Millionaire Reacts: Living on $280k A Year In Detroit | Millennial Money

welcome back to the Graham Stefan show my name is Graham and welcome to my show so this one we're gonna have a lot of fun with because I subscribe to this YouTube channel called CNBC make it and one of my favorite things that they do is called millennial money where they go over different Millennials finances so they go over their income and they see what they spend their money on and then people argue about it in the comments section no usually these types of videos don't get a ton of views but this one really stood out it's called living on two hundred and eighty thousand dollars a year in Metro Detroit millennial money I can already tell this one's gonna be good because got a hundred and forty two thousand views in three days so I'm gonna go ahead and watch it and comment on it from my perspective of someone who became a multi-millionaire in their 20s and I like to think that I'm pretty good with money I try I'm pretty cheap but anyway let's see what this guy is doing and maybe we kind of roast them a little bit let's see I've really only functioned under the mentality of you need to enjoy your life this guy is pretty much already the opposite of me if there is anything I wouldn't buy this dude is like you know what I'll take ten of them that may be new I never really wanted to die with a bunch of money in the bank my name is Alex Pardo I'm 25 years old I live in Royal Oak mission the dude has an arcade in his kitchen this is gonna be a good episode again just outside of Detroit and I make two hundred and eighty thousand dollars a year I am a hairstylist I own a salon I do private education and I have a hair product line I got it I got to say this so far this dude's income is pretty well diversified I think he owns the business and everyone's gonna get their hair cut I mean even in a recession so what you may be lower prices a little bit but the fact that he owns the business I think is great education is always a huge industry that's never going away anytime soon and his hair products it's it I think it's great so far so so far no complaints with what he's doing I think it's smart the hair because I really loved the infant transformation that you could give people and the confidence boost that you could give people so how my two hundred and eighty thousand dollars gets broken down about a hundred ninety of that comes from doing hair behind the chair with my personal clients fifty thousand and tips thirty thousand with the two kinds of education that I do and then ten from the product line so I'm a little bit confused because he owns the hair salon but he's doing his own clients hair I would think that some of the money would come from the business maybe he's hiring it out to other people and maybe he could say the business generates a summa I don't know if he kind of owns the business but is on the lease and like he just brings in his own money or if he has employees that work for him it's a little bit confusing but either way I got to say two hundred eighty thousand dollars a year for somebody's twenty five years old she's running your own business regardless I think is incredibly impressive I should but I don't really have a system to keep track of my money or budget I really just have that cushion of savings that I put away monthly Wow Wow almost let's just round this up here fifteen thousand dollars a month in spending now I'm gonna guess that if this guy is smart enough to make two hundred eighty thousand dollars he's not just doing it in his personal name if he owns a business I'm guessing the business is held and probably an S corp so he gets paid out as an employee and takes the rest as distribution from the company so I'm gonna guess two hundred let's figure out what the Michigan State tax rate is four point two five percent that's not that bad okay let's just say he's an S corp $280,000 let's just say on average because this isn't really tough one to estimate what his tax bill would be because the thing is we don't know the full extent of his two hundred eighty thousand dollars i I think this is gross before taxes before any write-off so I'm guessing off two hundred eighty thousand dollars so you can write off a significant portion maybe the cars for him or a write-off he could I don't really think he can write off food here he might be able to write off some clothes and shoes and accessories if he can claim that's part of his business two hundred and eighty thousand dollars before two hundred and ten thousand after after taxes let's just say that which by the way I you know some of you guys might be roasting me in the comments here and being like the gram this yeah I mean listen I'm gonna be pretty conservative here so let's just say he's left over with two hundred and ten thousand dollars after taxes which would mean what is that broken down per month seventeen thousand five hundred per month okay after taxes which again is low let's make that very clear realistically it's probably closer to thirty percent but let's just say so he's really there's really not much left over so his fifteen thousand dollar budget it looks as though because if we even account for thirty percent in taxes sixteen thousand three hundred and thirty three dollars let's just say he probably has one to three thousand dollars a month left over after all of this but anyway if I were looking at all of this chart right now I would say his rent is is fine insurance seven hundred and thirty dollars is ridiculous I have a feeling that's not business insurance I have a feeling that's probably car insurance if he's spending four thousand dollars a month in cars it's probably insurance it's very high food is ridiculous twenty five hundred dollars a month and food he spends more and food than I spend in a month on myself for everything and he's spending that more on just