In this week's episode of WealthTalk, Kevin and Christian discuss the best way to reduce your financial outgoings so you can invest more of your money!
One of the best ways to invest more of your money is to review and reduce your outgoings annually. January is the perfect time of the year to ensure that you're putting every penny to work. In this episode Kevin and Christian revisit an integral aspect of wealth-building process and even come up with a new twist!
Resources Mentioned In This Episode
>> FREE eBook: '12 Secrets to Eliminate Your Mortgage, Loans, and Credit Cards'
>> WealthTalk Episode 4: 'How To Uncover Hidden Money In Your Life Using D.E.B.I.T.S.'
>> Join the WealthBuilders Academy
>> REGISTER HERE FOR FREE RESOURCES ACCESS
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Unknown Speaker 0:01
The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
Unknown Speaker 0:19
Welcome to Episode 135 of wealth talk. My name is Cristian Rodwell, the membership director of wealth builders. And right by my side today, our founder Mr. Kevin Whelan.
Unknown Speaker 0:30
Cruz is great to be with you. COVID, free and yeah, relax, recharge, refreshed and ready for action and 22. And of course, you, me and Paul have been spending the last few days just kind of refocusing our own strategy for wealth builders. But sometimes, you know, it's really important to revisit some of those things that we've done before. And I think, given what's been going on, not just pandemic wise, but with a massive, massive hike in energy prices, inflation. We're seeing tax rates going up both personally and professionally in business, obviously, to pay for the pandemic, which I don't begrudge for a second. However, there's never been a better time to revisit one of our old favorites. And I think we need to do that today, Chris.
Unknown Speaker 1:19
That's right, we're looking at process that we call debits. And it's a core step inside the recurring revenue roadmap. It's it's step number two part of the foundation. And we've covered this in previous episodes. But way back in episode four for 2019. Dominic, so we went into some detail. So definitely here, then, I don't think. So we will point you back and link to that episode in today's show notes because we covered off debits in detail there. But we want to kind of freshen it up, revisit and make a little tweak today as well,
Unknown Speaker 1:57
well, you have to refresh things because world's changed. Just think about it Majan, you've got a beautiful building. And you're on a gorge, we're in the farm today, right. So we've got a gorgeous farm here, we've got a gorgeous building, and we're seeing the beams we're enjoying life now. But if you imagine we left that for two years, and there was a leak, and the water was spilling out, but we know it's only a drip, it's not gonna matter. What would happen over time, Chris is that building would gradually get worse, and worse, and worse. And eventually that building would dilapidated. And not only lose the power to create income, but it would also lose its value, and become instead of an asset to become a liability. Now, if you had a building like that, you wouldn't dream of letting that leak continue, would you night way you nobody would do it if they could see it. But the problem that I see with people, is the lack of transparency. Because the lives of busy, we're all busy. The vortex of life that holds us in an eddy, of what we do every day, who we see and who we meet and how we work that keeps us going round and round in a circle and makes us a bit dizzy. And that dizziness means we don't see what's going on in our finances. So we just encourage from time to time, ideally, once a year, ideally randomly. So it's got nothing to do with the tax year. It's got nothing to do with January, albeit we're talking now in January 22. But given as I said, the big changes that I've seen, I think it's never been more important to revisit it. And here's why. The other thing I want to mention, because one of the things we'll cover it's as you know, as tax. But the Adam Smith Institute, which I did refer to way back on the original podcast we did the Adam Smith's been economist, more famous economist denier, Chris but he's dead still around. And they publish something called Tax Freedom Day. And Tax Freedom Day is a kind of a highly calculated, what's the average length of time during the course of the year, beginning on the first of January to the end of December? How long does it take us before the money we're earning in our jobs or our businesses? How long before we stop paying tax? In other words, at what point in the year or working for ourselves? This year, or was 20 21/31 of May? Shocking. We're working till the 31st May on average, some people working on recourse and usually employees that pay more tax because there are tax breaks in business that you get you don't get them as employees will maybe touch You're not. And that's the longest it's ever been in history. If you think about that, that's five twelfths of the year 40. What is it 44% and 41% of all of our income is going in taxes, generally. And that's huge. Which means it's really important that in the context of that being the highest it's ever been, and it's not going to get any easier. anything's going up, the tax takers going up, we've got to be paying attention to our debits. So maybe you could set the scene. Yeah, what that process is,
Unknown Speaker 5:36
well, let's just cover off what we mean by debits because it is an acronym. We love an acronym it well for motors. And, as I say, covered in detail in episode four, but D stands for debt. Yeah, E stands for education. B stands for bills is for insurance, T for taxes. Yeah. And we're gonna save the best for last.
