This 22-Year-Old Needs a Reality Check… | Making a Millionaire

What does it really take to hit a million-dollar net worth by 30? We sit down with 22-year-old filmmaker Cyrus, who’s built an impressive foundation, but might be chasing the wrong goal (without health insurance). Together we unpack the numbers, the mindset, and the money habits that actually build long-term wealth without losing yourself in the hustle. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠NordVPN.com/MONEYGUY⁠⁠⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 0:27Speaker 01

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• 0:52Speaker 02

  I told Meghan the goal was a million by 30.

• 0:55Brian Preston?

  What's the power source for all this?

• 0:56Speaker 02

  I just feel like you don't hear a million by 30 much.

• 1:00Brian Preston?

  There's a reason. I love stretch goals, but also want to make sure they don't kill the spirit that made you as well. You can turn a power source for good into a cycle of failure, and it's not because you are a failure, it's because you set bad goals.

• 1:20Speaker 04

  When'd you get to town?

• 1:21Speaker 02

  Yesterday.

• 1:21Speaker 04

  Yesterday?

• 1:22Brian Preston?

  Oh, I need a koozie.

• 1:23Speaker 04

  Have you been to Nashville before?

• 1:24Speaker 02

  I have.

• 1:25Speaker 04

  When someone says, "Oh, hey, what do you do for a living?" What do you say?

• 1:27Speaker 02

  I would say a filmmaker.

• 1:28Speaker 04

  Filmmaker? Awesome. How'd you, how'd you get into that?

• 1:31Speaker 02

  Honestly, I feel like my entry into it is different from most people because I'm young enough that like, I came into it almost kind of seeing the way it paved from YouTubers.

• 1:42Speaker 04

  Okay.

• 1:42Speaker 02

  Whereas most people, it was like, "Oh, I'm all about the art," and like, that sort of thing. But I actually saw it as a possibility to make money and like, be in that world. And so I just like, dropped out of school after a semester and just like dove in.

• 1:56Speaker 04

  Okay, so how, so how, you said I'm young enough. How old are you?

• 1:59Speaker 02

  22.

• 1:59Speaker 04

  You go to college, said, "Hey, this isn't for me. I'm gonna stop doing this." YouTube was your foray into filmmaking. Is doing that your full-time gig?

• 2:07Speaker 02

  I would say that YouTube was how I taught myself.

• 2:10Brian Preston?

  Okay.

• 2:10Speaker 02

  And a lot of like the people I looked up to were YouTubers that were kind of doing like YouTube filmmaking. So like short films, stuff like that. And I actually started with photography first.

• 2:20Speaker 04

  Okay.

• 2:20Speaker 02

  So I have a running background. So I went back home and I started taking photos of track meets.

• 2:25Speaker 04

  Okay.

• 2:25Speaker 02

  And that was like my first way of making money. And I was just shooting all the like local high school sports.

• 2:31Speaker 04

  Love that.

• 2:31Speaker 02

  And making nothing.

• 2:33Brian Preston?

  Okay.

• 2:33Speaker 04

  Don't love that.

• 2:34Speaker 02

  Had like part-time jobs at a gym, just like different things just to survive. And then I actually met the guy I was talking about. He was one of those big YouTube filmmakers that I watched. I met him out in Chicago and.

• 2:47Speaker 04

  Like shooting at a sporting event or through something else?

• 2:49Speaker 02

  So I actually went to a different film premiere that he was a part of.

• 2:53Speaker 04

  Okay.

• 2:53Speaker 02

  And introduced myself. I asked him to go for a run. And he was just like shocked because he expected everyone to talk about photos the whole time. And so he was like, yeah, let's go for a run tomorrow.

• 3:02Brian Preston?

  That's awesome. Make an opportunity.

• 3:04Speaker 02

  He gave me a full-time job like three months later.

• 3:06Speaker 04

  Let's just let that be a lesson right there. You saw, you saw an opportunity to like network. And then you create, you create this really interesting way to peacock yourself.

• 3:15Speaker 02

  Yeah.

• 3:16Speaker 04

  And that was the door in to you even being able to like to now turn this into a living.

• 3:20Speaker 02

  Yeah.

• 3:20Speaker 04

  That's awesome. Alright, so you, he gives you that first full-time job. Is that what you're, like, give me some timeline. Is that what you're doing now? Like, are you still working for him, with him, or no?

• 3:31Speaker 02

  Not anymore.

• 3:32Speaker 04

  Okay.

• 3:32Speaker 02

  I do a lot of work with him.

• 3:33Speaker 04

  Okay.

• 3:34Speaker 02

  So we have a shared studio space in Chicago with a few other guys and we all do projects together. Um, so he's kind of like the bigger one in terms of like internet personality out of the space. He has two different successful YouTube channels. So I work on both of those with him.

• 3:50Speaker 04

  Okay.

• 3:51Speaker 02

  Just like as a contractor now, but I do a lot of like commercial filmmaking. I still shoot weddings here and there, kind of just like take whatever gig comes. So I moved to Chicago from Florida, February of last year, 2024.

