00:00:04 [Speaker 1] Welcome to the Roy Matlock Junior money and business hours where he'll help you fix your finances once and for all. 00:00:10 [Speaker 1] To reach Roy, call (615) 843-2999. 00:00:14 [Speaker 1] That is (615) 843-2999 or visit roymatlockjunior.com. 00:00:20 [Speaker 1] Now here's your host, Roy.

00:00:23 [Speaker 2] Alright. 00:00:23 [Speaker 2] Roy Matlock junior, and we are here once again. 00:00:27 [Speaker 2] Been doing this for a long, long time, talking money. 00:00:29 [Speaker 2] And, today's show is gonna be quick clips, on getting your finances fixed and with the idea that, we're gonna get you started. 00:00:38 [Speaker 2] And then if you wanna go get more details, you can go to roymattlinjunior.com and get a little bit more into it.

00:00:45 [Speaker 2] But I'm gonna just kinda buzz through some things and kinda get your offense going and your defense going so you're on the way. 00:00:51 [Speaker 2] So what's the starting plan? 00:00:53 [Speaker 2] Number one, education and advice. 00:00:56 [Speaker 2] And I say this. 00:00:57 [Speaker 2] I was talking to a friend of mine, and he said, hey, man.

00:00:59 [Speaker 2] I listened to your podcast yesterday. 00:01:01 [Speaker 2] And I was so great. 00:01:02 [Speaker 2] You know, that's basically the podcast, Rory Mountain Lake Junior Money Business Hour. 00:01:07 [Speaker 2] We've had about 65,000 listens. 00:01:10 [Speaker 2] So, educating the public.

00:01:12 [Speaker 2] And if you want to learn anything about money, you can do that, the Roy Mountlake Junior Money Business Hour. 00:01:18 [Speaker 2] It's on all of your different podcasts. 00:01:20 [Speaker 2] But the idea, number one, if you want to get your finances in order, education is the first step, and education and good advice. 00:01:29 [Speaker 2] And so when you work with someone, one of the things that you should do is, get to a point where you can explain what you're doing, alright, to your friends. 00:01:38 [Speaker 2] So if you're working with me, one of my goals is I tell people, when we get through here, one of the things you're gonna be able to do is tell your friends what you're doing.

00:01:47 [Speaker 2] Alright? 00:01:48 [Speaker 2] Then from there, we go into what we call initial review. 00:01:51 [Speaker 2] Initial review for anyone, when it comes to their money is, let's take a look at where you're at in life up to today. 00:01:58 [Speaker 2] You know, you started out, you're on this earth. 00:02:01 [Speaker 2] I was talking to another buddy of mine, and he said he had this deal that he got where he's getting recurring revenue, and he employed his, two daughters even when they're little just to do little stuff.

00:02:12 [Speaker 2] And he funded Roth IRAs. 00:02:14 [Speaker 2] He's been doing it for his daughters who are now in their early twenties, been doing it for fifteen years, something like that. 00:02:21 [Speaker 2] How that what kind of deal is that? 00:02:23 [Speaker 2] I mean, now they got a truck of money in investments, and it's all tax free. 00:02:27 [Speaker 2] So you're always taking a look at where you're at.

00:02:31 [Speaker 2] So they're going to be starting out good and everybody wants to do that. 00:02:34 [Speaker 2] And so we do an initial review, find out what you did right, what you did wrong. 00:02:38 [Speaker 2] Then we build a defense. 00:02:39 [Speaker 2] A defense is mainly to protect you against mistakes. 00:02:44 [Speaker 2] We use a defense to protect your income and your assets.

00:02:49 [Speaker 2] So we start there. 00:02:50 [Speaker 2] We go to a financial offense. 00:02:52 [Speaker 2] An offense is to grow wealth, where you can, one day be able to have do nothing money, which is investment income that comes in. 00:03:00 [Speaker 2] From there, you have to have products and put products, in the in the right place for the right situation in life. 00:03:09 [Speaker 2] So if you're younger, you're gonna be more aggressive.

00:03:12 [Speaker 2] If you're older, you're probably gonna be more conservative in the way you invest your money. 00:03:16 [Speaker 2] You may need income. 00:03:17 [Speaker 2] You may not need income. 00:03:18 [Speaker 2] And so you go into a product marketplace. 00:03:21 [Speaker 2] Most of the product marketplace, has to do with products, meaning investment and or insurance products.

00:03:29 [Speaker 2] And then you have other things in the product line that we would consider more of a service that would be like estate planning and and things of that nature, your tax, and and so on. 00:03:39 [Speaker 2] Then once you do all that, you go to updating. 00:03:45 [Speaker 2] And as life changes, you stay on track, and you make adjustments, you do reviews, and you do updates, and you do product change. 00:03:56 [Speaker 2] Because as you get older, maybe something changes, kids are grown, whatever, you have kids. 00:04:02 [Speaker 2] It's called money in motion.

00:04:03 [Speaker 2] Most people take a look at their finances when something happens. 00:04:07 [Speaker 2] And so you do that, and then one of the things that you've done is you've eliminated the concern to your money. 00:04:16 [Speaker 2] That's what people like. 00:04:17 [Speaker 2] They want to know that they're on track. 00:04:19 [Speaker 2] I always tell my clients I'm an implementer of automations and we automate and make sure that things happen so you will one day get free.

00:04:31 [Speaker 2] That is the six components. 00:04:33 [Speaker 2] Let's start about, the education side. 00:04:37 [Speaker 2] Well, to begin with, we're going to understand the defense. 00:04:40 [Speaker 2] The defense is to protect, preserve. 00:04:43 [Speaker 2] It's to, keep the mistakes out because a typical mistake, will cost you $50,000 to $500,000 over your lifetime.

