Business Innovators Radio - Interview with Stanley Targosz, Founding Member of The Responsible Brand Discussing Cashflow Management to Fund College Without Affecting

Episode Date: April 23, 2025

As the President and Founder of The Responsible Brand, Stanley is dedicated to bringing financial education back to families and the industry. He believes that responsible solutions begin with a knowledge base that can be applied to each phase of life, helping individuals have more control over their current and future financial decisions. With over 20 years of experience in helping families understand how to afford the next step after high school without affecting their life goals, he also solves the extreme college debt issue organically, using a knowledge-based solution that everyone can implement. His mission is to put the family at the center of the solution, ensuring everyone wins.Learn more: https://theresponsiblebrand.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-stanley-targosz-founding-member-of-the-responsible-brand-discussing-cashflow-management-to-fund-college-without-affecting-your-retirement

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us Stanley Targos, who is the president and founding member of the responsible brand. and we'll be talking about how to fund college without affecting your retirement. Stanley, welcome back to the program. Thanks, Mike.

Glad to be back. Hey, so I know that this is such a huge issue these days. You can look at statistics and you can see where people are in debt, the percentage of student loan debt. And like you said, in our previous conversation, that, you know, there's a lot of people having Social Security wages impacted negatively because they're still paying on. student loans that they help their kids with. So I know that this is such a big, big piece. And it's something that so many Americans are going into, which is helping their kids get through college.

But if that blip of four to five years or whatnot or if you have multiple kids, many more, we don't want that to affect retirement. So where do you start when you're working with a client, a family, in helping them understand this cash flow management situation so that it's keeping retirement. in the proper perspective so that you can accomplish both. Mike, you know what's fascinating about that is what got us down this path is we were meeting so many families who wanted to get their kids to college. And after about 100 meetings, we gathered the team and we talked about the experience.

What we realized is most people were making good decisions, trying to make good decisions to get their kids to college. But what we found is the impact on the retirement. was more motivating than the college and the decision that they were making. So they want their kids to go to college. But at the end of the day, the cost of the college determined to the impact on their retirement, was determined by the impact on the retirement, which helped them put a boundary in place for what they were willing to do. So when we think about how to pay for college without affecting your retirement,

it's really during these college years, how are you able to accomplish both goals at the same time? You see, the world wants to tell us that we're in an either or scenario, but we believe in a both and. I can get my kids to college and I can fund my retirement. I can help my kids get through college and I don't have to sacrifice my lifestyle during retirement to make it happen. And when we met so many families and showed them how money works and how to manage cash flow, the things that they thought were important maintained a level of important. but when we ask them to prioritize, is your lifestyle important, is paying for your kids' college important, is paying off your house important, is funding your retirement important, is taking a vacation

important. Very rarely did paying for college make the top of the list. Most of the time, it was maintaining lifestyle and funding retirement that were the two key pieces. But when they're in the college years, what throws people out of balance is their money is not in alignment with their goals because there's this emotional attachment to my kids have to have this college at any sacrifice that I need to make if I'm a good parent. And that's just not true. You can have both and, but it comes with a different understanding of knowledge and a paradigm shift for how we manage cash flow during those years.

So one example is this. Before your kids go to college, every 12-month window is managed under how the I IRS financially for most people is managed on how the IRS will give you a tax refund. So people will pay off, put as much money as they can in their 401k. They're going to, because they're going to get a tax refund and reduce their AGI. They're going to pay down their house and eliminate their mortgage. And the world tells you, before your kids go to college, pay off your house because then you can use your mortgage payment to pay for your kids college. Put money in a savings account.

Build your emergency fund. Fund a 529. You might get a tax benefit for that or not. But when your kids go to college, all of those things actually increase your cost at college based on how the financial aid works. So everything we do that's responsible until our kids get to college is flipped during the college years, which is why so few people have money to put into the retirement while their kids are going to college because they've played the game by the IRS rules for 18 years instead of the FAFSA rules for 18 years. You know, you bring up a good point, and I know that this is not the place to do like a four-day seminar in one conversation, but let's touch on the high point, right? But, you know, it's almost like it reminds me when you play chess and you make a move and you leave your finger on the piece and you look around and go, is this the best move? You know, I need to, I need to look two moves ahead.

