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[00:01] Over the last two centuries, nearly 90 percent of the world's millionaires have created their wealth through real estate. Here to tell you how you can ride this wave with less risk and less capital while creating greater income, is your host, best selling author and Speaker, Michelle Russell.
[00:21] Hi, this is Michelle, the Master of Money Mindset, and you are listening to the Short Term Rental Revenue Podcast...
and in today's episode,
Speaker 1: (00:27)
we're going to be talking about retirement because this is important. I don't care how old you are, retirement, it's time to start thinking about it, okay? But first I wanted to remind you that today's show is brought to you by audible. You can get your first audio book for free by going to audible trial.com forward slash S T R revenue. That's audible, trial.com forward slash S T R revenue. You'll get your first book to download for free and 30 days trial into Audible's amazing app where you can listen to different channels. You'll get a book deal of the day and every month you get a gift of two free books that are usually a couple hours. Sometimes even up to six hours long and you'll absolutely love it.
Speaker 1: (01:17)
Lots of stuff to choose from. So get your first book for free by going to audible, trial.com forward slash S T R revenue. Okay, I've got a granddaughter. Oh my gosh, she's adorable. She's absolutely adorable. She's going to be seven come December. She's now in first grade and she's lost that baby face. You know how little kids have like a little girl face will. She's growing into like the big girl face, which is really, really real, like Greeley's ad. But when I look at her and it's amazing to me how fast the last seven years I've gone, I mean it's in of flash and if you have kids, you know it goes fast. But when you have grandkids, it really goes fast. I mean, you turn around and one day your kids are all grown up and then they've got their first girlfriend or boyfriend, and then next thing you know they're getting married and they're having kids and it's so crazy.
Speaker 1: (02:19)
But when you have grandkids, just that time is just a heartbeat, right? Have you ever seen somebody that I haven't seen for a long time and you're like, in this store or you're shopping somewhere, you're out and you see them and you're like, Oh my gosh, I haven't seen you in forever. Or how are the kids? And they whip out their phone and they start showing you pictures and you're like, Holy crap. Like the last time you saw these kids, they were like little kids and now they're in high school. Or sometimes they're even graduated or they're getting married, or they're having babies and you're just like, Oh my gosh. Like how did time just slip away from us? That's what I want you to think of today. I want you to think of how quickly time just gets away from us. And if we don't plan for our retirement now today, regardless of our age, that time's gonna slip by and we're going to have nothing.
Speaker 1: (03:21)
Absolutely nothing. So it's really crazy is when you look at the statistics out there, there's a bunch of different statistics, and I don't know if you've ever read, there's a bunch of books about how to lie with statistics. So you really don't know who or what to believe. When it comes to retirement. There's a ton of information out there that talks about retirement funds, so studies say that nearly half of Americans aren't saving for retirement. They don't even have $1,000 in their bank account at this moment. That's more than half of the Americans that are out there. Who do you think is going to pay for your retirement? If you have listened to this podcast before and I hope you have, you've purchased and read or at least read the beginning of this book, but there's a great book called the power of zero and in this book the author McKnight, he talks about the power of zero taxation and the power of creating retirement accounts, usually through IRAs like Roth IRAs or using insurance policies as a retirement account.
Speaker 1: (04:38)
He also goes through in the very beginning of this book, if you don't read anything else, read that so that you know and understand what social security is all about because social security was never meant for people to have as a retirement account. It was a supplemental account. And actually when they created it, the average age that people live to was way less than they collected upon meaning. I'm trying to remember what the book was because it's been awhile since I read it, but let's say that the average person only lived to 58 and they put the retirement at 65 knowing that the majority of people were gonna die before they could even possibly dip into this retirement. So not only did they know that people were going to die, but they knew that the majority of people weren't going to be able to collect on this.
