How to Save $100,000 on a Low Salary

24:16but I want you to start to think about how much money you spend every single month. If you are spending more than 60 % of your income, then the likelihood is two things. One is that you are overspending in a couple of different categories. That's the most common thing that happens. But number two is you are literally not making enough money. And that's just the reality of what you're dealing with. Like if you're spending 80 % of your income, for example, on just essential expenses, Things like housing, food, transportation, clothing, medical expenses, those types of things. If you're spending over 60 % of your income, then you could just really not make enough money.

24:56And if that's the case, you can't cut back any more, then we have to focus on the income side of the equation. But if you know there are some areas that you could trim a little bit of fat to reduce your expenses, I think that's going to be one of the areas to look through. So how do we audit this? How do we figure out if that's the case? Well, first, I want you to add up all these essential expenses. One of the ways that you could do this is you can print out bank statements from the last three months, and you can start to add up the amount that you spent on essentials. Not eating out, not the extra spending that you did on clothes or the time that you spent money going out for drinks or whatever else you did.

25:33No, the essential expenses, the bare bones expenses that you would need to spend in order to survive and live. your rent, your utilities, your medical expenses, your car payments. Those are the types of things that are essentials in addition to debt. And I want you to figure out what percentage of that is your income. And then we're going to audit these things and try to reduce some of these expenses. And what I want you to focus on is if you can't reduce expenses anymore, we're going to focus on the income side. But if you can reduce expenses, let's try to cut them back by 15%. That's a big number, my friends.

26:09If you make$100 ,000 per year, someone who's making good money, like$100 ,000 per year, or a household that's making$100 ,000 per year, that's$15 ,000. But if you're making$30 ,000 per year, we're trying to cut back our expenses a little more per year. So maybe it's going to be$3 ,000 per year. And so when we look at that, maybe we're trying to cut back a couple hundred bucks a month. And so we start to think about this in ways that we can reduce these. Well, what are the biggest culprits overall? Number one is housing. Housing is a big one for a lot of folks. And if you have a really nice apartment, but you don't make good money, probably not the best choice to have made.

26:42Or if you are really over leveraged on housing and you bought a house and you feel as though I can't really afford this house and I am house poor, that could be the reason. You want to keep your housing expenses 30 % or less of your overall income. And so if it's above that, that's housing expenses plus maintenance plus all the other things that are associated with housing. If it's above that, I can tell you right now, you're probably teetering that line of being above 60 % if you're not over 60 % already. That's a big, big thing. Two is transportation. If you are living in a middle class house and you've got a Mercedes, BMW, Lexus in your driveway that isn't 15 or 20 years old, then you most likely are over leveraged on your transportation, especially if you're not making good money yet.

27:27Or maybe, and for a lot of you out there, this might hit home too. Maybe you're driving the$60 ,000 truck. Maybe it's your work truck. Maybe you're driving the$55 ,000 SUV because you got kids. That's the excuse that you gave yourself. Well, all of these need to be evaluated. You need to start thinking through this. If you are drowning in payments, and I don't take this lightly. This is way easier for me behind a podcast microphone to say to you, said than done. But if you are drowning in car payments, one of the things that you can do, and I have people who have done this in Master Money Academy because they decided, actually, I want to prioritize my family's financial future over me in this vehicle.

28:06but you can go and sell your vehicle and take the difference, pay off the rest of the balance if you're underwater on it and move on to paying cash for a different vehicle that is significantly cheaper. Not a great situation for most of us to have to do but if you really want to do this, if you really want to make it happen, that is an option. Guess what? You got free will and you can do a lot of different things. Even if society doesn't say this is the way to go, you can do certain things that are going to prioritize your family's financial future or your financial future over everybody else because a lot of times, I want you to think about this for a second.

28:38If nobody else in the world was here, would you still be driving that car and making that car payment? Or would you just be buying the safest, most reliable car at the best possible price that you can find? That's the question I want you to ask yourself. And it's a deep question. It goes deeper than just this surface level conversation you and I are having right now. And so I want you to remember and think through exactly how you want to do that, okay? Lastly is food. Jesse Meacham was just on this podcast and his episode, we were talking through kind of some of the things that he has seen time and time again when it comes to folks who are finding ways to find money.

