Build Wealth AND Community Using This Real Estate Strategy (with Mel Dorman) SB1745

Summary

The Stacking Benjamins Show: "Build Wealth AND Community Using This Real Estate Strategy" (with Mel Dorman) SB1745 – Oct 8, 2025

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Episode Overview

In this episode, hosts Joe Saul-Sehy and OG welcome real estate innovator Mel Dorman to discuss how you can simultaneously build wealth and foster community using creative seller financing strategies in real estate. With a focus on Mel’s unique journey—from dumpster diving student to accomplished real estate investor—listeners learn how alternative financing models can empower more people to participate in real estate, create win-win situations, and support broader financial stability in their communities.

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Key Discussion Points & Insights

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Mel Dorman's Journey: From Scarcity to Community Wealth

• Dumpster Diving Days (05:42–07:08)
  • Mel recounts graduating during the 2009 recession, struggling financially, and “dumpster diving” for fresh food at Trader Joe’s. She describes transforming “debris into charcuterie,” demonstrating resourcefulness and community with fellow students.
    "At that time, it was about going around one or two in the morning… get in and out as fast as you can." – Mel (06:16)
• International Development Lessons (07:27–08:50)
  • Mel’s work in Uganda and India exposed her to the devastating effects of debt and economic exploitation. Personal stories of seeing others controlled by debt inspired her eventual approach in real estate. "That was the first time I really saw how debt could control people's lives." – Mel (08:03)
• The Kiyosaki Book and Changing Mindsets (09:24–10:02)
  • Initial skepticism of wealth-building literature faded over time.
    "I flip over the cover… 'Rich Dad, Poor Dad'. I'm like, oh, this is another American book about making money. Those selfish Americans…" – Mel (09:29)

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Real Estate as an Accessible Wealth Builder

• Family Crisis Sparks Action (10:10–12:17)
  • Mel faced her own financial hardship when her father was diagnosed with Alzheimer’s, and her family lacked savings. This spurred her to learn everything about real estate investing through resources like BiggerPockets podcast. "I realized real estate was such an accessible way to build wealth…" – Mel (12:30)
• Getting Creative: First Deals & the Power of Seller Financing (13:37–16:17)
  • By saving $50K as a social worker and utilizing FHA loans, Mel bought her first property. She quickly realized she’d need to move faster and think creatively to help her family.
  • Decision to focus on off-market deals and seller financing was pivotal. "I knew it was a way that I could build relationships in my community to build wealth." – Mel (15:55)
  • The “nobody’s coming for you” lesson: Mel underscores individual responsibility in wealth-building. "There is nobody coming to help. You have to do it yourself." – Joe (16:37)

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Seller Financing Deep Dive: People-First, Win-Win Real Estate

• Meeting Kelly: The Triplex Deal (17:32–20:43)
  • Through relationship-building and direct mail, Mel finds Kelly—a bankruptcy attorney with a triplex to sell. She negotiates creative terms, including a low down payment and delayed first payment. "I said, great, that's all you need then, right? If I don't pay you, you can just use $15,000 of my money and foreclose on me. And he saw the logic, and he agreed." – Mel (19:09)
  • Mel further leverages her community, borrowing from friends to meet the down payment.
• Structuring the Deal—Why Seller Financing Works (21:47–23:34)
  • Mel explains how seller financing can be more profitable for the seller than a traditional sale, especially after taxes, and provides more flexibility to both parties. "He's not making $725,000. He's making a million dollars on that property… He gets to move from being the landlord to the lender…” – Mel (22:25)
• Building Trust and Community (23:14–24:31)
  • Seller financing requires high trust, transparency, and shared values. Mel stresses that being trustworthy and responsible is vital, as it’s “your neighbors” you’re working with.
• Finding Seller Financing Opportunities (24:31–25:40)
  • Mel shares her “love letter” direct mail strategy:
    • Hand-addressed, sincere letters focused on relationships, not transactions.
    • Build lists through relationships with escrow companies or available software. "All it is is introducing yourself as a neighbor… it's really just a building of a relationship. It's not very much about the property, it's more about the person." – Mel (24:00)
• Tenant Relationships & Social Capital (25:53–27:01)
  • Mel believes in personal connections with tenants, which helps navigate issues humanely and ensures smooth transitions when problems arise.

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Advanced Seller Financing Techniques

• Flexible Terms & Deal Engineering (27:31–29:57)
  • Unlike traditional bank loans, seller financing terms are completely negotiable (ex: interest-only payments, remainder beneficiaries, early buybacks, splitting notes across properties). "I put some terms in there that allow me to take a promissory note… and I can move those pieces of debt to other real pieces of my property, and that creates equity..." – Mel (27:53)
• Managing Risk & Learning Curve (30:27–33:05)
  • Mel cautions that real estate is complex and potentially risky, requiring education and mentorship rather than reckless experimentation. "Real estate is something… like flying a plane or becoming a doctor. You are working with massive numbers... take the time to read books and listen to podcasts and learn from experts..." – Mel (30:27)
• Low Closing Costs & Simplicity (31:00–31:52)
  • Closing on a seller-financed deal often costs ~$2,000 versus ~$12,000 for a traditional bank mortgage. "With a real estate attorney, it's about a five-page document... with a bank, it's like a 30-page, really, really crazy document..." – Mel (31:38)

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The Bigger Picture: Community Wealth & Banking Skepticism

• Community Wealth-Building (33:05–33:38)
  • Mel argues the standard banking system is less community-minded and more extractive, citing the losses most Americans experienced during the 2009 crisis. "The banking system has let us down… this is a much more practical way to build wealth and to do it in such a way that we keep wealth in our communities..." – Mel (33:05)
• Achieving Scale (33:52–34:27)
  • Mel has gone from dumpster diving to 34 units in 5 years using her model.
• Book Recommendation
  • Mel’s book, Bank on Your Neighbor: People First Real Estate Strategy to Build Wealth Together, was released in September and is available in print and podcast formats.

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Notable Quotes & Moments

• On Self-Reliance:
  "There is nobody coming to help. You have to do it yourself." – Joe (16:37)

• On Borrowing from Friends to Close the Deal:
  "I called through about maybe five or six people, and I found some lesbian friends of mine, and they lent me $10,000 in a second position lien for an entire year..." – Mel (19:40)

• On the Power of Seller Financing:
  "He gets to move from being the landlord to the lender which is what's most lucrative." – Mel (22:25)

• On the Heart of the Strategy:
  "At the basis of this is financial literacy. And this is not about taking advantage of folks… but at the end of the day, you have to be responsible because you're working with a community member." – Mel (23:14)

• On Relationship-Driven Prospecting:
  "I want to know my tenants. I want to know everybody that's on my team... It's a team sport." – Mel (25:40)

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Financial Headlines Segment: Understanding Fed Rate Cuts (37:30–52:21)

• The Fed recently cut its rate for the first time in almost a year (quarter point cut to 4–4.25%). Joe and OG explain:
  • This is the rate banks pay each other for short-term overnight loans, not directly your mortgage rate.
  • Lower rates impact variable loans (credit cards, car loans, HELOCs) and savings rates first, not existing fixed-rate debt.
  • Use reductions as an opportunity to revisit your debt strategy, not for lifestyle inflation. "If you have a car loan at 7%, not going to change… you can go refinance it maybe." – OG (41:02)
  • Consider both “debt snowball” (smallest balance first) and “debt avalanche” (highest interest first) approaches, but be sure to lock in a plan as rates fall.

