Afford Anything - Ask Paula -- How to Care for Aging Parents, Buy a Car, and Organize a Business

Episode Date: March 6, 2017

#67: It's the first Monday of the month, which means it's time to answer questions from the Afford Anything community. Our first question comes from a caller in a tough spot: Her mother-in-law is 66 years old. She's divorced, holds no retirement savings, and will only receive a tiny Social Security check. Her health is worsening, and she'll need to step away from work shortly. The caller wants to help her mother-in-law ... but how? Our second question comes from Erin, a listener who's moving to California and needs to buy a car. She's new to the world of car-buying, and wants to know how she can get a great deal. What red flags should she watch out for? Our third question comes from Hong, a 32-year-old mother of two who's interested in early retirement. She's thinking about saving money in a 401k until she maximizes her employer match, then switching to a Traditional IRA, and then switching back to saving in her 401k. Should she pursue this strategy? How can she maximize her tax advantages? Our fourth question comes from John, who wants to know what I've learned from building an online course. He's contemplating creating one of his own. Finally, I answer a question from Adalia, who wants to know if my online business and real estate business are structured as part of the same company, or operated as two separate entities. She asks if I can talk about how I made my business structuring decisions. Have a question? Record it from your smartphone or computer. Go to http://affordanything.com/voicemail and leave a short message. Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. And that's true not just for your money, but also your time, energy, focus, attention, anything in your life that's a scarce or limited resource. And I'm not saying that to promote some type of scarcity mindset. On the contrary, I believe in abundance and I believe the opportunity is everywhere. But we must make choices about how we are going to spend our limited resources, our limited time and attention and energy and money in pursuing that abundance that's around us. So, what decisions are we going to make?

How do we make better choices? My name is Paula Pant. I'm the host of the Afford Anything podcast where we explore these questions. Today is the first Monday of the month, and that means it's time for a round of Ask Paula. The episode in which I answer questions sent in by you, the listeners. Our first caller doesn't state her name in the recording, and even though I know what it is, her question is a little sensitive, so I'm not going to repeat her name. here is her question. Hi, Paula.

My question is about preparing financially for an aging parent. My mother-in-law is 66 years old this year. She's divorced with $10,000 to her name, no retirement savings, and will be getting a social security check for a few hundred dollars a month. With her worsening health situation, I'm afraid she'll need to stop working this year. I know she has little time,

but I'm trying at least to stretch the money, I have for her as far as it can go. So I'm thinking about opening either a traditional or Roth IRA for her. At her age, she's allowed to contribute $6,500, and with her low income, it seems like she might qualify for a retirement savings contribution credit. Do you think this is a good idea, or are there potential pitfalls that I'm not seeing? And do you think there's an advantage should choosing one type of account over the other. Related to this, do you have any other general advice? We're saving and investing as much as we can,

but is there anything else we can do to prepare? Even with Medicare, I know there will be extra expenses to pay out of pocket. What would your five- or 10-year plan be if you're facing this situation? Thank you for hosting such an amazing show. You are truly changing lives. Wow. I am so sorry to hear that. To be honest, I got a little emotional when I first heard this question and I was listening to it with Will and he felt the same way. Your question hit both of us really hard because I feel for your situation. I really do and I think it's really admirable

that you care so much and that you care enough to not just be calling into the show but to as you said, be saving and investing as much as you can and clearly worrying about this and trying to make sure that this person whom you love, who is unprepared for retirement and is 66 and is not in good health, has a good future, a humane and just the best future that she can. So thank you so much for your generosity and your heart. And thank you for being the type of person who asks this question. All right. Here are a few things that I would say to this. Now, first and foremost, I'm assuming that you've had conversations already with your mother-in-law about what she thinks that her plans for retirement are. But just for the sake of covering all of our bases, as well as for the sake of anybody else who's listening, who might be in a similar situation, step one is to talk to your mother-in-law about what is happening inside her head.