• 4:05Brian Preston?

  Okay.

• 4:05Speaker 02

  And I did a full year contract with him. And then went full-time freelance back in March.

• 4:12Speaker 04

  So from Florida to Chicago and the reason that you moved to Chicago was like for this job?

• 4:18Speaker 02

  Yeah.

• 4:18Speaker 04

  Awesome. And so that was a one-year gig. And then what happened at the end of that year?

• 4:23Speaker 02

  We agreed to keep working together on a contractor basis and I stayed in the studio. I started paying rent instead of being his employee.

• 4:31Speaker 04

  Oof.

• 4:32Speaker 02

  So we have a very affordable space, actually.

• 4:35Speaker 04

  Okay, great. So it's not a bigger space.

• 4:36Speaker 02

  Between five guys, it's like 250 a month.

• 4:38Speaker 04

  Oh, that's great for studio space, right? Let's kind of like level set, right? Because here you say you're 22 years old. You were kind enough to share some of your financials with us. So we put together just like sort of a loose net worth statement for you. And this is what we can see that at 22 years old, you have a total net worth of $51,300, which is for a 22-year-old is wild. I think most folks that at your age in the country right now have like a negative net worth, like they are below zero. So you are in a fantastic spot. You have about $19,000 total in cash. You have about $19,000, $20,000 total investments. And then because you are, and I want to be clear, you're self-employed, like you work for, there's not another, you don't have another job. It's just you, right?

• 5:21Speaker 04

  Inside your business, you have another $12,000, $13,000 in cash. So when you transitioned from Florida to Chicago, you had like this one-year contract. It's not exactly a salary, but you knew you had some money coming in. Since it's gone away, how has the, I'm going to call it the hustle, the hustle of entrepreneurship been? Have you been able to like drum up new business and find new clients and find new projects?

• 5:43Speaker 02

  I mean, it's a roller coaster for sure. I, so March was my first month as fully self-employed. It was, I feel bad saying like a low month because two years ago I would have dreamed of this money, but it was like five grand type of month. And then April and May were my two highest months ever at like 14, 15K.

• 6:01Speaker 04

  Okay.

• 6:02Speaker 02

  So it's kind of just like up and down.

• 6:03Speaker 04

  Now, when you throw these numbers out, like five grand in March, 14, 15, are we, is this like top line revenue? Is this prop, okay, top line revenue. You're sending out invoices, getting money back.

• 6:12Brian Preston?

  How much of this is reoccurring versus hunt and kill?

• 6:15Speaker 02

  I have only a few recurring jobs that kind of. Bring that like baseline to like around three to four grand and then everything else is kind of like hunt and kill.

• 6:23Brian Preston?

  I see business profit of sixty thousand, sixty seven thousand, five hundred. Is that including your thirty five thousand dollar salary or is that separate? So you're actually over a hundred thousand?

• 6:33Speaker 02

  Yeah, that would be after the salary.

• 6:35Brian Preston?

  So you're you're actually making close to six figures then or right at six figures?

• 6:38Speaker 02

  I would say gross this year. I'll probably do like a hundred twenty ish.

• 6:41Speaker 04

  A hundred twenty gross, but after you take out all your expenses and everything.

• 6:45Brian Preston?

  Yeah, take out all the business expenses. What's the net?

• 6:46Speaker 04

  Net amount, probably close to that sixty five, seventy mark, right?

• 6:49Speaker 02

  Taking out salary as well or no?

• 6:51Brian Preston?

  Well, no, salary is you, because you're you're a small business owner. So you kind of, you know, when you're doing business analysis, a lot of times you have to, you have to strip out the business owner. So you're you're kind of the business owner. So you you kind of start lumping. What do you take a salary? What is the net profit that flows to you? And you that way we can kind of see what is the ultimate benefit for owning this business, both for your labor and for being the owner of the business?

• 7:16Speaker 02

  Yeah, I would say roughly somewhere between seventy and eighty.

• 7:21Speaker 04

  Seventy and eighty?

• 7:22Brian Preston?

  Okay, so that's why that that profit, business profit is probably counting some of that salary as well. Okay, that makes sense. That helps me out tremendously.

• 7:30Speaker 04

  And you said that March is the first, first time you've been on your own. That was your first like, hey, no, without being off that contract work, right?

• 7:38Speaker 02

  Yeah.

• 7:38Speaker 04

  So some of this is even still trying to like figure it out. Like we're estimating that it's probably like seventy to eighty.

• 7:43Brian Preston?

  Yeah, it's all over the place.

• 7:44Speaker 04

  But it's all over the place. You said baseline, maybe like revenues, like three grand, but then there are months like June or July, we had like fourteen, fifteen thousand, right?

• 7:51Brian Preston?

  How did you make the decision to go from, do I go the traditional path of I go through four years of college? Go to a filmmaking school. I'm not saying anything's wrong with that, but at some point you're like, no, I'm going a different route. Give me some some color on that.

