Speaker 1: Welcome to how to Money. I'm Joel and I am Matt,
Speaker 1: and today we're talking help for high earners with Rachel Camp.
Speaker 2: Yeah. So, I think very few folks feel rich right like,
Speaker 2: even if they're doing really well for themselves. And oftentimes
Speaker 2: I think that has the most to do with the
Speaker 2: hedonic treadmill. We think we need a new car, or
Speaker 2: a vacation, a new house. We think all those things
Speaker 2: are going to make us happy, but we quickly return
Speaker 2: to our baseline happiness and at the end of the day,
Speaker 2: folks definitely don't feel rich. But guess what, I think
Speaker 2: a lot of folks, especially couples who are able to
Speaker 2: share the load of some of those big expenses like housing,
Speaker 2: I think those folks would be surprised to find themselves
Speaker 2: in the top ten percent. We're very near there of
Speaker 2: earners in the US. And when you make a lot
Speaker 2: of money, or at least if you hope to, it
Speaker 2: takes a different approach to how you should handle your finances.
Speaker 2: That's why we're excited to be joined by Rachel Camp.
Speaker 2: She's the owner of Camp Wealth who is on a
Speaker 2: mission to help her clients build, and not only build.
Speaker 1: But also preserve their wealth.
Speaker 2: But it's also not just the six figure earners who
Speaker 2: are pursuing financial independence. She believes that anyone can actually
Speaker 2: do that. We're going to talk about that and more today. Rachel,
Speaker 2: thanks so much for joining the podcast.
Speaker 3: Yeah, thanks for having me. A huge fan of the podcast.
Speaker 3: I didn't get to tell you guys that before. We've
Speaker 3: been listening for a while, so I'm happy.
Speaker 4: To be here, all right.
Speaker 1: Well, thanks Rachel. Yeah, no, we're glad to have you.
Speaker 1: I found you on Twitter. You are one of those
Speaker 1: rare good things that comes from the devastating platform that
Speaker 1: is now called x ye. So glad that happened. Our
Speaker 1: first question to every guest who comes on the show
Speaker 1: is what's your craft beer equivalent? Because while Matt and
Speaker 1: I spend ridiculous amounts on great craft beer, top notch stuff,
Speaker 1: we are also saving and invest saying wisely for the future.
Speaker 1: What's that for you? I know you're saving and investing,
Speaker 1: but what do you like to spend a ridiculous amount
Speaker 1: of money on here and now?
Speaker 2: Oh?
Speaker 3: Yeah, I mean I could go on and on about this,
Speaker 3: but I will try to keep it concise. Actually, my
Speaker 3: financial life is designed in a way where I keep
Speaker 3: fixed expenses really really low, so transportation, housing really low,
Speaker 3: and I get to splurge everywhere else that I want to,
Speaker 3: so you know, the big ones for the for daily expenses,
Speaker 3: I do love a latte. I'm very classic millennial in
Speaker 3: that sense. But outside of that, you know, anything experiences,
Speaker 3: so like I just bought an insane amount or I'm sorry,
Speaker 3: I spent an insane amount on snowboarding, boots, anything fitness related,
Speaker 3: so everything like that.
Speaker 4: I when I go to spend the money, I.
Speaker 3: Just know that there's some people whould think that that
Speaker 3: is insane. But I've intentionally designed my life so I
Speaker 3: can really splurge in those areas when I want to.
Speaker 2: I love that.
Speaker 1: Is the latte like a daily habit? Or is this
Speaker 1: like a couple times a week? I'm curious And obviously
Speaker 1: obviously you didn't read David Box's book The Late Factor.
Speaker 4: Right, avoided that one.
Speaker 3: No, it's it's probably three four times a week. So
Speaker 3: actually I look at it as an investment. That's how
Speaker 3: I justify it because I work really well from coffee shops.
Speaker 3: There's something about being there that I can just tap
Speaker 3: into deep work really easily, and so of course I
Speaker 3: have to get myself a latte. I love a good
Speaker 3: Macha lte, and so it works really well for me,
Speaker 3: and I really, I truly do enjoy the latte, so
Speaker 3: it's worth the splurge for me.
Speaker 1: Very cool.
Speaker 2: You know that's funny. Joel and I we joke about
Speaker 2: a mutual friend of ours who is always at the
Speaker 2: coffee shop that is right here near our office.
Speaker 1: He's like the mayor of that coffee shop.
Speaker 2: And but I was thinking about it the other day
Speaker 2: and I thought, you know what if he is kind
Speaker 2: of one of the pros and cons between showing up
Speaker 2: there whatever he wants, being in a great spot where
Speaker 2: he can see some friends, expand his network, and all
Speaker 2: he's got to do is pay rent by buying a Lotte,
Speaker 2: by buying a coffee that can harry to a co
Speaker 2: working space. It is so much more affordable for him
Speaker 2: to do that as opposed to, you know, some stuffy
Speaker 2: co working kind of space, which obviously they're making all
Speaker 2: those cool and they also include coffee, but it's not
Speaker 2: the same as going to the place that's got the
Speaker 2: best pastries in town.
Speaker 1: Makes me think of JK. Rowling, who it was like
Speaker 1: cheaper instead of paying for the heat and her house.
Speaker 1: She went to the coffee shop. Matt, you and I
Speaker 1: got to go, like see the coffee shop where Harry
Speaker 1: Potter was birth like pink elephant or something red elephant,
Speaker 1: something something like that, something my elephant related. But yeah,
Speaker 1: I mean I get that, Rachel. I think I can.
Speaker 1: I can understand your reasoning on that.
Speaker 4: Yeah.
Speaker 3: Actually I sat down and calculated what I was spending
Speaker 3: on the lattes too compared to a co working space.
Speaker 3: And I'm coming on ahead, So yes, of.
Speaker 2: Course you did. Rachel is a CFP that in her intro.
Speaker 1: But and actually, am I correct?
Speaker 2: Do you come from a long line of cfps.
Speaker 4: It's a short line. Yeah, a short line.
Speaker 1: Okay, I think it's your dad.
Speaker 2: My dad's a CFP propel you into the profession.
Speaker 4: A little bit.
Speaker 3: Yeah, it's interesting. He honestly, growing up he was kind
Speaker 3: of more on the insurance side. It wasn't until maybe
Speaker 3: like ten years ago he got his CFP started going
Speaker 3: more into the financial planning route. But he is a
Speaker 3: big reason that once I decided to get my degree
Speaker 3: in finance, that I actually went to the wealth management space,
Speaker 3: you know, not something like investment banking. Or, which I'm
Speaker 3: really grateful for because that is soul crushing, but he is. Yeah,
Speaker 3: he was a motivator for that. But also not a
Speaker 3: lot of young people know about this industry. It's a
Speaker 3: lot of gray hair, and so it was a little
Speaker 3: bit abnormal for me to go into the sector. And
Speaker 3: so he is a big reason for that. When I
Speaker 3: went out and got my first job, I was the
Speaker 3: youngest person in the office by far.
Speaker 1: I believe it. Super cool, Yeah, I believe it and
Speaker 1: set you apart though. Yeah, And it's fun and interesting
Speaker 1: to see like a new breed, a new generation of
Speaker 1: cfps of people who care about this not from sort
Speaker 1: of like and they're starting their own firms, their own businesses,
Speaker 1: their own small businesses as a way, and it just
Speaker 1: seems like such a healthy approach. I think that the
Speaker 1: new generation is taking versus kind of some of the
Speaker 1: ways that the industry used to run. I'm curious, with
Speaker 1: your dad being a CFP and like incredibly knowledgeable about
Speaker 1: the topic of insurance, what were money conversations like around
Speaker 1: your table growing up? If like, were you guys constantly
Speaker 1: having money conversations? Was it something he kind of left
Speaker 1: at the office. How was that impacting you as you
Speaker 1: were growing up.
Speaker 3: Yeah, I think it's probably surprising. We actually really didn't
Speaker 3: have a lot of technical discussions around money. On the
Speaker 3: other side, though, my dad was very entrepreneurial and a
Speaker 3: big believer in having control over your income. So that
Speaker 3: was really what the discussions were centered around, was figure
Speaker 3: out a way to kind of create your own thing
Speaker 3: and you know, don't work really hard just to make
Speaker 3: somebody else rich. So he was really focused on that.
