Welcome. Together, we're going to explore our personal finances and figure out how to improve them. Whether you're just getting started in life on your finances, or you may already have a home, a car payment, and you're struggling to get credit cards under control, or you may be getting a late start in life on saving for retirement, reduced debt increased wealth.com is a podcast to educate those to improve personal finances, whether it's eliminating debt, or making smart investments. Mr. Chuck here in this episode, I'm going to be talking about numbers happy numbers. These are the numbers you should know for your personal finances. first article, I'm getting information from his eight critical personal finance numbers you need to know by Tanya reading, you can find a link to my articles in my show notes if you wish to read our article. Do you know your financial status? If not, you're not alone. A recent Gallup poll found that only 32% of Americans have a household budget. That means 38% of Americans do not have a budget. No wonder Americans are getting so far behind on credit card debt. Everything we see everything we're exposed to is borrow more, get a credit card, it's easy, buy what you want, don't pay it back in a recent bank rate survey found that 55% of Americans don't think their financial situation will improve this year. With 44%, who think their situation was stayed the same. And another 12% saying they think their situation will get worse. And boy, are we a bunch of negative people. That's what happens when you don't pay attention to your numbers. And as I'm going to call them, they're going to be happy numbers. Because the more you know what they are, if you don't know what your numbers are, how do you know if you're improving or not? Well, you don't. So if you know, from early on these particular numbers, and you can compare it to later in life and five years down the road, let's say and you got to know if you're one making more money or to getting out of debt or been able to save money. When I was a lot younger, I always thought I was working for the banks, the credit unions and credit cards. Because that's all I was doing. I was just trying to pay back debt. I know I did buy a house and I did have expenses that I had to put on credit cards to get started. And I had you know remodeling to do and all those things. But I didn't have any savings. I couldn't save any money. Because I was too far behind on debt because I didn't know what my income was. I didn't know what my budget would be. I was just working in the dark like many of you out there. Every journey has a beginning in your you must know yours. And it's important to accept the things you do know don't know or ignore that have impact on your current financial situation. And only then can you build an effective financial plan. You can start your journey any place or any time. But more importantly, start now today this get born. Here are the eight critical fun personal finance numbers you need to know no matter where you are on your financial journey. Number one, after tax income, I've talked about that your net income. That's what you deposit in your bank. Every time you get paid. If you only work in one job, it's an easy number to remember. If you're on salary, you get the pay same pay every week or every two weeks. It's easy to know if you're like me and your pay changes because what you do or don't do, and then you have to work at it a little bit. I would like to say if you got a variable income rate, which means it changes from pay to pay that you go back to last month, maybe two months. And the more you do, the better average you're gonna have, add them all up and divide it by four or two, or whatever it is, the number of numbers you added together. So if you want back free pays, add them together, divide by three, that's your average, go back six pays, add them together, divide by six, that's your average. That's the number that you need to be aware of your after tax income. Now this numbers can change. Or sometimes a year, I make more and other times a year, I make less, but I'm aware of that. I know that coming into the holidays, I could be making less so I plan for that. But I know what my after tax income is gonna be every week. And if it's more, I'm happy. If it's less, I'm close. And I've already budget for it. Number two monthly expenses, so we know what's coming in. Now you got to know what's going out. There only truly know what's going out each month is to build a budget. My simple budget is you just go back the last three or four months. Figure out the average on everything that you're paying every month. Your mortgages, your credit card should be easy. Because your loan payment is the same month, the month, your car loan is the same month, the month, your credit cards are going to go up or down depending on if you are paying them down. Or if you're spending them up on the for your credit card. Use the minimum payment for that dollar amount that we're looking for. There are five major sections to a budget. One income, to fix expense, and fix expense are everything that you pay every month, no matter what. All your loan payments, all your credit card payments, utilities, grocery bills, gas for the automobile. Those are fixed expenses. variable expenses are things that change from time to time. And stuff that maybe you only pay once a quarter such as trash pickup, if you have a home, or maybe your water bill is every four months or every three months. And then you have to know what your debt payments, that's all your loans and your credit cards and your balance with the money you have left over. After add three done paying income last fix expense, less variable expense, less debt payment balance and leave some in your checking account, transfer the rest to your savings and pay yourself first. Three debt total and for each loan. What is your total debt? How much do you owe everybody? How much you owe on your mortgage. Now this is the unpaid balance. You don't have to have an exact amount, but you should be in the ballpark. I know I owe$6,003 and four cents on my mortgage. Because that's the only loan I got. So it's easy to remember. So you need to know the total amount of debt you have. And you need to know the total payments on all that debt every month. Or how are you gonna know if you're making improvements? And how are you gonna know if you can afford to buy something that you're thinking about buying that cost a lot of money? And then for savings and savings rate? How much are you saving every month? I gonna say most people could answer that as zero. What's the saving rate? If you're saving zero, your savings rate would be zero. rate of savings at