WEBVTT - Escape Living Paycheck To Paycheck #073 0:00:00.040 --> 0:00:03.200 Welcome to how to Money. I'm Joel and I'm Matt, 0:00:03.320 --> 0:00:07.080 and today we're discussing how to escape living paycheck to paycheck. 0:00:26.120 --> 0:00:29.040 All right, Joel, I am excited to talk about living 0:00:29.040 --> 0:00:30.760 paycheck to paycheck. You know, we've gotten a lot of 0:00:30.760 --> 0:00:34.239 emails recently of folks writing in talking about how that's 0:00:34.280 --> 0:00:36.880 something they struggle with. And oftentimes the topics we cover 0:00:37.320 --> 0:00:39.080 start from the assumption that you do have a little 0:00:39.080 --> 0:00:41.080 bit of cash, you know, to start investing, to start 0:00:41.120 --> 0:00:44.800 putting towards those goals that you have set. And so today, yeah, 0:00:44.840 --> 0:00:46.600 I'm excited that we're gonna be able to step back 0:00:46.800 --> 0:00:49.199 a little bit more to talk through how to take 0:00:49.240 --> 0:00:51.360 those steps to get a little bit of financial margin 0:00:51.440 --> 0:00:53.720 in your life. Yeah, Matt, I know there are a 0:00:53.800 --> 0:00:56.040 lot of people living in a scenario where they're living 0:00:56.080 --> 0:00:58.240 paycheck to paycheck. It hurts my heart to hear about that, 0:00:58.440 --> 0:01:00.600 and I'm looking forward to hopefully providing some from those 0:01:00.600 --> 0:01:03.600 practical solutions. Real quick, though, I wanted to mention there 0:01:03.680 --> 0:01:06.440 was an article posted in our Facebook group by Heather 0:01:07.040 --> 0:01:08.959 and the article she posted was called is it an 0:01:09.000 --> 0:01:12.760 expensive bike or inexpensive Transportation? And I thought it was 0:01:12.800 --> 0:01:16.920 super helpful in kind of reframing the conversation around riding bikes. 0:01:17.160 --> 0:01:19.240 And we've talked about this before on the show, but 0:01:19.360 --> 0:01:22.160 that article in particularly was just a really good example 0:01:22.480 --> 0:01:25.759 of how cheap riding a bike can be, even an 0:01:25.760 --> 0:01:29.840 expensive bike, when you're comparing it to normal car transportation 0:01:29.959 --> 0:01:32.720 and how expensive that gets. Yeah, it's just a great 0:01:32.760 --> 0:01:35.200 example of how just thinking about something from a different 0:01:35.360 --> 0:01:38.959 perspective can completely change how you view the value of 0:01:39.000 --> 0:01:42.200 that thing. And you mentioned expensive bike, and it's true, 0:01:42.240 --> 0:01:44.000 the guy that wrote that article has like an eight 0:01:44.000 --> 0:01:47.800 thousand dollar bike, which is crazy expensive. That's crazy expensive, 0:01:47.800 --> 0:01:50.160 way more expensive than anything that we would even dream 0:01:50.200 --> 0:01:52.040 of owning. But again, when you put it in the 0:01:52.160 --> 0:01:55.640 context of transportation, and he had the numbers up for 0:01:55.680 --> 0:01:58.600 how much it would cost him to operate a basic 0:01:58.640 --> 0:02:01.320 Honda Civic and the fact is it's almost impossible to 0:02:01.560 --> 0:02:04.480 operate a vehicle like that as a small reasonable vehicle 0:02:04.560 --> 0:02:07.520 for less than six thousand dollars every year. And so 0:02:07.760 --> 0:02:09.839 you know, by no means are we advocating and saying, yeah, 0:02:09.880 --> 0:02:11.720 you should go out and buy an eight thousand dollar bike. 0:02:11.919 --> 0:02:14.799 There are lots of affordable alternatives to that where you 0:02:14.840 --> 0:02:17.480 can get an electric bike for much cheaper that would 0:02:17.480 --> 0:02:20.040 allow you to replace the vehicle. But just that sort 0:02:20.080 --> 0:02:23.640 of paradigm shift by thinking about the bike not as 0:02:23.680 --> 0:02:26.640 just a nice bike or even as an affordable bike, 0:02:26.720 --> 0:02:29.560 but viewing it as a replacement to transportation. We recently 0:02:29.560 --> 0:02:32.840 talked about secondary costs, and the secondary costs associated with 0:02:32.919 --> 0:02:36.160 owning a vehicle are huge. Yeah, there's an article that's 0:02:36.200 --> 0:02:38.760 on our site that I wrote about insurance and if 0:02:38.760 --> 0:02:41.080 you can even just reduce the amount of miles that 0:02:41.120 --> 0:02:45.360 you drive every year to less than most insurance companies 0:02:45.400 --> 0:02:48.120 will give you a pretty big discount for being a 0:02:48.160 --> 0:02:51.280 low mileage driver. Other insurance companies are starting to charge 0:02:51.440 --> 0:02:54.680 by the mile, which means if you drive very, very little, 0:02:54.800 --> 0:02:57.600 you could save a lot of money on your insurance costs. 