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Timestamps for Key Segments

• Mel’s Background and Dumpster Diving: 05:42–07:08
• International Development Experiences: 07:27–08:50
• Family Crisis & Learning Real Estate: 10:10–12:17
• First Purchase & Seller Financing Introduction: 13:37–16:17
• Community Relationships & Finding Deals: 17:32–25:40
• Tenant Relationships: 25:53–27:01
• Creative Terms in Seller Financing: 27:31–29:57
• Risk Management and Closing Costs: 30:27–31:52
• Reflection on Banking System & Community: 33:05–33:38
• Fed Rate Cut Explainer & Debt Strategy: 37:30–52:21

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Episode Takeaways

• Seller financing can be a transformative approach for both buyers and sellers, allowing for flexible terms, better community outcomes, and sometimes superior economic returns compared to traditional bank loans.
• Community and relationships are foundational for Mel’s strategy; trust and reciprocity make creative real estate deals possible.
• Innovation in real estate is accessible with the right mindset, education, and community support—even if you start from dire circumstances.
• Leverage opportunities from rate cuts to shore up your debt strategy and prioritize long-term wealth over short-term consumption.

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For more on Mel’s methodology and personal story, check out her book, Bank on Your Neighbor, and listen to her TEDx talk (both linked in the show notes).

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End of summary

Transcript

[Joe]

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[Mel Dorman]

This episode is brought to you by Progressive Insurance. You chose to hit play on this podcast today. Smart Choice Progressive loves to help people make smart choices. That's why they offer a tool called Auto Quote Explorer that allows you to compare your Progressive car insurance quote with rates from other companies so you save time on the research and can enjoy savings when you choose the best rate for you. Give it a try after this [e-mail] Progressive Casualty Insurance Company and affiliates not available in all states or situations. Prices vary based on how you buy.

[Joe]

Stacking Benjamins is not for everyone. Side effects may include euphoria, increased ability.

[OG]

To meet your goals, and aggression from.

[Joe]

People wondering what the hell your secret is.

[OG]

Stacking Benjamins may be habit forming, especially.

[Joe]

If you stick around for the entire episode. Wink, wink. Please check with your doctor to see if Stacking Benjamins is right for you.

[Doug]

Live from Joe's Mom's basement, it's the Stacking Benjamin Show. I'm Joe's mom's neighbor, Doug, and while your neighbors are busy fighting with each other on social media, let's be neighborly and help you invest in your community with today's mentor, Mel Dorman. You've heard her TED Talk and now she's here to teach you real estate. In our headline segment last month the Federal Reserve cut interest rates for the first time in practically forever.

[Joe]

Hyperbole.

[Doug]

Oh, that was a gajillion percent hyperbole. But here's what's not hyperbole. We're going to tell you what the Fed rate changes mean for your money so you know how to tweak your financial dashboard. But that's not all, of course. I'll also share some ear popping trivia that sounds uncomfortable. And now two guys who love their Current real estate deal with Joe's mom. It's Joe and. Oh, Juju.

[Joe]

J.J. told you a thousand times. Doug, don't say that so loud. We can't remind mom ever. What a sweet, sweet real estate deal we've got podcasting for free in the basement. Hey there, Stackers. Happy Wednesday to you. We're so happy you're here. Grab a piece of paper, because this is going to be a good one whether you're interested in real estate or not right now. You know what? Negotiating deals is a part of our life, our everyday life, and Mel Dorman's going to help us do that today. But a guy who's going to help us through this entire episode today is here, across the card table from me, Mr. OG reporting for duty at the basement. How are you, man?

[OG]

I prefer the term rent controlled. Isn't that price controlled rent or something? Isn't that.

[Joe]

Well, the bad news is mom is like the city council or the whatever in this analogy.

[OG]

But it's controlled at zero so far, so.

[Joe]

Well, yeah, we got to make sure that she keeps it at zero, so.

[Doug]

I'm glad we joined the rent is too damn high party.

[Joe]

It's. It's a good day when you get that one line item. You know, they say. What guys, they say control the three things, right?

[OG]

Yeah.

[Joe]

Your housing cost, your auto cost, and your grocery, your hair. And if we can make one of those, zero and your hair, which none of us have done a good job, I'm looking at.

[OG]

What are you talking about?

[Doug]

It's like a. I think I'm doing stellarly.

[OG]

It's like a main. Compared to you two idiots.

[Joe]

If we're trying to get rid of all the alleys, I've got power alleys. Is that what we start referring them to is Yes. I don't want to come over because I got my power alley.

[Doug]

Yeah.

[OG]

Pretty soon the show is going to be sponsored by Neutrophil Chia Pets.

[Joe]

Remember, at one point, Neutrophil did sponsor our show.

[OG]

I never got any samples, so no idea why.

[Joe]

Why they went.

[OG]

Clearly, that was maybe. Clearly none of us did maybe 10 years ago.

[Joe]

Speaking of sponsors, we've got a couple sponsors to make sure we can keep on keeping on. You don't pay any money for today's great show with Mel. And also talking about interest rates and how interest rates work. The interest rate. One on one show. So we're going to hear from them. And then coming down. Oops, she's starting to come down to the basement right now. Mel Dorman getting ready to join us. She had a TEDx talk that you may have seen because this thing went viral. And today she's going to share her story with us. Oh, stackers. I love a great story about community and creativity. Mel Dorman's here to tell it. How are you?

[Mel Dorman]

I'm doing so good. Joe, how are you doing this morning?

[Joe]

I am good, too. And it's so funny is I'm getting to know you. I just feel like we're singing off the same song sheet. You are all about community and helping your neighbor.

[Mel Dorman]

Absolutely. I love it.

[Joe]

I'm not sure where to start. Do we start with you Dumpster diving? Do we start with I love. What'd you say in your TEDX doc? You were turning garbage into Garchuda. Yeah.

[Mel Dorman]

Debris into charcuterie.

[Joe]

Brie. That's right.

[OG]

So good.

[Joe]

Is there a key when you're dumpster diving to doing it right?

[Mel Dorman]

You know, at that time, it was about going around one or two in the morning, right. When the night manager was leaving and they were done with their shift. And then, you know, get in and out as fast as you can.

[Joe]

Yeah, yeah. Right. And not starving. I mean, you're dumpster diving because you have no money.

[Mel Dorman]

Yeah. At that time. We graduated in 2009, so most students who graduated didn't have any money. So we were making ends meet. And honestly, we ate like kings and queens. Like Trader Joe's throws a lot of good stuff away.

[Joe]

Well, you even said in your TED Talk, which we'll link to in the show notes, you had, like, a methodology. There was a bunch of stuff that the. The expiration date hadn't even come by yet.

[Mel Dorman]

Yeah, yeah, yeah. We were getting steaks that would expire like, three or four days later. So we just stick them in the freezer. And we had an entire meat freezer, which, I mean, which college grads do you know? Had an entire steak freezer.

[Joe]

And all from Trader Joe's.

[Mel Dorman]

All Trader Joe's.

[Joe]

Yeah. That's phenomenal. It's funny stackers, because I know when Og and I were talking about you coming down that we were going to talk about seller financing, and you're like, what the hell are we talking about? Dumpster diving? But it all is this idea that initially you're struggling. You're dumpster diving. Why did you go to Africa?

[Mel Dorman]

My undergrad. I was a global studies major, and so I went there to teach English and to study on HIV aids. So it was really part of my curriculum.

[Joe]

Yeah. And how long were you there?

[Mel Dorman]

I Lived there for four months. Yeah. In a rural village and then in a slum in the city of Kampala.

[Joe]

I want to get to the Robert Kiyosaki part of this in a second, which we'll get to everybody. But before we do that, what else did you learn in Africa? Because I feel like that type of experience could teach you so much.

[Mel Dorman]

I learned a lot there. But I would say a lot of my more formative international development work was when I lived in India, in Kolkata, India, helping women out of sex trafficking.

[Joe]

Oh, no.

