The Personal Finance Podcast - Cut These Expenses to Reach Millionaire Status (By Age!)

Episode Date: May 29, 2024

In this episode of the Personal Finance Podcast, we are going to talk about the expenses that you need to cut to reach millionaire status by age.  How Andrew Can Help You:  Don't let another year pass by without making significant strides toward your dreams. "Master Your Money Goals" is your pathway to a future where your aspirations are not just wishes but realities. Enroll now and make this year count! Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining  Index Fund Pro! This is Andrew’s course teaching you how to invest!  Watch The Master Money Youtube Channel! , Ask Andrew a question on Instagram or TikTok.  Learn how to get out of Debt by joining our Free Course  Leave Feedback or Episode Requests here.  Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at  shopify.com/pfp Monarch Money: Get an extended 30 day free trial at monarchmoney/pfp Thanks to Fundrise for Sponsoring the show! Invest in real estate going to fundrise.com/pfp Indeed: Start hiring NOW with a SEVENTY-FIVE DOLLAR SPONSORED JOB CREDIT to upgrade your job post at Indeed.com/personalfinance Thanks to Policy Genius for Sponsoring the show! Go to policygenius.com to get your free life insurance quote. Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/ Delete Me: Use Promo Code PFP for 20% off!   Links Mentioned in This Episode:  How to Maximize Your Travel and Get the Most Out of Your Credit Card Points Points with Chris Hutchins How We Travel The World Completely Free! (Travel Hacking 101) How Much Do You Spend on Alcohol? Should You Pay Cash or Finance A Car? (This May Surprise You!) How to Skyrocket Your Net Worth By Building an Amazing Network with Jordan Harbinger Here is the total cost of ownership calculator: https://mastermoney.co/total-cost-of-ownership-calculator/  Connect With Andrew on Social Media:  Instagram  TikTok Twitter  Master Money Website  Master Money Youtube Channel   Free Guides:   The Stairway to Wealth: The Order of Operations for your Money  How to Negotiate Your Salary  The 75 Day Money Challenge  Get out Of Debt Fast  Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

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Find your advisor at IG Private Wealth.com. On this episode of the personal finance podcast, cut these expenses to reach millionaire status by age. What's up, well, builders. Welcome to the personal finance podcast. I'm your host, Andrew founder of mastermoney.com. And today on the personal finance podcast, we're going to talk about the expenses that you need to cut to reach millionaire status by age. If you guys have any questions, make sure to hit us up on Instagram, TikTok, Twitter, Master Money Co and follow us on Spotify, Apple Podcasts, or whatever podcast player, you love listening

to this podcast on it. If you want to help out the show, consider leaving a five-star rating and review. I cannot thank you guys enough for leaving those five-star ratings and reviews. Now, today, we're going to be diving into the expenses that you need to cut in order to reach millionaire status. And there's something I want to talk about on the top of the show is I do not love the idea of trying to only cut back expenses in order to build wealth. I'm not a person who is really into being extremely frugal.

Now, in my 20s, I was very frugal, and I really tracked every single penny that I made. But it was important for me to do so at that time because my income was lower than as it is now when I started to progress and learn skills and learn how to develop my income. And so this is one thing I want everybody to note at the top of the show, is that you need to make sure that a lot of your time

is being focused on increasing that income because that is the lever that you can pull that will make everything else easier. I'm going to talk through a bunch of these today. And when I talk through some of these, you can afford a lot of these by just changing that lever to increase your income. And as your income starts to increase, you will start to see that you'll be spending less and less as a percentage of your income. And you can start to invest a huge chunk of that income.

You'll hear people say, hey, I'm investing 50% of my income or 60% in my income. You know how most of them are able to do that? They increased their income and they didn't really change their lifestyle. Much their lifestyle stayed the same so they were comfortable, but they increased their income and then all of a sudden that percentage started to shrink and that allowed them to invest that 50%. This, my friends, is really how you can start to save a lot more. So I want you to know that off the top of the show is I'm not a huge fan of just cutting spending because I want you to control your money. I want you to have total control of your money. Don't let money control you. I want you to have total control over your money and this is how you do it.

