You Winning Life Podcast Ep. 105- Money Grit with Karen McCall

Hey everybody, welcome back. Today's guest is the founder of the Financial Recovery Institute. She's also the creator of the money management program Money Grit. She's an author. She has created an incredible coaching program. She has gone from dodging the IRS back in the day to helping thousands of people get out of debt and also build a life and business they love. Today we get to hang out with Karen McCall. And if you have been hanging out with us for a while, you know that, uh, another one of our old good friends, uh, Jerry Detweiler, has been a guest twice on this show and who already brought us some incredible information about PPP and EIDL and helping us through the financials of this pandemic. So I know, Karen, I'm so excited to have you because we're gonna just tackle some other things that are going on in the world when it comes to finances. So welcome.

Thank you, Jason.

It's just really lovely to be here. Thanks for having me.

My pleasure. So, so this running away from IRS calls, I mean, I know like right now every single other call I get on my phone is a telemarketer. And thank goodness our phones now tell us that it says telemarketer or scam, but 30 years ago, right? Or there was no call. We didn't have caller ID. We didn't have any of that stuff, right? We had a filter and sort through everything. So what was going on for you then that you were dodging all of these calls?

Well, I had gone through a divorce and I was alone for the very first time of my life, in my life. My kids were in college and, um, I got this nice big sum of money and I just, I just went through it, you know, just no thought, just kind of in a total money coma. And, um, but if you would've seen me at that time, you would've thought, wow, this woman is really a success. I was working for the second largest computer company in the world. I had a corner office in this big, beautiful round building in San Francisco overlooking the bridge and wore beautiful suits and carried a nice Italian briefcase. And you would've thought, wow, you know, she's an amazing success. But what you wouldn't have known was my dirty little secret. Home on top of my refrigerator, I had this big round deep teak bowl and all my mail just went in there. And one day I came home from work and there was an eviction notice on my apartment door in San Francisco. So I thought, hmm, time to do something about this. So what I did is I was dating a guy at the time who kept bringing me these big binders of cassette tapes. Are you familiar with those? Mm-hmm. Self-help. And so I, this particular night, I just opened a bottle of wine and I put on Dr. Robert Schuller's tapes of possibility thinking and decided to, and it was an all-night process. I have lots and lots of things and lots of duplicates. And I looked at everything and I realized I was really in trouble. So I went to the Yellow Pages. We didn't have Google then. 'cause this is back in the early '80s. So I looked at in the Yellow Pages and what they had, they had financial planners and they had budget counselors. So obviously the budget counselors, right? So I tried the budget counselors twice and their approach was, give us your money, we'll pay your bills, we'll give you an allowance. And that would last, you know, less than 2 months. I mean, it was just, it never worked. And so I thought, you know what, this is really serious. I discovered a 12-step program that dealt with money and I thought, wow, this is amazing. You know, someplace to really talk about it. And, uh, and they had some tools that were really great tools, but I knew that I was a serious case and I needed more than just that. So I also went to therapy. Now you're a therapist, right? Yeah. Well, between therapy and that, I realized, um, you know, it was helping, but I even, I needed more. And, uh, so that's kind of how the whole thing started. And as I started creating my own recovery path, um, taking what I was learning in therapy and taking what I was learning in the 12-step program program, I realized there were probably a lot of people like me kind of caught in that gap between the financial people and the budget people. And so, um, 1988, I launched my business, and I had my very first client February 2nd, 1989. So just this, this is my anniversary month. And, you know, the rest is history. I mean, it just went from there. It was just an amazing process.

So it's so interesting that you're saying, like, as you looked at that stack of mail sitting on your counter— and I can reflect back to, I was living in New York, I had to be 21 '21 or so, 2021. And I remember my student loan receipts would come in with the book back in the day, right? This is before everything was digital and electronic. And I'm like, eh, whatever. And I remember just tossing it like, and I might have thrown it away, I might have thrown it in a pile of stuff. And for some reason at that point, my student loans weren't on hold, even though I was still in school and I was expecting a payment. And so I'm sure there was like a $20, a $50, whatever it was, payment a month that could have been nothing that I know later on accrued into whatever interest that accrued. And I know so many people have that, what I would probably deem as an anxious avoidant approach to when conflict or issues come up. And one of the most common occurrences is financial strategy, financial success, financial safety, being understanding that I don't know what I need to know in order to feel confident around it. What was going on for you as far as that money mindset in your mind from that timeframe that maybe contributed to that process?

Well, like I said, I had never learned anything about money. So there was certainly the part of just lacking skills and understanding, but it went a lot deeper for me. I not had one of those good childhoods, you know, I was given up by my mother and kind of tossed around a lot between family members and foster homes. And then I was really sick as a kid. So, um, had polio during the polio epidemic, had kidney disease and lost a kidney. I was in the hospital for years. And I just think I just grew up completely kind of empty, you know, and feeling that my needs were important or taking care of myself was important. And so I really functioned well while I was married and had children to take care of. On my own, it was like, okay, you know. And so one of the things that I developed in my process is that one of the things I've learned is it's really important for people when they start looking at their relationship with money that they look at, are they spending their money on their wants or their needs? And a lot of times there's such misunderstanding about, um, you know, how, how things can meet our needs. There's so much confusion about that. So, so that was one of the things I built into the process. You know, I needed love and connection. I needed, um, a lot more than what I was spending money attempting to fill my needs.

