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The One Video That Changed My Financial Life

Caleb Guilliams 17 January, 2025

The One Video That Changed My Financial Life

All right guys, I'm gonna be reacting to one of the videos that has had the biggest impact in my life. It only has a few thousand views, but when I was in the process of taking over the bank's investment department, kind of worried inside about knowing nothing about money, this was a video that I stumbled upon. I became friends with Todd Langford. I use Truth Concepts, I've been to multiple of their trainings, and I'm a huge fan. If you're an advisor or an agent in the space wanting to do the right thing for your clients, I highly recommend you use software and calculators, and I think Truth Concepts are one of the best ones out there.

In this reactionary series on the BetterWealth channel, I wanted to start with a video for which I have a ton of gratitude. It really has helped me build the foundation of understanding money — understanding opportunity costs and realizing that every time you lose a dollar, you don't just lose that dollar, but you lose what that dollar could have earned you for the rest of your life. So, lots of good things can be learned here, and I just want to highlight Truth Concepts and their channel. If you want to learn more about money, go binge watch their videos. It can be dry at points because it's not super graphically pleasing, but the underlying math and lessons learned are unbelievable.

Without further ado, I'm going to be reacting to the video. I'm going to do my very best to not talk too much, but overall, it'll be a great video that I haven't seen in multiple years. I probably watched it five to ten times when I first got into the business because it's been so fundamental for me, but it's been a while. So without further ado, I'm going to pull this up. If you want to learn more about Truth Concepts, I'll link all their info. If you are an advisor who's watching this video and wants to learn about how to potentially use Truth Concepts or go to one of their workshops, I would highly recommend it.

Here's a disclaimer: I normally watch videos at like two and a half times speed, which sounds crazy. It's hard for me to watch a video at regular speed. So I'm going to do my very best, and I would love if you could share in the comments: am I the only one? Do you guys listen to me on a podcast or YouTube sped up, or do you listen to me at regular speed? If you've never listened to a video fast, I would encourage you to start. Life is really short, and I've found that you can consume a lot of information. Our brains are pretty gifted and well-designed for that. Now, let's jump into max potential, a fundamental calculator that's going to be good.

Understanding Financial Potential

Let's go out 35 years. We won't use any current assets. Let's use $90,000 of combined income. If we've got a family making a combined income of $90,000 a year over 35 years, that's about $3.1 million. It's wild and hard to realize $90,000 compounded at zero interest. So it's just $90,000 multiplied by 35, which gets you that number over $3.1 million. That's the amount of money that would pass through this family's hands over this 35-year timeframe.

Would we be happy if everything was going up by 4% a year, and we have gotten to a point where we were spending every bit of what this is? Everything else is going up, making it hard to continue to eat. So we would expect that our income has to go up at least by 4% a year, correct? If we do that at 4%, just to keep up with inflation, that's $6.5 million. We often take for granted our ability to work, which is one of our greatest and best assets. Over this timeframe, that's $6.6 million, where the last year's income is $341,000. That's what's so amazing about inflation.

We can look back and see that this has happened to families for a long time. Looking towards the future, if $90,000 of income equals $341,000 after 35 years, is $341,000 going to be any more than $90,000 is, if inflation's 4%? I want to highlight what Todd is saying: if you start with $90,000 today, assuming inflation and you're making a 4% raise, you would have to spend $341,000 in the final year to have the same buying power as $90,000 today. However, remember this is just a tool for analysis, and is only as good as the inputs we provide.

It's wild to think that maintaining a $90,000 buying power over 35 years would eventually result in such a high number of $341,000 required annually. Even more importantly, due to tax brackets' structure, would $341,000 after-tax buy as much as $90,000 does today?

The Impact of Taxes and Debt Service

Letting everything else stay the same but adjusting total taxes to 35%, including federal income tax, state tax, local tax, sales tax, cell phone tax, hotel tax, gasoline tax, and even potential future taxes, you pay out $2.3 million in taxes. This impacts long-term wealth by taking away over $5 million worth of future assets. Why?

Dollars that are taxed early on quit earning for the rest of the time period. Every dollar that comes out stops earning for the rest of the timeframe, leading to an actual loss of $5 million despite only paying $2.3 million in taxes.

Every unnecessary tax or expense stops contributing to your long-term wealth. That’s why, though you only paid $2.3 million, the actual loss to your maximum potential is much higher. This illustrates the point that it's not just about the dollars you lose today but the compounded effect on your max potential—or what those dollars could have earned you.

Statistics show that 34.5% of average American income goes toward servicing debt. Using that 34.5% number reflects another $2.3 million going out in debt service, taking another $5.1 million away from future assets. Finally, lifestyle expenses set at 28.5% result in 1.8 million dollars in expenses and 4.2 million dollars lost in future potential, leaving barely over 3 quarters of one year's income in savings.

