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Day 19: Recession-Proof Your Finances

Apr 3rd, 2020 • Jasmin Snyder

Today we are diving into Power Percentage®. This is a metric similar in a way to net worth, but this is a version created by Pete to reward you for good behavior. What exactly does that mean, well, I’ll let the expert explain:

Power Percentage®

What exactly does Power Percentage® measure? This:

  • Your financial effciency
  • Level of lifestyle creep
  • Rewards you for good behavior (i.e. paying off debt, contributing to retirement, etc.)
  • Whether you are making wise housing decisions
  • How prepared you are for financial independence (as in working toward a place where you don’t “need” all of your income each pay period)

Side note: this calculator is for those making above a living wage.

Time to Math

To get your own Power Percentage® we’ll have to do some math. Grab a calculator and let’s get started.

First, you’ll add up these contributions on a monthly basis:

  • Retirement contributions
  • Savings (emergency fund or 529 contributions, don’t include savings you are planning on spending soon — i.e. a vacation or down-payment fund)
  • Mortgage payment (not your total mortgage, just the part that goes to your principle, this amount will be listed on your mortgage statement)
  • Debt payments

Take this total and divide by your gross monthly income. Your gross monthly income is your pre-tax total income divided by 12.

Let’s say your monthly total from above is $1,000 and gross monthly income is $5,000 then your total is .20 or 20%. This is your Power Percentage®. Here’s what it means:

10% and below — This is a problem. If your income hasn’t changed and you are still in your “normal” situation then this is problem. You aren’t doing enough good things with your money each month.

11% – 20% — In this zone you are in the danger zone headed in the wrong direction.

21% – 34% — This is better and if you’re in this range you can really turn your ship around fairly quickly.

35%+ — Great job! You are using your money wisely and aren’t too reliant on your income.

For more personalized guidance don’t forget that a Hey Money expert is always ready and waiting to help you sort out this mess. Use code ‘cheese’ to get a 10% discount on a monthly subscription just for being a part of the 30 day recession-proof your life program. Stay strong!

These live streams are still going strong and we still have a lot of ground to cover. To catch the live broadcasts like the Hey Money Facebook page to be alerted when Pete goes live at 2:00 pm EST daily.

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