Cutting expenses is not total control. It's going to help you trim the fat, which is what we're going to be doing today. But I want you to have total control with your money and the way that you do that is with your income. Now, for most people, we need to realize something. We only have so much money coming in. And so we can afford some things, but we cannot afford to buy just every single thing that we want. It is not the way that you can manage your money properly is just to buy anything. And so the message today is truly just to be cautious. Be cautious of where you're spending your dollars and make sure you're cautious about what runs your life. You can either own things or things can own you. And if you don't think through your purchases and if you don't

think through how you're spending your dollars intentionally, things will start to own you. And you're going to start to pick up tabs of debt that you really don't want and you're going to have to drive to work every single day in order to be able to afford those debt payments. That is not really what I want for you. Now, as we go through this, you're going to see, hey, maybe some of these areas I don't truly value. Because what this really comes down to is what do you actually value? What brings you joy in life?

Now, if you're a person with high class taste and what brings you joy in life is exotic vacations, having the fanciest car, having the biggest house, and living a multi-million dollar lifestyle, without having a multi-million dollar lifestyle, then guess what? We're going to have to bring that joy dial down just a little. bit until we get you to that point where you can have that multi-million dollar lifestyle. Hey, we all want to live this lavish life. But at the same time, we also need to be conscious of where we are in life. And if we're not conscious of where we are in life, then we need to make adjustments in order to be able to afford some of these things that we're doing. Now, as we start to talk through

some of this stuff, if you're thinking I need to cut back spending in some of these areas, let me show you our master money system of how you can master cutting back spending. Because mastering cutting back spending is actually a skill, and it is not something that you just rip off the band-aid. See, what most people do is they go and they just wipe out spending whatsoever. So maybe they want to cut back on eating out, for example. So they just take eating out off the table right away. Just rip the band-aid off. Or maybe they just limit to $100 where they were spending $800 a month.

That's not how you do it. Because if you do it that way, you're going to end up quitting. It's going to be no fun to actually learn how to reduce that spending, and you're not going to sustain it long term. This is all about psychology and understanding your psychology. is going to be very, very important. So how do you cut back this spending? Number one is I want you to list out the things that you want to cut out, okay? And I want you to prioritize this list by most important to least important.

So say, for example, you're spending too much money on cars, you're spending too much money on housing, you're spending too much money on food, you're spending too much money on frivolous purchases. You're spending too much money on Uber Eats. All these different things are just adding up into one big pile. Well, what I want you to do is I want you to list those out, and I want you to put them in order of important. So on that list, for example, we know housing, food, and transportation are the big three that sucks the life out of people when they're trying to learn how to build wealth. So if your housing, food and transportation costs are too high, those three, the big three, are going to be something that you want to focus on first. But I only want you to pick one to two areas to cut back at the beginning.

And I want you to do this because I really want you to focus and I don't want you to get stressed out. or worry that this just isn't going to work and or I don't want you to be miserable throughout this process. So you're going to pick one to two areas that you're going to cut. Then I want you to start cutting gradually over six months. So the example I always use is a lot of people don't realize how much money they spend on groceries or eating out and food costs whatsoever. So I actually classify groceries and eating out as two different classifications.

So let's use eating out as one. Let's say every single night you're getting Uber Eats and you are just really, really just spending way too much money on food. And so you're eating out of the time. You're going to fancy restaurants on weekends. Maybe you're going to bars with your friends on the weekends. And you're just constantly, constantly buying food. And so if this is you, what I would do is I would start to gradually reduce that spend.

So say you spend $800 a month, okay? So in month one, I would bring it down to $700 that month. And so you're only reducing it by $100. I take that extra $100, by the way, and I would allocate those dollars towards something else. So automatically, I would increase my contribution, say, for example, to my emergency fund or my investment accounts, buy $100 once I reduce this. So now the money's gone. It's out of your account. It's moving towards productive activities that are going to help you build wealth. And instead, you've reduced your food costs slightly. Then secondly, in month two,

I'd reduce it down to $600. So now you're down $200. You're saving $200 extra a month. I'd automate the rest of it out and move it towards other accounts. So now you're saving an additional $200. The next month, maybe I'd reduce it down to $450. So now you're bringing it down another $150 to closer to where you want to be. And so you're at this $450 number on month three. Automate the rest of it into your other accounts. But then the next month your parents come into town and your parents come into town and all of a sudden you're going to spend an extra $100 from that $450 and you actually

end up spending $5.50 because you guys eat out a little more and you wanted to treat them one time when they came into town. Nothing wrong with that. Now here's what I want people to hear. you start to gradually reduce expenses. You are not perfect when it comes to money. And I want you to be okay with not being perfect when it comes to money. Because when this happens, most people decide, ah, I can't do it.