Yeah, that makes so much sense. And I always challenge people to think about like, if you weren't your job, right? And you no longer were able to define yourself as what you do. If you were no longer able to define yourself by the relationship you were in or the role that you play, in society, who and what would you be, and how would you live your life proactively and healthily without having those titles define you that are many times just circumstantial? And God forbid, like, you know, a divorce or a death or a child moves out, right? Then that role shifts and changes, and therefore your identity and relationship to yourself and to that experience changes. And I do see it as far as money as a consistent theme, because it's not just what— it's your relationship to that thing, but also how do you get access to it, how you stay connected to it, how do you relate to it. And a lot of times, especially with like it could be, well, substituting, you know, connection and time is let me solve this problem for you. Let me pay for this bill for you. Let me have you still— and I had this recently with one of my clients where it was the idea of like, at what point do your children come off the payroll? And are they doing enough to be a justified employee for you to cover this, especially when they're treated as a young adult and they're treating you like crap or they're disrespecting you or causing you to have to work harder in exchange for your belief of what you need to have as a relationship? With them.

Well, and you know, that was one of the things that I discovered too. You know, I thought that my practice would be primarily people like me. However, right from the get-go, I started getting referrals from therapists whose clients had millions or had inherited millions. And it wasn't that they had earned it. In most cases, it was that they had inherited it and they had the same problems that I did. You know, they were living way beyond their means. And they did not understand money and money was not a tool, but more of a weapon in their lives. And so that was a big lesson right from the get-go is it wasn't, you know, sometimes people wouldn't end up with debt if they had enough people enabling their behavior, but they could go to the family for another million, you know, to bail them out. So what I realized is it was, you know, a far-reaching problem and it encompassed a lot more people than just that vision that I had in the beginning of this little gap.

Yeah.

What do you think is the philosophy? Because I know it's all socioeconomic backgrounds, it's all cultural backgrounds. Every— from my experience of being a therapist since 2005 when I graduated, people have certain rules and certain laws that are family, right? And therefore, for family, we'll do this, for family, we'll tolerate that, for my business, I'll do this, for my business, I'll tolerate that. I don't think it's like a— I don't think it's a one-size-fits-all, like this specific culture at this age bracket with this demographic with this financial, right, tax bracket is specific to this.

So are you—

have you found that over the years that there's not a one-size-fits-all? Like you were just saying, like you you didn't expect these millionaire inheritances, but have you seen maybe that this is just a human condition, as you know, that, that can fall along every single type of background and every single type of financial status?

The process I created, I used in every different scenario. And, and, and when I train money coaches, it's the same thing. I train them in this process. Now, for one person, it may take, you know, longer period than someone else, but the process is the same where we really start. One of the things, first things I have them do is write a money autobiography. So they can look at how they— what are the family rules? What are some of the family messages? They may not have been said out loud, but they may as well have been posted on the refrigerator because they were so loud and clear. So whether they were, you know, you better not be successful because you can't pass dad or me, right? Or whether you better be the one that saves the family. All kinds of messages, but the process worked the same for almost everyone.

And do you see it as far as like certain age brackets, that there might be a developmental age range for certain things to more likely show up? Like, is there for young adults or young professionals or new professionals, right, post-college, have you found that there's some type of theme that might be more, uh, attributed to them of what they're going through at that time versus someone who has the parents who might be like, they might be in their 30s, 40s, and 50s and might be concerned about an aging parent and the, and the rules and the beliefs start to shift? Or is it kind of you haven't seen anything that's consistent regardless of what age range, they're still the same consistent themes?

Well, it's very interesting in that very few young people out of college in their 20s would come to a money coach for help. It was almost always people who were older, some in their 30s, 40s, but a lot of people as they get older. And sometimes what they do is they think, "Okay, my kids are now getting ready to go to college." They want to come in and say, "Teach my kids about money." But mostly it was families, couples that I would see and not not so much for young people. And I think one of the reasons for that is they're just not in enough pain yet. You know, they haven't really hit what is their pain point where they say, I really, really need help. However, one story that I heard once, and we were talking earlier about Jerry Detweiler, you know, in one of the speaking gigs I was on once, I remember arriving a day early, being in the hotel, turning on the television, and there was this panel of mothers who had lost their children to suicide.

And there was a story of, um, this woman said, when we found my daughter, when her roommate found her, she had all of these credit cards out on the bed and with an apology note, you know, she had run up all this credit card debt, was feeling like she couldn't do anything about it. And so she committed suicide. So, I mean, we certainly, uh, you don't hear that a lot for people really young, but, um, but that was really daunting because, you know, on college campuses, The people pushing credit cards are like drug pushers.

Sure.

Yeah.

And you just saw this past year with Robinhood, with the app, with the trading app where that kid committed suicide. And I mean, it's, you know, there's, there's two sides to that story, right? One is, you know, how do you not know that this is real money that you're playing with, especially when you're pulling it from a bank account or that you're going to be owed this money? But yeah, two is like, what's the— what is so— what is the social responsibility based on circumstances? But that's the market, right? That's the market these days.