your bank is like a quarter of 1%. If you're lucky, and you go to a high yield savings account, it might be one and a half to 2% if you're lucky and many people ignore savings all together preferring to put it off until they're older, make more money or have less debt. Well that's a huge mistake and I can testify to that. savings for retirement and needs to happen in whatever amount and capacity you can manage. Because the length of time saving is more impactful than the amount saved each month, a few can put $25 a month into your savings account. for 30 years, that's got to be better than putting $500 a month into your savings account for two years. Because over time, it's gonna grow on its own. And he don't have to earn that money, the money is working for you. In other words, a small amounts a monthly for more years will be more impactful than a large amount, say for a few years. With that being said, your total amount of savings and your savings rate or some other crucial personal financial numbers you need to know. total savings include money and checking account savings account, as well as retirement accounts and other brokerage accounts. I saw an ad on TV last night for a brokerage account, Charles Schwab now has online where you can start out five bucks, and he can make $5 investment. He can start out small and you can grow it and you can buy slices of stock, just like a robo investor. So I've talked about in the past, now the major brokerage accounts are starting to offer that same service. So look into that and see what information they're given you and see how helpful they are in training you on how to be an investor? What information are they putting out there? like are they telling you, you need to diversify, you need to spread your money around different areas. Don't put it all in one place, especially your employer. And savings for retirement is what they talk about next five interest rate for debt and savings. How much interest are you paying on that debt, it's going to be at least 15 17%. If not 20% to 21% on you debt, especially credit cards o your mortgage, it should b somewhere around 3%. Now, if yo if it's if you're paying mor than 4%, you definitely shoul be refinancing on your car loan gonna be I think 789 percent depending if it's a used car o new car, a new car, you coul have a zero percent interes rate. That's great. Let them s that's your debt, well, how muc is your interest rate on you savings. It's about a quarter o 1% at local bank. But you nee to know those numbers. So yo need to know how much you hav dollar amounts and you need t know the interest rate then si you need to know your credi score, you should check you credit score at least three o four times a year I have had past episode talking abou credit score not to make peopl seem to be interested in it, bu it's an important number t know. And your credit score ca range from 300 to 850 tha represent your credi worthiness. In other words, you credit score is a representatio of how responsible you are wit credit and is used by lenders t ask assess the level of ris associated with extending yo new credit. If you have a credi score of 300, you're not goin to get new credit. And if yo have credit score of 850, you'r not gonna have any proble getting new credit. my credi score is 818. So I know m credit score interest rate on m mortgage is four and a quarte somewhere around there. I'm no refinancing it because it' almost paid off and it's goin to be paid off in the next tw or three months. So why goe into trouble? Seven Network What? What is your net worth? D you know how much you're reall worth? How do you figure it out net worth is the total of al your assets less than everybod you owe equals net worth an reduce debt. Increase wealth wa the name of this podcast. That' why I named that that way. I you reduce your debt, you'r gonna increase your wealth. I you increase your investments you're gonna increase your well One is related to do you know what that is? Do you have an idea now what we're triggering net worth, we're wanting to look at the fair market value of your assets. So your house can be worth more than what you pay for it, your car's gonna be worth less than what you paid for it. Unless you have collectibles that go up in value, and then they may not go up in value based on the market. I don't know what the markets doing now as far as collectibles, but I'm gonna thanks since we have a higher rate of unemployment and may not be doing as good. And number eight is how many years to desired retirement. And finally, another critical financial number you need to know is approximately how many years you have until your desired retirement age. This number is important, so you know how many years you had to say. And as a result can plan for how much you need to say, to be able to retire at your desired age. So if you're planning to retire at 50, and you're 40, you better have a million dollars in the bank already, and you made probably have three to 5 million in the next 10 years. That's just a guess off top my head. But the earlier retire, the more you're gonna need. This makes sense. Why you can take social security as early as age 62, full retirement age and more money and Social Security isn't until at least 66 depending on when you were born. And that's what mine is 66. Furthermore, retirement accounts typically have a minimum age requirement before you can access the funds without a penalty and IRA is age 59 and a half for assessing assessing earnings. And the moral of the story. A large portion Americans have no idea where they stand financially. And as a result won't be able to make any progress even if they want it to those with that and other issues may be tempted to ignore the problem. But financial, out of sight, out of mind isn't two way to go if you want things to change. An important step in getting control over finances is to know where you stand at critical personal financial numbers you need to know discussed in this article, give you a snapshot of where you are. So you can make a plan for where you want to go and track your progress along the way. It's important to know your after tax income, monthly expense, debt saving savings rate, interest rate, credit score net worth and years to desired retirement. No matter where you're starting from, you can always improve your financial situation. Remember the eight critical personal finance numbers you need to know to take control of your finances. So let's reflect on that. If you don't know what your net income is, you don't know what your expenses are. You're living paycheck to paycheck, you get paid on Friday, you have bills piled up at home, you pay the ones you can pay your way to the