I Made $3.3M, Here's How

This episode is about Noah Kagan's financial journey, detailing how he made $3.3 million in a year and the lessons learned from managing wealth and personal finance.

1. Investing back into your business can significantly increase future wealth.
2. Real estate investments can offer less income compared to the headaches they bring.
3. Personal finance management becomes more complex with increased income.
4. High earnings do not necessarily equate to high cash availability due to taxes and expenses.
5. Wealth provides comfort and security, influencing lifestyle choices and personal freedom.

1: Introduction

Noah introduces the episode's theme and his intention to discuss personal wealth and financial management. He outlines the main topics to be covered, including investment strategies and tax handling. Noah Kagan: "Today, I'm going to share exactly how I made $3.3 million last year and the complexities of managing that money."

2: Breakdown of Earnings

Detailed breakdown of how the $3.3 million was earned, including various income sources such as salary, business distributions, and real estate. Noah Kagan: "I made $1.7 million in salaried income from Appsumo and additional earnings from real estate and other investments."

3: Financial Management

Discussion on tax strategies, expenses, and the impact of lifestyle inflation on personal finances. Noah Kagan: "The biggest expenses are taxes and lifestyle costs, which significantly reduce net income."

4: Philosophical Reflections

Noah reflects on the meaning of wealth, personal satisfaction, and the psychological aspects of having a high income. Noah Kagan: "Having a lot of money changes the way you experience life and your personal expectations."

1. Reinvest profits into your business to foster growth.
2. Consider simplifying investment portfolios to reduce management complexity.
3. Be cautious of lifestyle inflation which can lead to increased spending as income rises.
4. Use tax strategies wisely to optimize financial outcomes without compromising legality.
5. Engage in financial planning and regular reviews to maintain control over your finances.

My company AppSumo is running an insane giveaway right now, where we are giving away a Cybertruck! Go to http://appsumo.com/sumoday/ to enter

Here is your Harvard Business Review hook up with 10% off a subscription for access to business advice articles and their world class case studies. Go to hbr.org/subscriptions and use promo code NOAH for 10% off.

In today's episode, I break down how I made $3.3 million last year and how I spent it. Now, this isn't about boasting; rather, it's a transparent look into the complexities of managing substantial sums of money. There’s a lot of misconceptions about personal wealth management out there so I wanted to help share some clarity on how I do things.

I’m super proud of where I’ve gotten to in recent years but managing this level of income presents a lot of challenges. I've been striving to streamline my finances, and you can join me on this journey. I hope you can be inspired and get rich as well. It’s a great feeling and I know you can do this too.

In this episode, you’ll enjoy 3 BIG things:

How to invest back into your business to foster future wealth.

How to shield yourself from tax liabilities by using your personal projects as LLC’s.

What does having lots of money really mean to life satisfaction?

You’ll enjoy these things and a whole lot more.

If you liked this episode about hacking your wealth, you’ll also enjoy an older episode we did with Jeff Rose from Wealth Hacker (YouTube channel) you can find that as episode 194 in this feed.

I have also been sharing emails on my brutally honest advice on a variety of topics. People have been loving it. Sign up at noahkagan.com and join 350k other people who get juicy insights every week.

People

Noah Kagan

Companies

Appsumo

Books

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Guest Name(s):

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Content Warnings:

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Noah Kagan
What is up, you sexiest bastard of the entire planet? It is your boy, mister steelyourpennies, aka Rabbi can't lose aka Noah Kagan coming in spicy in today's show, for some odd reason, I'm going to share exactly how much I made last year, which was $3.3 million, and how I spent it. Now, this is not about bragging or boasting. I want to do a transparent look into the complexities of making money and how you can do it for yourself. Now, there's also a lot of misconceptions about personal wealth management, and so I want to share some clarity on how I do these things because I've started out jobs where I made $0 a year and I'm super proud of where I've gotten to in recent years.

But there's definitely complexity in growing this amount of money and also dealing with it. I hope you can be inspired to get rich in your own life as well. It is an amazing feeling. It's something I'm still working on my own self worth and feeling more security financially, but also just more emotionally and mentally. And I want you to join me on this journey.

I want to hear about your income and make it not such a taboo subject and something that all of us can be talking about, maybe more openly, so that you can be living your dream lifestyle, whether you're making over millions of dollars a year or you're making a few thousand bucks a month, having your own business and loving that too. Now, in this episode, you're going to learn three gigantic things. Number one, how to invest back into your business to foster future well. Number two, how to avoid taxes. I don't know.

People love talking about taxes. I don't have as much time to optimize my taxes, but I'll give you a few things in the show that'll help you with yours. And number three, what does having a lot of money really mean to life satisfaction? You can enjoy those three things, plus a whole many more ear nuggets along the way. And if you liked this episode about hacking your wealth, check out Jeff Rose from the wealth hacker, also a YouTube channel.

You can find that episode at 194 in the feed. Also, my company for some reason wants to keep spending money, and we're giving away a Tesla cybertruck totally free. I am not eligible to win, but you can win. Then sell it and you'll have an extra almost $100,000 in your bank account. Go to appsumo.com sumoday to enter.

