Afford Anything - Habits We Rock to Kick Ass and Grow Wealth

Episode Date: January 28, 2016

#3: Paula and J. Money share the financial habits they use to grow wealth. Full show notes can be found at http://themoneyshow.co/03 Listen as they share their favorites (and a couple neat tricks): Track Net Worth Maximize retirement savings accounts Pay bills at least 1 month in advance Set up bills on auto-pay Leave a buffer in your checking account Round up debt payments Double the principle payments of your mortgage Enjoying the show? Please leave a comment or write a short review for the show in iTunes: http://themoneyshow.co/itunes Learn more about your ad choices. Visit podcastchoices.com/adchoices

What up Jay Money? Hi, Paula. How's it going? Hey, I'm going. Jinksies. Welcome to the Paula and Jay Money Show, a real and uncensored show about growing wealth and financial freedom. Your host, Paula Pant, is a fun-loving globe charter who lives on the West Coast, focuses on real estate investing, and runs the blog at Affordainthing.com. Host Jay Money is a husband and father of two who lives on the East Coast, focuses on saving money, and runs the blog, budgets are sexy,

dot com. While they may have wildly different approaches to building wealth, they both have your financial independence in mind. Which one most resonates with you? Find out. As you listen to the Money Show, here are your host, Paula Patton, and Jay Money. What's up, Pauli? Oh, I am excellent. I am on my first cup of coffee, so that's actually rather good for me. Normally, I'm like four cups deep at this point. Ah, is it bad if I say I'm drinking a beer? Really? I'm not that crazy. Hey, wondering why the sound quality kind of sucks? It's because we don't really know what we're doing. At least not yet. So if the sound quality bothers you, just skip ahead to episode six where we figure it out. But if it doesn't bother you, stick around. We got some good stuff. I'm not that crazy. Although yesterday at the end of the day, I got really, like, I didn't want to do any work. And so I just went to a bar all by myself.

And I sat there and I was just like in deep thought and I had a beer. And it was actually kind of cool to be by yourself like that. Oh, that sounds nice. Yeah, no phone, no, whatever. It was just you and your thoughts and a nice pint of beer. Oh, that sounds great, actually. Yes. It's a good habit to get into.

Drinking alone, kids. That's the lesson for today. Drink alone. Yeah, see, I was trying to segue into our thoughts on a day with the best financial habits. It was at happy hour, too, mind you, $3 for a drink, which is really good. Nice. Yeah, and you went and took it the alcoholic route, I see. But yeah, let's talk about some financial habits, like the ones that you have found that work really well for you over the years or even something that I guess didn't, too, if you wanted to.

I kind of just throw out all the different ways that we found out just work and help grow our wealth over time. Perfect. That sounds great. So, Jay, what's your favorite of all of the habits that you've developed over the years, other than drinking alone? What's your favorite? My favorite, which would be no surprise to anyone that reads my blog, is tracking your net worth. Woohoo! Tell me more.

Yes, I love it. Here's the thing about tracking. So the one thing with money in general is you kind of have to know where everything is, right? You have to know where everything is so that way you can see if you're going up or down. Right? Like it's a really simple thing. It's like when you're trying to lose weight, you got to know how much you weigh, so then you can figure out if you're losing weight or gaining weight. Right. So it's the same thing with net worth. People are either too scared to do it or they don't think they have money so there's no point in tracking net worth.

And net worth isn't about how, like, I mean, it's about how much money you have, but the point isn't to like, oh, I have a net worth of this many hundreds or thousands. It's just to know where the hell you are. You know, a net worth for people that don't know is pretty much just, you know, have two columns. One, all your assets, you know, your savings, your investments, your house, if you want to put that in, or whatever, whatever you have that's money or an asset. On the other side, you have all your debts. You know, your loans, your mortgages, car payments or car loans, and you subtract them. And whatever that number is at the end is your network, right? And what I love about it is that they're facts.

You know, they're like, they're like real numbers. Either, you know, like, unless you're tricking yourself and putting numbers from your head in there, you know, which you shouldn't. You should be log into your accounts, copying and pacing the numbers and just putting them in there. You know, they're facts. And that's what I love about, you know, the network. This is at this given point of time when you track your network, this is what your quote worth. So just to review. So like, let's say that you have a car that's worth 10, and you have a, a house that's worth 100,000 and you have 90,000 in your bank account, then your assets add up to 200,000. Yes. And then let's say like the balance leftover on your mortgage is 100,000. That would be 200 minus 100. So your net worth is 100. Yep. You got it.

Yeah. And the nice thing is too, yeah, like you can have, there's people that have like a million dollars in assets, but they also have a million dollars in debt. So that gives you an overall picture. Your net worth is zero, right? Like, it's not good or bad. It's just depending on how your situation is. I mean, well, obviously you want your network to be higher. But, like, it gives you a snapshot.

You know, and the other nice thing is if you're heavily in debt, let's say your net worth is negative $100,000 because of student loans, right? If you're negative, anytime you make a payment, you know, towards a principal, like your number is going to be less negative next month. Like if you're paying off debt, the number's going up, right? The same thing is if you're saving or if you're saving and paying off debt, the number is going up by more. So that's what I love. Like, it doesn't matter if you're in debt.

It doesn't matter if you're investing. It all reflects, like all your actions reflect like whatever that net worth is with the only exception of like a lot of my money's in investment. So if the market crashes, my net worth crashes. So those are kind of like outside of your control. Right. But by and large, you can tell like, oh, like if that's the only red area, you know, in the whole spreadsheet here, then, you know, like that's not, that's not something that

like I'm going to be able to control. So Jay, how often do you track your net worth? So I like to do it the first of every month, just to see what happened last month if I need to adjust, if I'm doing good, bad. Some people do it every quarter. Some people will never do it. And then some people do it every year. I don't think it's, I mean, I think as long as you're consistent, however you're doing it,

personally, I think it's fine. I just think it's important to be doing it on some level. Yeah. You know, especially when you're starting out. So I track my net worth too, actually, and I do it twice a year. I do one in like roughly January-ish and then again in like roughly July-ish, you know, and then give or take a month on either side. So sometimes I'll do, you know, the summertime one, basically a wintertime and a summertime.

Okay. So you like, you think it's important. You don't, you're not obsessed with it like me. Well, I found in tracking my net worth, I've, I've, I've sometimes been shocked at how much it goes up. And I found that a lot of that really does come from, for me at least, comes from investment growth, both in terms of like stock market stuff as well as housing values. Probably partially for that reason. I like the once every six months sort of thing because that way I'm not like, if the market fluctuates a little bit, I'm not freaking out about, oh, the market had a downturn.

and now I'm worth 100,000 less than I used to be, oh my God, you know, like. Right, right. It kind of helps me keep a more long-term view. Well, and I will say, too, like, you know, like, I don't know, I lost my train of thought. I was going to ask you what your network is, but I didn't know if you were going to disclose it. So I switched here. I'll get back on talk by saying mine. So, like, mine fluctuates too up and down.