I'm going to quit. But when this happens, what you do instead is you say, hey, I'm going to focus on the things that I can control, which are my actions, and I'm going to go ahead and move forward. I, friends, have never, ever, ever in my life. I've had a perfect month with money. I make mistakes every single month. We all make mistakes. And I'm a guy who talks about money all the time.

You're going to make a mistake when it comes to reducing these expenses. And I want you to forgive yourself because this is not something that you are going to be perfect at. So make sure you understand that as we go through this. Okay. So now you're at 550 is what you spent last month. So now we're going to reduce it down to 400. We're in month 5 now. So now we're at 400.

And your target was getting right around to $300. Okay. So now you've gone back down to 400. So you reduced it another 50 bucks from where it was previously before your parents came into town. And so you're now at $400. In the next month, you bump it down to $300. And you see if you can sustain that $300. Now, $300 is something that is tough to go from from $800 to $300. This is why we're not ripping the bandaid off all at once. A, you've got to kind of slowly reduce the amount of times that you're spinning with your friends or the weekends or your family or whoever else you're eating out with all the time. And so A, that helps that action take place and helps that psychology in that side of the equation. And then B, what this also does is it just helps you get used to it gradually. You're not just, boom, 800 or 300. And all of a sudden, I'm suffering every single weekend because I'm so used to going out all the time. And now I have to really, really think through what I'm going to do going forward. No, instead, what you're going to do is just gradually reduce it and then you get to that point in time.

So this is the example I love to use because I think you need to gradually reduce spending. I think you need to gradually increase investment contributions. I think this gradual system is going to help you get used to doing some of this stuff. So this is exactly where I want you to be as you start to cut spending. Now, let's get to the areas to cut spending by age. All right, so group number one is we want you to stop spending money on these in your 20s so that you can become a millionaire in your 30s. This is some of the things that I want to talk through. out in my 20s, I was a very frugal person and I had to become frugal because I was making a very low income early on and I realized, hey, I'm going to go deep into debt if I don't start to

figure out how my money operates. So I did things like create a budget, for example, to track my expenses and then I could figure out, hey, how can I allocate some of these extra dollars towards the things that I actually value? And this is where my entire money philosophy came from because I had to figure out how to take a finite amount of money, a small amount of money, and be able to allocate those dollars towards my values. I didn't have a ton of extra dollars to utilize towards things that I liked. And so what I wanted to do was figure out a way to do this. And in your 20s, let's all get real here.

You're not going to make as much money as somebody in their 30s and 40s because you have no career skills yet. And so some of you may be making good money and you may be making better money than people that you know around you because you're a high performer. More power to you. I absolutely love that. But for the majority of people, you're not going to be making as much money as you will be in the future. So let's take these dollars because they're so incredibly valuable and utilize as many of these as possible towards investment accounts. Because you could be investing half the amount of somebody in their 30s who just gets started because you started early and allowed compound interest to get that ball rolling. So we want to make sure we are really thinking through our big purchases in our 20s so that we can take those extra dollars and put them towards wealth building, knocking out that debt all.

those different things. So the first thing is expensive rent. Housing, food, transportation. I'm going to beat that into your head in this podcast. Those three different expenses will absolutely destroy your wealth building ability if you do not control them. And if you get really expensive rent that you absolutely cannot afford or you buy a house that you cannot afford, it is going to be the worst possible thing for your financial situation because what's going to happen is you're going to become house poor. Now, how much of your income should you spend on rent? Because rent does not have the additional expenses that housing does for most people, I want it to be 30% or less of your gross, but really what I want for most people, if you want to build wealth, is it needs to be around 25%

or less of your gross income spent on rent. Why? Because your landlord covers all your other housing costs when it comes to maintenance, when it comes to making sure all these different things are put into play. So you're most likely going to be covering utilities, maybe some insurance. And then outside of that, that's all your total housing costs. And so I want you to make sure that you are keeping it around that 25% number. Now, if you get to 27, 28%, a, more power to you. But if you get above 30%, that's no go. It needs to be 25% or less of your gross income.

Do not go above 30% because that will mean that you are spending too much money on rent. So when you get to this point in time, making sure that you reduce those costs in rent is going to be really, really important. Do not go for the fanciest apartment. Go for the one that's in the nice enough neighborhood that you can afford. That's safe. That's clean.

All of those things, absolutely. But at the same time, if you can't afford a safe, clean area, then it might be time to get roommates. And so that might be something you have to do in order to make sure that you are being financially responsible. Because the options here are pay too much money for an apartment or a house or whatever else you're utilizing or become financially responsible.

