George Kamel - New Paycheck Routine: What to ACTUALLY Do With Your Money

Episode Date: May 22, 2024

💵 Create a free budget. Sign up for EveryDollar today!  About This Episode Caught in a cycle of living paycheck to paycheck? In this episode, I’ll break down three different paycheck routines, each tailored to help you manage the money in your next check—no matter where you are financially.  Next Steps  📗 Order George Kamel’s new book, Breaking Free From Broke  ▶️ WATCH: How to Stop Living Paycheck to Paycheck (Without Getting a Second Job) Offers From Today's Sponsors  This episode is sponsored by Tello, a mobile service plan designed to save you money. Go to tello.com/George for $5 off your first month of Tello’s unlimited data plan. 🙌    Listen to More From Ramsey Network  🎙️ The Ramsey Show    🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💼 The Ken Coleman Show  📈 The EntreLeadership Podcast     Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

What's up guys, George Camel here with an unsettling stat for you. 78% of Americans live paycheck to paycheck. If that's you, it's super important that every single dollar from your paycheck has a purpose. And even if you've got more breathing room in your budget, having a consistent paycheck routine will help you be intentional with your money so you can reach your financial goals. But here's the thing. Not everyone should do the exact same thing with their paycheck.

It's going to be different depending on where you are financially. This is not a one-size-fits-all situation. I'm not a fan of one-size fits all. Have you seen me? As a man of below-average stature, I can assure you one-size does not, in fact, fit all. So today, we're going to break down three different paycheck routines for three different financial situations.

That way, wherever you are on your journey, you'll know exactly what to do with the money in your next check. And, spoiler, one of these routines will be the method that I personally use every single time your boy gets paid. I'm your boy, if you didn't know. That's my boy! But before we get started, hit those like and subscribe buttons and share this video with someone you know who has a job.

Actually, share it with your unemployed friends too. Maybe it will give Jeremy the motivation he needs to find gainful employment. I find that unlikely. Okay, this first paycheck routine is what you would use if you have any kind of debt other than your mortgage and you've already got a thousand bucks set aside for a starter emergency fund. So credit card debt, student loans, car payments, medical debt, basically anything you owe anyone.

Yes, including the $300 you still haven't been moed Kristen for the Bachelorette party. And no, she didn't forget. In fact, she started a group text without you. She's talking trash. You knew she was a mean girl before the party. Okay, don't act surprised. She's so pathetic. Step one, open the every dollar budgeting app.

Now, this is the app that I use for budgeting personally. I'll link it below, and it's easy to get started for free. Step two, you want to plug in your total monthly earnings. This includes your paycheck, your spouse's paycheck, money from side hustles, and any other income. List it all individually with different items. Step three, cover your necessities, or what I call your four walls. That would be food, utilities, shelter, and transportation. The bare necessities, the simple bare necessities.

Don't sing it. I know you started in your mind. You were, just don't do it. Look for the bare necessities, the simple bare necessities. Step four, put in each of your debts and minimum payments. Organize them from smallest to largest, regardless of the interest rate or monthly payments. This is the order you'll pay them off, and it's called the debt snowball method. And by the way, it is the best way to pay off debt.

It's the way that I paid off debt and millions of paid off debt. And the reason it's so powerful is because it's psychological. It helps you stay motivated. It gives you quick wins, and that actually causes you to keep going. Step five, use any remaining money to cover expenses in order of priority. So plug in the rest of your expenses in order from most important to least important, and then keep going down the line until you run out of money. So at the top of that list might be things like daycare, insurance, your home security system,

and then as you go down, there might be more discretionary things, like your shower patch kids. If you know, you know. What the heck are you talking about spectacles? Now, this is probably going to ruffle some feathers, but beyond your $1,000 starter emergency fund, if you have any money left over, don't save it. Say what? Yeah, don't save it. And before you berate me in the comments, let me explain why.

In the long term, I recommend everyone have an emergency fund of three to six months of expenses. But at this point in the game, you've still got debt payments sucking money out of your paycheck. And that's going to make it way harder to save up for that emergency or invest or do anything else that requires financial margin. So take any extra money you have from your paycheck and use it to knock out the debt first. Then once it's all paid off, you can channel that money towards saving up your three to six month emergency fund. Which brings us to the next paycheck routine. And this one is for people who are debt free except for a mortgage and have a fully funded three to six month emergency fund. So step one, open up the every dollar app and plug in your total

income for the month. Step number two, cover your four walls, food, utilities, shelter, and transportation. Now step three is where the paycheck routine really starts to veer off from the first. So step three is to invest 15% into retirement. So now, instead of throwing money at debt payments or your emergency fund, you can channel that money into building wealth. Now this is really important because according to the Federal Reserve, 26% of non-retired Americans have no retirement savings. Nothing. That's about as sad as this photo of Keanu Reeves sitting on a park bench.

And you do not want to end up facing retirement with no savings. I see it all the time and it breaks my heart, especially considering the rising cost of prunes and cream of wheat. You're going to need that when you get older. I don't know why, but they tell me. And that's why you should be investing 15% of your income into tax-advantage retirement accounts at this stage, like a 401K or a Roth IRA.

