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7 Secrets To Free Up Cash Today
I am excited to share a topic that I would say is one of the flagship topics of what I teach. Most people in the financial world out there, hopefully, read my last blog. You will read a little bit of the difference between what I teach versus other financial experts out there because I’m all about finding cashflow. All about creating wealth and money now, not 20, 30, or 40 years from now but right now. Things all make a difference in your life. Now, If you haven’t noticed, the theme is right now.
What I want to cover are those 7 Secrets to Free Up Cash Today. If you want it in written form, you can go to my website www.MoneyRipples.com. You will find all of this there. If you go on the front main page, you can get downloadable versions. Enter your name and email, and you will be able to get a copy of that. This one is a book called Beyond Rice and Beans: 7 Secrets to Free Up Cash Today. If you want it in written form, not just audio, I recommend that you go and download that now.
I know I’ve got very little time. Normally, when I’m on other shows and being interviewed by other hosts, typically, this is going to take at least 30 to 40 minutes, we can even cover three if I’m going to cover this in depth. Now, I’m going to breeze through these. I’m going to get you wild content here, and it’s going to come at you pretty fast.
The good news is I’m going to go more in-depth with this. In fact, you want to make sure you join us next episode because there’s a key thing I’m teaching you here now. These are strategies that I’m teaching you but the real key to this engine to make it work is not the strategies. People mess up strategies every day. It’s the principles that make the strategies work that you need to understand.
Unfortunately, what you hear is too often that you hear many people out there will call strategies as principles. Let me give you a good distinction of what they are. Principles are things that never change. They are forever. They are eternal. They are the same today, they will be the same tomorrow, and will be the same thousands of years ago but strategies can change sometimes day by day. You will hear some of these, “Paying off your debt is not a principle. Paying off your debt is a strategy. It’s an action that you take.”
However, the principles of why people talk about paying off your debt are because you are to live within your means. You are to create more than you consume. We will talk a lot about that next time about creators and consumers because that’s the critical factor here. The whole point of this show is to teach you how to be a creator and a good steward versus a consumer that lives in scarcity and has money rule them rather than you rule over money.
These are seven secrets. These are not all of them. There are a lot more than this. When I last counted of ways that people leak money and how they lose money in different ways, there were at least 24, and that list keeps building too. I got to recount these again. There are at least 24 ways that you can lose money. I’m going to talk about seven now. Some of the more common ones that have helped my clients free up on average $33,000 in their first year and much of that is still ongoing year after year. This is the big part of what’s helped people free up over a total of $40 million cumulatively for the last several years.
Let me tell you a little bit about how I came up with these strategies. Some of you might know this but in 2008, I was in a place where we were in the hole big time. I was in the hole of about $16,000 a month, meaning I was spending about $21,000 to $22,000 but I’m only making about $5,000 or $6,000 a month between my personal and my business life. Not all of that was debt. A portion of that was, for sure but even if I went debt free, I would still have been in big trouble.
It was an interesting time and tough several years. In the midst of that, I got creative on how to free up cash for myself, and in doing, I was able to find out ways to free up cash for others. That’s why one of more than 500 entrepreneurs has been helped to this point to find them free up a ton of cashflow. This is where we are going. This is where the rubber hits the road.
Let’s talk about secret number one. It is tracking your money. You’ve got to track your money. You got to know your numbers. That Law of Attention says, “Whatever you put your attention towards expands and grows. Whatever you ignore leaves you”. You got to make sure that you are paying attention to those numbers. You cannot expect that money will come to you easily.
I get a lot of people out there that they like to be metaphysical with this, and a lot of times, they are metaphysically broke. A lot of time, they will say, “Money flows easily into me. It flows in, and it flows my life naturally and easily.” How much is flowing in? I know I live every day. That’s great. You are surviving, but you are not thriving. How can you truly be abundant if you don’t know what’s happening? The way I like to say it is this, “If you’ve ever put coordinates into your phone or your GPS, how can you know how to get to point Z to your destination point if you don’t know where you are starting from? You got to start here.”
I would add too, as a bonus here is know what your destination point is too. Be clear about what you want. This will make getting what you want easy. Mark Twain said, “I can get people what they want. I can’t find anybody who knows what they want.” Tracking your money is the starting point to achieving what you want. You’ve got to track it. This is an interesting thing because most entrepreneurs that I talked to think that somehow money is hard. It takes a lot of time and focuses on being able to deal with their money.