That's appsumo.com sumoday also, special pre show shout out to listener Varun eight. Inspiring. Been following Noah for years and he really does give you a playbook to follow. Appreciate the honesty and authenticity. Thank you Varun.

I love you and I love every other one of you gorgeous listeners. You're the best looking people on the planet. Again, if you leave a review on iTunes or Spotify, I check every single one of them personally and will shout you out in a future episode. Also, if you like this topic, or if there's topics you're curious about, slide in my DM's Oakagan and let me know.

My first year I made nothing for Mapsumo. Even though we generated $300,000 in revenue. All of it went back into the business or hiring people and so forth. All of my income that year, I think it was $80,000, came from consulting, from having more or less a day job. And when I started Appsumo and made zero my first year, I just wanted to make $3,000 a month so I could work on the beaches of Thailand.

That is all I wanted, $3,000 a month. I could live, I could eat and I could save a little bit to live my dream life doing work that I wanted to do. It wasn't I need to go out and have this job so I can search if I'm in the 1%. It wasn't to do any of this stuff. It wasn't to have the house or any of these things.

It was just to make enough money to live life the way I wanted. And through a lot of different things, I was able to stick with the business for 15 years. To be able to get to this point where I took home $3.3 million. Now there's a lot more to it. I don't actually have $3.3 million in cash, let's just say right here, and we're going to talk about taxes, we're going to talk about expenses and things of that nature.

But it's been a long, fun journey. For many years of running appsumo, I didn't even pay myself that much. I think it was the second year was somewhere around 70,000, and then it was around 100,000 for the next three years. Because I felt, why is anyone getting more than anyone else? And I talked to Taylor, who works in our operations management, and he knows how much I made.

This was on CNBC. My numbers are verified. And he said, I wouldn't want to trade places with you because the responsibilities and the things that it takes for you to do what you're doing to get that money. It's not what I want. That was interesting, you know, and I think it's all of us dialing in what kind of life we want to be living.

So could I ever imagine making this amount of money? No, but it's sure as hell sweet. And you can do it, too. So let's do a revenue breakdown. Show me the money.

Show me the buddy, Jerry. You guys are way too young to know about that movie. So, first off, I made $1.7 million in my w two salaried income from Appsumo. So it's not as straightforward as that. My base salary is 250,000, which is really good.

Now, only if we have profit at the end of the year do I get a distribution. And so we pay everyone in the team, we pay the leadership team, we take everyone, all expenses paid, to Mexico. We invest in ads, we buy servers. And then if there's stuff left, me and my partner Chad get a distribution. And so my distribution was around $1.5 million.

So that's where we get to the $1.7 million number. This is insane. Now, next up, I get a million dollars from Appsumo to sponsor all the content you're seeing here on YouTube. And I'll talk about expenses next. So that's another million dollars.

Now, the other $600,000 that I made last year is a combination of real estate equities and some distributions from investments. So I don't think it's as important in this video. I think if you look at the numbers, like the majority, 80% is from entrepreneurship. So we'll focus a little bit more on that. But the Airbnb, I think, is around $135,000 from two Airbnbs.

And then I have three offices that I rent out, one to Appsumo and two to two other people. I will talk about a little bit more about this later, but I'm getting rid of all of my real estate this year. So that's where the $3.3 million comes from. So the real estate one is pretty interesting, where the amount of headaches is high and the actual amount of money is relatively low in terms of income, not revenue. The appsumo money is all over the place.

Right? So what does that mean? In 2021, I made 971,000. That's a big decrease from the almost $3 million that I got last year from Appsumo. So what happened?

Covid happened. A lot of bad decisions happened. We hired a lot of people we spent a million dollars on Black Friday marketing, which was a total waste and it was my idea. So there's a lot of expenses. So at the end of the year, yes, 971,000 is a ton of cash and I was super happy to get it, but it still has a lot more fluctuations and I'm only getting rewarded at the end of the year.

So I would say the maintenance is more of a thought about opportunity costs and what is the best use of your life for generating revenue? Doing what you want to do. I've noticed with the real estate stuff you can get a 5% return a year on this real estate, or maybe it appreciates 10%. That's cool. Appsumo started with $50 and I was able to generate almost $3 million cash for myself.

And I'm not taking as much as I can, and I don't say that arrogantly, I could definitely take more, but I think I'm taking a pretty great amount and everybody else at the company is doing well. Whereas in real estate, a lot of that stuff is capped. All right, expenses break down. The number one expense, you guys can all guess it. It is mister government.

A lady would never be so rude. And the government takes, you know, 37% and I'll talk about taxes after that. But government is, is the biggest chunk of all that money. Government number one. Number two is the team.

So I told you, appsumo sponsors into an LLC that all the money that takes to run this YouTube channel or my email list@noahkagan.com. or all the social content, that's $500,000 a year. And if you are thinking about how to do taxes, which we can talk about later, start an LLC. I'll save it for the tax section, but that's half a million dollars a year. So taxes number one, that's 40% of around 3 million.

