Afford Anything - Ask Us Anything #1 - Student Loan Help, Tax Hacks, Time Management Tips and REITs

Episode Date: February 15, 2016

#12: It's time to pick the brains of Paula and J. Money with our first ever "ASK US ANYTHING" episode.  Follow along with the answers: http://affordanything.com/episode12 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hey, I was going to ask, you're from Nepal, right? Yes. Do you speak Nepalese? Yeah, kind of. I speak it like a drunk toddler. How do you say money? Do you know how to say money? Besa.

Besa? You're listening to The Besa show? Welcome to the Paula and Jay Money Show, a real and uncensored show about growing wealth and financial freedom. Your host, Paula Pant, is a fun-loving globe charter who lives on the West Coast, focuses on real estate investing, and runs the blog. at afford anything.com. Host Jay Money is a husband and father of two who lives on the East Coast, focuses on saving money, and runs the blog Budgets Are Sexy.com. While they may have wildly different approaches to building wealth, they both have your

financial independence in mind. Which one most resonates with you? Find out. As you listen to the Money Show, here are your host, Paula Pitt, and Jay Money. You want to do some questions today? Yeah. All right, why don't you load them up? and we can bang him out.

I feel like that needs a third thing to it. Load them up, bang him out, and... And then take action. Woo-hoo! That actually is a really important piece to the puzzle, right? Yeah. I mean, how many people know how to save, know how to lose weight, know how to quit smoking. It's very simple.

Yeah. He's got to do it. Then doing it is the hard part. Yeah, exactly. You give us the first one here, Polly. We've got eight questions from our listeners. Question number one. The one thing that ties me to my nine to five job is health insurance. I have a condition which

requires daily prescription pills. I would not be able to function without them. To buy them out of pocket, even in Mexico or Canada, is still hundreds of dollars per month. High deductible plans won't cover prescriptions, and if you did find a plan that covered it, it would cost so much that it wouldn't be worth it. Other than this roadblock, I'm on the right track to save you and getting things ready in order to retire sometime between the age of 35 and 40. I'm currently 27. Damn. I plan to live modestly and sustainably.

The one thing I can't figure out is how to curb the prescription pill expense. And if I can't figure that out, I may never get to leave my 9 to 5 job. Isn't that freaky? It's freaky because, like, the hardest, I mean, that part sucks. Like, the hardest part is figuring out how to retire early and bank all this money. Like she's done a lot of awesome stuff to get to this point. And I mean, in a few years, she's going to be retired. That's incredible.

Yeah, exactly. Good for her. Man, she'll beat me. So at first, how do you manage your health care right now, Paula? So I have a high deductible health plan that I bought from, I price compared between like the Obamacare website and also ehealthinsurance.com. Okay. And then I looked for the crossover point between a deductible.

that I thought was reasonable, as well as like a premium that I thought was reasonable. And my take on it, because like Will and I are both young and healthy and we don't have very many medical needs, I would much rather get a really high deductible health insurance so that I could pay low premiums. So our health insurance is the deductible is $11,000 a year. Okay. Oh, wait, that's not, I'm trying to think what I do, huh? I think that's high, I guess. Well, I'll say this first. The nice thing is once you get insurance not tied to anyone like company, like it's at least for me.

So I've been self-employed for five years. The first half of year I forgot to even do insurance. I was so like upside down trying to figure out like how it will work by myself. And then finally I realized I needed insurance. I went through the same system that you did. E-help insurance, found a plan. But the nice thing is like I was I think I was paying like $200 a month. But what I realized is that.

especially with Obamacare, like it was all separated out from your job. So no matter what happens, granted, it's not like the best plan and the best cost and everything. But it's nice that you have that option not tied to anything. Like that was, you know, now older, that's really important for me. Yeah. Once you figure it out and you're separated out, you don't have to work again. I don't know if we have an answer for her directly. Oh, I do.

I do. Okay, okay. Well, before you get it, so I'll just say that the second option besides your awesome one that you're about to is that there's nothing saying you can't get a part-time fun, awesome job, like, I don't know, working at the movie theater, working wherever that you can get insurance from and still have that part to it, but you're still doing something cool and not really using your brain. Oh, that's great. I hadn't thought of that.

Yeah, Starbucks gives health insurance to part-time employees. Yeah. When I worked for the airlines, people would work there to fly for free, but you had to work a certain amount of hours, but they would trade their hours around. So they really worked like five hours a month instead of like 20 a week or whatever. So they got around it by trading people that needed the work because they didn't. They just wanted the free flights. Do they give health insurance?

Yeah. They used to. I haven't worked there for like seven or eight years. Yeah. Yeah. If you're full time you do, I don't remember about part time anymore. Huh. The airline industry is wacky.

It's so freaking crazy. Wow. That was totally not what I was going to say. That's all I have. So what I was going to say is there's this line in her question where she says to buy them out of pocket, even in Mexico or Canada is still hundreds of dollars per month. And if you were to buy a low deductible plan, that plan would cost so much that it wouldn't be worth it. And I'm interpreting that to mean that the cost of the plan would be so high that it would be cheaper to buy the prescription pills out of pocket.

Great. Now we know exactly how much money we need. We need a few hundred extra dollars every month. I don't know how many hundred. Let's say 500, 600, 600. I'd say 500 to make it easy. You know, but we need, but I mean, no matter what that amount is, that's the amount of money that we need per month in order to buy them.

And so at this point, it becomes a budgeting question. Like it literally just becomes, don't think of it as what that money is being spent on. Like, don't think of it as money for prescriptions. Think of it as I need X amount of money in order to cover my costs. Like your expenses for when you retire early. Exactly. If I need $1,000 a month to retire early, right now with this stupid thing on my back, I need $1,500 a month instead. Exactly.

So it just all goes into your overall game plan? Yeah, exactly. Like when you're creating that retire early plan, I feel like a lot of people will compartmentalize expenses and they'll be like, like, it's always surprised me that. Nobody writes to me about the high cost of housing because everybody seems to just have accepted that. Which is crazy. Yeah. But when there are certain expenses that aren't commonly shared by most people, those are the expenses that I get questions about.

But at the end of the day, it all goes into a giant bucket that's called your monthly expenses. And so at the end of the day, the question is, what are your monthly expenses? And how do I design an early retirement plan that will cover all of those costs? So in this girl's case, let's say she was going to retire at 35. And so that gives her like seven or eight years to look for other alternatives. And maybe Obamacare gets better. Maybe new things pop up, right? Let's say everything's still the same way as it is now in eight years.

Yeah. And it costs $500 extra a month, which is holding her back. So instead of retiring at 35, maybe she works two more years to cover enough expenses for the rest of her life to cover that 500. And then she retires just two years later. Yeah, exactly. That would totally be one of the many possible ways to do it. Or quit at 35 and then go work at Starbucks. That would be another option.

