Afford Anything - Ask Paula: Can I Make Money With My Passion?

Episode Date: January 18, 2023

#423: We’ve heard the warnings about following your passion.  People ask if you can *actually* make money doing what you love. They frame the question “passion or profit?” as though these are in opposition.   The majority – who have never tried – decry, “what if you fail?” Nobody asks the more important question: what if you succeed? Are you still going to love your passion when you rely on it to pay the bills? We grapple with that question in today’s episode, which is devoted to side hustles and starting a business. We use questions from two of our listeners as a jumping-off point to discuss the realities of going into business for yourself, doing what you love.  We share examples from our own lives as professional podcasters, as well as from the lives of friends who are full-time photographers, musicians, writers and other creative entrepreneurs. Enjoy! P.S. Got a question? Leave it here For more information, visit the show notes at https://affordanything.com/episode423 Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a trade-off against something else, and that doesn't just apply to your money. That applies to your time, your focus, your energy, your attention, to any limited resource that you need to manage. Saying yes to something implicitly carries trade-offs. And that opens up two questions. First, what matters most?

Second, how do you align your choices around that which matters most? answering those two questions as a lifetime practice, and that's what this podcast is here to explore and facilitate. My name is Paula Pant. I'm the host of the Afford Anything podcast. Every couple of weeks, every other week, we answer questions that come from you. And my buddy, Joe Saul-Sehigh, former financial planner and former money guy on Detroit's WXYZ TV, joins me to answer these questions. What's up, Joe?

You know what else I used to do, Paula? I used to work in a Pepsi bottling plant. You're going to tell me some high school job, aren't you? Well, I had to quit because it was so depressing. Sorry. It's early here, Paula. Last time we recorded, it was late today. If we're looking at, you know, real time, it's earlier than we usually go.

So I got my coffee and I needed the dad joke to kick it in. But we got some great questions. Yes, let's get to the questions because that's going to be better than Joe's Comedy Hour. Oh, come on. We're going to do something different today. this is going to be a hybrid between a traditional Ask Paula and Joe episode. And I don't want to call it an interview episode. It's not exactly that.

But a topical or thematic episode. Today we're going to spend a lot of time discussing entrepreneurship, starting your own business, transitioning to working for yourself. And oftentimes that means it starts as a side hustle. So for those of you who don't necessarily want to do this full time, but you're looking to make more money on the side, you're looking to build out some type of a side hustle, whether it's part-time or full-time, today's discussion will shed some insight into how to do that.

We're using two questions in order to guide this discussion. One from a caller who's just getting started and wants to build out a side hustle that eventually he can scale to full-time. The second question, which we'll get to later in the episode, comes from someone who already owns a business, but it's a capital and intensive business, and the structure of it is fantastic for building her net worth, but not so much so for her cash flow. And we talked to her about the experience of being on the other end. Once the business is set up, it's successful, and she wants to retire or take a mini-retirement.

What does she do there? So those are the two questions that we're going to cover today. our first question is perhaps the cornerstone question of any type of entrepreneurship, any type of small business, any type of side hustle. Garrett asks the one question above all else that matters most. Here's Garrett. Hi, Paul and Joe. This is Garrett calling from Pennsylvania. I'm a very big fan of both of your shows. And I was excited to see Getting Smart with Money.

Much like Lindsay, I am currently. trying to create my own artistic side hustle. Music has always been a big passion of mine. And various events in 2022 have been a reminder that life is short and you should pursue your passions while you still have time. Since I've started putting this extra effort into music, I have been able to keep myself booked for most weekends with paid shows. And I think I can continue to do that.

However, I've heard a lot of people warn about. turning your passion into a job. Do you have any advice on how to pursue a passion and monetize it without burning out? For me, the music part seems extremely fulfilling, but the other jobs such as social media, marketing, booking, accounting, those are the parts that really feel like they could be a drag and caused me to burn out, especially since I am working a fairly intense 9 to 5 as well. I really appreciate your input. I did want to throw it in there.

Joe's a big fan of having smart people in your corner. I did hire a business consultant, and I'm excited to quarterly meet with him and talk about some goals for the business, expectations for the business. And I also have read the e-miss. So help me here to determine next steps and how I can pursue this in a level-headed way and a smart financial way. Thank you so much for all you do. Garrett, thank you for that question. There's a lot to say about this. So let me dive right in with

core ideas that come from two of my favorite books around this topic. One of the two books you mentioned, The E-Mith by Michael Gerber. As you know, in the E-Mith, Michael Gerber talks about how starting a business is necessarily the work of being the business owner, not being the crafts person inside of the business. So if you start a cupcake business, you're not the chef, although you sometimes may make cupcakes. You are the manager and administrator who needs to have a hiring process, have an onboarding process and a training process for new employees, a software point of sale system that you select and set up, leases that you negotiate, you need to do the business management end of that cupcake company.

And that is the workload, the true workload of owning a business. It isn't the craft itself. It's the management of that craft. The other book is Big Magic by Elizabeth Gilbert, where she says, don't burden your art by making it pay your rent. Both of those books, in the way that I've just described them, sound rather pessimistic. rather discouraging around the notion of starting a business around a passion. I do not bring them up for the sake of being discouraging. In fact, I love the idea of starting a business based around a passion.

Elizabeth Gilbert is now a well-known writer, but before she wrote Eat, Pray, Love, she was still, for a decade, a full-time writer, writing lesser-known books, writing plays, but she was very much paying her mortgage, even in the days when she was an unknown, through the craft that she loves most, which is writing. I'm sitting here on this microphone right now because I started a business around the craft that I love, which is creating media. I started in the world of traditional media as a newspaper reporter and then realized that ultimately, while the risk is greatest in starting your own business, that's also where

their awards are greatest. Had I stayed in the world of traditional news reporting, I'd probably be at some newspaper making $80,000 a year, having a decent, respectable life. And that would be fine. But it would not be anything close to the life I have now. But let's even talk about that, Paula. Let's say that he does this, but somebody else owns the business, there still is the risk of burnout there. Somebody that likes to write, but hasn't experienced the grind of having X number of deadlines per week and hasn't been through that still doesn't know what the burnout is.

