The Personal Finance Podcast - 13 Personal Finance Cheat Codes That Can Change Your Life

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Starting point is 00:00:52 Learn more at tellus.com slash online security. No one can prevent all cybercrime or identity theft. Conditions apply. On this episode of the personal finance podcast, 13 personal finance chequos that can change your life. Welcome to the personal finance podcast. I'm your host, Andrew founder of mastermuddy.com. And today on the personal finance podcast, we're going to be talking about 13 personal finance cheat codes that can change your life. If you guys have any questions, make sure you join the master money newsletter by going to mastermoney.co slash newsletter. and don't forget to follow us on Spotify, Apple Podcasts, YouTube, or whatever podcast player

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Starting point is 00:02:16 So today we're going to be diving into personal finance cheat codes that can change your life. And if you learn how to follow some of these cheat codes, you can dramatically improve your finances just by learning some of these things. And so we're going to go through 13 different things. And I want to bring you as much value as we possibly can. I want you to have idea generation when you go through this. And I want you to start taking action on some of these things when we go through this list. And so as we go and progress through this list, I want you to think through, well, how can I apply this to my life? How can I actually take action on some of these today. That's the way I want you to listen through on this episode. Now,

Starting point is 00:02:50 some of these are going to be talking through financial freedom. Some of these are going to be talking through tax situations, ways to actually optimize the way that you move your money around. So there's a lot of different cool stuff we'll be diving into today. So action-packed episodes, without further ado, let's get into it. Number one, and if you've been listening to this podcast for any amount of time, you know this is probably going to be on this list. And this is because it is one of the ultimate cheat codes that are out there, which is to automate everything, making sure that you build systems that run without you when it comes to your finances. Now, why is this a cheat code? Why? Because willpower is finite. And so because willpower is finite, systems are the

Starting point is 00:03:30 things that are going to help you build wealth. And for everybody out there, if you are not currently automating your finances, if you are manually moving money around within your finances, you are doing it wrong, my friends. So it's really, really important to make sure that we set up automation systems that work really well. This is why we prioritize it so heavily in Master Money Academy is we talk through why it is important to ensure that you automate everything. Now, automatic transfers to things like your investments is going to be really, really important. You don't want to have to remember every single month. Oh, I got to move money over to those investments. Then I got to remember to actually invest the money after I move it over to the investments. No, instead,

Starting point is 00:04:07 you just wanted to automatically go into that account and then it auto-intend. invests for you. The same thing goes for savings. When you set up savings buckets, if you have not heard our episode talking about the bucket method, I highly encourage you to check that out. But when you set up savings buckets for your emergency fund, maybe your vacation fund, your down payment fund on the house, maybe it's a down payment fund on the car, you want to make sure that that money just automatically flows to the right locations. And so saving money is also a personal finance sheet code by automating it. And that's really important to know. Also bills, if you're still manually paying bills in 2025 or 2006.

Starting point is 00:04:43 My friends, this is just going to be one of those things that we've got to make sure that we make a shift here. When it comes to your bills, those need to be automated. Then you can check your budget or whatever else to look at those transactions, but really, it needs to be automated so you don't have to remember to go in and pay bills. People who rely on their memory to go and pay their bills,

Starting point is 00:05:01 usually they're going to have late payments. They're going to be bogging down their brain with all these extra things they have to remember. So instead, I highly encourage you to automate that process and then check it on the back end. Now, here's what I would recommend is if you have never automated your finances before, let's create what we call a default month. A default month is to try to get all of your money to move for an entire month without

Starting point is 00:05:23 you touching it. So set up your automations and see if you can get your entire financial picture to move around without you actually having to touch it. 100% of your money is going to move automatically when you do this. So this includes investing. This includes savings. This includes paying off your bills. Now, one other thing that you can do is if you feel like, oh, I get to the end of the month,

Starting point is 00:05:42 and if I try to automate my money, I'm not going to have enough money at the end of the month. Well, you can set up automations on a weekly basis as well. This is going to be very helpful for a lot of folks. If you feel like your living paycheck to paycheck, set it up on a weekly basis, and then you can monitor it over time as you begin to get ahead. Also, the beautiful thing about automation is that you can get your money to work for you sooner. So mentioning every single time you get paid, you can start to get those dollars invested every week or biweekly,