Speaker 1: (05:30)
And there was a lot more people putting money into it then taking money out and they would only live for a very short amount of time. So suddenly people started living longer and longer and longer, and they weren't using it as a supplement anymore. They were trying to use it for complete retirement, which you couldn't. And then that's when the challenges all occurred. Right. And obviously we all know, we hear this story about the baby boomers and the baby boomers are getting older and they're going to take over. But guess what guys? Here's a big secret for you. There are more millennials than there are baby boomers. Only because our population keeps growing. And I don't know why people don't talk about that more. There is more of my kids than there are of me more than my Anne's, right? But we have more kids out there today, so that system is going to collapse upon itself.
Speaker 1: (06:24)
And we all know it is, and we've been talking about this literally for decades, and yet people will still sit and bitch about it and moan that they're not going to get their fair share, quote unquote. And guys, it was never meant for that anyway, so don't depend on the government to take care of you. This is your job. Let's go back to our founding fathers. When people came over here and they started farming or started businesses or started working, there were no pensions. There were no retirement plans, there was nothing for them. And no one ever even thought about getting pissed off about somebody else not taking care of them. When they got old, they depended on family members to take care of them. Then we started moving away from that because they started offering pensions in some areas and then with a retirement plan.
Speaker 1: (07:18)
Then everybody thought, well, I need to get in on this. What was really cool though was the IRAs, the government coming in and saying, you know what? We need to help our American citizens out. Let's allow them some tax breaks on retirement plans, and so they structured something called an IRA individual retirement account, and you can go and open your own IRA. Your company might have a 401k, which is basically, you know, very similar. The difference is that I want you to know is that you can self-direct your IRA, meaning a retirement account, like if you have a job and they have a 401k, most likely you can't choose what that money is being invested in. So obviously money is coming out of your paycheck and sometimes your company might be matching that, but it's not just sold in a savings account, doesn't just sit there collecting interest.
Speaker 1: (08:18)
Very little interest nowadays. What is it is less than one or 2% rights. It's so tiny, the interest amount, but what they do is they reinvest that money and they invest it into things like mutual funds or whatever they're investing in, but it is in something called a portfolio or several and they'll be investing that in other things. Stocks, all kinds of things, reads real estate, investment trusts, all kinds of different things. But they are the ones choosing what they invest in, which is really sad and scary. When my dad had cancer and he was dying, my real father, he had a retirement account that was just before 2000 right? So that was in the late nineties and in the late nineties Oh my gosh. The stocks went up and then the stocks went down. I mean, they plummeted and he lost almost all his retirement savings. He had hundreds of thousands of dollars in his retirement and then when the Sox took a turn for the worst boom, everything went wrong and when he passed away, there were only tens of thousands of dollars left.
Speaker 1: (09:30)
It was a fraction of the money that he had had in there at another time. That's because he had no choice what they did with that money. I love self directed IRAs. These are IRAs that you get to choose what you do with them and where you put your money, what you invest your money in. So you have to have your self directed IRA in a custodial company that specializes in IRAs and there's a few of them out there. The company that I love is equity trust and equity trust has equity, trust university again, and I've gone to this thing a couple of times. I actually won a free one one time, so that was pretty cool. But equity trust university is a great weekend where they have speakers come and they stand up on a stage and everybody's in there. Hundreds of people are in there and they're telling us all the different things.
Speaker 1: (10:29)
What we can do with our IRAs, with our self directed IRAs, and then they have these awesome breakout sessions. So if you're really interested in real estate, you can go with one. If you want to learn about diamonds, you can go with another. If you want to learn about stocks, you can go into another room, whatever you're into, to invest in your IRA, that's legal to do. They will take you into those rooms and tell you how to do it. And they'll also keep you legal, right? So let's say you want to get into investing in real estate, and you want to get in with a bunch of people. Well, there's different ways that you can all put your money and pull your money together. You have to follow the letter of the law, otherwise they're gonna seize your IRA. And remember, if you do anything against your IRA, if every single bit of it can be taken from you, let's say you had $1 million in there and you had some money put in to a real estate investment and some money put in stocks, and you had some put into whatever, right?