Speaker 3: As far as technical, you know, financial things. Surprisingly, it's
Speaker 3: that was more of my mom's side. Actually, one of
Speaker 3: my flexes is that my grandpa on my mom's side
Speaker 3: was an early He was an og Jack Bogel and
Speaker 3: Vanguard fit. Oh yeah, I yeah. Once I realized that,
Speaker 3: I thought that was the coolest thing ever. But he
Speaker 3: huge fan of like millionaire next door. So a lot
Speaker 3: of that, you know, the power of compounding interest and
Speaker 3: saving your money and becoming that millionaire next door actually
Speaker 3: came more from my mom's.
Speaker 4: Side, and then my dad's.
Speaker 3: Was more of the you know, entrepreneur and pushing us
Speaker 3: to kind of start.
Speaker 4: Our own businesses. But influences on both sides.
Speaker 2: Yeah, exactly, good intersection for you to come from. But oh,
Speaker 2: I was gonna say, it makes me think of I
Speaker 2: met a recent friend and he was talking about how
Speaker 2: his mom grew up in Omaha and he had a
Speaker 2: big old.
Speaker 1: Flex which was that?
Speaker 2: Which is that his mom grew up with the buffet kids.
Speaker 4: That sounds like a huge flex what.
Speaker 2: I don't know if this should be surprising or not,
Speaker 2: but he's like, not surprising. I'm into finance as well. Yeah,
Speaker 2: I don't know. I'm like, well, that's that's like the
Speaker 2: CLIs thing I've learned from somebody in the past like
Speaker 2: year and a half, being in a new town in
Speaker 2: a new city. But we're talking about millionaires personal finance advice,
Speaker 2: Like it's often targeted to the middle class, but high
Speaker 2: earners they actually need some help saving on taxes and
Speaker 2: maximizing their wealth building potential as well. Like what is
Speaker 2: it that made you opt to focus on that group
Speaker 2: in particular? And I guess too, Maybe it's good to
Speaker 2: sort of set the stage, like how do you define
Speaker 2: a high wage earner?
Speaker 3: Yeah, I mean we could put a number to it,
Speaker 3: or we could personage, you know, top ten percent. Most
Speaker 3: of my clients, I'll say make at least five hundred thousand,
Speaker 3: and decent amount of them are approaching seven figures and
Speaker 3: beyond too. Yeah, so really really high earners. And I
Speaker 3: always say, you know, making money managing money are two
Speaker 3: very distinct skill sets. So when I decided to focus
Speaker 3: on high earners, I really saw distinction and the need
Speaker 3: for somebody to kind of come in and say, Okay,
Speaker 3: you've done a great job making the money. Now let's
Speaker 3: figure out how to optimize and manage the money. And
Speaker 3: then you know, I'm sure it's not surprising to you,
Speaker 3: but there are a lot of people who make a
Speaker 3: lot of money and don't have a lot to show
Speaker 3: for it, haven't actually built a lot.
Speaker 4: Of wealth with it. So you know, seeing some of
Speaker 4: those problems.
Speaker 3: In my first job, you know, I was at a
Speaker 3: huge firm, was out in Chicago, and we worked with
Speaker 3: ultra ultra high networth, so at least five million in assets,
Speaker 3: you know, and we managed over a billion. So I
Speaker 3: got to see kind of that side of people to
Speaker 3: where they would come in with a tremendous amount of money.
Speaker 4: A lot of them went through exits.
Speaker 3: So we had some tech entrepreneurs that all of a
Speaker 3: sudden came into a huge sum of money and we're
Speaker 3: very lost about what to do with it and really
Speaker 3: didn't have a grasp on some basic personal finance concepts.
Speaker 3: So seeing that at that extreme, I knew that there
Speaker 3: was a demand for or a need for financial planners
Speaker 3: there to kind of help them start to manage this money.
Speaker 3: And then too, you know, selfishly, I've always liked to
Speaker 3: help people where I'm kind of in a similar situations.
Speaker 3: Why I like to help small business owners as well,
Speaker 3: so being younger but also making you know, a good salary.
Speaker 3: Went into finance partially for that reason. I noticed that, yeah,
Speaker 3: that there wasn't a lot of content or planners centered
Speaker 3: around helping a younger generation manage their money. So that
Speaker 3: was a big influence on me to get into that
Speaker 3: and fill that need.
Speaker 1: Yeah, it's also, hey, these are the things you're kind
Speaker 1: of tackling for yourself, so why not then pass the
Speaker 1: knowledge and help other people with the stuff you're already
Speaker 1: kind of working through on your own. Okay, question, what
Speaker 1: are high earners typically? What are their biggest needs when
Speaker 1: they come to you for advice? Like, I'm sure it
Speaker 1: runs across the board, and you mentioned how like even
Speaker 1: people who have high salaries sometimes they're still spending way
Speaker 1: too much, right, they're not saving enough, they don't have
Speaker 1: a high enough savings rate. Are you even broaching the
Speaker 1: topic of like frugality with people who earn eight hundred
Speaker 1: k a year, Like, do you have to have those
Speaker 1: kinds of conversations?
Speaker 4: You do?
Speaker 3: You know, it's really interesting. One of the first things
Speaker 3: I look at is cash flow. It's one of the
Speaker 3: very first meetings I have, So where's our money going?
Speaker 3: When I ask the question to people, where's your money going?
Speaker 3: I never get a response. Nobody has any idea. And
Speaker 3: there's a lot of high earners too that like think
Speaker 3: they're doing fairly well. You know, they're putting away, say
Speaker 3: one hundred k into savings, but if we break that
Speaker 3: out as a percentage of their income, you know, it's
Speaker 3: actually really low, could be like ten percent. So taking
Speaker 3: that and translating it to a percentage for them is
Speaker 3: really helpful and really eye opening. So that's one of
Speaker 3: the things that we look at. Cash Flow is really important,
Speaker 3: and if there is an issue, if they're overspending, then
Speaker 3: of course we have to start talking about that. I'm
Speaker 3: a huge fan of reverse budgeting, especially for high earners,
Speaker 3: as the money comes in, let's put it to work
Speaker 3: right away and investing, you know, paying the bills and
Speaker 3: then spending what's left over. Now, that is a process
Speaker 3: we have to leg into that. We can't just go
Speaker 3: from saving ten percent to thirty percent. So that's something
Speaker 3: that we will work through after that. Honestly, taxes, by
Speaker 3: far the biggest thing that people come to me for,
Speaker 3: whether they're a high earner or small business owner. Usually
Speaker 3: it's I get a lot of people coming in after
Speaker 3: tax time, after they've paid their tax bill and just
Speaker 3: trying to figure out how they can spend lesson taxes.
Speaker 3: And it's interesting too, and you mentioned this that so
Speaker 3: much of the personal finance content is geared to kind
Speaker 3: of middle class, and as a result, I see a
Speaker 3: lot of really high earners coming in and they're putting
Speaker 3: a lot of money into like wroth accounts rather than
Speaker 3: pre tax accounts. So that's a mistake that I usually
Speaker 3: see for high earners, and so it's about kind of
Speaker 3: shifting that and then finding some other avenues like charitable giving.
Speaker 3: There's a way to do that in a tax efficient manner,
Speaker 3: and really having a big checklist and kind of going
Speaker 3: through each item to see, can we save on taxes here?
Speaker 3: Can we optimize taxes anywhere? Yeah?
Speaker 2: I got to think that that takes a big old
Speaker 2: I mean, I don't like paying taxes. I can't imagine
Speaker 2: somebody who's like breaking in some serious money and just
Speaker 2: what that feels like. The psychological component of that is, yeah,
Speaker 2: oh my gosh, it's painful. And of course, this time
Speaker 2: of year, as everyone's getting their documents together, I'm sure
Speaker 2: it's on a lot lot more folks minds.
Speaker 1: I'm curious. I kind of laughed to myself when you
Speaker 1: said that.
Speaker 2: It sounds like what you're doing is putting these millionaires
Speaker 2: on budgets. Do you get much pushback when it comes
Speaker 2: to that, because I'm like, I was about to say Mint,
Speaker 2: but you know, Mint, they're running off into the sunset.
Speaker 2: But when it comes to Whinea, yeah, whiteabb or copilot,
Speaker 2: when it comes to personal budgets, it seems so quaint
Speaker 2: and I could I feel like I could see a
Speaker 2: lot of high earners really pushing back on that. Or
Speaker 2: are they able to embrace that because they're used to
Speaker 2: seeing balance sheets and their own profit and laws statements
Speaker 2: from their business.
Speaker 3: No, I think they embrace it. I've rarely had somebody
Speaker 3: say I can't do that. I can't make those changes,
Speaker 3: because that's what they're coming to me for. You know,
Speaker 3: they know that there's some thing in there that isn't optimized.
