George Kamel - Here’s How Money REALLY Works

Episode Date: June 26, 2023

There is a lot of bad money advice everywhere that’s failing to teach you the truth about money and how to build wealth. But when you see how the system works, you can outsmart it, break free, and build wealth on YOUR terms. Check Out Financial Peace University I love a good deal, when you sign up using this link, I’ll hook you up with a 14-day free trial and $15 off your first year of the premium version of EveryDollar. Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

Listen, there is bad money advice everywhere that is failing to teach you the truth about money and how to build wealth. And the worst part, you're falling for it. And I know because I've fallen for it too. Just like I felt for the amiable allure of Steve Martin and Cheaper by the Dozen, too. In the words of Rotten Tomatoes, cheaper too wasted solid cast and scenes of over-the-top predictable humor. Pity.

And I'm not just bitter because of my Twitter feud with Steve back in 2010, where he called me a sad idiot child. I wish that wasn't a true story, but it is, and I regret it. also pretty cool to get tweeted at by Steve Martin. In his defense, I said some not nice things about Steve and tagged him because I'm an idiot. And he called me one. But before I get ahead of myself, head on over to that LNS so we can keep the party going. Little like and subscribe, if you will.

And while you're at it, hit the share button. You're right there anyway. You already hit the like and subscribe. What's the share going to do at this point? You can do it. So what's all this bogus advice you ask? Well, like many of our other most dastardly psychological issues, this question, When crap started when we were kids.

Now, like me, you probably didn't really get common sense financial literacy in school, meaning you had no clue about debt and budgeting and taxes and investing. But hey, at least we know the mitochondria is the powerhouse of the cell. I can't begin to tell you how useful that factoid has been in my adult life. I use it almost on a daily basis to annoy people. And then you probably grew up in a house where money wasn't talked about either.

And maybe when it was talked about, it was, as the kids say, the ock. Awk. So you all avoided real conversations about finances, just like you avoided grandpa after sloppy Joe Saturdays. You know how he gets when he's on the sauce. Plus in high school, everyone told you college was necessary to make it in life, and that taking out a crap ton of student loans at all costs was an investment in your future.

Now, little did you know you were signing up for potentially decades of debt and stress. Not to mention after graduation, you entered a tough job market, and you ended up taking a position that likely paid less, than some magic number you had in your head, right? We all thought we were going to make $100,000 when we were little. Let's see, what other nonsense did they... Oh, duh, you were told that having a good credit score was a huge pinnacle of adulting success,

and this is the sign of wealth, was having a great credit score. And after you opened a credit card or two, you told yourself you paid off every month. You'd never pay a dime in interest. But before you knew it, you were sucked in by cashback offers and rewards and airline miles. And then life happened. And maybe you missed the payment or you couldn't afford the balance in full, which triggered insane interest rates at like 23%.

And let's not forget, you were told that renting is a sin and it's a waste of money, and that owning a home is the ultimate symbol of success, which made the bank happy as a tick on a fat dog to loan you way more money than should be legal and left you broke, because you put down all the money you had to get into this house that turned out to be way more of a curse than a blessing. You see, many of us bought into this normalization of debt without even thinking twice. Heck, we might have even been advocates. And I know. Realizing we've been fed lies by a system designed to screw us

is a lot like the stages of grief that you feel when you find out. You're gluten intolerant. Denial. Anger. Nausea. Heartburn. Indigestion. Upset.

Sterea. And this dyspepsia and injustice is the whole reason why I haven't had a cinnamon roll in six years and why I'm so passionate about teaching people the truth about money. Because when you take off your own rose-colored glasses and realize you've been sold a lie, you see that everyone is coming after the money that you work really hard for. The banks, the corporate marketers, higher education, comparison culture, Instagram ads, not to mention the most ruthless salespeople of all, the Girl Scouts. Would you like to buy it?

You ever tried telling a Girl Scout no? Good luck. Those people are not looking out for you. Not the Girl Scouts, I'm sure they're very sweet, and they are maybe looking out for you. I'm talking about everyone else. The people that convince you to follow the trends to get rich quick, but all they're really trying to do is get into your wallet, leaving you wondering why it's empty, and wondering why thinments don't actually make you thin.

When you make a promise, keep it, girls' counts. When you see how the system works, you can outsmart it, break free, and build wealth on your terms. So let's talk about how, starting with one of the biggest lies out there, that debt is just a way of life, and it's also the way that leads to wealth. You see, these so-called financial experts want you to believe that debt is a tool that you can use to build wealth.