00:04:53 [Speaker 2] You know, if you make wrong decisions with your money, let's say you have your money invested at low interest rates and you do that your entire life, may cost you half a million bucks. 00:05:01 [Speaker 2] Or you don't take advantage of your tax deductions, like maxing your four zero one k or doing IRAs or anything like that, and you're just giving the IRS a bunch of money. 00:05:10 [Speaker 2] So there's a lot of things that go into that. 00:05:13 [Speaker 2] So the goal setting is number one. 00:05:14 [Speaker 2] We call it the GPS.

00:05:17 [Speaker 2] Goal plan schedule. 00:05:18 [Speaker 2] What is a GPS? 00:05:19 [Speaker 2] What is the goal? 00:05:21 [Speaker 2] The goal is is to get to a point where you don't have to depend on your effort, meaning your earnings that you earn from working. 00:05:31 [Speaker 2] You wanna get to a point where you are financially independent.

00:05:35 [Speaker 2] Step number one is you get three to six months of your income set aside. 00:05:39 [Speaker 2] Alright? 00:05:40 [Speaker 2] That way you've got three to six months of an emergency fund. 00:05:43 [Speaker 2] Then we go to saying, hey, if I were somewhere down right now, I'm five years into it. 00:05:48 [Speaker 2] One day you look out and you're like, wow, I'm financially free.

00:05:53 [Speaker 2] I will never run out of money no matter what. 00:05:57 [Speaker 2] And so, the first thing is, what's the goal? 00:05:59 [Speaker 2] 20 times your desired income would be your starting goal. 00:06:03 [Speaker 2] What that means is, is that if you need a $100 a year in your mind to live the way you want to live, you need 2,000,000 in cash. 00:06:10 [Speaker 2] 2,000,000 in cash, 5%, gives gives you a $100 a year, you're pretty well getting there.

00:06:15 [Speaker 2] So we take 20x our income, that's our goal. 00:06:18 [Speaker 2] We then come up with a plan. 00:06:20 [Speaker 2] The plan is how much do we need to set aside? 00:06:23 [Speaker 2] How much do we have now in order to reach that goal? 00:06:26 [Speaker 2] When do we want to do it is the schedule.

00:06:29 [Speaker 2] So we say, alright. 00:06:30 [Speaker 2] Realistically speaking, 25 years old. 00:06:34 [Speaker 2] I'm getting started. 00:06:35 [Speaker 2] I would love to be there in twenty years. 00:06:38 [Speaker 2] And to be there, I need 20 x my desired income.

00:06:42 [Speaker 2] I want a $100. 00:06:43 [Speaker 2] That's probably a lot for someone 25. 00:06:46 [Speaker 2] But the point being is is that you need 2,000,000. 00:06:49 [Speaker 2] You then say twenty years from now, What happens? 00:06:52 [Speaker 2] Inflation money doubles about you have to have twice as much about every twenty years.

00:06:56 [Speaker 2] So now we got 2,000,000 is 100,000 twenty years from now. 00:07:02 [Speaker 2] 4,000,000 is the equivalent of 100,000. 00:07:05 [Speaker 2] And we start and we say, at 8%, what is the number that I need to be setting aside? 00:07:13 [Speaker 2] What is the interest rate I'm expecting? 00:07:15 [Speaker 2] This is part of the plan, and I will hit my schedule twenty years from now if I begin with nothing.

00:07:21 [Speaker 2] If I have x, I'm gonna put my money to work for me. 00:07:24 [Speaker 2] How many doubling periods will I have? 00:07:27 [Speaker 2] You know, if I get 10%, it doubles three times, and so we're moving along. 00:07:31 [Speaker 2] So what we're doing today is quick ideas. 00:07:35 [Speaker 2] The goal, the plan, the schedule.

00:07:36 [Speaker 2] We're getting started. 00:07:37 [Speaker 2] Stick with me. 00:07:38 [Speaker 2] We're going to be talking about budgeting, emergency funds and getting out of debt as we go throughout our next segment. 00:07:44 [Speaker 2] My name is Roy Matlock Jr. 00:07:46 [Speaker 2] And if you want more information on what we do, visit roymatlockjunior.com, and be sure and tune in to our podcast, the Roy Matlock Junior Money Business Hour.

00:07:55 [Speaker 2] We'll be right back.

00:08:04 [Speaker 1] Welcome to the Roy Matlock Junior money and business hours where he'll help you fix your finances once and for all. 00:08:10 [Speaker 1] To reach Roy, call (615) 843-2999. 00:08:15 [Speaker 1] That is (615) 843-2999 or visit roymatlaijunior.com. 00:08:22 [Speaker 1] Now here's your host, Roy.

00:08:28 [Speaker 2] On all across the board on your offense, your defense, when you get your money, set aside. 00:08:34 [Speaker 2] If you're just tuning in, you'll be able to listen to this afterwards. 00:08:40 [Speaker 2] After the show is over, it goes on to our podcast. 00:08:43 [Speaker 2] So So you get a chance to do that. 00:08:44 [Speaker 2] We started with the GPS, goal plan schedule, written, goals, work.

00:08:52 [Speaker 2] Your brain automatically starts focusing in on where you wanna be, the plan. 00:08:57 [Speaker 2] We get a plan in place, 20 x our income to get us financial independent. 00:09:02 [Speaker 2] We come up with a schedule and we're off to the races. 00:09:04 [Speaker 2] It begins with the budget. 00:09:06 [Speaker 2] How does the budget work?

00:09:08 [Speaker 2] Well, to begin with, you should have a goal of living on half of what you earn. 00:09:14 [Speaker 2] The IRS will take care of the other half, of what's left over, and you've got about 25% left over. 00:09:21 [Speaker 2] So I try to tell people, if you really want to get moving quickly, here's the way you do it. 00:09:28 [Speaker 2] You live on half, you save 25%, and the IRS is probably gonna get the rest of it. 00:09:33 [Speaker 2] If you do that, you say, well, what's that that that's nothing.

