Debt Pay Off Strategies That Actually Work For Your Lifestyle @PersonalFinancewithLeila

Now I want to transition into your financial framework. Now that you've decided, hey, I'm going to document my journey, I'm going to share with people what I'm doing. I'm not trying to convince anybody do anything. I'm just saying, hey, I don't like debt, I want to pay this off, I want to recapture cash flow, I want to save and invest money and I'm going to take notes along the way. Can you break down for us how, not necessarily what you invest in, but how you take the money you earn from YouTube, from coaching people, even from when you were working your nine to five. What, what are the layers of your framework to create the results that you desire?

So I'm gonna go back to when I was working full time because that's a little bit easier and often more relatable. So I was working my 9 to 5 making the highest I ever made from a full time job was with the bonus, I think $75,000 gross. So I always was making some money on the side, but 75,000 gross and then some YouTube income and coaching. But when working full time, I was contributing to my 401k up to the company match and then sometimes beyond that depending on the year. Because if I had debt or if I wanted to focus on maxing out my Roth IRA first. So for the most part contributing at least up to the match for my 401k. I actually didn't have a 401k until 2022. Before that I had no benefits, just like health insurance at my, at my previous job. Outside of that Roth IRA has always been important for me to max out. I've been maxing it out only since 2022 as well. I started it a little bit earlier than that. But I, that's like a big goal of mine. Max it out for as long as I can every single year. Outside of that savings, I think having an important, I mean having a savings amount that is comfortable to the individual is big. I would like mine to be larger at this point. I have like 21,000 in my high yield savings account and that's, that's slowly decreased as I've become self employed. Not that I had to, I didn't pull from my emergency fund or anything. I just had like random sinking funds that I've pulled from travel, car maintenance, so on and so forth. And I, for my emergency fund I like to keep that like right now it's at about 14,000. I would like that to be higher. But there were times where I had no money in savings. So this is pretty, pretty good for me. But a number that you're comfortable with I think is of course key and something that helps you sleep at night outside of that brokerage account if there's room outside of your Roth ira. And depending on like, I guess I'm talking about myself. But the reason I, the reason I started adding to a brokerage account was because I knew maybe at some point in the future I would need to pull from it. Like in my 50s, before actual retirement age, I wanted something that's a little bit easier to pull from versus actual retirement accounts. So I've slowly added to that. But I think the tax benefits with 401k or, you know, similar retirement accounts and Roth IRA are like top, top priority for me. And that's kind of it. I don't keep much of my checking. I like it low because I'd rather my money work for me. But that's just my comfort level. So did I answer the question? Is that what you're looking for?

No, that's, that's really good. So that's showing, that's helping us understand what account that Layla has. So it's 401k Roth IRA. So for you, is it Roth first, then 401k.

So currently I, because I'm self employed, I am set up as an S corporation. So I do contribute as the employer and as the employee. So I, So altogether I'm contributing about 9% of my salary to 401k. So that's just consistent as of right now. And I would love to be a 401k. Yeah.

Is it self directed or is it just a standard?

You know, what do you mean?

So with the, so this is good actually. So self directed is when you have any kind of qualified retirement account that's going to invest or have the ability to invest in alternative assets. So it's not typically held with like a Schwab or a Vanguard or Fidelity. It's going to be held with a custody trust firm. That's usually what they call themselves. And you have the ability to buy gold and silver, actual gold and silver. You can buy real estate with your 401k. You can buy cryptocurrency. You can basically anything that you, that you can't buy on the exchange or on with any brokerage. So I'm assuming with you it's your solo. 401k is with a brokerage firm.

Yeah, it's with, it's with guideline and invested in Vanguard funds.

Okay, cool, cool, cool. Gotcha so it's a standard solo 401k. You're getting the tax deferral on your W2 income and then you're getting the deduction on your business side.

Yes.

