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- [00:00]
A
If you lived on the money you earned last month, this month, and I mean this for the business too, by the way, then everything, the temperature just comes down. You're not freaking out, how am I going to cover the bill due on Friday? Or I'm waiting for accounts, you know, accounts receivable to come in this month. No, you've got it all to. Whatever you earned last month is now allocated to this month. And again, give every dollar a job for this month.
- [00:23]
B
Welcome to Built online. I'm Cody McGuffey and this podcast is all about why one thing. Building the business of your dreams. Selling art, teaching classes, starting a blog, launching a brand. Whatever your passion is, we show you how to turn it into real income. I created Everbee to help anyone with a dream start and scale business.
- [00:45]
A
Ever be, ever be, ever be ever be, ever be ever be.
- [00:49]
B
We now serve over 800,000 creators all across the globe. On. On this show, we bring on real entrepreneurs who've done it. They share their secrets, they share their failures, the exact steps that you can take to get started. What if you can get one golden nugget out of today's episode? And it's the breakthrough that takes you from just dreaming to actually living a life on your terms. At Everbee, we believe that every human is a creator, and every creator should own a business. Mark, what's going on? How are you, Cody?
- [01:16]
A
Glad to be here. Thanks so much for having me.
- [01:19]
B
Very happy to have you. We're gonna have a fun conversation and we're gonna. I have a feeling we're gonna nerd out over some financial stuff, cash flow stuff, business stuff, and kind of COVID all that. All that stuff, which is all my favorite topics.
- [01:32]
A
So, yeah, great, Great to hear that. In most entrepreneurs, that's the. The one thing they didn't get into businesses to become their own bookkeeper. So the fact that we'll be hopefully able to share some insights and plant some seeds today may just help grow. You know, those seeds might just grow into a bountiful harvest for your listeners. So I'm excited for this conversation.
- [01:54]
B
I love it. What. How would you describe what you do and kind of. What. What are you in this industry?
- [02:00]
A
Yeah. The label on the. On the business card says Certified Financial Planner. And what that means in practice is I get to work with people who want to grow their wealth in ways that make sense for them, add sanity and predictability back into their lives, not just their portfolios. So we work with entrepreneurs, people who want to swim upstream financially, people who are sick and tired of just feeling like a tennis ball floating down the gutter of their own life. You know, most people have, you know that I know that you speak with and work with are just getting started at possibly initiating that business, that small business online. And we have found ourselves in that space for now, almost 10 years working with entrepreneurs in the e commerce space specifically. So as a financial planner that specializes in working with people who are in that realm, it can be a lot of fun, it can be harrowing, especially in the first year or two. But it comes out of a desire to see the world transformed through financial control, predictability, and something that gives the entrepreneur a leg up over the chaos that is the market.
- [03:08]
B
I love it. Yeah, it's totally speaking, speaking to the right type of people, I would say. I like this. I look, I look forward to this conversation particularly because a lot of people in chapter one of their, their online business journey or entrepreneurship journey don't get to have conversations like this or for some reason they just don't even know that a financial planner like you exists. Right. So they get to kind of be in the fly on the wall in the conversation and I get to kind of ask questions on their behalf and then I get to, I get to learn a whole bunch for myself selfishly too, you know, and then just shares it to them. So I'm curious, I, I do have a question to start us off is you work with a lot of entrepreneurs, e commerce store owners, as you mentioned. What are some of the main things that you're seeing, like commonly come, come up amongst of of those clients? Like what are, what are some like you're just like, ah, I wish we could just fix that. I wish people just knew this. What are some of those things?
