Your Money Questions Answered... Money Mentoring Over Coffee

Hey there, real quick, before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Welcome to this episode of the affluent entrepreneur show. This one is a special one. This is one of my favorite things to do. And this is a money mentoring over coffee. This is where I got to talk to each of you and answer your financial questions, your money questions, your business questions, even your life questions. So this episode is one of those Q and A episodes. Enjoy it. And if you have questions that you want me to answer to bring you on live Even, go to askmelnow.com but I'll see you in this episode. This is the affluent entrepreneur show for entrepreneurs that want to operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth so you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect so you can scale your business, scale your money, and scale your life while creating a deeper impact and living with complete freedom because that's what it really means to be an affluent entrepreneur.

Welcome to this edition of money mentoring over coffee. Hopefully we'll have some questions coming in, some things to talk about. I see people let me know where you're coming in from. Say hello.

If you're on Facebook, do me a favor, put your name in because sometimes it comes up as Facebook user and I want to be a little more personal than that. So Charlotte is here. Awesome. Awesome. So, so good to be here. Yesterday, yesterday got a chance to celebrate with my beautiful bride her birthday and we're celebrating again tonight. She actually says that it's a big birthday, so therefore she gets to celebrate the whole month. I don't know. You let me know should she be able to celebrate the whole month? My guess is I know what the answer is going to be from y', all, but that's okay. Hello from London. One of my wife's favorite places. One of the gifts that I gave her for her birthday is a trip to Scotland. We're going to Scotland. In October. So those of you that know places that we should be seeing in Scotland, let me know because we've never been so. All right, so here's the thing. I want to be able to answer some questions for you. If you have money questions. We just. The market just closed. It was kind of a crazy week.

Powell spoke and interest rates went up a little bit. And so things may be happening for you. I don't know. We're in February now, so that's where we're staying in Edinburgh. So we're in February now. One month of the year is gone. Where are you at? Where are you at on your financial goals? Where are you at on your goals? Where are you at in your business? Where you at in your relationships, your health, all those things? It's time to start looking at these things and say, hey, am I on path or do I need to make some changes and really start to move some things in a different direction? Look, we always have the opportunity to adjust. In fact, I did something this morning.

Where we were talking about this whole idea of success. Success is not something that just lands on top of you. Success is something you create and you carve out over time. That is something that step by step, all of a sudden you have those successes that come into play. Whereas too often we think that it's just something that just happens. It happens because we're on a path. It happens because we're willing to learn. It happens because we make mistakes. Trust me, I made a lot of mistakes.

And if you don't think I've made mistakes, talk to my wife. She'll give you a list of them. So, I mean, but the fact is, is that the greatest lessons come out of those mistakes. I've lost more money than some people will make in a lifetime, but I've also built it back up and we've surpassed it. And so I learned some lessons. The things that I teach, the things that I talk about with respect to money and finances and investing and, and building businesses, most of that came from my screw ups. Most of that came from the scars and the bloody nose and the skin knees that I got because I screwed it up. So listen, if I had to pay for it once, there's no reason for you to pay for it. That's why we talk about these things. And so these sessions when I go live are a time for us to have a conversation. If you have things that you want to talk about, success, business, money, then you let me know. Post the questions in there. Drew's in now. Thank you drew, man. So post the questions in there and I'll make sure that I answer them. If you are on Instagram with me and you have a question and you feel like coming on live with me, you know, click that, I want to go live and I'll bring you on. All right. We'll have a conversation around it. I've got some questions that have come in that I have. I have a separate.

I have a separate.

Site called askmelnow.com where you can go and submit your questions. And I collect these questions and I'll do these lives and start to answer some questions. And the questions, a lot of them are money related, but they don't have to be money related. I get some that are.

Around business, entrepreneurship, achievement, you know, productivity, living your fullest life, those kinds of things that come into play and everything. So I'm totally, totally game to have those conversations and see what we can do. All right, so let's do this. I've got some questions. Come in. High interest. I think it's the high interest credit card debt. Use a HELOC to pay it off. Morgan Lowe, Wintert, Lowen, Hertz, hopefully. I did it. It's Morgan. I did get that. Right. So should you use a HELOC to pay it off?