Speaker 3: They're worried that they're not building wealth in the best
Speaker 3: way or building enough wealth. So if they come to
Speaker 3: me and that is something I notice that we're spending
Speaker 3: a bit too much, they're very receptive of it. And
Speaker 3: you know, I'm very careful with how I approach it too.
Speaker 3: It's not a matter of you're spending you know, seventy
Speaker 3: percent of your income, We've got to cut that in half.
Speaker 3: It's more of let's walk through it, see where the
Speaker 3: money is going, and kind of figure out a plan
Speaker 3: to how it can shift it more to savings. So
Speaker 3: and there's several different ways to do it. Like I said,
Speaker 3: I love to show them on a percentage basis where
Speaker 3: their money is going. They hate to see the percentage
Speaker 3: that is going to taxes.
Speaker 4: But when you.
Speaker 3: Approach it or bring it up in a way, especially
Speaker 3: with taxes in a tax efficient manner, because even if
Speaker 3: we're talking about just a taxable brokerage account, there's a
Speaker 3: lot of.
Speaker 4: Tax excuse me.
Speaker 3: There's a lot of tax advantages within a taxable brokerage account.
Speaker 3: So if I frame it in that way, in a
Speaker 3: way that we're building wealth and we're going to be
Speaker 3: saving on taxes this way, they are much more receptive
Speaker 3: to it. And then many of them too, have a
Speaker 3: goal of generational wealth, so it does really bother them
Speaker 3: if they're not putting enough money away to where the
Speaker 3: next generation can't carry on this wealth. So it's just
Speaker 3: about framing it the correct way, making sure that it
Speaker 3: aligns with their goals. Once they figure out their goals,
Speaker 3: it's very easy to say, if we want to hit
Speaker 3: these goals, this is how we kind of have to
Speaker 3: shift the money. So it's all about lining it up
Speaker 3: with what they first tell you that they want.
Speaker 1: Yeah, it's probably also going to have a mindset shift
Speaker 1: on just kind of how we think about taxes too.
Speaker 1: I think oftentimes it's like taxes are the enemy, and
Speaker 1: in some ways more paying more taxes mean our goal.
Speaker 2: They're the enemy.
Speaker 1: Paying more taxes means hey, you're crushing it, right, And
Speaker 1: so it's like nobody in the right mind would take
Speaker 1: a two hundred thousand dollars pay cut in order to
Speaker 1: pay less taxes. And so I guess we have to
Speaker 1: kind of have that shift too and just realize, okay,
Speaker 1: cool or taxes might mean more success might mean higher
Speaker 1: investment returns and just a higher paycheck. Two. So that's
Speaker 1: one thought. But okay, talk to me too about investment accounts. Yeah,
Speaker 1: you mentioned the WROTH and that is something that Matt
Speaker 1: and I talked about regularly. For middle class folks. The
Speaker 1: roth Ira is you know, a gotcha. It's incredible, Like
Speaker 1: everybody you know making average money should be contributing and
Speaker 1: hopefully maxing out the roth ira or let's say the
Speaker 1: WROTH four O one k. But if you if you're
Speaker 1: making five hundred and fifty k, well, the WROTH four
Speaker 1: O one k probably doesn't make nearly as much sense
Speaker 1: as the traditional because you're able to take a big
Speaker 1: tax break now. And what yeah, what other accounts? How
Speaker 1: else would you steer high income earners into specific account types.
Speaker 3: Yeah, I don't want to say that I steer them
Speaker 3: away from WROTH because that's not the case at all.
Speaker 4: I mean a high earner.
Speaker 3: To tell them that we can put money into an
Speaker 3: account and we get tax free growth. That is, you know,
Speaker 3: a huge benefit, something that all higher owners should know about.
Speaker 3: But it's really it's zooming out a bit and looking
Speaker 3: lifetime tax rate, not the year tax rate. Everybody's obsessed
Speaker 3: with how can I bring down taxes this year. What
Speaker 3: we should do is dooom all the way out and say,
Speaker 3: how can we pay the least amount you know, legally
Speaker 3: of course in taxes over our lifetime? And that's where
Speaker 3: we and of course we can't. The variables that we
Speaker 3: don't know, like what's your future income? What are future
Speaker 3: tax rates?
Speaker 4: Makes this a.
Speaker 3: Bit complex, But there are some things that we do know,
Speaker 3: So what is your tax bracket today? And then maybe
Speaker 3: do we have an estimated guess of how that's going
Speaker 3: to change. So say somebody's making five hundred K, but
Speaker 3: they're very young and anticipate making over a million someday,
Speaker 3: maybe a wroth makes sense for them. It's hard to
Speaker 3: say who should go into what account until we look
Speaker 3: at that person's individual life. I will say I'm a
Speaker 3: big fan of for high earners of this combination of
Speaker 3: doing pre tax four oh one ks and then a
Speaker 3: backdoor wroth. So for many of them they can't directly
Speaker 3: contribute to the there is a way to get around
Speaker 3: it as long as you don't have money in any
Speaker 3: IRA accounts. So that combination I love because those people
Speaker 3: can't make a deductible IRA contribution anyway, so we might
Speaker 3: as well fill that up with the backdoor wroth. So
Speaker 3: I love that that combination. We don't completely exclude the wroth,
Speaker 3: but we bring it in when it makes sense. And
Speaker 3: that's one of the times where I see it makes
Speaker 3: the most sense, is complementing a traditional four one K
Speaker 3: contribution makes.
Speaker 2: A lot of sense. Okay, I kind of want to
Speaker 2: walk this back a little bit, Rachel. I'm thinking about
Speaker 2: a second ago you were talking about generational wealth and
Speaker 2: how that's oftentimes either a goal for a lot of
Speaker 2: folks or maybe something that they're having a hard time
Speaker 2: kind of wrapping their heads around. Do you talk with
Speaker 2: a lot of clients about that, like more from like
Speaker 2: a philosophical point of view, like whether or not it
Speaker 2: makes sense to leave large sums of money to their kids.
Speaker 2: I'm thinking about I read a history basically on the
Speaker 2: on the Vanderbilts and how one of them basically said that,
Speaker 2: like in HERI died, wealth is like cocaine to ambition. Essentially, Yeah,
Speaker 2: for the individual, because when you know you've got these
Speaker 2: literally life supporting sums of money coming your way where
Speaker 2: you literally don't have to work a day in your life,
Speaker 2: it changes your outlook. It changes how it is you
Speaker 2: approach your school, your education, It changes how you approach
Speaker 2: just everything. And I'm curious if you've had any conversations
Speaker 2: like that with folks, or if it's more about hearing
Speaker 2: what their goals are and applying the nuts and bols
Speaker 2: to get them there. Do you ever kind of dabble
Speaker 2: in the is this a good thing for us to
Speaker 2: be doing in the first place?
Speaker 1: Yeah?
Speaker 3: No, And I love those conversations because one of the
Speaker 3: things I think is a little bit unique about my
Speaker 3: approach is that I really do like to bring the
Speaker 3: behavioral side to it. So we have a goal of
Speaker 3: generational wealth, you know, making my child a millionaire. Things
Speaker 3: like that I do I love to bring in. Okay,
Speaker 3: what are other ways we can do that that's not
Speaker 3: just passing on money? So obviously a great one is
Speaker 3: to pass on good money habits or a good work ethic.
Speaker 3: I think those things should be priority number one over
Speaker 3: passing on money, because your point, most wealth is lost
Speaker 3: by the second generation when we look at generational wealth,
Speaker 3: and that's because we're passing on money without passing on
Speaker 3: the habits that the parents had to use to get
Speaker 3: that money. So if I had to pick one to
Speaker 3: pass on to my children, I had to pick one
Speaker 3: to inherit, it would definitely be the mindset and the habits.
Speaker 4: Now, one thing I have.
Speaker 3: To look at quite a bit is sometimes people have
Speaker 3: this goal and they over prioritize it over themselves. Even
Speaker 3: so they may not have built up enough wealth to
Speaker 3: someday be work optional quite yet, but they are shoveling
Speaker 3: money away into their children's accounts rather than their own.
Speaker 3: So there's the problem of you know, we have to
Speaker 3: be very careful with how we pass money on to
Speaker 3: our children and to make sure that it doesn't kill
Speaker 3: their motivation or their drive. The other problem is we
Speaker 3: have to balance it with how we're saving for ourselves.
Speaker 3: So I see that problem. It's one of the most
Speaker 3: common problems I see is saving for your children before
Speaker 3: you save for yourself.