Uh-huh. And mine at the time right now is 400. 95,000. But it goes up and down because of the market. But I started tracking it when it's 50,000. So to give you an idea, that's been over seven years. Now,

like I could see like if there's days where I'm like, oh, man, like I don't feel like I'm doing good or whatever. And I track it every month. So I can go back through the months and see it and chart it from where I started to where I am now, which I think is really, so the reason this is my number one tip for me at least

is because, A, I know where everything is, but it keeps me motivated. When I first started tracking it, my network, I thought that I was saving like two or $300 a month. Like, that's what I had in my head. When I actually went to track it, I was losing two to $300 a month, like a complete opposite. And it's just crazy because that's like a $400 or $500, you know. Delta? Yeah, like a difference.

Gotcha. Whoa. Somebody's mathy. SAT words today. Anyway, so the point is, it's good to track it at some level, you know, you can track your progress. You don't have to tell the world about it. It's just for you, you know, but That's like, you know, when you see people drive in, you know, bends and lander, like all these fancy cars or fancy houses, all that stuff's fine, like whatever. What matters financially is what your net worth is, right? Some of those people can be negative millions of dollars worth, right? Right. So keep that in mind when you're starting to get a little jealous or whatever.

And I do too. Like I always want to stop those people and say, you look rich as hell. Like, what is your net worth just so I can see if you're really rich or not? You know? Because that would change everything. right especially a million-dollar neighborhood you just don't know how they're managing the money they're all looks

anyway so that's my favorite habit what is your favorite habit since I know that one's not your number one so my favorite habit is something that I call the anti-budget oh geez budgets are boring.com which I own so that you can put it on there

oh yeah it didn't occur to me that I'm talking about the anti-budget with the guy who writes a blog called budgets are sexy. That's right. I'm cool with alternative ways to do it as long as you're paying attention. So you can go right your head and see. Jay Money's like you and your alternative lifestyle. Yeah, that's right. So the anti-budget, it came about because I'm not a super detail oriented person. I kind of like having a taking more of a big picture look at things rather than like scrutinizing into the decimal points. And so what I found was that whenever I tried to make a

conventional budget, you know, where I'm like, this is exactly how much I'm going to spend on groceries. This is what I'm going to spend on gas. This is what I'm going to spend on toilet paper and cat food. That just wasn't working for me. And I would, I'd go through the motions and I'd make this detailed budget and then I would completely ignore it. And then God knows what happened the next month. And it just wasn't working for me. And so then I decided, you know what, if you can't live it down, play it up. Like if you can't force your to like jive with a certain way of doing things, then don't do it that way. Do it in the way that works for you.

And so I started doing what I call the anti-budget where every month or every year, whatever, I know exactly how much money I want to save. And so I just pull those savings off the top and then whatever is left over is the money I have to spend. And I don't give a shit where it goes. I don't care if it goes to toilet paper or to buy. of champagne or to clothing or it doesn't matter. That's the pool of money that I can spend and my savings are my savings.

And when I say savings, I should clarify that I'm referring to like retirement contributions, health savings account contributions, money that just accumulates in a savings account. Like I'm referring to sort of all of that. So this is like what they say, right, like pay yourself first kind of thing. Yeah. Like save or pay debt, whatever you're doing first and then live off of whatever's left. That's the right mentality. Yeah, yeah, exactly.

Like for you, like, I would imagine you can't, like, so a lot of people listening are either like living paycheck to paycheck or they're like going down every month, right? So for them to do that, like, you had to get comfortable with how you're spending just in general. It kind of had like a general idea, right? So that you knew like you had that, that, again, like that Delta, that gap, you know. I say Delta, I imagine an airplane. And I know that you used to work for the TSA, so that makes it even more confusing.

I used to work for Condoanel Airlines, too, which is not Delta. But yeah, so let me ask you, I guess I'm just assuming, like, you know, like, if you were making, let's say you were making $2,000 a month, right? And you're like, oh, I want to save $500 this month. Like, if you pull that $500 out and you have $1,500 left, in theory, that's great, like, just spend $1,500. But what if your bills are like $2,000? If you do that, now you're, now you have $500 on the credit card, even though you have $500 in savings. Right. Yeah, yeah, yeah.

So I love that mentality once you kind of know what the, what like generally how you're spending and earning as long as there, there has to be a difference there, right? Yeah. Unless you're just splurging like crazy and you know very damn well with your salary. You should be like you have plenty of room to save. Then I think you can just start with it right away, right? Like there's people I know that make 100, 100. $150,000 that are always traveling, which is fine, going to clubs doing their thing,

but then they complain about not saving, right? So for them, for you, like, that's easy. Hey, put $5,000 a month here or $2,000 or whatever, you know, right away and then go ahead and blow the rest, and then they can do it. Well, so when I first started doing this, I was earning a salary of $21,000 a year. And ever since I was little, I've always been really into retirement savings. It's just one of those weird things about me. Like the idea that one day I will be so old that I may not have the ability to work, even if I wanted to, you know, I might just not be healthy enough to be able to work.

Like that idea, even when I was young, always kind of scared me and always motivated me to like shovel money into a retirement account because I know that I'm not going to get a pension. You know, I know that Social Security is not going to be very robust. So, yeah, so I was making $21,000 a year. and I put 15% of it into a 401k, just right off the bat. And then whatever was left over was the money I could spend. So I was living on what, 21,000 minus whatever taxes I paid, minus 15% that went into retirement. Yeah, how much was that like just in general? Was it like $100 or $200 or something like that?

I don't want to be math right now. It was like ballpark somewhere around $15,000. $1,000 a year, $15,000 or $16,000 a year, basically. So that was just what I had to spend. And then knowing that that was what I had to spend, I made my decisions accordingly. So I rented this, like, really crappy little studio apartment that cost $400 a month. I didn't have a car, ate most of my meals at home. Yeah.

So, like, that was, I was like, okay, I know that I am living on basically a thousand a month plus. Yeah. And so then I just made every spending decision, every, like, I decided what my bills would be in accordance with no. Yeah, I like that. I think that's the key part to your anti-budget budget. You know, like you have to make choices and decisions based on the amount you have left over.

Yeah. Because the other way doesn't work necessarily unless, again, like you have that big gap. Yeah, exactly. You start with the pool of money first and you're like, all right, this is what I have to live on. Now, where am I going to live? Yeah, that's right. And if you don't want to cut down your expenses, then all right, then A, you need to go make more money, right? Yeah.

So, so which is fine too. If you want to live a more luxurious life or whatever, right, you know, which is, again, all these things are fine. Whatever you want to do, just know that there's consequences. You have to earn more, you know, or save less, right? So, yeah, I like it. I like the anti-budget budget. I can get down with that. Thank you.

