Why I'm Finally Spending Money

What's up you guys? It's Graham here. So, a little over a year ago, I made a video breaking down exactly how much money I spend every month, where it all goes, and my philosophy is when it comes to saving money, investing, and trying to get the best value for everything you purchase. I know it sounds kind of weird, but I have always been the type of person who gets more enjoyment from saving money than I do from spending it. Like, you know how some people enjoy going out shopping and buying new clothes? Well, I'm the opposite of that. I enjoy not going out shopping and not buying new clothes. I know I'm weird, but when it comes to this, here's the thing: over the last year, I've made some pretty substantial but well-calculated changes when it comes to my spending.

And no, I'm not talking about going and following it up with, like, fast cars, designer clothing, and heaven forbid, Starbucks coffee. But there are some things that I found that are worth the money that, in the past, I never would have spent money on. In this video, I'll go over exactly what those are and how my financial philosophies have changed over time. And of course, I'll get to what the title is talking about: how much money I now spend in 2020. However, I just got to share something with you guys really quick. I'm gonna grab my computer so I could thank today's video sponsor: smashing a like button for the YouTube algorithm. Just kidding! This video does not have a sponsor. So if you wouldn't mind just destroying the like button for not having to listen to a sponsored segment right here, it'll greatly help me a lot. And smashing that like button is fun, it's free, and it's very easy to smash. So thank you very much!

When it comes to my spending, there's definitely been an evolution over time that's slowly begun to change. It all starts here with Stage One; and you know what? Actually, we're gonna call it Phase One. Phase One sounds a lot more official; we'll go with that. At first, my mentality was to live as frugally as possible, avoid spending money at all costs, and go to any extreme for the sake of saving and investing more money. This was my mentality for the first six years of my career, and I'll admit I took this extreme to an even further extreme just because I wanted to save and invest a little bit more.

This was the point in my life where I would avoid hanging out with friends just because I didn't want to spend the money. I would avoid or postpone purchases just so I could save the difference. In really every area of my life, I was just cheap. Although I do believe if it wasn't for that militant-like discipline for saving money, I never would have carried it through in other areas to such an extreme where I could turn that savings into another source of income. So, at the point where I began investing in real estate, I took a slightly different savings approach, and we gotta enter the stage—no, wait, Phase Two of saving. Phase Two! They start with Phase Two.

Now, at this point, I only spent the money that the rental properties generated, and then anything else I earned above that working as a real estate agent could just be reinvested. My thought process behind this was pretty simple: if I could only spend what the rental properties make, I could pretty much guarantee to maintain the same lifestyle indefinitely without worrying about how much I made as a real estate agent. It also meant that there was no pressure as a real estate agent to close a deal because I had some huge overhead or, like, a Mercedes-Maybach payment that I had to make at the end of the month. I just kept things simple; I still lived very frugally, and I consistently invested everything else with the mindset that I could freely spend whatever that investment makes me.

So that theoretically, every year should be slightly better than the last. Well, what started off almost 10 years ago as a few thousand dollars a month to cover my overhead of living in Los Angeles has now turned into almost 20,000 a month between six rental properties, stocks, bonds, and index funds. Enter now Phase Three of spending! At this point, I still make sure to spend less than what my investments make me, and I still make sure to invest the difference of everything else that I earn. But over time, I've begun seeing things from a slightly different perspective and spending my money just a little bit differently. For me, Phase Three is about using that money more efficiently and maximizing the value of what you spend instead of just saving for the sake of saving.

But I'm not gonna bore you with all the details right now. Here's what you came for: here's how much money I spend, and then after that, I'll go over all the changes and everything that I've learned along the way. First, looking at this video from a year ago, my basic personal expenses actually just got cheaper. And I'll break them down here. We'll begin in the same order as I did before with the Tesla Model 3 car insurance. That used to be $125 a month; I got that down now to $80 a month. I ended up switching over to Tesla car insurance, which brought down my rate, and then now, with everything closed down, I barely drive anywhere anyway, except the occasional drive on the weekend every now and then, so that ended up bringing down my rate substantially.

Now, second, we have the gym membership. Now, back when I made this video, the cost was $200 a month, and then they raised it to $220 a month, but now it's all the way down to zero dollars a month. Here in California, gyms have been shut down for the majority of the year, and because of that, Equinox put their memberships on hold. In the meantime, I got some free weights and a bench in the backyard, so not only am I saving money, but I can also work on a bit of a tan at the same time.

The third, we have my health insurance, and since this video last year, they have raised my premiums by $15 a month, so now I'm paying $230 dollars a month. And fourth, we have my phone bill. It used to be this price right here, but, uh, yeah, I was able to get that down to $70 a month for unlimited everything. This one is pretty much my lifeline for work because I can tether my phone data to my computer and pretty much work from anywhere in the world, or I could browse Instagram from anywhere for business purposes though. Anyway, to get this cost down, my girlfriend and I got on the same phone plan, and I was able to remove one of those annoying phone insurance coverages I had no idea was on there. I was paying that for a very long time without even knowing it.