So it's, you know, kind of like you're offsetting taxes today, you'll still have to pay it later, but you still get the win versus if you were employed. You don't get that deduction. You only get the tax deferral, which you still end up, you know, you sell the paying, you know, quite a bit. And then, so, okay, so boom, 401k first, then it's Roth IRA. And you like to really max that out. So for you, it's. Before I even get income, I'm already invested. So I have this mentality of spend less than what I make. So that's, that's a framework. So. And you're taking money off the top that you're not going to be able to touch till after 59 and a half into the 401k and the Roth. Great. Then from there you get your money lands into your checking account and you said savings, emergency funds, sinking funds. When it comes to savings and emergency, out of, out of curiosity, with the savings account that's seeing the high yield is that money you're just saving for future investment, future expense. And then the emergency is like, I don't touch this no matter what kind of deal. Like, like stuff has to go bad in order for me to like. And it's in two separate accounts. Is that right?

Exactly. So, okay, I use Marcus and it's like different. I have eight different accounts with Marcus that I have like labeled with my different sinking funds. Emergency fund. I don't touch it unless it's like a true emergency. And I'm grateful to say I haven't touched that in quite some time. It's just kind of growing at this point. And then I have like a travel sinking fund, car maintenance, car insurance business. Now I have like a wedding fund. So those I add to more regularly just depending on kind of what's going on with, with life. So they shift like typically every year or so, how much I put to them on a monthly basis or something. Like, I won't have the wedding fund forever. It's just for some time. And some of them I've had for years, like a gift sinking fund so that if there's birthdays, I can pull from that instead of having to be like, oh, no, where do I. If I have like a shorter, a slower month as far as income Goes I have that backup money in case I need it.

Got it. And then when you're saving, is it a percentage automatically every time you make money or is it more of after you've paid your bills and expenses, what's left over, you take a percentage of that and save it. How, how exactly is that money flowing to those savings accounts?

For some time when I had my full time job, I always had a certain amount going to the sinking funds on a monthly basis. So I would say like you know, $75 to gifts, x amount to travel, so on and so forth. More recently when I quit my job things got tighter. So I was like, okay, I'll transfer when I can. And I kind of like set these goals of what how much I wanted different funds to reach. More recently, now that I've kind of felt more comfortable with my income, I have set up auto savings or auto auto when I have my payroll it goes directly to those different sinking funds, like I think five of them at this point. So that's just automatically like 750 or so per month going to my various sinking funds. And then that's after like I make my budget monthly so I'm able to kind of predict what my income is going to be based off of that. I create my budget and of course I have to take care of all of my bills and then you know, the savings is auto happening now. But if I absolutely needed to I could stop that and get the money back. But it's been good so far.

Nice. Then from there you've got the brokerage account.

Yeah.

And that's like the last account that gets funded, correct?

Yeah. Like this year I haven't added to it at all.

Okay, cool, that's awesome. So from, and what would make you contribute to it is once you've hit max out on roth, contributed the 401k hit hit the amount of money you wanted to save in your high yield emergency sinking funds. Once those are all exhausted then you're like okay, I'll put money in this brokerage account. After the brokerage account, is there anything else that you, you do? Okay, cool.

No, no, the thing too is I, I still spend on and, and for some context I, you know I quit my job last year. I was making good money. I, with my full time job and with the business, I was making like 130k. That was easy. Life was on easy mode. Like I, I don't know how people personally, I find it hard to struggle with that amount of income. Especially if you're in A relationship and, like, living together. Life was easy. I was like, save, save, save. I can do anything I want to, basically. Then when I left my job, I knew it was going to get tighter. Um, so in 2024, I believe my gross earnings for my business were about 50k. So after all the business expenses, my bills, I didn't have that much money at the end of the day, which was fine with me. Like, I was so much happier. And I still am. This year I'll probably gross. My goal is like 120k, but I'm a bit short on that. So at this, at this point, I'll probably reach 80k unless I can, you know, I'm working on increasing my income, but 80k gross. And so that may sound like a lot, but with business expenses, with the way my business is set up as the S Corporation, like, I have to pay for payroll and I have to pay for guideline and all these different things. It doesn't come out to that much. And I do have. I have to pay for the house, I have to pay for pets. Like, there's a lot of things that add up, so I have room in there to save and invest, which is good. But beyond that, there is not as. There's not as much as before. So there's some context on. On that. And that's kind of why, like, in the past, I was able to save up $7,000 for my Roth IRA, for example, the year before, and max it out come January 1st. I wasn't able to do that this year because my income decreased. So that's why I'm slowly adding to it instead of just like maxing it out. First day of the.