Anti-budgets are sexy.com. They'll go there and then it'll just change one day to go there, one to my, blog back and forth until people can decide what they're like. You know, to your Earnmore point, that is actually what I ended up doing at that point, because I wanted to travel. And I was like, well, I can save 15% into my retirement accounts, but there's not enough money that I could save even more in order to, like, create a travel fund. And so at that point, the 21,000 minus taxes minus retirement was what I lived on.

Right. And then during the evenings and weekends, I wrote freelance articles. And every single dime that I made from that after taxes went into my travel fund, my travel savings fund. Right. Because you made a decision, I'm not going to touch the 401k money. I'm going to leave it alone. If I want something else, I need to go earn more to get it. Exactly.

Yeah, I like that. Well, the nice thing about 401K or IRA versus savings is that you're less tempted to pull it anyways because you get all this stupid triggers with taxes and nonsense. Exactly. Taxes and penalties. and all of that. Yeah. So, and actually that leads us into,

at least for me, like my next habit that I've only been doing for the last few years because I'm making more and cutting back than where I was before. But it is,

is retirement accounts. And this is something like, I even had one of my brother-in-laws, like we talk about money every now and then he makes a lot and is a lot higher network than me. But I, you know,

whenever he talks, he's like, I don't even pay attention to money really. Like, all I do is like this one thing every year and I know I'm going to be fine. And I'm like, well, damn, like, what's this one thing? Right? It's awesome. And he says every year he maxes out his 401k, like whatever 16, 17,000, whatever it is. It's 18,000. He puts 18,000 every

year. And then usually he also maxes out like his IRA too. So he's putting like 20 something thousand every year at the very minimum into investments no matter what. IRA is 5,500. Okay. Sorry, now I'm the numbers person. Yeah. No, but I liked it because like if you put that amount of money every year, again, regardless of everything else, your debt, your life, whatever, right? If you could just pull that one thing off, which admittedly is it like the easiest sometimes, like you're going to be set. Like you will become a millionaire over time. It's just a matter of like building it up over the time, right? Like it's awesome. And so I heard that about four or five years ago and I was already maxing out my 401k in the beginning because like my company, I worked at a startup.

Dude, they would match 100% of what I put in. Like, and not even like, yeah, not even up to like 5%. Like I would put in like, that's why I'm stuck at 16,500. That's what it was back then. You know, I put in 165 and they would match 16,500. Automatically no like best thing. Like, it was ridiculous. That's crazy.

And what's even crazier is that like I was one of like two people in the whole company that did it. Right? Which is fast. I mean, it's just I couldn't, you know, it was like the easiest win. that you could ever do right now on the flip side i was for like three months like until i maxed out like i would have like 90 dollar paychecks i put like 90% in because i wanted to hurry up and get it in case it went away yeah you know and and so i just have like 90 dollar paycheck so i had to live off of like some savings for a little bit and side hustle money in order to get that and then once

i got it like my income my checks were back up to like 100 you know um so anyway so that's another that habit has stuck for about five or six years now and IRA. So those are the two things all maxed out every year, no matter what. You know, at least so far I've been able to do it. And even without anything else, those habits will get, you know, again, there's no way for you not to become a millionaire over time. Right. So that's my next one. You know, the maxing out retirement accounts point is one of the reasons that, like, I've become a big earn more advocate. Because like if you think about, all right, so you need $18,000 to max out your 401K plus another $5,500 to max out your IRA, you know, and then if you have if your HSA eligible, which is a health savings account, which some people are eligible for it if you have a high deductible health insurance plan, then that's another for an individual, it's like roughly $3,300 or for a family it's $6,700. So once you add all of those up, it's a shitload of money. Yeah. And that was, it was more money than I used to make.

Like I said, I used to make 21,000 a year. And then over time I got promotions and things like that. And by the time I quit my job, I was making 31,000 a year. And so, like, literally the amount of money today, the amount of money that I contribute to my retirement accounts every year is more than I used to earn. That's why I'm like, dude, earning more is really. powerful. Yes, yes. I agree with you on. I know we have our debates here and there. But hey, I'm good for earning and cutting back. I just had to throw that in there for the Earnmore camp. Yeah. Well, it is true. Like, if you're only making 20, 30,000. Like, people that are listening to this are making like

$5,000 a year up to like $500,000 a year in theory. Right? So the rain, so there's, you know, depending on where you are and you're not going to start like on day one. Oh, I want to get my money and check. oh, I'm going to go max out my 401k this year. You know, like you do it over time, you know, but that's a good point. You have to be making enough money in order to siphon it away to still live and, you know, invest for your future. So you max out your stuff too, right? Yeah.

Okay. Yeah, so I'm self-employed. And so I have, as are you. So I've set up a Roth solo 401K. So I put in 18,000 a year. And that's all Roth. So I pay the taxes on it up front, which means that, For the rest of my life, it's going to grow tax-free.

Tax-free. So when I eventually withdraw it, when I'm like 60-something or 70-something, you know, all of those gains, all of the dividends, all of that is going to be tax-free. That's pretty sweet. And then I also, because I have a high-deductible health plan, I'm also eligible for an HSA. And so I maxed that out. And actually what I do, and this is something I learned recently,

what I used to do was max out the HSA account, and then use it to pay for medical expenses. And then I read a blog post by Brandon from Mad Fienist. Yep. I knew it. Yep. And what he recommended. And you know when you hear an idea that is so brilliant that in hindsight it seems

obvious? That was what this idea was. Brandon said, don't spend that money on your medical expenses. Just pay out of pocket for all of your medical bills. And let that money accumulate in your HSA. because it will, the HSA, similar to a 401K, the contributions that you make into your HSA are tax deferred, and the growth within it is tax deferred. And so if you pay for a medical expense out of pocket, just keep the receipt and, you know, you have the right to reimburse yourself from your HSA account at any point that you might want to. So, and it could be any time.

Like if I make a health payment at the age of 30, I can reimburse. myself for that at the age of 50, you know, as long as I've got the documentation to prove it. And then also, once you reach retirement age, and I forget what the official age for this is, it might be 59 or 65 or whatever, but once you reach a certain age, then all of the money within your HSA functionally turns into a 401k and you can withdraw it and live on it during retirement. That's awesome. Basically, the HSA, sorry, I don't want to overcomplicate things, but the simple kind of moral of story is that if you just start viewing your HSA as an additional 401k and just treat it like that,

then boom, you've got extra retirement account. Yeah, and I'll say a lot of, a lot of early retirement bloggers use that strategy. That's when I first came across because I didn't know what the hell it was until like a year ago. And I don't have one yet, but that's like, that seems to be a really popular strategy amongst people that are like in their 30s retired financially free, you know. And just so people know, too, like, my brother, I don't know why, he always asked me the same question. It drives me nuts.

But like you can, in a retirement account or HSA, or I guess I don't know all the way about HSA, but you can be invested in mutual funds or index funds or stocks or bonds or even just cash if you're crazy. Right. Yeah. Yeah. So all the Roth IRA, traditional IRA, like these are all just vehicles that you put some money in. And then you can decide if you are going to, you know, put it into stocks or funds. or bonds or whatever, right? Or hold it in cash, yeah. It's totally up to you.