And number two is the one you will not regret. Number one is the one you will regret 100% of the time. You're going to regret it 100% of the time. So making sure that you keep it below that 25% number is going to be really, really important. Number two, brand new cars. Now, if you're a car person, that's what you really value. I get it. You like cars, all right?

But you need to make sure that your spending does not exceed too much on cars, especially in your 20s. If you're buying brand new cars in your 20s instead of just getting one, two, three, four years used, it really doesn't make any sense. because brand new cars should really be something that really wealthy people buy. Why? Because they depreciate instantly. So you're significantly losing value the moment you drive it off the lot. And so really for most people, you need to be buying slightly used cars or just driving your cars longer. You need to drive your car for at least 10 years no matter what. That's our rule here when we talk through some of this stuff.

And so driving it for 10 years or longer is going to be one of the goals. Unless you're buying cars that are seven, eight, nine, 10 years used, then you can drive them for a shorter period of time because you're taking all that depreciation off and you're getting a lower price point. But if you're buying a car that's just a couple years used, drive that thing for 10 years. You'll be so much better off than if you did not do that. So it's really important to think through that. Don't buy brand new cars in your 20s unless you can really afford it. The third one is Uber eats all the time and dining out too frequently. So we already talked about dining out at the top of the show and how it would reduce that. But this can be something that could be a detriment to your wealth. And we

run numbers a couple of times just for the fees on Uber Eats. And, and If you got Uber Eats just a couple nights a week and you're in your 20s, that amount, just the fees alone on Uber Eats, the extra fees, the driver tips, all those different things, it's multi six figures in your retirement. Just if you invested those dollars instead. And so this is something where really you have to be conscious. I have people in my life and people that I've seen who are spending on Uber Eats every single day and every single night. And I remember it in the office, people would be buying Uber Eats every single day. This, my friends, is a real, real problem. that could really make a big, big dent on your retirement plan if you're not investing your

dollars instead. Number four is constantly buying high-end clothing or designer clothes. Now, there is nothing wrong with buying high-end clothes. I like nice things. Your boy, loves some nice stuff. But at the same time, if you're constantly buying it and you're that designer person, that's just only wearing designer all the time, you need to figure out a different option, especially when you're in your 20s.

I know you enjoy it. I know you love wearing that stuff. but at the same time, we got to think through what is best for our financial situation. The next one, alcohol and partying. Now, in your 20s, you're going to be more likely to utilizing alcohol and party. Now, one interesting thing is Gen Z is drinking less and partying less than the millennial generation, which is the generation that I'm in, which is an interesting thing to see because I think for a lot of people, it looks like drinking rates for younger folks are going down

significantly, which this is a great thing for your wallet as well. Well, we did an episode early on the Personal Finance podcast. Don't go back and listen to it because I wasn't as polished as I am now. But your boy did an episode on how much money you would actually save if he stopped drinking alcohol. Because this was a question I always had with my friends when we'd be talking through, you know, having a couple of beers or something like that. We would talk through and have some conversations. And I always wondered in the back of my head, what if I invested my beer money instead of actually spending it on beer and consuming it? You know, your boy has weird thoughts like that all the time.

So I was thinking through that process. And it was multi-million dollars just by changing. that one decision. So if you're someone who drinks sometimes or you drink all the time, and you're like, I hate this. I really don't want to do this anymore. And you just need another thing to put you over the edge to stop doing it. You could really invest a large amount of money. Now, your boy still loves a glass of wine or some beer every once in a while. And I have significantly reduced the amount that I've been drinking over the years, where in my 20s I could go out and have some fun. In my 30s, it's just not worth it to me anymore. And so really, I'm trying to

significantly reduced the amount I'm drinking and I might just get rid of it altogether. I'm kind of at that point in time now where I'm trying to decide do I just want to get rid of it all together or just kind of casually and socially drink. So that's one of those things that I think a lot of people need to think through specifically in your 20s. If you go out and party every single weekend, really think through that spending decision because it does make a big impact on your wallet. And I know it's fun and you're going to have some fun times with friends and stuff like that. I don't want you to forego experiences. So if that's something you love to do and I don't want you really foregoing experiences, but at the same time, let's just kind of think through those decisions and how we can

actually do better when it comes to that. Your health is going to thank you and your wealth is going to thank you. And then the last one is going on constant luxury vacation. So I know a lot of people in the 20s who go on way more vacations than their actual income can afford. And so when it comes to vacations, this is the one thing that I really think that you can still do and do it in an inexpensive way. So when I was in our 20s, we started to travel hack, which is utilizing credit cards and rewards points in order to travel for free. And we went to multiple countries from Greece to Italy, to Puerto Rico, to, we went all over the place with just travel hacking. And so we have episodes on travel hacking if you haven't heard that or you don't know how that works. We talk through

