096 - Summit 11 - Free Up Money to Play With & Enjoy - Wade Galt

So this is a conversation that a lot of people enjoy if they get it and if they don't get it, it's a very frustrating conversation and it's about freeing up money to play with and. There are a lot of different ways to get a result, you'd say skin a cap. That's I guess it's kind of a mean way of saying things, poor cat, but there's a lot of ways to get a result. And a lot of the times when people want to make more things happen in their life, but in ways they think, I've got to make more money, I've got to do more, I'm going to work harder and.

You know, working hard can be fun, but there's a point, and this is, I think, the difference between the grind and and being good and not being good. As you know, I've had people say, Wade, do you want to do this? 3-Day Weekend your laziness? And, you know, I hustle. I grind for four days a week. I do the work that I want to do. And sometimes if it's summer, it might be seven hour days or six hour days or five hour days and other times it might be 10, 11, 12 hour days.

Whatever it is I give myself that time I commit, I do the work and I really get to put myself into it. And then I also get to have time on the weekends. If my spending were out of control, I would not be able to do that week in part without accumulating more debt, without making things happen, without doing stuff like that. So what I'm going to suggest to you. Is that this is all about understanding, kind of like we did with the assets and time wasters and liabilities, looking at one of these things are things that you want to invest in.

You want to spend on where you want to trade with. And it's a slightly different conversation. The graphics kind of similar. But I'm going to give you an idea of a conversation around investments, trades and expenses. And just like in the book, Rich Dad, poor dad, Robert Kusaka gives you his own definitions, for example, of what an asset is. And if you haven't read that book, understanding and ask them before you invest in real estate, definitely very, very valuable and relevant.

What I'm going to go with is a simple idea here, when you give money for something, you don't always get something back of equal or greater value in return. So you put money into something different. Things might happen. If it gives you back more money than you put in, I'm going to call that an investment. So you made some money, you had some sort of gain. If it gives you back the same amount or something of equal value, I'm going to call that a trade.

And if you get back less than you put in, I'm going to call that expense somebody real simple math. If you gain, it's an investment. If you broke it, it's a trade. If you lost, it's an expense. So. Farmers, the most effective ones, invest money and time in their crops. If they align with the laws of nature, their investments usually going to pay off. Effective employees invest money and time, and their people should be effective, employers invest money and time and their people, if they align with the laws of business, their investment usually pays off.

Effective parents invest money and time in their children, also invest energy, but in this case, we're focused on the money part here. If they align with the laws of life, their investment usually pays off. Most great investments will pay off over time, not necessarily right away. So patience is going to be required for success. And as somebody who's grown up in the insurance industry and that business model you see, there's so many companies that are named after farmers there, State Farm, there's farmers, there's Farmers Bureau, there's all these different things because that's a model.

It's it's a nature. It's what you want to call it, lifetime value of a customer. It's how businesses can grow. Now, at times, you're going to have to trade, so if you're in business or in life and you want something that you don't want to produce, you're going have to trade for it. So effective farmers trade money for raw materials because it's more effective to buy the raw materials than to make them because they're farmers, they folks on the farm and they let somebody else focus on that other part.

Farmers make money in their business, not from making raw materials, so while it might be great to get the best deal, it's no need for them to profit on trades. In fact, it's best for the suppliers of the raw materials. If things work out to be profitable, we want it to be that that supplier stays in business. If I'm a farmer and I'm depending on some sort of input to my process, I want to make sure that my supplier stays in business.

Effective employers trade money for supplies and materials. So they invest in people in in systems, but they trade for things on a pause on that, when you get that an employer trades money for supplies and materials because you can buy those, you can't really buy people or their loyalty or their commitment or their passion, you can buy their time. But we want more than that because employers who trade money for time get a low commitment. Employers who trade.

Excuse me. Who invest time and money in people get better returns over time and better quality. So you want to invest in people, invest in proven systems and trade for things, so we want trade. This is slightly different than the other conversations we've looked at. We want to spend as little as possible in this sense, the most effective farmers spend money on almost nothing. Crops that are likely to fail eventually end up as expenses, so they don't want that.

So if they try a crop and it doesn't work and they find hay in this part of the country where it doesn't work. I'm going to move away from that. Crops that the market does not wish to buy usually end up as expenses. And anything that ultimately leads to loss of money is an expense. Some things will appear to be investments, but prove to be expenses that happens sometimes. Effective employers spend money as little as possible. Failed investments eventually are considered to be expensive, so something we thought was going to work, our investment didn't work out OK.

We look back with hindsight, say that was an investment, that was an expense. But it's not always to see that investment will end up failing. That's why we want to avoid anything that we know we're spending on. So sometimes I'll hear people say, you know what, I've got a loss leader. I'm going to lose a bunch of money and maybe I'll sell something. Well, why not? Let's skip the last part. Let's go. We sell the thing.

Let's figure that out. So spending is waste. It's a waste of your money, your time, your effort, your energy, your your your everything, your life force avoid proven expenses. What I mean that something just proves to be a bad idea. Stay away from it. Never intentionally spend or waste money or time. So now what we want to do is we want to invest big trade a little bit and spend nothing, invest as much and as often as possible in high quality people like yourself, projects and causes trade when necessary for high quality goods needs and raw materials.

