🤷🏻♂️ Where to put extra cash

In this issue:

• 🤑 Rich people problems
• 🧮 Excess cash “Order of Operations”
• 🧦 How to beat the socks off standard checking accounts
• 🧃 What freedom and optionality affords you

So you’ve been reading this newsletter which means you might be widening that Expense-to-Income Gap and finding yourself with extra cash on hand.

But what should you do with it?!

If you’re in this boat, congratulations. You now have “rich people problems.” 🤑

Even if you don’t feel rich, the fact that you’re creating excess cash that needs to be put to work … this IS one of the biggest problems rich people solve.

This is where the real wealth is generated – when your money, starts working for YOU.

What To Do With Excess Cash – Order of Operations 🧮

Please note: this assumes you’re already taking advantage of any full employer matching (401K, HSA, etc).

1) make sure your emergency fund is adequate & liquid. 💧

Rule of thumb here is minimum 3 months of living expenses.

Personally, I like to keep a healthy margin in checking to cover unforeseen larger auto-drafts and bills …

and keep the rest of emergency funds in a HYSA (High Yield Savings Account, a friendly cousin to our favorite, HYSH – High Yield Side Hustle) … more to come here.

2) pay off dumb debt. 💪🏼

If you’ve been around this newsletter long, you know the difference between dumb debt vs. smart debt.

Short version: smart debt is used to acquire assets designed to appreciate in value + ideally throw off cash flow (e.g. real estate, cash-flowing business).

Everything else (most debt), you want to get rid of because it just holds you back.

A major potential exception: if you can save cash for downpayment to get into a smart “house hack” … this could delay certain debt pay off plans (assuming it reduces your living expenses and doesn’t require a lot of unexpected capital expenditures).

3) determine your “excess cash” holding vehicle. 🚙

Once dumb debt is behind you, you’re really ready to cook. 👨🏻🍳

Until you know exactly what you want to invest in, it make sense to use a HYSA as your default holding vehicle.

At the time of writing, a good HYSA is paying in the 5% interest range. This beats the everloving SOCKS off standard checking accounts at big banks. 🧦

Here’s a 40 second video I made on HYSA’s with 3 options you can check out.

The HYSA should at least try to offset inflation, but don’t get too cozy here … after taxes, you’re lucky to be holding neutral with the way “true inflation” has been running these days.

Another cool thing about using a HYSA is that it removes that cash from your consumer spending mindset. It’s already earmarked for investment.

💡 Inspiration: One of our Net Worth Coach members has recently created such a large Expense-to-Income gap, he’s opening up his first HYSA to hold that extra cheddar. 🧀🧀

This brings us to step 4.

4) deploy capital opportunistically. 😯

I talk about freedom and optionality a lot. Here’s a tangible example of what it looks like…

When you’ve widened your Expense-to-Income gap (+ free of dumb debt), you now have the freedom to invest opportunistically.

This is the fun stuff.

Maybe you’re a fan of investing in stocks or currencies you consider to be undervalued … or maybe you want to methodically trickle additional capital into index funds.

Or like me, maybe you want flexibility to capitalize on a real estate or business opportunity you find especially juicy. 🧃🧃🧃

Personally, I’d be looking for relatively low risk opportunities with the potential to earn me at least 10% on my money (ideally, a lot more than that) … for me to feel good about taking it from a safe HYSA.

Bottom line: extra cash is a blessing you’ve worked hard to generate. Now, make sure it’s working hard for you.

This is what creates multiples in your net worth.

👉🏼 Next issue, I’ll tell you more about my favorite way to deploy cash opportunistically.

In your corner,

Blake Bozarth

When you're ready, here’s how I can help you:

If you're a young professional with a solid day job, it's entirely realistic to add an extra 36K to your bottom line in the next year.

I run a very affordable coaching program with the goal of creating an additional $3K per month in your bank account and accelerating your Net Worth.

(widening Expense-to-Income gap, High Yield Side Hustle, etc).

🙋🏻♂️ Just message me on LinkedIn if interested in learning more. ✅