The Middle Class Just Got FINANCIALLY RUINED

What's up, Graham? It's guys here. So how should I say this gently? Uh, we're screwed. It was just reported that household debt reached an all-time high of 16 trillion dollars. Credit card debt is on the rise. One in three Americans making 250,000 is living paycheck to paycheck, and CEOs are warning that people are burning through savings at an alarming rate which could run out in months. This isn't just online rhetoric either; personal savings rates have recently hit the lowest level since the Great Recession at just 4.4 percent. One in four people have absolutely nothing saved for retirement, and sixty percent have less than 500 in savings.

So when I heard that, I immediately thought to myself, this is unacceptable, and we have to make a change starting right now. Plus, the more I looked into it, the more I realized that these issues run much deeper than expected and that deserves an explanation so people could either avoid these mistakes or they could turn their own situation around so that they could make and keep more money, even if you don't make anything extra.

Although, really quick, I just want to thank each and every one of you for your support. When you hit the like button for the YouTube algorithm, it seriously makes a huge difference for my entire channel. The more people that like a video like this, the more the algorithm is to recommend this video to a brand new audience who could also obliterate the like button and start the process over again. So thank you guys so much for doing that, and also, a big thank you to Truebill for sponsoring this video, but more on that later.

Alright, so here's where all of this begins and where the trouble starts. A recent report found that the U.S. median household income is around sixty-two thousand dollars a year, which that in itself is not the problem. But instead, it's where all of that money is going. Because at the end of the day, it doesn't matter so much how much money you make, but how much of that you get to keep. And this is where things aren't looking so good.

With rising costs and skyrocketing inflation, the average U.S. household spent roughly seventy thousand dollars last year. And when you break down where all of that money is going, it begins to add up. First, twenty-one thousand dollars a year, or roughly 30 percent of the average household budget, goes to housing. Next, ten thousand dollars goes towards transportation. Ninety-four hundred dollars goes towards taxes. Seventy-three hundred dollars gets eaten up towards food. Okay, that was bad. Had pun; we'll move on.

Seven thousand two hundred goes towards Social Security, and it keeps going and going and going. When you add all of this up, the amount left over is pretty much nothing. Once you account for non-housing related consumer debt, with the average credit card balance at fifty-five hundred dollars, the fact is for the majority of Americans, there's nothing left over for emergencies. Very little of that is going towards retirement, and there's not much of a buffer to soften the blow should something happen.

On top of that, there's another side effect of not having enough money left over, and that's the profit you miss out on by not investing your money. When everything you have goes towards expenses, you inadvertently don't get to participate in ways that your money continues to grow. That's why the top one percent has seen such tremendous growth over the last 40 years, because they have the disposable income to invest in the markets.

However, at least the good news is that if you want to grow your wealth exactly like the one percent, there is a step-by-step blueprint that you could follow to get the exact same results. And even if you're not in the top one percent yet, you will be eventually if you could stick with this consistently. First, have a budget by tracking your expenses and reducing unnecessary spending. No joke, without exaggeration, if you could just do this one step, even if you skip the rest of the video, I guarantee you're going to be ahead of 99 percent of the U.S. population.

Because truth be told, almost nobody does this. If you've ever found yourself short on cash or wondering where all of your money went, you need to do this immediately. To start, all you need to do is itemize all of your expenses into income over the next 60 days, as in every penny that goes into and out of your account. Personally, I've been using the free services at Truebill.com, and they just so happen to be sponsoring today's video. But honestly, the choice is yours, or you could create your own Excel spreadsheet.

But from there, you can see exactly where your money is going, determine if you're spending money on things that don't matter, like avocados and Starbucks coffee, or otherwise, if you're spending money on stuff that you never really thought about. Doing this helps you discover whether or not you're overpaying for services, if you should cancel subscriptions you're not using, or if you could shop around for cheaper alternatives. I guarantee one hundred percent that if you could just do this one step, you'll be able to cut back without even realizing it.

Everything that I have seen, you could probably save about 10 percent of your income just by tracking your expenses, being diligent about your spending, and cutting back as needed. It's a very, very simple step, but it's highly effective if you want to have extra money. Second, from all the money you're now hopefully saving, create an emergency fund of at least three to six months' worth of your expenses. For those unaware, an emergency fund is simply the money you have sitting on the sidelines in cash to be used only in case of an emergency.