food forty one hundred eighty dollars in cars that's stupid that is that's like that's about 30% of his take-home income after taxes goes to cars now if that's a business write-off then maybe I can kind of understand a little bit more but regardless that that's that's ridiculous clothes shoes and accessories $1,500 a month that that for me is a tough one because I think judging by his judging by the way he dresses that could be a part of his image and branding and all it you know me maybe maybe I can understand that if that's just part of the brand subscriptions $50 a month is fine credit card repayment $100 a month I don't know why you would need credit card for payment Adan that sounds like an interest payment $1,800 a month in savings is that that's that's nothing that makes me sad okay 2:30 and phones this is high and then 1875 and miscellaneous includes travel donations entertainment cabs and pet expenses $1,900 a month in that okay this makes me sad but anyway she's got the income I live in Detroit where housing isn't wildly expensive so this is my room and then I have a bathroom in here and then this is my Birkin closet my rent with utilities is $2,500 a month and out of that $2,500 I paid personally about nineteen hundred dollars of that rent cuz I split rent with my boyfriend I know it sounds expensive but it's a bang for your buck here it's funny he's saying like $2,500 for an apartment I'm here in Los Angeles for 2500 would be like the low end like the low and the low and I don't know Detroit and probably sure Detroit's a lot different but anyway to me that's pretty reasonable in comparison alright it's time to go to work let's go I have my tray set up I'm like cardi B prayer candle you never know we are gonna need to pray to the car to be gods and I have my energy drink so we're ready to go being a salon owner has kind of changed my life in a sense that I don't really work a nine-to-five anymore I feel like I work at 24/7 let's do shades cream 7g and six na I am on the floor three to four days a week taking clients as well I personally can take up to 22 guests and one day and that's usually a Saturday it's or longer day and a hair extension installation takes about 45 minutes and color can take between 15 and 45 so that's how we can fit that many people in one day I don't blow-dry I don't cut that's all the assistants or another stylist will do the haircut for me pretty first of all I mean obviously he's a smart guy here we go here's the 4130 I'm going to work every morning I get to choose what car I get to drive I have two cars I have a limited edition 2018 Mercedes on g550 that is $2,200 a month Oh $2,200 a month for lease payment ah not when you're making not when you're making 210 a year after taxes ten percent of your income goes towards a car one car out of two but if he's using this as a write-off it makes it marginally better not by a lot but it makes it a little bit better if he's writing this off and I have a 2015 BMW i8 and that is $1,300 Oh No $1,300 a month for a lease payment well you know I just hope he didn't buy the i8 if he's leasing the i8 $1,300 a month is actually pretty reasonable if he bought this car paying $1,300 a month is the stupidest thing I mean these cars are the epitome of depreciation you have on the curb mansour bodies which are terrible you have Aston Martin's that are terrible and then you have the BMW i8 which is now you can buy them for like I think under like 60 grand now for an i8 because just nobody wants them they're in a weird class but they look cool cuz the doors go up this much money in cars now it explains the insurance but this is stupid I mean this is straight-up stupid get one car if you don't need two of them just get one for right now just get one if you're gonna be stupid but this is like the Louboutin like shelf here these are shin now I have Gucci I have like a bunch of stuff and then this is all my designer stuff over here this is 1250 the couch is just the most ridiculous ripoff guys why why what makes that $1,250 let's be real it's a ripoff that's a ripoff because it has a Gucci law I've been to the Gucci store I've been there I've done that I felt the fabric on the ion estanque the Gucci is the exact same that you see on like $80 hoodies except that says Gucci on it made in Italy or what whatever it is what it's it's a ripoff but you know I teach their own I shop on consignment a lot and I buy a lot on consignment so I'm saving myself like fifty percent is really so at least if he's going stupid he's only going half stupid you never go full stupid because once you go full stupid you never coming back from that he's going half stupid that I could at least respect that because there is a second-hand market for a lot of these clothes that if he wanted to sell them he'd probably recoup a decent portion of his money as long as Gucci is still in style I'm worried the Gucci is just gonna become like an Ed Hardy we're gonna look back you know ten years later and I think like what was I thinking that stove has never been turned on I do delivery services for almost everything we calculated last month that I spent about twenty five hundred dollars on food delivery services it just seems wasteful it's it just seems like this you know he's had a whole bunch of income coming in and doesn't really know how to manage it is really what it seems like and you know I just be worried how sustainable is is that lifestyle you know if something comes up or something happens you store what what happens and now he's living this high life and it's something you know if something happens maybe not he's a smart guy but I let's let's keep going I have about seventy seven thousand dollars in my checking account right now no no Kay okay so I'm hoping the seventy seven thousand dollars it's like a business checking account where you got like you know expenses rent and things like