Well, those people are plain wrong, and they probably dip their pizza and ketchup too. Disgusting. I know it's tomato-based and so is sauce, but it's not the same. They're unequally yoked. Your biggest wealth-building tool is actually your income, not debt. And when debt causes you to send huge chunks of your income out the door every month to payments,

you've completely lost control of that tool. And if you want some proof, let's pretend you're dishing out income every month on student loans, credit cards, and the new car you just bought a few months ago. Here's a look at what those payments add up to. The average student loan payment in America today, $393. The average credit card payment based on a 2% minimum, $116. The average new car payment in America today, $700. On a Chevy tracks, really, Brad, really? What are we doing here, man? The total,

a whopping $1,209. But we're not done here. Let's tack on the median mortgage payment of $1,600. The only kind of debt I'm not mad about, but that all brings your payments to a total of about $2,800 each month. Now, with the median household income, At about 71,000, you're throwing close to half of your gross income out the proverbial window at payments. It's no wonder, then, that 48% of Americans have less than 10,000 saved for retirement, and 45% have less than 1,000 saved for emergencies, because all of their money is going to credit card companies and the banks. Not exactly a recipe for wealth building.

So what would things look like if you didn't have payments? Let's just say you decided to tell your debt to kick rocks and pound sand, and you paid off your student loans, you paid off the credit card, and you paid off the car, and you keep the mortgage for now, we'll knock that guy out later. And instead, you took that $1,209 and you were able to invest it monthly from age 25 to age 60. Guess how much you'd have using the average rate of return of the stock market? About $4.6 million, and probably a hot tub?

And guess what you'd have if you stayed on the merry-go round of debt payments with no margin. $4.6 million imaginary hot tub, but zero actual dollars and a rusty old wash bin full of your tears. Here's what you need to know about debt and interest. Interests you pay is a penalty. Interest you earn is a reward. So if you've fallen for the lie about debt, there's still hope. You can get rid of your debt and take control.

And the way I personally did this was using the debt snowball method. It's a perfect snowball. Here's how it works. You're gonna list your debts out from smallest to largest balance, ignoring the interest rate. Not the monthly payment, the balance, smallest to largest. And we're gonna go after that smallest debt with a vengeance that would

make Sir William Wallace blush. And while you're attacking the smallest debt, just keep paying the minimums on the rest. Now once you've paid off that smallest debt, we're going to start on the second smallest. You're going to take everything you were throwing at that first one, and now we're going to add it to the second one. That's your minimum payment and all the extra margin you were throwing. Once you've paid off that one, you're going to move on to the next one, and the next one, and you're going to keep going until you've paid off all of your consumer debt. And here's why the debt snowball method works. Imagine a snowball rolling down a hill. Well, as it rolls, it gains size and speed, just like Gremlin's after midnight.

Except the debt snowball isn't destructive, it's constructive, and instructive, and depending on who you are, potentially seductive. I mean, ladies, tell me you're not swiping right when you see debt-free in that dating profile. Now, the debt snowball is way more psychological than it is mathematical, because when you start with the smallest debt, you get a quick win early on, which helps you gain the momentum that motivates you to keep going until you can finally say, I'm dead for. free. And when that happens, that's a different way to live. You get to call the shots. You have

options. You have freedom and you have autonomy because you don't owe anyone anything. And it's an incredible feeling that will help you build wealth way faster than any debt leverage tool. And did I mention that debt flat out sucks? Regardless of what you've been told, debt is not a tool for building wealth. In fact, it makes you a tool to make the banks and lenders more money. So they can slap their name on big buildings and stadiums while you stay broke. U.S. Bank Stadium, is the ugliest stadium in America. Why is your name not on a stadium? Brad?

Imagine that. Imagine to just Brad Stadium. We'll workshop the name. So you've got to play the long game to build wealth. And that means ditching this cycle of debt and cheap wins. You've got to be a tortoise in a world full of hairs. Be a crock pot in a world full of microwaves. So when I started getting out of debt 10 years ago using the debt snowball,

I found out all this information from a course called Financial Peace University. The peace and financial peace. actually comes from outrageous generosity. And it was the first time I felt like I was actually being taught the truth about money and the truth about how to build wealth for myself and not someone else. In fact, the average household that goes through Financial Peace University, they pay off 5,300 bucks in debt and they save $2,700 in the first 90 days. That's a heck of a turnaround.

So if you want to check that out, I'll drop a link below. In the meantime, like and subscribe if you enjoyed this video and share this video with a friend who can't have a conversation and without mentioning things like debt ratios and arbitrage and leverage and cashback. I want to know what they think to. And in the meantime, ask them what you can't get through a conversation without mentioning. For me, it's Costco. I know. I'm working on it.

Self-awareness is a great start. Thank you guys for watching. I'll see you next time.