And that's kind of what you're talking about here is I need to make sure that college is taken care of, but also keep the finger on the move of the retirement piece. and go, how is this going to affect that? If I make this move, like what you said, like paying down a mortgage or doing this, this strategy or this tactic, how will that impact? And it's like you need the, if this, then that methodology. If I do this, then that will happen. So you mentioned paying off a mortgage. So I know that statistically, you know, you can get 10 advisors in a room and get 27 opinions,

but how specifically does paying off the mortgage negatively impact that, FAPS, that whole concept. Sure. About 10 to 15% of the colleges will penalize you for having equity in your home. And the penalty that you pay is greater than the payment you make on your mortgage. So not every college does, but if you're going to a college that's going to penalize you for having equity in your primary residence, you should know it. The second thing for equity, I meet a lot of people in our area, not everybody, but probably 20, 25%, have a second property, a rental property, a vacation home. And they want to pay that vacation home off or that rental property off.

But a second property penalizes 100% of the schools you go to. So when I look at how a mortgage is structured, even on your primary mortgage, you might even be at a higher interest rate today than you were six, seven years ago. But the penalty that you pay for having equity in your home is greater than the cost you pay for the mortgage. So if you know that your kids are going to go to college and it's going to be at a university that has that penalty, you shouldn't be aggressive with how you're paying down your mortgage, especially if your mortgage is at an interest rate of three or four or five percent. That's cheap money today. You should be sitting on those dollars.

There's other ways that you can save and be responsible without showing up to the college as saying, I'm so responsible I can afford to pay more. That's just putting salt in the wound and penalizing you for being successful. We shouldn't have to do that. And so what you just described there means that we need to plan ahead. You know, so you can't just be, oh, my kid graduates next month. So let's check into this thing. This needs to be at freshman, sophomore, junior, at the latest so that, you know, here

some of the schools we're going to look at. What would that happen to be as far as the mortgage and the equity? And the penalty is not a literal like penalty. It's just missed opportunity, right? So if you have too much equity, then the effective family contribution is impacted to where you're not going to get some preferred grants or things like that. So, you know, clarify that a little bit. Yeah, the colleges don't raise the price of tuition, the sticker price because you have equity.

They take away the gifting that you would have qualified for because you look too responsible. You know, the home for 10 to 15% of the colleges, that's a sexy talking point. But here's one that's more realistic for people. They think that they're putting $15, $20,000 a year in the 401K, which gives them a tax, deduction and reduces their AGI. But the FAFSA adds back that $20,000 on their AGI and penalizes them as if they had access to the dollars, even though they can't touch it until they're 59 and a half or in retirement. So when you're funding your retirement and you're funding your future during the college years,

the truth is the IRS plays differently than the FAFSA. Most CPAs understand a little bit, but not a ton. And I'm not a CPA. I'm not giving tax advice. I don't give investment advice. When it comes to college planning, I give families advice on how to keep the cash that they've worked so hard to earn in their family.

And if people want to fund a retirement, it's better off doing a Roth contribution to your 401K because that's already taxed. And people say, I don't want to pay the taxes. Well, deferred taxes is one thing. But during the college years, if you want to fund it and you have the ability, do the Roth.