Unknown Speaker 5:54
Yeah, I think I'm going to make another tweak this year, because I've been a bit horrified at what I've seen. And we had a really, really great review this year, where we made a fantastic saving for someone. And that saving was so big, it was a catalyst for me to say, I think I should change debits, I think I should make the change. So why don't we go through each of those. Now, of course, we did a bit of a run through way back when, but some things will change. And it doesn't hurt to repeat things that was you know, repetition is the mother of, of all of this, this knowledge and this wisdom. So we need to do that. That's a big one. Because you know, people use debt, in all sorts of aspects of their life, sometimes for good, sometimes bad. And that's not the scope of today's webinar, or today's podcast, rather. So we're talking about debt, generally, most people have got some kind of debt, which they're either paying their life, right, so they're paying for consumer debt, like credit cards, and so forth. Or they've got debts on, let's say, their home, because for most people, they're not using their home as an asset. So we're not talking about mortgage debt for buy to let or for investment property, not in this particular discussion was talking about debt that we have in our life. And debt is a really, really big expense. And the important thing to recognize, is whenever you buy anything with debt, anything, it costs you more, right, because you got to add the cost of the debt on. But one of the most important things I didn't say, way back when Chris, is that the cost of anything that's ignored, the cost of anything that you can reduce or eliminate is not just the saving, but it's the compounding effect of what you can do with the money that you can't do if you spent it. So if you can save some money on debt, then it allows you the opportunity to plant the seed of what you save, and make those seeds turn into things that you can grow, you can turn into recurring income. And for many people who start their life many people perhaps who are new to wealth builders, Chris, there might be just getting that feeling that, yeah, maybe you guys are right, we need to stop trading time for money, stop working for one source of income, be in a job or being in a business, we need to be building wealth, but where's the money? Where am I going to start? And the place to start? Generally speaking, even if you don't connect with people is in your debits. And debt is one of the biggest ones. Because whether it's student debt, whether it's debt from mortgage, whether it's debt from consumers, and in my book, which I wrote in 2004, actually crusade for Fortune, how to completely eliminate your mortgage loan to credit cards fast, definitely worth having a copy of that. And we're going to give you a copy for free, and we'd like you to download it. And there are some lessons in there or 12 lessons in there that you could use. And some of those lessons are still relevant today. Some of them definitely been updated. And some fun ones up could touch on later, particularly as the world is kind of changing in terms of what you can sell these days. You know, like decluttering selling stuff, that's all I mean, yeah, we'll get to that. Yeah.
