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You have stumbled onto another episode of Get Your FILL – Financial Independence, Long Life where we explore ways to achieve both of those goals. Last week and next week we have Jeff Hiatt talking with us about fast-tracking our depreciation using cost segregation. Cost segregation accounting is the best of both worlds. You are both taking a lot of your tax benefits earlier by putting many parts of your building on a shorter depreciation schedule and potentially extending your depreciation by itemizing parts of the building that likely won’t last 27.5 or 39 years. If you missed Jeff last week, check it out.
This is an even-numbered episode so normally we would be in the Sunrise Series format with a different topic for every day but I’ve been listening to some of the past episodes in that format and I think they’re kind of boring so I’m going to mix things up a bit. Whenever possible, I’m going to have a co-host because it’s nice to have a few voices to listen to. I’m also going to focus on just one aspect of financial independence and one aspect of long life and call it a day. That should allow us to go into more detail and hopefully be more interesting. If you find you miss the old format, let me know. I’m doing this for you.
And along those financial independence lines, I’m very excited to be joined today by Tylene Henry and I’m gonna let her give you her bio. But I first met Tylene because she was forming an investment club that I ended up being a part of. And so we’re gonna talk a little bit about that as well.
C: So, Tylene can you just give us a little bit about your background?
T: Absolutely, so thank you so much I truly appreciate you inviting me to be a part of this awesome podcast, that you have started here. It takes a lot of diligence and persistence to continue to do it. So hats off to you. I hope that one day when I grow up, I can be as persistent.
And yup, you were truly a blessing and you came at the perfect time to take the investment club to the next level.
And so I really didn’t know anything about forming an investment club being a registered investment advisor, I’m not allowed to be in an investment club. And so, my purpose and role was more of a facilitator in providing the information that the folks that were interested in forming the club would need. And we use the book In Search of the Green, How to Start an Investment Club When You Don’t Know from Beans.
And so using the Better Investing model really just following that and being more of a facilitator and helping to keep people on track as they were going through the different steps to form an investment club. And then you came and it was like perfect timing because it took a long time, as you know, to really get people to be aware of the commitment that it takes and the different things that you have to put in place in order to have one. So anyway, that was that, so thank you.
I am from Detroit, Michigan, grew up… My dad’s an entrepreneur, my mom stayed home most of the time, and I grew up in an environment where I was in some cases, in most cases, the only black child and so that came with advantages and disadvantages. But I’ve learned that every apparent disadvantage is an advantage in a certain way.
And so what it helped me to do is really understand kind of socio-economic perspectives, and situations, how you can be in an environment where you might be around more affluent people, but socially, you may not be included in that environment, but there are certain resources and ideas and things that you may gain advantage to that you would not have in another socioeconomic situation that can change your perspective and change your idea on what’s possible.
So I didn’t know what a swim club was when the kids were talking about swim clubs. I didn’t know what going up north, meant to a cottage on the weekend but those were things that I learned about as a result of my environment, which was, you know, something that helped me to start asking more questions, which eventually led me to just being in a position where kind of fearless I’m okay with being the only woman in the room, or the only black person in the room or the only tall person in the room or the only chubby or skinny or whatever.
I’m okay with that, because I’m used to kind of being in environments where I may not be 100% comfortable and I kinda learned how to thrive in it, and it’s one of the things that I try to help others sometimes I’m that one. If someone doesn’t wanna ask the question, I’ll go ahead and ask the question ’cause I’m used to it and it’s a little bit of a thrill but my personal mission and vision is to alleviate socioeconomic disparity, and so I’m very confident that that is not just the lack of access to money, it’s really a lack of equitable access to ideas, resources, and relationships, and so even if you know about something, sometimes you need a relationship in order to really take advantage of it, and sometimes if you don’t know it’s possible then you’ll never even try. And so, that’s where those ideas, resources and relationships come from.
And so I feel like my purpose here on Earth, is to be able to connect the dots for folks, that may not be connected and to develop those relationships so people can trust, and explore something, a new idea, a new opportunity, a new resource knowing that the person that’s telling them about it is genuine and really trying to help them. And so I… That’s my mission, I am a financial advisor, so I hope my clients which are typically individuals and business owners, to really gain confidence around what they’re doing with their financial well-being and success and again that’s not just about money, it’s really an emotional aspect for a lot of people.