Here's the thing, okay? First things first, if you have high interest debt, interest credit cards, or you're carrying credit card balances, I want you to understand, and you probably do, if you're carrying it because you're seeing it, you're experiencing it, is that, that we are in a rising interest rate environment. The feds just raised the rates another quarter percent. That means that your credit card balance, the interest rates on the credit cards are going up. They're going to be well into the 20s, which means that it's going to get more and more expensive for you to pay off those.

Those credit cards. Now, the challenge is this is when you swap a credit card balance for a home equity line, what you're doing, one of the things you're doing, yes, you're going to probably reduce the interest rate. However, at the same time, you are swapping unsecured debt. Okay, credit card is unsecured, meaning that it's not attached to any assets and they can't go after the assets. And you're swapping unsecured debt for secured debt because now it's going to be against your home. Now if you can't make the payment, they can foreclose on your home. Not only that, you're usually swapping Short term debt for long term debt, which makes it almost more affordable. You kind of go, oh, I'm okay, because the payments are down. But what ends up happening if we don't pay that thing off is now we just extend and keep building the debt that is now secured by the home and or.

That is got a different payment structure because it's a longer term payback. So I'm not a huge fan of it. Here's what I'm going to tell you to do, Morgan, if you don't have this already and you can let me know if you do. Do you have an actual payment plan in place right now that is formal, that you are doing it now? I don't mean formal the credit card. I mean with you, with you. If you don't, I want you to go to Mel abraham.com no debt, melabraham.com no debt. You're going to download a free spreadsheet, okay, that you're going to be able to put in all of your credit card debts and the payments and the interest rates and you're going to be able to play around with which is the best way to get it paid off the fastest, the cheapest. And it will spread out all your payments and tell you exactly what to pay if each month. And there's a short training video where I explain the whole thing to you. I want you first on that type of a program. Second.

I want you to make a call to your credit card companies and negotiate the.

Terms of your credit card. They are negotiable. Now, if they don't, at the very beginning want to negotiate, then you escalate it. Let me talk to someone else. Let me talk to someone else or you call back. I actually did an episode on my podcast on my show on YouTube. Look for it about negotiating with your credit card company. So before I put anything against a home, I would negotiate and I would set up a payment plan. And then the third thing I would do is I'd start looking at my expenses and say, what can I cut that I'm actually not using and use that to start paying these credit cards down. So hopefully that helped a little bit, Morgan, but I'm going to try and get you to.

Avoid putting it against the house. Okay, let's do this. How do you feel about 100k investment that pays 1% per month that also has a personal guarantee with it?

Drew, tell me, is the personal guarantee on their side? I'm guessing you get a personal guarantee with it. This is a real estate. This is in real estate, where you also hold a first position on the underlying real estate. So you're a lender. You're a lender. I do these types of investments all the time, Drew. So what. What Drew's talking about, I think. And you'll let me know, is that he's making a loan again. He's becoming the banker. He's putting a mortgage on a property. He's getting 12% interest rate, 1% per month, and he's getting a personal guarantee from the owner of the property. I kind of do these things all the time. The question really is, what's the loan to value.

Related to it? So. And for those that you don't.

That are new to this, when I say loan to value, let's say that the Property is worth $200,000, and he puts a loan on it of $100,000. So 100,000 over 200,000. That means it's a 50% of the value is in the loan. So that's a 50% loan to value. Obviously, the higher the loan to value, the more risky the investment is. If Drew's making this investment of 100,000 and the loan to value is down at 50%, it's a $200,000 piece of property. He makes a loan at 100,000, the property itself could go down by 50%, and he could still get his investment out by foreclosing and selling the property. And so the lower the loan to value, the lower the risk. Plus, he's got a personal guarantee. I've done these things, so I think it really. It depends, but I kind of like it. Correct. Private lending. Yeah, that's what I. I've done that. We can talk more about that, Drew. But I think that it's. It's totally something. I've got a couple of them right now that they just pay me every month. Every month. So. Cool. All right, let's go back to this question.

Financially fit divorce, she says. Can we talk? Can we talk live about divorce and money? We can chat. Okay, tell me what it is. Hey there. How are you? Good.

How are you?

I am doing well.

Yeah.

I'm gonna have to repeat what you say. So everyone here on Facebook and everything is there. So first off, let's let everyone know who you are.

My name is Pam Friedman. I'm a certified divorce financial analyst. I've met you before through Growth Day.

Yep.