What does she think that her retirement plan is? You want to just make sure that you have a good idea of what's the plan that's happening inside of her head. Once you get that out in the air, once you just know that information, some things that you're going to want to ask, what assets does she possess? I know you said that she has about $10,000 in savings, but does she have any other assets? For example, does she own a house? And if so, is the house paid off? How much equity does she have in this house? And what are her plans for it?

What are her plans for her living situation? So if, hypothetically, if she owns a house and she wants to live independently, would it be possible for her to sell that home, downsize into a smaller home, and then use the equity from selling her home and moving to somewhere smaller in order to pad that retirement account in order to have some money that she can live on? That's one possibility. If she wants to stay in her home, another possibility could be to do a reverse. mortgage. I typically, that's kind of a complicated topic and it's not one that I want to dive into the weeds here. But that is a possibility. It wouldn't be my first option. But it's on the table for the sake of discussion. Alternatively, if your mother-in-law can live with you or can live with one of her other children, she wouldn't have to pay any rent or mortgage. She probably wouldn't,

you know, depending on the agreement that she made with the kids, wouldn't have to pay utilities or maybe even groceries, that could go a long way towards helping her save the remainder of the income that she makes for the sake of her retirement. And if she does have a home, then the money that she is able to liquidate by virtue of selling her home could also pad those savings. For all of those reasons, you want to ask her what assets she holds. You also want to ask her what insurance she currently has. And specifically, you want to find out if she has any type of insurance that can help with long-term care. It would be kind of expensive to get long-term care insurance at this stage. I would encourage you to at least get the information, see what those

costs are, and then have a discussion as to whether or not you think this is a worthwhile purchase. Because long-term care is expensive, yes. That being said, long-term care insurance, especially at this stage, could also be expensive. So at least investigate that option. That's another thing that I would absolutely say. Other things you should be looking at, a durable power of attorney so that you can make financial decisions if and when she is unable to do so. You also want to establish a durable medical power of attorney, also known as a durable power of attorney for health care. And this allows you to make health care related decisions. And in line with that, you'll also want to make sure that she has a living will so that you know what she wants. In other

words, you know what her advanced medical directives are. So to recap, a durable power of attorney, a durable medical power of attorney, and a living will, in addition to having a conversation about long-term care insurance and having a conversation about other assets that she holds that could be liquidated and turned into cash. Let's get those established, get information about all of those. Now, as to your specific question about a Roth IRA, that Roth IRA, if it's set up in her name, then the funds for that Roth IRA need to come from earned income that she can show. So in other words, if you wanted to give her a gift of $6,500 and that gift is money that she would put into a Roth IRA, that's fine as long as she can show earned income of at least $6,500.

Now, you mentioned that she's working this year, so this year it should be fine, but in the future, she's going to need earned income of at least the amount that's put into that Roth IRA. Now, that being said, the other thing that I would mention here is because her time horizon is so short, you don't want to put the IRA assets too heavily into equities. Again, because she's living on a very short time horizon, she may need access to this money right away or very quickly. The simplest solution in terms of how you may invest the money that's in the Roth IRA, the easiest solution is a Vanguard target date retirement fund with that target date being set for 2015 or 2020.

That's the simple 80-20 solution. If I were in your shoes, that's probably what I would do. The other thing, in addition to a Roth IRA, I think that's a great idea, but I would also recommend, if you are able to, that you set aside an emergency fund that is specifically for her expenses. So in other words, you may have an emergency fund for yourself, but on top of that have a separate emergency fund for her. And then decide, and this is going to have to be a conversation between the family, decide if and when you do give her any money, particularly money that comes out of that emergency fund, decide if you're going to give her the money or pay some of her bills directly. Like, for example, pay some of her medical bills directly or pay even utility bills or rent bills directly.

The advantage to paying bills directly rather than giving her the money is that you can make sure that that money is being used for its intended purposes. So those are some of the things that I would encourage you to think about. I hope that's helpful. I know it's not a complete and total answer. And you're facing an uphill battle and you've got a lot of work ahead of you. but I'm glad that you're asking these questions now and good luck. I will in the show notes, which is available at afford anything.com slash episode 6.7.