- [04:06]
A
Well, okay, so much to do there. I'll try to be as brief as I can. Feel free to, to dive deeper into one area or another because you're right, there are a number of bear traps that are waiting for the young budding entrepreneur in terms of cash flow management. Let's talk about two different bank accounts. You know, so many people mingle their bank accounts together, they spend their groceries, come out of their business account and vice versa. Other people are so scared of that that they end up not putting many of their expenses into a business deductible business account like a cell phones or your car that you drive, maybe part in part, at least for your business, whatever. You should be ready to make arrangements for yourself. There should be a business side of yourself and a personal side of yourself. You know, when you're filling up the gas tank. Which debit or credit card do you pull from when you're at, you know, when you're buying some materials for your business? Do you have a business checking account? That's a key first step. Next, I would say, is maybe incorporating having sort of a, a personal limited liability against your business saves both your business and your personal life. Let's say that someone sued your business, you don't want them coming after your personal checking account. And same thing, if someone slips on the sidewalk outside of your house, they don't need to come after your business. So that's another one I would say. And then a regular way to follow. We call it the four rules of cash flow management. The four rules. And if you just do these four things that we're putting this stuff out, the candy's in the lobby here today on this episode because we're trying to get it out there as soon as possible. So the four rules, I would say to make sure your business doesn't become another statistic. Number one, give every single dollar in your business a job to do, you know, have maximum full employment of those dollars. Otherwise they're going to be unemployed and they're going to go look somewhere else to go to work, I. E. In someone else's wallet, right? So that means every dollar. So whatever you have in your checking or whatever account today, does all of it have a job to do, even if it's to wait for the next, you know, insurance premium that's due in six months. Maybe it's just supposed to sit there and look pretty for five more months, you know, give every dollar job. That's rule number one. Rule number two, be ready for the irregular expenses. Save for the rainy day is the idea there. This is true for your personal, business, personal and business budget. Save for a rainy day. This means prepare for that weird thing that happens every December called Christmas. Who'da thunk? It comes around every year. Maybe we could prepare for that every year. If you have any kind of marketing expenses or online, you know, bills that are due on your websites or whatever, your annual fees for your social media software, whatever you use in your business, maybe you can pay for it annually, get a discount on that. But that means preparing for that by cutting that payment into 12 payments and leave it in your checking account each month. That's just called saving for a rainy day. Third rule, roll with the punches. This is a big one for entrepreneurs. Many people create that perfect, ideal, pristine, put it behind stained glass budget, and they say, well Here is the capital T H E budget and they never touch it and they, they just forget it even exists. They put it on the proverbial shelf. In their mind, there's no such thing as a perfect month. So there's no such thing as a perfect budget. It's always going to be breaking. So roll with the punches. If you spent too much on dining out this last month, that's okay, or yesterday, you blew it on the dining out. Just adjust your clothing budget today or whatever. Right. Adjust other account to accommodate for that. Fourth and final rule is live on last month's income. Live on last month's income. That's good for your personal and your business. This comes from a group called YNAB Y N A B. And I would say if you lived on the money you earned last month, this month, and I mean this for the business too, by the way, then everything, the temperature just comes down. You're not freaking out. How am I going to cover the bill due on Friday? Or I'm waiting for accounts, you know, accounts receivable to come in this month. No, you've got it all to. Whatever you earned last month is now allocated to this month and again, give every dollar a job for this month.
- [08:34]
B
Can we talk about that for a second? I'm curious there. I'm not sure if I understood. I've never heard that one before. I live on last month's income and so I want to understand that in real money. So like for example, if you earned, let's say the business earns $10,000 last month in profit.
- [08:48]
A
Yep.
- [08:49]
B
What does that mean with your saying, what does that mean last month?
- [08:52]
A
So let's say we woke up and it's, you know, May 1, and our bank account has $10,000 in it. That means until we get paid again, we have to only spend 10,000 bucks. Now, a lot of our business owners get deposits every month, but I would suggest ignore it and just let it accumulate in an income bucket. Think of it almost like a grain silo. Think of what happens with a grain silo. We pour grain in on the top and then we pull grain out to eat at the bottom. So how old is your money? That's the key question. Is your money two hours old? Some people it is. I worked at a restaurant for a couple years before getting into finance. And my colleagues there at the restaurant, they would earn their tips and then they'd go out and spend it at the club that night their money was two hours old. Yeah, maybe your money is one day old. That's that's going to keep you nervous. That's going to ruin your sleep. If you can get to 30 days, if you can age your money up to 30 days, it's like a fine wine. It gets better with age.
- [09:55]
B
I understand.
- [09:56]
A
That's what I mean.