Now, most people with employer retirement plans have this automatically deducted from their paycheck before it ever hits their bank account. So if that's you, you actually don't need to worry about this in the budget. It's already done, just set it and forget it, and learn to live on what's left in your check. Step number four, use any remaining money to cover expenses in priority order. Just like we talked about in the last one, same thing here. Step five, put any extra money toward your other goals. Since your debt is gone, now you can start saving that extra money for things like your kid's cost. vacation to Gatlinburg or a car to finally replace your 09 PT cruiser that

smells like a combination of kombucha-soaked carpet and clinical depression. And that one was personal. Not the depression, the kombucha. Don't shake the kombucha. It's not what you want to do. And then, if you still have extra money, put it toward your mortgage principle to get your house paid off fast. Because once you've gotten rid of that mortgage payment, you'll be able to channel that big chunk of money to other things like saving, investing, and yes, more spending. Okay, before I show you my paycheck routine, I want to tell you a way you might be able to find more money in your budget with TELO, a mobile service provider designed to save you money.

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You want to upgrade? Boom, you upgraded. You want to downgrade? Boom, you downgraded. Pricing starts as low as $5 a month, up to $25 a month for the Unlimited Everything Plan. And to sweeten the deal, you can get an extra $5 off the Unlimited Plan for your first month of service when you use my link. So grab this exclusive deal at tello.com slash George or just click the link in the description. Okay, now I'm going to share with you my paycheck routine. And this is what you would use if you're debt-free with a fully funded emergency fund.

You're investing at least 15% of your income into retirement and your house is paid off. If that's you too, then congratulations. You're doing pretty freaking amazing and I'm proud of you. But you still need to be intentional with every dollar you make. You don't just stop doing a budget because you're at that point. Budgets are for life. Just like true friends and the lower back tat you got during your quarter life crisis. That one is, it's hard to undo.

That's my credo. Don't regrets. And the cool thing is, now you can really price. prioritize giving, saving, and investing. So here's what my paycheck routine looks like and what yours can too. Step one, give. Now, this one is controversial. Might be shocking to you, but we found that as a family, giving is really important to us, and so we make it a priority in our budget. So decide how much you're going to plan to give for things like church, charities, and nonprofits. Now, I always tell people to give 10% of your income no matter what your financial situation is. And once you're at this point with money,

you'll probably have a lot more money that you can use for generosity. And truthfully, giving is the most fun you'll ever have with money, even more than investing, even more than spending. And in the Camel family budget, we try to include some really fun giving line items. For example, we have a spontaneous line item called the Blessup Fund, and we just put some money in there, and if either of us sees an opportunity to give, whether it's a stranger on the street or a friend at work, we can just give spontaneously, and it feels amazing.

So even if you're not part of a local church and you're tithing, find ways to give, find things you're passionate about, and donate to them. It is well worth your time and money. Step two, invest for retirement. Now, up until this point, we've said to invest 15% of your income. But once the house is paid off, you can increase your investing. Which means you can do things like max out your 401k, max out a Roth IRA, max out your HSA, and even look into further things like a backdoor Roth IRA

or a brokerage account outside of retirement if you want to retire early or pay for your next house in cash. That's where it gets really fun. Step three, cover the bills. Shocking, you still got to cover the bills at this stage. So this would be things like your four walls and also other things like streaming services and other luxuries like fancy gym memberships. Step four is to save.

Now at this point, you should have some margin to save up for big purchases like vacations, luxury stuff, or a $3,000 printed mesh grocery tote bag. It is real, and I don't know why. Look at this guy. What are we doing? Like, as a society, what are we doing? Oh, where did we go so wrong?

Anyway, in a more down-to-earth example, my wife and I are increasing our sinking funds for things like vacations, car upgrades, self-care, and other things that would fall under the entertainment category. We can also increase some of the little luxuries in life, like getting a house cleaner once or twice a month. All of that really adds to my quality of life, and it's the kind of stuff you can do when you have the margin.

Step number five, cover other expenses. This would be things like eating out, clothes, fun money, and things that are totally unnecessary, but make life a tiny bit more enjoyable, like a subscription to the pickle of the month club. I love a sweet gherkin, okay, sue me. If it's a crime to love a sweet gherkin, go ahead and put me in jail. Lock me up. Right to jail, right away.

And here's a pro tip. When you're making your every dollar budget, add a miscellaneous category to account for the little surprises that pop up. That way it won't wreck your budget when you have to make an urgent trip to the exotic pet store to secretly replace Brad the fish because someone had a little gogurt spill in the aquarium. Now, I don't know if you can actually kill a fish with gogert. I've never tried. I don't want to know. I'm not a fish expert. Call Graham Stephan. I bet he would know. Okay, so now you know exactly what to do with the money in your next paycheck. And if you're part of the 78% of Americans who feel like they're living paycheck to paycheck, follow this routine, and you won't be in that situation for long. It's probably not going to be easy, but trust me, it will be worth it.

And before you know it, you'll have more margin and less stress. And sticking to a paycheck routine isn't the only thing you can do to create more margin in your budget. So check out this video for some more practical tips on how to stop living paycheck to paycheck without having to get a second job. I'll also drop a link in the description below. Thanks for watching. We'll see you next time.