0:02:57.639 --> 0:02:59.920 And so if you can step up your bike usage 0:03:00.200 --> 0:03:02.480 and lower how much you're driving, yeah, it can be 0:03:02.520 --> 0:03:05.880 an alternative form of transportation to you and then save 0:03:05.919 --> 0:03:08.480 you money on your car costs every month. And be 0:03:08.520 --> 0:03:10.760 sure to check out electric bike review dot com as 0:03:10.760 --> 0:03:13.520 well if you're looking at electric bikes. The guy that 0:03:13.600 --> 0:03:15.480 runs that site has got tons of reviews on there. 0:03:15.520 --> 0:03:17.720 And be sure to check out his top rated section 0:03:17.760 --> 0:03:20.480 where he reviews different styles of bikes, and that's where 0:03:20.480 --> 0:03:22.240 you'll be able to find, you know, like a roadbike 0:03:22.360 --> 0:03:25.119 versus a hybrid or a city commuter. And in most 0:03:25.120 --> 0:03:27.679 of those options, he has a nicer expensive option, but 0:03:27.720 --> 0:03:30.440 then a really affordable one. And dude, a lot of 0:03:30.440 --> 0:03:32.120 the ones that come in that are really affordable that 0:03:32.160 --> 0:03:34.240 he loves our rat bikes and that's what you own, 0:03:34.240 --> 0:03:37.200 the rat Wagon. Yeah. Rad has this awesome direct to 0:03:37.240 --> 0:03:41.120 consumer business model and they've made electric bikes so much 0:03:41.200 --> 0:03:44.160 less cost prohibitive. I've seen so many people riding RAD 0:03:44.200 --> 0:03:47.760 bikes more recently around town just because they've lowered the 0:03:47.800 --> 0:03:50.480 price and the barrier to entry into hopping on a bike. 0:03:50.520 --> 0:03:52.440 And so I'm just seeing people ride around town more 0:03:52.480 --> 0:03:55.400 frequently on bikes, and a lot of that is electric bikes, 0:03:55.400 --> 0:03:57.480 which is super cool. It's fun to see. Well. In 0:03:57.560 --> 0:03:59.960 quick shout out to to Heather because she works for 0:04:00.080 --> 0:04:04.320 the Atlanta Bicycle Coalition, which is an awesome Atlanta nonprofit 0:04:04.400 --> 0:04:07.880 and they promote bike safety, bike awareness, basically just trying 0:04:07.920 --> 0:04:11.320 to make biking in Atlanta better. Yeah. So, if you're 0:04:11.320 --> 0:04:13.120 into biking and you're wanting it to be safer in 0:04:13.200 --> 0:04:15.680 your city. Be sure to look up your organization and 0:04:15.720 --> 0:04:18.680 seriously consider supporting them most definitely, my friend. All right, 0:04:18.760 --> 0:04:20.479 let's mention the beer that we're gonna have on the 0:04:20.480 --> 0:04:25.200 show today. We're drinking Roast Beast by Modern Methods Brewing Company. 0:04:25.320 --> 0:04:28.839 And that's beast, not beef, right right, So it reminds 0:04:28.839 --> 0:04:32.159 me of Whoville. Uh, the who's carved the roast beast, 0:04:32.279 --> 0:04:34.480 that's what That's what this must be named after. Uh. 0:04:34.520 --> 0:04:37.400 And listener Krista was kind enough to send us this 0:04:37.440 --> 0:04:40.839 beer in crowlor form out of Cleveland, Ohio. And the 0:04:40.880 --> 0:04:43.279 coolest thing about this beer, Matt and Krista sent us 0:04:43.320 --> 0:04:46.440 some info on this is that this brewery is located 0:04:46.520 --> 0:04:49.599 in David Grohl Alley. So Dave Dave Girl, who's a 0:04:49.600 --> 0:04:52.720 famous musician, the frontman for the Foo Fighters, drummer for 0:04:52.800 --> 0:04:56.920 Nirvana as well. Yea originally yeah, so apparently this this 0:04:56.960 --> 0:04:59.800 brewery is located right in this alley that's named after 0:05:00.000 --> 0:05:01.760 world famous Dave Gross that's kind of cool. Yeah, And 0:05:01.800 --> 0:05:04.840 technically they call this a groller, not a crowler, so 0:05:04.880 --> 0:05:07.240 it's it's a groller. And did you ever listen to 0:05:07.240 --> 0:05:09.880 Food Fighters back in the day. Obviously, Nirvana is kind 0:05:09.880 --> 0:05:12.880 of a staple. But Food Fighters, man, you know, not really. 