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- [00:01]
Candy Valentino
This episode is brought to you by Progressive Insurance. You chose to hit play on this podcast today. Smart Choice. Progressive loves to help people make smart choices. That's why they offer a tool called Auto Quote Explorer that allows you to compare your Progressive car insurance quote with rates from other companies so you save time on the research and can enjoy savings when you choose the best rate for you. Give it a try after this episode@progressive.com Progressive Casualty Insurance Company and affiliates not available in all states or situations. Prices vary based on how you buy. Welcome to the Candy Valentino show, the podcast for founders, investors and entrepreneurs where we have honest conversations about what it takes to grow your business, build more wealth and create financial freedom.
- [01:15]
Co-host or Guest
Hey guys, welcome back to another episode of the show. As I told you, we are changing things up. So today marks one of the first episodes of that change because instead of dropping an interview like we have done for so many years, today on Mondays and now in perpetuity, I guess on Mondays we're going to be doing something different. Monday is going to now be some money motivation. So we're going to give you straight out of the gate some things that you need to know in order to make more, keep more, invest more. And so today's topic I'm really excited to jump into because we saw something on Yahoo. Finance when we were preparing for the show and I thought, oh, this is really good. So let's talk about it now. You probably listen to several people, experts, financial gurus online or maybe on social media, maybe on podcasts like this. And you hear so many different, similar opinions. But then you probably hear some different opinions as well, right? It's, I always say it's the difference. If you listen to Dave Ramsey where he's talking about how to get out of debt and you listen to Grant Cardone who talks about how debt is the way to get more assets, two totally different opinions. Who do you listen to? Well, we're going to break that down and we're going to talk about all the varying opinions that you may hear when it comes to brutally honest money tips. So let's break it down. Number one, let's talk about some of the key things that most people can do because there is a completely different school of thought and behaviors and decisions that people make when it comes to building their wealth habits or keeping their broke habits. And one of the things I hear that most people argue about or experts kind of differ opinions on is an emergency fund. I call this a fallback fund. You will hear people saying that you need three to six months available in cash in an emergency fund. You'll hear other people say 8 months, 12 months. What's the real answer? Well, here's the answer. Have one, make sure you have one. Have a fallback fund of some kind. The time doesn't matter as much as you may think. 3 months, 6 months, 9 months, 12 months. What's the real answer? It all depends on your financial situation and the amount of responsibility that you have. For example, if you're a single person, you don't own a home, you don't have a business and you're renting something and you have a W2 job, it's kind of crazy to have nine to 12 months sitting in a bank account making very little to no interest when you could be leveraging that money in investments. Now on the flip side, if you have kids, if you have a very big life, if you have one mortgage or more than one, if you have a business with employees, three to six months is probably not enough because you may come into cycles within your business where you're short on cash flow. You may have a disruption in your life or in your family where maybe mom has to stay at home because you have a child sick, or maybe this, the business is just not doing as well as it once was. Those are things that you want to consider maybe having 6, 9, 12 months. And it also determines your risk. So your risk, how much you like risk. If you are risk adverse or if you're okay with some volatility and risk overall in your investments and in your money, well then maybe you don't want to have as much put put aside. I always say, understand what is your monthly expenses and your commitments in your business and in your life. And then how many months should you have? 3, 6, 9, 12. But at least start it. And then step two of number one is don't just leave that into a zero percent interest no bearing account. Put it into something like a money market, a short term CD or a high yield savings account. You may only get 2, 3 or 4% interest on it, but it's better than nothing. And to find out the best rates and the best banking institutions that you can put your money in, you can go to bankrate.com or Nerd Wallet every single month. The rates change, the best programs change. So you can go on there and see exactly which one you want to use or open up in order to have that fallback fund sitting in something that's getting a little bit of interest. Okay, that brings us to number two, that a lot of people disagree on and talk about, do you use a debit card or a credit card? All right, again, let's go to the extreme. If you listen to Dave Ramsey, he thinks that credit cards are dangerous and they're the enemy. You talk to someone like Robert Kiyosaki, he thinks that credit cards are absolutely what you should be using. Again, two very different opinions. What's the real answer? Well, it depends on your decisions, behaviors and habits. If you cannot control your spending and if you are the type of person that goes into credit card debt that overspends beyond what you make, then credit cards are very dangerous and it is a risk to your financial future. If you have diligence and you're disciplined and you pay your credit card off on time every month in full, you don't have credit card debt, you've never been in credit card debt or at least for a very long time, and you have those wealth habits built, then credit cards are a better tool because they