So that's one, one $2 million just in taxes. Then I have half a million dollars in the team cost. So now you're like, holy shit. So that 3.3 is now down to about 1.5. Then this house I live in a two and a half million dollar house, my previous house with about half a million dollars, so I went from 500,000 to two and a half million.

This house alone without water, without Internet, without the cleaner, without the gardener, without the pool person is $120,000 a year. So the costs add up in your lifestyle. As you make more money, you start feeling more comfortable. And I was talking to a high school class recently and they said, you know, what rich is, Noah? I was like, dude, I'd love to know.

They said, rich is going to a restaurant and ordering whatever you want off the menu. I was like, that's rich. I love that. And, you know, for me, rich now is how do I fly private all the time? I still am trying to figure out what that is because I look at these flights, and this is still stuff I'm thinking about.

Like, flights are 20,000 for private or 500 for southwest. It's like, it's really hard to justify that, that amount of money right now. But maybe in the future, as I. As I get more, that's what happens for all of us. Like, $20 used to be a lot when you were young, and now $20 is what it costs for maybe a lunch at Chipotle.

It's gotten more expensive. So then the house is 120,000. I think my lifestyle expenses, just like my wife, myself, our house, food, all these things, you know, credit card alone is generally around $20 to $25,000 a month, which is a lot. It's a lot. I think one of the best parts about being wealthy is not worrying about the menu.

And when you want to order from whole foods or when you have unexpected expenses, it makes me feel sad and really tough for a lot of people out there. But it also makes me feel optimistic that through entrepreneurship and through starting your own businesses, there's no cap to your income. There is unlimited income for entrepreneurship, whereas in a salary job, it can be limited. The other overhead costs, you know, when I talked about Airbnb and we talk about real estate, I don't get all that money. It's not.

I get the hundreds of thousands of dollars. You have a mortgage and you have property tax, which is very high in Texas, and they go up every single year. You have insurance costs for when you get to different levels of wealth. You have umbrella insurance. So I have insurance that covers if someone trips in my house, there's more costs for that that go up.

I have a wealth advisor that's in the five figures a year. I have a personal bookkeeper. That's another five figure expense a year. So I would say that there are definitely a significant amount of expenses that just go up when you start making more money and you want to have more conveniences and comfort, you know, we have food delivery every week. You know, that's $500 a month, which is really nice to not have to worry about what we're going to have for lunch every day.

We have to fly to go get a passport renewed. That's $1,200 just for tickets. And it's like, fuck. I really sympathize with people out there trying to do an uber eats meal, even like getting uber eats delivered. I'm like, how was it $70 for two sandwiches?

Or two weeks ago, my some pipe. I don't even know what it's called. It's a u pipe. And it broke. And I called a person, he's like, all right, 2500.

I guess because every dollar I had to earn myself, I never got lucky with Zuck money, or I never got mint pay me out or some crazy crypto stuff getting me super rich that I've earned the dollar. So I was like, I'm going to get a second opinion. I called a second person, he's like, 800. I was like, okay, that. Or I just had to renew my car.

$200 because it's a Tesla. All these different expenses. It makes me sympathize with other people that are out there. And also, hey, you can do something about it. Maybe you don't have a million today was able to, but if you start, you will get to that point.

And so I think that's an opportunity for a lot of the people out there, you know, wanting to change their situation. Like, it's not easy today, but it'll be easier tomorrow. Cause you start taxes. Uh, so I put out a book. Maybe we'll make it free for this video.

How do I approach tax optimization? There's a lot of different people. I think governments are inefficient, so I'm not as excited to give them my money. I'd rather give it to private businesses. When I had more free time, I was doing a lot of tax optimization.

So, conservation easements, it's when you buy land and then you say you're not going to build on it, and the government gives you a tax credit. And then I did art donation. So you buy art, you donate it somewhere, you get another tax credit. Those are little gray zones. There's new ones that I've considered, which is like a box option.

So if you buy t bills, you get taxed at ordinary income, but if you buy box spread, you can get taxed at a lower income rate. So you go look it up, Bo xx. And you get taxed at capital gains in America, which is lower. I don't feel like moving to Puerto Rico. I like Austin and Barcelona, but that's for some other people out there.

Other ones I've considered is energy credit buying. So you can buy energy credits today? Yes. Look that up. And you get tax credits for that.

So you can buy them for 80, but you get $100 worth of tax credit, so you get a 20% discount on your taxes. Or I've looked at defined pension option or defined benefit plans, which is your own pension plan, so you can put more money into your retirement account. Now, I just don't have time for all that stuff. You know, I'm married. I'm trying to be a good father.

Good. Be a good husband. I'm trying to make sure I have time to do this content run appsumo, and the amount of money I'm saving, to me, doesn't seem worth it. But there's tax strategists out there, I think in terms of opportunities for taxes. One, there's a company called ocho.

I think it's now called carry. It was called ocho.com comma, which I thought was a pretty good name, and now they've called it something else. But you can do a sep Ira. I think that's one that's kind of common. Most people know about it.

