Single Mom Discussing Business Exit & Stepping Into Purpose Driven Work

Yeah, I think it's, it's a combination of burnout, combination of frustration, combination of I invested money into the business at the end of 2024 for the sole purpose of improving the valuation of the company.

Right.

Well, that and me prepping myself for the 10 year. I think that's what's stressing me out for that, for the exit.

Right.

So I'm planning my exit and I'm doing so many things where I'm like, okay, I need to make more money. So obviously I didn't do anything with yourself in the month of February because I wanted to figure out what I'm doing. I can't find other work. I've been applying, so that hasn't been working. So now I'm in the pace in the place where I'm like, okay, do I then start doing something else on the side so then I can make more money? So then I keep everything afloat. And I think what's bugging me is I'm going to be seven years in June. I'm burning out from the work that I'm doing because I've been doing it for so long and because I haven't had a break.

Yeah.

I'm getting bored, if that makes sense.

Yeah.

So three year is like, what is Janiece doing in the next three to five years? So if I were to sell the business in 10 year, I don't have a backup plan in 10 years. If I continue to do what I'm doing, hence why I'm like trying to pay off all this debt so then I can start working something else. Now, whether that's working for somebody else. I briefly mentioned it to you where accounting seems to be my thing. So maybe work in the field of accounting. I even looked into, I put it under the notes. I even looked into maybe getting a master's in accounting. And then I'm like, but that costs money. Um, because I don't know if I can continue to do the entrepreneurship route for the next 10, 15 years. Um, so I'm, I'm, I understand exactly what you're saying that I think it more through. Yeah. And I knew that I was going to get, you know, slammed today, which I'm, I'm fine with. I want you to do that. That's why you're my coach. I want you to, you know, to, to, to talk to me that way and be raw. Because my focus right now is I gotta have a plan B. And this is, this is a, when you're saying trauma, yes, it's a Trauma of always surviving. Yeah, I gotta get out of that surviving mode because I'm a single mom, because I don't. I'm not married again, you know, I don't have a spouse. So me, for me, it's like I'm the only one who's gonna keep this house together. So I have to figure it out today what I'm gonna do when three years come. So that's why paying off the debt easily, quicker will get me to that goal, while at the same time I'm looking for work, while at the same time I'm working in my business. But the reality is this is where entrepreneurs, this is the role we hit. We're bored with what we're doing, we're getting annoyed and we're burnt out. And it definitely hit me the last four months.

Yeah. And when you're not leaning in on your support, then that also, you know, add to the stress even more. So I think, you know, a. That we literally like everything I just said. This whole strategy is only going to work if we figure out who's in control and then who are we going to partner with to be held accountable. So. So that we make the best decisions for ourselves by processing each of these financial moves. Because when we don't run the math, we don't look at the consequences of the decision, the full effect of it over a period of time, we come to realize, oh my goodness, that cost me a lot of money. That's. Wow, that's really expensive. That doesn't make any sense at all. Versus I just pull from this location, wipe that out and just pay myself back. Right. So the amount that I pay myself back compounds tax free, no cost. So I think that's what we need to really, really figure out. Prayer. And then we need to get on a consistent path of communication. And then ultimately we need to get clear if we're going to move forward with that surrender and if it's possible to reverse it. Would you be willing to reverse that and solve for a better path?

Yeah, I mean, I guess, considering. But if I do that, do I not put any more money into my investment? Like, do I pause that? That's, that's where I'm getting all wrapped up.

No, because we already, we're already accounting for that in the, in the expenses. So.

Yep, I don't put anything into my Roth because so the 1200 that I get is only for my Roth IR and my interest. I then take money out of the business and put that into my Roth 401K.

Right.

So I'm doing three.

Yeah. And so it's accounted for, if I'm not mistaken, in all of this that we laid out. So it's not like as of right now, you are doing it, you're, you're investing right. With the money that you generate. So instead of a surrender cash out, looking at the amount of cash value that's in there, when you do a loan, chances are you're going to have more money to leverage than a, than a cash out withdrawal. So if we just did a loan out of the policy, it's one option. Or if we did a loan out of the 401k or a withdrawal out of the Roth, penalty free, either way you look at it, you're going to have more to work with. And then you, you solve for the immediate thing and then couple that with everything we just discussed today where it's like, can we get on the same page that making extra payments towards multiple debts does not make financial sense? Right. Can we get on the same page with that? Are we in alignment on that part?

Yes, I'm just talking to myself to be patient.

Yeah. So, so by redirecting all those extra payments, we actually solve for what you want, pay off debt really fast and that solves for the long term path of being in a better position three, four, five years from now. So we actually get there faster by not making extra payments on the mortgage as well. So by recovering that money, sticking it in your business line of credit, you now have all this space and all this extra cash flow that, that you free up and gives you permission to, whether it's Max fund the policy and Max fund your Roth and hsa. Those, those three different accounts put you in a very, very healthy position to get those things, you know, accomplished. So I think we've got multiple levers that, that we can pull on. So let me reach out to my team and see if we can reverse that, that policy surrender option and then come up with a new plan to eliminate those two debts. And then I think you're ultimately going to be putting yourself on a much better path. Sound good?