Speaker 1: Yeah, filling up those five twenty nine before you've really
Speaker 1: contributed to your own retirement.
Speaker 3: Accounts enough, yep, And yeah, we have to look at
Speaker 3: it in the context of their children again to really
Speaker 3: help to say, do you think your children want to
Speaker 3: be put in a position to where they might I
Speaker 3: frame this very carefully, but do we want to put
Speaker 3: your children in a position to where they might have
Speaker 3: to help you someday, because that's a very uncomfortable and
Speaker 3: awkward position to be in.
Speaker 4: Or do you think your children would prefer.
Speaker 3: You to take care of yourself and to be sure
Speaker 3: that you are self sufficient in your later years as well?
Speaker 3: So I have to frame that conversation very carefully, but
Speaker 3: it is extremely important to make sure that we get
Speaker 3: those priorities.
Speaker 1: Sets the old airplane oxygen mask scenario right, yeah, and
Speaker 1: put it on yourself first. Talking about insurance, you mentioned
Speaker 1: your dad was an insurance guru. Rachel, it sounds like
Speaker 1: it passed the genes. You've got the same You've got
Speaker 1: the same mentality and a lot of the the same
Speaker 1: intelligence when it comes to money. What about insurance coverage
Speaker 1: for high income earners? Like being underinsured can be insanely costly,
Speaker 1: and so what insurance mistakes are high earners often making.
Speaker 3: This is another one of the biggest mistakes I see
Speaker 3: is that they are really under insured. So we can
Speaker 3: look at life, disability.
Speaker 4: Umbrella insurance.
Speaker 3: Those are you know, the big three when it comes
Speaker 3: to protecting wealth, protecting your family.
Speaker 4: So life insurance.
Speaker 3: A lot of high earners, you know, accept what they
Speaker 3: get through their work and then don't really think about
Speaker 3: it after that. And you know, you get a little
Speaker 3: bit through your work, but usually not enough, especially if
Speaker 3: you're a high earner. So life insurance is really important
Speaker 3: to look at to make sure that if something were
Speaker 3: to happen to you, that your family is taken care of.
Speaker 3: And I'm a huge fan too of getting life insurance
Speaker 3: on both spouses, even if one is just you know,
Speaker 3: the homemaker, not bringing an income, because what people often
Speaker 3: don't consider is that if something were to happen to
Speaker 3: that spouse, now we have a lot more expensive is
Speaker 3: that that spouse was taken care of like homemaking, you know,
Speaker 3: cleaning and taking care of the children, and all of
Speaker 3: these expenses are now going to come up if something
Speaker 3: were to happen to that spouse. So people always think
Speaker 3: about protecting the spouse that is bringing in the income,
Speaker 3: but often don't think about the spouse that is taking
Speaker 3: care of a lot of expenses by being a homemaker.
Speaker 3: So that is a big mistake that I see is
Speaker 3: that we if we have one spouse insured, we don't
Speaker 3: have the other one insured. And the disability insurance, I
Speaker 3: think this one does not get enough attention. Life insurance
Speaker 3: gets all the attention, and we can talk about why
Speaker 3: big commissions.
Speaker 4: But disability.
Speaker 3: You know, you're far more likely to be disabled than
Speaker 3: you are to die prematurely. So disability is what's going
Speaker 3: to come in and pay you if if something, if
Speaker 3: you were to become disabled and not work anymore, not
Speaker 3: be able to work anymore. And the thing with disability
Speaker 3: you have to be really careful of is the wording
Speaker 3: of disability. There's own occupation, which is the premium wording,
Speaker 3: and disability just means if you were to be disabled
Speaker 3: and you can no longer work in the job that
Speaker 3: you were just in, then you'll get paid out. So
Speaker 3: a lot of doctors need disability insurance because what could
Speaker 3: happen if you have a lower form of wording with
Speaker 3: disability insurance is you become disabled and the insurance company
Speaker 3: looks at it and says, well, you could work the
Speaker 3: front desk even if it's one fourth of your income
Speaker 3: or less, and they won't pay out because it's a
Speaker 3: poor definition of disability. So that is the one I
Speaker 3: really I don't see enough people having adequate coverage. And
Speaker 3: then umbrella insurance. This is one that's really important for
Speaker 3: high earners or anybody with the significant net worth. So
Speaker 3: umbrella insurance is the insurance that sits on top of
Speaker 3: auto and home. So auto and home has some coverage limits,
Speaker 3: and if something were to happen, if you were to
Speaker 3: get sued, or your child were to get in trouble,
Speaker 3: or your dog were to run out and bite somebody,
Speaker 3: your coverage with auto and home might not be an
Speaker 3: enough to cover, you know, beyond what somebody might sue
Speaker 3: you for, and then they can start going for your assets.
Speaker 3: Umbrella is what sits on top of that and covers
Speaker 3: the rest of your assets in case you were to
Speaker 3: get into a really bad situation like that. So I
Speaker 3: rarely see anybody have umbrella insurance. And you can get
Speaker 3: a decent amount of coverage for for pretty cheap. So
Speaker 3: I always look at those. Those are the big three
Speaker 3: for high owners.
Speaker 2: I love it, yeah, And it's the rare individual who
Speaker 2: is over ensured when it comes to some of these
Speaker 2: different to see that those are the financial.
Speaker 1: Have like dialed it in.
Speaker 2: It's just like, buddy, why do you even have this?
Speaker 2: And because they're got things a little too buttoned up. Honestly,
Speaker 2: that kind of makes me think of the Fire Movement,
Speaker 2: where folks have kind of gotten like where the cart's
Speaker 2: gotten ahead.
Speaker 1: Of the horse a little bit.
Speaker 2: And so we actually we want to talk to you
Speaker 2: a little bit about that that in addition to maybe
Speaker 2: entrepreneurship will get to all of that. Right after this,
Speaker 2: while we're back, we're still talking with Rachel Camp, specifically
Speaker 2: talking about how high earners can make more progress with
Speaker 2: their finances. Rachel, I know, I don't know if you
Speaker 2: would call yourself like, oh, a Fire adherent or if
Speaker 2: you're just kind of, like, you know, tangentially related to
Speaker 2: the movement. I don't know where exactly you fit. But
Speaker 2: you've talked about kind of delayed gratification and how important
Speaker 2: that is. But then you also recently wrote about the
Speaker 2: downsides of delayed gratification, which is not something the Fire
Speaker 2: Moment movement is prone to really admitting.
Speaker 1: It seems like this is something that you're wrestling with
Speaker 1: right now. Though as we speak, like the balances finding
Speaker 1: that balance first going to extremes. What are your thoughts
Speaker 1: and where do you kind of land right now?
Speaker 3: Yeah, so I can tell you a little bit of
Speaker 3: my history with the Fire Movement. I actually became really
Speaker 3: obsessed with it, I guess you could say.
Speaker 4: With my first job.
Speaker 3: Didn't love the first job and had a little bit
Speaker 3: of just an obsession with money and the way. I
Speaker 3: viewed it as a way that I could have control
Speaker 3: and freedom over my life. And Fire Movement kind of
Speaker 3: found me or I found it at that perfect time
Speaker 3: where I was looking for a way to regain control
Speaker 3: of my life and to potentially look at, you know,
Speaker 3: shifting out of this job. So I found the Fire
Speaker 3: Movement and honestly just fell in love with it. I loved,
Speaker 3: you know, your money or your life. I love all
Speaker 3: the people in the Fire Movement and I still have.
Speaker 3: I still appreciate it for what it's done, but I
Speaker 3: will I will say I was at one end of
Speaker 3: the spectrum there and now I've kind of come back
Speaker 3: to the middle to more of a balance. My issue
Speaker 3: with the Fire Movement is what you mentioned, which is
Speaker 3: I think it delays too much gratification, and it became
Speaker 3: more and more apparent to me when I started working
Speaker 3: with clients actually and seeing that they had some of
Speaker 3: these goals like I want to take a trip with
Speaker 3: my family, or I want to move to a different
Speaker 3: city I don't love the city, and they were delaying
Speaker 3: all of it in the name of building up their
Speaker 3: net worth. And being able to view them as an
Speaker 3: outsider really made me realize that we don't always we're
Speaker 3: not always really logical with money. Many of these people
Speaker 3: could have taken that vacation with no impact to their
Speaker 3: fire or minimal impact to their financial freedom number. So
Speaker 3: that really made me start to reflect on my own life.
Speaker 3: And then of course the book Die Was Zero came
Speaker 3: around and made a huge impact in the financial independence community.
