Financial Armageddon is coming. Here's how you prepare...

Are you worried about financial Armageddon and how to protect yourself? Don't panic, I'm here to help you prepare!

In today's episode, I share my thoughts on the current state of the economy and what it means for your financial future. I break down the factors contributing to economic uncertainty, from high debt levels to market volatility. But more importantly, I provide actionable strategies to help you weather any storm and come out on top. From building your financial literacy to managing debt and investing wisely, I cover it all.

Want to take control of your financial destiny, no matter what the future holds? Tune in to the full episode now!

IN TODAY’S EPISODE, I DISCUSS: 

- The importance of financial literacy in navigating uncertain times

- Why liquidity matters for both safety and opportunity

- How to manage debt wisely and avoid destructive debt

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If you liked this episode, you'll love these ones:

• Are You Really Living a Rich Life or a Bankrupt One?
• A New Path to Conversation, Connection & Conversion with Natasha Willis
• Fulfillment & Wealth Through a Personal Brand with Rory Vaden
• Build Wealth & Live a Rich Life at Any Age (My son's journey)

RECOMMENDED VIDEOS FOR YOU 

If you liked this video, you'll love these ones:

• Are You Really Living a Rich Life or a Bankrupt One?: https://youtu.be/yrredqHf09s
• A New Path to Conversation, Connection & Conversion with Natasha Willis: https://youtu.be/u0GEulUo4Tk
• Fulfillment & Wealth Through a Personal Brand with Rory Vaden: https://youtu.be/uJAee2sVqco
• Build Wealth & Live a Rich Life at Any Age (My son's journey): https://youtu.be/5p7OVp2pAbM

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The key to building the life you desire and deserve is to build your Money Machine—a powerful system designed to generate income that’s no longer tied to your work or efforts. This step-by-step guide goes beyond the general idea of personal finance and wealth creation and reveals the holistic approach to transforming your relationship with money to allow you to enjoy financial freedom and peace of mind.

Part money philosophy, part money mindset, part strategy, and part tactical action, these powerful frameworks will show you how to build your money machine.

TAKE THE FINANCIAL FREEDOM QUIZ:

Take this free quiz to see where you are on the path to financial freedom and what your next steps are to move you to a new financial destiny at http://www.YourFinancialFreedomQuiz.com  