The other thing I think a lot of us could be doing is setting up our own LLC. So the advantage of an LLC or just your own entity is that your phone, your Internet, your car can be it, your travel can be it. A lot of books you buy, your, you know, everything. These cameras, painting, this room, all this stuff is all. It's a write off, right.

It's an expense to the YouTube business. There's also R and D credits for companies. There's a lot of different tax things, I think, in my personal life, and this is a fascinating point, I don't really have budgets, which is luxury. That's a super luxury. I don't have a lot of modeling, or how am I trying to retire and these certain things, because I just have so much money, honestly, and I don't mean that bragging, but you can get to that point, too.

Whereas in our business at appsumo, we have models and budgets and a whole team dedicated to every single penny. And I like the fact that I can not have to worry about that or have to figure out how to optimize my taxes with more questionable activities. In terms of taxes, I think I paid around $812,000 for my extension. Most rich people, or seven figure people, do extensions because they have k one s. So k one s are investment returns from generally private entities, and they come a lot later in the year.

So you'll file a k one, which means you have to do an extension I don't know. I guess I'm rich. I never thought I'm a rich person or not a rich person. I think what I try to think about is, like, when I'm at the restaurant just treating everyone equally, that's it. It's not that I'm better or worse.

And I will say there are times, candidly, where I might go on YouTube and I look when they are like, well, here's what top 1% make. And I go there, and it makes me feel worthy when I feel like, wow, I'm making in the. In the top 1%. Because I think I've felt so unworthy in this whole journey for so long. Like, oh, I don't think I'll be able to do it.

How do I finally make money? I'm going to ruin it all. And so it is. It is a form of comfort. And at this point of stage of life, I think what I'm thinking about is, like, how much do I really need and what do I really want to spend my days doing?

And I think this is kind of the counterintuitive thing about entrepreneurship, whereas if you actually do the thing you really like doing and you keep getting better over a long period of time, you'll actually end up making the most amount of money. So I'm really trying to dial back in less. How do I get more views here? How do I get more revenue there? Just like, what do I think is good for me, what I think is good for our customers, good for the audience, good for our team, and we enjoy.

I think that will benefit a lot of people down a longer period of time. Now, in terms of taxes, I'll just pull up 2022 taxes. So my tax liability in 2022 was 300,000. My tax in 2021 was 1.1 million. There's a lot of different income streams.

And as I'm getting older, I'm trying to simplify my life. I find the appreciation and the cash flow of real estate so insignificant relative to the headaches I've invested in bars, which went out of business. And the thing with that kind of, there's just so many different distractions. I've put 150,000 in real estate, syndicated deals that are totally washed out, totally lost it. And the way that I've thought about my finances and, you know, personal spending is that I want to have enough cash to live forever.

And so I did an analysis with my wealth managers, and I basically never have to make another dollar. And I could spend 20,000 a month until I'm 90, that was really relieving. And so think about for yourself like what is your spending habits? And then if you map it out to 90, you know, I think there's a great book die with zero by Bill Perkins and he's talking about like, don't spend at 90 when you can't really enjoy it as much as you can enjoy it today. And so really finding that right balance, where can you save yourself time?

Can you pay for convenience? Can you enjoy the experience now? Whereas when you're 65, retired, finally being able to tap into your 401k, you really physically can't do stuff like my back is hurting, I'm 42, you know, like I have to go to physical therapy and all this shit. And it's like, oh man, this is what they talk about. When you are younger, you don't give a fuck about it.

When you are older, you're like, oh, I should have spent it then. So thinking about my priorities and my personal spending, getting out of the tax stuff, I think I spend a lot on convenience. So when I go to flights I only look at duration. That's definitely a priority of my personal spending. It's easy for me to gift give.

I think that was my dad's love language and I love like spoiling my wife. I'm excited to get my daughter the nicest things possible. I'm happy to treat my brother to things. I took my parents on a nice vacation last year. I don't think I really prioritize anything.

I think I'm still value conscious right? I'm still like oh that would those glasses are $10 or let me try to find a coupon. I think I'm just more now value. I'm more aware of how much time I'm spending looking for that discount. Like heck think about it.

I got most of my money from a deal website. Check it out appsumo.com dot I love saving money. I love being value driven. It doesn't mean I want to just go waste it. In terms of reinvesting money with the businesses versus the need to save personal finance goals, I don't really have a goal right.

My goal is never retire. I love the work. I want to just be able to spend as I see fit. I do think theres times where one of my dreams now is to fly private and so what do I need to have? So its not an issue.

I want to buy another house in Barcelona where we spend the other half of our year. So im selling almost all of my real estate here so ill just move that money over to there. But the way we approach appsumo is that we take almost all of our profit and reinvest in the business. And the idea is that each year gets bigger and bigger and bigger and you want a tax optimization dont have profit on this show I share mine and other entrepreneurial journeys so that you can get ahead in your own business adventures. Now one thing that's always helped me is learning.

And guess what? The Harvard Business Review. Yes them apples. Harvard Business Review has sponsored this show. Now they have a website, hbr.org dot.

