Afford Anything - Q&A: Why 3 Years Is a Weird Timeline for Money

Episode Date: March 31, 2026

#702: Olivia is saving for a specific three-year goal and wants to know whether a money market fund is the right place to store that cash, or if a traditional savings account would be safer. Robert is planning to retire early in the next few years and is trying to decide whether to prioritize building taxable investments or continuing to grow Roth accounts. And finally, we’ll hear from a listener with nearly 30 years of experience in social work who wants to open an adult day center in a rural area where services for disabled adults are extremely limited—but isn’t sure whether to structure it as a nonprofit or a for-profit business. We’ll tackle all of that on today’s episode. Enjoy! Learn more about your ad choices. Visit podcastchoices.com/adchoices

Joe, three years from now is 2029. No, it's not. No, it's not. It sure is. You got any plans? I plan to be podcasting with you, Paula. Duh. Oh.

Well, if you have any other plans for 2020, plans that include spending some money, then the question is, where do you put it for the next 36 months? Oh, good, good question. Yeah, we're going to answer that today. Wait, we have to answer that? We have to answer that. That's a question for us. Oh, man.

We're going to tackle that and much more starting right now. Welcome to the Afford Anything Podcast, the show that knows you can afford anything, not everything. This show covers five pillars, financial psychology, increasing your income, investing, real estate and entrepreneurship. It's double-eye fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode-ish, I answer questions from you. And I do so with my buddy, the former financial planner, Joe Sal C-high.

What's up, Joe? Paula, I'm having a frustrating morning. Why is that? I accidentally sprayed axe body spray in my mouth, and now I'm afraid the whole podcast I'm going to speak with an accent. And with that, we go to our first question, which comes from Olivia. Hey, Paula and Joe, this is Olivia from Houston, Texas. I love your show so much. Thank you for putting it out there each week.

My husband and I are putting aside money for me to be able to take. a year off of work in three years when he goes on an international assignment. It's a concrete goal with a specific and relatively short-term timeline, and so far I've been putting the money allocated for that goal into a vandard federal money market fund. My thinking is that it's a safe place to put it in terms of it not being likely to lose principle, and it's also pretty liquid. What do you think? Am I okay to put money for this type of specific three-year savings goal into a money market fund as opposed to just a straight savings account? Thank you so much. much. Olivia, I think a money market is great. Money markets are great. High yield savings accounts

are great. T-bill and chill, great. I have no particular preference between any of those. I think you could, you can't go wrong. You could do any single one of those for a 36-month goal and be solid. If you decided to do T-bill and chill, I would do individual T-bills because I think there's a risk of inflation returning with all of the Middle East stuff, Paula. So do not do a T-bill. fund, a T-Bill fund or a T-Bill EDF, E-T-F buys a collection of T-bills on the open market, which means that you could see losses. And with a three-year goal, you don't want to have losses. Right.

Yeah, exactly. So if you do T-Bill and Chill, then go to Treasury Direct and get individual T-bills through them. Specific. Don't go into a fund. Yeah, exactly. A lot of people don't know the difference between a money market account that they'll see at their bank and a money market fund that you can buy through Schwab or Fidelity or

vanguard. And I think there is an important difference, which we saw raised its ugly head in 2008. Money market funds are not insured. They're on the open market. Now, are they safe? They're incredibly safe. One time in modern history have they, quote, broke the buck, meaning have they lost money? That's a great safety record for something that's not insured.

However, I think you've got to know when you go in, the reason why a money market fund will often have a higher interest rate than a money market account is because they don't have the overhead of the insurance cost. But all of that said, I have no particular preference between them. I think, and I'm saying this, Olivia, not just for you, but for everybody listening, any of those options are solid. And for people who might be new to the community that heard us just go, yeah, Olivia, great, fantastic.

Let's describe our thinking because the biggest mistake. you can make with a three-year goal is to get into anything that has volatility. Because you think, oh, I got three years. So, man, I could make a little extra money. Get that trash out of your mind, as mom says. Just take it and dump it because the second that you do that with a three-year time frame, you're really gambling more than investing. Yeah, exactly. And the thing is, when times are good, people tend to think of the stock market as a high-yield savings account. You know, what we have seen consistently from 2009 through today, pretty much with the exception of 2020, with the exception of like March of 2020, March and April, we have seen a continuous bull market.

And when you have had 16 to 17 years of a near continuous bull market, it can be very easy to think of the stock market as a high-yield savings account. and when that happens, it can be easy to take excessive risk with short-term money because you're going, wait a minute, why would I put this in a savings account? Why would I put this in a money market account when I could be getting much, quote-unquote, bigger returns in the stock market? Forgetting about the fact that those returns come with the acceptance of risk. And that risk is fine for a 10-year, 15-year, 20-year goal. it is not appropriate for a three-year goal. I was reading in, I believe it was a Wall Street Journal recently a piece talking about

researchers believe that the reason why these prediction market apps like Kalshi or Robin Hood prediction markets are so hot right now, Paula, and so many people are doing it, is because we have seen relatively few people just get destroyed. had this had this been 2002 or 2009, you would not see those apps going crazy like they are now. They really tied the fact that it feels pretty easy to win. Feels pretty easy to win. And the longer, the more wins we get, the more we naturally, our brain goes, oh, why not a little bit more? Why not take a little bit more?