A lot of this is because there are a lot of financial advisors out there that try to teach you that money is a difficult thing. That’s a bunch of bull. It is. There is no such thing. The thing is, they keep trying to put your life into a calculator and make it seem all complex. Your life was never meant to be put into a calculator. Your life is your life. It has twists, turns, and all kinds of things. It doesn’t work at a straight course. There’s no way that people have a perfect scenario workout every time with their money. We got to make sure we know what’s happening with their money in real-time.
It’s like anything in your business. If you are tracking what’s in your business and ignore it for several months, what do you think will happen to your business? If you ignore your family for several months, what do you think will happen to them? If you ignore your health for several months, what do you think will happen to it? You will lose it. You will be in a much worse position than you are now. That is why we check our money. When you ignore things, it will leave you like everything else.
A great way to start tracking your personal income expenses, I recommend using a free site called Mint.com. It’s a great place. This is why I love it. All of my finances can be downloaded into one place. I can have all my income coming in and expenses, all my checking and savings loans. Sometimes even investments, depending on the investments.
You can have all these things in one place and know in real-time where you are at. The cool thing is you can go in and start categorizing your expenses and whatnot. Before you fall asleep, here’s the thing. You start categorizing those expenses. It remembers how you categorize.
If you categorize your expenses, let’s say you go to Chevron. A lot of times, if you go to Chevron to get gasoline, it’ll automatically say, “Gasoline.” You don’t even have to do anything. If it’s a store, maybe it’s a little bit more confusing. They don’t know. For example, here in Utah, there’s Macey’s grocery store. Sometimes they will confuse that with the department store, which is slightly different spelling. You have to teach it, “No, that’s groceries.” If you do that, all of a sudden, the next thing you know, it remembers groceries point forward.
I’ve timed myself. It usually takes maybe 4 or 5 minutes to update all my numbers for that week. If that, a lot of times, I have to double check, make sure it’s categorizing correctly, and fix a few things. If I’ve written checks, I have to add categories there. I looked over the reports to see how I did for the week. Usually, it’s within easily five minutes. For most people, I would say ten minutes. You will know exactly where you’re at financially and be able to make goals for the coming week.
I recommend that whether you are single or with a spouse, especially if you are with a spouse or significant other, I would recommend setting a time once each week to do that. Whatever that might work best for you. I know if my family was having five kids, it can be difficult to try to find that time together, to get that quiet time.
My wife and I, oftentimes, will do a planning meeting on Sunday mornings before the kids wake up so we can have that time to coordinate schedules and talk about the financial situation for the week. Make sure it’s not about the money but make sure it’s also about your dreams and goals that you are enjoying this and dreaming bigger.
If it’s about tracking money and it’s that boring and dry, it’s not going to be a lot of fun, is it? Number one is you got to track your money. This is critical. You’ve got to do this. Everything else will fall apart if you don’t. I’ve had people who freed up anywhere from $1,000 a month to $1,500 a month. Usually, people who say they’re too busy to track their money are the ones that are losing the most money and not tracking. Make sure you are doing that on a weekly basis.
The worst-case scenarios I’ve seen or even the best case, are people that have gone and looked for productive expenses and people that have started looking for ways of how they are not using their money efficiently. I’ve seen a few dentists, for example, that anywhere from $15,000 to over $20,000 a month because they’re attracted money both and their business and their personal life. Personal life, Mint.com. In business, use things like QuickBooks Online. It is okay, but I know there are a few bugs with them.
Dollars follow the value that you create for others. As you look for ways to serve people in a way that they want to exchange money for you, it's amazing how much easier it is to make money. Click To TweetNumber 2 of 7 is earning more money. This might seem a little bit playing before you go and sacrifice and burn me at stake. Earning more money is not just going into getting a second job, although it can be that way. Most of the time, the potential is right under your own nose. If you see the example in my book, you will see Brian took my advice. I told him, “If I were to go back and work a job again, I would go to my supervisor and my manager instead of feeling entitled and thinking, “I deserve a raise,” I’m going out and ask him, “What can I do to merit more money to get a rate to a merit raise?” Brian did that.
