George Kamel - How to Budget Variable Income (And Other Juicy $$ Questions)

Episode Date: July 3, 2023

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What's up guys, George Camel here, and today I'm answering more of your burning money questions with answers I got from ChatGPT. Okay. I'm kidding. The only thing I use Chat GPT for is generating a list of excuses to avoid a toddler's birthday party. Here's one. Oh, I'm so sorry. We recently discovered a time machine in our basement, and unfortunately, in malfunctioned, throwing us into a parallel universe on the same day as the party. We'll try to fix it for next year.

Classic Time Warp Dilemma, am I right? I mean, we'd it kill you not to be so funny all the time. That's all I'm asking. Anyway, a lot of you know the story of how I went from broke to millionaire following a simple plan, and now I get to teach thousands of people how to do the same. So let's get to more of your money questions and my answers, which might be worth exactly what you paid for it. Nothing.

Zilch, which is the exact cost of hitting the like, share, and subscribe buttons. Although it does cost some finger energy and maybe a brain calorie, but that's not bad. That's a good day. I'm not really sure how I feel about it. Let's get to it. First question comes from Ben Boomgarden. How to set and stick to a budget when you have variable self-employment income.

This is a great question. For those of you that are self-employed or you work on commission, you have any type of regular or variable income, you still got a budget. In fact, you need a budget more than anyone. So here's how it works for you guys. Generally, you know what your lowest month would be, right? It's generally not going to be zero dollars. It's going to be something. And so factor based off of your lowest month or your average month out of a, a six,

to 12-month range. That gives you a great baseline to start budgeting. So when you make your budget, you've got your income at the top, then your expenses. So at the top of your expenses should be the necessities. This is going to be your four walls, food, utilities, shelter, transportation. Outside of that, we can start to go down the list of the next priority and the next priority of what gets paid and the next priority. And at the very other end of the spectrum, you've got the little luxuries that you could let go of if the income wasn't there that month. So it's called an allocated spending plan, a prioritized spending plan, and this is a great way to budget with a regular income. Next question comes from Galila Beauty. How to prepare to help or guide parents who are not

prepared for retirement. This one is a tough one, because you're out here, you're following personal finance YouTube channels, you're doing the right things with your money, but your parents maybe didn't set themselves up for a great retirement, and now you've got to be the one to talk to them, because who else is going to do it? So here's the key. You can't change them. You can't force them to do anything. What you can do is, encourage them, support them, and maybe rile them up about their money situation. And so that might mean giving them a book. I recommend the total money makeover as a great start.

But again, you can't force them to do anything. What you can do is say, hey, mom, dad, I love you too much to see you not retire with dignity, to see you continuing to work because you have to and not because you want to. What can we do to work on this thing together to get you guys to a better spot financially? Once they're out of debt, they can really ramp up those investments and hopefully retire with some dignity. so that you're not taking care of them. Next up, we've got DBB.

Here's what they're asking. Best way to invest for a senior that started late and has no payments now except for a little mortgage left. Okay, so this kind of harkens back to our last question. There are some things you can do to ramp up your investing if you started late. It's not too late to retire with dignity. Now, you may not have $5 million in the bank at retirement,

but you still can get by, cover your expenses, and have some leftover to enjoy. So the key here is to invest 15% of your income until you get that mortgage paid off. So all extra money outside of that 15% towards investing should go towards paying off the mortgage. And once you do that, you can ramp up that investing beyond 15%.

And there's some great things you can do at that age once you're 50 plus called catch-up contributions. We have 401Ks and IRAs. You can add even more money so that you can catch up for retirement. Good luck. A real man makes his own luck. Billy Zane, Titanic.

Coming up next, Michael N asks, Should I use a traditional IRA and a Roth IRA when my work has a Roth 401K? Or should I stay at the match and then max out both Roth IRA and traditional IRA, then add extra to both 401Ks? All right, that got real complicated, real quick, with a lot of numbers and a lot of letters. So let me simplify this for you. The simplest investing strategy is this. Match beats Roth beats traditional.

So if you have a Roth 401k option, that's great. We're going to invest up to the match. And beyond that, if you've got a Roth 401, you can do all 15% of your investing into that Roth 401k as long as you have good options to invest in. Good gross stock mutual funds in there with good returns. Now, outside of that, if let's say you don't have a Roth 401k, you would invest up to the match with your employer if you've got one, then go to a Roth IRA, fully fund that. And if you still have some room to go to hit that 15%, go back to your 401K and continue on.

