George Kamel - Where Does Your Income Rank Compared To The Rest Of America?

Starting point is 00:00:05 Where does your income rank compared to the rest of America? You might be surprised. Today we'll dive into the actual numbers so you can see how your income stacks up. Plus, I'll share the metric that's even more important than your income because it's the one number that actually determines if you'll be wealthy. And no, it's not your sleep number. I thought the same thing. Okay, to be in the top 50% in terms of household income,

Starting point is 00:00:26 you need to make $83,592 per year. So if your household brings in more than $84,000, congratulations. You're ahead of half of the country. Now, I know what you're thinking. George, that doesn't feel like a lot of money anyways. You could be right. It may not feel like a lot of money, and we'll get to why in just a bit. And that's what they call a tease in the biz.

Starting point is 00:00:47 No one says that. But first, let's see what it takes to be in the top 25% of earners. To crack that income tier, you'd need to be pulling in around $153,000 per year as a household. To be in the top 10%, about $251,000 per year. And to be in the top 5%, a lot. little over $335,000 per year. And if you want to join the exclusive top 1% club, you'd need a household income of $659,060 per year. That's jump change. And by the way, these numbers come from the fine folks over to DQYDJ,

Starting point is 00:01:22 who have created some cool little calculators to figure this stuff out based on data collected from the U.S. Census Bureau and the Bureau of Labor Statistics. So if you want to dispute these numbers, take it up with them. Do not at me, bro. So now you know where you rank nationally, but here's the deal. Your national income percentile really isn't a great indicator of how well you're doing financially because it doesn't tell the whole story. For one thing, it doesn't take into account where you live in this massive country of ours. And cost of living can be vastly different based on your location. You've got places like San Francisco, New York, Washington, D.C., where you might need to start a sinking fund just to buy a submarine sandwich.

Starting point is 00:01:59 Then you've got areas of Alabama, Mississippi, rural Kansas, where your money goes way further. In San Francisco, for example, the median rent for a one-bedroom is $2,418 per month. So if you're in the Bay Area making the national median income, which is just over $83,000 per year, good luck finding a cardboard box on Zillow. Meanwhile, in a place like Wichita, Kansas, you can get a decent one-bedroom for $812, about a third of the cost, which means you'd be spending $1,606 less per month on housing if you're a Wichita? Wichita? Wichita. Which, just tell me in the comments. Right away, sir.

Starting point is 00:02:38 So you can see why income alone is not an accurate measure of how well you're doing with money. Another reason, you could be pulling in six figures and still be broke regardless of where you live. In fact, nearly half of U.S. consumers earning over $100,000 are living paycheck to paycheck. That's sad. But it's not just inflation and cost of living here. A big reason Americans are living paycheck to paycheck is debt. If you've got $150,000 in student loans, $50,000 in credit card. debt, two big car payments, and a mortgage that's choking you out every month, it's going to be

Starting point is 00:03:09 hard to survive, let alone build wealth. And here's why you're using a massive chunk of every paycheck to pay for past mistakes instead of building wealth for the future. You don't have any financial breathing room. And that brings us to the metric that's even more important than your income. In fact, it's really the one number that determines if you'll actually become wealthy. And that is your financial margin, aka the gap between what you make and what you spend. Or as I like to call it, my cash cushion.

Starting point is 00:03:34 Put that on a shirt, cash cush for short. Anyway, your financial margin really is the single greatest indicator for wealth building potential. Because margin is what lets you pay off debt faster. It's how you build that emergency fund. It's how you save up for things instead of going to debt for things. It's what you invest to become wealthy. And I'll show you what I mean. Let's say there are two people who both make $100,000.

Starting point is 00:03:55 We'll call them Person A and Eugene. Person A has a student loan, credit card bills, and a hefty car payment. On top of that, he eats at the Cheesecake Factory so much the servers know him by name. Because he doesn't have much margin, he's only able to invest 3% of his six-figure salary into retirement. So let's head to the Ramsey investment calculator to see how this plays out if he keeps this up. So we're going to go here, current age, he's 30 years old, and we're going to go till 65. All right, is that a sound fair? Starting with $0 in retirement, is not invested a dime.

Starting point is 00:04:30 How much will he contribute monthly? Well, 100,000, 3%, that's 3,000 a year, comes out to 250 a month. All right, 250 a month. What do you think the annual return will be? We're going to go 10%. That's the historical rate of the S&P 500, the U.S. stock market. Calculating? $949,000.