0:05:12.920 --> 0:05:15.200 I know they were super popular, but I wasn't cool enough. 0:05:15.200 --> 0:05:16.960 I don't think did. I was looking back over their 0:05:16.960 --> 0:05:21.440 discography and I forgot how much I love them. The 0:05:21.480 --> 0:05:23.880 Color in the Shape and I'm freaking rocked. It had 0:05:23.880 --> 0:05:26.840 so many great songs on there, Monkey Wrench, I know 0:05:26.920 --> 0:05:28.960 the song man, but I'm sorry, we just can't connect 0:05:28.960 --> 0:05:31.000 on this level right now. I'm not saying I dig 0:05:31.040 --> 0:05:32.920 them like today, but it definitely makes me want to 0:05:32.920 --> 0:05:34.919 go back and listen to some of that awesome, you know, 0:05:35.000 --> 0:05:37.800 late nineties rock. Well, I did like some late nineties rock. 0:05:37.839 --> 0:05:40.480 And even if we can't kind of bond over Food Fighters, well, 0:05:40.520 --> 0:05:42.800 we can bond over this beer. So thank you Christa, 0:05:42.880 --> 0:05:44.200 and we'll kind of let you guys know what we 0:05:44.200 --> 0:05:45.480 think about this speer at the end of the show. 0:05:45.720 --> 0:05:48.080 All right, Joel, onto the topic at hand. Today. We're 0:05:48.080 --> 0:05:52.240 talking about how to escape living paycheck to paycheck, and honestly, 0:05:52.680 --> 0:05:54.880 a large swath of Americans wouldn't be able to pay 0:05:54.880 --> 0:05:57.200 their bills if they missed a paycheck. And you know, 0:05:57.240 --> 0:05:59.839 we saw this evidence earlier this year with the government shutdown. 0:05:59.880 --> 0:06:03.320 How there are tons of government employees who are in 0:06:03.320 --> 0:06:06.080 that very situation, you know, when you're living paycheck to paycheck. 0:06:06.160 --> 0:06:09.320 The idea of even setting aside extra money every month 0:06:09.600 --> 0:06:12.279 is honestly laughable, Like, how are you supposed to set 0:06:12.279 --> 0:06:15.119 financial goals? How are they supposed to be attainable when 0:06:15.160 --> 0:06:18.480 every single dollar is going to go towards just staying afloat. Yeah, Matt, 0:06:18.480 --> 0:06:20.680 and I feel like, honestly, some of the advice that 0:06:20.760 --> 0:06:23.720 gets targeted towards people who are living paycheck to paycheck. 0:06:23.839 --> 0:06:26.880 First off, there are a lot of predatory companies that 0:06:26.960 --> 0:06:29.120 like to leach on the people that are the most 0:06:29.200 --> 0:06:31.600 vulnerable in our society, and we're gonna kind of talk 0:06:31.600 --> 0:06:33.839 about that more later in the episode. But so much 0:06:33.839 --> 0:06:36.840 of the advice that that is mentioned for people living 0:06:36.839 --> 0:06:39.960 paycheck to paycheck is is kind of cheap and not 0:06:39.960 --> 0:06:42.880 not very thorough. And so, based on some recent listener emails, 0:06:42.920 --> 0:06:44.960 we felt like this was a subject that we needed 0:06:44.960 --> 0:06:47.599 to tackle. We needed to tackle it well, because, like 0:06:47.640 --> 0:06:50.520 you said, this is a problem for a huge percentage 0:06:50.600 --> 0:06:53.120 of Americans, and we want the people living paycheck to 0:06:53.160 --> 0:06:55.320 paycheck to be able to find some of that margin 0:06:55.560 --> 0:06:58.000 so that some of our other episodes can be really helpful, 0:06:58.040 --> 0:07:00.680 so that they can start gaining ground when it to saving, 0:07:00.680 --> 0:07:02.920 when it comes to investing for the future, and just 0:07:02.960 --> 0:07:04.800 have the confidence that they're going to be able to 0:07:04.839 --> 0:07:08.840 meet financial challenges that arise, because it happens for all 0:07:08.880 --> 0:07:12.480 of us. Unexpected expenses pop up, whether it's a car 0:07:12.520 --> 0:07:16.640 breakdown or an HVAC system