Chuck, hello, I'm your host. Mr. Chuck, a retired accountant turned truck driver, I reduced my debt in a relatively short period of time. Debt reduction to achieve financial freedom takes commitment, confidence, determination. Debt paid off now. What have debt under control? Should be paid off soon. What to do next? Start building wealth and getting money to work for you is a great goal to have. I'm going to be talking about what you do as your debt is coming down. It's not quite all paid off yet, but you're making great progress. So what are you should be doing in order to be ready once all your debts paid off? And what are you going to do with all that cash once you have no debt? Let's assume your goal is to pay off all your debt, your mortgage, your car payments, all your credit cards, personal loans, everything. And it might be two or three years, but maybe you've been working on it for two, two and a half three years, and you're getting close to having your debt paid off. Maybe you're about 90% done, and what should you be doing at this point? At this point, it should be increasing your emergency fund that minimum of 1000 and the maximum of 3000 was to get you started down the right road, on the right path, now that you got your credit cards paid off, maybe a car loan paid off, you need to start increasing your emergency fund. Your goal for your emergency fund should be a minimum of three months worth of your expenses go into your budget. Add up. What are your what's your housing, what's your transportation, what's your food, your clothing, it insurance. How much is that? Yes, you need three times that. Minimum. A good number to have is six times that, six months. In case you lose your job or recession hits, you get laid off, whatever the case. Maybe you're in an accident, you can't go to work and you don't have sick leave, or you don't get paid unless you're work. There's a lot of people out there like that. So you need to start building up your emergency fund first. Now, once you have a minimum of six or 7000 in there, that's your that's going to be your minimum, you need to move your emergency fund from your local bank to a high yield savings, or a high yield money market. It used to be a high yield savings, but it's changed over the last year or so. Now it's a money market. It works just like a savings, but they call the money markets a little different. If you want to know about that, then you need to look it up and find out what the difference is. But you should be getting somewhere 5% plus as of like time I record this on your savings, or which would we're going to be calling your emergency fund? That way it will build up a little bit faster. You got your money working for you, 5% is better than, you know, 1/10 of 1% at your local bank. I don't really have a whole lot in my emergency fund at this time, around 10,000 and I'm getting $35 a month. I think it's about five and a quarter percent, something like that. So, you know, $30 a month versus, you know, 30 cents a quarter makes a big difference. So once you get that done, and you're still going through the process of paying off your debt. Now your minimum balance for your emergency fund might be 5000 or 7000 or even 10,000 so then you build it up to 15,000 and you use the difference between your minimum and your maximum of 5000 and you apply that to your debt. Now, as you pay off debt, the gonna be building up your emergency fund a much faster. So if you're say, You got two or three credit cards paid off, and you have five, and you're starting to see the speed up increase your minimum from 1000 to 1100 and then the next time you do it from 1100 to 1200 that way you're slowly building it up, and you're not gonna miss the money. It's not gonna really hurt you that much. So when you increase your minimum 100 or 200 or $500 your. Maximum gets increased by the same amount. So you keep building up. Instead of the 3000 it might be 3200 or 3500 depending on how much you increased your minimum. I hope that makes sense. And as you pay off all your credit cards, you can increase it a little bit again, maybe 100 or $200 you pay off a car loan, you do it again. You pay off your second car loan, you increase it again. Now maybe your minimum is 3000 so now your maximum is gonna be five to 6000 over time. It's gonna be a slow process, but it's gonna speed up as you pay off your debt, the amount of money be able to put into your emergency fund to apply to your next debt, that process is gone. To speed up the last debt you have, the faster that's gonna go. It also helps if you get a pay raise at work, or if you change job and get a big pay increase. That's what I did. I changed jobs and got a healthy pay increase, and that really helped my progress along. So as you're doing this, by the time you make that last payment on your mortgage, your first mortgage, and you're 100% debt free, you should have somewhere between three to six months worth of money in your emergency fund. Three to six months worth of your expenses in your emergency fund, and you can, if you want to be more comfortable, you can build that up maybe to nine months or even a year. The more you have, the better off you're going to be, the longer you can weather a downturn in the economy, a layoff or accident or whatever the case. So it's up to you. Once you get comfortable with the amount of money you have in your emergency fund, you continue building up past that point, just like you did with your debt. And now we're going to look for ways to invest your money. I always invested in mutual funds, because mutual funds invest in maybe an industry segment, or whatever the different things in the stock market, and they buy multiple different companies, so the mutual fund is more diverse than buying one stock in one particular company. Now, if you are buying stock where you work, the company you work for, got to be careful that that's not you know, 90% of your retirement because you're not diversified. What would happen if your company has a downturn in the value of the stock drop, you lose all your money in your retirement account. You need to diversify your everything you do, meaning you need to have a little bit money spread all over the place in the stock market, so if one segment drops, you're not going to be hurt all that bad. And also, if the market has a big