That's affordanything.com slash episode 6.7. I will link to resources related to this question and related to some of the stuff that I've talked about. Thank you so much and best of luck. Our next question comes from Aaron. Hi Paula. This is Erin. I've been listening to your show for a while. It's excellent. It's a good mix between the serious and I still can laugh. I have a question for you. I'm looking into buying a car. I'm relocating from D.C. to California, which means I'll need to have a car to get to work and to make finding a apartment more affordable with having more options because I can drive. The question is, I'm looking for an SUV, small, not looking for. large. I realize that's a personal preference, but I'm just wondering in terms of pure financial aspect, what is the best route to buy a car? I always hear you shouldn't lease. I hear the only way car dealerships make money is by financing. I technically can afford to buy one outright,

and I'm just wondering, I'm a total car newbie. Do I show up with a check? How do I actually make the purchase? And from a pure financial standpoint, what is the best way to do it? Thanks. good work. Thanks, Erin, and congratulations on moving to California. Never buy a new car. That's the number one rule of making a smart financial decision about car buying. Don't buy new. That's like setting your money on fire. The newest car that I've ever bought was a five-year-old Honda Civic, and I felt guilty about buying something that was that new. I was like, five years old? What am I, Paris Hilton? Why don't I just buy some diamond-encrusted sunglasses while I'm at it? And you're absolutely correct. don't lease a car. I typically like to avoid dealerships. I kind of call them stealerships. But every now and again, you might get a good deal from there. The best deals typically that you're going to find are private party used, which you can find on Craigslist or various other websites. But if you are going to negotiate with car sellers, whether it's private party or some dealerships or wherever you're going to negotiate, the best way to do so typically is online. Email is your best friend when you are negotiating buying a car. A big part of the reason for that is that salespeople at a dealership can't pull the same type of high pressure tactics that they could in person or even on the phone if you're negotiating by email or negotiating online. They can't ring their hands or call in the manager or play good cop bad cop. And likewise, you yourself have a little bit less of that sunk cost feeling. You know, you don't feel like, well, I've already spent an hour and a half like I drove all the way out here.

let's just get it done. Typically, you're going to get the best deals if you negotiate with a bunch of different sellers by email and just continue to do that. Now, there are four points that, and I'm saying this for the sake of any listener who also has the same question, typically dealers will negotiate four points. The price of the vehicle, the down payment, the monthly payments, and the value of the trade in. Now, in your particular case, Aaron, the good news. news is that you only have to think about one of those four points because you can afford to pay cash and you don't have a trade in. So literally the only thing that you're negotiating is the price of the vehicle. That makes your job a lot simpler. For the sake of anybody else who's listening, who might be in a different situation, if you are negotiating with a dealer, negotiate on all four of these as separate points and don't let the seller tell you that the outcome of any one of these affects the outcome of the other. And as a related note, for the sake of anybody else who's listening who may be financing a car, look for financing, if you

must finance, look for financing from a credit union or a local community bank, because they will often give you much better deals than a dealership would. And if nothing else, as long as you have that offer in hand, like an offer from a credit union, you can always email a copy of that to the dealer and say, hey, this is the best financing offer that I've got. can you beat this? Because heck, worse they can say is no and, you know, maybe they can. Remember, you do not have to take a dealer's financing. So that's a related note. Now, as far as the actual purchase of the vehicle, Aaron, in terms of what you should look out for, and oh, and by the way, there's a book called Secrets of Power Negotiating by Roger Dawson.

If you've got the time, it's worth reading that book. I'll link to it in the show notes, afford anything.com slash episode 6.7. That's a fantastic book to learn just the basics of how to negotiate in any situation, whether it's with a car seller or with an employer. So check that out if you've got some time to do so. Now, in terms of actually checking out the car itself, there are two things that I always do. One is I run a Kelly Blue Book report. That's kbb.com. I'll link to it in the show notes.