Always, always excited to hear what you have to say about everything financial.

Oh, absolutely. Thank you. Thank you. So tell me what's going on.

So, I mean, we're having lots of.

Follow up. I had a divorce case. It's not my case, it's a friend of mine who's also a cdfa and six years after her divorce, her husband has filed bankruptcy. She never changed the warranty deed on her house and now she might lose her home.

Yeah.

So we've been talking a lot, not just about the numbers, but about the follow up. When you make a decision to do something financial, whether it's splitting from a partnership or splitting from a relationship, it has a component you gotta follow up.

Well, so, so this is, this is huge. And for those of you on Facebook, let me explain what you just said. She has a client or someone that she's working with that went through a divorce and they went through a divorce. And in the divorce they do a property settlement. So someone gets part the home, someone gets the business, someone gets these assets so they do the settlement. The problem with the divorce in a lot of cases, that there's a lot of legal things in there and if you don't follow through with it properly to make sure that everything is clear and clean, you stand to have a problem. And this person didn't follow through on the house to make sure that the ex was no longer on the home. And the ex, six years after divorce is declaring bankruptcy and now this home is getting tossed into a bankruptcy that it should have never been in. And here's where I see this, and this is not just with divorce. I see it when people decide I just did an episode on should I get a trust and living trusts and those kinds of things. And so the tendency is that I see things where we make half the move, we don't make all the move, we create the living trust, but we don't put the assets in the living trust. So we don't get the protection or we don't have the benefits of a living trust. We get a property settlement for the divorce, but unless we get the X off the property and get the loans modified or something, you have a problem because here's what's going to happen. And I've seen this happen also where I.

You know, I'm not, I'm happily married 12, 13 years. She told me that divorce isn't an option, murder is. So we're good.

And so someone gets divorced and the other person takes the home and there's a loan on the home that is actually a loan in both parties names and they don't rewrite the loan, they don't get the loan redone well down the Road, the person that got the home has been paying the mortgage, but then they decide, I'm not going to pay the mortgage. I can't pay the mortgage. And it goes into default. Now, your name is still on the loan. And the divorce, no matter what the divorce settlement says, they don't govern what the bank does. And the bank has to. You got to. You got to do something to make sure that you're not still obligated for things that you think you cut the strings on. Otherwise it's going to come back to haunt you.

Situation. Mel.

I got.

I've got another couple. A couple of years ago, wife moved in to her husband's house. So he had the house as separate property, but she didn't know anything about separate property. So she moves in. And he had put down money on the house. So she agreed because lots of couples have informal agreements with each other. She said, hey, I'll pay the mortgage. Mortgage until it's equal to your down payment, and then we'll start splitting the mortgage. Five years later, they get divorced. He claims the house is separate property, and she only got back the principal portion of those mortgage payments.

Look, I. Here's. Here's the thing, and this may sound so unromantic, and I'm a hopeless romantic, I've got a great relationship with my bride and everything. But.

There is a financial structure to your relationship, and the tendency is to push that financial.

Conversation either off or allow one person to handle it or not. It's one of the biggest things that I. I will tell couples is that I want you to have conversations around money. Doesn't mean that you all have to be so intimately involved unless you want to. But my wife and I talk about the money all the time. And, and so, like it or not.

A marriage, a relationship, especially when you're cohabitating or, you know, or married and living, there's a financial arrangement to it. And so.

You can't just automatically assume that, well, because we're married, we don't have to worry about that stuff. No, there's the reality of life. And so I think we need to be aware of that. And especially if you're coming in second marriages or third marriages or you got kids.

There'S something to have a conversation doesn't mean that you have to do anything. But the worst thing that we can do is not have the conversation.

Absolutely. I mean, it starts with a conversation. I mean, if you're gonna get married, if you're planning on it, there is a financial component on it. You Just have to just not be afraid of it.

Trust.

I mean, if you're trusting him enough to marry him, trust enough to have the conversation.

Absolutely, absolutely. And I have an episode on my show that I want everyone to go listen to about a couple who, I have them do this. And she was a little reluctant to it, but.

It brought them closer together.

Exactly.