Yeah, for anyone out there, just go over the fine print of your cell phone bill and see if something like that is included. I had no idea, so I removed it. I hadn't used that ever, and now I'm saving even more money. The fifth, we have $75 a month for internet, and I recently splurged for the slightly faster internet with a promo code, so now I could smash the like button just a little bit faster. Now, I was initially thinking of classifying this one as a business expense because I use it primarily for business, but let's be real, I mean, we all have internet. I absolutely love the internet and smashing the like button, so I would have this one regardless.

Number six, we have my utility bills. Now, at my previous place, I was spending about $120 a month for everything, including the water for the unit next to me, but now that I moved into a house with more plants to water, it's a bit more expensive, and lately, it's been about $260 a month. This one includes water, gas, electric, and trash, and it's not terrible because that also includes the charging of the Tesla that I barely drive, but it's still a lot more than I'm used to considering there's a big front and backyard to water. I've also been running the air conditioner a lot more during the day instead of doing my usual open up the windows and then turn the room into a sauna approach.

So even though money can't buy happiness, it does buy you 74 degrees. The seventh, with all the plants everywhere, I do pay a gardener $150 a month to come once a week to take care of everything. There's a lot of pruning, upkeep, and cleaning that we just don't do ourselves. That also includes cleaning up all of these palm tree fruits that fall everywhere this time of year. Now, number eight, something else that increased lately is my food cost, and that runs about $400 a month. Most of that is dining out because Macy gets the groceries and cooks a lot of food at home, but it's been really enjoyable to go and try new happy hour sushi places or go and split nachos at the restaurant down the street.

At this point, I gotta say, working from home is really nice, but when you've been home non-stop, it becomes an extravagance to get out of the house. So, this has become that little special splurge to get out and go somewhere and try something new, especially when everything else is shut down. Then, number nine, we have that other category, and that probably adds up to another $200 a month or so. Now, in the past, that would include things like haircuts, entertainment, travel, or anything else along those lines. But lately, with everything pretty much shut down, this other category has turned into buying stuff off Amazon. For example, I bought some face masks, I bought two new scooters a few months ago so we could take those around instead of driving and parking. I ordered a bean bag, which is really cool, and just random stuff like this.

That means, as of right now, we got $1,465 a month in spending, but we're leaving out one of the big ones, and that would be housing. Now, prior to this, I was living in a duplex where, between the rental income of the other units, tax write-offs, and home equity, I brought my cost of living down to essentially zero dollars a month. But now that I moved into a new place, my total out-of-pocket cost between the mortgage, property taxes, and insurance is $7,700 a month. Now, part of this was justified because I knew I was going to be working from home, and I could turn a portion of this into a work-from-home office.

But also, when you account for rental income, it's really not as much as you would think. In my previous home tour video, I explained that when you subtract the value of the guest house, the value of the unit that I was previously living in, and the extra $2,150 a month in mortgage equity by paying down the loan, that brings my net out-of-pocket cost down to $650 a month. However, if we exclude rental income from this, my true out-of-pocket cost is more like $5,550 a month since the remainder of that goes right into home equity. And lastly, we have the Tesla Model 3 car payment of $630 a month. Now, technically, this one is a business expense that's paid for itself many times over, but I'm just gonna throw it here because why not?

I bought the car with zero percent down and financed the rest at a 3.75 interest rate. At that point, my investments make more money than I pay in interest, so it just makes sense to keep this loan and not pay it down any sooner than I absolutely have to. However, as far as how much this car actually costs me, even though yes, $630 a month does come out of my account, most of that goes towards paying down the loan, and only $60 a month of that goes towards interest after tax write-offs. That's it! So if we go and add all of this up in terms of the gross payment, meaning the total amount that gets subtracted from my account before rental income, tax write-offs, and equity, it's $9,795 a month. However, when you go and look at the net cost every single month after accounting for tax write-offs, equity, and rental income, my own personal spending really comes down to more like $7,075 a month, with 75% of that just going towards housing.

I'll be honest, that's an amount that was initially way higher than I ever wanted it to be, but I made sure I didn't make such a big lifestyle adjustment without making sure that my investment income would be able to cover all of it with plenty of a buffer to still make sure I could save the difference just in case anything happens. But the overall enjoyment from being able to wake up every morning and water the garden and being able to work from the backyard has been so much more relaxing. And because of that, I've been able to work way more efficiently.

But now we have another big change that I really haven't told many people about until today, and that would be my business expenses. When it comes to this, these are the expenses that I know will make me more money, or another way of looking at it is that these expenses to me are like an investment. Items like this cost money upfront, but they pay for themselves rather quickly. And for the most part, what I spend here is purely discretionary, but there are some costs that I do need to make every single month. The first one is a membership to Teachable at $99 a month to host my programs on. That includes the Real Estate Agent Academy, which teaches people how to grow their career as a real estate agent, the YouTube Creator Academy, which teaches people how to grow a YouTube channel, and the Graham Stephan Mentorship Program where we meet twice a week, and I answer whatever questions or concerns or issues you're facing—link down below in the description.