Unknown Speaker 9:07
So save a fortune fast. If you'd like a copy of that Kevin's book, head to wealth builders.co.uk forward slash save a fortune fast. All together. We'll link to that in the show notes as well. So you can just click on that link, and then just download copy. We also did a couple of podcast episodes where we went through each of those CEOs. Okay, so I'll link to those as well. And let me just ask you a question around deck having because it's something sometimes people ask is, you know, should I put all my money to pay off debt? Or should I use my money to build assets? Yeah. Is there a view on that? Yeah,
Unknown Speaker 9:40
there is a view on that. And the view on that is really all depends on the cost of the debt. So if you've got look at you know, one of the things that definitely has changed over time, is you see that people having adverts on the TV, right? And it says, you know, here's an easy way to consolidate your loans only 99% A Apr. Okay, so they don't have to publish their interest rates now. And everyone's focused on what's the cost per month? Not what's the cost on the money. Now, if you're spending 99% APR, that's a huge sum of money, you couldn't possibly make that as a return. So if you've got high cost debt, focus on elimination, if you've got low cost ahead, 345 6%, you could probably make more money. Once you understand the asset building strategies and techniques, you could probably make more money than the cost of the debt. However, sometimes we don't just do things for financial reasons. I've mentioned this before. Sometimes people want to feel that the weight of debt has been removed from their life and want to feel debt free. They want to feel mortgage free. That was a feeling that I had, it was definitely feeling I needed for my wife, if you remember. That's why we don't have a mortgage on our home. And we never will, because it's important to my wife to feel like the roof over our house over our head is completely say. So if Kev croaks, she's okay, she doesn't have to worry about the complexity. And of course, being slightly, you know, slightly tongue in cheek about that. But you know, we're not talking about the roof as in the physical roof or the roof as in how to protect things, which is another part of the wealth building. foundation that we teach how to make sure you're protecting your family, create, build and protect your wealth. And that probably would be the source of another reminder podcast will increase in the coming weeks.
Unknown Speaker 11:44
Okay, so I think we've covered data for debt. So definitely a way to find some savings, and
Unknown Speaker 11:50
get a good mortgage broker, if you've got mortgage that get a good mortgage broker you trust, you can connect with and Nate can shop around for you and get you the lowest possible costs, and review that all the time for you. So every one year, every two years, if you've got fixed rates, the end of the fixed rate. So it's something that's happening proactively to manage the cost of your debt down. So if you make some profit, pay some of it down. So you've got slightly less debt next time. And always look at what if you're, if you've got buy to let investment properties look what's known as your debt to equity ratio. So what's the value of the property you own compared to the value of the debt and stress test it. And what I mean by stress test is, the mortgage rates right now will be low. But they're not going to stay low. At some point, they're going to go up. So every 1% if interest rates go up from three to four, then four to five and five to six. What will that do to your cash flow. So it's important to be aware of what happens if, and the safest way to not to have that problem is gradually move your debt from 75% to 74%, to 70%, to 65%, and so on. And ideally, you want to get that down to 50%. To be really safe, or lower than that, if you're like me, you want to have the lowest amount of Daniel.
Unknown Speaker 13:18
Yeah. Okay. So on to he then he is for education. So before we start looking at how you can help reduce those costs, what do we mean by education? How, what kind of education might this include?
Unknown Speaker 13:31
Yeah, so look, we know education, is at the very essence is the starting point of the wheel of wealth that we refer to which is that circle of excellence that says, How does wealth built and it always starts with education. But look, we have to be lifelong learners as wealth builders. And we know for some people, they've still got the cost of the education, the student debt around them. So we've got to think about that as a cost. We're not talking about that we deal with that in in the deeper debt. But if you're going to build wealth, you need to grow your education. And how you do that is you're going to be investing some of your money to build knowledge. How do you keep the cost of that down? are one of those is to deal with trusted people, because just as there are a talked about interest rates being very high, shark infested waters there, there are many sources of education and all assets you can build from cryptocurrency to property to trading options to stock market, you name it, there'll be some kind of education that you can get nothing wrong with googling that just to get a feeling for you know, where education is out there, but be absolutely mindful that you would want to work with trusted people who have the education but that the education followed very quickly by the application, the education because education that's not used Just money spent education applied leads to cash flow. And wealth comes from cash flow. Sounds like you wanted to jump in? Well,
Unknown Speaker 15:07
I think, you know, we speak to a lot of people, unfortunately, who've been overwhelmed, you know, so much possibilities out there. And we've heard the terms haven't weighed shelf development, cost junkies. Unfortunately, you know, some people do get into that kind of, you know, circle of just one course to the next but never actually applying it, as you say.