He did that over the course of about a year and a half to the point where we went from $15 an hour to more than $28 an hour, nearly double his income in a matter of about a year and a half. All because he applied that principle, and that key principle for making more money is this. Dollars follow the value that you create for others. Dollars follow the value that you created.
As you look for ways to serve people in a way that they want to exchange money for you, it’s amazing how much easier it is to make money. It doesn’t become mysterious or strange in any way, shape, or form. It’s finding ways to add value to people’s lives. In business, you’ve got to do this. Find ways to add more value for more people, and that equates to more money.
There are a ton of ideas on how to do that. That’s why when I did my event, we spent a good afternoon on this topic of making more money, whether it’s through investing or through your business. It’s all tied to the same principle that dollars follow the value you create. The more you are exchanging that value, the more money you can make because exchange does create real wealth. Look to do that.
Many of you, if you are in business, if you haven’t raised your prices in years, I would recommend you do so. That’s something that most people don’t do because they don’t think that people will be willing to pay more for them, even though the average person with a normal job where they clock in and clock out, these are the people that aren’t trying to live better.
I know there are lots of people that have jobs that do amazing things to create value, and they see that they see it in their income. There are other people that are there not to get fired, so to speak, keep getting that paycheck, and do the minimal amount. Those people still at least get raises every year. Why not you? Look for ways to add more value to more people so they can find increasing your price or find ways to add more value, more people that don’t require more time, and maybe even lower your prices.
Earning More Money
If you have a job, you are looking for a part-time business or hobby, turning that into a business can be great because there are a ton of advantages to doing that. Number one is to track your money. Number two is earning more money. Number three is saving on taxes. As a disclaimer, I’m going to tell you that I am not a tax accountant at all. I do have an accountant on my team, a CPA that we use and refer our clients to. That’s not my forte. That’s not my thing. I’m not licensed to tell you about taxes. However, I can tell you some of the things that I’ve done that could work in your situation if you consult with your accountant.
Many ways that people miss money when it comes to taxes. For example, if you are an employee, I’m going to start with you. Naturally, you can write off only a few things. You write off your mortgage interest, education, and donations. Let’s say you donate to the local Goodwill, Salvation Army or Deseret Industries if you are here in Utah.
You donate to these places, donate up to about $500 before you have to start itemizing these things item by item. If you’ve given me a whole load of stuff, and you don’t have to individually itemize these things and tell the IRS what things you donated. To be specific, it might say, “I could tell from all the loads I’ve donated this year, it’s probably about $300 worth.” That’s something you can write off right now. Make sure that you are getting taken advantage of that.
If you have a normal job, I recommend turning your hobby or something on the side and turning it into a business. This is also where things like network marketing or direct sales can be an advantage too. It’s like business in a box. It’s nice when you have a business that you have to start from scratch. That’s where I’ve seen it.
A lot of people do well jumping from the corporate world and doing a side business with things like direct sales or network marketing. It doesn’t have to be that way. It could be a hobby that you have, and you do something on the side where you are doing some service. If you are looking for a business, what to do? Ask yourself. What do people keep asking you to help them do? What questions do they keep asking you? If you get people asking you certain questions or doing things over and over, it might be time to capitalize on that.
When you have a business, there are a lot of great benefits you can take advantage of. For example, one thing you start doing is you can start tracking mileage. For every mile that you drive, you can write off about $0.56 a mile this year. That’s a pretty hefty deal if you think about it. It’s also with meals and entertainment if you are going out with potential clients, whether it’s something that’s more entertainment purposes. Maybe you go out to a movie with a friend that’s a potential client, a client or a customer. Great. Write it off. You go out to lunch or dinner with them or breakfast.
Anything that can be justified as a business expense, you can write off heck. Even when you are going to places, let’s say you are trying to study ways to do your business better. Most people don’t realize they can run off things like Disneyland, for example, who’s one of the best organizations or companies that shows you how you can truly create an experience for your customers or clients. Their whole focus is how to plus. They are always plussing, as Walt Disney used to call it.
The cool thing with plussing. That’s also another word for adding value for people. Looking for ways to do that. There are all kinds of ways you can write things off. I have things I call busications where we go on vacation but I make sure that at least half the days I’m doing business of some sort. It doesn’t have to be the entire day but at least there has to be some business activity happening during at least half of those days at some point.