• 8:06Speaker 02

  It's a funny story because I was straight A student, like honors list in that semester at school. And I was actually doing a double major in film and finance.

• 8:16Speaker 04

  Oh, wow.

• 8:16Speaker 02

  So I've always been obsessed with personal finance.

• 8:18Brian Preston?

  Okay.

• 8:19Speaker 02

  Sixteen years old, I read like Rich Dad, Poor Dad, like just dove in. My school that I went to, I went there to run. And I had a basically career ending injury that. Remove my athletic scholarship.

• 8:30Brian Preston?

  Okay.

• 8:30Speaker 02

  And it was a private school, so I was gonna go into a decent amount of debt for it. Like I said, I had seen these people online that were making real money with filmmaking. I was like, well, I'm just gonna give it a shot. It honestly felt like a smarter decision than staying in school and going into debt.

• 8:44Brian Preston?

  Did you give yourself a timeline?

• 8:46Speaker 04

  How was that received by the family?

• 8:47Brian Preston?

  I mean, that's gotta be a hard thing.

• 8:48Speaker 02

  I mean, my mom, she really struggled with it. She was like, what was all this work for? And I told her, I was like, if anything, it should show that if I just apply myself in a different direction, it's gonna work. And after a few tears and a few hard conversations, she admitted, she was like, I know that you'll be great at whatever you decide to do. So I still have support.

• 9:06Speaker 04

  Sure.

• 9:07Speaker 02

  For sure, but it was tough in the moment.

• 9:09Speaker 04

  Well, I love what you did is you did a cost benefit analysis, right? Hey, here's the cost if I go pursue the traditional education. And what I've discerned is that it's gonna be hard for me to overcome that cost. I'm likely gonna be a better spot not doing that. I think more and more people are arriving at that conclusion that based on the path they wanna go, maybe the traditional education route is not the best fit for them.

• 9:28Brian Preston?

  But I don't wanna let him off the hook. I wanna know if this was a jump, a leap of faith, or did you give yourself a timeline and have a path? I wanna know how deliberate this was, or how much of this was luck?

• 9:39Speaker 02

  I would say a lot of it was luck and the people in my life try to tell me it's not and that it was like the work ethic. I will say that in the moment, it was kinda just betting on myself.

• 9:48Brian Preston?

  So you didn't have a timeline of how long you were gonna give this dream a go before you went back to school?

• 9:52Speaker 02

  I felt confident that in within four years, I'd make it work.

• 9:55Speaker 04

  Okay. How old were you when you dropped out?

• 9:57Speaker 02

  Eighteen.

• 9:58Speaker 04

  Eighteen.

• 9:58Brian Preston?

  So you were a freshman.

• 9:59Speaker 04

  So we're four years in now, we're kind of at that mark, right? So as you sit here now, you've made it through these four years and now you've, I mean, you've got, obviously I've got revenue coming in, you're able to support yourself. What are some of the goals that you have? Can you kinda give us some, some flavor around that?

• 10:15Speaker 02

  I have aggressive goals and I like to set goals that are pretty scary. At the beginning of this year, I wanted to have that number be six figures.

• 10:23Brian Preston?

  Okay.

• 10:24Speaker 02

  For net worth.

• 10:25Speaker 04

  So by the end of 2025, we won a hundred thousand dollar net worth?

• 10:28Speaker 02

  Well, that was the goal in January. We've had to recalibrate so far.

• 10:32Speaker 04

  Okay.

• 10:32Speaker 02

  I told Megan before that the goal was a million by thirty.

• 10:37Speaker 04

  A million dollar net worth by thirty?

• 10:39Speaker 02

  That's like dream goal.

• 10:40Brian Preston?

  What's the power source for all this?

• 10:42Speaker 02

  I would say. Both of those numbers are very round numbers. And I know a lot of people's goal is a million. And I just feel like you don't hear a million by 30 much.

• 10:53Brian Preston?

  There's a reason.

• 10:53Speaker 04

  You don't. You don't.

• 10:58Brian Preston?

  Does that give you anxiety? Because I mean, if you set big goals, so there's no anxiety or stress that you ought to be, you don't get to live for today because you have these big goals. I'm just trying to get into your mind a little bit. I love stretch goals and audacious goals, or whatever you want to call it. But also want to make sure they don't kill the spirit that made you as well. If you disconnect them too much from reality, you can turn a power source for good that is done so much with talent and taking opportunities and chances into a cycle of failure. And it's not because you are a failure, it's because you set bad goals. That's why I'm trying to get to the why.

• 11:35Speaker 02

  I would say I set that goal probably two years ago, before I even had an increase in income. And so.

• 11:41Speaker 04

  At an even crazier spot, time to set that goal.

• 11:44Speaker 02

  And I would say that honestly, most of my journey over the last two years has been, instead of going harder and pushing more financially, it's more about like, I've had an increase in income and realizing that that's not necessarily the solution for the problem. More money doesn't necessarily fix all your problems in a way.

• 12:05Speaker 04

  Exactly right.

