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How to Make Millions Investing the Money You Play Powerball With | 1 Minute Money Talk


A lot of us like to play the Lottery, especially when the pot gets really big. There are also people who play it every week, very consistently. I get it, it’s fun, even when we know the odds of winning are next to nothing.

So, instead of spending our money on Powerball, Mega Millions, Scratchers and other Lotteries, I want to show you how we can use that money to become wealthy.


Let’s look a Tom. Tom is 25 years old and plays Powerball and Mega Millions each week.

Both of these Lotteries have two drawings each and a ticket is $2 each. Let’s say Tom spends $20 a week for Lottery tickets.

Now, if Tom took that $20 each week, or $1,040 a year and invested it in VTSAX, Vangaud’s Total Stock Market Fund, and let’s assume he averages an 8% return through the years, at 65 years old, Tom will have about $270K.

Of course, $270K isn’t rich, but it’s at least a good start and that’s only from $20 a week. If Tom could invest $100 a week, he’d have $1.3M at age 65.

The First Three Steps to Financial Independence | 1 Minute Money Talk


Financial independence is when your wealth is sufficient enough to live on without needing an income from a job.


To achieve this state, there are three steps you must take to even begin this journey. So these are the prerequisites.


Step #1: Have $1,000 cash as an emergency fund.
  • This is our basic emergency fund to have until we pay off all credit card and high interest debt.


Step #2: Pay off all credit card and high interest debt.
  • If you have credit card debt, you need to drop everything and treat this as an emergency.


Step #3: Build an emergency fund of 3-6 months of expenses.
  • Then, after paying off all the credit card, you should build up your emergency fund from $1K to 3-6 months of expenses.
  • So, figure out how much you typically spend in a month and then save 3-6 months of that number.


These are the basic steps to even get started. There are additional steps that you must take if you’re really serious about achieving financial independence.

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How Much Money Should I Have Saved By 30 | 1 Minute Money Talk


Obviously, this number is different for everyone. If you want to retire by 40, your number is going to be different from someone who wants to retire at 60.


However, there are some big financial companies out there that have done studies on this. One says you should have 1 times your annual salary while the other says 0.5 times your annual salary by 30.


A study from 2017, says the average American salary for 25-34 year olds is $40,300. At thirty, you should try to have either $20K or $40K saved.


But, I think this is low. If you’re watching this video, then you probably care about your financial situation more than the average.


I would shoot for 3+ times your annual salary. And so if you’re making $40K, strive to have more than $120K saved at 30 years old.

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Two Ways to Pay Off Debt | 1 Minute Money Talk


Whether it’s student loans, credit card debt, car loans or any other type of debt, you should aggressively pay off your debt.


There are two main ways to go about paying off your debt.


  1. Pay off accounts that have the highest interest rate first.
  2. Pay off accounts that have the lowest balance first.


The first method is more practical because you will pay a lower amount of interest because you’re paying off debt with higher interest rates first.


However, the second method has more of a psychological effect as you are likely to be more motivated as you pay off your smaller accounts first.


I really like both methods and you can’t go wrong, it’s really up to personal preference and whether you’re motivated by seeing smaller accounts being fully paid off or more motivated by paying the least amount of interest total.

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How to Save $1000+ a Month | 1 min money talk


American households spend an average of about $60K a year according to the 2017 study by the Bureau of Labor Statistics.


There are three things that Americans spend most of their money on.


  • Housing – $19,884 (33%)
  • Transportation – $9,576 (16%)
  • Food – $7,729 (11%)


Focus on reducing the big three expenses instead of minimizing your avocado toast or morning coffee.


In the past couple years, I’ve gone from $1,700 a month in housing to $1,350. I got out of my brand new leased car which was about $500 for car payment, insurance and gas to a 2006 used car for $5K cash and bike to work everyday. I also lowered food costs from $500+ to about $250 a month.


Through these changes I’ve been able to save about $1,000 a month.