that goes kaplui, that happens, 0:07:16.800 --> 0:07:18.840 and so you and I'm at we were empathetic to 0:07:19.200 --> 0:07:21.960 the plight that many people in this country face. And 0:07:22.080 --> 0:07:25.680 so many people are in a position like this, often 0:07:25.760 --> 0:07:28.800 through through very little fault of their own. Sometimes it's 0:07:28.840 --> 0:07:32.240 a personal circumstance or a family member having an issue 0:07:32.560 --> 0:07:34.680 where you have to help out. It turns out six 0:07:35.360 --> 0:07:39.800 of bankruptcies happen because of unexpected medical bills, and often 0:07:39.840 --> 0:07:42.440 those medical bills arose out of an issue that kind 0:07:42.440 --> 0:07:44.640 of popped up out of nowhere. But I do think 0:07:44.680 --> 0:07:47.720 at the same time, there are some practical steps that 0:07:47.760 --> 0:07:50.560 we can lay out that can help people who are 0:07:51.000 --> 0:07:53.920 who do find themselves in that situation get a leg 0:07:54.040 --> 0:07:56.000 up and start making changes. And so that's what this 0:07:56.080 --> 0:07:58.840 episode is all about. And the thing is if this 0:07:58.960 --> 0:08:01.120 is your situation, right, this is the boat that you're in, 0:08:01.240 --> 0:08:04.760 keep in mind that this won't change overnight. Getting your 0:08:04.800 --> 0:08:06.920 finances in order is going to take time. It's going 0:08:06.960 --> 0:08:10.960 to take intentionality. And high earners aren't immune to living 0:08:11.000 --> 0:08:13.560 paycheck to pycheck either. Right, It's not just those that 0:08:13.840 --> 0:08:16.240 are living at the poverty line. You can have a 0:08:16.320 --> 0:08:18.960 huge income, but if your expenses are just as huge, 0:08:19.080 --> 0:08:22.080 you are by definition living paycheck to paycheck. Yeah, Matt, 0:08:22.120 --> 0:08:24.200 I feel like there are a lot of stories of 0:08:24.240 --> 0:08:26.840 people that make six figures are close to it, who 0:08:26.920 --> 0:08:29.720 are are living paycheck to paycheck. So you're right, it's 0:08:29.760 --> 0:08:32.960 not just people living below or near you know, the 0:08:32.960 --> 0:08:36.320 poverty line. It's a huge percentage of Americans across the 0:08:36.320 --> 0:08:39.640 income spectrum. Okay, So in order to get out of 0:08:39.679 --> 0:08:42.520 that cycle of living paycheck to paycheck, what needs to 0:08:42.520 --> 0:08:45.440 happen is that you need to create some financial margin. 0:08:45.800 --> 0:08:48.040 And what that means is there's just some room. There 0:08:48.080 --> 0:08:51.120 are literal dollars between what you make your income and 0:08:51.200 --> 0:08:54.080 the expenses that you have every month or every two weeks. 0:08:54.520 --> 0:08:56.520 And so the first steps in order to transition you 0:08:56.559 --> 0:08:59.280 away from living paycheck to paycheck are. The first thing 0:08:59.320 --> 0:09:01.959 that we're gonna cover is tracking your spending. Knowing where 0:09:02.000 --> 0:09:03.840 your money is going every month is going to be 0:09:03.880 --> 0:09:07.920 the very first step in knowing how to reroute towards savings. Joel, 0:09:07.960 --> 0:09:10.120 I know personally you love using Mint. Yeah, Matt, I 0:09:10.160 --> 0:09:13.240 love using Mint. I hook up all my accounts to it, 0:09:13.520 --> 0:09:16.560 and it helps me track my spending all in one place. 0:09:16.640 --> 0:09:19.720 I love going there in order to get quick overviews 0:09:19.760 --> 0:09:22.360 of my budget. But then also I literally have every 0:09:22.400 --> 0:09:25.360 single transaction spelled out, and I can see every single 0:09:25.400 --> 0:09:29.120 incoming and outgoing financial transaction at the same time, all 0:09:29.160 --> 0:09:31.320 in one place, and and that's what I love about Mint. 0:09:31.360 --> 0:09:34.559 So it's also free, which is really nice. You can 0:09:34.600 --> 0:09:36.840 download the app or go to the website. So at 0:09:36.880 --> 0:09:39.320 least for me, that's the best tool that I use 0:09:39.440 --> 0:09:42.240 to track my finances. It's nice to be able to 0:09:42.320 --> 0:09:44.520 kind