Because, you know, every professional writer I know has gone through this period where you're like, I got nothing. I'm at the bottom of the tank. So not even the entrepreneurship piece, but just take. the thing and putting deadlines on it and audience expectations on it and for sale sticker on it so that you've got to justify a price for that thing can also create burnout if you're not in love with the fact that this is a job. I was speaking to a friend who's a professional musician. This was a few years ago. We were talking about this exact topic. He drew Venn diagram circles.

He drew it on a napkin. We read a coffee shop and illustrated in one sense. circle what I want to play and in the other circle what my audience wants me to play. Yeah. And, you know, we had that conversation where he talked about how he is tired of playing the same songs over and over and over. But that's what his audience wants from him. So that's what he has to deliver. Well, you know, my high school and college job was a wedding DJ doing high school dances and college parties. I can't stand brown-eyed girl. I absolutely. I absolutely. I really hate the song, Celebration, YMCA, old time rock and roll, like all of these standards that you hear at every single event, hear them over and over at 120 decibels. And it sucks. It's so, so bad. And I imagine you get into something like DJing, either because you're an audio nerd and you love playing with mixers and equipment, or because you love EDM music and you want to mix together tracks into incredible.

incredible beats or you've got your reasons. You don't go into DJing to play YMCA over and over. Exactly. So the fun for me, the fun for me actually, Paula, and I think this is where the answer begins to lie for Garrett, is you need to be in love with the fact that this is a business, which means that your love of this incorporates the business aspects. Because my goal, to the point of your musician friend, was to play, celebrate. or YMCA or whatever, brown-eyed girl, in a way and at a spot that was fun and innovative and different, which brought the art out, but also at the same time made it fun for me to explore how I actually play the stuff that they want, but in a way that is going to suit me. So I found

these remix versions. I found these weird versions. I also found new ways to get people on the dance floor to keep the dance floor packed. And they were all these little tricks that I learned over time, but exploring all that, but then also exploring how I can set up business systems had to be fun. How can I make sure that the tax bill gets paid on time, that I have a good budget, that I have a strategy around when I buy equipment, that I have marketing. I had to fall in love with marketing. If I'm not in love with marketing and I'm just in love with being a DJ or being a musician, then the business is going to absolutely suck. So I think to turn it into a business, You have to be in love with business, don't you?

Yes, you do, but I'm going to add some asterisk and nuance to this. There is a distinction between administration, which are the routine day-to-day tasks, versus management, which is the oversight of those tasks across a team and across systems, versus strategy, which is the creative thinking about, how to grow. I believe, or at least this is the way that I act within my own company, that so long as you are in love with strategy, with vision, with having that six-month, one year, two-year, five-year plan for your company, so long as you're in love with that, you can grow to the point where you outsource the administrative tag, and eventually grow to the point where you outsource the management.

And I will say there's a big difference between the two. It is much easier to find somebody who's good at administration because that simply involves finding someone who likes following procedures and taking orders. And there are a lot of people who enjoy that. And it's relatively easy to find that person. It's much harder to find someone who has that streak in them. where they are administratively competent and detail-oriented, but also good at management. I think there's a fine line here, Paula, that we need to define for everybody, though,

because if you're just interested in strategy all the time and you want somebody else to do the day-to-day management of the J-O-B part, right, managing the books, handling the stuff, and you're just flying at 30,000 feet, you're going to fail. Because what that represents to me is not deli-day. as much as abdication. You cannot abdicate your thought processes in the core aspects of your business. You can't. You have to know what you're doing there. I've seen far too many people fail because they think they're delegating and they're like, yeah, Paul, I don't like doing the books. So you go do the books. And then, you know, next quarter, you get angry because, hey,

how come my books are all messed up? Well, you know, Paula started doing the books the way she thought they were supposed to be done. And because I don't know that much about books, because I'm way more heading the clouds, it doesn't get done the way I need it done. The business starts to go downhill. I think you have to know enough. And I've said this about real estate too, right? I've said this about the reason I think you should put together a portfolio versus just having one fun. I think one fund is a fantastic place to start. But I think that at some point, you should design a portfolio. It is more efficient, but also you then know what you're doing, right? It's the same reason why we talked about we don't use these generalizations when it comes to planning. We talked

about this the last time I was here. We instead do the actual work. I think with real estate, you got to know how to fix the toilet before you delegate the toilet fixing to somebody else. I think it's the same thing with a business. So I just want to be careful that we're not giving people the wrong idea here about what it means to actually be interest. I totally agree. What I'm doing in my business right now is extricating myself from being involved in every process. And one of the things I'm most proud of about the Stacky Benjamin's organization this year, last year, 2022, is that we came out with three products that I was not involved in at all. Hooray. And we need that to happen more and more often, right? What were those products, Joe? We have two guides, a guide to your benefits, and we have a

a year-end tax planning guide that we released late last year. We also have our newsletter, the 201, which I look at and I'm involved in. I'm very proud of it. But my team does 99. So when I say not completely involved in, I look at it, it has my name on it. I stamp it. I literally spend 15 minutes on the 201. Brooke Miller and now Kevin Bailey spend about three hours per issue that goes out of that. So when I say not involved, I guess I am involved a little bit. But generally,

when you read our newsletter for stacking Benjamin's, when you read these guides, I didn't create them. I just okayed them. I made sure that I was all right with them, that did I know exactly what's going out that has my name on it? And then it went out. I helped them tweak it so it had a stacking Benjamin's vibe.