Starting point is 00:06:07 instead of just once a month. What does this do? This means your money is getting invested even sooner than it would have had before. What do we want to do? We want to get those dollars working for us as soon as we possibly can. And so this is going to be a great way to get your dollars working early and often. So that's number one is automate everything. Number two is to prioritize high leverage skills over saving pennies. I cannot recommend this enough. So why is this a cheat code? because your income can solve way more problems than frugality or penny pinching ever will. So I want you to focus as much of your attention as possible on increasing your income if you're a living paycheck to paycheck. Sure, we want to make sure that we are cutting back expenses.

Starting point is 00:06:49 That is one side of the coin. But we want to focus the majority of our time on our income. Why? Because for most people who are living paycheck to paycheck, the biggest problem for them is they have an income problem. And so once you start to raise your income, then we can figure out, okay, well, where am I overspending? What are some of these areas that I need to come back on? Here's the real truth. You can only cut back so far, but your income growth is exponential.

Starting point is 00:07:11 It can continuously grow over time and is truly infinite if you can figure out how to unlock growing your income. And so there's a bunch of different ways that I want you to do this. I want you to spend the majority of your time learning and mastering high income skills. So this could be sales. This could be negotiation, AI tools now, communication, money management. All of these are high leverage skills that you can learn. And it's using that income leverage to really grow the gap, the gap between your income and your expenses.

Starting point is 00:07:39 Once that gap begins to grow dramatically, all of a sudden, you have so much more room to develop. Every $10,000 raise that you get is going to be worth so much more than you going out and clipping coupons or cutting back on a couple of subscriptions. Instead, we want to focus as much time as we possibly can on our income. Cutting back that daily latte is not going to make a huge difference like learning how to grow your income will. We've got to make sure that we're focusing in on the right things and identifying the right things. Now, as you start to grow your income and as you increase your income, take some of that extra money. The 50-50 rule is what we talk about here. Take 50% and

Starting point is 00:08:16 put it towards wealth building activities. So growing your investments in your emergency fund, those are the two places we want you to put it towards because this is going to help you build wealth over time. And so growing your income is one of the most important things. Now, once you begin to grow your income, you still need to know how to manage your money because there are so many different high earners out there who do not know how to manage money. And so they still live paycheck to paycheck to paycheck, making $200, $300,000, $400,000 per year. They still can't get by. Why? Because they never learned how to manage money. And so once your money comes in, you need to also have the money management high leverage skills that are going to allow you to put those dollars in the places they need to go.

Starting point is 00:08:54 Automation helps solves this problem because if you leave money just sitting in your checking account, it has got to get commingled with everything else. And you are going to spend it. So instead, moving that money automatically every month is going to help you get those dollars invested sooner and help you manage money so much better. So both of the first two are going to actually sync up together. And if you do both together, oh my goodness, your financial life is going to change dramatically. They are real personal finance sheet coats. All right, number three is going to help a lot of you out there who struggle with motivation. If you struggle with motivation or staying motivated long term, this is going to help you tremendously. It is treating your savings

Starting point is 00:09:31 rate like a game and keep leveling it up. So here's what I want you to do is wealth isn't about just how much you make. It's also about how much you keep it invest. So first, on number two, we talked about, you know, earning more, but you also have to keep a portion of that income and put it towards things that are wealth-building activities. And so as your income rises, I want you to focus your time and energy on increasing your savings rate. So if you don't already track your savings rate, this is going to be something that is going to be new for you. And so what I want you to do is track the percentage of your income that you put towards investments and your emergency fund. You may be listening right down and saying, I don't think I put anything towards those two things.