Well, and that's where helping people really get conscious and connected to their money is so important. And that, that's one of the things that I always felt— I talked about money in therapy, which was great. And I learned a lot about how I was acting out, but it wasn't until I really got strong and connected, conscious and connected to my money, to the numbers, not just as data, but as a process to really learn how I made decisions, for example. You know, one of the things that people can do with credit cards is you split off consequences with your spending. It's like, you know, what are our two motivators, right? Pain and pleasure, right? And so pleasure buying something, and then the pain of paying for it. Use credit cards, you know, out of sight, out of mind. So a lot of the process is helping people get conscious and connected to their numbers to see what the numbers tell them.

Yeah. One of my new habits over the last year or two has been whenever I use my card, especially for my business, I immediately— whatever that money that is that's charged to the card, I immediately set the payment up for that number amount because I know, especially now that I'm home, right? And but even if it was like an Amazon thing or whatever, right? $30, $50, $70, whatever it may be, I immediately set up an automatic payment for that amount of number coming from— because, right, I get the points, which will be great. I get the benefits of the protection of that product through the credit card. But it takes another— and even if I did it once a week, which I'm now doing, I'm sitting down for a half hour with all my financial stuff. Uh, and I use Mint, which I love, and I've set up years ago. And now, you know, when people are wanting to get really creative with that, it's very daunting to put all these things in one place and to make sure everything's going to the right place. But I've set it up where now it literally takes me 3 minutes a week to go through my financials and then maybe another 5 to see what needs to get paid and set up those payments if it's not just gonna be automatically pulling. But I think there's systems that we're, we're looking at things from the way of chaos. And complexity versus simplicity. And probably my guess is that if we had a pattern, if we had a system, if someone was sitting with someone like you, asking the questions, what's your belief about, what's your story about, what's your narrative, what's the family's belief about, this will unpackage so many different issues.

Well, first of all, let me say that is a fabulous thing to do, to set up the payment, because what you're doing is you're not spending money you don't have, right?

You're doing it for the convenience and for the points and so on. But let me say something about men. So For Mint, somebody like you who sounds like you've got a pretty good relationship with money, good behaviors, it's fine, but it's all rearview mirror. And for people who have problems with money, a program like Mint doesn't work as a recovery tool. And I would have never gone into the software business if Quicken or Mint or something like that would have worked. And so do you want to hear about it? Do you want to hear about it?

Please, yeah.

So as I said, when people will start working with a money coach, they definitely work on their emotions. And a lot of times if they're in therapy, I'll say, hey, you know, see what your therapist would think about reading your money autobiography so that they're— and a lot of referrals came from therapists because they knew that we'd be working on the numbers and they could be working on the emotions. So one of the first things we do is we create categories for every area of their life where they spend money and put a lot of thought into it. And with each category, you're asking the question, how do you feel about this part of your life? How do you feel about your home? How do you feel about your food? How do you feel about your clothes? How do you feel about your entertainment? You know, your social context. And so you're kind of getting the story as they're creating their categories. And at the same time, we create a wants and needs list. So if people, let's say they're in a home and they say, oh, cleaning person, I wish I had that. Single mom works 5 days a week. On the weekend, wants to go to the kids' games before, before COVID right? Wants to go to the games, but they've got to clean and shop and cook. And so, okay, that goes on the needs list. We start helping people identify— or I'm embarrassed, I don't have people over my home because the cat shredded the couch and all this deferred maintenance. So you start recognizing where the deprivation is, where the incompletions are, where people are not taking care of themselves. And then we do a spending plan. And now we've got this list, needs and wants. And in the beginning, there probably isn't money to really tend to a lot of things on that list. But as people start seeing where they spend their money and that they're spending on everything but their needs and what they really think they want. It's more the impulse spending tracking against a plan and not having it be rearview mirror. Now they have information that we can work with. So let's say someone says, you know, one of the things I really need to do, I need to get my car fixed. I really need to get my car fixed. You know, I haven't had it— haven't had my brakes checked. I haven't had the oil changed. You know, all this maintenance. They put it in their spending plan, but they don't do it, but they do other things instead. Now we can explore the reasons that, you know, what changed where they abandoned what they said. Because if we have this beautiful spending plan that we show will work, they have enough money, we've made adjustments to make it come out, and now it looks like a different person implemented that plan, then we can explore. Did, did you just not plan enough or plan too much because you've never planned before, you're guesstimating? Did something come up that you could not have anticipated? When John and I were in Portugal in March, we did not know we'd have to buy tickets to come right back to United States, right? I mean, things do come up, right? And then the third thing is, I saw it, I wanted it, to heck with my spending plan. So it's very— it's needs-based but category-driven in a way. So now people are going, yeah, look at that, I didn't do this, but I did that. So now they're starting to connect consequences to their behaviors so they can learn to be that type of thinker like you described. I'm not spending money on something I, I don't need or I don't have the money for. Um, and, and so we do that. And then the other thing is really educating people to get in touch with, you know, how every financial program, everybody you talk about, they talk about an emergency fund. You know, Jason, in reality, there are very few emergencies. I mean, there are, right? The fires this year, California, Oregon, medical, business. Austin, Texas, you know, last week in the storm, certainly things like that happen.. But most people think, oh, my car, my old car needed repair, an emergency. No, you can plan for that if you have an old car. So it's helping people become— and this is what almost everyone describes, and it was always so exciting to hear— I feel like I'm becoming a grownup with money, you know, because they're learning how to make decisions, right? They're learning how to start identifying their needs, and then they're learning and discovering how they sabotage what they say they're going to do to start taking care of themselves. The other thing that people would be surprised about was this wasn't a quick fix. You know, people would stay with, with me when I was working with people and with the coaches, 3, 5, 10 years. But in that period of time, they're not seeing them every week. Now it's maybe 3 times a year or twice a year. But what, what I learned is if people come in because they want to get out of debt and learn how to save, they've never learned how to do those 2 things. Okay, get to that point. Okay. You're, you're finished, right? And they would leave and they'd come back a year later and they would be back in the same situation. So we realized we needed to extend the process so that people could tolerate being out of debt. And when you wanted to know some of the philosophy, you know, you've heard the saying, you know, if you think you will, or if you think you can't, you know, you'll be successful. So I created a program called Saving Your Way Out of Debt, where we really explore not only a person's relationship to credit cards, but the relationship to savings. And that, that is the key to ever being able to get out of debt and stay out of debt. Um, so it's, um, you know, it's just been a wonderful process and, and people stay for a long time, but their life becomes way more expansive over time. You know, they're starting to reach some of their bigger goals that feel completely out of reach when they're mired in debt. You know, there's, there's no—

