Epic Real Estate Investing - 5 Personal Finance Basics Your Financial Planner Won't Share with You | 524

Episode Date: November 23, 2018

Learn the secrets that your financial planner won’t tell you about! We are sharing with you the 5 personal finance basics that will considerably facilitate the money aspect of your life. Discover how to invest in yourself, what the good use of debt is, and why you should start a small business. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, Rockstar, Matt here. And as promised yesterday, we're doing something really special today that I don't think we've ever done. At least I don't remember doing it. And that's a Black Friday promotion. I've never been much into the ritual, but I'm feeling a little left out as I see everyone else's promotions. But the team, they've insisted that we do this and they've made a compelling argument for it. So they put something together for you that you'll be able to appreciate. The Epic Intensive, it's officially on the calendar for January 24th.

through the 26th, and we're doing it in Las Vegas. Yep, you're invited to attend this three-day lead machine intensive. It's all about generating leads. It's all about finding motivated sellers. It's the invitation-only workshop that will reveal the secrets to billing your lead machine and your passive income streams, and you are invited. And for today only, Black Friday, the intensive is free to attend. On Monday, the regular price of $297 will go live, but for today, only,

the intensive is free. It's risk-free even, as there is a $97 seat deposit required, of which $100 will be returned to you at the door. I know a little bit of an inconvenience, but it's a hotel thing. We've got to make sure that we get the right size room for the people that are going to attend. So in exchange for that little inconvenience, I'm willing to pay you $3 more and maybe grab a coffee or a burger or something at the break. All righty, so go to epicintensive.com, reserve your seat, and I'll see you in Vegas. Intensive.com. This is Terrio Media.

Hey there, rock star Matt Terrio here at Epic Real Estate. And today I want to show you five personal finance basics that your financial planner probably isn't telling you about, nor will they likely ever tell you about. So we're going to discuss those today on this episode of Financial Freedom Friday. So at a recent Epic Intensive, I went to dinner with a few of the attendees and we were talking about our kids. We're talking about specifically how we're teaching them about money and how much smarter they're going to be than we are right now and how much smarter they're going to be at such an earlier age. And I've got a son. He's seven years old and I'm

already imparting certain financial concepts into his world. And, you know, the concepts are basic, but there's still concepts that I didn't learn until my mid-30s. And I don't know where I would have learned them if I wasn't just, if I just wasn't lucky. to cross paths with the right person. And fortunately, I did. And I think back on how differently my life would have been had I learned these in my 20s or even my teens, let alone it's seven years old like my son. So I just want to go over these five personal finance basics with you today.

And so you will be wiser for it and hopefully at an earlier age than when I found it. So number one is invest in yourself. invest in yourself and that really means invest in your financial education it's amazing how many people say how important money is to them yet how little they actually know about it and their ultimate action plan is to send their money to someone else like a financial planner hoping that they know what they're doing that's not financial education no financial education does not consist of you sending yourself, or excuse me, sending your money to someone else with the idea or the investment strategy of hope. No, a good financial education is learning how to get people

to send money to you. So there's a lot of really good books out there. Read them all. Read as many as you can. There's always something to learn. There's always something to pick up. I continue to educate myself. I continue to invest in myself. You know, and there's podcasts, there's workshops, there's seminars, there's videos, there's masterminds, there's coaches, they're mentors, there's online programs, all kinds of stuff. But I pulled aside a few books that have really had a significant impact. And I don't know if any of these would be a surprise to you, but I just want to point a few things out that I think were life-changing the first time I was exposed to them. And the first one, obvious one, rich dad, poor dad. It's hard to find a person out there that hasn't read this book yet.

But there's two concepts in this book that I am really instilling in my son. And one is the first idea is the whole escaping the rat race formula. focusing on generating residual income, cash flow, passive income, whatever you want to call it, the type of money that comes in on a monthly basis regularly that's not directly connected to your efforts, that type of money and enough of it so that it exceeds your monthly expenses. And what that really does is it creates financial freedom. We hear that word so often or that expression so often and so little of us really know what it actually means.