But yeah, I mean, basically, my main piece of advice would be don't think of it as a prescription cost. Think of it as a, this is what my monthly cost of living is. And then approach it from that mindset. Okay. That's a good one. I wouldn't have all of that. That's why there's two of us on this show, Jay Money. Yeah, I know.

Good, good question. Good, I think hopefully answers that help to some degree. This is our first time doing this, by the way, guys. We get so many questions on our blogs and other projects and now the podcast, but this is like the first time we're answering them like live. It's really, really interesting. Question number two, I would like to know more about REITs. Are they worth the investment?

Is that the end of it? Well, I mean, he also kind of says, you know, I'm the sole breadwinner in my house. I'd like to earn more money. I've been looking at various investments for some time. I've been doing some peer-to-peer lending through Lending Club. I've been successful with that. But, you know, but I'm, oh, he mentions he's only 27. Oh, the other person was also only 27.

This is like the podcast of 27-year-old. Yeah, good for them. So he's 27, so he knows that he has the ability to try out a few riskier ventures. And he's been considering REITs. What are your thoughts? All right. Why don't you first explain what REITs are? REIT stands for real estate investment.

trust. And basically the idea is, if you want to invest in real estate, but you don't want to literally directly invest in real estate by virtue of, say, buying a piece of property, you can effectively become a silent partner in a major real estate venture. So a REIT is publicly traded. Is it a stock or like a fund? No, no, it's a REIT. It's a REIT. Okay. But you can go to like Vanguard and just buy it right now. Yeah, yeah, exactly. You can go on Vanguard and just buy it. So a REIT basically is your buy-in as a fractional owner, a venture in which, let's say, a company is building apartment complexes

or building shopping malls or strip malls or offices or whatever. In highly simplified terms, that's the nature of a REIT. Yeah, you know about real estate and all this stuff way more than I do. I hate real estate, right? So this is actually interesting because me, I like to invest all of my dollars, not into real estate, not into physical businesses, or directly at least. I like to invest it all on the stock market and usually with index funds. But whenever I get that thing like, oh, crap, Paula's building this empire, building homes,

you know, like I should get in it, you know, like that all makes sense, right, to do that. Then I think, yeah, REAP for me might be somewhat like a nice, happy medium where I could still invest money directly in real estate, but I don't have to lift a finger. I don't have to do maintenance. I don't have to do jack crap, you know. I just hit a button and I invest it online and then in theory it makes enough money. I have a feeling you have different thoughts on it. I have completely opposite thoughts, Jay.

Yeah. But for me, for someone who doesn't want to invest in real estate directly and likes the freedom, maybe that's a good. If this person is more like me, it was good. But if they want to do hands on and invest in the real estate empire and grow this whole thing, maybe it's not for them. That's my opinion, but you're the experts. So now you tell us how it is, girl.

So my feeling about REITS is that I actually would not invest in them if your goal is to be a real estate investor. I think the benefit to REITS is that it's a different asset class that's not going to. So basically, stocks and bonds tend, generally speaking, they tend to have an inverse correlation, meaning that when one goes up, the other goes down. If stocks are doing really well, bonds are kind of lagging

or staying, you know, flatlining. And vice versa. When stocks start tanking, bonds end up doing much better, typically, because investors need to put their money somewhere and everybody flogs into bonds. So people invest in a mix of stock and bonds, largely because the two have an inverse correlation with one another. And so losses in one can be offset at least a little bit by gains in the other. The benefit to reads, in my view, is that it provides a third,

third asset class, so it provides some additional diversification. I wouldn't put a lot of money in there. I would put beer money there, but don't make it, you know, make it like an accessory to your portfolio rather than the main course. But I wouldn't go into it if you're interested in real estate. And here's why. The benefit to real estate investing is that it's a hybrid between an investment in a business. As a direct real estate investor, you control the decision making. You control the expenses and the overhead, you have so much control over. Like, do I want to put in stainless steel appliances and granite countertops and try to market this as a luxury rental? Or do I want to say, you know what, this is good enough? I'm going to kind of keep the 1980s kitchen and market

it at a lower rent. Like, you have those kinds of choices. You can hire and fire property managers. You can hire and fire contractors. And it's a lot of those decisions that you make. that determine how well your investment performs. If you're in a REIT, you have kind of, you have a lot of the bad sides of real estate, but without the good side of being the decision maker. So I wouldn't go into it from a real estate perspective. I think it's fine from a diverse, like a general portfolio diversification perspective, if that's your goal.

But to me, it's not quote unquote, really a real estate investment. It's like faking it. Yeah, man. It's like, to me, it's just another invisible trade that you make in Vanguard that put your money somewhere. Right. Like I used to like putting like $500 a month. Maybe you're not. Maybe like 100 or 200 into like random stocks that I would choose that I thought I was like being really cool and can game the system. Like this would be one of those. Like this month I'll do some reits and see how it goes. And it's money that like could all disappear, which you hope it doesn't. But it's more money for fun and learning and just playing around where. bulk of your investments are safe and sound and through your game plan. Yeah. That makes sense. Yeah. All right. Well, good answer. I learned something too. I didn't know. I'm always confused by it. So I don't touch it. I don't mess with any of that stuff anymore. All right. Question number three. How do you start a real estate business from scratch? What's the first

thing you must do to put it into action? And then this person actually said he, he has part two of the question, which is time management. And that was literally Ollie wrote. It was like question two, time management. Yeah, that's everyone's problem. No matter how successful or not you are, everyone has problems with time management. It sucks. It's hard. He didn't even have time to write a complete question. That's right. He's like, Hail Mary. Please answer this. All right. Jay, well, I imagine you're not going to talk about starting a real estate business from scratch. So I'll take that one. You take the time management? Yeah, yeah, yeah. But I do have one answer that you'll agree with. Oh, cool. Hit me. It's to go back and listen to the one podcast you and I did that you went over everything for an hour for that any like random person off the street could understand how to do it after listening to that podcast. Thank you. Yeah. So that's what I would do first. Like I learned a lot like half the time I was asking you questions out of my own curiosity and to learn. So that in my opinion is a good way to get the bulk of it right there and listen and, you know, all the questions we ask you. And you answer like,

For a newbie, right? It's perfect. Oh, thank you. That's my answer. So that was episode something. And I'm not sure which one. But if you go to themoneyshow.com, that's themoneyshow. Dot C.O.

We'll have that episode listed on there. And it'll be clear which one it is because it'll probably say real estate. And we'll put it in the show notes too. Oh, hey. Yeah, we can do that now. Yeah, we have a guy for that. We have a guy who does that. That guy is totally listening to this right now and ready to kill us.

