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About Indestructible Wealth: I’m Jack Gibson. I’m your wealth strategist and I’m here to help you make some money. The Indestructible Wealth Podcast is for young entrepreneurs who want to make, keep and grow wealth to enjoy now, and for years to come.
Episode #27 – Rapid Fire Personal Finance
Podcast Episode Transcripts:
Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.
Welcome to the Indestructible Wealth Podcast. This is the place where we help young entrepreneurs to make, keep, and grow wealth that you can enjoy now, and for years to come. I’m your host Jack Gibson, a serial entrepreneur, founder of multiple seven and eight figure businesses, and wealth building strategist. Each week I’m going to share my tips, resources and secrets, to help you create a plan and build the life you’ve dreamed of.
Hey guys today we’re going to do a rapid fire round on personal finance so this isn’t investing. These are just things that my beliefs and philosophies have kind of formed over the years. Just looking at how this has played out for me. Some of these go against the traditional grain of advice as you can expect. I’m an alternative finance and investor and I’m going to lay out the pros and cons to some of these as well, but we’re not going to do a deep dive in any of these. I’m just going to give you guys a bird’s eye view of these kinds of concepts, so let’s get going. Let’s just rapid fire credit card or debit card. Which one would you go with? Of course in everything in finance investing. The answer is “it depends”. Overall, I’m a huge fan of credit cards for a couple of reasons, but let’s talk about debit cards. So the prevailing wisdom from some of the gurus of why debit cards work is because it hurts more when you spend in cash and you can’t get yourself into credit card debt, when you are using debit cards. The problem with this is that you’re not protected very well. If your card gets hacked, it gets stolen and your cash is swiped out of your account, then it could be taking a while to get it to recover it or you may never get it back. I had a situation in college where I was only using debit cards all the way through college because I thought that was the financially responsible thing. However, 2 big problems. Number 1, my card got hacked. I don’t have any idea how I had it in my possession so that somebody hacked the numbers somewhere. They went into an urban clothing store and spent $500. I took the company to a small claims court and they were like well it wasn’t our fault we just processed a normal transaction. The judge sided with them. I didn’t get my money back. He said, go to the credit card company I did and they denied it and they wouldn’t give me my freaking money back $500. When you’re 20 years old, that was a big deal. So it still hurts.
Just thinking about that, because that was a higher portion of my net worth so you have a lot more protection with credit cards. If it gets hacked or stolen and somebody goes on a spending spree, there’s a lot more production because it’s not your money. The money that was spent was the credit card companies. They’re a lot more conservative and careful and protective of their own money. So that is one thing: protection.
Number 2, is that you’re using other people’s money to leverage off of. So especially if you’re running a business then, and let’s say you have inventory and revolving inventory that gets sold off every month. If you have your own cash with a debit card, that means your cash is sitting on the counter or it’s sitting in the shelves or in the stock room. So your cash is just sitting there not doing anything. Whereas if you have credit cards you’re leveraging off of the credit card companies, money and their funds.
The 3rd thing, which is most important in my opinion, is using a credit card helps build up your credit. And I feel a good credit score and a history of showing great credit is very very important in the wealth building game because I believe so strongly in utilizing debt, good debt to buy cash flow producing assets that then can help me accelerate my wealth building strategy exponentially. We’re going to use good debt responsibly, good debt makes you wealthier, whereas bad debt consumer debt, which can be the problem with having credit cards if you rack it up. Is very very detrimental. But overall credit card all the way I’m pro on that.
Emergency fund. should you have an emergency fund? Absolutely. You definitely want to have, I have 4 different emergency funds. So first off having cash on hand you should always have some level of cash in your possession at all times. If you have it stuffed under your mattress, fine. I think locking it up somewhere in a fireproof safe, probably smarter. You definitely want to have some cash. The 2nd way that I have an emergency fund is through my whole life high cash value insurance policy. So I am a huge proponent of these. If you didn’t hear the episode with Rachel Marshall on how to have your money working for you in 2 places at once at the same time, go back to that episode. I know it’s not the most exciting subject but it creates a great foundation of protection and creates indestructible finances. You guys like that? So with the high cash value insurance, I can call my agent and I could have a check In my possession within 7 days tops, usually it’s quicker than that. So if I need quick access to cash, my money is still compounding. It’s still growing. It’s still making money while it’s tied up in the whole life insurance policy. On top of that, the policy provides protection for my family should anything happen to me and I’m able to borrow against the policy at any time that I need to when I need cash.
So that’s the 2nd way. 3rd way is through a heloc home equity line of credit. So I’m always a big fan of opening these up. Even if you don’t need them that way you have access to quick credit, quick cash. I can go to my bank drive there in 10 minutes and I can have access to cash immediately. They’ll give me whatever my line of credit is up to. I can max that out and I can pull that out and I can have cash right then. So I think that’s very smart to have those open. If you have equity in your home and you have the ability to do this, I would definitely say open one. Don’t use it to go on vacation or to buy a boat, or to buy an expensive car or treat it like an ATM machine. But having it available to you is smart. And if assets were to go on sale for example, stocks crash, real estate crashes, crypto crashes, you guys are going to be able to go right to your to pull out cash out of your heloc and you’re going to be able to scoop up things at bargain levels. This is super smart. Cash will be king in the event of a market crash. There’s going to be one. We know that winter comes, we just don’t know when, so you want to be prepared for it. And then the 4th way that I have an emergency saving is in precious metals, some gold and silver. You definitely want to have some I think with the amount of government printing of money, it’s super smart to have this as a hedge and to have it as a safety if the shit were to really hit the fan, then silver will be a very dependable and accepted medium of exchange. So those are 4 emergency funds that I have. You definitely want to have about 6 months worth of expenses in any or combined through all 4 of those types of emergency funds. So it doesn’t matter whether it’s cash. Cash in the bank, cash greenbacks in your safe. I think you should have both. And then the cash value whole life policy, heloc, whatever. If all of that tallies up to 6 months worth of expenses then you are in a pretty good position. Should anything major get disrupted with your income.