[Mel Dorman]

That was illuminating. Just to see how, you know, all these women had been trafficked, but they were stuck there because they couldn't pay the pimps off the money they owed for having been stolen from their family and told that they owe this, this debt now. And so that was the first time I really saw how debt could control people's lives.

[OG]

Wow.

[Joe]

Oh, that's horrible. Cheryl, my spouse, did part of her training in Mumbai and she was working at a children's hospital where most of these children did not have families. And just very similarly ugly. Completely different stories than your stories, but it's similar. And she loved it, by the way. She loved India so much.

[Mel Dorman]

Yeah, it's an amazing place. The people are so generous and kind. And I learned a ton about international development that actually really informs my practice now with seller financing.

[Joe]

That's funny. I'm going to ask you about that because I can't figure out how the hell that would. How would that translate? But before we get there. So you're in Africa, you've graduated in 2009, you're seeing how evil banks can be and a lot of capitalist stuff that's falling down can be. So I would bet that would help make me kind of negative. Then you're seeing all these people in this income disparity and that would make you negative. And then you're in Africa and this kid shows you this Robert Kiyosaki book. Yeah, what happened there?

[Mel Dorman]

Yeah. So I'm living with this rural family in the middle of nowhere in Kampala. I'm the only white person. Most people are scared. They've never seen a white person before. So I'm this anomaly. And I remember one day the 16 year old cousin comes over and he's holding this book and he's like, putting in my face, you got to read this book. You got to read this book. So I pick it up and it says, rich dad, poor Dad. I flip over the COVID and I'm like, oh, this is another American book about making Money. Those selfish Americans. I want nothing to do with them. The kid was like, begging me, please keep it for like two weeks. I'll come back and you can just read it during that time. And I said no. I was like, so principled. And I just gave it back to him. I was such a fool.

[Joe]

Well, I don't know. I mean, on one side, yes, but it was how many years later then that your dad started to have issues?

[Mel Dorman]

Yeah. So speed up. About seven years later, I graduated college. I had lived in India, I had done all this work, and I came back having done international development work, helping people in third world countries, coming back to the United States and realizing that I was the financially disempowered one because my dad was diagnosed with Alzheimer's as a 67 year old and he was the breadwinner.

[Joe]

So young.

[Mel Dorman]

Yeah.

[Joe]

I have friends that we found out that she had Alzheimer's maybe eight months ago. And then I found out just a few weeks ago that he has Alzheimer's. This. This beautiful couple in our community, and they have no children to take care of them. But you're tasked with helping to take care of your dad?

[Mel Dorman]

Yeah. So, I mean, I was a 23 year old. I had $10,000 in my checking account. And I thought, okay, well, you know, my parents have some sort of retirement, right? No, they were like 60% of Americans just living paycheck to paycheck, no plan. And the doctors told us it was going to cost $7,000 a month to take care of my dad, to have home care. And so, you know, we ended up doing something that was really challenging. My sister had lost her house in the 2008 housing crisis, and so she was living on the streets. She had developed a drug addiction. And so my family trying to solve two problems at once without the safety nets that we used to have in our society. We had my sister, who was drug addicted and homeless at the time, move in and take care of my dad for the last few years of his life. And that really shook me. Yeah. Wow.

[Joe]

What was your net worth at this time?

[Mel Dorman]

Like $20,000 maybe? I had nothing.

[Joe]

So here you are, you're trying to come up with $7,000 a month to help your dad. Your sister has issues. You definitely have seen the worst of the crisis. What flips the switch for Mel and changes things.

[Mel Dorman]

So after I found out my dad had Alzheimer's, you know, it took seven years before he passed away. So right away at. This is going to sound so funny, but I was a social worker at LA county jail. So you can imagine during the day I'm processing inmates doing mental health care. And in between I would just be reading books from like Bigger Pockets or listening to podcasts or just everything I could get my hands on and 20 hours.

[Joe]

But how do you choose. Wait a minute, hold on. How do you choose Bigger Pockets, though? Because I can't imagine a social worker who seems to be very anti a lot of capitalist ideas. Rich people are evil all of a sudden. How the hell are you reading Bigger Pockets?

[Mel Dorman]

You know, after I read Rich Dad, Poor Dad, I finally picked up that book. I was sitting in the jails going, okay, how am I going to help my family? Once I realized real estate was such a accessible way to build wealth, naturally BiggerPockets was a free and accessible resource for me. So I just listened to 300 episodes while I was sitting in jail as a social worker, not as an inmate, but I just listened to everything I could get my hands on. And by the time I got done with all those episodes, I had a pretty good understanding of what could go wrong and how to make it go a little more right.

[Joe]

And not only are not all rich people evil, I think some rich people are evil, some poor people are evil totally. But it depends on how you use your wealth. And now you've got this. Really what I think of when I think of bigger pockets, and especially then, I think they still are now, but then just such a giving community, like all these people just giving all this information, steering people clear of a lot of the shysters in real estate. But you still have this issue. You're in social work, not making a ton of money. Mel, how do you afford to buy a first property then to get this thing rolling?

[Mel Dorman]

While I was working in the jail for that year, I did overtime and I saved up about $50,000, which was remarkable for a social worker. And I started sending out direct mail letters when I moved to Portland. And about three months into it, I got a call from a woman, and she was an out of state realtor. She wanted to work directly with me. And since I was a very broke buyer, I was not very competitive. So we talked about doing an FHA loan. At the time, I was absolutely shocked. So I had no real estate knowledge locally for Portland. When I moved up there, I didn't know what anything was worth. I was shocked to find out when the appraisal come back that it was $50,000 more than I was paying for it. And that opened my eyes. I was like, whoa, a 50,000 DOL. What a social worker makes in a year. Like, it was absolutely amazing. And so that really changed my mind about real estate, that it was a very accessible way to build wealth.

[OG]

Wow.

[Joe]

But you realize buying this first one that it's going to be a long slog if you keep doing it that way.

[Mel Dorman]

Yeah, yeah. And, you know, they made like 150,000. They flipped it over two years. They were super excited, too. So nobody was getting gouged. But, yeah, it made me realize that money really matters. You know, my family is going through this crisis, and if I was going to accelerate my timeline and help them, I needed to figure out how to make money in a much faster way. And, you know, off market properties seems like a great way to do it.

[Joe]

This is. This is when I start to get excited. Because as our stackers know, real estate excites my son. It excites a lot of people in my community. I think it's a great way to build wealth. It's just not for me. But the next thing that you decide to do excites the hell out of me. So you find this guy. And I'm looking through my notes here. Kelly. You find this guy named Kelly. Tell me about you and Kelly. And you starting to explore this idea of seller financing.

[Mel Dorman]

Yeah. So let me just back up a little bit. Like, right after I bought that first duplex, I was ecstatic. I was going to tell my family, and I was going to be this hero and solve the problem. Right. At least for a year. Right after I closed on that property, my sister called me and told me my dad was dying. I was just shocked. And I did something really radical. I quit my day job as a social worker, and I had about $16,000 in my checking account at the time. But the reason I felt so emboldened was I just learned about seller financing. And I knew it was a way that I could build relationships in my community to build wealth. And even though I didn't have any money or a job, I knew that I could do that.

[OG]

Wow.

[Joe]

No emergency fund, 16,000 bucks. We're either going to do it or we're not going to do it.

[Mel Dorman]

Yeah. Yeah. Not something I recommend to your audience, but that's what I did.

[Joe]

No, but isn't it wild how there's these dramatic times in your life that change everything that should just change your complete outlook? And it seems like this switch must have flipped, going, you know what? I got to do this.