give you a little more risk protection over a debit card. So I've talked about this on the show before, so I won't go into all the weeds on it, but credit cards overall have a little bit more fraud protection than debit cards. Credit cards can take a fraudulent charge right out of your account. Where a debit card, you have to work a little bit more comp. It's a little more complicated. It might take longer to get that back. But overall, if you do not have the discipline to not overspend, then a debit card is the tool that you want to use. So again, it depends on you, your behaviors and your current habits. I am, I'm a credit card user. I have been my entire life because I've had my first, you know, company since I was 19. So we had company expense cards and accounts, but we always pay it off every month. I love seeing those points and those free miles accumulate. But if you can't have the discipline to pay it off every month on time, in full, stick with the debit card system until you can. And that's going to bring us to number three. Credit card debt is bad and should be your number one priority. Is that true? Well, let's get back to credit cards because it is a super important topic. The number one destroyer of your wealth isn't how much you buy. It isn't what you're currently spending. It isn't if maybe even that house is a little bit too much for where you are. It's credit card debt because you cannot out invest bad debt. And if you are carrying any revolving balances, you have to eradicate debt before you continue on your financial journey. Because you can't take money and stick it in the market and try to get on your 401k or your IRA returns that are even as good as 10, 12, 14%. When you're spending 18, 20, 22, 24% in credit card debt, it doesn't make sense. So you have to eradicate credit card debt. It will be the number one destroyer of your wealth. So regardless of what somebody talk about, and when you hear people saying good debt, good debt is always on assets. It's never on depreciating assets. Credit card debt, boat loans, personal loans, car loans, those are all things that depreciate, meaning that you're paying the most amount of money for them when you buy them because of being a consumer, and they're depreciating over time. You want to get those paid off as soon as possible. And remember that 35% of your overall credit score is all determined on your credit card payment history. So if you're ever late, if you're ever a little behind, if you leave that account revolving over and over again, it will drastically pull down your credit card score. So make sure that you eradicate that debt. And there are multiple ways to do this. Some people say that you work on a debt snowball where you take them and you list the smallest balance, regardless of interest rate, and you nail that one first, knock it out, then you go to the next one and the next one. So if you have a card that's $500, you start with that one. The school of thought behind that is this. It's that wealth building is a habit. And that's literally what it is. What you do with a little bit of money, we know over time, we unequivocally know this, that what you do with a little bit of money will determine what you do with a lot. So if you have a little bit of money and you're rushing out to spend it, or you have a little bit of money and you're not necessarily saving it into a fallback fund or investing it into your future, that is the exact same behavior and habit that you'll take into life when you have more money. So the debts snowball is because they're trying to get you to develop the habit of paying that off, understanding how good that feels, because it does feel good when you pay off debt and then going to the next one, regardless of interest rate. The other method is taking the highest interest rate and going to the top. So Whether it's a $20,000 or a $10,000 or $500, you would put the highest interest rate at the top. This is debt de escalation. So this is where you take the highest interest rate. If you have one card that's 24%, that's what you're paying off. Again, you all. It all depends if you have the discipline to do it. If you don't have any wealth habits built yet, don't worry about it. Take the smallest balance first. If you really want to do the de escalation to get out of debt in the most intelligent way and you're committed, then you can start with the highest interest rate first. Again, doesn't matter how you do it, just make sure that you get out of credit card debt. Most important thing, don't miss it. It will literally change the future of your financial life. All right, number four, what do you do with your savings and your investings? Well, I'll tell you the number one thing to make you successful is to make it automatic. So many of the financial gurus and experts all agree on this one, so we don't have to talk about all the different schools of thought. Because everyone says and insists that if you make this automatic, if you set it and forget it, that is a proven way to stay committed to your saving and your investing goal. Having that money taken right out of your checking account, throwing it into your savings account, or right out of your checking account, throwing it right into your investment account. That is the way that you are going to start to build wealth and hit all of your investing goals. Because as we know, if we do have a car loan or we do have a mortgage or we do have to pay taxes, we somehow find a way to make sure those are all paid. So the same thing happens with your investing. If that is automatically coming out of your account, if you're automatically paying for your health care, if you're automatically paying for your life insurance policies, those are going to get paid. So make investing and saving automatic so that you can set it and forget it. Nobody disagrees on this one, so it's an easy one we can breeze right past. Brings us to number five, saving for retirement so that you can live to be really old. I don't know about you, but ever since I was young, I always said that I'm going to live to be 95. I have no