Second, I spend another $150 a month on business insurance, and third, I spend another $150 a month on S Corp and LLC filing fees. Fourth, I spend another $200 a month for tax filing fees for those I just mentioned. And number five, I probably spend another $100 a month on services like Google storage, Zoom, and so on. Oh, and then six, I spend another $130 a month on credit card annual fees. And yes, I'm putting this one here as a business expense because I get a lot of these cards to review on YouTube, but not to mention I get some really sweet, sweet points and sign-up bonuses. And then finally, number seven, I pay $7,500 a month for a Jack. That's right! I finally hired a Jack full-time to take some of the work off my plate because after almost four years of working full-time running two channels, posting a new video pretty much every single day, it got too much to handle on my own.

So now, Jack edits all the videos you see in the second channel, The Graham Stephan Show. He also runs and edits the podcast, The Iced Coffee Hour (new episodes being posted, by the way, every Sunday morning 9 a.m. Pacific Standard Time). He also runs the mentorship group—linked down below in the description. He goes through the hundreds of emails that we get every single day, and he takes over anything else so that I could focus my time exclusively running this channel and just working on the bigger picture. Now, this is something I never thought would happen a year ago because I took a lot of pride in being able to do everything myself, but once it got to the point where I was working 12 hours a day every single day and I was still stressed out because there was not enough time left over for me to get everything done on my own, I knew something had to change.

Now, having a Jack work with me full-time frees up at least five hours a day of my own time, and we could accomplish way more throughout the day together than I could on my own. I gotta say, being able to buy back my time is now indispensable, and it's also something I never considered until it got to the point where I had to, and I’m really glad I did. So that now brings my total business overhead to $8,230 a month, but I gotta say that $8,230 pays for itself dozens of times over. Without that cost, there would be no way that I could earn the income I do today. And to me, this one isn't so much of a cost; it's more of an investment that you have to make when you get to a certain point if you want to continue growing and expanding. Something like that just becomes necessary, and that was a really big realization for me.

Anything beyond this, though, is purely discretionary; although if I see something that I think would improve the quality and the enjoyment for you and the channel, then by all means, I think it's worth it, and I'll spend money on it. Everything else, though, is still very simple, and I still pride myself on being as hands-on as I can for pretty much everything that's out there. But now being able to hire out some help takes some stress off me and gives me more time to focus on the aspects I enjoy the most—like making these videos, doing research, and investing. And of course, asking you to smash the like button for the YouTube algorithm, and then continuing to edit videos to continue to remind you to smash the like button.

So, when it comes to everything, these are my two main takeaways that I have learned when it comes to saving and investing, and it really just comes down to this: First, I only view my income instead of how much money I make. It's only how much money does that money make me. For example, if I make $10,000, I don't see that as $10,000. Instead, I see that as $50 a month in passive income invested into a rental property at a 6% return. By that logic, if I'm able to invest $50,000, well, that's enough to cover my basic grocery bill for the rest of my life. Then, if I can go and get $350,000 invested in that rental property, that's enough to pay for a basic one-bedroom apartment here in Los Angeles in a decent area.

I challenge you to think the same way as well; it's gonna make the aspects of saving money and investing that much easier, and over time, you could replace all of your expenses just by having your money do all the work for you. The second: beyond the essentials, I only try to buy things that I could put to work to make more money or something that I could see as an investment. For example, I consider this computer that I'm editing on right now—a good investment because I use this to edit all my videos on that make money—or buying an extra camera, so all of a sudden, now I could film a second angle for The Graham Stephan Show. If you could find a way to coordinate your expenses around things that will increase your productivity or income, it could absolutely be worth it.

So, that's exactly how much money I spend for anyone curious, and those are my philosophies when it comes to saving and investing and how to budget so that that way everything is sustainable long term. Now, as far as where this goes from here, I have a feeling that my next big expense is going to be a reinvestment back into the YouTube channel. And instead of spending any more on myself, I really want to take this to the next level and make a combination of like a Dr. Phil meets Joe Rogan meets Dave Ramsey meets Judge Judy all in one for personal finance. I know it sounds super weird, but I have an idea of exactly what I envisioned in my head—it's in here somewhere. So you guys are just gonna have to stay tuned and subscribe so that way you don't miss what this ends up turning into! I think it's gonna be pretty fun.

So, with that said, you guys, thank you so much for watching! I really appreciate it. Make sure, as always, to hit the like button and the notification bell. Also, feel free to add me on Instagram; I post pretty much daily, so if you want to be a part of it there, feel free to add me there, as well as on my second channel, The Graham Stephan Show. I'm posting there every single day. I'm not posting here, so if you want to see a brand new video from me every single day, make sure to add yourself to that. And lastly, if you guys want two free stocks, use the link down below in the description. Webull is going to be giving you two free stocks when you deposit $100 on the platform, with one of the stocks potentially worth all the way up to $1,400! So, if you want those two free stocks, use that link below. Let me know which two free stocks you get. Thank you so much for watching, and until next time!