[Mel Dorman]

Yeah. Watching my dad clock in for 50 years of his life with nothing to show for it. You Know, it's like the American dream crumbled in front of me. And I realized that it was this facade that it's not going to work out anymore if you just keep clocking in the rest of your life. And I didn't want that to be my life. I wanted to work for like five more years and have financial independence. So that's what I set out to do after that point.

[Joe]

You know, you wrote this in your book and it's very true today. Part of what I like that you wrote was you realize nobody's coming for you. You look at all the vitriol happening in Washington D.C. you look at the chaos of, you know, with politicians around our country, they're not coming to help. No, there is nobody coming to help. You have to do it yourself.

[Mel Dorman]

Yeah. In your corporate job or even your government job that feels secure and stable. It's really not. The only thing that you can control is what you do in the world. And I wanted to learn a way to create value for other people and solve their problems. And I knew if I could do that really well, that the money would eventually follow.

[Joe]

It's so exciting that you decide that your community is the answer, not just to your issues, but maybe to your community's issues. Like bringing people together can help lift all ships. I guess. So does that bring us to Kelly? Are we. Let's talk about Kelly. Because this, as you can tell, I'm a little excited, Mel.

[Mel Dorman]

Yeah, I want to just give you that backdrop so you can see how desperate and poor I was when I met Kelly.

[Joe]

Well, not just poor, but I could also think, you know, despondent and disillusioned. Like I feel like a lot of people are. How do you meet Kelly?

[Mel Dorman]

So I'm sending letters to strangers. I'm cold, calling about 10 hours a week. And one day this guy Kelly answers the phone and I say, kelly, do you know who Joe is? And he says, well, Joe's dead. And he used to be my client. I'm a bankruptcy attorney. And so I thought I was in trouble. Like, oops, I'm talking to the wrong guy.

[Joe]

Gotta go, gotta go.

[Mel Dorman]

Yeah, but he was so sweet over the phone. He actually asked me to meet up for drinks later. He was hanging out with a few friends and he's a 65 year old guy from Manhattan, married straight. You know, I'm a queer lesbian from Portland. You know, very different people.

[Joe]

Very much the same. Yeah.

[Mel Dorman]

And so we grabbed drinks that night and we really just developed a friendship and we stayed in touch and about three months into the friendship, he texts me, hey, I got a triplex. I'd like to sell. Could you do an evaluation on it? And I had been a realtor for about five minutes, so I could do that. So I met up with him and we walked the property. And he said to me, before I could even say anything, he says, I'd like to sell or finance this to somebody. And it was like, oh, my gosh. Manifestation. Right then and there. I had been saying that to myself. Every morning I'm trying to find a seller, finance property. And here he was saying it back to me, and it was like magic.

[Joe]

How much did he want for the property?

[Mel Dorman]

You know, I did the evaluation. I said it was worth about 725. He had a realtor, maybe 750, because they got to pay the realtor fees, but working together directly, It'd just be 725. And of course, he wanted 10% down, right? 75,000. So I was thinking, no way. I have, like, $8,000 in my checking account, right?

[Joe]

16 now, gone to 8.

[Mel Dorman]

Yeah, yeah. And so I'm thinking quick on my feet. I asked him, what would it cost you to foreclose on me? And he thought about it, and he was an attorney, so he said, well, about $15,000. I said, great, that's all you need then, right? If. If I don't pay you, you can just use $15,000 of my money and foreclose on me. And he solved the logic, and he agreed.

[Joe]

And then I'm sure everybody walking the dog right now listening to us. Mel is going to. Okay, but she doesn't have $15,000.

[Mel Dorman]

Yes, exactly.

[Joe]

You're a great negotiator, but you still can't do it.

[Mel Dorman]

Exactly. So I left that meeting that night and went, okay, better pick up the phone. I'm going to rely on my community again. And I called through about maybe five or six people, and I found some lesbian friends of mine, and they lent me $10,000 in a second position lien for an entire year. So when I got to closing, I only needed $7,000, which I had, technically. And so it's 5,000 for the remainder down payment and $2,000 for the closing costs. But I had another little hiccup. I had a lot of hiccups as a buyer here. I realized that two of the units were vacant. So I told Kelly, how am I going to pay you in a couple days when I got no money coming in for that mortgage? And so we agreed to give me a two month Delay on the first payment, which allowed me. Yeah, yeah, it was amazing. You can't do that with a bank. Right. And so we just added those two payments to the principal. So he was making interest on interest. He's very happy. I ended up recouping 6,500 of that, 7,000 in those two months, which meant I was all in. $500 on a triplex in Portland, Oregon, in a great neighborhood.

[Joe]

And from then on, it just gets better every month.

[Mel Dorman]

Yeah, yeah, it was cash flowing right away, about 200 bucks, because we did interest only payments, which is a big unlock in seller financing for both the buyer and the seller. So I had plenty of money to pay the seller and to pay my friends in the second position. And after a year, it was cash flowing about $1,100 a month.

[Doug]

Wow.

[Joe]

Is that after maintenance cost? Is that all in?

[Mel Dorman]

Yeah, all in. Yeah. Taking good care of the tenants through that process. Yep.

[Joe]

So 50,000 questions about this, Mel, that people are going to have, number one is, you know, a bank wouldn't have done any of that. And, and you point this out in your book on this topic, which we'll give people that in the show notes as well, and talk about it at the end of far discussion. But a bank's not going to let you do that. Why would he let you do that when there's so many people out there right now? There's, you know, Wells Fargo is going out buying up these communities. Why wouldn't Kelly just sell to them, maybe make more money? Why is he gonna mess around selling to you and giving you two months free ride before things pick up?

[Mel Dorman]

I think there's a misconception here that he would make more money if he sold that way. Just like a cash buyer or even just somebody with a home loan, honestly, like a regular bank loan. Because the way the math works out is I end up paying him over $250,000 in interest over seven years. So he's not making 725,000. He's making a million dollars on that property. And had he sold it the traditional way, he would have been left with about 560,000 after taxes, and he'd have to go reinvest that at a 9% rate to try to beat what I was paying him at five and a half percent interest. Seller finance.

[Joe]

You're getting yourself in the game and you're making him more money.

[Mel Dorman]

Exactly, yeah. He's saving on taxes, he's making hundreds of thousands of dollars. He gets to move from being the landlord to the lender which is what's most lucrative.

[Joe]

Now, he's a smart guy, he's a bankruptcy attorney. So he's dealt with numbers his whole life. But how easy is it to draw that picture for the average person now that you're dealing with this on a wider, broader scale?

[Mel Dorman]

You know, the amazing thing is there are millions of boomers out there that were around during the 70s and 80s when interest rates were 17, 18, 19%. So a lot of boomers actually have a working memory of either buying seller financed or knowing somebody at that time who did that. And so it's not necessarily that you're convincing them. You're just finding the people that already know and then they already understand the advantages of it and it's just partnering with them.

[Joe]

You make it very clear you have to be a very trustworthy person for this to work.

[Mel Dorman]

Absolutely. At the basis of this is financial literacy. And this is not about taking advantage of folks. This is not about getting one over or buying a property with little money and no credit. I mean, yes, you can do all those things, but at the end of the day, you have to be responsible because you're working with a community member. And that's even more important than if you're working with a bank because they are relying on you.

[Joe]

It's going to be somebody who's going to be your neighbor. And potentially these are people that know people. And now it makes seller financing easier because that is my next question. Mel, how do you find likely people? You said at one point, I think in your book, that initially you were sending out flyers and doing mail campaigns and all kinds of stuff. But really what has worked for you the best in finding the right who, as you put it, to talk to about seller financing deals?