• 12:06Speaker 02

  It's been a lot of recalibrating and focusing on like, what do I want out of life beyond just the money?

• 12:11Speaker 04

  So let's talk about those, what are those goals? We're going to give you some thoughts on a million by 30.

• 12:15Speaker 02

  For sure.

• 12:16Speaker 04

  Outside of the money, what's a million dollars at 30 years old do for you?

• 12:20Speaker 02

  I've always liked, not necessarily fire, because I don't want to retire early. Like, I enjoy working. I enjoy what I do for work. But I don't want to have to take jobs I don't want. I've seen people that have had to work really hard while their kids are growing up. And I would love to be on the other side of that. And be kind of able to spend more time with kids as they're growing up.

• 12:44Speaker 04

  Do you have any kids right now?

• 12:45Speaker 02

  No.

• 12:46Speaker 04

  No. Are you married right now?

• 12:49Speaker 02

  I'm not married. We're discussing an engagement in the next like six months or so.

• 12:54Speaker 04

  Oh, congratulations.

• 12:55Speaker 02

  Thank you.

• 12:56Speaker 04

  One of the things I think is interesting is we said, okay, look, Cyrus came in and he said, this is where I am today and I have this goal of this is where I want to be. I want to have a million dollars by age 30. I said, okay, well, what would it take to make that happen? And we actually did the numbers for you. We actually did the math. If you look today, right now, you have $51,000 total net worth. And if we want to get to a million by the time we're 30, do you know how much that means you would have to save on a monthly basis?

• 13:25Speaker 02

  With my income as it is right now?

• 13:27Speaker 04

  No, no, I'm just telling them mathematically to go from 51 at 20, at 21, 22 years old, to 1 million by 30, how much you got to save a month to do that?

• 13:36Speaker 02

  I'm not sure.

• 13:37Speaker 04

  Well, we did the math for you and the answer, and this is assuming a 9.9% rate of return. You gotta save $5,300 a month in order to be able to move from where you are to that step. So let me pause there for a moment. How much are you currently saving towards that goal on a monthly basis?

• 13:54Speaker 02

  I would say on a monthly basis, somewhere between 2,500 and 3 grand.

• 13:59Brian Preston?

  Your total, by your own estimation, you're somewhere between $67,000 to $70,000 of total income. This would be 90% of that.

• 14:08Speaker 02

  Yeah.

• 14:08Brian Preston?

  So I think if you just look at it through those glasses, we go, wow, there's a lot of work we have to do to make this actually happen.

• 14:16Speaker 02

  Yeah.

• 14:17Brian Preston?

  You said something earlier that really struck a chord with me because I've heard so many successful people, you think money can do so much for you until you start getting it.

• 14:26Speaker 02

  Yeah.

• 14:26Brian Preston?

  And then you're like, oh, my gosh.

• 14:27Speaker 04

  It's not solving the problems I thought it was solving.

• 14:29Brian Preston?

  Just choosing a number of a million dollars or 2 million, 3 million, you put whatever number you want, you'll get there and realize it is, dag, I'm empty. Um, now, look, I'm not saying, don't mishear me. Getting your first $75,000 a year, enough income coming in, reoccurring, that you can cover paying for your family, paying your rent, there is definitely happiness or, or, or something good from that. But the incremental increase beyond certain levels, it just, it's. It starts diminishing if you don't have the rudder of why tied into it. When I see these goals, like a million by thirty, first of all, the odds are just not there.

• 15:08Brian Preston?

  We, we, we, we covered on the show and I think I try to share this type of data to free the young person who's, because we're in this hustle culture, social media where everybody's showing you their highlight reels. It's not tied to reality. The typical millionaire is forty nine years of age and had twenty seven years of building and saving slowly to create this. So to put yourself at a million dollars at thirty is doing something extraordinary. Now, that's not to say you, you, you can't do it, but I just don't want that to diminish or extinguish that flame of excitement for life and enjoy the present moment. There's so many things that I have sacrificed for the goal without understanding I'll never be this age again.

• 15:53Brian Preston?

  You'll never be twenty two again. You'll never be, you know, think about you and your soon to be significant other spouse. You'll never be twenty five without kids again. You know, these are things you have to put yourself in this present mindset to maximize so that when you do get to be my age, post fifty, that you go, job well done. Not because, imagine you sacrifice your twenty two year old self, your twenty five year old self, your thirty five year old self. From a ritualistic standpoint, you'll look back and go, for what?

