Episode Transcript
[00:00:00] What's going on, y'all? Jesus Hilario Hernandez here, back at it. Obviously a different format here. I appreciate you guys for joining this video.
[00:00:08] Yeah. So we're just here talking, doing the, doing a short, quick podcast, sharing with what, what's on my mind right now, starting something new here and figure out where it goes.
[00:00:22] So, yeah, so today was an awesome day, was an all right day. Spend the time with my family here in South Texas. The weather is not too bad out here. It's kind of cool in the morning, it get hot during the day and it gets cool at night, so it's not too bad.
[00:00:36] So I guess the main stuff that I talk about right now or lately is like finances, getting out of debt and stuff like that. And because I have had a personal journey myself and getting out of debt and stuff like that.
[00:00:51] Actually not me, but my wife and I, you know what I mean? I always got to include my wife in this stuff because she helped me. We helped each other along this, in this debt free journey, you know, and a financial journey, marriage journey, you know what I mean? Raising kids journey. All this stuff is just together, you know what I mean? My wife and I. So when I say me, it's not me, it's us, you know what I mean? My wife and I. So that's a huge part of who I am and what I do. So I made a post recently about like one thing to remember or two things, like one bad thing and one good thing when it comes to getting out of debt. The first, I don't know if it's good or bad. Anyway, the first one is when you're getting out of debt, you, you expect people, expect people not to follow your plan.
[00:01:40] Like you, if you're telling them you're getting out of debt, they'll be like, what? That's, that's, that's dumb. Why would you do that? You know, because some people want, say that you got to have a credit score or whatever, whatever, you know, and we decided that that's obviously not a wise thing to do. So we chose not to. We chose to get out of debt and to stay out of debt, you know, meaning consumer debt, credit, credit cards, student loans, car payments, you know, any type of consumer debt that we had. Dude, we, I had initially it was like 27,000 in student loans, right? And then eventually I kept deferring it, you know, kept stuck, kept paying, deferring, paying it off. And eventually when I look back at it, it turned, it doubled in size. So at that point I had, I had to tell my wife, she knew I had student loans. I had to tell her, you know, this is how much I have, you know, and let's, we have to knock this out to get out of debt. And she stuck with it. We stuck with it. We worked both loads of overtime. My, my parents were watching my daughter at the time and we paid it off. It was like two years like, like 48, 46, 000 in two years. Like we went ham, we went crazy. And a lot of people were like, nah, that, you know, you need to have a credit score, you need to keep paying it off for so many. And I was like, nuh, we're not going to do this.
[00:03:04] And, and the other thing is, is once you are out of debt, you realize how much money you actually have left over at the end of every month. You know what I mean? And we did it intentionally. We said, okay, this is what we're going to do to get out of debt. We're going to have a budget, we're going to pay off our debts from from smallest to largest using the debt snowball. And during this time we listen to a lot of Dave Ramsey, right? So Dave Ramsey, if you don't know who he is, he's, he's like a guru and getting out of debt and all this other stuff anyways, we would listen to him. So we learned about getting out of debt by using the debt snowball, which we did. My wife and I, we did that. We paid off our smallest loans first. The reason and, and the reason why I love this, the debt snowball, is because you have small victories. You have small victories and paying off smaller ones first. And then you start to tell your wife, you and your, and yourself start to believe, okay, this is actually possible.
[00:04:01] So when it gets to the biggest loan, you already have all these small victories and it's easier to continue that momentum, to pay it off, to get rid of it, because it can seem like a daunting thing. It may seem like it takes forever, but when you're focused and, and you don't used, you get on the budget. It's possible. You know what I mean? We did it. Like it's it. We're living testimony. Two years. Look at this. $46,000 in debt. That's like two small cars paid off, you know, and a lot of people don't believe us, but we, we did it and we can actually say that we did it. So the reason why I talk about this stuff is because I want this for the people that do want it, because not everybody wants to get out of debt. And I know it's hard because a lot of people say, oh, you need to keep your credit score for whatever reason. You know what I mean? And one of the main reasons that people say is that, well, how are you going to get, how are you going to buy a house without a credit score? Right?
