How much net worth do I need to retire?

Brett multiplies your yearly expenses by 25, or your income by 20, to get a target. On $150,000 in expenses that is $3.75 million, and on $200,000 of income that is $4 million. He suggests tracking both numbers and treating the higher one as the safer target.

How much should I spend on a car?

Brett teaches Sam Dogen's rule: spend no more than one tenth of your gross income on a car purchase. He has never had a car payment and recommends buying a car about two years old with under 20,000 miles instead of financing something new.

Should I pay off my mortgage faster?

Brett compares your mortgage rate to the Treasury bill rate and the inflation rate before answering. If your rate sits below both, like a 2.78% mortgage against 4% Treasury bills, he says the math favors investing the extra money instead of paying down the house early. He still likes making one extra mortgage payment a year, which can cut three to four years off a 30 year loan.

Is it better to rent or buy a house?

Brett says you buy utility and you rent luxury. On a $200,000 house renting for $2,000 a month, owning costs about $16,200 a year once the opportunity cost of the down payment is included, so buying wins. On a $2.7 million house renting for $10,000 a month, owning costs $160,000 a year and renting wins by $40,000.

What order should I pay off debt in?

Brett pays off credit cards first because unpaid balances run about 29% interest. After that comes car debt, since cars lose value and he avoids ever financing one, then student loans, which he says should only be taken on if the degree and the job it leads to actually match up in pay.

How Much Net Worth You Need to Retire

House price	Yearly cost to own	Cost to rent instead
$200,000 house, $40,000 down, 5% rate	$16,200 a year with opportunity cost included	$2,000 a month, buying still wins
Same $200,000 house	$16,200 a year with opportunity cost included	$1,500 a month, buying still wins
$2.7 million house, 26% down	$160,000 a year with opportunity cost included	$10,000 a month, renting wins by $40,000 a year

Read the full transcript18,468 words · about 80 minutes to read

0:00Welcome back to the Be Wealthy Podcast with Brett Tanner, the show where we deep dive into the strategies, mindsets, and real world tactics that unlock true financial freedom and abundance. Today on Be Wealthy, we're going to break down how the wealthy really think about their net worth, how they think about cash flows, and how they think about building models in their lives. You need to lock in, get your notepad out because this is one of our longest episodes. But we break down how to know exactly what net worth you need to live your ideal life when you are ready to quit working. We walk through how to think about your house purchase, how to pay down your mortgage, how to think about cars and debt. We cover everything. And I don't want to waste a minute. I want to jump right in with my co-host Katelyn Mitchell. Listen to my conversation where we break down the models of the wealthy. For today's episode, I'm joined, as always, by my co-host, Katelyn Mitchell. Katelyn, we've got a jam-packed show today, and we're going to talk about models, financial models for your life, and how to just make better decisions with our

1:03money. It's something we all need to do better. And it's something you and I talk about it at the mastermind. We talk about our private clients. Um, making better decisions with your money is the way to become wealthy. I mean, it's just that simple. If you want to be wealthy, you got to get better with your money. And the way to do it is to build models. Before we jump in, Katelyn, I know that this conversation has had an impact on you in the past. Anything you want to share before we just jump right in and start running?
For me, Brett, when we before we worked together, I was super familiar obviously with models in business. We know KPI statistics, conversion ratios. We track everything in a business so that we can make the right decisions. If you think about it, if you're spending money on leads for your business, we're tracking how many dollars you spend on a lead. And then we're tracking it all the way down with KPIs to really at the end of the day, how many leads created, how many conversations created, how many appointments to how many closed

2:06contracts. And we can run math on models in business. And like most of our audience, we're awesome at it. When it comes to our personal world though, we don't have those models. And when I first started working with you, I could run them in a business back and forth. But when it came to the decisions I was making financially in my own world, in my own investments, in my own wealth with my husband, we didn't have those models. Our choices were based on what we thought, what we felt, what our gut was, or honestly sometimes what we wanted other people to think about us. And the fact of the matter is we have so much more discipline in the how we spend money in our business, expecting the dollars to get our business to grow in the way that we want to. And you looked at me one day and said, "Katelyn, why wouldn't you run those same things at home? Why wouldn't you have those same models at your house when you and your husband are making your financial choices to get where you want to go? And you really helped me to build out and

3:09make some incredible decisions that really changed the entire impact and the entire trajectory of where our wealth is going. So, first I want to say thank you. Second of all, I want to say I'm so excited for you to share this with all of our audience because of the impact it's had on me, on the rest of our team, on your private clients, on our mastermind clients. It's a lifechanging set of lessons. So, I'm excited to jump in. Thank you for having me on this episode.
Well, Katelyn, you know what's interesting is I think people in their business, right, they're running a great business. They've got key performance indicators or KPIs, right? They've got a business plan. They've got a P&L. They've got a strategy and yet then they go to their home life and it kind of looks like a shoe box junk drawer of the way they're managing their finances. And I don't mean that to be disrespectful, but for some reason we spend a lot of time and energy on the internal mechanics uh and strategy in our business and we'll build business models and we're reading about it. And yet in our personal lives, we're pretty loose

4:13with the way we make decisions financially. And and I think so fundamentally, you know, when I'm coaching someone, I go at it the other way. I set people's personal financial goals first, right? If someone wants to make a $100,000 a year, they want to make a million dollars a year, I'm going to set that goal. Then I'm going to figure out all the, you know, why did that matter? And what did they want to make the million dollars for, right? Like, okay, cool. Or like, I need a million dollars to live my ideal life. Now, I'm going to go to the business and I'm going to set the business goal to make a million dollars or whatever I needed to fund my ideal life. And I'll tell you that sounds really in, you know, obvious as I'm saying it here. And the listeners are like, "Yeah, I totally get it." People don't do it though, Katelyn. They end up living a year, they set a goal in their business, they hit it, and then they're miserable in their personal lives because there was no connectivity between the business and what they wanted personally. And the reality of it is your business is there to serve you as the human being. You're only like I joke I do a lot of things for fun, Katelyn. I do this. I do

5:16business for money. And I I play golf for fun. I wish I did it for money, but I do golf for uh for fun. Like in business, the only purpose of my business is to create the cash needed to come over to my personal world to live my ideal life, to make the investments I want, to be able to protect my family, to do cool things with people, to take care of those I love, to donate to charities, those are all the things I do on a personal basis, but if I don't know what those things are, there's just not a connectivity. And all of that's a model and just thinking differently about your money. And so as we jump into today's episode, Katelyn, I want to I want to I want to anchor a point to people that most folks, right, as all and me included, Katelyn included, we make emotional decisions in our life and then we're going to come up with reasons to justify it with logic. I'll give you an example, Katelyn, we we've talked about this before. You know, if you you've ever had a car repair, um it's like $3 to $5,000. Let's make it on that edge of you know, it's really annoying. I mean, they're all car repairs are annoying,

6:18but 3 to 5,000 super annoying. So, you drive your car in, it's five or six years old, it's got 100,000 miles on it. Katelyn, the repair guy comes out and says, "Hey, Katelyn, it's going to be it's going to be $3,700 to fix the flux capacitor, you know, on the old on the on your on your machine there." And and what do you do in that moment? We all every human I have yet to meet anyone that didn't do the exact same thing. They go, "Oh, let me think about it." it and they go walk around the new car parking lot looking at all the new cars and the and the the story in your head goes just like this. I'm going to put $3,500 in this thing and then next month it's going to be another $800 and then it's going to break in a year and it's going to keep breaking it. So, I'm just going to fund this thing and if I just went and spent $62,000 and bought a brand new car, I am making a great decision today. And you get to this place like I I need to go and it's really it's $3,200 repair Katelyn that it first of all like the I mean you'll you'll eat that up in additional insurance tags in in a few payments if you're if you're having

7:20payments on it. So it makes absolutely if you were to lay this out in a spreadsheet if you were to send it to a hundred smart people or if you were to use Katelyn what I call the hundred person rule. If you were to ask a hundred people that scenario, if the overwhelming majority agree with one position, it probably means you're wrong. Right? There's this there's this book called The Wisdom of Crowds. And you know, on one hand, you could look at society today and say, man, a lot of people are largely just checked out. Not our listeners because they're trying to grow their lives. But society today, Katelyn, they're checked out. And so, we got to go look at where are the better decisions. is not book the wisdom of crowds. It's about if you ask a thousand people a really hard question, the majority of the answer will be pretty close to what it should be, right? The majority of thinking is pretty right on. And so the the the long version, long story short, we've got to have models to at least look at so we know that our decision is either optimal or suboptimal as we think about our lives. I was speaking the other day with um

8:25Dustin Renan, good friend of yours. He was one of our podcast guests. And he said a phrase to me that absolutely stopped me in my tracks. And it was Katelyn, just because you can buy something doesn't mean you can afford it. And I said, what do you mean by that, Dustin? And he said, well, you have to look at your full plan, your full wealth plan. Sometimes just because you can buy something because you have the dollars or you can get approved for something because you have the credit or the financing capabilities doesn't mean you can afford it in your wealth plan to get where you're looking to go. And it ties so closely to a lot of the coaching that you've provided me of all of the decisions that you're making. If we can put a model around them to make sure that these decisions are not emotion-driven such that they will allow you to achieve your wealth goal, you're never going to miss your wealth goal. But let's put the models in place today so your emotion or

9:30your des, you know, or that new car scent doesn't get in the way of you achieving your wealth plan. And so I'm really excited for us to dive in. Well, so I I want to talk about models today and I'm going to base it on our book Katelyn by Sam Dogen. It's called Buy This Not That. Sam Dogen,
the financial samurai.
He's the financial samurai. Uh huge in the fire movement. Fire fie being financial independence, retire early. There's 93 versions of the fire movement. Um and I don't agree actually with all of his models. Um, but I love the fact that he put them out there. And I don't think the point was that he thought everyone was going to read his book and agree with his models. However, if you don't agree with it, I would have you ask why and what should your model be? And so, Katelyn, I'm going to we're going to jump in here and start talking about uh a variety of things. Uh, I'm going to get my screen where it's ready to share here momentarily. Uh, one sec here.