Starting point is 00:10:06 Or you may be saying, well, I put 10, 15, 17 percent. Whatever you do, let's think about this for a second and let's move a portion of our income towards savings and investments. Now, how much should it be? At a minimum here, we want you moving 20% of your income towards savings and investment. Why? Because that is the starting point that is going to help you start to progress towards retirement. And so what we want to do is try to get to that 20% number first. So this is level one is I want you to think through, okay, if I'm saving 5% right now or I'm saving 10% right now, maybe I'm saving 12% right now,

Starting point is 00:10:41 I am going to try to level up every single month to get closer to that 20% number. So maybe it is 1% every single month that you increase your savings rate. So you're not just ripping off the Band-Aid really quickly and feeling the pain and then you quit. Instead, you're going to slowly increase the dial for your savings rate until you get to that 20% number. then let's say your income increases and all of a sudden you get a raise amazing well if you get that raise let's dial it up to 21 22 percent and we're going to start to see this increase trying to get to a point in time that we feel comfortable with our savings rate let me tell you right now i know people who retired early you can retire if you didn't know this your savings rate is the catapult

Starting point is 00:11:20 to a lot of different things you retire in 17 years with a 50 percent savings rate now you be saying to yourself a 50 percent savings rate how does anybody do that there are countless examples in the financial independence community of people who are low earners and high earners who had a 50% savings rate. They made sacrifices for short periods of time so that they can get to that point in time. Now, I'm just telling you, it's possible to do something like that. There are people in the financial independence community who had 70% savings rate and retired in less than 10 years. Now, is it common? Absolutely not. Is it for everyone? Absolutely not. But if you really want to do it, your savings rate can dictate a huge difference maker in terms of

Starting point is 00:11:58 how fast you can retire. And so learning how to increase that savings rate and gamifying this system. Some of y'all just needs motivation and gamifying it is the motivation that you need. And so really, every increase is going to accelerate your retirement by years if you just increase it by 5%. Every 5% is years off of the amount of time that you have to work, especially if you have a long enough time horizon. And so here's what I would say is you can increase it by monthly. Option two is you can increase it quarterly. Every quarter, every three months, you say to yourself, okay, I'm going to try to increase my savings rate another three, four, five percent until I can get to that 20 percent mark plus. And then every raise you get, every bonus you get, every windfall you get, use those to help increase your savings rate for the year.

Starting point is 00:12:44 Let's see which year you can actually save the most in one given year. These challenges really work and they are something that you can really, really make a big difference on. And so treating savings like a game and making a goal of where you want it to be is going to help you tremendously. Number four is to use the tax code as a tool. So not enough people out there think of the tax code as something that they can utilize to try to reduce their taxes. Even if you're a W-2 employee, there are a lot of different things that you can do to reduce your taxes. The number one thing that you can do is making sure that you use tax advantage accounts. So things like your 401K, for example, if you max out your 401k in this given year, so $23,500 this year is what you could put in your 401k, unless you're over the age of 50, then you can put even more into your 401k. So let's say, you you put $23,500 into your 401k. That means you do not have to pay tax on that money right now and you've deferred that tax until a future date until retirement when you start to pull that money out. That's a great tax hack.

Starting point is 00:13:41 Or let's say you want to open up a Roth IRA. Well, with a Roth IRA, you pay taxes now, but then money goes in and grows tax free and you can pull the money out tax free. This is another fantastic option to reduce your taxable income long term or the HSA, which has triple tax advantages, meaning money goes in tax free. grows tax-free and investments, and you can pull the money out tax-free as long as you have a qualified medical expense. It has those triple tax advantages. We have lots of episodes on the HSA if you want to check those out. All three of those are wonderful. Or maybe you want to save your kids' college

Starting point is 00:14:12 and you want to get a tax deduction on your college savings and a 529 plan is another great one. So this is why we talk about these accounts so much because these are tax hacks for everyday people, including W-2 earners. Now, a second tax hack for a lot of folks out there is if you own a business, even if it's just a small LLC. Maybe you own an LLC for rental properties. Maybe you own one for a small side hustle that you have going on. Maybe you have a side hustle that you're trying to turn into a full-time business. There are a lot of different small business deductions that you can utilize.

