Ep. 38 Your Money Isn't Going Further... Here's the Math Nobody's Showing You

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Groceries, gas, insurance, rent... everything costs more and most people's paychecks haven't kept up. In this episode, Jim breaks down the purchasing power squeeze and gives you a real, actionable 3-bucket plan to fight back.

You'll learn how to do a budget autopsy, run a subscription audit, negotiate your fixed costs (yes, even medical bills and insurance), and think about your income lever — not just your expense lever.

The people who come out ahead aren't the ones who panic. They're the ones who get intentional. This episode will show you how.

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Transcript

Jim 0:00

Prices on everyday things, groceries, gas, insurance, rent. They've all gone up significantly over the last few years and the catch is wages for most people just haven't kept the same pace the gap between what things cost and what people earn has quietly widened. This is called purchasing power squeeze. Really, it's inflation. Your dollar literally buys less than it did three or four years ago. Easy example, a grocery run that might've cost $125 now costs 175. This isn't a character flaw, it's just math. And the cool part about math is you can work it. The people who come out ahead in times like this are not the ones that panic. They're the individuals that get intentional. Welcome to the Netwealth Nest podcast. Thanks again for joining us to learn a little bit more about how to break out of the paycheck to paycheck cycle. Today we're gonna talk about how to attack inflation and some specific things you can do, and really we've got it kind of built into three buckets, finding the leaks, attacking your fixed costs, and then thinking like a wealth builder. Let's start with finding your leaks. You need to look at your budget. Not as a punishment, not in an emotional sense, but almost like a CEO is looking at the p and l of their business. You're doing a budget autopsy. What does that look like? Pull up last month's actual spending versus what you planned. look at the categories that went over not with guilt, but with curiosity. Like, where did this money go? Maybe why did it go there? What were the circumstances? again, wealthy people review their finances like a CEO reviews, a p and l. They're emotionally unattached and they're looking for patterns. One miss, probably an accident or an overspend, but the same miss month in and month out. That's a signal. Your budget needs adjusting, not your willpower. the second part. Do a subscription audit. Pull your last two, maybe three credit or, banking statements. Highlight every single reoccurring charge. Everyone. I guarantee you're probably gonna find at least one that you forgot about. And if you haven't forgot about any of them, there's one that you probably either haven't used or use sparingly over the last 30 or 60 days. The other thing you could think about is what level of subscription do you have? And a great example of this is the Disney one. And I've actually done this with my kids where at one point we had the Disney plus subscription that did not have ads. As we switched over some things in our household, it automatically switched to ads, and I was paying less for that version. And my wife and I talked about it at first. We're like, oh, we should just upgrade and not have to worry about ads. But then I was like, really? Should we, does it really matter? I know it's for our kids and they consume, 99% of the Disney plus content that happens in our household. But I remember watching commercials all the time as I was a kid. We didn't have the streaming when I was younger, and so we just let it ride. And guess what? Our kids just know that their commercials now during their shows or if they wanna watch a movie like, you know, frozen or something like that. there's just happens to be, you know, a minute and a half to two minute commercials. And guess what? They do the same thing that people my age did when they were kids and were watching a show, and then a commercial came. They go and grab a snack, they go use the restroom, they go do whatever. Sometimes they watch commercials, but they know that it's just part of how the program works. And now we're saving ourselves that extra five, $10 a month just because. We're willing to let our kids, or even ourselves watch a few commercials, just like we would normal tv. It's not about denying yourself, it's about paying for what you actually use and also understanding what the difference is between a what and a need. The need might be for kids, you need to have Disney plus because that's what you use for their, their entertainment. Okay, but do you need the ad free version in this example? And there's food spend, reality check, and we talked a little bit about this in the previous episode about eating healthier but yes, groceries are more, expensive. But just like we talked about last time, built into that is sometimes the convenience spending that can really get outta the control. It is the Door dash, the Uber Eats grabbing lunch out. If you're working every single day, These all add up fast and often aren't tracked in an honest budget. That intentional meal planning per week can really bring meaningful change to this number. All right, so let's talk about bucket two. And this is the bucket I really want you to think a little bit differently about because most people just skip past this, and it's probably the most important part of this specific video. Fixed costs and negotiating your fixed costs. Most people, they just treat their fixed costs. Like they're actually fixed. And the reality is that they're not. So what do I mean by fixed costs? I'm talking about things like your internet, your cable, your cell phone bill, your insurance. sometimes even as big as your rent or your mortgage. They're all things that you can do to go in and ask to see if there's a different. Strategy for you to pay