Hi, everybody. This is Steve, the guy who does that for Paula and Jay. The episode they're talking about is episode number four, the ultimate beginner guide to real estate investing. That can be found at the money show.com. Or just click on the link inside the show notes right there on your smartphone or the website that you are listening to this from. Sorry for the interruption. Back to Paula and Jay answering the listener's question about time management. As far as time management, one of the best books that I recently read about this is a book by Gary Keller, who's one of the co-founders of the Keller Williams Real Estate Brokerage, and he wrote a book called The One Thing. And he recommended that every day when you wake up, ask yourself, what is the one thing I could do today such that by doing it, everything else becomes easier or unnecessary.

Damn. That's a good ass quote. He's like, and if you just ask yourself that question every day and you start your day doing that, even if you can only work on that one thing for like an hour or two a day. Or 10 minutes. Yeah. He's like, just start every day with that question. And if you continually ask it, you'll focus down, focus down. Because really, I think a lot of time time management difficulties come from trying to do too many things.

Like part of, I'm not trying to talk about real estate too much, but part of the reason that I took the approach. to focus very specifically on residential rental properties is I knew that I wasn't going to have enough time or focus to be able to do everything. I just don't have the bandwidth to flip houses and also wholesale and also buy and hold and also invest in tax liens and also go into apartment complexes and shopping complexes and retail space. Like that's just way too much. So I thought, you know what, I'm going to focus. I'm going to go into residential buy and hold long term investing. And that's it. That's all I do. And then you learn how to master it. Yeah, exactly. And that helped tremendously as far as time management goes because I just cut everything else out and said, I'm going to do this one thing and this is it.

Yeah. And I'll say too, like, so I've heard that quote before and I try it. And I have two things to add one. I started waking up at 5 a.m. every day, which sounds horrible and lame and you have to go bed early and all this stuff. But I noticed the first hour or two of the morning when everyone's sleeping and it's dark out, like I get a lot more done and you could put all the fun stuff in there or just the stuff for your own thing. Like whatever is most important to you for that day, by and large, depending on what it is, you can knock it out right before the day get started. And then the rest of the day, I mean, you still have to do stuff, but it doesn't matter as much because you already knocked out the one major thing you wanted to do.

Which is really, I've been doing it. Today actually is day number 120, work days in a row. Yeah, I keep a journal every morning and I label the days and it keeps me motivated. Like now I don't want to miss a day, right? Because it's been so long. Holy moly. Yeah, it's crazy. And I've never, ever, ever wanted to wake up early. Ever. So that helps. But two, I do one thing. I always have one thing that I have to do that day. It's not always what's going to save me time or what's going to like improve my future. Like I wish it did. I wish I could do it, like automate one new thing a day. Like the reason that I'm talking. talking to you and I have my blog and I'm self-employed is because I always said every day,

for example, I need to write one blog post about money, right? I wrote every single day, workday on Budgets Are Sexy for, I think, six or seven years in a row. Like I never missed a day. And there would be times, it would be like midnight and I'm in bed. I'm like, oh, crap, I forgot. I would get my ass out of bed and do it. And that one thing, like I knew as long as I had one blog post, I'm in the game and it's growing and that's what got me here. Now, sometimes I work, sometimes it doesn't, but that just happened to be like my one thing was the one blog, one blog post. Today, for example, my one thing is to do this recording with you. As long as I get this recording done with you, it doesn't matter what else happens through the day because I've done the one thing

that's most important. So it feels good to have that one thing and know it because then all the other stuff, I mean, you still have to do live life and do stupid stuff you don't want to do, but you've gotten the one major thing like you know you're not going to be in bed until you've done it. Right. So yeah, that's good. What about, do you want to talk about a little bit about just the very basics of what to do when you want to get started with real estate? Oh, well, actually, that leads perfectly into question number four.

Okay. Cool. Because question number four is very similar. The person says, rental property is how I want to quit my job. Can you please go into detail about putting your team together A to Z from property manager to handyman to contractors to legal to accounting? and what one could expect to pay percentage-wise to assemble a good team to allow for your level of passive income. Wow.

Yeah, she wants details or he. That's not going to be it. But we could do another show based all on that. Yeah, you know what? Let's do that. Let's do another show based entirely on this question because that's a big question. Like first they listen to your intro one and then maybe this is the second one. Like stage two, when you're ready to go, here's the rest of the info or something?

Yeah, yeah, yeah. Let's do that. Okay. Do you want to answer briefly? Sure. Okay. As far as what you expect to pay percentage-wise, so a property manager is typically going to cost you about 9 to 10% of monthly rent.

So if your place, if gross rent is $1,000 a month, they'll charge 100. They also tend to charge one month's rent as a placement fee when they're finding a new tenant. Yeah. But remember, if you're doing your job right, they shouldn't be replacing the new tenant every year. Like one of my, actually two of my problems. properties now have had the same tenant in there for three, we're now in the third year. Nice. For both of those properties, it's like once every three years we deal with a tenant turnover.

Or hopefully, knock on wood, even, you know, they'll stay for four years or five years. Yeah, and I'll say too real quick before you continue. I just sold my house, but like literally this week, but I was paying 8% to a property manager. They paid, yep, they charge one month to do a new one. But every year they'd pay like, I'd have to pay like half of a month's rent just to renew it, which is crazy because you didn't do anything, right? But that's at least something for me that my person charged. So that was an extra cost that I didn't really, you know, I just assumed that it wouldn't be there. That's probably because you were only paying 8%.

Because 8% sounds pretty low. So they might recoup that from that. Yeah. And our person was there for two and a half years. And the only reason they left because they got military orders. Which is another thing to consider military orders. You can't really, you know, you got to go and you got to go and legally and everything got to be okay with it. Yeah.

All right. Sorry about that. Continue on. So as far as putting the team together, well, actually, no, let's just tackle that. But in another episode because it's a really big question. But the short answer is get recommendations from people you trust. Get to know other real estate investors in your area and talk to them, see who they're using. is property managers

find people who specifically work in that area. You do not want a property manager who has houses all over town. You want a property manager who has all of their houses in that particular neighborhood because they're going to know

the nuances of the neighborhood. And one of the easy ways to find that out is just to start from the point of view of a renter and look at the other houses in that neighborhood that are for rent and look at who's managing them and see how good of a job they're doing. doing. Like, look at those ads. How well are those ads written and how good are the photos in those

ads? And when you call them, how quickly do they call you back? That's good. Start from the perspective of a renter and see what other managers are working in that area. When you do, then, you know, contact those managers and say, hey, I've got a property. Would you be interested? Sometimes I actually have worked with multiple property managers partially because my houses are in multiple different neighborhoods. And so I want managers specific to each neighborhood. So that was the initial reason that I started doing that. But one of the unexpected benefits is that now I have a basis to compare the performance between multiple property managers. So now I'm working with several different ones. It's like any type of hiring. Like if you were to hire five writers or five

designers, you would be able to evaluate the relative performance of those five people because you would see who does the best work, who's the most communicative, who comes in before deadline. It's the same thing when you're hiring a property manager. What does your team consist of? Do you have like a lawyer, a couple property manager? Like what do you need? I mean, I know you could do everything yourself if you were, you know, wanted to. No, no, you definitely couldn't. Okay, okay. No, no, no, no. What are the, what are the, what are like the minimum you need to have a team, even just to own like one rental property to get you started? I have a lawyer who's based in the DC area, but I actually didn't retain her until I was, until after the fifth property.

