TFTC: A Bitcoin Podcast - #205: Morgen Rochard

Episode Date: October 30, 2020

Join Marty as he sits down with Morgen Rochard, author of Personal Finance QuickStart Guide, to discuss: - Personal Finance - When you should start saving - How much you should be saving - How you should be paying down debt - When can you buy bitcoin? - Should you speculative attack your debt? - Keeping tabs of your finances - much more Follow Morgen on Twitter Check out her podcast: Money Owners Check out her book: Personal Finance QuickStart Guide Link to student loan advice Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse when you download the app.

What's up, freaks? It's your boy, Marty, here to introduce this episode of Tales from the Crypt. I have some coffee brewing in the background. I have an empty bent open in front of me, ready to start my day. I hope you guys are ready to start your day with this podcast. I sat down with Morgan Rochard to talk about personal finance in her new book, The Personal Finance Quick Starter Guide. Very important conversation to have.

how are you managing your money how are you saving for the future especially you young freaks out there if any of you freaks are in your early 20s i highly recommend you pay attention to this episode and pick up morgan's book again personal finance quick start guide it is on amazon and if you're a youngin who is stressed out about finance and your personal finances Specifically, this is a great episode for you This episode is brought to you by our good friends That's motherfucking Cash App

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we're stacking whole sats so on top of that you can stack sats uh on a set cadence you can dca you can set it and forget it you can set automatic buys in the app either daily weekly or bi-weekly we're trying to front run matt odell so you got to wake up before 5 a.m eastern time here in the united states uh and set your your daily buys before 5 a.m that's when matt odell is dcaing and we're trying to front run him because he's trying to front run the u.s markets on the east coast so we're going to front run the front runner via the cash app beyond stacking sats they have their boost program which allows you to go to partner merchants and save money have a sweet debit card that you can personalize i believe they have a glow in the dark one now you can put the

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your local app store download it when you do use the code stacking sats that's s-t-a-c-k-i-n-g-s-a-t-s you're going to get ten dollars and ten dollars going to go to our good friends at owls lacrosse that's owls lacrosse down in the cash app and enjoy this episode of morgan richard i learned a lot i hope you do too you've had a dynamic where money's become freer than free If you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven.

I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. You probably should be. What is up, freaks? Welcome back to Tales from the Crypt. Very excited for this episode.

A little bit off the beaten path. We're definitely going to touch on Bitcoin today, but this episode is very special and a very interesting topic. One that scared the hell out of me for most of my 20s. I still have a few months left in my 20s, and I think this topic is a little less daunting than it was when I was younger. But I'm very excited for this because I think we're going to learn a lot today. I'm sitting down with Morgan Rochard, author of Personal Finance Quick Start Guide,

The Simplified Beginner's Guide to Eliminating Financial Stress, Building Wealth, and Achieving Financial Freedom. Morgan, welcome to the podcast. Thanks for having me on, Marty. I'm excited to be here. Thank you for coming on. Like I was saying, the topic of personal finance was one that scared the hell out of me in my early 20s. I had a good job. I was never very good at saving money. I think maybe it wasn't until I got really into Bitcoin where I was like, all right, maybe I should save some money. But I think this is a topic, particularly in today's economy, that is a bit daunting for a lot of individuals out there.

How the hell do I save money? What should I prioritize and plan for my financial future? And you've written a book about it. and so i guess before we jump into the specifics of the book and some advice you would give to the listeners of this podcast what what incited you to write the book in the first place yeah so i have a financial planning practice and i also have a financial coaching practice and i wanted to be able to balance the needs of my family um which is being making sure that i'm here for my son and our baby that we have coming along the way um and also being able to serve all

my clients and do it in a way that is time effective, cost effective, made me money, made me happy, made my family happy and really kept my whole life in balance. But what I was finding was that I couldn't serve that many clients doing that. I currently have 25 clients in my practice. I'll probably never have more than 30 to 35 just because I don't want to spend that much more time in my business. I love my business, but I also want to spend time doing other things. So, um, there, I wanted there to be a way for me to serve people on a one-to-many model rather than a one-to-one model, because, um, that's the only way that I could really help more people than I'm able to do with my time currently. So the book was part of that. And

also my podcast, I run a podcast called money owners podcast, um, where I disseminate as much free advice as anyone is willing to listen to me talk about, um, to myself basically for a half hour every couple of weeks or so um and yeah the book is basically a better written version of how I normally speak and congrats on on getting it out there by the way did you it released what last week yeah last week um October 19th so um most of the writing it took place um in chunks for sure um like majority of the writing was like over a good three month period where I just kind of stuck my head down and did it. And then the editing was a much longer period of time

where it was me working with my editor and publisher to make sure that like, you know, every I was dotted, T was crossed, there were no typos, serious grammar errors, everything else. And then making sure that like we got good graphics and other things into the book and making all that stuff look clean and nice

so that people can actually read it and not fall asleep while they're reading a personal finance book because this topic could get a little heavy sometimes. and then kind of weaving the most important themes through the book like the whole book is about making sure that somebody could pick it up and actually live their most fulfilled life and fund it along the way so it's like what I noticed about personal finance books in general is that they would maybe address like there are a lot of personal finance books out there that just address

kind of the emotional and money factors but they don't necessarily address the practical side of it and vice versa where you could pick up let's say something like you know personal finance for dummies and they'll address a lot of the practical parts of it, but they don't address the themes that are really important that help you make the practical decisions. So my goal in the book was to combine the two, give people a framework to actually think about making decisions. That way, when they go to make them, they know the decision that they want to make, and then they can reference the book to see how they can go and make that decision. And so this all revolves around the ability to craft your own positive money mindset and sort of plan for the future and accumulate

wealth so that you can live the life that you want to so i guess again like in my early 20s for some reason when i was uh preparing for this interview i wanted to speak to to young marty specifically and give him advice because that's the one thing you hear about planning for the future is the earlier you start the better and you're gonna have uh you're gonna be much happier later in life if you start earlier. So for any of the early to mid 20 year olds out there who may be living paycheck to paycheck and not focusing on their financial future, what advice would you give to them at this point? How important is starting this journey as early as possible? Yeah. So the one thing I would say is that it'll be easier for you.