At least then you're not compounding pain. You're creating a benefit. in the future with the taxes for the Roth, and you're maintaining a lower EFC on the FAFSA. You know, I know that there is, as a blanket statement, there is not one solution that works for everybody, right? Everyone's different. And there's not one cookie cutter solution that, you know, oh, well, good thing you came to me, because here's the solution for everyone. Because some people cannot contribute to a Roth for a variety of reasons. Maybe they make too much money or whatever the cases. But what are some of the strategies you recommend for identifying and eliminating some of those

common cash flow leaks so that you're prepared and can better manage the college expenses? Sure. If you've got time, so if I meet someone who's a senior who's going to college next year, obviously the strategy changes because you lose some of the options of planning two or three or four years in advance. So depending on when you show up that change, But when we're managing cash flow, things that people are very familiar with, especially if you're following the traditional thought process, you know, eat beans and rice and freeze your credit cards and pay cash for everything and eliminate all your debt and don't live your life until your debt's gone. When we have kids that are going to college, one of the things I want people to do is

make minimum payments on the right debts. That would be the mortgage for sure, for most people. only put it up to the match on the 401k. That would be, I would comfortably say for most people that would work. And my comments to people is, if we don't fund your retirement to the level that you're doing, but we get through the college years and you have extra money that you can add to your future, and it doesn't change your lifestyle during retirement should you do it. And that's really the litmus test. If the strategy increases your lifestyle during retirement, do it.

If the strategy decreases the lifestyle during retirement, keep doing it. doing what you're doing. And when I benchmark the strategy to your lifestyle during retirement, it's very obvious what direction you should go. Now, you might not like things like insurance or Roth IRAs or having a mortgage for five more years than you want to. But I would rather have you control that cash on hand in a way that doesn't penalize you, be able to use it at the right time for you, than being forced to spend it every year to pay for tuition or room and board for your students to go to college. And that's the game. If I can help you say, save $60,000 to $100,000 over the 10-year experience for three kids going to college.

And you can add that $100,000 back to your retirement account just in a different way. Does it make sense? And the answer for most people is yes. Now, not for everybody, but for most people, yes. And most people aren't sitting on $4,000, $600,000 a year incomes where $30, $40,000 a year is meaningless. most people, if I save them $60,000 to $100,000 a year on the cost of college and the cost of servicing the debt after college, that has such a huge positive impact on the retirement. It's a no-brainer. You know, I feel like that is so huge, Stanley, and probably if we were to list out all of the steps and tactics, which we won't.

That's too detailed here. But probably half of them would be like someone would go, oh, yeah, that's common sense. Oh, that's common sense. what do you say to someone when they go, that looks just too, I already know that, but you know it, but you're not doing it. And it's also the accumulation amplification effect of doing it all together in the right order.

So talk a little bit about that because I'm certain that you get that response from people, right? Yeah, I start my conversation with, by the time we're done, if you don't say this is too good to be true, this is too simple, this is too easy, and how come everyone's not doing it, I failed because that's the truth. And I'm not smarter than everyone out there. There's a lot of brilliant smart people who have an understanding of how to manage money and how to set you up.

But very few of them understand how to manage money during the college years and how to manage cash flow. So just because the strategy is a little different doesn't make it bad. If you go on the FAFSA page 9 or 10, it says the two areas that you can put money that doesn't impact your FAFSA score is the balance of your retirement account and the cash value of a properly designed life insurance contract. Now I'm not here to sell your life insurance and beat that drum, but I am here to say, if that's the strategy that works and it saves you 60 to 80 grand, get over it and do what's right for you. If it compromises your conscience and you can't handle it, then don't complain about paying an extra 60 or 80 grand because FAFSA is dictating the rules that we're playing by. And most people really don't care at the end of the day. It's not 1980 where people have a knee-jerk reaction to their grandfather's 1970 policy. and life insurance is a great tool.

It's not the only tool. As we've been talking about, it's how do you manage your 401K? Is it a Roth? Are you paying off your house? Are you building a savings account? Mike, did you know there's a limit for how much money every family can have in a $529 before they're penalized and it's custom for each family? But most people don't know what that limit is, which is why they put as much money in it as possible.

I have three kids. If I put $30,000 in a $529 for each of my kids, most people will say, and this is how you affect retirement, because that's, That's 90,000 that could be in my retirement, but I need to fund a 529. If I have 90,000 between three, 529s for my kids, how much penalty does my oldest daughter get for what we've saved? Most people say they don't because it's the 529 that's in her name and your name. The reality is I get penalized on the 60 grand I save for my younger two kids while my oldest daughter goes to college. That has an impact on my retirement.

