- So as divided as America seems right now
there's one thing that most of us
still have in common, debt.
80% of Americans have some form of debt.
When you add up deficits from credit cards, mortgages,
and student loans, it's clear that we're
in the middle of a personal financial crisis.
Even if you take away home loans,
because for some reason most people
don't consider that debt.
I get it.
If it's an investment, if it's taking the place
of rent, okay, let's just push that to the side,
even though it's a massive weight
on most family's shoulders.
Pushing that to the side,
the problem of debt is still palpable.
The Atlantic, citing data from the federal reserve,
showed that non-real estate consumer debt
rose nearly 10 times
from 1948 to 2008.
Factoring in inflation,
it ballooned from $1,100 to over $10,000.
This is a new story.
A problem that's truly unique
to our times of increased tuition,
housing and healthcare costs, as well as stagnant wages.
It's one that's left
so many people feeling regretful, hopeless and frustrated.
Consider one study that showed that 52%
of Americans have said that they've cried
over their personal finances.
In this video,
I wanna dig deeper into that problem,
but I also want to talk about the solution.
The solution isn't easy.
It's going to take a lot
of work to finally dig your way out of the hole
and to become financially free, but it is possible.
This video is brought to you by audible.
I'll share three fantastic personal finance audio books
towards the end of this video.
So stick around for that.
Debt is a trap that holds us back
from living the life that we truly want
and our poor decisions compound
and dig us further into a hole,
as we never seem to learn our lesson.
We take on one loan after another,
trading, our freedom to fit in.
It seems like the only thing that matters
to us is to stay on the same trajectory as our neighbors,
to go to a similar college,
to have a similar phone in our pockets.
Debt helps us get the things that we think we need.
Consider purchasing a new car.
If you don't live
in a city with a solid public transportation system,
you likely need a car to get to work.
It's a necessity for many of us.
So in order to purchase one,
there is a reasonable financially sound way
to go about doing that.
And then there's what most Americans do.
We make up all these excuses for why we need the newer model
with the heated seats, the sunroof,
and the automatic parallel parking,
because you know I'm just a really bad parker
and it's only an extra $3,000 and that's not a lot compared
to the $40,000 that I'm paying for the car.
We buy into the notion that advertisers
often sell us that we work really hard
and we deserve the nicest top of the line car.
We deserve driving around in something that we love.
Instead of taking the few thousand dollars
of cash that we have
on hand and buying a reliable used car upfront,
we take that money.
We use it as a down payment on a new car.
We buy this new car, but we also buy into the status quo.
We think to ourselves
what's the problem with this small loan?
I've already got $300,000 on my home mortgage.
I've got $30,000 for college tuition.
I've got God knows how much on my credit card.
We think is it really gonna make that big of a difference?
And yes, yes, it makes a huge difference.
The biggest problem is
that you're stretching a budget that you don't have.
You're pushing yourself further and further into debt
and you're delaying your financial freedom by years.
We make these kinds
of decisions in every corner of our lives
and happily share our least success on social media.
We show off the new car, the clothes, the upgraded gear
and we bury away the anxiety
and overwhelm that comes
with every bank statement and bill.
It's not only socially acceptable
to put all these things on a credit card,
it feels like it's actually socially unacceptable
to do the opposite,
to go to a community college,
to live at home with your parents,
to buy an old used clunker to get from A to B.
We continue to reinforce this idea to each other,
that in order to be happy,
to be accepted,
we need to accumulate stuff.
And as a result, we sink further into debt.
This might be the new normal that we've accepted
as a society, but it doesn't need to be normal.
You do not have to go down this path.
It takes a lot of work.
It's not easy to change the course of your life
and to do the opposite of what everybody else
in your circle and your world is doing.
But trust me, it's worth it.
Imagine looking down the road
and seeing a life that was free of debt,
free of that weight on your shoulders,
a life where you could leave a job that you hate
if you want to
because you're financially secure and financially stable.
When I was 22 years old, I had taken
on far more debt than any of my friends.
This sucks.
I suck at this.
With over $117,000 of student loans and car payments,
I felt the weight that so many Americans
are feeling right now.
In the beginning,
I did not even want to think about the problem.
It was so big.
$117,000 just seemed like I would never be able
to pay it off in a million years.
And so I just pushed it to the back of my mind.
But then one day I started to think about realistically
what's the future gonna look like?
I'm gonna be 40 years old,
still getting these monthly bills,
still paying off $400 or $500 every month for 20 plus years
from a decision that I made when I was 18 years old.
Think about that.
How crazy is it
that we make these decisions when we're kids
and then we have to deal with it for decades?
That's when I really started to think
about how I wanted to change things,
how I wanted to turn things around.
I've learned a few lessons
from my own experience that can get you started
in the right direction.
First, you need to recognize the powerful
and often negative effect that your social circle
has on you.
There is a current
of opposition that makes it really difficult
to take the most basic steps towards financial freedom.
And so it's important to surround yourself
with people who are going to motivate you
and inspire you along the way.
I recommend that you ruthlessly curate
your social media feed and unfollow
anyone who makes you feel
like you aren't enough or that you aren't keeping up.
Some people might look
at you sideways and you probably won't get
get as much validation on social media,
but it's an important step to keep you on track.
The number one rule for personal finance,
I've said it many times before,
it is so simple.
You need to save more money than you spend.
Surprisingly, most people get this wrong.
That's why we have so much debt
in America and around the world.
It's because people are spending money that they don't have.
