Personal Finance Wisdom You'll Hear No Where Else

personal finance wisdom for real estate investors and in fact this could be for anyone but since I mostly speak to real estate investors it's going to be geared directly towards you hi I'm Phil pusta offski with freedom mentor.com I'm a full time real estate investor I mean real estate mentor to literally thousands of people at this point many of which are among the most successful real estate investors in their respective areas and in this video I want to share with you what I have discovered about personal finance and how it can apply directly to your plans of becoming financially free now I would guess that you watch this video arcane to discover about anything related to my program or my videos through the process of you trying to improve your personal financial situation am i right I mean at some point you were researching how to become wealthy how to make more money how to have a home basement at some point you are trying to improve your finances and that's how you may have stumbled upon me in other people's videos that talk about real estate investing now I believe that real estate investing if done correctly is the best small business in America by a landslide but that's not actually what I'm going to cover here what I want to cover is the different schools of thought on personal finance that are out there and then share with you what I have discovered from all of this experience as well as trying to test out and apply what I've learned from others okay so when I first got started and I began the journey of becoming a real estate investor it all began because I had just gotten out of college I was flat broke I had met several classmates in college whose parents were so well off financially I couldn't believe it because these people had started broke like me when they were into getting out of college I used to think to myself how the heck did they get there so I went to this place that's kind of dinosaur these days it's called a bookstore they don't have that many around these days back then there was plenty of them and I went to this bookstore time and I wandered into the personal finance action and even today if you do so I haven't been to one in a long long time I'm assuming many of the same titles still exist this is what I saw on for the most part I saw a bunch of books written by people like Dave Ramsey ironically Dave Ramsey's from Nashville where I'm from a person named Suze Orman I think that's her name in these people and and many others as well wrote books in they have radio programs and maybe they even appear on television and they talked about creating a better financial picture for yourself and they all pretty much have the same advice and this is what they're going to say they're going to say things like set a budget okay so you need to plan your spending so that a budget is a spending plan how much is going to go toward your house how much is going to go toward the car how much is going to go toward food and insurance and and you set a plan you stick to that plan and ideally you spend less than you earn you live below your means live below your means meaning you don't spend as much money as you earn so you save money you save save save what do you do with that savings well assuming you've got a budget worked out you're now living below your means you're now finally saving money this is where they're going to teach you to invest your money and things like mutual funds and so you would you would set up a retirement account and you would try to max out your retirement account after you did that and you set up other accounts and you would invest in mutual funds and or other sorts of quote investments and this advice right here has been around for eons and what I'm going to talk to you this video is where this advice is wonderful but where it also breaks down okay so having a budget brilliant you have to have a budget when you're on a business you should always have a budget personally now what I do with my budgets is I use a system called mint.com mint.com and it will keep track of all of your expenses and so you can put them in the right categories Dave Ramsey for example he teaches that you should never use a credit card ever no credit cards whatsoever you should pay everything with cash at least I think that's what he used to teach that anyway you may not anymore honor well in today's society you gotta have credit cards to buy things online and those sorts of things you might use your debit card but I recommend you always fill in the credit card just in case there's identity theft so with credit cards mint does a great job it keeps track of all the expenses and you can put them in the right categories to keep your budget budget wonderful things or call it a spending plan living below your means brilliant yes you definitely want to do that because you want to be a day early in a dollar long you probably already heard the other side of that phrase which is a day late and a dollar short so living below your means is wonderful being able to say that is absolutely wonderful I had a mentor of mine once tell me he says he said if you cannot or will not save fill the seeds of success are not in you I was like whoa that's pretty serious saving money is absolutely incredibly powerful we'll talk more about that in a moment I'm betting that there is to trickle down to invest in mutual funds okay well we'll talk about the pros and cons there and then no credit cards and it's you know it's no debt be completely debt-free you know all right I should say debt-free okay enter a completely different view of this entire idea enter Robert Kiyosaki you may or may not have heard of this individual I have one of his books here in the office and that's a that's a picture that's a profile picture of him right there Robert Kiyosaki all right so this guy came along and wrote a book called Rich Dad Poor Dad that book has sold I maybe you can google it and check out the number of sales and it's over 30 million it's the most successful