- [09:57]
B
That's a really cool way to put it. I've never really heard it put that way, but I agree with you. I live by this principle. I think I actually always have. And I think the people that are in business long term, they. They live by this. And the people that are in business medium term, and then they end up. They're always. They're the people always stressed about money constantly. They're always stressed like there's never enough. They're always in lack is because they're always living off of like today's money. Like the paycheck I just got today, paycheck to paycheck, it's kind of the same thing. And also. Or they're living in future money. Like I have. I've sold this much money. I have this, you know, I've sold this many. Sold this many jobs or whatever it is. So therefore. But I haven't been paid by that. So. But they, but they're already living off of that money.
- [10:41]
A
It's chickens and eggs before they hatch, you know? Right.
- [10:45]
B
Yeah.
- [10:45]
A
You. You really got to make a distinct effort. My wife and I, when I was working at that restaurant job, I would collect my tips, I'd put them in a little envelope, we'd put it in a lockbox, and I wouldn't even see it. I would just write April's tips basically on that envelope, and then I'd pull that out on April 30th. And that was the amount of money we had to spend early in our marriage, you know, to figure out, okay, what can we do this month? Okay, wow. We didn't make enough. Okay. We need to adjust. We weren't putting it on credit cards, thank God. You know, we had, we had enough problems. We were doing. We had some major student loan debts. And the pathway out of that is a whole nother story on. Of itself, Cody. But learning to live on last month's income is a, Is a journey. So can you get to seven days? Can you get to two weeks? Build up to it.
- [11:31]
B
That's interesting. It is a, it is a problem. It's. It's not a sexy topic. I wouldn't say, like, this is a topic that everyone knows. They, they should, they should be living below their means. Um, but it's like, not that fun to talk about because everyone's like, it's a daunting thing, sure, you know, but I. I like it. I like your practical approach to it. It's like, hey, if you're living on one day, like, get it to 7 days and then get to 14 days and 21 days and eventually get to 30 days, make your money a little older.
- [11:55]
A
Well, hey, here's the. Here's the thing. When you, When. When you go to the doctor, is it the. Is it the rate or the volume that saves you when it comes to medicine? If you have a, you know, debilitating disease and they have to inject you with some kind of medicine, is it the rate that they put that into your arm or is it the volume that makes all the difference? Well, it's the volume, Right. Too little medicine and you're still sick. Too much, it might kill you. Right. People are so concerned with rates of return. You know, I'm a cfp, so they'll come to me and they'll say, well, Mark, I want to get a great rate of return on my ira. And I'll say, that's fine. What did you get last year? They have no idea, of course, very often. And they might show me an annual statement. And Cody, check this out. Average returns are usually printed on your statements of your IRAs, brokerage accounts. Typical. Typical investment amateur products like that. Let's say, for example, you. You had an investment worth $10,000. And let's say, Cody, that you got a 100% rate of return this year on your investment. So your 10,000 grows to 20,000 bucks.
- [13:06]
B
Amazing.
- [13:06]
A
And you're feeling great. Yeah, amazing. Now, in year two, unfortunately, you lost half of your investment, negative 50% in year two. Okay, so your 20,000 went back down to the original 10,000 bucks. Now, how. How happy are you? How wealthy do you feel after two years of this? Not at all. Right? You started with 10,000. You ended with 10,000 two years later.
- [13:30]
B
Yeah, but.
- [13:31]
A
But your account statement arrives in the mail next week and you're shocked because it says average rate of return 25%. And they're right. It's mathematically true. 100 minus 50 divided by two years is 25%. And the investment manager is taking a fee off your back to basically show you a lie. Okay? So rates of return are, in my opinion, especially average rates of return are meaningless. In fact, I think they're worse than meaningless because it gets you thinking that you're getting something that you're not actually getting the Real investors in the market. According to third party research like Dalbar, D A L B A R over the last 30 years, the real investor returns the rates of return back to rate and volume. We'll get back to volume in a second. But the, the rate of return of real investors over the last 30 years was 3.6%. That's for all the risk and volatility we've had over the last 30 years, man.
- [14:32]
B
In a savings account.