00:09:37 [Speaker 2] I mean, how how am I gonna live? 00:09:39 [Speaker 2] You raise your income. 00:09:41 [Speaker 2] And so what happens is if you focus on getting more valuable in the workplace, raising your income, this is an easy doable thing and you just get used to doing that. 00:09:54 [Speaker 2] And you wake up one day and you're like, Hey, no stress on me. 00:09:59 [Speaker 2] I've got plenty of cash set aside.

00:10:01 [Speaker 2] I'm not worried. 00:10:03 [Speaker 2] And so the idea is raise your income. 00:10:05 [Speaker 2] How do you do it? 00:10:06 [Speaker 2] Become more valuable in the workplace, start a business, do something on the side. 00:10:12 [Speaker 2] Or another way you can look at it is, outwork people.

00:10:16 [Speaker 2] That's the starting point. 00:10:17 [Speaker 2] Be smarter by studying and getting good at what you do, and you'll be able to live on 50% because your income's big, and you do whatever you want to do, and you're on your way. 00:10:29 [Speaker 2] And then we set up a budget based upon that. 00:10:32 [Speaker 2] So when I set budgets up, the first thing I tell people is when we wanna set a budget up, the first scenario that we have to do is we have to fire all of our bills. 00:10:44 [Speaker 2] Now how do you fire your bills?

00:10:46 [Speaker 2] Well, to begin with, what happens is is you so what, you know, what am I earning? 00:10:53 [Speaker 2] And I'm earning a $100 a year household income. 00:10:57 [Speaker 2] And I wanna live on $50 a year. 00:11:01 [Speaker 2] Alright. 00:11:01 [Speaker 2] So we got that.

00:11:03 [Speaker 2] And then we go through and we say, if I had no expenses right now, which ones would I not hire back? 00:11:12 [Speaker 2] In other words, if I have a expensive car payment, if I could do it over, would I get rid of that car payment and not have a big expensive car payment? 00:11:24 [Speaker 2] You say, yeah. 00:11:25 [Speaker 2] Okay. 00:11:25 [Speaker 2] So we're we're going to, fire that bill.

00:11:30 [Speaker 2] And we're gonna put a little note beside it, and we're gonna say this one is gonna be fired. 00:11:35 [Speaker 2] And how are we gonna do it? 00:11:37 [Speaker 2] Alright. 00:11:37 [Speaker 2] Some of them, you can't do it. 00:11:38 [Speaker 2] You have too big of a house, you know, then you do you what are you gonna do?

00:11:43 [Speaker 2] You you got a house payment. 00:11:44 [Speaker 2] You can't just fire it, but you might be able to downsize. 00:11:47 [Speaker 2] You might be able to do some stuff like that. 00:11:49 [Speaker 2] Now this is for people that are sick and tired of being broke. 00:11:53 [Speaker 2] That's what you got to decide.

00:11:54 [Speaker 2] I'm sick and tired of being broke. 00:11:56 [Speaker 2] So I was sick and tired of being broke. 00:11:59 [Speaker 2] Here we are, 1986. 00:12:03 [Speaker 2] Sick and tired of being broke. 00:12:04 [Speaker 2] Bought a house, newly married, bought two new cars, had no business doing it.

00:12:09 [Speaker 2] And can you imagine this? 00:12:10 [Speaker 2] I'm I'm I'm 20 25 years old, and I'm a big shot. 00:12:17 [Speaker 2] I go buy two brand new cars with two car payments, and back then, those car payments are like $500 a month between the two of them. 00:12:27 [Speaker 2] You think about that. 00:12:28 [Speaker 2] It's stupid.

00:12:29 [Speaker 2] And so then one day, my income didn't work, and I'm new into, you know, I'm starting part time into the financial services business. 00:12:38 [Speaker 2] And, basically, once I started getting involved in it, I'm like, are you stupid? 00:12:43 [Speaker 2] What are you doing? 00:12:44 [Speaker 2] Why did you do this stupid stuff? 00:12:46 [Speaker 2] Okay.

00:12:47 [Speaker 2] Time to set up a new game plan. 00:12:49 [Speaker 2] We're gonna fire the bills. 00:12:50 [Speaker 2] So sold both my cars, which I got to a point that I could afford to get out from underneath them because I bought them new, and, of course, they go down in value. 00:13:00 [Speaker 2] And, went and bought two used diesel VW matching VW rabbits. 00:13:11 [Speaker 2] Why did I do that?

00:13:12 [Speaker 2] Because I was sick and tired of being broke. 00:13:14 [Speaker 2] I think the car those cars got, like, 50 miles a gallon. 00:13:18 [Speaker 2] Diesel at the time was cheap. 00:13:21 [Speaker 2] And if you got on the interstate, it was like a thrill ride because you could floor the car. 00:13:25 [Speaker 2] And if you pulled out in front of a 18 wheeler, you didn't think you could ever get out of the way because it would go zero to, like, 80, and that was it.

00:13:33 [Speaker 2] And it took forever to do it. 00:13:34 [Speaker 2] And so but you know what I did? 00:13:37 [Speaker 2] I took those two car payments that were tied in for, like, thirty six months, and within one year, I didn't have a car payment again. 00:13:46 [Speaker 2] And then one day, I upgraded, started buying used cars. 00:13:49 [Speaker 2] And so I got sick and tired of being broken, so I did that.

00:13:53 [Speaker 2] Eventually, house, same way, you know, moved to a house that was more affordable, and income continued to rise. 00:14:04 [Speaker 2] And it wasn't too long thereafter. 00:14:07 [Speaker 2] Starting, within the within five years of where I was at, I was living large on 50% of my income and I was saving money on a consistent basis and I got it going. 00:14:22 [Speaker 2] So how do you set up a budget? 00:14:23 [Speaker 2] Number one is you fire your expenses, you rehire the ones that are absolutely necessary, get rid of the ones that you can't get rid of yet, put it on a plan to get rid of them, cut your cost, and a 100% decrease in expense starts going to the bottom line.