your current bills. The easiest ones are some of those reoccurring costs that you need, or are using like your cell phone and your internet or your cable bill. If you haven't called your company that you're using and asked, Hey, what's the best rate you can offer me right now? I've been a customer for multiple years. Or, maybe you're starting to call other providers and you might be a new customer, but finding out what the best rate possibly is for you. I did this recently with my. internet bill where we have a, relatively, high-end, fast internet. And they are, they were coming to my house to upgrade the system and I took that moment where they were, doing the upgrades on their system when I was talking to the person on the phone to schedule it. I ask them like, Hey, I've been a customer of yours for quite some time. Like, this is the program that I'm on right now. Is there one, that. Still gets me the same speeds and everything else, but is less expensive or is there any promos that I qualify for right now? And they looked and they're like, actually, yeah, we can save you, $30 a month on your current bill. And nothing changes. Just a promotion that we offer for customers that have, been around for a while and been with us for a long time. So now I'm saving $30 extra every single month for the next year. Because I just asked the question when I happened to get ahold of 'em, and ironically, I was not the one that reached out to them. They reached out to me because they wanted to upgrade some of their equipment, in our neighborhood, but. I just took the opportunity to ask that question, and so $30 a month, I'm gonna save $360 over the course of this year just because I asked that question. The same applies for all of those other items that you might have. It doesn't hurt to just call up the company and be like, Hey, costs are high. My budget's thin right now. Are there any promotions or anything I can do to lower my bill? I've been a customer of your for a while. I've been reliable. I just need to lower the cost of. Of what I'm doing. I've done this with, things like satellite radio in the past where they give you a promotional rate and then, after 12 months it, it goes up to the normal price and it's usually sometimes double, maybe even triple what that intro rate was. And usually I call 'em and be like, Hey, like I see, that the price is gonna go up. I'm not going to, want to pay for that, so I'm just probably gonna go ahead and cancel it. They're usually like, Hey, let's just extend the pro and we'll just keep you on as a customer. That's another option. Medical bills is one that really trips people up, and the sad part about this is that medical bills can really. just derail people's financial pictures and so many hospitals and providers, will reduce or set up 0% interest payment plans. you have to ask before you start paying. And then the other thing they'll do sometimes is if it's a bill that you have the capability to pay off. In one shot, you should ask for a discount to pay in full. if you're, getting a bill for a recent medical visit and if you have the capability to pay that bill up in one shot, a really good strategy is to call up the office or their billing, department of wherever you're going through and say, Hey, I'm thinking about. paying off this bill, but I want to know if there's a way to get a discount for, a payment in full and see if they'll do that. even if you can't pay it off in full, calling them up and being like, Hey, I've just got this bill. do you guys have payment plans? Almost everybody does it this point. 'cause they understand that, especially if it's a couple thousand dollars, most people aren't able to pay that immediately. they don't have that money just laying around and so. They'll say, yeah, we've got a payment plan or whatever. And I think the next question you should ask after that is great. That's awesome. We can do that. I'm wondering with setting up a payment plan and getting on this, knowing that, I'm gonna be making these payments month in and month out. Is there any extra discounts or any type of negotiating we can do to lower the overall amount that is due? Just ask. And even if it's. 7 times out of 10 that they say no. There's still probably one, two or three times where they're gonna be like, oh yeah, we could lower that maybe 10%. We could give you 10% discount for setting up a payment plan with us, or whatever it might be. You're saving money in the long run, so always, always ask. The other one that most people get caught up in is insurance, and specifically around their home insurance and their auto insurance. And most people, once they set up insurance on their vehicle, it just kind of renews the next year and they just go ahead and pay it. I would say you should never, ever do that when your insurance is about to come up. You should be researching what insurance would cost for other companies, and then also, having the conversation with your current insurance company on how you minimize any increase in that cost. I actually discovered this out the hard way. I had an insurance provider, on a vehicle, and every year my insurance went up, including once I paid off the vehicle, it just continued to go up, which was concerning to me because understanding that insurance doesn't just cover the vehicle. It also covers like medical bills if something happened to me. But the vehicle I had was depreciated in value. I didn't owe anything on it, and it would continue to increase over and over and over again. I was just struggling to understand why these relatively decent sized increases were happening year in and year out. And so I called the insurance company and they're. They were like, oh yeah, you know, our typical insurance just, it, the rate just increases, but you know, we'll rerun it for you, whatever that means. And they came back with a lower number and I'm like, why wouldn't you just do that in the first place? I have a good driving record. I have a nice vehicle, but it's, again, it's