Latest / Money Grows on Trees / #223 - Do THIS Every Time You Get Paid (To Get Out Of Debt)

Transcript

#223 - Do THIS Every Time You Get Paid (To Get Out Of Debt) · Money Grows on Trees

0:00
It's not that far away to be at financial peace, truly. It's just that
0:03
people aren't doing this first easy step. You're spending your money on coffee,
0:06
eating out, holidays, nice cars, nice clothes. It
0:10
could be costing you way more than what you think. Here's what I mean.
0:13
You've got to build an emergency fund. What for? Emergencies.
0:17
And you've got to start with know your financial baseline, which
0:20
means know your numbers. What does it cost to live each month? What are you spending on
0:24
rent, food, transport, vehicle, bills, insurance? whatever
0:27
it is. I'm Lloyd James Ross, seven-figure investor and entrepreneur, and
0:31
I've helped thousands of business owners and professionals turn financial stress
0:35
into success. If you're stuck in old money habits, overwhelmed by
0:38
investing, or unsure where to start, this is for you. I'll
0:41
give you the mindset and strategies to take control, grow
0:45
your wealth, and achieve financial freedom. It's time to make your
0:48
money work for you. Have you ever looked at your paycheck and
0:51
thought, what the hell, where did it all go? You're
0:55
not alone. Most people live payday to payday, not
0:58
because they don't make enough, but because they don't have a plan. In
1:02
this episode, I'm going to give you the exact step-by-step system
1:06
to master your money every time you get
1:10
paid. We're talking know your numbers, build your emergency
1:13
buffer, kill the high interest debt, automate your way to
1:16
wealth, and invest like a pro without needing a finance
1:20
degree. So whether you're a nurse, a tradie, or running your own business,
1:24
this plan works. It's simple, it's powerful, and
1:27
if you follow it, it can change your life. So let's
1:31
get into it. Step by step plan, step one.
1:35
Know your financial baseline, which means know your numbers. What
1:39
does it cost to live each month? What are you spending on rent, food, transport,
1:43
vehicle, bills, insurance? Whatever it is, you've
1:46
got to know these numbers. What I mean by that is not the estimates. You've
1:50
actually got to, every single month, sit down and print out your bank
1:53
statements. You can actually download them from your bank account on
1:57
a CSV file. If you go to your online banking, click the buttons for your bank
2:00
statement last month, you can click download Excel CSV file.
2:04
And as it downloads, it'll come into Excel for you. And
2:08
when it does that, you can actually then see on the screen, you
2:11
can highlight, you can actually filter the data and
2:15
clump them all together. And what you'll see on there is like rent,
2:19
insurance, phone bill, they'll all be clumped together. And
2:22
then there'll be a really big one at the bottom, it'll say Uber Eats. I
2:26
promise you, all right? And then you'd be able to see your subscription. So by
2:30
clumping them together or bundling them together, you can see what
2:33
the biggest movers of your costs are every single month. And
2:37
what's great about bundling them together is you can then see which
2:40
area to actually attack to start reducing those costs. And
2:44
so the whole idea of that is to figure out where the heck you are. Because
2:48
self-awareness is the first step to transformation. Most
2:52
people don't even do this. So if you've never done it before, now
2:56
is the best time to start. Download your statement, filter it
2:59
all together and bundle them and then start to figure out what you're going
3:02
to cut. Step number two, you've got to build an emergency fund.
3:05
What for? Emergencies. That's why. And you've got
3:09
to start with a small amount of money, you just gotta start. It's
3:14
$1,000. If you can't save $1,000 in an emergency fund, I
3:17
think, I don't know if there's any hope, okay? You gotta just go for it,
3:20
all right? Some people don't, I don't know how they even live. How
3:24
do you, how do you, you don't have $1,000? How are
3:27
you like living? How are you, if you get a speeding ticket, you're
3:31
gone. How did you go bankrupt? Got a speeding ticket. Oh
3:34
my God, how? I'd be a nervous wreck. How
3:37
do people function? Anyway. Moving on, it's $1,000, okay?