drop, don't sell everything, because you end up selling it for a loss. But a time you re you think it's time to get back in. You're going to be too late, you're going to miss it, and you're going to buy it at a high. So you're going to sell low and buy high, and that's not what you want to do. You want to buy low and sell high. So a big drop in the market, then that's the time you should be looking to buy. Whatever it is you want to buy. I recommend you get a financial advisor who understands how all this stuff works, they generally need a minimum of, say, 10,000 or 50,000 so check around, and I'm not talking about stock brokers. Stock brokers make a commission on what you buy and sell, and they're going to be trading more things more often in order to make a commission. Stock brokers are not financial advisors. Financial Advisors set you charge you a maybe quarterly fee based on a percent of a quarterly fee. That's a percentage of how much you have invested with them. So if you have 50,000 invested with them, and their fee is like 2% you pay 2% a quarter. As the goes up, they make more if it goes down. Out and they make less. That's referred to as a fiduciary. They're looking out for the best interest of you and not themselves. A stock broker is looking out interest of themselves. I need to make more commissions, so I need to do more trade. So I buy and sell stuff that I don't necessarily think this guy should be doing but I do it anyway, because I need to make money. A fiduciary financial advisor does not do that, and they work with the larger ones work with, like swab or whoever, fidelity, Vanguard, all the different brokers or agencies, whoever they are, they have, you know, agreements with them so you don't pay the fees. You pay their one time fee, and it's not too bad if you're concerned about paying the law fees, tell your financial advisors you want to invest in mutual funds that don't have high fees to minimize it, or whatever your particular strategy is that you want to do. If you want to have a conservative investment and not have the risk of losing the principle, the principles, the amount of money that you're putting in, then you have a conservative investment. If you're young and you want a lot of growth, because you got 30 years, then you be a more aggressive investments that will grow over time, and if it drops, you got time to recover. The main point here is you're getting your money to work for you. You hear people on advertising and on the radio where they say they saved $2 million well, I can bet you they did not save $2 million they saved money that grew into $2 million they might have saved 500,000 and over 40 years, grew into $2 million they put in $100 a month, and then $200 a month, and they did that for 40 years. So their initial investment may only be 500 but their total if they would sell everything that they would be worth over 2 million assuming they got the market price for everything. It's also very important to continue to do your tracking and continue to do your monthly budgets. That's how you keep track of everything. That's how you keep your personal finances under control. You may feel that I got all my debt paid off. I don't need to do that. Well, if you don't do that, you're gonna go back to exactly where you were before you may start using credit cards too much and get behind. You might spend all your emergency fund because you were careless. Maybe use emergency fund to buy yourself a brand new car, and I'm going to repay that back. I can pay that back because my don't have a car payment, but you never get around to doing it. Keep everything that you did while you're reducing your debt, you deep doing the same thing. You don't stop doing that ever your goal in building wealth, if that's what your next goal would be to do and building wealth, you can only do it if you have more income or what the value of whatever you buy goes up. That's why people invest in the stock market, because over period of time, they go up in value over 30 or 40 years. If you don't want to wait that long, well, how much wealth are you trying to build? And you want, like, a million or 2 million. Or what's your goals? You want 3 million for retirement, or you want 50 million? Well, if you the more you want, the more aggressive you got to be. You have to get in to some type of business that is profitable, that you can start from the ground up. And if you watch the shark tanks, for instance, most all those people are making the investments, started some type of business at the right time, build it up, and then sold it for a fortune. That's how they made their money, and they why they're looking for new business to invest in, because they know the value of that. They know that there's going to be some small businesses to fail, and some that do really well, and they're looking for the opportunity for the ones. It will do fairly well. That's why they want a percent of the ownership, so that the value of that business goes up. The value of their investments go up. Same thing with in the stock market. Same thing when you buy real estate for rental purposes, if you buy in a single family home and you rent it out, you're technically you, even though you're personally responsible for the mortgage. If you keep it rented out for 12 months out of the year, for multiple years, the renters are paying the mortgage for you, they're paying the real estate taxes, and they should be paying enough rent to cover the maintenance. Now, there's going to be time to time where you have to cover it and then recoup it later, but the value of that property is going up, hopefully. So if after you own it for 10 or 15 years, is worth more than what you paid for it. So not only did you make money from the rentals, you got to make money from the sale and the con stock is the same way. If you invest in stock to pay a lot of dividends or bonds that pay interest. You're going to make money from the dividends and interest, and you're going to make money from the sale, hopefully, of that particular item, that's what you're trying to do. Buy low, sell high on everything that you do. It doesn't have to be real estate, anything that you think is going to go up in value may be a good investment. Every investments has risk, the more risk, the more chance that is not going to work out for you. That's why