Normally, when I worked with business owners, we find at least $3,000 to $5,000 a year that’s being missed easily. It’s rare that I ever find anybody that’s doing the best. Let’s say you have an accountant that’s telling you to invest in IRAs, and you are a business owner. I would fire them. Those accountants are a dime a dozen, and they don’t understand how to think like a business owner. They only think about the numbers. They got to see the bigger picture to make it work to your advantage. That’s number three.
Tracking Your Money
Number one is tracking your money. Number two, earn more money. Number three is to save money on taxes. Number four, a lot of my clients have freed up cash is refinancing. I had a client. I get their house refinanced. We use that to consolidate loans and do some things. She freed up over $1,000 a month. That couple was happy with that, and that’s not the most. I’ve had people free up, sometimes thousands, even pushing towards $10,000 a month if they do it right.
I’ve got one couple that is in the process of refinancing three different mortgages and with that taken from a place of negative cashflow of a few thousand dollars a month to get him at least breakeven. Here’s the key. It’s not just a refinance to free up cash. When I shared that experience about $1,000 a month, she reached out to me and said, “I don’t think that’s a good idea because people blow money.” She is absolutely right.
This is why you need to make sure you read these next episodes because we talk a lot about being a steward. I told her, “Yes, that’s true. These people are good savers but they are paycheck to paycheck. They are even saving a little but they could be saving a lot more.” One thing I’ve learned in business is that income can go up, and it can go down. There’s nothing worse than when your expenses are higher and you want to pay things off too quickly.
Sometimes you can try and do too much of a good thing. Sometimes you can try to pay off your debt too quickly, be aggressive and be unwise with it. I recommend people try to lower their payments as much as possible. From there, as you open up more options because you freed up more cash, then you are able to make a decision of whether we pay extra on loans, put more in savings, put more on your business, and whatever that might be.
Refinancing is another great way. Remember that when you create more cashflow, cashflow creates more options. When you have more options and more choices in a situation, that’s where true financial freedom happens. It doesn’t happen from having millions of dollars in the bank. It happens because you have lots of cashflow coming in, more income coming in than what was going out in expenses. That creates those options. It creates that breathing room, the ability to feel freer. You become more productive in your work and increase your income at the same time.
I will ask you if it’s happened time and time again, “Does it pay to know details?” One of my clients, Tony, was out in the Midwest. We were looking at some of his business stuff and personal stuff. At first, we talked to him, we saw some of those numbers and said, “If you do this and this, we will free up over $1,000 a month. No problem.” In the course of our conversation, he said, “I’ve got these leases too. I got some of these leases that I do pay a lot of payments on in my business.” I said, “Why don’t you say so?” We looked at that.
It’s not only loans we are looking at, even leases. We looked at some of the leases there and said, “This is costing you more in cashflow than some of your loans and even your credit cards. Start paying those off. Let’s consolidate that.” We are able to free up over $2,700 a month. If you think about that, that’s over $30,000 a year. He’s able to free up because he gave me one little detail.
When you have more options or choices in a situation, that's where true financial freedom happens. Click To TweetI’ve had other people who refinance where we are able to get them to quit their jobs. Sometimes completely but not usually. I had one couple where the husband was able to quit his job and launch his new business, which he’s doing now. He’s brilliant. I’m glad he did that business instead of staying in the job that he’s in. It’s amazing what you can do when you start freeing up that cashflow.
Stop Retirement Contributions
Number one was checking your money. Number two is earning more. Three is saving money on taxes, and four is refinanced. Number five is to stop retirement contributions. I’m not recommending anybody specifically on this stopping your retirement contributions, like your 401(k) or IRAs. If you are in Canada, you’ve got your own plan as well or around the world.
What I am saying is that if you need cash and you are in a crunch, it’s not wise to charge up a credit card just so you can keep funding your 401(k) or IRAs. It’s not wise to do that. I recommend, instead, is if that’s going to be the case, we might want to look at redirecting those monies elsewhere. That’s one thing you want to do. A lot of times, when I meet with my clients, we have them meet with my investment advisor to figure out what’s the best option given their particular situation.