Rethink Investment Risks

Despite traditional advice to take on risk for better returns, risk means increased likelihood of loss. Simply put, if you earn 100% on zero input, you still have nothing. Necessary lifestyle adjustments aside, if you can save on taxes, paying less by moving assets into tax-advantaged areas, you can reduce debt and take real steps towards fixing long-term financial issues.

While investment returns are vital, significant impacts on wealth come from better saving and spending decisions. Understanding how money works by saving money over taxes and reducing debt while maintaining a lifestyle conducive to saving can make a tremendous difference.

Thank you for your time and energy on this blog. We are committed to helping people live more intentionally by making personal finance posts, business posts, and encouraging people to be intentional and powerful in their lives.

Full Transcript

All right guys, I'm gonna be reacting to one of the videos that has had the biggest impact in my life It only has a few thousand views But again when I was in the process of taking over the banks investment department kind of worried inside about I know nothing about money This was a video that I stumbled upon. I became friends with Todd Langford. I use truth concepts I've been to multiple of their trainings and I'm a huge huge fan if you're an advisor or an agent In the space wanting to do the right thing for your clients I highly recommend you use software and calculators and I think truth concepts are one of the best ones out there So in this reactionary series in the better wealth channel I wanted to start with a with a video that I have a ton of gratitude for and it has really built It really has helped me build the foundation of like how to understand money how to understand opportunity costs How to understand that every time you lose a dollar you don't just lose that dollar But you lose what that dollar could have earned you the rest of your life And so lots lots of good things that can be learned here and I just want to highlight truth concepts their channel Again, if you want to learn more about money go binge watch There their their videos it's it can be dry at points because we're looking it's not like super graphically pleasing But the the underlying math and underlying Lessons that can be learned behind math Unbelievable and so with that I'm going to be reacting to the video I'm gonna do my very best to like, you know, not talk too much But but overall it'll be it'll be a great video that I haven't seen in multiple years I've probably watched it five ten times when I first got into the in the business Because it's been so fundamental for me, but it's been a while So without further ado, I'm gonna pull this up if you want to learn more about truth concepts I'll link all their info if you are an advisor that's watching this video and want to learn about how to potentially use truth concepts or go to one of their workshops I would highly recommend it and Without further ado, I'm going to play this video. I'm gonna put myself in the corner I'll pause the video once in a while and share some ideas or thoughts if I have any which I probably will And then I also just here's a disclaimer is I normally watch videos at like two and a half X Which sounds crazy like I it's hard for me to watch a video at one X So I'm gonna do my very very best I would love if you could share in the comments am I the only one like you guys listen to me on a podcast or YouTube do you speed me up or do you listen to me at one X if you've never listened to a video fast? I would encourage you to start life is really short and I've found that you can consume a lot of information in our brains are pretty gifted pretty pretty well designed as it relates to that so there's nothing to do with money But without further ado, let me jump into max potential. This is like the fundamental calculator and it's gonna be good Let's go out 35 years We won't use any current assets Yes, let's use. I don't know $90,000 of combined income Okay, so if we've got somebody that's a family making say a combined income of $90,000 a year Over 35 years. That's 3.1 million dollars wild. That's a hard number to to realize 90 thousand dollars compounded at Zero interest at zero interest. So it's just nine. It's $90,000 multiplied by 35 gets you that number over three $3.1 million yet. That's the amount of money that would pass through this family's hands over this 35 year time frame Would we be happy if Everything was going up by 4% a year and we have gotten to a point where we were spending every bit of what this is Everything else is going up. It's gonna make it awfully hard to continue to Eat so we would expect that our income has to go up at least by 4% a year, correct? And if we do that at 4% just to keep up with inflation that's 6.5% Million dollars we take our ability to have to to work for granted and the reality is that is one of our greatest and best assets that we have So we take this over this time frame 6.6 million dollars And That last year's income is 341 thousand dollars and this is what is so amazing about inflation We can look back and see that this has happened to families for a long time We can look back and see that this has happened to families from the past when we look out in the future and look at 90 thousand dollars of income Equals 341 thousand 35 years is 341 thousand going to be any more than 90 thousand is if inflation's 4% I just want to I just want to highlight that what what Todd is saying is if you start with 90 thousand dollars today And assuming inflation and he's using the 4% but he's not just saying 4% inflation He's saying we're assuming that you're making a 4% raise which that would be the number one thing I would ask you is if you're not getting a raise if you're not earning more money each year you're essentially taking a pay cut Um, but what he's saying is assuming a 4% inflation and at the time of this recording some people are saying inflation's are more than 7% um, you would the the last year you you would have to spend or 341 thousand dollars Is an equivalent to the 90 thousand dollars for today's