Why not go a little bit more? And I think it's going to take a good house cleaning, which will come at some point. we already know it. It will come. It's not a matter of if. When that happens, I think we'll see interest in apps like that, at least for a little while, abate. Right. Well, and part of the reason, you know, people have often seen that the wisdom of the crowd on these prediction markets tends to come true, that these prediction markets are actually quite useful as predictors of what will happen. Yeah, data gathering. As data, yeah, exactly, as data gathering sources or as analyst signals. And part of the reason for that is because when you are a

financial professional, you are required to give a prediction whether or not you have a high degree of confidence in it. Whereas on a prediction market, you don't have to make a prediction unless you have a high degree of confidence, which means that there is some sampling bias in what we see in prediction markets because the people with the highest degree, of confidence are the people who are making the bets, which is why prediction markets often outperform industry analysts at certain predictions. Imagine if an industry analyst had to put $100 behind every prediction they made. I wonder if that would change things.

$100 might not be enough. Yeah, it might not be enough. I'm sure Olivia's wondering, how did we go from where do I put money for a three-year goal to why are prediction market so popular? And I think it's because Olivia, yes, you're awesome, was not a long enough answer. I think that's 100% why. Yeah. Yeah, I'd say, Olivia, you're doing it right.

Between money market versus high yield savings versus T. Bill and Chill, I think you could pick any one of those and you'd be good. Back in the day, people also used to choose laddered CDs for three-year goals. Those don't really pay out very much anymore. So while in theory, I have no objection to a ladder. CD in reality in the present day, the payment just isn't there. If that were to change at some point in the future, then that would also be a viable fourth option. It's just, the payment just isn't there right now. So as of 2026, that's in principle good, but in payment, not worth it. Yeah. It's something we thought about for about 0.2 seconds. Yeah, exactly. The main takeaway,

Olivia, not just for you, but for everyone listening is don't take excessive risk. with a three-year goal. The only exception to that is if it's not a goal, it's like a, it's a three-year, if you have the money, you might do it, but if you don't have the money, you wouldn't. If it's a three-year, like, flex, flexible idea. An example of that might be, okay, three years from now, if I have the money, maybe I'll put some money into landscaping the yard, but if I, if I don't, then I don't really care about missing that. You know, that would be if it's some super flexible idea, sure, you can take some risk there because if the market goes down, you don't really care because you were never really tied to the...

It's not even strong enough to be considered a goal. It's just sort of a maybe I'll do this. If you've got something like that, it's not a goal, it's a maybe I'll do this if the money is there. sure, you can take risk with that. But if it's a goal, if it's something that you are truly committed to doing in 2029, keep it safe. All right, Olivia, thank you for the question. You're doing it right. So congrats on doing it right. Coming up next, we're going to hear from Robert. Robert is 53, and he's considering retiring early in the next three to four years. After that, we're going to talk to Anonymous, who wants to know about starting an nonprofit versus

is starting an LLC. Welcome back. Our next question comes from Robert. Thank you for taking this call, Paula and Joe. I'm 53 years old, and I have about 58% of my investable assets in rock or Roth equivalent accounts. And my question for you all is, if I retire early, which I'm thinking in the next three to four years or so, should I prioritize?

prioritize taxable accounts, or should I continue to add to the raw balances? I do have pre-tax accounts. For those accounts, I'm actually already doing 72T distributions to lower the amounts of that account so that I can have more flexibility when I end up in RMD territory someday. So I'm already taking action there, but just wanted to know if I should prioritize taxable. account. Thanks so much. Robert, congratulations on being so close to early retirement. That is incredibly exciting. Also, congratulations on already taking SEPP 72T distributions. That tells me that you are in a solid place in your pre-tax accounts. Yeah, I'd be curious to learn more about that,

because what that tells me is you're already doing some fantastic long-term planning. You must be worried about something called Irma, where there may be a struggle with a struggle, I think, is probably the most judicious word we could use for what's going to happen to the price of your Medicare coverage if you go over a certain threshold in the amount of money that you're taking out. Mitigating that this early on is really cool to see. Right, right. And so given that you're already taking 72T distributions, my assumption based on is that you are very, very well contributed. I mean, you're extremely well contributed in your pre-tax accounts. And also, those pre-tax accounts are around 40% of your total retirement savings

because you've mentioned that about 58%, so we'll just round up and say close to 60, right? Close to 60% of your investable assets are in Roth or Roth equivalent accounts. What that indicates to me is that given that your pre-taxist, so well-funded that you are concerned about Irma, you're taking out 72T, and that well-funded bucket consists of 42% of your invest, well, I guess not counting taxable, but, you know, consists of 42% or less of your overall contributions. And 58% is Roth or Roth equivalent. What that tells me is you're very well-funded. Like that to me is an indicator of just how strong your funding is. So for any additional savings that you amass, I mean, first, strictly speaking, I don't know if that's even necessary for you to continue saving.

And I don't know the exact numbers, but it sounds to me, based on the 72T and based on the fact that 58% of investable assets are Roth or Roth equivalent, which means the rest are combination of tax deferred and taxable, it sounds to me as though you're so well funded, you may not need to save anymore. but if you do, Roth it up. Taxable brokerage. Oh, I would roth it up. Yeah, I think he could go either way. Taxable brokerage would give him some flexibility. I thought about that, though, is that if he's taking 72T now,

which is money that he can spend, and he's still talking about saving money, he doesn't have a cash flow need then. If he anticipates, I mean, don't get me wrong, I would totally do what you're suggesting, which is timeline it out and see if pre-59-5, and a half if he's got liquidity issues. And if he doesn't, besides that, there's no downside to the Roth because he could take the money out like he would in his taxable brokerage. So why not

