13 Bad Habits That Keep You Poor [0:00:00]
[Music] By far, the most common excuse I hear from
guys on why they’re not dressing sharp, “Dude, I’m broke. I don’t have the money.
Man, I got kids and a wife. They’re sucking me dry.” Well, gentlemen, let’s fix the
problem. In today’s video, gents, thirteen bad habits
that keep you poor, and how to fix them. Now, the first bad habit is actually more
of a belief and that is that you will be able to do everything yourself through will power.
And, I’m about to tell you that your will power is not very strong.
People ask me all the time, “Oh. In the military did you learn how to be really strong
when it came to will power?” The answer is no. I was put into a system in which it
had a very strong will and you conform to it or you are kicked out. It’s the same
thing if you want to get a hold of your finances. You’ve got to understand that your will
power is going to break, so you want to set up systems so you can succeed.
Now, the second bad habit is that you ignore the situation. You’re that ostrich putting
your head in the sand and you’re just simply not going to look at it so it will go away.
No, that’s not how it works. In fact, it’s going to get a lot worse.
You need to bite the bullet and look at the situation. You need to get an assessment of
the situation because if you don’t do this, then you’re not going to be able to figure
things out. You’re not going to be able to take actions in the right direction if
you don’t know where you’re at. So, you can approach this in a lot of different
ways. I’m a big fan of actually just simply writing everything down or putting it into
an Excel spreadsheet or going through and actually getting one of those apps and I’ve
talked about Personal Capital, but there are other ones out there.
What you want to do is gamify the system. I have found whenever I can see all of my
accounts, all of a sudden I’m keeping score especially one that puts all of my student
loans my credit cards, my bank accounts everything in one place, my investments, all of a sudden
I’m playing along with the game. Next up, pay yourself first. And this can
be a lot of different things. For me, as a business owner I can tell you the first couple
of years of my business, I was not paying myself. I would take money out of the accounts,
but that was only if we had money, and oftentimes, we did not.
But, here is the thing. Whether it’d be the money you have coming in whether it’d
be your business or if you’re working for somebody else, you’re going to find a way
to spend the money, so you need to spend and pay yourself first.
For a lot of people, this is simply putting money to the side. For me, as a business owner,
when I started paying myself a regular salary, I was amazed that my business was able to
make up because I realized I had paid a consultant a lot of money and I realized I was paying
her more than I had paid myself and I found a way to make that money.
So, all of a sudden when you’re paying yourself, you’re going to be able to find a way, you’re
going to make it happen, and that right there I have found works for me and has enabled
me now to start taking a much better salary and my wife is very happy about that.
Now, the next bad habit you need to break is you need to be measuring your progress,
and this is something that happens over time because nothing gets you more excited about
continuing to do something than seeing progress. I mean when you go to the gym, you’re starting
to lift more weight. You get excited to go the gym because you see this progress. You
want to see the say things with paying down student loans, with paying off credit cards.
And the best way to do this is focus in on one bill that has the highest interest rate
and like a laser-focus all your extra money there. I don’t know, maybe it’s extra
$25 a month. But, you can find a way to apply that and all of sudden start pushing that
down and then, the money you save there, you go and you laser-focus somewhere else. But,
remember, what is measured is what is improved, so measure that progress.
Now, this next bad habit, this one is really hard to break and that is preconceived notions
about money taught to us by our parents because basically most of our parents did not know
how to manage money. Some of you guys were lucky, had great parents that taught you well.
My parents, they’d gone through bankruptcies. They’d lived paycheck to paycheck. My mom
worked three jobs, but it was something she never saved money and she always, you know,
mismanaged it. They smoke, they drink, there were just a lot of things going on. They just
weren’t good with money and they taught me what they could be. You can’t teach somebody
something if you don’t know how to do it yourself.
Find your Yoda. Find someone that you connect with who can show you the path, who can show
you the way. I’ve talked about my friend, Jeff Rose and I’ll link to his channel down
in the description of my video. This guy [0:04:04 inaudible] I absolutely love what he’s doing.
He actually served in the army, good friend of mine. He is helping people online, but
there are so many other people out there. There isn’t going to be one person that
you’re going to take everything from and that’s it. I really like to go out there
and cherry pick and bring it together to find the best lesson for me.
The next bad habit, you’re not sharpening your mind. You’re not reading the right
books. You are not getting smarter when it comes to finance. Imagine going to a fight
with a dull blade. What’s going to happen? You’re going to hit somebody and you’re
just going to piss him off versus cutting him in half.
Now, if you’ve got a sharp blade you got a sharp end, you’re going to be able to
do some damage on the battle field. Well, the modern day battle field, guess what, guys?
It’s using your mind and being able to go out there and intellectually make things happen.
So, you want to be able to, hey, be reading Riches Man in Babylon, great book. Right here,
I talk about Ramit Sethi, I Will Teach You To Be Rich, excellent book. Jeff Rose, Soldier
of Finance, great read. Again, gentlemen, make sure you’re sharpening that mind.
[0:05:01] The next bad habit that’s keeping you poor
is you have to keep up with the Joneses. And, I know coming from a channel that talks about
improving your style going out there and buying Rolexes, nice suits. But here is the deal
is I always say never spend money that you don’t have.