Is there another aspect also? to a 529 where there is a certain percentage of students who just will grow up and decide, you know what, I'm starting my own business. I'm not going to college or I'm going to a trade school. And then the funds in that 529 are there's some struggle and stress there. So maybe you need to think about that and have a financial vehicle in place that gives a a little bit more flexibility. Yeah, I think if you're going to save 90,000, how about if you save it in a way that

if you need it for college, it's available, but it's not dedicated to be picked on first. Yep. And if you don't need it for college, what does 90,000 do to help your kids with their wedding, with the down payment on their home, with a car, so that you can have extra money in retirement so you can take your wife on a 25-year anniversary to Hawaii? Yeah. I mean, exactly. I don't like the idea of locking up money and dedicating it for one purpose and one purpose only,

and then having to get penalized. and jump through hoops to get my money back. That never feels good to me. 100%. And again, it sounds like a broken record here, but all of this, when you see some of these potential landmines, they can be avoided if you just knew about it and knew about it ahead of time.

So I know you talk about the possibility of having college costs returned. So walk us through a little bit of some of your approach to how you educate families, how they can set themselves up to possibly have college costs returned to them. Yeah, you know, what's interesting is the question I ask people is, is not, is the only way to not have a mortgage to pay off your house. Is the only way to not make a mortgage payment to pay off your house. Think about that for a second. Most people say, well, yeah, I got to pay off my house to not have a mortgage payment.

Well, college, think about college the same way. But think about the house. If I took the extra money that I was aggressively paying down my house with and I put it in a fund that earned four or five percent, and I'm going to use a. super conservative fund that by the time I was 65, the interest that was earned made my mortgage payment for me. Am I not effectively using the same dollars to eliminate the mortgage payment but keeping control of my asset? College is the same way. If you're going to spend the money on college, what if you could replenish those dollars and use them more than once? And it really goes down to how is the velocity of money working inside your economy? What if you could use your college

dollars to also be part of a tax-free with the right strategy retirement plan, also be part of unfunded health care benefits, also be part of a legacy or something that you leave to your kids or grandkids. And there's solutions out there that work for this, not for everybody, because not everybody qualifies to do some of these strategies, but most people do. And when you open the door and show people how to make that work, suddenly it is about wow, I can manage money. You know, if I could help your kids get to college without spending one more dime than you're currently spending, would you do it?

And that's a question we ask for a lot of things, but it's really, I'm using the current cash flow in your economy to make it happen. Everyone else is going to make you go on a financial diet to take care of the problem. Yeah. It poses pain on mom and dad outside of the pain of paying for their kids, which they would love to do. But we don't need to compound pain. We need to work in a way that puts the family at the center of the solution, not Sally May, not Uncle Sam, not the IRS, not the universities, but the family. And when the family functions with the family's goals front and center, the family wins. 100%. Well, I think this has been so eye-opening to be able to recognize that there's opportunity to optimize cash flow with money you're already using and just reallocating them into some common sense places that.

that will help you accomplish all of these things you're talking about. And I think that that just makes so much sense. And it doesn't feel like, you know, extra work. It's just like, oh, well, you do things this way. Let's just now look at it through this lens. So if someone is interested in kind of taking that peek ahead to see if they can set some things in place for them, what's the best way that they can learn more about what you do and then also reach out and connect with you. Sure.

We have some books that are online. The Affordable College Plan is a book that I've written. Stanley Targos III. The basics is a book I've written on college loans and debt. God's given us the ability to educate, share, and show people how to make things work through that way. But you can also go to the responsible brand.com, and you can reach out to us there. You can get tons of information. We'll give you all the information you need so you can make an educated decision for what works for your family

and base it on facts, not fear. which means you'll walk away winning. I love it. Well, Stanley, thank you so much for coming back on. This has been a very enlightening and helpful conversation. I appreciate you. Have a great day. And God bless you.

You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www. www.influentialentrepreneursradio.com.