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Mindset & Money | Why You’re Broke & Can’t Get Ahead

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Hosted by
Mike Ayala

On this episode of Investing for Freedom, Mike talks about five things you can do to get over feeling broke and stuck. Mike explains why we may feel that way and goes into detail on what we can start with to start overcoming that feeling. Enjoy!

“If you don’t invest in your mindset and growth, and you keep putting money into entertainment and that stuff only, you will never get above broke.”

HIGHLIGHTS:

0:00 – Intro
0:45 – If you want different results you’ve got to do stuff differently
1:41 – 1. Bad debt vs. Good debt – You need to figure out how to use good debt to your advantage
3:14 – 2. Figure out how to pay yourself first – You give all your money to someone else before yourself
4:49 – 3. Giving & Recreation – Mike has set up another account for giving to help others, and another one to dedicate to vacationing with his family
5:55 – 4.  You’re buying expenses and liabilities instead of assets and cash flow – Start looking to buy assets and cashflow like a business or even starting a new one
7:40 – 5. You’re investing more money in things that don’t matter than you are in mindset and growth – You need to get into rooms where you can expand your mindset and grow or you will be stuck

FULL TRANSCRIPTION:

Thank you for joining me on the Investing for Freedom podcast. Today, we’re going to talk a little bit about money mindset. I’m going to go through the five things that you need to change in your life. Five reasons why you’re continuously feeling broke and feel like you can’t get ahead. But before we get into that, I just want to mention to you that if you want different results, you’ve got to do things differently than what you’re currently doing.

And so many times in life. And by the way, we talk about this in the episode, but the deck is stacked against you. The deck is stacked against most of us. There’s a lot of things going on behind the scenes, and I’m not here to get too into politics and conspiracy theory. But the interesting thing is most of this stuff is not conspiracy theory. A lot of these money financial institutions, the way money works, the programs that happen behind the scene, the federal reserves, all that stuff. This stuff’s been going on for a long time. And it was modeled out by people that are a lot smarter than we are. And you really need to start looking into this, but I’m going to go through five simple things that I think keep you broke and poor and getting past your money mindset issues. So anyway, let’s dive into the show. Hope you enjoy it.

So right now, we’re going to take a look at the five reasons why you’re financially broke and feel like you can’t get ahead. So, the first one is bad debt versus good debt. Now, a lot of us have been taught, you know, through some of the gurus that you shouldn’t have any debt at all, cut up your credit cards, etc., etc. And I’m not saying that that isn’t a good practical application for a lot of people, but here’s the reality. If you don’t figure out how to use good debt to your advantage, you are never going to get ahead.

The entire system, which you didn’t create. This goes all the way back to 1913 when the federal reserve was created, we live in a system of debt. And if you don’t figure out how the elites have stacked this against you and how they use debt to their advantage, you will never get ahead.

So, here’s the thing. If you can’t use consumer debt, your credit card properly, then you should take the guru’s advice and cut up your credit card. If you can’t learn to spend within your means and live within your means, you should cut up your credit card. But here’s the reality. Everybody who I know who is successful has used good debt to their advantage. Here’s one small example. You could go out and buy a $100,000 real estate property with $10,000 down.

Now, a lot of times when we talk about real estate and cash flow, a lot of people think to themselves, I could never afford a hundred-thousand-dollar property. You don’t have to; you can use good debt and borrow $90,000 and put $10,000 down and have yourself a cash flowing asset. You could probably even borrow that $10,000 down payment from your parents or your grandparents. So, using good debt to your advantage is extremely powerful. The problem is we’re used to buying cars, credit cards, you know, financing stuff from Nordstrom, all the things that we want in life that’s bad debt. So, if you don’t learn how to use good debt versus bad debt, you’re never going to get ahead in life.

The second thing you give all your money to everyone else first. You might say, Mike, what are you talking about? Well, I don’t know if you’ve ever heard the saying, pay yourself first. A lot of the financial advisors talk about this. When it comes to investing in your 401k, pretax money out of your paycheck. That’s not really what I’m talking about. I’m not saying you shouldn’t invest in your 401k. My personal belief is if your employer’s going to match you 3%, you might as well contribute 3% tax-Free out of your paycheck.