yeah.

And I see it as developmental stages, right? I see that as developmental stages of growth and awareness around these things, like you were explaining. And I'm wondering, you know, I see this where, especially when there's so much pressure today about investing, whether, whether it's in the market, whether it's in real estate, whether it's in cryptocurrency, whatever's going on that it's like, well, you need to be doing this or you're behind the ball, even if you don't have money. But if you do have money and if you have something to— you might, you should put it in the market because the market's going to make you something or cryptocurrency, or you should invest in real estate. But yet they may not have that financial stability. And there's this like, cultural, societal guilt, right? The FOMO, the fear of missing out. And it's really, really interestingly tricky to see what's going on and what the pressure is. And I saw it the other day and it really smacked me across the face where they were talking about— I think it was Janet Yellen was talking about knocking— she was knocking cryptocurrency. That's such an unstable thing and da da da. But yet meanwhile, the stock market is equally unstable. But yet you can tell because it's not regulated by the government, whatever side, whatever party, right? But it's still an unregulated platform and they're still going to say, but you're better off putting your money into the stock market than you are into cryptocurrency because there's, there's all of these challenging beliefs that are in this of this is the old way of doing it. This is the old, it's like the Rich Dad Poor Dad thing, right? How do we change how we're doing? Or the E-Myth with running a business, right? The entrepreneur, the manager, the technician, which one are you really good at and hire out the rest. And know that, and you can't be all. And I see that both in, in personal paradigm as well as in professional paradigm. And one of the ways that I challenge my clients when they're struggling with money, and I see this a lot in the helping professions, whether it's in the nursing field or education field, is for X amount of hours a week on the side, working privately for a third of the hours that you're working or half the hours that you're working now, you can make the same amount of money working for yourself over the course of time, freeing up time, effort, and energy, giving you a better relationship. But at the end of the day, there's two things that they're always afraid of. One, they know that they're gonna have an income coming in that they don't have to hustle for. And two, healthcare. And I think that is what keeps and limits a lot of people from going out and being more creative or using their talents and their organic passions to create a financially stable lifestyle because of those two fear components. What have you seen that similarly and anything else in addition to that?

Well, first of all, just a little bit that what you were saying about investing, people would much rather talk about investing because that's sexy, you know, but people don't talk about their debt or their lack of savings. And we know that Americans, oh my gosh, I mean, the numbers are astounding. But what you're saying about someone who could do so much better on their own, but they're afraid and it's the two things, that's what they attach it onto is healthcare. Coverage, which is a biggie. I mean, a lot of people, especially if they have pre-existing conditions or a family that's being covered as part of their— right. Yeah, exactly. And then the other is, um, yeah, whenever somebody is going to be in charge of their own income, it brings them face to face with their beliefs about money. You know, my husband's an attorney, he's a retired attorney, um, he is not an entrepreneur, um,. And I have been an entrepreneur since I was a little girl, you know, it's like, and, and that's been one of the things I've studied a bit, you know, are we born entrepreneurs or can we learn to be entrepreneurs? But I don't want to go off on that. But this is the other thing. When I, when I said that when people get grounded in their numbers and they really start learning how to make strong decisions and not sabotage, now they start seeing possibilities like, well, you know what, if you did have your own business and then Money Grit, I have a personal version and a business version. And my reason for that was within the first few months, I recognized that people who were entrepreneurs, they had a backdoor. We do a spending plan for their personal life and come back, it would look really different. Oh, I did that through my business. So people justify spending money out of their business as either, you know, saving on taxes or somehow it's justified, you know, for whatever reason. And so I realized, oh no, Entrepreneurs, we gotta— if you're really going to be able to recover and develop a strong, healthy relationship with money, we have to be doing this in your personal finances and also in your business finances. And what I would also do is somebody who might have a little dream, you know, maybe they're, they're kind of tiptoeing around the idea that maybe they'd want to go out on their own. So one of the things we would do is we would go through that process on the Business Money Grit, and we would look at, well, what would it take? What would you need to earn to be able to pay for your own insurance? And what would it take? You know what you need to earn to pay yourself because you're working on your personal finances. Now we're doing a plan for your business. What would it take to start your business? What do you need for marketing? All the different things. And now people have a concrete number, and then we can come up with an earning plan from that. So a lot of people who go through the process who were afraid, but they had this little dream, you know, buried down deep inside, they start seeing the possibilities, you know, that maybe I could do that.