00:14:42 [Speaker 2] Alright. 00:14:42 [Speaker 2] If you raise your income, you have to pay taxes. 00:14:44 [Speaker 2] But if you cut your overhead, it's right to the bottom line. 00:14:47 [Speaker 2] And so what we're going to do is we're going to do that. 00:14:49 [Speaker 2] We're getting the budget going, then we set up two bank accounts.

00:14:53 [Speaker 2] If you're married, you have three bank accounts. 00:14:56 [Speaker 2] The first bank account is where all of the income comes in and all of your drafts, I call it a draft account. 00:15:03 [Speaker 2] If you were to see my bank account right now, it says draft account. 00:15:07 [Speaker 2] And in that draft account, what happens is is everything coming in is set up automatically deducted. 00:15:13 [Speaker 2] Everything going out, is, is going out via automation, including savings.

00:15:23 [Speaker 2] It may be a four zero one k is your savings vehicle to start, so it's pre paycheck, but the long and short of it is, is you automate everything. 00:15:34 [Speaker 2] Then from there, we have inside of these two, in this account, we have a budget form. 00:15:41 [Speaker 2] You can get that at roimatlinjunior.com. 00:15:44 [Speaker 2] That budget form will give you all of the miscellaneous expenses that occur that are not regular, of which you are preparing for. 00:15:53 [Speaker 2] And then after that, we have a weekly account that we use in order to have weekly expenses, eating out, gas, all the different things like that.

00:16:03 [Speaker 2] So if you're married, you would then take that account on Sunday and send over x amount of dollars to each of those accounts. 00:16:13 [Speaker 2] You have a debit card that you can use right and, right with that. 00:16:19 [Speaker 2] And then each day put on automations, again, emails or text messages from the bank that says you have this much money left on this week's budget because it'll give you your bank balance. 00:16:31 [Speaker 2] I still have that coming in every day. 00:16:33 [Speaker 2] They send me my bank balance by email every day.

00:16:37 [Speaker 2] And then what happens is, by the end of the week, you say, well, I've only got this much money left. 00:16:44 [Speaker 2] I can't spend any more than that, and I'm actually under budget. 00:16:49 [Speaker 2] And the next week, if you really want to get get with it, you can say, well, you know, I normally pull 200. 00:16:55 [Speaker 2] I'm only gonna pull $1.75 because I had $25 left, and now I have a plan. 00:17:02 [Speaker 2] It's a budget.

00:17:03 [Speaker 2] Alright? 00:17:04 [Speaker 2] And a budget is not an accounting system. 00:17:06 [Speaker 2] A budget is a pre planned way to spend your money in advance of spending it. 00:17:12 [Speaker 2] An accounting system is looking at what you spent. 00:17:15 [Speaker 2] Most people confuse a budget with an accounting system.

00:17:20 [Speaker 2] So what we're gonna do is is we're gonna get on a budget. 00:17:23 [Speaker 2] Without a budget, you will never save any money. 00:17:26 [Speaker 2] And the reason you won't save any money is because there's always something shiny. 00:17:32 [Speaker 2] You know, Amazon today, you can buy anything anywhere twenty four hours a day pretty much worldwide. 00:17:41 [Speaker 2] So guess what people do?

00:17:42 [Speaker 2] They spend. 00:17:43 [Speaker 2] And so as a result, when you get on a budget, you say, well, I'm going to control that. 00:17:49 [Speaker 2] My name is Roy Matlock Junior. 00:17:50 [Speaker 2] If you like the show, visit roleymatlockjunior.com to find out more details of what we do. 00:17:55 [Speaker 2] We'll be right

00:18:03 [Speaker 1] back. 00:18:04 [Speaker 1] Welcome to the Roy Matlock junior money and business hours where he'll help you fix your finances once and for all. 00:18:10 [Speaker 1] To reach Roy, call (615) 843-2999. 00:18:14 [Speaker 1] That is (615) 843-2999, or visit roymatlaijunior.com. 00:18:20 [Speaker 1] Now here's your host, Roy.

00:18:23 [Speaker 2] Alright. 00:18:24 [Speaker 2] We are now going into quick tips, on your money. 00:18:28 [Speaker 2] And so far, we've talked about your GPS, the, you know, the budget, the defense, offense, product selection, getting a plan in place, getting sick and tired of where you're at, firing your expenses, and getting on track. 00:18:44 [Speaker 2] And so now what we're gonna do, we're gonna talk about having an emergency fund. 00:18:47 [Speaker 2] Now why do we have an emergency fund?

00:18:49 [Speaker 2] We put those in money market accounts or it can be a bank account it can stay in too. 00:18:55 [Speaker 2] But the long and short of it, the reason we have an emergency fund is because emergencies will happen. 00:19:00 [Speaker 2] Things will happen along the way, period, end of story. 00:19:02 [Speaker 2] Something's gonna happen, count on it. 00:19:04 [Speaker 2] It's not, you know, you got unlucky.

00:19:06 [Speaker 2] Everybody has something happen that that could cause them not to work or you have some type of, you know, breakdown. 00:19:14 [Speaker 2] What whatever it may be. 00:19:15 [Speaker 2] Alright. 00:19:15 [Speaker 2] So what is an emergency fund for? 00:19:18 [Speaker 2] Three to six months of liquid cash expenses.

00:19:22 [Speaker 2] If you're both working, three months of expenses. 00:19:26 [Speaker 2] If it's single earner, six months of expenses. 00:19:31 [Speaker 2] The rate of return you get on your emergency fund is that you can raise your deductibles on your insurance and save money because you have money set aside to pay the deductibles. 00:19:42 [Speaker 2] That can happen in your home insurance, your car insurance, your health insurance if you're self employed. 00:19:48 [Speaker 2] You can take a more risk, you can have it on your car, you can drop collision because you have cash set aside.