of automate some aspects of your life, right, But 0:09:44.679 --> 0:09:47.840 at the same time, it's not necessary. Tracking your expenses 0:09:47.960 --> 0:09:51.440 isn't something that requires hard thinking or decision making, Like 0:09:51.480 --> 0:09:54.360 tracking your expenses is very different than budgeting. It's just 0:09:54.600 --> 0:09:56.480 looking at where your money is going and just keeping 0:09:56.559 --> 0:09:58.319 up with it a little bit. So as long as 0:09:58.360 --> 0:10:01.600 you just keep receipts, you can ease the track you're spending. Uh. 0:10:01.640 --> 0:10:03.640 If you don't have a smartphone, by chance, keep up 0:10:03.679 --> 0:10:06.720 with your receipts, list amount on paper. That is tracking 0:10:06.720 --> 0:10:09.520 your expenses. Yeah. And I think the reason that we 0:10:09.600 --> 0:10:13.160 say tracking your expenses is the first step towards building 0:10:13.200 --> 0:10:16.120 some financial margin in your life is because if you 0:10:16.160 --> 0:10:18.280 don't know where your money is going, it can kind 0:10:18.280 --> 0:10:20.559 of take on wings at at different times in your 0:10:20.600 --> 0:10:23.680 life and you might spend five bucks here, ten bucks there, 0:10:24.000 --> 0:10:26.200 and typically if you're not tracking your spending, you just 0:10:26.240 --> 0:10:29.520 forget about those purchases. You don't remember that they even happened. 0:10:29.800 --> 0:10:31.720 And you want to be able to look the cold, 0:10:31.800 --> 0:10:34.600 hard dead facts right in the face. And that's why 0:10:34.720 --> 0:10:38.280 tracking your spending is the first step that you have 0:10:38.400 --> 0:10:40.640 to take if you want to kind of end that 0:10:40.720 --> 0:10:43.360 vicious cycle of living paycheck to paycheck. Yeah, and just 0:10:43.520 --> 0:10:45.440 as you start making progress, it's good to see where 0:10:45.480 --> 0:10:47.360 you've been, because it's fun to track your progress as 0:10:47.400 --> 0:10:50.160 you improve, which leads us to our next step, which 0:10:50.200 --> 0:10:52.880 is setting goals. And so ask yourself, what is it 0:10:52.920 --> 0:10:57.360 that you want aspiring towards specific goals can be incredibly helpful. 0:10:57.600 --> 0:10:59.520 Knowing your why behind money will help you to get 0:10:59.559 --> 0:11:03.200 through those tough times of austerity. Which is a funny 0:11:03.240 --> 0:11:05.640 word to use because, like typically austerity is like a 0:11:05.640 --> 0:11:08.880 political or economic term where a government will either cut 0:11:08.920 --> 0:11:11.880 spending or raise taxes, And when it comes to you, 0:11:11.960 --> 0:11:13.839 like on a personal level, those are the exact same 0:11:13.880 --> 0:11:15.840 things essentially that you have to do. You have to 0:11:15.880 --> 0:11:20.080 either increase your income or most likely cut expenses. Those 0:11:20.080 --> 0:11:22.760 are your two largest levels that you can pull in 0:11:22.880 --> 0:11:26.160 order to make change in your personal finances. Yeah, Matt, 0:11:26.200 --> 0:11:28.760 and our whole show is kind of based around living 0:11:28.840 --> 0:11:32.160 or rich life. Now, we're big fans of people prioritizing 0:11:32.160 --> 0:11:35.240 saving and investing, but at the same time not depriving 0:11:35.280 --> 0:11:38.199 themselves of things that are meaningful. But I gotta say, 0:11:38.280 --> 0:11:41.160 if you are in the position of living paycheck to paycheck, 0:11:41.480 --> 0:11:44.760 the idea of austerity is an important one to consider 0:11:45.040 --> 0:11:46.800 for the time being. You might need to make some 0:11:46.960 --> 0:11:50.480 short term sacrifices so that you can achieve the goals 0:11:50.559 --> 0:11:53.000 of achieving margin in your life. I'll tell you what, Matt. 0:11:53.360 --> 0:11:55.600 From everyone that I've heard that's gotten out of the 0:11:55.600 --> 0:11:58.360 cycle of living paycheck to paycheck, They actually have an 0:11:58.360 --> 0:12:01.640 emergency fund, they have the financial means when they encounter 0:12:01.760 --> 0:12:04.760 an unexpected expense. The sort of mental freedom that they 0:12:04.800 --> 0:12:07.720 gain because of that is so much greater than the 0:12:07.760 --> 0:12:10.559 pain of the austerity that they had to endure. I 0:12:10.640 --> 0:12:13.240 think that's important to note and knowing that that is 0:12:13.280 --> 0:12:15.040 your goal, that's your light at the end of the tunnel. 