But you have to get clean on the numbers. And I grew up with, and I still have a phobia of numbers, but, and I joke that I use the tip app still in order to, you know, when I'm pre-pandemic out at a restaurant, that I still use my fingers.

Huh?

Don't you miss restaurants?

I mean, I don't miss tipping, but, you know, no, no, I do miss restaurants, but I do miss tipping. You can still tip, guys, during the pandemic. You can still tip the people for, you know, makes up some money on their end. But I would joke, like I would sit there, I'm like, oh wait, I have to make sure I'm getting the numbers right. I don't want to shortchange anybody. I don't want— because I just have this, I just grew up thinking that I sucked at numbers. But the more I sat down and figured out equations to make my business more successful, to figure out what my costs are, and I see it kind of, and maybe I'm not using the right title and you can help me, like where it's an aggregate cost per session, right? Because yes, I'm paying my liability insurance. Yes, I'm paying for marketing, whatever. And that changes based on variables. Yes, I'm paying for licensure and continuing education and all these things. So it's kind of like to figure out what is it— what am I making per client per session? And what are my costs in order to do business? And a lot of people don't look at that down to the nitty-gritty, like aggregate it out to per session cost.

People think of gross dollars rather than net, and they don't understand the difference between cost of sales, cost of goods sold, and overhead. Let me tell you another situation.

This is a story of a woman who was in real estate and came from a family with money. And are you familiar with California at all? San Francisco Bay Area, Tiburon, and Tiburon and Belvedere Island. And she's told this story like to newspapers so I can tell the story. Um, and she, she sold— she was in real estate in that area and she rented an apartment in that area and, um, made a lot of money, you know, at that time. This was many years ago and it was, I mean, way up in the six figures, but she had nothing to show for it. What she did, and this is what a lot of people who live on commission do, she would live on her credit cards 2, 3 months, gonna close a deal, pay them off, and start the process all over again. Her car was leased. And so she came to see me and so resistant. It's like, okay, I'll just make up a name, even though she's giving me her first and middle name. This is what we're going to do next time. And so we started working to see what, what her business expenses were and what her personal expenses were, what she needed to live on each month. And the next time she got that big check, we're going to put it in savings and bring one month over at a time, which means she wasn't able to pay her credit cards all off. And to her, that seemed crazy. Because she would pay interest for the first time. So it's like we're looking for the long game here, right? Short-term pain, long-term gain. So she did it because she respected me and trusted me. And, um, but like I said, it just, it was just crazy-making to her that she's going to carry that credit card debt, just bring over the money to live that month. And, but so fast forward, she did it, and the time came, of course, that, um, the debt was paid off and she had built up savings. And the first savings that I always have people focus on is your periodic savings. I'll come back to that in a minute. And then the safety net savings and then your investments. But let me tell you what happened before the big real estate boom in California in the early 2000s. She was able to buy her first place in Tiburon. And about 4 years ago, she called me out of the blue one day and she said, I have to tell you, I retired early, but just bought a place, a condo in Hawaii. So she broke that cycle that she was on. You know, because then she'd borrow from her mother to pay her taxes and then she would owe her mother, but she would make the money. She'd make $200,000 or $300,000 a year that she could keep, you know, paying back. But she was in that constant cycle of, and there was no connection between what she could afford to put on those credit cards because again, pain and pleasure. And it changed her life. She retired, she had her beautiful home in Tiburon, and then she also got a condo in Hawaii. And she was well-educated, bright, smart as she could be, but people get caught in a process that seems to make sense. You know, this mentality, if I pay my credit cards off every month, I'm okay. Well, but are you, are you spending your money in the way that is going to really make a difference in your life? But I would like to tell you kind of my approach for helping people learn to think about savings in a different way. I told you earlier that people like talking about their investments, right?. And a lot of people, they have that. They have the 401s, they have their IRAs, maybe have some mutual funds, but they don't have anything else. And you hear people say, save for, you know, have 6 months or 1 year or whatever. And so for somebody who's never saved, you may as well say, hey, go, go to Mars. You know, it's, it seems completely impossible. So what I do is I want people to look at their part of their money, Autobiography is looking at what their history with savings was. And so the first thing is identifying what are the periodic, the variable expenses that come out through the year, throughout the year. And that's the first savings account, but it's not really savings. It's revolving door. But if you don't identify it as that, when people start saving and if they have to take it out for car repair or for the doctor or vacation or whatever, they feel guilty that they've done something wrong. Now they feel defeated. So revolving door savings first, identify those periodics and be able to cover them because that is when people pull out their credit cards. That's been their buffer. And that's fine if people really have the cash flow to do that and then can pay it off. But for many, it's like, it just gets— it's just debt that gets carried on for a long period of time. The next level of savings is safety net savings. And I have these triangles and it's like safety net savings is just for income protection. So for my client Mary that I was telling you about, you know, we needed to have safety net for her 3 months. That was the period of time that she felt she could go without an escrow. And then also to think with entrepreneurs, someone, a therapist or a coach, could you take a paid vacation? You know, can you take sick leave if you're sick? Can you stay home, you know, and cancel your clients or your patients? And then help people realize what it needs to be for them. So, my need for a safety net savings was very different from my husband's. My husband had disability insurance. He also was very employable if he, for some reason, lost a job. So, instead of just this impossible amount, for each person to think, what are my needs for a safety net? When would my disability insurance kick in? And if they've never saved, it's like, well, what would it be like then to just The first goal will be saving for your rent or your house payment, you know, and then your food. And they have to build that muscle. They have to learn to save and to be able to hang on to that saving because it's labeled. Those two areas support a person's investments. If they don't have that, what happens? They borrow from their 401s, they sell their IRAs, they have tax consequences, and they really feel defeated. So everything in this process is designed to help people come out of denial and to build a strong foundation for themselves that's unique to them.