Speaker 1: (11:33)
You had all these different things you were invested in, and then somebody said to you, Hey, I'd like you to take this 50,000 we're going to all pull our money together. There's 10 of us and we're all gonna invest 50,000 each into this $500,000 property. It has half a million property and we're gonna use it for short term rentals in Panama, right? So it's a half million dollar property there. Everybody gets one 10th of it, and then you'll all get one 10th of the income of it. Well, the way they pulled it in, maybe they didn't do it exactly legally, right? And so if they didn't, all kinds of people would come down on your asses if you're doing it wrong, but they can take not just the 50,000 you invested in that bad real estate deal and it might've been a good real estate deal. It just wasn't put together legally.
Speaker 1: (12:23)
Right. It didn't have all the T's crossed and the I's dotted and it didn't have the attorneys that it needed and it wasn't formed the way that a reach should be formed or whatever. If the collection of those funds wasn't exactly up to par, all of the million dollars, it would be forfeited. It would probably, you would lose it all. You could possibly lose it all I should say, you might not, but almost always you will because the government usually sides on the side of the government. So it's like the house wins when you're playing, you know, roulette in Vegas, it's like go house is pretty much always on top. So that's pretty much how the IRS and the government is too when it comes to your retirement. So you always want to do everything on the up and up. But what's cool about the university is you can go there and they'll tell you, do this, this and this.
Speaker 1: (13:14)
Make sure you don't do this right. So remember I've talked about to how when you're using your IRAs that you have to have this arms length from any of the benefits that you get right now. So you can't benefit in any way, shape, or form immediately from what your IRA is doing, right? It's a business and only the business can prosper, but you personally cannot, or your family members cannot correct. So you know, some people are going to say, well, my second cousin can do this, or whatever. Don't ever go there. Okay, just stay away from stuff like that. You'd really don't want to walk that Razor's edge. But for instance, you can't buy a vacation property with your IRA in Hawaii and then go stay at your vacation property for a week or two even if you pay, you can't. So don't let people tell you that you can.
Speaker 1: (14:14)
A crazy thing is we go down to Panama because it's one of the places that we're thinking of retiring. And there's a bunch of wonderful, wonderful places that you can invest in down there and they've got this pension auto program and it's really amazing, right when you go down there, bill tell you, Oh yeah, buy this. And then you can come down and stay here. Just buy it with your IRA. And they'll tell you that is legal and it's not. And there's been times where I've gotten in arguments with these guys, especially when there's a whole group of people and I'm like, that's not true according to U S laws. And I'll pull it up on websites and show and they get so pissed. But here's the deal. They will lie to you. People trying to get your money will constantly lie to you guys. They'll lie to you, they're trying to get your money, they want your money, they want you to invest there.
Speaker 1: (15:04)
So they're going to tell you all these wonderful things and you won't be able to. What you can do is maybe invest in a condo and then also buy a house there with your regular money. But whatever money you buy your condo with from your IRA, you cannot stay there. You cannot benefit from it. So keep an arm's length distance. Same with if your kid is going to college somewhere, you can't buy a place with your IRA and then allow your child to stay there at a discounted rate or even paying a regular rent. Okay? Because your family, you and your immediate family cannot benefit in any way, shape or form from this transaction. So you have to keep an arm's length distance from it. Everything you do within your IRA has to only benefit your IRA and not you personally until obviously you retire and you can start collecting the funds from that IRA.
Speaker 1: (16:00)
That's when you're going to reap all your rewards. But in the meantime, keep those things separate. So you need a company like equity trust. And what I love about their university is you spend a couple of hundred dollars and you go there and you spend the entire weekend learning about all the different things that you can invest in and all the different ways that you can do it because they always have speakers who started off with $20,000. I've even heard stories where people started off with $5,000 and turned it into a million after only three to five years or something and you can absolutely do this. One of the best things about an IRA is while you were young and while you are not making a lot of money, you can still get a Roth IRA. You can still qualify for something called a Roth IRA. A Roth IRA is the best IRA to get because unlike a traditional IRA, you're going to be taxed at a different time.