Okay. So that was not a requirement to get started. Obviously, when you close on a property, you'll need, like, you'll need an attorney for the closing, but that's not an ongoing relationship. That's just a one-time deal. Right. You'll need a real estate agent or a real estate license. You'll need one of the two.

Okay. Again, that's just to buy the property. Oh, you mean, like, do you buy them yourself? You don't use, like, a realtor, or you do use a realtor to help you? you? No, I have, I got a real estate license after the purchase of property number three. So properties one through three, I used a real estate agent. Okay. And then after property three, I was like, well, clearly I know I'm going to be in this for the long haul. So I may as well just get my license. Okay. So, but starting out, like, but yeah, starting out, you don't need to do that.

Yeah. Okay. Gotcha. I wouldn't recommend because that's a lot of time and energy and expense to get a license. Yeah, before you even get started. Yeah. So I really don't think that that's a good use of your time. I think it's much better to just focus on being an investor. And then after your like two or three properties deep and if you plan and continuing to buy more, then you can start thinking about that.

Do you have any handymen? Man, you hire and fire a lot before you find one that you like. The single best piece of advice I can give for that is get referrals from other people in your area. Talk to other investors because there are contractors who specialize in working with investors and there are contractors who specialize in working with owner occupants. And you're going to see price differences between the two and not just that, but expectation differences. One of the big frustrations that I had, especially when I was first starting out, is that frankly, a lot of contractors treated me like I was just some silly wife who wanted to remodel, you know?

And I got a lot of that. And it was very hard, I think especially as a woman who's home in the middle of the day, it's very hard to be taken seriously and treated as a professional. Interesting. You know, and so they would try to upsell me on, like, stuff that you would never try to upsell to an investor. You know, stuff that might make sense in a primary residence, but that you would just, you know, they're like, well, well, this particular type of paint has, like, extremely low VOCs and it's eco and green and it's also $20 a gallon more. Oh my gosh. You know, and I'm like, maybe in my own house, but this, you know what I mean?

And no matter how many times I told them, this is a rental property, like it never seemed to sink in. So, yeah, that was really annoying. And I found that that problem diminished when I started working with contractors who specialized in working with investors, you know? That's a good point. Because they just, they understand the investor mindset. I found the same thing with real estate agents, actually. Like, real estate agents who work with investors are a very different breed than real estate agents who work with owner occupants.

And you'll meet a lot of agents who are like, oh, I work with both. But you can tell when you talk to them who is really good at working with investors and who is just not. Right. I think, like I know, you told, you said this before too, like when you're looking at or you're using real estate. at least in the beginning to find realtors that can keep their eye out on stuff for you too because what you want is going to be different than, you know, Joe Schmoe just buying a house to live in. Yeah. So I know that was important to you.

Yeah, exactly. But yeah, let's do a whole episode on this. I like it. I'll just ask you a bunch of questions since I don't know what the hell I'm doing. And then I'll help everyone else that doesn't know what the hell they're doing. Awesome. Yeah. All right.

We've got four more questions to go. So let's. Okay. The next one is student loans. Suggestions about them? Thank you. Okay. I'm assuming that they want it to be paid off quicker, as my guess.

If they want to take on more student loans, I don't know. Yeah, go back to grad school, then get another degree. Oh, my goodness. I have a friend who did that. He like, what did he do? He got his undergrad. then he got a master's and then he got a JD and then he got a PhD. Oh my Lord. Wow.

Yeah. So he's like, yeah, completely overeducated and underemployed and has like mountains of student loans. And he has a wife and two kids who like are the most patient people on earth. Anyway, sorry, random tangent there. Okay. So the question, man, I've been blessed and fortunate that I didn't have student loans. so I'm not the right person to do this. But I know one company that keeps popping up

and I talk to the people that run different parts of it over there, is student loanhero.com. They're really good. They're like one of the best out there. If you want to like refinance or get a, yeah, to get a lower loan or to condense or whatever the case is, like you can go there and they have. It's kind of like e-health insurance actually.

Like you put in your info and they say, hey, here are the five different companies and different rates and terms and all that kind of stuff. So you have like one portal to kind of, you know, search to see, you know, what better options there are for you than what you have now. And I know like there's all these different rules and regulations. If you can refinance, if you can, all that stuff. But like that's the one place that I send people to and they want to like pay less interest. I know they're pretty good and pretty, you know, they're starting to blow up a little bit.

So that's only, that's my real only, you know, contribution, I guess. Yeah, like there's a lot of different pieces to the puzzle, basically. I would say if you can consolidate your student loans into a single lower interest payment, then that's definitely something you should pursue. There are just a lot of people who have like four or five different loans, all of which have different interest rates and all of that. Before you consolidate, you'll want to look into, like, if you are on a government sponsored repayment program, you'll want to look into if and whether or not that affects it.

See, I'm having a hard time with this question because it's so general. Yeah. Like if this person were like, oh, this is exactly my situation. I have this particular income-driven plan. I could answer that. But so the thing is, there's the revised pay-as-you-earned repayment plan. There's the income-based repayment plan. There's the income contingent repayment plan.

and all of those have these different requirements and different guidelines and different qualification standards. So it's very hard to make a general statement about student loans, suggestions, because what that question tells me is that you may not have done enough research to even know what you're asking. So my first piece of advice would be to do the research to be able to know what you're asking. Like, do the research to know specifically what your question is. Is your problem that your payments are very high relative to your income? Is your problem that your interest rate feels too high? Is your problem that you have four or five different loans

and keeping up with all of those bills as getting to be overwhelming? Like, what exactly is the issue? Let's start there. And then once we've identified the issue, then we can come up with a solution. Bam. Trying to be mind readers over here. But I guarantee it's I want to pay them off fast and have them out of my life. It's pretty much what it's going to come down to regardless.