Transcript

0:58

This is the affluent entrepreneur show for entrepreneurs that want to operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth so you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect so you can scale your business, scale your money and scale your life while creating a deeper impact and living with complete freedom, because that's what it really means to be an absolute entrepreneur. All right. This episode is going to be a little different. This one, because I want to talk about some things that are going on. You know, I'm watching, we've got all kinds of stuff. Let's just face it. You know, you got an election coming up. You've got a, an assassination attempt on a past president. You've got the current president stepping out of the whole campaign. You've got all kinds of stuff going on. Now this is not a political episode at all. In fact, I steer clear of politics. But I do want to talk to what is going on financially, economically, the things that maybe that you are aware of, you aren't aware of my thoughts on it and what to do to make sure that you're taken care of. It doesn't matter what's going on. All right, so here's the thing. Let's just talk about the economy first in general, just so we start to understand where we are here. We had the pandemic and we had the drop in the stock market and we had all those things. I'm going to jump to the iPad for a moment here, because one of the things that we have is we have high. Well, we did until, until the second half of the year. We had high spending. And what do I mean by that? Well, this is where our GDP was growing at a, at a high rate. At a relatively high rate. This is where we started to see inflation and that kind of thing. But here's what we've seen recently is that we aren't shrinking, but we aren't growing as fast. In other words, we are slowing. Now there's this question of, are you in a recession? Is it a recession? Now let's just talk momentarily. What is a recession? Just so you understand, technically, the technical definition of a recession is that is it is two consecutive quarters of negative GDP growth. In other words, our spending goes down for six months. And when you look at the data that exists currently, technically, we're not in a recession. Okay. The GDP has not gone down in the last six months. Now, they will adjust GDP based on new data, and they might adjust it backwards, and they might find that maybe we were in a recession at some point in time. So technically speaking, currently we're not in a recession. And this is what a lot of the proponents say. They say, oh, economy strong, the stock market's at highs, everything is going well and all that. But you know what? The reality on the ground with you and I may feel a little different. You go to the store, things are more expensive, or you go to the store, they're not more expensive, but you get less for what you pay for, which makes it more expensive. And so you look at the gas pump, you look at housing, you look at interest rates. There is no question, recession or no recession, that the public, you and I are feeling the pinch, are feeling the choking effects of higher prices, higher cost of living. And along with that creates uncertainty, uncertainty about how do we survive, how do we thrive, how do we sustain ourselves, is it ever going to go down? All that uncertainty creates angst. Okay? Now, why are things slowing? Why did they speed up all kinds of things that you can look at. Here's what's really transpired. And then we got to go back a little ways and look at what really was working in our world. Okay? And now I'm talking about going into the pandemic, because in order to keep the economy running during the pandemic, what happened was that our government had the feds basically increase money supply, make money more available through grants, through loan programs, through, through various different programs, we're to the tune of $5 trillion. Okay? $5 trillion. Now, when you put money into the market and you make it easy for people to get money, whether it is through loans, grants, or other programs, what do you think happens? Spending happens. And it's the typical economic trends or laws. If you look at it and say spending is going up, which really is another way of saying demand is going up, and when demand goes up, what else goes up? Prices go up. Well, what is prices going up? That's called inflation. Okay, so things got more expensive, but yet how did we, how were we able to pay for it? Well, we paid for it by taking on debt. We paid for it by doing, doing things that we wouldn't normally do because we had access to funds that we didn't normally have. Okay? And I'm just trying to lay the foundation for you. And like I said, this is not to create fear. This is to create understanding, awareness, and then give you some things that I think you need to focus on. Here's what we've seen. If you start to look at the data, people have taken on much more debt. You've had housing and house values that have increased. So they had equity in the house. And now people started tap the equity. And at a time where if you tap the equity to invest the money, in other words, investing to create more cash flow, to create more wealth, that's one thing. Because now that investment begets investment begets investment, and now you have this overall growth. But that wasn't what's happening. You were tapping equity refinances, tapping the equity of your home for purposes of living. So it wasn't for investing, it was for spending. Or what we've seen is an inordinate jump in hardship withdrawals from 401 ks. So what we're doing is taking from our future retirement to take care of our current day. Because what happened is that all that crazy spending that may have gone on during the pandemic years because money was free, all of a sudden, things got tight. Interest rates were up, costs were up. We didn't have the money coming in. There's some unemployment. All that stuff starts to come to roost. Our credit card debt hit the magnitude of over $1.1 trillion. So we are living on debt. This is a house of cards, cards in spending by spending our future away, that has to get paid. Now, I'm gonna. I'm gonna tell you, it's not just us doing it. The government's doing it. When they turned around and accelerated $5 trillion of pandemic funding into the money supply, what did they do? They borrowed it, too. They borrowed it from you and I in the construct of treasuries and issuing bonds, but they borrowed it from foreign countries. And so. So there's a lot of debt floating out there right now, $35 trillion in government debt that has an interest payment on it that is going to come due. The interest on it alone is astronomical, and the only way they can pay for that is taxes. On who? You and I. All right, so what happens is that this can get out of hand pretty quickly if we're not careful. And taxes, it's, you know, the interest on the government debt is one of the fastest growing expenses on the government right now. And so there is a lot of things that I think at play. I don't have all the answers. I just know that that math is math. Wealth is wealth. Money is math, and it will solve the problem at some point. You cannot pretend that two and two is six all day long. Sooner or later, two and two is going to equal four. And when it does, we have to pay the difference, and that's going to come home