00:19:56 [Speaker 2] It allows you to have cash in the event that you lose a job, you don't dig into penalties on four zero one ks's and IRAs and and things like that. 00:20:06 [Speaker 2] So the emergency fund gets the return because it's liquid and it's available. 00:20:11 [Speaker 2] And so, we're going to shoot for that and we're going to use that in order to protect other issues that will cost us a lot of money. 00:20:18 [Speaker 2] Alright. 00:20:19 [Speaker 2] An emergency fund keeps you from having your car taken from you, if you have car payments.

00:20:24 [Speaker 2] There's all these different things that keep keeps you from borrowing at 18% on your credit card. 00:20:30 [Speaker 2] I can go on and on and on and on and on. 00:20:33 [Speaker 2] So the rate of return you're getting is the fact that you don't make mistakes that cause you to pay big. 00:20:40 [Speaker 2] For instance, if you don't have cash set aside and you pull from your four zero one ks and you're prior to fifty nine and a half, let's see, you lose 10% to the IRS, you lose taxes. 00:20:52 [Speaker 2] But even more than that, you lose all the growth that you may would have gotten over the next ten or twenty years, something like that.

00:20:59 [Speaker 2] And so that's a $50,000 mistake maybe, as I spoke of earlier. 00:21:04 [Speaker 2] And so then we do that, we have an emergency fund. 00:21:07 [Speaker 2] If you're in debt, and what I mean by debt, bad debt, and if we define debt, I always, you know, my former colleague Dave Ramsey, we did the show together. 00:21:19 [Speaker 2] I never agreed that you should pay your house off. 00:21:22 [Speaker 2] Alright.

00:21:22 [Speaker 2] And because I think it's good debt. 00:21:24 [Speaker 2] I never agreed that, you know, that having debt with your business is bad debt. 00:21:29 [Speaker 2] It's opportunity money. 00:21:30 [Speaker 2] What bad debt is is when you have debt that you cannot afford to pay make the payment easily, that's bad debt. 00:21:38 [Speaker 2] The underlying item that you borrow the money for is tied to something that goes down in value or consume, meaning depreciation on a car, a new car, that's bad debt.

00:21:51 [Speaker 2] Okay? 00:21:52 [Speaker 2] Or a credit card, something like that. 00:21:55 [Speaker 2] And we our real rule of bad debt is you can't afford it and it goes down in value. 00:22:02 [Speaker 2] Alright, so what you're doing is you're paying interest on something that is immediately depreciating. 00:22:07 [Speaker 2] Now what is good debt?

00:22:08 [Speaker 2] Good debt is you can easily afford it, you're financing an appreciating asset such as a home. 00:22:16 [Speaker 2] It could be a rental property, it could be a business or some type of asset, it could be an equipment for your business, whatever it may be. 00:22:25 [Speaker 2] So let's make the assumption that, we're going to talk today, you've got yourself into bad debt. 00:22:32 [Speaker 2] Alright. 00:22:33 [Speaker 2] So bad debt goes back to the budget.

00:22:35 [Speaker 2] The reason you have bad debt likely is one of two reasons. 00:22:40 [Speaker 2] A, you did not have an emergency fund, or B, you have been spending unknowingly more than you make. 00:22:47 [Speaker 2] Alright. 00:22:47 [Speaker 2] So how do you know if you've been spending more than you make? 00:22:50 [Speaker 2] Well, it's time to get a new car and you don't have any money set aside, so you have to finance it.

00:22:56 [Speaker 2] That's spending more than you make. 00:22:58 [Speaker 2] You have credit card debt, that means that you have spent more than you make, that's why you got the credit card, you couldn't pay it off. 00:23:05 [Speaker 2] Alright, so what we want to do is we want to start out understanding what causes debt, and that's spending more than you earn. 00:23:11 [Speaker 2] And if you run a business and your expenses are more than your income, you will eventually go under. 00:23:18 [Speaker 2] And if you are a consumer and you're spending more than you make consistently, you will file bank or end up going bankrupt.

00:23:26 [Speaker 2] So what is the answer to doing this? 00:23:29 [Speaker 2] So let's get a plan to get out of debt. 00:23:31 [Speaker 2] There's several ways we can build and get out of debt. 00:23:34 [Speaker 2] Alright. 00:23:35 [Speaker 2] And so, again, we fire the expenses to free up money to save.

00:23:39 [Speaker 2] We look for things that we can reduce costs on, we look to find ways to get a gap. 00:23:47 [Speaker 2] And what is the gap? 00:23:48 [Speaker 2] The gap between our income and our outgo. 00:23:51 [Speaker 2] And then that gap allows us to reduce and eliminate debt. 00:23:57 [Speaker 2] Alright?

00:23:57 [Speaker 2] So that's what we're doing. 00:23:58 [Speaker 2] It may be you have to get drastic, like I did. 00:24:02 [Speaker 2] Sell two cars that had car payments, so I could buy cheap cars, in order to have no car car payment. 00:24:08 [Speaker 2] Back in the early days of the money game, we did a remote broadcast from a car dealer out in Rivergate. 00:24:17 [Speaker 2] And that car dealer sold cheap cars.

00:24:20 [Speaker 2] Cheap cars. 00:24:21 [Speaker 2] I mean, like, $1,200 cars, $1,500 cars. 00:24:25 [Speaker 2] And we had some bumper stickers made out, and these bumper stickers said, don't laugh. 00:24:31 [Speaker 2] It's a money game car, which meant it was paid for. 00:24:34 [Speaker 2] And one of our, our reps, went and bought a car for, $750.

00:24:42 [Speaker 2] Got rid of two car payments and bought a $750 car, and he was, like, so excited about it because you when you put the bumper sticker on, that meant you were smart. 00:24:51 [Speaker 2] You didn't have a car payment. 00:24:52 [Speaker 2] And he drove the car and he was in Hickory Hollow Mall, if you're from Nashville. 00:24:57 [Speaker 2] And he parked his car and he came back out. 00:24:59 [Speaker 2] Somebody backed into the side of his car.