Speaker 3: I felt like that book was written for us, like.
Speaker 1: Kind of like a classic cold water to the face
Speaker 1: to the face, you know, just like, hey, what are
Speaker 1: you guys doing?
Speaker 2: Yeah?
Speaker 1: Yeah.
Speaker 3: Bill Perkins came around and said, we're all being a
Speaker 3: little insane, So that was helpful. But he made some
Speaker 3: just great points, which is while our you know, our
Speaker 3: accounts are and our investments are growing and compounding, our
Speaker 3: health and energy are doing the opposite. So there are
Speaker 3: only things that we can do at certain points of
Speaker 3: our life. And one of it might be because our health
Speaker 3: and energy are going to decline, but it also might
Speaker 3: be because, you know, maybe you're aren't going to be
Speaker 3: this young forever and they aren't. They're going to grow up.
Speaker 3: So those family vacations that you really want to take
Speaker 3: it may be the only time you can do it.
Speaker 1: Taking your kids to Disney World at twenty two is
Speaker 1: it very different than taking them at like, you know, eight.
Speaker 3: Yeah, I don't think they'd be into it two quite
Speaker 3: as much.
Speaker 4: So, yeah, I mean things like that that you have
Speaker 4: to think about. And I was. I realized that.
Speaker 3: I was putting off a lot of you know, vacations
Speaker 3: like that myself. I've always wanted to backpack Southeast Asia,
Speaker 3: and I've continued to put it off, you know, also
Speaker 3: building the business. That was a big reason for it too.
Speaker 3: But finally, you know, reading the book and just doing
Speaker 3: a lot of reflecting on delayed gratification, I realized, I
Speaker 3: probably am not going to want to do this when
Speaker 3: I'm sixty years old, So let's bring it to you know,
Speaker 3: the front, make it a priority now, and if it
Speaker 3: hurts my savings rate a little bit, I'm fine with that.
Speaker 3: I have come to terms with a lot of the
Speaker 3: money that I'm saving and investing right now probably will
Speaker 3: never be spent by me. So again we look at
Speaker 3: the extremes. We have this obsession with oversaving and then
Speaker 3: this obsession with spending everything that we've saved. I kind
Speaker 3: of want to land in the middle again and not
Speaker 3: have any obsession with money. If I leave behind millions
Speaker 3: of dollars, I've come to terms that that is fine.
Speaker 3: You might go to charities, might go to my future children,
Speaker 3: but I don't really care either to die with zero.
Speaker 3: So I've landed in the middle of kind of both
Speaker 3: of these extremes.
Speaker 1: I like it, and I like what you said there too.
Speaker 2: About he says something along the lines of realizing that
Speaker 2: there is there are only experiences, that there's only things
Speaker 2: that you can do today, Like there's a limited window
Speaker 2: of time to take advantage of some of these things.
Speaker 2: And what's crazy is that we do that all the
Speaker 2: time when it comes to money, Like it makes me
Speaker 2: automatically think of a four to win K match with
Speaker 2: an employer, and it's like, what we would say is
Speaker 2: that if you don't take advantage of the match, you're
Speaker 2: being an idiot like that, money is not going to
Speaker 2: be there tomorrow, so you have to pounce on this opportunity.
Speaker 1: That is what we say, But we don't.
Speaker 2: Think in those same terms when it comes to life experience,
Speaker 2: and especially I mean you mentioned in the kids like
Speaker 2: that totally hits home having four kids, and that has
Speaker 2: allowed my wife and I to feel a little more
Speaker 2: empowered to like we're in a smaller home and we're like,
Speaker 2: should we renovate? It seems kind of ridiculous to add
Speaker 2: add onto the house, but we're like, well, now's the
Speaker 2: time because our oldest is ten. Yeah, in six years,
Speaker 2: she's not going to really want to hang out with
Speaker 2: us anymore. So maybe we should go ahead and make
Speaker 2: this thing happen and I can continue to work. But
Speaker 2: as far as the kids being at home, like there,
Speaker 2: like you said, there's a there's a closing window of
Speaker 2: time that you have to keep in mind.
Speaker 3: Yeah, and you know, we talk to bring it back
Speaker 3: to to generational wealth. Another thing that he talks about
Speaker 3: quite a bit and Die with zero is how people
Speaker 3: receive an inheritance at not an opportune point in their life.
Speaker 3: So usually once they're much older, fifties sixties and really
Speaker 3: don't need the money at that point. So he makes
Speaker 3: a really compelling argument that we should be giving or
Speaker 3: helping our children when they most need the money, so
Speaker 3: maybe for their a down payment on their first home,
Speaker 3: or for student loans.
Speaker 4: Something like that.
Speaker 3: I do like the idea of that, and also donating
Speaker 3: during your lifetime to to be able to see your
Speaker 3: money be put to work. So there's something to giving
Speaker 3: your money away during your lifetime that I think can
Speaker 3: be really satisfying rather than just waiting to pass it on,
Speaker 3: you know, as an inheritance.
Speaker 1: You're not maximizing the dollars and cents allow Warren Buffett
Speaker 1: giving it away, you know, after your death, but you
Speaker 1: are maximizing some of the joy that you can receive
Speaker 1: from seeing those dollars. And I think you can have
Speaker 1: a little bit of both again some balance the donor
Speaker 1: advice fund, stocking that up a little bit and then
Speaker 1: letting that money grow, but also giving it giving it
Speaker 1: away at like while you're while you're alive, while you're
Speaker 1: still living. Okay, you've talked about building your business, and
Speaker 1: you know you've done a really good job with that.
Speaker 1: Owning a business can be beneficial too from a tax perspective.
Speaker 1: So can you talk maybe about some of the low
Speaker 1: hanging fruit that self employed folks can and should be taking,
Speaker 1: you know, taking advantage of.
Speaker 3: Yeah, I mean, you know, obviously a big one is
Speaker 3: being able to deduct business expenses that you could not
Speaker 3: deduct as a W two employee. So home office not
Speaker 3: something you can deduct as a W two employee anymore,
Speaker 3: even a portion of your cell phone. All these things
Speaker 3: that before there is no deduction for you now get
Speaker 3: to deduct as a business expense as long as it
Speaker 3: is an ordinary and necessary business expense. You know, again,
Speaker 3: we want to pay the least amount of tax possible,
Speaker 3: but always make sure that it's legal and above board
Speaker 3: and that we're tracking everything too. Now, after the business expenses,
Speaker 3: there's entity selection, which is really important. It's not going
Speaker 3: to be as important in the beginning, but once you
Speaker 3: start bringing in a serious amount of revenue, you might
Speaker 3: look at something like electing s Corp. Which can help
Speaker 3: with deducting self employment tax. So that's something that was
Speaker 3: a milestone in my business that was really excited for
Speaker 3: when I was able to electes Corp and receive tax
Speaker 3: benefits from that and then two my favorite probably is
Speaker 3: self employed retirement accounts. So the awesome thing about a
Speaker 3: self employed retire account when we look at a solo
Speaker 3: for oh one k, for example, is now you get
Speaker 3: to contribute as the employee and the employer. So if
Speaker 3: you're putting away a lot of money for retirement, or
Speaker 3: we just want to receive, you know, a big tax deduction,
Speaker 3: a solo for oh one k is a great way
Speaker 3: to do that because you get.
Speaker 4: The employee contribution limits, but now.
Speaker 3: You get to add in the employer contribution limits as
Speaker 3: well and put away you know, twenty twenty four. I
Speaker 3: think the total limit is sixty nine thousand, as long
Speaker 3: as you have the revenue for it and the cash flow,
Speaker 3: of course, but it is a way too for a
Speaker 3: lot of these high owners who are also business owners
Speaker 3: to receive a big tax deduction and put away a
Speaker 3: ton of money into retirement accounts.
Speaker 1: That's right.
Speaker 2: Yeah, And you've talked about how one of the reasons
Speaker 2: you started your own business. Not only does it make
Speaker 2: sense financially from a tax deduction standpoint, but again kind
Speaker 2: of going back to kind of the fire mindset, can
Speaker 2: you talk about some of the other reasons that you
Speaker 2: to start your own business, because like, one of the
Speaker 2: things you encourage your listeners and your readers to do
Speaker 2: is to think about their ideal day and talk about
Speaker 2: autonomy and being able to kind of run the shows
Speaker 2: what your life looks like.
Speaker 3: Yeah, so I mentioned, you know, my first job, and
Speaker 3: the thing that was challenging for me was a big
Speaker 3: thing that was challenging was my work environment. And I
Speaker 3: was in a room with five other guys. TV was
Speaker 3: on and it was so hard for me to be focused.