put the interest or dividends inside a tech shelter? Like, why not? Yeah. Yeah. So yeah, yeah. Flexible brokerage is fine, but I would go Roth first only because of the fact that I think you gave us a hint that cash flow is not an issue. Right. If there's a hint at all that cash flow would be an issue, I'd 100% be in non-IRA, put it in the textable brokerage account, make it flexible so you can get it to money whatever you want. If you are sure that you've got enough money to get you to 59.5, roth it up, baby. Yeah. And the other piece of the puzzle is he's 53. He said wants to retire in three to four years. We'll take the lower of those two numbers and say three years. So we assume that he's 56 at the time that he retires. And so the gap that we have to plug is simply

age 56 to age 59 and a half, three and a half year gap. honestly, if he can just plug that gap with assets from a taxable brokerage account, that's the simplest thing to do. Yeah. And if he's already got that, which he might already. Yeah. So, I mean, I like that strategy of, you know, part of the reason that I say go for taxable brokerage is I just want to see him plug the gap because it's only a three and a half year gap,

right? Age 56 to age 59 and a half. If he can plug that full thing from taxable brokerage, do it. That's going to be simple. You're going to sleep easy. at night. There's the math, Robert. Yeah. That is all the math that you need. And it's funny because we are, Paula, answering this different, I said as we were preparing ahead of time, that we've had this question in different ways previously, but this is really the first time we've answered it

a little differently because for most people, we feel like there is a gap. Like we're sure there's a gap, right? And with those people, I was like, taxable brokerage, textual brokerage, taxable brokerage. In this case, if there's not, then Roth IRA is like a surrogate for taxable brokerage because there's no downside. There is no downside. But yeah, you know the math, that three and a half years fill that layer, maybe put a nice little extra in there to make sure that if you decide to go crazy and spend a little more money that you can. But besides that. Yeah. So once those three and a half years are well funded, everything after that can go to Roth.

Great, but these are my favorite problems to have. Right? Yeah, it's a problem of abundance. Robert, the important detail in your question to me was the detail about the fact that you are currently taking 72T distributions. That was a game changer in your question. 100%. Yeah, because even without knowing your numbers, the fact that you're taking 72T, that tells me how well-funded you are. Wow.

Joe, is this going to be? the world's shortest episode. We have, between Olivia and Robert, we have people who are doing it right. Like, our answer to both Olivia and to Robert is, you're doing great. Just keep doing what you're doing. But they are great questions and there are still some great lessons in them. But yeah, a lesson doesn't need to be long to be thorough. Right. So yes, we might be saving you time today, Afforders. Wow. What will you do with the rest of your day? Oh, my goodness. They'll probably cry. They'll probably cry that they don't get their fill of Paula and Joe. I don't want to be creating sadness in the world. Well, it's sadness because they had so much

joy for about 45 minutes and they wanted it to continue, you know. Joe, for the new people who've just joined the afforder community, should we explain what 72T is? We should because... We should because... You know me. You know me. Because, A, we've got the time,

but also B, you know, that truly is jargon. Like, you know... Right, it is, yeah. A hundred percent jargon. We joke about 72T, hey, you know me. But that joke is only funny

if you know what it references. Yeah. A, the song. Right. From a long time ago. And B, what the L 72T is. That song was.

I didn't realize how long ago that. That was like a 20 year ago song. Longer than that. Really? That song might be 30 years, Paula. Wow. Hold on a second. I am going to look it up.

Are you ready for how old that song is? Oh, no. Uh-oh. I feel like I'm not going to like this answer. The song OPP, which is what we're singing about, was released in August of 1991. No. No. That song.

That song is 30, 33 years old. Oh, no. Wait, 1991, that would be 35, 35 years old. I'm sorry, 35 years old. What am I doing? Wow. Okay. That song's at least 10 years old.

You could be wrong. Yes. There are people in the audience that have no idea what we're referring to when we're like, you down with 72T. Yeah, you know me. Be like, what are you talking about? Wow. So anyway, 72T is also referred to as CPP rules.

So you can call them either one of those and you will be correct. SEPP is separate but equal periodic payments. These payments are a way to get around the IRS rules around getting money out of your IRA before 59 and a half. Now 401Ks have their own rules where you can get out of them, possibly you have to read the plan document, but possibly before 59.5. But in an IRA, you don't have that ability. It's substantially equal periodic payments. I like separate but equal periodic payments. Substantially equal. Somebody write a letter to the IRS. But they mean different things.

Well, I like my meaning. I think my meaning is incredibly important. IRS, come get me. So substantially equal periodic payments are these very specific rules that you have to follow to take money out of these IRAs pre-59.5. And as long as you follow them, there will be no penalty. You know, there is a 10% penalty and you're going to pay taxes if you made the money today if you take money before 59. and a half. There's still going to be the tax after $50.9.5 on your pre-tax plans, but you won't pay that penalty. So this gets around the extra 10%. There are three different ways to calculate it. You also don't have to use all the money in your retirement plans when you calculate it. So what we would do, Paula, is if I had a client who had amassed a substantial amount of

money. And we were trying to do what Roberts doing. Substantially equal amount of money. I think separately equal amounts of money. I think if they want separate or substantial, it could be both. It could be both amounts of money. When they take that money out, what we would do is we would start off with how much money do you need. And then we would go backward because the way the rule works is if you segregate that money into a separate IRA and then you take the entire IRA. So it has to be the entire IRA, which fools some people to thinking, oh, it has to be all my IRA money. Nope, has to just be based on all of the money in that IRA account. So I will segregate the amount of money that I need to feed the amount of income that I'm looking

for. And then that will create a payment that I want. And that payment, while the word equal, years, equal is defined three different ways. In some ways, the dividends interest, the changing amount in the account matters. In other ways, it does not. So you can set it as a fluctuating a number, or you can set it as a set number. The only downside to SCPP is if something happens during the time that you're taking it and you need to violate the agreement, then the IRS is like, we had a deal and you broke the deal. And so now you're going to see those penalties rear their ugly head again, which is why I also don't like using the entire account for SEPP. So if we, if we want to take the money early, I like to try to leave some money in an IRA that's off to the