So because of the power of compounding and time being on your side, if money is actually growing, right? If you were to, let's say, take a bunch of money and put it into an investment that went to zero, obviously that's not going to help you. But if you find something where you're able to consistently invest earlier, you will have significantly more money if you start in your 20s than if you start in your 30s and 40s and so on. So what the point of prioritizing when you're young is just so you don't have to do so much

work later. So if you don't start in your 20s or 30s and you start in your 40s or even 50s or 60s, you just have to put away exponentially more money to make the math work on the other side when you ultimately retire or want to fund a very large goal. Yeah. And how would you recommend that somebody that is already living on a budget, maybe they're out of college or their salary is not as high as they like. don't think they can save as much as they should be able to so they just don't uh they don't save at all because they don't think they sh they can uh what advice would you have for for that cohort or that demographic yeah i love that question how do you start um how do you start so um the first thing i would say is that you want to prioritize say your savings rate um and i'm going to be really precise about my language because i know your bitcoin audience there there are different

ways to approach saving. And so there's the savings rate, which is the flow of savings, right? It's your income minus your spending equals savings. And then you can take that savings and then go and invest it. And then there's saving stock, which would literally be that you're holding cash. So if I interchangeably use the words, I'm sorry, we just tend to use them like that. But let's concentrate on savings flow rather than saving stock for the purpose of our discussions. And you want to create savings flow, which is your savings rate. The savings rate that I typically recommend to people is 20% or more of their pre-tax income. So if you're making $100,000 a year, that would be $20,000 a year that you want to put aside in savings. So if you're able

to do that, if you're able to save the 20 grand, let's say, then you don't have to worry about any other expenses. You can spend the 80%, however you want to spend it. Nobody cares what you spend it on. You want to buy a bunch of video games and, you know, 18 million cases of beer and sit in your parents' basement and that's how you want to spend your money. Great. If you're saving 20%, I don't care. If you're not though, then you have to start evaluating like budget line items. What I would say from there, the best place to start is actually your large fixed expenses. So a lot of the things that we hear about from financial pundits is like, stop going to Starbucks, stop going to the movies every week, stop, you know, hanging out with your friends and doing

all the things that are fun for you because you need to save money. What they really should be talking about is how much are you paying for rent? How much are you paying on a car? How much are you paying on the large amounts of money that go out every single month that you can if you were to change those they would significantly move the needle and help you save while also still allowing you to live the life that you want to live during the time period that you're living right so like when you're in your 20s nobody really wants to like I don't know like live with their parents maybe and eat ramen all the times that they're able to save and not like be able to see

friends and do all the things that are fun so if you're able to kind of like to the whole point of it is just a balance so to figure out a way for you to spend your 80% in a way that makes you feel good, but also spending it in a way where, you know, maybe you can cut corners on things that don't matter as much. I would say that that's the best place to start. If you do live in a place though, with high cost of living, that starts to get really complicated. It's like the New York cities of the world, San Francisco's, right? It starts to get hard to cap it at 20% of pre-tax income for your, let's say your, your housing expenses, which trying to make all the numbers work here. So save 20% of your income, you can also spend about 20%

or less of your income on let's say housing. If you do that, then it'll make it easier for you to save 20% of your income while still being able to spend and enjoy. You live in New York, that might be hard, you might actually need to spend 30% to like not live in a cardboard box under the bridge, right? So in which case, then you got to start looking at your lattes. um but either way right you got to just find a way to make the math work um and unfortunately it does involve some scrutiny of expenses and some thoughtfulness um but if you do all that thoughtfulness early then you'll you'll be able to play the long game which will be good mm-hmm yeah i don't recommend living in new york in your your young 20s i i do recommend it if you

want the fun it's a lot of fun but it is very expensive i uh find find like a sugar mama you know right or sugar daddy your daddy there's some there's some girls listen to this podcast too i believe but uh no i just from personal experience and maybe you can speak to this as well because you've recently moved out of new york uh my the financial stresses has been reduced significantly since leaving new york um and i'm in a small town where i can't really go eat out that much so i'm like forced we're forced to cook a lot which saves a significant amount of money in and of itself yeah definitely i mean we've noticed that too since moving from new york to texas like um definitely like expenses they're just less because there's just less there's less

everything right there's less rent for the restaurant down the block to actually operate so thereby like going out is cheaper than it would be in new york um yeah the thing is so i don't really i like to pick on people for their food expenses but i also don't like to pick on them too much. I feel like food is one of those things where if it really brings you joy, then fit it into your, like find a way to fit it in. Um, if it's one of those things though, where you're just ordering in because you're like, you can't figure out how to use your toaster. Um, then I would say like, you know, maybe it's time to make some changes. Um, when you see that you're not enjoying the food and that's, that's when it's time to make changes. Um, I had a client who like

literally her and her husband, they would just go out every night. Cause that's just what they did. and it had gotten to a point where they literally like they were eating ridiculously expensive meals and they weren't even enjoying it um like things that like i'm salivating over because we never do that but like um but yeah when you find yourself just becoming accustomed to a certain thing and not really enjoying it it's one of those things that it's actually easy to cut and you might find more satisfaction in cooking because you've been eating out for so long or learning a new skill or whatever it is that is costing you money. And so to shift a little bit here, how does credit and debt work into this conversation? How do you prioritize, again, speaking to the

young 20 year old who may be out of college with some student debt? How do you, how do you prioritize that and fix that into, obviously that'll be one of your fixed expenses, I would imagine. Yeah, for sure. So that is definitely a, well, it's an income based question too. So when you come out of college, typically you have a lower salary than what you hope to make maybe down the road after, I mean, the hope, right, is that you went to college so that you can eventually make a lot of money and you spend a lot of money on college so that that project would actually be NPV positive, right? Um, so in the early years when your income is not so high, it's, it's going to be hard. It's going to be tight. That is going to be when you're going to want to maybe get a roommate, get a bunch of roommates, try to make the math work as much as you can. Um, try to cut costs where you can, because you're probably going to be spending about 10% of your pre-tax income,