Speaker 3: And then on top of that, a lot of my
Speaker 3: performance was measured by you know, hours in a chair,
Speaker 3: so was she there eight to six rather than output
Speaker 3: I So all of that I really was not the
Speaker 3: biggest fan of when it comes to translating how I
Speaker 3: was doing with my work. So I always wanted to
Speaker 3: be able to control my work environment, be able to
Speaker 3: control the hours that I want to work. You know,
Speaker 3: ironically I work way more now as a business owner,
Speaker 3: but it doesn't feel like quite as much because if
Speaker 3: I need a break at noon to go work out
Speaker 3: or go take a walk, I can do that and
Speaker 3: I can work later, and those things are so so
Speaker 3: important to me. I think if There's one theme that
Speaker 3: I can point out when it comes to me and
Speaker 3: my view of money is control and control over my
Speaker 3: schedule and my time. And I know too when they
Speaker 3: look at when they research human happiness and what contributes
Speaker 3: to that, a big component of it is do we
Speaker 3: have control over our time and our schedule. And so
Speaker 3: when it came to starting my own business, that was
Speaker 3: really important to me. But also in the wealth management industry,
Speaker 3: there's a lot of you know, traditional financial advisors. Like
Speaker 3: I said, it tends to skew at an older age,
Speaker 3: and I just was excited about kind of a newer
Speaker 3: and different way of doing things, one of that being
Speaker 3: a big emphasis on financial planning rather than investment management
Speaker 3: or insurance sales. I realized, you know, I could find
Speaker 3: a firm that does that, but there weren't that many
Speaker 3: out there, and the firm that I wanted to build,
Speaker 3: the idea I had behind it is to create a
Speaker 3: firm in a way where it's how.
Speaker 4: I would want somebody to help me with my money.
Speaker 3: And the only way I could really do that is
Speaker 3: to completely start my own thing, to have control over
Speaker 3: the process, to have control over how we operate. I
Speaker 3: knew the best way to accomplish that was to do
Speaker 3: it on my own, so that was a big motivator
Speaker 3: as well.
Speaker 1: Yeah, I think I think of that as being the
Speaker 1: number one benefit of being self employed is kind of
Speaker 1: being able to steer the ship. And so, yeah, the
Speaker 1: time flexibility is great, but the ability to kind of
Speaker 1: eat what you kill and make more money is great too.
Speaker 1: But I think more than anything, it's kind of the
Speaker 1: creative oversight that you have and no one else can
Speaker 1: be like, no, don't do that. I guess Matt can
Speaker 1: if it really sucks, if my ideas for your omnie, yeah, yeah,
Speaker 1: he's like a sorry, dude, that's not going to work.
Speaker 1: But for the most part, like yeah, it's it's a
Speaker 1: decision between the two of us and and nobody else
Speaker 1: has the oversight. And in all my previous jobs, it
Speaker 1: was somebody saying, yeah, nah, maybe six months down the
Speaker 1: road or actually that idea, we're not We're not driving
Speaker 1: with that, so let's now we're going to put that
Speaker 1: on the back burner or the never burner. I'm like,
Speaker 1: oh man, that's it's so nice to be able to
Speaker 1: kind of have a lot more oversight over that. I'm
Speaker 1: curious to hear too your thoughts on debt, Rachel, because
Speaker 1: we haven't really talked about that. How do you help
Speaker 1: clients think through whether or not they should prioritize eradicating
Speaker 1: debt from their life verse accomplishing other financial goals. So
Speaker 1: we talked about how, okay, cool, Maybe you actually don't
Speaker 1: need to be or some of your clients need to
Speaker 1: be investing a lot more, others might be overdoing it.
Speaker 1: But what about debt payoff? How does that factor in?
Speaker 1: And how how do you have those discussions?
Speaker 3: Yeah, so you know, debt is an interesting one in
Speaker 3: personal finance. There's a lot of really strong opinions on it.
Speaker 3: And again, I one of my biggest pet peeves is
Speaker 3: blanket advice in the personal finance world. So I don't
Speaker 3: believe in old debt is bad, and I don't also
Speaker 3: believe in overleveraging yourself. So it's again a balance and
Speaker 3: it always depends. But when it comes to debt, I
Speaker 3: never ignore the behavioral side of it. I always ask
Speaker 3: people what their opinion of debt is and how they
Speaker 3: feel about having debt if they do have it, and
Speaker 3: there are a lot of them that just hate it
Speaker 3: and it can be really low interest rate debt which
Speaker 3: could be three or four percent, and it still bothers
Speaker 3: them to have that outstanding debt. So I believe every
Speaker 3: decision we should start with the numbers and then we
Speaker 3: should look at the behavioral side. So when it comes
Speaker 3: to paying down debt, you know, of course I'll run
Speaker 3: the numbers on this is what it looks like if
Speaker 3: we pay down the debt versus invest the money, and here's,
Speaker 3: to the best of our abilities, how we can translate
Speaker 3: that to a dollar amount or an opportunity cost. And
Speaker 3: so they'll look at that, and then I'll say, but
Speaker 3: I don't want to ignore the behavioral side of this.
Speaker 3: And if it really bothers you to have this debt
Speaker 3: then and we're still funding all of your other financial
Speaker 3: goals and those are on track, then I'm fine with
Speaker 3: going ahead and paying it down. Now, if we have
Speaker 3: a discussion where we're struggling with financial goals, we're struggling
Speaker 3: with not investing enough, and they want to pay down
Speaker 3: their two percent debt, you know that is something that
Speaker 3: I might push a little bit more to the investing side.
Speaker 3: I certainly don't want to ignore the numbers, and I
Speaker 3: do believe people hire me to really optimize the numbers
Speaker 3: for them and optimize building wealth. So I'm not afraid
Speaker 3: to push people in one direction, but never at the
Speaker 3: expense of their peace of mind. I never want anybody
Speaker 3: to stay awake at night thinking about something if we
Speaker 3: can easily fix it. So, like everything, it's a balance,
Speaker 3: but with debt, I consider both components to it and
Speaker 3: we just go from there.
Speaker 1: Nice.
Speaker 2: Okay, So, speaking of bespoke a financial advice, we're going
Speaker 2: to talk about how you recommend for folks to approach
Speaker 2: hiring a financial advisor, and we'll get it's a that
Speaker 2: and more with Rachel Camp.
Speaker 1: Right after this our we're back. We're still talking with
Speaker 1: Rachel Camp, and Rachel I want to talk about financial advisors.
Speaker 1: Let's get a little meta. We're talking to a financial
Speaker 1: advisor about financial advisors. Obviously you're going to say, don't
Speaker 1: ever hire a financial advisor. They're terrible. No, that's a default,
Speaker 1: right default answer. Well, you don't seem like the kind
Speaker 1: of person who's going to have this hard pitch sales
Speaker 1: pitch for someone who comes to you like here's why
Speaker 1: you need to hire me right now. But like, yeah,
Speaker 1: what do you tell folks who are thinking of hiring you,
Speaker 1: And what would you tell somebody out there who is
Speaker 1: thinking hiring a financial professional might make sense at this
Speaker 1: point in my financial journey, but I'm just not sure.
Speaker 1: How do I know if I'm ready?
Speaker 3: Yeah, you know, in another way that I built my
Speaker 3: business was I never wanted to have to do a
Speaker 3: hard sell. I only wanted to be able to help
Speaker 3: people who I really thought I could help. So sometimes
Speaker 3: I have people come in and they're kind of taking
Speaker 3: care of the big things. There's not a way that
Speaker 3: I can see that can really optimize, and so we'll
Speaker 3: decide not to work together. So I'm not afraid to,
Speaker 3: you know, turn people away who I don't think need
Speaker 3: a financial advisor yet.
Speaker 1: So you might just look at their numbers, look at
Speaker 1: their and say you're doing a great job. Go on
Speaker 1: your marry way, keep it up.
Speaker 3: Yeah, unless there is something you know that they really
Speaker 3: want me to help with, like a behavioral side to
Speaker 3: it or starting a business. But yeah, I'm not afraid
Speaker 3: to turn people away and say I or say I
Speaker 3: don't think I'm the best person to help you. But
Speaker 3: maybe there's somebody else that specializes more and what you're
Speaker 3: looking for that can help you. I'll be honest. Most
Speaker 3: of the time it's younger people who are kind of
Speaker 3: just starting out, and that I say, I usually recommend
Speaker 3: a book to them or some other resources, but I
Speaker 3: don't think they're at the stage quite yet where they
Speaker 3: need a financial advisor.