29:16And he said the place that he sees it the most is eating out. Groceries are one that I see a lot too. And so when we look between those two things, your food costs could be significantly higher than even you realize. Hey, if you don't make good money and you're door dashing all the time, I'm going to tell you right now, you are way overspending on food. I don't even door dash. I can't stomach the cost. So if you can stomach the cost and you're not making good money, we are overspending probably. Listen, you can get mad at that all you want. You can get mad that I am saying this. But the reality is that's probably true.

29:49And sometimes when we feel this feeling of, this guy's telling me not to get door dash. What is he talking about here? When we feel that feeling, but we're also not financially ahead of where we need to be. many times that might be what you need to hear. And so I want you to really evaluate what you value in life. This is what it comes down to is spending more on what you value and less on what you hate. And you may be saying, well, I don't value spending money on my power bill. You don't like the lights on. I really value that. That's one of the most valuable things I could spend my dollars on.

30:23One of the most valuable things I could spend my dollars on is my utilities bill because I got running water that is warm in my house. What a time to be alive. And so being grateful for some of the stuff we have, finding ways to increase our income, and having the ability to be able to cut back some of our expenses is the trifecta to really getting ahead financially. And so I'm telling you to attack these big three expenses because this is the most common area that many people don't realize could be costing them a lot. But you may be saying to yourself, all right, well, let's think about this for a second.

30:56What am I going to do if I'm buying a daily coffee? Or what am I going to do if I'm eating out at lunch every single day? Sure, you could be losing because you have death by a thousand cuts. You could have a thousand cuts where you're just at micro expenses. I've seen this with people, for example, who go to the gas station every day and go inside to buy something. Where all of a sudden you look back and they're spending$8 per day at the gas station. Well, if you're doing that and you don't make good money, all of a sudden you are taking all the extra dollars that you have that could be the runway for you to be able to build financial freedom and you're spending it on stuff that doesn't really matter.

31:28I care about death by a thousand cuts way more for people who don't make good money yet or don't have a high income. If you make less than$50 ,000 per year, then those small expenses will add up and they were really going to matter. Now, if you make$150 ,000 per year, your daily coffee is going to matter a little less depending on where you live and the cost of living. Yeah, yeah, yeah, I get it. But it's going to matter a lot less than someone who is making less than$50 ,000 per year. Because if you make less money, that$8 coffee or that$8 gas station run or that$8 daily transaction is gonna be a big deal.

32:05It really is. It just is overall into how much you make because it is a percentage of what you make. And what you have to realize is when it comes to personal finance, percentages of your income matter. And when you have expenses in place, this is why it is personal for most people. It's gonna depend on how much you make and it's going to depend on that percentage as to if this is a good choice or not. All right, next. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before.

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35:55Spend$250 on your first campaign and get a$250 credit. Go to linkedin.com slash campaign. Terms and conditions apply. Let's talk about increasing our income. This is the biggest part of this equation that I want you to realize is very, very important. In fact, this is the most important thing that you can do with your money is focus on increasing your income. There is a ceiling to how much you can cut back spending, but there is no ceiling to how much money you can earn. And I want you to start to change your mindset from someone who is making, from someone who feels as though, oh, I can't make more money, to someone who knows they can.

36:30And I want you to pull a bunch of different levers. I'm going to go through each and every single lever that I want you to think about today. All of these can be ways that you can increase your income, and they can be ways that could be low-hanging fruit that are right in front of you that maybe you just have not taken advantage of yet, all right? So, number one is raises. I want you, if you have not gone through our ebook yet, on how to ask for a raise at your job. If you go to mastermoney.co slash resources, I literally wrote a free ebook for you that's gonna show you how to ask for a promotion or a raise at your job.

37:03We have two podcast episodes talking about how to ask for a promotion or a raise at your job that we will link down below in the show notes. I want you to learn my system like the back of your hand. It's a six month system that takes you through the entire process of how to get a raise or promotion at your job. I cannot stress enough how powerful this can be. We've had people go through it and they've gotten tens of thousands of dollars raises over the course of their career. We've done some really cool stuff that have helped a lot of people go through this process. I want you to understand it like the back of your hand.