personal finance book ever written but this guy's quite controversial because he not completely but for the most part just bashed this entire idea and he said that this right here was the slow way to wealth he said that doing it that way you by the time you have enough money so that your investments your bit you know whatever you've done asset wise that you've built up by the time that that's paying you enough money to live off of you're retired and your life is basically wrapping up so he said that this was the slow way to wealth and so Kiyosaki's attitude was by assets not liabilities start businesses start businesses invest make mistakes invest make mistakes his attitude was go out there and go big and his his theories really resonated with a lot of people and what was so interesting about what he had done here was he had also become enemy number one of mutual funds he was teaching people not to invest in mutual funds but to go invest in their own businesses go buy real estate and go have complete control over your investments and if you are invest in the stock market you better know what you're doing and buy individual stocks or or play the game the way the other successful stock investors do like Warren Buffett so he came from a completely different approach and by so doing I know he inspired a lot of people to go out there and basically ignore this advice well what I have discovered is that it's not that this guy is right and these people are wrong or these people are writing this guy's wrong it's actually both okay and I'm going to put this hopefully we can see it I just kind of skin going both sides here it's both both have incredible pieces of wisdom that you can learn from that I'm going to share with you here in this video and I'll tell you where it gets all summarized it's not from these people or from this guy I'll tell you the book here it is the millionaire mind by Thomas J Stanley this is signal if you wash them out of the videos when I refer to signal I refer to truth that which is not the noise this right here is the single greatest book on personal finance and almost nobody knows about it what they know about or what they've heard about is more popular book called The Millionaire Next Door this is an interesting read the the authors basically did a study of millionaires and discovered their their habits what they spend money on what they don't spend money on and I do think this is helpful certainly this is going to be helpful in fact a lot of the principles you learn in here talk about budgets living below your means saving money investing wisely so you say well how can the same author Thomas J Stanley talk about this but then all of a sudden incorporate this in this book right here well that's the that's the magic in this book what he does is he breaks down the seven hundred to a thousand people then he personally met with in these focus groups and he takes the lessons he learned from those people that were millionaires and he incorporates into this book I've either listen to the audio or read this book so many times I've lost count because it's the stories of millionaires in how they got there and one of the greatest themes in this book is that the DECA billionaires people ten million dollars or more are business owners so your million to 2 million people tend to be you're 50 to 70 year olds that had professional jobs and follow this advice here your deca millionaires also followed some of this advice budgeting living below your means and saving but they did have some debt and they didn't invest in mutual funds they started businesses they used debt wisely to buy assets and they did make mistakes along the way but they learned how to become successful investors and business people so what I believe is the best model of all is is a combination of the two here and now this is where things get real interesting so there is a dichotomy there is something in conflict at odds here so from one perspective from a personal expenditure standpoint buying things your personal use you want to be frugal so from the personal level you want to be frugal but from a business level you want to be aggressive intelligent you want to be you want to use your brain and not just blow money but when it comes to business and investing you want to be aggressive so the more money you save the more money can go into businesses can go into assets can go into investing you can go into making mistakes on some of those things because the and that creates an education for you you spent the money you learn what you what you're not supposed to do but that makes you smarter and it shows you opportunities that are people wouldn't see what I've discovered from my own my own life and my own experiences is that so often too many people are too scared to spend any money on their on assets starting businesses investing and what ends up happening is they stay in the safe zone which hey their safety in this but the problem is they never make the bigger terms now that's that is part of this dichotomy so yeah you want to be frugal as you could be on personal standpoint you need to drive the nicest car at the biggest house in fact owning a home is usually a bad idea from a financial standpoint it's almost always better rent close I'll just tell you that to rent a home as opposed to buy it yes I invest in real estate owning real estate for you know rental purposes or buying and fixing up and selling it now you make a killing but your own personal home is going to be a liability to you all the things that go wrong the household things you have to fix up because taxes insurance mortgage well it's usually cheaper just to rent nobody likes to rent but I'll tell you this there's a gentleman um my name of Chuck Feeney he was a he was in the duty-free business at one point he was worth over four billion and nobody knew it because his wife was a French citizen living in the Bahamas and his entire businesses and assets were in her name so he'd ever paid any any IRS in a US taxes anyways um Chuck Feeny never owned