You know, I just said, uh, these sentences don't work. Can you like redo these things so that it's much more. We call it basementy, right? So it's a little playful, a little fun and not so prescriptive. So I would just do that. But then I wouldn't do the corrections. They would do the corrections. Right. So I do think you're right. I think you're totally right. But I also think that people have

to understand that you can't abdicate. Right. Yeah, I think part of that comes, and this might just be a matter of semantics from being at that strategy level. Because if you're thinking strategically about what does this business need, then you're aware enough to know what are the strengths and weaknesses of your team. What are the areas in which your team is better than you at certain tasks? And what are the areas in which you are clearly the most skilled or knowledgeable person at other tasks? And in the areas in which you're the most skilled person on your team, and for me to afford anything that's writing, you then get to the point where you say, you know what, if I am the writing bottleneck, then we're limited in our capacity to produce.

So what do I need to do in order to get someone on this team who is better than me at this? I think we can even more clearly define that, Paula, which is because I don't think it's just what I'm better at. What is my unique talent that nobody else on my team can do? Because it's generally your unique talent that got you to this point. And it's your unique talent that people are going to buy. So how does Paula Pant make it so that Paul is doing the thing that she is uniquely talented at doing 100% of the time, which by the way, never happens. You'd never get to 100%. But if that is your goal is to get to 100%, maybe you get to 70% of the time, 60% of the time, heck, I'd even play for 50 at this point in my business. If I'm doing it 50% of the

time, like things are going well. But I think that's what we're looking for, not even that I'm good at it, because there's things that I'm good at that I'm better than the people on my team, but I hate doing them. To not get burned out, I think it's got to be the thing that I'm uniquely talented at where I could just do this thing all day. I just watched the movie The Fableman's, which is half biographical Stephen Spielberg. And Steven Spielberg uniquely talented to be behind that camera making movies.

And his dad keeps trying to tell him, no, you got to go to college and do, you know, the college track. You got to give up this thing because it's not useful. but he can't stop doing it. And clearly Stephen Spielberg has proven to us that he is uniquely talented to be behind that camera. And the world's a better place because he's doing the thing that's behind that camera. I think it's the same for Garrett. But that said, you can't, you can't abdicate. And it's got to go back to that little point. You can't abdicate the other stuff. Right. You know, and the world, to your Steven Spielberg example, the world will

constantly tell you to take the safe route, to do the safe thing. Which is why, I feel a little guilty about starting this answer by highlighting the e-myth and Big Magic by Elizabeth Gilbert because, as I said at the beginning, both of those messages sound discouraging and pessimistic, and I don't need to be telling you that because the world will do so. When I started to afford anything, every single person, my family, my friends, my therapist, everyone told me not to. Seriously, seriously. Even my own therapist was like, Why don't you become a real estate agent instead? Because the idea of becoming at that time, a full-time blogger,

which later transitioned into podcaster, sounded absolutely bat poop nuts. And so everyone discouraged me and continually discouraged me until one day they all woke up and started asking me for advice on how to do it. And that's how it goes. People will tell you that you can't until they start asking you how you did. But I do think, Paula, that it's different than what people may imagine, which is why those cautionary tales are so important to begin your answer.

Right. I'm with you. It's not to discourage you. It's to make you realize that it's a little more well-rounded than just in the e-meth making cakes, right? Or in your case, just writing all day. You know, and people can fuse flexibility. with not having a schedule and not having deadlines. Flexibility with availability.

Right. Yes. I mean, how many people have you seen over the years that come to what you and I do and they fail because they think because it's a flexible job that I don't have to get up and start? Like, I could just do this whatever I want. Well, to a degree, yes. But I was getting an episode of my show ready at midnight last night because I decided to take the day and go see the fablements. I decided to do other things in the middle of the day. So I had to work at night if I was going to get the product out on time.

That's flexibility. I once had a cousin. This is when I was living in Vegas. My cousin asked if I could drive her to L.A. Now, from Vegas to L.A. is a four-hour drive. Round trip, that's eight hours. I can't just take a day in the middle of the week to drop somebody off in L.A. from Vegas and back.

I can't just take eight hours off in the middle of the work week. Well, let's put this way, Paula. Actually, you can, but the cost is way too high. Exactly. The cost is way higher than that person knows that it is. Right. Exactly. So I said no.

And when I said no, I could sense this. I won't even say disappointment. It was something beyond that. This almost like a sense of betrayal. She was like, why won't you do this? She didn't say this. But I really got this feeling of, why won't you do this for me? You have, quote unquote, you have the time.

And that was a prime example of conflating flexibility with availability. So I bought her an airline ticket. I was like, you know what? This is your Christmas present. Merry Christmas. Here you go. Get to hell out. It was December.

Yeah. So. But that's sometimes how you have to preserve your time when, you know, You can't tell people that you have a boss because you don't, and therefore people don't respect your time. I have to say that happens less now. Sure. Weirdly, the more that I'm in the public eye, the more people seem to recognize that what I do takes actual work. So the Netflix documentary, Get Smart with Money, for example, has led people to recognize that what I do is actual work, which is strange because, well, especially being at Columbia, I work less.

less now on afford anything than I did in five years ago, you know, when I was living in Vegas, when I was hustling and still building this. And we didn't have the momentum that we do today. And you're working then on a bunch of stuff that wasn't your unique talent where today you can focus more on your unique talent. Right. Anyway, that's a bit of an aside as to how others will perceive the work that you do. We'll come back to this episode after this word from our sponsors. The holidays are right around the corner and if you're hosting, you're going to need to get prepared.

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Fifth Third Bank has the big bank muscle to handle payments for businesses of any size. But they also have the fintech hustle that got them named one of America's most innovative companies by Fortune Magazine. That's what being a fifth-third better is all about. It's about not being just one thing, but many things for our customers. Big Bank Muscle, FinTech Hustle. That's your commercial payments of Fifth Third Better. Paul, let me share one more cautionary tale that I think helps us as well. Just for people that are on the fence after hearing you and I talk about this, like, do I want

to take the leap? Do I not want to take the leap? and while our bias generally is, as long as you are in love with the business, what I'm feeling is take that leap. Don't let the nay say or say nay. But I do like this. I was speaking with Austin Cleon, the guy behind Steele like an artist, show your work, a lot of these great books. Austin said that we also have a problem in society, Paula, which is that you bring cupcakes to your friend's party and they're really good cupcakes. what is the first thing everybody says?