37:34It's a six month process. What you're not gonna do is you're not gonna walk into your boss's office and say, I deserve more money today and slam your fist down. No, instead, what you're gonna do is go through the process, understand how to create value at your company, understand why those values allow you to earn more money and take some action. That's number one. That's the next six-month plan. But there are other things that you can look into. One is job hopping. Many people who go from one company to another make 14 % on average more than a person who stays at the same job. Loyalty doesn't pay anymore.

38:07This is not 1950. Loyalty doesn't matter to a lot of these companies. But job hopping does. Now, I'm recording this at a time where I feel as though the job market is a little shaky. I think a lot of people are trying to figure out, what's AI going to do to my job? What's going to happen here? So do not start job hopping if you feel as though you're in a shaky position. But start job hopping if you feel as though I'm in an industry that is thriving right now and there is a huge demand for what I do. That's an industry that you can start the job hop and really start to make more money. What about overtime?

38:40Does your company offer overtime? If not, can you request overtime? So overtime is one of those great things that you can do some pretty cool stuff with overtime. My first job in the corporate world, I actually requested that I work on an hourly wage. And then I got overtime because I realized that job is going to be about 60 plus hours per month. And so I got 20 hours per month at time and a half. And I used to love doing that stuff. So I would get in really early in the morning. I would leave. I'd be one of the last ones to leave, just getting all my work done. There was so much work to get done.

39:09It didn't matter. I could have worked literally 24 hours a day and not have it all done. So it was one of those things that was very valuable for the company. In addition, I was willing to work hard. And so I would work and work and work to try to increase my income. That's one of the things that I did was why I worked a bunch of overtime. What about certifications? Well, there are different certifications that you can get in different industries, depending on where you are and what you do and some of the things that you can do in place that can help you increase your income. An example is, you know, maybe you work in the construction industry or you work in a blue collar job and you can get additional certifications based on where you work, whether you're an electrician or a plumber, or if you're someone who works out in the field for government jobs, maybe you work on bridges, maybe you work on repairs, maybe you build buildings.

39:52Are there certifications that you can get within your industry that help you make more money? There are things you can go back to college, for example, and if that college degree helps you earn more than what you are currently earning and that ROI, you could do an ROI calculation on this, but if that ROI calculation makes a lot of sense, there was some pretty cool stuff that you could do in there. So certifications is another low-hanging fruit for some people. I mean, I've seen certifications, for example. There was a friend of mine who owns a painting company. They actually paint bridges. And when they go through the process of being someone who is a painter versus someone who is an inspector versus someone who could do all these different things, there are certifications you get for$3 ,000 that increase your income and double your income.

40:33And so I want you to look for those low-hanging fruit in your industry if they exist. If you're in the corporate world, maybe becoming like a project manager, a PMP is something that helps increase your income. Maybe there's additional certifications in AI or Excel that you can go and get to help increase your income. Just make sure you're kind of looking for this low-hanging fruit. And it doesn't have to be this really expensive college degree. It could be something that is just a certification that helps you increase it. So just look for that stuff. Continue your education as much as possible and see if it helps.

41:00And then side income. I think side income is really important. If you're in debt, if you're trying to get your emergency fund going, if you're just trying to get some extra income going, any side income can be helpful. Whether it's flipping items on Facebook Marketplace. I used to sell things on Amazon. I used to flip things on eBay. I had a side-of-the-road Christmas tree stand that I would sell Christmas trees. I would try literally everything. I had so many different online blogs and businesses that I was trying, and I was failing and trying and failing and trying, trying to make something work.

41:27And eventually, stuff started to work because I would get better and better and better every single time. and every time I failed, I'm like, why am I doing this to myself? But all of a sudden I realized my purpose was to continue to push forward so that I could figure out something that worked and I figured out a lot of different things that worked, which has been really cool over that timeframe. So I want you to think about ways that you can increase your income. If you're like, I don't know where to start, we have an entire series on this podcast called Side Hustles that can turn into a full-time income.