a home he rented he looked at the math it was better to rent okay so frugal personally that means you're not blowing money you don't need to look rich don't need to accurate you just need to be rich so one of my great examples of this would be like Sam Walton who served Walmart he drove a beat-up pickup truck even though when he hit the billionaire status so when forbes descended upon his property in arkansas they found a guy with a beat-up pickup and they said oh my gosh you're a billionaire Sam why are you driving a pickup he goes why not it gets me to where I'm supposed to go Who am I trying to impress so frugal personally but business-wise the intelligent that'd be aggressive you may have to take on some debt that's okay because you know if you're if you're taking on debt to buy a piece of real estate well that real estates an asset so it can actually make sure it cash flow is positive make sure you have more equity than you have debt obviously but the the intelligent use of debt can make a huge difference there is good debt and bad debt and good debt can make you extremely productive financially and that debt is a bad thing so bad debt is going to be you know boat debt card debt anything like that on all that stuff outright all my you know cars but all that stuff I own it outright because having having any sort of loan on a depreciating asset is such a bad idea um now if you do on a home the actual the interest on your mortgage is tax-deductible so some people leave a little bit of a mortgage on their on their home but you know again it's usually better to rent all together so the best thing to do is probably own your home outright um okay so but those are all personal right so it would be frugal personally but business-wise we want to go out there start businesses we want to invest we want to make some money now here's where this also breaks down okay great to have a budget great to live to blow your means but you know what in the real world you can only save so much on car insurance in that right I mean we have rising gas prices rising food prices store these days you drop $300 that fast so the cost to live is pretty high and so your job your income may not even bring you enough so you can ever budget to live below your means unless you lived in a house for like $100 a month and those rentals don't even exist really so this entire model breaks down when it comes to the fundamental concept of bringing in enough money so you can actually budget so you can actually live below your means so you can actually say am i right this is a problem so Kiyosaki and others of his attitude they're added their argument was IDEO start some businesses you need to become your own business person and if we go back to almost the Bible of personal finance the deck of millionaires were their own business owners they had started small they built their own businesses they give examples of people that owned junkyards that are worth over 10 million and you know just all kinds of businesses so starting a business is a great way to improve your income but it doesn't improve right away usually it takes a while to get the business up and going it can take a year it can take two years just to even get it up and going up so it's making enough money now as you heard me say in the beginning the video I believe that creative real estate investing the way we do anyways at the greatest small business in America makes incredible amounts of money gives you great level of freedom and flexibility and you can also invest along the right but starting a business alone isn't the end-all be-all of personal finance because what you want to have happen is you want your businesses to bring in the money so you can throw that back into investing so you still live frugally you save save save and all those and all that money is poured back into investments what kind of investments now I'm not an investment advisor as they I guess have these different designations for them and you go to you take these classes and courses and stuff on that my argument is you want to invest in assets that you have complete control over do you have complete control over a mutual fund absolutely not you have no control over that now there is some value some people diversify in the mutual funds and you may consider doing that so you've got you've got a uh if you think of it like a pie chart run out of room here pie chart you know you've got some in real estate and then you've got some in precious metals and then you've got some in a mutual fund and you can do it that way that's fine because I go back to my theory on both might as well do both live frugally investments in mutual funds but also invest in assets that you completely control real estates an example your own business is an example you know this is an awesome little tidbit so Andrew Carnegie one of the wealthiest people in American history at one point he he wrote an autobiography didn't have my autobiography he makes mention of how confused he is by how many people he knows that are business owners that take the profits from their businesses and pour them into other people's businesses it needs to say to himself why don't they just reinvest the money back in their own business that's the one they have the most control over so if your business has tremendous amounts of opportunity you may want to reinvest it right back in your business or invested in in my opinion in real estate I think you can watch other videos as I describe all the power of being a real estate investor so the the the wisdom of personal finance that I'm sharing here is that it's not Dave Ramsey versus Kiyosaki you know it's it's really doing both on a personal level being very frugal living below your means keeping a budget I use mint.com I think it's absolutely fantastic for that um but you know having credit cards in the real world you'll need them and you know you should probably know how to use them reasonably responsibly it's a good idea to have credit cards in going to use them intelligently if you're going