next paycheck. And you keep doing that over and over and over. You may know that rents do the first of the month or your mortgage is due the first of the month, you may know your car payments due the 12th of the month. And you may know that every once in a while you got to pay a credit card. How's that helping you if you're always using your money to pay your bills. And if you're paying credit cards, that means you're repaying previous items you purchase in the past, you're not going to get ahead if you know what your income is, and if you know all your expenses, and if you know how much is going out and you can plan ahead and you can have money so you can pay those bills on time. That's one of the early steps you got to start doing. Once you get on time payment you get in that cycle, it starts to get a little bit easier, because now you're not catching up on trying to pay stuff. You're just day in on time. Then eventually you'll say oh, I paid all my bills and I got $100 Well, instead of going out and spending it on something you don't need, like going out to dinner. If it's not a reason to go out then or like an anniversary, birthday or something. Then don't spend it put in a savings account and it's called an emergency fund. Now I'm gonna go into the second article, the personal finance number that matters the most, he's got just down to one number that matters the most. You need to know those other numbers in order to get to this number. This is from the simple dollar Comm. By Trent Hamm, founder of the simple dollar. And the only reason I'm relating to this article is because I kind of liked it. And it makes a lot of sense. Personal Finance is a numbers game. As much as I like to vouch for the personal part of personal finance, it's only half the story. Finance is part of the phrase to in the end, you're still looking at the dollars and cents on your paycheck on your income tax forms, on your investments, in your retirement accounts, and so on. The most important thing is spend less than what you earn. That's simple rule number one. And this is the gentleman that wrote the simple rules love personal finances, how much you make, how much you spend that gap. And your goal is to make that gap as big as you can. What am I talking about? He spends less than what you earn? How much do you make? How much are you gonna spend? What's your net income? What's your budget amount? What's your, what's your fixed expenses, what's your variable expenses, what's your debt, and what's your balance, the balance is this gap. The bigger the gap, that means the more money you can save, and the more money you save, the better off you're gonna be. Because step one, and building wealth and increasing your net worth is to say money to get money invested in the long term, earn more, one, get educated to earn more income streams three, start a side business or as nowadays, they call that a side hustle for a move towards your passions. Five, don't burn bridges. And six, keep in touch. So if you're interested in a certain area that you would like to find yourself working in, you need to educate yourself on what it's all about, and what you have to do. And then you create more income streams, maybe having a part time job, or going to main job that doesn't provide enough income then work a part time job. If it's something that you're doing on a regular basis, and you can do it as a side hustle on your own, on the side, on your days off, maybe one day, you can make more money, you can increase your income. When you increase your income, that gap could get a little bit bigger. Don't burn bridges. Don't upset your former bosses. If you're working a job and you want to leave Don't upsell. Don't get mad at you. Leave on a good note. Because you never know you might have to go back. You never know that former employer may refer a customer to you and keep in touch. Just call him every once in a while see, you know, tell them how you're doing. And let them know you're still out there. And maybe they'll refer you some business and then live frugal, maximize every dollar habits of all kinds are dangerous, because one of they're dangerous to your health and they may be dangerous to your wallet. And that 10 second rule is hold it for 10 seconds and think of why you really need it. If you can't think of at least two or three reasons why you really need it. Don't buy it. And for don't make yourself miserable in other words don't scrimp so much that you're not happy. You need to still buy the basics. And don't cut back so much. You're buying inferior products but buy quality products specially food and clothing. Don't forget the big picture. What's the big picture you're trying to get out of debt or you're trying to say more money for retirement or you're trying to save money for your colleagues, your children's college education, whatever your goals are. Don't forget that manage money. How you manage money? Well the first thing you do is pay off all your high interest debt which are credit cards and build an emergency fund and max out retirement at work, if you have a 401k at work, put the maximum and that your employer is gonna match college savings, pay off all debts invest in low cost broad base. And that's why I don't really agree that earnings up spending down big gap. Big deal. That's how you manage money. And that's how you get ahead in life. And that's how you improve your life and control your own destiny. Not about being rich, all about freedom, follow your passions and dreams and do whatever makes you happy. No regrets or worries. So if you can do whatever makes you happy, and you don't have a whole lot of debt, that allows you to do whatever makes you happy because you're not bogged down. You're not locked in, I can't change jobs because I got too much debt, I got a car payment, I got to car barely got a house payment, I got five credit cards, I can't just quit my job, I gotta make all these payments, I never make it. You're not financially free. If that's the case and financial freedom is he can quit whatever you don't like you're doing and move on to something you may like, even if it means taking a pay cut. If it means going without income for a while, you're still able to do it because you're not tied down to a mountain of debt. And you can find that in my show notes. Also, that's the end of another episode. I hope you found it useful. And if you'd like to share this episode with your friends, please do so. I'm open for any suggestions for improvement, or for information that you would like to talk about in future episodes. You can go to my Facebook page and leave me a message. I am more than glad to respond. 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