10:34Give me a second K as I go to share my screen. I'm ready and all right. So he's got you can see my screen Katelyn. All right. So big idea, right? And I think about this all the time. Our expectations are a part of the problem, right? So he has this whole idea in the book around a happiness equation and its reality. the current way we view the the current reality of the situation the way it actually is minus our expectations the way we think it should be equals our happiness. So reality minus expectations equals happiness. And Katelyn the important point to think there is we've got to be careful about our expectations because expectations are where a lot of the pain and unhappiness in our lives come from. And there's this old saying that I that I I heard once and I think it's completely true. Luxury once tried becomes necessity, right? And if you don't believe that's

11:36true, go, you know, and wherever, you know, wherever you're at in the journey. But, you know, if you're if you flown economy your whole life, Katelyn, as an example, and the first time if you fly Southwest, lovely airline, flown it a millions of times, still fly today. Uh, and then you start flying in first class, the first time you now go back to where you flew your whole life. You just one time got upgraded. You're now back where you were. All of a sudden, the seat that you were totally content with before now sucks. And you're like, I can't believe I'm back here. This just is it's never been this way. I can't believe the way they're doing it today. The passengers are crazy. People are bringing on their service crocodiles on the airplane now. You know, I've got all kinds of I'm going to get a service crocodile just because I think it's it's a musto in 2026. But the re the thing is a moment ago, we were totally content and happy. We raised our expectations and now we're not happy. So, it's really important to think about money is not going to be a

12:40driver in your happiness in all things, Katelyn. And one of my favorite thoughts of happiness and money comes from a guy named Ricardo Semler, and we'll link to it in the show notes. He did a he wrote a book called The 7-day Weekend. He did a 2hour interview with Tim Ferrris, which is by the I would call it just absolute must listen to. and we'll link to that um podcast, but he has this concept, Katelyn, that your happiness and your net worth are linked to a certain point. And he called that number about $12 million. And this is about 15 years ago. So I adjusted that for inflation. And I'm going to call it 20 million. So Katelyn, as you grow your net worth, every dollar you gain up to your net worth grows up to 20 million, your happiness will improve. And that 20 million, again, it's a generalization depending on where you're at in the country and your expenses and all those things matter. So, it could be lower for some and higher for others. But I and I've lived that for me, Kayn, that was true. To a certain point, more dollars

13:44earned equaled a greater happiness. And I know there'll be the detractors out there that say money is the root of all evil and more money doesn't help it. And I'm going to tell you, that's largely just something poor people say, Katelyn. And I know that's aggressive. That's just something poor people say because the reality is the more money and wealth you create, the more people you can impact, the more you can give to charity, the more you can leave a legacy, the more you can do uh with your money the things you care about. And again, wealth is so much more than money, but money is a part of all of our lives. It's neither good nor bad. It is what you make of it. And so I just want as we go through that to realize that there is a correlation but expectations matter immensely when you think about your happiness and your money.
Right? When you talk about 0 to 20 million just for a second for that number I think it's important for us to discuss there's different phases of that right like the beginning of what's giving you that happiness is honestly a roof over your head and food on the

14:46table. Once that happiness grows from there, now we're looking at security, right? And that we're not living paycheck to paycheck and we're not concerned that, you know, if if we have a an issue with our car all the sudden, uh, we'll have, you know, we we can't afford the $3,000, there's some security that comes there. Then there becomes um some ability to invest and create passive income. After that creates some ability for us to upgrade some things in our lives. Then we're able to have more lifestyle. So as you go from the zero to 20 million, there's more things that you're able to do, places and people you're able to help until that point, what you were trying to say was once you get to the 20 million, whether you're worth 20 million or worth 40 million, your happiness tends to stay about the same. It's just the greater impact you can provide in your legacy. Is that right?
That's exactly I didn't you're that's a great point. So the point he was making was after $20 million at $20 million of

15:50net worth today, you know, as we're filming this in real time, Katelyn, you likely are living in the the primary residence you want to live in. If you want to have a second home, you have one. Um you're likely flying first class to all the destinations you want to go to, and you're staying at the places you want to go to. You're eating the food you want. Um, so all those things happen and his point was after 20 million, sure the house can get bigger, the boat can get bigger, you could get another home, but no more happiness was created. And I think that's an important distinction because Kayn, I told when I first started my journey, um, I had a couple things, right? The one of the happiest moments ever was the first time I had $10,000 in a checking account. I was like, "Oh my gosh, wow, look how much money I have." And it took I can't tell you how hard it was to get there. It felt like it was hercule. It was probably one of the hardest things I ever did was getting from zero to $10,000. And the reason why that was hard, Katelyn, is you have to quit spending the money, right? Like you have to actually make the money and not saying learning that discipline was challenging, right? For me, I think it

16:53is for all of us to have money in your account. You have all these wants and you can't do it. And so it it's just about building a muscle and figuring out what you really really want. And so I want to go as we go through today, I just want to keep anchoring that point that reality minus expectations equals happiness. And so Sam Dogen, the guy that wrote the book, Katelyn, he worked for Goldman Sachs and Credit Suisse. He retired at the age of 34 years old. He realized that he he could come up with a different way uh through these models and determined that he would still be really really wealthy, could live his ideal life, and he didn't have to go uh work his whole life. And so he had a couple different ways to look at it. So he calls the happiness equation. You could base it off your net worth, you know, goal. You could base it off your expenses, Katelyn, or we could base it off your passive income. So the first thought he had was, what if we based it off our annual expenses? And Katelyn, if you'll play along with me and uh use your calculator if you would. Let's assume one of our listeners today has annual expenses

17:56of about $150,000 a year. So, little over 12 grand a month. They got $150,000 a year. He says our ideal net worth to be able to retire very comfortably would be 25 times our annual expenses. So, 150,000 times 25, what's that number, Katelyn?
3.75 million. So if our annual expenses are 150,000, our target if we want to base our net worth off expenses, okay, we would need what you say 3.75 million. Now, one of the challenges of arguing off your expenses, you could always try to like cut your expenses and live cheap, Katelyn. And hey, get rid of the Starbucks. And I know you love to shop. So, getting rid of that shopping and shoe budget, you know, we could always do um we could always do with less, but I would argue that when you start cutting the little things, it really does start impacting your happiness. Cuz right, sometimes that Starbucks or that little thing you do

18:58might make you really happy. So then he goes to what if we base it off your income today, which is really Katelyn a byproduct of your expenses, right? If I'm earning an income today, is that a better way to do it? And he goes, all right, take your income today, and most people listening to this are very comfortable spending whatever they're naturally spending today. Multiply that by 20. So, let's assume the person with $150,000 in expenses is making um $200,000 a year in this scenario. So, now multiply that by 20. So, let's go 200,000* 20.
4 million. So, pretty close between 3.75 for the if you did it based on expenses or 4 million if you did it based upon income.
And let's level that up a little. Take out some taxes. So, let's go 250. So let's take 250 times 20. So I really think that's where you want to be. If your annual expense right now are 150,000 and your gross income, you

20:02know, we did it off 250 there. So that could give you around the 200 mark after taxes approximately. So we either to be at 5 million Kum, we're living our same life forever. 3.75 million if it's off of our expenses. Uh, another. So, that's two ways to look at, but now we've got targets. Everyone listening to this, I want you to stop right now, pull your car off the road, have your spotter rack your, you know, if you're if you're cranking out, you know, your your personal best over on the bench press or the squat rack right now. Take a second. I want you to think about your annual expenses and I want you to multiply those by 25. If you're at home at a computer and you don't know your annual expenses, log into your bank account and just look at the outflow, the amount of money on your on your checking account statement. It shows what did you deposit, what did you have going in, you know, withdrawals. Look at that total amount. Take a three-month average, multiply that by 12, and multiply that by 25. We want to know your annual expenses times 25. That is one net worth target. That's a range. That's your minimum target. Now, I want

21:06you to take your income today, or you could average your last three years, however you want to do it. Multiply that by 20. Those two numbers are your happiness equation range of net worth. So, Katelyn, our example, 3.75 to 5. Now, we're going to go down to your passive income. So, Katelyn, if our annual expenses, in this example, we went to $150,000. 30% are expenses, which that would be $45,000 for a total I'm sorry, the taxes, annual expense are 150, taxes are 30%, which is another 45. So, we're going to add that to our expenses. So, that number is 195. So, Katelyn, our passive income equation, we need $195,000 in passive income per year so that we're basically, Katelyn, when we retire or when we're ready to hang up our cleats, we're living the life that we're living right now. Anything you want to add to that as we

22:08kind of think about breaking it down, but we've we've really given the listeners here an exact target. This is your target. You've got a range of net worth and you've got the passive income you need to live the life you live today. So if you do not have a plan to get you to that passive income number, it means you're going to have to one of two things. You're going to have to continue to work for a long period of time or you're going to have to radically exchange your expenses in the future. And here's why that's really hard, Katelyn. Things go up in price. Like I don't know if you've noticed, Katelyn, uh I'm sure you have. things are, I'll be honest, I feel really expensive. Like when I go out to places and I have, you know, dinner, a drink, you know, we went to somewhere, things are expensive and so costs are only going to go up and that's why they're using your income and your current expenses in this model and it will change over time.
I think it's so important. This is one of the questions I actually I remember asking you at one of our first meetings