that an entire episode, so I teach you step by step. I think we also have a travel hacking. We still have it, a travel hacking email course, which is like five emails that you get that teaches you how to travel hack. So between those two things, you can learn how to do this, This is something where though, if you're taking these luxury vacations and you're not travel hacking, you really need to be doing that to reduce the cost. It's going to help you significantly and it's going to save you thousands and thousands of dollars per year, especially if you are a lover of traveling. I absolutely love travel hacking. And we'll have some more episodes on some of the credit cards in my wallet this year that I'm using to travel hack and some of those things as well. Like we're going to Spain this year and that's one of the things we're utilizing is we're trying to go completely for free and I'll tell you exactly how we're doing that.

So all of this stuff is going just to say that if you are taking luxury vacations without travel, hacking, reduce that expense. I don't want you foregoing in those experiences because I know how valuable those can be, but try to reduce that expense through travel hacking and using points and miles. Now, let's jump to the 30s. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy. Clothes don't fit anymore and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring, making sure the safety. net we have in place actually matches the life that we're building. And that's where PolicyGenius

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important time to think about your money outside of your 20s, but at the same time, you're so incredibly busy that it's tough to always be thinking about your money at this time. So let's talk through some of these things in our 30s and making sure we actually think through some of the decisions that we're making. So number one is a big one. And I see a lot of people in their 30s wanting to partake in this. And I have done it myself and it was the worst decision than I ever made. And it is luxury vehicles. So luxury vehicles, right now at the time I'm recording this, car prices are absolutely astronomical. They are prices that you could buy a house for at the same price 10 years ago in some areas. And so this is something that I think a lot of people are going to get themselves into

really bad situations if they do not consciously think about their vehicle purchases. And so if you are just going out there and you've never run numbers when it comes to buying a vehicle, and you just go buy one without actually thinking through it because you're only thinking about the monthly payment and you're not thinking about the total cost of ownership, that is something that will be a detriment to your finances. I want you to think through the total cost of ownership instead of the monthly payment when you go out and buy a car. What a lot of people do is they'll go into the dealership and this is why they ask you this question. What monthly payment do you want to be yet? Do you ever heard anybody ask you that question? That's the question you want to avoid as much as possible.

Instead, what you need to be thinking through is total cost of ownership. What is this vehicle going to cost me in total, in maintenance and gas, in insurance? How is all this going to go up and how is all this going to change? What about my interest rate? How is that going to impact the total cost of this vehicle? What about the taxes and the depreciation of this vehicle? How is that going to impact the total cost of this vehicle? Because you could be buying a car for $50,000 and end up spending $90,000 over the course of that loan.

And guess what? That $90,000 you will never get back. You could resell the vehicle a couple of years later for $30. So guess what you just lost? 60 grand because you didn't run the numbers and understand total cost of ownership when it comes to a vehicle. So I want every single person listening here to understand. We did an episode recently about should you pay cash, should you finance a car? Check out that episode.

We're going to do a total cost of ownership spreadsheet for you guys so that you guys have that available so you can run those numbers. But avoid upgrading to high-end cars if you can at all costs. Just go out there, get the traditional Toyota, get the Honda. It's going to last you longer, especially if you have kids. they're going to beat it up like crazy anyway. So having the luxury vehicle just is not worth the time. And if you ask people in their 60s, 70s, and 80s what they regret, it's usually buying the luxury vehicle.

Number two is big housing upgrades that you don't need. So some of us, maybe you have a bunch of kids in the house, and so you need to upgrade your house from your starter home to a bigger home where you have more room and everybody can stretch your legs a little bit. Hey, that's great. More power to you. I love having a nice house.

I think it's one thing that a lot of people really enjoy having. It brings them joy. it brings them happiness. And the same thing goes for an apartment. If you're, you know, trying to buy a luxury apartment, you don't have kids or you don't have a family and you want to have a luxury apartment or a nice place to rent, more power to you. But guess what? If you are spending more than you can actually afford, that will absolutely destroy your wealth.

So it needs to be 30% or less of your gross income if you're buying a house. And so that is the most important thing. And that's for all housing expenses. That's for everything. Maintenance, all that stuff. And we have a total cost of ownership calculator for housing already. It's a spreadsheet that you can download for free. If you go to mastermoney.com slash resources, the total cost of ownership calculator is there.