- [14:33]
A
All right. Yeah, just. Okay, so there you go. Okay, so let's say that you were, let's say that you were a saver and I was a speculator or an invest investor. Let's say I was getting 10% a year on my mutual funds and I was saving 1% of my money. And let's say I was, I was earning, you know, 100 grand. And let's say you're earning 100 grand a year. I can save, let's say, 3% of my money. Okay, so I'm earning what, 3,000 bucks a year? I'm investing 3,000 bucks a year and my rate of return is 10%. So I'm making what, 300 bucks a year? Okay, so that's my number. You got to beat my number. Let's say you can save 10% of your income in a tin can. 0% rate of return, but your volume is 10% savings. 10% of your hundred grand of income is 10,000 bucks. You earn zero. But I'm at the end of the year with, what is it, $3,300 in my investment account. You've got 10 grand in your tin can. Which one of us is going to win the race? Right. You're more prepared for your Future with a 0% rate of return. It's rate versus volume, and volume will win every time.
- [15:46]
B
Bringing it back to, I think it's, I guess this is a promise, everyone. This is relating to entrepreneurship. These principles. I know Mark went full on CFP mode right there, which is exactly his job, and that's why he's on here. Mark, how does this relate to that founder who's building her business? And she's, she just now started separating her account from personal business. She's operating, she's got some revenue now. How should be, how should she be thinking about her, her personal finances and her business finances? Should she be investing in that, in that mutual fund and should she get that ra. Because she's starting to get some advice from people now because she's got some income now, or should she just keep it in her bank account and roll it into, like, the next year's inventory. Or just double down on her growth. Like, how should she be viewing her money?
- [16:34]
A
Well, listen, where you put your money makes it act differently. That's just a. It's a simple sentence. But really understanding where you want your money to go can transform everything. You know, imagine you're walking on a. On a trail. There's lots of beautiful hills there in Austin, the beautiful hill country. And you're walking the trail and every, you know, 200 yards, you see this pretty looking rock. So you want to. You went ahead and bend over, you pick up the rock, you throw it in your backpack. Oh, that's a pretty rock. Let me throw that in my backpack. Over time. You've got 10, 50, 100 rocks in your backpack. How is your backpack feeling? How's your journey feeling at that point? Oh, feeling burdensome. Right. So we do this with our money. Some CPA tells us, oh, yeah, you opened a business, Time to get an IRA. Time to get a SEP IRA, time to get a 401k. So time to get. And we just take their advice because, hey, we got other things we're trying to focus on right now. We got kids, we got soccer practice, we got that brand new business we're starting. We're trying to figure out what website host to use, etc. Etc. But think about it for yourself. What do you want your money doing for you? Your CPA would love to give you a tax deduction today. It makes them look really smart. But what happens to IRAs in the future? What does the word tax deferred really mean? Well, just deferred just means push it off to the future. Every IRA and 401k is taxable in the future, which say that again, taxes could be.
- [18:04]
B
Taxes could be higher in the future.
- [18:05]
A
Could be higher. Yeah. Do you think they might be? What's the likelihood? Do you want to pay those taxes? These are all questions you got to answer for yourself. What about not having access to your money? You know, we call that liquidity. But basically, would it be helpful to have your money available and usable for you right now, or would you prefer to have it locked away for the next 20, 30, 40 years?
- [18:30]
B
What do you tend to. I love. This is by. By the way, very contrary to what I would probably expect you to say. And I imagine a lot of your colleagues probably don't necessarily agree with everything that you're saying. Like, okay, you'd agree with that.
- [18:44]
A
Our podcast is called not your average financial podcast for this.
- [18:47]
B
Yeah, Most financial advisors would probably say go open that IRA because it makes logical sense to do that today and go do this, get the tax deduction here and get to this. But your point is, is that that doesn't always make sense if you're depending what you're trying to do. Specifically for business owners, you need to be laser focused on what you're doing and all of your liquidity and all of your focus and energy needs to be focused on, on that thing. And that will actually be your primary wealth strategy. Wealth builder will be that business if you do it properly. But you diversify too soon, you're saying is that it becomes heavy, comes burdensome and you end up getting too tired before you even complete the trail.
- [19:25]
A
You're investing in somebody else's business, quite literally when you buy stocks, you know, so which business do you have more faith in? Yours or someone else's? Which one do you have more control over? Yours or someone else's? Which one will give you the best, you know, performance over time and best life that you're looking for? You know, a lot of times this is in like, what do we want our life to be like? But locking that money up.
- [19:48]
B
The average millionaire has seven streams of income.