Right. With the only exception of, if you, with 401K is usually you have whatever your employer offers you. So they might only give you like five or 10 or 20 options, you know. And one is always like cash or something similar to it. So you might not be able to pick like, I want all my money in Apple stock in my 401k. That, you know, that doesn't work all the way. But, you know, within your IRA, you could do that if you wanted to.

Right. You know, and all my, and so I don't have a solo of 401k, although. I keep hearing it's smart to do. So I just have a SEP IRA. So I save the taxes now and I pay them later and then it grows. You know, but so all of my like my IRA, my set is like 300 something thousand, whatever. It's all in one index fund. So I specifically chose that versus like 100 different funds and stocks and bonds and all that stuff.

Right. Now maybe, and we don't have to get now. Which index fund is it? Yeah, it's VTSAX. Yeah. I like that one. total market. So I go to lazy. I want to just match the market. I'm cool with it. I don't need to beat out anything. And that's a whole strategy for another day. But anyways, the point is,

I had it all in one, right? And if you look at your accounts, 401k IRA, I guarantee you have like tons in there. Right. So I just want a simpler route, whether it's smart or not, we'll find out later. But anyways, yeah, so just for you, when we're saying like it grows over time, your HSA grows, your 401K grows, is because you have it in, you know, investments within that account. Right. All right. So that's good for that one. So let's move on to another, what's another habit that you do?

So far we've covered tracking your net worth, living by the anti-budget and maxing out your retirement accounts. Yeah. So the fourth habit is it relates to how often you pay your bills. And Jay, money, you and I have different strategies on this. Surprise, surprise. I think we're opposite and almost everything except money. So you pay your bills once a month, right? Yeah.

So once I got self-employed, like I was trying to like figure out how to pay yourself, how to pay your bills. Like it was all kind of complicated to me. And going back to like the idea of simplicity and minimalism stuff, I decided, you know what, on the first or second of the month, like right in the beginning, I'm just going to pay all the bills a month ahead of time and just be done in one sitting. And that way I don't have to worry about. And then I also pay myself once a month too.

So all my money, just to make it simple that I earn online or consulting or whatever goes through my business checking account. And then at the end of the month, like I draw a salary from that account and I just literally transfer money into my personal account. And then that's my salary. and then I go ahead and I start knocking all the bills right away while the money's in there. And then there's usually like a little bit leftover, a buffer or whatever. But I find that for me it's easy to just like, I know I'm going to pay all my bills.

And since I'm ahead of time, I don't have to worry about anything. I just do it one time, you know, once a month. And some of them are automated and some I manually do. And then I'm done, you know. And sometimes it's like, you know, you have to sit there a little longer because you're doing all the bills, whatever is an annual. But it's just easy for me to get out of the way and just feel good and wipe my hands for a while, you know. And you don't do it that way, right? No, no.

So I don't. So what I do, I technically have auto pay set up on all of my bills. So, you know, all of my bills are set up so that they will automatically pay every month. But the reason that I set that up is just as a, what do you call it, like a fax? Backup? Yeah, as a backup, you know, so that just in case I happen to forget, the auto pay will kick in and save me from that oversight. So I technically have auto pay set up, but that's not actually how my bills get paid. I go through and I pay them weekly.

And the reason for that is because, number one, I like putting everything I can onto a credit card because it gives me rewards. So all of my credit cards are associated with. different airlines, including Delta. And no content netbook is. They're merged with someone, right? They're merged with United. So I actually, I have a United, United Continental credit card. I have a Delta credit card and I have an American Airlines credit card.

Okay. So, yeah, so I put everything onto a credit card so that I can max out my airline miles. And then I also, I'm kind of obsessed with keeping a really high credit score. I think because I buy so many houses. And so one of the factors that affects your credit score is this thing that's called the debt utilization ratio. And that is a measure of how much money you've charged relative to how much you can charge. So if, let's say, your credit limit is 10,000, and you've charged 1,000, then you're using 10%. Right.

And so the lower that ratio, you know, if you're using a little bit of the amount of $1,000, and you're using $1,000,000, and you're using $1,000, and you're using $1,000, then you're using $10%. you know, if you're using only 10%, the better. You know, if you're using 50%, that sucks and it's going to decrease your utilization ratio. Now, the thing to know, and it took me years to discover this, is that your utilization ratio is measured based on a snapshot that happens on any one random day of the month. So it doesn't actually, like a lot of people are under the false impression that the utilization ratio measures your outstanding balance, like debt that you're carrying month to month to month. Yeah. That's not actually the case. You could pay your bill in full so that you never carry a balance and you never pay a dime in interest charges.

But that actually doesn't matter. If you charge $5,000 on a credit card that has a limit of $10,000, it re-end the money. The snapshot that's reported to the credit bureaus happens when you have that $5,000 balance, you know, mid-month. It reads as though you've utilized or used 50%. And so that adversely affects your credit score. So if you do it weekly and you're paying them all off, because I do the same thing, I put all myself in a credit card, but I wait once a month. And so the odds are that it's going to take a snapshot when it's all building up over time. And the longer in the month that we do the snapshot, the more my utilization is going to look like it sucks.

Yeah, exactly. Because it's only paid off like on one day. Exactly. So you, okay, that, I did not know that. So I'm learning something. I love it. That's really, really fascinating. Now, I don't buy houses or anything, so I can care less, at least with that stuff.

But let me ask you this. Now, obviously, this is a really stupid way to measure each other right now. Just because we're talking about the credit scores, what is your credit score right now? or last time you checked, and I'll tell you mine, and we'll see how much of a difference it makes, even though it's not going to matter because it's like one factor. Let's, hold on. We log in to like credit Sesame right now and check this. So I can give you it for right now.

All right. And I'll tell you mine, too. So I, so mine, USA, actually a lot of companies are now giving you your free score, which is awesome. Discover card does it. I use USAA for all my stuff, and they now have it when you go checking in your credit card section. Yeah.

So every time I log in, it's always in there, which is nice. Yeah, I think one of my credit cards offers that as well. But it's the American Airlines executive card. They offer the FICO store. Ooh, 818, according to credit, Sesame. 818. 18, 818? Yeah.

Mine is 821. Whoa! So the monthly win. No, I think of you. Their snapshots are all. off this month. That's funny. But no, I honestly, I had no idea about how they check that. I knew that that stuff was important. Like, you want that barrier. And actually, that's why, like, when I first got credit cards, here's another tip, like, as long as you're good with your credit

cards. Like, I think my max, like, credit card bill, or the max allowed that I could put on was like $2,000. And I'd spend, like, $1,000 a month. So, you know, and then I'd pay it off. But like I was always in this case like halfway utilized, right? Right. And then I read on some blog, I'll just call up and, you know, give good, you know, standing see if they can raise the max. So I called up both of my cards and I jacked them to 30,000 and 35,000. So my 1,000 was now again, $65,000 high max limit.

