Miles here, milesbeckler.com and this video is all about money, specifically how to achieve true financial independence. So we’re talking about paying off all your debt. We’re talking about building true wealth and a system. You’re going to learn a specific system. The same system I use to go from over $50,000 in debt, constantly bouncing checks, constantly overdrafting accounts, having to borrow money from my parents to truly getting on a path of financial freedom to be able to live where I want to live, to be able to buy houses, et Cetera, et cetera. Now there is a system that I’m teaching you that I personally use, but keep in mind, this is personal finance and your personal situation is different than mine and your personal situation is different than mine was. Okay? I was living with my parents at the time.
I had $50,000 in student loan debt. I had no income because my businesses had failed and I didn’t have a job and that was the hole I had to dig myself out of. I don’t have kids so I’m not saving for retirement accounts and I’ve already got a couple of houses so I’m not really saving up for down payments. Your situation is going to be different and that’s a cool part about a system is it allows you to customize this based on your exact situation here and now you see this channel is often about making the money, okay? We’re talking about earning income, making money online, building online businesses, which is great, but we need to talk about the other side of that coin, which is what you do with your money. And the first big key idea for you right now is that every dollar needs a job for me. Every dollar has a job, okay? And your situation, you might not be there yet. And that’s the first big idea. That’s the overarching philosophy that we’re working with that you need to be moving towards.
If you want to get a handle on your money situation, give every dollar that comes into your world a specific job, you see money flows to those who are most disciplined with money. Money literally flows out of the hands of people who have no discipline into the hands of people who express and show and have great discipline with money. Just like electricity will flow in one direction because it’s a law of the world, I swear this is absolutely a law of the world and you’re going to learn this system.
So the first idea under this overarching theme of every dollar needs a job is zero based budgeting. Now this is a budgeting system and what it means is that all of your income adds up to a hundred percent, right? You make a hundred percent of your income each and every month, then you can divert it into specific unique accounts that each have a different purpose, right? These are the jobs. And then you should end up with zero at the end of the month in the origination account.
So if all the money you earn go into your checking account at the end of that month, it should be placed into the specific different accounts that all have their own job. Okay? And if you mess up or you need to move one from one and move something over here, you have some flexibility within this, but it’s all about building a structure.
You need a system that you can follow. Now there’s a really cool online tool and education portal. It’s called you need a budget, you need a budget.com. It works with apps and it connects to your bank accounts and it’s got a lot of information and training. So if you want some handholding and some guiding to get going down this, they’ve got over a 30 day free trial. Um, and then you’ll also see, I think it’s like $7 a month or something. This is something I did manually. Okay. There were no apps. We didn’t have smartphones during the years. I was putting this together. So I managed this all with separate checkbooks and separate accounts and I had to wire things back and forth. Um, it’s easier today than it ever has been to gain control of this. So let’s first and foremost talk about the different financial goals you might have to help you understand the order of prioritizing these goals. And then we’ll talk about a very specific structure that you can use in order to implement this kind of a process for yourself.
It’s all gonna make sense. Stick with me, give me a thumbs up if you like these kinds of personal finance, finance, and kind of money management type videos. Leave me a comment if you’re like… “Yes, Miles! Do more of these.” So I can see that you like these and you want more of these because this is a little bit of a test on my end, but it’s not just about making money, it’s about keeping the money. And theoretically it’s about multiplying our money and getting our money’s to go work for us so they can have a little money.
Babies in our accounts full of monies grow into more monies. We’ll get to that. But first it’s usually about paying off debt and it’s usually about getting a handle and getting some control over your financial ecosystem. Okay? So we can prove ourselves that we are, um, you know, deserve more money because we know how to manage the money we have and we have to make this kind of proving process to the universe in order to get more coming in. Um, money loves discipline and money flows to those who are most disciplines. So generally speaking, in a rough order, the first step is to figure out what your budget is and increase your savings rate. Okay. So what generally is going to happen in the, you need a budget system is going to help you with this process. But generally what is going to happen in your world is you need to figure out where’s all of your money going. So there’s a tracking expenses process, which is, that’s why this tool plugs in with the app.
It’s really easy to use. And then there’s also the kind of figuring out what percent you spend and what percent you actually can save. Now when I was working full time at a job and I was growing my debt and bouncing checks left and right, the only way I was able to save any sort of money is if I hid it from myself. I did this two ways and it wasn’t great. Number one was I literally pulled out $20 bills and each time I went to an ATM I got an extra 20 I slipped it in a specific little kind of a notebook thing in my room. The other thing I did, I went to HR and I increased and I had my HR increased the amount of money that went directly into a savings account that I had no ATM card for. And I started with like 5% of my income and by the time I left that job it was up to 40 plus percent. Because as we get used to living on less, we find ways to get by living on less.