23:11and it was Brett, as I'm tracking this, I'm confused. Should I be tracking my net worth and the growth there or should I be tracking my passive income? Which is my actual goal? Because we spend so much time helping people get higher rates of return. And you said, Katelyn, it's both. You need to be tracking and you need to be growing both of them. So, I think while these are two options, being very clear on what both of these numbers are is really, really important.
I would say absolutely they're both important. If I was forced to pick only one, I would pick passive income. Um, now the reality is as you grow your net worth at any moment, in most cases, you could convert it to income, right, Katelyn? If I've got $10 million worth of land and I decide to sell it and just put it in a dividend stock yielding 7%, well, I'm going to make 700 grand a year, whatever that number is, right? Like, so it's not I could always convert it, but you can't if you're if it's at all dirt and I don't have another plan, that's where pain exists. So, I would

24:16argue the majority of your net worth should always be in cash flowing assets, businesses, real estate, royalties, dividend stock, whatever your flavor is. But now you've got a net worth equation. And so the next
if people don't have that over, if people don't have that yet, first thing you need to do, you likely all know how much money do you make. If you do not know what your your standard burn rate is, we all have a number. We think it is, but if you don't know what your standard burn rate number is, we have done previous episodes on that. Brett has some great exercises. We'll include them in the show notes of spreadsheets that you can utilize to start tracking that at a really great um consistent way. So that's that's a big piece there if people don't have that true number. I had the number I thought it was. Brett said I I think you should probably track that every single month for the next six months and gave me the structure of how to do it. And now I'm crystal clear on my burn rate. So first thing if you're listening to this, if you do not know your burn rate, you do not know what

25:18your true annual expenses are, figure that out. and then come back and you'll have these equation numbers
100%. Your burn rate is just whatever you spend naturally living your current life, not cutting anything out. What are you actually spending? You've got to know that number. We've got to get closer to our money. You got to complete this exercise and know your net worth range of where you need to be. There's four questions, Katelyn, I want our our listeners to either write down, and we'll put these in the show notes, too, if you want to come back later. But really, when you look at those net worth targets and you cast yourself out into the future, and I would say, you know, put yourself out at age 65, okay, for whoever, and if you're 65, you can put yourself out further if you'd like, but Katelyn, at 65 or at some point in the future when you want to retire, whatever age that is, you can insert your own age. What do you really want the freedom to do? Like the net worth is made up of an example we're giving here was $5 million as a target, but that's just a number that doesn't really mean anything. It just looks really cool in a spreadsheet. But what does 5 million do, Katelyn? Does it does it give you the

26:23time and ability to go volunteer at your church? Does it give you the causes? Does it give you the home you want? Does it allow you to go stay in Portugal for a month in the winter? Like I don't know what the aspirations are, but if you don't write it down and you don't have a target, I know one thing, it's very hard to hit a target that you don't have. I have found that to be true, Katelyn. And so, number one, what do I actually want the money for? Number two, how do I how do I want to do it? Like, how do I want to spend my time? What does a day look like? Okay, Katelyn, where is it? Do I want to live in my current home? Do I want to have a second home? Do I want to change homes? I want to upsize, downsize, live on the beach, whatever. Where do I want to be? And then who am I doing all of this with? You know, this is our spin around money for the mission statement for my life, which was how I thought about freedom. And for me, I link happiness and freedom. They're absolutely exchangeable. Happiness, I believe, is on the road. I think freedom is on the

27:26road to happiness for sure. And so, Kayleie, he's got this next idea. So, we now know our targets. We know that we need 25 uh times our expenses. We need 20 times our income. And so, then he goes to this chart. And so, if you're watching this on YouTube, there's a chart. If you're listening, don't worry. We're going to break it down. But, so, so Katelyn, I'm going to use my age here. So, I'm 45 years old. I know I look 19. I know how crazy that is. Um, but I'm 45. And so at this point, he's got a number that I've worked 23 years. Okay. So basically, I'm guessing 18. I went to college at 22 and I've been in the game ever since. Okay. Multiple of income equals net worth, right? So he's got a number there of 45 of 30. So if I am if I am making $50,000 per year, Katelyn, I need to have a $1.5 million net worth right now based on where I'm at. based on how long I've worked. That would be my target. Now, Katelyn, all the way on the right

28:30hand side, uh, making sure my Okay, if I have been making $500,000 a year, I need to have a net worth of $15 million right now to be on track for this is the extreme version of early retire, Katelyn. Okay, this is the extreme version. When you say extreme version, is that like that's bit to retire and I think that's what we're seeing here to retire at 50 to 55. So if you wanted to retire around that age, is that what I'm seeing here?
So this is if you wanted I No, this is Katelyn. So if I'm 45 and I want to retire today because I've got a long horizon.
Okay. You want to retire today? Now I got all So K, I'm 45 years old. I've been making 50 grand. If I want to retire because I've got a lot of years left. So, I need third I need 30 times my income

29:32today in net worth to be able to retire. Now, before you you know, we did uh income we did 20 times, right? But that's your retiring later like at later in life. So, if I want to go early, extreme early retirement, like if I want to quit right now, Kayn, if I make if I was making 500 grand a year, I've got to be worth $15 million if I want to hang up my cleats and not work again. And we'll give you the math here in a second. So, let's go a different one, Kay. Let's go down a little bit. So, if you're um if you are 60 years old right now, it shows that you've worked for 38 years. And if you wanted to retire right now based on a we'll do a $200,000 annual income, you need $8 million to retire right now. Okay. So, the point of this isn't that it's right or wrong, but everyone should go look at this chart and and we'll again we'll include a link to in the show notes. This is be if you wanted to hang it up right now. Now you'll notice

30:35Katelyn is you're there's two different equations as you're younger, right? You're you're less far along, right? So you're you're not there. You've got you're you're starting in this green section. Now you go down to the bottom here. Well, you don't you you've got less time horizon. So the numbers from 75 on, Katelyn, you see it at 75 years old, you need a multiple of 20 times your income. Well, that's what we talked about before, right? So, you would need at age 75 if you want to quit, you only need $10 million put away if you were if if your net worth was based on a $500,000 income because you have less time left as opposed to at age 50, I need 25 million cuz I got to run another 25 years and I'm going to withdraw out of it. Does that make sense?
Makes total sense. It makes total sense. So, basically what you're sharing with us here is determine when and when you want to retire. do the math based upon the numbers we just discussed. Figure out the why. I mean, sometimes it's exciting to say, "Oh, I want to retire

31:39by the time I'm 55." But for what? What do you actually want to go do and then let's build the plan to get there? So, I love how you're saying if we do the math, the plan will come. Let's do the math first, see exactly where that target is, and then build the plan. So, I love it. I could tell Katelyn, you know, I to I coach some of the top real estate agents in the country, some of the top investors, and regardless of income, Katelyn, I very rarely, and I can't even think of an example. I think there probably has been one where someone came in with their net worth target, what they needed, how they were pacing, in knowing that they were on or off track for their goals. Most folks don't know. They don't have a plan. And so, if this seems overwhelming and stressful, this is basic math. It doesn't have to be stressful. And it doesn't matter, Katelyn, that you're behind. There's been many times in my life where I was behind my plan. There's been, you know, times now, the last 15 years, I've been way ahead. But it started out, Katelyn, that I was behind. Why? Because I didn't even know where I was at. I was just running and gunning.

32:40And in my early days, you know, Brett, as a 21-year-old was, was there more money in the bank account at the end of the month than at the start of the month when, woohoo, we're crushing it. That isn't a model. So, if that's you, we've got to do some basic math. The good news for all of our listeners is I'm actually not that smart. You do not have to be ridiculously smart to have a lot of money. You absolutely do not need that. And I could tell you that all of my teachers, Katelyn, would uh would share that thesis with me. All right, Katelyn, we're going to move to our next slide here. All right, so Katelyn, we talked about this a little bit. your your net worth and passive income, they're linked, but but as we said, as long as you achieve the target net worth, you can always change the makeup of your net worth to generate more income if you want. Again, my focus would be passive income, but you could change the makeup of it. So, we talked about those net worth targets, and many people might be saying, "Well, that's a lot more than I thought. That's a lot less than I thought." So, there's different ways people think about

33:42starting to draw down their net worth. The first one, Katelyn, the model he talks about is the yolo. And Katelyn, I don't know. I know you're a millennial, but you don't know that yolo is you only live once. So, Katelyn, if you do this uh the yolo strategy, because you're only going to live once, Katelyn, you're basically trying to literally die with nothing. Okay. Now, here's the only downside to YOLO, Katelyn, and there's one major downside. If you live a really long time, because if you live a really long time, you are going to run out of money and those last years are going to look really interesting. So, I do not subscribe to this. I would not agree with it and I don't Sam Doa doesn't either. Um, but yolo, so you're going to take your net worth, Katelyn. We'll take our we'll take our math here and we'll go back to our person, which was we're going to say that, you know, we're uh we'll say I hung up the cleats at age 50. So, I needed Katelyn on a $500,000