- [19:53]
A
Yeah, yeah. And what they don't tell you is that's usually related streams of income. One core river with lots of tributaries that all span from that one stream. Right. So let me give you a quick example. Let's say you and I are both doing the E commerce thing and we're both just getting started. Let's say that I take the traditional financial route and I, I listen to my CPA and I open up a 401k in my business or an IRA or whatever. And you and I are both not going to make a lot of money in our first year. So we're not having like, it's not like I have a giant income in the first place. Okay? So there's not a lot of deduction anyway. But you decide to put your money in something that's accessible to you and grows forever and never gets taxed again. But I have my money in something that's not liquid, not accessible to me, market based, which bounces up and down with the emotions of the market and I can't touch it for the next 30, 40 years. Who do you think is going to be more competitive between the two of us in that scenario? You, obviously. You've got the access to the money. You've got the ability to use that money as collateral or leverage to help grow Your business and there's no taxes on that money ever again in your lifetime. That seems like a shoe in solution for most businesses, but most people just don't realize tools like that exist.
- [21:17]
B
That's so interesting and you're so right. And it's so contrary to what I remember. When I was 24 years old, I think I got my first I was corporate job and I remember had a few thousand dollars saved in my account and I had a co worker and he's just like, oh yeah, I put my money in this like this money market thing of course, you know, and it's like. And I'm like, cool, I should do that too, right? And so literally I took that that night I went home and I transferred almost all my money to this, to this thing. And I remember just obsessing over this thing. Now I'm watching it every day, checking it, checking it. Goes up, goes down, yada yada. Meanwhile, I have zero money in my savings account. So even if I have this epiphany of this amazing business idea or this amazing opportunity that comes across my desk, I'm locked up. I mean how I feel, I'm locked up. Otherwise I have to take a loss. And that's a whole emotional thing. And now it's like, and I think so often people do this exact same mistake, especially early on in their career.
- [22:13]
A
So you know, I, I totally agree with you. Couldn't, couldn't agree more. And how many businesses have failed due to lack of access to funds? It's not that the, the market wasn't there. It's that they had to go out and look for, you know, a payables account or you know, a, you know, a cabbage account or some high interest bank loan because all their money was in their home Equity or their 401k and they had to rely on credit cards or they had to rely on XYZ. 1, 2, 3. The banks are the vampires of the entrepreneurs. And you know, you have to fire your banker. And the only other solution is to become your own banker. To actually tell us more about that. Not just to, not just to get rid of the banks, the snakes that vaporize the entrepreneurial spirit, but actually learning to act and function and become the very thing that was sapping your strength could actually be the fuel that helps you grow. And what I mean by that is to not literally set up an FDIC insured bank. I don't need that. And I don't mean don't have a checking account. What I mean is rather than relying on lines of credit that other people offer, you learn to become your own line of credit for yourself and borrow from yourself. Bank on yourself. This is one of the key phrases that we help teach our clients. And the mindset, but not just the mindset, but also the tactics and financial tools are out there where you can in essence, become your own source of financing, borrow from yourself, pay yourself back with interest, and become the banker that you know is sapping the wealth and the health of many other businesses and competitors all around you. If you can not just pay cash for things, but bank on yourself and become your own source of financing, you can handily beat your competitors and have a better shot at survival in the first few years of your business and beyond.
- [24:13]
B
How does somebody do that? So I think what you're kind of leaning towards, it seems like, is like whole life insurance or some sort of life insurance. Is that kind of where you're kind of going with that?
- [24:22]
A
That's one of the tools that we use. Yeah. Now, a lot of people may be unfamiliar with that tool. Would it be okay if I kind of explained that?
- [24:29]
B
And honestly, I'm not familiar, super familiar with the options there either. There's term, just to understand, there's term and there's whole life. Is that, is that two main.