The key is to put that extra that you’re creating by living on less to work to do the right thing. So after we get the budget established and we know what our savings rate is and we start to increase our savings rate, the next step is to build up an emergency fund. So I’ve had car issues, I’ve blown motors in more than one car. As I’ve rolled cars I’ve, I’m pretty hard on cars. I was when I was younger. So there are these one thousand two thousand three thousand dollars expenses that can creep up. And if you aren’t prepared to handle that and it gets stuck on a credit card at 22% this creates a very significant treadmill and it will absolutely drain you. So this is again exactly how discipline can help you if you are disciplined enough to have six months of living expenses. That budget that we’re talking about, right? Your actual living expenses, six months of that set aside in a separate account just there in case you blow a head gasket in case your tiny belt snaps and you have to have a major repair repair done on your car in case who knows what else goes on in your world, stuff happens, right? So having an account that’s there and ready for that is a big key.
This is going to help you stop growing debt and be able to manage these things. Once you have that going right, that emergency fund is up to about three months. At this point, your focus starts to go all in on paying off debt. There’s two debt repayment methods that I think you need to pay close attention to find the one that works for you. There’s the avalanche method and there’s the snowball method. I’m going to explain them.
They’re both covered in great deal on personal finance blogs. They each have their benefits. The avalanche method is you write out each and every one of your debts and you rank them based on the percentage rate. Okay, so credit card debt, that’s 20 something percent is probably going to be higher than student loan debt. That’s 7% or 4% whatever it is for you. So you rank your debt in order of the highest interest rate first and you go all in. You get absolutely obsessed with paying off the highest rate debt first. That’s the avalanche method. The challenge here is that most people don’t stick with this. The snowball approach is you rank all of your debts based on which debt is the lowest, so you want to just find out what’s the lowest number. So you might have $15,000 in student loan debt. You might have 12,000 on a credit card and you might have $2,500 on a car payment left and that’s all of your debts. So in the snowball method you would focus on going after the lowest debt first.
The reason you do this is because it often will give you a little bit of momentum and momentum breeds momentum and when you make that final payment on some loan that you’ve had for a long time sitting around and you actually pay that off, you feel damn good about yourself. You start to feel those emotions of being financially free.
There’s one less bill for you to pay off. And then when you do, you take all the money you were putting towards that loan plus everything else you were paying on the minimums of the other loans that you focus that all in on the next one and the next one and the next one. So snowball method, you start from the smallest number and you work your way up the avalanche method, which is mathematically a better idea, but physics, it’s more difficult to do. You go after the highest percentage rate first, and then you work your way down to the lower and the lower and the lower percentage rates.
All the while, all of your money is running through the different accounts and that’s what you’re gonna learn next is this account system because you have to be able to manage your rent, your food expenses, all of the normal day to day budgets while you’re paying off this debt, right? We can’t not pay rent to pay off our debt. That’s not a good situation. That wouldn’t be a positive thing. Once you get the emergency thing and you’re going all in on your debt, if your employer offers you a matching option for a retirement, right? They say they will match you up to 5% of your pay.
It’s a really good idea to get up to that match amount. Okay. The hundred percent match amount, it’s literally free money. So they say they’ll give you 5% of what you earn matched. You put in 5% they put in 5% you got a free 5% towards your retirement account. So that makes really, really good sense. Um, and then once you get these systems in place and you’ve paid off your debt, at this point, it’s time to think about what are your personal goals.
Do you have kids? Do you want to pay for their college? You need to start a college account for them. Do you want to buy a house at some point in time? Well, a 20% down payment, that’s a big hefty chunk. It’s generally speaking, the largest check that most people will ever write in their life. So you want a separate account for that. Okay. Do you want to do a year sabbatical and travel the world? Well, you can save up for this in a specific account, so that’s what we’re going to talk about now is an account system. It’s a series of multiple accounts and the number of accounts is not all that important, although obviously everyone who teaches this process thinks that their way is the right way.
I’ve heard it explained as simply as two accounts. You need a wealth account and a charity account and you need to give every time you earn income, money needs to go first into your wealth account and then into your charity account and then you live off of what’s left. This is the theory that was popularized from the book of the richest man in Babylon that says, pay yourself first. Remember how I mentioned I went to HR and I had them divert money out of my paycheck that I never even saw that went into this other account. Then my bank account only increased with my direct deposits by whatever was left over and I was able to live on that. So I increased the amount I saved and my amount I lived on when smaller and I was still able to live on that and I kept working this system and it kind of forced me to be a little bit more frugal.
Cause when I went to my bank account and says, you’ve got a $180 left, and that’s all I had. But my other account was growing month over month and all of a sudden I had $10,000 saved. I’d never had 10,000 before. That was a big moment for me when I kind of crossed that threshold and it proved to me, and I know the same is true for you because if you were to ask me before I started my miles, can you live on 80% of what you earn? Nope. Nope, nope. I see it all. I use it every time. I’m just out of money at the end of the month.