Really important to understand total cost of ownership. And it's also going to help you compare if you should buy or you should rent. I love that part of the spreadsheet. So make sure you check that one out too. But making sure you reduce those housing expenses really, really important. Number three, expensive vacations. So as you start to get older, you're going to be able to afford more vacations. A, I want you to travel hack those vacations.

B, I don't want you to forego experiences, but you need to afford the vacation. So every single month, I want you to start a vacation fund, okay? And I want you to start saving money in that vacation fund. Once there's enough money in that vacation fund and you have enough points accumulated to pay for the vacation, then you go on the vacation. Okay? Now, I know this sounds simple. I know this sounds intuitive, but there are way too many people going into debt so that

they can go on vacation. That, my friends, to me, is a stresscation, not a vacation. That's not something I can relax doing. Why? Because I'm going into debt and I got to come back home and I'm going to be even more stressed than I was when I went on the vacation. So let's A, vacations you always have to pay in cash. If you ever put vacations on credit, you are making the wrong move.

There's no if ands are up buts about it. Yeah, experiences, yada, yada, yada, you're making the wrong move if you go in debt for a vacation. I want you to remember that. So vacations need to be paid for in cash and with points if you utilize credit cards. Now, those credit cards need to be paid off every single month. if you don't have your credit cards paid off, do not utilize travel hacking, just pay in cash.

So save every month. I like to use a bucket inside of my high-yield savings account called vacations, and you just allocate dollars every month into that vacation bucket. But do not go into debt for it, especially in your 30s. A lot of people do that because they have kids, they have families, vacations are way more expensive. They want to go to Disney. They want to make sure they experience that stuff.

Save for it in cash. That's the only way to do it. There's no other way to do it. Save for it in cash when you go on vacation. The next one is frequent tech upgrades. So your boy loves tech. Your boy has a bunch of different Apple products that he utilizes inside the business and all on a bunch of different things.

But upgrading to the latest iPhone every single time or upgrading to the latest Samsung phone or Android phone or whatever else you utilize or upgrading to the latest iPad or upgrading to the brand new laptop every single year. When you don't actually need to be doing that is going to be a detriment to your finances in the long run because that means you're spending an additional $5 to $10,000 per year that you could be utilizing towards other things like building wealth. And so when you do this, when you start to do all of these upgrades constantly over and over and over again, and a lot of people just get caught in this loop, then it's something where if you

enjoy this stuff, if you review tech as a business or you enjoy actually upgrading tech and you love that stuff, I have no issue with it as long as you can afford it. But if you don't love that stuff and you just do it because you think you got to do it, then really think through how you want to do that. I try to hold my iPhones for at least like four to five years if I can't. and they last for a decent amount of time. The worst part is just making sure the battery lasts long enough. And so that's where a lot of people need to stop doing those frequent tech upgrades.

High interest debt is the next one. So you need to stay away from high interest debt. And if you have high interest debt now, that should be one of your number one priorities in your 30s to get rid of. That means any debt above a 6% interest rate. That means credit card debt needs to go. Student loan debt above a 6% interest rate needs to go. Personal loans above a 6% interest rate needs to go. Buy now pay late.

car loans. I cannot believe the car loans that are being handed at right now. That seems like it's a massive bubble right now where people are getting 12, 13, 14, 15% interest rates because they can't afford the car. And so car companies are just giving them the car anyway with really high interest rates to offset the risk. No, all of that needs to go. So you need to make sure that anything outside of your mortgage that's above a 6% interest rate needs to get out of here as fast as we possibly can. And the other one is the impulse purchases. So a lot of people in the 30s are making, a lot of impulse purchases. And this is something where a lot of times you're stressed or you just have maybe a little extra time. You walk into the hardware store and you go out and you buy $300 worth of

stuff. Or you walk into Target. I'm talking to you, my wife. So you walk into Target and then you go and you spend too much money. Or your boy goes on Amazon and just impulse purchases a couple of things. I do this all the time. Everybody does this all the time. But we got to be conscious about our impulse purchases. So here's some of the rules that I utilize. If it's over $100, I wait at least 24 hours. If it's over $200, I try to wait an even longer period of time to allow that cooling off period before I just go and purchase something. Because that's going to make you think through, hey, do I actually want this item? Do I actually value this item? And that's going to help you reduce impulse purchases. The other thing, though, that you need to do, and this is even more dangerous.