By running that report, you can see the value of that car, given its condition, in any given particular zip code. So you can check out what cars of a given make and model in year are valued at if they're in good condition or excellent condition or fair condition in wherever part of the country that you're living in. So check that out so that you have a ballpark of roughly what that car should be worth. Also, pull a Carfax report in order to see the history of the car. You'll be able to see if it's been in any accidents. You'll be able to see a lot of its maintenance history. So always check those two things. And finally, and this is something that not a lot of people do, but I think it's invaluable, once you have decided the general make, model, and year of the car that you are

interested in buying, check out forums, online forums, that are dedicated to that particular make model and generation. And when I say generation of car or an era of a car, I'm referring to roughly a four-year-ish window of a particular type of car. So, you know, I drive a 2008 Honda Civic. So, you know, as an example, I would then just look for online forums, if I were buying that car today, I would look for online forums of other owners of Honda Civics who have cars from roughly that same ballpark era. And what I would do is I'd read through those forums and look for common problems that come up because there are certain problems that just a particular type of car made it a particular time just seems to commonly have. When you're checking out the car, you'll know

specifically what red flags to look out for. This is something not a lot of people do and I don't understand why because it's such a good way to be able to get an idea of what you're headed in for. So good luck, Aaron. Congratulations on your move. And I'm, I'm, excited for this new life on this new coast. Thanks. Our next question comes from Hong. Hi, Paula. My name is Hong. I'm a 32-year-old Mary with two kids. I've been getting into reading early retirement blog this past year. I love your podcast. You are so methodical, precise, and comprehensive in all your answer. I was wondering if you can explain to me the difference between contributing 401k up to the company match, then contributing to a traditional IRA,

then going back and maxing out your 401k, versus just maxing out your 401k from the get-go. I want to specifically look at tax advantage of the two. I'm currently maxing out my 401k and wanted to contribute to my traditional IRA. Unfortunately, it is then now non-deductible. I read that you can contribute up to the 401k match, then contribute to traditional IRA and going back to maximizing 401k. Is there a loop around it? And would the traditional IRA be deductible? Thanks, Paula. I look forward to your answer. Thanks for the question, Hong. So I'm going to answer this in a couple of different ways. From what I hear you asking, it sounds like the basic question that you're asking is on the surface, it's a question about where to put your money. You've got these two different

buckets, right? You've got the 401k and the IRA. and you want to save money, particularly for early retirement, as you said at the beginning of your question. And so you're asking about which bucket to put that money in for the sake of maximizing tax advantages. On the surface, that's the specifics of your question. The broader, if I zoom out for a bit, the broader question here, and I think that the first question to ask is, how do you plan to access money when you're retired? Because from what I'm hearing from you, you're 32 years old, you're interested in early retirement. I'm going to assume that means that you plan on retiring when you're maybe 42, 45 somewhere in that region, which means you'll be decades away from being able to access money from retirement accounts in a traditional way, meaning, you know, the way that most people tap their 401k when they turn at least 59 and a half.

So how do you plan on accessing money in early retirement? Do you plan on taking the 72T-SEPP process? Do you plan on having some type of small side income that comes maybe from a, you know, small side gig? Do you plan on having some rental income? I mean, how do you plan on accessing money in retirement? Because that's one of the questions that we've got to establish before we can fit. out what buckets you should be putting money in right now. Now, to the specifics of your question, typically when I tell most people, when I give most people strategies about how to invest their money, I typically do tell them, put money in your 401k up until you get the employer match, then switch over into a Roth IRA, and then once you've maxed out the Roth IRA, switch back into the 401K and continue to max that out. Now, in your case, you are not eligible for a deductible traditional IRA because, presumably, your income is too high. And that means that you're also not going to be eligible to put money in a Roth IRA because your income is going to be too high.

