How To Stop Living Paycheck To Paycheck

alright so in this video I'm gonna show you seven steps towards obtaining financial freedom if you're living paycheck to paycheck if you're struggling to sort of pay your bills or find yourself getting to a better financial position then I think this video is going to be helpful in some way now this is not exciting I know we're not can be cracking a lot of jokes but this is going to be more so if you're looking to go from where you are now with your finances to getting to financial freedom to having financial independence then I think this video is really going to be helpful for you so we're just gonna cut the chase we're just gonna get right to it I'm going to show you these seven steps towards obtaining financial freedom and essentially stop living paycheck to paycheck because I know a lot of people are struggling with that and there's nothing to be embarrassed about that there's tens of millions of people in America and throughout the world who are struggling to pay their bills they're worried about getting an electricity shutoff on them they're worried about their credit card getting decline because they don't have enough money and their bank accounts to cover everything and I can tell you that there's definitely hope and there's something that you can do to combat this and put yourself in a better position so we're gonna dig into that in today's video if you're new here to the channel make sure you subscribe to these videos we do them for free so let's just get started here with this in the first step towards doing this I'll be seven steps is to acknowledge the problem is to look at the problem that face on and and think about how we can start to work towards the solution here now this is actually the number one step here of acknowledging the problem is what most people cannot do and I'm gonna assume that you've already kind of gotten to this step because you're watching this video maybe you've searched for it maybe it was recommended to you but the point here is to acknowledge the problem just like with any other problem in life if you're going to Alcoholics Anonymous one of the first things that you do is you acknowledge that there's a problem same thing with finances we need to acknowledge that okay we want to get to a better position maybe I'm spending too much money I'm not making enough money something's not right here so what can we do here that's what we move into step number two which is going to be essentially balancing our budget so this is one of the most important aspects here on this video and what I help people with personal finance on is to run yourself like a business so try to imagine say Walmart or Target or Amazon not thinking about how much they're buying and selling products for every business needs to sort of run their accounting they need to know how much money are they bringing in how much money is going out they need to know their balance sheet their cash flow statements their income sheets now we're not going to get too technical into this but I can tell you this right now that if you're not running yourself like a business in the sense of understanding your finances it doesn't mean that you have to be trying to make as much money all the time but the point here is that you want to make sure that your financials are in a good position at the moment so step number two here is to do an audit on our current financial situation I'm gonna show you how to do that in the coming minutes here like I said earlier in this video I would suggest taking out a pen taking out a piece of paper writing this down so that once this video is done you're going to have an action plan towards going for this to really put yourself in that better financial position okay so the first thing that we want to do on the one side is we're gonna want to essentially calculate our net worth okay and this is going to help us line ourselves up for our goals and see how much progress we can make in the future now imagine trying to play a sports game trying to play a football game and there's no clock there's there's no scoreboard it's difficult to know your progress are you pinning are you losing you might not be able to remember correctly same thing goes with personal finance that if you're not keeping track of your finances you're gonna have no idea if you're doing better or if you're doing worse than what you were doing last month so the first thing that we want to do here is calculate our net worth and this is very simply put the easiest way to do this is to look at all of your assets or things that you have a positive value so your bank accounts if you have investments retirement accounts any type of asset things that are worth money that you could sell add up all of those on one side and then you can add up all of your liabilities on the other side so on the other side you can add up all of your negatives things that you owe maybe you owe $100,000 in student loans $700 in credit card debt maybe you have $4,000 on a car loan and maybe you owe some other people some money right so you light down all of your liabilities all of your assets and then you're gonna balance these out and look and say okay well where do I stand financially maybe I have a lot of student loan debt I don't have very much in my bank account so my net worth at the moment is negative $100,000 negative $50,000 I have a lot of student loan debt right so this is the first step that going to do on this side is calculating your net worth if you're a little bit confused on this a simple way to just fix this is just do a quick Google search but we will go more in depth later on in this video we talked about it more on this channel as well so that's the first step and then we're going to look at another way of calculating our current financial position and that is going to be doing something that's more so kind of focused on the short term which is going to be looking at our monthly budget so we have our net worth here but then we're going to calculate a separate formula here we're going to look at our current monthly budget so we're gonna look at how much money came into our bank account last month and how much money came out of our bank account last month so say that you made $2,000 last