41:56Go listen to that series and go think through some of the things that you can do based on that, okay? That's what that's for, is to start to generate ideas, start to think through some of those ideas, and start to think through ways that you can do this. Next is once you start to increase your income, don't let those raises just get eaten into your lifestyle. Use those raises to build wealth. Use those raises to pay down debt, to increase your net worth, and have the ability to also put them towards investments. You want to make sure that every raise is going towards your financial future until you get to the point in time where you're hitting your retirement goals.

42:30So if you go from 50K to 55K a year, take that extra 5K, put it towards wealth building. If you go from 55K to 65K the next year, take that extra 10K and spend maybe part of it and then the rest of it, put it towards wealth building. But making sure you're balanced with this so that you can enjoy life but also increase the amount that you're investing every single year is how you're going to get out of this situation and how you're going to get to your first 100K. Next is make sure you have an order for every single dollar. So for many people, looking into making sure that you get your emergency fund in place, making sure you pay off that debt, and then we go when we start to invest our dollars towards employer match, making sure that we put our dollars in the Roth accounts, in the HSA accounts, in the 401k.

43:12Have a plan in place. We've got lots of episodes that teach you with that plan in place on what to do, but have a plan in place on what to do with those next dollars so that you're not just veering off and straying into crypto and all these random things. Now, you've got to know what you're doing with your money. You've got to know what's next. And so I think for many of you, that's why we have things like Master Money Academy, for example, is we teach people what to do with their next dollar so they understand how this is actually going to work and how to kind of think about this. And also, when you think about investing, don't try to get flashy with it, especially if you're just getting started.

43:47Keep it boring. Boring is how you build wealth. Look at some of the greatest investors of all time. People like Warren Buffett. He puts his family's money into index funds. I personally invest in low-cost index funds and ETFs. Many people who listen to this podcast invest in low-cost index funds and ETFs. And so you want to build your foundation first, meaning the foundation of your portfolio should be the boring stuff that is proven. The boring stuff that has historically been something that has been proven over the course of the last few decades. It's got to have low fees, diversification, and something that you can consistently continue to invest in long-term.

44:22because time in the market is going to be timing the market every single time. If you're trying to time the market or buy into all these crazy different things that are out there now that you can invest in, you're just going to get lost. So proven low-cost index funds and ETFs are the way to go. Do your research on those. Dive deeper into some of that. We have tons of free episodes here on exactly how to do that. Now, when we start to think about this first$100K, as we start to work towards this, I want you to break this up into smaller chunks, into smaller milestones. We've had an episode talking about the big three milestones in your financial journey, and we've talked about$10 ,000,$100 ,000, and$1 million.

45:01So I want you to break this into chunks so that you can stay motivated. Let's say, for example, you're trying to get your first$100 ,000 first, then your first$5 ,000, then your first$10 ,000. But have this in place where you're starting to get more and more motivated. After$10 ,000, maybe you want to get to$15 ,000 or$25 ,000. After$25 ,000, maybe you're like, no, let's move the jump to$50 ,000. That's the next big milestone that I'm going for. After 50, maybe it's 65, maybe it's 75. And then you're starting to move up the list so that you can stay motivated over time. And I want you to celebrate each milestone.

45:30Sit down with your family. Sit down with your friends. Celebrate these milestones together. Sit down with your community of people who are working together to build wealth with you. That's gonna be the power of staying motivated long-term. And what you're gonna see is you're gonna have some changes mathematically, but you're also gonna have some changes psychologically where you hit the next one and you get even more motivated. And you're like, oh, I wanna make even more money so I can get more dollars invested, so I can get closer and closer to my goal. And eventually, you're going to build this into a habit.

45:57This is going to start to become who you are. Once you start to make these shifts, your purpose then becomes, okay, I'm going to take this extra dollars and start to put it towards freedom. Because guess what? When my kids become teenagers, or me and my wife are starting to move down the line, or me and my husband are going to start to move down the line, all of a sudden you see, wow, there's some cool stuff that we could be doing. I could be doing whatever I want with my time and energy if I just keep pushing here. And you can get there even faster than you probably realize once you get the ball rolling.