And how does money make them feel, what their experience has been growing up with the money and do their parents talk about it, do they not? And helping them to be in control of those emotions and to be able to make decisions that are gonna be in their best interest, but also, not just making them in silos.
So sometimes you find that folks are just focus on their budgeting or they’re just focused on their retirement planning or they’re just focused on their estate planning. When really and truly all of those areas, your tax strategy your regular brokerage accounts that are not qualified retirement accounts, all of those things impact one another.
And if you’re really trying to grow and build something, it’s helpful to be aware of how you can get some synergies going so that you can make the most out of what you have.
So that’s what I’m passionate about. And I guess that’s kind of some of what we’re gonna be talking about today.
C: As a matter of fact…
I was actually gonna ask you, because the way I came up with this name, Get Your FILL, is because of FIRE and I’m like, Well, I’m an old to be retiring early, I can’t have FIRE, but… So I’ll just go for a long life. And that’s how I ended up with FILL.
So financial independence, I know it means a lot of different things to different people, but is there sort of a definition that is an industry-accepted definition that we could kinda share and uses a foundation?
T: So the Consumer Financial Protection Bureau, defines it as being able to maintain your quality of life, even in the event of an emergency, so, if an emergency should happen, be able to maintain your quality of life and as well continue to make progress towards your long-term goals.
And so, that clearly means different things to different people. But what’s so important about it is really just being aware of where you are and having some piece of mind over how much money do you need to maintain your lifestyle?
Before I quit my corporate job and started my financial practice, I thought I needed a certain amount.
Well, I learned that I could live off of less and I also learned that the lower I keep my expenses the closer I can get to that financial independence point. And so I would say for most people, financial well-being and success is just having peace of mind that they can maintain their lifestyle, and that they can save for those long-term goals and often that is retirement because we don’t always have a choice as to when we retire. Some people say, “I’ll work forever.”
Well, we don’t always have a choice, so if we can begin to do some things and position ourselves then we have some things that are growing for us, it gives more piece of mind that, at that point at which either you can’t work anymore, you don’t wanna work anymore, you have the freedom of choice as to whether or not, and ultimately it’s freedom of choice.
I tell my clients all the time: you don’t have to be 60 or 70 years old, when you retire, you can choose to do that, but if you’re in a position where you don’t have debt, you’re choosing. So maybe if you want to live off of $200,000 a year then maybe you have to keep working, you find that you would rather have the choice of working or not, and live off of $20 or $30, or $40,000 a year sometimes a piece of mind and freedom of choice, it’s worth it to people, so it just depends on what’s important to you.
C: Yeah, and I think it comes down to hobbies. If you think, Oh, when I retire, I need to have a yacht so I can sail around the world versus if you’re thing for retirement, it’s like, I just wanna be able to garden and I just wanna be able to travel and do things and whatever, I mean and if you do something that I’m gonna get an RV and go across the country, then that’s gonna be, hopefully, a lot less expensive.
Then you bring up another good point, because I try to encourage people when I talk to them about retiring about what it means, what financial independence means is the first thing cut a whole bunch of expenses right out of your life if you can, ’cause that allows you to do two things, right, you can save and you can potentially retire a lot earlier. I watch the way people go through money and I think men, you need that thing?
I don’t know, I mean, I want you to do the talking, but I just feel like I could just say to you, say you wanna retire and then you just bought this junky thing and you just fill your house with all these tchotchke, ask instead of saying, Hey, I’m gonna make my coffee at home, I’m gonna take that $10 or whatever – it’s more than that. It is a 25, 30 bucks a week that I’m saving and I’m gonna put that into some kind of a stock purchase. So you tell me realistically, I know people think it’s hopeless, for me to save it’s hopeless, for me just to… I might as well just go ahead and buy this thing because I’m never gonna achieve my goal.
Can you talk about the power of small savings and small changes in your life?
T: Absolutely, so when you think about the opportunity for compound interest, so I’ll give you a scenario. So I’ll sit down with someone and I will talk to them and explain to them that it’s pretty important that they have some sort of emergency reserves. If you get sick or hurt, if you lose your job, you can at least maintain your household for three to six months. Okay, depending on what you feel comfortable.
