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Highlights from this episode include:

  • The surprising way your parents may have influenced the debt crisis (3:16)
  • The most avoidable type of debt, that still sucks the brightest people into financial ruin (5:28)
  • These are the ONLY conditions when you should consider student loans (6:20)
  • How to avoid following blind faith financial beliefs into bankruptcy (8:10)
  • Ignoring this commonly misunderstood financial calculation is a sure way to ruin your future (9:15)
  • A surefire sign that you should abandon certain financial beliefs (16:50)
Read Full Transcript

Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.

Oh, hi everybody. This is Harold Green of Brighttree, welcome to the show. It is time to stop doing what you hate. I have a pretty interesting show for you guys today. Super excited to be sharing some of these things with you. But the title of today's show is America's debt crisis. I talked a little bit about the debt, one point 6 trillion in student loan debt, other trillions of dollars in other types of debt, and it's going to be a very interesting show and we're going to talk about why people find themselves in debt. I'm going to share with you the number one reason I think people are finding themselves in debt.

(00:55): By the way, how was your week? Mine was okay. As you guys all know, we have this coronavirus thing going around and it is greatly impacting people's lives. But I want to share with you a couple of useful tips that I'm implementing for myself and it's just kinda common sense. Number one, wash your hands. I mean, this is something that we all know to do, but sometimes we just don't wash your hands. Okay. Common sense, but please do it. Number two, the patient, there's a lot of anxiety amongst a lot of people and I see people doing things that they probably should not be doing. Number one, don't pay a lot of attention to the media because these days things are being over-sensationalized way more than they should be. It's just the times that we're in the third one, make adjustments to your life only if you only if you have to.

(01:51): For me, one of the biggest adjustments I've had to make is making sure when clients come in that the office is sanitized and that, you know, things are the way they should be the way they need to be. I've also had to cancel some trips just because again, I don't want to go out there and get infected and then bring that back to my clients because I do see a lot of clients also in your portfolios. You may want to take a look and make some adjustments and before I get into talking about investments, I want you guys to go to my website, www dot retire now, retire wow.com go to the rapid retire section. Please move over, download the brochure. Also fill out the game changer form to get in contact with me after the show is over. But I want you to read the disclosures that are down there at the bottom of the page on the rapid retire program.

(02:46): All right, so you guys ready? You ready to get into this? Ready to win. All right, I hope so. One, two, three. Let's get it. One of the major reasons why I think people are getting into a lot of debt that they shouldn't be getting into. There's something I call blind faith and belief systems. There's a lot of things that people have been taught over time, things that they've learned, things that their parents have taught them, that that are just no longer accurate. And today's role. And the question is, if I told you that something that you believe is wrong, how soon would you like me to tell you now or 20 years down the road when you've made a crap ton of mistakes that you could have avoided? So one of the things I'm going to do today is I'm going to tell you one thing that will help you turn time and some money.

(03:37): A lot of people say time is money. And you know what? That's absolutely correct. But I also want to say that in today's show I'm going to be challenging a couple of things that you may, you may believe. And one of the things I tell my clients is that you may not like everything I have to say, but I want you to understand that I care about you tremendously and I want what's in your absolute best interest. And so nothing I say today is intended to harm you. Make you feel bad, make you feel bullied or anything like that. But I'm just going to tell you the absolute truth. So just hang with me. All right. So I want to do a review of America's debt crisis. Again, there's trillions of dollars in mortgage debt and mortgage debt is not all bad. Later on I'm going to have my man mortgage.

(04:25): I call on mortgage Matt on the show to talk about the different types of mortgages. Okay? So there's good ones. There's bad ones. And you know, right now there's a meme going around on the internet from that Wolf of wall street show that movie, the guy Leonardo DiCaprio where they're talking about having loan interest rates of 4% or more. And so right now you, you probably should not have a loan interest rate of higher than 4% because rates are down at an all time low. And we'll kind of get into some of that in some other shows. Car loan debt, trillions of dollars in car loan debt. That's, that's one of my pet pages. Looking at car loans and how people buy cars. And we're going to talk a little bit about that credit card and consumer debt. There's a, there's trillions of dollars in consumer loan debt.

(05:09): Sometimes you know, people don't have health insurance and have to put it on their credit card and so on and so forth. But there's a lot of reasons for consumer debt and it's one of the worst kinds of debts that you can have because quite frankly, there are no investment returns on consumer debt. And I felt the most avoidable type of debt is college debt. There's tons of people out there with trillions of dollars in student loan debt and it's just, to me it's avoidable. And I think there's only three or four reasons why you should take on college, why you should take on college debt. And I'm going to just give you some points here to keep in mind. Number one, your kids have awesome grades and test scores. Now keep in mind that this is all part of a process. Okay? Number one they must have or what I call conditions that need to be met.