money in this equation Remember this is nothing to do with like real life. This is just this calculators only as good as what inputs that we put in That's wild. It's wild to think that um maintaining a 90 thousand dollar You know buying power over 35 years would be that that big of a number Oh and and and even more importantly because of the way our tax brackets are structured Is 341 thousand after tax going to buy as much as 90 thousand dollars does really good point It's really good point. I'm going to keep up And yet that's 6.6 billion dollars passing through Their hands over this time frame now. I want to get kind of ridiculous and let's just assume I guess we had a government job everything was paid for right? Food housing everything okay, if we didn't have any expenses could we save and invest all this money? All right, if we did that at 5 percent We end up with 15 million dollars as a maximum potential. It's crazy now clearly we do have Expenses we can't do that. So if we look at this and we look at total taxes unless you use I don't know by total taxes I mean we have federal income tax here. We don't have state tax a lot of places have local tax sales tax cell phone tax hotel tax gasoline tax And thanks to your buddy Al Gore breathing tax pretty soon, isn't it? All right, so if we look at 35 percent And again one thing that a lot of times people say is like oh, I don't pay 35 percent and again This is just an example, but we're talking everything tax We're not talking income tax. We're talking income tax state tax We're talking like everything in this studio right now when I paid I had to pay tax And so again the principle that you'll see real fast is every time you pay a tax You'll see what that does to someone's max potential It's it's literally if they saved every single penny and assumed they could earn 5 percent for the rest Earning on their on their savings. It would have had over 14 million almost 15 million dollars Just see what this tax does to someone's wealth Then what we see is that we pay out 2.2 million dollar 2.3 million dollars in taxes But it impacts us in the long run by taking away Over 5 million dollar worth of future assets. Why is that? Anybody Yeah, and when did they start eroding wealth it's way back here, isn't it? We don't we don't get to take the taxes off the end Unfortunately every dollar that comes out quits earning for the rest of the time frame So while we only wrote checks for 2.3 million dollars like that's not enough It took 5 million dollars away from us. So the impact of taxation is horrible What about debt service? What's Nelson's number? So my and just going back to this and by the way, this is fake money But every time you spend an unnecessary dollar Anytime like whether it's a tax whether it's a tax on your coffee whether it's a tax on Income tax regardless. It's like you don't just lose that dollar But that dollar is never going to earn for you ever again. So if you go back to this And you you go to like this year whatever they paid in tax They didn't just pay that tax, but that money will never be able to work for them ever again So that's why in this equation you only paid 2.3 million But you you have an actual loss to your max potential of five But if you look at this in an equation, it's like, oh, you only paid 2.3 million, which is a lot of money But a lot of times it's like was that the actual loss to my Max potential no it was far greater than that because we have to factor in opportunity cost Number statistics show that 34 and a half percent of the average americans income goes towards servicing debt And if we use that number at 34 and a half percent, we see another 2.3 million dollars going out in debt service Same thing again takes another five Point one million dollars away from our future assets And then we look at lifestyle and let's put lifestyle in here at 28 percent or 28 and a half There's another million eight, you know, what's interesting about that is That's the smallest piece of the whole thing, isn't it? It's pretty sad 1.8 million dollars which results in 4.2 million dollars in loss in the future and We end up with a whopping 296 thousand dollars in savings, which is about three quarters of one year's income It's crazy It's crazy It is What they're what they're saying in the video because this is live is um I mean if you look at that number and you look at average, you know rates of you know average account balances what people have You know that might even be generous So we think like oh like this is super good if I have a million dollars at retirement Well a million dollars for me 30 years from now is like Not going to be worth a million dollars today Um, but it what's also crazy is you you eroded over 14 point like 14 million dollars 14 million dollars eroded But the actual loss is only 6.4, which again a lot of money when you look at taxes that Lifestyle, but it's like that for me. There's a lightball moment that went off of like, oh Like it's not just dollars that we lose today, but it's what those dollars could be worth the rest of our life And they were told somewhere back here that if they just put a dollar a week away everything's going to be great Because these numbers were huge but think about what was happening back here somebody was making an equivalent of 20,000 dollars, which equals 90,000 dollars and to that, you know 296,000 dollars seemed like a lot of money Okay, now then when we go forward it's three quarters of a year's income So what are the financial institutions say that we need to do to solve this problem? Take on risk right because risk automatically means we're going to have more money I hear it all the time. Oh, you know Everybody looks at risk as one of those deals where we're going to you know, we're going to hit it out of the park The best definition of risk is the likelihood of loss. That's what risk means It's not the like the likelihood you're going to hit one out of the park It's your likelihood of total loss. So the thought process here is I need to take on More likelihood of total loss so I can have more money I mean Is that really what we're buying? And yet they do it all day long. So let's look