What you could do is put money into a non-deductible trad IRA and then use that money, roll over that money into a Roth IRA. And since you plan on retiring early, typically the route that a lot of early retirement people take, they'll put money into trad IRAs when they're working. And then when they retire, they convert money from a traditional IRA into a Roth IRA. And the advantage of the strategy is that at the time that they're working, they get the tax deduction. So I'm not talking about you right now because this is, I know that you're not eligible for a deductible, but I'm just telling you what the typical scenario, right? So typically when a person's working, they'll get that tax deduction from putting money into a traditional IRA. So that maximizes their tax advantage at the time in which they're working. And then when they retire and their income drops and their tax bracket drops, they then execute that conversion into a Roth, which means they're converting into a.

from the position of being in a much lower tax bracket, which means that, again, they're maximizing that tax advantage. That's something that a lot of people in the early retirement community do. You, however, can't do that because from what I hear in your question, you're not eligible to put money into a deductible traditional IRA because your income is too high. So given that that is your situation, I personally, if I were in your shoes, I can't tell you what to do. I personally would probably just max out the whole 401k. Unless you have some compelling reason that you would want to put it into a non-deductible trads and then execute a backdoor Roth conversion, unless you've got some very compelling reason for that, which I'm not hearing enthusiasm for that within your question, then I would just max out the 401K.

that that's the easiest solution. It's a path of least resistance. It maximizes, given that you're making a high income, it's going to maximize the tax deductions that you're eligible for now at a time when you have a high income. And that seems to be, you know, the strategy that you would want to undertake. And again, I'm saying that with a caveat of asking you how you are going to access money in your retirement. Because you can access money that's in a 401k while you're retired. We talk. We talk. about this in an earlier Ask Paul episode, the one that I did with Joe Saul C. High, which I'll link to in the show notes. In that episode, we described in a bit more detail how people who retire early can access funds. But that's going to be part of the equation as well. So I hope that answers your question. I think that's a little bit rambly. But the short answer is, if I were in your shoes, I would max out the 401k, get as much tax advantage as you can now while you're in a high tax bracket. And just leave it at that. We'll come back to this Ask Paula episode in just a moment, but first I want to give a shout out to one of our sponsors, Blue Apron. How much time do you spend figuring out what you want to eat for dinner, looking at your pantry, seeing what you have, running to the store, probably a whole bunch of time, right? Blue Apron is a meal delivery service that sends you preportioned ingredients for meals that you can cook at home. So you can make, like, for example, a chicken and chickpea, like Moroccan dish at home. With all of those ingredients sent to you, all you've got to do is cook that home-cooked meal. It saves you time.

It costs less than 10 bucks per meal. And if you want to give it a try for free, you can get three meals free, including free shipping, by going to blue apron.com slash afford. That's blueapron.com slash a F-F-F-O-R-D. You'll get three free meals plus free shipping so that you can try this for yourself to see if you're into it. Save time, save money, blueapron.com slash afford. Our next question comes from John.

Hey, Paula. This is John Zoratsky, calling from San Francisco. I'm wondering if you can share any lessons you learned while creating your online course. I'm considering making an online course of my own based on a book I published last year and would love to learn from your experience if possible. Thanks. Oh boy. Thank you, John, for asking that question. And I, wow, yeah, I've got some commentary here. As background for those of you who don't know what John's referring to, about a year ago, probably a little more than a year ago, I announced to my audience mostly blog readers at the time because this was right around the time that this podcast was just beginning, I announced that I was going to build a course called the working title is your, not the working title, the title is your first rental property. And it's a course on rental property investing. And it takes you from A to Z, walks you through how to find, analyze, make an offer, buy, renovate, find tenants, and manage tenants in your first rental property.

Okay. And I've been working on that for about a year. And it's, it's been a, wow. Okay. I realize I'm not saying anything other than just the word, I'm just repeating the word wow over and over. So I don't know if that's actually helpful or educational or not. But I guess there are two ways that I can answer this question. There's what have I literally learned about the logistics and the administration and the organization of the process. And then there's, what have I learned about myself? And I realize that that second question, the what have I learned about myself, sounds a little like puppies and sunflowers and, ooh la, la. But that's actually a critical piece of the process. And it's one that I completely underestimated before going into this. So we're going to talk about that. And because building the course, I don't mean to sound dramatic, but it's held up a mirror for me in a lot of ways. and it's helped me discover who I am.