• 16:24Speaker 04

  And I think about the sacrifices that would be required in your life to attain some sort of goal like that. You were kind enough to share with us your P and L for the business. So you were able to show us like, we could see total revenue since January of this year, total expenses. So we can kind of track your profit line and you can see that like, you mentioned like March, not the absolute best month from a profitability standpoint, but then April was great, May was great, June was strong, kind of settled down, right? But you can see right here, your total profit from January through August of this year is about forty two thousand dollars of like total profit. That's all the money available for you to pay yourself. Well, you just said, man, or we showed you that if you want to get to a million dollars,

• 17:06Speaker 04

  you gotta save $5,000 a month to be able to do that. You have to start like choking out a lot of other stuff. That means like no gym membership, no travel, no, uh, we haven't talked about like if you've already funded engagement ring and wedding and like all those sort of things. There'd be a lot of stuff that you would have to give up in order to be able to achieve that goal. Not suggesting that goal is impossible, but it's pretty aggressive based on what we're seeing now. And that's why we're like harping so much on what the why is. Cause sometimes it's worth it just to kind of pause and triage and says, okay, where am I right now? And is where I'm at right now, okay? And then what small changes can I begin making? If I told you, hey, in order to do this, you gotta start saving five grand a month.

• 17:49Speaker 04

  The very next thing I'm going to say to you is now you gotta go figure out how to get more clients. You gotta go work more. You gotta go, you know, you gotta go hustle, hustle, hustle to do that. So I think we should take a step back. Okay. If we're gonna do that. Uh, you know, uh, we have, especially for young people that are starting out, we say, hey, a great tool that you can use to navigate your financial life is the financial order of operations. And I just thought it'd be helpful if we kind of just like went through the financial order of operations for a moment. So, you know, step one, financial order of operations is highest deductible covered. We want you to list out your health insurance deductible, your auto deduct, your homeowner's deductible. So just run me through those really quickly. Do you know what your highest deductible is?

• 18:28Speaker 02

  Yeah, well, honestly, all of those are not necessarily like in a factor right now because I think I told Megan, so I don't have health insurance.

• 18:39Brian Preston?

  Uh-oh. Oh, no. Why?

• 18:43Speaker 02

  I've been off of my mother's plan for two, three years.

• 18:48Brian Preston?

  Does she still have insurance?

• 18:49Speaker 02

  She has it through work.

• 18:51Brian Preston?

  And why aren't you on that insurance?

• 18:53Speaker 02

  Not sure.

• 18:54Brian Preston?

  Cause I mean, typically that's one of the big things that came out of the legislation is if you're under 26 years of age, I mean, half of our young employees are still on their family insurance plan.

• 19:03Speaker 04

  So for two, two or three years, no health insurance?

• 19:05Speaker 02

  Yeah.

• 19:06Speaker 04

  Uh, you travel?

• 19:07Speaker 02

  I do travel.

• 19:08Speaker 04

  You do sports?

• 19:10Speaker 02

  Yeah.

• 19:10Speaker 04

  You work out?

• 19:11Speaker 02

  Yeah.

• 19:11Speaker 04

  You ride a bike?

• 19:12Speaker 02

  Yeah.

• 19:12Speaker 04

  You do a lot of things that would present an opportunity for you to somehow potentially injure yourself?

• 19:17Speaker 02

  Yeah.

• 19:18Brian Preston?

  Do you feel like that's wrong? Do you know it's wrong?

• 19:20Speaker 02

  What?

• 19:21Brian Preston?

  To not have health insurance with all these things.

• 19:22Speaker 04

  Let's not say wrong, let's not say wrong, but let's say risky.

• 19:27Speaker 02

  Yeah, so that was one of the things I wanted to come to you guys with is I've looked into health insurance and obviously being self-employed like market plans are pretty expensive and being like a single guy currently, I haven't felt terribly like terrified. But I will say that.

• 19:45Speaker 04

  You feel a little bit invincible?

• 19:46Speaker 02

  Not invincible, but I know that it would be smart to have some sort of like emergency coverage and I just am not sure which direction to go with that.

• 19:55Brian Preston?

  Do you know why most Americans file bankruptcy?

• 19:57Speaker 04

  Number one cause of bankruptcy in this country.

• 20:00Speaker 02

  Medical debt, yeah.

• 20:02Brian Preston?

  Do you think most of those people thought that they were going to get an accident? Cause you're in Chicago?

• 20:07Speaker 02

  Yeah.

• 20:08Brian Preston?

  You ride a bike in Chicago?

• 20:09Speaker 02

  Not often, mainly walking.

• 20:12Brian Preston?

  Okay.

• 20:12Speaker 02

  But.

• 20:13Brian Preston?

  Okay.

• 20:14Speaker 02

  Yeah.

• 20:15Brian Preston?

  Okay. Man, I'm trying to look, we are.

• 20:18Speaker 04

  Okay, let's pause for, let's, let's, let's triage some solutions here, right? Obviously you mentioned marketplace, right? That's, that's a place you could look for medical coverage. You said your mom is still covered on a group policy and you being a child under the age of 26, you could potentially be on her policy as well, right? That's a, an option. Do you know how much, is your mom on, right now, do you have like siblings and it's family coverage? Or is it just her on the policy by herself? Do you know the answer to that?

• 20:44Speaker 02

  I know that she's paying for just her.

• 20:45Speaker 04

  Just her.

• 20:46Speaker 02

  We were once on it and then it was, I'm pretty sure something made it more expensive.

