Episode #69 – How To Free Up $500 To Invest

 

Do you want more investable dollars? In this episode, I will tell you how to “audit” your spending to easily free up expenses, and turn them into assets.

I did the exercise, too, and I’m sharing my findings…  Laugh along with me on your way to Indestructible Wealth!

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Listen to the podcast here

How To Free Up $500 To Invest

#1 Key To Building Wealth

In this episode, I’m going to teach you how I saved $500 per month or $6,000 per year. It’s $497 if you want to get detailed and technical, but that’s usually not my style. How did I do it? This whole lesson is on creating more investible dollars. If you look at all the different things that go into building wealth that we talk about on the show and that other financial gurus and experts talk about as well, the number one key to building wealth is the gap between your income and expenses. This determines your financial life.

 

If you are saving and investing $100 per month and you are twice as good as me as an investor, in which I don’t think that would be all that difficult. Let’s say you are earning a 10% return on investment or capital. I save and invest $1,000 a month, earning a 5% ROI, so half of the year. After twenty years, you are going to have $68,730, and I’m going to have $396,000. The amount of investible dollars that you create per month is the key to your financial future.

On my Instagram account, I’m posting this graph chart that says, “How to get rich,” and the relative impact that activities have on building wealth. When you look at the chart, the biggest component, 97% of the chart, you divided between increasing income and a decrease in expenses. There are all the other things, a high-yield savings Roth versus a traditional investment or retirement account, an ETF or a mutual fund, 401(k) versus IRAs, Tax Laws, and hybriding buy versus rent, which we covered on a show. A credit card churning, meaning how quickly you pay off your credit cards, utilize other people’s money or stock picking. There’s a list that goes on and on of all the strategies that help you build wealth.

Of all the other activities that you do, the most important things are increasing income and decreasing expenses. As I talked about many times, you can only squeeze much blood out of the proverbial turnip. There’s only much that you can cut back before you get overly restrictive, and then you are not enjoying your life. There’s a point to which you can sacrifice too much in the now for the future. Where is that balance? I know it’s tough.

That’s very difficult for most of us as humans to try to figure out, “I want to enjoy my life. I’m going to spend this now,” versus, “If I sacrifice now and I can invest this, I’m going to get much more consumption later.” That balance is only something that each of us can figure out for ourselves. However, overall, in the grand scheme of things, getting wealthy is all about how many investible dollars you have. The only way to create more investible dollars is to increase your income and decrease your expenses.

 

We are going to audit your expenses. When we think about a financial audit, none of us think about that as, “I’m going to enjoy that. I’m going to love that. That’s going to be fun. In fact, that’s something I don’t want to do ever.” In all likelihood, you are going to skip over this. You are going to read what I have to say but then you are not going to take action. I understand because out of nine hours of lessons in my video course, this was the very last video that I had to do.

I kept putting it off because to effectively teach this lesson or do a show on this subject. I knew that I had to do it myself. I had to do my own financial audit so that I could come back to you and say, “I did it. It wasn’t fun,” but saving $500 a month or $6,000 in a year is a pretty big deal no matter how much money you make. $6,000 that you are almost wastefully spending in a month, and $6,000 over a year is still quite a chunk. What do we fear? Why does our stomach get turned into knots when we get pulled over or see the flashing lights go off behind us like, “Is that me? Please pass me all. They pass me. Thank God.”

Why do we get uptight about that or nervous when we see those police lights going off behind us when we are driving? It’s because we know where we are going to get a ticket or a fine. What are those? You get a fine of $100 or $200. Some of you have a real lead foot. Your speeding tickets could be more than that. We are worried about the points on our insurance, which is going to cause our insurance to go up. That’s an additional cost but that’s still what we are talking about a few hundred dollars for a pullover speeding ticket, whereas you are already giving yourself a self-imposed speeding ticket every single month because you are not auditing your expenses.

Eliminating What’s Not Serving You

I think that like weeds growing up around our house. Something that’s inevitably going to happen is that these things are going to creep into the weeds in your financial life. You sign up for something that is a monthly subscription and you believe that you are going to use it or use it for a time, and then you stop using it but you never take the time to cancel it. An audit is an examination of an organization or an individual’s accounts or financial information. It’s time that we do an audit of your spending. The question is, “What are some things that you are spending on that aren’t serving you or you are not using?”

Let’s eliminate them. We are not going to spend the savings. We are going to invest the savings for your future because you were already partying with that money and either wastefully or even unaware of spending it. You are not going to miss it. It was still going out the door every month. Let’s reclassify and redirect that spending into something that’s going to benefit your future.