Never intentionally spend money or time. If you know it's an expense, avoid it. Why would you spend money when you can invest or trade and you're still going to end up having something turn out as expenses? So focus on those top two areas. Sometimes you won't know until after learned from your mistakes and see what you can do to make it as likely to succeed as possible. So here's some examples. Investments in things such as your personal growth, your gym membership, assuming you're using it and your personal growth, assuming you're learning from emergency savings, retirement savings, college savings, pre-paid college plan, student loans, if it's again going to be for an education that helps you learn and you're going to apply that education, supporting a charity that does good work, supporting education, supporting the cause, giving gifts, paying it forward, all these are things that where you're making investment doesn't guarantee the little pan out, but chances are they're going to be investments trading.

We need to trade. And again, think of a trade. Some people say, well, why wouldn't I want everything to be an investment? No, because other people need to make money, too, so that the system can continue. So we want to be that you pay a fair rent for your home, your utilities, your Insurance, your all these different things so that the system works. If everybody else goes out of business and just you're in business, that's not a good system.

But we want to get out of here are the things that are guaranteed expenses, addictions, bad relationships, unused items, unused memberships, credit card interest, overpriced cars, junk food loan interest. OK, maybe a little junk. A little. A little bit. Sure, I'm sure. Got a have. But in other words, things where you're just giving away money, tax penalties, late fees, bank fees, there's really almost nothing redeeming about these.

Again, I'm going to have to look at that junk food thing. That's interesting. Depends on which junk food is and how good it is and how many calories and how big it is. Everything else there, I think, is is something we want to let go of. So what we want to be able to do is have you look at where you're putting your money and and what's it doing. So if you look at your investments and your trades and your expenses to see what is it you're doing?

And then start looking at how you can find 12 areas where you can look at your current amount, find the desired amount that you want to shift that to. Make that change in that money outflow. And then decide where you're going to reinvest that and set a target date for that. So, again, it's not always going to be guaranteed that we know if something is going to be an investment or a trade or an expense. But for the most part, on our trades, we want to make sure, you know, if you're buying something, you're buying raw materials, you're you're paying for a home, you're paying for a car.

You want to make sure you're getting a good deal when you're investing. You at least want to know it's something that has a really good chance of turning out to be a very positive thing. And when something looks like an expense, you want to be thinking about it for want to be seen. Do I want to do this? I want to give this while before I do this, do I want to perhaps put this on hold, pause Wade on that and create a situation where you're more likely to end up in favorable situations.

It's like the situation of buying investments. Most people will tell you you make your money on a stock when you buy it, not when you sell it technically. Mechanically, yes, you make the money, you receive the money when you sell it. But if you bought at a really high price, if you bought real estate a really high price, if you overinvested in anything, it becomes a lot harder to make the money back. If you overpay an employee more than they're worth, it becomes hard for that to be made back.

And so what I want to do now is, again, bring this to this massive part of the conversation and of all the different pieces, this is so precise. And again, you can use these ideas or create ideas of your own that are similar to this. And the first thing is to look at do you have enough income to pay your bills, live within your means and save 20 percent monthly? Now, that might feel like more than you want to say, or you might say Wade, I'm not sure if I can do that, but again, this is a mastery milestone.

So it might be that you say Wade. I first want to earn enough income to pay my bills and live within my means and then eventually to say five percent monthly, then 10. But again, this is something to be aimed for. Zero credit card debt with balances paid off each month and no interest paid. Emergency Savings Fund equal to six months of your take home income. So if something happened, that you'd be able to use that. Personal income protection now in the United States, this is often referred to as Disability Insurance, and that's the type of income protection where if you're unable to work, the insurance company pays a percentage of your income, usually about 70, at most about 80 percent of your income because you're unable to work.

So if you become sick or hurt, a lot of people don't have that. If you're an entrepreneur, if you're a solopreneur and you don't have Disability Insurance and you suddenly become unable to work, got no income unless, you know, if other systems set up or passive income situations. But either way, if you have the income, you want to protect it in some form or fashion. Feminine protection, which is life Insurance equal to 10 to 20 years of your income, if you have a family that's counted on you.

You won't have a situation where all the debt you carry has an interest rate under five percent and your credit card stores are plus and obviously it's better if you don't have any debt or the least amount of debt, maybe your home or car loan. You have a monthly budget, you track your expenses with a software and you review that monthly. You're able to travel and enjoy life comfortably according to your priorities, and again, you might or might not be a traveler, but to know that you can do it and this is one of those things like retirement.

Some people say, Wade, I don't plan on retiring, but I want to have enough money available. So if I need to or if medically something happens or I decide, I change my mind, I want to be able to I might not execute it. I might not decide to do it, but I want to know that I can do it. Being able to comfortably give to charitable and educational causes you believe in. And building a net worth to afford your educational goals and retirement at your same lifestyle, again, you might choose not to retire, but knowing that you can do it, knowing you have the ability to do it, is something that can be extremely powerful and extremely liberating.