I didn't really want that because there isn't a part. I'm big believer in it. I don't think there's a person alive you could go through your house right now, this minute, wherever you are, or your car and find stuff that's in your house that you bought and you're like why the hell did I buy that? Why did I waste my money on that? So do the delay of gratification strategy? Wait, and sometimes on the big ticket items you got to wait longer. On a car you should probably wait 30 days, six months, especially if you got a good working car. It's an ego thing.
Speaker 1:Yeah, I've had this car for years. I'm over it. I really, man, I keep seeing that car over there. That's nice, I want that one. You know what I mean. And once you learn compound interest and you know you bought that car at an interest rate of whatever it was, you're not done paying on it and you already want the next one, you are throwing your money out the window. My last two vehicles that I've owned the last one I owned the longest I've ever owned any vehicle 10 years, had a five year note on it. So I drove that car for five years with no note on it. The previous one was, I think, I drove it three years after I paid it off. And so if we can get in the habit of buying these expensive cars in today's world, right, unlike when you and I were teenagers, they wasn't that bad, they were under 10 grand. You could buy a car now Brand new car, yeah, and now we're looking at six figures for a nice new car.
Speaker 1:But my point is delay the gratification and wait and ask yourself if it's a small ticket item, wait a few days. The bigger the ticket item, the longer you wait and just ask yourself and most of the time you're gonna go. I didn't eat that, no, I'm good, because I think you'll be like you're gonna have a shiny object syndrome. I call it. Oh, that was shiny at the time and now this thing over here is shiny. I'm looking at this other item, what it may be, and keep doing that and don't spend that money. Instead, put your money to work, keep investing, because there's a term and a lot of people don't agree with it anymore, but you and I grew up with this term, and you've heard it the golden years. Thanks, you're in the golden years, you and I are in the golden do you feel like you're living in the golden years right now?
Speaker 1:I think I do Kevin.
Speaker 2:I'm very golden nowadays. That counts then. I feel like I'm in the golden years.
Speaker 1:So, but you're only the golden years, because you sacrificed for a couple of generations, I mean a couple of decades. You sacrificed. You didn't buy that brand new vehicle, right? You were more interested in the endorphin high that you and I both get today. That we love is watching our money grow. That's the endorphin high that I want.
Speaker 1:I put this dollar amount to work, whether it's one day, one week, one year, and it's grown to whatever. I'm like I didn't do anything but park that money over there and my money made money. That's very exciting. And then tell you the first time you experience it, you'd be like wow, because normally I'm trading my time for money or service or something right to get money back. Well, when I didn't do anything and I wake up and I made money, you're like that's a pretty darn good feeling. And that's what investing is about putting your money to work, because money works 24, 7, 3, 6, 5,.
Speaker 1:You and I don't, right, but we were getting ready to talk about protecting what we've built over time. Right, protection comes in different forms. Insurance protects you. Asset protection could be a corporation. You need to open a living, trust, a will, because what do you think happens to folks like yourself. As a matter of fact, and we did have this conversation, I don't know, a few months ago about when you pass and the assets you have, who's gonna get them? If we don't dictate who gets it, then who do you think gets it? Because it's going somewhere? It's called probate. Yeah, it's called probate, and so it's vitally important that you open these certain accounts depending your age.
Speaker 1:You're married, you got kids? Oh man, you need all kinds of protection. If you're married and you have kids, you better have life insurance. You better have life insurance because stupid stuff happens. Not everybody gets to have the pleasure of living to 90 years old or whatever right, and so you gotta protect your family. Life insurance is one way to protect your family, but you also gotta protect your assets. If you've taken years and years to grow assets money six figures, seven figures you don't want anybody coming in and wiping you out because something in your life happened right, and so learning how to protect your assets is vitally important. I can remember up until maybe just 12 to 15 years ago didn't give one thought about asset protection, not one thought. I had assets when I had my construction company building specs, houses, three million bucks not protected at all. That's like let me give an example. That would be crazy.