side that, you know, maybe I could create a second SEPP with that, you know, I might be able to do something that gives me some flexibility. But that's CPP. Substantially, as I was saying earlier, substantially equal periodic payments. Which if you think about what that means, it's basically just another way of saying the same amount of money. Yes. And the fact that it can, it also, they kind of, Paula, I'm joking, but I'm not. What they're also alluding to is substantially equal means it can be a flat line or it can be a

fluctuating line depending on how you look at it. So they could have said equal-ish. Equal-ish, yeah. Periodic payments. Oh, kind of like how we do these episodes on Tuesday-ish. Ish, right? Yeah, yeah. We do, yeah. This is like every other episode-ish, you and I. You know. Every other episode-ish, we answer listener questions. Every other one, wouldn't they happen? Yeah, and they happen Tuesday-ish. Yeah. So that's the, that's the skinny on seven. 22T. Yeah, you know me.

Can't believe that song came out in 1991. I was like, that song might not be as young as we think it is. What was I listening to it on a disc man or something? What was, you were probably. Jeez. And by the way, you were walking with flat feet so it wouldn't skip. Yeah, that's right. I'm trying to walk very smoothly.

Yeah, yeah, exactly. You don't want to scratch the CD. Oh, the disc man. All right. Well, thank you, Robert, for the question. And congratulations on being so close to early retirement. We're going to take one more break to hear from the sponsors who make this possible. When we return, we're going to hear from an anonymous caller who is interested in nonprofit versus LLC. Whether it's with your besties or date night, get to all the hottest concerts with Go Transit. Go connects to all the biggest entertainment venues and makes it affordable with specials. e-ticket fares. A weekend pass offers unlimited travel across the network on any weekend day or holiday

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Many promotions are available both in-store and online, though some may vary. When Westcham first took flight in 1996, the vibes were a bit different. People thought denim on denim was peak fashion, in-line skates were everywhere, and two out of three women rocked, the Rachel. While those things stayed in the 90s, one thing that hasn't is that fuzzy feeling you get when WestJet welcomes you on board. Here's to Westjetting since 96. Travel back in time with us and actually travel with us at westjet.com slash 30 years. Welcome back. Our final question today comes from Anonymous. Hi, Paula and Joe. Thank you for your wonderful podcast and especially your

Q&As. I am anonymous and I have a question about opening a business. I have an almost 30 year background in social work and am a parent to an adult with special needs. I live in a rural area and there are almost zero resources for disabled adults. Within an hour radius are two sheltered workshops and one residential group home. My dream is to open an adult day center and I have no idea where to start. I was thinking of doing an LLC or business model as a nonprofit depends on government grants, which can differ from administration to administration and also fundraising. I have a person in mind who is a special ed teacher who would run the actual program, but it would probably just be me and her as the initial staff.

I have been to a training about becoming a provider paid through the state, and the process seems daunting to say the least. Any advice, resources, or things to think about for people with no actual business experience to start a business. Thank you so much for all of your help. Anonymous. I love the vision. I love the goal. I love the objective.

I love the question. Let's give you a name. I have a name for her Paula. And as soon as I heard her question, I thought of this person. Back in November, we helped raise money for an organization that teaches kids about money. And what I love about Anonymous's mission is that this is community driven. She's doing it

because she truly sees a need. I mean, don't get me wrong. She wants to make money. But I didn't hear so much make money as I heard, let's fill this need that I have that nobody's addressing in my community. This woman's name is Karen Holland. She has a wonderful 501c3 called Gifting Sense. That's fantastic. And it teaches kids at that age. when those dopamine hits hit really hard, hit really, really hard to learn to ask themselves, does this purchase make sense before I go out and ask my parents for it or I ask a relative for it or I save money for it or whatever it is. And it really helps kids learn the basics of spending. So I would love to call her Karen, because Karen, same thing, saw this need in her

backyard. The kids are not getting what they need. Was she somebody that you interviewed on the Stacking Benjamin's podcast? She's somebody we actually raised money for in November. And we actually beat a bunch of other podcasts. And we actually won this trophy. Oh, for those of you listening on audio, go to the YouTube channel because Joe is holding up his trophy. Yes. So we won the 2025 ultimate voice. Ultimate Voices for Good. Wow. Raising money to help kids learn about money. And what was cool was a lot of the podcast we were up against were big I-heart podcast that had celebrities on them. We meet a bunch of celebrity podcast because people in personal finance are such badasses and gave money to cause we all think is pretty important.

Take that, Conan O'Brien. Bam! So I think that the fact that she's community-oriented, I just, I don't know, I'm inspired, and we'll call her Karen, I guess. I'm very inspired by Karen's mission. her drive to get this done. Right. Great. So in honor of a role model in the world of creating organizations that do good in the community, perfect, perfect, perfect. All right. Karen, I want to answer the initial, the piece about do you form this as an LLC or do you form

it as a nonprofit? And your answer to that is going to depend on how you plan on raising money and how you plan on funding this, particularly in its early years. Because when something is formed as a business, as an LLC, the, I mean, the benefit to that is from an administrative perspective, from a paperwork perspective, it's actually very simple. One of the great things about LLCs, one of the great things really, you know, you look at the paperwork requirements in some other countries around starting a business. It can be quite onerous. And I think one of the great things about the United States is that in every state and different states have different requirements, but in every state, starting a business is actually relatively simple, relatively cheap, very straightforward and takes, yeah, an hour. or less, depending on what state you're in. If you go the LLC route, the great news is that it's very, very simple and easy and cheap to do, to get established.