[Mel Dorman]

I think that direct mail, what I call love letters, is what I send out. So imagine like what you'd get from your grandmother on your birthday. Looks like a birthday card. It's hand addressed, it's even hand signed, got a cute stamp, maybe it's got Santa or bouquet of flowers or something. So the open rate is really high. And all it is is introducing yourself as a neighbor. Like, I want to get to know you. I'd like to talk about your property. Maybe you're not ready to sell now, but at one point I'd like to be that person. And it's really just a building of a relationship. It's not very much about the property, it's more about the person.

[Joe]

You gotta be targeting a group of people though. Where do you find your targeting list?

[Mel Dorman]

Yeah. I reach out to local escrow companies and I ask them if they can create a list of either single families or multifamily that haven't been sold in the last 10 years. Have a lot of equity. They have a variety of ways of finding who has equity in their home.

[Joe]

Okay. But I'm sure they don't give you that for free. Is it inexpensive to pay for?

[Mel Dorman]

I mean, I develop relationships with my escrow company, so it is free for me. And because I know that they're going to be my escrow officer when I actually close the transaction, so they're happy to provide that information for me.

[Joe]

This is the important stackers of getting into your community and being a valuable member of. Of a community. Have you seen. There's this movie that I love, Mel. It's called Join or Die. Have you seen this movie?

[Mel Dorman]

I haven't yet, but I've heard great things.

[Joe]

We had the producers on back in late June, early July. It just. It's the idea of what you're talking about. You're using social capital to dig in and be a part of a community. I can't imagine escrow people giving you that list for free. It seems like a very valuable list. But if you know the people and they know you and they know you're going to help build this community, that's a powerful place to be.

[Mel Dorman]

Yeah. And of course, there's softwares online, too, that you can get these lists from for pretty cheap, too. But, yeah, I prefer to do everything relationally. I want to know my tenants. I want to know everybody that's on my team. My cpa, my bookkeepers. It's a team sport when you say.

[Joe]

You want to know your tenants. A lot of real estate people used to have a real estate podcast for a hot minute. And when we did, a lot of landlords would tell me that they're a sucker for a good sob story. And it's so hard to go, no, you got to pay your rent this month. No, I can't have the excuse for the third month. Do you really want to get to know your tenants?

[Mel Dorman]

Yeah. For me, it really paves the relationship when those things happen. Folks will lose their jobs. This is part of life. And so I find that if I'm showing up day one with a gift in my hand and I'm shaking their hand, getting to know them, and they feel that they have a comfortable relationship with me, when those things happen, it's more of a conversation. And usually I'm saying, okay, you got about two months of a security deposit to burn through, but then you got to move out. I don't want to evict you. Why don't you try your hardest to get a roommate or get a job, but if you can't, then let's, let's just try to find you somewhere else to live. And when I give that grace, it's always been reciprocated with them actually moving out if they can't do the task right. I find that again, it's just about community and relationships. And when you invest in that social capital with your tenants, then they're much more amenable when you need them to pull through too.

[Joe]

Oh, that's so kick ass. When you're setting up this seller financing deal, I want to go back to the initial deal because there's a few things here I think that our stackers won't understand. Number one is if you go to a bank, you probably have a 15 year or 30 year loan. I mean, there's a few crazy loans out there, but not many. And you could do an arm. But you make a great point, which is you can structure this however the hell you want. It's just between you and the buyer. Tell me about some of the different terms that you've used on some of these seller financing deals.

[Mel Dorman]

Oh goodness. We're gonna get into some good stuff here. So we talked about interest only payments. That's a huge unlock. It drops the payment by about a third. So all of a sudden you're cash flowing. It helps the seller because they're not paying taxes and capital gains. So they get to delay that and make interest on that money instead.

[Joe]

You have to point this out to them though, right? You have to say this is good for you because it's going to help you at tax time sometimes.

[Mel Dorman]

I mean, a lot of them are trying to avoid that. And if they have an understanding of seller financing, they know that's one of the big perks of it. I'd say, you know, I also include what's called a remainder beneficiary. So if they were to pass away, it's their ability to hand off that baton, that payment, that revenue source to somebody else, which is a big legacy piece for sellers. I would also say that I put in a first right of refusal. So should they want to sell the note early, let's say it's a 10 year note, but they want to sell on year one. I want to have the ability to buy my own debt back. The reason is because often you have to sell it at A discount. And I want to be the one who gets that discount. So I put that in there as well. And then I get really creative. This is the fun part, but I put some terms in there that allow me to take a promissory note. Let's say it's a million dollars, and I can chop it into multiple pieces, like 100,000 and 100,000 times 10 or whatever, or 200,000 times 5. And then I can move those pieces of debt to other real pieces of my property, and that creates equity. And I can do things like cash out refinances or sell and, you know, make that money. So it's quite. I see your face right now. You're like, what are we talking about?

[Joe]

Like, how does that work? Slow down a second, Mel. So you take this one big note and you chop it into smaller notes.

[Mel Dorman]

Yeah. I'll give you a case example. Let's say it's Monday and you're buying a house from a seller, seller, finance, for $300,000. And they give you fantastic terms like 2% down, 2% interest rate, 20 years. Right. It's amazing. But you don't like the house. The house is a wreck. And you don't like flipping houses. So Monday night, you call your friend and you say, hey, flipper friend, would you like to flip this house? Could you buy it for 300,000? They say, yes. So the next day you could move that promissory note to another property that you own. Your friend could then buy that property for 300,000, the flip house. And on Thursday, you get $300,000 of cash, tax free.

[Joe]

Ah, bang.

[OG]

Wow.

[Joe]

How did you come up with that?

[Mel Dorman]

I studied seller financing.

[Joe]

Deeply, apparently.

[Mel Dorman]

Yeah. Yeah.

[Joe]

We talk a lot about having a debt strategy versus just having debt, Mel. And CFOs of companies, they have a debt strategy. They will find the best terms that they can get, and then they will manipulate those terms as much as they can, where the average person out there just goes, oh, I feel like putting extra on this one random credit card. If you're going to be the CFO of your life, you really have to think through what's my overall debt strategy. Is there an opportunity here to get in over your head, though?

[Mel Dorman]

Oh, absolutely. You know, real estate is something I like to think about it, like flying a plane or becoming a doctor. You know, you are working with massive numbers. You're dealing with housing, which are real people's lives. To learn that type of technical knowledge, you should take the time to read books and listen to podcasts and Learn from experts and get coaching. Because you can either learn your lessons by paying a coach or a program, or you can learn them in the streets. When you learn, when you lose $50,000 on your first flip or something, it's an investment that's important to make up front.

[Joe]

How much money is your typical closing cost then?

[Mel Dorman]

Oh, yeah, about $2,000. So you know, at the bank it's like if you have a $500,000 loan, you're probably paying $12,000 and there's going to be an appraisal fee and there's going to be an underwriting fee and there's going to be all of these hands, you know, collecting that $12,000. But with a real estate attorney, it's about a five page document. It's a promissory note and a deed of trust. And the promissory note is just spelling out the details of the agreement. And the deed of trust is just securing it to the real piece of property so you can't run off to Mexico and sell it. It's a very simple document and it's actually, when you look at a mortgage with a bank, it's like a 30 page, really, really crazy document that has lots of teeth and lots of scary words.

[Joe]

Every property I bought is 50,000 words. And the person having you sign it doesn't walk you through it. They're just sign here, sign here, sign here.

[Mel Dorman]

Yeah, yeah, we all do. But those are the bank's attorneys and I'd prefer to hire my own so that we can really make it whatever we want it to be.

