Ask Jason Episode #5- Emergency Funds, Passive Income, and Saving Money

00:00 Greetings, it's time for another episode of ask Jason. Where today I'll answer all your personal finance questions. And I'll do it totally unscripted, giving you hard hitting, to the point answers to your financial questions. I'm Dr Jason Cabler from the Celebrating Financial Freedom blog, and the Celebrating Financial Freedom YouTube channel, where I teach you all about how to manage your money better, get out of debt, make more money, and do it all from a common sense and Christian perspective.

To go to the blog, just go to celebratingfinancialfreedom.com. Click the get started button on the main menu where I'll show you how to get moving in the right direction with your finances. I'll leave you a link to that in the show notes.

And while you're there you can also sign up for my free 10 day master your money email course. It's absolutely free, and it'll show you step by step how to take complete control over your finances!

How Can Martin Save Money When His Wife is Not on Board?

00:56 I'll leave you a link in the show notes for that one as well. Okay, now let's get to the first question. And the first question is from Martin. Martin says, Hi Jason, thanks, and God bless you for your tireless efforts and trying to help people like me. I'm a 62 year old who still has a family to support and I'm still clinging to my job.

I tried to save but not to much avail. The problem lies in my wife and family who don't share my idea of savings for a rainy day. Please advise if I missed you earlier lessons on this subject. Okay. Well we hadn't talked really about this subject a quite yet. Martin and, so let's get started and kind of review here. You, you say you've tried to save but you've never been able to do it.

Who's Really to Blame?

01:50 You say the main problem is your wife and your family who don't share your ideas about savings. And Martin. Um, I'll tell ya, that's kind of a difficult thing when you've got a wife who really is not on the same page with you. I know that because I've been there and it's not easy to deal with.

But here's the deal. Here's one thing that I think you might be missing. You're blaming your wife, you're blaming your family, but you know, if you're earning income and you're part of the finances, which you are when you are in, when you are in a married couple, whether you're earning income or not.

It's about you as well. You have to blame yourself as well. Now, I'm not saying that to be harsh, but I'm saying that to be realistic. Because when you have a family, whether you're earning an income or not, it's up to you and your wife to be on the same page financially.

We Didn't See Eye to Eye on Finances

02:52 And especially as you are from a Christian perspective. You're the leader of the home. And you have to set the tone for anything and everything. And uh, but you have to obviously work together with your wife to do that.

Now I know that's not easy because listen, when I first, uh, when Angie and I first got married and we did not see eye to eye financially at all, it was very difficult for us simply because we came from two very different backgrounds.

Two Different Financial Perspectives

I came from an upper middle class, highly educated background. She came from a very poor, very uneducated background. And part of our problem was, is I was a saver. I was, I'm a natural saver, but she being from a poor gut background, um, what they tend to do is when they get money, uh, for instance, when they get money on payday, they go out and spend it.

03:59 Not necessarily because they're irresponsible. But because that's what they had to do to survive. Soon as you get paid, you go out, you get you some groceries, you get what you need, you pay the rent and you do what you gotta do to stay afloat.

And so when she married me and I had some money and I had a very good income coming in, she stayed in that mode and she was a spender. But it really stressed me out that that was the way things were happening.

I Was Not Being the Leader of My Home

And the problem was, a big part of the problem was, is that we never sat down and talked about money and we simply argued about money and we were never on the same page because of that. And a large part of the problem also was, is that ultimately I was not being the leader in the home.

04:51 I was not being the priest of my family like I should have been. And I was not taking the lead and making sure things went as they needed to go. And that was a failing on my part.

I Became a Better Leader

And so what I had to do finally, eventually things really came to a head and we went to a popular personal finance course to where we learned how to budget.

We learned how to, we learned simple financial concepts about how to save our money. How to budget, how to save for retirement, all of those things that, all the basics that we all need a to live a better financial life.

And she started seeing the light on some things and I started seeing the light on some things and I started, ultimately being a better leader of my home and of my marriage and of my family.

We Got on the Same Page With Our Finances

05:45 And the ultimate result is that eventually we started doing a written budget. And we started doing a better job at communicating with each other about money. And we eventually got on the same page and started pulling in the same direction financially.

And let me tell you something that has made all the difference in the world for us! We haven't had a fight about money, Gosh, 12, 13, 14 years now. And it's just been an amazing thing.

Now you're not telling me anything about money fights or anything like that. But, what you're telling me is, is that your wife and family are to blame because they don't think the same as you do. Well, Martin, it's up to you to be the leader and help them understand why this needs to happen and whether you need to go to a personal finance course like I did.

06:38 Um, or like we did. Or maybe read a personal finance book together, like a financial peace by Dave Ramsey or the total money, Total Money Makeover by Dave Ramsey or any number of other books that are about basic good, solid personal finance.