The drawback is that it's up to you to come up with all of the money, and that means that you're going to have to put some of your own money as initial seed money to get the ball rolling, And then the products or services that you offer, in your case it would be services, the revenue from those services will need to pay for any expansion. And so it's very bootstrapped. It's fueled entirely by initially by owner contribution. And then after the initial seed owner contribution, it then grows through that revenue. And that can be hard and it can be spotty. And there are times when the revenue is.

is not enough to keep the operations going, and then you need more funds coming in from the owner, more owner contributions in order to maintain operations or in order to grow. The bootstrap route is, I should say, simple but not easy. Yeah, I think that if you go 501c3, which is, you know, jargon again for if you're a nonprofit, that doesn't mean, by the way, that you can't pay yourself and you can't make money on it.

You can personally, but there are very specific rules around nonprofits. And also, you have to convince people in the community to fund your organization. The IRS has some very simple, but difficult to follow rules if you're not thinking about marketing. And really what we're talking about here, Paula, I think is the key no matter what you do. Because my initial thought, I'm glad you brought this up at first because it was, because it It wasn't where I was going to go. And like so many answers to questions, we kind of attack it from different ways. Because I was like, I don't know that I would even start with LLC.

I can see why you did because you're getting to the place that I would start, which is how are you going to fund the business? And how are you going to market the business? Because that is going to be the key to your success no matter what. when you start to put some numbers in place, you begin building spreadsheets about what you're going to need and how long you're going to have to fund the operation before it runs itself. I think there's a couple things that longtime entrepreneurs will tell you. Number one is whatever numbers you come up with, number one, you already know they're going to be wrong.

It doesn't mean I wouldn't do it. I would 100% do it because once you have an expectation of what the, the numbers are, the way they're wrong is going to help you then pivot because we don't know how they're going to be wrong. We just know they're going to be wrong. And as wrong data comes in and you're comparing it to what you thought, it's just going to make your data better if you come in with some ideas and you've done some research. And also just the time it spends talking to entrepreneurs that are already doing in other areas, what you do going online and looking at people that do what you do, it gives some thoughtfulness to the process of building the business and you're much more

likely to spot holes ahead of time if you do that legwork of coming up with numbers, even if you know they're going to be wrong. But whatever number you come up with, every entrepreneur will tell you, you need to either double that number or triple that number, specifically in two areas. Your startup cost are going to be about double. The number you come up with is going to be about half to one third of what you really need. Every entrepreneur will tell you this. And then the second thing is the runway to profitability. If you think it's going to be 18 months, you need to double or triple that as well. It's going to be 36 months, 72. And by the way, when we talk about profitability, because I think that is a term that's often misunderstood, profitability simply means you cover your operating

expenses plus $1 more. Yeah. Yeah. Right. And that $1 more is just a dollar that you then can spend doing some type of marketing or outreach that you have not previously done. Maybe you cover your costs plus $1 more and that extra dollar, you decide I'm going to put that into Facebook ads or I'm going to put that into t-shirts or stickers or flyers. Like, you know, profitability just means it means money to grow. That's what profitability really means. And I think it is misunderstood and much in some circles, maligned word. Because there are people who think, oh, profit.

No, no. Profitability means you cover, because if you think about an operation in two phases, there's maintenance and then there's growth. Profitability simply means you've covered maintenance, and now you have some additional money outside of just the bare bones that you need to maintain what you're already doing. You've got something on top of that that you can use for growth. There was a wonderful mentor I had in one of the first businesses that I ran who put this very simply, Karen, very simply, he said, you need to calculate how much it's going to cost you to just turn on the lights in the morning.

So if you walk in and you need to turn on the lights another day, what does that cost? Meaning the people that work, they all need to be paid. Payroll, yeah. The electricity, the rent, the whatever. Like, what does it cost to turn on the lights? that's the number. And if you're thinking, well, we're not going to rent a space or, you know, at least not initially, if you're running this remotely, software costs are enormous. I mean, I was, this morning, I was looking through afford anything's credit card bill. And I was like, what the, how did this get? You know, what the hell are we buying? It's Dropbox. It's click up. You know, there's so many different. And I know people in the age of AI are talking about the death of SaaS, software. as a service. But we pay for so much SaaS. I mean, it is incredible. I'm paying AI agents now. Yeah, exactly. Every month. You know, we pay for Riverside and for Loom and for all just air table.

We pay for all these things. So there's payroll costs. There's huge payroll costs. And then there's software costs. That tech stack, especially if you're brick and mortar, then you pay the brick and mortar costs. And if you're not brick and mortar, if you're remote, then you have a pretty expensive tech stack in order to support that remote operation. I cautioned everyone earlier. We both did, I guess, Paula, about using jargon, about us using jargon. In this case, I like the fact that people that don't know the business like you and I do of what we do, you just gave them a bunch of jargon. They have no idea what air table is or what any of these Riverside. Like, what the hell's that. This is how intimate you want to become with the business. You want to know what some

of these things are. So you're going to want to go to other communities and talk to people that already have these costs that are hidden from people. I mean, heck, everybody listening, I'd say 95% of people listening have no idea of these costs that Paula just talked about. And yet, if you were going to create your own podcast doing what we do, you need to know what these things are because we don't buy them unless they're important to making sure that we can make this end product. And so often a business owner has a great idea and will open up the business without knowing what those hidden costs and they're like, why am I not getting this done? And then some business owner, they happen to meet up with six months later and like,