Speaker 1: (17:02)
I've talked about this before, being taxed before you withdraw the money or being taxed after. So let's use the example of the two types of IRAs or Roth IRA and a traditional IRA. For the most part, a Roth IRA is going to be taxed before you put the money in. That money is tax before you put it in. So if you earned $100,000 last year and you paid taxes on $100,000 then you put five or $6,000 into your IRA, that money was already taxed. That got put in there. Okay? So the tax, you paid the tax on the $6,000 before you put it into the IRA. So now any money inside that Roth IRA that is earned off of that $6,000 will be tax free because you've already paid the taxes on it before it was paid. Now in a traditional IRA, which is the IRA that they push and the IRA that the government loves, and the reason why is because you're not taxed on the money that you put in there.
Speaker 1: (18:03)
So let's say you're putting $6,000 into the traditional IRA, you take that $6,000 and you put it in there, and when you're doing your taxes, it says, did you put any money into a traditional IRA? You say yes, and they go, Oh great, we'll take that $6,000 off of your income. Meaning you're not going to pay taxes on that $6,000 and be, and you're like, Ooh, I saved money in your taxes. No, you did not. You did not save money in your taxes because when that $6,000 starts earning interest and making money on its investments, just earning any kind of income, then that money is going to be taxable. So now we've got $6,000 in both of our accounts in our Roth IRA, we paid taxes on the 6,000 before we put it in there. And the traditional IRA, we did not, okay. Now we found a piece of property that somebody was selling.
Speaker 1: (18:54)
It was a house or something, right? Somebody, maybe we got an auction or something, but we only had to put $5,000 down to hold this piece of property and we put the $5,000 down and we had an end buyer. So we're going to do a little wholesaling with our IRA. So we put $5,000 down to hold this property. We're doing a wholesale real estate deal. And then we found a buyer at the end. So we bought, maybe it's a house for $100,000 we bought it for the, from this guy. And then we found a buyer who wants to buy it from us for $150,000 so we gave the seller $5,000 from our IRA to hold that. And then we went in and we did an a to B, B to C transaction with a title company, right? So we might do a double close and I'll go through that with you all later.
Speaker 1: (19:47)
But basically we're making that $50,000 difference, right? And we used our $5,000 to hold that. So we bought the house for 100,000 and we sold it for 50 more. So we sold it for 150 we made $50,000 that $50,000 that we make goes right into our IRA, right? So we get the $5,000 that we put down on it, plus the 50,000 that we made and we put it right back in our IRA. So now our IRA just made $50,000. Now if we did it in the Roth IRA one, guess what? That 50,000 we don't pay any taxes on that. We made all that tax-free. The money sits in there, and now instead of just having $6,000 we have $56,000 and all 56,000 is tax free. Now if we did it in the traditional IRA account, then it's different. Because remember they made us all, so when we were doing taxes going, Oh good, we'll take this off of your income and you won't pay taxes on it.
Speaker 1: (20:52)
Guess what? Now as we begin to withdraw that money, when we get older and all that 50,000 will be taxed. So when we pull 5,000 out for something, we're taxed on that 5,000 when we pull another five, even if we pulled it all out at once, it's going to be taxed every single time. The entire amount, every withdrawal we make is going to be taxed. So imagine over many, many years putting money into your IRA, right? And having your IRAs working for you, investing, making money. So maybe you put in, I don't know, let's say $100,000 over time into your IRA, but you have a million at the end. And the same holds true with your traditional IRA. Maybe put $100,000 in there and at the end of all you're investing in all these years, you have $1 million in there. What's better to pay taxes on 100,000 going in or a million coming out?
