100% Dad Episode 007- Interviews with Dads- Jacob Wade

Welcome to 100% Dad Episode 7 with Jacob from I Heart Budgets. So we're going to talk budgeting during this COVID process and, and kind of things financial and budgeting overall in regards to dads. So with no further ado, here is Jake from I Heart Budgets. Alright, 100% Dad Podcast interviews with dads. Jacob Wade. I Heart Budgets. Uh, go ahead and introduce yourself, tell people who you are.

Hey, thanks man, glad to be on here. Jacob Wade here from I Heart Budgets, and I, uh, am a full-time traveling RV crazy person with my family of 5. Uh, we quit everything and hit the road 18 months ago, uh, and I've just got a passion for helping people get their, get their dollars and cents in order. So I run the website I Heart Budgets I help people get on a budget, kill that debt, and start saving money, building wealth, and eventually getting on the roadmap to financial freedom.

Nice. And I just, I just realized we have a cleaning lady here and my hair was insane. How's that? Do I look better?

It looks like quarantine, man. You're good.

You want to explain to everyone why you're, uh, you're in your truck?

Yeah, well, so I live in a hallway, also known as an RV, and I've got, uh, 3 kids. Um, so the only place to get some quiet— and I've done this, by the way, several times, I've done podcasts where I just sit in my truck, uh, but it's the most silent place around, so I'm hanging out in the truck so we could, we could chat and, uh, minimize any noise distractions.

Yeah, so we might pick up some noise. We have a cleaning later, so my kids and wife are going to the beach just to hang out.

And, uh, nice.

So if you hear any vacuuming or anything, it was unintended. But all good. If I had known better, I wouldn't have scheduled it for this time, but I think we'll live. I hope, I hope we will live.

Hey man, at least you got somebody taking care of your house. That's awesome.

How do you like these graphics I'm throwing up?

I was digging it. So as soon as I joined, like, this is like professional, man. I'm digging it, right? Love it.

Yeah, it looks cool. I can put one about me too.

That's awesome. Look at that. Boom. It's like live newscast.

Yeah, unfortunately, because it's a one-person thing, I've got to actually talk and simultaneously find these things. Yeah, I pulled a couple pictures from your site. You don't mind, do you? Here's your, uh All good. There's the rig.

Yeah, that's in front of Guadalupe Mountains. Um, we pulled out of Big Bend National Park and we're heading over to New Mexico, and we were just like, that is an epic shot, we gotta stop. There was nobody on the road. Yeah, love that spot.

That's beautiful. Did you, uh, did you guys custom build that?

Um, yeah, so the, the RV was, uh, it's just a Keystone Cougar bumper pull, 35-foot ginormous, uh, bumper pull, but we, we we kind of gutted it, ripped out all the carpet and floors. We literally painted every square inch because it smelled pretty bad, and we had to rebuild one of the walls in the slide because we did find some water damage. And then we've done all little upgrades here and there. And so yeah, we've, uh, we've made it our own. We did custom furniture, um, new—

that picture makes it look a lot smaller than it really is.

Yeah, you can't tell. Yeah, there's a family.

I don't know where that— it's got to be somewhere out west.

That's Devil's Tower in Wyoming. Um, incredible spot. I mean, it's— the picture doesn't do it justice when you just roll up to the thing. It's in the middle of nowhere and then you just see this 1,200-foot, you know, old lava tube, just frozen lava. It's, it's incredible. Yeah, very—

now is that an area where there's a ton of those or is that just like randomly?

That's just the one. It's literally just— you're just like looking at kind of rolling fields and then you're like, oh, there's a 1,200-foot like frozen lava dome type thing. Um, yeah, it's in the edge of Wyoming. Um, so we went out— we went there out after we left Yellowstone. Um, but it was just— people climb that thing too. It's a sheer rock face and we— there was people climbing that stuff at night. I mean, it was, it was nuts.

Nice. Yeah, looks fun.

It was way cool.

All right, now we're just gonna cycle through the pictures because I'm not going to do this the whole show. We actually have to start talking at one point.

Boom, it got wrapped! I did not—

yeah, we haven't showed anybody this stuff yet. We haven't released it.

Yes, that is awesome.

Yeah, boom. Clearly I am humble and not wanting attention.

Hey, you know what, it's just part of your marketing budget, so It's all good.

It absolutely was, 100%. Um, so you— I'm assuming things are booming for you over there, um, you know, business or hobby-wise, whatever we call it at I Heart Budgets. Um, I mean, just the, the times we're living in, the panic everyone's living in. Um, so we'll probably, uh, we'll hit on some other things, but figured you're the budget guy and, and, and we're in a weird, uh what, every 10-year time of life where everything just goes to crap and you really got to pay attention to how much you're making and where you're spending money and future planning and things like that. And yeah, you know, so are things booming? I'm assuming your website's getting a million hits a day and all that kind of stuff.

Yeah, we're— our traffic's way up and we've got a ton of people coming in. Uh, the big thing that I ended up doing is there, when everything's shut down there was all these programs to say, okay, like, people that have never even thought about things like unemployment before are technically unemployed. How the heck do I do that? Um, or people that are like, I don't have paid sick leave, but I just got the, the rona and I gotta— do I get paid for this? So there's all these new things coming out. So I built an entire resource page for here's where you go, here's what you apply for, here's what you do. And I called it the, the COVID-19 financial resources page. And so a ton of people have been showing up to that. And, uh, getting help and figuring out what they can do right now immediately. Um, and then I built a whole, uh, section on how to, how to manage your money during this time and, and create what I call an emergency budget. Uh, and then, you know, people want to know about their stimulus checks and, and, uh, you know, the, the PPP loans and all that stuff. So I just built this huge hub, uh, and so yeah, tons of people are showing up right now. Um, and, and I'm getting a lot of questions, a lot of DMs, and I'm, I'm hopefully helping people navigate some of the insanity that's happening right now. Um, because being locked down is one thing, but losing your job and losing your income and not knowing where to go is another thing.

So can you see this on your screen?

I can. Yep, that's the web page.

Yep. Where were you talking about?

That's it right there. So if you just click on that top link, the COVID-19 financial resources just click that link there. Um, it's sort of a hub, and I just kind of keep that updated. And as you scroll down, you'll see like, here's your latest updates. And then when you scroll down, I put it— I put it in a bunch of different sections where you can say, okay, what's happening with stimulus checks, what's happening with banking credit cards, and you just click on those and they'll drop down and open up and just give you details on— by the way, where can I get help?

I saw this, see, you posted something about CIT Bank doing that 1.75% for, uh, the money market account. And we— I clicked through on that, so we definitely stashed some cash there, just, you know, what we're keeping on hand for emergency fund.

Yeah, we moved there. We had Capital One and we moved there, uh, just because CITs consistently have a higher rate. And they're fluctuating with everybody else, right? Interest rates go up and down, but they just— they, they've been eking out everybody else and they've got a nice simple app.

And so, yeah, I mean, banks are getting free money. I would think they'd be paying out solid interest.

You would think credit cards would be dropping the rates, what with what the Fed's doing as well, but are they not? No, they're, they're giving some leniency and forgiveness, but yeah, they're about to take a big punch in the mouth. Uh-huh.

Yeah, mortgage, rent relief. What's going on with mortgages right now? Um, yeah, my parents were talking to me about that because, um, uh, you know, they have a mortgage and my, my stepfather His income is, uh, he's a really good salesperson, but he's a salesman and he's in the hair industry, so beauty supplies.

Oh yeah, that's at a full stop.

He's been over 30 years, really good, and, and, you know, in a high traffic area. But all those states have shut down hair salons, and so, you know, go from productive to zero with nowhere to sell your stuff. And, uh, it's not like he gets laid off, he doesn't get furloughed or anything like that. He can't even claim unemployment because he's I don't think— because he's not laid off, um, right? So he just has a commission that goes essentially down to zero. And I was telling him I wouldn't be paying that mortgage. I'd be putting the money aside. Um, I'd be talking, you know, and they say they can't get through their mortgage company. They call 10 times a day. Um, you know, they've written, you know, a dozen emails or so, uh, and I haven't got an update in the last week or so. But I said I wouldn't be paying that because we're such a unique situation. I would assume all mortgage holders, at least on the residential side, Uh, you know, for personal homes, they're going to be offering some sort of programs, you know. I know about different— because some of them are, you know, you don't have to pay for the next 3 months, but then it's all coming due.

It's a balloon payment, right?

Which is not going to help anybody.

No, it's just going to just— I mean, they're, they're like, how do we recreate 2008? Oh, let's make a bunch of balloon payments. Like, no, that's an awful idea.

Um, right.

So So for residential, that's a good question. Uh, so the CARES Act that went out in late March is the same one that gave everybody a stimulus check. But what they did is— and they can only do this on federally backed mortgages, private loans are not—

they—

it would be overreaching or whatever.

Is that FHA loans, VA loans?

It's all of that. So Fannie and Freddie Mac backed mortgages, or VA, USDA, FHA, um And there is actually a provision in there for reverse mortgages as well.

Uh, are conventional mortgages federally backed?