month from your job went into your bank account but then out of your bank account went $3,000 so you spent more money than you made and then you know that you went negative $1,000 last month and then you can look at this little chart here you can look at this formula of count of calculating that budget and then apply it to the other one that we just created with calculating your net worth so if you're if you spent a thousand dollars more than you made last month you can directly transfer that over to looking at your net worth that also probably went down a thousand dollars last month because of that so those are the two things that I want you to do after this video to calculate your net worth and calculate your monthly budget both of those you can do with just a piece of paper and a pen you can get fancy with it make an Excel spreadsheet or you could pay for some different budgeting apps or there's even some free ones out there as well on the app store to do this but it's one of the first things that I would recommend people doing now keep in mind I'm not a financial adviser this is just something that I found as work really well for myself so I think it's something that could work well for you as well but just just remember that you and only you are responsible for the financial decisions that you make so for some reason you do something stupid that's that's on you okay now let's talk about the next one here the next step after you've analyzed your current situation and a lot of people don't even get to this step because they're scared of what they might find and so they kind of sweep it under the rug continuously I see so many of my friends doing this and it's a massive mistake so you've realized that there's a problem you have analyzed your current position and you you realize okay maybe I am worth $20,000 or I'm worth negative $200,000 I went to school for eight years and I have a quarter million dollars in debt whatever position you find yourself in at the moment I want you to know that it's okay and that it's definitely something that you can get to a positive number and to a pretty large positive number I don't want to say easily but with with dedication by following through with these steps I think you're going to find yourself in a good position here okay so step number three is to simply set some goals that are reasonable realistic goals for the next 12 months and then the next five years so there's a lot of different types of goal-setting that you can do but this is an important step in the financial freedom process is to set a goal so if you have $10,000 in debt your net worth is negative $10,000 you can set a goal for saying next year I want to be worth zero dollars and that's actually something really good to strive for a lot of people have a lot more debt than they have assets in their life at the moment so step number three here is simply setting a goal for yourself for the next year of where you want to be now now we're getting into step number four here which is to really focus on your education in personal finance now obviously you're watching this video there's a lot of other ways to do this as well you can go to a free local library or you can pick up some audiobooks so the sponsor of today's video is actually audible so you can get a 30 day audible trial you can choose one audiobook and two free audible originals for absolutely free just go to audible.com slash Nate O'Brien that's audible.com slash Nate O'Brien or text Nate O'Brien - 500 - 500 that's Nate O'Brien - 500 - 500 but you can pick up a number of audiobooks for example I have a couple here but I know that they have a lot of different selections for personal finance books but for example Dave Ramsey's the Total Money Makeover or even just some massive text books like this personal finance one there's a lot of personal finance books that you can listen to on your drive to work every day just listening to them so you can get better with kind of managing your money so thanks for all for sponsoring this video I just thought it was something that would be a perfect fit for this video is increasing your education maybe this means going back to school maybe this means some other things but audible is just one that fit very well in this video now let's talk about Step five here because Step five is it is going to be one of the most important aspects here we're getting into step five six and in this video here in step five is to essentially go on the defense so you've analyzed your position you've set a goal for yourself you started to educate more maybe you listen to or you read a dozen different books and you're feeling pretty good now the next step is to go on the defense to start to essentially cut some costs that might be kind of running rampant for yourself so do a big audit on your finances but you already did but now you're gonna look okay where can I cut some cost and the big three expenses in America it goes in this order it goes housing transportation and food these are the biggest three expenses in American households today in 2020 so what you can do is you can focus on the big expenses now some people like to say I'm gonna stop going to Starbucks I'm gonna stop buying a dollar coffee at McDonald's and that's gonna save me a lot of money but what I would think is a better strategy for if we're focusing on this it's focusing on the really big wins or the things you can get to save $500 a month instantly so for example if you're paying $2,000 a month for rent at the moment maybe pick up a roommate or two roommates so that your rent is only $600 a month find ways to save money on housing transportation you guys know I don't even have a car that's because I live in a very urban area so I don't need one but the average cost of owning and operating a vehicle in America is well over $8,000 those stats are coming from the Bureau of Labor Statistics it costs a lot more money to have a car than most people realize obviously if you live in a rural area or you live in a suburban area and you need a car that's understandable but cars very extremely expensive and then food as well find ways to cut back on food without being foolish about it in buying poor food quality so what I would try to focus on is just making food from