[Joe]

That is really interesting. You make this great point of with a bank, the terms are locked. With seller financing, the terms are flexible and you can agree on what helps you and your neighbor that you're purchasing from. You can help both of you by putting together the terms that work best for you. Closing cost fairly high through banks. And if they're not high, you're going to pay for it in a higher interest rate. Right. If you go with a zero cost loan, they're going to make their money somehow. Here it's $2,000. That's it. There's maybe 10 more ways that seller financing beats traditional bank loans. I mean, think about this. You get three quarters of the way through this transaction and it doesn't work. You'll lose your earnest money, you lose your appraisal stuff. You lose, you flush all this money down the toilet and you end up with nothing if it goes bad, if the deal goes bad. And yet that doesn't have to be the case on a seller financing deal. And yet you write, we think. Or maybe you didn't write this. Maybe this was my interpretation of what you wrote. We think a seller financing is kind of sketchy and whatever, but you're like, but look at this banking system. Yeah. How sketch is this bank?

[Mel Dorman]

Most people don't realize that because of the tooth 2009 housing crisis and the bank failures, every man, woman, and child lost $70,000 of lifetime earning potential. And I don't know about you, but when people have lost me $70,000, I don't like to give them more of my money. The banking system has let us down, but our neighbors were so afraid of each other. But really, I mean, this is a much more practical way to build wealth and to do it in such a way that we keep wealth in our communities rather than sending our payments off to big banks and institutions.

[Joe]

If you want to dive into this. I did after I heard Mel's story about coming from someone who is dumpster diving to 35 properties and being. It was 35 properties or 35 doors in five years.

[Mel Dorman]

Yeah, 34 units in five years.

[Joe]

30. 34 units in five years. That's crazy. And your experience in Africa and just hearing how you went from somebody who thought that all this was evil to. To somebody who thought, I can merge community and creativity and make sure that everybody gets what they want. What a powerful place to be. Mel's book on the topic is called bank on your neighbor, People first Real estate strategy to build wealth Together. It just came out last month in September, I'm assuming. Mel, everybody can get it everywhere.

[Mel Dorman]

Yeah, it's on Amazon still getting it into Barnes and Noble and that sort of places. But yeah, Amazon is. It's widely available and actually put it in podcast form. So if anybody wants to listen to it in the car, you can go to Spotify or Apple or any other place you can find it.

[Joe]

That was awesome when I opened up the book and you're like, you know what? The best way to learn is not just by reading. It's all these different inputs. Which you did while you were at the jail.

[Mel Dorman]

Yes, exactly. Yeah.

[Joe]

Mel, thanks for being such a great mentor for us today. I love talking community, and congratulations on all the success.

[Mel Dorman]

Oh, thank you so much, Joe. This was amazing.

[Doug]

Hey there, Stackers. I'm Joe's mom's neighbor, Doug, and today we celebrate the birthday of the lead singer of a band whose top song you still hear at stadiums across America to this day. That's right, the band Was called Cool and the gang. And after their first big hit, ladies night, hit number one in 1970. They followed it up with the wedding and stadium crowd pleaser called celebration. Here's a question about our birthday boy. What was the lead singer's name? I'll be back in a moment with your answer. And we can all throw our hands in the air like we just don't care. Hey there, stackers. I'm the guy ready to have a good time and also the guy who knows it's always ladies night. Joe's mom's neighbor, Doug Kool and the gang were a band that was hard to classify. Sure, they created pop music, but their sounds also fused. Funk, soul, and straight up R B. The lead singer of the band is celebrating his birthday today. Here's the question. What's his name? If you said, well, duh, cool, it's like Cool and the gang. So his name must be cool, right? Yeah, sure, you'd be correct, but his full name is Robert Kool Bell and He celebrates his 75th birthday today. And he's a huge fan of the show. Probably Happy birthday, Cool. I'm sure you'll celebrate all day long. And now back to two guys celebrating good money habits next to a hot water heater, Joe and OG hey, I'm.

[Joe]

Bob Wheeler, and when I'm not talking to people about money, I'm stacking Benjamins. Great trivia today, Doug. The fact that the lead singer of Cool in the gang's name is actually cool with his gang.

[Doug]

Who knew? Actually that just tells you how cool his parents were. Put that on a burst.

[Joe]

Do you think his parents named him cool or that he adopted that nickname later?

[Doug]

Yeah, like maybe when he was three or four. Yeah, people just saw it in him.

[Joe]

They're like, he's cool.

[Doug]

Yes, with a K. Big thanks to.

[Joe]

Mel Dorman for stopping by. And what a great way to help your community and help yourself at the same time. Let's do a headline. Hello, darlings.

[OG]

And now it's time for your favorite.

[Mel Dorman]

Part of the show, our Stacking Benjamin's headlines.

[Joe]

Our headline today comes to us from USA Today. Of course, by now everyone knows that about a month ago, the Fed announced a quarter point interest rate cut and USA Today and everybody else reported on it. I'm not gonna talk so much though about the quarter rate cut as the fact that OG this is the first time that the Fed has cut rates since late 2024. So it's been nearly a year since they've cut rates. And for a lot of people, they haven't been through this a lot. If you're a brand new stacker to this area, you read these pieces first of all, and it says the Fed's benchmark interest rate was cut to a range of four to four and a quarter. And you're like, wait a minute, four to four and a quarter. My interest rate on my debt is still, you know, whatever. Mortgage rates are still high. When they talk about the Fed lowering rates. Can we take a few minutes today, now that the Fed says they may do it again next quarter, Take a few seconds to talk about how this works and why it's important. So four to four and a quarter. What is this, what is this rate the Fed's cutting?

[OG]

Well, that's the rate that the Federal Reserve charges banks for them to borrow money. And for banks to lend money to one another, that's kind of their internal rate. By setting that, without getting into a macroeconomics class, that kind of sets everything else from a domino standpoint beyond that. Right. If that's the rate at which banks lend to one another or the rate at which the Federal Reserve lends to banks, so the big government sends to banks, then everything else is going to trickle down from there. And if you think about banks as they're for profit institutions, generally speaking, so if their wholesale cost is four and a half, they're not going to retail it to you for four and a half, they're going to retail it to you for their cost plus the margin of profit and their expenses. Right. So no different than any other sort of business model that's out there. There's a cost structure to make widgets and they have their raw costs and then their operational costs and then that's the retail price that you pay.

[Joe]

The important thing stackers to know is going to be how this affects you. And for me, knowing that underlying piece that these are banks borrowing money very quickly, short term loans from each other, the short term lending, that's the only, frankly the only thing the Fed does is controls this one little piece and it's actually a huge piece of the. But it is.

[OG]

Well, and the money supply.

[Joe]

But, but it is just one lever. Well, the Treasury's involved there. The Fed is really going to talk about the exchange between the, between the two banks or between all the different banks.

[OG]

Touche.

[Joe]

Yeah. But before we get to actually the end of it, I think the next lever that means is so these are banks that are trading money between each other to make sure that they cover what's called their capital Requirement, this base of money, they have to have to stay compliant with the banking system rules. But that means, oh gee, then the next domino is any loan, then that goes through a bank that can be tied directly to a bank. Those are the only loans. Then they're truly, I guess, pound for pound, affected by this. So this would be like car loans as an example, unsecured money loans where a bank is going to give you a signature loan or a personal loan. Like, these are the loans I think that are affected the most by this, right?