00:25:02 [Speaker 2] And they left a note on there and gave him their name and all that kind of stuff. 00:25:05 [Speaker 2] He went and got an estimate, and he got $1,250 for the damage on a $750 car. 00:25:12 [Speaker 2] And this same guy, less than three years later, had saved over a $100,000 as a result of getting rid of the debt, raising the income, living lean, and saving money. 00:25:26 [Speaker 2] And so those are the ways you do things. 00:25:28 [Speaker 2] So what we do, we eliminate it, we start looking at ways to reduce debt.

00:25:34 [Speaker 2] So how do we go about doing it? 00:25:35 [Speaker 2] So we got a couple ways. 00:25:36 [Speaker 2] We can begin paying it off, you could do what's called a debt stacking, and there's a couple ways you do that. 00:25:42 [Speaker 2] I like to set up automations always. 00:25:46 [Speaker 2] And if you do nothing more than levelize your credit card payments, what will happen is, if you pay minimum payments, it takes you ten years to thirty years to get out of debt.

00:25:57 [Speaker 2] Because as you pay a minimum payment, what happens on credit card, the next month, your payment goes down. 00:26:06 [Speaker 2] So what happens is it just keeps keeps dragging it and refinancing it out. 00:26:11 [Speaker 2] So if you do nothing more than levelize the payments on all of your credit cards, you'll take it from a thirty year amortization down to about a three year amortization. 00:26:19 [Speaker 2] It's crazy. 00:26:20 [Speaker 2] So, if you're paying a $100 this month, set it up to automatically pay a $100.

00:26:26 [Speaker 2] That's one way. 00:26:26 [Speaker 2] The other way you can say, well, I want to have a little motivation and I'm gonna do this. 00:26:31 [Speaker 2] I'm gonna pay the minimum payments on all of them, and I won't pay all the extra money on a draft automated. 00:26:38 [Speaker 2] I'm gonna do that toward the lowest one. 00:26:41 [Speaker 2] And once I do that, that pays that one off, and then I'll take that payment and apply to the next lowest one, and so on.

00:26:46 [Speaker 2] It gives you a little momentum. 00:26:48 [Speaker 2] So that's one way. 00:26:49 [Speaker 2] Another way you can do is you can consolidate debt. 00:26:52 [Speaker 2] The only thing you need to know about consolidation is, is that if you don't change your spending habits, you will now have another payment. 00:27:01 [Speaker 2] And you're gonna keep going back in debt.

00:27:03 [Speaker 2] And so, you got to be on a budget before I would tell you to consolidate. 00:27:07 [Speaker 2] You can do consolidation in the form of a home equity line of credit. 00:27:12 [Speaker 2] And you do that and you're going to get lower rates. 00:27:15 [Speaker 2] You put it into one, but you gotta then decide to automate the payment. 00:27:20 [Speaker 2] And what do you do?

00:27:21 [Speaker 2] You say, I'm gonna pay it back off and I'm gonna set it up for x amount of dollars. 00:27:25 [Speaker 2] And you can go to a simple amortization schedule, look at your interest rate, and you can automate it and say, okay. 00:27:31 [Speaker 2] Based on what I'm doing, I owe $30,000. 00:27:35 [Speaker 2] I will be out of debt if I pay at 8% this much per month, in three years, in five years, whatever you choose, to have the goal, and then you forget about it, and then you start operating correctly. 00:27:46 [Speaker 2] So that's what I tell people to get out of debt.

00:27:49 [Speaker 2] We're gonna continue. 00:27:50 [Speaker 2] We're gonna talk about insurance. 00:27:51 [Speaker 2] Stay with me one more segment. 00:27:53 [Speaker 2] Roy Matlock Jr. 00:27:54 [Speaker 2] We'll be right back.

00:28:04 [Speaker 1] Welcome to the Roy Matlock Junior money and business hours where he'll help you fix your finances once and for all. 00:28:10 [Speaker 1] To reach Roy, call (615) 843-2999. 00:28:15 [Speaker 1] That is (615) 843-2999 or visit roymatlockjunior.com. 00:28:21 [Speaker 1] Now here's your host, Roy.

00:28:23 [Speaker 2] Alright. 00:28:24 [Speaker 2] Roy Matlai junior here, and, we are talking money. 00:28:28 [Speaker 2] And so far, we have been, doing quick, you know, ideas on how to, just go through the goal setting, the budget, the emergency fund. 00:28:41 [Speaker 2] We talked about debt management. 00:28:42 [Speaker 2] All of this you can find on roymountainlikejunior.com.

00:28:46 [Speaker 2] If you're listening now and you missed some of the shows, the Roy Mountlake Junior Money and Business Hour is, happening, and we have that on everywhere podcast. 00:28:58 [Speaker 2] And we've got a lot of great information on the website, but just visit roymountainlickjunior.com. 00:29:03 [Speaker 2] We're gonna go now. 00:29:04 [Speaker 2] Let's talk about insurance. 00:29:06 [Speaker 2] These are defensive positions.

00:29:07 [Speaker 2] The next show I'll be going through all the offense. 00:29:10 [Speaker 2] But one of the things about insurance, we've got insurance to do accomplish two things, to protect our income and our assets. 00:29:16 [Speaker 2] And if I go through and so what is life insurance? 00:29:19 [Speaker 2] Well, you can use life insurance to protect your income. 00:29:22 [Speaker 2] You buy term life insurance.

00:29:23 [Speaker 2] You can use life insurance to create an estate for your kids. 00:29:29 [Speaker 2] And you buy something that might be a permanent life insurance policy that builds up cash values. 00:29:35 [Speaker 2] You can buy insurance that has living benefits. 00:29:39 [Speaker 2] Living benefits are a way to, in the event you get sick or you become terminally ill. 00:29:45 [Speaker 2] So you're you're on this earth, but you're in bad shape.

00:29:49 [Speaker 2] You can draw against the death benefit in advance. 00:29:52 [Speaker 2] So those are things like that. 00:29:54 [Speaker 2] So life insurance protects income. 00:29:56 [Speaker 2] Disability insurance protects in the event you can't work. 00:30:00 [Speaker 2] I've always said this, that I think becoming disabled, is probably worse than dying because, if you're disabled and you don't have any money, you can't do anything about it.