um, paying down the debt, if not more. Um, and that paying down debt is actually, it's considered a savings category. So even if you're not able to put aside money, like try to set aside something um but paying down your debt is is actually helping to increase your net worth right because in a way you're going from negative net worth to positive net worth when you're doing it um so i always actually include that in the savings category so you don't need to rearrange so much um but you do still want to figure out a way to save something if you just have student loan debt if you have credit card debt that's a kind of a different story so you have to evaluate the interest rate interest rates right now are pretty low um anyone coming out of

college right now with student loan debt is going to have probably a pretty good rate depending on how long ago they started school. But I've seen them just be like 5% or below at this point is what people are coming out with. It's not a super high interest rate. There's kind of no point of you aggressively trying to pay it down unless you have just loads and loads of debt. You went to grad school or something else like that. But that said, it might make sense. You have to figure out and do the math, right? It always makes sense to do the math on these things. There are a lot of financial planners out there i'm not one of them but who have um a it's a credential oh my gosh i'm like losing i can't remember it is i think it's the cslp it's like the it's a um college uh debt

designation and i'll get you a link for that so you can put it in the show notes but basically they'll they can help you prioritize how to pay down your debt you would obviously pay a fee to do that but it would be maybe like a one-time consult fee to make sure you're prioritizing and doing what you need to do you have credit card debt though those are high interest rates So you're going to want to do everything you can to pay that off because interest is accumulating. It's really hard to get out from under that when interest rates are 20% plus. I've seen them be as high as 35%. So you got to be careful of that stuff for sure.

And then if you're a young person buying a home, mortgage rates are so low. I mean, I don't see any reason why you'd want to pay that off early. Well, with credit cards specifically, I'm actually, I get ridiculed a lot because I've never had a credit card. I have like a $500 limit credit card that I just never use. And I've never had a credit card with a huge balance or high interest rate. They scared me. Like I like to use cash and what I have at hand.

Is that a bad idea? Like how do you go about building credit? Should that be a priority? Or is it okay to go without a credit card with a huge limit? Yeah, I think it depends on what you want to do. If you are looking to buy a home down the road and you know you're going to want to finance it because you didn't save enough to buy the house in cash or you don't want to have you want to take on a car loan because your interest rates are so low in those scenarios having more

like having credit will actually help you have lower interest rates because they'll see oh she you know this person has a credit history they're they will actually pay off their debt they're a good credit I don't totally agree with how they calculate all this stuff but I mean I don't make the rules. We kind of just have to follow them. And one of the rules of credit is that you have to use credit in order for them to know that you're good for your credit. If you're the kind of person though, where if you get a credit card, you're maxing that thing out all the time and you're not even, you know, you're only paying the minimum balance rather than paying the whole balance off at the end of the month. I would say it's better for you not to have that card at all

and to just not build up credit than it would be for you to try to build up credit to eventually get more credit right like debt is kind of like what's the best way for me to put this um that's kind of like fire so a campfire is nice right sit around the campfire you can you know roast marshmallows you you can dance around the campfire you can get a little bit of warmth from the campfire right and everything's great a little bit of debt's fine when you have a wildfire situation right where you've got credit card debt like crazy you also have student loan debt maybe you also have a mortgage like i mean i've seen i've seen things like this where people can really get out of control. You even have IRS debt sometimes where people are running a business and they get

behind on their taxes. That's a situation that's extremely difficult to come back from where you have to make significant cuts in your spending to make the math work. Otherwise, you're just stuck under debt for a really long time. So I would say do everything that you can to build good credit, but don't do so much that you end up in a wildfire situation where you're worse off than what you would have been had you not done it at all i like that advice yeah i try to put like a couple hundred bucks on my 500 limit card and pay that off every month just to show that like hey i can pay back this back hey you're doing it you can even get a credit increase probably if you're only spending that much it'll help your credit yeah will it all right maybe i

should apply for that yeah go to a thousand dollars you only spend 200 bucks a month you're fine yeah and uh all right we yeah there's a huge section on debt in my book um and i i encourage people to buy it um it goes really in depth on all the different strategies how to get out from debt if you are in debt um it is a good idea to to really be budgeting um we try to stick away keep people away from budgeting because they hate it so much and it's tedious and horrible and not fun to do. So if you can get away with like simple rules of, Hey, if I'm saving 20%, don't worry about the other 80%. But when you're in significant debt, sometimes that those rules don't really apply to you anymore. And you actually have to do a deeper dive and make sure that you're like

evaluating every line item, seeing what you can change. If you have significant debt, you might even want to be saving, i.e. putting more money towards your debt than 20% of pre-tax income, just so that you pay it down faster and move on with your life. I mean, I've never met anyone who says that like their goal is to live in debt right most people when they think about their most fulfilled life they're like talking about traveling around the world and having kids and starting a business or you know starting a non-profit whatever is really important to you nobody's ever like i would love to have tons of debt so um something to think about when you're balancing the needs of today with the needs of the future okay and this is where we can transition to bitcoin because you

were married to the man who wrote uh one of my favorite pieces on bitcoin which is called speculative attack um speculative attacking your debt via bitcoin would you recommend this well um i think he's still mad at me about this to be honest so um if you're right right if the thesis plays out and bitcoin does replace the us dollar and there's a day where people don't want dollars anymore um and they only want bitcoin and all all debt will basically be canceled because dollars will be worth Zimbabwe dollars. Um, then yes, it would make sense for you to not pay down your debt, take on as much debt as possible, buy as much Bitcoin as you could, um, and live that way. Right. The problem with that is, um,

the time, the time. So, um, I actually recently got asked about like doing a cash out refinancing on your mortgage to go buy Bitcoin. And the question I always have for people is like, okay, in the meantime before your thesis plays out if it does and when it does play out um like how and we don't know how long it's going to take we always like i feel like bitcoiners tend to be really optimistic about how long these things will take if you would ask pierre like seven years ago when we met he was saying next year you know um and here we are in 2020 and you know bitcoin is still not replaced with us dollars so um it's kind of one of those things where like can you keep your head above water in the meantime if you're going to do that as a strategy are you