home eating out less focusing on those but going on the defense so that you can cut your budget quite a bit like I said if last month you're looking at your budget and you've spent $3,000 but you only made $2,000 find a way to get that down so that it's closer to even so that maybe you spend $2,000 and you make $2,000 that's a better position to be in than one where you're spending more money than you're making okay so the defense is very important but a defense it cannot really win games so the way that I view this and I like to use a lot of analogies here but the way that I view this is imagine playing a football game right and if you're playing only defense it's gonna be hard to actually win the game you might be able to hold off the opponent for a long period of time you might be able to kind of hold your own for a while but at some point you're going to need to play offense and so that's why step number six comes into play here which is playing offense in the financial world so what you're going to do here is you're gonna find a way to increase your income and there's a lot of different ways to do this we have a lot of different videos on this topic so if you're looking to start a business pick up a second job find some type of high income skill that you can use to essentially just make more money sometimes people ask me and like I said I'm not a financial advisor but people ask me they say Nate here's my budget this is what I'm looking at what should i do how should I get to a better financial position and sometimes when you look at it the best way to do it is to just say make more money and I know that sounds simple that sounds I'm making it sound easy and understandably it's not but I can tell you that there's a lot of different options out there before dealing that we have a number of different videos on that so we're not gonna go crazy into depth on that but it's kind of this two-pronged approach of you're playing defense by cutting some expenses but then at the same time you're gonna play offense and you're gonna go out and find ways to make more money both of those are very important now if you go too hard on defense and you only focus on defense you might end up depriving yourself of certain things you might not be able to go on vacations or live in a decent house or a decent apartment or a decent School District because you're focused on playing defense so much so kind of do both of them and that's gonna be sort of the best position then I found for myself to be in at the moment and let's finally talk about the last one here which we're gonna we saved the last for a reason but that is going to be credit ok so credit is step number seven this is the one that we're gonna focus on after we've already analyzed our position we've set our goals we've already focused on going on defense going on offense focusing on our financials quite a bit but then we can finally talk about credit so credit is a very interesting situation because if you listen to people on one side like Dave Ramsey he's very much against borrowing money using credit and then there's other people on the other side who were Pro credit they say that you can get credit cards and go on free vacations and you can use it to leverage your money to maybe buy investment properties so you can buy more and more now my general consensus on this channel and it's changed over time but my general consensus on this channel is that if you are struggling with your finances at the moment if you are living paycheck-to-paycheck at the moment then I would suggest staying away from credit cards and borrowing money with with auto loans or any type of loans for some period of time until you are sort of graduated to the position where you're feeling good financially you're making more money than you're spending in a month you're kind of on your feet financially you have a nice buffer of maybe a two or three or four thousand dollars at least in your bank account once you get to that position then you can dip your toes into credit and obviously I can't tell you what to do here but this is what I like to do for myself is to sort of make sure that you have a really good grasp on financials right so like I said listening or reading to a number of different books and then you can dip your feet into credit now I've personally gone on vacations across the world I went to Japan for free with credit card rewards from my credit card so I do think there are perks to it but you just need to be very careful with it because I would say as a whole credit cards and using debt in society is probably worse for society than it is better in terms of the amount of people who end up in terrible amounts of debt massive amounts of credit card debt paying 25 percent Interest so my word on that is just be very careful with it I think what I like to do is I got a credit card when I was 18 and I used that credit card to literally buy like one candy bar per month and with that I was able to build a good credit score credit schools are very important we've talked about those in a number of other videos we'll link to some of those down below as well if you're interested in learning about building a credit score but essentially building a credit score without borrowing too much money is kind of the optimal way to go from my position so those are the seven steps towards gaining financial freedom getting out of a paycheck-to-paycheck environment we have so many videos on these topics if you're not subscribe of the channel yet I recommend that you do so I would appreciate it we don't charge any money here we just removed just kind of survive off of people subscribing to the channel so thanks for watching the video I think we did this thing in one take here so thanks for watching and I'll see everybody in next week's video

Channel: Nate O'Brien

Views: 139,606

Keywords: how to save money when you live paycheck to paycheck, how to stop living paycheck to paycheck, living paycheck to paycheck, paycheck to paycheck, stop living paycheck to paycheck, stop living paycheck to paycheck tips, nate o'brien, personal finance, get out of debt, money tips to stop living paycheck to paycheck, financial freedom

Id: dut-n0g-7RU

Length: 15min 30sec (930 seconds)

Published: Wed Feb 19 2020