Yeah, gotcha. So just to recap here for the audience, I really getting so much value out of this. So it's. You got again, contributing to your 401k, maxing out your Roth when you can. Right? Then from there it's savings, emergency funds, sinking funds. Then from there it's the brokerage account. A mentality is you spend less than what you make. That is something I've been preaching for the last seven years. And that's a tough one. I don't, you know, I. I'm with you on the whole. Like, if you're making 100 grand a year, like, why are you not, you know, saving more money? Like, I talk to folks, I have clients that make three, four, five, a million dollars a year. Yeah. And they. And they spend that. And it just like, my heart, not my heart, my gut just like, feels like I just like falls because I'm like, wait a second, how is this possible? Like what are you talking about? Even with kids, you know what I mean? I'm like, wait, like how, how is this possible? So yeah, that mentality of spending less than what you make for you, is it, is it a matter of this is the lifestyle I simply want to live or is it I'm doing this because of the rewards that that comes out of it? You hear? You get what I'm kind of differentiating between the two or how do you interpret that? Just that mentality of like I just spend less than what I make.

I spend less than what I make more so because one, I don't ever want to go back into debt. Like that's just a non negotiable unless there's some huge emergency and knock on wood, that doesn't happen, you know, but that's one thing is if I spend more than what I make then I'm going to go into debt and I'm not perfect. So I go over budget all the time. But I, what I always talk about is having an annual budget. So I'm usually always on track with like my annual budget. So I'll as long as things look good there, then month to month there's, there's wiggle room. So I'm never perfect. But I don't want to go into further debt and I don't want to live how I do forever, honestly, as in I would love to make more money and spend more money on things that make me happy. Whether it's like more travel, living in a, we're living in the location that we're in because it's more affordable. Do I love it out here? No, but it's fine. Like it's, this is living below our means, you know, because out of necessity, if we were to go somewhere else we wouldn't be able to afford it and we would live like a lot of other people do. So at some point that's, that's what I'm actively working on is working, increasing my income as is my fiance and you know, by being a team together we, I'm fully confident that one day I'll get there, you know, to where I truly want to be. And it's not necessarily to buy random frivolous things. Like I'm, I'm all for buying things. I, I love books. That's what's behind me. I like workout clothes, things like that. But it's more so just to not have to think about money and stress about it ever. Like, you know, if I want to fly on a Sunday, but it's more expensive. We were talking about this. We came back from a trip recently, and we were like, why did we book these days? We were trying to remember why we did that. And I was like, I think it was because it was cheaper to fly back on Monday instead of fly back on Sunday. I don't want to think about that. I just want to be like, oh, yeah, that's fine. We can do Sunday. Because we can, you know, but there's still things that I do consider because I'm want to, you know, be financially responsible and not saying I would be irresponsible. It's just things, little things like that that I would. I would love to change.

I like that. Yeah. So for. I think the way you answered my question is you're. It's less about rewards for you. It's more about lifestyle. Like, I live this way because even if you gave me a million dollars right now, I'm not going to blow it.

Oh, no.

Like, even if I dropped a million dollars on you right now, you're going to follow your system, probably going to max out your 401k, you're probably going to max out your Roth. You're probably going to max out your savings to the number that you desire and your emergency sinking fund. You're probably going to dump a bunch of money in your brokerage account, and then you're probably going to pour it back into your business, honestly, because you're like, wow, that was a blessing. Let me keep going. So oftentimes I feel like when I'm working with folks double my age and they're struggling with that one framework, that way of thinking, spending less than what you make just seems impossible for them, especially if they're looking at a guy like me and maybe even a girl like you, no kids, not a whole lot of obligations, and all that stuff. And it's like, it's not about that. It's. It's about intentional living. Like, how can we just simply choose a lifestyle that doesn't match what we create? So I like to give my clients this visual where I'm like, if this is how much value you're creating in the world, AKA your paycheck, your. Your income, then your consumption should be below what value you create. And if you're living a lifestyle where you consume what you create, then you'll reap whatever consequences come with that, whatever fears, doubts, worries, uncertainties and pains and traumas, you know, failed marriages and Divorces and you name it and health diagnosis, that's what comes with this lifestyle. And if you go higher, which I have a lot of clients that do that. When you incorporate the debt living lifestyle and how even in some of your videos you're like, you're not a fan of normalizing debt.