Speaker 1: (21:53)
It's way better to pay the taxes going in. Do you understand? So that's why a Roth IRA, if you can still qualify for it, is so incredibly beneficial. Now don't cry and Boohoo if you have already passed that income, if you've already passed the income stage and you don't have a Roth IRA and you can't qualify for it, don't cry. You can't cry because you're already making a shit load of money. So just be happy you're making money so you don't qualify for it. But big deal. But here's the deal. 53% of baby boomers are not saving for retirement. They have no plans to save and no way to do it. You are way above and beyond 53% of the baby boomers who are retiring right now. I remember what I said and I said it before, baby boomers, they used to blame us for everything, right?
Speaker 1: (22:48)
We are not the biggest group anymore. Our millennials outnumber us. And ladies, I want to talk to you too, because you realize that more men will say for retirement than women. Why is that we outlive men by years, many, many years. Why are we not thinking about our own damn retirement? So ladies, I want you, even if your husband is like putting things off and putting things off and he hasn't done it yet, you take this step at you open your own IRA, you get going, you can open a Roth IRA. I don't know why women don't do this, but more men have IRA savings than women by far. So I want you ladies to go out there and open your own retirement accounts. You need to do this for you and for your future because no one's going to be taking care of you, but you know that.
Speaker 1: (23:40)
But you can take really good care of yourself because I plan on taking good care of myself because I like having money. I do, let's just admit it. There's a lady who wrote a book and I loved it and I'm trying to remember. I can remember the cover because she's on the cover of it, but it's like I've been rich and I've been poor and let me tell you, rich is better. It's like everybody has problems. Rich people and poor people, but poor people problems a lot of times can be solved with money, but rich people problems are way different. I'm going to tell you right now, it's a lot nicer to have money. They help you solve a lot more problems. When someone's sick, you can pay for their medication. When things get broken, you can fix them. When you have money, the ability to change a lot of things is yours.
Speaker 1: (24:30)
It's in your hand. It's like a little wand and having money is a blessing. It really is and if you look through all the biblical things, you'll see God blessed people with money all the time, all the time. If it was bad, he wouldn't bless them with money. Woody, like you don't give your kids something that's bad. If it's something evil, it's like, here, honey, take this evil little thing and I'll give you some more of that. No money is not good or bad, it's just a thing. It's just a tool. You need to learn how to use it correctly and how to use it wisely. And part of that, a big part of that is saving for your retirement. So start now. Now, how much should you be saving for your retirement? Well, it depends on how old you are. So if you're really, really young, start with 10% I love 10% savings.
Speaker 1: (25:29)
Get a savings account and start saving 10% when you're very, very young, start your kids at 10% as soon as they get their first job right, and have at least half of that going into a retirement account, especially if it's an earned income, because the only money you can put into an IRA is earned income, meaning money that you've earned with a W2. Correct. Okay. So when they're working at McDonald's or they're working at Chick-fil-A, like my son, when he gets that check, it can go right into his IRA because it's an earned income and you want to put as much of your earned income as you can. You want to max out that amount every single year as much as you can. Now, right now I think is about 6,500 or maybe 6,000 a year. And as you get older, once you're over 55 they allow you to do like a ketchup thing and they add I think another thousand dollars to that or something like that.
Speaker 1: (26:31)
It goes up. Just know that as you get older you can put a little bit more away. You want to max that amount out every single year and every time you have any kind of ability to invest, you want to use it. You really want to use that money. You want to invest it in as many things as you possibly can legally. Now your custodial company like equity trust, they'll tell you the things that you can and cannot. So if you called them and you said, for instance, that you wanted to invest in a piece of artwork right now, as far as I know, you still cannot invest in artwork, so that's something you can't invest in. They'll tell you, sorry, you can't buy that picture because that's not considered an investment. But diamonds, you can, I like diamonds too. Diamonds are a lot of fun and diamonds you can wear, so he can wear them around.