Sometimes people think that means like three to six months of my salary. Well, if you’re living off of every single dollar then yes, but if your expenses are less than your quality of life, that what you need to maintain your lifestyle is less than 50% of what you earn then it doesn’t seem that unattainable to have three to six months of that saved up. But sometimes when people learn that they’re like, “Okay I’m gonna start putting away half of every paycheck and then three or four months later, something happens and they end up spending all that money and then they’re done. Whereas if they do something like carve out a small amount like 5%. Five cents of every dollar – five cents on every dollar and put it into the savings account and leave it there and let it grow. It’s not enough to really miss it to the point where you’re like, “Oh my gosh, I got all this money But it is enough to the point that, over time, and quite often if folks will follow the advice that I give them, it may take them three or four or five years to get that emergency fund but better to take your time and do it based upon something that’s established from a habit, as opposed to just saying, “Okay well I’m gonna just cut my spending, in half because then all those things that you missed out on, they’re coming and you haven’t established a good habit. So that concept of having a systematic approach to whatever your financial goal is, it’s very, very helpful.
But one of the first things too, ’cause you mentioned people wanting to buy things and stuff and junk. Even more importantly than having a specific financial goal, or strategy to get there, is really just knowing yourself and being comfortable with who you are, and really being clear on what makes you happy, and what doesn’t make you happy? Because a lot of us are self-medicating, and we think of that as like prescription drugs and narcotics. But no, sometimes it’s that latte that you just gotta have from Starbucks every day. It may be having those red bottoms shoes. Is it really that you want them, or is it that you want the status or you want to prove yourself worthy?
And so, when we really begin to back into why our habits and the things that are preventing us from having financial independence and freedom, we can really get to the core root of things to really make change in the direction that one wants to go. But if we just look at the symptoms, and we don’t really look at the root cause, then we really never get to a point where we’re making progress.
C: You talked earlier about something that I’ve noticed myself struggling with, as I inch closer to my own financial goals. And that is your Money Concept: your ideas about what it means to have money, is it the rich person is bad, they’re evil, you see a nice car and you think all that person must be a jerk or whatever, and also and then all of a sudden you wanna turn that around and say, “Oh okay, now I’m gonna have that nice car. Am I gonna now be a jerk?
Do I need to maintain a certain level of discomfort in order to fit in with my people?
That makes sense? ’cause that’s something that I struggle with and I love my family, and I don’t want it to sound like I’m dissing my family, but sometimes I feel like I’m not fitting in with them because I’m striving for this higher level of success and I have to dumb down a little bit. And that’s not the right term, and it’s probably offensive to my the family members, but you know what I’m trying to say,
T: I get where you’re going. 100% and I just think that goes into when you are truly confident in who you are, and you define yourself, you can no longer allow other people’s opinions to dictate who you are, how you feel about yourself because you know in your heart that you are not seeing yourself as being above or more valuable than anyone else, you just know what you want and you’re not willing to compromise it.
And so sometimes we try to show up differently so that we don’t make other people uncomfortable, but at the end of the day, nothing should get in the way of you living your best life.
And there’s a difference between that jerk who’s flaunting everything they have and they’re really those material items are what they feel is validating them and they need that because they need something to make them feel whole, or make them feel like they have a status.
There’s nothing wrong with having nice things, maybe you just really love Louboutin that you just love it. It’s in your budget, you can do it, that’s fine. But what I find more often than not is a lot of these more luxurious type of purchases and things are not just coming because I just like nice things sometimes it’s because I didn’t have anything growing up and I really wanna have nice things.
Or it could have the opposite impact of… I didn’t have anything growing up, and so I’ve got all this money sitting in my savings account that’s doing nothing for me because I’m afraid of not having it.
So, it manifests itself in so many different ways. And so I think the number one thing is just to get really comfortable with who you are, to get really clear on what your goals are.
And establish boundaries. You can’t allow anyone to get in the way of your success and what you want for yourself and as long as we’re not doing anything to harm or disadvantage anyone else, we can’t be worried about what someone else thinks, because I… It’s just not gonna..
I wanna save money for my kids to go to Harvard, but my family member, they don’t care about paying for their kid’s college. Should I not send my kid to Harvard… ’cause they’re gonna think I’m better than them. It is what it is.
C: I was just thinking as you’re talking, that you must be a big part of your job is being the psychologist for everybody.
T: I’m telling you, it’s more of that than anything else, it’s more of that than anything else. And one of the biggest challenges I face is getting people to be honest with themselves, being honest with themselves so people be like, Oh, well, they won’t talk. It’s not that you… They won’t be honest with themselves.