to be and you know what if you're going to master personal finance you need to be able to have the discipline to have big credit cards with no balances on and only there in case you need them to deploy modern asset and the more you save the more money you can throw back into investing and the more that you have access to I'll say this the older I get the more I realize how many people don't have just a little bit of money they need for the next opportunity they want to jump into and they're always thinking well all I need is an investor and maybe you seen the show shark tank they're always asking these these sharks for 25,000 or 50,000 well man they just had that money they wouldn't need to go begging and give away 30% of their business so the key here is frugal personally aggressive business-wise now if you don't have enough money coming in to even get to this level of budgeting living below your needs and saving money then you have to make some changes now a Robert Kiyosaki would argue that the old wisdom of go to college get good grades get a good job maven salary and he he has choose that altogether he just bashes that and he basically says that that's what his Poor Dad toddy and okay my attitude if you have a job and there's a way where you can continue to earn well in your job and then save save save the rest fantastic throw back into assets on if you're just starting off and you're trying to figure this whole thing out I definitely think the faster you can get into the world of business and become a business owner understanding how to run a business is a much more lucrative way down the road and you know the first couple of years all the people you know that went and got safe secure jobs they're going to be beating you but over time this is what's going to happen they're beating you and then boom you just you knock them out of the park because you just explode past them other thing is taxes by the way now if you own your own businesses and you have assets and you structure them wisely you can really reduce your tax liability but people who just have a safe secure job you all pay the most in taxes employees at ER these doctors high-income the vast majority in taxes whereby if a lot of your income is coming from assets then all of a sudden your income is not as taxes is heavily which I know that's that's like unfair but it is the way it is right so if you need more money right now you're going to need to figure that out and I think the best way to make money in life is to become a business owner to learn how to make money in business there's always new business opportunities out there there's tons of them you know if you know how to capitalize on them you're going to be a lot wealthier than those that that stay in a job and again I want to I want to go back to this you know the millionaire mind it proves it you know it talks about the people that are worth a million or two million worth of the ones that are worth 10 million or more it's it's the people that own their own businesses that's just that simple so you own your own businesses and you invest wisely and so in other words we go back to this it's both it's both these people's attitude and their in their teaching and it's partly his as well you know he's got a lot of controversy by the way and so in some of the stuff I completely disagree with what he teaches so definitely with caution on on that side but then the overall framework of what he shares is incredibly valuable about buying assets not liabilities and starting businesses investing making those mistakes getting out there and getting it done and I really hope that this has provided you with a level of understanding on personal finance that maybe you've never had before I really wish somebody would put this video together for me about you know 20 years ago this has been really helpful I had to learn a lot of this on my own and kind of go through that journey on my own and really discover you know where people were correct and incorrect cuz I just went on a binge I read all these personal finance books and on these kind of things like budgeting Limbo you're means this stuff is incredibly valuable it's what most personal finance books talk about but very few of them talked about how the heck do you make the money so you can actually get to this level well one of the greatest ways to make money is to be a business owner and start your own business all right well I'm Phil PST offski with with freedom intercom I'm a real estate investor and mentor I didn't talk much about real estate in this video but I think this is very important than it applies to to just about anybody who is investing in real estate and that is you know are you on the right path or you're on the right plan and my argument is if you're trying to get into real estate that means you're trying to start your own business that's fantastic it's a great place to be learning those skills will help you become a lot more personally financially sound than that anybody else you know and that's what happened for me alright y'all thanks so much for watching if you if you like this video if you have any questions comments you definitely down below here I try to interact as best I can with my schedule I'm pretty busy these days but every so often I get back inside YouTube and I'll respond to comments those sorts of things also if you want you can check out my book how to be a real estate investor it's an Amazon bestseller and really breaks down if you have interest in real estate investing it really breaks it down for you so you can discover exactly how to do it how the other good guys are doing it how it actually works in the real world and thanks so much for watching y'all happy investing in good luck mastering personal finance

Channel: Phil Pustejovsky

Views: 450,492

Rating: 4.8792353 out of 5

Keywords: Personal Finance (Column Genre), Personal Finance, Phil Pustejovsky, Freedom Mentor, Robert Kiyosaki, Dave Ramsey, Suze Orman

Id: Irsjjeaa73Y

Length: 27min 4sec (1624 seconds)

Published: Thu May 29 2014