Uh, a lot of them can be. So a lot of mortgages get bought out and backed by Freddie Mac and Fannie Mae. So on that actual My Mortgage page, I have a whole thing that says, okay, here's how you find out where— who owns your loan. Um, and so Freddie Mac, Fannie Mae, VA, USDA, they all have a link. So you can click on those links and then go Um, so there's a section there that says, how do I know who owns my mortgage? And if you do, what the relief they're giving you— and this is again where it still can get a little dicey— but basically you can do what's called elective forbearance, which means, yeah, I'm not paying for up to 180 days and we're not going to accrue any extra interest or penalties, just the regular schedule. So it'll still be there. The idea was supposed to be tack that on to the end of the mortgage, right?

Because that would make sense.

But they didn't get exact enough in the bill. And so people are technically allowed to just do the balloon payment or set their own schedule on when it is supposed to be paid back. And so that is what is frustrating.

Yeah. And I mean, the mortgage holders have to know that it's the amount of defaults and just pure panic they're gonna, they're gonna force is stupid.

I completely agree. So what I've had— so I'm, I'm in a big, uh, community of other financial writers and, and professionals and CPAs and lawyers and all that stuff. And so what they've been seeing is when you can get a hold of a bank, you just get the terms from them. Say, hey, you know, you, you can use my tool and say, okay, yeah, it is federally backed, but I need to get a hold of my lender to say, once, you know, I can elect this forbearance by law, you've got to give it to me. What does the repayment look like? Are we tacking it on the end? What are we doing? Uh, because that's what you want. If they're going to just say I know you can stop paying for 6 months, but we're going to need that 6 months worth of payment the day it's done, then that is an awful option.

Um, do you know of any mortgage holders that are doing this the right way by tacking on to the end? Because I feel like the companies that are going to be leading by doing that are the ones, you know, maybe people should do business with going forward, right?

No, I haven't. That's a great idea. I want to see if I can track down a list of those people, um, because there's just so many different lenders and stuff. But as far as I know 5 times. Well, yeah, that's the other thing is, is your, your loan gets passed around and passed around. Um, so no, I, I've— I don't have a list of those people yet, but that is a— I'll see if I can dive into that because that's like you said, those people are leading and hopefully we can throw business their way if they're doing the right thing.

Cool, cool. Any, any news on, uh, uh, tax bills when they're— I know it's July 15th instead of April 15th now. Has there been any talk of pushing those back?

No, July 15th. They did do the quarterly payments and push that to July 15th as well. So everything's July 15th as of now. Um, but the state— here's the other killer— is if you live in a state with state taxes, not all of them, as far as I know, not all of them pushed the April 15th date out to July 15th. So you might still be filing and paying some state taxes, but then the federal stuff isn't due till later, which was— again, when you have this disconnect between federal and state and there's there is— they run individually, even though there's federal guidance, the states still run their own thing. And so there are a lot of people were saying, okay, if you're in a state with state taxes, still file by the 15th, and, you know, if you have to pay or whatever. Like, it was just— it's just been so convoluted and frustrating. Um, yeah, but on a federal level, no, July 15th is still the date.

Well, that's why I'm glad to live in Florida, is deal with that.

Washington State here, so state income tax.

Oh, you got big ones. But yeah, Washington, I'm assuming Washington State, no state income tax in Washington.

Their sales tax is 10% and their property taxes are nuts, and they're all the other stuff, but the, um, the state income tax is, uh, not there.

No. Oh good.

Yeah, yeah, that's—

this is like a nightmare to have to deal with.

Oh yeah, no thank you.

What else we got on here? School lunches. All right, so if a dad's, you know, if you got kids who've been going or getting school lunches at, uh, at the school, it looks like most of those are keeping them open.

Yeah, so what they had is the, the programs where you've got school lunches, and a lot of it was for like, that is the meal that those kids get, right? This is this low-income housing or low-income families that have subsidized school lunches. They were like, oh my gosh, there goes my kids' middle of the day meal. And that, you know, that could severely impact them if they're, um, if they're counting on those free school lunches. And so they're doing— I haven't seen the latest, and there was a— there's a link in there to a gal that's been keeping up, uh, state by state. Um, uh, it's toward the bottom there. This gal, uh, Ellen, had a whole running list of where to get the free meals for kids. But basically what the schools did on your page— yeah, so if you scroll down under school lunches and go look What does this mean for you? There's a thing that says here's a list of all the free meal by state. And so the idea was, okay, well, I can't send my kid to school, nobody's open. They were doing to-go meals, which was really cool. So basically cafeteria workers would still go in, package lunches, and then you could drive by and pick them up. There was in Washington State, because it was one of the first and hardest hit places by the virus, um, they actually had the school bus drivers dropping dropping off lunches as well. So it was, it was pretty cool to see some of the way some of the states handled this.

But, um, yeah, I think that'd be—

but yeah, it's just one of those, you know, if you were counting on that and all of a sudden it's gone, uh, they, the schools took care of that in a cool way. And it was nationwide, it was most, most counties were doing that.

So, so the stimulus check Uh, well, that came through, what, a couple weeks ago?

Yeah, so, and I just got an updated schedule on it. So there is a few, a few things about it. One, and I've got the— if you go to my stimulus check, uh, breakout post, I have an entire like, um, like formatted table for who gets what, what the phase-outs are, what your check amount should be, and all that stuff. But it was the $1,200 checks for single taxpayers, $2,400 for married, and then you get $500 per kid that is 16 and under. That qualifies as your dependent. The people that didn't get them were college students that were claimed as dependents, right? So if you're 17 or older but you're quote-unquote living at home and your parents claim you, not only do the parents not get the $500, you don't get your $1,200. It was kind of a black hole. Same with elderly parents that were claimed as dependents. They're over 16, so they didn't get paid. Parents didn't get paid. It was kind of a bummer. But those checks went out direct deposit On April 15th is when most of those hit the accounts. Uh, there was a lot of people that didn't because there was, uh, people that— well, there was, there was major issues through filing taxes through somebody like Jackson Hewitt or H&R Block or TurboTax. And when people elect to get what's called a tax refund advance, which I don't personally recommend, but some people are like, how about you advance me the money and then when my refund comes in, it's yours, TurboTax. Well, they set up sort of these dummy accounts and that's the information the IRS had. So the IRS was trying to direct deposit to like up to 20 million people to accounts that didn't exist. And so then there was these major issues and, you know, millions of people didn't get their check or their direct deposit, but then the IRS released this app called GetMyPayment. So if you just go to irs.gov/coronavirus, You can see the Get My Payment app there. You can actually go in, punch in your social, your date of birth, your address, and then it'll allow you to go in and punch in your current bank information so they can get it to you quicker. So if you didn't get direct deposit but you thought you were supposed to, or if you don't want to wait for a paper check, you can go and put your information in there. And they just updated it on like April 25th because there was, of course, issues with that tool as well. But luckily it's, it's working a lot better now. So I've coached some people through this, my— and, uh, and some family members Um, but if you are waiting for a check, the current schedule has them going out based on lowest adjusted gross income to highest, and it could take all— and it's like in weekly waves, um, and it could take all the way until September, maybe not. Um, and that's why they're encouraging people to go just put your bank information into this other app to get it quicker. Um, but yeah, the way the waves of checks started mail on April 24th.

So a twofold question, uh, yeah, what should dads be doing with that that are getting— because dads are probably getting, uh, you know, either married or some of the kid money, uh, then simultaneously, um, it seemed like the last couple weeks, at least I was reading on e-commerce, retail spiked like crazy a couple weeks ago, or last week, whenever the, uh, the stimulus paid, which means everyone just started buying stuff. And e-commerce isn't really, uh, I wouldn't qualify that as maybe necessary or exactly taking care of your family. Just kind of like you felt like that was free money and you're spending it instead of— at least I would have felt like the times we're living in, maybe set that aside and maybe buy food, make sure you don't lose your shelter, uh, you know, some more important things. Or just, you know, you know how long this is going to last.

Uh, exactly.

They're gonna get your opinion on that as well. So what's your opinion to dads? What do you think about, uh, e-commerce spiking so hard?

Yeah, I think that, that people are treating these like they would a tax refund. Um, it's their money they already paid to the government, they're just getting it back, but they see it as free money, and that's not what it is. It is, is meant to take care, you know, help you through this time. So I, I put together a whole segment on what's called creating an emergency budget. And so there's your typical budget of like, here's how we run our household. And then there is, okay, things are crazy here. We lop everything off except for these couple of things, right? You only spend on necessities. So I recommend everybody cutting out unnecessary expenses and just focus on the, the 4 main things, which is food, shelter, utilities, and then some reliable transportation. Not that you need to spend a lot on that, but at least have a way to get around. And then everything else is negotiable. And you have to consider whether or not you need to be spending money on that right now. You could call your subscription services, your Netflix, your everybody, hit the pause button. You can stop the retail spending. Like you were saying, it spiked recently. Do you need to do that spending? Is it necessary? I mean, maybe everybody was ordering toilet paper on Amazon. I don't know, but I kind of doubt it, right? So focus on those core things. And then stack cash. So my kind of rule of thumb is if, if you don't have an emergency fund in place, you need to take all, any and all savings that is maybe sitting for other things and just sort of consolidate and say, here's our emergency fund right now, because we're technically living in a state of emergency. So until things calm down, open back up, smooth out, employment is stable, I'm gonna, I'm gonna just recommend people stack cash. Now Now, if you are paying off debt, I would say go back to just paying those minimums, like just, just hold on right now.