paid off. It's going to decrease in value over time. And they're like, well, we just, we don't do it unless we're asked. And so that was a wake call of like, why wouldn't you try to have the least amount of payment? And it's a business and I understand, or they make profit, In my opinion, that's unnecessary profit that I'm giving that company for no reason. And I'll be quite honest with you, I was so frustrated with that answer that they just increased because that's what they do. And it's the consumer's responsibility to try to find the best price within that own company that I left them and I said, well, I'm not gonna do business with you anymore. There's another company. And when I talked to that other company, and I talked to an actual agent, I said. I just expect that you're giving me the best deal every year, and if I find out that I have to call you to get that best deal, I'm not going to continue to do business with you year over year. I would love to stay with one company for a long time because I know that's good for you and it's also good for me. But if you can't figure out how to gimme whatever your best prices, I'm not going to do that. And I found a great agent that does a great job with that. And every year I still bring it up to him just to kind of remind him like, I want the best deal that you can give me. And he does every year. And I've seen minimal increases in my house insurance and my car insurance compared to what I was seeing previously with other insurance companies. The other thing people forget about insurance is you can shop at any. Six months ago you signed up for car insurance, and let's even say you paid for the entire year in one shot. You can still shop online and be like, oh my gosh, somebody else is charging me 25% less than they are. It's the same coverage. It's a reputable company. They will protect me if anything happens. I feel good about that. You do all your research, you're like, man, it's less. You can get that new insurance and cancel your old insurance, and that old insurance will actually pay back the remaining of what was, what you had paid in advance. So if you paid a thousand dollars for car insurance for. A year, let's say, and you've only used six months, they're gonna give $500 back if you cancel that insurance and move to another provider. Now, the other key to think about when you're doing this is you've gotta be careful with this, especially if you have a loan on your vehicle or your home, because the bank is going to wanna make sure that you always have insurance. And the reason they do that is because if anything would happen catastrophic, a bad car accident, a house fire, any of that. the bank wants to make sure that you are covered because quite frankly, if somebody's house burns to the ground, and they don't have insurance, they're not going to pay off the bank and then go build a new house and the bank will lose out and also not have an asset to foreclose on. So just make sure that like you, if you have a loan out, that you do the insurance switch, that you're getting that paperwork to the bank so that they don't come, and start asking you questions. and then the last one for kind of a fixed cost that I would look at. Is asking yourself an honest question about your car. Now here's the deal. I'm not telling everyone to go sell your car and buy the cheapest car you can get, but I do think you need to ask yourself, is this payment that I'm making on a car if I'm making a car payment aligned with where I am financially right now? And the reason I see that is the average car payment right now is somewhere around 700 to $750 a month. That is an incredibly high payment, especially if you're on a tight budget and especially if you're living paycheck to paycheck. It's just one of the fastest ways to suck up all your money. And so looking at that, and if you have that high of a payment and you are struggling, is there an opportunity where you could potentially. Trade in or sell that car and step down to a more reliable used vehicle or certified pre-owned vehicle with a lower or no payment. So you could free up some significant cash flow. And I've seen people that have had that $750 car payment, they're not currently upside down on their car. So they've had it for, you know, multiple years, maybe three or four years. But they're still making a very large payment and they. have enough equity built into the car because they have made so many payments right now where they could step down to sometimes even a newer used vehicle. So newer than what they have, but not technically new. that might have, you know, 10, 20, 30,000 miles on it, maybe 40 or 50, depending on the type of vehicle they're looking for has less miles on it. It's a newer vehicle, and the payments are less after they trade in and sometimes significantly less because they have a decent amount of. Trade-in value with their current vehicle, and that takes 'em down from that 700, seven $50 range, maybe all the way down to three or $400. That is a huge shift in your budget when you are scraping and trying to figure out how to get out of that paycheck to paycheck cycle. Now, I'm not gonna lie, this is a tough question and many people bought the car that they own because they really liked it But remember, it is. A device that gets you from point A to point B, whatever that point A and point B is usually your job. So it has to be reliable. But do you need all the fancy bells and whistles? Does it need to look as cool as it does all of those things? And again, it's a hard question, but wealthy people ask hard questions about their money regularly. and then we have bucket three, thinking like a wealth builder. So we've talked a ton about a single lever and that is figuring out your expenses. But there are two levers. And the problem is most people only pull one lever, and at some point you can't pull that lever anymore, and that's the cutting expenses lever. At some point, you are going to cut and trim and optimize as much