Speaker 1:That's like if you've ever been to the Grand Canyon, walking on the very edge of the Grand Canyon, for what For a view, right, and you're like, well, you're looking at the view, you're not watching where your footsteps a little pebble, you slip, end of story, boom, you're down at the bottom, dead right. So you've gotta protect your assets through a bunch of different vehicles. You need to go see an asset protection specialist. I have one. They're on my website. You can find him, mr Lonnie Weissman, over at Executive Asset Solutions. He can help you out with all of those things because it's people. I'll just use an example. If someone did all the right things, like you did nest egg of money, nest egg of assets you've got a front yard. Somebody trips, breaks a kneecap, wants to sue you. What's the attorney looking for? Assets? Can he get to them? Yes, I can. He's not protected. I'm gonna take a 90% of what that man has.
Speaker 1:Your kneecap was worth $2 million ma'am, your life was ruined and so, boom, you go back all the way to square one because you didn't set yourself up correctly, whereas, oh, my house, oh no, that's in a corporation that's not in my name, so they can't sue you personally. So there's so many things that we can do to protect ourselves from lawsuits that I really want people to understand that. It's funny how I try to think back on the 12 chapters of my financial literacy program, of which one I like the most. And, man, when I start talking about one, I'm like, yeah, that's the most important one. Like we're talking about asset protection. I'm like, man, that is so important, it's so important, yeah, I know. But then I started thinking about investing. No, that one's the most important. And then I think about the rule of 72. No, that one's the most important. They're all important, they all build on each other that we can go out there, bring value to society on whatever level.
Speaker 1:That is for you, make a living doing whatever you want, whatever makes you happy. And because, what do they say? When you make a living doing something you love, you never work today in your life, right? Something that effect? Well, you don't want anybody to take it, that's for sure. You don't want anybody to take it because something silly happens and some attorney comes in and they don't care about you, they don't want to be like, well, let's not take all those assets, let's leave them with some. I don't know that guy, screw that guy. He had a sprinkler head sticking up two inches tripped. Now I'll never walk the same in my life. I want everything he's got.
Speaker 2:Right, think about that, kevin. And they're sitting there waiting on they call them ambulance chasers. They're sitting there waiting on the ledge for that opportunity, waiting in the wings.
Speaker 1:So we must protect ourselves. We must protect ourselves. Any assets, whether, if it's your assets could be only cash, that's fine. Your assets could be no cash. But you have a house, some cars, jewelry, maybe you're a baseball card collector and you've got baseball cards that are worth 20 grand, 30 grand. That's an asset. It's an asset. And, believe me, when most attorneys come looking or the IRS you owe the IRS, they want your assets too. You owe me dollars. Oh, no, no, no. We see you have assets. You need to go sell that. You gotta pay us. They literally will say that.
Speaker 1:I've talked to my accountant that I had for 20 years and then he passed God bless us all great accountant and he used to work for the IRS. So he shared with me the tactics that they teach them. You get that money any means necessary. Get it any means necessary. You get that any means necessary. You tell them to go borrow it from family and friends. You tell them to sell assets. You tell whatever they got you owe the IRS. You give me that money right now and the longer you wait, the more it's gonna cost you, because they penalize you daily. You know penalties and interest. It's crazy. You do not want to owe the IRS money. It's the last people you want to owe money, because you know you don't want to. The only way to clear those guys is to go BK bankruptcy, and that puts you all the way back to square one. You don't want that to happen either. You know what I mean.
Speaker 1:So today I think we had a very lovely conversation. I opening, I hope, or some reminder for others, some people are. There's a commercial out there about life insurance. I see this. The commercial comes on and something happens and the wife says hey, well, you took care of our life insurance. We got it right, didn't we? Honey? Puts his head down, he goes I didn't get to that yet. Whoa, she freaks out what. I'll go get it right now. So if this conversation got you to realize that you gotta go do some things, then Banks, you and I did our job.
Speaker 2:Protect the assets. Kevin, that's what you're saying right now protecting assets.
Speaker 1:We did our job. Well. There's protecting assets, learning how to use credit cards correctly. If you're not responsible, you can't do it. Don't get one. Don't get one if you can't handle them correctly. Understand good debt, bad debt, okay, and compound in just understand what you're getting yourself into. All right, these are all food for thought types of conversations that we're having, so hopefully we got you to think today. All right, all right, guys. So again, if you're on YouTube, do me a favor, hit that like button, smash the subscribe button if you haven't already on. Follow me if you haven't already followed me on the podcast, and we'll talk to you guys on the next one.