And so that’s one of the things this is… I’m going into I think my fourth year of being a licensed insurance and investment advisor, and before that I was an associate, so I worked with someone for about four or five years, but I’m going into my fourth year being on my own – One of the biggest things I’ve learned is: everybody is not my client, and this concept of really identifying people that you can connect with and communicate with, because I wanna help people, I don’t wanna try to force someone to do anything I want them to know what they want or help them explore what they might want, and then give them the information to make informed decisions. And when something happens like someone passes away or they get a raise or they inherit something that they can make informed decisions that are gonna help them get towards those long-term goals ’cause often… We’re making if you think back in time, we’re making it through the day we’ve gotta survive without getting eaten by a lion, or tiger or bear, right?
So it’s like getting through the moment and survival, but how do we get beyond survival, and look at a strategy that we can be able to have some piece of mind and knowing that we are getting to a point that survival whether it’s work every day or getting the clients or making the sale that we’re stashing away a piece and a piece and a piece, and then doing something strategic with some of it investing, so we can get some return. Planning so that if something that we don’t know is gonna happen or plan for happens, that we can continue our lifestyle making sure that if I don’t wake up, I didn’t wake up yesterday that my son and all of his financial needs are met, that whoever is supposed to have guardianship of our children.
People don’t wanna talk about those things, but really, and truly, if you’re living for your children, and they’re the most important thing in your life and you will do anything for them – to make sure they don’t have to pay for college, to make sure they have this or that – the very first thing that we need to do is make sure that we’ve got our estate planning in place.
Because all of us may have siblings that would be willing to take care of our kids, in something were to happen to us, but all also have ones that we will prefer and there’s one We will prefer to take care of our kids, then maybe they aren’t good with money, so there may be somebody else that needs to manage the money. Maybe you need to be very specific about how much of that life insurance benefit should be used for their care, should be used for college should be withheld until after they’ve had an opportunity to go through their first marriage. If that’s something will happen, then they can get it later, right?
These are things that I don’t have to have a million dollars today to make sure that that’s a reality for my child and when we start to think that way, then we start to bring other things into our lives and have another sense of well-being that makes other things happen in the interim that we’re getting on the path. ’cause no one wants to plan to die, right? Nobody wants to do that, but I do know that one day I am going to die and I wanna make sure that whether that day come sooner or later everything that I’m working so hard for everything that I’m so passionate about all of those things continue to happen and the only way they can happen is if I take the time to step off the treadmill of life and do the stuff that nobody wants to do, so that it’s taken care of.
C: You’ve touched on a little bit of this, but what do you think are the components of a successful financial plan or there are sort of checklist items that you just have to make sure that you definitely including.
T: So typically the first thing that’s really, really important is the financial position. So I can’t tell somebody, you need to save this amount. You need to invest this amount, if they don’t know their financial position.
So financial position embodies, things like your cash flow, your budget, your debt.
So once you know your financial position, then you know how much money is disposable to be able to save, to use for the next area of planning, which is risk management. Risk management is looking at your insurances.
And so sometimes it’s… It encompasses things like life insurance, auto insurance, your umbrella policy. So, really looking what are the things that could impact your ability to achieve your financial goals?
It could be getting sick or hurt it could be a job loss, it could be several different things, but how do we manage risk so that we have a plan in place?
Some people are not insurable. So life insurance is in an option, so they have to look at other ways that they can have money that’s building so if something happens to them before they plan for it to happen, there’s something there for the people who are counting on them ’cause insurance is really for the people who live, right? We think of it for death but is for the people who live.
So we got the financial position, we’ve got risk management, we also wanna take a look at our investments, right? So maybe that’s like a brokerage account where you might hold individual stocks or maybe mutual funds, so having some type of way to know what you have invested. A lot of people are like… Oh, well, I’ve got an E-Trade account I’ve got Robin Hood, I’ve got something over at Edward Jones, right?
If I go get a local bread from Meyer and I get a local bread from Kroger a lot of bread from Wynn Dixie and a loaf of bread from Publix -So whoever your audience is, hopefully I got somebody’s store – a loaf of bread from Walmart.
Okay, I still have a loaf of bread. So, that’s not diversification… So really looking at your investments and identifying where am I invested?