34:48annual income. I'll do the three I'm going to do the $300,000 income. So, 50 years old, I need $15 million. Katelyn, would you give me a 8% withdrawal rate of 15 million? 8% times 15 million. And so this would be the amount of money I could withdraw out
2 million.
So if I withdraw 8% on an annualized basis, uh it's not hard to see that is going to drain that balance. Now I'm earning something on it, but odds are year in year out maybe I'm earning eight, but I'm not. Like, so if I'm taking that amount of money out, Katelyn, I'm drawing down the principal pretty massively and I could put myself in a bind. Now, however, if I did a 4% withdrawal rate, which would be 600,000 on the 15 million, uh odds are my I could earn today, Treasury bills pay roughly 4%. So,

35:52Katelyn, that if I could live off that 600, I'm kind of in the go zone, right? my treasury build a risk-free rate of return that can is largely uninterrupted provided the United States of America continues to exist. I'm going to be able to take out that 4% and I'm going to be in a good spot. So, it's why it's so important to draw a connection between your net worth, the percentage you withdraw, and your actual burn rate and expenses of your life. It's so important to draw the connection between those three points. The bigger you want to live, the higher on the hog you want to live, Katelyn, the the less the greater the likelihood that you end up with nothing. And again, the danger here, which is the whole point of wealth is to take care of your health to live and do things as long as you can. And as a 45year-old today, here's what we're all humans are living much longer day than ever before. Medicine is on a J curve and only getting better. Like I did all this, you know this game, I know all this stem cell PRP work. I had tennis elbow which is super cool because I don't play

36:56tennis and I went and was gonna they wanted to have surgery and instead I did stem cell in my ar elbow and I you remember at the point where I couldn't shake people's hands because I had this issue in my arm. I am completely healed with stem cell PRP you know my body fix itself. So we're living longer and doing better. Katelyn, I don't think that it's smart for us to have a plan that involves us living cheap and running out of money and then just hoping we die before our money runs out. Sounds like a really crappy way to live.
Agreed. Absolutely agree.
So, what are the other options, Katelyn? Now, we go to the other. So, we went to the yolo. You only live once, Katelyn, for the trend for the hipsters. Now, we're going over here to legacy. Okay. If you want to leave a massive legacy, if you draw down zero to 3%. So what if you want to keep working uh or you only you could live off 2%. So go back to our number. If we could live off 2%, that's still $300,000 a year on the example we gave. So if you could live off that,

38:00odds are your not odds are your net worth is going to continue to grow because it can earn 4% on a risk-free rate of return. It's probably going to average more like 8 to 10. If you're only drawing out two, Caleb, it's continuing to grow. And so this is the way you would leave a massive legacy to your family, to causes you care about, to other people you care about. Or you could also go do massive um philanthropic efforts where you could go, you know, get involved in your church, in schools, in museums, or whatever causes you care about, Katelyn, you could do that. And so that there's a different philosophy there. The key, Katelyn, we've got to figure out as early as we can what is our what is our draw down or our safe withdraw range going to be once we hit our time that we're ready to quit hang up the cleats and quit trying in our day jobs.
I think the legacy retirement at least for me really made a lot of sense. Number one, it ensures and protects you

39:03against um honestly living too long. That was one variable of our concern on the yolo approach. Second was that um your that things are getting more and more expensive. Inflation is occurring, right? And that helps you to hedge against inflation when you look at the legacy retirement philosophy versus the yolo. And then as you said, the the ability for you to make the greater impact not only in your life while you're alive, but then something you can leave later on as well. uh is really really impactful. So for me when you when I when we read this and and I looked at both of them for me I was definitely I fell into the legacy retirement philosophy
and you know and he talks about this key most people are somewhere in between. If if someone asked me Brett what should I do model it off 4%. 4% historically has been the safe draw down rate. Today, Treasury bills are at that number. And that's a very safe safe number is 4%. If you want to go higher

40:07than that, the challenge, Katelyn, is folks that didn't put money away whose net worth didn't climb enough for them to retire, the problem is they typically need the 8% to have enough to live their current life. And that's the danger, right? So, if we could put the pressure, the the money in early, 4%'s where we really want to be, the lower the number that you can still live your ideal life, the greater legacy you can leave. So, let's talk about how to make it work. Number one, we have to have a savings plan, Katelyn. Go ahead. Oh, I was going to say just to tie that together with where you came from originally, we have the two options. is we were looking at your net worth number for retirement and we were looking at your passive cash flow. If you look at your net worth number, so going back, if you look at your net worth number and you multiply that times the 3% withdrawal rate, that should equal what you need from the passive income component. Correct? Am I thinking about that the right way?

41:09
That's right.
As a way to back in. Okay, perfect.
Yeah,
my math is working. Brett,
yes. So, so Katelyn, then we got to think about everyone needs to save something. Every single person. I've met people, you don't understand, Brad, in my situation, in my town, in my neighbor. I I I can't save anything. And And you've seen me do this. I go, "Well, let me see your bank statements." And I have done this more times than I can count. I have yet to look at anyone's bank statement that I didn't find a waste. And if you don't believe that, just go to your and I can't do it on Android, but go to Apple, go to settings, click on your name, click on subscriptions, and then scroll down to all the crap that you're paying for subscriptions for that guarantee there's $50 a month sitting there. There's your 50 bucks a month, right, Katelyn? And that's not going to get you ridiculously wealthy, but it's going to get you on the path to saving. Sam Dogen recommends saving at least 20% of your ax after tax income in investments. Save at least 20%. So Katelyn, that's got to be our minimum

42:12target for folks. We've got to get to where you're saving 20% of your income. I could tell you this gets easier if you lock in your expenses. I mean, today, Katelyn, I save the overwhelming majority of my income. you know, my income's grown very dramatically and I probably spend less than I I I probably save 80% or more. It might even be 90. Um, I live a beautiful life, but most of the things I own uh I bought for cash, paid them off, did whatever. And so my expenses, even though I have nice things, are relatively low because I did them a certain way. But I w I started my secret to success, Katelyn, was I started saving money doing this model uh my own version of it. I mean, I didn't know about Sam Dogen uh back then, but I was saving 20% and always trying to buy income producing assets. I started that at 21 years old, and I would tell everyone, you can do it. You've got to start where you are, but you got to start saving 20%. So, that's step one, get a savings plan. Step two, Katelyn, we got to optimize

43:16your earning. You know, we no doubt we talk about the mastermind. You can only when we talk about cutting expenses. What's interesting is if let's just say you're you're spending $150,000 a year. Some folks Katelyn, they could cut 20% of their of the expenses out, right? They could go from 120 150,000 expenses. 20% of that's $30,000. So they could live off 120,000. But they have cut out every single luxury in their life. Katelyn, there's no Netflix. There's no going out. You're never going on vacation. You know, it's just it it's a harder world. But so there's a there's a limit on how much we can cut, Katelyn. We can just we can only cut so much. However, if you flip the coin over and say, "Well, how much can someone grow their income?" Well, that number is almost limitless. I mean, Elon Musk just has a billion dollar compensation package. Now that's not on an annual basis, but there are people earning a hundred million a year, a billion a year. And so your upside potential on income is unlimited.

44:18Your cutting expenses um is limited. So yes, all the frivolous things if you're not saving 20%, Katelyn, we got to get to that number. We got to make some cuts. You're living beyond what you can afford. Fact. However, immediately you should be focused on growing your income. Bump up your income. Find something you're good at and then go get the education. Growing your income isn't hard, but you do have to have a plan for it. Katelyn, you've got to have a strategy. If you're in sales, go read every book on sales. Go find a mentor in sales. Find a peer in sales. Get around the people that are doing the thing and grow your income. Join a mastermind. Get in a group around sales on your industry and make it happen. You've got to go optimize your earning power. Number three, Katelyn, you got to stick to a plan. You've got to have a way to measure. People missed their financial targets or any goal, not because they didn't have a great plan, because they got off track and they had no check-in points. I want you to imagine here that if you were running a marathon and like you weren't on the on the road, okay, like you were

45:21just they said, "Hey, you got to go run 26 miles and you just started running and there was never any markers." Would you naturally, Katelyn, be able to know when you'd hit 26 miles?
No. I bet you wouldn't even get close. You're going to get it probably mile 15 and go, "Yeah, I did it. I nailed it." No, we got to have check. We got to know like, "Well, that was mile 15. Okay, harder than I thought." You got to know where we're at. Yet, some people start running a marathon and they have no idea if they're on mile three or if they already finished the race. And so, we've got to have goals. We've got to have a plan of where we want to be in the future. Our 10year goal becomes a fiveyear. Where do I need to be on five years to be on track for 10 years? Where do I need to be on track one year to hit my 5-year goal? Or do I be on track this month to hit my one-year goal? And then what do I got to do this week to win the month? It's not that hard. Or my my good buddy um Tim Heyl had this incredible saying, you know, he runs Homeward. Amazing dude, just one of the most beautiful humans I know. Uh both just physically looking at

46:25him and inside of his heart. He's just a majestic beast, Katelyn. But Tim had this idea of when he was started out in real estate, all he wanted to do is know if he won or lost the day based on his effort and he had a little chart on the wall and every day it would be, "Oh, I got a W. I did the work that not did he get the result. Did I do the work?" And over time, he just wanted to have a winning record. Was he perfect every day? No. But it's the same thing with your net worth and your goals. Are are you going to win every single day and do the right thing with your money every day? Absolutely not. But should can you get back on track realizing you missed hit the week, hit the month, hit the oneyear to hit the fiveyear, to hit the 10-year, Katelyn, it is a game. And all of this you need to gify. Play game. Find out what's going to truly motivate you to play this game. For me, it was laying out that 30-year plan, seeing where I need to be 30 years from now, and then knowing where I need to be next year. Like, Katelyn, right now, I know where I need to be next January. I know exactly where I need to be. My game, Katelyn, because I'm a crazy person. I