Unknown Speaker 15:27
I mean, there is a, of course, we need to be mindful of our own wealth dynamic and how we are. And yes, we see people who are looking for the perfect answer, and there is no perfection, it's you just get started. And then you learn to get better. Later, you always get better, you never get perfect. So it's about getting enough education, that will lead you to getting the right kind of connection to people who are using the education, you apply a bit of due diligence, and then that should lead you to action. And that's the way we teach him. But it's just as important to recognize that educators have got a business. And like any business, there's a win win. And the win for them as they want to sell more education. Of course they do we recognize that. But we want to get the education but at the lowest possible price. And just as you can ethically negotiate, you can negotiate terms with educators, you don't have to take the off the shelf price, you know, this is life. So you can negotiate, what you could do, there is number one, you could use wealth builders, trusted partners, what we're looking to do there is serve our members, negotiate the lowest possible prices, with the best possible people that we trust that we resonate with, that we know is good education, backed by decent support. That's one way to do it. But if you don't want to do that, and you don't want to connect with wealth builders, that's fine. But if you want to then work with somebody else, see if they do a two for one, you know, you could go with a friend, because usually they don't, they don't mind if you've got two, two people there. And maybe it's a way to build on somebody else's wealth dynamic, maybe it's a way to find a joint venture partner, or maybe it's just a way to reduce the cost of that. So there's all sorts of different ways that you can use to make the cost of education, either lower, or in some cases, you can get it completely. For free. For example, we've got a relationship with one of the big educators where they will refund the cost of being in the wealth builders program. If you buy, you know, their their flagship program, which many hundreds of people do a year, there's nothing wrong with that, but because they respect us so much. And they know how committed we are to helping people build their wealth, and making sure they do follow through not just by the education, they will refund the cost of being in our program. So there's so many different ways people can do it. And if you're curious about that, before you commit to buying education, give us a call, and we'll help you understand, are they trusted people, you know, is there a way that we know that can help you reduce your costs, there is no publish scale of these things. So there's always room for negotiation, because once they've written the educational program, it's there, they don't actually cost that much to make it available to you. So let's just say negotiation is an art. And as long as you understand that, we can help you become more of a negotiation artist in what
Unknown Speaker 18:28
we do. Okay, so B is for bills. So we all have bills, probably a really good place. Actually, we should mention for all the debits, processes, money saving expert, because definitely a great resource.
Unknown Speaker 18:40
It's a great resource. Look, I've got to say, you know, Martin Lewis does a great job and got a great website. And of course, he makes affiliate income behave. He's doing all the work all that hard work. I mean, I was looking at something he was doing the other day talking about how the gas prices are going up and how some of the gas companies are saying you, you can't move to a standard variable tariff, you've got to do certain things and you don't. So by understanding your rights, you know, when if anybody changes the terms of the contract, like your phone contract, once they change the terms of the contract, you've got 30 days to decide whether you want it or not. So there's so many different things you can use to help you say, No, I don't want that. Or no, this is my right. I don't want to pay that I want to pay this. But the starting point is always transparency. So it means you've got to do some work. And guess what? Most people don't do the work. They're not willing to get their bank account out. They're not willing to get their online statement or their paper statement and highlight it and say what am I paying? Is there a way I could save a bit more money? We're not saying and let's be clear. We are not saying save your way to wealth. You can't do that. You cannot shrink Way to be a wealthy person, you have to expand your way. But the way to start our process is shrink some things that don't deserve to be there, or can be negotiated or can be corrected. And there's so many different ways to do that now using technology, that you can save some money, then when you make the saving, put the money to work, plant that seed that allows you to, you know, to grow your wealth and get your kids involved. You know, kids are brilliant with technology. And there's so many things that kids can do, you can get them to research things, you can get them to check things, you can get them to suggest things. It's just a way to give a teaching moment, a moment of education for your own kids to give them a challenge to try and find a way to do what Martin does so well, but to physically do it in your case.
Unknown Speaker 20:53
And we'll be including some of those things in the wealth builders for Families program when we launched that as well.