Yeah. That means looking to side hustling and rearranging budgets and all that, good stuff. Cool. Number five, baby. Or was that number five? Number six, baby. What is the best way to keep on top of and on track with the work that being an entrepreneur creates? I find myself overwhelmed sometimes and think I'm probably doing some things that I shouldn't be doing

and I'm probably not doing things that I should be doing. And this person goes on to say that she has a Irish dance school with 200 students. She also has a flooring business. And she also has two properties, both of which are 100 years old. Oh, my word. So a lot of different irons in the fire. The hustler. Yeah.

Wow. Wow. That's a lot of disjointed things, it seems like. Fits her interest, I guess. I guess the flooring business serves Irish dance competitions. Oh, nice. So, yeah, I think there's an Irish dance theme, which is really cool. That is cool. Yeah. These kind of questions are always hard because I feel like all of us, again, whether you have lots of stuff or little stuff, we all deal with the same problems of trying to, I guess it comes down to like simplifying or streamlining.

And I know for me, like there's times where I've had, you know, 15 different websites. And then there's times like now we only have like two, you know, or now three with the money podcast. And I'm still trying to figure it out, even though I've wheeled it down. And still it's like some days it's like, you know what? I wish I just had one major thing to focus on, to kill it, to just be awesome and then say no to everything else. But it's so hard to do that because you're interested in other things, your opportunities come. So the only thing that I know for sure, for a fact, at least in my life, and, you know, 36 years, and I know my aunt once told me, like, when you're on the right track, like, if you're doing something and everything keeps going your way and, like, you can tell you're on the right track, like, it's probably a good thing to keep on going, you know. And there's times where you try something or it's stumped.

Like, there's all these stupid hurdles and you can never seem to, like, get through it or it's always like a big old, like, mess. And so for those, at least for myself, I've trained myself to like, you know what? But obviously I'm not on the right track. Or if I am, like, I'm not willing to like keep doing this to like get over whenever that hurdle is going to be where it goes smooth again. So I've been in the better habit of shutting stuff down or stopping and then refocusing on the ones that either I love a lot or that's working out really well. You know, like my blog, right?

Like it was just a hobby. I had no idea anything. It just kept going well because I kept writing and communicating. It just naturally started doing well. You know, and I was working a full-time job at the time. And I was doing like 30 hours on the blog, 40 hours at work. You know, when my wife said, hey, you got to quit one of them. I was like, how can I quit the blog?

It just keeps going well. Like, it seems like it's the right track. And the work certainly was not. And that's what ended up going. You know, and here we are, you know, another four or five years later. So at least in my life, like, I think that's one thing that I've always remembered. And it's hard because you read a lot of things that say, hey, to succeed, you got to hustle. You got to get through all the hard parts, which there are hard parts.

But I think deep down, you can tell. if a project is working or it's not, you know, or if it seems like you're putting in more effort and not getting as much return at that stage, I think people can tell more or less. It just depends on how bad you want it after that point, you know. And luckily with life and all this stuff and business opportunities, there's a million opportunities. Like every single day, you know, I'll get an email with some sort of opportunity, big or small. And there's a billion.

So I used to think, oh, no, this could be my only opportunity, you know, like I need to fix this house or have this flooring company. But once that's gone, like other ones magically appear, I think, you know, I don't know if she wants to keep doing what she's doing, but be more efficient. Or if she wants to figure out how to just be efficient overall and focus more, right? Because that could just mean doing one thing, verse three, you know, or it can mean, you know, what are you doing in those three things that you can streamline better or can you hire people? Like, I know you like to hire, like you have VAs and stuff like that. So that's another route. You can look at it too, I guess.

Yeah. I would answer this question in a few different ways. Number one is hire help. I think a lot of entrepreneurs are reluctant to hire because it feels like a loss of revenue. You know, you see like, well, right now I'm making this much. But if I paid people to do the work, then I would only be making this much. And I think that kind of comes from a, it comes from like a fixed mentality. You know, like people forget that if you hire someone,

somebody else to do work, your income will temporarily decline, but over the long term, either your income's going to grow or at the very least, you'll have your sanity back. I would consider both of those to be win. Right, right. Well, and you can't buy more time. I mean, besides that, you can. If you hire people, that's pretty much the only way you can buy time. Yeah. And there is something to be said for having lots more time than worrying about, you know, lots more income. I'm a huge proponent of hiring people. I mean, when I started my, you know, and my first property was a 100-year-old, more than 100-year-old house. It was built in 1910, so it needs a lot of work.

Like, old houses need a lot of upkeep. And in the beginning, we were trying to do all of it ourselves, and we were driving ourselves crazy. And then I slowly got comfortable with hiring, and it started with hiring contractors to do the work. And then, I mean, now we've got a CPA, we've got an attorney, we've got, like a real robust bookkeeping software. Um, you know, we've got, we've just really got a whole team in place. And as a result, we're creating jobs, which I feel good about. And also, I don't have to spend a whole lot of my time doing that, which is why I'm able to be on this podcast right now. There's no way I would have this podcast if I were still trying to handle all

of that work myself. Right. So yeah, tip number one is, is higher people, um, you know, like reinvest your money back into hiring. Tip number two, and this is something that I've really been working on a lot this year. So a little bit of a backstory. For Afford Anything, this year, 2016, I decided to make a big hire. I've had like assistants in the background for a few years, but I've never had like a really dedicated assistant. And this year, myself and one other blogger, um, the two of us decided to hire somebody full-time. And so this person is working half-time for both of us. So she's roughly 20 hours per week with me and 20 hours per week with her, just running the behind-the-scenes on afford anything.

And she's expensive. She's really good at what she does. I've worked with her. She's been my assistant for a few years now. So this is not like some VA based overseas. This is somebody here in the U.S. who's very, very strong. smart and charges me a lot of money, but is absolutely worth every penny. Number one, that was scary because I simultaneously made the decision that I was going to drop a lot of my consulting

work. So I simultaneously dropped my revenue while dramatically increasing my expenses. And that was terrifying. But I knew that I'm stagnating with afford anything. Like, the only way that I can get it to grow is if I take those risks. You know, so, Number one, I dropped other commitments that I wasn't as passionate about. That was the consulting work. Number two, I hired somebody to help with afford anything. And I hired somebody, I hired the best person rather than the cheapest person. And then number three, because I have her working for me and because her time is very valuable,

and I know that because I'm paying for her time, I want her to use her time as efficiently as possible. That means that I have to create systems and workflows for her. So that rather than her, like, splashing around in the water trying to figure out what to do, for a new project that neither of us know how this is going to work, that's fine. There's a splashing around, period. But if there is some project that I've already been handling that I am now trying to pass on to her, I have to create a workflow for it. And that involves just putting my brain down onto paper and just bullet pointing it out. And so now, and I've spent the month of January doing this, Afford Anything has a very long, very detailed 2016 business plan.