And, and I would have thought you call them and just ask for, you know, hardship pause.

You can do that. There is some provisions in the new bill that will actually protect your credit as well if you do file for hardship or forbearance on some of these places. Some of them don't. And yeah, if you want to go even further on debt like credit card loans, car loans, student loans. Call all of your lenders and just say, what can we do? What are the options here? Student loans, if you have a federally backed student loan, if it's one of those Fed loans, they literally just stop collecting payments. So if you log in, you should see zero payment due no matter what your loan is. If it's a Fed loan or federally backed loan, for 6 months you're going to see zero payment due. So I would just not pay it. Stack that cash, stack that cash, stack that cash. Like, unless you have 12 months in the bank— that's my personal number, at least— unless you have 12 months in the bank, I would just hang on to your cash, and then you can redeploy it later once things smooth out. So that, that's my big recommendation for people.

When you say 12 months in the bank, 12 months of what?

Uh, 12 months of bare-bones expenses. So say your budget is $6,000 a month, but your emergency budget, after you cut all the fluff and pause things is about $4,000 a month. I would say $4,000 a month times 12, that is 12 months of expenses in the bank so you could survive whatever, you know. If this thing— I don't know, I'm not saying this thing will last 12 months, but whatever it is that comes, if there is job loss on the horizon or something else, you need to be able to last 12 months on that cash.

There's going to be a revolution in this country if this goes 12 months. Everyone's gonna rise up with works.

Well, I don't think the lockdown's 12 months, but there's going to be people out of work. There's just— companies are going to lay people off, and it's going to be— it could be 12 months is a, a significant cushion. Personally, for me as an entrepreneur, that 12 months is required. If you know there's job possibilities or stability or a way to get other work, maybe 6 months is a number. But most people don't even have $1,000 saved. I think it was something like 40% of America couldn't cover a $400 emergency. Uh, and 60% of America could barely cover $1,000. 40% of America could not cover a $400 emergency.

Golly, that'd be scary to live that way.

And it is. And so that's why this can be an opportunity with the stimulus money, with everybody cutting back, with literally the inability to spend, um, if you allow yourself to actually cut back, to, to build that emergency fund Um, especially if you have employment now and you don't have— like, I, my minimum for people is like have a month of expenses put away when things are good, right? That's my minimum. So if you're not even there yet, hey, maybe you could put $4,000 away if you have stable employment.

That way, if 100% of your income gets hard stopped for at least 4 weeks, you're covered.

Exactly.

That makes sense.

And that's my— that's the minimum. And while, like, if things— like I said, if things are going really well and you're like, you're knocking out some debt or whatever, but if you're debt-free, then ramp that up to 6 to 12 months because then you are— you've got that cushion. You're protecting your family, you're protecting yourself.

Um, yeah, I will say it's, it's, it's much less stressful when you have a nice pile there. You know, these things are less panicky. So, and there's always something. It's, you know, COVID's obviously unique. But there's always something. I mean, '08, you know, when the housing market crashed, when the stock market or the e-bubble burst in '01, there's always, always something. And then just, you know, outside of that, just personally, you know, industries fall. Gosh, what was that big one? Started with an E. Enron. How many people worked for Enron? And just one day it's just, mm-hmm, I think everything's great, and then your life gets turned upside down. So Yep. Yeah, emergency funds are hugely important.

Well, that's why it's my— so I have, I have a formula called the 5 Steps to Financial Freedom. And the idea of financial freedom for me is, is less financial stress. Like, how do you take stress away? Step 1 is saving a month of expenses, because when you're a month ahead of your money, you don't think about when things are due. Like, you no longer worry about— you're not paycheck to paycheck anymore. You're now broken out of that. You're living on last month's money, you've got a month cushion, and you can start make way better money decisions. Everything's more clear because the stress is gone. Like, when I was living paycheck to paycheck, it was stressful. It was so stressful to think about, oh crap, that thing came up, or this is due, and like anything could knock you down. And debt was almost inevitable at that point because, you know, we weren't ahead, we were just reactionary. We were not, uh, planning or proactive we were reactionary to what happened in our life and we felt like a slave to our circumstances. But when you get a month ahead, you are now on offense, right? So it is a really big deal. And that's why it is— I'm like, before anything, do this. And that's what I'm saying. Like, I get right now there are people that do not have that opportunity, and that's why I put that resource page together to like just get you through this. Um, but there are people that do still have, you know, income. And so let's, let's make the most of it right now. And build that cushion so that when you do come out of this, you're stronger, you know how to live lean, but you also have that cushion and your day-to-day stress goes down. So now you can make long-term plans and, and bigger goals and actually start to hit those things.

So if you haven't pissed away your stimulus fund yet, or your, uh, stimulus check, save it, build up an emergency fund.

Yep. And I like money market accounts because they're not like— you can't immediately spend them. You can't write checks out of them type of thing. Like, there's a little bit of like, oh, I've got to transfer it to my checking account. Like, it makes you think about whatever that purchase is. It's a nice little pause in between, and it earns higher interest, which is nice. Um, so yeah, I recommend that.

Switch some over there. Uh, like I was telling you earlier, because you, you said you'd share that CIT link. I'm like, yeah, why not? Because ours went from— we had a bank that was sitting at 1%, which none of these rates are great, it's just better than nothing. and then they got pulled out and I just realized they had switched it to a quarter percent. But we always kept— we actually were super— Ryan and I are both nerds when it comes to finances. Like, we were both on the ball, I guess, and always have been. So we always kept our emergency fund in our checking account. But I could see if you're, if you're the kind of person that's looking at balances and just feels like you can spend it because it's there, having that separate account would make a lot of sense.

It's, it's a human behavior thing. It just, it just creates that little barrier to entry, and now you're like, oh, I guess I won't do that thing. Okay, cool, moving on. And then, and it could— you could just protect yourself from yourself as you're building better habits, right? Sometimes you— it takes a while to get to the place where, like you said, you're naturally just adept to this stuff and it just works out for you. But a lot of people, if they're not, will then create some systems that help work with your personality to keep your money secure.

Yeah, I agree. We're just— we've always used— I should ask you about that because you're the budget guy. So we've always used QuickBooks because we've had our own businesses for a decade. And so QuickBooks is what we use in the business and might as well use it for personal as well. So we always kind of based our numbers off what our register says, not what the bank account says, because we could have a $50,000 check for equipment coming out at any point. So what's in your bank really doesn't matter. 'Cause we always pay attention to our register and where things are allocated. But we're gonna go ahead and get off of QuickBooks 'cause they're starting to drop certain support for the version we had, and so we'd have to renew it, and there's just no point having that desktop-heavy application, which uses a lot of storage and computer power. It's just not necessary anymore. So actually, I just downloaded yesterday, um, two apps. So I'm still trying to keep the 100% dad business separate, um, from the, uh, personal side. Yeah, download two. We tried FreshBooks, uh, so download the version of that and we'll see how that does because it'll be all app-based, so we don't have to have the, the desktop version.

Yeah.

Um, and what else? Uh, and EveryDollar. We went to Dave Ramsey's site and downloaded his app, and so I figured I'd try that one for personal and the other one for business and see how they do. But you're the, you're the budget guy. It's in your name, I Heart Budgets.

That's it.

So, uh, have you used any of those, or what would you recommend?

What, what's in the budget guy's pocket right now? I use an app called You Need a Budget, Y-N-A-B. Um, it was just sort of like a startup that, that took off, and it was custom built for people that just like want to like have full control. Um, it's similar to EveryDollar. It's what they call a zero-based budget where like you just, you can only budget for money you actually have, which is nice. Um, so for example, if you're, if you're living paycheck to paycheck, that paycheck comes in, you can't budget for more than that paycheck. It only allows you to spend that paycheck. You can't budget the rest of your money till that next money comes in. Um, it does sync with your bank accounts, does the auto categorization thing and all that fun stuff. Um, but it gives you a really good control and a great snapshot of where your money's at. And their big goal on the app is to get you— like, I always recommend people get you a month ahead of your money. So if you're not there yet, they try to work you toward that so then you can actually budget for an entire month. So then you're like, oh, I've already got the money in the bank for this upcoming month, let's budget it all out. And then you just track it. It's a super simple phone app. They've got a desktop version as well, um, and, uh It's— I, I've been doing it for a year and a half, um, and I really— I don't know, I really like it a lot.

Nice. So how do all these different apps go? Because I, I honestly haven't looked at them. I just kind of picked a couple popular ones real quick from a quick Google search. Yeah. Um, how, uh, I guess, how do they differ?