oh, you're doing that. Why wouldn't you just have this thing, but you pay $40 a month for it, but it takes care of that. And now you, A, you drop some cost, but you include. occur another cost that's not going to go away. How many times a day, Paula, does a marketer tell you about another cost that you're like, yeah, that would be really cool, but it's not mission criticals, and I can't afford it. I would say I get 50 those a day and I now have filters that I pay for. Another thing I pay for, I pay for filters to make sure that I don't see them because I get marketed so much, these products that would make it even better for me, another subscription. I think there's a cautionary tale here too, though, Paula, that I was thinking of, which is the

entrepreneur's journey. I'm sure we're not the only people that you're talking to about this idea. I know when people get excited about an idea, they tell their friends, they tell everyone. Your friends are generally the wrong people to talk to about your business. I agree. Don't take advice from anyone who doesn't have the results that you want, specifically the results that you want in the particular domain, which is to say, for this goal, don't take advice from anyone who isn't already a successful founder of a small business or founder of a nonprofit. Those are the only people that you should be taking advice from. because anyone who hasn't founded either a small business or a nonprofit doesn't know what the

F they're talking about. Yeah, my spouse, Cheryl, will tell you, like, just during our whole marriage together, there's things that I tell her that I'm doing. She's like, I sure you want to do that? I'm like, we need to do that. Here's what we need to do. And then six months later, she's like, I would have never done that. And I can see how that was, but she's not an entrepreneur.

She is not an entrepreneur. And that's why she doesn't give me advice about the business is because she's not an entrepreneur. And, you know, when I talk to my mom about the business, which I do sometimes, my mom's always like, ooh, that sounds or whatever. And I take it and it's well-meaning. Your relatives don't want you to get hurt. Your friends don't want you to get a hurt. There are things that you have to do as an entrepreneur.

There are things that you won't do as an entrepreneur. People like, well, it's obvious you should do that. No, I shouldn't do that. But they don't understand the entrepreneurial journey. A book that I like that I've been reading recently, and I've dog-eared the crap out of this, is from a guy who created and people in the Midwest will know this chain, a chain called Big Bee Coffee. Big Bee, huge in the Midwest, non-existent elsewhere. But he has a great book for entrepreneurs.

You can see, I actually have it here on video, but it's called Grind. Ooh, a no-b-S approach to take your business from concept to cash flow. grind by Michael J. McFall. And this is a gentleman who's been there. And you know what he talks about, Paula? He talks about the importance of getting rid of everything. I mean, this is my big takeaway from the book, and he goes much deeper into it. You need to think about marketing, nonstop, non, it doesn't matter what business you have.

And he said, the same thing that most people think is, I'm not good at marketing. I'm not great at marketing. You have to learn what marketing really is, and you have to think about how do I market my business? Because one more customer today in your business is the chance for that person to tell five other people, for them to become your marketing. And soon you're going to learn a term called net promoter score. But you need to just think marketing all the time. And he is a guy, by the way, a big B is a franchise. And so he speaks to franchisees, potential franchisees. And he walks through franchises that fail. And he says,

almost every Big Bee coffee that's failed is a lack of marketing. It's where the person thought they were too good for marketing. No, I'm making coffee. I'm not marketing. Well, if you don't have anybody buy your coffee, nothing else matters. You have to, have to, have to think grind, which by the way, grind, you can see because he makes coffee is a double intandra grind. Yeah, yeah, yeah. But a really good, just very blunt book about how rough it's going to be your first couple of years. And I think if you go in thinking that the first couple of years are going to be pretty rough, I think Paula, then you set the standard for every day's a blessing. And anytime something good happens, that's fantastic.

Like we're going to celebrate the small wins then, which I think if you don't go in thinking it's going to be hard, that's why businesses fail. Yeah. The fact that you've got somebody else who is also in this week. you from day one and who shares the same vision, the same goals, the same objective, that's important. It's particularly going to be important if the two of you have different but complementary skill sets. If that person can compensate for your weaknesses, their strengths are the opposite of your weaknesses and vice versa. If your strengths are the opposite of their weaknesses, because naturally, there are just going to be some things you're good at and somethings you're not.

And same with them. They're going to be somethings they're good at and some things they're not. And if those things are different from one another, then you can split the workload because it's going to be a big, big, big hurdle ahead. And everything takes longer than you expect it will. And logistics are just sometimes onerous. They're tiring. And so there's the emotional support that you get from having somebody else who's in the trenches with you every single day. There's also just, if you can split the workload in a way in which you, you're both in your zone of genius and you're both doing what you do best, I think that's a great way to start. Long time afforders have the bingo card out. So I'll make sure that you get the square

because we need to mention this book. It's so important when it comes to. Oh boy. He's going to say the E-myth. I wasn't going to mention it until you brought up partners because I think what the E-Mith does really well. The book is called the E-myth. So now you get the square. Everybody gets the square in the Bingo card that we did mention the E-Mith. But the reason I think this is important, Paula, is that what Michael Gerber talks about there is clearly defined roles, clearly defined roles. And I think that especially in a partnership, the reason I see partnerships fail, I knew this. And we started a podcast called stacking deeds with two people that were running it for us, right? I did not create roles ahead of time.