One thing I want you to be aware of is that when you are funding most retirement plans, most of the things do not pay you cashflow now. When I see people that are stuffing money into their plans, they feel like they are broke. A lot of the reason is that they’re putting their money in places where they can’t touch it. There’s nothing I hate worse than giving money where it’s controlled by the government. You can’t get to it unless you either quit your job or get fired. I don’t recommend that necessarily. A lot of times, it’s better to have freed up cash. I love having liquid caches or you can get to in a savings account. It’s important. That’s a big conversation, and we will focus on another show on that one.
Paying The Minimum Payments
Number six is paying minimum on loans and payments. Sometimes people are spreading out many extra payments on all these different loans when we can focus on one. If cash is tight, rather than trying to pay off extra loans to pay them off faster but charge up a credit card. That doesn’t make sense. For example, if you had a car loan that’s at 3% or 4% interest, and you are making all these extra payments on it but because of your negative cashflow, you are charging up an 18% credit card, does that make a lot of sense?
You are not necessarily. It’s rarely would that ever make sense. That’s more based on a system that I teach with cashflow, but rarely, I would say, “No, that doesn’t make a lot of sense. You can always pay minimums on loans. That’s why we look at the minimum payments as being the required payment, and that’s something we want to be careful of.
Selling Your Assets
Number seven is selling your assets and stuff. A lot of times, people forget that they’ve got a lot of clutter. They got a lot of things that they aren’t using. If you were to be a good steward, stewards use their resources. Steward also knows too. If they have resources that they are not going to use, they are going to end up getting rid of them. They are going to give it to somebody who will. This is where you could donate a lot to your charities. This is where you could sell these things online like on Craigslist or locally. I know Utah has a great site. KSL.com has been a great one.
There are lots of ways you can do that. You can give it away to someone who’s going to use it or exchange it for something. Find ways to get rid of these things. I will tell you from our own personal experience. When we were in our toughest times, selling things helped a ton. It helped us get through some of those bad months. I’m grateful for my wife, who’s the wizard selling things online.
Sometimes we give it away. We didn’t always sell everything. It wasn’t trying to make money off stuff but we did at times give things away, and other times we sold it. If you’ve got extra vehicles, for example, you are not using, you are like, “I might use this boat someday.” You’ve got this boat sitting in your driveway. Why not sell it and rent it from somebody when you do go and use it? You will save tons more money, and you can use that cash now to start creating more cashflow.
That’s why I look at it as can I sell something? Can I get rid of assets I’m not using that could be put to better use now to free up more cash and make a bigger difference in my life now? Does that make sense? There are lots of things you could do there. Those are the seven biggest things there. These seven points, tracking your money, first and foremost, it’s important. Number two is finding ways to earn more money.
Remember that you can only reduce your expenses so far before you have to stop, and you don’t want to live in a cardboard box. We want to make sure you find ways to earn more money. That’s limitless. That’s what’s awesome. Don’t be cheap. I don’t want you to live off rice and beans. I want you to live beyond that. I want you to enjoy your life because you don’t know how many years you will be on this planet. Enjoy it. Find ways to earn more and increase your means. You can better live within your means.
Number three is finding ways to save on taxes. Especially if you are in business, that’s a critical thing. Number four is refinancing. Find ways to refinance. It’s either reduce your payments by refinancing. This is more than loans, mortgages, student loans, car loans to be, and all kinds of things. Look for ways to refinance and even consolidate. Five, stop your retirement contributions so that you are freeing up the cash and use better payments on loans. It’s the same concept of contribution. Looking for ways to sell your assets and things that you aren’t using, be a good steward of what you have.
These seven things right here, although it’s not everything, make a huge difference. This is where the majority of my clients in these seven areas or the combination of all these have freed up, on average, about $33,000 a year in their first year, not to mention ongoing. I’m going to tell you, “Cashflow creates more options.” When you have more options, it creates more financial freedom, and that is the key to success. That is what’s going to make all the difference.
Stop being in bondage because you live by all the other persons and these other “expert’s advice,” but start doing things that make a difference now. You will be amazed at what it does for your life because it’s not about the quantity of stuff that you have. It is the quality of life that you live. I’m so happy to have you here. Join us next episode as we get deeper into these principles. Remember, cashflow creates freedom. We will see you later.