You should open a cupcake business. You should open a cupcake business. And he's like, those are not the same thing. They're not the same thing. And the bad news is, is to Garrett's point, you can suck all the joy out of making cupcakes. If you just like making cupcakes, you'll suck all the joy out of it. But if you go into the cupcake business thinking, I want to teach other people to make cupcakes, I want to create a system of making cupcakes so that these cupcakes taste delicious for a lot more people.

Okay, now maybe you've got something that's a lot of fun. Right. If you go in thinking, I want to grow a cupcake business. Yes. Yeah. I'll give a couple of examples. One, the cupcake example reminds me of this. I have a friend who occasionally gets super frustrated with his job.

And I don't think he's serious about this, but very occasionally he sometimes says, you know what, screw this. I just want to go open a steak restaurant. And I'm like, that's great. Have you ever worked food service? And he has not. So I tell him, I'm like, all right, if you want to do that, why don't you go get a job at a steak restaurant for a little while, get some food service experience under your belt? Do that for a year. See how a restaurant works from the inside.

And then see if you still have that dream. And, Joe, to your earlier point, that can be applied to any craft. Right? The fact that I was a newspaper reporter before I started my own media company, which afforded. anything as a media company, right? That is a perfect example of taking the craft of writing, but doing it as a job where you've got deadlines and editors and where the true work is not even the writing, it's the reporting. And that's what you learn when you are in the media every day. Do it as a job, work for someone else for a while, and then transition to building your own business.

So Garrett, the analog of that for you, you mentioned that you have a nine to five. I don't know what you do, but if there is something that you can do in the field of music as a job while you are simultaneously building this business, that could give you some experience with what it is to practice this craft as your day job, the reality of practicing this craft as your day job, while you are also then simultaneously growing a business at it. I think there's even an intermediate step. I love the fact that he is working to surround himself with smart people. I love the idea of the business coach, Paula. I think an even better coach early on would be somebody who already is doing what he's doing. So somebody who already has a

business. So if he goes to the local farmer's market and finds the musician who plays there or the corner pub or coffee shop where there's somebody who is working and seriously, works to have gigs planned out doing what he's doing. And if he sits down and buys them coffee a couple times and talks about the business of what they do, I think you can very quickly go from the grass might be greener to what the grass really actually looks like in that role. Right. And again, that's not to be discouraging. It's simply to get a good sense of what that is. Realistic look, yeah. Right. I'll also say the examples that you mentioned are public facing and so they're salient. But there's so much music hidden in our daily lives, people who write original

scores for commercials, for example. That's far more often than you know, by the way. There's a guy I follow named Gooding, who his music, Paula, has shown up all over the place. And nobody, when I say the word Gooding, nobody knows who that is. But if you go to Spotify or your favorite platform and you download a few Gooding albums, you're like, I've heard this guy a lot. his music is the music that plays at critical moments in Gray's Anatomy or when there's a touching part of the commercial, you know, you'll hear Gooding's music all the way through it. He makes a great full-time living outside of performing. Right. And those people often need assistance. They need someone to handle the administrative

side of their businesses. That would be an excellent full-time job while you are simultaneously building your own music business because then you get to see their business from the inside and get a sense of what you're in for. This is the same thing getting back to money. This is, by the way, the same thing when people are considering becoming a financial planner, going to work for a financial planner who has a mature practice and helping them inside their practice allows you to get your license, see how the daily grind works, see how you actually help clients on a machine level, you know, how you build a business.

machine helping more people get where they want to go. Right. It's really the same concept. As I even say that, Paula, it's kind of career agnostic. You can apply this to so many different careers. Go work for somebody who's already doing this or at the start interview them, but then go work for them. That's a great way to get where you want to go.

Exactly. Exactly. Yeah. It's the equivalent of working food service before you start your own restaurant. I have a friend who is a photojournalist, very successful for you. freelance photojournalist. And he would not trade that career for the world. He's made a great living at it.

He's excellent at what he does. But he has also told me, number one, that people assume that he spends all day taking pictures, when in fact he spends a lot of his days editing photos, emailing back and forth with editors, fact-checking captions, making sure he spelled the person's name correctly, the minutia of the grind. He also supplements his income, teaching photojournalism classes at the local college. He does five or six weddings a year, not many. You know, he's not super into it, but he sells a package to people who are getting married who want not posed photos, but photojournalistic style pictures. And so that combination

of teaching at the local college, once every two months he'll do a wedding. That combination allows him to put together a portfolio of income that all told then becomes a very comfortable, very respectable full-time living. Well, I think because Garrett says, Paula, that his primary role can be very demanding. I think there's also a middle ground here. have a friend who by day is a urologist. So imagine the amount of time he spends doing what he does and the intensity of doing what he does. He's also part of one of the top bands here in Texarkana. And he's the lead singer and the lead guitarist. They used to do a bunch of gigs. And he found

that that was really a grind, trying to be a urologist, a dad, a husband. been and to have this band that is doing phenomenally well. And he decided that his priority was, he likes to play in the band, but everybody in that band got together and decided, you know what, we like to play when we like to play, how we like to play at gigs for people that we like. So now they turn down about 90% of the gigs. They play Paul about roughly twice a quarter. And you know what? It scratches Sean's itch. It gets him out there. It gets him in front of people. he makes a little extra money, but it doesn't interfere with all the other things in his life that he likes as well. So maybe for Garrett, there's that middle ground, you know?