They got articles, they got case studies, they got podcasts that are exceptionally good and they have a podcast hbrideacast. Maybe I should be on that one day. But there's been so many articles. Like here's one I've read recently. Every leader has flaws.

Don't let yours derail your strategy leadership development. They just got so much juicy stuff out there. And I think learning has been something I'm actually revisiting extensively to be more successful in my own leadership at Appsumo and just in life. Now most stuff on HBR Harvard Business review is free. My favorite price, you just go to hbr.org dot.

But they also have unlimited premium content that's a lot cheaper than a degree at Harvard. They got case studies and more. I recommend their subscription. It is only $10 a month. We need to get them a lifetime deal in Appsumo.

But until that, that's the price of one Chipotle bowl, except with inflation. Now if you want a better deal on that, you can get actually 10% off, which is pretty sweet. Their subscription using promo code Noah so go check it out, maybe even subscribe, check out some of the articles and see if it's helpful for you. Go to hbr.org subscriptions and enter promo code Noah Alrighty, back to the show.

And so Appsumo has very good revenue, very little profit, because everything is either reinvested or distributed out so that each year the company just gets bigger and bigger. But in terms of my personal life, I try to have most of my active income and time on Appsumo. And then that's like 90% and 10% on this passive stuff, which is like putting it into stocks, putting it into. That's it. So you can see the four stocks I pick up here.

It's a global index fund. I think it's like 60% America, 40% international, 90% stocks, 10% bonds. And I've just put automatically $10,000 a month right into that account. That's the majority of my savings. I do own crypto because I bought it every month for years.

I do have a lot of other more complicated things, but again, a lot of stuff I'm actually trying to reduce and simplify to just mostly save up headspace. What areas am I willing to splurge? I probably spurge more on hiring people, right? Because I think I run a company. We have 100 people there.

And so I'm kind of used to hiring and having people help me. So, like an EA, two chiefs of staff, I'm trying to get a PA, you know, just having more assistance. I'm willing to spend because it saves me time and peace of mind. I think food, I'm not really splurging, but I don't really look at the menus as much. I don't really think about food at grocery stores, but I do use a lot of, like, my credit card points to buy those kind of foods.

So it's. I actually haven't spent on that technology. Like, I just buy the latest laptop. I don't even think I literally, if there's a new MacBook air, it's instabuy maxed out. It's like $3,000.

And I know that could be a lot for you, but that's literally the cheapest investment in something that can generate millions, if not billions. Think about OpenAI. It's literally built off of computers. I do fly mostly first class, but I use points, so I don't. I feel like when people flex and like, oh, fly first class.

Like using points. Yeah. Spend this $8,000 on the ticket, and you'll say, think differently because it is a lot of cash to fly first class. I've gotten more splurgey on my clothing, especially because of being on YouTube stuff. So, like, if it's a shirt or something I'm excited about, I buy it, but I will say, like, I saw a guy, and you've heard me a million dollar weekend talk about asking.

And I saw a guy with nice outfit. I went up to him and I said, dude, I love your outfit. Where's it from? He's like, rude, rhude. And I go over to rude, the website, and I look at the outfit he was wearing.

It was a $1,500 outfit. I was just like, I can't do it. I can't do it. But, like, you know, this shirt was like, maybe 100. Or I just bought a pair of marine layer pants for 128 with coupon.

And I don't know, it just seems reasonable. It doesn't seem. I don't mind doing that. I think because of YouTube, I felt like I want to have different outfits on now. Mostly I've worn a lot of appsumo clothes because I was promoting Appsumo in the book areas that I'm frugal on.

Yeah, probably $1500 outfits. I wouldn't try to like buy Gucci. I went to the Gucci website, I was like, I'm rich. I'm by Gucci. It's like $1,000 for a shirt that is redonkulous.

I was like, I'm not buying a shirt like that. I think when it just feels unjust, like, you know, they come to the house and they see, I have a two and a half million dollar house, which I will say I had a $500,000 house before and I am ten times happier in this house now. I didn't realize how much your nesting and where you live can make such a significant difference. But people come to the house and they're like, we want to charge you. It was like $5,000 to even help build out the studio.

And I was like, that is insane. I'll do it myself. And so a lot of times just get a second opinion. So I think the frugalness comes to like, all right, I feel like they're trying to cheat me. I don't know.

That's honestly a lot of it. Or it just doesn't seem like, okay, $1,000 for a shirt. There's also things I just don't care about. Like, I don't have a Ferrari. I could buy ferraris, I could buy some of that stuff.

I haven't really cared. I splurged sporadically on rolexes to commemorate moments. So, like, when my buddy sold his company, when my buddy got his house, when I got my wife, you know, it's just moments to kind of recognize that. That makes me feel special. When I got my pilot's license, when I came back to CEO of Appsumo and just a nice like, wrist tattoo that I don't need to flex other people on.