It brought them closer together because that conversation wasn't about. It wasn't about the money. It was actually about their vision for life. And now all of a sudden, when you put both of you in the same ship, in the same boat to, to this horizon that you're co creating, then the conversation around money really is about money. But as a subset of the vision for life and not about money, it might, because the people, they'll sit back and say, so I was supposed to have monthly meetings with my spouse and go over the budget. So yeah, think about how good this is going to go. You're going to sit down and you're going to tell your spouse, you know, you spent $10 too much last week. I said no one, there's nothing productive about that. But when we're talking about.

The vision for your life and how we are together co creating that existence, this is where things start to really start to take hold. When you start to look at, I'll be 62 this year and my wife, I won't say because she looks 22. She's not, she's 23. But, you know, but my point is, is that we're looking at, hey, what's this new season in our life? We've got two now. We have two. We just got another granddaughter. So we've got our second granddaughter that's like two weeks old. So we've got, we've got these grandchildren. What is the vision like and how do we continue to have these conversations and have conversations with our children and at some point our grandchildren? So they're financially literate, financially astute. It's not about the greed and the money. It's about equipping and educating and empowering. So they have the capacity to be independent.

Of, of, you know, whether it's government or anything else, to be able to do things in a different way. So.

Absolutely.

So fun to have you on. Thank you so much for coming on.

Thanks for having me on, Mel.

All right, Charlotte is asking, what do you think about joining a franchise with a pay as you go option? Is it risky? One can buy out after three years, five years? Charlotte, I need a little bit more information. Okay, let's Just talk about franchise in general.

The reason we buy into a franchise is because we want to have the ability to. We want to. We don't want to build from scratch. And when we buy into a franchise, we actually get their operations, their systems, the their processes, their recipes, their everything. So it's proven. And for that you end up paying a royalty.

You pay a franchise fee. Also, though, they can tie your hands on things. So I think that.

That is really important for us when it comes to that franchise. What does that look like? What are the terms of the franchise? What is the lock in? Are they locking what you can do? Are they going to allow competitors into a regional space? What is. When you say pay is a go option, does that mean that they just take a percentage of whatever you make? Great. That's possible. Because then, you know, are you on the hook if it's not successful? But how long do they take that percentage for all those things start to come into the evaluation of it. I'd love to get more information, Charlotte, and talk through it a little better so I can give you more direct input. But I think that it's an important thing to look at all the details, make sure that you have conversations with other franchisees that have done it. What it has been like to be a franchisee. How was the training? How was the support? How was the reporting? How was the payouts? Were there any issues? All those things come into play, and depending on the franchise, some of them are more risky than others. Some of them are more established. Some of them have a success pattern to it that, that they know they. They go into certain locales with certain criteria, certain demographics, and they make it that way. So hopefully that that helps.

All right, Kelly, I. I'm loving this conversation. Communication is so important, Kelly. You know, this is something that we don't do with money, with wealth, is we don't have the conversations. Communication is huge.

I think communication is one of the most powerful skills that we can ever nurture in ourselves. And I didn't understand this when I was going to college. And the fact of the matter is, I was going to be an accountant. So all I figured I needed to know is spreadsheets and columns and rows and mathematics. So I didn't have to worry about communicating. But because I started to speak and because I started to testify in trials as a financial expert, realize that communication is huge, but not as was it huge in my professional career. It's huge in every aspect of our life. Think about it. All problems.

No problem. Let me put it this way no problems will get solved. If we can't communicate in the relationship, in society, in communities, in the world. I mean, if we look at some of the problems that we see around us, most of it comes down to the fact that people aren't communicating. They can't have a reasonable dialogue. That comes to some productive conclusion. Doesn't mean it's your conclusion. But we come to some productive conclusion and move on. But we don't. We choose to not have.

The conversations and we resort to something worse. And it causes dissension, it causes distrust, it causes wars, it causes all these other things. And yet the only way we can solve it ultimately is through communication. And when we reduce that down to just our own personal lives, your ability to communicate, whether it's money, whether it's relationships, whether it's health, all of that stuff is going to change the richness of how you experience those relationships. And I think it's huge. So.

Trust is okay. I have the contract details and they have a meeting set for me with the franchisee. Giving training. Thanks is really okay. Good, good. It is a pet support business for pet parents and veterinarians. Oh, don't get me caught up in that. I'll, I will. We we with our little Buddha all of a sudden where it's like we want to take in every dog.

So. But I can see that pet support. I love this. All right.