Mm.

Where there are other content creators that normalize it. And I'm like, wait, that's. You're really pushing the post now. You're really the post. And I can totally get. If you're an entrepreneur making multiple six, seven figures and you're leveraging 10, 20 million dollars worth of real estate and producing cash flow and there's tax strategy and you have a team and you have totally get that. If you're a W2 earner, dual income household and you've got 50, 60, 80 hundred plus thousand dollars of consumer debt mixed up of student loans, car loans, credit cards, mostly credit cards. Nowadays, as you know, we're over 1 point something trillion dollars of credit card debt. It's. You're, you're consuming more, you're taking more from the world. I like to give people that perspective. I'm like, you're taking more from the world than you're giving back to it. And then you wonder why. Right. If you have these complaints about, about your life, it's this reversal that needs to occur. How do we create more than what we consume? And, and you actually live an abundant life. You're actually living out of abundance, regardless if you drive a Ferrari or not. Like I drive a Hyundai Tucson. I make multiple six figures. I've, I've, you know, I do very well, very blessed. I drive a sign. My wife drives a Hyundai Elantra and I have my mom that drives a gmc. And sure, I want a, she wants a Bronco. She wants the classic one that's like, you know, custom, so that's gonna cost, you know, good money. She wants to, wants it pink. I'm like, okay, cool. Well, I want a Porsche. I want a Porsche. So these are things that I want.

Yeah.

But I'm not willing to compromise what I want if I'm not creating the amount of value to have a Porsche to, to have the Bronco, to have say, a bigger home or to fly private over commercial and all the other things that come with it. That mentality is huge. I think that's what is going to help you explode. Obviously your wealth as you, as you already know and then to keep moving down the, the path here is like you invest before you receive income, which I don't even personally do, I think that's something I can definitely incorporate where I do have automation in my life and I think that's huge. Especially nowadays social media and everything that, you know, everyone's busy nowadays, so doing what you can to automate and delegate your financial frameworks is huge. Yeah. And you've got, you've got this profit first mentality where you, where you save right before you, you know, spend and money on your, on your living expense and things like that. But what helps you do this and what helps do the investing and the saving is really critical, is that you just simply spend less than what you make. You realize you're aware of where you're at and you know where you're at is not where you're gonna end up. And you're in this constant motion of working, becoming who you are more and more every single day. That, that, that mindset is what's driving you and you're perfectly fine with having X amount of pairs of shoes, clothes, etc, etc, etc. It's not because you're cheap. It's not because you're trying to be cheap or you're trying to like, I don't know, like, it's not like, I think that's where a lot of people really mess themselves up or they shoot themselves in the foot is they think they're going less by spending less. And I would argue, no, that's not, that's not necessarily the case. It's like you're just being more intentional with every dollar you spend, whether it's at the grocery store, whether it's the clothes you wear. I like to, you know, when I go buy clothes, things like that, I'm like, will this bring joy to my wife, to my family? To like, will I enjoy this purchase or am I going to regret looking at it that I spent 500 on this, on this item, you know, a thousand dollars on this thing. So I think that's, I think that's huge. Good.

Yeah, yeah, that's what I was gonna say, like getting down to what it is that you want to prioritize in your life, that's really, that's kind of what I try to talk about with my clients because I can't. Sometimes people will say like, oh, is that, is it bad that I'm spending this much on food out or this much on groceries? Like, I can't answer that for you. It's up to you. Because I have clients who, yeah, you can spend a thousand plus on food out if that's what you really value. For me, I barely budget 50 bucks a month on food out because I don't want to spend on. On food out. There's things in my life that I know I like to buy books, certain clothes, that type of thing. But I. But I don't get my nails done. I don't get my hair done. I don't. I don't drink. I don't like to go out to eat too often. There's, like, so many things that I don't enjoy, so I'm not going to spend money on it, you know? So it's just like, I've figured out what makes me truly happy. And sure, those things may come up here and there, but it's barely, you know, so that's how I kind of just balance everything.

I like that. That's. That's incredible.