And I used to feel self conscious, but I think one of the things about wealth is shame and feeling like we have to show off which most people who are showing it don't have it or we need to show it to others versus showing it to ourselves with my money. Unless you hear me talk about in a video, you're like, oh, yeah, it's just a bald jewish dude with earrings. Like, theres not much there, and thats okay. I dont necessarily need to feel validated in that way. And thats something I think you really get with age.

And another thing with this wealth part, in terms of splurging and other things, its about probably who youre around and how you were raised. I was raised extremely frugal. My mom would say the opposite. But yes, I was very practical in everything. And I think if youre around people who are flexing Ferraris and theyre always balling out even though theyre on a budget, youre probably going to be influenced by that.

Most of my friends, I would say, have nicer houses or have pretty cool cars and they have decent watches, but they're not. I think they're also, like, practical about a lot of it. So think about who you're spending around. Some budget and money habits. I use asset allocation, so I do 30% cash, 30% stocks, 30% real estate, and 10% risky.

Risky is I vested in a church that failed, invested in a club that failed startups. Most of them are gonna fail or I haven't got returns on them. And as I'm getting older, I'm going to actually reduce my real estate percentage. But the whole point there is that I was so concerned of losing the cash. I know.

And there's a no, don't keep it in cash for the market. I just wanted to see it, wanted to swim in it like Scrooge McKagan. But it's just like I was scared of it all going away. So I really have more cash than I think a lot of people my age, younger and older. So I like asset allocation.

I think that's a great way to do it. There's a lot of different budgeting approaches. I just never wanted to budget. I wanted to think, let me get the things I want to get when I want to get them. And asset allocation made me feel good about that.

I think the other way you can reverse engineer this is whats the minimum I need to live. I talk about the freedom number and how do I create that amount of money so I can live for free and have the freedom. Thats the thing that kind of always in my mind, I think its simple, attainable, and you can do it now, and you realize within a year, maybe two, youll actually be at your freedom number. And you could decide if you want your day job, which has a limited income, or your entrepreneurship, which has unlimited income. How do I stay disciplined with my finances?

I don't. I'm not in appsumo. We're extremely disciplined. I think with my personal finances, it's a luxury that I don't have to be as disciplined. You know, maybe as I've gotten more money, you could say I'm less disciplined on it.

I think it's not about discipline or not. It's just more freedom to not have to worry about it. You know, Mark Manson had a great point where there's no tab open that I'm like worrying about the money all the time. And that is a real treat. I do have wealth managers, so I like the idea of how do you have accountability with your finances?

So maybe you read, you know, a book like Ramit, I will teach you to be rich, or you get a wealth manager, or you go read, you know, a lot of different blogs that are out there or podcasts. Paula plant afford anything. There's just a lot of great content out there, especially if you're earlier in your financing stages. But it's something that I'm not as concerned with. But yes, I check in with accountability once a quarter and I think that's been good.

I've really enjoyed them. You know, hey, you should change your mortgages. That's what, years ago when mortgages lower, hey, let's move your money into t bills and get out of cash and just someone double checking things for you. Any financial habits or rituals that you found particularly helpful? Yes, there are two that I will recommend.

If you do this today. We'll have a lot of wealth. Number one is organizing your bills in order. So this is, I learned from Susie Orman, but in my wallet, and I don't really carry cash or wallets anymore. I always have my bills in order and I just thought that was nice.

It was pretty. And if you pay attention to your sense, they will take care of you. Now, the second thing I do, I check my finances, my net worth, assets, liabilities and net worth every single month. And I've done it for every month for 15 years now. I look at every single thing manually, even though I helped build mint.com that did this automatically.

I like the intentionality of looking at my money and seeing how it's doing on a month to month basis. And at the end of it, I look at my allocation actuals versus what I said my allocation would be, and I compare it and see if I need to make changes. Then I make a to do list of anything I want to be doing. Like do I need to be adding to my sep Ira, do I need to be getting out of some of my stocks, which I almost never sell stocks, Noah. Never sell.

Kagan is my nickname. I just buy and hold forever. So id say the monthly checking where almost everyone when we were building min I asked them what do you do? And theyre like, I just dont want to do it. I look at every single penny.

I dont round it up or round it down. Id look at every single one every single month. And its kind of like when you look at the scale and you see you're at a weight that you didn't want, you can now do something about it to get it to the place you want. The same thing with your finances. Lessons learned.

Is there a standout story when you take a look back at your 3.3 million? I would say one of the stories last year was I took my parents on a $30,000 yacht trip. That was insane and that's something they would never do. And it felt nice to share that experience with them. That was such a cool moment for them to see them on a boat.

And yeah, it was just nice. It was really nice. I felt proud that they raised me well, that I could, you know, treat them on that. I'm trying to think of when I finally got like a million dollar payday at the end of the year. It's definitely underwhelming from an external success, blah, blah, blah.

It's super cool, but it just goes to the bank. It's like I worked my ass off, I'm really proud of myself. And then like the numbers transferred to here and I'm like, that's okay. So I don't think that that's as magical as I think people imagine. I think the magical part is finding the work that you love to do and it turns out maybe you can get paid to do that.