47:27want to see how far how many years in the future can I get ahead of this. And so my competitive spirit, right? I don't do fantasy football, Katelyn. Uh I what I did is I drafted a team about about 25 years ago. I drafted myself on my own fantasy team. In my sports business, it's the only sport where there's really no rules. It's 247, 365, and the only real player you have in the game is yourself. And I've been playing that game now for 25 years and I am focused on winning and gamifying wealth in my life to get what I actually wanted. Anything you want to add there, Katelyn, as we as we throw all that at them? I think people spend a lot of time on two things. One is well I shouldn't say that a lot of people get that I have seen and I' we've had the discussions with get paralyzed in two things. One is trying to figure out how to

48:31um live in their current world. What I mean by that is they really struggle and and they get paralyzed before they put their balance sheet together and their wealth plan together. They're they're struggling today. So I think at the beginning of this episode you said that a lot of times you felt like am I behind or we hear clients say I'm behind. Putting where you are today getting it on track and establishing the plan is the most important action you could possibly take today. Eat the elephant. Set aside some time and find out where you are today because you're not behind. You're right where you should be. All of your decisions today have gotten you right to this point. Then I love that he broke it down here into three simple steps. Number one is to establish. If you can go back to Brett, that'll be super helpful for the people who are able to see this. Go back one more. Perfect. Step one, establish the savings plan. Where are we today?

49:33Set aside 20% of your income today. cut your expenses to get the based on the income I'm making right now or what on average what I've made in the past five years. What does my current spending need to look like to be able to save 20% today? And you should focus on saving 20% of your income until you have a minimum of 12 months of your burn rate. That's what Brett talks about all the time. That's security. Now, beyond the 12 months, if you need additional security, you want additional liquidity, great. We can talk about that. But number one, where are you at? Put your plan together. Inside of that, make sure your plan includes that you have the ability to save 20% of your after tax income based on today average of the last 5 years. So if you had one killer a year and you made 300 but really your average is 150, we need to make this plan on 150. Step two, now when we go to the next portion, step two

50:38is all about increasing your income. Brett has really simple models here. Increasing your income for him is how do you become the absolute expert and how do you go out and get additional opportunities? Find something you're really great at and monetize it. He gives the perfect example of sales. If you're in sales, guys, all the information in the world's available to you. Watch every YouTube roleplay with someone else. Get in a group like our mastermind or or another mastermind where people are honing that skill set and grow your income. Because even if you reduce your expenses by the 30%. You'll actually get even greater results now if we increase your income. I always tell Brett's private clients when they start with them, this is where he's going to go. Number one, where are you? Number two, where do you want to go? And number three, how can he help you to increase your income as quickly as possible so that we can start taking your money and putting it to work? And that's why step three was really around

51:41that work. But if you're sitting here or listening to this or as Brett says, doing a squat, you know, or a a deadlift or a Bulgarian split squat right now, put the weights down.
If you're doing a clean and jerk, if you're if you're doing a cleaning jerk, you're doing a clean and jerk. If you're a cleaner,
guys, if you're clean and jerking your face off right now, stop. Take a second. Do you have these three pieces in place? And do you have a plan in this year to achieve them? Start with step one night right now. Cut your expenses. Find out where you're at today. Get to where you're saving 20%. Step two, increase your income. Bump that puppy up. What can they do today to get another $100,000 in income this year? My guess, if you're like me, is that you need more education. You need more exposure to what's working in today's market such that you can hone and monetize that skill set. And then number three, let's stick to our plan. As Brett says, like

52:46totally crazy people, like psychopaths. How did we stick to that plan all the way down to the consistency of daily? We did an exercise, Brett, in one of our masterminds that really changed something for me. It was where we had to look at all of the different areas of our life and figure out in the slight edge book exercise. What is the small consistent thing in each of those areas we can do every day to achieve our goal? Physical fitness, it's easy, right? Oh, I'm going to count my calories to make sure that I'm eating less calories than I'm burning and I'm going to go to the gym and do x amount of exercise. In our financial world, it's really similar. You gave the example of what can I do every single day. Your answer was I log into my bank account and look at the numbers. It gives me clarity for the day. What deposited? What withdrew? What do I need to look at? When I was going through the exercise with one of our team members, her answer was to log and she was

53:49working on controlling her expenses. She wanted to reduce that and make sure that she got the 20% savings. So her answer was she looked at her credit card every day. She knew that her spending amount needed to be a certain number. So what she did was she said,"I know every day I should spend on average this amount and by the end of the year I can afford to pay my credit card. I can afford to pay the rest of my bills and I can put the rest away." So she logged in and looked at her credit card bill every single day. So, with this consistency at the back end, make sure you're tracking the two things you put forth on step one and two. Step one was reduce expenses and save 20%. Either look at the amount going in or the amount going out every single day. Number two was bump up your income, right? What is the activity you can do every single day to stay consistent in that? And is number three is stick to your plan relentlessly. Once we save the money, once we start boosting our income, now we're going to

54:53be looking at how to invest it in a really cool way. So, these three steps meant a ton to me and really helped me hone in on what do we do need to do on a daily, weekly, monthly place. We don't we aren't going to miss it. Like you said, if we're tracking it like that, if we're that consistent, we aren't going to miss our goal. We're going to crush it.
Katelyn, that was so good. Everyone needs to go back, relisten to that last two or three minutes again and get your action plan. Don't listen to this podcast and leave without taking action. Education without action is entertainment. This is not designed to be entertainment. Even though Katelyn is hilarious and so am I. We are here to help you improve your life and your money and we want to do it. Go back and listen that and make sure you get that. So now we've got money. Katelyn, you got a plan. You're going, you're saving your income. We've got to figure out what income streams make the most sense for us. And Katelyn, we're going to look at this on a 1 to 10 scale. One being extreme risk, 10 being no risk. Okay, Katelyn. So, we put our

55:58money, right? If we want no risk, there's options or we're going to call it extremely low risk. And then one is extremely high risk. And so, where do we put our money and what does that look like? And so Sam goes through and he walks uh through different things. So he's got the first one on and he gives he evaluates a few different areas and I think you should really think about this for passive income streams. The first thing people have to think about Katelyn number one is risk. Part of risk right is what happens when you don't know what you're doing. That's really the definition of risk, right? I heard my neighbor is buying some new coin. you know, the Shiba Inu coin, Katelyn, which is was hugely popular three years ago, popular, and people were making and losing tens of millions in it or whatever, and well, my neighbor's buying it, I'm going to buy it. If you don't know why you're doing something, the underlying economics, you don't want to study it, learn it, you should not play in that game. There are plenty of games you can play on a set it and forget it basis, and we'll get that. But risk is our big as an investor, your biggest thing you should think about in

57:03my opinion is risk. And I always go to Warren Buffett's rule. Rule number one, don't lose money. Rule number two, see rule number one. And that's a great anecdote, Katelyn, but the reality is if I started with $100,000, okay, Katelyn, and I lose 50% of my money because I put in a risk and I bought Shiba Inu and it went down or however you say it, how much money do I have, Katelyn? Katelyn, that was a question that wasn't rhetorical. If I have $100,000 and I lose 50%. How much money do I have?
You have $50,000.
Boom. I have 50 grand. Now, Katelyn, if I want to get back to $100,000, what return do I have to get?
200%. Right.
I got to get 100% return. I got to get So, so get the So, I got to get now a 100% rate of return to give Well, getting a 100% rate of return is

58:06hard. It's It's beyond hard. So, the greatest money minds in the last if you took a 30-year span and you were to take averages of all the greatest money, if we're to take the 50 money manager managers of all time, Katelyn, they get about 10%. So, in other words, if you have a h 100red grand and you lose and you go down to $50,000, you're now you've got to get your way back up there, it's going to take years and years and years. So, we've got risk is our biggest thing. Second thing we got to look at, Katelyn, is return. So, how much money could it make? What's the potential of return if you want to go to the next level of the game? So, we're trying to reduce risk. Katelyn, we want the highest risk adjusted rate of return. In other words, how can I make the most money with the least amount of risk? As Katelyn will tell you, this is where I am completely obsessed. I spend my entire days thinking about how do we get the highest return for the least risk. The next step down the line is

59:09think about feasibility is how feasible is it that I pull it off. In other words, it on a 10 being it's really easy to do, one being it's not that feasible. You know, like as an example, private equity. Well, that's a three feasibility. Why? Because of income requirements, technical expertise needed, finding the deals. That's hard. A money market, Katelyn, feasibility. I mean, everyone can do it. Everyone can open a money market account. Why? It's Italian. Next thing we should be thinking about liquidity, Katelyn, liquidity is just how easy is it to get our money back. Some investments we make in life, we're tied the investments are tied up for a month, sometimes a year, and sometimes if you're investing in a syndication or something, it could be a five or sevenyear hold, right? So, am I going to need that money? Even though it creates income, am I going to need my capital back? Next is activity. You know, what's my level of involvement? Okay, activity. 10 being it takes no involvement, one being I need a lot of involvement. Okay, how involved do you want to be in this passive income

