6 Purchases That Are Keeping You Poor

Avoid Purchases You Don't Fully Understand Most people aren't broke because they don't earn enough money, they are broke because they spend it on the wrong stuff. When I realized what those things were and I started to make some changes, I started to actually buy assets instead of liabilities. My life totally changed. I actually became happier while spending less money. Reached freedom in about 5 years. All by not buying these things that I'm about to tell you. Starting with #1 things that you do not understand. I want to give you a couple of real life examples. First of all, I'm technically a millionaire because I have $1,000,000 in, I think it's Iraqi dinar. When I was I think 18, my uncle, I believe was like, hey, they're going to like burn this money or something. And so if you buy money now, it's going to go up in value because like whatever. And so I spent like $1000 and I bought this and over the past 12 years, it's gone down a couple $100. I don't even know how to sell this. But about like 6 or seven years ago, I bought about $800 worth of index funds. And that has doubled in that time period. So the $1000 that I wasted on this could have easily doubled if I had played it safe. But because I tried to get rich quick, I lost money. I was honestly kind of an idiot back then, but I'm not the only one. A study shows that 90% of active traders, 9 out of 10 active traders actually underperform index funds. This is a very common trap that a lot of people do is they invest in things they don't fully understand or they just try to beat the average. Now I'm all about investing smartly. That's a word and like finding things that are assets and they're going to over perform other things if you can. For me that's real estate. But like most people, if you don't really understand things, that's how you lose money on real estate, that's how you lose money on stocks, that's how you end up in multi level marketing schemes. I got in Amway for a while, lost a ton of money on that. Or you end up buying things that you have no idea. You're just going off the word of somebody else that you trust and like and the opportunity cost ends up costing you thousands of dollars. Like a lot of times the simplest way is the best way. And when it comes to wealthy people, they spend their money on assets that are going to put money in their pocket every month that are going to grow, that they understand that is well planned out. And the poor or the middle class generally are spending that money on either like just stuff or they think they're smarter than they are and they're buying things that end up losing money or underperforming because they don't understand what they're doing. The Trap of Buying What You Can Afford What you can afford. One of the biggest traps that I see a lot of people fall into is buying what you can afford. For instance, you get approved for $400,000 to buy a house. The mortgage guy tells you you can afford that. Or you go to a car dealership and you realize that like, hey, I can afford maybe 5 to $600.00 per month for my car payment. That's what I can afford. That's what I have budgeted for it, right? This is how you get stuck in the trap, in the rat race pretty much indefinitely. Just because you can afford the payment for something does not mean that will build you wealth, doesn't mean that will give you freedom. It will better your life in any way. Because the banks, the car dealerships, they don't care if you're wealthy. If you get to reach freedom a couple years, leave your job and go travel the world, do whatever. That's not their goal. Their goal is to get money out of you and as much money as possible. So they're going to tell you, yeah, $500 a month for a car payment. It's not actually all that bad because, you know, it's only X percentage of your income. So like, you know, don't really worry about that. And then once you get your car payment paid off, now you have an extra $500 a month. Instead of investing that money, why don't you just buy a nicer, newer car, right? I've seen this devastate so many young people and older people as well. And it is the main reason why people stay trapped is they buy things that they can afford, but they can't actually afford it. And my general rule of thumb is like, pick a percentage that you're OK with. Like for a house, I'm OK with it being, you know, whatever 20% of my income or something or for pretty much anything else. If I cannot afford to pay for it in cash, I'm just not going to buy it. I always buy cars in cash and that means when I didn't have a lot of cash, I bought a $3000 car. When I had more cash. Now I was able to buy, you know, a Tesla or whatever, but I'm never ever, ever going to buy something just because I can afford it. That is not a good reason to spend money. It's not a good reason to go out to dinner. It's not a good reason to go on a vacation. It's not a good reason to buy a house or a car. It's because you can afford it, because it's the goal just to have the nicest, shiniest stuff or to have freedom and enjoy your life and not have to stress about money. Maybe your goals are different, but I think that's pretty stupid because ideally you shouldn't be doing what you can afford. You should be shooting for like a 50% savings rate because when you do that now, like you have so many more options than everybody else. You have so much more freedom than everybody else. And it's really hard to get to that. But you cannot get to that if you're buying what you can afford. It's impossible. Stop Making Others Rich: Become a Creator Most people waste money on making somebody else rich. They spend a lot of time consuming and they produce very little. And so when I switched over my mindset from being a consumer to a creator, not only did my happiness go way up, I felt more productive. I got to chase my passions, but also my income went up a lot. And I was able to gain location freedom because when you're able to make things from wherever, work from a laptop, then you have that location freedom to travel or do whatever. Just some subtle viral. And over the past two plus years, I've helped hundreds of other people do the same thing, kind of get started making money on YouTube. And I just opened up cohort 6 of the five hour YouTube where I take a group of people for six weeks and I teach them literally everything I know from the past seven years of YouTube on how to make money on YouTube, how to start growing, how to monetize your passions and really just like make better videos. I'm a firm believer that we've literally made the best course on YouTube for cheaper than anybody else with more access to somebody who actually knows what they're talking about. Like if you look at anything comparable, it's probably going to be 3 to 5 to 10 times the price. And that's just because I want to get a lot of testimonials and really do a a good job. So if you are interested, there's a link below. The Short-Lived Happiness of Material Purchases And you also cannot buy stuff that makes you happy. I'm going to be honest, I used to be really bad at this. And I'm not saying you shouldn't ever be happy. I buy coffee. Coffee makes me very happy. And that is a good thing. I shouldn't