Having this type of three to six month emergency fund means that you're not going to have to rely on credit cards to pay your way through an unexpected event. You won't have to sell stocks for other investments during a time when they may have declined in value, and you won't have to take on high interest rate debt should something happen. Now, obviously, there will be people out there who complain that the money is losing value to inflation, it's not making you anything in return, and it's otherwise just being wasted away.

But from my perspective, an emergency fund can actually save you money and act like an insurance policy if poop were to hit the fan. Just consider that it's a lot better to lose seven percent to inflation than 30 percent in the markets during a time where you need money and can't wait for it to recover. And when it comes to myself, since I have slightly more overhead, I make sure to keep at least a one-year emergency fund at all times in cash to cover absolutely everything for both myself and my business.

That means if something catastrophic happens and all of my income goes to zero, all of the rental properties are vacant, and all of my investments plummet to nothing, I'm at least good for a year. And then after that, I guess I'll make it OnlyFans. Now, personally, I've been using Ally Bank for a chunk of my emergency funds because they're currently paying a 0.75 interest rate, and they have an easy-to-reach customer support team that always picks up the phone in a minute because I'm extremely impatient.

But besides them, there are plenty of other high-yield savings accounts that you could use, and if you're curious which ones those are, I'll link to a few down below in the description. Of course, before we go into the third step, it's extremely important to manage your finances on a regular basis; otherwise, all of this is for nothing. I think most people realize that it's easy to start off strong, but it's difficult to stick with it long enough for it to actually make a difference.

So thankfully, our sponsor Truebill is there to help. Truebill is an all-in-one finance app that helps you save more and spend less. This personal finance app allows you to manage your subscriptions, lower your bills, create a budget that works for your income, and build your savings all in one place. And no joke, this is the app that I use on a daily basis to keep track of the expenses that otherwise would have gone missing.

For example, I have them send me email reminders when I have subscription charges coming up, or if I spend too much money on all-you-can-eat sushi, so I could stay on track with my monthly budget. I really like that Truebill identifies your useless subscriptions and lets you cancel with just a tap. Truebill does all the hard work for you so you don't have to spend hours looking through all your bank statements to find the charges you must have missed. They'll even help you lower your bills; all you got to do is upload a photo, and from there, they'll negotiate on your behalf to bring it down and save you money.

Plus, it's incredibly simple and easy to use. They don't sell your information to third parties, they don't store any of your online banking credentials, and they use the same security protocols as banks to make sure your information is fully protected and encrypted. I mean, let's be real: you work really hard for your money, so why not keep as much of it as possible with Truebill's help?

So if you're interested in checking them out, learning more, and most importantly, saving more money, feel free to use the link down below in the description or go to Truebill.com/Graham to get started today. So thank you guys so much. Now, with that said, let's get back to the video.

Alright, so after you've done that step three, take advantage of any employer-sponsored retirement plans. This means if your employer offers what's called a 401(k) match, always take it. If you decide to ignore this entire video but only pay attention to this one thing, you could make tens of thousands of extra dollars for maybe 10 minutes' worth of work.

And here's what I mean: many employers offer what's called the 401(k) match, where they will match your contribution dollar for dollar up to a certain amount within a 401(k). So, for example, if you contribute a thousand dollars, they will also invest another thousand dollars right off the top just for making the contributions with no strings attached whatsoever. Like, you know, the scam where people say, “Hey, you send me one bit Bitcoin and I'll send you two back?” Well, that's basically what's happening here, except it's not a scam.

The 401(k) employer match is as close as it gets to free guaranteed money. And the mind-boggling part is that most people don't take it. It's kind of like saying, “Hey, here's a free thousand dollars,” and the other person says, “Oh no, it's okay, I'm good. I really don't want the extra money; you keep it.” But since you heard it here, let me be the first to tell you to take the money. Ask your employer tomorrow or today, if you're watching this at work, if they have a 401(k) match. If you do, contribute as much as you can to maximize that 401(k), and then just thank me in the comments for the free money.

Oh, and then after that, you should probably get back to work so you don't get fired. Not to mention, if you're self-employed, you could also make your own employer contribution in what's called a SEP 401(k). Just go ahead and Google that because it's a great way to save on your taxes and save a lot more money at the exact same time.