3:42
It's 1,000, that's the first goal. Then you wanna grow it
3:45
to 5,000 and then 10,000. 10,000 is a really good buffer and
3:49
it'll make you feel, that first $10,000 emergency
3:53
fund, when you secure that, almost all your financial stress
3:56
and anxiety will disappear. It's not that far away to be at financial peace,
4:00
truly. It's just that people aren't doing this first easy step. And
4:04
it won't take that long. You can really go for it for 90 days. And in
4:07
90 days, you can have it done. You may want to sell things like on Facebook
4:10
Marketplace, take extra overtime at work, work weekends, whatever
4:14
it is you do, cut your costs, of course, don't eat out. But what you
4:18
want to do is just create that 5 or 10K as fast
4:21
as you can. But let's not get ahead of ourselves. It's $1,000 to start. Once
4:24
you've done it, tick, all right? The reason why you need it, like, Lloyd,
4:28
why am I, I've got all this debt, why am I doing this first? Because this gets you off the
4:31
debt hamster wheel. This gets you off the credit cycle. Because if
4:34
you're in debt all the time, you've been in debt your whole life, you've got credit card debt coming out your
4:37
wazoo, then you're a credit junkie. You're addicted to
4:41
credit. You don't want to be addicted to credit, right? You don't want to
4:44
be a junkie. Give me more credit! Where's my credit?
4:47
Right? That's what it's like. So you don't want to be that. You want to get off the hamster wheel. So
4:50
the emergency fund will do that for you. Perfect. Once you've done
4:54
that and you've got your emergency fund, we can go to step three. Now this is
4:57
where you want to pay off debt. But you don't want to like pay off your mortgage debt. That's going
5:00
to take you a long time. What I mean by pay off debt is like the high interest
5:04
debt. How do I know it's high interest? Because it says on your statement, high interest.
5:08
like 17% interest or 20% interest. Do you know how
5:11
much that? That's so much. You are someone else's money tree
5:15
if you have that debt going on in your credit cards and personal loans. So we
5:19
wanna start attacking this. So any interest over 10% is
5:23
really high interest. So it's not your car debt, it's not your mortgage, it's personal
5:26
credit card debt that you've used to buy things, okay? So
5:30
it's like a financial cancer until we like, put
5:33
you in remission, it's going to keep coming back and back and back and back and back. So once
5:37
you've got your emergency fund, it'll help you step off the hamster wheel, then we're going to destroy it. All right. So
5:40
we want to use a bit of a snowball method, which is where you can actually start
5:44
paying off the most, the highest interest debt first. And as
5:47
you're starting to pay it off, you'll notice you're spending less that month on interest. So
5:51
that money you're saving, you want to use it not to go off and spend
5:55
on other things. You want to use it to pay off the principal of
5:58
that credit card faster. So as you're saving from paying off interest, you're
6:02
putting in to pay off the principal faster. And you've got to keep playing that snowball game
6:06
again and again and again and again. You've got to chop
6:09
down the money tree that you are for someone else so you can plant your own money
6:12
tree later. All right. So that's how you do it. It's the avalanche. snowball
6:16
method. It's exciting when you think about it, isn't it? How am I going to
6:20
feel when I get out of this incredibly toxic, annoying, repetitive,
6:24
painful debt? It's what I want for you. So we're going to do
6:27
that step first. Now, once you've got a handle on that and it's
6:31
happening, you'll start to feel like you're getting in front of this thing,
6:34
all right? Then we can do step four, which is to actually automate your
6:38
investments. Now, you don't have to be a finance pro to do this. It's very simple. If
6:42
you are in the United States, you add an app called Acorns.