Amazing. So taking it now from this personal identity to a business identity, I'm sure there are many things that you're seeing that business owners or small businesses— and I want to play with some of the titles for a second because I know that in 2020, 2021, you know, especially over the last couple years, there's been this entrepreneurial boom and everybody waking up in the morning is now an entrepreneur and they're now a CEO. And that's not true, right? Just because you own a business doesn't make you an entrepreneur. And just because you own a business does not make you a CEO. If you don't have a whole team in front of you, if you don't have multiple staff members, you're not a CEO. You might be the— you're the founder of the business, you might be the president of the business, but it doesn't make you the chief operating executive officer of all these. You have to have a team in the simple mindset. There's also a difference between being a small business owner and an entrepreneur. I think those mindsets and philosophies are very, very, very different. I want people to, at least from my perspective of seeing it, is that anybody can open up a small business. That is entrepreneurial, but it doesn't make you the entrepreneur in that classic sense. Because I think at the end of the day, in order to truly grow and be successful, is that you have to get a place where you yourself are replaceable by other people doing what you can do on multiple levels and by multiple people. So that when, like you said, what happens if you're sick? What happens if you want to take a week off? You are also making money when you're not around and the business runs sustainably. That's not around you. And that's a tricky thing, especially those in like healthcare or tutors or anybody that's in that direct one-on-one service type industry, right? Therapists especially. And that's why building a team is important. Building associates under you, building people that can back you up and have coverage. It does make the difference between being a small mom-and-pop shop a solopreneur versus really scaling and growing. Um, so what would you say is some of the things that if you're in that small business stage, you may just be you as a solopreneur, you may have maybe one or two other employees, but you're in that still that small business bracket. What are some of the things that you think that every business owner can do to really help their business flourish?

Well, I do the same process with business owners, and, um, one of the things that people can look at in terms of, like you said, growing or scaling their business is looking at their relationship with time and energy in the same way they look at it with money. So for example, I have this little chart, you know, anybody can do this listening to this. If you can do this for your personal life, but also for your business life, you just take a pencil and paper and draw a target with 3 circles, right? 1, 2, 3. An entrepreneur, you know, in the center is where you think, this is where I make my money. This is when I deliver my product. This is what I probably do better than anybody else. Okay. And then the next rung is I could do it, but other people could do it as well. And the big one, which is I don't like doing it and it takes a friggin long time to do it.

All right.

And so I know for me, I mean, I have, I think we're up to 9 now in terms of our team. And, um, this is exactly the goal, you know, is that, that whether I could work or not, you know, other people could do it, but sometimes people have to see it's like wants and needs. Oh my gosh. I only spent about 5% of my time on real money generating tasks because I spent all 80% of my time and all this stuff that I could absolutely delegate to someone else. But it's, you know, we, especially women, I think, and maybe this is not true, but you can correct me. I think women feel we have to do it all ourselves. We're kind of designed to take care of people, right? If we're really good, we should be able to do everything ourselves, right?

The Superwoman syndrome.

The Superwoman. Yeah.

And maybe there's probably a Superman.

There's Superman as well.

Yep.

Superman syndrome as well. But again, it's a part of that What do I really need? Well, I need and want a thriving, successful business. Then they have to come to terms with the fact that all of that stuff— so they have to let go of some control, right? And trusting that other people can do things. Um, so looking at your time, energy, and money kind of in the same way is a really— it's a good exercise to do. Um, and with the money coaches I train, 2 things that I will see show up for them. One, when we get to equipment, you know, we talked about, you know, good equipment, right? Good microphones if you're doing podcasts and interviews. Um, and, and so you've got to have a good— if your business is a community, you have to have a good computer. You have to upgrade it every couple of years. Um, you also need help to grow your business, but just like people don't know what their needs are, don't believe that they can meet their needs, it's the same way for, for business owners. And so they have to grow and, and let go and learn to trust and finding the right team member, you know, being willing, because then codependency comes in and everything. It's like, you may hire somebody where it is not a good fit for you at all. And you have to be willing to let go. And sometimes that doesn't mean you're a failure. It means you haven't hired well.

And there's so many of those philosophies, right? Hire slow, fire slow, hire fast, fire slow. But I think it's right. It's hire fast, fire fast at that point. And letting people know, right? When I'm— listen, we have 30 days to prove this. It's— and I think when it comes to those type of people hiring people, instead of making this generic job description, if people can start shifting it to action steps, target numbers, this is what needs to happen over the next 30 days, this is what I need to see. It's a very different way of putting a generic job description where people are like, I don't know what to do right now, and I don't know how to like prove my worth to the company. And companies don't know how to like, well, I I mean, I can't fire them because they're doing something. And it gets so much more muddled. And I think if companies and business owners and bosses, right, you don't have to be the business owner, but if you're a boss hiring someone to start changing things to indicators of numbers, output, this is what needs to be done.