- [24:37]
A
Yeah, and there's, there's some other mutations out there, like indexed universal life products and others. But whole life insurance is the only one that really can be used for the banking function. So you're right. When you have term insurance, it's sort of like renting a life insurance policy for a couple of years and then you have to give it back and the landlord raises the rates on you and so forth. And there's nothing wrong with term insurance, but it serves a simple, singular focus, purpose. When you have whole life insurance, it's more like you own a house or you own something that builds equity. And that equity, we call it cash value. And much like equity in your home, you can access that vis a vis a loan. But unlike a home equity loan, the policy is a loan, in essence to yourself. You're borrowing it from yourself. You know, you access the cash value through the policy loan and you are in control of repaying that loan on terms you set. Repayments are in essence, optional during your lifetime. If you never pay off the loan to yourself, to your policy, it just gets deducted from your death benefit when you pass away. They're not going to come like repossess your life insurance. Like they might a car or a house or something like that, so now when you have one of these whole life policies, we call them bank on yourself designed whole life policies. First of all, the commissions are cut way down relative to what Dave Ramsey would talk about. The cash value grows way faster than old fashioned whole life insurance. And the key function here is you can borrow against your life insurance cash value and the equity or cash value in your policy continues to earn interest and grows even on the capital you borrowed. So Cody, if you have $50,000 of cash value and let's say you borrow $40,000 to go buy a car, your policy continues to grow guaranteed outside of the stock market on the entire $50,000 as if you hadn't touched a dime of the money.
- [26:38]
B
Interesting. So you're saying that the whole life policy, I guess you could say is, it's. How much do they cost? High level, like what's, what's everything and anything.
- [26:47]
A
Yeah, it could be a few hundred bucks a month. It could be a few thousand bucks a month. It could be once and one lump sum and then you never add to it again. It's, it's really up to the, to the design of the.
- [26:57]
B
And what do they typically rent? What do they typically grow at? Like the interest rate on that? Is that market specific or.
- [27:02]
A
No, they're, they're going to grow at a reasonably conservative rate back to rate versus volume. Right. But the rate is going to be going to be close to your cash equivalent somewhere in the 5, 6% range. You know. Now that's a tax free yield. So your CDs or your money market accounts would have to do more than that since those are all taxable.
- [27:22]
B
So you're saying that a whole life. Let's say you put in like, let's say lump sum $100,000, you buy a whole life, whole life policy that's going to grow at 5% per, per year.
- [27:31]
A
That's right. Over time you're going to see these policies doing in the middle single digits like that somewhere around 5, 6. Really comes down to the design of the policy and if it was designed properly.
- [27:41]
B
Got it. And then you mentioned Dave Ramsey. Right. And, and I followed Dave Ramsey too for whether we agree on every single thing or not doesn't matter. The point is principles are there. And he. I feel like I've seen clips of him basically talking. What you're referring to is like anti whole life policies. Is that correct? Is that kind of his stance on it from your perspective?
- [28:01]
A
He's very anti whole life insurance. Yeah. In fact he. Why is that? Well, good question. I'll give you the short answer. First of all, one of his biggest sponsors is a term insurance company.
- [28:13]
B
Okay.
- [28:14]
A
And a mutual fund company. So Dave Ramsey was a part of the Al Williams and Primerica push in the 80s called buy term and Invest the Rest. Now that's a marketing slogan. And, and essentially it was created by a guy named Mr. Al Williams who owned a term insurance fund and a mutual fund. So if you ask a barber if you need a haircut, you kind of know what your answer is going to be. Right now he says you can always get 12% rate of return in the stock market. Dave Ramsey does.
- [28:45]
B
Got it.
- [28:46]
A
If that was true, I would be, you know, we'd all be millionaires. We'd be talking on beaches right now. You know, real investor returns are far less than 12% rate of return. He's been exposed for that. I agree with you. He has done so much good for so many Americans, myself included, to get me focused on my finances. But he is dead wrong about the return you can expect in the markets. In the last 25 years, real investor returns have been closer to three and a half, 4%. And he's dead wrong about this kind of whole life insurance. Not all whole life. I agree with him on some whole life. It can be a big bear trap of commissions and fees, but if we cut those commissions down and we design the policies properly, you bet, man. It's an incredible tool that entrepreneurs need to know about.
- [29:31]
B
There's something that I've always been curious about. I read this couple books in the past. They talked about the, some of like the wealthiest families in, in America or the world, I guess you could say, and studied like the Vanderbilts and it studied like the Rothschilds a little bit and also studied the Rockefellers. And I remember hearing this thing that the Rockefellers specifically, they would do this thing where every time a baby was born into the family, they would buy them an insurance policy. Now, they didn't specify which insurance policy that probably was, but the point was, is that they would just do this for every single one of, of of these babies or every single member of the family. What policy? What was, Was that a term or was that whole life, do you think?