Starting point is 00:14:42 The tax code is written very favorably for people who own businesses. And that's just the way that it is right now. And so we want to focus on those things that we can control. Even if you don't agree with that or maybe you do agree with that, you want to focus on the things that you can control. So if you make money on the side in some way, shape, shape, or form, having some sort of LLC could be beneficial. And so that is something, too, that you want to make sure that you are taking advantage

Starting point is 00:15:03 of those deductions. You can write off all sorts of different things. Number three is investing long term is a tax benefit. So long term investors have way better tax benefits than people who day trade or getting in out of stocks within a given year. Because if you hold a stock for less than a year, you are going to be paying a much higher rate in taxes than you would if you had long-term capital gains, which is holding a stock for over one year.

Starting point is 00:15:27 So short-term capital gains, less than one year. Long-term capital gains is over one year. And because of this, this is another way to help you, even if you're a W-2 employee, reduce short-taxable income. And then there's a ton of other things as well, understanding depreciation of assets. And when you have a business, you can depreciate all different types of assets, 1031 exchanges for real estate investors,

Starting point is 00:15:47 the step-up basis or estate planning. All of this stuff is really, really important to note. And here's what I would say is if you don't have a CPA in your corner helping you through this process. And we have a list of questions to ask a CPA. But if you don't have a CPA in your corner, it is very, very important to have one that can actually help you.

Starting point is 00:16:04 And having someone who does things like tax strategy to reduce your taxable income is very important. Now, if you're a W-2-er-owner, you may still be taking the standard deduction. And that's okay. But there are other things that you can do to help reduce your taxable income in a given year. And that is going to be one of the best things

Starting point is 00:16:20 that you can do is learning how to optimize for taxes. Now, you don't have to be a tax expert. That's what the CPA is for. What you do need to do, though, is making sure you're taking action on some of this stuff because it is going to save you hundreds of thousands, if not millions of dollars, depending on how much money you're making. And so learning this stuff is a multi-million dollar decision. It is a true finance hack where you will have multi-million dollars in your pocket more

Starting point is 00:16:41 if you just learn this stuff. So really, really important to make sure you're taking advantage of that. Now, number five, and this may not apply to every single person, but learning how to build more than one income stream early, even if it's a small one. So why is this a cheat code? Because we talked about how important income is. And if you are in some sort of job where your income is capped,

Starting point is 00:17:00 maybe you're a teacher, or maybe you are a nurse, or maybe you are someone out there who really can't earn more money at your day job because you can't go and get raises, there's not upper level management that really you can earn a lot more. Then what we need to think about is, are there other ways to have other income streams? Wealth is about taking your income and taking a portion of that income and putting into assets that will grow over time. And so if you can increase that income through a number of different ways, then there can be other

Starting point is 00:17:28 options for you. So let's say, for example, that you have a stable W2 job. You're happy with that W2 job. Maybe you're a teacher. We'll use a teacher as an example today. If you're a teacher, well, obviously your income is capped. There's only so much you can earn. Sure, you can become, you know, administration.

Starting point is 00:17:43 You can become a vice principal, maybe a principal. Maybe then go work for the county. But it is still only capped to a certain level. Getting to the top in education doesn't equal a ton more pay. Okay? That's just the reality of that. But there are countless examples of teachers who have started side businesses that have grown into full-time incomes.

Starting point is 00:18:02 And if you can start a side business, maybe you want to tutor on the side. That is a big one for a lot of teachers as they go and they can tutor. They can make $50 to $100 an hour by tutoring other students in a specific subject. Maybe you want to start a business that isn't even associated with education. And you do it on nights, you do it on weekends, you do it during the summertime so that you can work on that business. There are lots of different options out there for you. but building that scalable side hustle income is really important.

Starting point is 00:18:25 Then taking those profits, reinvesting them into assets so that your assets can grow over time. I think for me personally, one thing to talk about when it comes to income is if you have one income stream and you work for someone else, you are one other person's decision away from having zero income streams. And so it's very important to make sure that if you only have one income stream, you try to at least get the two. Getting to two at least helps diversify income so that if something were to happen, then you still have something else to fall back on.