Well, and you know, this day and age, like you said, and you know what, COVID has left a lot of people thinking, you know what, I would have been a lot better off if I had my own business. Business working at home. I mean, I'm sure I know how grateful I am that we have a portable business. I mean, we were traveling Europe doing our business and now we're settled in for a while before we can start our trip again. But being able— one of the things that's really tough for people right now is there's a lot of things that we don't know about, like a marketing person. You know, if people want to scale a business and they've got courses they can sell and that type of thing, social media is something they really have to do. And that, it's like, how do you find a social media person? You know, how do you find a community manager? Um, those things can be really tough for people and it can really stop people in their tracks if they have a couple of bad experiences. So being parts of communities, um, that's part of how I find my team is I'm a part of a couple of big communities of professionals and, you know, can get referrals that way. But I've learned you have to let people go if you realize your needs are not being met.

Right. Yeah. I had someone for a little bit that was doing some virtual stuff and they're a lovely person, I'm like, but this isn't an income-producing activity for me. Yes, it was backend stuff and it was blog posts. And, but I don't know anybody. And I asked people, like, how did you hear about us? Oh, I went to your website. I don't know if there was ever a blog post that I put out that convinced someone to work with me or not work with me. It may have, it might be good additional reading, might be good for SEO, but I'm realizing like, okay, why am I spending X amount of dollars there when I need to be putting it here? And it wasn't their fault. It was what, you know, I want. But I know specifically at this point for 2021, my two business goals that are different than just the status quo of what I've been doing is all virtual stuff. It's creating courses and it's creating more content for social media to draw people in from different places, whether it's the podcast or from my practice. But it has to be so tactical and specific. And I want people out there to listen that whether it's your personal goal or a professional grow— goal, excuse me, I want you to get as granular and as nitty-gritty as possible. About what that is. Not like— I love when people set goals and it's like, I want to lose 20 pounds. No, no. What number do you— what number weight do you want to be at?

Right.

It's the same thing, but you're getting— but it's so specific that you know exactly what you're working for versus I dropped another pound. Okay. But what are you working towards? And when's enough? When are you going to give up or when are you going to motivate yourself to be more? And I see that the same way with business owners. Again, they're not crystal clear on either. Their goals, be their objectives, and see the action steps in order to get there. And like you said, who are the three— what are the three rings of the people that need to be doing it? And I see this day in and day out. And when I was talking about my first podcast conference, and there's everybody there— were not everybody, there was a ton of people that are like, oh, I spent like 8 to 10 hours editing my podcast audio episode. And I'm like, how did you not find someone for $20 online somewhere to do that? And yet they're wasting their time because they may have another job. I'm like, okay, well, I understand if you're not working, if no one's walking into your door during that time and you need to do something, I get that. But at a certain point, you have to make a decision of what's, like you said, what's your higher value activity where you can be focusing purely on income-producing tactics. Even picking up the phone and making cold calls might be better than you editing your social media. If you're not going to become a social media editor, find someone to do that for a couple bucks an hour somewhere anywhere in the world.

So, you know, one of the things that can help people get to that place where they could see, oh, it really would be worthwhile to hire this person to edit my podcast, my videos is, um, you know, I talked about, we create the categories, the needs and wants, we do the spending plan. Um, and for business owners, one of the main objections when we say, hey, we're going to do a spending and income plan for your business. The number one objection is how can I do that when I don't know what I'm going to earn? Okay. So of course, more important than ever, how— and this is how this can really help people is when they're clear what they need to earn to pay themselves, they're clear what they need to pay for taxes, they're clear what they need to start their business and to grow their business. Um, now they have a concrete number of what they need to earn. Once they have that concrete number, now you can come up with an earning plan, a marketing plan with something really concrete and measurable., but so few entrepreneurs, they'll pick a number out of their head. Like I want to make 6 figures or I want to make 7 figures. And you see that all the time, but what's each person's number? And once they have that number, talk about seeing— I remember a photographer from San Francisco I worked with where, um, he was, he had a great flat in San Francisco, but he was living in a lot of, you know, he didn't have a good car and he wanted to be dating and a lot of other things. We went through this process. He saw that what he was short was a number that for him, because he was a high-end photographer, would only be 2 more gigs a year.

Yeah.

You know, and, and now, okay, how can you have a marketing plan that's going to be successful if you don't know that actual amount? So it was all of a sudden from something that seemed like my business doesn't support me. I don't know what I'm going to do. Do I have to do something else? Do I have to take a part-time job? Where once he had a concrete number and saw that, you know, and then that's when you, whether you're doing it yourself or you have, you hire people to help you. Now I have an earning number. How are we going to do that? What product or service am I going to sell? How do I need to get you there?

And I also wonder, and I see this a lot of time, and I challenge this to a lot of people in tutoring, um, and the healthcare professionals, that when they get full and they have no more space, raise your prices. And it's such a backwards, simplistic way of thinking about things. But clearly, if you're selling out at that price point, raising it $5, $10, and now seeing a little bit over the aggregate again, right, over a course of a number of clients, you might be seeing one less client a week at that price. But now you're opening up a new space for a higher thing. And I would challenge people out there, if you're doing any type of service-based, direct service-based thing, and you haven't raised your price— oh, And all the fear factors come in. What if they— I lose someone? But okay, but how many people will it take you to get new to replace all those people? But those who do have a full list of, you know, in business and you're constantly selling out, it's probably time to raise your prices. And that will make life a little bit easier.

Yeah.