able to like at least pay down enough of the debt while you're still buying Bitcoin with your money so that you're not in a situation where you're foreclosing on a house, you're getting margin calls on other assets, you're literally broke and can't put food on your table, right? You're homeless, obviously, like we can go to the worst case scenario where it could get really, really bad. And then you also have to go sell all your Bitcoin because you couldn't make ends meet. In which case, you pretty much forfeited your entire personal financial life for something that, yeah, might happen, but we don't know how long it's going to take to happen. So in the meantime, I would say balance, right? There's a responsible way to use debt and there's a

responsible way to have Bitcoin be part of your investment allocation. And I don't see any reason why you couldn't have a little bit of both and wait and do it in a way that doesn't put your whole life at risk. That's not what everybody wants to hear. I know. I'm sorry. I know. Do you want just throw caution to the wind just start buying bitcoin and take on debt it's gonna be fine i feel like sec is gonna like knock on my door after this conversation you're like i was kidding it was a joke i was kidding i never give financial advice without knowing somebody's situation it is uh no again i said this before we hit record it seems like there are a lot of bitcoiners out there who uh i don't say overextended but they believe in bitcoin

and its promise potentially could be vulnerable to the timing aspect that you just described. Like how much would you, like Pierre actually, he does a good job of tweeting this and warning Bitcoin investors, potential Bitcoin investors on Twitter, make sure you have six months worth of cash in your bank account before,

six months worth of expenses in cash in your bank account before you start investing in Bitcoin? Like what would you recommend a good strategy be for being confident to start plowing money into Bitcoin outside of your expenses? Yeah, that's a great question. So you always want to, so I think I want to start with this. Your liabilities right now are in dollars. So what I mean by that, right, is you can't just go use Bitcoin anywhere and everywhere right now. So something so simple as paying your utility bill right now is going to be in dollars, it's not going to be in Bitcoin. So because the utility company is not going to accept Bitcoin, you're going to have to sell Bitcoin if something

were to happen if you didn't have the cash flow to then go pay for it. Whereas you could keep dollars around to make emergency expenses. The reason why you would want to keep dollars around would be because Bitcoin tends to be a pretty volatile asset, right? I think over the course of this year, we saw something as low as 3000 and something as high as 13,000. So theoretically, if you had bought at 6,000 and then you needed to go pay your electric bill in April because you got laid off due to coronavirus, and then you had to go sell your Bitcoin because you decided to put a hundred percent of your assets and not keep any dollars around, you would have been selling at a loss. IRS loves that. You get to have a nice tax loss. They don't share completely in the burden

of your tax loss. They share a little bit in the burden and you take the rest of the burden, you get to carry it forward. Um, they also share in your gains. Um, but yeah, so keep that in mind though. Right. Because like, if you're, if you're not saving, if you don't have, if you have liabilities and dollars, which everybody does right now, and we're not in a situation where people don't want dollars anymore, or Bitcoin is really widely accepted everywhere, then you do need to keep dollars around. Um, my recommendation for people is to, if you have debt to have at least one to two months worth of non-discretionary expenses, like your rent, your utilities, any like really necessary insurance, really anything like food, like basic grocery expenses. You want to

have all of that for at least one to two months and then start paying down your debt aggressively. If you have debt also, you really shouldn't be piling into Bitcoin depending on the debt, right? So if you have low interest debt, it's probably okay. Credit card debt, not okay. Pay down your credit card debt, right? That stuff's going to pile up over time. Maybe you can create some sort of balancing act that makes sense for you, but I would say that that would be a priority after you've paid down your debt then you want to increase your emergency savings fund you want to have five to six months worth of dollars around for non-discretionary fixed necessary expenses not like you know i'm going to the you know a concert with my friend even though i'm laid off

but like true necessary expenses um and then after that go buy whatever you want i'm all for it if you want to be 100 in bitcoin i mean i i don't know your situation i would say like from my perspective, I don't, I wouldn't do that, but that doesn't mean that other people can't do that. And it doesn't make sense for them. Yeah. I think people are sitting, sitting with their headphones in and their jaws open right now. Rashard not recommending to go all in, but. I typically recommend one to 10% of net worth, depending on risk tolerance, time horizon, how well you know the technology. Bitcoin is a long term asset. I don't like to hold anything. I don't like to hold anything over a short period

of time that could be very volatile and how it fluctuates. So Bitcoin is a good example of that stocks, real estate, all three of those would kind of be in like the risky bucket category, quote unquote. So if you're going to hold that stuff, you better be ready to hold it for 20 to 30 plus years. If you want to go buy a house, let's say in three to, you know, three to five years, I wouldn't put your money in Bitcoin, right? Like that's when you have to start thinking about asset allocation with like, okay, I need to keep some cash around because if Bitcoin doesn't do what I think it's going to do over the next three to five years, then I'm going to be in a situation where I'm selling at a loss and then probably potentially buying less house than I'm

able to do. So again, it's hard for me to give recommendations about exactly how much people can put into Bitcoin without knowing exactly what people want to do later on with their money. But I mean, keep that stuff in mind of like, okay, this is a long-term asset. Am I matching it with um a short-term goal or a long-term goal i really like that advice and i think it brings up a good good point too because i think there are a lot of bitcoiners out there who are expecting a price increase to buy make a big purchase like a house um but i would rather see bitcoiners hold bitcoin and buy a house with cash considering the the tax burden that would come when you go to cash out that bitcoin let's take an optimistic view say bitcoin does increase significantly in price

and you use it to buy a house you're gonna you're gonna take a significant tax hit when you go to sell that bitcoin unless at that point in time you can use it as collateral which who knows maybe that'll happen but um i think uh i think there is a responsible way to to hold a significant cash balance and a bitcoin balance um so you don't have to sell your bitcoin in the future um like i guess the question i'm getting at here is take an optimistic view of the future from a bitcoiner's perspective the price of bitcoin goes up considerably how do you recommend they they handle and manage that new wealth denominated to bitcoin yeah that's a great question so i think it it totally depends i'm sorry i feel like i'm gonna keep starting all my answers with that um it it