Starting point is 00:04:49 Not bad, but after 35 years making six figures, he has less than a million bucks in retirement. Now let's take a look at our friend Eugene. Eugene has no debt. He lives on less than he makes, which means he has. margin and he's able to invest 15% of his income into retirement. Let's see how that pans out. Same thing, current age 30. He's going to retire at 65, starts with zero at the age of 30, but contributes 15%. That's 15,000 bucks a year, 1250 a month. Let's see what that turns out to be. $4.7 million. That is wild. Not even close. Eugene is going to run laps around Person A because he has

Starting point is 00:05:31 margin. And by the way, I will link this calculator in the description so you can plug in your own number. So go check it out for yourself. So how do you create margin like our boy, Eugene? Well, there are two levers you can pull. Lever number one, expenses. Lever number two, income. Now, you create more margin when you crank the expenses lever down or crank the income lever up. If you can crank both at the same time, even better. And if you can crank that soldier boy, congratulations. You're officially old and no longer on fleek. You should probably see a chiropractor as well. Three, good. Hold it. Hold it. Good. Good. Now let's talk about how to make more money first because that lever is truthfully way more fun.

Starting point is 00:06:08 If you want to get your income up, you've got some solid options. And I'll give you three ways to do that. But first, let's talk about where you're putting that money. Because where you do your banking matters. Nobody likes dealing with a crappy bank that just sees you as a dollar sign. And that's why I love Fairwin's Credit Union, the sponsor of today's video. I've met these guys myself, and here's how countercultural they are. They're actually focused on helping you get out of debt and win.

Starting point is 00:06:31 with money. You can get started with Fairwinds by signing up for their smart bundle, which includes their spend smart checking account and save smart high yield savings account. Plus, you get free nationwide access to over 33,000 ATMs and over 5,000 credit union partners if you need to access a local branch. So get started today. Go to fairwins.org slash Ramsey to sign up for the smart bundle or use the link in the description below. Okay, back to making money. If you want to get your income up, one thing you can do is change jobs. This is often the fastest way to bump up your income. According to a recent ADP survey,

Starting point is 00:07:04 job switchers saw a median 7.1% pay increase, while people who stayed put only got 4.4%. Another way to get your income up, negotiate your current salary. Now, this one's easier said than done, but it's still an option. Do some research on what the market rate is for your position with your experience and start the conversation with your leader. And if you want a pro tip,

Starting point is 00:07:24 don't just walk in and ask for a raise. Instead, ask for a growth plan and more responsive. after you've already been crushing it in your current role. Crested. Another way to make more money, start a side hustle or two. If you've got a driver's license and a reliable car, you can deliver people, food, groceries, packages, in exchange for money.

Starting point is 00:07:43 And if you've got skills, try freelancing or tutoring. If you've got stuff, go sell it on Facebook Marketplace. And if you want to find a good side hustle that fits your lifestyle, check out my free side hustle quiz by going to georgecamel.com slash side hustle or use the link in the description below. But before you go buy a domain name for your doggie due to removal business, I highly recommend doing a quick self-audit of your spending. I'm not talking about making a full-on budget here.

Starting point is 00:08:07 Just pull up your bank transactions from last month and take a good hard look. If you see that you're spending $100 on subscriptions you forgot about or that you spent $400 at Bojangles without even realizing it, you probably need to focus on the other lever first, spending less. So some quick ways to do that. Cut subscriptions, cook food at home, and be a smart shopper. Create and stick to a budget. The app that I use is called Every Dollar.

Starting point is 00:08:29 I'll drop a link to it below. It makes this super easy, does the math for you, and it's in your pocket wherever you go. And here's the cool part. With the all-new Every Dollar, you can find thousands of dollars in margin in the first 15 minutes of using the app thanks to the personalized recommendations will give you.

Starting point is 00:08:43 And here's a big one that people don't want to hear. Consider moving to a lower cost of living area. What does you say? I know. I know. Moving is a big deal. It's a big hassle. It can affect your job, your kids' schools,

Starting point is 00:08:55 being close to family, a lot of important stuff. And it might not be the best solution for you and your family right now, and that's okay. But if you're in a really bad spot financially, you've got to ask yourself, what am I willing to give up to fix this mess and change my family tree, to change my financial future? And if moving is on the table, it can be an incredible way to increase your margin and get back on track. And you don't have to go from New York to Nebraska. I'm talking about 30 minutes down the road. That could have a huge impact on your finances.

Starting point is 00:09:21 And if you want to see what I mean, check out our free cost of living calculator. You can plug in where you currently live, where you're thinking about moving to, your salary, and it will give you a complete breakdown on how far your money is going to go in different areas. I'll drop a link to that in the description as well. But don't get too caught up in where you rank nationally in terms of income. What matters way more is creating margin so you can get out of debt, build wealth, and give even more to bless others. And check out this video for even more ideas on how to increase your margin. Give it a click or use the link in the description.

Starting point is 00:09:51 Don't forget to like and subscribe and share this video with someone you would start, a doggie do to removal business with. And let me know in the comments what you would call it. Thanks for watching. We'll see you next time.

George Kamel - Where Does Your Income Rank Compared To The Rest Of America?

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