Starting point is 00:18:51 Now, here's a great example is a lot of folks out there, if you're married, you have two income streams if both you and your spouse work. So that is two income streams where if one of you got laid off, at least you have a second income stream coming in. And so if you can come up with a third income stream, maybe it's a side business that you both work on together, that could be really important. Very early on for me, I realized quickly that when I was single, I was living paycheck to paycheck, got my finances together, but I realized I still have one income coming in. Then my wife and I got married. We had two incomes coming in, but then we would start these side businesses. this. One example that I've talked about in the past is we had a Christmas tree stand. So every year in December, we started this Christmas tree stand where we would sell Christmas

Starting point is 00:19:26 trees on the side of the road. Yes, one of those side of the road Christmas tree stands. And it was a great little side income stream for us. And so it was something we'd work full time. Then we'd go to the Christmas tree stand at night before we had kids. And then we worked the Christmas tree stand on the weekend. We can make a few thousand dollars during the holiday season. Now, there was other people out there who were much better at selling Christmas trees than I was. And they would make tens of thousands of dollars every time. But these are side hustles. That's a great seasonal option, for example, where we would do a sprint on these Christmas trees and we would work double time during that time frame, but then it was a month and a half, we knew it was

Starting point is 00:19:57 over and then we came back. But we had an extra income stream available there. So there's a ton of examples like that. Now, this is why we do our episodes talking about side hustles that can turn into a full-time income because we want to generate ideas for you that can help you in a long run. All right. I remember when I needed to hire someone fast, but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where Indeed comes in. When it comes to hiring, Indeed is all you need. Instead of struggling to get your job post noticed, Indeed's sponsor jobs help you stand out and hire faster. Your post jumps up to the top of the page, making sure it reaches the right candidates. And it makes a huge difference.

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Starting point is 00:23:15 Find your advisor at IGPrivatewealth.com. Number six is to use debt as a wealth building tool, not a trap. So when it comes to debt, this is a cheat code because what rich people do is they leverage debt intelligently. Now, I do not want a lot of people out there leveraging debt, broke people avoided or misuse it. And so you don't want to leverage debt on credit cards or you don't want to utilize personal loans. But using, there is a difference between good debt and bad debt. So what is an example? An example of good debt would be you go out and you,

Starting point is 00:23:45 find a house that is in your neighborhood and you see it for sale. And you look at that house and you say, hey, this price looks pretty decent. Let me see what it would rent for. And so you go and you learn how to run the numbers on a rental property. We have a rental property calculator that can help you run that numbers if you want. I'll link it up down in the show notes below. But you learn how to run the numbers on a rental property. Okay. You take it step by step and you start to factor in. Okay. Well, the house is selling for $300,000. And right now, rents in this area are right around $3,000 per month for a single family house. Maybe it's a three two or a four two, whatever else. I wonder if this will cash flow. You run the numbers. You realize, oh, this can make

Starting point is 00:24:24 $300 per month, and this could cash flow. You factor in a mortgage, you factor in insurance, you factor in taxes, you factor in everything, maintenance, depreciation, all that stuff. And what you look at then is that you get to the end of this and you say to yourself, wow, this is going to cash flow, I am going to go ahead and buy this house. But how are you going to buy it? Well, A, you can go out and you can pay cash for it, but you don't. most people don't have $300,000 with a cash sitting around. So instead, they go out and they get a mortgage on the house and it's still cash flows even after the mortgage is paid off, all the maintenance, everything else is put into place.

Starting point is 00:24:57 And so now this is utilizing debt to buy an asset where a tenant, someone who is going to work every single day coming home is paying off that mortgage for you and you are making $300 a month by owning that house. This is an example of utilizing debt in a positive way. Let me give you another example. Okay? We own six pick of all facilities right now. When we bought the first one, we went to the seller and we said, hey, let's work out a deal where we can buy this specific facility. And so we put a down payment down and he financed the rest of it. So I had debt on the rest of it that he financed himself as the seller. And we utilize this to buy an asset. You can do the same thing by going out and finding a business that you want to buy and getting an SBA loan. You can do the same thing if you wanted to use debt to buy an apartment complex. If you are buying an asset, with debt and you know what you're doing. Here's the big keys. You got to know what you're doing, because a lot of people don't know what they're doing. They don't do their homework. And then all of a