Well, I disagree, Joe. I think if Garrett wants to do this full time, he's going to have to go the opposite route. If he wants to do this full time. But does he want to do it full time? Because he talks about his primary roles. You do them both full time? Currently, he is because he's still building the business. But the fact that he's hired a business coach, the fact that he's read all of the online business material,

that I've published, the fact that he's calling in with a question about this, that signals to me that he wants to do this full time. And if you, Garrett, if you want to do it full time, that means you take, especially in the beginning, you take every gig you get, even the stupid ones, even the ones where you're playing YMCA at the wedding as a DJ for the 17th time this week. Just wear eyeglasses so you don't poke your eyes out. Yeah. When I started afford anything in the early days, and this is back in 2012, 2012, 2013, I was primarily making money as a freelance personal finance writer while I was simultaneously building out the community. He don't afford anything. And so to pay my bills and make ends meet, I was taking on any writing assignment I could get, which meant turning out a massive. massive volume of articles that I am not proud of. I mean, they're fine. But they're your standard clickbait articles. Five ways to save on your heating bills. That's not going to help him avoid burnout, though, Paula. Well, you know what? It's going to light a fire under his ass. It's going to

allow him to quit his current day job, his current nine to five, so that he can do only this full time. And when he is doing only this full time, it's going to light a fire under his ass where he realizes that he doesn't want to be doing the shi gigs forever. He has simultaneously the pride of knowing that he is practicing his craft for a living. And also, the urgency of the goal of, I am practicing my craft, but I don't want to be doing it in this way, so let's go. Either way, he gets to quit the nine to five. And that's step one. is quitting the nine to five step one? I think if you're serious about it, then...

Burn your ships? Burn the boats. Yeah, exactly. That's funny. We came up with the same analogy at the same time. I have a friend who's going through this right now, a different friend. He's a successful news reporter, but he's started a YouTube channel on the side, and it's growing like bonkers. Now he's all in.

And it's scary. The first two weeks when you don't have a paycheck, after you've been used to getting paid biweekly for most of your adult life, that is terrifying. But that's exactly the fear that you need to kick your ass in gear. Strategically, of course, you've got to have your emergency fund, you've got to be debt-free, you have to have a runway. This particular person has an 11-month runway built out. But with all those pieces in place and a clear vision of what you want to do and momentum behind that thing, there comes that point where it's time to burn the boats, it's time to quit the nine to five. And when that happens, Garrett, then you accept any musical

gig you can get. And you'll be very proud of the fact that now you're a full-time musician. And you'll simultaneously be really sick of the fact that you're playing YMCA at every single gig. And you'll have both of those happening simultaneously. And that is what's going to propel you the next level. So, Garrett, I hope that gives you some answers to your question. In terms of your next steps, if this is something you really want to do, if you want to go full time with this, then step one, stay in your current nine to five until your debt free, except for a mortgage, if applicable, or maybe a very, very low interest car loan. If you've got a car loan at like 2%, fine, cool. But you want to be debt-free from everything other than that. You want to have a good

emergency fund. You want to have a runway bill that can cover all of your expenses for ideally minimum eight, nine months. And you'll want to be building this music business on the side, which means you're going to be working a lot. And that's part of the hustle to get this thing off the ground. I think that's job one. So that's step one. You talked about job one. Yeah, that's step one. Job one, quitting your job. Job one is this pre-work before you quit your job. Yeah, exactly. Exactly. That's what happens before you quit your job. Step two is quit your job. Step two is if you're serious about this, then it's time to quit the nine to five once all of those conditions are met. Do you know, to your point, I will still be okay with the fact that I told him there is a middle ground

because I think for a lot of people, there is a middle ground. I think there truly is a, this can be my hobby where I make cupcakes, but I will get paid from time to time. And I think that's all right. if that feeds where you're at. I do realize what you're saying that that's, that may not be what Garrett was asking, but I do think for a lot of people out there, there is a, it doesn't have to be this black and white. But, and this is interesting about burnout, Paula, when you quit your job, and this is what you rely on for money, you will find things will change in a hurry. And let me explain what I'm talking about. I like to listen to podcast about how movies get made. And this wonderful podcast called the Q&A with Jeff Goldsmith. They talked to writers, Paula, about the business

of how they write movies and how they've sold scripts and what they do. And it's very interesting to see people in the grind of doing that job. And what's funny is I remember a TV writer saying, I don't have time for burnout. I don't have time to be blocked. He said, because I got to pay the bill for next week. So Jeff Goldsmith, the host of the show, asks a about burnout and writers block all the time. And that was the guy's answer. I don't have time for it. If I have to pay the bill, I'm going to work my way through the burnout. I'm going to find a way. Right. And I think that is half the key to getting where you want to go is knowing how to deal with. It doesn't matter if I'm burnout. The electric bill's got to be paid.

Right. That's why I say burn the boats. So I'll share a story for my own life about that. I get anxiety all the time about publishing my writing, publishing my work. And when it comes to the aspects of writing on afford anything that I don't monetize, like we have a newsletter called First Principles. It comes out when I released it, I initially said, oh yeah, this is going to come out like every week or every other week. It's come out like three times a year, maybe. And the reason it comes out so rarely, in part, is because I let anxiety, fear, procrastination.

I let all of those get in the way because I can because that newsletter doesn't make any money. But there are aspects of afford anything like our course, your first rental property, where I am obsessive about constantly, making sure that this is the best effing thing that's out there. We're iterating, we're updating, we're scripting, we're editing, we're revising, we're gathering data points. We are constantly improving your first rental property because we have to, because I've got payroll to make, I've got salaries to pay, and that comes from the course.

And so I don't have the luxury of getting caught up in my head about it. Get it out there. Right. Yeah, I just, I don't have the luxury of fear. I don't have the luxury of fear. I don't have the luxury of blockage. I don't have the luxury of anxiety. I don't have the luxury of procrastination.