Good. Let me see. I've got a couple of questions I want to answer before I let you all go. If you're, if you're cool with it and if other questions come up, please, please let me know. Say hello. So the first question, this one is one says do you recommend where basically the question is, do you recommend having the, your emergency fund, your piece, what we call a peace of mind fund.

In just a traditional savings account or can I use it in other types of accounts?

For instance, a health savings account, a flexible spending account. So all those things. So here's here, let's just talk about what the peace of Mind fund is for. And we are in a time of uncertainty. We're in a time where there's going to be some, let's just call it volatility. Do I think, you know, people are, some people are saying we got a recession, some people are saying we don't.

It doesn't matter. Okay. In the sense of if we're doing smart money, smart financial decisions, they will work in recessionary times just the same as they will work in non recessionary times. I think that the important thing is to really start to look at it and say, one, I want to have some liquidity, okay? That's the purpose of having the emergency fund or the peace of mind fund is to have the liquidity to sustain yourself during a downturn. To sustain yourself, God forbid there's a health issue to sustain yourself, yourself if there was a loss of job.

So you don't have that stress and strain. The fact of the matter is that financial stress on a relationship is one of the biggest stressors in the relationship. There was a study that came out where it ranked it as one of the top five stressors in people's lives. And one of the ways to take that stress off is to make sure that you have liquidity to sustain yourself when you start to have potential challenges. And so the emergency fund or the peace of mind fund as we use it, is there to do that. Now, that doesn't mean that you park it in a corner at 1.1%, you know, interest rate, and you get nothing on it as much as the interest rates have gone up. The good part of that is that the savings rates have gone up. But you would need to go to a high yield cash account.

At a bank. And so I would put my emergency funds in a high yield cash account. I'm going to give you three criteria for a high yield cash account. I wouldn't tell you where mine are. I got nothing in there. I don't get any commissions that doesn't matter, any of that type of stuff. So.

There'S three criteria for a high yield cash account. One, it must be 100% liquid. Liquid meaning that you can get it in a day's notice. Okay. You don't have to wait. It's not locked up for.

You know, for a year or two years or six months. Okay, two, it is insured. Okay? It is insured, meaning that if this institution goes under, your money is secured, it is insured. And three, there are no fees. Y' all are giving them their money. They shouldn't be charging you for them to hold on to your money. So there are no fees. So it's liquid, no fees, and insured. Where do I have mine? Okay, you can find these places out at. Go to bankrate.com you can see what the best savings rates are. Watch for the teaser rates. There are going to be those out there that say, hey, we're going to give you 5%, 6%, but it's only 5 or 6% for the first 5,000 bucks. And then it becomes an issue. So be aware of that there's a lot of them out there. I have most of mine right now at Wealthfront. Okay. I have some at cit. I've had some at Marcus, and I see that in the. In the chat, but I have it at Wealthfront. They're. Right now, they just moved it up. They're paying 4.05% on their cash Connect account. It is insured, and it is insured not for the typical 250,000. It is insured up to $2 million. So you can have higher dollar amounts in there at an insured level. There's a couple things that I think are really important here. If, and many of you should consider whether you have a trust or not, like a living trust or anything.

And if you're not sure about that, go watch my episode on trusts to see what the differences are and what you need to do to make that happen. But a lot of the institutions, and Marcus is one of them, will not allow you to put the accounts in the trust name. Well, that can potentially be a problem.

With probate and other things. If you're not careful, Wealthfront will allow you to put it in the trust's name. So there's some nuances you want to be aware of, but like I said.

I don't have.

A dog in this fight at all in the sense that it doesn't matter where you go. What I want to make sure is that it's insured, it's liquid, and, and there are no fees. And you can go to bankrate.com check them out. Like I said, I have a good 90% of my stuff, including my mom's stuff, is at a. Is at Wealthfront. I have a little bit at CIT bank, which is a division of First Citizens. I have an Ally account, but I haven't funded. I have a Marcus account that I had funded and I moved it. So. And it just being full disclosure, it doesn't mean that they're bad. I still have the accounts, and I will move things around as needed. But the bottom line is the answer to this question is that if the money that you're putting aside is for your emergency, then it must be liquid, it must be insured, it must be no fees. You're not investing in a stock market. You're not putting it in something that locks up, because the purpose of an emergency fund is to have it there and available when you, God forbid, need it. Hopefully it's never okay. And if it's locked up, you can't get to it. The definition of an Emergency is it was unplanned, so you can't plan for it. So the fact of the matter is, is that I want to keep it there. Now, some people will say, but then I'm losing money to inflation. I get it. Yes, conceivably you are. However, we need to understand, and I talk about this a lot, that every dollar has a purpose. Every dollar has to have a job description. And these dollars description is to give you peace of mind, not wealth creation. The rest of the dollars we're going to put into wealth creation. But we need to have the peace of mind to operate. So hopefully that makes sense. Great. Great conversation. All right, let's see. I think I have time for one more. I want to buy a house. Okay. This is from Jenny. She says, I want to buy a house, but I can't really afford it completely. And so I'm questioning whether I can buy a house and kind of bring in a roommate or two roommates to help me make it more affordable. Because I know that you.