Starting point is 00:25:52 sudden they get themselves into trouble and they are in a worse situation than they were before. But if you know what you're doing, you can utilize good debt to help you leverage or increase your income over time and really increase your net worth. Now, I am not someone who is a big proponent of you getting millions and millions and millions of dollars into debt. In fact, I don't like that at all. But what I do like is for you to take small bets, get better, and then you can take bigger swings as time goes on once you know what you're doing. So start small and then kind of scale it up from there. Now bad debt is something that buys liability. So this is going to be credit card debt or car loans or consumer goods. These are all things that I consider bad debt. But there is good

Starting point is 00:26:31 debt if you are going and buying an asset that is going to produce cash flow for you. And so using debt as a wealth tool, not a trap, is one of the key components to someone who wants to become wealthy. Number seven is exploiting multi-million dollar decisions. So there are a lot of of things that are invisible multipliers when it comes to money sheet codes, things like your credit score. Okay? So number one is your credit score is something that if you have a good credit score, it is going to reduce how much you have to pay an interest when you go and borrow for certain things. If you go and buy your house, your interest rate is going to be lower if you have a good credit score. If you go and buy a car, your interest rate is going to be lower if you have a good

Starting point is 00:27:06 credit score. If you go out and get a bank loan for rental properties like we just talked about, your interest rate is going to be lower if you have a good credit score. And so all of these factors will become multi-million dollar decisions because over your lifetime, over the course of your entire life that you are borrowing money, 60, 70 years, you will pay significantly less on interest than you would if you had a poor credit score. And so your credit score is a big factor, a multi-million dollar factor that is an invisible multiplier. Another invisible multiplier is your employer match. Most people don't get their employer match. You absolutely should. Meaning if you have a 401k, 403B, 457, Roth 401K, any of those options that your employer offers.

Starting point is 00:27:47 If they offer an employer match, this is free money. And you need to take advantage of that free money. In fact, we've run the numbers a number of different times. Someone who actually maxes out there 401K but also gets that employer match up to a 6%, for example, is hundreds of thousands, if not millions of dollars, depending on what their time horizon is. And so really need to make sure that you're getting that employer match. Another one is stock options or employee stock purchase plans.

Starting point is 00:28:09 I have seen so many people as of late really accelerating their path to wealth by using stock options and employee stock purchase plans. I've seen people with $5 million net worth, and the reason for it is because those stock options. So making sure you take advantage of those is another one. Another big one is the HSA with those triple tax benefits. So if you have a high deductible health plan, money goes in tax free, it can grow tax free, you can pull the money out tax free. And that triple tax advantage could be a huge invisible multiplier. There are tons of these. out there over and over and over again that we need to make sure that we are taking advantage of them. And so learning about invisible multipliers can be really powerful. We have an episode talking

Starting point is 00:28:49 through six multi-million dollar decisions that you need to make. That is a powerful episode about a bunch of other invisible multipliers that most people have never even thought about before. So I'd highly recommend that episode as well. All right. Number eight is to reverse engineer wealth with the wealth gap formula. So instead of just guess, your path to financial independence, you engineer it backwards so that every dollar you earn has a job. So here's how it works. The wealth gap is equal to the desired annual lifestyle minus passive income. So this is the single number that tells you exactly how far you are from financial independence. And so once you know your wealth gap, you have two levers.

Starting point is 00:29:29 Number one is you can increase your passive income if you want to, meaning that you add rental cash flow, dividends, royalties, business income, etc. Or you reduce or lower your lifestyle cost, meaning that you decide, okay, I'm going to reduce my fixed expenses to shrink this gap faster. So here's an example of this. Okay. Let's say, for example, you want a $100,000 per your lifestyle and you already generate $25,000 in passive income. So your wealth gap is going to be $75,000 in this scenario. So you can focus your energy on a number of different things. Maybe you want to increase the amount that you're investing over time and you want to max out those retirement accounts. Maybe you want to get some rental income. That's going to eventually, hopefully add up

Starting point is 00:30:09 to $75,000 per year once those houses start to get paid off. And as time goes on, the time value of money is really, really powerful. Maybe you're trying to start a business. You want to try to find a way to earn an extra $5,000, $7,000 per month so you can take it over the hump here. Every $1,000 of new passive incomes shortens your timeline and increases your chance to become financially independent. And so learning how to use this wealth gap formula to your advantage is really, really important. It starts to flip your thinking from how much should I save and start thinking through what action should I do to shrink this number so that I can ensure that I'm getting there faster? Number nine, this is one for a lot of people out there that have done this in the past, is house hacking.