And that's the other thing I think for therapists and coaches and anybody who's in the helping profession, um, you do want to— in the equation of how much you want to earn, you do deciding how you're going to set your, your fees, you have to look at your lifestyle and how much you want to work and what kind of a lifestyle do you want to have. Um, and, and that's a key part in raising your fees. And, and then, you know, what, what I always say is talk about a challenge. And this is one of the things that can stop entrepreneurs, you know, somebody from starting their own businesses. They not only have to decide what they're going to charge. They have to be able to communicate that to people, and then they have to be able to collect it, you know. So there's just so—

and not be apologetic about it, which is such a huge thing. Or one of the things I tell people all the time, when you offer your price and it's silent, you need to stay silent too. Don't go in and say, well, but I can take $10 off, or, well, I can give it to you half off, right? Don't be— don't— you have to get really comfortable with the uncomfortable silence because that doesn't mean that they're not going to say yes. And it certainly doesn't mean that that means that you have to drop your prices just to get them to say yes in that moment. And I find that so often.

That reminds me of a call years ago, but I remember it, where it was a new client and I was going over my fees and my cancellation policy. And at that point they needed to mail their half in ahead of time because, you know, people have money troubles. Like they wake up the morning of the appointment, they go, why am I spending money? Right.

I've got it.

And so I went over this with this woman and she was silent when I told her my fee and to mail in 50% to arrive 2 days before, which was my cancellation policy. Silent. And all of a sudden she was, oh, that's how you do it. She was running an eating disorders clinic and she had, they had tons of no-shows. And so for her, it was, It's not, you know, I didn't know what the silence was for until she said that. So we also can be modeling good behaviors for our clients and our coworkers, you know, and other people in business. But as I said, I think early in our talk today, Jason Wasser, that anytime somebody is responsible for their own income, it brings them face to face with their relationship Too many.

Talking about no-shows and relationship and seeing mine evolve over the years is when I put a credit card authorization in my intake and I let clients verbally know both on the call and in the email saying it needs to be figured out. I mean, right, everything needs to be filled out in its entirety. And until I have your intake form in my hand, i.e., email, your session is not considered confirmed. And you have X amount of hours depending on the time of day. I'll talk to a person, if it's at night, I'll give them till lunchtime the next day. If it's that right? I always give them a nice, you know, amount of time, especially if it's a week or two out for the— or three weeks out for the appointment. But I'll say like, within 24 hours, I need to have this back. My no-show rate has— I can't even say, like 1% a year at this point for a first session. I may have someone who schedules something and then 24 hours say, you know what, I've decided I'm not interested in doing therapy right now. Or, you know, I talked to this other person, and maybe I want to try them first. That's fine. My ego doesn't go anywhere with that one. But as far as no-shows, where that says, and they're signing off each box, 3 different things. It says, I'm also acknowledging that I'm— by submitting this, I have my session, and whether I show up or not, this credit card will be swiped.

And, and that's what, what I train people to do is if their cancellation policy is 2 days before, then you run that charge 2 days before. And we talk about statistics. I remember only one time, one time, where somebody had sent in their check for 50% of their appointment Didn't show, never heard from them again. Once.

Right.

And that is, you know, we think of it as being, we're being hard on people, but it's being kind because anytime we can model how to have grown-up conversations about money and for it to be conveying that, hey, we respect our time, we value our time, and this time is going to be for you. And, you know, it's just, it's good practice. It really is.

Agreed, agreed. And, and one of the ways to get practice is actually by committing and doing this, by becoming more informed, by reading more, by learning more, by figuring these things out and unpackaging it. And I know you have some really good resources that I want to wrap up with in which they can do this, and they can do this specifically with you. And I know you've written some things, so please share that with everybody so they can connect with that.

Okay, well, if, and if this is resonating with anyone and you just want to know more about the work my book, I mean, it's really inexpensive, probably on Amazon, it's probably less than $10, Financial Recovery: Developing a Healthy Relationship with Money, where I did a really good job of describing the process. You can also go to financialrecovery.com and you can discover my Saving Your Way Out of Debt program. And MoneyGrit is moneygrit.com, and that's where you can find the personal and business versions of the money management tool that I talked about today. Yeah.

So everybody out there, we all need to get our money cleaner. We need to get our money more proficient. We need to have it working for us versus us working for it. As cliché as that is, it's truly simple. I want to make sure that people who either benefited from this episode or you do know someone who would benefit from this episode, please share it with them. And as always, we don't have anybody who's marketing on the show. We don't really have sponsors. So if you do get some value out of this. The only thing we ask is like, connect with me, right? If there's something that I can do, and I can offer you, whether from the therapy perspective or coaching perspective, or the guest that's on and you find something that really stands out to you, reach out to them. And they're right, as you already shared your, your website where they can track you down. And also, one other, other ask that I have is go on our— go on iTunes. Even if you don't have an iTunes, you can create an iTunes account, you can leave us a starred and written review. That just helps us get found by other people out out there that the show might benefit and this other episodes might benefit. But I really do want to thank you again. Again, the fight, the fight, the psychology behind money, the figuring out what's keeping us stuck from having this life that we truly want and desire is sometimes, sometimes a day, sometimes weeks, sometimes months, but it doesn't have to take our whole life to change something that can be done in a simplistic manner. And Karen, so I really want to thank you again for hanging Thank you, Jason Wasser.

It was my pleasure.