1:00:11stream? And then lastly is taxes. So I've always looked at these categories, but Katelyn, what I love about what Sam Dogen did was he took a 1 to 10 scale on the six different categories and then totaled them up and rank them against the different primary categories of passive income. And so you could see like what's easiest to do or what's got the best score. And so the the categories that he used were if Katelyn, we're going to go get passive income today. Number one, we could do peer-to-peer lending. He's got peer-to-peer lending. I'm going to delete that and call it hard money lending. And I think actually if you said hard money lending, I accept feasibility and maybe activity. I I would actually accept feasibility if you're if you're watching this, I would argue he's pretty right. But I I would not do peer-to-p peer lending, but hard money lending I would put in that category, you know. Then you've got private equity. Do I invest in some like in private companies or private, you know, credit? Then we've got CDs and money market accounts, right? those spin out a today. Most CDs are going to pay somewhere between three to maybe high

1:01:174%s depending on how long you're willing to lock it up. Then Katelyn, you go to fixed income and bonds. Okay, you could create your own, you know, products and subscriptions or some sort of uh vehicle there. Then you got physical real estate, Katelyn, your rentals, buildings, single family rentals, vacation rentals, commercial buildings, whatever. And then you go into like REITs, ETFs, things like that. And then you got dividend investing. You know, think of your dividend paying stock like a um you know, whatever. I I just happen to know this one. I'm not saying someone should invest it, but Katelyn, like Verizon right now is paying like a six 7% dividend as as the day we're filming this. So you you've got these different options, Katelyn. The key is to figure out a couple things. Number one, where does it fit in your risk profile and what gets you excited, Katelyn? Because at the end of the day, with the exception of bonds that are going to be like the the total the Vanguard bond index, REITs or ETFs or dividends like you could get and you could make this much simpler. Um,

1:02:19we're going to need some expertise to do some of these things. We're going to need education. We're need management and we're going to need an unfair advantage. So, the point is if you're looking at this and going, "Well, Brett, how do I get I don't want to do all the things that you do. I don't want to study things. what what should I do? I just want to put my money at work and I want to set it and forget it. I would have you look at at the Vanguard Total Market Index. And there's a really good book we'll link to in the show notes called The Simple Path to Wealth by Collins. And in that book, he just argues of putting it in. I'm going to give you the stock symbol here in a second. It's VTSAX, which is the Vanguard Total Market Index. Basically, you're buying a piece of America. And if you put it in there, Katelyn, set it and forget it, and woke up 20 years from day, I bet you're going to average about an 8 to 10% return. Okay, pretty confident. We've, and you and I have done case studies in our mastermind and shown that that's a really simple way to be ridiculously wealthy as long as you're putting enough money away, right? Set and forget it. You don't have anything about it. I think the mistake people make, Katelyn, is they want to take

1:03:23excessive risk to get to their goals faster by thinking that they're going to get some lottery ticket type investment that's going to perform at 20,000% returns, which isn't completely realistic. And so I just think when you look at the options, it's really important to match up who you are with the risk, with the methodology, with your plan and see where it all fits together. When you look at this, anything you want to add to that or other thoughts you have? It's a model, right? It's now that we're putting the cash to work, build the plan that works for you. Number one, understand your risk tolerances. Understand what you're comfortable doing. Number two, understand where you may have, like Brett mentioned, that unfair advantage. I've been around you, Brett, long enough to know your favorite investments are real estate where you believe that you have uh the ability to see something

1:04:27either that's undervalued or that you can bring value to it to increase not only the equity component, but get long-term cash flow with a great tax advantage. You have an unfair advantage in that world and you always want to play there. Another place that you really like that isn't necessarily listed here is investing in other businesses um or investing in other people and getting really high rates of return there. Those are going to be a little more active than necessarily these passive income streams. Um but I think it's developing a plan and seeing where you have the unfair advantage and where it falls within your risk tolerances. What I like here, Brett, is that they've categorized it for us. This was built for the masses, right? Our audience is primarily in real estate. So, our I would say our feasibility number on that line should be a 10 if you're in the real estate business for physical real estate. But what this has done is given you the categories to think about. What

1:05:29risk does it have? What rate of return do you think you're going to get? How feasible is it that you can go out and get it? What liquidity loads do you have from a security standpoint? How much work is it going to require for you? A lot of work, a lot of activity, or none at all. Are there tax advantages associated with it? And there's the score. This is what he put together for we'll call it the entire world. If you're just an average human, here's what it looks like. But I would challenge you that our audience may have certain areas here where their numbers may be a little bit different. They should go and identify this for themselves. How do they view these things as far as risk and return as well based upon their knowledge, their education? For me, Brett, I got to be honest with you, P2P lending, like you said, the risk for me that's a 20 because I'm, you know, it's it it isn't something I'm looking to do. Um, so, so for me, some of these numbers do change in that component. The money market or

1:06:32CD account, yeah, that's a 10. That makes sense. So, I would challenge people to go back, look at this also for yourself, and I think you'll highlight one or two areas that you really do want to invest and put your money to work. I think there's a lot of options out there. Picking the right one for you makes sense. And the great news is you can then look at those expected rate of returns and make sure that they'll allow you to achieve your goal
100%. And so everyone should think about, right, the the first question everyone should be asking when to place their money is where do you have an unfair advantage? And Katelyn, you know, she said, "Well, Brett, you buy a lot of real estate um and you lend money against real estate. Well, why do I do that?" Well, Ken, that was my unfair advantage. I was a real estate agent in Phoenix, Arizona, selling averageric houses. My portfolio was made up of real estate and average price houses because that's where I had an unfair advantage that I was the expert. And I built my entire wealth around things that where I had an advantage of knowing more than others, right? So if I were, you know, Katelyn, uh, if I were a dentist and I

1:07:35was paying to lease a machine or I like, you know, those those huge, what are they called? What are the machines that make the crown called, Katelyn?
Like machine. Yep. That's one of the manufacturers.
So a CEREC machine. And I don't know what that machine costs. I'm going to call it $700,000. Crazy expensive machine. Maybe it's millions. I don't know but you know some people may lease those machines as an example and I don't know how they all the mechanics I'm not in the dental space but likely someone's financing that the first investment you could make if you know that you're a dentist and you're going to be in business for 20 years would be like take your own finance your own machine right come up with your own way and that may be not the greatest example like let's say you're if you're paying on credit card debt and here's one thing we should talk about for a moment Katelyn I we see people that are looking to start investing while they have credit card debt and That makes no sense to me because your credit card debt, if you're not paying it off every month, has an interest rate of 29%. If you're going into an investment and you're going to get a 10% return, that's theoretical, and we got to, you know,

1:08:38it's over time, right? Cuz one year could begative - 20%, and it's an average of 10% over a 30-year period. You get a guaranteed return of 29% by paying off your own debt. So, we got to always think where are we at in the cycle? Where should we be putting our money? So Katelyn, which that's the segue to how should we be thinking about debt if we're if we're starting to take 20% of our money and save it. We're going to take this from worst to best how we should think about debt. Katelyn, number one, credit card. All right, Katelyn. So people might be listening to this right now and thinking about, okay, I I've got a different situation. I've got a little bit of debt. How do I start thinking about savings and investing and how should I think about debt? And Sam's put together a model here for us to think about. And the model is really a couple things. Number one, Katelyn, if we've got credit card debt, we need to start there. Why would we start with credit card debt? Because we're getting we've got a 29 if we're not paying them off monthly. We're paying 29% interest where if our goal is

1:09:41to get a 10% return, that's a maybe. It doesn't make sense for us to invest money when we have credit card debt. So, we've got to go down to the credit cards. We've got to pay it off. If you think of debt, Keelin, you're stealing from your future self. Okay. On bad debt, bad debt, we are in the future going to have to pay more for stuff that likely we shouldn't have bought today. And so, credit cards are the thief of joy. Having balances on credit cards is a disaster. No one should have it because it represents a massive, massive deficit in your life and something you should never have. with credit cards. We got to have a plan. You should not be investing in my opinion until your credit cards are paid off. It's the best place you could go to invest. Katelyn, I I made a joke to one of my private clients and I said, "I've got an investment that pays 20%. It's no risk. It's guaranteed. Would you do it?" And they said, "Yes." I go, "Cool. That's paying off your credit card." And the reality is it was 29%. It wasn't um 20%. But that's a way to think of it.

1:10:43Paying off your credit card debt is investing in yourself. That's what it is. Next thing, K, and I couldn't agree with Sam more as we look at these. Um, we've got to get rid of automobile debt. I've never had a car payment my entire life. Uh, it was something my father beat into my head that you do not finance luxury or anything that doesn't pay you. So, automobiles are one of those things that go down in value. They are not an investment. The best model for cars. you buy something 2 years old with less than 20,000 mi and you drive it as long as you could possibly stomach it is the way to lose the least on cars. He's also got a model, Katelyn, that you should spend no more than onetenth of your gross income on the purchase of a car. And I know when we were teaching this in our mastermind, that was hard to take because if you think about it, Ken, in our example earlier, if we're making $150,000 a year

1:11:47and we're going to go buy a car for 15,000, that's tough, right? That is a tough That is a tough thing. But again, his model is how are you going to get to retire early and live financially free? And it's not going to be by overleveraging yourself with credit cards and cars. But this is a tough one. So it doesn't mean if you spend more than 10% on your car, you're not bad. It's just something you got to be very cautious of.
These models, Brett, are put into place so you know what to spend on your daily things that we typically spend a lot of money on, right? so that we have enough money left of our income to go and actually do the investing. Right? This isn't to punish people. This isn't to say, "Oh, you're nuts if you went and spent that amount of money." It's so that the choice that you wanted the upgraded BMW is a choice. It's just going to be a choice that's, you know, feels great today, but is actually costing you significantly more in the

