Episode 019: Getting Started SAVING to Reach Your Personal Finance Goals

On this episode, Kristy and I discuss how to get started saving after you have worked through your personal goals and 1, 3, and 10 year vision.

Kristy, owner of On Route Financial, and I really start to dig into how to get rolling with a superb PERSONAL plan to get your money in order.

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Episode Transcript

Braden: (00:00)
Hello and welcome to episode 19 of the unfuck your best podcast. As always, this is Braden, your host. Super excited that you are joining us today. I am joined by Kristi Rosner runs her. Dammit. I did it again. I keep asking. Okay, Christie runs or I have a hard time saying that for some reason run is first and then we'll just call you Kristy [inaudible] of honor, right on route financial. Christie as a certified financial planner who helps businesses really project income, get organized and get their shit legit when it comes to hitting their goals, dreams, hopes, aspirations with both their personal income and business income. So if you've missed out on some of the past episodes, I would suggest that you go back and listen to episode 17 for sure. That was the last week's episode. This is really part two of a two part series with Christie.

Braden: (01:04)
And then if you'd like, you can go back to episode seven to listen first where Christie and I have discussed the differences between CFP, CFOs, CPAs, accountants, bookkeepers, attorneys, all that good stuff. So episode seven, episode 17 and then today's episode. So just to recap, last Thursday, Christie and I talked through her money workbook and we use myself as an example, talked about kind of my goals and hopes for my business and what I want to do just to give context to how Kristi operates with our clients. And now in this episode we're going to talk about next steps and how to actually plan to set aside the money that you need to to hit your goals. So all kind of turn it over to Christine out to kick off the discussion.

Kristy: (01:52)
Yeah. So we left off with having set, you know, your top three goals. You mentioned you have a revenue goal for 2020 that's number one. Yes. And then you mentioned two other goals on the personal side, which were paying down student loans and saving to purchase a home. Right. Would you say those are the top three for you? Yes. Cool. And you can start with your top three if that feels overwhelming for you. Start with one. And if that one goal still feels big, cut it in half or cut it in fourths again. Right. This is kind of just a framework, but, um, if thinking about three goals at a time feels like too much, definitely simplify and focus on one, a little side note there. But where we're going to go from here is starting to put some number towards some numbers to your goals. So what I will typically ask a client when I'm sitting down with them is kind of two components to a goal to start to make it more financial. And what I'm wondering is one, how much money you're going to need either to save to accomplish that goal or if it's a revenue goal, what that revenue figure is. And then secondly, your time frame on those goals. So I don't know if you want to go through with your top three goals and do an example or we can just leave it at kind of sure.

Braden: (03:25)
Yeah, let's do it. Let's, I think examples and context are always helpful.

Kristy: (03:29)
Cool. So starting with your 2020 revenue goal, we have your timeframe, right? That's eight, about a year. Um, what is your 2020 to 20? Uh, 2020 revenue call?

Braden: (03:42)
Well, I have a good, better, best goal, but we will just make it real easy for the podcast. And I'm going to say 150,000.

Kristy: (03:50)
Awesome. So a hundred 50th for that with your student loans, I believe you mentioned wanting them paid off and was it five years, 10 years?

Braden: (04:02)
Yeah. I never disclosed how much I have in debt, but let's just go ahead and we'll get it all out there on the table. Guys. Don't think poorly of me for this. Um, keep in mind, I was in higher education for like 10 years and law school will cost 60 grand a year. So after that and living expenses, I currently have about $300,000 in student loans, which is a mortgage in many States.

Kristy: (04:26)
Yeah, definitely. And nothing wrong with that. Right? But you know, education is expensive and it's a great investment that you made in yourself. Well, here's hoping, so 300,000 so timeframe wise, and this can be tough and again, not something you always have to have exact, but we want maybe a guideline. Do you have thoughts on when you would ideally want to have that paid off by? Yeah, it kind of

Braden: (04:56)
depends on how much house we would like to buy obviously. But I would say, um, my, I would really like to have it paid off before I turn 40, which would be let's, we'll say nine years and then I'll, that'll give me like 11 months of cushion.

Kristy: (05:11)
Okay, perfect. And then for buying a home, how about that? Any thoughts on timeframe? And then when thinking about setting a savings goal for purchasing a home, I'm really thinking around your down payment, any closing costs and then, you know, we do consider the monthly in terms of your cashflow, but for, for the point of this conversation, how much might you need for a down payment?