So EveryDollar is based on Dave Ramsey's Seven Baby Steps, um, and his is, uh, pretty rigid. It, it's not quite as flexible. Um, one thing I like about You Need a Budget— I've never seen this in any, any other app— if you overspend in a certain category, say you're like, okay, we got $1,000 a month for groceries or whatever it is, if you spend more than that, it will literally just pop up an alert on your phone that cannot go away until you borrow money from somewhere else in your budget. It's not like, oh yeah, just add more money to that budget. It's like, no bro, you overspent, so go grab that money from somewhere else. You can't make money appear out of nowhere, go get it from somewhere. And so it forces you.

It's almost like the old school envelope system where you actually had cash in an envelope and you just had to take it from something else while you're standing at the register. And literally, that's what we used to have to do when we were first married.

Yeah, exactly that. And I love that illustration because that was what we did too. We did cash envelopes that was like, okay, once this is gone, it's gone. And it sort of forced some good habits around limiting ourselves and planning out our month a little better. Um, but it forces you to— now, EveryDollar might do that. I haven't, um, because I'm doing deep dives into all these apps. I've only done a few so far. Um, I've got my own personal spreadsheet that I built on Google Sheets as well. But as far as the apps go, You Need a Budget is unique in that it, you know, it only allows you to to manage what you have. And then when you do overspend, it forces you to go deal with it. It won't let you go back into debt. Like, it'll just yell at you all day long.

When does it realize that you overspend? Because I'm thinking when you do these, you have to sync it to your account or your bank account, and then you have to say, all right, that charge, you know, I went to Target, I spent $100, $25 of it was for, uh, you know, the kids' sporting stuff, and, and, you know, $25 was for the dog's food and $50 was for grocery. So you have to kind of sit there and allocate it all. Um, is that when it would pop up when you're kind of sitting down and, and saying, hey, these dollars go to this category?

Yeah, that's exactly it. So when you, you set your budget for the month based on the money you have, you're like, I'm going to allocate it this way. You go spend money, you punch it in, and then is it'll auto— you know, if you say, okay, this was for rent, this was for— you can split transactions and stuff, and you can say this was for this then all of a sudden it'll— it pops up at the top. So like, I've got overspending right now because we're at the end of the month and we like overshot our food budget, of course, because we're stocking up. And so it's just got this big notification, this huge blue bar that will not go away until I go in and make an adjustment. And so that was as soon as it— and if I forget to punch in the transaction, it'll pull it from the bank account. Usually that's delayed, right, because it takes a minute, you know, a day or whatever for it to go through, but then it'll pop up and it recognizes different stores after a while and it says, okay, we know this is groceries, and then boom, we're going to give Jake an alert immediately. He just overspent on groceries.

Hmm. I can't believe the budget guy went over budget.

Yeah, always. That's— so here's the myth: a budget is a plan, but it is fluid. And if your budget is the same every single month and you hit that every single month, like sure, you're more rigid than I am, uh, is magical. But if, if you don't allow flexibility in the budget, that's when most people give up. Because every budget, every month, there's always some flexibility. And you can build that in in different ways. You can just have a stuff I didn't budget for, uh, line item, or you can have a miscellaneous account that absorbs some of that flexibility. But, but creating a budget doesn't mean I stick to this or I fail at life. It's let, let me adjust here and there. I have a total number I can't go over. This is the amount I have, and no matter what, I have to fit within this parameter. But if this category or that category is less or more, that's why I like this app, because it allows you to like borrow from each category and like and make it work for how life works.

Not borrow from another month, just borrow from other things allocated for that.

Exactly. You've already allocated the money somewhere. You're just basically pulling it from one category to another. Like, hey, I guess we didn't blow money on restaurants this month, we didn't go anywhere, cool, let me pull that money and stick it into groceries because that budget was higher.

Because we do a lot of annual expenses, like our insurances aren't monthly, they're, they're once a year because you get a discount for that, and that's how we pay them. Um, but we still kind of like, you know, budget, uh, the monthly amount, I guess, but it's not really being spent, it's just kind of a buildup so we make sure we're, we're we're tracking it. Exactly.

Yeah, that's— I think Dave Ramsey calls them sinking funds. I call them savings buckets. A similar thing where it's an infrequent expense, you put that money aside. Uh, I was at the point where, uh, things that were running a little different now, but essentially we had 10 savings accounts and there was an auto deduction every paycheck that just put $25 here, $25 there for vacations and, like you said, annual or biannual expenses. And so the money was just there right when the bill was due and just took care of it. So we saved up for all of those, those things ahead of time.

Cool. Uh, trying to think what else we got going on. What else is in the finance world happening that's crazy right now?

Uh, well, people are freaking out about the stock market, um, because of course it's dipping. Nobody's working, people are worried about earnings.

You notice this? It's like doing what it's supposed to be doing. It's been on like a 3 or 4 week upward trend.

It seems like every, every time 5 million people apply for unemployment, the stock market goes up. So that's totally logical. It is, it is all over the map. Um, the way that it's working essentially is the government's trying to pump money into the economy with these stimulus checks, with the bailout loans, with the, the small business programs to prop up the, the market. And so I, I, I'm not a predictor. I'm a big huge fan of passive investing. Like, you just invest in the long-term low-cost index funds and ride this thing out and know that, yeah, like you said, every 10 years there's going to be something. You can never predict what it is, but when it happens, you're like, okay, this is that something. Right now we're in that something. The market dropped 30, 40%, and now it's kind of back up, and it might go down for another year or two and come back up. But just invest in low-cost index funds all the way down, all the way back up, and your long-term dollar cost averaging is going to get you to a good place. So the— what you shouldn't do is pull your money out or sell your stocks and move it to cash, because all you're doing is locking in your losses. If you're invested in stocks, you're invested in businesses. If you're investing—

especially not if someone's listening to this podcast, which is dads, which probably means you're trending younger, which means you have 20, 30, 40 years before you're going to retire. So yes, yeah, certainly leave it alone. If you're 78, you know, you shouldn't have been in 90%.

Yeah, exactly. If you, if you are, uh, if you were within 5 years of retirement and you were 90% equities, uh, that was just a bad strategy. Like, you should be less than 50% and you should have already hedged yourself. Um, but yeah, if you're younger, uh, listening to this podcast and you're— you've got that 30 to 40 years of investing in front of you, you're going to hit a few more of these roller coasters and you just got to keep pumping money in. I mean, that's, that's just how they're not predictable.

COVID wasn't predictable, right?

You can't predict it.

A few people saw '08 coming, um, but very few. Everyone else just thought we'd charge right through it. Yeah, yeah, it's, it's— now, do you see that as a buying opportunity, the stuff we're going through now?

Yeah, so I give the caveat of if you are debt-free, uh, except the mortgage, but if you're consumer debt-free and you have a comfortable emergency fund, I tell people whatever helps you sleep at night. So if you're sleeping well at night, you have secure employment, and you are debt-free, then absolutely you can, you can stack some more money into a down market because you're investing, especially if you're doing low-cost index funds, right? I, I keep saying low-cost index funds because that's my jam. I love companies like Vanguard that allow you to just invest in a single fund that buys one of everything in the market, right? So for example, their Total Stock Market Index Fund, their S&P 500 Stock Market Index Fund, lets you buy 3,600 companies. So when you buy, you're buying everything on their index And those 3,600 companies have publicly traded shares, which means they know how to be successful to the point where they went public, and they have employees and some of the brightest minds in the world that are going to continue innovating to grow those businesses. So you're not just investing in stocks, you're investing in people and companies that are built to grow for profit, and you're diversified across 3,600 companies. So even if a couple of those wipe out they disappear off the index. They're going to get replaced with some other public company, and it's self-cleaning. So, and the big thing is then you're paying like less than a tenth of a percent for that index fund. So if you invest in those things, those companies long term are going to grow. They are built to grow. That index only tracks companies that end up growing. So yes, it is a buying opportunity. You do it in passive index funds, and you just let the thing ride. And long term those things go up. If you, if you go to the search Dow Jones on Google and you look at the last month, you're going to freak out. But if you zoom out and just look at the last 30 years, you're going to be like, okay, it always trends up. These companies grow. That's just how we're built. That's the system we're in.

So, so yes, don't worry about what it's going to be in 6 months or a year. No, it's going to be fantastic.

And, and that's the— and the power of compounding interest is it just compounds over on itself. So if you want some fun, just look up a good investing calculator, pop in 8% for a conservative number, and just say, okay, if I invest $500 a month, let's see what that looks like in 30 years. You'll be surprised.

That's— do you look at— I don't even know if any funds do this. Do any funds pay out dividends or anything like that?

Uh, a lot of the index funds have a dividend built in because it's owning all of these shares of all these companies and they pull in those dividends. And I just tell people, I personally reinvest Yeah, exactly. I personally reinvest all my dividends. They call it the DRIP model, the dividend reinvestment plan. Uh, and then you just— so not only do you get your, uh, your growth, but the dividend reinvesting, maybe it's a 2% on top of that. So instead of 8%, maybe you're at 10% long term, right? That's how the market works. If you reinvest all your dividends and you're invested in index funds, you could hit that. I mean, that's the average is 10%. That's, that's it. So long term, that's a huge, huge deal, especially if it's compounding month over month, year over year for 30 years.

So cool. Now, I've always said Roth, Roth is the way to go. Like, I love what a Roth looks like down the road. Yeah. Do you agree or do you like some other vessels for retirement?