That you don't recommend going with.

A small down payment. So here's my belief. If it's your first home, I'm okay with a smaller down payment. If it's the first home, however, we need to be smart about it because there's a couple things that happen. And like, so.

I don't want you to overextend yourself. Bottom line is that if your housing costs are more than 30%, more than 30, 32, 33% of your income, it's too expensive. Now, when I say housing costs, that means mortgage, insurance, taxes, okay? I don't want you choking on the house and you can turn around and say, well, I'm going to get some roommates, okay? But.

Then you have a whole nother situation because now you become a landlord. And not only that, you are in a situation where what happens if you don't get along with roommates? What happens if these roommates turn and all that stuff and you got to be able to afford the payments when you don't have the roommates? And if you really want to get scared, there was a show, and I don't remember the name of it, but it was a series and it was this. It was about the. The worst roommates in the world. And this was like, astronomically scary. So before y' all think about, hey, I'm going to go get some real estate and I'm going to get some roommates, okay? Now this is a little different than house hacking where you get a duplex or a triplex and you're living in a good portion of it. And they're in a separate building, they're in a separate unit, they're not in the same house as you now, mind you, I had roommates in college and out of college when we first started, but good thing we all got along okay. It could have been a disaster if we didn't. And so house hacking, you'll put them in a separate unit. That still is a, is a potential problem because you need to understand what it's like to be a landlord. If someone stops paying, how do you get them out? Okay, I know in California, if someone is in the property for more than 30 days, it's no longer short term rental. And now you have to go through an eviction process. And if they're smart about it, okay, smart or crappy about it, and they understand how to gain the, the process, they can lock your property up for a couple years by declaring bankruptcy, by doing all kinds of things where you can't throw them out. And now you can't, you can't sell the property, you can't rent the property. You don't have cash flow coming in. So I am reluctant to say to you, hey, yeah, go get a bunch of roommates so you can go get this house, this property and your first property live under the same roof. That's a. Especially if you don't know them. The roommates I had, we knew, we went to school together and we spent a lot of time together. So I knew them. So I'd be really careful about it.

In doing that and realize that the buying of a house.

Is a long term decision. If before you even think about buying a house, do you anticipate that you'll be in that property for five to seven years minimum? Because to get in the house you got costs. To get out of the house you got costs. There's a lot of friction in and out, and so I'd be really careful about. I love the idea of potentially buying a house. I don't like the idea of the roommates potentially. So cool question coming in on ig, Is it better to save for a house or put money away for retirement? This is a. Okay, this is a touchy question.

Indirectly, they're kind of the same. But when interest rates were lower, it was an easier answer than it is today. Because the cost of homeownership is actually two, maybe even in some cases three times more. Because interest rates are two to three times more of what you could get. You can get 2%, 2 and a half percent rates before, now you're in the sixes. Okay, 5 and change, 6 and change, depending what it is. But here's the thing that I think we ought to look at. One.

The power of time to create wealth is huge, okay? And so the sooner we get the dollars working for us in building an investment portfolio, the better off we are. Now that can be in real estate, but then the real estate has management cost to it and other costs to it, Whereas stocks or ETFs and index funds typically don't have those kinds of costs. And long term, they grow. If you are in a place where you are working for a company and you have a company that is matching your contributions to a 401k, you've got to make that a priority because they are giving you free money, okay? They match 3% you get, you put 3%, they give you another 3%. It's 100% return on your money. You've got, you've got to at least take that. But we walk through something called the wealth priority ladder. And at the, at the base, the first thing that I want to make sure you do is to make sure that you, you've gotten and eliminated.