I think that's one of the things you need to do, because it's always going to be very difficult if you and your wife are not on the same page.

Start Doing a Written Budget

So here's what you need to do from a basic standpoint. Once you and your wife get on the same page and the first thing you need to do is you need to start doing a written budget. That's almost always what I recommend. Anytime you're having any kind of financial difficulty, because most people are just not doing a written budget.

And it makes all the difference in the world because you know where your money's going, you know you have a plan for your money to spend it on paper, before it gets spent in the real world.

07:44 And that's how you are able to save money, because you make it a line item in your budget and you don't deviate from that. You don't go spend it on eating out in restaurants. You don't go spend it on going to a concert or something like that. Make a provision for that and you put it in the bank and you forget about it.

Make Savings Automatic

And even one of the best things you can do is make it automatic. Have savings automatically deducted from your paycheck. Put it into a savings account and or put into to an IRA or other investment and leave it there.

So, but ultimately, Martin, you got to get on the same page with your wife. You got to make sure that both of you are pulling in the same direction so that you can save money for a rainy day because eventually, you say you're 62 years old, so you're getting close to retirement age and if you don't have anything saved at this point, you're going to be hurting.

Start Saving Now!

08:44 You're going to have to work the rest of your life. If that's the case. And hopefully or health will hold out to where you can have some savings and, and hopefully not live in poverty.

I don't know what your total financial situation is right now. But if you don't have any savings at 62 years old, you're really going to have to hit it hard and you're really going to have to buckle down. And as I said, that means you and your wife getting on the same page with your finances.

Pamela Wants Multiple Streams of Income

09:14 So let's get on to the next question. Let me find her email here let's see, her name is Pamela. And Pamela has a simple question. She says, I've heard many times that to increase your income you need to have five avenues of income, preferably passive income. I really just don't know how to do that.

09:48 What avenues do I pick? What are the best options? How do I make sure it's passive income? Okay, Pamela? Well, I think what you may have heard and what I know, what I've heard over the years is that, most millionaires have at least seven streams of income and many of those streams of income are passive.

And so if you want to be financially successful, that's one of the things, that's one of the main ways that you get there is by having many streams of income, not just one income from a job. But from several different ways of making money and the more passive types of income that you have, the better.

What is Passive Income?

And so what exactly is passive income? Passive income is basically income where you do work once and you get paid many times over. My friend Dan Miller, he calls it, he calls passive income SWISS dollars- sales while I sleep soundly.

10:58 So let's, let's think about what passive income might be. For instance, let's say you have a website selling widgets, whatever kind of widgets you want. Um, your website is there and once you get everything set up and once you get a sales page, running and working well, it's selling for you all day long, 24-7seven.

And so that's some passive income. You set the webpage up, you set the website up, and after that it sells for you. You make money while you sleep, and you just have to maintain that website every once in a while and do what it takes. So that's the type of income we're talking about.

We're talking about passive income, and obviously the more that you have, the better because it gives you more freedom in life.

Multiple Streams of Income = More Freedom

But also, uh, just having many types of income well help you have a better, more freedom in life because if one type of income goes down for awhile, which they will typically do that occasionally to maybe seasonally, maybe every few years, maybe a recession in the stock market or the, in the national economy, can cause a type of income to diminish or even disappear.

12:23 Well, you've got other types of income coming in to compensate for that. So instead of relying one on one type of income, you might lose your job and then you've got zero income and then you got a big problem.

But if you have a job, if you have, let's say a website and two or three other types of income coming your way, well if you lose your job, at least you've got some other money coming in. You can pay the rent, you can buy some food and, and you can have a little time to look for a job while you've still got some income rolling in.

My Five Streams of Income

Dividend Income

And so let's take me for an example. I have at least five types of income at this point in my life. And for instance, one of them is investment dividends. So I have money in my investment accounts, in my retirement accounts, IRAs, those kinds of things.

13:20 And some of the stocks and mutual funds that I have money in, they pay a dividend every quarter. So they may pay, oh maybe 4 or 5% per year. So let's say if I've got $100,000 in Xyz stock, they'll pay me 4% every year as long as I hold that stock. And so that's $4,000 in income. And that's in addition to whether the stock price goes up or down.

So that's money coming in that just makes my investment account that much bigger. So that's very passive income. I really don't have to do anything other than buy the stock, by the mutual fund, leave it there and it makes money for me. So that's about as passive as you can get.

Rental Income

So now let's talk about another type of passive income that I have a, I also have a rental house. I've had this rental house for about five years now.

14:25 And the great thing about this rental house is I literally spend about three hours a year dealing with this thing. So it's been an awesome investment! And because I don't manage it, I have a property manager that manages everything for me. She collects the rent, she takes the phone calls when repairs are needed, she handles everything.