O.G. tells this story about a horrible coach he had when he first got into financial planning. Back when it was more sales, by the way, than financial planning, really selling financial products. and this coach at the organization Paula told him, you know the way to make a lot of money? Give yourself a huge car payment. It's the worst advice ever. It's absolutely horrible. So this dude was all about go buy a Porsche because you will show up at work every day.

You will make sure that the business runs all day. You will, you will make sure that the lights turn out all day. I'm like, what horrible, horrible advice. That is horrible advice. I get where he's coming from because he's saying give yourself a commitment device. But yeah, that's a horrible way to do it. The commitment device is make it your full-time job. Right.

It's exactly what you're talking about, but a bridge too far. I'm like, well, maybe we can pull that back a little bit, dude. Maybe we could put some velvet on that hammer. So, Garrett, step one, do the pre-work prior to quitting your job. Step two, quit your job. Step three, understand that the work that you're doing upon quitting your job initially is going to be music, but it's not going to be music in the way that you want to be doing it, and accept that as a stepping stone while you then work your way to step four,

which is the lifelong process of continually iterating the way that you're doing it so that it is more and more in line with how you want to do it. And that means continually growing and improving the business so that you're spending less time on management or administration and more time in your craft or on strategy. And it means continually improving and iterating and growing so that you're spending less time doing the projects and gigs that you don't want to do and more time doing the projects and gigs that you love.

But that, step four, that is the lifelong process of always iterating your business so that in one percent increments over time, it becomes more and more the type of business that you want to be running. And I think if you stay focused on that, you're much less likely to get burnout. Yeah, because your brain is constantly asking, how do I make this better? That's what the strategy is.

And that's the part you have to be in love with, the strategy. We'll come back to the show in just a second, but first... This Giving Tuesday, Cam H is counting on your support. Together, we can forge a better path for mental health by creating a future where Canadians can get the help they need when they need it. no matter who or where they are. From November 25th to December 2nd,

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But don't wait. Like leftovers at midnight, our Black Friday offers won't last. Shop now at IKEA.ca.ca. Black Friday. IKEA, bring home to life. We want to transition to one more question, and this is,

Garrett, this is the ghost of Christmas future. This is a question. Thank you. This is a question that comes from someone who is already a small business owner, running the type of business that many of us dream of, a beautiful seasonal inn, right? This person is already a successful business owner and they want to retire. Let's hear from Liza. Hello, Paula and Joe. I really appreciate your insights and I've enjoyed binging your podcasts. You have really made me think a lot, not just about

financial choices, but also about what we want and value in life. So, a big thank you. My husband and I are 44 and 47 and are interested in making some changes. I am hoping that you can help us think about how to invest and spend more wisely so that we can do what matters most to us, which is spend more time with our children and aging family. Currently, I run a seasonal inn, which is also my family's home. As such, my net income is very small between negative numbers and about $15,000 varying from year to year. Almost all of our home expenses are covered by the business. currently the inn is valued around $1.4 million as a property and has an outstanding mortgage of

$205,000. We also have a mortgage-free long-term rental property that is now worth $380,000. We have it rented with great tenants at a lower-the-market rent and are not interested in increasing their rent. We have a positive cash flow of about $12,000 per year from that property after expenses are paid and reserves are removed for future repairs. We have, and yes, I know what you're going to say $300,000 in cash in both savings and checking accounts. Also, we have about $100,000 euros that we have recently transferred to an account in Europe in hopes of investing in the euro's future rise. My husband's job nets about $90,000 per year after he puts money into tax advantage accounts and pays out our health insurance. We have about $130,000 in retirement

accounts and he takes advantage of his employer's match. He is thinking of stopping his job soon to spend more time with a sick parent in Europe. It isn't clear if you will be going back to another job immediately or will be waiting six months to a year to start back up again. The other job options may pay significantly less. We want to be able to retire early or try to enjoy some level of a mini retirement to spend time with our kiddos while they still want to spend time with us. And of course, other family too. I am considering paying off the mortgage on the inn. It is a commercial mortgage with 15 years left on it, and the first five-year arm is up December of this year. It will go up to an interest rate of likely above 6.76% for the next five years until it's

re-evaluated. Isn't paying for something like Principal on our home re-evaluing our devalued cash? In addition, I would like to invest our money in Europe while it is waiting for the euro to rise. Hopefully it does. I have no clue how to even go about this. If you have any ideas, I'd love to hear them. You will also be happy to hear that I would like to put some of it in the market. I was thinking about Vanguard's VT, SAX. Any other thoughts? I am not sure how much to reserve in cash with the impending loss of consistent income. I do plan to put much of the reserve in a high-yield savings account with an online bank like Brea Direct.

Other than that, I don't have any ideas, but I bet you two do. So thank you very much. Liza, thank you for the question. There are several things that I hear, and there's a reason that we try to, chose your question to play right after Garrett's. One thing that I hear right off the bat is that despite the fact that your seasonal inn has limited cash flow for tax purposes, it's a successful business. The seasonal inn that you run has a valuation of $1.4 million and its contribution to your balance, your personal balance sheet, to your net worth is $1.2 million. You've got a $1.4

million in with a $200,000 mortgage remaining. This business is making enough money to add $1.2 million to your net worth statement. It's making enough money to cover all of your housing expenses. And for tax purposes, it's showing up as minimal cash flow, which means you're building your net worth while not having an overly burdensome tax bill. So this sounds to me, when I hear you describe it, like a market. of what a successful business looks like. Now, your business is going to be very different than Garretz because an inn, by definition, is a capital-intensive business. But you know that, which is why you have $300,000 set aside. So that leads to my second piece of commentary,