Your.

Destructive debt, your variable rate credit card debt for consumables, not business stuff that's making you money. But if you're buying flat screen TVs and luxury items just to have a lifestyle and you're doing it on credit card, you got to get rid of that first. I would do that before I buy the house. I would do that after I make sure that I get the match for my.

Employer and I walk through how to do that earlier in this session. So go back and watch the recording about setting up the payment plans and that kind of thing. But the first things first is I would make sure that we get the match from the company. Then we can make sure that we have our peace of mind fund in place. So we have that peace of mind and now we can start putting money away into a High Yield Cash account. That High Yield Cash account then can be used for buying a house, for the down payment on the house and, or.

Or using it to make investing later. But you'll park it in High Yield Cash account until you decide to allocate it. So but get that match first. Great question. Is it Emma? Thank you for the question, Emma. Hopefully that helped. Let me know if there's other questions. We are right about at the top of the hour.

And if not, I am going to. We'll close this one out so here's the deal. I hope that you enjoy these. I want to keep doing these. I want to be able to go live with more of you. I want to bring you on my show and have conversations and coach you. I want to help you with this process and not only this, but business and life. Let's just make sure that we, we stay on this game. Now, in order to do that, I want to make sure that you are following me. Obviously, if you're on these pages, you're following me because you got notification. I want you to make sure that you're not doing it alone. So share the show, share everything out. So you're doing it with people that can support you on this. On a journey. Let's make 2023 an absolute breakthrough year for you and do it in a way that completely transform you. So when we have this conversation 12 months from today, you're looking at me or we're chat and you go, I'm in a totally different game. All right, Before I close it, I just saw something come in that I cannot let go by. The question was my thoughts on college student loans. Let's just talk about this.

I want to get on a bit of soapbox. I'm going to look at things a little differently. Here's, here's my thinking. We have a financial crisis in our, in our country today, and it is a financial student loan crisis. We're at 1.8 trillion.

Trillion dollars in debt. And you have these kids that are, that are coming out of college that are supposed to go sore, that are supposed to, they supposed to launch their new careers. They're supposed to go launch their professions, their lives and build things up. And they say, hold on. Before you go out into the world, let me strap this albatross to your neck. It's called your student loan, by the way. You're going to have to get this thing paid back. And I think it's a travesty, but it's not a travesty. Some of it is parents. But the reality is I blame it on the financial aid offices of the universities. You've got these kids that are coming in at 17, 18 years old that don't understand the dynamics of debt and they don't understand the dynamics of compounded interest. They don't understand the dynamics of all of that. And they're saying, just sign here. Don't worry about it until you graduate. But here's what's happening. You've got kids that are graduating with degrees that are going to get them into a job that make $27,000 a year, you yet they end up with a loan of 150,000 because they wanted to go to college because they like the mascot. And so the problem is is that if you're going to get a loan at all, it has to be at a level that you can pay it back based on your entry level salary that you're going to get when you get out of school.

So if we're getting a degree in sociology that might only pay us 30 grand a year, you have no business getting $150,000 thousand dollars in student loans. I don't care what school you want to go to. That's just my take on it. Now parents, I want to talk to you.

Because and hear me out.

You have no obligation or responsibility to pay for your kids college.

And I get that that might rub you wrong. But here's hear me out on this.

When you start to put money away for the kids to college, and I did and I will, and I advise people to do it, however, I want you to do it with a different understanding. The understanding is this. We don't know if our child is going to go to college. We don't know if they're going to finish college. We don't know any of that. And so what you're doing is you're putting money aside to take care of a potential thing that is uncertain before. You're putting money aside to take care of something that is absolutely certain. And what's absolutely certain, your financial future, your need to retire, your need to take care of your financial destiny. At some point you're going to stop working. That's a certainty. We have to fund that and make sure that we have a plan and that thing funded before we're worried about funding the uncertainty of their college. That's one. Number two, I look at it and say it's important for us then to start having conversations with our children.

They don't get to pick their college because they like the mascot. And if they like the mascot and that college is expensive and they want to go for a degree that isn't going to pay for it, then they need to figure out how they're going to get scholarships. They need to participate in their own success.

You need to engage them and enroll them in the process.

To do that. And there is nothing wrong with them going to a two year junior college and then transferring in.

