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  • You may have heard that money doesn't buy happiness

  • and the person that told you that probably had a lot of money,

  • but they aren't exactly wrong.

  • I think what's closer to the truth is having money's not everything

  • not having it is.

  • Kanye West said that.

  • And while I don't always take financial advice from rappers,

  • Kanye's got a pretty good point.

  • When you don't have money it becomes the source of a lot of pain, frustration, and anger.

  • It consumes your life and becomes the lens with which you see the world.

  • "Hey, how much did that cost?" "Oh, that must've been expensive."

  • "Hey, I think you owe me 20 bucks.

  • You can... you can pay me later.

  • That's... Venmo?"

  • When we don't have it, every problem seems to revolve around money.

  • And while being rich won't fix every problem in your life,

  • stacking up some money seems like a worthwhile pursuit.

  • When you become financially free, you will no longer make every decision solely based on money.

  • You don't take the job just because it pays better,

  • you don't have to look at the price of organic groceries to make sure you can afford them,

  • hell, you can take Uber Black to the airport

  • ...every once in awhile.

  • Imagine being at a place where you never had to worry about money again.

  • And maybe not even that far

  • Imagine a place where money wasn't the major stressor in your life and on your relationships.

  • The steps to get there are simple, but it's not gonna happen overnight.

  • So let's get started.

  • Step one: create an emergency fund.

  • Save a thousand dollars and put it into an emergency fund that you'll only use in dire circumstances.

  • I remember reading a story from Dave Ramsey from someone who literally put their emergency fund

  • inside a frame with the words "break glass in case of emergency."

  • Hold up though.

  • Emergencies don't include beer money,

  • vacations,

  • or even an engagement ring.

  • It's a... it's a minimalist ring.

  • This money should only be used if, and when, shit hits the fan.

  • When your car breaks down,

  • when you need to replace your water heater,

  • basically when your life would otherwise become completely derailed,

  • that's when you go to the emergency fund.

  • Why create an emergency fund?

  • Because everything that can go wrong, will go wrong

  • and instead of borrowing money from your family again,

  • or pulling out your credit card, pushing yourself further into debt,

  • you'll have something to fall back on.

  • The great thing about the emergency fund is that it starts to give you that feeling of financial freedom.

  • For the first time maybe in your adult life, you have some room to breathe.

  • This step is the quickest way to finally start to gain some control back in your life.

  • Step two: pay off your debt.

  • About 80% of American adults are in debt and we've just accepted this as the status quo.

  • Maybe we bought shit we didn't need to furnish an apartment we couldn't afford,

  • or purchased a new car when we could've bought used.

  • For me, one of the biggest problem with debt is that it restricts your monthly income.

  • So when you're paying five to seven hundred dollars, even more

  • on your mortgage, student loans, your car payment

  • it severely restricts the amount of money you can save.

  • The other thing I'll say is that you're gonna be saving thousands of dollars

  • in interest if you're able to pay off your loans quicker.

  • Forget about cutting back on your daily lattes,

  • this is where you're gonna take the biggest step toward financial freedom.

  • Let's say you have a hundred thousand dollars in student loans at a 5 percent interest for a twenty year term

  • if you only pay the minimum for the entire period of the loan,

  • you'll end up giving the bank over a hundred and fifty eight thousand dollars.

  • This kinda feels like an emergency.

  • So what's the best way to pay off your debt early?

  • There are a couple takes on how to do this.

  • You could tackle the high interest loans first.

  • Each loan is a different amount with a different interest rate.

  • By the numbers, the smartest decision is to attack the highest interest rate first,

  • then take them out one by one.

  • Another option is called "The Debt Snowball."

  • It takes into account human behavior.

  • By tackling the smallest loan first, we're able to knock it out quicker,

  • which helps build momentum and motivates us to pay off other loans.

  • So when I first got really serious about paying off my debt early

  • I brought everything and organized it into a spreadsheet like this.

  • I would log in a couple times a week

  • sometimes I would log in every single day

  • and just visualize what it would be like to pay off some of these loans.

  • And I would just delete them, one by one, like a madman,

  • like somebody who's completely delusional,

  • and I would keep an eye on my monthly payments

  • because I knew that if I could get them low enough, then I'd be able to move out of my parents' house.