Yeah. Which made me look like awesome. Even though I was spending the same amount, like it scores really fast just from that one thing. Yeah. But obviously, like if you're going to then spend more than, you know, like credit score is important, but not if you're going to screw yourself with your money. Exactly. You know, because that's supposed to help you with your money.

Exactly, exactly. The other thing that I would say to that, though, is if you're planning on applying for a mortgage or any kind of like, you know, if you're planning on taking out some serious credit within the next six months, I wouldn't do that in that case because the number of credit inquiries that you have, hard inquiries, also kind of adversely affects you. Okay. You know, if you're like, oh, I want to, you know, if you call and you ask them to raise your limit and that triggers a credit inquiry into you, I mean, the adverse effect is only temporary, you know, so it'll stay on your record for maybe like six months and then it'll kind of go away. Right. If you have too many of those and then you go and apply for a mortgage, then it's going to look like you're just, you're trying to get lots and lots of credit, which is going to be able to. It's like, it's kind of like dating.

It's like, you know, if you look like you're trying too hard, it makes you less attractive. Okay. That is true. I've got to feel confident. That's why budgets are sexy, they make you confident. It should be called net worth is sexy, honestly, these days. It's like, that's like I was going for with the whole blog name. Like, when you know your budget, you know you're like confident, right?

It's sexy. Confident equals sexy. No, I'm more like net worth is sexy. But anyways, yeah, all right. Well, that's fascinating. Good. I like learning from you, Paula. This is brilliant.

All right, so those are our ways we pay bill. That's our habits for paying. And we talked a little bit about whether we automate it or not. So that's interesting that you will automate. Now, when you automate it, but then you pay, like, let's say they're all set to go like next week. Right? And you pay today instead. Does it just skip over?

Is it not going to like double ding you? Because that's what I'm always afraid of. Oh, yeah. No, it doesn't double ding me at all. Okay. Double ding. I like that word. Yeah.

You like all my D-words. Because if it's set to auto pay and the balance is zero, then there's nothing to auto pay. So it just automatically reads that and it's like, well, there's nothing to pay. All right. Yeah. That's awesome. Because like I have all my like normal stuff that's usually the same like Netflix, automate, like that kind of stuff automated. Like that kind of stuff automated.

And then the big ones I manually do just because I, A, I'm afraid of it being like a crazy number. And then also I like to feel. like this is weird but I like to feel the sting like paying my mortgage I love like paying it because it pisses me off so much but then also gives me like a sense of like accomplishment at the same time you know and so I'll manually do those but I've never thought to automate I mean because there are times where I'll forget until like a week later got like something happens or I'm in the middle of paying when I sit down for that one hour and then I forget to do one thing for some reason which has happened so I like having that as a backup that's a good idea um and

And so all right, so let's segue into then, which reminded me with the mortgage stuff, another habit that I do, and I think you do too, Paula, is paying more of the principal, the debts that we have off. So for me, the only debts that I have is my two mortgages for my stupid house-laced alone. It's a first mortgage. Tell me how you feel about that house, Jay. Yeah. And then it's a second mortgage, which is really like a home equity line.

that was maxed out back when like people were crazy with buying homes and money years ago, 2008. And so my, so my two mortgages. One is like 1850 and the other is like $60. The $60 one's interest only. And so what I do is I used to just pay it like, all of me would just pay whatever is due and then it'll be paid off whenever it's paid off, right? The smart way to do it, of course, is to pay off as much as the principal as you can to save interest

and then you're done early. Right. And so for me, an easy way, habit that I just started doing was I would round up. So I first started at the nearest hundred. So I used to pay if it was 1850, I would just round up to 1900. The $60 one, I would just write up to 100.

And then, like, over time, like, oh, I'm going to do it a little more. So now I pay like $2,000 on the 1850, and then I pay $200 on the 60. So it's like I round up and I do the exact same no matter what the situation is going to know, every month for like five or six years. And obviously because of that, like the principle keeps going down a lot faster.

Right. But it's just easy because it's, I mean, even like $50 or $150 or whatever is a lot of money. It's in my head, it's like simple, tiny roundups, you know, that it doesn't really, I don't, like sometimes I forget that I'm even doing that because it's just a habit. Right. You know, and so these are the good habits to do versus like spending $50 or $100 on nonsense that you wish you could stop. You know, and what I, what I like about the rounding up method is that.

that it's, you know, it's so close to what you're already paying that you don't feel the pinch quite as much, you know, like in your example, if you're already paying 1850 a month on a mortgage and you just round that up to 1900, like, that's so close. You're probably not going to feel it in your day-to-day life, but it makes, but over time, it makes a difference. Hell, yes, it does. Yes, you're right on that one. So I do, so I do something different. So I guess I should give some background, especially for the listeners who don't know me,

who are probably wondering, like, what is she talking about when she keeps referencing all of these mortgages that she's always taking out? Yeah, you get her. So I'm a real estate investor, and so I've got five buildings, seven units, plus I have a primary residence that I myself live in. Those three mortgages plus my primary residence. So I've got four mortgages because four mortgages is four times the fun. So what I do is on my... primary residence, when I make payments on that, I double the principal. And so right now, like, you know, when they send you your mortgage statement and then they break it down and they show

this much is going to principal, this much is going to interest, and then this much is going into escrow for property taxes and homeowners insurance, right? Right. So I just look at whatever that principal amount is, and then I double it. And I send in a payment for that. And so right now on my primary residence, the principal is 350. And so I actually do a little bit more than doubling it. I send in an extra $400. You round up the doubler. You were like one up in you. And then you rounded up. I love it. I love it. Yeah, yeah, I do. I round up the doubler. And I actually ran a spreadsheet on this the other day because I'm a huge dork. So I ran a spreadsheet to see what effect this would have on like the total payoff plan.

And basically what this does is it allows me to have the mortgage paid off in 15 years. So I have a 30, I've taken out a 30 year mortgage. But by virtue of doubling the principle, I'm paying this 30 year mortgage as though it's a 15 year. So if I continue to always double the principle, I'll have it paid off in 15 years. Yeah. And the principle will always be lower in the first. beginning, right? And then over the years, like come year number 13 or 14, the principal is going to be like a thousand. Yeah, exactly. So you'll be paying more. But in a way, and I don't know

if you do this on purpose, because you could have easily taken out a 15 year loan instead of a 30 year loan, right? Yeah. But you probably now knowing your way your brain is working here, wanted like a safeguard. Yep. So there's one month where I don't want to double my thousand and set yourself back. Like the least amount you have to pay is just your initial bill. Exactly. Exactly. So I maintain the flexibility and the lower payments of a 30-year mortgage while still paying it off as though it's a 15. Yeah. And that's a really good trick, whether it's this or other stuff, because you don't know, like right now, your plan is to pay it off for 15 years. Who knows if you get a family, you get hurt, you don't make it much or whatever. Like your situation can change any day of the week, any time of the year of your life. Exactly.