So what I'm getting at is that we should be smart about it and a student loan shouldn't be the first stopping point. To fund college. There's a lot of ways to do it if we're smart early on, but we have to. I think that you all need to put your financial, well being above their college because they can, they can find other ways to pay for it. Okay, scholarships. I worked while I was in school. Okay, jobs, okay. All those things that can come into play. They can go to a junior college. If they can't, they can't afford. Jeremy, my son, he wanted to go to film school at USC. Film school at USA was going to cost me $250,000. I'm, like, going, oh, good thing he decided he didn't want to go to film school. But I was able to pay for it. We weren't going to do loans. I had the money put aside, but it was money put aside, taken care of, that didn't jeopardize my financial future. If it was a situation where I couldn't afford it, then the answer would be, yeah, you can go to film school, but you're not going to go there. You're probably going to go somewhere else. You might go to Chapman, you might go to another college or get a scholarship or some sort of grants, all those things. There's a lot of ways to do it, but the first place isn't the debt, because that debt becomes an albatross on their neck. And now your kids that you want to see sore can't because they're. They're carrying around this anchor. I heard a story. I don't know the person who went to school to be a doctor. He went to med school to get his medical degree. He went through, and he ended up with $300,000 in loans. 300 grand. Okay, that's more than some houses. Okay, not in California. Okay, but more than some houses. And then he didn't pass the medical boards, so he never became a doctor. So not only does he have a $300,000 loan, he doesn't have the job and the capability to pay it now. And student loans in many cases are not bankruptible. They're not. You've got a problem with that. So we need to be smart.

With how we look at things. And sometimes that means having hard conversations and looking at the hard reality of where we are. The worst thing that we can have happen is that when you are 60 or 70 years old, you got to go knock on your kid's door and say, I paid for college. Now I got to sleep on your couch. And the other side of that is that when they're 35 or 40 years old. You don't want them knocking on your door when you're sitting back saying, I want to enjoy my life. I need to come back and live in the basement. Now, I get it. Things happen. But when we create independent thinkers, independent children, and we have these conversations and we give them the tools to make it work, then we reduce the likelihood that either of those things are going to happen. Okay? And so I hope that this answer. You got me off on a tangent. It's a hot button for me.

God, I. I just. I don't even remember. Oh, it was Melinda. So it's a hot button for me. Melinda. So.

It just. I just. Because I'm struggling to watch these kids struggle, and all of it is because they didn't understand. And their lack of understanding isn't really their fault. It was. It's not something that people are talking about. And so if, like, this whole idea of student loan forgiveness, I. If I. I'm not a politician, because I just. Well, I'd probably offend everyone. But the fact of the matter is that. That I. I truly believe that you want loan forgiveness. You take it out. You. You go back to the institutions that gave the loans that they shouldn't have given it to. Okay? It's. It's a mess. Okay? The free money to get education caused education costs to go way up. And. And it's. It's created a situation where our kids are having a trouble living because they didn't realize the albatross they got around their neck.

Cool. All right, y'. All. You guys. You guys rock. So I hope, you know, for me, I just. I don't know, having these conversations, having a conversation with you, it's. It's. It's a blessing for me. And. And I appreciate you showing up. I appreciate you staying. I appreciate you asking questions. If you have more questions, send them to me. Go to askmelnow.com Let me help you out. Let me guide you. I get. I'm not here to sell you investments. I'm not here to sell you insurance. I just want to sell you on your dreams. I truly believe that financial freedom, it's a birthright. It is accessible to all of us. It may not be easy for everyone, but there's a path to make it happen. There's a path to live that life that outlives you, to create something that is meaningful, to create something that's richer. And if all I can do is shine, even if the light is dim, a dim light on it, that I'm doing what I'M supposed to be doing. All right.

Thank you so much for being here. Keep it rocking. Let me know about on the show. Anything. Reach out to me and know that I'm here on this journey with you each day in every way. All right? Until we get a chance to see each other again. As I always say, always, always strive to live a life that outlives you. Cheers. Thank you for listening to the Affluent Entrepreneur show with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the Affluent Entrepreneur Facebook group now by going to melabraham.com group and I'll see you there.

And that's it for this episode of Building youg Money Machine, where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple Podcast, or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people. Because I truly believe that financial freedom your birthright, and I want to help each and every one of you claim it. Thanks so much.