Speaker 1: Is that because more of their money should be going
Speaker 1: towards investments than paying for the advice and the help
Speaker 1: of an advisor.
Speaker 3: Yeah, I don't ever want somebody to pay me and
Speaker 3: I can't provide more value than what they're paying me. Now.
Speaker 3: I can't guarantee that, of course, but if I can't
Speaker 3: see a way that I can provide multiples of what
Speaker 3: you're paying me, then I don't really want to take
Speaker 3: you on. That'd be stressful for me, and of course
Speaker 3: it wouldn't be helpful for you. So a lot of
Speaker 3: people when they're just starting out, it's really hard to
Speaker 3: provide that value because it's just a matter of you
Speaker 3: just got to put more money away, get more money invested.
Speaker 3: And once they've reached that, or they've reached a certain
Speaker 3: point where their lives are just a bit more complex,
Speaker 3: like having a family, is a great time to look
Speaker 3: more seriously into some financial planning. Starting a business is
Speaker 3: a really important time to do that too. And then too,
Speaker 3: you know, say somebody is a little bit older and
Speaker 3: they haven't put enough money away and they really need
Speaker 3: help with figuring out how to carve that out. That's
Speaker 3: something I can help with as well. But for somebody
Speaker 3: who's on the fence or who's thinking, you know, I
Speaker 3: feel like I've got a good handle on things, I'm
Speaker 3: just not sure I'm optimized. I hear that all the time.
Speaker 3: I offer one time financial plans, and I have a
Speaker 3: lot of peers who offer them to who are great,
Speaker 3: And for a lot of people that makes a lot
Speaker 3: of sense for them to kind of come in, pay
Speaker 3: a financial advisor a one time fee, and the plan,
Speaker 3: you know, barring anything really drastically changing in their life,
Speaker 3: should hold up for a good five to.
Speaker 4: Ten plus years.
Speaker 3: So that is something if I meet with somebody and
Speaker 3: I think, you know, ongoing, I don't know if I
Speaker 3: can provide a lot of value, but I do think
Speaker 3: we could set up a good financial plan for you
Speaker 3: and you'd get a lot of value from that. So
Speaker 3: a lot of people on the fence, I usually recommend
Speaker 3: they a they meet with a financial advisor. Most people
Speaker 3: have complimentary consultations and they shouldn't be sales y. If
Speaker 3: they are salesy, then you can just leave. But after that,
Speaker 3: you know, you can always start with a financial plan
Speaker 3: and see if you think it's really helpful to you.
Speaker 2: Nice. Okay, so you just said that these financial plans
Speaker 2: should be good for like maybe five to ten years,
Speaker 2: which is a timeframe. That just made me think of something.
Speaker 2: So let's talk about fund selection for your clients. Like,
Speaker 2: we know that you're a fan of low cost funds
Speaker 2: passive investing, but how do you help clients think through
Speaker 2: which funds they shouldn't and specifically when their asset allocation
Speaker 2: should change. Because you get to a certain point and
Speaker 2: you're starting to look ahead, I don't know, I would
Speaker 2: like to hear your inswer here. Maybe five maybe ten
Speaker 2: years and as folks are thinking about I might be
Speaker 2: needing to access some of those funds. What's your uh yeah,
Speaker 2: what's your time frame there?
Speaker 4: Yeah?
Speaker 3: So shifting more into the fixed income side again, you know,
Speaker 3: I hate to say it, as always it depends, but
Speaker 3: with a client, we're going to look at first income streams.
Speaker 3: So I have a lot of clients where they might
Speaker 3: have some real estate investments or just some income coming
Speaker 3: in from other sources that even if they were to
Speaker 3: fully retire, they would continue to get that income. So
Speaker 3: we look at that first because sometimes you'll have clients
Speaker 3: and I used to work with a lot of retirees
Speaker 3: and one of the issues I saw is they had
Speaker 3: pensions coming in in Social Security, and all of those
Speaker 3: income streams were more than covering for their living expenses,
Speaker 3: and you know, they were all fixed income streams, so
Speaker 3: they could actually afford to be a bit more aggressive,
Speaker 3: and they were a bit too conservative when you considered
Speaker 3: these fixed income streams coming in. So that's something that
Speaker 3: I look at. But let's say somebody has no other
Speaker 3: income streams, then really you know, a good rule of
Speaker 3: thumb is as you get within ten years of retirement,
Speaker 3: we start fifteen to ten years, we start to shift
Speaker 3: more into fixed income. And once you get to the
Speaker 3: point where you're really close to retirement, we might be
Speaker 3: looking out a seventy thirty portfolio, and then say you're
Speaker 3: ten years into retirement or fifteen years into retirement, then
Speaker 3: we're going to we might start to shift to sixty forty. Again,
Speaker 3: very basic rules of thumb what's more important here is
Speaker 3: what do you need from the portfolio? So if you
Speaker 3: have a really big portfolio, but you're not spending that
Speaker 3: much or you're not requiring that much, then we can
Speaker 3: actually put a significant amount of money, leave it in
Speaker 3: the equity side. As long as we've got a good
Speaker 3: ten years in the fixed income side for your income, you.
Speaker 4: Know, we should be good.
Speaker 3: So I like to start with that is what's the
Speaker 3: income that we're going to need. But if you're just
Speaker 3: relying on rules of thumb seventy thirties, where I see
Speaker 3: most people enter into retirement.
Speaker 1: With, okay, So you talk to me about just kind
Speaker 1: of the services financial advisors offer. Now, it seems like
Speaker 1: those offerings have changed in the past fifteen or twenty
Speaker 1: years that the financial advisors almost in my mind, resemble
Speaker 1: more like life coaches with a ridiculous amount of knowledge
Speaker 1: about money and investments and tax planning and so. But
Speaker 1: I feel like at times in the past, the financial
Speaker 1: advisor's role was kind of like I'll handle your investments
Speaker 1: and you've got to figure out the rest. But that
Speaker 1: there's just a lot more that the modern financial advisor
Speaker 1: can offer to a person. Do you think that's true.
Speaker 3: Oh yeah, So I think the modern financial advisor kind
Speaker 3: of came from this need for tax planning.
Speaker 4: First.
Speaker 3: So one of the biggest complaints that I see is
Speaker 3: somebody will come to me and say, my CPA doesn't
Speaker 3: help me at all with tax planning, and by the
Speaker 3: time I meet with them, you know, all the things
Speaker 3: that I could have done, it's too late to do.
Speaker 4: Now.
Speaker 3: Most CPAs or accountants are just going to file your
Speaker 3: taxes unless you ask them for something else, and if
Speaker 3: they offer that, that is primarily what they do.
Speaker 4: So financial plan has.
Speaker 3: Really stepped in to kind of fill that role to
Speaker 3: be there with you throughout the year to take a
Speaker 3: proactive approach to tax planning. And when it comes to
Speaker 3: adding value, that's where I see some of the most
Speaker 3: value added. And then too we talk about risk management
Speaker 3: or insurance. There is a lot of risk that people
Speaker 3: are exposed to that they're not aware of. So a
Speaker 3: good financial planner should be looking at your risk management, insurance,
Speaker 3: but also cash you know, insurance for your business, all
Speaker 3: these different things that you might not be thinking of.
Speaker 3: Cash Flow planning of course, figuring out where you're mind
Speaker 3: is going and how to optimize it. Retirement planning. That's
Speaker 3: what financial advisors should have always been doing, but it's
Speaker 3: shockingly more of a thing now. You know, education funny,
Speaker 3: any financial goals planning, but a good financial planner. And
Speaker 3: what I think we're doing now is taking just a
Speaker 3: much more holistic approach to it. You know, when I
Speaker 3: first started out, what we asked for were your investment
Speaker 3: statements from a client. Now the document checklist is really long.
Speaker 3: It's tax returns, it's employee benefits handbooks, it's paced ups,
Speaker 3: it's auto and home insurance policies, it is Yeah, it's everything.
Speaker 3: So really it's they should be the CFO of your life. Yeah,
Speaker 3: that's the approach I like to see. And yeah, I
Speaker 3: have so many peers and people who are kind of
Speaker 3: coming through the next generation that see this shift, and
Speaker 3: it's really fulfilling work too. I was out to dinner
Speaker 3: with somebody who is in more of a he's really young,
Speaker 3: he's younger than me, and he's in a traditional advisor
Speaker 3: role still, and he was talking about how he wanted
Speaker 3: to shift more to you know, what I'm doing and
Speaker 3: what some other people are doing, and I told him
Speaker 3: it's once you've had the experience of being in the
Speaker 3: role where you're primarily an investment manager and now you
Speaker 3: shift over to a financial planner and being a CFO
Speaker 3: of somebody's life.