You know, so at some point in those 15 years, you can change your mind, whether it's for the good or the bad. Right. You know, so that that's a good, I like that you have that, you know, worst case scenario will be paid off in 30 years, best case 15 years. Exactly. You know. And some of your houses, I know you paid cash because you're a baller. We can talk about that another day, too.

That's not a habit that's very easily ingrained. Could buy a house in cash. Yeah, house number two and house number five I paid in cash. Oh, and so that's actually another habit. So for the other mortgages that I have, that three rental property mortgage, that I have. Instead of making additional payments on all three, I focus on one at a time. That way, if I completely wipe out a mortgage on one of those, that's like one less bill that I have to pay. So rather than making incremental progress on all three, I would much rather throw every dime I

have into one out of those three and get that one knocked out. You're like a debt snowball of investing. Exactly. The debt snowball of mortgages. Yeah, yeah. So do you pick, will you pick the lower amount or do you go by the lower interest or do you kind of just do whatever your feel like it? You know, I go by the one that is most emotionally annoying. Oh, good one. Yeah. And actually what I do is instead of paying it off every month, what I do is I accumulate money in the savings account. And I wait for that money to grow and grow and grow and grow and grow until it reaches like a shitload of money.

I think I've cussed like three times on this podcast. I don't normally cussed this much. I like it. You're passionate. You get some bleepers going. Some sound effects. Yeah. I like that.

So yeah, I let it accumulate. And then once it reaches a large sum of money, I then have the option to decide, do I want to use this to make a huge lump sum payment and wipe out this whole mortgage in one. check or do I want to use this to buy a house in cash? Interesting. And that was how I bought house number five. I just accumulated a bunch of money. So the fifth house that I bought cost $46,000. And so, yeah, I'd accumulated maybe like 60 or 70. And I was like, hmm, I'm getting pretty close to being able to wipe out a mortgage.

Or I'm also able to buy a house and, you know, obviously a, in a low-income neighborhood because houses sell for $46,000. Right. Or I could use this to pay cash for a house. So which one would I rather do? And at that point, I just start looking at real estate listings and seeing if there is a house that I want to own. And if there's something that makes sense, if there's something that's a good investment,

then I'll pay cash for it and just buy it. And then I don't have to deal with the hassle of like applying for another loan and paying loan origination fees and all of that. Right. You know, it simplifies my life. Right. Or if I couldn't find a house, if I couldn't find a good investment, then I would have just thrown it a mortgage and been done with it. Well, and I like it because now the downside, of course, is if you're paying down the mortgage over the years, it would be better than doing it in one-lap-sum, yeah?

Or does that not financially? Like, I know, like, I like your plan better, but I think it's probably technically worse financially to do that, right? Yeah. If you're going to go the paying debt down route. I mean, I certainly pay more in interest as a result of letting that money accumulate. my thinking is that the additional interest that I'm paying is the cost of keeping the option open. Yeah, I like it. The flexibility premium.

Yeah, you know, and even going like, like I've had this discussion with a lot of people. I love it. It's like, it's the same like breaking even thing. Like, would you rather have $100,000 in cash sitting in your account, but you have $100,000 debt on the books? Or would you rather be zero? No debt and no cash, right? And there's pros and cons. I always choose that.

the tons of cash in the account because the options are like amazing you pay it debt because you could always pay off the debt anytime you want right but you could buy another house or buy five houses if you go that route and put 20% down right right houses i mean you can do whatever you want but it's just that that power of feeling like i have the savings i'll do that too if i have like 10 000 i'm like i'll just dream about all the things i could do with 10 000 i never do any of them you know but it just feels good like you have like you have you're empowered you know So I like that round of you. I'm learning all about you today.

This is great. And they're good. These are good. These are interesting ways too. Like also it's all very not emotionally all the way, but like you know yourself like you're using your emotions to help you make better decisions versus using emotions like. Using motions like spend more money like on bad stuff. Do you know what I'm saying? Like it's a good way of harnessing your emotions versus not paying attention to your emotions.

So I think that's smart. All right. Cool. So that's automatic stuff. Let's talk about, I know you mentioned something about having a buffer, like you have a habit of keeping buffers in your accounts. Yeah, yeah. So what I do is I leave in every checking account. And I'm in the process of like, I realized recently I have too many checking accounts because a lot of times I'll open them for the sake of like reviewing them for my blog audience.

And so like over time, I'm like, well, I've got too many. I need to consolidate. But in my, in whatever checking accounts I use, I love. leave a buffer in there of like between one to two months worth of bills. So like my real estate business checking account, for example, which is where all of the mortgages and the water bills and the property taxes and everything get paid from, there's always about like 10 or 12,000 that's just floating in there. Okay. And in my personal checking accounts, you know, I've always got like one or two months worth of expenses just floating in there. And the reason for that is so that, you know,

in case, especially because I'm self-employed, like in case clients take a while to get around paying me, basically in case there are any delays with me getting money, I don't have to worry about it. You know, I can just, I know that I've got enough money to be able to pay my bills and I've got like this two-month cushion. That's awesome. Like, for example, I was just in Ecuador and Columbia and I'm supposed to be getting a check worth several thousand dollars. from one client, but in order for me to get that, they needed me to, like, fill out and sign some form. And so they emailed me, like, the day that I went to Ecuador, basically, and they were like, you need to fill this out and sign it. And so I emailed them back, and I was like, I'd be happy to do so, but right now I don't have

access to a printer or a scanner. Right. I will be able to access that in three weeks when I come back to the United States. So that's already a three-week delay, I have your mind. Yeah, exactly. You know, so it's a three-week delay in me getting paid. and you could tell that they were concerned about it. They were like, well, we're really sorry, we can't issue this.

And I was like, don't worry about it. I don't care. I got a buffer. I was like, doesn't even matter. It's if, you know, I'll just, just so you know, you'll hear from me in three weeks. You know, and it's like, it's just not a bit. And you, I could tell that the person on the other end of that email chain was like, are you sure this is okay? You know, and I was like, yeah, it's fine.

Well, it's possible a person like that would be missing a few thousand dollars. in their own lives. And so they're trying to like, this would suck if it happened to me. Yeah. That happens a lot. Yeah. Well, that's amazing too. Like, that's one less stress that you have to worry about of when your cash is going

to flow in. Right. Which is a big one because a lot of times, like people wait. They're like, you know, just they die for like pay day to come because that's the day they're going to pay. God forbid it's like a couple of days delayed, you know. So that automatically eliminates one of the stresses of our lives. Exactly.

So, no, that's, that's smart. I like it. And anything could happen. Like, I have a friend whose paycheck bounced. Oh, yeah. I know. Yeah. It happens.

Oh, yeah, it happens. Ooh. You got to jump ship, man. Yeah. Yeah. Not doing well. That's true. That happened at my start.