[OG]

Yeah. Everything will behave commensurate with what the costs are for the bank. So if a bank offers a credit card, which they're all tied to banks at some point, so they're going to probably lower their lending rate by roughly a quarter percent. I would suspect that car loan rates would be affected. Mortgage rates would be affected somewhat similarly, although it's not uniform. But you have to remember that this is going to be for new money necessarily, not your existing. If you have a car loan at 7%, not going to change car loans at 7%, like that's the deal that you signed, you can go refinance it maybe, or your mortgage, you can go refinance it. Or if you have a variable rate mortgage that'll adjust when it adjusts. More interestingly, we'll see it in credit cards and lines of credit that are variable month to month. But even so, you just have to remember that this is not the profound, life altering change that you think it might be like, oh my God, the interest rates went down a quarter point. Thank God I can now afford all this extra mortgage. It does affect affordability for sure, but not like I could buy a $300,000 house and now I can buy a $700,000 house. That's not the change there. Your credit card payment might be a thousand bucks a month, it might be 990 now. So in aggregate, in the grand scheme of things, in the entire universe, of course, $10 multiplied by everybody's credit card payment does free up some capital to the economy, which is why lowering interest rates adds stimulus, basically. But on an individual per person basis, you know, you'll be hard pressed to notice a big difference.

[Joe]

I want to take that discussion and I want to bookshelf that for just a second because I want to come back to it, because I think you build some pretty important arguments for how to use this and how not to use it that I think we're going to want to dive into in a minute before we get there. I just Want to finish this discussion about what is directly affected, what's not directly affected. We may see to your point and you kind of skimmed over this a little bit. Oh gee, we may see mortgage rates move, we may not see mortgage rates move. And that's because mortgage rates are not tied specifically to bank loans, they're tied to Treasuries. And so if the treasury market moves in lockstep, which it, what would you say? Maybe 90% of the time I didn't do the, you know, I didn't do the research to find the actual number, but it's got to be about 90% of the time that you will see mortgage rates move based on the Fed move. But it's a different mechanism that does that. So this does not mean that you can refinance your mortgage because the Fed drops. But oh gee, if the Fed drops again next quarter, we may see lower mortgage rates that are a little bit more eye popping than we're probably seeing right now with most banks.

[OG]

Yeah, again, I think it's, you know, is it the difference between you buying a house and not buying a house? No. Is it the difference between a house in, you know, middle class America and the gated community with the pool and the golf course? No. Is it going to potentially save you a few dollars and certainly over a 30 year lifetime of mortgage payments add up? Absolutely it will. And I think what you were getting at also here is, so then what do you do with this? You just say, oh great, this freed up $300 a month of cash flow in my mortgage calculations. Thank God I get to blow that $300 on interest to the bank to buy a bigger house. Or does that free up $300 that you can dedicate toward your savings? Does it free up if you see an interest rate reduction, your minimum payment on your large credit card balance goes down. Do you go, oh thank God, I finally have a hundred dollars a month that I can go out to dinner on now? Or do you say, hold on, I've been paying a thousand and now they want me to pay 900, I should still pay a thousand and start moving this thing in the right direction for me, finally take advantage of these changes so that I can get ahead of the curve as opposed to being on the backside of it. Everybody's going to be a little different there. But I think, you know, if you look at it from a analytics standpoint, you probably want to use this excess money for good, not for like a, just, just floats away.

[Joe]

Yeah. I think There have been three major times that I can think of in the 15 years we've done this podcast where rates came down significantly. And of course there's the granddaddy of them all. Right. Where people were able to lock in Rosewell sub. What's, what's that?

[OG]

Isn't the Rose bowl the granddaddy of them all?

[Joe]

Well, so we'll call it the Rose bowl of rate cuts. When it got to the point that you could secure a mortgage for less than 3% interest. Right. And there's still significant number of our stackers, I'm sure, that are holding on to those mortgages. But each of those three rate cut periods, rate drop periods that I remember, we spent a ton of time og and it was so frustrating as we saw the data afterwards. People that don't listen to financial content don't. Don't pay attention to these things as closely as I think our stacker community does. This is a great time to get your financial house in order. If you haven't paid down that high interest rate debt to get it refinanced, but not just to refinance it to your point. I love this point. So I can afford more. So I can go, you know, I could go buy another boat and finance that too, and wreck my financial picture long term. Instead, this is the time to secure your financial future by lowering the rates, lock in lower rates and get that debt payoff strategy going. And sure, oh, gee, I think we're early in the game, but it sure seems to me that, well, the Fed's already said that we're probably getting another one next quarter unless things significantly changed. And how often has that happened in the past? So I think we are getting another one. I don't like playing the crystal ball, but we might see then three, four, five of these. But regardless. God, I remember when we knew interest rates were going to come up, they were flagging. Interest rates are coming up, Interest rates are coming up. And you and I sat here at the card table going, lock in your debt strategy. Lock in your debt strategy. Lock in your debt strategy. And a year later we see that credit card balances are higher than ever. People have more debt than ever. People are starting to struggle with their money again. And just, just ugliness. This is a great opportunity to look at those refinances.

[Mel Dorman]

Yeah.

[OG]

If it makes sense. I think for a lot of people waiting until December, see what the December thing is. Agreed to see if there's two and then maybe it becomes a little bit more noticeable because there's a cost of doing this. Too. Whether there's a cost of mortgage refinancing or a cost of your time to shop credit cards or you know, do a HELOC to, you know, all that sort of stuff. So just go slow with it, but be intentional.

[Joe]

I think the thing to do right now would be to put your debt strategy in place. So a lot of people have debt, but they don't have an overall debt strategy. They just have debt. And hey, I make the payment. The, you know, the card comes, the payment notice comes and so I pay it. Well, if you look at your life as if you're a business, the chief financial officer of a business is going to take the bank for the best terms they can get and then they're going to get more strategic. So look at your interest rates, which one's the highest? Look at your payments. So maybe OG if we got a few of those small payments hanging out there, maybe we tackle those small payments first to get that snowball rolling downhill.

[OG]

I love it.

[Mel Dorman]

Yeah, absolutely.

[Joe]

And then go after. I don't like the full, you know, and this is a tired argument between the avalanche and the snowball. So the snowball is where we go low payment next, lower payment next, lower payment in bigger, bigger, bigger payments. So that now all my money snowballed into paying off the higher one. Statistically, historically, if you follow the numbers, that's not as efficient because you're ignoring some of the high interest rate debt that's out there. But I do like, oh gee, how that begins for non starters, you know, for people that just start out. I've got a friend who's an orthopedic surgeon.

[OG]

He said, wow.

[Joe]

Well, he says that two things have helped his career, and that is CrossFit and Pickleball have been huge for his career.

[OG]

I was like an orthopedic surgeon. Does pickleball like that's a terrible thing. Oh no, he means for staying busy at his job.

[Doug]

Increase sales.

[Joe]

Yes. And my point there is it's because a lot of people were doing nothing and all of a sudden go to these more strenuous activities that they're not used to. Sedentary people all of a sudden doing these body motions they haven't done before. So I think when you first start out, I like this idea of get those easy wins. Right. But I don't think you got to do this all the way through. When you get to the bigger stuff, well then pay attention to interest rates and go after it. Once you know that you're, you're moving along and the Strategy's working and you know you're going to stick with it. I think you can be a little more efficient and flip over to the avalanche where you're tacking those high interest rates. I don't know how you feel about.

[OG]

That, OG Well, I look at it from two sides. One is simplifier method. So are there a bunch of $500 balances that I can whip off with a $2,500 check? And I've got five credit card things that I don't have to think about ever again. I don't have to worry about missing payments. I don't have to, you know, it's not another line item coming on my checkbook. Like I just simplified my life. And then I, I actually look at cash flow because I'll say, you know, where am I going to get the biggest bang for my literal buck in terms of if I get this $20,000 credit card and my payment is $1,100 a month, and I got a $20,000 car payment, my payment is $500 a month. And if both of these are similar interest rates, which maybe they might not be, but assuming that they are, or I've got a loan that's A$500 a month, you know, you go, how do you choose between these? I want to take the one that's going to free up $1,100 to my cash flow. But you know, I've been kind of drumming on this for the last month and a half or so. But you know, you think about that $1,100, $14,000 a year, $12,000 a year, you gotta make 15, 16 grand a year just to pay the 1100 bucks. Like for some people, that could be 10% of your income, 15% of your income, you know, you're making a hundred grand, you got a thousand dollar credit card payment, 15% of your income gross, you have to make, you know, and you get rid of that, it's like getting a 15% payment, boom. It's a huge amount of cash flow to the bottom line. So I like paying attention to the cash flow and how it's going to affect, you know, and I guess in some way, shape or form, that's kind of a snowball ish method. But maybe the other way of saying, like, I just freed up a thousand bucks. I can put 500 in my savings account to build that up, and I can take 500 and put it on that loan. And now that loan's a thousand dollar payment, you know, and I'm Knocking that off in two years.