depends but it also is one of it's one of those things of like what do you want to do with the wealth later on right so if like your whole goal of buying bitcoin was like okay i'm gonna quit my job i'm gonna say f you to everybody in my office i'm gonna do a little dance and then i'm going to live off my bitcoin with my family for the next 40 years i don't know i feel like i hear that a lot so it's not using as an example um but yeah so imagine that's your example to retire early um so if you're if you're looking to retire early or do something like that right then you're taking smaller distributions based off your bitcoin um depending on your spending and you'll have to take into account taxes. You might even want to think about where you're living because

certain states charge taxes on capital gains, whereas other states don't have a state income tax, in which case you could save 10% by moving from New York to Texas, let's just say, because Texas has no state income tax. New York City charges 10% basically all in between city and state. And then from a federal perspective, the capital gains rates are actually pretty good. So if you have no income, depending if you're married or if you're single, the first $40,000 to $80,000 of your capital gains is actually tax-free. So if you really don't have any other income and you're actually only living off of capital gains, which is kind of the nice thing about Bitcoin, it doesn't pay a cash flow. So you don't have any income that's being generated off of that. You can generate all of it through capital gains, and capital gains has a much nicer tax rate than income tax.

It starts to get more complicated, though, when you didn't quit your job. so you're still making money in dollars maybe you're even making a nice salary now because you know this is 20 years down the road and bitcoin's gone to 300 million bajillion dollars and now you want to go buy the lake house for 20 million dollars or whatever on the lake right so but you still have your income so at that point you know your capital gains rate is going to be higher it also depends on where you live whether or not you're going to be paying income state income taxes or not um and i think it's one of those things where you're like okay look i kind of one. So I'll just pay some taxes. I mean, I don't, I wish there was a way around it. There

are other tax planning things that you can do, right? You can put money into retirement accounts. If you're running a business, you can reinvest back into your business so that you have a lower income year in a year that you're going to be taking large capital gains. That way you don't pay as much in taxes. There are like, you know, ways for you to do retirement accounts where you can really stock a lot of money away to lower your income. You can, I'm trying to think what else you can do yeah you can do charitable giving that's a good way to kind of get some income off the table um when you're doing a large purchase and you're going to be selling a lot of stock or bitcoin or something else staying on this optimistic tip do you recommend spinning up an

llc maybe holding bitcoin there or i know you mentioned retirement account ira i know our friend jeff andrew has the keykeeper ira which is tax preferable um yeah but is there other other avenues like do you recommend you said you mentioned a business maybe reinvest in the business yeah i mean if you hold bitcoin in an llc and it's not an operating business it's not really going to do much for you if you hold bitcoin in an llc where you're actually running a business um you can reinvest money into your business so if the business is selling bitcoin and then you've also like reinvested money thereby lowering income it'll it'll change your tax rate it's not going to look very different though in an LLC. An LLC is a pass-through vehicle. So

you report that on Schedule C and then you basically pay it on your 1040 like you would have otherwise. There's an S-corp status that you can take. That is one of those things you really got to crunch the numbers on to see whether or not it makes sense. There's still something called the QBI deduction right now, which if you are operating a business in order to be competitive with the corporate tax rates that they lowered with Trump's tax bill, I think back in 2017 it was um they also gave a nice um tax break to small businesses whereby you can i mean it's super complicated this is like the the like the surface of the rule is basically that you can deduct 20 of your income before you even start looking at what you're going to pay

taxes on um and there are so many rules and stipulations to that so i i don't want to go off the rails there but there are ways um to lower income by having a business but that said you have to have an operating business you can't just like fabricate a business put bitcoin in and expect that like you're going to get preferential tax treatment so get on get on starting some productive businesses freaks yeah better for your for your taxes for sure for sure and then like you run things through your business that are actually business expenses but sometimes there's like things that are overlapping right like for instance i use my cell phone in my business and also personally so um i deduct a third of my cell phone bill every month just because i do use it for

business. And I'm probably working on it about a third of the time and I'm doing other stuff to other two thirds of the time. So just like use your head about this stuff. But if you're a W-2 employee, right, there's not something you can do. You can't deduct a third of your cell phone bill. So these are things to think about, but obviously there's risks to being a business owner and you want to have a viable business. You don't want to just start a business for the sake of deducting a bunch of expenses. If you don't have any income, I mean, you're just going to be taking losses. And at some point IRS is going to audit you. So be careful with that stuff yes no this is a lesson i've learned in the last couple years starting a business for

for this podcast and the newsletter uh no it was daunting like i stumbled into this business and luckily became uh developed uh considerable revenue streams the point where like i was invoicing people and having it sent to my my personal bank account i got to a point i was like all right i should probably start an llc to separate this stuff so i guess uh i'm not going to explain what i would do like somebody in this situation that i was in like how how do you go about this and at what point do you do you say all right maybe i should spin up an llc for this for this business uh considering the amount of money i'm getting wired to my personal bank account yeah there are two ways to look at that there's um one way is to look at it from a mindset

perspective and the other way is to look at it from a practical perspective from a mindset perspective generally when people open an llc and they decide to operate a business like the opening of the llc is actually the thing that kind of like picks them up and gets them excited and like makes them feel like okay i'm a business owner now you know and then they get after it more than they would have otherwise if they were just operating as a sole proprietorship um if you're not the kind of person that needs that external motivation of running it all immediately opening up an llc there are expenses obviously associated with doing that um then you can wait and i um i'm actually dealing with a client right now. He's in the midst of starting a business and doesn't really have any

real income coming in right now. And the expenses are so minimal that it's like, why spend, you know, a thousand bucks setting up an LLC when we could just kind of wait for some income to come in. It's really easy to separate it out right now and separate out what your expenses are. Just keep a nice tally of a spreadsheet. And then when things start to like pick up and get a little bit more complicated, then we open the LLC, we open the business accounts. That way you don't have to like the one thing about opening up right you can have a lot of different accounts if you start opening these things up but they have minimums on them right so now you're tying up a bunch of dollars that bitcoiners don't like to do in accounts like a chase business account where