0:12:15.040 --> 0:12:18.400 That's sort of freedom to meet those unexpected situations that 0:12:18.480 --> 0:12:20.880 come up. That is going to help you to actually 0:12:20.880 --> 0:12:24.920 get through those times where you're cutting back ruthlessly. That's right. Gel. So, 0:12:25.200 --> 0:12:27.880 like we said, cutting expenses, uh and earning more like 0:12:27.920 --> 0:12:30.320 those are the main levers that are going to allow 0:12:30.360 --> 0:12:32.920 you to get out of that cycle of living paycheck 0:12:33.000 --> 0:12:35.280 to paycheck, and we're going to dive into the specifics 0:12:35.280 --> 0:12:37.120 on how you can do that. Right after the break, 0:12:45.960 --> 0:12:48.680 our buddy, we're back and let's talk about cutting expenses. 0:12:48.720 --> 0:12:51.439 We already kind of mentioned tracking your spending and how 0:12:51.480 --> 0:12:53.719 that's the first thing you need to do. It's hard 0:12:53.720 --> 0:12:56.000 to know what to cut unless you have been tracking 0:12:56.040 --> 0:12:58.080 and you actually know where the money is going. And 0:12:58.080 --> 0:13:02.360 then the idea is to ruthlessly unnecessary expenses. We had 0:13:02.480 --> 0:13:05.960 an episode earlier episode thirteen on cutting your monthly bills, 0:13:06.160 --> 0:13:10.319 and that's particularly powerful when we're talking about recurring expenses. 0:13:10.720 --> 0:13:13.679 We also did an episode about monthly cell phone bills. 0:13:13.679 --> 0:13:16.200 Matt I just talked to a friend that took action 0:13:16.240 --> 0:13:19.200 on that and he signed up for Sprints one year 0:13:19.440 --> 0:13:21.880 free service plan. Oh is that that deal? Like if 0:13:21.880 --> 0:13:25.560 you transferred over specifically from Verizon, right, yeah, but and 0:13:25.600 --> 0:13:28.320 it's from other cell phone providers as well, you can 0:13:28.320 --> 0:13:30.360 get the deal. So so it's worth noting that there 0:13:30.400 --> 0:13:33.199 are major savings to be had if you will only 0:13:33.320 --> 0:13:36.360 take the steps and cutting your monthly bills. The recurring 0:13:36.360 --> 0:13:38.679 bills that show up every single month are going to 0:13:38.760 --> 0:13:41.920 be huge in upping that margin in your life. Let's 0:13:41.960 --> 0:13:44.360 first now talk about some big steps that you can take, 0:13:44.679 --> 0:13:48.040 drastic steps. It is more effective to focus on these 0:13:48.120 --> 0:13:51.240 bigger winds when it comes to cutting your expenses sometimes 0:13:51.240 --> 0:13:53.720 than focusing on just like all the tiny little things 0:13:53.760 --> 0:13:55.560 that you think might make a difference, right like the 0:13:55.640 --> 0:13:57.720 latte every day. You hear that mentioned all the time. 0:13:58.040 --> 0:14:00.439 If you can tackle the biggest expenses in your life, 0:14:00.600 --> 0:14:02.800 you're gonna be able to take much bigger steps towards 0:14:02.840 --> 0:14:05.160 creating margin in your life. You know, if your leases up, 0:14:05.240 --> 0:14:08.040 consider moving into a smaller and cheaper place, or maybe 0:14:08.040 --> 0:14:10.800 even consider moving in with family. If you have a 0:14:10.800 --> 0:14:13.400 car payment that's killing you, consider selling that car. Go 0:14:13.440 --> 0:14:16.280 ahead and take that loss. You know, drive a beater instead. 0:14:16.880 --> 0:14:20.640 We're focusing on these bigger things because housing, transportation, and 0:14:20.680 --> 0:14:24.360 food for the average American takes up seventy of your budget. 