And oftentimes we are spending more money
as our income rises.
So our standard of living continues to rise.
We make more money.
So then we put it into a new apartment.
We buy an nicer car.
We continue to upgrade our lifestyle.
And this is the biggest problem,
the biggest trap you're gonna fall into,
if you are trying to eventually work your way out of debt.
And so what you can do right now,
no matter what your income level is,
begin to cut back on the expenses
as much as you possibly can.
Find ways to cut back.
You may need to move back and live with your parents.
That's what I personally did.
There are sacrifices, of course, that come with this.
For me, I have to sacrifice my dating life as well
as my personal life for two years,
before I eventually moved out.
The side benefit,
at least for me, my mom made really good lasagna.
One of the silver linings of the pandemic has been
that it's forced us to be frugal,
in so many ways,
from cutting our own hair
to turning our apartments into our new gyms.
This could be savings of over a thousand dollars a year.
Now this doesn't mean
that you need to do this with every aspect of your life.
Investing in your health
and wellbeing is an absolute necessity,
but paying off your debt does require you
to make trade offs.
There are sacrifices you'll need to make based
upon your income and your needs.
You need to be honest with yourself
about what luxuries you can afford
and which ones you can hold off
on until you have a better financial position in life.
The biggest resistance that you'll face is just
the sheer amount of time that it takes to pay off your debt.
It will not happen overnight,
especially if you have 10 to $50,000 in debt.
Now, personally, I was able to pay
off $117,000 in four years because of two reasons.
One, I radically reduced my expenses
and I moved home with my parents
and I cut down as much of my spending as I possibly could.
And really two, the most important thing,
I was able to increase my income rapidly
as a freelance filmmaker.
Now, a lot of this depends upon the economy.
A lot of it depends upon your skill set,
but this is not something that's guaranteed.
And so you need to make sure
that you have the right mindset to be able to stick
through for five to 10 years
to be able to pay off all of your debt.
And one of the big mindset shifts that I had early
on was to understand that as long as you're in debt
the money that you're making doesn't belong to you,
it belongs to the bank.
When you realize that every dollar that you make,
every paycheck that comes
into your bank account, isn't your money,
because again, you are in debt, you are in the hole,
when you realize that, then you won't always
feel so entitled to things.
You won't think,
well, I worked really hard
or this paycheck just came in.
So now I can go out and buy this new PS5.
You can start to really think pragmatically
about the money that's coming in.
And you can understand this from a net worth perspective,
that as you continue to dig your way,
out of the negative money that you have,
you can't be spending money that doesn't belong to you.
Now, this is a really difficult mindset to start to adapt.
It can be painful in the beginning to detach yourself
from the money that you are working so hard for,
but it's really, really powerful in turning
and reframing how you look at your own money.
It's easy to put things on a credit card these days
or to finance a brand new car.
Every year, a new tech gadget gets released,
that's just marginally different, marginally better,
from the previous year.
The flashy commercials
and conferences and endless articles and YouTube videos
about this new thing will make you feel
like you're a fool for not getting it.
They'll make you feel like you absolutely need it.
And everyone is telling you
that it's okay to put it on your credit card.
But by this point in the video, I hope you understand
that it's a problem.
Buy used, buy refurbished,
borrow from family
and get all the hand me downs you can,
better yet, don't buy it at all
and hold off until you actually have the money.
Do this for years
until you can afford to pay things outright.
You arrive at the same destination at a later date,
but here's the important part.
You won't be stressed out of your mind
on your way there worrying about your accumulating bills
and the payments that would continue to pile up.
Becoming financially free,
begins with the decision to make a change,
to turn away from society's expectations
of what we should own and what our lives should look like.
It requires a mindset.
It requires you to put your head down
and do the work for a very long period of time.
It is a lot of work.
Trust me, I know, but it is absolutely worth it.
Before I wrap this video up
I wanna share three personal finance audio books
from my sponsor Audible.
Now, if you're absolutely ready to get serious
about your personal finances, I highly recommend you check
out these three audio books
from three amazing personal finance experts
that helped me out a ton
when I was first getting started.
"The Total Money Makeover" by Dave Ramsey,
"I Will Teach You to Be Rich" by Ramit Sethi,
"Money: Master the Game" by Tony Robbins.
These three audio books put things into the simplest terms
possible to give you a roadmap to financial freedom
without complicating things.
Truth be told, I am a very slow reader.
I read at a snails pace.
And so audible allows me to listen to tons
of audio books each year.
You could listen to them at home while you're at home
or while you're at home.
Start listening with a 30 day Audible trial.
Choose one audio book and two Audible originals
absolutely free.
Visit audible.com/mattdavella
or text mattdavella to 500 500.
I've said this on the channel before,
but for me, when it comes to personal finance,
I either read or listen to one audio book every year.
It is absolutely vital for me to stay on track.
It's not necessarily about learning something new
when I digest this information,
even if it's like watching videos online
about personal finance,
what I'm doing is I'm not necessarily learning new things.
I'm reaffirming the reason why I'm doing this,
why it's important, because it can be difficult.
We make a lot of sacrifices to go down this road.
And so by having the advice,
having hopefully videos like this,
that you can go back and watch in the future,
will help you to stay
on track as you continue to get out of debt
because it's gonna take a long, long time.
But again, it's absolutely worth it.
No matter where you are at in your
with your own personal finances,
I wish you the best of luck.
And I really hope you find a place
of financial freedom for yourself.