they have a minimum and then you also have a minimum in your checking account you have a minimum in your savings account right and next thing you know like you've got 10 grand of like cash lying around just to like meet these minimums that you otherwise would have maybe been able to pile into the market because you didn't actually need it and you're just leaving it there for minimum six. So, um, again, a balancing act for sure. Um, but yeah, I would say once things start to get to a point where they look like they're about to be more complicated or they've already gotten more complicated, that's when it's time to set up an entity that way. Just make your life easy. Like nobody wants to be sifting through, you know, business expenses, separating them out

from personal creating spreadsheets. Um, it's a lot easier to just have a business account and then get like QuickBooks online and move on with your life. Yeah. But you brought up a good point there too is documenting all this like creating an excel sheet and staying on top of it i think this is something that most people myself included i'm pretty bad at um like having like a spreadsheet of personal finances and and uh articulating and visualizing goals uh in in spreadsheets or even just written down on paper and tracking stuff like how do you best go about that do you recommend doing it yourself? Are there templates out there at a certain point? Does it make sense just to partner up with a financial advisor like yourself or an accountant to handle that for you? And at

what price point does that make sense? Yeah. So I would say if your business right off the bat, you have income coming in and you have expenses or you just have lots of expenses because your business has a lot of startup costs, then probably right away, even though it would be an extra expense for you would be to get accounting software or and or hire an accountant. They typically want to operate with you with accounting software so that you're not sending them over spreadsheets and they're not pulling their hair out. If your stuff isn't so complicated, then yeah, just a regular spreadsheet would be fine. I would say mark your calendar and then honor your calendar. So it's not enough to just like put the to-do on your calendar. You actually have

to be like, okay, I set aside, you know, 30 minutes on Sunday, the eighth and every eighth, you know, every first Sunday of every month, I'm going to go and do my expenses for last month and then do it. And the trick to just doing it is literally you do it a couple of times. And then that's just what you do on the first Sunday of every month. If it's not that complicated, then I would say the easiest way to do it is literally just create a spreadsheet and it says date, description, amount, and you just fill them in. If they are a lot more complicated than that, then yeah, I would say you probably want software in which case things are going to be able to auto-categorize. You can create rules. That way you're not spending so much time on your first

Sunday of every month doing this stuff. I would say though, don't let it get away from you though too. I see this all the time with people where they just didn't do their accounting for eight months. So they have no idea. First of all, you don't have any idea of how much money is coming in. And you don't have any idea of how much money is going out. And you now also have eight months worth of expenses and income that you have to categorize, which is, you know, time consuming and annoying. So from all aspects of personal finance, it's kind of a fail, right? Because you want to know what your income less your expenses is that you have an idea of how much money you could be saving. And one of the things that happens to business owners is that you end

up not saving because you're worried about not having enough cash to make, you know, ends meet where the expenses and when the next income is going to come in, when you really just need to be a lot more disciplined about doing the accounting so that you're able to create a savings rate for yourself and be consistently saving over time. Yeah. Do you, is, is the software like QuickBooks enough? Do you think, uh, or do you, do you think that cuts corners in any ways or in your experiences is having a human there to help you, uh, give people more peace of mind and make it easier for them? Or is that too expensive? Yeah, I think it depends on how involved you want to be. So like for me, I did my own expenses, um, but it still had an

accountant. Um, and I used QuickBooks and that was enough for me. Um, and then I got to a point where I was just like, you know what? I don't want to do this anymore. So now I'm also going to hire a bookkeeper. So they do that for me too now at this point, but my business is six years old. So, um, it wasn't until year six that I was like, I will pay for a, a bookkeeper and an accountant. Um, I, I believe in accountants. I think that it does help to have a human there who's looking at that stuff. I know plenty of people who use TurboTax. I have clients who use it too. And we review returns all the time. I personally feel more comfortable having an accountant file that stuff for me, having somebody there who would be able to back me up if something

was wrong on my return, right? Where they can answer an IRS letter. And I even help clients with that stuff. And I still feel more comfortable and confident with an accountant doing that for me. That said though, these are expenses and they do add up. So if you're finding that you're able to do it yourself and it's no big deal, then great. But if you're starting to see, okay, my tax situation is actually getting a lot more complicated or I'm making a lot of money and I don't know whether or not I should elect to be an S-corp. Um, or, um, I just have so many expenses that maybe it makes sense for a bookkeeper to be looking at this instead of me. Like at that point, I think though you're at a stage in your business where you can actually afford to have somebody

help you in which case it wouldn't really wouldn't feel that expensive to do it. yeah that makes a lot of sense um can you freaks tell i'm asking business advice here on this podcast it's uh uh no happy to answer any questions you have marty about your business personally this is uh this is a free consultation kidding what what is the uh the number one mistake you see people make out there um whether it be complacency or just not prioritizing the correct the correct things like what what's the number one hurdle or mistake that people make definitely not saving enough um i think people don't they they always overestimate how much they're actually saving and they underestimate how much they're spending at any given time um and it always helps

to actually do the math on it and see whether or not you're hitting those targets um the thing about saving right is the more you do it the easier it's going to be for you later um it's that's just the way it is. And it doesn't mean that you have to save so much that you're sacrificing a lot in your life right now. But typically people tend to under save rather than over save. For every over saver I have in my practice, I have 15 more than are under saving, right? So I would say that's probably the number one mistake that I see. The second mistake that I see people make is they just don't do anything. They hate finances. They think it's a disgusting thing that they don't want to look at. Something about it is not exciting. It's a drag. It's time

consuming. I just don't like doing it. I hear, you know, that's outside my comfort zone. And to those people, I would say, like, be in your comfort zone. Like, the best way to conquer financial issues is to start learning about financial issues. And there's plenty of resources out there. There's kind of no reason why you can't learn something about even basics about personal finance to at least get yourself in a situation where you know the right questions to ask when you meet somebody right as opposed to like just having your head in the sand and not doing anything at all um and then i see it where people they don't want to spend money to get the advice but then they also don't do anything um as a result so sometimes you have to kind of know yourself if