Are there any bad habits that you have that are costing you? What are some things that you're spending on that aren't serving you? Eliminate them and invest the savings for your future. Click To Tweet

What are you paying on that you shouldn’t be? Let’s give you some ideas. Monthly subscriptions are the number one thing that comes up. What are you getting auto-billed for every month? You got your Netflix, Spotify, Hulu or YouTube Premium. Those are a few that come to mind, then monthly subscriptions with your cable or your cell phone plans.

Are there any bad habits that you have that are costing you not only financially but could be caused in your health, vitality, and energy and wearing you emotionally, things like smoking, alcohol, gambling or pornography? Those are all things that we all know don’t serve us. I don’t gamble. I’m a poker player. I play the odds. I make tons of money playing it. Sometimes I lose but my win rate is 80%, so don’t point fingers at me on that one.

Gambling would be like, you go to the casino, you don’t have any shot of winning, and you do that over and over again. I’m not against it if it’s for entertainment and it’s something that you don’t do on a very consistent basis with almost an addiction-like quality because everything in moderation is fine. Although I don’t think smoking, in any capacity, is good for you at all. That does not serve you, nor do I think any level of pornography is going to serve you. Those are such highly addictive things that are going to hurt you. Not only financially but in multiple areas of life.

Are you paying too much in taxes? Have you gone through my lesson, the show on how to save more in taxes up to $10,000 or more? Have you taken the time to go through that, study it and implement that? There are several items on there that are very easy to do and not to do. Are you buying new expensive cars? My wife and I didn’t buy new cars all the way up until a few years ago when I got my new Tesla, and then she got a new Mercedes-Benz SUV. Up until that point, we would always buy used cars.

In fact, the only time I ever bought a new car was back in 2001. I bought a BMW. I thought I had to have it, even though I already had a car that was paid off that was a pretty nice car, getting a little bit rundown but it was still decent. I had to get a new BMW because the business had gone up, and I wanted the respect and to look good. It’s a very costly decision to do that. That was that money could have been redirected and compounded into something that created an incredible growth in assets. Instead, I bought a huge liability.

What about a hobby that’s too expensive? Do you have something that you are spending a lot of money on that is financially too much for where you are at? There are things out there that you can do hobby-wise that are much less expensive than, potentially, things that you are doing. We didn’t go golfing and skiing nearly as much in our early years of building wealth because those are very expensive hobbies.

Food such as dining out instead of meal prepping or eating in. Are you spending a lot of money each month on these types of things because you want convenience? You can cook healthier and create more energy and vitality for yourself by cooking yourself. Look at that. When we were in the early stages of building wealth, my wife and I would go out to eat maybe once a month or twice at the most. We were also careful about the value of what we were spending. We would typically go to mid-level restaurants versus the five-star restaurants locally.

Anytime we go out to eat, I’m going to the nicest restaurant. I’m usually getting the most expensive thing on the menu because it’s what I want. Usually, I like the surf and turf, something nice steak or the great seafood special that they’ve got going that’s a market price. In the early stages, because your money is compounding, we didn’t do that. Now that we have multiple streams of income coming in, strong earning power, and a strong investment plan, then now we don’t worry about that. When we look at the menu, I’m not looking at the price first. I’m looking at what I want first. That definitely will change. This is temporary as far as some of these things go.

When you have multiple income streams, strong earning power, and a strong investment plan, you don’t have to worry about going to the nicest restaurant and getting the most expensive thing on the menu. Click To Tweet

Doing Your Own Audit

What I found when I did my own audit is that I was unnecessarily wastefully spending on things that I had not proactively canceled out or looked to reduce the cost of that particular item. I’m going to give you a few examples. The goal is to create $500 or more per month when you go through your financial audit. You can realistically find $500 per month. At a bare minimum, you may not be spending and doing some of the stupid shit that I was doing or am doing up now but you can find at least $200 or $300 per month. I would be shocked if you couldn’t get to $500 or more if you took this seriously.

Take that money and then invest it. Put it into a high cash value, whole life policy or index funds but set it up on auto payment. After twenty years, let’s say you get 10% interest on $500 per month. That’s $343,000 that you are going to have. You clear off $500 per month now, sit it, forget it, and put it into an index fund that generates around 8% or maybe 10% interest or compounding interest growth per year. That’s $343,000 in twenty years that you are going to have. If I had done this years ago, I would like to have an extra $343,000 in my net worth in my bank account.