to roost. Now, does that mean that you have to be scared? No. Does that mean that you have to be frugal? Maybe. Does that mean that you have to be smart? Yes, absolutely. And so this, like I said, this is not about creating panic. This is not about creating fear. This is about creating awareness. There's plenty of people that are creating panic and fear out there. Go to any, any news station or so called news station, let's call it propaganda station or opinion station, you can go to any of them. And what they're really doing is stroking the flames of fear. Because fear sells. Fear creates eyeballs. Fear creates talk. Fear creates viewers. Fear creates followers. And so they are doing it because what do they need? They need advertisers, ratings, and they need viewers. They need followers. They're not providing us real information. Here's the other side of it. Aside from the escalating debt, markets historically go up and down. Economies historically go up and down. There are times of boom. There are times of bust. There are times of recession. There are times of, of growth, there are, there have been times of depression. There have been extended recessions. Okay? It's happened in the past. It will happen again. The stock market will hit a high. It will go into correction territory where it ends up in a bear market. A bear market is a decline of 20%. Okay? It's happened. Here's the thing. We know the economy, the people, the stock market is resilient. It never doesn't recover. It always recovers. Now that does not mean that someone can't get hurt in the process because there are losers in it. There are those folks that actually get hurt. Because if we do hit a recession, there are job losses. There are people that can't pay for things. There are people that are struggling. So there, there is risk. There are things that can happen. But the thing that we can do is to control the controllables. Control the things that you can control. I can't control what the stock market's going to do. I can't control what the government's going to do. I can't control what the election is going to do. I certainly can't control what any of those politicians are going to do, no matter what side of the aisle they are. Okay? But what I can control is the things in my world. What I can control is my response to it. What I can control is how I take it. On emotionally and how I allow it to infect or affect my life, I can control those. And when I focus on the things I can control and prepare for the things that I can't control, we are better served to grow. No matter whether we have a recession coming or we have a market correction coming, or we have higher taxes or we have more debt. We need to work within our world. So what are the things that I think that you need to focus on to navigate this, no matter what happens? Because the government's going to do what the government's going to do. Politicians are going to do what politicians do. Okay? Interest rates are going to go up. They're going to go down. The Fed may decrease them, and they come later in the year. Who knows? But if we start to bank on that and anticipate that and pretend that that's what's going to happen or anticipate like we have a crystal ball, we might be mistaken. How do we prepare ourselves? The first thing, and this may sound really, really basic, but I want you to ask the question, okay? The first place is your financial literacy. How well do you understand financial concepts? How well do you understand some of the elements of the economy? I'm not saying to be an economist. I'm not saying to be a financial analyst, but do you understand how supply and demand work? Do you understand what drives the stock market? Do you understand the fundamentals, fundamentals of money management, of understanding smart money management. If you don't, if you don't, y'all, and even if you do, you should have it. My book, building your money machine, I break it down for you. I give you the recipe. I give you the prescription. I have being, being a dude that has, that is, I'm gonna be 63 in about a month or so. All right, so I have seen a few things. I've seen the.com bust. I have seen the SNL crisis. I have seen 40 rate hikes, fed rate hikes. I have seen recessions. I have seen Black Monday, black Wednesday. I have seen all of it. And here's the thing, still here. And the key is to not allow the emotions to take hold of you and start to make emotional choices with your money, with your investing. I did. At one point, I got out of the market. At one point, I stopped investing. I was freaked out, and I didn't even get on the sidelines. I got in the stands. I did not participate. And I did that for over a decade. And it cost me dearly if I look at the math now, because my fear would not let me get back in the game because it was partly fear, but it was mostly a lack of understanding, a lack of financial literacy that kept me out of the game and literally cost me millions. Cost me millions not because I lost millions, but I lost the possibility of millions because I wasn't participating. You know, I wasn't in the game doing the, doing the thing. So spend some time understanding what your level of financial literacy is. Get in the circles where you can have financial conversations that are real, that are true, that are things that you can control, understand smart money management skills, understand what it means to plan, understand having the right recipe to create wealth, to sustain yourself, to be safe, to create that unshakable foundation. Everything I do is built to say, hey, let's create an unshakable foundation. Let's find safety first, growth second. I don't need you to swing for the fences. I don't need you to speculate and think that that's going to happen. What I want you to do is build a solid foundation so that no matter what happens, it may be a little bit painful, but it isn't going to destroy you. Okay? So literacy, financial literacy is key. Now, we follow something in chapter twelve of my book. We talk about the idea of the wealth priority letter. I literally tell you what to do with each dollar as it comes in. So you know specifically how to allocate the dollar to make it work the best for you. Subtitle of the book is getting your money to work harder for you than you did for it. That's the key to creating wealth. Okay? The second piece of this and the bottom part of the wealth priority ladder is truly about your liquidity. Your liquidity, call it cash matters. Okay? Your liquidity and the cash matters. Having liquidity when there is uncertain times, if you have uncertainty around your job, if you have uncertainty around the economy, if you have uncertainty around your investing, having liquidity, having cash on hand is the thing that will give you peace of mind. It is the oxygen to allow you to survive. Now, you might sit back and say, mel, I don't have much cash. Well, now you know what you got to focus on. We have to get ourselves in a position that we start to build enough liquidity to carry us should anything happen, and I mean sustained, not, not one month, not two months. I'm talking nine to 18 months that you know, that you can, you can hold off, that you can carry yourself. It may or may not happen. But here I look at your cash on two sides. The first is, is you can call it emergency fund, but it's like your seatbelt in the car, y'all. And hopefully you do wear a