• 20:52Speaker 04

  Sure, yeah, when you go, when you have a group policy, if you go from just covering yourself, the employee to doing like an employee and a spouse or employee and family and kids, it does increase the premium. You have any idea what that premium increase was?

• 21:04Brian Preston?

  I bet it's less than $300.

• 21:05Speaker 04

  Let's, let's suppose for a moment.

• 21:07Brian Preston?

  I guarantee it's less than $300 a month. We have made a catastrophic mistake. You have so much talent, you have so much going on. Bo is being nice to you.

• 21:16Speaker 02

  Yeah.

• 21:16Brian Preston?

  But I'm sitting here and I'm not, mad's not the right word, but I'm just frustrated that you have all this talent. You're doing all these great things, but yet you're willing to jeopardize.

• 21:27Brian Preston?

  All of it for what's probably a $250 to $300 a month decision.

• 21:33Speaker 02

  Yeah.

• 21:33Brian Preston?

  And, and when we're talking about goals of a hundred thousand dollars by end of the year, a million dollars by 30, we can't come up with three grand a year for, to make sure that I don't one day on a Tuesday at three o'clock, because I didn't look left before I looked right or something like that, and I get taken out and then I never recover. I mean, that, that, that, that, that bothers me because it seems like a blind spot of, and I see a lot of financial mutants do this, that it just, it hurts my heart. It really does. Cause I, I see so much opportunity, but I see your, your flame. I keep saying you're a flame or extinguished, but I just seen it completely getting wiped out. Not because you're gone. I'm not talking

• 22:17Brian Preston?

  catastrophic in death. I'm talking catastrophic financially because you just can't recover because you have a $30,000 lien on you and you're not able to go buy the equipment. Cause that, you're a filmmaker. Is that a cheap thing to go out there and buy equipment? Or is it?

• 22:31Speaker 02

  It was not, no.

• 22:32Brian Preston?

  So, I mean, there's probably some capital that goes into that.

• 22:35Speaker 02

  Yeah.

• 22:36Brian Preston?

  So, do, do you have insurance on the, the equipment?

• 22:38Speaker 02

  I do.

• 22:40Speaker 04

  I'm not worried about myself. I'll protect the equipment.

• 22:42Brian Preston?

  What's more valuable? The equipment or you?

• 22:45Speaker 02

  I am more valuable personally.

• 22:49Brian Preston?

  But we're gonna be naked on, on the insurance.

• 22:51Speaker 02

  My gear has gotten hurt much more often than I have.

• 22:55Brian Preston?

  That's, once again, it better be lucky than good.

• 22:57Speaker 04

  A lot easier to replace the equipment, the gear than it is replace you.

• 23:00Speaker 02

  That's true.

• 23:01Speaker 04

  When it comes to financial planning, you've heard us talk about this on the show. There's sort of like this financial planning pyramid that we sort of walk through. And on the pyramid, you think about sort of the baseline is like cash flow and spending. We get our first paycheck and we got to figure out, how do we allow that to like pay our bills? That's like basic budgeting. You're four years into being an entrepreneur. So you figure some of that stuff out, right? Like you figured out how to have money coming in, how to have money going out. You're able to do that. Well, the very next tier, once you just can keep the lights on is risk management. By being uninsured for the last couple of years, you've just like blown through that. It is the single thing that can derail you. The, the, all the ambition in the world, all the goals in the world, a million dollars by 30, all this

• 23:40Speaker 04

  one guy, get married, have kids, all these things. Amazing goals to have, but if you've ignored the glaring risk management issue, then you've put yourself in a pretty precarious situation. Now, you may.

• 23:54Speaker 04

  Not need it. You may not have a catastrophic injury. There is a chance that you will not have a bad outcome. And there is a greater chance that you will have good outcomes based solely on the mathematics. Does that still mean that you would play that game?

• 24:08Brian Preston?

  No.

• 24:08Speaker 04

  Absolutely not, because the risk, that one bad outcome, is not worth it. Even if it may be low probability, because you're young and you're healthy and all these other things. So it's a risk you have to insure against. But what's great is, there are a number of ways where you sit right now to consider that. Obviously, we can talk about marketplace. We can go look at the different types of policies or what that coverage is. We already talked about another solution that may be available to you is, hey, Mom, if you were at open enrollment, because most open enrollments happen around October, November, December of each year. Hey, Mom, will you just see how much it would be to add me on to your insurance? And guess what, Mom? I don't want you to pay for it. I'll write you a check.

• 24:45Brian Preston?

  I'll Venmo you the monthly difference, plus 20 bucks, because I just love you. I mean, this is how simple this could be, is at least that would be step one.

• 24:55Speaker 04

  There are some trade organizations where you can even get like group insurance through that if you were a member of...

• 24:59Brian Preston?

  Because like, we're both members. I'm a member of the AICPA. I'm also a member of this group called NAFSA, which are fee-only financial advisors. I have disability insurance through both NAFSA as well as the AICPA. Because they usually link up. It's not that these trade organizations offer the insurance. They link up with somebody and they say, hey, we're going to give you access to all of our members, but you got to cut us one heck of a deal on... So we have, I have life insurance through AICPA. I have disability insurance through a lot of these things. But you can also get health insurance, because I know, especially like the Professional Photographer Association, it's a known problem that most of your members are small business owners. What's a big risk that small business owners have is health insurance.