[Joe]

Yeah, in a lot of cases things seem really tight at first for families and when they would come see me, they'd go, you know what, Joe? It's just super tight. So we'd knock a couple of those off and all of a sudden you got a little breathing room. But I'll tell you though, og, you gotta then take advantage of that, that breathing room that you have to put systems in place. So spending that same cash flow but putting it into your emergency fund so that the next time this happens you don't have to go back to the credit card. Great use of that money. But, but. So it's not just about paying it off. My frustration is I see people pay it off and immediately they get themselves into other debt. It's like, oh, guess what, I got some breathing room. So now I'm gonna breathe.

[OG]

I got all this, I got all this available credit and finally take that trip I've been meaning to take.

[Joe]

Fantastic. A two step process. Lock down the debt strategy and make sure it never comes back. And that means as you pay off 500amonth, put that money toward your emergency fund. You get the emergency fund now flowing, now put it toward the rest of the debt as you knock off something else, keep building the emergency fund, then put it toward your long term savings. Then you're building wealth to secure your financial future. Great stuff. I'll link to this [e-mail] but even more than that, we talk about stuff like this in the 201. The Kevin Bailey goes and dives into the best curated links for all of these 101 topics that are online. We find them all for you. Stackybenjamins.com 201 get you there. That means we're out on the back porch, Doug. And man, the community's got a ton of stuff going on right now. So what should we shine the spotlight on?

[Doug]

Well, we got to do it again. We got to be the wind beneath the wings of our new Seattle Stacker meetup group. There's a new group getting started up in the Seattle area. They are meeting for the first time on October 14th at the Poodle Dog Restaurant. 7:00pm Specific time. That's down in Fife, Washington. Look, if you live out there, you think, man, if I'm not going to Fife, it's super easy to get to. Even if you're up on Whidbey island, it's like an hour and a half down there. You hop on the ferry, get yourself to Mocateo and you Zip on down. You're up in Bremerton, it's like 48 minutes away. Find a way to get to the Poodle Dog Restaurant October 14, 7 o' clock and you'll meet up with a whole bunch of like minded trivia lovers.

[Mel Dorman]

Right?

[Doug]

The people just probably just meeting to, to review the trivia from the last month or two. That's, I mean that's reason enough.

[Joe]

All of our great stackers there. We also have a meetup group. The Twin Cities has a meetup group. You can find them also online. Put in Stacking Benjamin's Twin Cities this month. By the way, Stacker Mike is going to tell some of his financial story in the Twin Cities. So make sure that whether you're in Seattle or the Twin Cities that you go attend one of the meet. Meet like minded stackers.

[Doug]

Yeah. How about this? If you're not in one of those cities, form your own group.

[Joe]

That's a good idea. Write me joe stacky benjamins.com and we will, we'll help you out with that. And by the way, the Twin Cities meetup is happening October 15th at 6:30 at Devani's D A V A N N I. That's in St. Paul. 41 Cleveland Avenue South St. Paul. So Mike's going to tell his money journey and our friend Chris Luger from Heavy Metal Money who is one of our coordinators there, Chris and Veronica and Mike. Chris has it as a scary story. So apparently Mike's going to tell a scary money journey for October when the.

[Doug]

Groups get big enough. You guys fly me out there, right? We should the groups.

[Joe]

I think we need to.

[OG]

It will for sure maybe do that.

[Joe]

A star appearance.

[Doug]

Yeah.

[Joe]

Is this like OG when we say ask your mom because, because whatever my mom said ask your dad. I was like that's a no. That's like the biggest lie. Or, or how about this? I'll think about it. When mom said I'll think about it, you're like okay, that's the kiss of death.

[Doug]

We've also got a review that we can talk about quickly. Joe, I don't really know what this title means but I think maybe DJ Kimber was just gamifying the, you know, just playing the system because they knew I would read this because the, the title of this review says Doug brings the A team face to investing. I don't know what that means. Am I like Hannibal? Do I look like Hannibal from the old 18?

[Joe]

No, I think you look like Mr. O Face. You look like Mr. T. I look.

[OG]

Like Mr. T. Maybe your face.

[Doug]

Yeah, maybe. Oh, that was a character in the show. I'm with you now, og. I gotcha. Anyway, DJ Kimber said good investment podcast. Each host brings a different view of how they approach investment and goals. If you're going to listen to one, listen to this one.

[OG]

Wow.

[Joe]

Fantastic.

[Doug]

Short and sweet.

[Joe]

Thank you for those words. If you leave us a review like that. And you are also looking for good financial reads. I can't keep all these books in mom's basement. So write to me, [e-mail] and it might be a little while for those people that don't know my house renovation horror story here in October when I can find my books again, I will send you one right now. Everything is boxed up down here. Mom's basement. It's, it's a little ugly. One more thing, which is tonight, speaking of horror stories, a lot of people think the FAFSA is a horror story. Our friend Robert Farrington from the College Investor website joins me to dive into how the FAFSA works. That's 5:30 Pacific or as Doug says, Pacific Time, 8:30 Eastern. Stacky benjamins.com FAFSA to sign up. It's going to be live on YouTube. Robert and I diving into for about an hour. We're going to teach you about how the FAFSA works and get that blood pressure down so you can just attack this thing. The college financial aid is first come, first serve. So you want to get that in ASAP so that you're able to, you know, more easily Afford College. So stackybenjamins.com FAFSA that's it for the back porch, by the way. Coming up on Friday, Sean Mulaney going to join us to talk about planning for early retirement. We talked about planning your interest rates and your debt strategy today. We talked about real estate today. On Monday, we dove into all kinds of nuggets, financial planning nuggets from Jonathan Clements. Well, on Friday, we put that all together. If you want to use all that to retire early, Sean Mullaney joining OG and Paula and Doug and I on the roundtable. All right, Doug, what's our top three takeaways from today's show?

[Doug]

Well, Joe, first, take some advice from Mel Dorman. Wanna help yourself and maybe help your community at the same time? As legendary motivational speaker Zig Ziglar famously said, those who spend their time helping others help themselves. Second, interest rates lower. Well, that's bad news for your savings account. That could help you with your debt struggles. Create a get out of debt strategy and get those interest rates lower. But the big lesson, Joe's mom knows celebration more than anyone. She's always celebrating that that fat Social Security check hitting her account. We're gonna have a good time tonight. This is Joe's mom singing. Let's celebrate with Social Security. It's kind of got a ring to it, Ma. I like it.

[Joe]

We're gonna celebrate with Social Security. I wonder why that didn't go to number one.

[Doug]

Good time tonight with our hip replacements. Thanks to Mel Dorman for joining us. You'll find Mel's TEDx talk on our show notes and her book book on seller financing bank youk Neighbor. A people first real estate strategy to build wealth together. Wherever books are sold. This show is the property of SB Podcasts, LLC, Copyright 2025 and is created by Josal Sehive. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome [e-mail] along with with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. Oh, yeah. And before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug. And we'll see you next time back here at the Stacking Benjamin show. There's a party going on right here. Celebration.