Braden: (05:38)
Oh boy. Um, would probably need my husband for like real life on this question, but we'll just, we'll just kind of make some estimates. So let's assume, um, and again, I'm going to have everyone keep in mind that in the city of San Diego, average home prices are about seven to $800. So we will say 800,000 is the cost of the home. Okay. So in that, Christie, I know you're not a mortgage broker, but most people are not putting 20% down nowadays, are they?

Kristy: (06:10)
No. So you can I, I S typically recommend a range somewhere between five to 20 so you could go on the lower end and some States you can do three or you could do zero down with a seller's assist. I'm using some lingo here, but maybe we say, I dunno, 5% for example's sake.

Braden: (06:29)
Yeah, we, so by the time we're ready to buy, we will probably have enough equity in our current condo to roll into a 15 to 20% down payment. So for us it's more of just knowing that my business has consistent enough income to take on the new one

Kristy: (06:47)
mortgage. Okay, nice. So you don't need to necessarily have money saved because your plan is to sell your current home and use that equity to then purchase the new home. Is that correct?

Braden: (07:00)
Yes. And again, guys, this all comes back to, Hey, question for you Christy, and this circumstance. Would you generally want to have this meeting with both my spouse and I or do you often work?

Kristy: (07:10)
We're just one person. Yeah, definitely. Especially if it's decisions that you are making with a partner or a spouse. Yes, definitely. I would recommend involving both and you know that's not a black and white. Everyone's different, but it sounds like in your situation the answer would be

Braden: (07:27)
okay. Yeah, because I would probably say like 5% down, let's do this. My husband would probably feel more comfortable buying at the house first, so. Right, sure. A lot of, a lot of couples probably operate that way. That's a good balance.

Kristy: (07:39)
Definitely. So, and it might be a dollar amount and that you ended up coming to because he wants to put more down, but we could also say you could purchase it just through the sale of your current home, which is great.

Braden: (07:53)
Well, okay, so let's say my goal, let's just say then my goal is to save $50,000 to contribute towards a down payment. Okay, perfect. I'm going to make it a little easier for Kristy or guys or wish watching numbers.

Kristy: (08:06)
And then what would be a timeframe you would put on that

Braden: (08:12)
by let's say end of, I'm going to say, and of September, 2021 or end of October, 2021 we'll just make it two years from basically today.

Kristy: (08:30)
Okay, so two years. So if I'm looking at what you just told me, I like to start to break it down by an annual savings goal and then we can even get granular into monthly, but we'll go annual for this conversation standpoint. So looking at your revenue goal, that's 150,000 and then with your student loans, you said 300,000 to pay off over about nine years. I'm going to say 10 years just for easy math here. Right? So 300,000 divided by 10 years equals 30,000 a year. Yeah. And then for purchasing a home, $50,000 to have saved in two years is 25,000 a year. So if I add up your $30,000 in debt payment plus your $25,000 in purchasing a home, that would give you a goal of bringing into your household $55,000 per year. Yes. Is that making sense? Yes. Cool. So what we're kind of looking at here is you have a revenue goal of one 50 and then maybe you could have a profit goal post tax right, of 55,000 so pre tax that would be a little bit higher, right?

Braden: (09:54)
Yeah. So my, my profit goal is 70% profit. So here I'll get out my calculator guys. Yes. So no 150 times 70 would be 105,000 and then I figure on that probably about 25% will go to tax. So after that we're talking, let's just say take home pay of $78,000

Kristy: (10:21)
perfect. So if that is the scenario you are planning for, you have the money that you need for your down payment and your student loan for the first year.

Braden: (10:31)
Yeah, that would be close. I mean that other $20,000 needs to cover gas, car payments, groceries and that sort of stuff too.

Kristy: (10:39)
Yup. Great point. So that's a question is how much are you needing and monthly expenses and um, we don't have to go through your full monthly expenses, but um, if that is covered, if that covers it, great. You're on track.

Braden: (10:57)
Yeah. But for me, I'm already starting to see you guys. This is bringing a lot of clarity. I would guess based on my own personal finances, again, a 70% profit margin and my business is the goal I'm striving towards. It's not one that I can guarantee that I'll even hit next year. So looking at these numbers, I think it would be reasonable to contribute $30,000 next year. So 20% or a big chunk of that would be for the home a little, a much smaller chunk would be for the loan that as the income goals continue to increase, then it could go from 55 to 80,000 a year to a hundred thousand a year.