The company that I was at before I started blogging or why I started my blog at, they bounced one check. No, first they told us to just wait a couple days, which is the same thing. At least they saved us on a hassle. Then it was good for a while. Then they started bouncing. Then they got delayed by two or three weeks. And you have to know that stuff is going on obviously.

It was like, oh, the cash flow isn't coming in. Business is still fine, whatever, you know, whatever they said. But eventually, like I was trying to quit and then I ended up getting fired. And the day I got fired, it was two weeks that I was owed a paycheck. I never got my paycheck for the two weeks, which stocks, whatever. people stayed around for six more months and never got paid once in six months. Wow. And the company just vanished.

And we sued and we won. It didn't matter because there was no money. You know, it was crazy. So like, A, it was good that like I got the kick at only like two weeks missing a paycheck. Right. But yeah, rarely is it where things start bouncing and then usually it's okay down the road. At some point, yeah, it's obviously a bad sign. Wow.

So, yeah. So having a buffer, right? And I was also maxing out like my 401k at like 90%. Because, you know, maybe that whole cause trouble too. That's a ridiculous amount of money to match. It really is. Right. Right.

And the company was so like we're here for the employee. Like they wanted to do so good. I mean, the whole thing was really fascinating. But anyways, yeah, that's a red side of flag. Be careful. But yeah, having a buffer helps. For me, I have like always like $1,000 in cash in my checking account, my personal one. I don't really know why I choose a thousand.

It's just like a nice number for me. And it seems to do the trick. I'd certainly be screwed if I didn't pay bills after. Well, I pay a month and ahead. So that part saves me a month. So I guess that's my buffer is paying it earlier most of my bills. Yeah. But yeah, but yeah.

Yeah, I think if anyone is trying to figure out money, maybe just try a buffer 500 or 1,000, in your checking and just see how that makes you feel emotionally and if it starts changing your habits for the better. Yeah. Yeah. I totally agree with that. You know, you get your paycheck into your checking. They're like, oh, I'm going to save some money and you transferred into savings.

And at the end of the month, you're transferring the savings back into your checking because you messed up, right? And it's because that option is always there that you always do it. I did that. That's why I thought I was earning $200, saving $200 a month because I would transfer. And then in my head, I didn't register that I would transfer back later, you know? So that the buffer there also allows you not to keep playing the transfer game. Right.

Right. And then when you start seeing money built, like, that was like another big epiphany for me. When my savings account grew or actually at some point my 401k, when it was like $100 or $200, you know, it was like nothing so you didn't care. Then over time it was like $1,000, $5,000. I was like, holy shit, like this stuff grows if you don't touch it.

It's amazing, right? It's the stupidest thing. But once you see it, you're like, this is amazing. All you have to do is not touch it, right? And savings accounts get touched more than, I don't know, I was about to have to pay. Right. I'm seeing that analogy get really dirty.

Yeah. So layoff, right? And one of the way you can lay off is having a buffer in your checking account. Oh, man, that was giving a bad one. All right. All right, buffers. All right, let's see. I know we made a lot.

Just to review everything we've talked about so far. We've talked about tracking your net worth, which is your favorite. We've talked about the anti-budget, which is probably my favorite. Yeah. Maxing out all of your retirement account. paying your bills either once a month in advance or weekly, setting up automatic bill paying at least as a backup measure, if nothing else, leaving a buffer in your checking account,

rounding up your debt payments or your mortgage payments to the nearest 100th, and doubling the principal on your mortgage payment. That's a lot of good damn habits. Yeah, dude. We've covered some ground. Yeah. So those are the habits. We also have, I guess, like, challenges that we do, too.

Because I think a lot, so, like, usually, at least for me to get into habit, I have to be experimenting or do something, you know. Like, when I first started blogging, like, a no spend month was, like, a huge kind of like epiphany for me. Like, everyone was tired. Oh, for a whole month, you don't spend anything except on, like, bills, right? You don't go out to eat. You don't buy any electronics. You just pay what you need to pay. Right.

You know. Just groceries and, like, your electricity bill. Yeah. And that one experiment for me for a whole month I did it. Like it changed. Like I realized like I would go into stores. Like I would drive to the mall and be like, what the hell am I doing here? I can't spend money.

But I was so like used to going to the mall just because I was bored. You know? And I kept or I'd go to like Amazon, right? Because out of habit, like I had a bad habit of just when I was bored and looking around and then buying stuff. Right. And as soon as I did that experiment of no spending, like it caught myself. and then my habit now, like it was harder for me.

Like, I rarely go to stores ever. I'm on Amazon a lot, but I really go to my physical stores. Right. So I automatically was saving hundreds of dollars a month just on that one experiment, you know, because like I realized that that doesn't really make me happy, you know, I was just, I didn't know what I was doing. Right. And so I know you and I have these other experiments or challenges that we do.

And you have the 1% challenge, which I think is a really, I guess, kind of like an automated habit once you get going, yeah? Yeah. Tell us about the 1% challenge. Okay, so the 1% challenge, this is a challenge that I put out to my readers on Affordainthing.com. And it was in response to, I was getting emails from a lot of readers who said, like, hey, I just cannot save anymore. I'm saving as much as possible. And there's just no way for me to save more. And so my challenge was, regardless of whatever you're saving right now, next month, boost those sales.

savings by an additional 1% of your income. So how much is 1% of your income? Well, if you make, just take whatever you make in a month and like lop off two zeros. So if you make 2,000 a month, 1% is 20 bucks. If you make 3,000 a month, 1% is 30 bucks. If you make 4,000 a month, 1% is 40 bucks. That's nice. 8,000 a month, 1% is 80 bucks. It's super easy to calculate, which is part of the reason I like it. So whatever is that you're, earning, figure out what 1% of that is, and next month, save that additional amount of money. Doesn't matter what your current savings rate is. Like if you're currently saving 5% of your income, next month you save 6%. If you're- You're saving 0%? Yeah, save 1%. Exactly. Exactly. And so do that

next month. And then every subsequent month increase your savings by one additional percent. And so if you continue doing this, if you make this a habit and you continue just boosting your savings rate by one extra percent every month, then after a year, you'll increase your savings rate by 12 additional percent. You know what I like the most about it is that there's a lot of like on our blogs and personal finance world. There's a lot of like, I see 50 percent of my income or 75 percent of my income, which is like really damn like scary and impressive and hard to do. right um because in your head you're like well starting tomorrow i need to save 50 percent right you know which you can't do right so so even if you started at zero this month and next month you save one in 50 months right which is what is that three four years four years in four years they'll be saving 50 percent and you'll barely notice it you know over the years

but also it gives you four years to like get your shit together you know and work towards that which is brilliant i love it it's such an easy slow methodical way of doing it and turns into a habit, especially after the first few months. Yeah. You know? And by saving, like, going back to your stuff, like, you can physically put it in your savings account or you can increase your 401K. Like, you can put it places.

It doesn't have to just be like in your pocket or in your save or something. Yeah. Just put it somewhere. Exactly. Exactly. When I say savings, I'm referring to anything from, you know, making additional payments on your debt to making retirement contributions to little. literally accumulating it in your savings account, anything that increases your net worth.