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How Much Should I Contribute to My 401K? | 1 min money talk

What is a 401K?

Your 401K is a employer sponsored tax-advantaged account where you can invest money from your paycheck before the government has taken taxes out of it.


Why Should I Invest With a 401K?

Investing in a 401K is a good idea because the money gets to grow with money that would have otherwise been given to the government. Your 401K contributions also lower your taxable income, so for example if you make $50K a year but invest $5K in your 401K, you’re only taxed as making $45K a year.


How Much Should I Be Contributing to My 401K?

Basic wisdom says you should at least contribute enough to receive your employer match, as this is free money. So if your employer matches up to 5%, then you should at least contribute 5%.


Beyond that, you should try to increase it as much as possible until you reach the max contribution amount, which is $18,500 a year as of 2018.


That said, start with baby steps. So try to start with 5%, then each 3 or 6 months raise it a percentage. Ideally, after a few years, you’ll be at 10-20% and then a few years later you’ll be maxing it out.

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How to Become Wealthy | 1 min money talk

Becoming wealthy comes down to three things:

  1. Make more money
  2. Spend less money
  3. Invest the difference


Continually improve these three steps and you will become wealthy.


Step #1: Make more money

You need to get a raise at work, find a new job, take on a second job, start a business or side hustle. Get your hands on more money. You won’t get rich making minimum wage even if you crush the next two steps.


Step #2: Spend less money

If you become an income-machine but spend it all, you will never get rich. You have to not only make more money, but keep it so you can invest it. Eat ramen and beans for all I care, just don’t blow all your earnings.


Step #3: Invest the difference

Becoming wealthy is all about widening the gap between how much money you make and save, but then investing that extra money. You need to invest it and make a return on your money. This can be in the stock market, real estate, your business. Investing is about owning an asset that grows in value over time.


These are the three steps and they all work together. You have to improve all three if you want to become wealthy.

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Why I hate budgeting by categories: how to budget the right way


If you want to be wealthy, retire early or just get a better handle on your finances, you’re going to need a budget.


There are only 3 steps to becoming wealthy:
  1. Save more money.
  2. Make more money.
  3. Invest the difference between how much you make and save.


That’s it! It’s actually that simple.


So, in order to crush the game of money, we need to develop good habits around saving more money.


Later, as you get raises and have more money to spend, these habits will (hopefully) remain strong and instead of inflating your lifestyle (spending more as you make more), you’ll instead invest the extra money you make and be closer to financial freedom.


My budgeting philosophy:

Many people have an elaborate budget. They give money to each category or type of expense they want to spend each month. I used to do this, too.


But for me, I think it’s the wrong way to look at budgeting.


Budgeting by category means that I give each category a specific amount to spend each month. So rent gets $1,400, restaurants get $300, clothing gets $50, etc…


Main Problem #1: First off, there’s no flexibility.

Sometimes, gas will be $120 vs your budgeted $80 because you took a road trip.


Or, you will have an unexpected $300 car repair.


All of the sudden, your category budgets are all out of whack and the next thing you know, you’re saying, “well, this is a throwaway month, I should just spend whatever and try harder next month.”


Main Problem #2: You take small wins and spend the money elsewhere.

The month is coming to a close and I see that I have spent $10 on clothing when I set a budget of $50. Sweet! I have $40 to spend on iPhone games.


So, now I’ve just taken a budgeting win and then lost it because I spended money I otherwise would not have spent.


When I used to budget by category, I found myself doing this all the time. Ultimately, it didn’t get me any closer to financial freedom each month.


Here’s how I budget instead.

I used to budget by categories. But I discovered these mistakes and ultimately lost sight of the main objective. Which is…”saving as much money as you can each month.”


Budgeting should not be like dieting, instead, it should become your lifestyle. When spending as little as possible each month becomes your habit, you no longer need to budget by categories because you try to keep all spending to a minimum.