Yeah. So I have a, I have a multi-pronged strategy. Retirement. There's lots of options to have. Cash flow. I mean, you could do cash flow real estate, you could do your traditional retirement, but I am 99% focused on things like the— if you have a 401k plan with a match, you max that thing out and get your free money up to that match, and then you invest in an IRA. Now, the Roth IRA is my personal favorite, and the reason I like it is because it not only grows tax-free and you take it out tax-free, um, but it also um, you can take out what you put in if you need to. If things are awful and literally every other avenue is tapped, don't, don't touch it if you don't have to. But you technically could, like, if it hits the fan, you could touch it. Or you could use it for your kids' college fund, or you could use it for a first-time homebuyer's house down payment if you have to. But I recommend maxing it out, husband and wife here, right? $1,000 a month, you can do $6,000 a year each. So $12,000 total is $1,000 a month. And if you do that for 30 years, if that's literally the only investment you do in your entire life, you're set. If it's in those low-cost index funds, you're looking at $2 mil plus. I mean, it's— it is, and it's tax-free money.

So what— yeah, that's what I think people just don't realize when they got to pull it out at the end. That's millions, millions, uh, that you don't have to pay a penny on. Whereas a lot of these other vessels, when you pull that out, you're gonna have a, a solid tax bill to hit.

Exactly. And that's where, like, at the very end, I say people get— meet up with somebody for, you know, your last 5 years and come up with— there's some good tax planning strategies for where to draw out of. Um, and then, yeah, I mean, on the Roth IRA, technically you pay taxes out of your paycheck first and then you're investing in it because it's a post- tax investment. So you're not saving on taxes now, but you're saving taxes later and on that growth. And so what I like to do is the two-prong strategy of if you got some kind of, you know, TSP or 401k or something, put money in that and that'll save you on your paycheck now, right? You, you'll be investing, uh, and saving on taxes now, and then max out those Roth IRAs so you save on taxes later. So you're almost getting the best of both worlds where you like save on some taxes this year and you save on taxes down the road.

So you're a math nerd, uh, so you like numbers. Um, so investing typically is earning, uh, more than debt costs. Do you have a, um, a trend on what you like? Uh, you know, leave some debt on the table and then plug into your investments, or— yeah, so then plug into investments.

I've got a— my part of my 5-step plan is like, get your emergency fund in place and then pay off debt. But if you have a 401 with that match, that's 100%— 50% to 100% return on your investment immediately. So if you put a dollar in and they put $0.50 in, you just earned 50% right up front. So I say I like paying off debt. I like it. Can free up your cash, your monthly cash flow once those minimums are gone. And technically, yes, long term you could get some better returns in the market. But there is a peace of mind and a mental win for paying off debt, it's obviously high-interest debt that's killing you. Credit card debt, or if you've got a high-interest personal loan or something else, those things need to disappear. Some people advocate for hanging on to things like student loans because those are large and long-term, and some of them could be lower percentage, 5% or so, or a mortgage. I personally, I personally recommend killing all debt except the mortgage. So consumer debt, because there is almost all of that debt is typically not connected to an asset. Now you could argue student loans, but I, I think those things are way overvalued anyway. Um, so the only thing—

elaborate on that. We mean overvalued.

I mean the cost of college doesn't have the ROI that it once did, and the insane rate of tuition growth is outpacing everything. It's tuition costs way too much for the value that you get out of that. Now, there are certain fields that pay it out, but like, for example, my wife got a degree, um, at a private college that if we didn't have some grants and some other things in place would have been $40,000 a year. And so $40,000 a year to get an interdisciplinary degree that we didn't end up really using If we had pulled all that out in loans, we would be buried for life with no huge return on investment.

What is an interdisciplinary degree?

Um, basically she was doing— it's where you sort of like, I want this major, no, I'm going to switch to this major, no, I'm not. And so you just kind of like tie in what you've earned in credits between the multiple disciplines and call it an interdisciplinary degree.

Oh, you studied a bunch of different things, here's a degree.

Yeah, yeah, so you're majoring in multiple things. And now I would say engineering and programming, and so there's medical, and there's definitely fields where you not only do you have to get a college degree, but it's also gonna be a long-term huge benefit. But there are a lot of, I would say, like for example, I got an art degree. I spent $36,000, $32,000 to go to sound school that I'd never really used. Like, that money could have been better spent elsewhere. And that was back in 2006. I'm sure that school costs over 50 now. I mean, it's the way that tuition is rising, kind of hurts my soul a little bit.

And so, um, and I, I genuinely don't think college is the way to go, um, for everybody. I mean, I'm not against it at all. If my kids want to go, they'll go. Um, but I dropped out. My wife has a 4-year degree. She's a stay-at-home mom and I built 3 businesses. So it's kind of— it's—

unless you plan out exactly what you're going to do with that degree and how that works, which unfortunately, maybe things are different now, but for me, the guidance counselors and everybody else, nobody gave me any direction. I had no direction. But you were allowed to go borrow hundreds of thousands of dollars. Like, it blows my mind. So unless you have a plan in place and a direction and a career path and some real numbers to back it up, I would say like, don't. And so what I'm saying is, is college debt is technically tied to the asset of your career growth, but I still, I still say get rid of it. Just get rid of it as fast as you can. Just like a credit card, just like a car loan, just like anything else, like knock that out. But keep investing at least in your 401k match at a minimum. And if you have long-term debt, like this is going to take 10 years to pay off, then yeah, keep investing because you don't want to miss on, on that compound interest. If you can pay it off in like less than 5 years, go aggressive on the debt and maybe you can grow your income or find some quick wins and maybe actually knock that 5 years down to 3 years if you get really aggressive. But yeah, if you're, if you're 10 years in, some like, if you've got multiple six figures in student loans, don't miss out on the compounding interest of like a Roth IRA like you were mentioning.

Well, and from a dad's perspective because a lot of kids don't know what they want to do. Like, very few are sitting there saying, I want to be a scientist or an engineer or a doctor. Some are. But on the flip side of that equation, uh, she— so I went to WVU. There were a lot of kids who went there that were going to become pharmacists and chemists and engineers and doctors and this and that. And, um, they, they did stupid their first year or two and failed some core classes, which put them out of that program. So they're unable to do that. Or they got into it and realized they, A, don't the talent or the brainpower or the will to push that hard. And so they, you know, flunked out or changed majors, which almost 95% of them became teachers, which really concerns me. So they went to the easier path so they could still party and, uh, you know, get, I guess, a safe career. Um, but so I was sitting there, I was talking with this yesterday that, you know, my opinion, if my kids wanted to go to school, didn't know what they want to be, I'd be sending them down the street., to whatever community college, or maybe an online college, uh, just because it's, it's stupid cheap. And those first couple years, their English, their math, their, you know, economics and psychology and sociology, like, they're not, they're not really field-specific yet. Still almost general knowledge.

Well, they're figuring out what they want to do those first 2 years. Like you said, if they bomb those first couple years figuring out what they want to do, then it's you know, $4,000 a year versus $40,000 or whatever, you know, you can find in that local state college.

Mhm. Yeah. And then, uh, you know, in Florida we have Bright Futures, so you can get a lot, um, a lot compensated. Like, our lottery system in Florida subsidizes, uh, a lot of college tuition. Um, but still, even with that, going to some of the big schools is really costly. Uh, or, man, stay at home and And you don't know what you're going to do anyway. Stay at home, get a job, and then, you know, figure it out from there.

I'm a big fan of the gap year. Like, figure it— figure some stuff out. Get a job. Like you said, get a job and figure it out. And then if you need to, then you can jump. Like, after high school, like, have a gap year to figure out life. Like, there was this insane pressure, and I'm sure it came from the colleges, but like, oh, if you don't apply your junior year and have everything, all your ducks in a row by your senior year, you're never going to ever get into XYZ. And so having— taking a year off and then going to apply for some type of college was never even thought of as an option, which forced a lot of people to borrow a ton of money to go to a program where they didn't really— they weren't really sure, but they didn't want to miss out, right? It was like, you have to have a college degree or your life is crap. And, uh, the reality is hit, and I realized that that's not the truth. And then if you— that truth helped push college tuition way up.

And so I fundamentally disagree with this. So now I'm super curious, so why do you like the gap year then?

I, I like the idea of you graduate high school and then you go try— like, if you think you know what you want to do, you go try it out. Like, go figure out that whether it's construction or you go intern somewhere or you, you just sort of figure life out. A lot of people want to travel or figure like paying $20,000 to go figure out what you want to do and then figuring out it was wrong seems like a very costly mistake. But going to earn $20,000 figuring out what you want to do—

so I agree, I just don't think it's practical that that can be a real path. Now, in trades, different story. So like if construction or things like that— hey, yeah, you really don't need a trade school for construction. But you know, certain paths— electrician, uh, AC, you know, maybe welding— there's trade schools, uh, Um, and yeah, you can do an apprentice since— but most kids, I think, that are taking a gap year, um, it's A, not figuring out what they want to do. They're just taking the pressure off themselves of school and essentially partying and drinking because—

I got you. Yeah.