But personally, I just invests in my Roth 401k up to 15%. Bada bina bada boom, you're done. Now, why do I love Roth over traditional? Well, Roth money you've already paid taxes on, which means it grows tax-free, you can withdraw a tax-free. So if you see $2 million in that account at retirement, you actually have $2 million to spend. You don't have to pay taxes on it in retirement.

And the thinking here is taxes will probably go up over time, meaning it's better to pay taxes now than later. Next up, Jimmy Miller asks, Can you address the balance between saving and spending? How tomorrow isn't promised and you can't take money when you die, how to have fun and enjoy your hard-earned money, but still remain intact, responsible, and cover all the bases while we're still living.

The best thing you can do while you're alive is to not have this yolo mentality. We're just going to go into debt, buy things we can't afford because who cares? Tomorrow isn't promised. And yet you could live another 50, 60, 70 years and be broke. So I want to plan for the best future possible while still enjoying my life now.

And the way to do that is to take control of your greatest wealth building tool, your income. And that means we're getting out of debt and we're staying out of debt. We're investing for the future at 15% until we have our house paid off. That allows you to have margin to do other things, like save up and upgrade cars,

and go on vacations, and go out to eat on the weekends, and hang out with your friends and do fun stuff and explore different hobbies. But the idea that it's either one or the other, I don't subscribe to that. I think there is a great balance and the way I like to look at it is there's three ways to spend money. Give it, save it, spend it. So as long as you are balanced in

those areas, maybe you're giving about 10%. You're saving 15%. You're spending another 10%. And the rest is used to cover your bills and all of your expenses. That makes me feel balanced, and that allows me to enjoy life now and later. Sputerman, 1, 2, 3, 4, 5, 6 asks, Is Dave Ramsey holding you hostage? Short answer, no. Longer answer, send help. He's trying to speak to me. I know it. No, I'm kidding. He's not holding me hostage.

I choose to be here. It's an honor and a privilege and a joy to be here. And I don't know why he would be holding. I mean, I'm free. Yes, I'm stuck in the studio, locked away here for hours a day to record content to feed the beast. But other than that, I'm a free man. I'm a free agent. I can do what I want.

And while I could leave, why would you want to? I'm living my best life. Another question. Are you sponsored by Ramsey Solutions? That's a great question. And I guess the answer is, Everyone in this room is technically sponsored by Ramsey Solutions because we've worked here. But really, the reason I'm still here 10 years later is because I believe in this mission.

I love the people that I work with. I love the work that we get to do, and I hope to do it for decades more. Next question comes from Ricky V. 8989. I know you said you went to an Arabic Baptist church. Do you speak Arabic? Yes. Not as good as I used to back in the day because I moved away from family when I was 20. and you're not around it as much.

But yes, I speak Arabic. I learned it growing up. We spoke it growing up. I still talk to my parents sometimes and grandma in Arabic. And we'll say things like, You beteachem Basmer, I had you mitka feller to wish. We don't say it that angrily,

but we can say it nicer. You're bethachim basmer. And I had you mitka feller. That's pretty good. Still got it. Still got it. In fact, my pastor growing up at the old Arabic Baptist Church

was Assis Khaled, Robriale. Not to be confused with DJ Khalid. Another one. Our last question comes from Scam-Bam. Thank you, ma'am. What is your social security number? Okay, I'm not scared. I got good fraud protection. You got a pen? 8-0-588. 2-300 Empire.

Today. Thank you all so much for submitting your questions. There were so many good ones. It was so hard to choose. And some of them are really detailed. And to answer some of those, we've got to go in-depth, which is exactly what we do on the Ramsey show, another show I co-host. So I'm going to link to that channel below where you can get some great money advice, watch tons of videos, and call into the show with your question. A lot of the money advice points to some real basic principles. Live on lesson you make.

Create and stick to a budget every month. Get out of debt and stay out of debt. Don't buy stuff unless you can afford it in full, in cash, with the exception of a home. And follow the Ramsey Baby Steps, the same one that helped me go from broke to millionaire. I'll link to more info on those if you're interested. And if you've got a question we didn't get to, leave it in the comments, and I'll try to answer as many as I can for today's episode.

And since you're hanging out with me here, let me remind you that you can also hang out with me over on Instagram at George Camel. Give me a follow over there. Send me a DM. Let me know that you watch the YouTube videos, and if you're enjoying them or not. And as always, don't forget to subscribe to this channel

to get more hot, fresh content, and hit the like button, hit the share button, and share it with a friend who may want to know some of the stuff. I don't know what they want to know. until you tell them. So go do that. Thank you guys for watching. We'll see you next time.