And that ain't pretty. Oh, boy, it is not. Okay, so let's start with what I've literally learned. First of all, the scope of work in building an online course is a lot larger than it seems. It's much more work than I had ever anticipated. I started by first validating the idea. So initially, I surveyed my audience. I collected feedback.

I asked all kinds of questions, found out what people wanted to know, found out what their pain points were. And, you know, created plans, created an outline. I created a special sublist called the VIP list, which people are still signing up for. I created that sublist on the website. And then I opened the cart to a limited number of people. Initially, it was supposed to be only 25 people. I raised the cap to 50, 50 people who became the beta testers. And so that gave me the initial validation for the. course. The fact that I was able to to find people who wanted to sign up for the VIP list, which is a special opt-in that people choose to opt into, it's a special, you know, sign up on your email here if you're interested in buying the course. The fact that I was able to get a great response to that, I think at this point I've got about between three to four thousand people who have signed up. And then the 50 spots for the beta test group, those sold out in less than four minutes. So that was intense validation that there was demand for this course. And I absolutely

completely 100% recommend, not just recommend, but insist that you validate an idea. Your numbers may not be the same as mine, but get that validation because you don't want to do all the work of building something without first knowing that people want it. The phrase like if you build it, they will come is me, you know, make sure that people want the thing you're building. It doesn't have to be a lot of people, but make sure that there are at least five people who want the thing that you're building and who are willing to put their money where their mouth is. They're willing to give you their credit card information because that is how much they want the thing that you're building.

Because it is after you get that validation that the work actually begins. And that work is so much more intense than anything I had ever imagined. The module that I wrote on how to analyze a rental property, just that one module alone, came out to 40,000 words. To put that into context, that's the size of a short book. So functionally, she's the finding a property module at this point, I've been saying that I'm almost done with it for like two months now. I'm driving myself crazy, just repeating that. I'm tired of hearing myself say that, but the finding a property module is about 20,000 words so far.

So basically, when this thing is all said and done, I think there's going to be around eight modules. This thing is going to be about maybe 150,000 words. It's basically going to be the written length of two books. And not only is my assignment essentially write two books, It is also then produce full movie, literally many, many multiple hours of professionally shot and tightly edited and entertaining an educational video movie content around those scripts. So I'm writing two books and then directing a couple of movies. And then in addition to that, I'm setting up all of the distribution infrastructure.

So, yeah, it's a lot of work. It's really a lot of work. and so I guess don't underestimate the workload and make sure that people want it before you commit to a project that size. Now, that being said, the mistake that I made was committing to such a huge scope of what I was going to cover. If I could go back and redo it, you know, I thought that I was narrowing my topic by only covering rental real estate for beginners. that seemed to be a narrow enough niche. I'm not covering how to flip houses. I'm not covering wholesaling properties.

I'm not covering mobile home parks or commercial real estate, residential, rental real estate in the United States for beginners. I thought that was small enough. But in hindsight, I should have niched it down even smaller. If I could go back and do it again, I would have created a course just on how to find and analyze a property. And then I would have released that. And once that was launched and released and out in the open and, you know, running with legs of its own, then I would have worked on a second course on how to manage, renovate and manage properties. Just basically just to split up that workload because the scope of what I initially pledged to do was just, I'm repeating myself now. It was just really, really freaking big. So on the surface in terms of how to organize the project, that's what I've learned. Oh, and the other thing is, so I have all of these ideas about, you know, I don't want to just put this thing out there and hope that people do well. I want to actually do longitudinal surveys of my students. You know, when a student enrolls in a course, I want to have a very comprehensive survey of where they are at this point in time.

And then when that student is six months, one year, 18 months down the road, I don't. I want to continue to resurvey them to see what effect that course has had on their life. Have they bought a rental property yet? Have they actively looked for houses? Have they actively saved for down payments? You know, I want that type of longitudinal data. I want quizzes and checklists and interactive materials. You know, I want this to be an immersive and interactive experience.