And they're— it's just— and it doesn't usually lead to a lot of great results. Um, there's not a lot of people that take a gap year, party hard, and then go become, you know, successful surgeons. It's just, it's not going to happen. Now, I do feel if you don't know what the heck you're going to do, spending $20 grand a year, I completely agree with that premise. I just feel like you should go to the community college or online school and work.

Okay, sure.

Because most of the jobs coming out of high school with a high school degree and no college, um, I don't even think you're going to get a lot of, um, uh, great internships. Like, I try to get an internship at, uh, some financial institution because I wanted to be a stockbroker at 18, which thank goodness I didn't. Um, and they wouldn't even take me on until like junior year of college. I was like, I will work for free, I will do the trash cans, I want to be in the, in the area. Because I actually went to an office and asked this because I wanted to do my summers within this. They don't even take internships until your junior year. Um, and so I feel like they're going to go work in a restaurant, which I did, or construction, which I also did. I mean, so, okay, I think at the entry level with a high school diploma and no college, I think not as much opportunity to explore the fields that you might be interested in versus going to a much cheaper school. Without, you know, I agree with the premise, don't spend $20,000 a year when you don't know what your field's going to be, or online.

Sure.

I just have always felt gap years lead to excessive partying.

Hey, no, you're not, you're not wrong. And my opinion is formed based on like, I feel like I just wasted a bunch of time and money. Figuring out what I want to do, and I could have gone and worked, but I don't have the premise of trying to actually apply for some of these more advanced internships or fields. So that's a great data point for me to think about. And I, I would say I do agree with you, at least going to a cheap college while you're figuring it out.

Yes, that I'm 100%. Yeah, I, I feel like a lot of people need, in a sense. And I also think, you know, if you're going that route the first year or two of college is actually pretty easy, especially if you're living at home and you're not adjusting to life on your own, things like that. Um, I truly— I fully believe you should be working full-time. I feel like my kid, you know, I've got 10 years before we actually have to implement that.

Uh, same.

But it's not— I, I did the first 2 years of college. It's really not overly difficult. It's almost high school, 13th, 14th grade. Um, You know, the biggest challenge is really if you're on your own living in a dorm, being able to say no to partying and getting up on time and managing your own schedule and making sure you study because you don't have a grown-up. And the teachers really don't care. You show up or you don't. They don't care.

The structure goes away and it could fall apart. Sure.

Yeah, right. Um, I don't know. So that might be one.

Cool. No, no, I, I, I appreciate that perspective because like I said, mine's very limited in that I just wasted a ton of time and money on stuff that I was just trying to figure out. And, uh, but I like the idea of, yeah, do the cheap route in those first few classes. And it just takes some commitment and some structure to stick to those things. So then as you get into, okay, you know what, I'm actually really leaning toward this, let's apply for that, you know, get the AA degree and move to that, the third and fourth year in, in a bachelor's degree program. You didn't, you didn't chop your leg off and bury yourself in debt trying to figure that out.

Yeah, yeah. And maybe I'm just against gap years just because it makes life too easy. And I, I'm kind of like a fan of make life harder, like deal with stress, deal with difficulty, and, you know, learn to manage your time better. And idleness at that age, I feel like, is not usually a good thing. At least it wasn't for me.

Well, and you're going to embed some habits there, right? So might as well build the good habits, and then adversity is going to build character. Long-term, which is going to pay dividends way over and over. So I, I agree with you there, man.

Cool. Uh, how long you been married?

Uh, 11 years. Uh, coming up on 12 in August.

Nice. You guys gonna do anything special?

Uh, if we're not locked down, we were traveling up east.

I hope we're not.

We're traveling up the East Coast. Um, in the next month or so. So again, full-time RV living, we're just going to be traveling and hopefully we'll find— we're thinking about trying to get all the way up to Maine and do like Acadia National Park or something like that. So it'd be really cool to be up there.

We were supposed to be there in June. Um, we're thinking now we might have to cancel the Northeast and just go west. Uh, right, we're getting tired of sitting. We're supposed to be gone, what, 2 weeks ago?

Oh. Killer, man. Yeah, it's, uh, we, we're still gonna do it because we, well, we had planned on going up there by June and then heading west into Michigan and all that. And now it's just, if we're lucky, we'll get up to Maine. And that's one of our goals is to actually get up to there. Um, so we just kind of mapped it out last night. But yeah, we'd love to be in Acadia National Park by August and, uh, and enjoy that.

So that'd be cool. Yeah, we wanted to go all the way up there and then cross into Canada, come across come back down to Michigan and do that area, Wisconsin and all, and then head south when it starts to get too cold. Uh, right. But yeah, everything, everything got ruined by Rona.

3 kids.

What were the ages of the kids?

Yeah, we're 8, 6, and 3 right now. When we left, it was 6, 4, and 1. So, um, they've had a couple of birthdays. So 8, 6, and 3.

So to a dad who's complaining that his house is too small with 3 kids and they're looking at stepping up, maybe something they— maybe they can, maybe they can't afford it. Um, would you like to give them some life lessons on, on what, 300 square foot for the last 3 years?

Yeah, man, if, if you're a fan of doing life hard, RV living forces all the issues to the surface. You cannot avoid them, and you have to just deal with life right there in front of you. But oh my gosh, it builds relationships and communication, and you are connected with your family in a way you never, never could be Um, if you just kind of keep separated— we were in 1,500 square feet, we were looking at 3,500 square foot houses, and they were an insane amount of money. And then something just clicked and we realized this isn't what we need. What we need is just the freedom. And so, so if you're looking at bigger, more, whatever, I'm overwhelmed, I can't breathe, like, just kind of check yourself, check your heart, and say, okay, well, how can I lean into this instead of leaning away from it? Right? And so in 300 square feet, it's gonna get loud, and we've got chaos that happens. And yeah, but you can also like learn to like cope and take walks and have better communication. And you can't avoid issues, like you gotta communicate. So it has been an awesome thing for our relationships and our communication and how in sync I am with my kids and who they are. And like, you learn their individual personalities and how to work with them and grow them and Um, it's, it's been amazing. I'm— yes, there are times where you're like, oh my gosh, my head's gonna explode, but then you figure it out. So it helps, it helps grow you, man. It's awesome.

Yes. What are the kind of issues that have come to the surface when you're, when you're crammed that— you know, this is— now I'm just purely selfish wanting to know what's coming ahead for the next year. But yeah, but I mean, I mean, other people are going to be dealing with the same things, and, and I feel like this needs to be a perspective for the guy in the 1,000 square foot house or 1,200, 1,500 square foot house is thinking he needs to go bigger. Hey man, that's a— that's 4 times the size of what Jacob's living in and what Townsend's about to live in.

Yeah, I mean, it's, it's just siblings fighting or arguing or being— or dealing with selfishness or how you use your words. Like, you know, are you trying to cut somebody down with those words? Like, and, and so just like the, the kids going at it, or, uh, if a kid is going to disobey or just choose to not listen they can't just walk away or have their own space. You don't send them to your room, you just stand there and you talk through the situation. So it's not, um, you know, hey, cut this out, cut that out, go to your rooms. It's, all right, we're going to sit down and talk about what happened. This happened, this happened, this was wrong. Here's where your heart was at, and here's where you need to change that. And when this happens next time, here's the habit we're going to build. You're going to have this type of reaction. And so it, it really— all those situational things where we would just not want to deal with it, and having their own rooms or whatever helped us to be able to just kind of not deal with it. We got to sit there and talk through the thing. Even if I'm in the middle of something, it makes you stop life and just deal with it right there instead of like, oh, I'm frustrated, I'll deal with it later.

So you're just, uh, instant, uh, resolutions. Yeah, I guess you really can't hide, I guess.

No, and same with your spouse. Like, you're gonna— you got something that comes up, you're gonna deal with that, like, because you're not escaping them. You're not going anywhere. You're not disappearing. If you need it, obviously you could walk and cool down and work things out and talk through it, but you're not gonna— you know, as the Bible and Proverbs says, like, don't fall asleep on your anger. Like, you're just gonna deal with it right then, right there, um, or a little bit later, but you're not getting away. You're not going to avoid. You're not going to do silent treatment. None of that stuff is even an option. You're gonna— you're gonna figure it out, but you're gonna be the better for it.

Because— because most dads— and was this your life prior? Um, because we've always had incredible flexibility is because we've always had our own businesses. So I just can pop in in the middle of the day. Um, but I feel like most families, you know, you're gone in the middle of the day. Their mom and dad are working in the middle of the day, and so they're in a completely different environment, not seeing each other. And so you see each other in the morning, in the evenings, and weekends. Uh, and so there is a lot of time apart. Was that life for you guys before?

Even— yeah, even more so. I traveled every week. So I, I did— I was doing sales and I traveled on a plane every week. I was gone 2 days a week. So my time to be there and be dad was very limited, and I would leave early in the morning. Now, when I was home, I actually got to work from home, um, a bit, and so there was a little bit of that flexibility of popping in during the day, but there was a ton of me being gone. So being dad happened maybe a couple hours a day, maybe, and even a couple of those days were missed. So now being dad is all the time. And it—

and being a husband, it's awesome.