And I think a lot of people don't realize that, you know, no amount of money is going to make you feel good about yourself. I'll tell you, making a lot of money definitely makes it easier to like yourself more, but it just doesn't, you know, you're not going to feel worthy until you feel worthy about yourself and think about the things you do that make you feel worthy. Maybe it's going for a walk, maybe it's reading, maybe it's being a good person, maybe it's following through and making something you said you would do. Maybe it's being on time. Those are things that make me feel worthy.

I think big win overall with this money. This is a weird story, but I hired a guy, Ayman Al Abdullah. And Ayman ran appsumo for five years, and for maybe two or three of the years, I was making two to $3 million a year cash. And I felt so guilty. I felt unbelievably guilty because I didn't earn it.

Even though I started appsumo, even though I worked on it for years, even though I grinded on it, I was getting paid, but he was really doing it, and I felt really bad about it. Yeah, it was just, like, shame. I was like, oh, he's doing it. I'm getting it. And when I came back to be the CEO of Appsumo in 2021, it was hard.

It was like, people quitting, me making so many bad decisions, me getting blowing up at people, people blowing up at me. And I would say at the end of 21, moving into 22, I just felt like, wow, I'm earning this money. Like, I'm up early, I'm up late, I'm enjoying it, I'm being there, and it made me feel proud. That was a nice moment. I think the other thing I was thinking about was being able to get this house.

You know, I've lived in really shitty places. Not, dude, I wasn't on the streets, but, like, you know, my previous house literally is falling down. Like, there's lizards in it now. And even though I had to get a second quote, I thought it was too pricey to get the lizards out. And getting this house took me two years of therapy and feeling like, okay, why don't you test it out?

Which I did. I tested some Airbnbs, and I got it. And I remember being in this house just feeling really proud of myself. Maybe that's a lot of what the money is about, is feeling proud of who you are, and that is the scorecard externally. But finding your internal scorecard of this money and doing that for yourself, what is the most valuable lesson I've learned about managing money effectively?

You got to pay attention to it. It doesn't grow magically. I think there is a direct correlation between monitoring it and the effort you put and the effort you put. There's no limiter on it. No one can tell you how much you can work besides the amount of hours in a day.

And that's one of the coolest parts about the Internet, is that it's worldwide, accessible, and free for everyone out there to go do it. Whether you're in a really tough situation anywhere in the world, you can put in the effort to be able to create more money for you. And that's just such a cool lesson. I remember being in high school writing a business plan. And it's like, that's kind of fun.

I'm just kind of trying all these different things out. And I talk about it in million dollar weekend. Like, I tried and tried and tried and tried, and I see some of these stories out here. People are like, hey, I launched my SaaS app. It's not working.

Try again. Hey, I launched again. Not working, try again. And then you just keep going, you keep starting and you keep trying, and eventually you find the thing that's just working. And it does work.

And there is a process that you can follow for that. For me, now, appsumo has been something I've just found is my life's work. So you will be able to get there. Did making more money make you wiser about money? I think everyone has a money relationship, which is really fascinating.

And it's been very amazing to be with my wife because she's had two jobs, has been independent for 13 years. And I told her like, hey, let's just pay someone to drop this off an Uber. It's dollar 30. She's like, no, I'll do it myself. And so everyone's got a different money relationship.

It's not that one is better or worse and evolves over time. Evolves how much you have. It involves what's important to you, evolves where you came from. I think it's sad sometimes how much we make money, everything, and maybe, yes, I have it, a little bit of it, or I have a lot. I don't know.

It's all relative, which is the kind of the funny part. But I just seemed sad to like separate relationships or separate friendships or separate how you want to be living your life. And I would say the wisest thing is find the life you want to live and find money to be able to support that, because there is a way of doing it. I met a guy recently who was doing a job, didn't really like it, quit, and now his whole day is reading and making a podcast. And I'm like, how do you like your days?

I love my day. Make that your living. Now let's get wise about money on how you can do that, because that's possible. You can stick with the podcast, maybe take consulting gigs, stick with it, consulting, podcasts, writing, and eventually that can be your full time thing if that's where the way you want to be. Spending your life.

Looking back at earlier stage, your entrepreneurial journey, how does it feel compared to your financial situation then to where you are now? You know, when I started upsumo, in 2010, my rent was $550 a month. And I thought that was expensive. I think I generally, when I was starting out, lived an extremely low cost lifestyle. You know, there's a thing called lifestyle inflation.

I think I never had to worry about money because I always worked and I saved. And so I think the coolest part about the financial situation then versus now, I think I'm enjoying the money now, which sounds maybe strange to say, but I was always earning and making money, but I never enjoyed it. And I think a lot of these videos are like how I got rich in 40 days, how I have this giant mansion ass thing, but it's like, how do people enjoy it normally, like a normal, real human? And I think we imagine some of these things we'll enjoy, like going on vacation. But sometimes lately, I'm enjoying just being at home.