46:29So how long does that actually take? All right. Let's say, for example, that we start to work backwards here and you start this journey at$250 per month. Okay. At$250 per month, it would take you at an 8 % rate of return 16 years to get to your first 100K. But let's say you make a little more money and at$500 per month, it would take you 11 years. Then you make a little more money. At$750 a month, it would take you eight years. Then you make a little more money at$1 ,000 per month. It may take you six and a half years to reach your first$100 ,000 at an 8 % rate of return. And at$1 ,500 a month, you made a little bit more.

47:01Now it's 4.6 years before you hit your first$100 ,000. And all of a sudden, you're going to realize, wow, but then you hit your first$100 ,000 and all these contributions plus compound interest plus the rate of return that you're getting, all of a sudden it is going to start to snowball. This is how compounding interest works. And this is why it's so powerful and one of the best things that you could ever do. Your contributions plus that compounding interest is going to change your life forever as you start to think about this. And if you take those raises, if you take those additional increases, you keep throwing them at these investment accounts, you'll see your life change.

47:35Then what I want you to do is you get the system going and it's starting to move in that right direction. I want you to avoid all the mistakes that reset your progress. Let me give you some examples of this. Buying too much car will really kill your progress. Credit card debt would really kill your progress. Lifestyle inflation would really kill your progress. Rating your investment accounts or cashing out your 401k for the next hottest stock tip would all really kill your progress. Trying to get rich quickly, believe it or not, would kill your progress. If you feel as though you don't want to wait, it's going to be hard to get wealthy if you're not willing to wait a little bit.

48:12Because any of the get-rich-quick schemes that are out there typically lead to more ruin than they do progress. And I want you to make sure that you are focused on the things that are actually proven long-term. But the biggest risk overall is interrupting compound interest and doing it when you're doing it unnecessarily and starting to pull money out of these investment accounts or whatever else too early. So making sure you avoid those, I think is really, really important as we start to begin this. So I want you to start to think about how you're going to get to your first 100K. and I want you to comment down below and tell me some of the things that you're going to change, some of the things that you're going to shift to get to that first 100K, even if you don't make good money.

48:52Because once you start to realize that you can do this, it's going to take a couple of different things. One, let's increase our income by 10%. Make that goal number one. Two, let's decrease our expenses by 15%. If you can do those two things, that's a 25 % delta, a 25 % gap that you could start putting towards financial freedom. And boy, oh boy, Can you do a lot of cool stuff if you're investing 25 % of your income? And so I want every single person to make it their goal. Two, try to invest 20, then 25 % of their income at some point in time. It might sound impossible right now, but I want you to take the first step.

49:30Start investing five, then six, then seven. Increase your income. Now you're investing 12, then 13, then 14. You increase your income again. Now it's 17, then 18, then 20. And I promise you, you're going to get there. If you're motivated enough, and if you lock in, keep listening to this show, I will motivate the wazoo out of you. That's what I'm here to do. And so the more you listen here, the more I'm gonna help you through this process. So listen, I hope you guys got a ton of value out of this episode today. If anybody listening wants to dive deeper with me, we have Master Money Academy. Master Money Academy is where you will see a massive transformation in your finances over the course of the next year or less, where you will be at help directly from me.

50:12We have bunches of masterclasses every single month that are live with me in there. I do live coaching calls every single week in there. In addition, we have all of our courses. We have a lot of different content. And I answer every single question inside Master Money Academy personally. I'm on all the calls that are the Q &A questions and all those sessions. I am on those personally. So if you want to get help with your finances and you want to help transform your finances, I would love to be the person who helps you. Again, we have a seven-day free trial that we will link up down below in the show notes for you to check out.

50:47Feel free to join. Jump on some coaching calls. See if it's for you. If it's not, no worries. No worries whatsoever. But if it is for you, I would love to help you through that process. So join Master Money Academy if you feel as so you are inclined. And if not, no worries. Keep listening to the podcast. Podcast is free. Podcast is one of those things that many people have had massive transformations just from listening to the show. So I appreciate each and every single one of you. My goal is to bring you as much value as possible. I hope we did that today. Thank you so much for being here, and we will see you on the next episode.