[00:05:00] And then this is what I learned too, is that you don't necessarily need a credit score to buy a house. You, you need a good work history. You need good, like rent payments, you know, bill payments, whatever.
[00:05:13] And it's called manual underwriting. So manual underwriting is you go to a loan officer that actually knows how to do it or that will actually do the work to do an underwritten manual loan to give you for, for a house, if you do decide to get a house in the future without a credit score or with a, you know, an undeterminable credit score or whatever.
[00:05:35] So, yeah, just getting out of debt has been, that shows us how much money we have. So now at this point, we have money for retirement we can put away in a, in a company 401k or, or if, if the company doesn't offer it, we get an ira. So those are two ties. So that's on to the next subject, which is saving for retirement.
[00:05:59] So once we're out of debt, we got out of debt and then we started. And then the extra money that we had that was going to payments, we put it to a fully funded emergency fund to six months of expenses.
[00:06:11] So three to six months of expenses is basically like say if you lose your job, you have money in the bank to carry you over three to six months until you find a new job. You know, it's an emergency fund. It's not, it's not an investing fund. So you put that, we did that for emergencies and then we started investing into a Roth IRA because my company at the time didn't offer a 401K. Okay. So 401K is, is sponsored by your employer. So they set it up for you. That's, that's a 401k. Outside of that, you have a IRA, which is like a individual Retirement Account. I think that's the acronym. I'm not too sure. Okay, so those are, so those are two forms of retirement that we're doing right now. When I say Roth, the Roth ira, Roth basically means tax, tax free.
[00:07:05] So before you put your money into the Roth ira, the government taxes it first and then you put it into the Roth ira, right? So when you take it out at retirement it's not to be taxed because it's already been taxed. As opposed to a regular ira, you put the money in first and then when you take it out at retirement, it's taxed at that point.
[00:07:27] So there's a lot, there's a lot of stuff to, to uncover right there, which I'll probably go through late, maybe sometime in a later video, but. So we started saving for retirement, still saving for retirement. And a good rule of thumb is to save 15% of your income. So we're saving 15% of our income to retirement and that's only 15%, y'all. No payments, no consumer debt. You have 15% going to retirement. You have this other money that you can save up to buy a car, you know, a car, a vehicle, whatever.
[00:08:00] Save up for college. Save up for what? For whatever, for your kids, college, whatever you want to do. Save up for a, a trip, if you want to go on a trip or whatever you want to do with that money. But the point is at that point we've, we've already established a financial responsible plan by having a budget, by being transparent with each other, my wife and I, and being consistent with putting away for retirement, teaching our kids with money. I mean there's so many different avenues about learning this stuff that, that I'll probably, that I'll share with you in the future once I get this all together. And you know, some people like you want to go as far as to, to be able to leave something, leave a legacy behind or whatever because there, there could be that argument where people are like, well there's no reason to put the retirement for whatever reason. It could be like it's not going to be worth that much money later on, whatever, whatever. So hard thing is same for retirement. And then now we're so we got our consumer loans out of, out of the way, we paid them all off. The only thing that we have left is our mortgage, right? So our mortgage as you can imagine can be significantly reduced in the number of years of paying it off because we have the extra money that was going to consumer debt. We can throw chunks of that to the mortgage and pay it off in less than whatever the 30 year note, 15 year note that, that people usually borrow it at.
[00:09:35] There's an, actually a national study of millionaires here that I have that they did, the Dave Ramsey Group did. I don't know who exactly, but I know it's associated with Dave, the national study of millionaires. And the, the average millionaire, they paid off their home in less than like so many years.
[00:09:57] So millionaire, not to be confused with somebody that makes a million dollar salary. Millionaire is somebody who, whose what they own is a million dollars or more. So what you owe minus what you, what you own, what do you owe?