This is more dangerous for me, honestly, when I walk in somewhere, is walking into a store, you go in and buy the thing you walked in to buy. You're going to walk by the Bogos section. You're going to walk by all the cool stuff in the store. And stores are displayed in a way to make you impulse purchase. And you got to remember that. And so you have a list of things that you want to buy when you walk into a store. You do not walk out with more things than the things that you wanted to buy.

That's my rule. And I am not very good at following that rule, but that's my rule. And so I really, that's one thing I am trying to be conscious more about this year is to stick to what I walk. in for. And so I know we all go through this at the same time, but that's what we really, really need to be doing. Listen, I know your 30s are messy. I know it's tough. I like to spend money on convenience in my 30s because I have two kids going on three here in a couple of months. And so, hey, convenience is a big thing for me. And so overall, that's where I like to value a lot of my dollars is experiences, is convenience. And some of my hobbies, your boy loves a little

pickleball and golf. And those pickleball's cheap, golf's not. And so all of these are things that really, really need to be thought through as you go through this process. Now, let's jump to the 40s. All right, so your 40s and 50s I'm going to lump together. And the reason why I'm lumping these two together on this specific episode is because a lot of this stuff has to gradually happen throughout these two decades. So let me just say this. If you are entering your 40s or in your early 40s, you've got 15 to 20 years to really make some of these corrections and really change some of this stuff. This is the time to really start to build in that wealth protection. plan that you really, really need. 20s and 30s is the big growth plan. And if you haven't started

investing or you haven't started on your personal finances, then starting in your 40s and 50s is completely fine. It is never too late. I want you to understand that. But if you are starting to put some of this stuff together and you have some sort of nest egg saved up, we want to have our wealth protection plan put in place. And we want to make sure that during this time frame, we don't make any mistakes. We don't make any mistakes when it comes to our spending major mistakes so that we can really hit retirement, hitting the ground running. So here's a couple of things I want you to think through is one, I want you to assess your house and your living situation and say to yourself, hey, am I in a living situation that makes a ton of sense? Do I need to downgrade? Am I spending too much

money on my living situation right now in my 40s and 50s? How do I want to think about that? Do you have multiple houses in different locations? Do you have too much space where your kids are starting to slowly move out? They're getting older and you don't need as much space as you once needed as they were younger, that's one option. And also, avoid overspending on houses if you don't have the money. If you have the money and you're interested in buying a bigger house, more power to you. But if you are trying to get to retirement age and you're just trying to reduce some of that spending, you're trying to get leaner on some of the stuff that you own maybe, then reducing some of that stuff can be really, really helpful. Also, same thing for the first two is the cars. Luxury cars are going to kill your

wealth building ability. Now, if you've gotten to the point where you've saved up enough money to go buy a luxury car. I think you really should be paying cash if you're going to buy a luxury car. But if you've got to that point, you've always wanted to buy luxury cars and you've finally got to that point, more power to you as long as you can afford it. Another one is unnecessary home renovations. So a lot of times what people do is they kind of get bored at their house and they want to do these crazy home renovations when they get to their 40s and 50s and do some of these different things. Hey, I love that people customize their space and I love doing home renovations. I think it's great. It refreshes your house. It helps with a

lot of different things. It makes it more functional. There's some great reasons to do that. But if you are going over the top with some of these home renovations, like I've seen people, for example, putting in outdoor kitchens and they don't grill a day in their life. And it's like, well, why are you doing that? And these are the types of situations where if there's home renovations that are not going to add a tremendous amount of value or joy to you, then there's really no real reason to do that. I've seen people add just a random bathroom just because they feel like it, or I've seen people add just random rooms around the house. And these home renovations, when you add a room to a house, a lot of times, if you look at the math, it costs a ton and it doesn't add a ton

of value. Now, if you need more space and it's going to make you happy to have that more space, because I could see, if you're at a small house and you need more space, I could see how that could bring joy to your life. Absolutely. But at the same time, just thinking through those home renovations is going to be really important. Most people in their 40s, 50s, and the stats show this do home renovations that do not add a ton of value to their houses. And so you really got to think through that. Private clubs and memberships. So this is one where there are two sides of this coin where if you are joining, say, a private club, or if you are joining a country club and you love to golf and you're doing all these different things and you don't do it for a business purpose,

