You can escape the rat race by increasing your passive income, but you can do it even faster if you decrease your expenses! Today on Financial Freedom Friday, Matt shares 3 tips to accelerate your rat race escape through saving money – WITHOUT giving up your daily $3 coffee.
What You Will Learn About 3 Tips to Accelerate Your Rat Race Escape:
- What “escaping the rat race” really entails
- How to decrease the biggest expense of your life
- 3 ways to accelerate your rat race escape
- How to speed up your rat race escape OUTSIDE of real estate investing
- How to increase your marketing budget
- What recently happened in the office that made Matt “sick”
- How a simple list exercise can make a significant impact on your bottom line
- How to accelerate your rat race escape without giving up that coveted $3 daily coffee
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Matt Theriault: Hey, this is Matt Theriault over at Epic Real Estate. And welcome to another episode of Financial Freedom Friday.
Speaker 1: It’s time for Financial Freedom Friday, with Matt Theriault.
Matt: So, when it comes to escaping the rat o0race, it’s become cliché, but what does that actually mean? It just means where you get your finances to a point where your income, your residual income, your passive income, your cash flow, whatever you want to call it, the type of money that comes into you on a monthly basis, without you having to put a whole lot of effort forth to earn it. We call it just cash flow around here. You want your passive income, that cash flow, to be at a point where it exceeds your monthly expenses.
So to escape the rate race, there’s two ways to do this, maybe even three essentially, I guess. One, you can increase your passive income, that’s one way. Two, you can decrease your expenses, three, you can do both at the same time. So we talk a lot here about how to increase your income, how to make more money through real estate, and that’ll never change. But let’s look at another way to do it as far as decreasing the expenses. How can you go about doing that, and really make a significant impact on your escape.
So I’ll give you three different things that you can do, like you can do these right now. One thing is to, go ahead and audit your bank statements. In the world in which we live right now, with everything online, so many other subscription services we belong to, go through and just audit last month’s bank account for those recurring payments. Just go through the different services and products that you have on auto-recurring, like recurring payments. Just go through there, and say, “Do I need this? Do I need this? Do I need that?”
We just did this here in the office and it just blew me away. It almost made me sick. We found probably pretty close to $1300 a month in recurring payments, for different website hosting and payment processing, and membership website stuff that we don’t really use anymore. And it was stuff that was like, we’ve been paying for it for so long we didn’t even notice. So we went through and that saved us $1300 a month. I don’t know what it’ll be for you, maybe more, maybe less, but go ahead and check to make sure that you’re not paying for something every single month that you don’t really need anymore, or maybe you don’t even want anymore. All right, so that’s the first thing.
Second thing is, go ahead and take all of your expenses on a monthly basis, and just write them out, put it in a giant list, and sort that list from the biggest expenses to the smallest. So you’re going to have your biggest expense on top, and work your way all the way down. Just go through that, and ask yourself, starting at the top, you want to start at the top because you want to work from the biggest to the smallest, you want to make the biggest impact on your rat race escape as we can. We go through them and we ask ourself the question, “How can we pay less for this?” How can we pay less, we just moved our way down one by one. Be careful not to breeze over them, and skip over them too quickly. Just go through and like, how can I pay less for this?
Try to come up with three different ways that you can pay less for each single item. Is it changing services? Is it just calling and asking for a discount? Or, negotiating? Or, maybe it’s limiting some of the services that you’re paying for, to reduce the cost that way. All right, so that’s the second thing we had some significant … It made a significant impact to our bottom line, doing that as well.
And then the third thing would be, when you’re talking about your expenses, and working from the biggest to the smallest, most people don’t realize their biggest expense in life, they don’t even consider this as an expense, not in this context, is their taxes. What they pay in their taxes each year. Most people don’t realize that 50 to 55 percent of your entire lifetime’s income is going to go to some form of taxation. You’ve got state tax, and federal tax, and property tax, and sales tax, and just tax, tax, tax. But the one that we can really impact is our income tax, what we pay to the state, what we pay to federal each year.
So if you haven’t done any sort of tax planning with your tax professional, that would be a really good place to start, where you can create a significant impact to your bottom line and a significant impact to your rat race escape equation. So you’ve got this passive income that you’re working on every single day, where you’re building that, but if you can bring these expenses down, down, down, down, you can make that gap between the two that much bigger, and actually pretty quickly.
Most financial gurus out there, the people that you’ll see on TV, they’re telling you to do things like buy a used car, or limit your daily trips to coffee, or your Starbucks coffee every day. Do you know what that $3 a day is going to add to over the year and blah, blah, that’s their thing. I’ll tell you right now, you do some small, little financial planning, some tax planning, some tax strategy, you can still enjoy your coffee, and still have a significant impact to your bottom line and the your rate race escape journey.
I just met with my tax attorney, and every year, he shows me a new little trick that saves me thousands of dollars. If you want to consult with mine, you can, I’d be happy to refer him to you. Go to taxhacker.com. Go to taxhacker.com, he’s got a little e-book there about Trump’s new tax plan. You can get that little free e-book, but once you grab that book, on the other side, there’s a little calendar of his, and you can schedule some time and have a conversation with him or one of his professionals and see if that’s going to be a good fit. See if there’s anything that they can do for you there.
All righty, so hopefully that helps. A little bit of change of pace this week, not so much about income, income, income. Let’s talk about the expenses that, the stuff that eats up our income. If we can consume a lot less of our income, then our journey to financial freedom, that rat race escape is just going to be that much faster. And quite honestly, that much more enjoyable. Think about all the extra fun things that you get to do as well. All righty, I’ll see you next week on another episode of Financial Freedom Friday, take care.