which might actually surprise you. I totally get why you have $300,000 in cash. It makes complete sense. Yeah, it didn't bother me that much either, Paula. It doesn't bother me at all. Not at all. You run a very capital-intensive. business that is profitable and it makes money, but it doesn't generate those returns in the form of cash flow per se, which means you need liquidity. So it makes perfect sense to me that you would maintain that liquidity. I have no objection to that at all. And it's striking to me that one of your questions was, should I pay off the mortgage? That mortgage is 200,000. You've got 300,000 sitting in a bank account. You could easily write a check, and in one swoop of the pen, you could have

that mortgage paid off in the next five minutes, but you choose not to. And I see the wisdom. I see the logic there. Yeah, that's a horrible choice. Paying off the mortgage is a bad use of funds for her. Yeah, I agree. I agree. Don't go near it. And I love this idea of liquidity because building liquid funds is what she needs to do to get where she wants to go. But it's also kind of, you know, what we talked about with Garrett, which is what she really is trying to do, Paula, as build herself time. So if we're talking about the business, how does she change the business so that she's able to have the time to do what she wants? And then the next thing that I want to know is in the spirit of beginning with the end in mind, you know, all these things she's talking

about doing, how much money does she need to accumulate to get where she wants to go? Which I think is the first question she has to ask herself because I wouldn't be looking at a euro opportunity. I wouldn't be looking at any of that until I knew what rate of return I needed and how much money it was. Then I know how much risk I need to take, and that will drive the decision around the investment portfolio. 100%. So, Liza, that was the first thing that I thought when I heard your question. I'm calling it your question when really it was a handful of different questions contained in that voicemail. But all of the questions that you asked were highly tactical. Hey, I want to arbitrage from the dollar to the euro. Hey, I'm thinking about these investment

funds. These are all tactical questions, very in the weeds tactics. without first establishing directionally, how much money do you need, and in what form do you want that money to appear? And when I say in what form, I mean, do you want it to be residual income, active income, some combination of the two of the residual income that you want? Do you want that to be biased more towards cash flow? Since currently you are making good returns, but those returns are coming in the form of principal paydown and expense offset rather than cash flow. right? So do you want to be in investments where you're getting similar returns, but those returns are expressed in different forms? Those are the questions that we need to solve for. The starting point is when we retire or when we take our mini retirement, how much do we plan to

spend? What are our expenses going to be? And once you have that question solved, you can reverse engineer that to calculate how much money will we need to have saved in investments in order to be able to support that level of expense. Once you've got those two questions answered, then we can go into the weeds about these tactics. Investing in the euro while waiting for it to potentially rise, that's a tactic. But if we don't yet have a solution to how much are we trying that build, what's the ultimate portfolio size that we're shooting for, then that tactic is screaming into the void. There's no end goal to it. So it's a tactic, but to what end? Which brings up another worry, Paula, that I have, which is the business valuation because of the

fact, and I like what you opened up with, which is this business doesn't really show cash flow, but it has a ton of perks, right? It's got all these great perks. When you, you go to sell a business, though, a potential owner is buying based on, usually based on cash flow. In this case, it might be based on lifestyle. So you might be building in the whole fact that you've got this in lifestyle. But it brings up the question, because so much Eliza's net worth is built into this business, has she thought at all about building this business to sell? meaning to set up the systems and the processes in the business so that it becomes very attractive for a buyer. This is how you run it. This is how it operates. This is how we make money. This is how.

And really showing what that valuation is because like when I sold my financial planning business, it was a multiple of profit. So it was X number of years times the profit that I made in a given year. that's the way most businesses get valued. Liza is not going to be able to show $1.4 million using that valuation method. So she's got to know how she does it. Maybe there is already a way in ownership that you do that. I just bring that up, not even just for Liza, but for any business owner that you really want to think about built to sell.

There is a resource there that I like, a guy named John Warlow. That's how you pronounce his name. If you're spelling it, it looks like. like Warillo, W-A-R-R-I-L-O-O-W. But John Warlow has a whole brand called Build to Sell. Fantastic podcast about this, books based on building it to sell it. I think Liza might want to dive into that as well because this is Paula, a big part of her nest egg is this business.

But of course, Paula, that tactic is going to revolve around the larger strategy of how much money do we need. What are we actually doing with the business? Because as an example, maybe because of the fact that it pays her housing expenses, maybe still owning the business, but in a different way with some help is still part of her plan. So she still gets to live there, own the business, because that's a huge savings when it comes to the rest of what the rest of her nest egg needs to support. But if she keeps the business and doesn't actualize $1.4 million, or 1.2, the way it stands right now, that's a lot of money off the table for future endeavors and money that she may want to spend for other purposes.

She won't be able to do that if she continues in the business and having it be the place she lives. Liza, I want to explain a little bit more why Joe and I both immediately said don't pay off mortgage. When I look at your numbers, what strikes me right away is that you have a lot of equity, you have a lot of assets, you have a high net worth. On paper, your balance sheet, your net worth statement is solid, but you have very little cash flow.

And the immediate goal that you're trying to solve for is that your husband has a sick parent in Europe. So that is something that cannot be deferred. It needs to happen right now because it deals with a sick parent in a foreign country. And so he needs to quit working immediately. And yet his income, which nets $90,000 per year, is at the moment the bulk of your cash flow. The inn is covering your housing costs. That's wonderful. But the bulk of your groceries, your rents, your rents, random trips to target all of those day-to-day expenses, that's coming from a source that ideally would turn off the tap pretty soon. And that's what you're trying to solve for.

And so what we need in the immediate short term is to solve not for net worth but for cash flow. And it's for exactly that reason that, number one, I love the fact that you have $300,000 in cash. That's maybe one of my favorite pieces of your puzzle. And number two, I absolutely would not pay off that mortgage. I know it's a commercial loan. I know it's an arm.