If you have spent $200,000 in your education and you’ve only spent $200 or maybe even
$1000 on your wardrobe, I think that’s an issue because if you’ve got so much up here
and you’ve invested so much here, you do need to put your best foot forward.
So, if you’re a lawyer in New York City or if you’re maybe a consultant in Chicago,
you’re in the entertainment industry in LA, I do think that you should be spending
a bit on your wardrobe when you’re making good money.
But, if you’re not there are still ways to actually look great and not spend a whole
lot of money and not go into credit card debt or the poor house. The key here is don’t
spend a lot of money just thinking you got to keep up with people by buying that new
iPhone by going out there and getting a new car every couple of years.
That takes me to the next bad habit which is justifying expenses. And as human beings,
we find a way to justify everything. Human beings are very good at this, but just because
you justify it does not mean that it is correct. The point here, don’t overspend when looking
to impress others. Yes, first impressions are important, but you can do it on a budget.
Now, this next bad habit is the what the hell effect. Yes, this is a documented effect whenever
basically you start to spend money and all of a sudden you’re like, “Ah, what the
hell, I’ve already started I may as well keep going with this.”
This happens all the time when people start to diet. They take a bite of a doughnut, they’re,
“Oh, I shouldn’t have been eating this, might as well eat the entire thing.” You
don’t have to eat the entire thing. And, whenever, you know, you go out and you spend
a little bit of extra money, you don’t have to say, “Oh, I’m already using the credit
card, might as well throw this on it and throw that on it.” No! What the hell effect is
real and you need to be careful of it. Now, the next bad habit is credit cards. Notice,
whenever we spend money on credit cards, the pain is a lot less than if you spend cold
hard cash. So, how do you overcome the bias with credit cards that you’re more likely
to spend? For me, it is the use of debit cards. Now, I use debit cards and credit cards, but
with debit cards, I find that I immediately know that money is coming out. It’s a small,
very small thing, but it’s a reminder that this money is going out of the account immediately.
And, with credit cards, I have all my credit cards set up to pay in full at the end of
the month. But, most of the time I’m using my debit card especially for personal expenses.
And, when you can, try to use cash because it’s the most painful of all and will really
make you rethink do I really want to spend money here.
Now, this next bad habit is actually related to economics, and that is as your income increases,
you are more likely to spend more. And it’s oftentimes the small things because maybe
you’ve been buying a really cheap toothpaste or really cheap shampoo, so you’re getting
nicer toothpaste, nicer shampoo. Now, this makes sense if it’s a better toothpaste.
Maybe you’ve got – and I think for some – okay, I will justify that, but be careful
of other things because all of a sudden you thin, you know what? I need a nicer apartment,
I need a nicer car, and all of a sudden your expenses rise to meet your income. You got
to be careful of this. The smartest people I’ve heard they’ve
actually set up systems so that, again, they’re paying themselves first and they’re actually
living at the same level they were when they were making half as much money and instead
they’re aggressively saving money. Now, the next bad habit is the present bias.
And this is that we feel something given to us right now is going to be, you know, right
now spending the money I’m okay with not having the money in the future. The future
will take care of itself. This is something we all fall into. For me,
what I try to set up, again, saving system. So, every single month the money is going
putting into my Roth IRA. Why? Because a Roth IRA is actually set up so that you can’t
touch it without penalty till you’re 65 or maybe if you want to use it for education
purposes. Point being is it’s difficult. I’ve also set up multiple savings accounts.
I’ve chosen a certain bank for certain – I’ve got multiple banks and with that, yeah, I
got it, so that the money falls into these savings accounts they have no card. I have
to actually physically go into the bank to access them, so guess what? All of those barriers
protect me from stupid me, who stupid me would want to go off and splurge a lot spend all
that money on watches which I’ll find somehow justify or spending on fragrances. I will
find a way to spend the money. I fall into this like anyone else. And by setting up those
barriers, I’m able to protect money from myself.
Now, this next bad habit doesn’t maybe seem like a bad habit, but that’s being over
focused on savings and not focusing in on income. Think of it like American football.
You’ve got offense and you’ve got defense. And, if you’re always focused in on the
defense, that’s when you put 99.9% of your resources, yeah, you’re going to have a
great defense. You’re going to save up a lot of money, but if you’re only making
a couple of thousands per month, the most that you’ll ever be able to save even if
you have 100% savings rate is $2,000 a month. [0:10:01]
But, here’s the deal, how about actually go out there and look for another job. You’ve
got some great skills, you haven’t actually shop your market out, all of a sudden you
find a new job for $4,000 a month and guess what? You just got a huge pay raise and that’s
what so many people don’t think about is the offensive side going and looking to change
your income, maybe changing careers, going into a different industry that pays a lot
more for the same amount of work or just simply do some work on the side.
And, if you want to learn how to do that, I’ve got you covered with this video right
here, how to make an extra $1,000 in the next week. I made this video a while back. It’s
got over a million views because it’s got actually really good information or maybe
I’m just so darn good looking. I’ll let you be the judge.
Point being, guys, is go check out this video. Great information about how to make more money
and it’s linked to a playlist that goes into a number of other great finance videos,
so go check it out. [0:10:53] End of audio