Unknown Speaker 20:58
Yes, I'm very much looking forward to that. Because you, your kids are just brilliant at what they do. And and I think bringing money into the home, talking about that being a great role model. By the way, Chris, I just got to give you a little bit of news here. We just created a quiz, right? In the quiz says, how good a money role model are you for your children? Okay, yeah. Just to put in the finishing touches to that now, can I ask you, can you tell or ask the listeners, if they would like to participate in the quiz. To send a note, however, you want to get them to send a note to whatever URL you want to create. So that as soon as I've signed it off, I could send it to them, which will give them a real insight into how good they are about bringing money into the home. And that's why we're not judging because we don't get the result. It's for you. But what we will be bringing is case studies, and ideas from other parents, enlightened parents, just like, I got me and like other people who've got children, and how you can do that, to bring children not just in to talk about your debits, but how you can bring them into the money subject, because after all, we're gonna have the biggest wealth transfer in history in the future, and we need to equip our kids, and they ain't teaching this at school. So we need to take that responsibility seriously. Anyway,
Unknown Speaker 22:25
yeah, it was segue, well, I'll just give the URL because we always know we get a lot of interest every time we mentioned the program. So wealth builders.co.uk, forward slash families, fa M I L. I e. S, and just put your name and email that will get you onto our list for all the upcoming news when we're launching that quiz.
Unknown Speaker 22:46
Alright, final one. Watch out for that one. If you've got in credit, you know, because sometimes the utility companies will charge you based on an estimate. And you can be in credit. Yep. You know, and if you're in credit with a supplier and the supply goes bust, you'd lost your credit. So do check that you're not in credit. And if you're in credit, get the money in your bank account, not on their bank. Yeah. Good. Now couldn't be said that three years ago, or whenever we did the last podcast because he would have thought, you know, gas companies could go bust. You never thought that just like in 2008. We didn't think banks could go bust. That's why you got to revisit these things.
Unknown Speaker 23:24
Yeah. Maybe now's a good time just to take a quick pause Kevin and likely enjoy doing is always pulling out a review from a pilot. We've had quite a number actually over over the start of the new year. But I had a great call just for Christmas with a gentleman named Terry Lewis and Terry kindly, has put a review, which I'd like to read out. So Terry says I was introduced to wealth builders through a property mentor. I cannot praise the quality of the podcast enough. It's simply superb. What I love the most are Kevin and Christians integrity, transparency, and honesty. They have a genuine desire to help people like me achieve financial goals. And for that I cannot thank them enough. I also love Kevin and Christian's ability to take a complex subject and to break it down into easily digestible chunks. Please don't stop what you're doing. The industry needs people like you. Oh, isn't
Unknown Speaker 24:16
that nice?
Unknown Speaker 24:17
Lovely review, Terry, famous,
Unknown Speaker 24:19
good review. And, you know, we like the endorsement. It's not about blowing smoke or barrio rear ends. It's about saying, Hey, you're doing the right things. You're helping us with the right information. You're giving us the right ideas. You're not making it too complicated. You're breaking it down into bite sized pieces, which means people can do it. And for most people, if they just take these small steps and they're only baby steps on they really do you debit and then you just make a little bit of progress. That's the key is like one of the things that I do. It's a bit of a funny thing, Chris, but it's hard. It's completely related, but you'll see what I mean. I put my trainers on Right, I have to put my trainers on every day, even if I'm just going to go for a walk with a dog. But by putting them on, I've got to do something I'm not allowed not to. Whereas it might not feel like doing a 30 minute run on the, you know, in the home gym, but the first step, but it's, it's doing something, so I just put them on. And then I'm going to do something because they are the act of putting the minuses I'm taking step Yeah. Now, I'm not saying I'm the fittest guy in the world, but I am making a commitment to doing something every single day. So
Unknown Speaker 25:31
that is, you know, the important subset of our members who join the Academy. We're talking about just one small element of the nine step roadmap today, which is debit, you know, all of these things compounded, you know, with someone there to hold your hand keep you accountable, others on that same journey. You know, that's what makes the difference. The
Unknown Speaker 25:49
thing I said at the beginning, Chris has to transparency, you don't see what that step does. You don't see what the baby step does. You don't see the bar? Well, I won't get around to my debit, because I won't save much. Most people say about 1000 pounds. Some people save a lot more get onto that big one in a minute. But some people save an awful lot of money. And when you can save 1000 pounds though, or $1,000 crumbs, you know, and if you can do that regularly, and your kids can do a little bit more, and then you can learn how to create some income on the side. And that's another podcast. We did. Do you want to signpost, that one as well,
Unknown Speaker 26:25
in some way it will be in the show notes. I can't remember off the top my head.