Starting point is 00:30:48 One of your biggest expenses out there is your house. And for most people, their mortgage or their rent payments are going to be their biggest expense. So if you can reduce your housing costs, this can mean that you can have a massive increase in capital that you could put towards wealth-building activities or your financial independence. So house hacking, if you've never heard of it, here's how it works. There's a couple of different ways to do this. One example is you go out and buy a duplex. You live in one unit, you rent out the other unit.

Starting point is 00:31:14 And so virtually, either your housing costs are free, they are reduced, and or you're even making money for living in a specific house. And you can do this over and over and over again with different rental properties. So if you're someone who is interested in real estate investing, maybe you're young and you are interested in doing something like this, the duplex strategy or triplex strategy is a great option. Secondly, though, you can do this with a house that has an in-law suite. So if you're single, you can live in the same. the in-law suite and rent out of the house, or if you have a family, you can live in the house

Starting point is 00:31:40 and rent out the in-law suite. Third, you can do this with a traditional house if you have roommates. So you can also buy a house, live in the house, and then put roommates in other rooms, and you can live virtually for free or with a reduced cost. This is going to help you save a tremendous amount of money and is a cheat code for a lot of people, especially in your younger years. Listen, I know when you have a family, you don't want to have a bunch of roommates or if you have a family, you don't want to live in a duplex. So those two options are probably out. But this is something that when you you're younger, it can help produce your costs. And when you're younger, you get favorable terms if you're living in that unit. So let's say, for example, you want to go out and buy a duplex.

Starting point is 00:32:14 Well, you can buy a duplex with an FHA loan at 3.5% down. And if the numbers work, the numbers work. Then after two years, you decide to move on to the next property and you can move on to that next property and do it again. Or you can get another duplex with a favorable loan term. Maybe you get put 5% down, 10%, 15, 20, whatever you want to do. But you can do this over and over and built up a rental portfolio just because you have favorable loan terms because you lived in that unit. And so there's a lot of cool things that you can do when it comes to house hacking because you want to keep your housing costs below 30%. If you want to become financially independent, I would keep below 25 or 20%. But when you are someone who is just getting started, keeping your housing costs

Starting point is 00:32:53 below 30% is really, really important. And so this can help you tremendously lower that cost. Number 10 is to play the long game with arbitrage. What do I mean by that? Wealth is a time game. When it comes to building wealth, everything has to do with the amount of time that you have. It's not just a money game. So you need to start investing today if you haven't. Anybody listening right now, time is your greatest asset. If you were in your 20s and you're like, I can't even invest much money at all. No, time is your greatest asset. Getting started now is really important. We have something called the wealth builders matrix. If you go to mastermoney.com slash resources, there's something there called the wealth builders matrix. What this is, is this will help you look at your

Starting point is 00:33:33 age and how much you're investing every month and tell you how much that money every single dollar would be worth by the age of 65 if you invested it. It is absolutely amazing. So for someone who is 19 years old, for example, every single dollar they invest or spend is worth about $100 invested. And it is incredible to see the growth of that. Whereas someone in the 30s, maybe every single dollar they invest is worth $25. But you want to see how impactful those dollars can be. It's going to change the way you think about buying that next beer or buying those smaller things. because every dollar is so incredibly valuable over time. And so you've got to understand, hey, one thing we're never going to do is we are never

Starting point is 00:34:09 going to interrupt compound interest. We're never going to interrupt it unnecessarily. So for those of you out there who have decided, okay, I'm going to actually pull money from my 401k. Well, first you're going to pay taxes on that money, then you're going to pay a 10% penalty, but you're also interrupting compound interest. All three of those things combined are absolutely terrible for your finances. And so you never want to sell assets to go buy lifestyle things, making sure we need.