All I have to do is answer an occasional email from her saying, the sink's broken. Okay, well I'll email her back and get the sink fixed and send me the bill. Easy peasy. It's, it's, it's so simple.

And I get almost a thousand dollars a month in my bank account, in rental income just from this rental house. And it is very easy. It is very passive. And it's wonderful to have somebody contributing to my bank account every single month without me having to do much of anything.

Blogging Income

15:30 So let's talk about my third type of income. My blogging income. So of course I have the Celebrating Financial Freedom blog, and it's been around for quite a while and it does fairly well. And uh, so that is sort of a semi passive income because I do a lot of work on the blog and of course doing these videos as well.

And so I do get some semi-passive income out of that in the form of advertising dollars.

So if you'll go to my site Celebratingfinancialfreedom.com you'll see a that I have ads on the site. Of course those ads work for me 24-7, 365 days a year. And so I don't have to physically do anything other than set those ads up, maintain the website and make sure those are running. And I get paid money every month for putting those ads up.

16:26 So that takes a good bit of work to maintain the site and everything. But, I'm making money from it. So, um, it's semi passive income.

Course Income

So the same thing goes with my Celebrating Financial Freedom course that I sell. It's pretty passive income because I put together that course probably three or four years ago and I updated occasionally, but basically it's there for sale.

Um, and the platform that I have it on, Udemy, is a great platform because they also sell for me and they, um, they advertise and they take of course, they take a cut of the proceeds.

But, uh, it's pretty passive because I don't have to, I've only, I've only produced the course once and just updated every once in a while. So I'm not having to do a lot of work on it continually. So that's a pretty passive income stream there as well.

17:27 And by the way, if you're interested in getting out of debt, through taking my course, you should check it out. I'll leave a link to you in the show notes.

it's very easy to find. You can just go to Udemy.com u-d-e-m-y.com, and search, Celebrating Financial Freedom. And my course will come right up so you'll be able to check it out.

Income from My Job

So let's talk about my fifth, uh, type of income. And that's my income from dentistry. I'm a practicing dentist and of course that's my main job, my number one source of income. And it is most certainly not passive in the least.

Uh, I've got to show up to work every day and I've got to put in the hours. I've got to have my butt in the seat, seeing those patients and, taking care of them and fixing their problems.

18:22 So that is a very unpassive income, but it's the best income that I have by far and exceeds all the others combined. But it's nice that I am able to not only have the dental income but have all these other types of income coming in as well.

Um, that help build my bank account, help build my investment accounts and help really multiply my income more than I ever would just through dentistry alone. So it's great to have those types of income.

What Can Pamela Do to Get Multiple Streams of Passive Income?

Ebooks

18:55 So now, Pamela, what can you do to have some passive income or to set up several different streams of income? Well, man I tell you there are so many different things you can do anywhere from anything from writing an Ebook, there are lots of people writing ebooks. If you have a special area of expertise that you're good at it, write an Ebook, put it up on Amazon.com.

19:22 Uh, advertise it. And you might be surprised at how many sales you can make, and that can be pretty passive income for you.

AirBnB

You can do things like a rent a room in your house through Airbnb. That's pretty passive income because you only have to set it up once and you don't have to, you maybe have to answer a few emails when, uh, people are, um, looking at renting your room.

And of course you'll have to clean up when they're done, when they leave. But you know, not a ton of work involved there.

Become a Virtual Assistant

Another thing you could, uh, be a virtual assistant. You can help other people run their business and assist them with things like answering emails and creating documents for them, whatever they need. And, uh, I've written some posts about that that you can check out. I'll leave those in the show notes.

Flipping Cars

20:18 Um, another one that I've written about is flipping cars. You can buy cars at the auction, at the auction house, uh, wherever is near you and you can buy them at a low price and resell them at a higher price. And you can, you can make several thousand dollars on a car if you buy right.

Uh, if that's, um, something that's in your knowledge base, if you know cars very well.

Posts About Making Money

So, uh, that's just a very, very few of the things you can do. Some passive, some not a, but I've got, I've written a ton of posts about making money, different ways of making money, a lot of them, very detailed post about how to get started making money, doing whatever.

And I've got a whole list of those that I can uh, send you. I've got those. I'll, I'll put those in the show notes for you and give you a link to the page where you can find all of those listed out for you.

21:18 So the best thing you can do, like I said, is just have multiple types of income. Some if you can get passive, that's great. Passive income can be a little hard to come by sometimes, but the more income that you can produce, the more streams of income that you can produce, the better off for you, especially if they're passive.

21:40 Okay. So let's switch gears now and I'd like to tell you a little bit about our sponsor Personal Capital. You know, I believe one of the most important things you can do for yourself financially is to have a solid system for organizing your finances, but for most people, that's not always the easiest thing to do.