00:30:12 [Speaker 2] And you can fix that by buying disability income insurance. 00:30:15 [Speaker 2] So we're buying things to protect income. 00:30:18 [Speaker 2] Term life insurance is an income protector. 00:30:21 [Speaker 2] Disability income insurance is an income protector. 00:30:26 [Speaker 2] We buy we buy health insurance to protect assets.

00:30:34 [Speaker 2] And so the difference in disability is we, in the event we can't work, it pays. 00:30:40 [Speaker 2] If we die, we buy life insurance, it pays to replace an income. 00:30:45 [Speaker 2] So we buy term, we buy disability to do that. 00:30:48 [Speaker 2] We buy health insurance primarily to pay medical bills. 00:30:53 [Speaker 2] In the event we have some type of problem, we can buy different types of health insurance.

00:30:59 [Speaker 2] If you are self employed, you can buy health share or you can buy a high deductible plan. 00:31:05 [Speaker 2] The idea, anytime you raise deductibles on insurance, you're taking on part of the risk with the intention that if you take on part of the risk, you are going to end up saving money on the premium. 00:31:17 [Speaker 2] So we do that. 00:31:18 [Speaker 2] But what is health insurance? 00:31:20 [Speaker 2] Health insurance is designed for asset protection.

00:31:26 [Speaker 2] So if you have a wreck and you're hurt, then what happens is you go in the hospital. 00:31:32 [Speaker 2] Rather than having a $30,000 bill, you pay a deductible. 00:31:36 [Speaker 2] And that deductible is affordable, it's part of your emergency fund you set aside. 00:31:41 [Speaker 2] So we have that. 00:31:42 [Speaker 2] So, then we go to protecting our assets again, that's personal lines insurance.

00:31:49 [Speaker 2] Or what is that? 00:31:49 [Speaker 2] That's your home and auto? 00:31:51 [Speaker 2] That's your liability coverages? 00:31:55 [Speaker 2] It's, renter's insurance. 00:31:58 [Speaker 2] It's things of that nature.

00:31:59 [Speaker 2] And then we have a plan in place to protect. 00:32:04 [Speaker 2] Alright. 00:32:05 [Speaker 2] All we're doing is protecting our assets. 00:32:06 [Speaker 2] I want you to think about this. 00:32:08 [Speaker 2] You work hard to accumulate.

00:32:11 [Speaker 2] You wanna protect your income, protect your assets. 00:32:15 [Speaker 2] We use a mortgage. 00:32:17 [Speaker 2] What do we use a mortgage for? 00:32:18 [Speaker 2] Well, to begin with, we borrow money in order to purchase a house. 00:32:23 [Speaker 2] If you have a lot of equity in your house, I always recommend while you're working to have an equity line of credit.

00:32:31 [Speaker 2] Why do you have an equity line of credit while you're working when you don't need the money? 00:32:35 [Speaker 2] Because bankers are funny. 00:32:37 [Speaker 2] They love to loan money to people that don't need it and can and can pay for it. 00:32:42 [Speaker 2] But they don't like loaning money to people that need it that can't pay for it. 00:32:47 [Speaker 2] So therefore, if you have a job and you have good credit, then you can go get an equity line of credit and not use it, and it becomes a big emergency fund.

00:32:59 [Speaker 2] If you are not working and your credit's bad and you try to get a loan, they don't want to give it to you. 00:33:08 [Speaker 2] So what I always tell people is we always, you know, buy the umbrella so when it rains we don't get wet. 00:33:16 [Speaker 2] That's what we do when it comes to doing a mortgage like that. 00:33:20 [Speaker 2] We set up estate plans as part of the defense. 00:33:24 [Speaker 2] A lot of the state planning is called a living trust.

00:33:29 [Speaker 2] But let's talk about what living means. 00:33:31 [Speaker 2] Living means you have a health care power of attorney and a financial power of attorney. 00:33:35 [Speaker 2] That means if you have something happen, someone can help, help you by giving them the right to pay your bills for you, to make decisions as it relates to your health. 00:33:48 [Speaker 2] And so what we're doing now, we built this defense. 00:33:51 [Speaker 2] And so I got into detail quick about, I did budgeting, I did emergency funds, we talked about debt management.

00:33:59 [Speaker 2] Now I'm gonna hit these insurances, and then this is gonna kinda close the show out. 00:34:04 [Speaker 2] And if you need help or would like to get, a review on your money, We go through this with everyone we meet with. 00:34:13 [Speaker 2] We'll take a look at where you're at. 00:34:15 [Speaker 2] We build a defense and offense. 00:34:19 [Speaker 2] We go to the product marketplace.

00:34:21 [Speaker 2] We are a fiduciary, and we do that, when it comes to insurance and investments. 00:34:26 [Speaker 2] We have big marketplaces. 00:34:28 [Speaker 2] No. 00:34:28 [Speaker 2] Not one company that we're tied to. 00:34:31 [Speaker 2] We match products to the people based on their time horizons and things like that.

00:34:35 [Speaker 2] So let's talk about insurance. 00:34:38 [Speaker 2] So we got two types of life insurance. 00:34:40 [Speaker 2] You've got what is called a term policy. 00:34:44 [Speaker 2] Term is no cash value. 00:34:47 [Speaker 2] You have cash value insurance, which typically is considered permanent insurance.

00:34:53 [Speaker 2] So what is the difference? 00:34:55 [Speaker 2] You buy term with the intention that it's to replace your income. 00:34:59 [Speaker 2] So a rule of thumb, if I'm going to buy a life insurance policy, I'm going to add a zero to my annual income and that's going to get me a close estimate of what I need. 00:35:09 [Speaker 2] So if I'm making a $100 out of zero, that's a million. 00:35:14 [Speaker 2] And if I take a million dollars and invest that money, if I get 8%, it's going to get close to paying back my income that I was making along with, over a period of time.