There you go. It always comes back to the net worth. I love it. It's true, though. Yeah. So that's good about the debt, because that's the question. Well, if I'm saving 50%, how am I going to pay off my debt, right? Well, that's the same thing. Yeah. I would consider that to be savings. Those additional debt payments, I would consider to be savings. Okay. And then when your debt's gone, obviously, it is 100% savings. Yeah. So, yeah. Okay. Well, that's good. So that's one way you can take, that's an action item you can start literally today. after you listen to this, if you wanted to, like, get going and get all sexy up in here. So I think, yeah.

You have this other challenge also. Oh, by the way, for anybody who wants to, here's my little plug. If anybody is interested in the 1% challenge, I've started a Facebook group where people who are taking the 1% challenge can just, like, talk to one another and share their strategies and share, like, things that they've done. And it's pretty cool. Like, people have done some pretty creative stuff. Yeah.

So hopefully we'll have a website with some link on it somewhere. The links to that. Otherwise, you can just, if you go to afford anything.com and look up the 1% challenge, there's links there to the Facebook group. Okay. So that's good. So that one covers saving more money, like physically putting it somewhere. Yeah.

A way to make it easy on yourself is my challenge, which I just call challenge everything. I love this, fun. It's kind of morphed over the year. I've been doing it for a year now, a little over year. The gist of it is cutting expenses and cutting a bill. And you just take anything. Like I started with my cell phone. Figure out a way to get it lower like one time up front,

but then having that continual savings every month going forward. Like paying dividend pretty much like passive income in the way, right? My wife and I had an iPhone. We were paying $100, I think, at $1.60 or $70 a month for it, which is fine. Most people have iPhones. You know, a lot of people spend a lot money. And I had to earn this challenge, I thought, well, you know what?

Like, I want to start spending less money so I don't have to make a ton more money and I could retire early. Like, that was the whole gist of it. Less money you spend, the less you need to earn, the quicker you don't have to work ever again if you don't want to. Right. And so my iPhone, I looked at my iPhone, I'm like, I love this thing. Could I have a phone that does pretty much the same damn thing for a lot cheaper

so I can shave off a year off of my working life, for example. Right. Long story short, I end up going with Republic Wireless. We pay like $25 a month. Total, we pay about 50 bucks a month now. And we have, like, droid phones, which, God, I don't even know what droid did or what it was. But it pretty much does the same thing an iPhone does. You know, like it takes pictures.

It calls people and it texts and you have Internet, you know. And we've unlimited stuff. But anyways, that one change, even though it's kind of annoying one because you had to switch phones. Yeah. That one change saved $100, $110 off my bill every single month going forward. Right. So in a year, I saved $12, $1,300. Yeah.

That's more than $1,000 a year. Yeah. So now, now that's the first part, right? That's fine and dating. Great. You shaved a bell. Woohoo. Good for you.

It doesn't matter unless you do something with that money. Because if you go out and spend it again, then what the hell? You're in the same spot. Your lifestyle's the same. Exactly. It ain't savings till you save it. Yeah, exactly. So I made that second part of, I said, all right, I'm going to open up a separate account,

savings account. I'm going to throw it in every month. That was one bill. I went to my cable bill. I went to my car insurance. I kind of looked into other stuff and then I got lazy. So those are like the three main things. things I cut.

But that's every month that I got three things every month. I was saving like 200, 250 just on those every single month. So, and then I started like selling stuff on Craigslist and all these other kind of, that was a habit I had to every Friday list something on Craigslist to sell. And so anyways, over the course of the year,

I had almost exactly 5,500, which is pretty much maxed out my Roth IRA, right, which is pretty much free money. Yeah. You know. And so that was one thing that I got on to have. And again, the cutting the bills is the grace because it recurs every single month.

You know, whereas if you sell something online, it's like a one-time payment. Right. But if you're struggling and you don't have this extra 1% or you don't think you do, even though you probably can do it anyways, like this is one way you can start. Do the challenge. Whatever you save every month, just transferred over into savings or investments, wherever you want. And then it's like you're breaking even saving money, you know, because you're used to spending the same amount. Exactly. So what I love about challenge everything is number one that it's

so methodical. You go through every single thing that you spend money on and like maybe once a week, you're like, this is what I'm going to focus on this week. This week I'm going to look at my cell phone. This week I'm going to look at my car insurance. This week I'm going to look at my electric and gas bill. And it's just super methodical and you go through these things one by one and challenge them. Then that Craigslist thing that you did, I love that because I've often, like I have like a pile of stuff that I'm like, you know, that I always intend to sell on Craigslist or eBay, but it's such a big pile. Like, I'm like, I'd have to take a day off of work to do this.

Yeah, it's a noise. And you don't do it. You don't sell anything. Exactly. Exactly. And so I love that you're like, I'm just going to list one item per week. It's so simple. And I literally have a Gmail calendar item that pops up and says list something today, dummy,

every Friday. It pops up right now. It doesn't mean I sell everything. week. Some take a month, months, but it's the habit of just doing it. And then like, and that one thing changed too because the reason is call, challenge everything is it really changes your lifestyle. Because I would look at things in my house that I would never sell. And at six months into it, I started selling. Right. You know, because my mind shifted from what would I ever have to have this thing or this money so I don't have to work ever again. And I most times chose

the money. Not all the times, but a lot of times. And once you start getting rid of stuff that normally you wouldn't, like your whole, even the iPhone, I would have never given away my iPhone ever. There's like no way in hell. But when I compared it to, you know, freedom, it changed. You know? Why now out of six years owning an iPhone did that happen? I don't know. So now I'm challenging just my life in general. And even jobs and work and even podcast, like all this stuff I'm challenging because now I realize it's just good because we get so complacent of doing the same thing over and over again that we just stopped thinking about it. Right. I paid $180 for years. It was just the way it was. Right. But it didn't have to be that way, you know. So lots of good challenges

you can do. You can do a lot of items, but the point of all this is pick a couple habits, start experimenting and know that all these little changes. Like if you listed like five or six different things we do, they all together help grow your wealth. over the long term, massively. Yeah. Yeah, and it all comes back to that. It comes back to growing your net worth. Yeah, that's right.

That's the name of the game. Awesome. I think we chatted a lot here, my friend. I think we have. I think we have. So, yeah, track your net worth, run the anti-budget, max out your retirement accounts, pay your bills either once a month or once a week,

automate your bill paying, leave a buffer in your checking account, round up your debt payments to the nearest hundredth, double your principal on your mortgage, Take the 1% challenge and challenge everything. It's really easy. You can do it all tomorrow. Take it one step at a time, please. Yeah, yeah, exactly.

Pick one of those things and do that one thing. All right, guys. Hope you enjoy this. We'll catch you here soon. Cool. We'd like to thank our sponsors. Nobody. We don't have any sponsors, but we would like to thank you for listening

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