Good night. It's organized in order of priority. Oh my goodness, you should see it. It is insane. But it's organized based on priority and every single task is chunked down into its constituent components. So it answers what we're doing both at the very high level as well as at like the detailed day to day level. And then if any of those bullet points need further explanation, they link to a Google Doc that has like a more detailed explanation of exactly the workflow required to do that thing. Damn. I mean, it's taken me a month of a lot of work to put that all together. But the effect is that now anytime I email her and say, let's work on this, like, boom, she knows exactly what to do.

And she can look through all of that and look at the workflow. And when she does it right, like, when she does it the first time, she does it right. So we don't have to waste a whole lot of time going back and forth on like, oh, you delivered me this thing, but it wasn't exactly what I wanted. But the reason that it wasn't exactly what I wanted is because I failed to adequately communicate my vision to you, you know? Right. Because that was the issue that I was having before. But now I've put in the time to really adequately communicate the vision. And you're faster at emailing me back when I email you.

It freed up so much time. Like you're real fast at things. Oh, thank you. I mean, that's another trick too, right? Like chunking, like some people like will chunk two hours to knock email out. And then every day they spend two hours, you know, and it's like the same time. Like I know some people I only get responses during a certain round of hours, you know, of the day. And then others are like not like I send it.

And then before I go to create a new email, like the answer is already back. I'm like, my word. Like, what's all you're doing in there? So yeah, systems. That's good. Yeah. It's exciting. It's really interesting to hear you talk about this whole blog stuff too because I'm the opposite

of you. I don't hire anyone, which I probably should. And I don't have time. I guess I don't think in big like strategy. Let's grow this blog into like XYZ. I just like do whatever I do every day. Like I literally have no business plan. Nothing ran ahead.

Like, it's just all purely based on my emotions and what I feel like doing that day. Right. Which is good and bad. But the way you do it is how you would do it in a business, right? Like, you're very conscious about business and growth, you know, where I'm like, much to my dismay, like, I'm very into it like for fun and hobby. And then I'm like, crap, I got to remember about the business part. You know, so it's interesting to hear this. And I think, yeah, it would be cool.

I mean, when maybe one of these shows, we get the people answering the questions to come on. so we can pester them with all the questions and get all the details and then answer them that way too. Yeah. Right. Like that chick that just wanted to know about student loans. Right. Come on a show and like let us tell us exactly what it is. I don't remember if that was a girl or a guy.

Okay. Oh, no, in my head. I just think everyone's a girl in my head. It makes it more enjoyable for me. Like hot women asking questions. Don't listen to this life. There's like all these supermodels wearing big. bikinis washing cars asking about student loans.

Yeah, exactly. The world according to J. Money. I'm all the time to help you. That's funny. Well, I was going to say, too, like, I know some people, like, have mentors, and they also, like, you might even have one where you have, like, two or three people, like your mentor group or something like. Oh, a mastermind group. Mastermind group.

And people swear by those. So maybe this woman or guy, whoever with the Irish step dancing and all that, right? maybe they can get their own group or find a mentor that can really, you know, like streamline or at least motivate you or get to the heart of the problems, you know. That's really helpful. Cool. Next question. We've got someone who says it would be good to hear more about your rental strategy,

the numbers you've been sharing, tips and tricks, etc. Jeez, that's, I don't know how to approach that question. It's like it's so much easier when it's a specific question. Give like three like little hacks or tricks. or nuggets. Okay. When you're purchasing a property, number one, only purchase properties that meet or at least come very, very close to meeting the 1% rule of thumb, which means that the gross monthly

rental income must be at least 1% of the purchase price. In other words, for every $100,000 worth of house or property, that property must rent for $1,000 per month. So a $200,000 property should rent for $1,000. $200,000 a month. $300,000 property, $3,000 a month. Now, that doesn't mean go out and buy every house that meets the 1% rule. That's simply a method of eliminating. It doesn't mean buy everything that meets it. It means don't buy things that don't meet it. Perfect. That's a perfect example. I like it. I love it. You said that before on our podcast, and I've never heard that, so that's great.

Oh, thank you. Yes. And for people, I know there's like probably listeners in D.C. or Southern California who are like, what if are you smoking crack? You know, when they hear me say that. A few tips if your knee-jerk reaction is I can never find properties that meet that. Number one, have you actually done the research or are you just having a knee-jerk reaction that says that? Because I get emails from people in Atlanta saying, I can't find any 1% properties. And I'm like, all right, I know you can find that in Atlanta. But the problem is a lot of people look at the neighborhoods where they live, the neighborhoods where a whole bunch of college educated people live. And they're like, well, there's nothing in this extremely white-collar college-educated neighborhood that meets that criteria.

And I'm like, was that actually you? Yeah, that was totally easy. I thought like you hit a button that was like or see our editor like put something. Oh my gosh. You're funny. Wow. Good point. So, yeah, that would be tip number one.

You know, where, like, when people are like, everything in my city is at least $400,000, I'm like, are you telling me that all of the custodians live in $400,000 homes? Is that what you're saying? Like, are you telling me that everybody who's a baggage handler at the airport lives in a $400,000 home? Right. Because I don't believe. that. Yeah, baggage handlers might get paid a little bit more in California or New York than they do in Kansas,

but not $400,000 home more. Right. So that should be step two, maybe figure out what you're comfortable investing or, you know, because that might change, change stuff. But you, or you wouldn't even do a 1% home that, let's say, in the area. Like, say where you live in Vegas, right? Like, I assume you live in a non-poor area and a non-expensive one, but somewhere, in the middle. Like, how does that work if you want to? Oh, no matter where you're investing,

it doesn't matter if it's a high income, low income, whatever. One percent rule of thumb is the minimum that I would require. Now, you could, if you wanted to, if you wanted to pursue higher returns, you could push that criteria up to like 1.5 percent or 2 percent. There are a lot of real estate investors who won't touch anything that doesn't meet the 2 percent rule of thumb. Oh, damn. Wow. They are good. But, you know, the problem is if you're going for 2% properties, then you are typically going to have to go for what are known as Class C or Class D neighborhoods, which just have a different risk profile.

Okay. That's why I don't pursue 2% properties. I'm totally satisfied with getting lower returns in exchange for having a manageable risk profile. Okay. All right. So that's nugget number one. Right. Give us two more nuggets.

Oh, yeah. So anyway, just to consider. quickly finish that up. So if your knee-jerk reaction is there's nothing in my area that meets that, number one, question your assumptions because I, you know, if you haven't, if you haven't put in 50 hours into verifying that assumption, then I don't believe you. Oh, geez. You're hardcore over here. I mean, people are trying to make like, you know, $10,000 a month in passive income. Yeah, you got to be hardcore. Right, right. So, yeah, number one, question that assumption. Number two, If that's really the case, look at multi-unit properties because often you can buy, you know, most duplexes are not double the cost of a comparable single-family home.