1:12:49future. So what he's trying to do is say, "Guys, you can have any car you want to, just your income versus the percentage that you're spending here. This ratio will allow you to have enough additional non-spent income such that you can invest and get the financial future you want tomorrow." You always say this and it makes total sense. Your life is the sum of your choices. nothing more and nothing less. What Sam's trying to do here is say, "Guys, I'm going to make this choice super easy for you. Here's a mathematical equation that will ensure that the choices you make give you the sum that you want at the end of the day. And so, you should spend no more than onetenth of your gross annual income on the purchase of a car if you want to reach the financial goals that he's talking about. That's it. You either make the choice and get it today or you make the choice and get everything you want tomorrow.
It is. It's that classic case, Kayn,

1:13:54that life has costs and we all get to choose when we pay them.
Yeah.
And so the payment might be I didn't do these things. I bought a car that was 40% of my income. Well, then you're just going to have to work a lot later and you're going to have a you're going to have to do a lot. You're going to have different costs that you're going to pay and that's a decision you can make. Next piece of debt we need to talk about, Cadence, student loans. First of all, for the young people listening, make sure that the loan you're taking out and the job you're getting actually aligned. I can't tell you how many times I've seen someone with $200,000 of student loan debt that that is that that is trying to get an $80,000 a year job. Katelyn, that doesn't make any sense to me. And I know things are about following your passion and all of that, but the end of the day, if you went into debt $200,000 to get an $80,000 year job, I would argue you could have got that job before you started. So, you got to make sure the debt matches up. And if you're taking on student loans, take the minimum. You can try to not take them, but if you have them, we've got to get them paid off. It's something to work out. I know the interest rates are low. You can argue that the interest rate on a car is low, but all of it is debt, not against an an asset, but it's a payment

1:14:58that's going to go on forever, and it's a guaranteed return if you pay it off.
Yeah.
So, studio,
once you pay it off, you get to take that extra money and invest it and grow it. So pay it off as quickly as you can
100%. So he's got ratios here and how you should think about debt and interest rate and so you can read the book and see all that. Um I want to go to um I'm going to skip over here Katelyn a little bit to to really a few things. Right. So we're going to talk about optimizing our investments. We're hu we're huge believers in having a Roth IRA for your kids. I believe this is a single place you can offer the most value to your kids provided you do two things. Number one, if you own a small business, you got to get with your CPA on this because we're not tax professionals, cage fighters, or anything cool like that. But Katelyn, the best place people could go to give a gift to your kid would be if you paid them if they did work in your business, you could hire them. You get an expense and then it provided they don't make over a certain amount, they

1:16:01would actually pay no taxes. Now, once they've got income, Katelyn, they could take part of that income and put it into a Roth IRA. We're going to film a future podcast on Roth IAS, but the whole thing is you could help your kids do it. I believe very few financial products work for every human out there. I believe that everyone out there, every human should have a Roth IRA because if you're very smart and you do the right things in your life, that you can grow that money exponentially and then it you can pull it out taxfree. So, a Roth IRA is one of those vehicles that I think is critical. I've got one, my wife's got one, my three kids have one. So, I fund it for my kids. They choose to invest it. They can invest alongside you and things they're doing. You have there's all kinds of rules around this, but like if I'm buying a house, they could choose to invest in the house with me and it it's taxfree. But the ne the second part is you got to have conversation with your kids on where they're going to be and make sure they understand the tool. What are the returns? And my commitment

1:17:03to my kids, I'm gonna fund this Roth IRA until you're 18 years old. After that, it's on you. And I want them to pick up that. And if you look at the returns, and everyone should go play with our B wealthy calculator and go plug in a kid at seven, it's b wealthy calculator.com. Plug in a kid at 7 years old and see how much money they have at 65 years old. If they put away $500 a month and get a 10% return, spoiler alert, it's tens of millions of dollars. It's absolutely insane. It's one of the frustrating parts. Katelyn and I always joke for my parents. I really wish they would have done that for me. However, um they didn't and that's great. Thank you. Um they didn't know about it, but it's it's the best gift you can give to your kids. So, optimizing that is important. There's a reasonable wage. You can also Katelyn, there is a way to do this where they don't actually pay the payroll taxes. You can pay your kids and you can avoid payroll taxes. And again, we're going to cover that in a future podcast, but I want to plant the seed today.
This is the cool.
This is the really cool part. It doesn't

1:18:05seem like much fun the beginning, right? Where we said, "Guys, you've got to save 20% and then you need to come up with a plan and all this." Once you do that though, you save the 20%, you've paid off all the debt, you get to do really cool stuff like that where you get to invest in your kids' Roth and change the entire trajectory of their lives because they have such a long runway. Guys, had the discipline to put together the first two steps of the plan because the third step, which is what Brett teaches us, the wealth part is really, really fun. and you start looking at decisions like should I give the my kid the gift of a brand new pair of sneakers for Christmas maybe or should I also help defund their wroth kind of makes a bigger difference in their life I know that's kind of silly to say but I think there's ways to do all of it but you have to have the discipline on the front end to save the money master your craft and go grow your income and then start doing the wealth component here because you get to do cool stuff like that
and So Katelyn, this is so good. It it we

1:19:09got to think about just how do we get better at all these purchases? So one of the biggest expenses people have, Katelyn, over the course of their life will be their house. And so, you know, if you're listening to this, I would ask you, what was the financial model that you used when you purchased your last home? Overwhelmingly, your answer, you're listening to this, you're probably like, wait, my financial model? I don't know what you're talking about. I just I like the home. I like the street. I like the neighborhood. I love the kitchen. I bought the house. Cool. But did you realize that that decision may have had a bigger impact on where you land financially in your life than almost any other decision you made based on the city you bought it in and how much you spent and those things? And so Sam Dogen has this rule and he's called the 30/30/3 rule. Katelyn, first rule, spend no more than 30% of your gross monthly income on your mortgage payment. I would argue we've got to average three years of your income. No, three years. Let's take a three-year average and then get that monthly. Second rule, have at least 30% of the

1:20:13down payment saved. He's not saying you should put 30% down, Katelyn, but we need to put 20% down on all real estate we buy. Why? Because if you don't put that down, banks charge you what's called PMI or private mortgage insurance. Now, Katelyn, this is super aggressive, but you know what PMI is? It's a tax on poor people. They charge you insurance because you didn't have the right amount of down payment. And by the way, this isn't me being a disrespectful comment to poor people, Katelyn. Not at all. I've been a poor person. I've actually been as poor as you can get. I mean, I went to negative numbers in my early years. So, I get it. I've been there. So, that's not a negative. And I said all kinds of things that poor people say, like, "My bank doesn't treat me right." Well, no. My account was overdrafted. I didn't have money in it. They weren't taking advantage of me. I was broke. So, the point is, you've got to put 20% down, but because we want to get the lowest payment, the best terms because we want to have more cash to fund our plan. The reason he's saying the additional 10%,

1:21:16we're going to put 20% down. We've got 10% saved, Katelyn, for the things that naturally come up. Things are going to come up in our world.
What's that? So,
I was saying like, you know, you you buy a home and in year two the furnace goes out. Well, we need to have the amount of money to be able to do the repairs needed on the home as part of home ownership.
The reality is we're going to spend money on our primary residence on things that make no sense to the next person. And we all do it. And so, we've got to have money saved, whether it's repairs, things we're going to do, etc. The last rule, Katelyn, is the hardest. You got to limit the purchase price to no more than three times your annual income. I would argue three times the average of the last three years. So let's think about what he did here, Caleb. We're putting 20% down, but he really used two different metrics to guide our decision. One was we want to make sure the payment stays within no more than 30% of our gross income. And he chose payment to make a model

1:22:19that would work regardless what interest rates we're doing. The second the second model was based on our income or I'm sorry on our gross income and limiting the purchase price. So we need to tie those two together. So let's look what that looks like. Katelyn, you know, we we live I live in Phoenix, Arizona, and our average house today, I believe, is about 500,000. So I'm going to work off that. So Katelyn, if you're buying a $500,000 house in Phoenix, Arizona, he gives you a minimum, a reasonable, and an ideal income. Well, I don't believe anybody listening to our podcast got in here to be average. You got an ear to be exceptional. So, we're going to go to ideal. So, if you want to buy a $500,000 house, Katelyn, in a perfect world, you make $166,000 a year or more. Your net worth is 1.6 million or more. If you follow that rule, if you did those two things and made that decision and you invested the extra money that you're going to have because your payment is such a small part of your

1:23:21income, you are going to be financially very, very wealthy. However, Katelyn, if you buy a $500,000 house and you have $100,000 income and $150,000 net worth, it is going to be harder for you to hit your plan. You've chose to be, as they say in the business, house rich and cash poor. So there's no judgment on this. There's no good or bad. It just is. But you got to think about it. So the people you wonder, the people that are buying the $3 million home, Katelyn, do they really have a million dollar income and a $10 million net worth? It's actually not what I see. I see the inverse all the time. I see people buying a $3 million home with a $600,000 income and a $900,000 net worth, Katelyn. And I am beyond confused at what they're even doing. And when you see people that fall under really hard times, it's people that are playing on the minimum side of everything in life. I'm saving the minimum. I'm putting the minimum down. And Katelyn, it's almost a bragging point and I put I only put 5% down on this house.