(05:54): Awesome grades and test scores, you know, four whatever GPA, crap, ton of AP courses, scores of five, four or fives, and then great SAT scores and ACT scores. Number two, they were accepted to top colleges and these colleges have the best programs and pathways to a successful career. A lot of times parents, again, are choosing schools based on price versus value. And these schools don't have the type of pathways to the careers or research programs or grant money. These are all things that you need to take time and research and not just sending your kids to college, to a school just because it's cheap. And if you want to know more about that and how to get your kids through college in four years without spending your entire life savings or going broke, give us a call and I'll talk to you about that. A number three, your kids met all the requirements you've laid off for them along the way, and that's one of the things we did with our kids.

(06:45): We set parameters, we set progress goals and so on and so forth. And if they met these, these, this criteria along the way, then that's and I'll kind of tell you how that ties in. And then number four is for a professional degree that requires a master's or a PhD, we are not going to borrow money to go to a $80,000 a year private school to study history. Now, if you, if you're that person and you have that kind of money, by all means knock yourself out. I am not talking to you. I'm talking to the people that are middle-class and make about 160 to $300,000 a. So somewhere around there, that's the one I'm talking to. And this is all very important because if your kid has met all those criteria, then it's kind of okay to take on some college loan debt.

(07:29): And, but it just kinda depends on the kind of debt that you are taking on. And we can kind of get into that when you, when you give me a call, but maybe you can't cover the entire cost. Maybe you're $10,000 short. And if you've got to borrow $10,000 to get your kid through a MIT, which is basically $40,000 for four years, by all means do it and it's well worth it. And again, we can kind of talk about that when you give me a buzz, that two belief systems, what I call blind faith and belief systems, there's a lot of things people are believing out there and they're believing it blindly without running any numbers. Okay? So I say blind faith is bad faith because you really don't know. And what, why you believe, okay, you ever thought about some of the things your parents taught you grown up again, it was good for them, good for the time that you were living in at that time.

(08:18): But right now it may not. It made them all no longer apply to your situation. And so if your belief system is holding you back from the success that you want, then you may want to change that belief system. And a lot of times you believe that way because you're told to. And one of the things I always hear is faith without works is dead. A lot of people have a lot of faith, but they don't have any complementing works to go along with that. And it's, I believe, the number one reason we have such bad debt and then the United States is because of that investment choices. And people are making those choices based on what they believe. And one of the things I'm going to do is I'm going to start off with one of the worst offenders that I see when it comes to making bad investment choices.

(09:05): And it is the investment of time. And, and this is where I want you to listen carefully. So I want you to sit down, maybe you're driving in the car, but when you go home, I want you to sit down or read or listen to this and, and stop right here or after I share with you, I want you to stop, take out a pen and, and, and start to write some numbers down. And is this, have you ever calculated what your time is? Work? There are a couple of different times sheets are Tom calculators online. And if you guys want, give me a call and I'll, I'll send you one that I, I've used or I've looked at. But up until some point in time, you know, I really had no time what I have, I had no idea what my time was worth, what my hourly rate was, work and running this calculation.

(09:52): I'm telling you guys, it has changed my life forever. And so one day I was sitting down in the office and I came across that idea to calculate what my time is worth. And to be honest, I've seen that in a seminar booklet that I went to, I dunno, almost 30, 20 something years ago, 25 years ago. And it was talking about that, what is one hour and one day worth to you? And so I grabbed the book back out one online, grab some other stuff and, and sat down and started looking at my time. And what I found was that at the time when I did that, my time was worth about 275 to $300 an hour. And so I was kinda, I was kind of shocked and I thought, wait a minute, every hour and the day that I'm supposed to be sitting here working as worth $275 an hour.

(10:44): So I began to kind of reassess things and look at some of the things that I was doing in my life that maybe I should change. And one of the things was my wife and I, we had one car for a very long time and my wife had a fear of driving. She had a phobia of driving in when she was growing up in Japan. She actually got into an accident on her moped, and I don't know who it was, but I don't know if it was her mom and her grandmama. They told her, Hey, you know, you're, you're, you're clumsy. You don't know what you're doing. And so you don't want to end up killing someone. And from that day on, my wife had a belief in her mind that she could actually kill someone driving. And it just, it just, it froze her every time she would get behind the wheel.

(11:26): It took her, I don't know, four or five years just to get her driver's license. And it was, it was just a big ordeal. And so she had her license but she just did not want to drive. And so I would have to take off time for work and you know, grow, go grocery shopping because sometimes, you know, I was having a lot of appointments on the weekend and I just really didn't have a lot of time, so I would actually have to go during the hours that I was supposed to be working. And I told my wife one day, I said, honey, you know, I'm, I'm, I'm burning hours. And she said, is money worth more to you than your family? And I said, no, that's not where I'm coming from. I want you to listen to something here because every hour that I'm away from the office is costing us, me and you, not just me, but me and you.