So if you can buy a duplex, a triplex, a four-plex, you'll be much more likely to purchase properties that meet the 1% rule. There's a reader that I have who's based in Portland, Oregon, who buys duplexes. And all of her properties are very, very close to meeting the 1% rule. Like they're, you know, a tiny fraction away from it. Okay. Close enough to count. Okay. And she does that by targeting duplexes.

And then number three, if all, if those two don't work out, then consider properties in another area. There's nothing wrong with being an out-of-town landlord. I live in Las Vegas and my properties are in Atlanta. I salute you. I can't even. Oh, gosh. I think I just threw up in my mouth a little bit.

I would say spend 50 hours thinking about that, whether that's the right option or not. 1%. 10 50 hours to start you what you want out of life. Jay and I are a great team because you're like, you're so anti-real estate and I'm so pro it. I'm only anti for if you know deep down it's not what you should be doing. Right. And they force it. Right.

Like I forced myself into buying a home when I shouldn't have. And every day I hear people buying and then they, oh, it just drives me crazy, you know. And frankly, I wish that I was had the mentality and brain set as you and the emotions that you do. Right. Because I would like if I could choose this is what I want to do and I want to feel good and happy about it. I would choose real estate investing. It's incredible. But I'm not wired that way.

So I got to stick to how I'm wired, you know, and it's just a different way. All right. Do you have any more nuggets before we move on to the next question? Sure. I think that was nugget one or something. Yes. So Nugget 1 was find properties that meet the 1% rule. Nugget 2 is don't rent to your friends. Never rent to friends or family. I love it. Nugget 3. I'm just kind of like throwing random tidbits of advice. Yeah. Nugget 3 is to from day one, treat it as a business. So set up a business bank account for it, set up a business credit card or debit card, either one, that you put all of your expenses on. All right. Separate everything out from your personal stuff.

Absolutely. You know, have it completely separate, you know, from all of your personal accounts. And then link it to bookkeeping software. Okay. So that you can separately track it. Because then that way you can just invite your CPA into your bookkeeping software and boom, everything's good to go. Yeah, that's tip number four, have a CPA. Yeah, yeah. We've gotten so many questions about this.

We should probably do another show. Yeah, we'll do another show. Yeah. What else is on that list? I think we've gone to like six or seven. Yeah, we're done with seven. So now question eight out of eight. This is the last one.

All right. Make it a good one. I'd love for you to... How sexy is James? Oh, sorry. Hi, I'm a supermodel who's washing a car and I've got some questions about student loans. Answer it. Please.

I'm 100% listening to you. Question eight. I'd love for you to talk about taxes and high-income. earners. I'm doing... So this person has a high income and she says, I'm doing everything, maxing out my retirement and contributing to my daughter's 529 plan. And these taxes are biting me in the...

And then there's an expletive here. What do you think that expletive is? Biting, biting me in the neck? In the neck? No. Necking. Yeah. All right.

So we assume, I mean, so the first like few things that you would go down the list, right? And you and I are probably pretty similar. Like max out like the number one, which is like the 401K or whatever option you have that's similar to that. Right. Like a 403B or a CEP IRA, whatever, whatever 401K equivalent you have. Right. And that alone, and you can do different orders and different pieces. But that alone is what is the max right now?

$17,000 a year? 18,000 a year for the 401. So you have 18,000 right there that you can bank right away, and let's assume she's doing that. Next, would you say is the IRA, whether Roth or traditional, and if it's under her income, so that's what, like, $5,500? Is that $5,500 now? That's $5,500. If you're a high income earner, then you're not eligible to contribute to a Roth. And you're actually not eligible to contribute to a deductible traditional IRA either. So if you're a high income earner, then what you can do is make a non-deductible contract. to a traditional IRA and then process a proportionate share of that into, you do what's called

a backdoor Roth conversion. So basically you make the contribution to the traditional IRA and then you convert that money into a Roth account because there are income limits on whether or not you can contribute to a Roth, but there are no income limits on converting money from a trad to a Roth. Okay. But either way, the max you can put in for that year, depending on your age and all that, you know, the details. Right. Mostly average is what, $5,500? It's $5,500 if you're age 50 or younger, or 49 or younger, you know, and it's $6,500 if you're 50 or older.

All right. Let's assume this young woman is like 21. And making like $200,000. Okay. I love the world according to J Money. So she has, what did you say, 18500? It's 18, you know, or for the 41K? Let me Google this right now, but I'm pretty sure it's 18, yeah, 18,000.

All right, so you have 8,000, then you have 5,500 if you're under 49 and a half or 50 or whatever. So that's already at like 23,000, almost 24,000. Most people have a hard time maxing it. Like, if you can max out those two or one of those two, like, you're good. Like, you can just do that every day or every year, you know, and you'll be a millionaire over time, right? Like, it's just a matter of how long it takes, right? So if you have more money, you know, usually from what I hear, it's all right, divert that third, the rest of the money into, like, real estate or stocks or whatever.

But for her, she's doing tax stuff. We're missing a few things. So there's- Yeah, yeah, yeah, yeah. Well, I'm saying that's what normal people think. Yeah, yeah. But you are not normal, so that's why I'm trying to set you up here. Oh, oh, thank you. So then there's all these other little hacks that you can do, right?

And she already mentioned 529. Right. So why don't she use, since you do this stuff and I don't, why don't she go and talk about those? So yes. So then there's the 529 college savings plan, which it sounds like she's already doing. And so that's another way to shelter some of your income from taxes. Another option, if your health insurance plan is HSA compatible, then you can contribute to an HSA account as well.

A couple of things here. Number one, your health insurance plan must. be HSA compatible. And you'll know this because you just look at your plan details and it will be extremely abundantly obvious. Like it'll say something like HSA, yes. Or HSA eligible? Yes.

Well, it's like like asking him later. I'm doing good making me laugh today. I'm feeling good. I'm feeling on top of my jokes. So and, and know that there's a different. between an HSA and an FSA. So an FSA is a flexible spending account, which is use it or lose it. It's a spending account. It's not a savings account. So you put money into the FSA and you have to spend it by the end of the year. An HSA, on the other hand, is awesome. It's like the Supremo

account because you can put money in there and then just leave it in there. And so what I do is I'll put money into my HSA and instead of spending it on medical expenses and the money that I put in there is tax deductible. So it's another way to kind of lower that tax bill. And then instead of spending HSA money on medical expenses, I just leave that money in my HSA and pay out of pocket for all of my medical bills. And so as a result, that money that's in the HSA continues to grow tax deferred over the years. And then eventually, when I'm like 65, I can then withdraw that money from the HSA. And at that point, I'll pay income tax on it. But, you know, functionally, it's serving the purpose of and it being an additional 401k. We should mention, too, go back to our podcast and

listen to the interview with Brandon from Mad Scientist. Because we go into a lot of this stuff in the tax hacking and how to pretty much like have a lot of money and not pay taxes and hack the whole system, even though you're like, you know, worth millions. You're not. not paying Jack on taxes. So I would say that's a really good episode to get into more details of this stuff. Yeah. Although Brandon, so Brandon's situation is a little different because he has a high net worth but not a very high income.