00:35:27 [Speaker 2] If you're pulling 8% out and you're getting eight, then you're maintaining that asset along the way. 00:35:33 [Speaker 2] And so that's an idea there. 00:35:35 [Speaker 2] So rule of thumb, we buy a term policy long enough to protect us until we would normally retire. 00:35:44 [Speaker 2] So if we're young, we're going to get a longer policy. 00:35:47 [Speaker 2] You can buy now thirty five year terms, And so if you're 30, you might buy a thirty year term or a twenty five year term, something like that.

00:35:54 [Speaker 2] If you're 50, you might buy a fifteen year term that gets you to age 65. 00:35:59 [Speaker 2] And you buy income replacement, rule of thumb is about 10 x your income. 00:36:04 [Speaker 2] I like the living benefits riders now to where you can get, in many cases, up to 90% of your death benefit while being while you're living because you may have a critical illness, a chronic illness, even a terminal illness if you're deemed to have something terminal. 00:36:23 [Speaker 2] You wanna have money now, and that's twelve to twenty four months, based on doctors saying you've got twelve to twenty four months left. 00:36:32 [Speaker 2] You can get up to 90% in many cases, and that's good for, you know, care that you may have.

00:36:39 [Speaker 2] And you they even have insurance now where you can get for long life insurance as long term care riders. 00:36:46 [Speaker 2] So we have that. 00:36:47 [Speaker 2] We buy permanent life insurance with the intention that, we can keep it until we die. 00:36:53 [Speaker 2] Why do we need that? 00:36:55 [Speaker 2] Well, dying is expensive.

00:36:57 [Speaker 2] You have cost going along with that. 00:36:59 [Speaker 2] And if you're married, you lose one of your Social Security incomes. 00:37:04 [Speaker 2] Other reasons you buy life insurance and keep it is to pay estate taxes, or you may decide that you want to put aside money monthly today to change your family tree. 00:37:15 [Speaker 2] And if you hold life insurance, a permanent life insurance policy all the way to death, it's a good investment. 00:37:23 [Speaker 2] It turns out to be a great investment for people, and it's a way to ensure to change your family tree.

00:37:31 [Speaker 2] You say to yourself, I'm a put $500 a month into one of these things and keep it forever, and it's gonna leave a lump sum for your beneficiary. 00:37:41 [Speaker 2] So we have that. 00:37:42 [Speaker 2] We go by disability income. 00:37:45 [Speaker 2] The idea is you're going to get about 6070% of your income, you pay a premium, the waiting period determines, and the amount that you purchase determines the cost. 00:37:58 [Speaker 2] So if you're willing to wait for ninety days because you have a emergency fund, you can, you will get a lesser cost than if it's an immediate disability income policy.

00:38:08 [Speaker 2] So we buy that, pay for you to become permanently disabled or you can't do the job you normally were able to do. 00:38:14 [Speaker 2] Health insurance, I like health shares. 00:38:16 [Speaker 2] Health shares, I have done this for many many years, had high deductible plans, I buy it myself, I negotiate in advance. 00:38:24 [Speaker 2] I negotiated thirty three years ago on the labor and delivery cost of my first child, paid in cash in advance. 00:38:32 [Speaker 2] Usually, you get 50% or more off of any health care procedure if you're willing to pay in advance.

00:38:38 [Speaker 2] And if you have deductibles, you can do that. 00:38:41 [Speaker 2] We buy P and C. 00:38:43 [Speaker 2] Here's the thing I would tell you on your home and auto insurance, you want to make sure you have adequate liability. 00:38:47 [Speaker 2] I would buy an umbrella policy. 00:38:49 [Speaker 2] That's a cheap lawyer.

00:38:51 [Speaker 2] As your emergency fund grows, you may bring your deductibles up, you know, dollars 1,500, dollars 2,500 deductibles on your home, your auto, all those kind of things. 00:39:02 [Speaker 2] And so now what we're doing is is we're getting things together. 00:39:05 [Speaker 2] If you rent, you get renter's insurance. 00:39:08 [Speaker 2] If you, your renter's insurance covers liability. 00:39:11 [Speaker 2] So if somebody, you know, shows up and gets hurt, your dog bites them, whatever it may be, you have that.

00:39:19 [Speaker 2] It also covers contents. 00:39:21 [Speaker 2] And so when I'm looking at doing stuff like that, I always want to make sure that I'm working with someone that has multiple carriers, meaning not going to State Farm only. 00:39:34 [Speaker 2] And the reason I say that is is that certain companies like certain type of of risk. 00:39:41 [Speaker 2] They like certain kind of drivers, and so we want to go and shop it. 00:39:44 [Speaker 2] And if you haven't done that, you can reach out to us.

00:39:47 [Speaker 2] We have referral partners, that we do that kind of stuff on. 00:39:50 [Speaker 2] And so I buy an umbrella policy, in the event I have a big claim against me, it protects my assets. 00:39:57 [Speaker 2] Again, we go back to mortgages, get you a home equity line of credit. 00:40:05 [Speaker 2] That is a big emergency fund. 00:40:07 [Speaker 2] And if you haven't got your estate set up, which is about 60 plus percent of the population, you need to have health care power of attorney, medical power of attorney, all that kind of stuff.

00:40:19 [Speaker 2] And so, what we've been doing today, this show will be recorded on the podcast, Roy Matlick Junior Money and Business Hour. 00:40:27 [Speaker 2] If you need any of this information, you can pretty well visit my website at roymatlickjunior.com. 00:40:35 [Speaker 2] We do, think we implement things for people to take the stress and worry off of your life when it comes to money. 00:40:42 [Speaker 2] Once again, thanks for listening, and, visit roymatlockjunior.com. 00:40:48 [Speaker 2] Schedule a one on one with one of our financial advisers.

00:40:52 [Speaker 2] We will talk to you next week.