(12:09): $275 an hour. So how many hours did it take for me to go grocery shopping today with you? Okay? It was a three hour ordeal from the time you got in the car. I went to the store, went to a couple of different places, and 275 let's just call it $300 an hour. That was almost a thousand dollar day. So I tell my wife, I said, you know what, honey, we gotta get you a car. And around that time, my son, he had went to a summer program that was offered by MIT and he came back and they, told him what he needed to do to get into MIT. So he needed some more tutoring, but I couldn't constantly be taking off work and then taking my son to tutoring. And so I told my wife, I said, honey, you know, as far as son, he's worked so hard and everybody's, everybody's working hard and this is something that you're just going to have to overcome.

(12:57): So we started looking for cars and you know, my wife was awesome about this. We started looking for cars and what we decided to do was we decided to lease her a car. So I had a friend in the business and so I can't say where it was, but it was a, it was a, it was a luxury car. And what we found was it wasn't that much. And so they were having lease specials and so on and so forth. I knew my wife wasn't going to be driving all that much. And so it was a good idea for us to invest and Elise. And so I think we put down about 1500 to $2,000 and the payment was about $300 a month or so, somewhere around there. And it made sense because that $300 basically was about an hour of my time. I instead of me now taking off three hours to go grocery shopping with my wife.

(13:44): And this is again guys, this is before Uber and all of this stuff. Okay. This is a long time ago. It was, it was before that. We didn't, we didn't have Uber and all that back then and so, but it was about one hour of my time and and I was just kind of shot. So instead of spending $1,000 a day, basically it's one hour, it's a work in order to cover that lease payment of $300. And so I, it's basically two hours because if you look at taxes and expenses and what it takes you to earn that money, that's what it comes out to. So one of the reasons why I looked at least in cars versus owning car was because I know what I'm worth. I don't want to waste my time and things that have absolutely no return, like car repairs.

(14:30): If you add up the amount of time that it takes you to go down to the dealership, okay, drop the car off right? If you live close enough to the dealership where they can just take you to work, that's fine. But in some cases, you know if you have a car that's used and there is no extended warranty on it or the extended warranty is ran out, you have to go find a different type of mechanic and someone that's much cheaper than a dealership. So if you begin to add up all these hours, the time that it takes you to go down there and drop that car off, get it service and then and so on and so forth, it can be a lot of money. And the truth be told, you're going to kind of come out in the same place in the end anyway, whether you put $3,000 down and $300 a month for three years, it comes out to about 25 to $30,000 which is the price of a brand new car anyway.

(15:18): But then if you add that extended warranty on, it's going to cost you another five or $6,000. So technically you might be paying closer to 35 to $40,000 for your brand new car and that's one car that you use over the next 10 years. Some people keep their cars 20 years because they just think it's cheaper to do so. But if you're in a situation where you're earning potential is, is, you know, between 100 $200 an hour, you might want to look at this and if you're earning less than that, it may be beneficial to you to, one of the biggest issues I hear people tell me or concerns they have is that, Hey, you know, you own a business, you can write your leases off. Well I can only write off one of my leases. I can't write them all off. And so the other lease that I have that I had on my wife's car was just to save me time.

(16:01): Now I couldn't write it off on my taxes, but my God, the amount of time I was taking, just dealing with the fact that we only have one car was just unreal. And it wasn't the grocery shopping, it was taking kids to doctor's appointments and all these other different types of things. And so we ended up saving ourselves a lot of money. But I'm going to tell you, when you look at investing your time, you definitely have to run the numbers and make sure it's the right thing for you. Many people hate that, but the idea of leasing, which you'd have to run the numbers, okay? And so it's one of the things I see when people are investing their time. A lot of times they're, they're missing, they're missing investing their time or they're investing it in the wrong place. And so I want to challenge you today that if you have a belief system that's not working for you, you seriously want to think about changing it.

(16:49): And in my next series show, we're going to talk about stewardship versus stupid ship. And it's about giving money. It's about donating money. And if you have a chance, I want you to go out there and download some books. One is smart as philanthropy philanthropy that gets results by Thomas J Tierney and Joel F Fleischman. There are some out, there's another book out there, title wealth and families by Charles Collier of Harvard university. So we're going to be talking about giving and the right way to give money, but back to investing your time and when it comes to buying cars versus leasing. The other thing I see is sometimes people will buy used cars and they'll take a car loan on that, but then that used cars constantly breaking down, even though they have an extended warranty. Now they're in there wasting more time, which could be used earning another, you know, three or $400.

(17:41): And if you're in a position where you're allowed to work overtime, that's something they kind of think about too. If you're needed at work and maybe you should work an extra hour or two and do that lease versus buying, it's going to be totally up to you to run your numbers. But if you're in a situation where you're doing something you hate, you hate wasting money, you hate wasting time, I'm going to tell you it is time to stop doing what you hate. Okay? So thank you for listening in today. Until next time, one, two, three. Let's get it.

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