And these two wonderful people ended up stepping on each other. And then there was a power struggle. And then we had to have a really difficult discussion about the future of the podcast, which is if you follow my brand, you know, stacking deeds is not a podcast we have anymore. And one of our host is gone. He's a super guy. And it's really as much my fault as it is their fault.

as it is their fault that we did not have something I knew about ahead of time. How many times I mentioned the E-Mith? Yeah. We didn't have predefined roles. And I love it when somebody is the CEO, where somebody's got to be the CEO where, you know, if we disagree, we're doing what I say. And it's not an ego thing. It's defining it ahead of time. Yeah, it's authority. Because when authority, when there's unclear authority, people push the boundaries to, discover where they are. Everything turns into a negotiation. I actually posted about this on Twitter a while ago. One of the mistakes that I made early in business was I didn't want to, I was uncomfortable stepping into authority and I didn't want to be dictatorial. I didn't want to be one of those people

who just pulled rank and was one of those all because I said so type of people. And so I overcorrected and made everything a discussion and everything felt negotiable. And as a result, we didn't have proper standards. We took way too long to make decisions. Everything got just so watered down. It was just it created more chaos and confusion and ultimately was worse for the organization. Layla Hormozzi just posted, she said something I really like. She said, you know, your role is not to be agreeable.

your role is to do the things that are mission critical. I'm paraphrasing. I don't remember her exact words, but it was, yeah, your role is not to be agreeable. Your role is to execute the mission. And that doesn't mean that you have to be somebody who terrorizes your employees. No, we're doing it my way. Right. I mean, my management style is very much, and we have our team meeting.

We talk about the why behind a lot of stuff because of the way adults learn. And I also get input during those meetings and people feel, I want people feel comfortable with me, giving me their input. But they also know that Joe's deciding. Yeah, yeah. If you're like me, if you're the personality type, who's a bit of a people pleaser, if you have the flaw of being too agreeable, that can really bite you. And it can bite the company.

It's something that you have to really learn to keep in check. Yeah, it was funny because even on something as ridiculous as being podcast, co-host, like it became a power struggle and ridiculous. Yeah. So predefined roles. I did not want to, I will tell you long-term people, I did not want to mention the e-mith. I was very proud of myself that I was not mentioning the e-mith. But then Paula brought it up. She made me mention it. But I think that book, though, Paula, you'll agree, does a better job than any other book about entrepreneurship of talking about clearly defined SOPs.

You know, I'd say there's another one that's called Who. It's really more about hiring. But who, let me see, who are the authors? Who are the authors? Who are the authors of who. Jeff Smart, Jeff, G-E-O-F-F, Jeff with a G, Jeff Smart and Randy Street. They're the authors of a book called Who, the A Method for Hiring. It talks about how to build a scorecard, and it talks about how to clearly define outcomes for a role. I strongly recommend that book. That book was actually recommended to me by Scott Trench, the former CEO of Bigger Pockets. you know, the most important thing that you're going to do is hire. As a leader, your job is really three things.

It's number one, hire the right people. Number two, don't run out of money to pay them and to pay for all of your software and operational expenses. And number three, set the vision, set the goal, set the objective, set the vision. Those are the three things you do. You hire the people, you don't run out of money, and you set the vision. set the course. I know some entrepreneurs I've seen kind of roll their eyes that set the vision, but that is, that is hugely important. Because people like to come to work feeling like they have

meaning. And the meaning is bigger than I just go to work to make money. This isn't everybody, but this is most people that I've hired. They want to be a part of something that is impacting and truly care what you're doing is going to have a big impact. So when you start to, when you start to hire people, you get to see the results because you're working with your end users all the time. But a lot of people that work for you don't get to see that. If somebody is in the stock room or whatever, but they need the vision as much as anybody that stacking these things is important so that we're able to do this thing. So I've found myself over the years during our team meetings. I've had to become Paul a little bit of a storyteller, tell people about the wins that

we had because of the important work that they do. Because it took me a while to realize that Every employee you have does not get to see. They don't get the accolade of, oh, thank goodness, you guys do this for us. I'm so happy that we do this. And if I don't pass it to them, then it makes it more difficult for them to come to work. They're like, what am I doing? Right, right. Well, and vision is, it's beyond just that.

It's how do you respond to changing times? You know, in the world of AI, you know, vision could be something as fundamental as what roles are we hiring for versus what roles are we building agents. AI for. And your employees want to know that. Yeah, yeah, exactly. So someone's got to make that decision, right? And that's, as the CEO, that's your job. You know, vision could be, if you're thinking about your revenue streams, all right, here are five different ways that we can diversify our revenue streams. Which of these, we can't do all five, which of these five are we choosing? And why? You know, that's vision. Vision is, I mean, even if you look at the history of afford anything. We went from, we iterated from a blog to a podcast, to an audio only podcast, to now

a video podcast in which our guest interviews are all in person, in studio. That, every single step of that was setting the vision, you know, for five years, afford anything was a blog. We don't blog anymore. That's outdated now, right? Now we're a podcast. And now, not only are we a podcast, or a podcast that insists that if you are going to come and be a guest on this show, and Joe, this doesn't, of course, qualify because you and I do the Q&As, this isn't a guest interview. But if you are going to come and be a guest, then you have to show up in person. We have to do this face-to-face.

People have flown to New York to do interviews with us. I say that to emphasize how much we insist on that, you know, how unwilling we are to make. exceptions. And it's because we are committed to getting the best possible interview and the interviews that you get with somebody face to face do not hold a candle to the interviews that you do remotely. Just as an interviewer, you can feel it. You can feel how different it is. There's a lot of friction with that. And so to execute that vision, there's a lot of cost. There's a lot of friction. There's a lot of administrative burden. And so you have to have the, you have to have conviction. You have to have conviction and you have to have resolve

because people are going to fight you on it every step of the way. That's where vision comes in. Like, that's commitment to vision is conviction. And that's what a great leader needs. A great leader needs conviction. I think that was a convincing way to answer her question. You answered that with a lot of conviction. Oh, I thank you. Well, I thank you. So yeah, in terms of it, do you form as an LLC versus a nonprofit, it totally just depends on how you want to raise those initial funds. Yeah, I think what's the old phrase, form follows function, right? Yeah. Will it be owner contributions or will it be outside fundraising?