have mentioned coffee, but The thing is when you buy something, it feels good for maybe 10 minutes even. Like, I hate to use this example, but my Tesla, when I bought that, I had this goal of getting that for a really long time. It was always like this cool thing, I don't know why. And then about a month after having it, I was like, it's a car. Like it's nice, I enjoy it, it's cool. Gets me from point A to point B, like it's ultimately a car. Same thing with everything I've ever bought that I thought was cool, I thought would make me happy. Whatever makes you happy for a few minutes and then it just doesn't matter. And so if you are spending your money just on things that make you happy in the moment and you're not practicing delayed gratification, you most likely will never have good finances. If you're always on that spot of like, oh, I need this new thing, you just buy it on Amazon. You're always just buying things that you want that make you happy immediately. If I want to watch, I'm going to wait five years or until I hit this really cool goal and then I'll get that watch. This was actually a $23 Teamu watch because ultimately it's a watch does the same thing. If you think of it as a diet, if you always just eat the foods that taste the best, you're going to be like fat and unhealthy. That's just like math. And if you always spend your money on whatever you want, you will always be broke and you will never escape that. And so just because you want something, just because you can afford it, just because it makes you happy, not a good reason to buy something. And yet that's what most people do. Invest in Experiences for Lasting Happiness On kind of the flip side of that, if you're looking for something that actually makes you a little bit happier, I would say definitely experiences is what does that for me. Pretty much anything ultimately just turns into a thing. But experiences, traveling, going somewhere with friends, doing something with other people, or even by yourself. For the most part, I have never regretted any money I've ever spent on that ever. And I wish I had spent more. And I've actively put it more and more into my budget to have more experiences. Even for Christmas and stuff, we don't really buy stuff, buy experiences for people or for kids or whatever. But like, for most people, if you can trade wanting stuff for more experiences, you're going to generally save a lot more money and have a lot more like fulfilled and enjoyable life. Like just in the past year, I took America's worst flight and America's worst train ride with a friend for a video. And both of them were technically like, not great because we took this route for some reason, because we were like, you know, went from New York to LA via Austria for some reason. I don't know why that flight exists. That's why it's a video. Next video, invite Tony. You know that video blew up. Anyways, that was literally an experience that I will remember for the rest of my life. It was super cool, super fun. It was a great use of money. But if you think of like what stuff you got last Christmas, I don't know what I got. Like for my birthday, for Christmas, like any of the past like 5 years, I can't remember like a single thing. And like my kids don't even remember and it's a couple months after. Like stuff doesn't matter. Experiences do. And yet we see like 10,000 ads a day. And that's why people just waste all their money on stuff going into debt and now they can't have experience spending on convenience. How Convenience Purchases Keep You Poor If you don't have money, this is the number one thing you should probably cut out. This is what I cut out. And that is everything that is convenient. It's generally when you're paying for convenience, you think of a convenience store, it's going to be 20-30, fifty, 100% more than like a grocery store. If you think of DoorDash, it's going to be a similar markup, sometimes even double the price. When you calculate all the fees, the up charges, the delivery fee. You think of going out to dinner versus cooking yourself versus meal prepping. The more work you put in, the more money that you save on a lot of things. So if you are at this point where you are broke, that is the number number one easiest pickings where it generally doesn't change your life almost at all. But even just saving 20-30 bucks a day can equal out to being thousands. Or you know, $27.00 a day is $10,000 in a year. So these small things, paying extra to have something delivered, going out to dinner all the time, buying drinks when you're out, not packing your lunch when you go to work, all of those things could be destroying your finances and they don't even make you any happier. What to Buy Instead: Books and Real Assets So I want to end off this video by listing a couple of things that I think are actually worth it and that you should buy and will make you more money. Number one is gonna be books. Literally like these three books have probably made me hundreds of thousands of dollars over the course of the past 10 years. Because you don't know what idea can get you interested in buying real estate. You don't know that, you know, starting your own business and running it on five hours a week is an option. If you don't learn exactly how to do that, you don't know about different investing strategies and how to manage your finance as well. If nobody teaches you, if you don't learn how to do it and all the information is out there, you can learn it in videos or books or courses or anything you want. Just like taking that time to actually go through actually open up the account, actually start putting money and actually like make some changes in your life. Actually learn some options makes you have different opportunities than everybody else. When you know that if you buy assets versus liabilities and what assets are and what good assets are, that's how you can actually start having your money go and make more money. But if you don't even know that's an option, you don't know what an asset is really you don't know how to buy one. You don't know, like a lot of the stuff you have no chance of success and your life's just always going to be hard because you just have a knowledge gap on the other people who know how to and have their money, work hard for them and said you have to work hard in order to get money. And just like that sucks. So it's all just a knowledge gap. So I think that's like #1 investment, just invest in your brain, learn all these different options, and then you literally just have more opportunities than everybody else. And then of course, kind of like the sub two of that is any type of asset. Instead of buying a shirt, buy $20 worth of a stock. Instead of going out to dinner all the time, save up all that money. And you know, like stop buying everything for three years and buy your first rental. Start a business anytime you can invest into an asset of any sort. That's how you get rich. You just have to have enough assets to cover your life. Then you're like totally free. And the rich know that they buy assets. The poor buy liabilities. That's like literally all it is. If you enjoy this video, don't forget to subscribe and drop a like whatever it is. Thanks for watching.