6:46
If you're in Canada, you add an app called Mocha. If you're
6:49
in Australia, you add an app called Raise. And if
6:52
you're in the UK, you add an app called Moneybox. they
6:56
pretty much do all the same thing, all
6:59
right? And they're very easy to use. What happens with those apps? You
7:03
add it on your phone, you set up your account in about 10 minutes, and
7:06
what you can do is you can automate from your savings money that goes
7:10
in there each week, but also they round up your spare change from
7:13
purchases too. And when that happens, it'll start to automatically
7:17
invest your funds into one of those inbuilt index
7:20
funds that are in those apps. So you don't have to be a freak financial expert
7:24
or an investing pro to do it. You just have to set up and do it, all right?
7:28
Now, when my wife did this, she started one of those apps and
7:32
she methodically did it over time and she built hers up one
7:35
day to a crazy number. I said to her one day, hey, what's your raise at
7:39
at the minute? She said, 60,000, I was like, 60, six
7:43
zero, yeah, 60,000, right? Because
7:47
she set it up after she had to sleep in
7:50
the same bed as me for five or six years before she then finally did it. So
7:54
please don't do that with me. You can just set it up today. That'd be great. Then
7:57
she just let it, she's so patient. She just put money in it, right?
8:01
And kept building it and building and building, got to 60,000. So now that pays her
8:04
passive income, which is awesome. So you want to just set it up. Once it's set up,
8:08
Just don't rob the account, because when people set it up,
8:11
step four here, they'll rob it. They'll put like a thousand, then
8:15
it's two thousand. They're like, oh yeah, cool. And they'll check it every day. And then boom, something
8:18
comes up like, oh, they want to go on a holiday. Oh yeah, I took it all out of there. I'm
8:22
like, what? Why? You just robbed your future self.
8:26
You want to get ahead, you can't rob your investments. Okay, so there's a rule
8:29
that once it goes in there, you don't touch it, all right? And maybe have a
8:32
goal to get it to like 50,000 or 100,000, okay? Just let
8:36
it sit there and sit there and sit there and build and build and build. This is what wealth building looks like,
8:39
all right? Remove the emotion. Just quickly, if you're ready to take control of your
8:42
finances but feel stuck on where to start, I have a solution. My
8:46
book, Money Buys Happiness, simplifies investing and
8:50
wealth building with practical steps to help you achieve financial peace.
8:54
Get your copy via the link in the show notes and let's get your money working for
8:57
you. Now back to the episode. build wealth on autopilot, all
9:01
right? So that's step number four in how to get your money sorted out.
9:04
Now, step number five, depending on where you live, you
9:07
wanna max out your retirement account. So if you live in the United States, you wanna max
9:11
out your 401k. If you live in Australia, it's like superannuation, make sure you're
9:14
adding to your superannuation consistently. In Australia, you kind of do that anyway with your
9:18
pay. But of course, if you're in the USA, you can add
9:21
these cool tax effective accounts called like your IRA, like
9:24
a Roth IRA, where you can actually add in after-tax
9:28
contributions and grow your assets tax-free, which is super cool.
9:31
What I like about those accounts is you can actually take the money out too. So very
9:35
flexible. You can max it out at about $6,500 to
9:39
$7,000 a year. And maxing it out means putting it into that account and
9:42
buying an index fund of some sort with the money. So
9:45
if you're in the States, you've got the Roth. If you're in Australia, just make sure you're
9:49
leveraging your superannuation as much as you can because it's tax effective,
9:53
right? Which means you're getting tax breaks on money you put in
9:56
and you're getting tax-free gains on the assets as they grow. So
10:00
max out your retirement accounts as much as you can because when you hit
10:03
60 or 65, you're gonna give yourself pat on the back and say, oh, well done.