Kristy: (11:34)
Definitely. It's not linear, especially for entrepreneurs who are growing, growing, growing. You might start off smaller and then you might get much closer to the completion of your goal as you get closer because you've hit higher numbers. So I think that's a great thing to keep in mind as well. So that's kind of a rough sketch of, you know, maybe where you would target to be, right. So this is our, our goal, right? Yes. From there, step two of financial planning. Step one is setting the goal and having the numbers to it. Step two is getting a sense of where you're at today. So for you it's what's, what's the revenue? What's the profit? You don't have to give us all the juicy details unless you want to, but that would be where you would go next is where are you at now with those metrics, right?

Braden: (12:29)
Yes. Yeah. So I'm a long ways off right now, everybody. But I think for me, what I'm learning, tough lesson learned for all of us is, you know, I think I read this, I'm sure it was like a cute meme on Facebook that it was like you don't learn how to manage money by having money. You learn how to manage money and then you get money. Yes. So I'm trying right now my big focus is trying to implement and go to habits so that I have a system in place to actually set aside these savings when I'm hitting the revenue goals I want to have. And that's where I currently am in this journey that we're discussing.

Kristy: (13:09)
Ooh, I love that. So tell us about some of the habits that you're working towards.

Braden: (13:16)
Yeah, so right now I don't have really any great habits. Um, yeah. Basically I ha I haven't really started saving I that I will say the one nice thing about my personal financial situation that I'm thankful for is due to the fact that I have my husband to help. And I just generally don't believe in credit. I have no consumer debt. So the student loans are pretty terrifying, but I don't have, I don't own any credit cards. I don't have a car payment, nothing like that. So other than student loans and business expenses, that's really all I have to work with. So it's really just setting a budget for my personal finances. And then I'm setting up a savings schedule for these goals.

Kristy: (14:01)
Yeah, I love that. So you have your marker of where you are with revenue and profit and then in terms of habits you are working on budgeting and getting some savings set up. So that's kind of your where you're at now,

Braden: (14:14)
right? It's like I'm kind of at that point now where every time I get a big client I feel like I'm allowed to go to Lulu lemon and it feels harmless when you're in the beginning stages of your business because that extra money is like a $50 pair of shorts, but then that turns into like $300 at the mall. And so I'm really worried that's going to turn into like thousand dollar watches at the mall. And this is, that's kind of the point where you got to cut it off obviously.

Kristy: (14:39)
Yeah. And I love that awareness because that is where you can start to really put some savings into place or some practices and habits into place to help you say, wait, wait, wait. I would love to have that watch and I'll have it one day. But right now it's more important for me to do X, Y, Z, right. Priorities and what we're focusing on.

Braden: (15:02)
Exactly. Cause we all have a list of stuff we want. For me it actually wouldn't be a watch, but it's like there's a chair at West Elm that I really like and it's still fine. I'd love a new, it's like all that kind of interior to core stuff. Right? So every time you get a step up in income, you have to realize that that is not a simultaneous Appleton offers. You needed to upgrade your lifestyle.

Kristy: (15:25)
Yeah. And it can be about a balance too, right? Cause we don't want to necessarily deprive ourselves and we still want to enjoy life. So maybe you get, you know, a nice pillow at West L instead of the chair for example.

Braden: (15:40)
Right? Yeah. Cause the little, the little stuff adds up so and steady. Just put all that stuff in your budget.

Kristy: (15:46)
Yeah. Um, and that's part of the, where you are now process as will recommend getting a sense of all the different moving pieces of your finances. So what are you making? What are you spending both in your business and personally and then you know how much is in the bank, how much do you have in investments, how much are you saving, how much do you have in debt, what type of debt is it? And really laying it all out there to see every single different moving piece of your finances to give you a full picture of where you're at today.

Braden: (16:21)
Yeah, so the question I always have, so I see in the money book workbook, which again you guys can and should download. If you go to the show notes unfuck your biz.com check out episode. What episode did we say we were on 17 and 19 you can download either one of those places you give the goals, max out, Roth IRA travel and save for home. So maxing out our Roth IRA is something I feel like I should be doing. But where I need someone's expertise like yours is to know how to balance that goal with the ones we've already discussed.

Kristy: (16:55)
So

Braden: (16:57)
that would be my question. Of course you can't, you might not be able to give me a direct answer, but what, what factors do we look at to make that decision?