you need an accountability partner it might actually be in your best interest to pay somebody to help you do that that way you actually do something as opposed to doing nothing um because doing nothing is not going to get you anywhere yeah i just guess from a mental perspective how like how much less stress does actually planning and executing on these these plans uh in your experience with your clients like what's what's the increased peace of mind that exists out there when you are actually doing this is there considerable less uh stress load Considerable. Like, amazingly different. People generally come into my office, they couldn't be more stressed out and within, you know, six months to a year,

they're a completely different person. You're just able to prioritize other things. So one of the things that I see with people who they kind of stick their head under in the sand like an ostrich and they don't want to look at their finances, they're still thinking about it all the time. It's still consuming them and they're not doing anything about it. And it's very very stressful. Or somebody who's maybe doing too much and actually messing up their finances because they're overtrading and they're thinking about things, you know, in a different way rather than just, you know, thinking about things from a high level asset allocation perspective and then thinking more about what their goals are rather than like the nitty gritty details of finance

before they've figured out the goals. As soon as you have the plan in place, when you know what you want to do and you're prioritizing the things that are important to you, all that other stuff is going to fall into place, you're going to know what to do. And if you don't know what to do, you'll know what to look for. So you can figure out what to do. And that in and of itself, I think is, is like the gift of doing financial planning is like, there's a relief there of like, oh, not only do I know what I want to do, but it's what I really want to do. And I have a plan to actually execute on it. So I know what's going to happen. And the thing that I noticed with clients the most is that if you're able to figure out something that you can do in the next six to

18 months, let's say something, a short-term goal that's really important that you can knock out and really attain, then you're going to get the ball rolling. So typically when you think of financial planners, we're all like, you got to save money and retire and, you know, think about what's happening for you in 30 to 40 years. And nobody wants to think about what's going to happen to them in 30 to 40 years, right? Like we want to know what's going to happen to us next week, next month. So getting short-term goals met, finding ways to get the ball rolling where you're actually starting to, you know, get wheels turning and feeling like you're accomplishing things is going to help you more than focusing on some longer term goals that maybe would be

easier to accomplish if you did a lot more now for them, like putting away money into a retirement account. But that said, you might not have a fire in your belly to do it because it's going to happen so far from now. Yeah. Well, I think you just touched on something very important. It does not take that long once you dedicate yourself to it. Six to 18 months is not that long in the grand scheme of things no definitely not and i mean you have you have an eight month old um you know how much a little baby can accomplish over a course of a year so imagine what an adult can do right that is it's crazy but there's something about that paralyzing stress like again like you said people don't even want to think about it they just put it to the back burner put it to the back

burner take another shot put it to the back burner uh it's something about our generation particularly i think i don't know um i don't want to speak like things that we find unpleasant in general it's easy to put to the back burner like for instance i have compliance in my financial planning practice um i have to do it it's important for me to do it the state is going to audit me i don't like doing it it's not adding value for my clients um it costs me time and effort and money um and if it were up to me i would never do it but because it is required of me and it's something that I wanted to be held accountable to doing, I hire somebody to help me to do that. And that alone, I mean, that's worth the price alone. And she also actually does other stuff for me,

which is nice. But like, she sends me emails and says, hey, you have to do this now. And then I'm like, okay, I got to do this now. And I do it right. Like, there's something nice about that. So even if you don't want to hire a financial planner, find somebody you could be accountable to, right? Like your spouse, your roommate, your parents, your siblings, like people out there, they want to help you and if you're willing to kind of let your guard down and open up about something that's really important to you and ask them to remind you like hey did you do you know did you save this month did you pay down some debt this month did you buy some bitcoin this month i don't know whatever your goal is right like it does help to have somebody else be on

your team cheering you on who is there for you and wants to help you and wants to help you achieve that goal yes accountability accountability is that what they're called accountability i forget accountability accountability it sounds right accountability you need a buddy for accountability yeah there's a word out there that combines the two but that is that's another thing like being upfront and honest especially with a spouse or a family member uh about expenses or something very i mean obviously very private about expenses but um it does help when you're you have somebody you can lean on to talk about this stuff and motivate you to work towards it yeah definitely i mean i I know Bitcoiners, we tend to be, we don't want to tell anyone like how many coins we have,

where they are located, all that stuff, right? And obviously, I'm all for that, like have secrecy around the things that matter. But there are things that you can say to other people that will help you achieve financial goals, right? That don't put, let's say, your finances in jeopardy. And I'm sure, I mean, I hope that everyone listening to this has at least one person in their life that they can trust to do that kind of thing with. I'm lucky to have my wife. She whipped my, my financial life into shape. Thank God. Um, no, it is, it is huge having, uh, somebody to keep you accountable and then motivate you to stay on top of this. Like, again, like I said, my early twenties, out of college till 25, I was one of those back burner people just like put it on the

back burner. I don't want to think about it. Don't want to think about it. I was a 1099 contract worker for for a lot of that time and uh any of you young freaks out there starting as a 1099 contract worker put that money aside for taxes it'll come back oh yeah yes i uh i was one of those again put it on the back burner living in new york city as a 1099 contract worker uh live in paycheck to paycheck then the tax bill came as a crap don't have enough money it took me a couple years to get um get into good standing uh based on that so like don't put those things in the back burner, especially if you're a 1099 worker. Opening up the book here, T-Freaks. Yeah, for sure. Same thing for business owners. I mean, if you're a contract worker or a business

owner, you've got to set aside money for taxes and you have to do it in a way that makes sense. So same thing with what we were talking about with business expenses and knowing what your income is. You're not going to know how much you need to set aside if you wait till December 31st to have done all of your income and expenses, right? And if you're spending money in the meantime. The last thing that you want to do is end up in a situation where you've got like a large tax bill and you have no money in your account. And also you happen to buy a bunch of Bitcoin and now you're selling it. So yeah, it's one of those things where like short-term tax liability can't really be met with a long-term asset like Bitcoin. And so why I always answer these questions with

it depends is because it's so hard without knowing your situation, how much money that you could really plow into an asset like Bitcoin. You just really need to have a long time horizon for that kind of a thing. And I think that that's the framework that you need to think about it. If you're like, okay, I actually don't need this money for a long period of time. This is the amount of money I don't need for a long period of time. This is how much I can do. Versus this is the money I need for a short period of time. I need for taxes. I needed to, you know, make regular bills. I needed to have an emergency fund. I needed to buy my wife an engagement ring. I don't know. Whatever you're thinking about, right? So, but yeah, just always think about like matching