I know the interest rate is going to rise above 6%. I don't care. That's not the problem that we're solving for right now. We're not solving for your long-term net worth. We're solving for your short-term need to be with a sick parent in Europe. right now. And when we're solving for that, we're solving for liquidity. We're solving for cash flow. We're not solving for net worth. Every dollar that you put toward that mortgage decreases the amount of time you can spend in Europe. Right. Because what's the upside if you pay off that

mortgage? The cash flow incrementally improves. Yeah, she does get X amount of money per month back that she's paying toward the mortgage every month. Yeah, but that's not what we need right now. No. Right now, Liza, I love that you have such a healthy balance sheet. You've got a great net worth statement. That's laudable. And to me, it shows that you have built and run a very successful business, a very successful in. But that success is showing up on a balance sheet and not in a bank account, which is to say

that success is showing up in theory, but not in practice. And what we need right now is practice. Yeah. But Liza, I also think you have sharp instincts. The instinct that led you to keep $300,000 in cash, the instinct that led you to keep another hundred thousand euros in cash in an account in Europe. Those are the instincts in which I think intuitively you recognized that what you need is liquidity.

And that liquidity, I think, is what's going to be. to get you through the immediate goal of having the flexibility such that your husband can quit his job, can be with the sick parent for as long as he needs to be, and then can come back to some job later when he's ready. And when the conditions are right, the fact that you have that much cash gives you flexibility to live on that cash for a while. So I don't think there's a anything that you need to do other than stay in cash, which I know is a very strange thing to hear in such an inflationary environment. But as long as there's a sick parent in Europe, cash is king. Which is why this all comes down to strategy first, right? Where we began,

Paula, it all comes down to what are we solving for? Financial planning, I think, is really fun because of the fact that we begin with what we're solving for, and that creates all the tactics. All the tactics always branch around and dovetail into what the larger theme is that we're working. And this is why one size fits all advice about you should do, you should always, doesn't work, is because we're all solving for something different. Right. And that is what makes the plan effective. And it also makes it really exciting because then it's much easier to see what needs to stay and what needs to go. Like people say, hey, should I invest in this hot opportunity? Should I invest in this thing? Should I do this? But when you begin with the end in mind, it's very easy to see what's

congruent with that end and what isn't. So it's much more like pruning the bonsai tree. It's way more about what doesn't belong than it is about this hot opportunity. It's about saying no rather than yes. I feel like I bordered on getting a little Zen there. Oh, could have. That a bonsai tree pun. Could have gone for it. Well, it wasn't.

No, actually, I was just thinking that I was about to get very Eastern philosophical. And I could have, but I didn't. No, it wasn't. If it was, it was inadvertent. And I don't know where it was. So I'm very confused right now. But Liza, I love beginning with what am I? solving for. So Liza, I hope that helped answer your question or questions. Again, you asked a lot

of tactical questions. I think keeping money in euros is great because you're also planning on spending money in euros. So diversifying between dollars and euros, which are the two ways in which you are going to spend and live, makes a ton of sense. To me, that's not an investment, per se. It's simply keeping your money in the forms in which you are going to spend it. Keeping your your money denominated in the currencies in which you will be living. I love the fact that you have so much cash. I would stay in cash. I would not pay off the mortgage.

And honestly, I would not worry right now, while the parent is sick, I would not worry about what your net worth will be in 20 years. I would worry about staying liquid enough to be able to be with your family at this time and live on that liquidity. That's what you've been working so hard for. That's what you've done this all for. So thank you, Liza, for asking that question. Joe, this has been a unique episode.

We started with Garrett, who dreams of one day building and owning a business. And then we transition to Liza, who has built and does own a successful business and now wants to exit from it. Or at least put it on pause for a while. I think while there's a ton here, Paula, for entrepreneurs, I think there's also a lot of lessons for people who aren't entrepreneurs because I think a lot of us being an entrepreneur and whatever business we work on, we work in, is a huge asset. And those people are able to demand more money from their boss because they become so instrumental to the business. So being able to fight off burnout to stay focused on what's important in your business

from the Garrett question into Liza's, how do we make our exit? And what am I solving for when I do exit? I think our lessons for all of us, not just for the entrepreneurs. Well, Joe, thank you for joining us. Where can people hear more of your sage wisdom? Oh, you're welcome, Paula. You're welcome very much. You can find me. Monday, Wednesday, Friday at the Stacking Benjamin show. We call it the greatest money show on Earth. Mondays and Wednesdays, we have interesting guest headlines, a TikTok minute where we talk about some of the bizarre stuff people say and do on TikTok, which, as you know, Paula can be holy, oh, I am not on TikTok.

Probably better. Let's put it that way. With all the TikTok minutes we've seen. I watch Instagram reels like a grown-up. We do all of that on Monday and Wednesday. And on Friday, we have a roundtable episode that really is a nice way to end the week. It's a lively chat that you've been a part of for a long time where we talk about a topic that's really hit the personal finance community, a blog post, some idea that's hit

the personal finance community. We begin the weekend by chatting about that. So Monday, Wednesday, Friday, stacking measurement show. Well, thanks, Joe. And thank you to this community for tuning in. If you enjoyed today's episode, please do three things. Number one, subscribe to the show notes. It's free.

afford anything.com slash show notes, you'll get a synopsis of every episode, along with timestamps so you can jump directly to your favorite parts. Number two, open your favorite podcast playing app and leave us a review. These are instrumental in helping us book amazing guests. And number three, share this with a friend or a family member. The easiest way to do that's forward the show notes. But you can always send an episode through your favorite podcast playing app to whomever you think would benefit from hearing some of the ideas that we share about living a financially healthy life. Thanks again for tuning in. My name is Paula Pant.

I'm Jossal. See hi. And we will catch you in the next episode. Here is an important disclaimer. There's a distinction between financial media and financial advice. Financial media includes everything that you read on the internet, hear on a podcast, see on social media that relates to finance. All of this is financial media. That includes the Afford Anything podcast, this podcast, as well as everything Afford Anything produces. And financial media is not a regulated industry.

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Oh, I went to the doctor and he said I was going deaf. Man, that was hard to hear.