But that being said, when I say pay yourself first, the problem is you give all your money to everyone else first. Think about this. Uncle Sam takes up to 35% out of your paycheck before you even get to see it. The government gets paid first. And then we put this money into your 401k or your retirement account. Well, technically that’s paying yourself first. And that’s what all the financial advisers talk about. But let’s take this a step further. As soon as you get your paycheck and you cash that paycheck, or it gets direct deposited. Now you have to pay the electricity bill, and now you have to pay your car bill, and now you have to pay your rent. And so, everybody keeps getting paid. And then at the end of the month, you look at your bank account and you’ve got $10 left. Well, if you don’t figure out how to pay yourself first, you’re never going to get ahead. And so, this is what Kara and I do.

We’ve got several different bank accounts where we put money into an investing account. So, before anybody else gets paid, we take a percentage of our income and you could start at 1%. 1% is better than nothing. So, you start at 1% and you put 1% into investing bank account. If you can do 5% awesome, if you can do 10%, even better put that into a specific account where you’ve got money set aside. So, when an investment opportunity comes along, you’ve got the capital to do it. Here’s another thing. So, giving, I’m a firm believer that you can’t outgive the universe. However, you want to call this. So, we set up another account for giving and whenever somebody’s in need, somebody hungry, somebody has a health issue. We have that separate account set up to where we can help other people.
That’s not really paying us first, but we use it as a bucket as well.

The other thing about paying yourself first, and I think this is extremely important. We take several vacations a year and I think this is very valuable. Recreation is literally re-creation. And the reason why we love vacation so much is because it gives us time to relax and rest. And I’ll tell you what, most of my best business ideas have come from when I’m on vacation. So, another way to pay yourself first is start a vacation fund. If you don’t start a vacation fund and put money in that fund every single month, then after you pay everybody else first, you’re not going to have money left for your own vacation. And I’m telling you right now, if you can set aside time, once a month, once a quarter, once a year, to get away from the noise and really work through the process of what do you really want out of life, that’s going to pay you extreme dividends. So, the second thing, make sure you pay yourself first and don’t be the last person that gets paid.

So number three, you’re buying expenses and liabilities instead of assets and cashflow, this kind of ties back into good debt versus bad debt potentially, but we spend so much money every single month on do dads, as rich dad would call it you know, things like games and going to the movies. And none of that’s, there’s nothing wrong with any of that. We’ve got to enjoy our life, eating out, etc., and liabilities things that we have to make payments for every single month. We go and buy a car and every single month we have to make those payments.

Well, if you really look at that, those liabilities are things that you’re required to pay over the next five or 10 years. Those are expenses that come out every single month. And before you know it, you’ve got so much expenses stacked because you borrowed so much money on the liability page of this that you just can’t even get ahead. And so that’s one of the major things that keep us broke. So, let me switch this. What do you do instead? So instead of buying expenses and liabilities, we need to buy assets and cashflow. How do you do that? Well, an asset could be a business. A lot of times when we think of assets, we think of, you know, just purely real estate or something like that. But an asset is even you, your intellectual property, the things that you create. So, you could create a business around, you know, making product and put it on Etsy or Shopify. That’s an asset, that’s a cash flowing business. It could be real estate. It could also be buying cars for $10,000 that you know you can sell for 12. It could be baseball cards. There’s so many ways to create assets and cashflow and you might have to invest some money, but here’s the good thing back to, you know, the thing that I said earlier about paying yourself first, if you start saving money, then when you have an opportunity that comes up, you’ll be able to buy those assets that create cashflow for you.

So, I would just start keeping track and maybe at the end of every month, look and see what expenses you’ve been spending and see how you can convert some of those expenses into assets that create cashflow. So, here’s the last thing. You’re investing more money in things that don’t matter, entertainment then you are your mindset and growth. And as I told you earlier in the video, this is what I think is could be the most important thing, your mindset and growth.

I talk about this a lot, but if you don’t get into rooms where you can grow and expand your mind, then you’re going to get stuck. And we’re in interesting times right now, where we’re in isolation, we’re not surrounding ourselves with people you need to get in bigger rooms. You need to get around smarter people. And I’m telling you that if you don’t invest in your mindset and growth and you keep putting money into entertainment and that stuff only you will never get above broke. And this is probably one of the biggest things, your mind and your ability to create. And the mindset change is probably the number one thing that you can do to get ahead.

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