0:14:24.440 --> 0:14:26.240 So if you can focus on those three things, you know, 0:14:26.280 --> 0:14:28.880 like we already covered housing, we did transportation, food, you know, 0:14:28.960 --> 0:14:31.320 stop eating out like that is the most expensive way 0:14:31.320 --> 0:14:33.040 to feed yourself is if you go out to a 0:14:33.080 --> 0:14:36.200 restaurant every day, but focus on the bulk of where 0:14:36.200 --> 0:14:38.520 you're spending your money first in order to see the 0:14:38.600 --> 0:14:41.720 largest gains. Yeah, Matt, those are huge. Often times for 0:14:41.760 --> 0:14:45.240 people those feel like fixed immovable costs, but they're not. 0:14:45.640 --> 0:14:48.320 And especially if you're living paycheck to paycheck and you 0:14:48.320 --> 0:14:50.880 want to change that cycle, that are often ways that 0:14:50.920 --> 0:14:53.480 you can change the makeup of those bigger monthly bills 0:14:53.520 --> 0:14:56.080 in your life. At minimum, it's something that you should 0:14:56.160 --> 0:15:00.400 start thinking about and creating an action plan for. Maybe 0:15:00.400 --> 0:15:02.920 taking on a roommate is an ideal, but you know what, 0:15:03.160 --> 0:15:05.280 maybe that's the step you have to take for the 0:15:05.320 --> 0:15:07.640 time being. Yeah, for a short period of time. You're 0:15:07.640 --> 0:15:09.560 not saying that you have to always do this, but 0:15:09.600 --> 0:15:11.200 if if you know that, like man, if I do 0:15:11.280 --> 0:15:13.280 this for six months or a year, like, think about 0:15:13.480 --> 0:15:16.400 the kind of margin like that that would give you. Yeah. Completely, 0:15:16.560 --> 0:15:19.040 And Matt, you did kind of mention getting a latte 0:15:19.160 --> 0:15:21.600 every day, and that is something that I feel like 0:15:21.760 --> 0:15:25.360 a lot of financial experts quote unquote say stop drinking 0:15:25.360 --> 0:15:27.080 the latte and you'll be able to save this and 0:15:27.240 --> 0:15:29.880 such more for a retirement. And I understand where they're 0:15:29.880 --> 0:15:31.720 coming from. I feel like for a lot of people 0:15:32.040 --> 0:15:35.360 that's not necessarily helpful. But if you are living paycheck 0:15:35.440 --> 0:15:38.120 to paycheck, a lot of people living in that vicious cycle, 0:15:38.360 --> 0:15:41.040 they feel like when they do something positive, they owe 0:15:41.080 --> 0:15:43.760 themselves kind of like a little reward, and those rewards 0:15:43.840 --> 0:15:46.480 can be costly over time, whether it is a latte 0:15:46.640 --> 0:15:50.080 or eating out. We mentioned the word austerity earlier. I 0:15:50.080 --> 0:15:52.440 think it is important if you are living a life 0:15:52.480 --> 0:15:55.520 that is paycheck to paycheck, you have to forego some 0:15:55.600 --> 0:15:58.120 of those even sort of rewards for the time being 0:15:58.480 --> 0:16:00.720 because they can kind of mess you up on your 0:16:00.760 --> 0:16:03.480 way towards gaining that bit of margin in your life, 0:16:03.560 --> 0:16:06.240 which is so important. Yeah, sometimes it's key just to 0:16:06.320 --> 0:16:08.520 kind of go cold turkey, Like it requires you to 0:16:08.560 --> 0:16:12.040 completely jar yourself off the normal patterns and the habits 0:16:12.120 --> 0:16:15.000 that you have in order to completely reframe the way 0:16:15.040 --> 0:16:17.120 that you are thinking about your expenses. It's like a 0:16:17.120 --> 0:16:19.200 prize fighter doing some training, right. Oh, I know all 0:16:19.240 --> 0:16:21.560 about that, do you? Okay, Yeah, of course you do. No, 0:16:21.800 --> 0:16:25.720 don't really, but they're not eating donuts ever, Like one 0:16:25.760 --> 0:16:27.520 donut throws them off their game if they've got a 0:16:27.560 --> 0:16:30.160 fight coming up in two weeks. And so the same way, 0:16:30.400 --> 0:16:32.080 you need to kind of take on the focus of 0:16:32.080 --> 0:16:36.360 a prize fighter where those things are completely anathema to 0:16:36.440 --> 0:16:38.760 what you're trying to achieve. And Joel, like you mentioned, 0:16:38.760 --> 0:16:41.120 those small things do add up, and so now is 0:16:41.120 --> 0:16:43.440 the time to kind of feel like that last of 0:16:43.440 --> 0:16:46.600 your expenses. Uh, there are ways to just reduce those expenses, 0:16:46.640 --> 0:16:48.920 like with your insurance shop it around, if you're making 0:16:48.960 --> 0:16:52.640 