Okay.

Awesome, awesome.

But how do I, how do I borrow from my Roth? Is that like, do you tell. I don't know how that works.

Yeah. So either the Roth is self directed that you have. Correct. If I'm not mistaken, your Roth 401k is under Charles Schwab. Right. So all the money that's, all the money that's growing in there is growing tax free. So whether it's for both. So Whether it's Charles or Vanguard, we can contact them and ask them how can I access my money or some of that money tax free, use it now, penalty free. And we can either do a loan, which we would have to figure out what their loan loan terms are, or you do a withdrawal which allows you to access your principal dollars paid in tax free to pay off the debt, and then you're simply putting it back. Right. With the cash flow gain that you just got to get your Roth max funded for the year. Just going to be one of those two options. And then the other one is keep the policy and just borrow against it. And the interest that you pay back to yourself shows up in cash value the longer you keep the policy in place.

But if I, if I go, okay, but if I go back to, to, to the loan to the, the whole life don't. Isn't my payment due now?

So we can, we'll look at that as well in terms of what the anniversary date is on that. And we can change it to monthly payments. Right. And just make a monthly payment just to keep the policy in force. You can always go back up in funding. We can borrow against the policy and use that to not only pay down the debts you're trying to pay down, but also cover some payments for a period of time. Because I think you've had the policy now for over two years, if I'm not mistaken.

No, I think it's just a year. It's going to be a year in May.

I think this would be two years now. Like you'd be approaching year two funding.

Oh, yes. In whole life. Yes. Terms. Yes.

And you've paid into it. How much. Do you know how much you paid in.

You mean what the value was?

No. How much money did you pay into the policy? Do you know?

I think every quarter I was paying 37, 100. Let me go back.

Yeah.

I think November was the last one.

I think I have it set up.

Every quarter recorder, I want to say 36 or 3,700.

Yeah. And the structure was paying in 15,000 a year, I think was like the max.

Yeah, that's right.

Right. So when you break that into quarterly payments, you said 3,700?

I think so, yeah. Sounds about right.

Yeah. So times four, that's almost 15,000 a year. So the requirement on that policy is only 3,750. Right. Or about 4,000. So if we switched it, you were okay, I don't have $3,700. Right. So you're like, oh my God. But what you have to remember is you're not required to pay that in. Right. We could have just simply went to as little as a $400 a month contribution into the policy. So we had options there. So when you look at. When you look at 3,700, and I think you've made four payments of that, and when you surrender the policy, how much money were they going to give you back?

I think. I think that balance was like, 76.

Okay.

75, 7,600, something like that.

Yeah. So if you've made four payments of 37, you paid in $14,800, or even if it was three, you've paid anywhere from $14,800 to $11,100. If you surrender it, you only get 76. Right. And you lose 3,400, which could have been money that could have funded your Roth. Now, I don't know how you're okay with losing this.

I don't think I was thinking about it that way. I was just looking at it like, I can get rid of two debts with that. That's. That. That was just the way I was thinking.

Yeah. Yeah. So I'm glad we're doing this. So you can see. Whoa, whoa, whoa. You're about to lose this and the death benefit, which. Yeah, the whammy, which is a legacy play. So you lose the legacy play, you lose this, which could have improved your overall investments later. So that ends up being tens of thousands of dollars in potential growth inside the policy just by holding on to it. Right. So let's. Let's see if we can reverse that. Let's. Let's look into that. I don't know if it's.

I'm gonna call tomorrow Vanguard and find out about the loan.

Yeah, just get the loan, education, and then how much you can withdraw with penalty free. Because if you withdrew out of your Roth 7,600 principal, let's just say you're earning, what, 7% right now in there? What do you think, like 12, I think.

No, it's like 12, I think.

Not the whole thing. Right. It's like an average performance. So I'll give you that. Say 12%. 7,600 times 12%. $912 in earnings. Right. So if you withdrew 76, your opportunity cost is 912. That's for one whole year. 3,400 in losses divided by 912. It would take 3.72 years to realize the loss in the Roth versus an instant loss now of 34, which 34 is actually multiplied over three plus years. So the numbers multiple thousands of dollars more than 3,400. Whereas over here, you only lose $912 at most. Mind you, you can put that right back. If you did a loan, if you do a withdrawal, you can't put it back because you're limited to how much you can pay in, into a Roth IRA every year. Right? So you did a loan. 76 at, I don't know, 7, 8%. 76 times 8% is 608. At 8%. Guess what? When you pay that 608, you're paying yourself back. You pay yourself back the interest, that money goes back into your Roth. So did you lose money? Did you lose money? No, you didn't lose anything. Because what was the, what was the gain over here? 15.49. You saved. Game changer, when you look at it that way. Yeah, let's call them. Let's figure that out. Reach out to my team, see if there's anything that we can do to save that policy. I think.

Okay, I think we're good.

I think that's everything.