at this. Let's just Um humor them for a minute if If we are in 10 every year instead of five would that be a pretty risky A pretty high rate return because that's got to be net of fees and if we're talking about market fees We're looking at probably having to earn at least 14 percent in order to get 10 even before tax Let's see what 10 does on our returns instead of five Wow that moves us up to um a little over two years of income Didn't quite solve the problem didn't it did it and yet we took we had it's crazy to think that you could make 10 every single year for the next 35 years which Most likely will not happen for people watching this And yet you're not even at a million bucks. That's pretty crazy to me earn 14 or 15 every single year with no down years For 35 years straight to make that happen That doesn't solve the problem because here's the problem Problem is if I earn 100 percent and I put nothing in it, how much do I have down the road? What's that exactly And that's i'm gonna highlight this again if you make 100 percent But you put nothing into the machine You're still gonna get zero a lot of people they they think their problem is better investments And by the way better investments are are great A big big fan of trying to figure out better yields and better ways to grow money But a lot of times that's not the fundamental root issue There's there's bigger issues and it's because we're not we don't have a lifestyle We don't have a process to actually save money And so we're taking on unnecessary risk or increasing our chance of loss and we wonder why We're we're broke in the future That's where the problem is but who wants to Reduce lifestyle to make this happen I I do but Few people do that's not much fun either is it what if we got to look at your Information and found where we could trim off some of those tax dollars. Let's go back to 5 percent What if we could trim some of those tax dollars move some of your assets into some more tax advantaged areas? And Potentially find some places you're overpaying tax. Maybe we knocked that from 35 down to 30 percent We're a big fan of tax strategy majority of people especially if you're an entrepreneur watching this you are overpaying on tax And we call it the ignorance tax That right there would have more impact Than the 10 percent ever thought about having because now we're actually shifting some assets into the saving side But what that's incredible importantly What if we took that money that we saved and we understood how debt works and we applied that against our debt? And maybe it had the impact of over this time frame knocking that debt in half We can't get rid of all of it today, but what if we went down to say 18 percent? Now we've got three and a half million dollars out there or 10 times our last year's income Now we're actually making some headway And hopefully we can do that without impacting our lifestyle terribly now I think for a lot of us we probably do need to impact our lifestyle a little bit. I agree but but You know ideally if we start to understand how money works and we start shifting dollars around the biggest thing is We can't steal the peas If we start if we start saving money in these other places that can't go to lifestyle Okay, we've got to start applying it against our future and If we can do that we have a potential of actually fixing this thing and but we need to understand that If I can earn 10 percent Like our mutual fund people say and then back off. So, you know, with our mutual fund You only need to put 50 cents a week away or whatever it is If I could make more why would I why would I want to back off on the amount of money I'm putting into it? I mean, it's it's really backwards and what's more important. We just saw it right here Is that the amount of money we're saving or so the interest rate we're earning on it? All right, there you have it So so many good takeaways and again the big the big epiphany that I I had is okay if I'm going to help people with money Investments are important. Don't get me wrong super important, but like let's look within and let's let's ask the question Where are you losing money? Where are you being inefficient? Are you overpaying on taxes? Do you know what your debt service is? Have you looked at your insurance premiums and make sure that you're not overpaying? Unnecessary insurance. Um, do you spend money on what you value? There's so many things that need to need to Like be talked about and yes, are your investments? Can we invest better for your goals? But at the end of the day so many people their whole goal is better investments crypto all those things And they don't look within and they they're like they have a broken foundation and and the it's like hey like the Gaslight's on but just just cover it up because we'll be able to you know We'll be able to figure that out and investments will cover all the problems and yet a lot of people's financial lives are falling apart And their solution is take on more risk and and overall it may work for them It might not but it just that was really a big inspiration for me to be like every dollar You lose you don't just lose that dollar but that dollar Of what it costs to lose that dollar But that dollar of what it could have been worth the rest of your life And what you would happen is if you took that that max potential and took it out 50 years Losing a dollar today you you see the the loss and the cost of losing that one dollar over your lifetime is insane And it just makes you hyper aware of every decision Having a ripple effect. So anyways, let me know your thoughts and Appreciate you your time energy in in this in this channel where it were committed to helping people live more intentionally And that's why we're making personal finance videos business videos so that people can show up more intentionally and more powerfully in their life

The One Video That Changed My Financial Life

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The One Video That Changed My Financial Life

Understanding Financial Potential

The Impact of Taxes and Debt Service

Rethink Investment Risks

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