And I think when I look around my house or I look around my life, you know, detached from the success externally detached from having to achieve, I feel really grateful. I don't know that I was playing pinball earlier today, or I can have pay for my buddy Isaac to come help and set up the studio and not have to worry about what he's going to charge me. And I wish that for everyone, I wish everyone gets out there and is living the life they want, making the amount they want. Like, you know, I have an aunt and uncle who are in the environment and into therapy practices, and they've lived in the same house for 40 years. And I don't think they're trying to optimize around money.

I don't think they're like, how do we go make more? I think they're making enough to go on cool trips. I know they like going to Nepal and other fun places, and that's an amazing life for them. And there's not that one life is better or worse. It's seeing how money supports you, not you just working for the money.

The money needs to work for you. And so I think that that's probably been the biggest shift about how money has shifted me in entrepreneurial. I think being an entrepreneur has been an awesome part of making money, because I think you look at money a lot as a return on investment. Like, when you're an entrepreneur, you're like, how much does it cost? What does it make me?

And that is sometimes harder. And when you're in your personal life, because you're like, okay, what's this vegetable, and how much is it going to benefit my health? But, you know, I would say the entrepreneurs has really helped me appreciate money, and as I gotten older, really enjoyed the money I have. What advice would you give to aspiring entrepreneurs who may be discouraged between the gap between their current earnings and the kind of success I've achieved? You can have this 100% if you stick with it.

There is no difference between you and me. There is no. Okay, I might be more bald. Unless you're bald. Maybe I'm, you know, I got more earrings, but you can get more.

You know, it's discouraging. That is part of the journey of life, and you are the author of it, and you are in charge of the discouragement, and let that hate and let that discourage motivate you. I'd say part of the reason I got to these numbers is because I was so angry at Mark Zuckerberg for firing me and for all these people laughing at me, thinking I couldn't achieve it. And when you get to these numbers, they're not even thinking about you. One, because they're in further out numbers, but they're living their own fucking life.

And so I think I would try to figure out what and how you really want to live your own life. And if you think this rich ass stuff is going to make a difference, go be around more rich ass people that are actually rich, that are not selling you stuff and really stick with it. You know, like, if you look at the appsumo journey, I made almost $0 for myself. First year. I think it's 50 to 70 the second year.

Then it was like 100 for the next three to four ish years. And then only finally, in, like, the last, you know, half of appsumo, the past, like six, seven years, have I been making like 1 million, 2 million, 3 million. And also it went down. I was telling you, it went from 3 million down to 970,000. And so it's sticking with it at the end of the day.

You know, a lot of people I've seen that have really good jobs, I met this guy boomin. He's a doctor. Watching these videos and listening to the content makes probably three hundred k. And so the hard part for him, even though maybe his job is not his dream, is that when he does the side hustle and he's got all these ideas, he doesn't really either do the ideas or it makes like, $50, which is amazing. And he doesn't realize that that $50 can get to 500,000 or 5 million over time.

You got to stick with it and realize you're just not yet. So if you're feeling discouraged, you just. If you keep going, it's not yet. Why did you decide to give a detailed breakdown of my finances with the audience? It does increase my security risk.

It does worry me. It's an experiment. So I experimented living in nice houses during COVID I'm like, I love it. And then I finally got a nice house, and so I feel comfortable experimenting, sharing my income. And if negative things and security risks increase, then I will definitely pull back from doing something like this.

But the benefit to me is that I think it's inspiring that people, there's going to be one person out there watching, thinking, hey, I can do it, too. Thinking, maybe it's going to be in software like noah did with Appsumo. Maybe it's going to be in car washes. Maybe it's going to be in a food delivery business. But, huh, that seems like a pretty cool life.

And, like, there's. And it is, you know, buying whatever pinball machines you want or being able to eat wherever you want or travel whenever you want. And having those options is priceless. And so being able to share how I was able to get here, be able to share what it looks like, and, you know, there are a lot of costs in it. There's definitely a lifestyle.

Inflation, maybe percentage. Right? So your income has a percent to savings and cost. But it's been amazing to get to the point I'm at. And I hope for you, there's going to be one of you out there that'll choose to take action today, to be able to get there and maybe beyond.

All right, y'all. Love you. Smooches.

That is a wrap. I hope you loved the episode as much as we did making it for you. Remember, we're giving away a cybertruck. I don't know how we convinced myself, but really, the team's got amazing ideas, and this giveaway is going really well, and I think you'll have a chance to win. Go to appsumo.com.

sumodayappsumo.com slash sumouday. People have been loving our latest emails, where I've been sharing brutally honest advice on relationships, careers, business. Go join 350,000 other smart people@noahkagan.com. that's n o a h k a g a n. Next, text a friend.

You'll love them. Yo, dog, let's go for lunch tomorrow afternoon. Where are we gonna go? I don't know. Let's cook at home and save some money.

There you go. Tweet at me. I know. Okay. Again, finally, a couple shout outs to the team who make this happen specially.

Thank you, jasonodcasttech.com. thank you to Jeremy, Cam, Sylvie, J. Diego, and memo from the dork team. For all the magic, you guys do have a gigantic day. What's your favorite stretch?

My bones just cracked.