that coming in and out if that's the case I think having probably under a hundred thousand dollars is reasonable for a checking account if it's a business checking account and it's being used if he personally has seventy seven thousand dollars in his checking account what tastehh open up an allied bank account online get 2.2 percent interest he would be making pretty much free uber eats money he wants to do that he'll make like you know $1,800 a year put that towards Ober eats get platinum status everyone wins never keep that amount of money in a checking account ever ever ever so less than everyone watching never do that in a checking account done and a story I keep a lot in my checking just because I like seeing the number that's in there so it's probably better for me to put it more into my like Roth IRA on my brokerage you can see the number in the Roth IRA you can see the number in a savings account why does it need to be in a checking account why I don't want to retire at 65 which is why I don't have a 401 K I plan on retiring much earlier you realize though at this level that he's doing right now there is no way that he can retire early let's let's figure out he saves 22 thousand dollars a year okay so I just calculated here if he wants to maintain his current standard of living spending fifteen thousand dollars a month and he's gonna be spending about four percent of his total portfolio every single year to maintain this lifestyle it's going to take him 45 years to retire at this level 45 years earning a 6% interest rate after inflation so he's got to be making somewhere around seven and a half to eight and a half percent annually on average over forty five years to get to that so if he's 25 years old now he's gonna retire at 70 70 years olds to be able to retire on his current level right now now here's the thing if he maintains this level and he makes a million dollars a year and saves all of the difference then by all means but right now he's not doing that I feel like making that first hundred thousand dollars like didn't feel any different I think it was one of those aha moments as a hairdresser like I can make a lot of money and I can support myself and I'm not a national average so I think my whole take on this is that this guy is obviously a really smart guy he knows how to run a business you notice how to make money I don't think for him making money is going to be an issue he's smart enough that I think no matter what happens he'll be able to make money the biggest thing for him I think right now is his lifestyle is just ridiculous and if something happens to his business maybe maybe the economy dips down or something happens what is he gonna do now all of his spending right now seems discretionary besides the cars on leases I mean you can always get rid of your leased cars you can always not buy $3,000 a month on food and $3,000 a month on clothing and all that sort of stuff so he he could cut back significantly if he wanted to my recommendation if this guy is ever watching which I have no idea if he is would be to really cut back and now is the time while he's making his money you may as well save it now because you don't know how long this is going to continue and if I were betting I would say he's probably gonna be continuing to do very well with whatever endeavors she wants to do and I think that he has the smarts for business to to really make the million dollars a year I don't doubt that I think he can do it but I would just be overly cautious and figure what do you need right now do you need a g-wagen and do you need an i8 do you need all of the clothes do you need all of the food I think it would be very easy for him to save probably half of his income and just cut back half on everything and really not notice a big difference in his lifestyle right now I mean get rid of the the g-wagen and well I guess he needs the g-wagen for the dog but get rid of the i8 and there's $1,300 a month extra that you can save that means you can increase your savings by almost 50% just by getting rid of one car instead of buying $3,000 a month and close by 1,500 and so they're spending $2,500 a month on ubereats spend 1200 just cut everything you're doing in half and even reinvest some of that back into the business like you'll get you'll make more money reinvesting it back into the business by doing something other than other than that I mean the students ability to make money I think is commendable I like it I think his heart is in the right place I just think you know he is someone to probably to started making a lot of money very quickly and it's just going overboard with the spending other than that though I would just you know caution this person just make sure that you save more money and and immediately move the money from the checking account to a high interest savings account if you just do that I'll be happy if you just do that and ignore everything else then I'm good so with that said you guys thank you so much for watching I really appreciate it if there's anything else you want me to comment on comment that video down below take a look at it maybe I can do another sort of reaction video like this make sure to add me on Instagram my plus there pretty much daily so if you want to be a part of it there feel free to add me there thank you for watching and until next time

Channel: The Graham Stephan Show

Views: 1,307,869

Rating: 4.8401232 out of 5

Keywords: millionaire reacts, investing, investing for beginners, investing in stocks, investing in stocks for beginners, how to invest, investing in real estate, how to invest in real estate, real estate investing, real estate investing for beginners, investing 101, real estate investing with no money, how to become a millionaire, cnbc make it, millenial money, investing advice

Id: PcXhIvudD5w

Length: 17min 49sec (1069 seconds)

Published: Tue May 28 2019