you put the majority of money somewhere that is less risky, such as stock market, maybe you can have a semi aggressive investment strategy. So part of your capital is going to be, you know, saved where you're not going to lose it, and part of it's going to be more risky, where you could lose it, but it all depends on how much time you have before the end of your life, let's say, or before you retire, that you want to start using that money. This investments is money that you're going to put somewhere and not use. You don't do it for two weeks or six days or six months or a year. We're talking long term, five to 15 year time period. The longer you do it, the more you can make, the more you put in, the longer you put in more money, the more you're gonna make. It's as simple as that. The strategy here is to make your money work for you. I'll be back in one moment with my final thoughts are the articles I refer to in my episodes. Have a link in my show notes if you're interested in checking out the software that I personally use to get my data control. It's in my show notes, under shop financial. You need to copy and paste the link, and it'll take you to the website. Any questions, you can just contact me through that particular website if you value this podcast and I'd like to make a contribution. I had a contribution link in my show notes. Also get whatever you feel is appropriate for the information I am providing. I thank everyone for listening to my podcast as you're paying your debt down. Let's review here, as you're paying your debt down, you should be slowly increasing the minimum in your emergency fund. Once you get all your debt paid off, your minimum in your emergency fund needs to be at least three to six months worth of your expenses. The more you have, the more comfortable you're gonna be once you get to the point where your minimum emergency fund, let's say 6000 you would then find yourself a high yield investment, such as a high yield savings or high yield money market that's gonna pay you somewhere around 5% five and a quarter, five and a half percent, maybe lower, maybe more, but somewhere around that range, so that you can make start making your money work for you. I say 5000 because a lot of these places have a minimum of 1000 or 2500 so 5000 would be. Safe, and you move it from your local bank into that high yield account, which generally are online banks. I've done it for years. I've had no problems. So instead of only getting a few cents every quarter, you can get a few dollars every month. 5000 should be some around 15 to $16 a month in interest. So that's money you don't really have to work for it. Your money is working for you. That's the start of getting your money to work for you, as your debt is slowly decreasing over time, that will speed up. So your amount of money you're putting into your emergency fund or savings account will increase faster. That's why you want to start increasing the minimum balance so that you have maybe 2000 and then maybe one month and then maybe two months worth of expenses. And slowly build that up as you're paying your debt down. Once you get your debt all paid off, then you need the first thing you should do is build your emergency fund up to a minimum of six months worth expenses. And it can be more than that. And then you keep doing you keep doing this, just like you're doing paying down your debt, but now you have that minimum emergency fund. You keep building it up until you have 5000 more, and then you find a place to invest that money. And I'm not talking about stock brokers. I'm talking about mutual funds, safe investments, and not CDs at your bank, because it's not going to pay much you want to get some money started in the stock market, especially if you don't have any retirement accounts at work, and if you have a retirement count of work, maybe whoever invests there might allow you to set up a non retirement account and put some investments in, and you can follow the guideline of your retirement account. Got things that you invest in there and doing well to put in non retirement money. I advise that once you have 10,000 or more non retirement money to invest, you should find yourself a financial advisor that will help you do all this, he should take a survey with you and find out what your risk limits are and what you want to do, and your goals and all them things, so that he can make the appropriate investment based on your comfort level. They don't get paid by every time they buy and sell like a stock broker would a stock broker. If you put money with a stock broker, he's going to want you to buy and sell on a regular basis, because that's how he makes a commission. You may lose a bunch of money. You may make a little bit of money, but over the long term, it's not good for you. You don't want to do that. You want to put money into the stock market as a long term investment, five years or longer, 20 years, 30 years, 40 years. The longer, the better. The sooner you start this, the more you're gonna have when retirement time comes. Once you get that set up and get comfortable with that. And maybe you build it up till you have 100,000 200,000 of money you actually put in there. You keep, maybe didn't you reduce the amount you're putting in, and you start saving up. And you look for other ways to make investments, such as buying real estate, rental property, or maybe a business of some type, or whatever your long term goals are. Maybe your goal is to have your own business. You can start looking at doing those type of things, or you're gonna earn more money. The goal here is you want your money working for you, so that you don't have to work as hard, work smart, not hard, and the more money you have working for you, the more income is going to generate, the more wealth you're going to end up having over time. So it all depends on your goals and how fast you want to do it. It's just not a fast process. It might be faster if you're investing 5 million at a time versus 5000 Yes, but it's a lot more risky. You could lose more, so you need to have more. So it's all up to you and what you want to do, but the goal here is buy low. So sell high. Have your money working for you, and as you're paying down the debt, you're in the process of getting that ball rolling in your direction, and you'd be glad you did so you.