I don't just want to be blah, blah, blahing at people all day long. I want there to be software and tools and interactive, you know, So I have all of those design ideas for this course as well. And initially I was like just this idea machine that was like, bing, we're going to do this. We're going to do that. We're going to do. And I've had to calm myself down and realize that this is all going to happen in phases. Phase one is build the course and launch it, which has already taken me more than a year and is going to take me a lot, you know, hopefully, you know, initially I was hoping that I would have it out by last.

fall. Now I'm hoping that I'll have it out by this summer. So, you know, it's taking me quite a bit longer than I had ever anticipated. And I'm realizing that I need to, you know, hold down the scope of phase one, get that out, get that launched, and then in phase two, start adding in a lot more of the educational layers that help ensure that students are getting much more out of this than they would ever get from a book or a movie, because that's not what this is. This is a true immersive learning experience. This is not just some video substitute for a book. And there's a lot of work that goes into that. And that's, I guess, the other thing that I've learned is that all of that work has to happen in phases. And so I have to really like keep dialing back and organizing

things down into phase one, phase two, phase three, phase four, and be okay with the fact that not all of it is going to happen at the same time all at once. So that's what I've learned about creating an online course. Now, then there's also the piece that I've learned about myself. First and foremost, I've learned that this is really messed with my sense of self-worth. And, you know, I've blogged for six years. I've written articles for six years since 2011. And I've never directly asked my audience for any money before. And now that I'm asking my audience, I'm asking people to pay hard-earned money for something I've created. And I feel a massive responsibility towards creating the best damn thing that I could possibly ever create. So that has caused a lot of like questions and doubts about my ability to create something that I think is good enough to sell to my audience because it's got to be really freaking good. So, you know, it's led to a lot of insecurity. It's led to a lot of self-doubt. It's led to it's, I've questioned my self-worth. I've needed not just external validation, but I've really needed to work on my own ability.

ability to internally validate myself and to release attachment to outcome and to commit to doing the best, taking the best actions that I can and then letting go of the outcome and not taking it personally if the outcome doesn't, you know, measure up to my standards. I've had to work on my own perfectionism in a way that I've just never had to before. You know, writers face this a lot. you know, writers can often be perfectionists and creatives and creators and entrepreneurs. I think this is a challenge that a lot of people face. And I don't know if this happens to everybody who creates a course. Maybe I'm just like uniquely crazy. But that is really what came up and what is continuing to come up for me as I go through the process of putting this course together.

So, yeah. And then the final thing that I'll say is that I've noticed that often the things that I think are important are not the things that my students care about. And that's why having a beta test group is so critical. It's not just for the initial validation of the idea. It's also so that, you know, I know what's going on inside of my head, but I don't know how that sounds to the outside world. So I might agonize about something for hours and then distribute that to the beta test group and discover that they don't actually care about the facet of the thing that I've been agonizing about. But they are supremely interested in some other facet that I thought was. just kind of a side whatever, you know. So, for example, I might pass out some lesson,

and then I'll notice that several of the beta testers will ask me the same question. You know, so if out of a group of 50 people, I hear the same question three or four times out of a group of 50, that tells me that I did not adequately answer that question well enough. So that's really the advantage of having a beta test group is, you know, it's not just the initial validation, It's the constant feedback so that I know that what I am producing is or will one day be worthy of selling. And that's a responsibility that I do not take lightly. So that might have been more of an answer than you were wanting, John, but that's been my experience of creating an online course. And now that I've gone on about that for so long, I guess I may as well say that if anybody does want to sign up for the VIP list, that's the list.