For me, Instead of budgeting by categories, I budget by month. Each month, I give myself a target number to hit. The general rule that I’ve been using is “rent + $1,200.” Then I set a stretch goal of “rent + $1,000.”


So, because my rent and utilities comes out around $1,400 a month, my monthly budget goal is $2,600 and stretch goal is $2,400.


Why this is better for me:

When you are trying to create a habit or lifestyle, making the task as easy as possible is really important. I budget for the whole month because it’s easy to keep track of. I log onto Personal Capital a couple times a week and check one number – how much I’ve spent this month.


Let’s say it’s the middle of the month and I’ve already spent $2,200. Yikes, I need to slow down and not go out to eat too much for the remainder of the month. Yes, I do check my spending many times throughout the month, but that is another habit I’ve created for myself because I check all my finance info multiple times per month (spending, income, net worth, investments)..


I still look at each expense and category. But I don’t assign a target number to each category. I know I usually spend $200-250 on restaurants each month. If I want to spend $350, that’s fine, but I know I have to sacrifice somewhere else, because there’s only one number that matters, the total amount spent at the end of the month.


The potential downside:

All budgeting takes discipline. With more flexibility and less structure, this type of budgeting may require even more discipline. That said, I think a person is more likely to stick with it because it is less restrictive.


Ultimately, it takes the understanding that you are trying maximize your savings each month.


There is never the thought, “Oh, I’m $300 under budget this month, let’s go shopping!” You must approach spending consistently across the board. Splurge and treat yourself every once in awhile and on stuff that brings you happiness. But don’t go too crazy.


Start small and try to reduce your monthly budget by $100 every couple of months until you’ve really minimized your spending.

How I Paid Off $26,000 in Student Loans by 26


I graduated University of Southern California (USC) with $26,000 in student loans.

However, in my senior year of college I took out an extra loan in order to invest in the stock market. Read more of the backstory.

This was extremely risky and dumb, but I did get lucky and made a couple grand (please don’t do this).

So, right before my loans went into repayment status, I returned the extra loan and a bit extra to lower my student loan balance to $16,000.


Graduated to Reality

In the beginning, paying off student loans was not a priority.

I figured I’d pay the minimum and they’d be gone after 10 years.

I was making about $3,200 a month after taxes at Fandango in digital marketing. Thinking I was grown up now that I had a real job, I upgraded my lifestyle with a new leased car and one bedroom apartment.

My monthly expenses in Los Angeles were usually $3,000 – $3,500. So, often I was losing money each month.

That’s when I discovered personal finance blogs and books.

After a year of making changes to my life (eating out less, buying an old used car, selling extra things, etc) my monthly expenses averaged closer to $2,800.

Still, I was not thinking about student loans.

Instead, I was focusing on saving as much money and investing in index funds.


Investing in Stock Market versus Paying Off Student Loans

This is a hot topic and deserves its own post, so I’ll just touch on this briefly and then jump back into the story.

I am definitely one who looks to maximize my returns.

But, now that I know what it feels like to have no debt, I know paying off student loans was the right decision versus sticking that money in an index fund.

Reducing your risk and freeing up your mental energy beats a higher investment return, especially when it’s a relatively small amount like $16K.


From Fandango to Facebook

A couple years passed, I kept working at Fandango and paying the minimum on my student loans.

I believe I was at $13,000 when I got hired at Facebook.

I moved up to San Francisco to take the higher paying job.

In conjunction with raising my salary, I lowered my expenses by living with roommates and taking advantage of the free food at Facebook.

At this point, because I didn’t inflate my lifestyle (actually deflated it), I was able save more than 50% of my income most months.

This allowed me to quickly build up my investments and cash reserves.

Meanwhile, I started listening to Dave Ramsey and got inspired to look at my debt differently. Fortunately, I never had credit card debt, and I had bought an old car in cash the year before.

The only thing left was my student loans.

So, I stopped contributing large amounts to my 401K and instead stockpiled cash.

It took a few months, but I paid off the student loans in two payments of $6K each.

And then it was done!