The surprising thing is when I started sticking 20% away, I still spent every dollar that was left in my checking account, even though it was a lower number. I didn’t actually notice in the end. So there’s a six account set up. And what’s cool is on a lot of banks today, um, whether it’s like ally account or a lot of the inter like online banking, even like a wells Fargo or a bank of America, you can often open these other savings accounts and money market accounts and you can manage them through one interface. So the money comes into your checking account and then every time you get paid you go in and you do your little transfers based on the percentages.
So I’m going to run through the six different accounts right now and their names and then we’ll talk about the different percentages that they expect that they recommend you allocate for each account. And then from there we’ll talk about what the uses are for each of these accounts and why they’re all important in this framework. So number one is your necessities. Gotta have money to live. Nobody’s gonna argue with that. Number two is your longterm spending. Number three is your play account. Number four is education. Number five is financial freedom, and number six is your charity account. Okay, one more time from the top necessities, longterm spending, play, education, financial freedom and charity. Everyone who teaches wealth comes back to the idea that giving somehow magically, and you’ve heard me talk about it, the law of attraction and the law of reciprocation, but that giving account is not the one to skip on.
I give to many different charities and I’m looking and researching and many more. That’s kind of a fun part of life as it grows and I don’t know how it works, but I do know that it works. The more we give in this world, the more we are blessed in this world. It just works. So necessities, they recommend 55% of your income is their target. They believe you should be able to live off of 55% of your income. So if you currently aren’t able to do that, and again, you need to budget your stuff first, then there’s two ways for you to manipulate that math, right? You earn more or you spend less. My recommendation is do both. If you’re making 1250 an hour at a call center right now, you might be able to go find another job where you can get $15 an hour at a call center doing the same exact hourly work.
You might be able to increase by jumping around. You might be able to talk to your boss about what kind of professional training you could go through to become more valuable to get a raise. But generally speaking in the corporate world, you’re going to get better raises by jumping ship and going to another company, then you will by staying in the same company. There’s a lot of data on that. The average raise within a company is like three to 5%, um, upwards of a 20% raise by jumping ship to another company. So there’s ways to build more. And if you know of my channel before you probably trying to build a side hustle and try to build something nights and weekends as well. There’s also, if you work Monday through Friday, you’ve got your weekends, you could get a second job. It is technically possible to increase the amount you’re earning. Then the spending frugality comes in, right? And again, we’re going to go back to discipline.
Spending money you don’t have is not disciplined. Okay? Buying a pair of shoes, buying a handbag, buying something or going out for an expensive night at a bar or at a restaurant on credit card is essentially stealing from your fruit future self. And that is not a living expense. Eating out is not a living expense. Eating out as a luxury, eating out as a pleasure, eating out as playing to get sustenance and nutrients you eat in that. That is the way. And my wife and I still cook it. We make 95 plus percent of our meals here at the house and there is an account for those. Eat Out Times. So necessities, you gotta learn how to live on less and you got to learn how to earn more, right? The, the lower you can get your necessities percentage to the better you are because that means you have more money to pay off your debt to fill up your wealth accounts, et cetera.
Number two, longterm spending. So this is 10% of your income necessities with 55% longterm spending is 10% so this is for in the first step, this is for paying off your debt, okay? This is for getting all the debt and getting your um, emergency fund built up. But then once those things are done, this is where you start to build up for potentially like big vacations where you can kind of get, um, for big purchases for new cars or I would say new to you cars, right? Not, not necessarily buying a lease or buying a brand new car, but maybe a three, five year old car that’s already depreciated. Having the account for that to come out of so you don’t end up taking a 5% 7% loan that will just jack up a bunch of interest over the course of the next five to 10 years. That’s how the banks win and you lose. This is why discipline people are better off financially is because they don’t have to go into debt for these things. Not all debt is bad, but generally speaking, consumer debt is 100% needed to be avoided then 10% in your play account.
Now it’s important to have a play account because we need to have those moments of fun, right? You might want to go out to dinner once a week with your spouse and have some youtube time. Well that’s why there’s a play account, but it’s 10% so that account is going to have a number in it. And when you look at it, it’s like, wow, we got $42 great, let’s go out. Well how much can we eat? Well, can we get that bottle of wine? Probably not. Cause that would put the bill over $42 and that’s what we got. This is discipline in action. So you want to have a play account so you’re disciplined in the fact that you’re supporting yourself. And if you love shopping or if you love eating out, you can still enjoy these experiences without having that negative feeling of like, Oh man, I shouldn’t, you know, buyers are Morris, right? I shouldn’t have spent that much on that.