10:07
I'm glad you listened to that YouTube episode or Spotify
10:10
episode of Lloyd's and you did it and now you're getting the dividends from it,
10:13
right? It's what I want for you. So max them out. as that step. Now
10:17
we can move on to the next step, because once you've done them, you can start to
10:20
invest more of your free cash flow, because if you're making more money, you
10:23
got a side hustle, you're doing overtime, you've got a different, you
10:27
know, pay rise in your job, right? Then you
10:30
can start putting money into a regular brokerage account,
10:34
meaning a regular investment account. You can set up an online broker
10:37
platform. A lot of banks have them. There's different
10:40
types of broker platforms you can start. They're not difficult to
10:44
find. You just type into Google, top 10 broker platforms to open. It's
10:47
pretty simple stuff. and then you put in any extra cash
10:50
you have into that account, you can start buying assets. Meaning you can
10:54
buy index funds, you can buy shares, you can buy real estate investment trusts,
10:57
you can buy bond funds, you can buy gold
11:01
funds. You can buy assets once you've got a brokerage account set up. So
11:05
that means you're starting to put extra money away over and above your
11:09
superannuation and retirement funds. Because if you could have two retirement funds, you're
11:12
building one, and your retirement fund is growing, you're doubling the rate of
11:15
growth of your assets for when you retire, which is way better, all right? So
11:19
that's what we can do once you've got your emergency fund in place, once
11:22
you've started getting a hold of your debt, once you've automated some of your investing, you
11:25
can start to graduate into building a bigger nest egg, all
11:29
right, which is super fun. Of course, if you want to, you can put that money into paying your home off
11:32
faster, that's okay too. Just start to really put your money to
11:35
work, either which way, all right? And the other step we've got to do next
11:38
is step number seven, which is really understanding opportunity cost. And
11:42
what that means is every dollar you spend now is future wealth
11:46
sacrificed. And I forget when I did this exercise, but
11:49
I put a cup of coffee for like $5 into the compound
11:53
interest calculator, and I put like a 10% growth rate on it over
11:56
30 years. And I just calculated how much that cup of coffee
12:00
would be worth if you instead of buying the cup of coffee for $5, you
12:04
invested that $5 into an index fund that compounded 10% a year. What
12:08
happened was the coffee tended to be like $2,500. So every coffee you buy for $5 is
12:13
actually costing you $2,500 in 30 years time. That's
12:19
opportunity cost. Some people are like, I want the coffee. And that's fine. Just
12:23
understand it's costing you $2,500. And this is why Warren Buffett still
12:27
basically just has the same basics from McDonald's for breakfast. He
12:32
doesn't really spend on lavish cars. He bought a very modest house
12:35
in the 60s. He still lives in. And the reason he does that is because
12:39
he understands the real power of compounding. He understands the
12:42
opportunity cost of that money. If it's spent on things and stuff,
12:46
you're going to pay a massive price for it. over time. So you've got
12:49
to learn to say no to short-term dopamine hits for
12:53
long-term freedom. It seems pretty crazy, doesn't it? What do
12:56
you mean? I've got to act poor for a long time? Yes! You've got to act poor.
12:59
You can't just be rich to start with. There's a price to pay in this
13:03
game. So they're the steps you've got to take to
13:06
really get ahead of your money. I'm just laying them out exactly how
13:10
I've done them, how I'll continue to do them, It's not magic. It's
13:13
not rocket science, thankfully. It's just methodically putting these things in
13:16
place and sticking with it. It's the discipline to stick with it
13:20
that matters. And I'm sorry that there's no magic formula or magic spell.
13:23
You're probably not going to win the lotto. You're probably not going to get a massive inheritance or
13:26
a trust fund. That's okay. There's a way out of this because I've
13:30
been following this for the last 15 or 20 years. And without a doubt, it
13:33
works and it will work for you too. So that's your game plan. Simple,
13:37
clear, and powerful. It's not about being perfect.
13:40
It's about having a system that actually works every time you
13:44
get paid. So stick with it, stay consistent, and your future self will
13:47
thank you. And if this has helped, share it with someone who's stuck
13:51
living paycheck to paycheck. This could change everything for