[00:10:12] Their net worth is basically a million dollars. Like they, what they make annually, their, their investments, their accumulates to a million dollars. That's a millionaire, right? So though the people in studying in there, they paid off their home in like, I think it was 10 years or less or something like that. Check it out. The Dave Ramsey study for millionaires. But what I wanted to bring up is that these people are just like normal people. Like one of the statistics. The top five careers of millionaires include engineer, accountant, teacher, teacher. Oh my God. Teacher, management and attorney. Those are the top five careers of the, the study of millionaires that they did here. And they studied 10,000 participants.
[00:10:58] 8 out of 10. So 8 out of 10, 8 out of 10 millionaires invested in their company's 401k plan. A teacher, y'all, I don't know any teachers that make above six figures.
[00:11:14] Imagine like you're, you're investing for 40 years, 50 years at a time, consistently, every week, every month. I can, I can see how they could have so much money by the time they retire. You know what I mean? And some people, and some people bring up the argument like, yeah, I'm gonna be too old when I retire. What's the use of having it in there? Like, I talk to guys all the, I'm a truck driver. I talk to old dudes that are like 60, 70 years old. And some of them are like, they're still having to work because they didn't save money when they were younger for that period of time, right? So some of them are, are say some, their excuse to be like, I'm not even going to be alive by the time it's time to take it out. Whatever. I think 59 and a half is the youngest you can take it out on a Roth ira, you know what I mean? So in that case, you can have a bridge account. A bridge account is a, a brokerage account that you open outside of your 401k or Roth IRA. And that's going to hold you over you if you want to retire early to 59 and a half. That bridge account, if you have money saved up in there, will hold you over into retirement so you can retire early and do whatever you want. You know what I mean? And that's another thing because, because your retirement money is Going to replace is meant to replace your income when you stop working, or your bridge account money is to replace your income when you stop working. I mean, some people maybe want to stay working in that same job, you know, all their life. Some people want to stay a teacher all their life, whatever, you know what I mean? But if you're stuck in a field that you don't want to be in, you know what I mean? Obviously, you gotta. You gotta think of stuff that you need to do to. To continue to progress, you know? So, you know, this study, for me, like, I was like, oh, my God.
[00:13:04] So 94% of the P of these millionaire people lived on less than they made. Three quarters of these million millionaires have never carried a credit card balance in their life.
[00:13:16] Here's one that I like.
[00:13:19] A small number of wealthy people inherited money overwhelm the overwhelming majority, which is 79%. So that's basically 80% of these millionaires did not receive any inheritance at all from their parents or other family members.
[00:13:37] While one in five, which is 21, received some inheritance. Only 3% received an inheritance of a million dollars or more.
[00:13:48] So it's like, dude, these are normal, average working people like us that can actually have money, you know, actually have money, you know what I mean, in their pocket.
[00:13:58] Another thing, too, when we got out of debt, we started seeing that these payments, right, that. That we're now going to our pocket. We were just like, oh, man, we could do this, we could do that. Like, Like, I can invest in doing a podcast, you know what I mean? In having equipment. Or I can invest in, you know, whatever venture I've been wanting to try, whatever side hustle I've been wanting to try. I actually have money that I can say, okay, I can set this money aside and pay this much for whatever equipment I need so I can get this started, you know, instead of getting a loan for it. Because sometimes we can go into business and get in a loan and that business fails you, and then what happens? You still have the loan left over to pay that to pay it off. And your business, you don't have your business anymore, you know, so in doing this, it teaches us. It teaches you basically to be responsible with money, right?
[00:14:48] And which makes me think about, okay, yeah, like, some people could be like, oh, yeah, you're talking about money. It's not all. And some people, they use this phrase all the time, and it bugs me. They're like, oh, it's not about money.
[00:15:02] Oh, he's here.
[00:15:04] Okay, gotta go. Y'all appreciate y'all.
