Would you like to know what I learned losing 1 million dollars because this might help you avoid the mistakes I made?
What did I learn losing $1 million?
I'm grateful that since 2014 I've made $1.6 million online.
Now where did it all go?
Well, I hardly have any of it left aside from a few thousand.
I'll share my lessons here, so that you can learn from what I've done and you don't have to make the same mistakes I made.
Now naturally in the course of making $1.6 million online, I certainly had some necessary expenses. However, the necessary expenses were only a few hundred thousand dollars. I easily could have kept $1 million from what I made online.
Here's the number one lesson I've learned and the number one reason most people don't build wealth, even though they increase their income.
What I did is when my earnings went up, when I started making more money, I increased my expenses.
Now that seems very common and it seems very logical when you start making more, you might buy a better house, you might buy a nicer car, you might start taking some nicer vacations and that's why most people never accumulate any wealth.
The second thing I learned is that I was not quick to drop my expenses when my income went down. A lot of us are very quick when we get a promotion at work. When I started making a thousand dollars a day, I immediately went out and bought a new car for a $900 a month car payment. It didn't seem like a big deal to buy a new car with a $900 a month payment when I was making 30 plus thousand a month.
When I lost that $30,000 a month, it did seem like a big deal to have a $900 a month car payment. The car payment did not go away, however.
While income can almost instantly manifest and go away, when your expenses come along often you can't just drop that $900 a month car payment.
What I noticed is that when my income went up, I would often increase my spending quickly, but when my income went down, I would be very slow to drop my spending.
For example, I recently cut $2,500 a month in expenses. All of these expenses should have been cut a year or more ago when my income dropped to the lowest in 2014 after I took a year to make music and play video games.
It took me a year to cut expenses like to call my internet company and say, "Hey, can you lower my price?" And they did. They lowered my price over a hundred dollars a month. I could have easily made that call a year ago.
It took me over a year to cut unnecessary expenses. For example, I had Hulu and Twitch Prime. I had Spotify, I had Netflix, I had HBO, I had Amazon Music and iTunes, and YouTube.
I was using all these different music and live-streaming services even though I wasn't actually using them that much. When I was making a lot of money every month, I didn't think it was a big deal to have a bunch of small expenses.
What I saw is that all those little expenses add up and each one of those takes time and energy to cancel, and then you have this guilt about not using them.
I also learned to buy things used. I've probably spent $50,000 at least on equipment for my studio and I just sold all that equipment for a few thousand. If I would have bought all my equipment used, I would have saved at least $40,000 maybe more.
On top of that, I didn't even need all that equipment.
I'm doing these live-stream videos on my phone like this. I'm actually getting a higher click-through rate and better engagement making videos on my phone in my backyard than I did setting up this really complicated $50,000 studio.
What I learned losing a million dollars is to keep a simple life, to keep your expenses low even when you make more money. If you can do with one car instead of two, do that. I've also found it difficult to do things like reducing. I've had two cars now for my wife and I since we first started dating aside from a few months where we sold one, and then I bought that $900 a month car payment.
Now, even though we haven't driven two cars at the same time for years, I've still been holding onto them and in fact, until recently I was paying about an extra $70 more than that, $100 a month in car insurance for this car I barely drive, and then I racked up credit card debt on a car when I could have just sold my car and paid that credit card debt off.
I lost money by getting out of control on my expenses and by constantly focusing on making more money and investing more and more money on these crazy schemes to try to make a lot of money instead of living a simple life, instead of just cutting my expenses to the minimum, and then saving the money I've got paying down the debt I've got.
I managed to lose my money because of my mindset, because I also thought this can't last. When I started making a lot of money, I had this mindset that this can't last and that contributed to it.
I hope this has been helpful today to share the lessons I've learned losing a million dollars, and if this has been helpful for you, you can go to Jerrybanfield.com and take any one of my online courses for free, and show up tomorrow for the live stream here on YouTube.
I love you.
You’re awesome.
Love,
Jerry Banfield
Edits from video transcript by Michel Gerard.