• 25:43Brian Preston?

  So they offer not only equipment insurance, not only cyber insurance, but also health insurance, you know, introductions. I think about a lot of our employees. There are groups, they're not med share type plans, but they are like, I think of like, there's a farm bureau around here that offers, so every state has unique things that might not be on the exchange, but there's still health insurance, they're catastrophic protection. And then that last one is med share plans, you know, you could get with like-minded people who just don't like how health insurance is handled in America. So they've created alternative paths where they say, hey, let's, let's take what is insurance in general, is a group of people get together and say, hey, I don't think we'll all get injured at

• 26:28Brian Preston?

  the same time, so let's start pooling our money as a resource to figure out how we can protect each other from catastrophic events. I mean, that's the basis of what insurance actually is. And those things are cheap.

• 26:39Speaker 04

  Thinking through the financial planning pyramid, obviously, you know, risk management is a big piece of it. You gotta, you gotta solve that, right? If I were to ask you what your burn rate is, right now, based on what you spend, how much does it cost you to be able to do the things that you do and kind of live the life that you want to be living at this stage?

• 26:59Speaker 02

  Thirty-five hundred is what I told Megan and them.

• 27:03Speaker 04

  So I don't do public math very good, so I'm gonna do thirty-five hundred times 12. So you gotta be making forty-two thousand dollars a year after taxes, just to be able to like, cover rent, groceries, utility, all that kind of stuff, right?

• 27:19Speaker 02

  That's, thirty-five hundred is also paying taxes on a quarterly basis.

• 27:26Speaker 04

  Great.

• 27:26Speaker 02

  And that's also, like, there's wants included in that. That's not as low as it could be. That's a generous.

• 27:32Speaker 04

  So you, you actually broke this down for us. You said, okay, rent's about a thousand, groceries are about four fifty, we're banking quarterly estimated payments of about eight seventy-five. And so we do have some miscellaneous wants and needs in there of about twelve hundred bucks. And that's, I got in here, gym, car maintenance, eating out, those sort of things. So this is kind of like, it's a pretty good, pretty good budget, right? There, there's no health insurance in here, but in the very near future, there's going to be health insurance. Now, you have two options for that. You can either take health insurance out of your miscellaneous wants and needs, or you go make more money. And I think that the thing is going to be you gotta make more money, right? So $42,000 needs to be baseline. How easy is it for you to hit that? You said, based

• 28:16Speaker 04

  on your recurring, you have, you know, $3,000 or $4,000 in top line revenue coming in? So you're close-ish to being able to hit that? Or you need some of these one-off side projects to be able to do it?

• 28:27Speaker 02

  I mean, those like recurring jobs are like maybe three days of work per month. So it's pretty easy to hit. For example, this month, it wasn't hard to hit over 10 grand. It just depends on the time of year, honestly.

• 28:40Brian Preston?

  You only started this in March.

• 28:41Speaker 02

  Yeah.

• 28:42Brian Preston?

  So I mean, this is, I mean, can we pause for a moment? I've given you a hard time, Cyrus. I really have. But I mean, we are a little over six months into this thing. Just so you know, as an entrepreneur to entrepreneur, my first year out, I made $17,000 for the entire year.

• 28:59Speaker 04

  Hmm.

• 29:00Brian Preston?

  Horrendous. I mean, so, and I always tell people, if you can't hack it the first three years, I don't care how good you are, you might just not make it. It doesn't mean you didn't have talent. It didn't mean that you didn't have a good business idea. It just mean you didn't have enough time to make it through the crud of what happens when you start a business. Cause there's, there's a traction period. For you in six months to already be profitable, man, that's pretty freaking incredible.

• 29:26Speaker 04

  Again, I mean-

• 29:27Brian Preston?

  $3,000 a month of reoccurring in the first six months? I mean, what I'd be curious, you have to be careful because it's a trap. Because you, you know, you get too much reoccurring, there's not enough to go shoot for the sky on bigger things. But it's nice having enough reoccurring that it covers all your stuff. If, are we to think that in six months in the future, you'll now have $6,000 a month of reoccurring? Or is that not the way you're setting your business up?

• 29:50Speaker 02

  It kind of just depends on my preference. And I've tried to avoid recurring for the sense of all of the bigger jobs. Like they, I know they come, and I know when they come.

• 29:59Brian Preston?

  Cause they turn into a job. Is that what it feels like to you?

• 30:02Speaker 02

  Yeah. I don't want to tie up all my time into because the recurring projects tend to be the ones that you don't love to do. Whereas the one off ones are more fun and bigger budgets, they are just one off. So I would say my plan was to get it around five grand reoccurring.