Okay. Next rapid fire. Automation. Should you do it? Absolutely. You should have things automated in your finances. To me the most important are the big 3. You want to have your taxes automated, your savings automated and your charitable giving automated. My emotions swing from month to month guys. Sometimes I don’t really feel like I’m not in the charitable mood. The kids can go get a job is what I’m thinking sometimes. I don’t really want to support anybody I want to support me. That’s happens like we’re human and our emotions swing, our generosity kind of swings, but having these 3 set on autopilot where they’re automatically swept out every month, this keeps me on track with my plan, my taxes go get paid in monthly and you don’t want to overpay on your taxes. Otherwise the government has your money for free for most of the year. If you’re getting a tax refund at the end of the year that means you just paid too much to the government. So we want to try to avoid that because we want our money with us working for us, being put to fruitful measure. But my savings is pretty much done into my whole life cash value insurance policy. And that way I’m at least getting some level of return. I figured out it’s 5.5% in my policy after tax value, which is pretty, that’s not bad so that it’s automated every single month without fail. And then the 3rd thing is our charity. We believe strongly in charity. Our main charity is to our church. That’s just fundamentally what we want to support and what we believe in and make a huge difference in our lives supporting the place that spiritually nourishes us wherever that charity is to you, it doesn’t have to be that. And I’m not telling you that’s what it needs to be, but I think a level of charitable giving where you put it on autopilot every month is very important. We have $100, just $100 a month. It goes out to the young life program. This is a great program to empower high school kids and give them a sense of community and support. And we signed up for automation so that they just get their $100 a month, every month, and that’s great for them. And it helps them to forecast their cash flow and it helps us to stay on track with our giving with that organization. So that’s another, those are my thoughts on automation.
Debt pay down. Certainly. The most important thing you can do on debt pay down is to be attacking any and all high interest consumer debt. This is so important. I cannot reiterate this enough. You certainly should not be investing until you pay down your high interest consumer debt like credit card debt, or you’ve got an auto loan that’s super high. You have to attack that and get that out of your life. Okay, please think about it. Let’s see if something for 10% or 15% even, and you pay that down. That’s an automatic 10% on your money, right? So I wouldn’t be trying to go out and buy any other asset when you have that kind of liability hanging over you because you’re not going to be able to outpace that with your investments, all that easy.
Should you buy or lease a car? This one I don’t have a strong opinion on. I don’t care either way. What I’m most concerned about in either situation is how big or like essentially how expensive a car you buy. I’m a huge proponent when you’re starting off in your wealth building journey to buy a nice quality used foreign car, or it doesn’t have to be formed but I’ve had really good luck. I bought a used Mercedes-Benz. Some of those run until they’re like 300,000+ miles, you can get out of them and they still they hold their value. Most of the depreciation on a car happens like the first 3 years. So getting a car around year 3 and you’re picking it up where so much of the value of the car’s been lost so your depreciation from there will absolutely slow down depreciation meaning the loss of value on the asset. So that’s the hidden cost of owning a car is the loss of value of that car as you drive it. So I think that buying a expensive used or new car when you’re getting started trying to build wealth and you’re not investing and you’re not building for your future. You’re not buying cash flow producing assets and you’re buying expensive liabilities. Think you have to rethink your plan here. So come on. Let’s not try to keep up with the Joneses. The Joneses are broke. You don’t want to be broke. You want to be rich. You want to be wealthy. You want to have cashflow coming in whether you’re working or not and you’ve got to do some of these smart finance moves in the beginning in order to get to the point where you have the ability to create an incredible investment portfolio.
So then hidden fees. Let’s talk about this. There’s a lot of hidden fees that you guys are not aware of, but the main one is if you have any sort of investment account, those 1%, 2%, if you’re in a mutual fund, 2 per day, charged, some of those are like 2% and that extra percent really adds up. So I think that you really got to be watching and understanding what fees that you’re paying. Inside of all of your investment or banking accounts, look at what’s your monthly, where you’d be charged a monthly service fee for your banking account. Are you paying late fees and interest fees on your credit cards? Because you miss your payments, those things all rack up. You got it by really watching any of those unnecessary fees that you’re paying that could be draining on your future, creating this drag on your finances. That means you have to earn that much more to overcompensate for the fees. And then also reminds me that what I also love about credit cards is the cash back rewards. I got several thousand dollars back. I don’t know how much, I think it’s $5000 to $6000 a year just on credit card cash back rewards because we use it for our businesses and those like the amount of spending and everything. It’s just that little cash back, it adds up and that creates some really nice cash back awards that we’re able to use. Like an extra stream of income for just using credit cards. So definitely consider all that. So these are just some basic finance if you guys have additional finance, just personal finance type questions hit me up. I’ll definitely include them into the platform. I’ll answer on one of my next podcasts. I’ll do a Q and A session, but don’t hesitate to reach out with questions. I want to hear what’s on your mind? What are your obstacles? What are your challenges? Let me know. And I’ll be able to serve you more effectively.
All right you guys have a great day. Hopefully this helped clear some things up on the personal finance game. I look forward to interacting with all of you throughout the various platforms you can find me on the Gram, Tik TOK, still working on my strategy there, Facebook.
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