short-term goals with short-term assets, long-term goals with long-term assets. aligning time preferences of your assets that's a good and that's a very good advice um because obviously the listeners of this podcast are very uh focused on the long-term value of their bitcoin holdings but you got to keep the short term in mind as well like you said earlier the uh the timing of bitcoin success is not uh not predictable so you can't unfortunately yeah i wish it were i mean i wish i had better advice i feel like i'm always coming in and like you know crapping all over people's plans like one of my clients is always saying he's like every time i meet you i just feel like i'm never gonna retire oh you saved a little bit more money this

these meetings wouldn't suck so much you know um but yeah it's one of those things where it's like um i love to just like rain glitter all the time and tell people that they can do whatever they want um it's just unfortunately like not the way that it works and like wealth is kind of it's a simple equation, right? It's income minus spending is savings. And then you do something without savings. And there's no way around it. And I keep getting like people on Twitter find me and they say, no, you do this, you do that. You can, you know, but you still, it's still income minus spending with savings, right? Even if you, let's say had options in a business that then IPOs, if you spent that money from the IPO, right? You wouldn't have that as savings anymore

that you can invest so maybe it'll be a lot more money because of the ipo and everything else but you still have to be willing to not spend it on something um and that is really the driver of wealth um and nothing else unfortunately yes and it's uh you got to think about the stuff freaks i know we're all gung-ho on bitcoin and we think it's going to take over the world i truly believe that you can't time it though you got to take care of your expenses and your family in the any time. So be responsible. Hard truths. You need to hear hard truths every once in a while. Again, a lot of people just want to plug their ears and say, I don't have to worry about this. Also, the more you do, the more you're willing to plan and see how much income you have coming in,

or maybe try to make more income, the more you'll be able to go and then buy the Bitcoin that you want to buy. I think that that's the thing that's lost often with financial planning is that if you do the planning, if you run your numbers, then you'll actually know how much you can do. And then you'll know, too, also, okay, if I do X, Y, and Z thing, then I can do more. And if, like, your ultimate goal is really just to accumulate as much Bitcoin as you can, there's no better way to do it than to be, like, evaluating your own personal finances and seeing how you can make the math work for you. Beware, freaks. Beware. Morgan, I know I only blocked off an hour for this interview, so I want to be respectful of your time.

Last question. What are your thoughts on Suzy Orman? i was not expecting that question um she's got a bad haircut um and she sometimes gives okay advice but a lot of the times i just think she's in it for herself so and it's like a gag you know um i think she could be a little more down to earth with how she approaches things but um some of her basics are fine i mean again it's a simple equation right um i feel like in some regards, like I'm, I'm always kind of throwing the tools out to people all the time. And if you're willing to do it yourself. Um, and I think she does a little of that too, of like, Hey, like

make more money, spend a little bit less, save some more and invest it. Right. And you're going to be okay. Um, the problem is that we don't, we have trouble actually following that advice. And I don't think that she does a good job of, um, effectively communicating and listening to people. So two things that are really important when you're working with a financial advisor or planner whoever you decide to work with so um in that regard i don't think that there's there's not anything specifically wrong with her but you know just heuristically i think you were onto something where she's in it for herself all of her books have her face right front and center personal finance kickstart guy yeah she's got that the face and the earrings and the hair it's like she's a

she's an act for sure yes well you gotta be authentic you know i think that's her though right that's her business that's who she is that's her that's her brand her brand she's gonna like if she ever listens to this i hope she does actually it'd be nice she can she can send me an email a scathing email well morgan i'm a big fan of your your brand because it seems that you actually care about your your customers like you said you only want 35 max uh customers for for what you're doing clients excuse me customers clients interchangeable but not quality over quantity. And I really liked the intention behind this book, uh, one to many instead of one-on-one because you want to be able to service the clients that you already have on your book,

but you also want to help others. And the best way for you to do that was write this book. So, uh, props to you for doing it number one and congrats on, on launching it. I'm very, very happy for you. Thank you. Yeah. I, I, um, I do care about all my clients and I do actually, I care about everybody. I want everyone to be financially successful. I think if we all lived in a world where people try to live their most fulfilled life like imagine what that would be like if everybody really was doing what they wanted to be doing all the time um and i don't mean that in a yolo sense i mean that in like the things that are actually important to us um it would be it'd be a nice world to live in so the more i'm able to disseminate information and help

people do that i think just the better this place is going to be to live yeah i completely co-signed that message and go pick up the book where can we pick it up where can we find out more about you where can we find your podcast how how can we start uh taking steps towards a better financial future for ourselves yeah great my um my book can be found on amazon it's the personal finance quick start guide um and you can also get it on clive bank media which is my publisher's website um i think they actually direct you to amazon if you go there though so probably just go to amazon my podcast and my financial coaching practice is money owners and that could be found at money owners.com you can also submit questions to me if you want them answered live on the podcast

I just had a really good Q&A session that I released on Sunday last week it was all about housing and we got some really good questions so if you want a question answered live by me my suggestion would be to just put as much information into that question as you can otherwise you're going to get a really bland it depends answer and it's not actually going to be specific to you um but you can do that on my website moneyowners.com forward slash ask morgan with an e or you can find me on twitter morgan with an e rochard or money underscore owners we will link to all this in the show notes morgan congrats number one new release in college university financial aid thanks on amazon uh so book book is number one on the list right now

Uh, if you freaks are out there, if any of you young freaks are out there in your early twenties, uh, sort of not thinking about finances as somebody, uh, who put finances on the back burner for, for a lot of my early twenties and didn't clean up my act the last few years. Specifically, I highly recommend picking up this book, starting early, start early freaks, you young freaks out there. I know some of you are older than me as well, but I think you would co-sign the advice we're giving right now. Uh, I hope you would at least.

morgan thank you for your time uh tell pierre i said hey i will thanks barney it was fun all right that's all we got today freaks peace and love