seatbelt. But every time you get home safely, do you sit back and say, well, I shouldn't have worn my seatbelt today. See, the seatbelt is something that you know is necessary. You wear it because it's there and you hope you never need it. Your liquidity, your emergency fund, you hope you never need it, but it is there for peace of mind. It is there to take care of you. It is there to sustain you. You could have a medical issue like I did. You could have a job issue, you could have a relationship issue. It could be anything that triggers it. So liquidity matters from a safety standpoint, but it also matters on another piece that a lot of people don't think about. When there is uncertainty, there is opportunity. When there's uncertainty, there's opportunity. And the people. More millionaires are created in uncertain times than any other time. Why? Because uncertainty creates opportunity. And those that have liquidity can take advantage of it. Those that have liquidity, there may be an opportunity to buy a piece of property because someone needs to get rid of it. And if you don't have the liquidity to get in the game, you miss the opportunity. So I want you to have liquidity for safety and for opportunity. That leads me to another piece of this. And this should be no matter what's going on. Three is avoid debt, especially destructive debt. And what I mean by destructive debt is debt that is to sustain your life. If you heard me earlier, there are people that were spending money, but they were doing it through equity refinances of their homes. In other words, they were spending their home's equity to live. They were taking 401K loans or withdrawals to live. I saw, you know, they've got credit card balances that are going up into the trillions to pay for lifestyle. You, that. That is a demonstration of people living well beyond their means and financing their current lifestyle with their future earnings. That's. That is not sustainable. And so during this time, this is a time to, one, eliminate debt. You've got high interest rate debt. I saw someone sent me a question, and his interest rate on his debt was 29.99% on his credit card. Y'all, that will destroy you. So we have to be on a debt payment plan, get ourselves out of debt as soon as possible. So if anything happens, you're okay. Not because you're panicked, but you're prepared. So I want you to get on a debt payment plan. If you don't know how to get on a debt payment plan, get my book building your money machine. I walk you through it. Also, I want you to go get a tool that is free. Go to melabraham.com node. Grab my debt breakthrough calculator. It will help walk you through it. Get on a debt payment plan. Get rid of the destructive debt in your life and that will give you some breathing room. So manage debt properly at this time. Now, this means that the next piece I want you to look at is this idea of investing. I know, I know. But understanding it, understanding investing becomes really important. Your greatest investment is going to be in yourself, to grow, to learn. If I'm going to build financial literacy, I need to understand my investing literacy. Do I understand what drives the stock market? What is the stock market? How can I invest properly? How can I create? I have done episodes and videos on the probabilities of success in the stock market. When you do it right, you can have the stock market goes up eight out of ten years, eight out of ten years, 80% of the time when you look at things through a long term view. So it's important for you to start to understand what it takes to invest and get your money to work for you. Not save only, but invest, get it working for you. Okay, number five, once we start to understand that is, how do you kind of stay informed? In other words, how do you keep your finger on the pulse so you can be in the money conversations? Well, I think you stay here. If you have not subscribed to this channel, subscribe to this channel because that's what I do here. All right. Stay with me. But also readdez listen, have critical thinking. Stay informed along the journey. Okay. Two more things I want you to think about during this time. Number six is get in the game. Don't do what I did. Don't sit on the sidelines and wonder what to do. Get on the field. Get on the field, get in the game. You cannot win the wealth game on the sidelines or in the stands. You have to be investing. So increase your financial literacy, understand money management skills, track your debt and make sure that you've controlled your debt. Build your investing knowledge of doing things, doing things that are, that are long term, sustainable, not speculative, not gambling, not, not anything like that. Okay. Something that has proven, okay. And then there's one kind of investment you might want to consider at some point. Get in the game. And that is protective investing. I don't have a lot of this, okay. But what I'm talking about here is like gold, okay? When things decline, gold seems to hold its, hold its value, but gold is golden. You can't use it for a ton. It's hard to store. It is there, but it is something that has been known to actually hold its value over a period of time as a protective asset. I don't see it as an investment. I see it as just a protective hedge should there be a decline. And so these are the things that I would focus on to prepare. Is there Armageddon happening? I don't know. All right. You know, the media is going to tell you that because it's going to get eyeballs, it's going to get viewers, it's going to get ratings, it's going to get, then it's going to get advertisers. But the fact is this, we do know economics and economic times will ebb and flow. They will cycle. They will go up and down. They have for decades and decades and centuries, and they will continue to do it for decades and centuries. The question is, how do you navigate it and control the things that you can control and allow the uncontrollables to happen and not try to be affected by it and the way you do it are these seven things. All right, so I hope this helps. I hope that this settles you down a little bit as you start to prepare and say, hmm, if the market goes up, it goes up. If the market goes down, it goes down. But I've used sound principles. I am following a process and a recipe and a prescription that works. And I know long term things recover. We're resilient people, resilient economy. I don't see, I don't see Armageddon happening. But even if it does, we're good. All right, so I just, this was a different kind of episode, but watching what I see out there, I just wanted to hopefully give you a little peace, give you a little direction, and give you a little courage to go out and do the things you need to do to take control of your money, your wealth and your financial future. It's not in someone else's hands, it's in yours. All right, listen, if you know of someone that might need to hear this message or get some of this stuff, do me a favor, share this out. Let people know. Let's share the message. All right? Let's build the journey together. All right? Until I see you on another episode or out there as I'm out speaking or just on the road, always, always strive live a life that outlives you. See you soon. Thank you for listening to the affluent entrepreneur show. With me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com.com group, and I'll see you there.