So investment is another key area of planning, retirement so retirement, most times we’re looking at employer plans so maybe a 401k. If you’re a business owner, it may be a SEP IRA. But looking at those accounts and identifying not just where is your money invested and how are you trending towards whatever your goals might be in a long term, but also looking at the tax treatment which is the next area.
So we’ve got financial position, we’ve got risk management, we’ve got investments we’ve got retirement and now we’re talking about tax planning.
So a lot of times people like… I’m just gonna save… I am saving 25% of my income and I’ll worry about when I get to retirement. What happens when you get to retirement and all of your money is in a pre-tax retirement account?
I don’t care how much money you saved. Uncle Sam has a checkbook to your account.
And they change those rules, they just changed with the Secure Act. And I think I don’t wanna quote… But they increased the age for required minimum distributions, which is a good thing for some people. If you’re not at 70 and a half yet, that you can wait longer before you’re required to take distributions from your retirement account, but if you don’t learn about that until the IRS sends you a letter at 70 and after your 70 and a half saying, “Hey you didn’t take this required minimum distribution and you owe us a penalty think you’re not being… You’re not able to fully leverage what you’ve worked hard for, and so that’s why having those conversations earlier are important.
So we talked about financial position, we talked about risk management, we talked about investments, we talked about retirement, we talked about tax planning and the sixth area is estate planning out. Most of the people I sit down with, they’re not like having estate tax issues, right? But there are still things you want to take into consideration if you’re planning to leave those assets to your family, you have beneficiaries on your account a Medical Power-of-Attorney or healthcare Power-of-Attorney in which if you can’t make your own decision, someone else can make them for you.
What if I’m doing a great job, I’m paying all my bills on time, I’m saving, I’m investing, I’m on track for retirement, I bought a home, I’ve got a rental property, and then I get sick or hurt and I can’t pay my bills on time and someone in my family can’t come help me because I haven’t designated someone that I trust to do that.
What happens is someone steps up whether that’s the person that I’ve chose or not, and they’re gonna try to manage something they don’t know where things are, they don’t know what the priority is. So when I’m better, and I can make decisions for myself, how long is gonna take me to undo all that – to unravel all of the chaos that’s happened in between there.
And I’ve also met people who they end up having somebody become their power of attorney out of having to go through the court system, and now they are… Have their wits about them, and they can now take care of their own things and now they’re having the dickens trying to undo that power of attorney or something with it, is taking, taking advantage of it.
And so there’s just all these pieces. But those are the six key areas in which when I say people make financial decisions often in silos and they say, “Oh I’m not ready for estate planning or… Oh, I’m not ready for insurance or if you’re not ready for the conversation about insurance until you’re 50. 60, 70 years old, guess what?
Yes, that’s why people think life insurance is so expensive, they don’t think it’s not a priority to them until they’re 50-plus years old. And at that time, it’s expensive, but if you get something in place… And a lot of the more affluent clients that I’ve worked with their grandkids are more they get a policy and it’s not for them to die, ’cause now they’ve got an asset and they have something that’s growing for them, you know, I… So those are the areas that you really want to address and you don’t do it overnight, you’re not gonna… Some people, they’re head is spinning – all of that is too much.
We start with financial position. So one thing at a time, nothing too big. You’d be surprised. a budgeting exercise can reveal a couple hundred bucks, opportunities that you can make more intentional decisions.
How many people have had an Audible subscription coming out quarterly they forgot they had and the app isn’t even on their phone, they’ve got a magazine or some iTunes… And they’re to use Entitle now. So taking that time to just do some basic review of those key areas, especially the financial position, those are things that you can do to really have a positive impact and know what is your capacity to save and invest.
Maybe I’m getting ready to move and I have this idea, ’cause I gotta raise that I’m gonna get this nicer place. But I was already exceeding how much I should be spending on my living expenses anyway. But you never get to make that decision if you don’t pop off the treadmill of life and take a look at where your dollar is going.
And what’s more important being happy and super comfortable right now, or having the peace of mind to know that if you go in the office and somebody tells you something you don’t like or something unethical is going on that you’ve got the freedom of choice to make a stand and step away if you need to.
Thank you so much, Tylene, for sharing your wisdom with us and for helping us to get one step closer to financial independence. Be sure to join us next week for Part Two of Jeff Hiatt, where he is going to tell us more about cost segregation accounting and how it can both fast track and extend our useful depreciation of real estate.
Alright, have a fantastic week see you next week.