- [30:11]
A
Well, the only cash value life insurance back in those days was whole life insurance. Universal life wasn't really even invented until, you know, within the last 25, 30 years or so. So it had to be whole life insurance. It wouldn't have made sense to get a term policy on a baby because that term will expire before hopefully the Baby would gotcha. So it had to be whole life insurance at that point.
- [30:34]
B
Interesting. And so then this, by the time they're, they're paying on this baby for let's call it like I guess 60, 70, 80, 80, 65 years at the time, maybe 70 years. And then that cash value has become so big and then when that person passes, it basically goes straigh into the trust.
- [30:49]
A
That's right.
- [30:50]
B
Is that correct?
- [30:50]
A
And then they have a number of families that do exactly this. That's right. And they run it right to the next family. So the next baby that's born, the, the grandparents that pass are basically a harvest that's planted into the seeds of the next generation. And it's an unbelievable tax free wealth transfer tool. Income tax free to the family that, that has this baked into their family's portfolio. Think about this for a minute. If your family, every single one of them had a policy on all the beloved family members, you're going to, when the family member passes. And I know you and I both unfortunately experienced parents that passed away, but my family, my parents both left me gifts from their life insurance policies. Guess where I put the proceeds of those of those investments? Right. We put them right into new brand new whole life policies on my, my wife, my brother and his wife and kids and grandkids, as we have grandkids, we open, open up new policies for them and we're just giving now to the fourth generation. All this is done without any markets or the government getting involved. And meanwhile we can access the cash value to help little Johnny get his first business started or help little Susie go to college. I mean, where is it written that we have to put our money into markets that we can't control? Especially when we're trying to get our businesses off the ground.
- [32:15]
B
That's very interesting. It's a fun conversation to have. I not expect to have this conversation about whole life. What is the universal life insurance that you were talking about?
- [32:23]
A
Yeah, and again, as a certified financial planner, I don't recommend everyone just rush out and go get a whole life policy or anything else. You know, you need to meet with a CFP like myself or someone like me to see if it's a right fit for each person listening. And there's considerations on any decision you make to your question about universal life. Short answer, we can go longer if you want to, but short answer is universal life is a annual renewable term policy. Okay, so what does that mean? That means there's a cost component to the universal life which gets more expensive as you age.
- [32:56]
B
Okay.
- [32:56]
A
All right. So it's an annual renewable term policy with a side fund in an index tied to the market. So hopefully the market does great when it doesn't and you get older because we're always getting older. Guaranteed market is not guaranteed. But the universal life policy grows and then it can get cut down and even lapse. And recent studies have said that 89% of universal life policies will pass, will lapse before the person passes away. In fact, I just saw just the other day in the Wall street journal a $50 million lawsuit from someone who unexpectedly saw their policy fall apart. And now she's suing the insurance company. So thank goodness. I don't really go that direction. I have the contracts to offer that product, but I just feel like it's a liability to my business and it really can't let us do the, the functions of banking that you and I have been talking about.
- [33:51]
B
Very cool. And we already went for 32 minutes and I wanted to get to the rapid fire questions. Are you ready for rapid fire?
- [33:58]
A
Let's do it.
- [33:59]
B
What's your favorite business book? And you can say your own if you want because you've written two or three books.
- [34:03]
A
Well, sure, I'll tell my book, but I'll get one here. This one here is the road less stupid by Keith Cunningham. Best little business book. Lots of notes and markups in there. We did write a book called how to be an Amazon legend and fire your banker. So whether you're on Etsy or anywhere else, you can read this book to learn more about how to become your own source of financing in your e commerce business and beyond.
- [34:29]
B
Awesome. Just list out your other books too. That way that we, we have in the description.
- [34:34]
A
Secret to Lifetime. Yeah, thank you. Thank you. The Secret to Lifetime Financial security, which I co authored with the New York Times best selling author Pamela Yellen and real estate investing for women. Now how did I get into that book again? It was a co authored book with Monique Sawyer and some others. I think I might have been one of the only one of two other men that snuck into the book somehow. So. And we're in the middle of writing a new book called the Business Fortress with a gentleman named David C. Barnett.