1:24:24You're overpaying. You're overpaying for that. And it doesn't make sense. So this is a model. Follow the 30/30/3 rule. It gives you a way to think about purchases you made, prices. I could tell you that every home I purchased, Katelyn, I've been on beyond the ideal side and everything I've done, which allowed me to have the resources to go invest at to go create the life that I wanted. We've got to get better at doing this math. So, I want to throw a couple scenarios, Caleb, before we wrap up. Everybody believes that buying and owning a primary residence is a really good idea, and that's actually not true. It's the answer is, should I buy a primary residence? Maybe. Maybe. So, Katelyn, let's do a little scenario here. We got a $200,000 house and we're going to say it's the 1% rule. It rents for $2,000 a month. This looks like somewhere back east, almost like a Huntsville kind of house, right? Brick. Katelyn, you you you've sold a lot of new homes. Katelyn, how would you describe that patio? What would you say that is? Is that a is that a two-door? Is that a It
it's absolutely gorgeous. Look at all

1:25:26the windows. Light and bright throughout. You have incredible sunrise views for your cup of coffee with a rocking chair. I mean, imagine waiting for your kids when they get off the bus from school. This is a dream come true, Brett. I'm in.
Okay. Yeah. Light and bright. It shows like a model. No question. So, here's the thing, Katelyn. Here's what people miss. If you're buying a $200,000 house, you put $40,000 down at 5% interest. You got mortgage interest, property tax, insurance, maintenance. All that equals $14,000 a year is what that house really cost you. $14,600. But people miss, right? We missed out on an opportunity cost. An opportunity cost, kid, is what else could I have done with the money? Like, had I went and rented, I wouldn't have put the 40,000 down. So, that $40,000, I could have done something with that's the opportunity. They call it an opportunity cost. So, if we add a 4% interest rate, which by the way, people on here are going to get a lot more than 4%. But we assume the risk-free rate of return that you put it in treasury

1:26:28bills. You're now that cost of that home is $16,200 a year. Okay, that's our cost on annual basis. Well, when you compare that to renting it at $2,000 a month, that wouldn't make sense. Katelyn, why would I pay $24,000 a year when I could lower my housing cost? I can write off some of the interest and I get all the benefits of home ownership that I love. Okay, this makes sense to home. And now if your rent's $1,500 doesn't make sense. Well, it's getting it's getting closer, right? Still economically $1,500 a month would be $18,000. So it' still make more sense to buy. The whole idea here is you buy utility, you rent luxury. So, I'm not. So, now, Katelyn, if I go to a $2.7 million home, and let's pretend I could rent it for $10,000 a month, and it might be a little higher, but rents don't climb equally as price climbs. Rents climb

1:27:31equally as price climbs to a certain point, about 400 or 500,000, and then as price goes up, rents only go up very, very subtly. So, would it make sense to buy a $2.7 million home or rent it for $10,000? Well, let's look at it, Katelyn. If this this $2.7 million home after we put a down payment, he used 26% down payment. So if you do that, your annual cost including the opportunity cost is $160,000. So Katelyn, why would I want to own that? Tie up 700 grand of my money and it cost me $40,000 more than it would be to rent it. So it wouldn't. But the question is, are you analyzing purchases in this concept of the buy utility and you rent luxury? People don't think about it. Everybody's obsessed about getting a vacation rental, right? But should that be the right call? It depends. There's a math equation around it. The language of business and life is math. Math problems. All the problems we have

1:28:34in life, Katelyn, typically are math problems. If I have an issue with the relationship with my wife, it's likely a math problem in terms of the amount of time I'm spending with her. That's a math problem. If I've got a rel, you know, if I've got a problem in my finances, that's a math problem. And so, we've just got to think about how we make how we think about this differently. So, Katelyn, as we're filming this, rates are coming down. And everybody right now, Katelyn, is just so excited to refinance. Okay. How do we know when we should refinance? Rates are coming down. How do we know? The first question you should ask, will the resulting savings, how much money you're saving between your current payment and the new one, will that cost be covered within 18 months? In other words, after all the costs, because you know, you've got a new origination fee, new appraisal, new title work, Katelyn, can I get my money back in 18 months? Now, I think this is one where I disagree. I think you would refinance. Even if you get it back in if you're if you're going to be there long term, even if it's a 2year or a 2 and a half year

1:29:37payout, I would still do it if you know you're going to be there. So, when you're finance, would it make sense? Next question, Katelyn. Okay, I've got I got my house. Should I We get this all the time in our group. Should I pay it down? Should I pay down my house? Well, one metric to look at would be the interest rate on your home and it would be to look at what are treasury bills. So, if you're if you're watching this or you're listening to this and you've got a 2.78% interest rate and treasury bills pay 4%. From a pure math perspective, it would make more sense to put more money in Treasury bills versus paying it down. From a pure math perspective, when not to pay it down, again, it's when it's lower. when to pay it down would be if you've got a 5% interest rate and the risk-free rate, it would make sense to put a little money more money towards your house. Another model he gives Kalin is if the inflation rate is higher than your mortgage rate. So if you again, if you got a 2.78 mortgage and inflation's

1:30:41ripping along at three and a half, 4%. You actually wouldn't make sense because that mortgage is actually benefiting you. You know, we filmed a podcast. will link to it which Josh Mettle got this whole idea of taking on debt against mortgages. It's fixed for 30 years or debt against cash flowing assets. You actually use inflation to become wealthy. Go check out that episode and we'll link to it in the show notes. So, we're looking at different ways, Katelyn, to think about should we pay down our mortgage. Now, this is where I agree um when not to pay it down um or or actually this is another section. I'm I'll tell you where my opinion is. the the interest rate on your mortgage is greater than the risk rate of return and lower than the inflation rate, you probably wouldn't want to pay it down. Here's my thought as it relates to your house, Katelyn. I would I would encourage everyone to pay an extra payment a year. Start paying it every two weeks. For the average person, if you pay your mortgage every two weeks, take your same payment. So, basically, you're making an extra payment a year. The average person, Katelyn, that'll

1:31:43take about three to four years off their 30-year mortgage payment, depending on how far they are into the the payment. So, one extra payment per year done in that format saves a lot of money, right? It's a totally different game. And so, Katelyn, the last guideline I want to talk about as it relates to your house, you take your your housing expense total and divide it by your gross income. And you look at that as a percentage. If it's less than 10%, there's no question it's 100% certain to be you're going to be financially independent. It's a certainty. It's inevitable. You actually almost couldn't screw it up even if you try. Like it it's that good provided you're investing the extra money. If your housing expense is 20% of your gross income, you're feeling financial momentum. You're picking up steam. You've got that extra money to go invest. Katelyn, as we go up the line to 30%. That's where most people are at, 30 to 40%. You know, his comment was at 40%. Katelyn, you're not sacrificing enough

1:32:46even though you know you should. And if your housing expense is 50% of your gross income, you will never be free. You're in the permanent rat race of misery is the way Sam Dogen describes it, which is pretty aggressive.
You can fix that in two ways.
If they're listening to this, there's two ways to fix that, right? Number one, guys, sell your house and move or when your lease is up, let's get somewhere more affordable. That's option one. Option two, go grow your income. Just like Brett talked about at the beginning, go get better at your specific skill and go grow your income. There's two ways to solve it. It doesn't have to be the always the the negative approach of, you know, we we need to move into the back of my van. It could be that you say, "We got to put a cap on these expenses. We got to reduce where we can, and then we got to get to work and go grow it." Growing your income is significantly a larger opportunity than reducing your expenses. But when you grow your income, the real discipline, the real flex, grow

1:33:51your income, but keep your expenses where you set them. That's the real flex.
That That was so good, Katelyn. I want to go back because we're wrapping up here and go down all the roads we traveled, right? We started up with reality minus expectations equals happiness. We went through and had everyone go through and figure out their expenses times 25 equals one target for net worth. Your income times 20. You got your range of where your net worth needs to be. We gave you a model to figure out your passive income you need based on your expenses today. Then we went through Katelyn and showed different scenarios of how this could play out on different income. If you want to retire early, what does that take? And then we went through how to think about different models from how do you you know car from credit debt to get rid of how do you buy a how do you think about a house do you pay down your rate these are just these are just a few of the major financial decisions in life. So number one everyone should go get the book buy this not that and read it. It's

1:34:53incredible. There's other books like this. It's just a really good one to start thinking about models for decision making in your life. But go out and start with the plan. Do not leave this episode without going to the show notes, getting our resources, and getting everything you need to go build your model, build your plan, and start making better decisions. And right now, I want you to stop what you're doing. Don't miss an episode of our podcast. Follow the show and do me a favor. If you got value, please leave us a review. We care deeply. We are doing this to help you and others like you, and we want to share the show with more people. Leaving a review would be greatly helpful for us. We would appreciate that. Katelyn, final thoughts before we wrap up our episode on all financial models and how wealthy people think about money.
It's the same wrap-up I tend to to share all the time. It's really to me the biggest differentiator of success amongst our clients. Take immediate action today. We gave you three simple steps. Brett couldn't have been more

1:35:55clear. Cut down. What did you call? the the clean jerks. Put down your clean jerk weights and actually take some action. Put your plan together. Look at your burn rate. Look at your savings rate. Run some of these ratios and get to work. Guys, if you put the plan in place and you stay consistent, you're going to hit the goal. So, that would be my big takeaway.
All right. I'm Brett Tanner. That's Katelyn Mitchell. This is the Be Wealthy Podcast, where we show you how to get more out of your money. Wealth is more than money and it helps you live a great life. Go out there and be wealthy. We'll see you next week.

How Wealthy Pros Spend Their Money

Net worth target is 25 times your yearly spending

Passive income has to cover taxes too

Losing half your money costs double to fix

Pay off credit cards before investing a dollar

Cap car spending at a tenth of income

A $500,000 house needs about $166,000 of income

Housing costs over half your income trap you

Rent vs. buy, three scenarios from the episode

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