as you can to live a life, and I don't want you to be living like a miser either where you're eating the same thing for breakfast, lunch, and dinner. You're living in a A poor area of your neighborhood or maybe a very poor building or a rundown house, you are not taking, care of yourself and going to the doctor when you need to go to the doctor. I don't want you to do any of that stuff. I just want us to think smarter about it. And so the other half of that is wealthy people also think about their income lever and the question they ask is. Is there a way I can create even just a small amount of additional income? if you have a W2 job, is there a way you can increase your pay rate, whether it's hourly pay or salary? Is there a way you can go to your boss and ask for a raise? What have you contributed to your job that is maybe above and beyond? That would, allow you to get a raise or allow you to ask for more money or a bonus or any of those things. Is there a promotion that you might be able to get, or, an opportunity that you just haven't talked to your boss about? Those are things. That you should be looking at? Is it extra hours? sometimes it's just more work. I'm not saying go get a second job. I'm saying just don't ignore the income side of the equation. And so start with Whatever you're doing now to make money. Is there something you could do there to increase the amount of income that's coming in? Then there's the stuff outside your normal day-to-day income, your normal nor normal day-to-day job, that's the side hustle. Right? And so what skills do you have that people would pay for? What would they pay for it? How much time would that take you? What would be the effort to do it? And we've talked about this in the past, understanding what you are good at, whether it be stuff you do in your current job, whether it be hobbies you have outside of that. But is there a way for you to make any additional income on that? even finding 50 or a hundred dollars every other week? Could be a huge lift for most people. Again, if you're struggling from that paycheck to paycheck. And that's what gets people outta the debt, is finding those little areas. The one thing to keep in mind about all of this, and this is a super critical piece. Is whatever the extra money you find, whether it's from decreasing expenses or increasing income, you have to redirect that money. You can't let it get swallowed up by the day to day or the whirlwind that is happening inside of your budget. I'm talking about the things like the extra subscriptions and all that, all that work that you. Did to cut stuff. You can't like it swallowed up by other things or think that you just have this money laying around. You should be redirecting it to accomplish your next goal. So even if you find 50, 80, a hundred, $300 a month that you are able to save, you should have a plan for that $300. Maybe it's to pay off high interest or credit card debt that you have. Maybe it's the buildup that emergency savings, maybe You've got both of those done and you're looking at how do I invest and start actually growing my wealth over the long term? If it doesn't have a job, it's going to get spent in that nonchalant type way, so make sure you give it a job. Wealthy people don't just cut costs. They don't just gain more income. They redirect that freed up cash flow towards assets so that they can grow their wealth over the long term. So quick recap. Three buckets. Find the leaks, attack your fixed costs, and then think like a wealth builder. Your money feeling tight right now is, it's not a personal failure, it's an economic reality, and there are real things you can do about it Starting today. This is exactly the kind of thing we dig into inside our community or in one-on-one coaching. Not just about the knowledge, not just about some actions you can take, but having people around you doing the same work and holding each other account. If you haven't yet, head over to our website. We have a little tool that floats around on our web screen as you scroll up and down. It's called the Pulse check, and basically what it does is it's a really shorthand, quick budgeting tool that's gonna tell you where you're at in kind of your main buckets. This is something to get you started and get you comfortable and start thinking about looking at how your money is spent, like a CEO, looking at that P&L. thanks for joining us today. Make sure you like, subscribe, share our podcast, whether it's through YouTube and you're watching the video, or if you're listening to it through audio on something like Spotify or Apple Podcast. Please leave us a review that helps us get in front of more people. The more reviews we have, the more people get to see our podcast, the more we can share knowledge and help people break outta that paycheck to paycheck cycle. My name's Jim. Thanks for joining. Bye everybody.

Jim (2) 23:04

Net Wealth Nest LLC and Podcast is an educational platform committed to providing resources and information to empower individuals on their financial journey. Please note we do not provide financial, tax or investment advice. All financial decisions should be made in consultation with a qualified professional who understands your unique circumstances. Seeking personalized advice is a smart and necessary step before making any major financial commitments. Thanks so much for joining us today. If you found value in this episode, please like and subscribe to our YouTube channel, Netwealth Nest, and leave us a review on your favorite podcast platform. We read every comment and they help us improve and guide what topics we dive into next. And hey, if you, something you heard today resonated with. Don't keep it to yourself. Share with a friend, a family member, a coworker, your barber, your barista, even a stranger in line. You never know who might need this message. Remember, building net wealth is a journey, but you don't have to do it alone. Stick with us and together let's grow your net wealth nest.