That's going to be the deciding factor there. At the size that you are operating at, you will not be forming a certified B corp. You might hear some people talk about that. that is appropriate for much larger organizations. It's not really something that a smaller organization would do. There are just too many costs associated with the B-Corp certification process. So while you might be a B-Corp in your heart, you will not actually be paying all of the costs to go through that process.

Build an org chart. When you're filling in the org chart, even if it's just you and that one other person, you should still build the org chart just to out-euvre. outline what all of the roles are so that you can say, look, here are 12 different jobs. And yeah, right now it's, we're filling in the names of two people. But, you know, when you build the org chart, you build it based on roles, not based on the individuals filling the roles. So building that org chart in advance will show you what the roles are and then have a job

description for every single one of those roles, have a set of ideal outcomes for every single one of those roles? I mean, for the people listening, even if you're starting without somebody, you might have an org chart with 12 roles and you've got the same person in all 12. But if you have that org chart and corresponding job descriptions, corresponding ideal outcomes, corresponding KPI's for every single role, you know what success in each role looks like. And that's going to be really important as you grow and as you start to bring in more people to fill in those roles. These are fun discussions. You know, we don't talk about the letter E enough in the FWIRE. So I love these questions because this is my favorite topic.

It's what I think about all day, every day. And it is incredibly gratifying to run an organization that is based around a mission of improving people's lives. That's the fun for me. Yeah. Thank you for the question. And congratulations on the vision that you have. Congratulations on finding somebody who will be in it with you from day one. and congratulations on everything that's about to follow.

You are about to create something incredible in this world that will change lives. What a beautiful thing. All right, Joe, we did it again. We did. We did. We found a way to really, I mean, three people doing fantastic stuff. Like this was really cool to see what different things people are doing in the community, but all great.

I mean, this idea of just going to do the thing you want to do three years from now is fantastic, taking time off of work and planning for that ahead of time. That's powerful. Saving enough money that you're doing SEPPs, separate or substantially equal payments, you choose. Doing that and really doing some great forward planning, I think is amazing. And then, you know, seeing this hole that you know that you uniquely can. fill. You and a partner can fill that hole and, you know, becoming an entrepreneur. I think those are all just amazing stuff people are doing. Yeah. So the theme of today's episode is all three of our callers, the next three years are going to be incredibly exciting. Yeah.

2029. All three of our callers are going to have great 2029s. And I'm just thinking the song, OPP will be 38 years old. Our baby. Our baby. grown up. Well, Joe, where can people find you if they'd like to hear more? You know, a fun place to find you and me and a fantastic group of other contributors is our roundtable recording session on Monday afternoons. It's funny because we get to pretend it's Friday on Monday, which is always great. That's 330 Eastern-ish, 330-4-5. We gather and then we go live as soon as we can between 333, 345. So we just have YouTube, the Stack & Benjamin's channel on and you've subscribed. It'll alert you that we, when we go live. But, man, we have some fun times.

We just had Paul Merriman join us, Paula. We also had on that same episode, Paula Pant won her first round of trivia for 2026. I did. I did. That was huge. Incredible. She's on the board. And so between Paula and our other frequent contributor, Jesse Kramer, OG, and these Brie, brilliant people that come join us every week. You get a few surprises, but also enthusiastic people in the comments. Like Paula, half the fun is watching what looks like financial beach balls being passed around in the comments as enthusiastic people are joining us. It feels like getting together with a bunch of friends. So come join us, stacking Benjamin's live recording of the Friday episodes, Monday afternoons, 330 to 345-ish Eastern Time, 1230.

1245-ish Pacific. Thank you, Joe. And thanks to all of you for being afforders. If you enjoy today's episode, please share this with the person who runs your money market fund. With those well-meaning relatives that want to tell you how to run your business when they're not entrepreneurs. Share this with the people at Treasury Direct.

Share this with your accountant who you're running your SEPP payment strategy by. Share it with the people at the bank, the bank tellers, the brink. ranch managers, all of the people who work at the bank who have that high-yield savings account or that laddered CD that doesn't pay anything? Share it with that partner you're going to go into business with. Oh, share it with the person who helps you form the nonprofit entity. Share it with Michael Gerber who wrote the e-muth and tell him we mentioned him again. Share it with Conan O'Brien. Tell him we mentioned him. We did. He hasn't had 15 minutes yet. Share it with all of those people and more, because that is a single most important.

important way that you spread the message of F-A-I-I-R-E. Also, subscribe to our newsletter. It's completely free. And Joe, what do I say? I learned this from you. Yes, it is 100% free and worth every penny. So that is at afford anything.com slash newsletter. Finally, open up your favorite podcast playing app.

Hit the follow button so you don't miss any of our amazing upcoming episodes. While you're there, please leave us up to a five-star review. And you know what? Can I throw in a fourth thing? Go to our YouTube page. YouTube.com slash afford anything. Follow us there. Hit the follow button, hit the bell, leave a comment on a video. Engage with our YouTube page. I think that's a great way to see our faces in addition to hearing our voices and help support this channel. Thank you to all of you for being part of the afforded community. I'm Paula Pant. I'm Joe Salli.

And we'll meet you in the next episode. Well, it's sadness because they had so much joy for about 45 minutes and they wanted it to continue, you know. I love pontificating about how much people should love us. You know, there's a title of a book. It's called Work Won't Love You Back. I haven't read it, but I think the title pretty much, you know, conveys the thesis. It does sound like a book that I might not even need to read to get that. Yeah.