- [35:04]
B
Beautiful man. Get excited to share that with me when you, when you, when that comes out, we'll have to have you come on and talk more about it.
- [35:09]
A
Thank you.
- [35:10]
B
What's one thing that you wish that you knew before starting your business?
- [35:13]
A
You know, really give every dollar a job. Don't just let money Sit stagnant in your bank account.
- [35:20]
B
What's the worst advice that you've ever received about business?
- [35:24]
A
Paying cash was the answer. Paying cash. People used to tell me that paying cash was the gold standard. If you can pay cash for a car, that's the best way to get. No, no. Being the bank is the best way to buy that car. So that would be, you know, the, the big all, all the good things that Dave Ramsey taught me. But paying cash is not the answer. You still finance it from your future self. You think about it, if you spent 30 grand on a, on a, on a car today, that's money won't be earning in your savings account ever again. That, that 30 grand could have continued to grow to 100 grand, 150 grand over your lifetime.
- [35:59]
B
How many hours do you think that you work on your business per week?
- [36:02]
A
I really dial that down. I'm at about 36 hours a week, which is hard to do, but a lot of fun. I keep trying to fire myself as much as I can.
- [36:11]
B
I love that. If your family and your friends, they and your customers all had to get together and you're not allowed to be inside that room and they had to write an honest article about you and it had to care. They had to characterize your traits. Good stuff. And also the not so good stuff. What are some things that they would say?
- [36:31]
A
Man, I have no idea. That's a very good, deep, thoughtful question. I have to give some better thought to that question. You know, I think the, you know, candidates, earnest, compassionate, those are the good sides, bad sides. You know, you said not so good stuff. You know, finding my way out to do some more hobbies and spending more time out either on the shooting range or the golf course would be a lot of fun for me. I don't know if they'd know that or not about me, but that would probably be a negative. I don't know. It's a good question.
- [37:05]
B
It's a good answer. How would you define a creator in today's world? Who is a creator to you?
- [37:12]
A
A creator, like in the business context?
- [37:15]
B
Sure.
- [37:17]
A
Someone who has the bravery to say, you know what? I'm not just going to rehash something or take what somebody else is doing and, and instead doing it themselves. There's a quote out there. It says 10% of people think, another 10% think that they think. And 80% would rather die than think. And I think that's true also with creating. It's a dangerous, scary thing to put your creation out there producing and Creating is scary. Consuming and critiquing is easy. So do the dangerous thing and develop something out of your own inspiration and potential. That's what a creator is today.
- [38:03]
B
I love that. Who do you think should be a business owner?
- [38:06]
A
Anyone who does not desire just to be that tennis ball floating down the gutter of their own life. You know, be a salmon swimming upstream. I love working with business owners because I can tell that they're looking for agency in their own life. And that probably means they have slimmer waistlines, they probably have happier relationships, they probably have better friendships, better balance sheets. These are people who are intending to manage as best they can. A chaotic world. We cannot control everything in this universe. We're not God. We can influence more than we think we can. However. And that's the people I love hanging around.
- [38:44]
B
I love that those are the people.
- [38:45]
A
Who should be business owners.
- [38:46]
B
I love that. Where can people find you, learn more about you, follow you, book a call with you, all that good stuff.
- [38:53]
A
If you're open to and learning about some not so average financial strategies. I mean, imagine not having to deal with the market chaos and having accessible money at any point along the way, small or large. I can help with that. Myself and my colleagues are available. You can go to kickstart with mark.com we'll schedule a 15 minute phone strategy session to answer your questions. That's Kickstart with Mark.com.
- [39:18]
B
Awesome. And you also have a podcast you mentioned?
- [39:21]
A
That's right, yeah. If you'd like to dig into some more of these concepts first before reaching out, you can find that link@the kickstartwithmark.com website or just search for not your average financial podcast.
- [39:32]
B
I will. For anyone listening or watching this, we'll link to all of Mark's all these links below, including the books and then also the podcast and also The Kickstart with Mark.com Mark, thank you very much for coming on. I really appreciate it. It was a very unique conversation that I've had on the podcast. So thank you. Talk to you soon.
- [39:51]
A
You too.