  • So this is what drove me.

  • I started to have hope again.

  • I started to feel like there was a light at the end of the tunnel

  • and I would actually eventually be able to pay all this off.

  • Step three: create a runway.

  • What would it feel like to have six to twelve months worth of expenses in your bank account at all times?

  • Imagine the kind of freedom and stability you'd have

  • knowing that if you ever got injured,

  • lost your job,

  • or you couldn't find anymore clients,

  • that you'd be taken care of for the foreseeable future.

  • This is why having runway is so important.

  • Open up a spreadsheet and take account of all your monthly expenses.

  • Rent, groceries, internet, insurance, Netflix, your phone bill, etc.

  • So pulling all of this information into my spreadsheet was an amazing way for me to start to see

  • what's the absolute minimum that I needed to survive on?

  • And as a freelance filmmaker with my income varying widely,

  • this was a really powerful number to have.

  • Okay, now for some tough math.

  • Multiply that number by six months to get your first target runway goal.

  • The next goal after that would be to get twelve months of runway.

  • This number now becomes your baseline;

  • it's like an extended emergency fund.

  • Except I wouldn't put twenty two thousand dollars in a frame above your bed,

  • I think the bank might be a little bit safer.

  • Step four: start a retirement fund.

  • Retirement funds are one of those things that you know you should do, but you haven't done yet,

  • but eventually you'll get to it,

  • but you probably never will.

  • Retirement funds are those things that your friends talk about sometimes

  • and whenever they do you just smile and nod,

  • but really you're thinking, "fuck you, Brian, you're a piece of shit. I don't care what your stocks are,"

  • and then you think to yourself, "what's a 401k I'm gonna look that up."

  • Personal finance is often about making short-term sacrifices for long-term gain.

  • By saving a little bit each year you'll be able to set yourself up for a dignified retirement.

  • First, compound interest is the shit, and here's why:

  • So you have a lot of money, like you have ten thousand dollars,

  • and then over the course of a year, that money is making money because you're investing it into stocks and stuff

  • and then you have more money at the end of the year

  • so then the next year you're making more money on top of that money

  • and then that money's making even more money

  • and then the next year you're making even more money.

  • I'm just gonna do a quick illustration so it's not as confusing.

  • Say you put ten thousand dollars into a 401k

  • receiving a ten percent annual return at the age of twenty

  • if you never touch that money until you turn seventy years old

  • you'll have over 1.1 million dollars in the bank

  • all that from simply putting away ten thousand dollars.

  • Use a compound interest calculator online to see how much you could retire with based on your yearly savings.

  • Alright, so for me personally, I invest at Vanguard

  • vanguard.com,

  • I invest primarily in low-cost mutual funds

  • about ninety percent stocks, ten percent bonds.

  • Now I chose this fund because it's essentially a snapshot of the U.S. economy.

  • So since 1923 when the S&P started

  • it has produced a return of around ten to twelve percent,

  • and that's basically what this fund is giving me.

  • Now that's over the long run,

  • we're not talking about a five year period.

  • So when you invest in the long run

  • you're not checking your Vanguard account every day,

  • every other day,

  • you're putting your money in, you're making sure you have everything set,

  • and then you're checking it maybe in six months, maybe in a year

  • but you're not stressing out every time that the stock market's shaky.

  • When 2008 hit, a lot of people lost money,

  • but if you're investing in the long term, that's not gonna matter at all,

  • because in thirty years, you're gonna eventually make your money back.

  • Now there are many many variables that will factor into your own investment strategy,

  • like your age, your income, how much money you'll think you'll need when you retire,

  • how much risk you're willing to tolerate.

  • Please do your research before investing.

  • I'm not your financial manager, investor, or fiduciary.

  • Read up and make a decision based on your life circumstances.

  • This is not a definitive blueprint.

  • If you're a freelancer and you can't stomach that much risk,

  • or you'd feel safer if you had five thousand dollars emergency fund from the very beginning,

  • then do that.

  • Or maybe you can actually handle the extra risk

  • and you decide, "I don't wanna build six months of runway, I wanna actually start investing in my future