you're just doing it for pure consumption. You may want to rethink that decision when it comes to some of this stuff. Now, if you really enjoy it, hey, I don't care. If that brings you value and you can afford it, then do it. But there is another side of this coin where if you're an entrepreneur or you own a couple businesses or you know a lot of people in the network that you need to be in, go to those country clubs, that may be worth the spend, especially if you don't have a country club that's really, really expensive. Like some areas, I know country clubs, you can, you know, become a member for six, seven grand. Those specific areas, if you can meet high value people who are going to help impact your career or your net worth, that may be worth it for the networking

piece. We've had episodes with Jordan Harbinger and other folks, and we've talked about networking, how powerful networking can actually be to increasing your net worth. I truly, truly believe that. So if that helps you in that way, then that is something that could be fantastic. And you can even figure out a way to do it as a business expense if you talk to your CPA and see if that would work. But at the same time, I want you to be conscious about this stuff because a lot of people start doing this. They get bored. They don't know what to do.

So they join the country club. Then they're stuck with this $7,000 bill. And all of a sudden now they've got all these assessment fees that come in and they have to do all these additional things. And really, it becomes very, very expensive. And it could be a huge bill on your line item if you're not careful with some of this stuff. Another one is excessive gift giving. Now, I am a massive proponent of giving more.

That is a real reason why we actually originally started this episode. I want people to give as much as you possibly can. But some people will do excessive gift giving when it comes to people in their life they love them and they can't afford it. So I have friends, for example, who have parents who are not able to retire because they have not saved any money. And I'm watching these people give their kids gifts or give their families. family members gifts or give things away in excess. When I say excess, I mean a wealthy person wouldn't give this much. And they're trying to make their kids happy. I completely get it. But they also have zero retirement. They have not taken care of their retirement. So if that's you or you know somebody who

does that where they just excessively give away stuff, then that's something I really want you to avoid. And so as this starts to happen, it's usually folks with older kids. They want to give them the life they never had. And I understand that. But at the same time, you have to take care of your retirement first if you have not done so. And that's what all of these are saying, is if you're taking care of your retirement, you can do any of this stuff. That's what I love about money.

If you're taking care of your retirement, you're hitting your goals, all this stuff is wide open as long as you don't go into debt. And so that is the beautiful thing about all of this, but just making sure you're thinking through some of this stuff. Another one to assess is unnecessary insurance policy. People are going to try to sell you life insurance,

left and right, long-term care insurance left and right. They're going to try to sell you all these different policies that you may or may not, need. And if you have policies that you're paying for that you do not need, that is just like throwing money into the wind. And so you need to make sure that you assess which ones you actually need and which ones you don't. We're going to do an episode coming up on the insurances that you need, what you might need, and what you definitely don't need. And so I'm going to go through all of those with you guys. So stay tuned. Make sure you're subscribed to this podcast for that episode because

I think that is going to be a very interesting one. We've talked about insurance almost exclusively never on this show, except for life insurance because there are some scammy people out there. And so in those episodes, we've talked through, you know, whole life insurance and stuff, all the insurances I hate, infinite banking, all of those things. But we have not really talked a ton about insurance, even like a simple car insurance and things like that. So we will add that in. But this is something where I want you to know which insurances you should have, which ones you

might want to have, and which ones you absolutely should not have. So we'll do an episode on that too. And so that is part of your entire plan, is to make sure that you have that in place and have the right things in place and not spending too much. Some people I know that are the excessive gift givers also have way too much life insurance. And they've talked to me about it and I said, you got to get rid of that. And they're saying to me, well, I can't. I've been paying on it forever.

And I'm saying to them, we're going to be paying on it for another 40 years. It doesn't make sense to hold on to it. And so there's going to be situations like that for people where you've been paying maybe on a life insurance for a little too long. Maybe it's a decade or more. And you don't want to get rid of it, but you need to. And so you need to have those hard conversations with yourself to see, do I need to keep these policies or should I not keep these policies? Well, listen, that is our episode for today. Can I thank you guys enough for listening to this week's episode.

And thank you so much for investing in yourself because that's exactly what you're doing when you listen to this podcast is you are investing in yourself. And that is the most powerful thing that you can do with your time and your energy. If you guys want to learn more about money every single week, make sure you subscribe to the Master Money newsletter. That is a newsletter that we put out every single week that is going to teach you one thing about money. And we would love to have you there. If you go to mastermoney.com slash newsletter, that is where you can find that. You can also find all of our resources at mastermoney. com slash newsletter.

Thank you guys again so much for listening to this podcast episode. Cannot wait to see some of the places that you are going to trim back the places that do not bring you value. And we will see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like, Ojo time. Let's play. Feel the fun with Playo. The online casino with all the latest slot and live casino games.

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