So that first step is creating your financial freedom, getting that residual income to exceed your monthly expenses. And what that does is it just gives you a life of options. It doesn't necessarily make you rich. It doesn't necessarily make you wealthy. I mean, it's certainly a byproduct of the practice, but you get your freedom first. And when you've got your freedom, you've got this life of options. So you get to do what you want with your day.

You get to work when you want. You get to work for who you want or doing what you want, pursuing your passion, whatever it may be. It's liberating. And I wish someone would have shared that with me. Gosh, my senior year in high school, I can only imagine what would have happened after that. The second part of that book or the second idea that I impart in my son is the difference between an asset and a liability. And it's really simple.

I just never heard it defined so simply as it was in this book. And that was basically an asset pays you and a liability costs you. And once you get that concept, it starts to become really clear on where you want to direct your own funds towards. Right. So that's the first thing. The first book that came to mind. And the second one is this book called Profit First. And I just read this book about 18 months ago.

And I've been educating myself and reading for, I don't know, the last 20 years or so. I did not read too much while I was in school, read a lot since I've been out of school. And this book, Profit First. I've had my always favorite top three for these last two decades. But this is crept up there. This is definitely a top three, top four book. And it's really just about automating your whole financial world. Right.

You've got your money coming in and then you need to designate. certain little accounts for each important thing in your life, like for your house and your food and your car, your taxes, an investment account, a rainy day account, your profit is, you know, and ultimately you want to pay yourself to profit first and then reduce the rest of your lifestyle to pay everything else, right? And you'll notice that you don't make too many reductions at all. It's pretty miraculous on how much money you waste and how much money you actually make and save by applying the principles in this book. Mike Mikhailowitz, great, great book.

Love it. The third book is right here called The Slight Edge. It's not necessarily a money book, but I think it's a great companion book for these other two books and any other books, especially your favorite books. And it just kind of discusses the concept of every decision matters. Whether you say yes or whether you say no,

those decisions are always compounding. And we all have heard the eighth wonder of the world, the magic of compounding interest, while that same magic works with your decisions as well. And it points out so clearly that there's really a lot of productive things you can do on a daily basis that are really easy to do. And it would be really good for you if you did them. But because they're so easy to do,

they're super easy for you not to do. And because they're easy for you not to do, you can discount them as not that important. But if you pursue those types of activities or you conduct those activities or on a daily basis or consistently at least, they will compound and produce amazing results in your life. And it's really the key or the access to whatever you want in life, whether it's finances or whether it's just a good vegetable garden.

It'll apply to whatever your favorite book is. So slight edge, that's another one. Jeff Olson, great book. All right, so that's number one. Invest in yourself. Number two is use debt to acquire assets. right, an asset is something that pays you, right? And debt is something that costs you.

But if you use debt, the cost, and you leverage that into an asset, something that pays you more than what it costs you to use that debt, then that's what we call arbitrage. It's what we call a good use of debt. Because there is good debt and there is bad debt. Bad debt, meaning buying liabilities, things that cost you, right? so you're using the money that costs you to buy things that cost you. Toys and vacations and shopping sprees, all that stuff, that's bad debt. But if you leverage other people's money, so to speak, you leverage debt to buy assets, things that'll pay you more than it costs you to use that debt, that's a good thing.

That's good personal finance. Number three is start a small business. Start a small business. And there's a couple reasons. maybe there's three. Let me see how many I come up with. You'll probably come up with some additional ones yourself. One, you just earn more, right? And if you're earning more, you've got this little side hustle, whether it's part time or full time, you can certainly, or maybe multiple side businesses, I don't know, but you earn more. And when you earn more, you can save more,

you can invest more, you can just do more. You've got the more options for the society of which we live in. Money's important. And the more of it, you've got the more important things that you can do. So that's one thing. Second thing is The whole tax code is built for business owners. And let me show you what I mean. You know, if you have this concept, what we just talked about already, of escaping the rat race, right? You've got to get your residual income above your expenses. So you can focus on one or the other, you can focus on both.