Unknown Speaker 26:28
So that's how to create extra income on this side. And if you remember that one, that's another acronym Chris, but I won't go into that one today. Because we want to stick to debits today. Yeah.
Unknown Speaker 26:38
Right. So we've covered the for debt. Yeah, if education, bills, yeah, I now insurance.
Unknown Speaker 26:46
Now, look, I'm not talking about saying hey, you've got to go get insurance, go get insurance. I'm not suggesting that. What I'm saying is when you start to build your wealth, you're not wealthy, yet. Most people will start from a place of financial insecurity. And they want to get to security, they don't want to get to independence. And generally speaking, when I'm talking to people myself, guess I'm saying what position you want to be in you financially insecure, now. You're relying on one stream of income, you'd like to be financially independent, whatever that figure is for you. It's something happened to you. If you were to die, or to get seriously ill, so that one income stream would not even come? Would you like to be financially independent? Come What make would you like your family to be financially independent? Come with me. So they're not stressing, you're not stressing, they're not stressing over a tragedy, their financial situation is resolved for the rest of their life. Now, that's big insurance. That's normally life insurance. I'm not saying get life insurance, I'm saying review what life is you've got? And your life insurance is going to come in three ways. Have a look? Which of the three do you have? Hopefully, all three. Number one, have you got a life insurance policy through your job? Work out what it is? Number two, do you have any private life covers your mortgage? Let's say? Number three, have you got a pension fund? Because a pension fund is a lifetime of policy, as well. So when you add those things up, you can get a sense of well, okay, something happened to me, what would that value be that will go back to my family? Once you know that, you can talk to somebody you trust or talk to us again, if you want to? And we'll help you understand, but what's the gap between what that cover will provide just like what's the gap between your current assets and the assets that you want? And how do you plug that gap if you want to, at least if you quantify it. And let's say if the gap was, is going to cost you 30 pounds a month to cover the gap. And you just found 1000 pounds in debits. You can guarantee financial independence for your family. And by the time three years is coming, you can already so far on the journey because for most people, it takes five years. So you see what I mean. It's a sense of perspective. It's just a way of looking at things and wealth builders look at things differently. They look for the creative solutions, they don't look for what's traditional. That's one way to do it another way you could look at that. I won't go into detail of it. Sure. We've covered this in the podcast. If as most people do in wealth, building life, they get a business. They create a business because they're entrepreneurs, if not, at the beginning, they become entrepreneurs and they create businesses. And if you've got a business, then you can get life insurance with tax relief where the company pays the premium and the taxman gives you a tax break. You don't get that if it's private life. So you're saving even more money. So if you're serious about protecting your family do you could do that we can help you. We've got a whole team of people who do that if you don't want to do it yourself or it's too complicated, just reach out in whichever way you would normally reach out. But the other thing to do is make sure if you do have elections policy is in trust. Now, that sounds complicated, right? Because nobody kind of understands the word Trust. But what it means you're probably too young for this quiz. But when I was a youngster, I used to get annuals. Did you know what I mean? Like a comic book RK here, like Leno or Dan, or the dandy right when I was young, or the whatever it was, you know, football annuals because other foot pocket. And one of the things you got inside a book, you turned over the first page, and the first page was always this book belongs to, and you'd write your name in this book belongs to Kevin Whelan. A trust is just that you say this policy belongs to my beneficiaries. Right? So my beneficiaries would be my wife, my wife and children. That's it. Once you've done that, and you've signed up, so it's just been a sticky label, properly done, but it's all done for free, didn't cost anything to do this, because all insurance companies have got these documents. And what you do is sign them.