Speaker 1: (27:25)
Nobody knows that you're wearing a big chunk of your retirement right there, but you can wear that. But whatever you're investing in, make sure that you go through your custodian and you let them know exactly what you want to do and they'll make sure that you are doing it on the up and up though. Now they're not going to, they can't really tell you what you can and cannot do, but they'll, they'll definitely warn you if, if you're, they're like, eh, look, read this, read this. Does it fall under that? And then, yeah, because you ultimately are always responsible for your own investments. But I do recommend that you go, I'm like I said, I'm going to put the link on for the equity trust thing. Go for that entire weekend guys. Because honestly you will learn so much. So very much as you start to get older and you're not in your teens and twenties anymore, you want to make sure that you never ever lower that percentage that you're putting away.
Speaker 1: (28:19)
So remember I said start with 10% what's really cool about money is if you're always taking it out before you see it in your bank account, you very rarely miss it. And if you start right away, you'll not miss it at all. So let's say you were making, what does the kid make? Like $300 a week, right? If they were taking $30 out a week out of their $300 check, I mean they would hardly miss that $30 would they? They put $270 into their account and they would go, Oh look, here's my $270 they wouldn't even miss it. But the thing is once they start getting older, if they stopped taking that 10% out and putting the whole thing in, they'll spend it. Whatever you have in that account, usually you will spend. So I always recommend taking things out automatically, doing automatic savings plan.
Speaker 1: (29:16)
And if your work or your office has something where they have a shared thing or maybe a matching thing, whatever you can do to up that income for your savings and retirement, you want to do those things. Start and don't stop and don't let that money touch your fingers or touch your hands or even touch your bank account if it has to touch your bank account. If you're doing an automatic deposit, then automatically as soon as that deposit comes in, have your bank account, switch it over to a savings account right away and then out of your savings account, have your IRA draw out that money every single month. So my husband and I each have our maximum, and I'm trying to remember the exact amounts, like $580 or something a month taken out of our savings accounts. So each of us has that. Every single month comes out automatically and goes right into our IRA's.
Speaker 1: (30:11)
It does that before we can even see it because if we saw it, I'd sure as hell would want to spend it. I don't know about you, but if I had like an extra $600 lying around, I could figure out a way to spend it and I'm sure you can too. The thing is not to see it and to learn to get along without it and that's what you've got to do. Now things will happen. Like I said, five kids obviously, right? Things will happen and sometimes we had to stop for a moment or we did something readjusted, but we went right back to our retirement savings, so obviously you have your regular savings and your retirement savings, but some people, what I love about Dave Ramsey's stuff is he teaches you to have your emergency fund. I always called it my HS fund, which is like a Holy shit, fun, Holy shit, something happen.
Speaker 1: (30:59)
I need the money for this, but you have at least a thousand dollars in a regular savings account. Then you have your HS fund, which is at least six months of expenses and stuff in there. And then once you get those there, then you can start just dumping that money into your retirement accounts, right? Dumping it into a savings account that you're putting away for retirement. And remember, when you're building your businesses, you want to keep reinvesting into your business because your business is going to need money too, right? So don't take all your money out, but definitely take out your savings. And don't forget, take it out automatically every single month. You need to also start planning what you're going to do with your retirement. So everybody has these big hopes and dreams. I'm going to go retire in Hawaiian, sip pina coladas all day long, because that's not a reality. You have to really plan to be able to do that.
Speaker 1: (31:55)
And if you really plan, you have to really stay on track. Not that it's not doable, it's definitely doable, but it's not doable and feasible if you're not planning and saving for it. So there are things, you know, you can say, I want to buy a Mercedes, but you're not putting any money away for it then really you don't. Or you can put your money away for it. So you need to do the same thing when you're planning for your retirement plan, what you want to do, where you want to live, how much you're going to be spending every month, and then take into account all the years until then. Right? So for me it's a lot less now. You know, we're talking 10 20 years out from my retirement. It's like, okay, in 10 or 20 years, what are the prices going to be like?
Speaker 1: (32:43)
And you can kind of go back and see and just kind of plan what are things going to cost, what are our expenses going to be? Why there's a lot of people who look into retiring into other countries and becoming expats is because the cost of living is so much lower overseas or in Panama or in Mexico or you know, in different countries, they've got a lower cost of living. So people will plan their retirement there. But then you've got all the trips that you're going to make back and forth, right? Cause you're going to come back at Thanksgiving or Christmas or whatever. So you have to take all those expenses into account when you are planning for your retirement, how often you're going to travel, how often you're going to eat out, what are your expenses going to be. So if you pay for your house beforehand and you still want to live there, you're still going to have to pay taxes every year, right?