Kristy: (17:04)
Yeah. Typically I'll start by looking at your cashflow. So you are making revenue and spending money in your business and that's one entity, right? And then there's a flow of money into your personal. And so once money flows into your personal, it's okay, you're spending X dollars on expenses and then there's potentially some money leftover. And it's a question of, okay, how much is left over? What do we want to be doing with this money? Should we put it all towards the student loans? Should we put some towards the student loans, some towards the house, some towards a Roth, and starting to consider what your different are based on the money that you have to save. Um, and, and making some decisions from there. So I know that's a more general answer, but that's kind of at least the process that I go through and can help guide you with based on your priorities and what's most important to you. Because it's about you. It's your financial plan.

Braden: (18:08)
Right? I like that in everyone. We are planning on doing another episode. I don't have it scheduled yet, but it will be coming probably in a month or two. We'll do another episode with a deeper dive into retirement savings specifically. And between Christie's expertise and my tax expertise, we'll be able to give you some killer information on what the differences between an IRA, a Roth IRA, a solo one, solo 401k and all that good stuff.

Kristy: (18:33)
Yes. So that is kind of the process in making some of those decisions. And again, starting by laying out all your goals, seeing what you're working with now, and then making decisions for the, for today. And then you can also start to create plans for the future. You know, right now maybe it's not feasible, but if you make X amount of dollars extra in your business, maybe that's your cue that that's money you're going to put towards your IRA, for example. Right.

Braden: (19:03)
Love it. So I know, and I feel like everyone has a personal philosophy. So I have mine that I'll share, but I want to ask you first because there are a lot of people who are really into Dave Ramsey's system. There are other people who are in two different systems and I know that, so like the Dave Ramsey camp, they're very, very anti debt. You pay down the debt, you save for retirement. It's a very conservative approach. There are other people who will tell you to invest all of your money into your business. Don't worry about profit margin that much. Starting out, it's all about getting your business up and running. Where do you kind of fit into this ecosystem as far as your saving and money management philosophy goes?

Kristy: (19:44)
Yeah, my philosophy is a very much, it depends type of philosophy, which is probably not a good answer per se because it's not giving it an exact opinion, but that's, I feel like it is based on what you want to accomplish and what's important to you and the different things that you're balancing, the different goals that you have. So some people maybe paying down that debt does make sense for them cause that's what's super important to them. That's what makes them happy. That's what brings them joy. Other people, they really want to hit different revenue growth numbers. I mean I am a fan of profit so I might not be of the camp of like putting everything back into the business per se. But if there's an objective of doing that to then get a certain amount of profit at a certain point, you know, I could see that being a strategy. So that probably doesn't exactly answer your question, but I think it's all based on you and what you want and important to you.

Braden: (20:48)
Yeah, that makes sense. That's probably the right answer. So I like that. What, what my kind of philosophy is, and you guys will see this and you'll start to understand it more as I talk more about the unpack your biz framework, which I talked about and I don't know which episode was one of the first five episodes. If you all go back and listen. But I am a big believer that trying to find the best way to explain this, but it's great to save for retirement and it's great to save for a new house, but it's going to stress you out more if your taxes are a cluster fuck even if you have that money saved. So for me it's all about getting healthy habits and healthy systems set up before you get really nuanced and sophisticated in your savings. So that's why I've started teaching like the profit first philosophy to get your business finances healthy so your current system's healthy and then get a system in check to save and pay for your taxes. And at that point you can work on getting more and more cash flow into your personal finances. And that's when it's going to be a lot more fun for you to sit down with someone like Christie because all your business stuff you're not even gonna need to really worry about anymore. It's all on automation. And now you can look at this money that you have going into your personal bank account. What should you be saving it for? What are your goals? And all that type of thing.

Kristy: (22:11)
I think that's great. I'm a big fan of getting organized and having different numbers and systems of things going in different places, but essentially just to keep it really clean and simple and you know what's going on.

Braden: (22:27)
Love that. Okay. Anything else for that we need to work through in the money will workbook or did we go through all the steps?

Kristy: (22:33)
That is it for the money goal workbook and then getting your financial data organized. That's not in there, but you can, you know, just go through a spreadsheet or a pen and paper or I have some Excel sheets I could share. Um, and we could pop in the, in the show notes to, to organize. But those are steps one and two there. And then three is kind of, you know, you know where you're going, you know where you're at. Okay. What's kind of that gap between where you're at and where you're going? And it's kind of the creative brainstorming phase, right? Like how can I get from a to B? How can I get from the revenue on that now to the revenue that I want to be at?