Speaker 4: It is ten.
Speaker 3: Times more fulfilling because you feel so good about the
Speaker 3: work you're doing and you can really see all the
Speaker 3: value you're adding, which investment management, it's a little hard
Speaker 3: to see the value there.
Speaker 1: So just the number going up, you're like helping families
Speaker 1: achieve the goals they want. I get that. Yeah, the
Speaker 1: smile on their face.
Speaker 2: More of an impact that you're going to be able
Speaker 2: to have knowing that that you are involved in all
Speaker 2: these other areas of life and that you know that
Speaker 2: they're helping them to achieve that. It goes back to
Speaker 2: like we're saying at the beginning that hey, maybe you
Speaker 2: need to show up with your budget as well, be gus,
Speaker 2: let's talk about your spending. Yeah, but Rachel, I mean,
Speaker 2: I think it's an awesome job that you're doing and
Speaker 2: specifically how you're approaching financial planning with your specific clients.
Speaker 2: But yeah, where can folks learn more about you? And
Speaker 2: want you share a little bit too about your new
Speaker 2: project the new podcast.
Speaker 3: Yeah, so just launched Becoming Work Optional. With my co
Speaker 3: host Matt Garrisik. So we have right now episodes coming
Speaker 3: out every other week. We're kind of easy into it.
Speaker 3: We both have businesses that we run as well. But
Speaker 3: you mentioned Twitter. I'm most active on Twitter, Camp Underscore Wealth.
Speaker 3: I do have an Instagram, not very active there, Camp Wealth,
Speaker 3: but my newsletter. I love my newsletter as well, which
Speaker 3: you can sign up on my website, Rachelcampwealth dot com.
Speaker 1: Awesome, Rachel, thank you for joining us. We'll pull links
Speaker 1: all those all those assets in our show notes and yeah,
Speaker 1: I hope to have you on the podcast again one
Speaker 1: of these days in the future.
Speaker 4: Yeah, thanks so much for having me.
Speaker 2: All Right. That was Rachel Camp of Camp Wealth fame
Speaker 2: Like honestly, I love.
Speaker 1: She's like a Taylor Swift of wealth management.
Speaker 2: I love how she's approaching personal finance with the client's
Speaker 2: Oh I think I've got my big take so I'll.
Speaker 1: Pitch it to you. What's your big takeaway?
Speaker 2: Because I almost almost.
Speaker 1: Ran away with it. You could have if you wanted to.
Speaker 1: I don't want to be selfish. You first, Oh, well,
Speaker 1: thank you age before I don't know, so I think
Speaker 1: my biggest segaway or there was a lot of good
Speaker 1: stuff in this episode, especially if you are a high
Speaker 1: oncome earner. I think there's a lot of like practical
Speaker 1: takeaway knowledge. But when she mentioned that the latte that
Speaker 1: she gets, however many times a week, is an investment,
Speaker 1: I initially bristle against that because just ask my mom,
Speaker 1: like every time she's like, my mom is way too
Speaker 1: many times called an inanimate object or consumable an investment.
Speaker 1: And I look at her, I give her the stink
Speaker 1: and I'm like, what are you thinking about an investment?
Speaker 1: Don't call it an investment, mom. And so when Rachel
Speaker 1: called the latte an investment, I was like, yeah, come on,
Speaker 1: it's not, it's not.
Speaker 2: I had a muture mic Joel's like shum.
Speaker 1: And so I was initially bristling, But then when she
Speaker 1: ran the numbers and guess what, it is true, Like,
Speaker 1: the more I think about it, you can consider that.
Speaker 1: I think an investment or at least a discounted way
Speaker 1: to work somewhere. I guess, substitute, you got to get
Speaker 1: out of your home office sometimes, right, And so yeah,
Speaker 1: I guess I need to be less judgmental. I realize that.
Speaker 1: But also I think, yeah, yeah, I guess you can
Speaker 1: call that an investment and I'm not. So that's my
Speaker 1: big takeaway. I'm growing as a person that you're.
Speaker 2: Just less judging of other people around you and what
Speaker 2: it is that they call investments and spend money.
Speaker 1: On slowly, but sure, look I'm getting there, all right.
Speaker 2: My big takeaway is going to be when she was talking,
Speaker 2: I can't remember what we asked her, but what she
Speaker 2: said in response was that one of the one of
Speaker 2: her biggest pet peeves is blanket advice. And it's so
Speaker 2: true because there are I think it's when we're talking
Speaker 2: about debt, because that's one of those one of the
Speaker 2: topics that people are always like, oh, you can never
Speaker 2: have debt, or oh you have to always use debt
Speaker 2: to its fullest advantage, to your fullest advantage if you're
Speaker 2: trying to optimize. But so much of it comes down
Speaker 2: to the individual. What's going on in their personal finance situation,
Speaker 2: what's going to weigh on their mental health, like, what
Speaker 2: is going to speak to them as a person. And
Speaker 2: this is going to be a plug for folks to
Speaker 2: send in listener voice and memos to for ask kind
Speaker 2: of money episodes because what I realized when she was
Speaker 2: saying all of that.
Speaker 1: Was that, man, that is exactly what we're.
Speaker 2: Able to do when it comes to answering listen questions
Speaker 2: on our Monday episodes because we're able to take into
Speaker 2: account some of those additional details, some of that nuance
Speaker 2: that provides, well, shoot, had you said this, we probably
Speaker 2: would have recommended to go ahead and pay it off.
Speaker 2: But you you said all these other things, and with
Speaker 2: that knowledge, with that in mind, we're going to say
Speaker 2: keep it around. In this example, debt is the is
Speaker 2: the topic.
Speaker 1: But I agree there's a there's a whole lot of
Speaker 1: people in the personal finance advice space and they treat
Speaker 1: everything like a hammer. It's like it's always debt is dumb,
Speaker 1: or it's always invest sixty percent of your income whatever
Speaker 1: I mean that that would be the fire crowd or whatever.
Speaker 2: Or you're an idiot and not consider using credit cards
Speaker 2: to take advantage of the of the perks and the
Speaker 2: benefits and the op It's it's personalized, and.
Speaker 1: So you and I I know it's not quite as
Speaker 1: doesn't make the headlines in the same way the shades
Speaker 1: of gray sorts of things that we the kinds of
Speaker 1: things that we weigdhe into here on this podcast on
Speaker 1: a regular basis. But that's what we try to do
Speaker 1: is kind of take all and really kind of even
Speaker 1: when we're spouting something that we think is true, we
Speaker 1: try to give the caveats every time because it's not
Speaker 1: always true for every person at all times, and we
Speaker 1: do our best to kind of cover that game. And
Speaker 1: Rachel does that too. She the thing that's ever answered
Speaker 1: work couched like that, And that's just the sign of
Speaker 1: someone who's who's smart and has lived some life and
Speaker 1: has encountered a bunch of people who have different sorts
Speaker 1: of financial situations going on.
Speaker 2: You know, man, all right, our beer was all citra everything.
Speaker 2: This was a beer by other Half. This was another
Speaker 2: one that you picked up while you're out there in
Speaker 2: New York?
Speaker 4: Is that right?
Speaker 2: What your thoughts?
Speaker 1: Do you diget? This one was juicy, not over the top,
Speaker 1: a nice approachable ipa but like but still heavy in
Speaker 1: that New England juicy realm so good. I loved it.
Speaker 2: I was just bummed to that this is one that
Speaker 2: we shared as opposed to us each having one.
Speaker 1: But it was bright, it was citrus case couldn't hold anymore, man,
Speaker 1: I get it. Super citrusy Bright had all this like
Speaker 1: it wasn't bitter at all. If you are turned off
Speaker 1: by the.
Speaker 2: Bitter ipa like those West Coast IPAs, you got to
Speaker 2: look into some of those New England.
Speaker 1: I pas, specifically Other Half.
Speaker 2: They make some incredible ones that drinks more like orange
Speaker 2: as I was gonn say adult OJ So good glad
Speaker 2: you know I did get to enjoy one of these today, buddy,
Speaker 2: But I think that's gonna be it for this episode.
Speaker 2: We'll make sure to have links up at our show
Speaker 2: notes at how to money dot com, but Buddy, that's
Speaker 2: gonna be it until next time.
Speaker 1: Best Friends Out, Best Friends Out,