they'll be the first people to hear when this course is finished and we'll get more updates about this course than anybody else. So I will link in the show notes to how you can sign up for the VIP list to get more information about the course. And again, the show notes are available at afford anything.com slash episode 6.7. All right, I'm going to take one last question for today and it comes from Adalia. Hi, Paula. I'd really like to hear more about the business side of what you do. Like when you decided, how you decided to become an LLC, you know, those kinds of things, like is afford anything a separate entity from your real estate work or do you have just one big company? Like I have the idea. I'm just now delving into

how to structure things and so on. Thanks. Thank you for asking. Adelia, I'm going to answer that question in two ways. So first, I'll directly answer the specific question that you asked, and then I'm going to pull back and put this into a bigger framework. So to answer your question, no, afford anything and the rental properties are not the same business whatsoever. And that's for a number of different reasons, but partially it's because rental properties are not considered active income. They're passive income. And that's not just me saying that that's the actual IRS taxation of rental property income. So, When you pay taxes on rental property income, you're filling out an entirely different tax schedule than what you would pay on an actively managed business. So afford anything, the blog, the website, the online business, that's Schedule C income, which is active income from a business that you yourself run. That's Afford Anything LLC. The rental properties all get reported on Schedule E. that's where you report income and losses from residential rental real estate. So the way that I run this at a structural level is I keep the two completely separate, as I should, because the two have nothing to do with each other.

The fact that there's some person who lives in a house in Atlanta and pays me a check every month as rent for that house, that has nothing to do with, you know, running a blog or hosting this podcast. So it makes sense that they're separate because they are different businesses and they don't relate to each other other other than the fact that I talk about one in the other. And in order to keep them separate, I have separate bank accounts, separate, I basically just have redundancies on everything. So separate bank accounts, separate business credit cards, separate accounting software that generates separate profit and loss statements, everything. is just completely separate. If you imagine, imagine that it's not me who owns the business. Just imagine that these are two distinct businesses. It just so happens that I happen to be the owner of them both. You know, but that's the way that that structure happens. Now, that being said, I kind of want to zoom out and go more towards the framework of your question. I hope I've

sufficiently answered the specifics of your question enough. But to zoom out and, go into the broader framework, I have noticed that a lot of people, when they come upon an idea for a business, it's common that the first question that you might ask is how to structure that business. I would encourage you instead, and this kind of goes back to what I said to John in the previous question, I would encourage you instead to begin with the question of, does the market want this business? Is there a market need for this business? Do people want the thing that I am trying to offer? Because if people do, if there is that demand, then you've got a business. If there isn't any demand for what you're offering, then all of the fancy designed websites and

the LLCs and the proper structuring in the business bank accounts and the business cards in the world. All of the playing business will not generate a paying customer, nor will it put that first dollar into your business bank account. So, you know, I don't know what you've done. I'm certainly not making any implications about you and your journey. I'm just kind of making a general statement that when you start to think about a business that you might want to start, begin with a question of does this sell? Do people want this? Is there value to this out in the world? And are people willing to pay for the value that I'm trying to create. And that is far more important than designing a business card or choosing a name or deciding whether you want your company to be taxed as a pass-through

entity versus as a C-corp. Yeah, that all can come later. And you can change your mind about that, but that is far less important than the basic question of, does this idea have legs? So I hope that helps. All right. Well, thank you so much to all of you who have listened, who've joined me this far into the podcast. Again, the show notes are at Affordanything.com slash episode 6,7. Please, if you are interested in leaving a question for an upcoming show, head to Affordanithing.com slash voicemail. Now, I've got a bunch of questions that I didn't get a chance to get to on today's episode. So next week's episode is also going to be an Ask Paula episode where I will be tackling even more questions that come in from you. I really enjoy these episodes. I really enjoy

answering your questions. So if you've got a question, head to afford anything.com slash voicemail. Leave your question and I will answer it on an upcoming episode. Thank you so much to everybody who's listened. If you enjoyed this show, please head to iTunes and leave us a review. And while you're there, upvote some of the other reviews that are there. That is super, super helpful for this podcast. Also, we have started a YouTube channel for this podcast. I'm going to link to that in the show notes as well. But the YouTube channel is the audio of this podcast. So there's no additional video.

But if you prefer listening to audio via YouTube, you can listen to this podcast on YouTube if that's how you like to do things. So check that out. The link to that channel is going to be in the show notes. Thank you so much. This is Paula Pant, host of the Afford Anything podcast. Thank you for listening. And I'll catch you next week. Thank you.