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Get Your Finances Organized

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You Can Make Better Financial Decisions

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How Can Josh Save for an Emergency Fund While Still in Debt?

24:09 So let's get on to our next question. And that question is from Josh. And let me find Josh's email. Let's see here. And Josh has a very simple question. How do you establish an emergency fund while you're still in debt?

And so that's a great question, Josh, because when you're in debt and you're trying to, you're trying to get the debt paid off, how can you possibly save money at the same time and build an emergency fund? Like most of us financial experts, tend to recommend.

Make a Budget

Well, the first thing you've got to do if you're going to build an emergency fund is that you have to have a plan. And what do I mean by having a plan? Well, what I mean is that you've got to be doing a budget because if, if you're going to be saving money, you got to figure out where that money's gonna come from.

25:17 So you might not have a lot of money at the moment to be able to put into an emergency fund, especially if you're trying to pay off debt. But if you have a plan and you know where you're going, then you can get your emergency fund established like you want it.

So the first thing I'm telling you, start a budget. And when you start a budget, um, what it does is it allows, it allows you to plan out your month financially.

A Budget is a Forward Looking Plan

A budget is not like so many people do it. It's not looking back at what you spent last month and listing it out and seeing how much you spent. That's not a budget- that's in the past.

A proper budget is one that looks forward. It's spending all of your money on paper before you spend it in the real world. And so that allows you to have a line item for your emergency fund that is part of your budget.

How to Build Your Emergency Fund

26:20 And so of course you need to be paying off your debt, but it may mean that if you don't have any money, um, if you don't have enough money to let's say, um, do all the things that you want to do that month, you'd have to, you may have to cut some things out in order to be able to put money toward that emergency fund.

Or another great thing to do that I always recommend is find ways to make extra money that you can put toward your emergency fund and then later put towards your debt. And the, obviously it's a good thing when you can accelerate to paying off debt and building your emergency fund.

And that's what making some extra money can do for you. So anyway, you'll want to start a budget. You'll want to put your emergency fund as a line item in your budget.

The Emergency Fund Comes First

27:13 And of course you're going to want to continue paying down your debt. But at this point you want to pay just the minimum payments on your debt, uh, for now because the priority first should be the emergency fund.

Now, why should your priority be the emergency fund first over the debt? Well, the reason that is is the reason you're have a, you're trying to build an emergency fund is so that when an unexpected expense comes up that you'll have the money to pay it off without having to dip into your savings account or having to struggle paying your debt while you're also paying for this emergency.

So just pay the minimum on your debts for now. Make your emergency fund I line item in your budget. And if you have to cut out some, um, meals, eating out, if you have to cut out some Starbucks, if you have to cut down a few, if you, if you have to, uh, maybe catch a ride to work to cut down on your gas bill, um, you know, do what you have to do to free up some extra money for that emergency fund.

What if You Need to Use the Emergency Fund?

28:26 Because when you have that emergency fund in place, it keeps you from getting derailed in the get out of debt process because you can just pay for the emergency. Most emergencies are under $1,000. You can just pay for that emergency, move on and continue paying off your debt.

Of course. Now, if you do have an emergency and you have to spend some money out of that emergency fund, the way that you replenish it, is you go back to paying on paying the minimum payments on your debt while you build that emergency fund back up. Then you can go back to paying extra on your debt and getting it knocked out quickly.

So that is, um, the number one thing you need to do. And I always recommend paying. You're making sure that comes out of your budget before anything else. Always say pay yourself second.

Pay Yourself Second

29:28 Now, this being a Christian blog, what that means is, is that you pay God first. Pay your tithes and make sure that you're doing what you're supposed to be doing in that realm. Then pay yourself second.

And that means putting money in savings, which in this case is the emergency fund. But eventually, once you get your debts paid off and you get a big emergency fund established, then that money goes into savings.

29:55 So you pay yourself second before you pay anything else, bills, anything. And so if you're doing that, that's going to ensure that you always have savings coming in and building your wealth on a daily, weekly, monthly basis. So I hope that helps.

Conclusion

30:18 And I believe that was the last question. So that about wraps everything up for this episode. I sincerely hope you came away with some information you can use to make your finances better.

I've left links in the show notes to the blog posts and other resources I mentioned in the show. Now, if you have a personal finance question and you'd like me to answer, simply shoot me an email at jasoncabler@cfinancialfreedom.com.

I'll leave that in the show notes as well. Or just leave, or you can just leave a comment below the video and maybe I'll answer your question in the next episode. Until then, have a great week. Be Blessed and remember, no matter your financial situation, when you walk with Jesus Christ, you are truly rich! I'll see you soon.

Resources

Resources for Saving and Managing Money Better

Blog Posts About Marriage and Money

Budgeting Resources

Multiple Streams of Income

Transcript

Intro