Exactly. Yeah. And so being there, it— because like, it was like I was, I was gone, I would come home, play with the kids till they fall asleep, and then my wife and I have like an hour or two to sync on everything we missed. The communication just couldn't happen because there was so much other like, just like checklist stuff to deal with. And then it just, it was not good. And so this, now that we were running our own business and we're traveling full-time in this tiny home, uh, it's a completely different dynamic. And, and we're so in sync, and like, we, we co-parent really well, and we work together really well, and it's, um, we deal with stuff better. We just— we— if, like I said, it forces the issue, you can't avoid it. And so our communication is, is off the charts awesome, and we, we've really enjoyed it.

Uh, what are your, uh, I guess, what are the biggest fights about now? And, you know, you're right on top of each other. So I guess they won't last long, it sounds like, because you guys have to resolve immediately.

No, if we're exhausted, it's like just picking up or cleaning up or deal with this kid's thing, or, uh, who's gonna jump up and deal with whatever that thing is at hand. Like, the kids get loud, very loud, very quickly. So the things that, that sounded kind of loud maybe outside playing in the backyard before are now just like right in the living room and in echoing. And like, so fights and yelling happen very, very quickly, but then like you said, they get resolved very, very quickly, um, because we're right there. So yeah, the biggest thing is just, you know, so-and-so took my thing or did that or, you know, shoved me, and okay, we got to deal with this right now. Uh, and then for my wife and I, it's just planning, or we're both exhausted, who's going to deal with the, the dishes, or this, or cleaning up that, or how can we like just get— who's putting the kids to bed tonight because I'm totally drained type of thing. But again, those don't— they don't— like, if there is like a, oh, I can't deal with this, it's, it's resolved that same day or that same night. There's no just letting it sit and fester and resentment and all that stuff. That, that just doesn't happen.

Yeah, which I assume is irritating in the beginning, but like now that you're experienced at it, it's probably almost nice.

Yeah, and, and I mean, for me in my unique situation, I was gone so much I actually didn't mind the adversity because I just was missing out on their lives completely before. So actually, I'm— it's, it's almost— it was one of those where I'm like, oh, this is hard, but this is— I'm now here. This is part of what I signed up for, is to be here, and I, I appreciate it.

So shift gears real quick. Because I meant to ask this about, uh, we're budgeting, I just forgot. Um, so in your budgets, do you— uh, this is what we always did, so I'm curious if somebody else does it. Uh, do you, and do those apps, uh, do they budget for like a profit at the end of the month? We actually kind of make sure like every single month we have a surplus, and that's just— that gets tucked away and we can do some either big purchases or investing, or we don't really know what we do with it, that we have a larger pile. Uh, but it's kind of like we ran it like a business. We have a profit and things are going to come up and we might have to use it or invest it, or, uh, it's just also nice to have it. It's kind of, in a sense, cushioning the emergency fund.

Yeah, I do what's called zero-based budgeting, which means every dollar already has a job. So even if there is a surplus, it's already assigned to go to savings or pay off debt or whatever else. Um, the— like this app I'm looking at, for example, though, it has a, a big huge green bar at the top that says to be budgeted, which is kind of like your surplus. It's like, okay, you've got this amount sitting here, you haven't assigned it anywhere, so it's still to be budgeted, still to be assigned. So you could keep that at whatever level you want, and maybe you have $1,000 that's sitting there, and as things come up, okay, let's, let's allocate it here. Boom, now we only have $800 to be budgeted. Right? But it's got this big huge— it's hard to see, but there's a huge green bar at the top here that gives you your sort of remaining balance. Like, here's what's available. So yeah, this app, the app that I use, You Need a Budget, does that. I'm assuming, uh, some of the other apps do that as well. Um, mint.com, for example, has like a bar at the top that says, okay, where are you at, where, how much is left. Um, but yeah, there is the, the app I use has that big green bar at the top.

But I mean, that's always been the excitement for me and Buzzing, is because it was always the— even, even like, we're just redoing our budget now. It's like, how do we get our expenses smaller? Even though we can afford to do more, how do we make them smaller? Because I wanted that number growing. I want that profit, in a sense, every month to be bigger and bigger and bigger, because it just, it gives more opportunity down the road.

That's a great way to do it, man, because what happens that I find is people when they just start getting on a budget, they haven't done it before, they create this ideal budget based on what they think they should be spending, but in reality they're spending way more and they never took an account for that. So then their budget fails and they feel awful about it, and then they just stop trying. But if you budget and give yourself that gap, that, that buffer or whatever, that, that, that goal, now it's almost gamified. You're like, okay, cool, how do we How do we win this game? How do we make it better? And so it's like a positive momentum thing psychologically. That is a fantastic way to not only hit the budget but get better and better at it instead of like, I want to get really aggressive. Oh man, we can't actually do this. Oh, screw it.

So it—

the way you're doing it is psychologically the best way to budget.

Well, then that's what motivates me. I mean, I, I really— maybe not everybody's motivated that way. I just have that, that, I don't know, that business mind where the profit is, is important because that is your future. Um, yeah, that's cool. That's good. Uh, Bias Everdead, this— you got a will in place?

I do. We actually— I was really bad about it and we didn't do it until we left, and then we ended up doing it. But we've got the last will and testament, including the healthcare provision and power of attorney and all that.

Good. Life insurance. Absolutely.

I've been covered forever since we had our first, um, kid. I should have done it right after we got the mortgage, but I didn't know any better back then. But yeah, we've got life insurance. I am— my wife's not covered yet, and I do want to get her coverage. And actually, I just wrote a whole comparison post on my site about the ones that you can get online with no medical, um, needed for a lot of people, and they're pretty freaking cheap. And so I think we're gonna pull a, uh, pull up where the nurse doesn't come and like take your blood and everything. Exactly. I mean, you got to answer a ton of questions to qualify, and, and not everybody will qualify for that. But in the, like, our age and condition, based on what I was looking at, because I researched every single one of these 8 companies that I reviewed, uh, pretty much for all of them we didn't have to have a medical, and they would cover you like almost same day, which was awesome.

I, I hate doing life insurance just because they always send that nurse to you and they poke you and prod you. And I don't mind ever— I just, I hate giving blood. I'm not afraid of needles. I just hate someone taking the thing that I worked hard to make. Like, I just feel like it shouldn't be done.

Yeah, I— dude, I, I'm— I am personally, I don't like needles. Like, I'm not like afraid of them, but like I get lightheaded and I'm just like, oh, I don't want to deal with this. Um, and so no, there's two companies on there. One is called Bestow Um, and the other one I think is called— what's the other one called? There's two. Anyway, it's on my site. You could go to the life insurance post under the saving money, you'll see it. Um, but they'll— and they'll cover you. They'll do a nice 20-year policy. You can get, say, like a, uh, half a mil. Some of them you can get up to a million without a medical exam, which is nuts. So I would definitely just go check out that and see what the options are, because then you could just get covered. Like, for us, we're on the road. Like, we don't know where the medical facilities are. We're not going to go to a hospital right now. Like Uh, we could actually just do it online sitting at home.

So they always come to you, or at least they should.

Oh, the ones that I've done, I, I had to go in for a— they sent me a slip and I went and took it into a testing facility and they just did it. But depend— I guess it depends on—

I've only done 2 policies my whole life. Well, when we first got married and then after we had, uh, after we started the business, at some point when we started to get a little more successful, we realized I didn't— I just didn't have enough. Yeah, but sometimes they had a nurse work on it. But we're also in a city, you know, where I guess that stuff is right. You know, Florida is filled with, uh, you know, an aging population. There's a lot of mobile nurses.

Yeah, we noticed every other billboard was a medical facility. So, yep.

Uh, how much life insurance should a dad have? Uh, or at least two questions. How much does the I Heart budgets guys say you should have, and how much do you actually have?

So there's a, there's a bunch of different ways to go about it. The rule of thumb is 10 to 15 times your annual salary, but I'm like, I don't care how much you earn, I care how much you spend and what you need. So I'm like, can you pay off the mortgage and be set for at least another 10 years? That's kind of my baseline. Um, I have a million-dollar policy. Um, We had it when we had a house. We— it's probably— it probably is more than we even need now because we don't have this huge mortgage and all these debts and everything else. Um, but yeah, I say at least—

and they probably want to get rid of the— they probably don't want to be in the camper without Dad for the next 10 years.

So then they want to go get that house. Yeah, yeah, yeah. So a million dollar policy allows them to get a house and have, you know, I think 10 years at least, um, to settle in. So I, I don't mind the 10x the salary thing, but if like you're living paycheck paycheck, you might need a little more because your salary isn't dictating what your family actually needs if you go, um, type of thing. So I like, I like the, like, if you're in your 20s or 30s, a million dollar policy. If you've got kids, if you've got a business, you might want to obviously want to up that. And if you've got other liabilities, if you've got multiple mortgages, just kind of take into account what's going on and what your plan of action would be. Um, so like, hey, how about no mortgage payment and just live on the money for 10 years is a good rule of thumb type of thing.