Braden: (23:20)
I love the creative brainstorming phase. I'm all about that. Okay. So what we'll do is I already have a copy of the money goal workbook. If you want to send me any of that extra information, what we'll do is we'll bundle it all together on one download so you guys can go to the show notes, click one button, sign up with your email and download it all at once and then you'll be in contact with both Christie and myself. Christie, let's talk about, uh, what it is like to work with you. So if someone wants to get started, um, what's like your initial offer, the best way to get started in order to start financial planning?

Kristy: (23:56)
Yeah, so I start everybody with kind of the initial planning process. So what does that look like? That looks like, as we were talking about today, step one, getting your goals set and putting some numbers to it and getting all of your financial data organized. And then from there we start to identify the main areas, kind of that low hanging fruit that you really want to start diving in and taking action on right away. So it could be, for example, for you, you mentioned wanting to set up some savings. It could be taking a look at what a savings plan could look like. Uh, it could be, Hey, I have this investment account. Is it working for me? Is it serving me? So maybe it's reviewing your investments. It could be that you are struggling to know even where money's going. So it's setting up some systems so that you're tracking, you know, how much you're making, you know, how much you're spending. Maybe it's putting a strategy for making some extra payments towards your debt, so whatever those kind of things are. A good way to think about it is all those things that you feel like you need to have together before you sit down with a financial planner. That whole, I need to get my shit together before I have a financial planner. Those are the types of things that we start off in our initial processes. Getting that shit together. Right. So

Braden: (25:31)
yeah, cause if you wait until you're ready, you're just never going to get started.

Kristy: (25:34)
Exactly. And no one's ever really ready. Like, cause there's always something that you can be working towards. So that's where I start with clients and create kind of a foundation and an initial plan. So your plan for example, is whatever with your revenue, whatever with your profit. Um, and then from there I work with them ongoing. So that's typically a quarterly meeting just especially with entrepreneurs being in such, whether it's variable cashflow businesses or they have a launch one quarter or they want to make a big investment this quarter. There's more frequent decision making that comes up. So we'll meet quarterly just to check in on your plan, review your progress, talk about changes and then make a plan for the next quarter. I'm a big believer in taking it one step at a time. I know it can get really overwhelming, especially if you're working towards a couple of different goals at to be, you know, juggling everything all at once. So we just take it one little step at a time. And just continue to chip away at it.

Braden: (26:53)
Love it. Okay, so I also noticed in your workbook you have a scheduling link, so you all can download this at work through the exercises. Do you request that everyone go through the exercises before they schedule with you?

Kristy: (27:07)
You totally don't have to because in that free call that's when I will start to ask you some of these questions and it's okay to not know the answers because that's where I'll be like, okay, this is what you would want to do before we actually sit down and get started. But if you want to then feel free. So either whatever's feels most comfortable to you, but you can totally show up as you are not sure what to expect, not sure if you have it together and we can work it out.

Braden: (27:42)
Love it. Okay, so we'll put the free download in the show notes for everybody, but then we'll also just put a direct link to your website and your calendar. So if you guys know that you just want to skip the work and just go straight to Kristi, you can do that too. Yes. Any other final thoughts before we wrap this one up?

Kristy: (28:02)
Kind of in line with what we're just talking about is you know, start, get started. There is no perfect day. There's no time where you need to wait until you're ready. You're ready now dive on in.

Braden: (28:18)
I liked that tip. That's a good one. So get started everybody. I will leave you all with this. If you listened to all of my Tuesday episodes, you've heard the spiel many, many times. But if you are new to the podcast, just a heads up. I have a Facebook group. It is called Brayden's besties. My name is spelled B, R. a. D. E. N. Christy are you already in the group? I'm in the group. Okay. Christie's already in the group so you guys can tag her if you have questions, but if you're not in the group you'll notice once you join. One of my question prompts to get into the group is tell me a legal or tax question you have for your small business. We are now allowing money management questions and there as well. So if you have a more specific question for me, leave it lead multiple questions if you whine, but if you have a money question, I would love for you to put that on there as well because I collect all those questions and the ones that are really in my wheel house, I answer those on Tuesday episodes. If they are specifically questions geared towards what Kristi does, or maybe it's a trademark question, a sales tax question, which I bring guests onto the episode to talk about, then we will save those questions for when Kristi and others are on the podcast. So make sure you do that. Go join the Facebook group, and as always, don't forget to leave a review and subscribe to the podcast. Thanks so much for tuning in and I will be back in your ear buds on Tuesday. Have a good one.