Ep. 34 The System Isn’t Broken: It’s Working Exactly as Intended.

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Is the system broken, or is it working exactly as intended? Today, Jim dives into the sobering reality of the "49% struggle"... the nearly half of Americans who are drowning financially despite working harder, or working multiple jobs. We peel back the curtain on "The Spread" (the math banks don't want you to see) and the "Stealth Tax" of inflation. More importantly, Jim shares his personal journey from the paycheck-to-paycheck cycle to financial ownership.

If you're tired of being the "unpaid intern" in the bank's business model, this episode is your wake-up call. Visit NetWealthNest.com to join the community and start building your Nest.

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Transcript

Jim 0:00

Nearly half of this country is drowning. A recent Redfin survey found that 48.7% of Americans, that's homeowners and renters are struggling to make their monthly payments. Think about that. That's one in two people. They're skipping meals, working two, maybe three jobs, and to lean medical care just to keep a roof over their heads. You've been told that if you work hard and you play by the rules, you'll win, but the rules were written by people who profit from your struggle. Today, I'm gonna show you some of the math. They don't want you to see. So let's start with something we like to call the spread, and we'll use a bank as the easiest way to explain this. The bank is a middleman. It's not a vault. Okay? And most big banks, they pay you next to nothing for your money. Point one or 0.01% of the money that you deposit into them. They call it safety because it's protected by FDIC I like to call it cheap capital for them. Let me give you an example. Let's say you deposit $10,000 into a bank and that's your emergency savings account, and they're gonna pay you 0.01%. They would turn around and they take that money and they lend it out. Maybe it's somebody who has a credit card. They are paying 24% on that credit card interest rate, or maybe they went and lent it out to your neighbor who's buying a car and they're gonna pay 8% interest. Think about that. Over the course of the year, they're gonna pay you a dollar or two for that $10,000 in interest, and they're gonna make somewhere between 800 and 2400 in the two examples we used. That's the spread, and you can see how dramatic it is. Keeping money in the savings account. It's kind of like watching an ice cube melt in your hand. Yeah, you've got it. You see it, it's there. It feels safe, but it's slowly disappearing and melting away you can save your way out of a system that's designed to devalue your savings. But here's the deal. Don't get mad at the banks. They're a business. This is exactly how their model works. They're just like any other business. They're working to provide a service, in this case, loans to other people. And turn a profit from that service just like any other retailer that you might go to, that you buy things from or anybody else that you buy a service from. The goal is to provide a service and turn a profit, and that bank is no different. The key is to understand that and then shop around. Don't just go with your major, national players of the really big banks. Shop around at your local banks. there are high yield interest savings accounts out there that you can use to house something like your emergency fund, or maybe you're working to save for some big purchase. Maybe it's a house or a car down the road. And so that kind of leads us into stealth taxes and the leaky bucket. The number one stealth tax that people don't think about is inflation. It's the tax that you never voted for. Think about this. Let's say you get a 3% raise, but rent goes up 10% year over year, and groceries have just gone up 10 to 20%. You didn't get a raise. You got a pay cut with a thank you note from those corporations that are charging you money. and while inflation is natural over time, most people don't think about it. And that's where they get themselves into trouble when they're not looking to buy and own items that outpace the rate of inflation. And they see their money lose value over time, little by little, by little. Now couple something like inflation with your attention. And what I mean by that is your tension is. Currency, and that is because of how good advertising is and has gotten. You see something and it's easier than ever in history to go out and just buy it, whether it be buying it with one click over the internet or running out to your local store and getting it, but that adds up so quickly. All of a sudden, you end up with a kitchen full of drawers of. Kitchen, Dew hickeys and all these other things, or you've got eight subscriptions to things that you may only sometimes use. This is part of the societal training. Work hard, buy more. And this is why people are working harder and working more and they feel like they have less those holes in their bucket, whether it be the inflation, or they're, consumerism, those holes feel like they're getting larger and larger. And the faucet that's pouring water into your bucket, your paycheck is not growing at the same rate. And this is where the game feels rigged and it feels against you. So much of this feels outside of your control, like it's just being done to you. and in some instances it is, but this is where it is actually possible for you to fight back. And so let me talk to you about a little bit of a personal story. I was this person about 12 or 13 years ago. I was stuck in a pretty massive, credit card debt. I was working at a job that I felt okay about, but it wasn't something that really, drove me or made me, you know, jump outta bed and be ready to go. And I didn't own anything. I had a car, but I, I had A car payment. And really technically I owed the bank all that money, yet I was renting, which was fine for my situation, but I didn't own anything there. I didn't feel like I was investing a whole lot or my net wealth was actually negative at that point because of all my debt and I didn't have all the savings and I didn't have an emergency savings account. I didn't have all these things and. As I looked at my job and was, you know, kind of like, do I want to continue doing this? Am I happy what I'm doing? I realized that I don't have a choice at that point. I had to keep that job. I had to continue to work and feed the, consumerism addiction that I had at that point, and all the money I was spending. I needed to change some things in my life. I needed to stop being, a depositor. in my financial life, and I needed to start being an owner in it. And so I worked really hard to do a lot of different things, and part of that was working, both sides of the equation. I had to work on how do I gain more income, how do I get. more money being poured into my bucket, and then where are the holes that I can close and how can I be smarter about those holes that I have? Are those holes maybe putting money back in or are they long term saving and investing so that I have even smaller holes as I get older? And that took a lot of reading and understanding, why I was making the decisions I was making and breaking away from the cycle. I was living very much paycheck to paycheck and honestly it was a negative paycheck cycle where I wasn't even making enough income, hence all the credit card debt that I had. So I really had to make some big decisions on what that looked like and how I was gonna, do that going forward. And so as I got myself out of that, it helped me start to build that peace of mind that I had and make things a little bit easier as I started to build my, you know, my nest, right? That was allowing me to grow faster than the system was draining me. And so I want you to understand that the system, the way it works. Isn't broken. It's actually working exactly how it was intended by the people who have designed it. But not all hope is lost. But we wanted to change the system so it's easier for that people. That does take time. In the meantime, you've gotta play the game the way it's been laid out for you, and that will help you get ahead of that as the system hopefully changes over the long term for the betterment of the majority of people. So I want you to do one easy thing right now. Open up your bank app, see how much interest you made last month. If it's not enough to buy a cup of coffee, you're not an account holder, you're a source of profit. Again, you can change that just takes a little bit of work. If you're unsure what to do next or need help, that's why we're here. Come visit us at our website or join our private community and if you're really ready, join private coaching. Get outta that paycheck to paycheck cycle. Stop sitting on the sidelines of a game that's rigged and get in the game and start playing thanks for joining today. My name's Jim. Bye, everybody.