Starting point is 00:34:32 never interrupt compound interest and let our money stay invested for the long run is the big key to building wealth. Time is your greatest asset. Number 11 is I want you to think in net worth, not just income. So obviously we want to raise our income, but we want to take that income and the purpose why we are raising our income is so that we can grow our net worth. Your net worth is your scoreboard. It is what we are watching to ensure that we are making progress over time. Now, if you are just getting started or if you're in debt or you have a negative net worth, I recommend tracking your net worth monthly. If you are someone who has a lot of investments, tracking it monthly is going to be counterproductive. Reason for that is because investments go up and they go down.

Starting point is 00:35:08 So if you have a really good month at investing, maybe you look at your net worth to stay motivated. If it's a bad month, maybe not check it that month. But your net worth is going to make sure that you focus on assets that grow over time and not liabilities. And you can make decisions on how they affect your net worth over the course of 10 years. It's going to help you become a better decision maker when it comes to your finances. We have an episode coming up on why you need to do a net worth audit and why it is so powerful, so get ready for that. Number 12, and this is one people don't talk about enough, is getting the right team in your corner. So this is a cheat code because the right experts can save you far more than they cost. So number one, I just talked about this, is a CPA.

Starting point is 00:35:43 Making sure you get the right CPA in your corner who can also be a tax strategist is really, really important. Number two is if you don't know what you're doing and you want more help, a fiduciary advisor at an hourly rate can be very important. A financial advisor who can help you put together a financial plan at an hourly rate, not taking a percentage of your investments, but an hourly rate. And fiduciary means they are working in your best interest. So making sure it's a fiduciary advisor that can keep you invested while others panic. That's a really important one, but you want to bet them very, very closely. And then three is a good estate planner or someone who is in your corner who can build out an estate plan or a will or a trust for you if you are at the

Starting point is 00:36:22 point in time where you want to make sure that your assets are going to the right people. those three alone are worth their weight in gold if you can find the right ones. There's a lot of bad ones out there. So I just want to put this caveat in right now. You need to find the good ones and you need to find the right ones. And that is one of the most important things. Now number 13, the last one, is optimizing for freedom, not just money. The reason why we all do this, the reason why we are trying to get our finances together. We work so hard to build wealth. We're working so hard at our day jobs so that we can take a portion of that income and put it towards wealth building so that we can buy our freedom. You work way too hard to not keep a portion of your income to buy back your

Starting point is 00:36:59 freedom. If you're going to work until 65, 70, 80, listen, you're working too hard to have to do that. We here want you to change your financial trajectory by going out and taking a portion of your income, putting it towards future you. And that's what I want for every single one of you. So I want you to automate so you can buy back your time. I want you to put money in your retirement account so you can buy back your time. I want you to invest so you can buy your future freedom. I want you to take every dollar you can so that you can have the option for freedom. Maybe you don't want to stop working, but having the option, boy, oh boy, does that feel good? And I want every single person listening to this show to feel how good that can feel. You want to be able to walk away

Starting point is 00:37:40 when you want, not when you're allowed. And that's what the most powerful position to be in when it comes to your finances is buying that freedom. We're not doing this to buy stuff. We're not doing this to buy the next fancy car or the new iPhone or the next big thing. Sure, all that stuff is great. But we're doing this to buy our freedom. And that's what I want for every single one of you. Listen, thanks for listening to the personal finance podcast today. I cannot thank you guys enough for being here. Again, we have Master Money Academy. If you want to get coached live by me, Master Money Academy is the place that you can do that. I appreciate every single one of you for being here today and hope you got a ton of value out of this podcast

Starting point is 00:38:18 because that is exactly what our intent is to bring you as much value as we possibly can. Thanks again for being here. Hope you have a great rest of the week and we'll see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play Ojo. The online casino with all the latest slot and live casino games.

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The Personal Finance Podcast - 13 Personal Finance Cheat Codes That Can Change Your Life

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