idea where it came from. I think it's maybe because Betty White, I knew she was up in her 90s. And was going to live a really long time. And she loved dogs and I love dogs. So somehow I just thought, I'm going to be Betty White and I'm going to live until I'm 95. She lived to be 99, almost 100. And now with modern medicine, I actually think 95, I might be shooting it a little low. I think maybe we can get to 100. I'm actually not that tall. I'm kind of petite. Petite people live longer, so who knows, we'll see how it works out. But the average lifespan in the US is 77 and a half. And of course that is just going to continue to get older. Saving and investing for retirement so that you can live comfortably and focus on your longevity. That is really important. Making sure that you have enough invested in retirement. This is what people typically mess up. They typically underestimate how much they need. And then many people retire too soon and then they have to go back to work. So don't let that be you. If you are working until you're 65 or 70, and if you're an entrepreneur, you're probably going to just continue to work and not ever stop. So making sure that you have enough invested into your 90s so that work becomes optional and you can live as long as you need to. Now, how can you start doing this now? I always say our goal should be to take 20% of our earned income and start investing it. Now, that doesn't mean you have to do that today if you've never done it. You can start with 5%, 10%, 12%. But again, making it automatic and making sure that you are increasing it over time so that you don't just stay at that first 5% or whatever it is that you choose, ramping that up so that you know that 20% of every dollar that you make is going to go for your future will then force you to live on less than you earn, which is obviously the number one destroyer of wealth outside of credit card debt, when people are overspending. So make sure that you are pausing, understanding that the only way to ever stop working is to invest more money so that you don't always have to work forever. And making sure that you're stepping that up and making it automatic. 5%, 10% and trying to get the whole way to 20%. And if you want to hear more about this, exactly what to invest in, how to diversify your portfolio, let us know in the comments or shoot us an email over@candyvalentino.com and if you have a specific question about your investment strategy or how you could be saving money or what to invest in. You can ask me a direct question that we'll answer here on the show. Go to candyvalentino.com Ask Candy. You can leave me a voicemail or write it out. Whatever's best for you. We're going to answer them live right here on the show every single week. So I'd love to hear from you. And going to bring us to number six. Patience is a virtue and it is in investing also. I'm sure that you have heard this before. Again, this is what something we all agree on, all of the financial experts about being patient. Understanding that compound interest does not accumulate overnight. Investing is a long game if you can trade the little things that you love now, if you can say no to some things now, I promise you that you can say yes to more than you can even imagine. So many times in my life, especially when I was in my 20s, just starting out in business, my friends were partying, they were going to spring break, they were doing all of the fun college kids things that people do. I'm literally trying to balance payroll, understand QuickBooks and how to figure out how to acquire more customers just to stay afloat. I had to say no to so many things, but what it gave me the ability to do I couldn't even grasp at the time. So I want to encourage you that if you will say no to some of the things that you love now, you can say yes to things that you can't even imagine later. Understanding that it is a long term gain, knowing that in order for you ever to stop trading time for money, investing in your future is the only way to get you there. We are going to see so much volatility and obviously at the time of this recording, we have already seen it in the last four months. That is always going to happen. We're always going to see markets shrink and then they recover. We're always going to see them reset and then they're going to rebound. Investing is long term and this is where psychology is important. Investor psychology is critical because if you can manage the volatility in your mind and you can minimize anxiety and know that what happens in the short term does not matter because you're investing for the long term and you stay the course. The longer you stay invested, the smaller your risk gets. It's historical data. When we look back at charts for 40, 50, 60, 70 years, we see the longer somebody stays invest invested, the smaller their risk is and the greater their return. So stay in. Keep your money in your investment portfolio. Make sure that you're focused on the long term game because nothing is going to happen. Great in the short term. All right guys, again, if you have your questions, submit them over to candy valentino.com candy and if you found value in this episode, leave us a five star review over on Apple or Spotify, wherever you listen to podcasts. And of course we'll be dropping these on YouTube every week as well if you would rather watch than listen. Thanks again for tuning in with me today. We'll see you next time. Hey guys, thanks for tuning in to this episode and if there was something that you loved or you had a specific takeaway, share it and tag me at @Candy Valentino. And if you haven't already, grab a copy of my latest book, the 9% Edge Life Changing Secrets to create more revenue for your business and more freedom for yourself. You can pick it up anywhere books are sold, Amazon, Barnes and Noble, or your local independent store. And once you do, head over to 9% edge.com and claim $1500 in pre order bonuses, including a chance chance to join me on this very show. Thanks so much for tuning in and spending this time with me today guys. We'll see you next time.