Uh, and is that what they should— so is that how you feel, uh, life insurance should be? Uh, sorry, so Jacob Wade dies, he gets hit by a bus at the campground. Yeah, uh, mom, mom gets a million dollar check. You have, you have the kids. Uh, what does she do with that?

She, she buys a house outright and she invests the rest in low-cost index funds at a balanced rate, probably 50% bond index funds, 50% regular. And then she draws, draws on that as needed. Um, if possible, it'd be cool to just draw the 4% because then you could stick to the 4% rule, but I would need a larger policy for her to live forever on 4% of whatever's left after that house is bought. But yeah, I mean, just invest it. I've actually written this all out, but basically just throw it in index funds, um, and just draw from that as needed.

And then if she's trying to live off the interest, um, but yeah, live off the interest and draw a little bit.

If it draws down, it draws down. Um, and then, I mean, at a minimum, if she had to draw down and it earned nothing for some reason, at least make it 10 years while she sort of figures out what's going on and what's next. Ideally, she could go even longer than that.

So bad, bad, bad, bad case scenario, uh, you got hit by, uh, a waffle iron and died. She gets a check. This was all February 1st of 2020.

Mm-hmm.

She put it into index funds. Let's say she plugged all $1 million into index funds, and then she just watched it go down to $550,000 next month 'cause COVID hit.

Yeah.

What advice are we telling Mom to do?

Yeah, at that point, it's like draw as little as you can. Um, at that point she wouldn't have bought a house, but say she already bought the house at that point, just draw as little down as you can and look for— like, there's tons of online job options and, and things possible. But the, the 4% rule is based on a 50/50 split portfolio and is based on worst-case scenarios. So it's actually based on this type of thing happening. So you could still— if she could draw only 4% of that remaining, let's say, $750K Um, math in my head's not working right now, but basically say she could draw $30,000 a year. So, so she's just under $3,000 a month. She could draw on that and then find a way to make up the rest. But with no mortgage, if she could live on $3,000 a month with the kids, like, just, just do that until things go back up, and then you can notch it back up to, to 4% or, or more if needed, because earnings are going to go back up. So yeah, I would still say draw— try to live on 3 to 4% of that if you can. If you can't, just draw what you need, because long term, the stuff that stays invested is going to grow and start to, you know, come back out of this thing, right? If you drop 30% and you, you draw down some, you still have this huge chunk that is going to grow 30% or more over the next 5, 10 years. Um, yeah.

Now, in that situation, do you recommend they, they not invest like an X amount of cash and then just pull annually from that investment, or is it kind of like trickle thing and plug it all in.

Yeah, I mean, there's a bunch of allocation things. I haven't— I, I'll be honest, I haven't like mapped this entire scenario out exactly, um, but that 12 months in cash is always a great thing to have, um, and then, then just kind of use that as your emergency fund, and then you draw— you do a monthly draw, um, but I'll be on—

like I said, I haven't mapped the exact like drawdown side of, you know, you're in your 70s and 80s and and now we're living off this thing. So we want to— it's different against downturns and things like that because, um, it goes down.

So, yeah, I mean, and the 50/50 split between, uh, index funds and bond index funds, uh, is still supposed to survive and grow using that 4% rule in the Trinity Study and all those things based on investing. So technically Yeah, it would feel weird pulling out money even though things are down, but you're pulling out a small monthly amount and you're almost dollar cost average pulling it out in a way. And that remaining $726,000 that stays there as things start to go back up is going to grow at a rapid rate as things go back up, even if it takes a couple of years. So you're still in a lot of those scenarios coming out ahead. So I wouldn't— I would say you just take what you need, like don't worry about 'Oh, I'm drawing a little bit too much here.' Obviously you're grieving, like, just take what you need. But if you're mortgage-free and you're living, and obviously like family would come around and support— be plugged into community, church, family, friends to support you during that time. Um, but yeah, don't worry about pulling too much out.

Yeah, and honestly, I mean, uh, you have an entire website around it your wife can read. I'm sure you guys talk about this stuff all the time, but, um, I, I feel like it needs to be said anyway. Widower or widow or widower. Um, hey, hopefully we had that conversation prior so everyone who's still alive can have that conversation of, hey, what would have— let's talk real scenarios. Um, so it's at least it's been discussed a couple times. Um, but yeah, that first year, I mean, every holiday, every, you know, every season, you know, this is our first spring without that, this is our first Christmas without that. It's just gonna be so emotional. No big decisions because they won't be good decisions.

Like, high probability that buying yourself out of grief— yeah. And it's, again, I've never been in that specific position. My dad did pass when I was 4, so my mom has been in that situation. And so I can't imagine dealing with that. Like, that is a difficult, difficult thing to do. So you're right, just like, don't— like, just be surrounded by the people that love you and can— you can lean on. And like you said, no big decisions is a great rule some there.

Yeah. All right, one last question, then we'll let you run. Um, how do you budget for this? This is my wife's computer. Can we see that? Is that a wife's computer cord? This is her power cord. Yeah, and it snapped off because we found the 3-year-old had ripped the cord out, turned the laptop upside down so it made a tent, and stood on it.

Oh well, yeah, I'd like to say that was the first time.

But this was already— if you can read it— it was already a replacement AC cord because they've already ripped it out before. Just not taking care of mom and dad's stuff. We need to have like— we need to get— we need to start focusing on his parents now. It's just like, treat other stuff with more respect and better because they're starting to, you know. So I struggle with part of that, just being boys being boys, because I was a crazy kid as well. But also it's coming back around. So, um, so how do you budget for those unexpected things? You know what parents have to deal with. Your kid— we just had in our back room, we, uh, used to be a screen room. We put some nice windows and everything in there and closed it in. Um, they're like $2,000, are huge, so it lets in lots of light, lots of air. And someone pegged a rock at the daggum things. We have a crack running from the top corner all the way to the bottom corner. Jeez, you know, look, you know, right? Take better care of mom and dad's stuff. But so a lot of unexpected things come up when you're— I feel like when you're a parent, because kids, they do break stuff, they do destroy things, they just, you know, they, they break their arm. There's lots of, uh, things adults don't do that kids will that are— don't make sense and are just going to be costly. So how do you prepare for that? Budget-wise?

Yeah, totally. That's, um, there's a couple of ways. One is there's a lot— you can literally just create a fund and just call it, uh, Stuff Just Broke or whatever. Like, call it whatever you want and just stock away, you know, $50 a month in that thing knowing that something's coming. Or you can use that buffer method that you were mentioning. So you've got a $500 buffer because life— you can call it the Life Happens Fund and just, just have that money set aside. Just plan for the unexpected to happen. Now, things like Christmas, birthdays, vacations, car repairs, you know those will happen. Plan for them, save for them ahead of time in those savings buckets. But for the unexpected OMG moments, just have a fund. Just call it the Life Happens Fund and just start socking away $50 a month into that thing so when it happens, the money's there.

Uh, would you recommend, like, your most reckless child— is there a market for them? Could you just sell them to to pay back all the things they've broken.

I will tell you, in Europe they actually have insurance that covers things. If, if kids go and break other people's stuff, you can file a claim for a DVD and get $20 from the other person's insurance company. I personally have a million-dollar umbrella policy because I'm so scared of our kids throwing a rock at a Bentley. So I have an umbrella policy that covers the possible destruction of other people's major property. What? Yeah, I just— I'm paranoid. So when we had a house, I'm like, if somebody slips and falls on my steps, if somebody X, Y, and Z and like gets injured, and I get sick, like, I need an umbrella policy to protect my assets. And so I've just kept that policy as we hit the road because who knows what my kids might accidentally do. Hey, we're hiking somewhere and pushed a rock off and like crushed somebody's leg. Like, I just— I want to be protected, so I'm a little bit over-insured.

Um, but I always thought umbrella policies would only stack on top of existing policies. They were coverage of other policies.

It's stacked on top of my— it's through my, my— I thought, yeah, so it is, it is attached to my, um, auto insurance. Now I'll tell you, I mentioned this to them. I said usually it's attached to my homeowners, and they just left it and said it was cool. So It's, it's through GEICO attached to my, my policy.

So cool.

Yeah, I, I sleep a little better at night knowing my kids can throw rocks at Bentleys.

I— well, I don't know, you just hang around more Bentleys than I do. We've got nothing but 1987 Toyota pickup trucks, so I'm not too worried.

Uh, so yeah, all right, cool.

Well, I appreciate you having on. Tell people where they can, uh, where they can find you and give them a little, uh, I guess, wrap up on I Heart Budgets.

Yeah, totally. Easiest way is just go to iheartbudgets.net. You can find all the, the money resources there. If you want to find us on social, Instagram, Twitter, Facebook, just @iheartbudgets, you'll find us. And, um, and hit us up, shoot us a note, let us know you're there, and we'll, uh, we'll hit you back.

Awesome, cool. Well, I appreciate it. And that wraps episode 7 of 100% Dad Podcast interviews with dads. That was Jacob Wade with I Heart Budgets, the Budget Master. Check out his stuff, iheartbudgets.net. And we're going to go out on his new stimulus check rap song he has on YouTube if you're looking for a a little lighthearted humor, go ahead and check that out as well.