purchases that are non necessity items. We've talked about this recently, 0:16:52.680 --> 0:16:55.480 but consider putting a period of time where you're gonna 0:16:55.480 --> 0:16:58.520 make yourself weight, Like consider waiting thirty days if you 0:16:58.600 --> 0:17:01.280 know that you are prone to making purchases on a 0:17:01.280 --> 0:17:04.280 whim and receiving it in two days or less. Cut 0:17:04.320 --> 0:17:06.760 that Amazon Prime membership if you know that that's causing 0:17:06.800 --> 0:17:08.919 you to stumble again. The whole idea is to kind 0:17:08.920 --> 0:17:10.879 of jar your habits and to kind of get you 0:17:10.960 --> 0:17:13.200 off that path that got you to where you didn't 0:17:13.280 --> 0:17:15.320 have any financial margin in your life to begin with. 0:17:15.720 --> 0:17:18.280 Another major step you need to take is to keep 0:17:18.440 --> 0:17:21.080 tracking those expenses. And it sounds weird, right We just 0:17:21.080 --> 0:17:23.520 talked about tracking expenses, but being able to note your 0:17:23.520 --> 0:17:26.200 progress is helpful, and the only way that you can 0:17:26.240 --> 0:17:29.600 do that is by continued tracking. And so even if 0:17:29.600 --> 0:17:31.600 you kind of came up with a list of what 0:17:31.640 --> 0:17:34.160 you've been spending in order to kind of get get 0:17:34.160 --> 0:17:37.679 a handle on your situation, continued tracking helps provide you 0:17:37.720 --> 0:17:40.359 the encouragement to see that changes are being made. It 0:17:40.400 --> 0:17:43.240 makes things tangible. And another way to kind of help 0:17:43.320 --> 0:17:46.720 make that tangible is by creating charts and graphs that 0:17:46.800 --> 0:17:49.440 helped track that progress. And so Katie and our Facebook 0:17:49.440 --> 0:17:52.880 group posted a picture of a bar graph that she'd 0:17:52.920 --> 0:17:55.000 kind of created to track her own progress on paying 0:17:55.040 --> 0:17:58.280 off debts and saving up an emergency fund and I thought, man, 0:17:58.320 --> 0:18:00.680 that is so helpful. It's his visual that she gets 0:18:00.680 --> 0:18:02.440 to look at every day and at the same time 0:18:02.520 --> 0:18:07.000 kind of physically color in those bars to track her progress. 0:18:07.000 --> 0:18:09.760 What a cool way to make your progress tangible. It's 0:18:09.800 --> 0:18:12.480 so much better than just looking at numbers on a screen. Yeah, 0:18:12.520 --> 0:18:14.520 like you said, she's doing it by hand. This isn't 0:18:14.760 --> 0:18:17.160 you know, some fancy graph or chart like that you're 0:18:17.160 --> 0:18:19.399 gonna do on your computer, but just written out on 0:18:19.440 --> 0:18:21.159 a piece of paper. Like it does not have to 0:18:21.200 --> 0:18:23.840 be complicated or fancy at all in order to feel 0:18:23.880 --> 0:18:27.440 the results of what you're accomplishing. And that's the reward, right. 0:18:27.720 --> 0:18:29.840 I feel like people are tempted to spend money in 0:18:29.880 --> 0:18:32.440 little ways here and there to reward themselves. The real 0:18:32.560 --> 0:18:35.520 reward is that tangible feeling that you get by tracking 0:18:35.520 --> 0:18:38.760 your progress. And another step in going down the path 0:18:38.800 --> 0:18:41.240 of cutting your expenses joal is to make sure you 0:18:41.280 --> 0:18:44.200 engage your support system, and by that I mean friends. 0:18:44.600 --> 0:18:46.440 You and I we love talking about money. We've done 0:18:46.480 --> 0:18:48.640 an episode on why you need to talk about money 0:18:48.720 --> 0:18:50.800 with your friends and family. But the fact is it 0:18:50.880 --> 0:18:52.959 is it's not easy. It can be really hard. To 0:18:52.960 --> 0:18:54.840 be vulnerable when it comes to your finances, when it 0:18:54.840 --> 0:18:58.119 comes to talking about scaling back your expenses, but it 0:18:58.240 --> 0:19:01.040 is so incredibly important to get your friends on board 0:19:01.080 --> 0:19:03.439 when you have that support system around you, and to 0:19:03.560 --> 0:19:05.760 know also that you have friends that are working towards 0:19:05.800 --> 0:19:08.040