Oh God, what am I done? Did I just bounce that? Or who am I going to have troubles pay my car? Oh Man, am I going to hit my credit card payment? Right? There’s all these emotions around it that are not positive in the world as the law of attraction education account. They think you should have 10% in your education account. You should always be improving your skills. You should always be improving your value to the marketplace. How do you do that? Through courses, through study, through Community College, through coaching, through mentorship. There’s a lot of ways that can go, um, financial freedom account. So these are your retirement accounts. These are that, that when we were talking about the percent matched, um, these are also potentially real estate investing. This is buying longterm assets that you never sell unless you’re just flipping it into another assets. Um, that’s one the main keys and then 5% to give.
So again, it’s 55% for necessities, 10% for longterm spendings, 10% for play, 10% for education, 10% for financial freedom and 5% giving to charity. Get, again, a totally different framework also has a charity component in it. If you want a guide to walk you through all of this, there’s a book called your money, the missing manual by JD Roth. It’s not a, it’s not an enthralling story based book. It’s not all that memorable. It’s a fricking handbook is what they should have taught us all in high school, in junior high school, got at least in university. Right? Um, but it’s, it’s what we all should know about, um, how to manage your money because when you are better at managing your money and when you’re disciplined with your money, you will accrue more of it and then you’ll be able to deploy it for more valuable potential things, whether it’s real estate investing, maybe you end up buying a triplex as your first home and you rent out two of the units and you live in one and that generates extra cashflow based on just flat out where you live.
There’s a lot of ways that money can multiply itself, but we generally need to have disciplined to build the seed and to eliminate the debt that drags most people down in order to get that little seed that we’d go grow into our little money. Treat. Um, other resources for you, a on Reddit, there’s a personal finance subreddit. If you enjoy Reddit, I highly recommend taking a look in there. The answers are quite simple. They have a big Wiki, a Wikipedia kind of in that subreddit that walks through all of the best books and the best ideas. There’s a lot of personal finance bloggers out there teaching this stuff. The you need a budget system.
You just having a system to plug into makes it well worth it. They do daily Webinars of education. Um, lot of good information on the you need a budget and it plugs right in for seven bucks a month. It could be one of the best investments of your life. It’ll help you really pay things off. Um, search the snowball approach or the avalanche approach if you have a lot of debt to be able to get out of debt.
And then the um, your money, the missing manual by JD Roth, I’m going to call it, let me know if you like these kinds of personal finance or these kinds of money management, wealth management, wealth creation type videos. I’m happy to share what I know, this path of running all of my income in through a series of accounts. Sticking with that for several years. Got me to the point where I was making $4,000 a month payments on my student loans at the end and when that one got paid off and I was making 4,000 on one, I put $8,000 on both student loans.
In the last month. In about six months, I paid off something to the tune of $38,000 in student loans. Why? Because it got fricking obsessed with it because I was so disgusted with dragging it around and I had a system and I knew that I was able to live on an extremely small amount of my income and I generated this excess and I just worked reworked these percentages to where 80% of my excess went into paying off all of this frigging debt that I was dead tired of dragging around because it was heavy and I can tell you something, honestly, the day I paid off those debts, my world changed. Okay? The weight, that’s those Brazos, right? These shoulders, there was a weight lifted from these shoulders and I started to make different decisions.
I started to look farther out in my time horizon. I started to think about things like wealth and I encourage you to race towards that debt repayment moment and hesitate at all costs collecting more debt, especially when it’s not required. Okay. There’s an argument to be made for certain types of debt and multifamily real estate that cash flows. I get it in that situation, obviously we can have that discussion later, but buying a car, buying something like debt is the enemy. We live in a debt enslaved nation and it’s done on purpose because that’s how the systems and the machines and the big time CEOs make all of their money and if you’re not disciplined it will flow from you straight to them in the form of interest payments. But when you become disciplined, you can create a new financial world for yourself that supports you in having play money and being able to make big purchases and being able to take big vacations because it’s all based on this zero based budgeting system.
You plan it in advance. When that play account gets to 150 bucks, you go out and have a good old time, dinner, drinks, buy yourself something great, you did it. Now let’s load those accounts back up because you know, all the meanwhile you’re building your wealth account, you’re building your charitable account, you’re paying off all of your debt, you’re building your emergence fund. All those things are taking place. And when you have a system that rewards you on every level like this, it has a high likelihood of working. Figure out which debt repayment approach is better for you, the avalanche or the snowball, I’m a call it. I’ve kind of repeated myself. I appreciate if you made it to the end. Hashtag Badass to you.
I know you can do this. I want to help in any way I can. So you have, if you have questions about personal finance or any of this, uh, get at me in the comments below and I will see you on the next video until then, be well cheers..
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