Whereas this person, because you don't get taxed on your net worth, you get taxed on your income. And so this person is like a high income earner. I'm assuming probably from a W-2 job. So, I mean, in that situation, yeah, max out the 401K, max out the IRA, max out the HSA, max out. How much can you put in a HSA so we can add up the totals? So the HSA is, it depends on if you have a family plan or an individual plan. It's like roughly 3,500 for an individual and roughly 6,500 for a family. But let me look it up to get the exact. And by the way,

every number that we're quoting here assumes that you're under the age of 50. For the HSA, it's 55 or younger. So if you're 54 or younger, then if you have a single plan, the contribution limit is 3350 per year as of 2016. And if you have a family plan, then the contribution limit is $6,750 per year. Okay. And she mentioned she's doing $529 for kids, so she has a family, or at least just a two of them. Yeah. So I'd imagine that would go in the case. So we're already at like, you know, almost $30,000. And for the $529, I know it varies by state. Some states, there's no tax deductible, some there are. I feel like where I'm in Virginia, I think it's like $20, 500, an account or a person. So it's not a lot, but it's still something. So I mean, you're at

already 30 grand out of your paychecks that you can max out before even doing the rest of the stuff. Yeah. So that's how you would shelter about 30 grand or defer 30 grand from taxes. So let's assume she's already deferring 30 grand, all that stuff. Is there anything else for tax-wise that you can think of? I mean, the next thing that I would say, I'm assuming that this person is a W-2 employee. If she were to start some kind of a side hustle or some sort of a side business, then she could start writing off expenses against that side business. Now, I'll put a big asterisk here in that the side business, in order to like really be

legitimate, it should be profitable. And I think the rule is for two out of every five years or three out of every five years or something like that, it needs to show a profit in order to be considered a business and not just some hobby that you're using as a tax. Who would do that? You should legitimately start a business and legitimately pursue a profit. But assuming that you do that, then there are a lot of expenses that could be tax deductible because they're used as ordinary and reasonable expenses in the span of your business.

So, you know, you could even have a home office deduction. Right. Well, and I'll say too, like the even other, the bigger picture thinking, which is still blowing my mind, even though I've been following the early retirement crew for two, three years now is what you said earlier. The taxes aren't on your net wealth, your net worth, it's on your income. So you can start wrapping your head around, hey, how do I have massive net worth and let's say make 30 grand a year and pay no taxes based on all these different ways you can hack it? You know, what does that look like? If you have a W-2, it might be different, but maybe there's

a way, hey, I'm willing to take a pay cut because my expenses are low. Right. At all, it all, hinges on your expenses, you know, but in return, maybe I get, you know, I'm like making this up. I don't know if this is legal or not like stock or something, a property or invested in the company, something that turns it into assets that doesn't make it income, like what you're taxed on. Right. And that's crazy thinking, but that's like the opposite, right? Or you get a different job or whatever. I don't know. But you know what I'm saying. Right. Well, certainly if you had your own business, you could reinvest your money back into your company. And the effect of that is that you're the value of your asset grows and therefore the value of your net worth grows because this company that you own is now more valuable.

But your income is lower because you've reinvested that money back into your company. For example, like when I spend money on afford anything, my income is lower. Like I'm paying, I'm paying that person who I've hired 20 hours a week. I'm paying her so my income is lower because of the fact that I'm using some of my LLC income to pay her. but she will hopefully, if I manage her well and if things go right, she will hopefully add value to the company in excess of what I'm paying her, which means that ultimately the asset will be worth more even though my actual income is lower. Well, and it's also, too, this is all stuff like how they say the richer gets richer and this huge divide and why aren't these multimillionaires, billionaires paying taxes? It's because they've all figured out the system, right? Like they can make $1 a year in salary, but they're worth billions of dollars, right?

their wealth is tied into stuff that's not getting tax. Right. I mean, it's really a fascinating world, and it's so extreme, especially in the early retirement, correct? Because you do have to, again, live off of so less. All that stuff is well worth looking into or researching or finding different financial blogs. And I love thinking about it. I've never enacted a lot of it. Well, that's the thing is, like, ordinary income gets taxed so heavily. You're kind of incentivized to set up your finances in such a way that you're not minimizing ordinary income, because I would never encourage somebody to pay less. But, you know, just bear in mind that capital gains get taxed at a much lower rate than ordinary income. That's just the way the system was built. And so

there's an incentive to try to push your money into capital gains. Well, it's good, too. Yeah, like you don't want to. It's kind of like the homeownership stuff too, right? Like people say, oh, like you want to keep all this debt. And there's could be reasons for it. That's legit. But they say you want to keep all the debt because you can ride off of the interest. No, that's stupid. Yeah. And it's like this crazy. I'd rather have, I'd rather repaying no money. Right. You know, what's the tax on there is zero, but you're paying no money, right? So like, if you're making two, three, four, 500,000 a year, you know, like don't make less just to save on taxes.

Yeah, exactly. Unless you're hacking the system and building wealth on the side and that's how you're maneuvering. Right. Make that money. And worst case scenario, you pay a lot more on taxes, right? And still it goes to the economy and all that good stuff, right? That's a whole other question and moral stuff, right? But, yeah, I mean, congratulations to her to making a lot of money and to have, these are good problems to have, right? Yeah. You're like the best problems to have. What do I do with all this excess wealth that I have? Yeah. Good. Good questions. Yeah, man, we can go on forever. I think we need to wrap it up and maybe we'll do another one of these every month or something like that.

I'm not making any promises. Yeah. Oh, and I got to clarify, too, when I called you Miss Rupy earlier on for people that don't know, like, so Paul is from Nepal. And we were, I was trying to joke with her to figure out what my name would be if, like, I was Nepalese, what Jay Money would turn into? And I think, what did you say money was? So in Nepali, the word for money is Pesa. Pesa, right. But it's not just the word for money.

It's like the word for coins are Pesa. So you'd have a handful of coins. You'd have a handful of Pesa. But then the actual bills, like the physical bills, are rupees. So that's what I'm calling myself J. Rupi from now on. I know everything Nepali now. What's the capital? What's the capital of Nepal?

Catmandu. Isn't that some... All right. Man, I am awesome. I didn't have time to Google that show. Capandu. Jay Bruppy, sign me out. We'd like to thank our sponsors.

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