The Aftermath

In reality, my first emotion was that I felt cash poor.

Cash makes us feel safe and insulated.

But, the next day I felt amazing. Like an invisible weight had been lifted off my back.

I really never thought my student loans had much control or power over my emotions, but I was wrong.

Knowing that you owe no one, nothing, is a freeing feeling.


So, get out there, save more money, make more money and pay off those student loans!




How I Got Into USC and Escaped With Only $26K of Student Loans

This article recounts my college history and how I was able to attend a good school without going into a crazy amount of debt.

A couple years later at 26 years old, I was able to pay off my student loans.

Accompanying video at the bottom.


Student Loans…eh, who cares

When I was in college, I didn’t think much about student loans.


I figured they would somehow get paid off because I was going to make a bunch of money right out of college.


When I got my first job out of college, my expenses were between $3,000 – $3,500 a month living in Los Angeles. I was making about $3,200 a month.




But let me backup for a moment.


School #1: University of Colorado – Boulder

I initially went to University of Colorado at Boulder. That lasted one semester. I got bad grades and left. I went home to St. Louis and took a semester off.


I accumulated around $8,000 in loans from that one semester.


School #2: Community College in St. Louis

I enrolled in Community College in St. Louis. I come from a low-income family so FAFSA gave me $5,500 a year for school. After tuition and books, I usually had around $1,000 leftover each semester.


Being paid to go to school!? Pretty awesome.


I was also working part-time and living at home, so I was able to pay off some of those loans from Boulder.


School #3: University of Southern California (USC)

After a year and getting a 4.0 GPA in Community College, I was able to transfer to University of Southern California (USC). This was my dream school and I was ready to take out as many loans as needed (not smart).


However, because USC is a private school with good funding and my family had low-income, USC and FAFSA paid for 95% of my tuition.


Looking back now, I can’t believe how much money this saved me.


Instead of $26,000 in student loans, I would’ve had $150,000+.


Living in L.A. was still not cheap despite living as a student. Going into my senior year in college I had about $18,000 in student loans.


My (Almost) Terrible Mistake:

In the summer of my junior year, I landed a high-paying internship in digital marketing. I made enough money to cover a good amount of expenses for my senior year (~$10K).


At this point I had started investing and playing around in the stock market. I had done pretty well so far and had made money from all my investments (#dangerous).


So, I got this little idea that since I had most of the cash to cover my expenses for the year, I could take out a subsidized loan and use it to invest and make money off it.


This is about the worst idea you can have.


Well, anyway, I did that.


In my senior year, I had about $26,000 in student loans.


Mistake Averted:

Fortunately, after risking my student loan money in the market, I made ~$2,000, sold and banked the money.


I was still working part-time at the digital marketing agency and had a few freelance projects so I made an extra few thousand throughout the year.


I graduated college and paid off $10,000 of the loan balance immediately. This was mostly just returning the money that I risked in the stock market plus some extra from working in my senior year.


So, I got my first job at Fandango in digital marketing with about $16,000 in student loans remaining.


Key Takeaways: how I was able to get into a top school
  • I went to Community College and had a 4.0 GPA.
    • Colleges love transfer students with high GPAs from other colleges. It is the single best indicator that you will succeed at their school.
    • Spent a lot of time crafting an amazing college essay.
    • Stellar referral letters.


Key Takeaways: how I escaped college without crazy student loan amounts:
  • Ultimately, I was in a good position because my family had low-income status.
    • Community College paid me over $2,000 to attend.
      • Also, lived at home and worked so I banked most of the money I made.
  • At USC, most of my tuition was paid for so I had to work and take out loans for LA living expenses.
    • Had multiple internships, including a high-paying one that I worked in the summer and then part-time during the year.
    • Always was working some job or side gig.
    • Got lucky to not lose my shirt when I risked loan money in the stock market.
      • So bad, do not repeat this.


In the next article, I’ll discuss how I was about to pay the remaining student loans off by 26.