Fourth, once you've done that and got some free money, the next step is to pay down all high-interest rate debt. Now, unfortunately, debt like this is on the rise, with the highest quarterly increase since 2007. Auto loans just so happen to be the fastest growing category, but credit card debt isn't too far behind. And with the rise of buy now, pay later, people are beginning to dig themselves deeper and deeper into a bottomless money pit.

That's why if you have any outstanding debt above a six percent interest rate, you should probably pay it down as soon as possible. And to do that, there are two different strategies that you could use. The first is called the Avalanche method, and mathematically, this should leave you with the most amount of money left over by the time all of your debt is paid off. This works by paying off the highest interest rate debt first and then working your way down until everything is completely paid off.

By doing this, you get rid of the debt that's costing you the most money first, allowing you more money left over to pay off everything else while you profit the difference. On the other hand, the second strategy is the Dave Ramsey approach, otherwise known as the snowball method. This works by paying off the smallest balance first, regardless of the interest rate.

And once that's paid off, you take that payment and roll it into the next biggest loan until eventually you snowball that method into being completely debt-free. Dave Ramsey suggests that this method works by giving you the psychological boost of seeing faster results by paying off smaller balances, and that, in turn, helps keep you on track. The downside, of course, is that you'll likely end up spending more money by not paying off the highest interest rate first. But if doing this means you get rid of consumer debt, either way, I'm happy with it.

In terms of my own philosophy on this, I believe that if you have any consumer debt above a six percent interest rate, it's probably best to pay it down as soon as possible. On the other hand, anything under a five percent interest rate could usually wait while you invest the difference, especially if it's good debt that's attached to a rental property or a business that makes you more money than you spend. But again, that's just me.

After that though, now we get into the good part—step five: use that money to invest back into yourself so that you can make even more money. This could be buying books; it could be learning a new skill; it could be reinvesting back into a business. I just believe at this point self-education and improvement is absolutely vital. If you're in a position right now where you're already doing as much as you can and you have no money left over, then there's no way around it, and you've got to work to increase your income.

The fact is, there's only so much that you could reasonably save before you can't save any more money, and at that point, you have to start looking at yourself. On the most basic level, it was found that people who switched jobs every two to three years make nearly 50 percent more than someone who stays within the same company. And if you switch jobs just once, you could see yourself with an average of a fifteen percent pay raise.

You could also start working on a side hustle, taking on more projects, working more hours, learning a new skill, or changing what you're currently doing. Plus, once you have that emergency fund and have paid off higher-straight debt, you'll be in a position where you could take on more risk to change careers so that you will have more money to manage.

Finally, six: you could get all that extra money working for you by number one, investing in a Roth IRA. This is an account that allows you to invest after-tax money, and after the age of 59 and a half, all the profit you make within the account is completely tax-free in years to keep. As of now, you're allowed to contribute up to six thousand dollars a year, and best of all, all the contributions could be taken out at any time without any penalty should something happen.

Opening up an account like this is incredibly easy to do; most brokers just have retirement account options, and probably within 10 to 20 minutes, you could have one set up and ready to invest. When it comes to building your wealth, having this available to you is absolutely priceless. And because I've made plenty of other videos on this in the past, I'll link to some of those videos down below in the description for more information.

Then, only after doing everything that I mentioned should you be investing in taxable accounts or making any other investments. This is after you've tracked your expenses, after you've got an emergency fund, after you've taken the employer match, after you've paid down high-interest rate debts, after you've increased your income, and after you've taken the Roth investment. Then everything else goes here.

From this point on, it's really all about increasing your income to be able to invest as much money consistently long term as possible. All of this is not meant to be something that could be done in a week, and some people potentially take years to get all of this in order. But I gotta say, from what I've seen, almost every single wealthy person that I met follows these steps in order to get to the final part of this video where they can increase their income, invest even more money, and subscribe if you haven't done that already.

Because the hardest part is just starting, and you could start right there with the subscribe button. So thank you guys so much for watching. Also, feel free to add me on Instagram, and also I just want to announce that I have a weekly newsletter where I go over all of this information with even more detail that I don't include in these videos. So if you want to be a part of it, just sign up down below in the description; it takes you like two seconds. Again, that's totally free too. It only goes out like once a week, so if you want to be a part of it, the link is down below. Thank you so much for watching, and until next time.