Let’s look at what I found from my audit. We went to Verizon. We were looking to add an additional line for our son, Tyler. We want to be able to track that little booger around. We want them to have a phone, so we can get ahold of them quickly and track their whereabouts. It’s got to be tough for kids nowadays with the parents being able to track their every move. If I had my parents the ability to do that, that would be suck.

We ended up adding the line but because Verizon had a new special offer going, we saved $75 doing that. Comcast is where we save the most. Let’s say $200. We had many channels and things on our package. It’s garbage. When I called and canceled my whole account, all of a sudden, they found lots of different ways to reduce my monthly bill and to keep us engaged. We made huge savings there. I had two Netflix accounts I was paying on for the last years. What am I doing? I’m a financial coach, yet here I am doing this stupid shit. Don’t feel bad.

Magic software. I don’t even know what this was for. I went to the site to look at what I signed up for, which was in German. I don’t know what happened but I canceled it. My kids signed up for the Sony PlayStation thing for $15 a month. I’m like, “What is this?” They are like, “This is how we get a lot of our games.” I’m like, “How often do you use it?” “We do use it.” I’m like, “You can pay me for it.” The kids are paying for that now.

PayPal automatic payments. I signed up for the ability to do automatic payments so that people could pay me automatically. Every month we were doing a promotional fund with our team where everybody would pay in and simplify it. I set them all up to autopay, so I didn’t have to go down chasing people down for money. I don’t use that anymore. I’m paying $20 a month for something that we are not even doing and using.

There was ExpressVPN for $10. I have no idea what that was. Discord, $10. I upgraded to Discord, but I never even logged into that. The Valve Corp, $5. I have no idea what that is, gone. Google, $4. The last I know, it’s free to do Google searches. We are the product. Anytime anything is free, you are the product. You are the one that’s being monetized and sold. I canceled that.

Anytime anything is free, you are the product. You are the one that's being monetized and sold. Click To Tweet

I’m not canceling anything I need for business. Microsoft, $15. I’ve got an iMac. I don’t use that. That’s gone, then alcohol, $100 approximately in savings. I have cut back. Not that I was drinking every single night. I don’t want to put that out there because I have never done that. Maybe in seven days straight on vacation, I’m going to have alcohol every day. On a whole, as a healthy, balanced lifestyle, I was drinking too much in the evening.

I needed a drink to calm down because my mind raced with all the things that I didn’t get done for the day and all the things I still had to do. Alcohol was my tool of choice to try to calm that down, so I could be present with my family. I knew I needed to switch and do things healthier. I moved my workouts to 4:35 so that the workout naturally gives me that endorphin high and rush. It makes me feel good and calms me down afterward. I do relaxation tea. That’s a product that we sell. I started doing that more consistently. It’s natural calming herbs that calm your whole mind, body, and everything down.

I grabbed some CBD oil. Golfing partner or buddy of mine, Sean, suggested CBD oil, which helped him with his PTSD, Post-Traumatic Stress Disorder, from being in the military fighting in Afghanistan and Iraq. I tried CBD oil, and that’s great at calming down. With those three things, I no longer needed any alcohol in the evenings to calm down. In fact, the only time that I have is if we go out to eat or go out to dinner or maybe a social event around friends. Other than that, there’s no alcohol. I don’t buy it. That’s a nice least $100 savings.

Freeing Up Investible Dollars

We are looking at the total saved. All tallied up as $496. That money can now be invested to free me up to have more investible dollars, which is the number one key to growing your wealth. Get after it. This is your wake-up call to stop procrastinating and attack your unnecessary spending. I know this is no fun, and it’s easy to put off but let’s do it now and free up some dollars for your financial freedom account.

I would look at this as cleaning out your garage or your self-storage unit. It’s something that you keep putting off, “I will do that next week or next month.” It keeps looming over you energetically. Not only are we going to free up financial space to create more wealth in your future growth in your portfolio, but you are going to energetically clear these things off. They could be weighing on you a bit because you have been procrastinating them over and over. We want to clear that energy off so that you can live presently and more enjoy the moment.

You do this. Send me a message on Instagram, and let me know once you’ve got it done how much you saved and what you cut out. I would love to hear the feedback on what you guys were able to do to grow your investible dollars. Let her rip, and for accountability, report back to me. Promise, I will respond if you send me a message, and I will celebrate with you.

 

Important Links

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