Speaker 1: (33:36)
You're still going to have to pay for your utilities. There are still going to be expenses that you have to pay. So know what those expenses are and then plan for even more really, really plan, right? So worst case scenarios, worst case scenario, what would this cost me and plan for that? Because some people will say, well, if I had $1 million to put away, it would be enough. But then they start saying, okay, well if you had to pull out $5,000 a month for expenses on that, how long would it take to deplete it? And so their savings will deplete in just a few years. They really didn't think it out. Chris Hogan is a wonderful author. I love listening to him cause he's a great speaker too, but he has a couple of books on retirement and I love his retirement books. He's extremely inspiring and he's very realistic.
Speaker 1: (34:27)
I recommend you get one of Chris's books because he's just fantastic. I'm going to put a couple of links on here for it, his books to get. Honestly, even if you just get the audio books, it'll be enough for you because Chris has got some really great information about really, really planning for this retirement and some real world steps on how to do it. Now, if you have trouble with those habits, remember the book atomic habits because that will teach you how to do things, how to create ways in which you can't screw this up. And like I said, a lot of those ways are automatic savings plans and things like that where the money comes out before you even see it so you can't miss it. Okay. But your retirement is something you have to start saving for. And the reason why is if you aren't, you're stealing from yourself, you're just stealing from your future self right now.
Speaker 1: (35:25)
Because later on in life, when you look back, you can look at the way you spent money 10 years ago, 20 years ago, and say, great you little shit you spent and blew all that money doing this, this, this and this. When now I need it. I need it for expenses. And you blew it on this, this, this and this. You'll be able to see it crystal clear how you are robbing your future self. So now I want you to look at your future self and really get in touch with your future self and say, how can I help you get to where you are now and help meet your needs right now, right where you are in the future. So the present self is going to help the future self by putting that money away. And you're going to read Chris Hogan's books too. One of the coolest things that Dave Ramsey ever created was this cool little chart that talked about these two brothers, Ben and Arthur.
Speaker 1: (36:22)
Ben started saving just $2,000 every single year from the time he was 19 and he only did it for eight years. He put $2,000 away every year at 1920 2122 2324 25 and 26 in just eight years. He put $2,000 a weight each year, meaning he put a total of $16,000 into his retirement. Fast forward. So when he retires at age 65 he has over two point $2 million. That's just 6% interest and that's accrued interest over all of those years. But remember he only did it for eight years and he only did it from the time he was 19 until he was 26 now his brother started seeing him and said, okay, this is really cool. Ben is investing this money $2,000 a year. And he was a little bit older and he said, okay, I'm going to start investing too. So at age 27 his brother Arthur starts investing $2,000 a year, putting $2,000 a year into a savings account.
Speaker 1: (37:34)
Arthur begins at 27 and he puts $2,000 a year away from the time he's 27 all the way through to the time he's 65 yes, I know that's a lot of years, right? It's like 40 years of money going in there. 40 years of $2,000 a year. So now remember his brother started at 18 only put $2,000 a year in for eight years, but started younger and his brother put it in for 40 years. $2,000 a year for 40 years. How much money do you think he had at the end of the retirement? If there are both making about the same, about 6% a year. Guess what? 1.5 million because the power of that accrued interest for Ben starting when he did, being so young, he made more money and he got to stop putting money in all the rest of his life. I mean, he only did it until he was 26 but he still had 2.2 million at the age of 65 his brothers started later put $2,000 a year in for 40 years and he never caught up.