But if you're going to focus on any part of that equation for yourself or that formula for yourself, if you're going to focus on reducing your expenses so you don't have to make as much residual income to escape, It just makes sense to me to start from big and work from big to small. So our biggest expense in life is taxes, right? And just by starting a small business, you can start taking a huge bite out of your taxes. So this is how it works. So if you're a W-2 employee or you are a business owner, just a 1099er, an independent contractor, see, you work, right?

you pay taxes and then you get to spend what's left. You got that? As a 1099er or a small business owner, you work, you spend, and then you pay tax on what's left. Now, it's just a little bit of difference in reversing these two things, but it has a big impact on that bottom line. All right. So this is really important. Start a small business for that reason, if not just that reason alone. And there's so many different small businesses that we can start these days. We just live in a world where it's so easy to do, whether it's starting a Shopify store or becoming an Uber driver. Yes, that's a small business. Or becoming a tutor or a teacher of some sort, taking some sort of expertise that you have in hiring yourself out to teach. Or flipping properties. That's a business as well. So start a small business. whether it's part time or full time, just start a small business. It's going to have a huge impact on your bottom line, not to mention that you're earning more as well. All right, so that's number three.

Number four, pay yourself first. And this is actually a rather new concept for me. I kind of talked about a little bit on profit first. It's very much what this is about. So whether you have a business or you don't, and this is just your personal finance, this, you've got bills, right? You've got bills that you've got to pay. You've got to pay the house.

You've got to pay the car. You've got to pay for your food. And you've got to probably take care of things for your family, whatever that may be. Just pay yourself first, right? Put it in a bank account that's maybe not attached to your normal household account, just so it's a little bit inconvenient to get to. You still have access to it.

You can still go get it any time you want. But if you make it just a little bit inconvenient for yourself, you'll be amazed on how quickly that, little account that you're paying yourself first, how quickly it adds up. And that gives you extra money for, it gives you money for a rainy day. It helps you sleep well at night. You're prepared for emergencies. And if something comes up that you really, really want, you can get it. If you have a friend or a family member that needs help, you're always there and you're in a position to help without it hurting you so much. Or you just got more money to invest. Right. So all types of side benefits.

And, you know, essentially when we start making more money, our lifestyle and our expenses, they rise to the amount of money that we make. And so typically for most people, making more money isn't the answer for them financially. It's just putting off or putting aside more of the money that they're already making. And if you do that, you're going to be really grateful. You'll be amazed on how quickly that adds up. So that's number four. Pay yourself first. Number five is invest.

for income. Income. It's a big distinction there. And that's a distinction I didn't have till later in life till reading the book, Rich Dad, Poor Dad. It was, most people in this world will invest to save money. They invest to create a big giant pile of money so that someday it will create a residual income for them. And for most people, that's a 40-plus year. plan. It's a long time. If it works for them at all, 95% per the Department of Health and Human Services, by the time they reach the age of 65, it didn't work out. Now they have no other choice but to invest for income because they don't have the 40 more years to start over and try again. So invest for income. And just focus on creating that income first. And then once you've

got enough income to live, you can still build the income, but then you can start taking that extra income to build your savings. So you can have the best of both worlds. It really is the difference between a 40-year plan and, I don't know, essentially a four-year plan. All righty, so let's review. Invest in yourself. Use debt for assets. Number three, start a small business. Four, pay yourself first.

Five, invest for income. These are five personal finance basics that I learned in my 30s that I'm now teaching my son. And I think about how differently life would have been had I learned them at the age of seven years old like my son. I mean, even in my teens or even in my 20s, it could have been so much different. and so much better. So look at these five. Which one of these will you implement for maximum impact? Which one are you not doing that you're going to take on?

So if you like what you heard or you know somebody who would like what you heard today about these five personal finance basics that likely their financial planner isn't sharing with them either, go ahead, feel free to share. I'd be grateful and you'd be helping out somebody significantly as well. All righty. I'll see you next week on our other episode of, Financial Freedom Friday. Take care. This podcast is a part of the C-suite Radio Network.

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