Speaker 1: (38:48)
He only had 1.5 million. That is the power of accrued interest. So when you're starting later you have a lot more catching up to do a lot more catching up to do because by the time Ben was 27 the same age as Arthur, he already had close to $31,000 in the bank. He had $31,000 in there because of the money that he had invested and the money that it had made an accrued interest. He had a $30,000 jumpstart. Remember guys, there are ways to make that and put that money away and ways to make that to when you are doing your short term rental business. So what I love to do is buy properties with buy IRAs and then rent from my properties with my Airbnb business. So I'll have my rental property, I'll be a landlord with my IRA and my BMB. We'll rent from them and just do that.
Speaker 1: (39:53)
Coalescing the whole master lease thing, right? Rental arbitrage through it, and I'm never staying there so I'm not breaking any of those rules. But at the same time, I know that I'm getting a really good rent for it. You might be able to even do co-hosting with it and pay yourself even a little bit more and come up with some kind of deal. But the thing is, start using that money. Start saving for the money and start using the money. I'm going to go into a little bit more and I'm going to have some specialists on about retirement because guys, retirement is so incredibly important and it's so important to remember now, why am I doing this right before November because November is coming up and what do we all do in November? We go Christmas shopping and we spend way more money, but guess what?
Speaker 1: (40:40)
We're doing more than ever. We're spending more money at Christmas time, not on other people, but on ourselves. Isn't that ridiculous? They've got all this data coming in that when they have these sales and you know TVs or a dollar a piece, you know this lineup at 4:00 AM and you can get the first 10 people get this TV for 100 bucks or whatever. Guys D need another TV. No, you don't. Do you need more of whatever the hell you're getting? Probably not. So this is the frenzied time of year when we start buying, we'd think we're going Christmas shopping, but we end up not shopping for other people. We end up shopping for us. So I wanted to talk about retirement now because I wanted you to make a plan not just for retirement, but a plan for the whole Christmas season. Know who you're buying for. No what you want to spend and stick to your guns later on.
Speaker 1: (41:43)
You will appreciate it. We had one tough year, my husband and I, where we didn't even buy our kids anything and we told them ahead of time. I mean most of our kids, they've gotten a lot of stuff at Christmas time at me. Our trees and the whole room is full with presence. And then we had this one tough year where a bunch of stuff had happened and I looked at the kids and I said, guess what? This year we're just giving the gift of each other. That's all we're going to do. We're not going to focus on anything else. And it was a great Christmas. It was a wonderful Christmas. It had nothing to do with the presence. Most of the time we make it all about the presence. Let's start making it about our family and the people that we're with. And I want you to start thinking about taking care of yourself later on.
Speaker 1: (42:29)
You and your spouse and even your children, even the legacy that you want to create and leave for them. Now is the time to do that and now as the time to plan for it. So I'm going to be touching on those every single week for the next few weeks. Throughout Christmas, we're going to be talking about how we're spending money and what we're doing for the Christmas season. We'll talk about decorating. Our places are not decorating them. And all the different things we're doing, but right now we're getting into this stuff, but I want you to really, really buckle down and do me a favor at least by Chris Hogan's book. If you can only afford to buy one book, that's the book I want you to buy. I'm going to have the link here. I'm going to have the link to Dave's little chart that shows you about the retirement for Ben and Arthur.
Speaker 1: (43:17)
I'm going to have a link to the education university from equity trust and if you can afford that, Oh, please go. Please go. So worth that guys. Investing in your own future, investing in your education, right comes to retirement. I would invest in that even before I invested in any short term rental program because you need to know what to do with that money. It's great that people make money and they take all these things and they learn how to make money, but then they don't know what to do with it. They end up blowing it. They end up not paying taxes, not putting money away the right ways. You need to know how to handle your money once you get it. And that's when you start receiving more and more when you are a good steward of your money. So these are the things I want you to do and what I want you to start thinking about this week, we're going to start talking more and more about retirement and retirement savings, spending habits, and all the different things that we can do with it. We're gonna touch on that in a lot of these episodes coming up. But I wanted to wish you a great week. Haiping so much for listening. God bless you. Have a great day. Go and grow.
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