• 30:18Speaker 04

  Okay, love that. So when we look at your net worth statement, you have a really healthy cash bucket. You have about nineteen thousand dollars in personal cash. You have about another twelve, thirteen thousand dollars in business cash. So if you said that your burn was thirty five hundred dollars a month, and I just take thirty five hundred times six, it's about twenty one thousand dollars. It'd be like a six month living expense. So I love, okay, step one deductibles covered, check. Step two employer match, you are the employer, so you don't have to worry about that one. Step three, high interest debt on this net worth statement. I don't see any like high interest debt. Do you have any debt at all?

• 30:52Speaker 02

  I don't have any debt.

• 30:52Speaker 04

  Ah, it's amazing, debt free at twenty two. So we go to step four, emergency fund, and that's awesome. Okay, so you've got twenty one thousand is what I kind of modeled. You probably carry a little bit extra because of the business. So you're kind of right there at a fully funded emergency fund, which is so exciting. That means once you've made it through steps one through four, then you get to the exciting stuff. Then you get to start building and you get to start thinking about how you're going to grow towards that future, you know, one million dollar goal.

• 31:19Brian Preston?

  Now, wait a minute, I think you, because Cyrus has given us some breadcrumbs here. There's nineteen thousand dollars, but he said he's about to be engaged in the next.

• 31:27Speaker 04

  Hmm.

• 31:28Brian Preston?

  Now, I'm not trying to spoil, spill the tea on ruining a surprise for your significant other.

• 31:33Speaker 02

  Yeah.

• 31:33Brian Preston?

  But is she okay just not having an engagement ring?

• 31:36Speaker 02

  In terms of those numbers, so like the fifteen thousand in savings, that's what I consider my emergency fund.

• 31:42Speaker 04

  Okay.

• 31:42Speaker 02

  I wanted to ask you guys if that should be higher.

• 31:45Speaker 04

  Mm hmm.

• 31:46Speaker 02

  Because right now it is around three to four.

• 31:49Brian Preston?

  What do you think we're gonna say?

• 31:50Speaker 02

  Yes.

• 31:51Brian Preston?

  But why, why do you think we're gonna say yes? Because I love it when people ask me questions that they know the answer to. That's, by the way, called a rhetorical question.

• 31:59Speaker 02

  Yeah, so.

• 32:01Speaker 00

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• 32:28Speaker 01

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• 32:54Speaker 02

  I figured-

• 32:54Brian Preston?

  No, give it- Why do you think we think it's gonna be higher? I want you to answer this question because I think you have it in you to tell me why $15,000 is not enough.

• 33:03Speaker 02

  Because of what I do for work and being self-employed and not having guaranteed income.

• 33:09Brian Preston?

  See, I knew it. He has a great instinct. He knows it. You know it. So what should that number? If we keep going, we'll go therapist route versus financial planner route. What do you think that number should be?

• 33:17Speaker 02

  Based off of a 3,500 burn rate, it should be-

• 33:22Speaker 04

  I would argue, let's take that 3,500 burn. Let's just add some health insurance on top of that. So let's assume that your real burn rate is probably closer to like 3,900. I'm just using 400 as a placeholder, right?

• 33:33Speaker 02

  Sure.

• 33:33Speaker 04

  Let's add to 3,900. So I'd just take 3,900 times six months because you are a solo income earner. And it's gonna be somewhere between like $23,000, $25,000. So for an entrepreneur, I would say an appropriate emergency fund for you would probably be $25,000 in liquid cash.

• 33:49Speaker 02

  Okay. I want to explain my reasoning for the 15 and how I came up with that. Was that that 3,500 burn rate, like I said, is being generous and that's living the lifestyle I want. I've always heard that emergency fund is your necessities covered per month? And my necessities are like 2,500 to 3 grand.

• 34:08Speaker 04

  It's a great exercise to work through. If I had to live off of Spam and ramen, could I do that? But realistically, a true emergency fund should reflect your current lifestyle. Hey, to live the life that I want to live, to give me enough coverage to make it for six months, I don't necessarily want to have to cut down to the quick. Now, what happens in those events? Because we've worked with clients who've lost jobs or they lost a big client and they had to go there. They end up doing that. But what that does is that six months at this level of spending, when they, when they actually live down here, it actually gives them like seven, eight, nine months. Does that make sense? So we would rather you model it off the way you're actually living than some hypothetical, oh, if I had to cut it down, I could. Does it make you nervous to hear that we would say you probably need about $10,000 more in your emergency fund?

• 34:54Speaker 02

  Not necessarily.

• 34:55Speaker 04

  How would you anticipate getting there?

• 34:58Speaker 02

  Like I said, so everything in terms of income is seasons for me, especially in Chicago. So like winters are slow, but the fall is big. So I know that I have big months coming, so I would just kind of attack that in the next.

• 35:11Brian Preston?

  You'd hustle during those months.

• 35:12Speaker 02

  Yeah, I get it.

• 35:13Speaker 04

  When you say, I know that the, that the fall is big, isn't this your first fall?

• 35:18Speaker 02

  Second.

• 35:18Speaker 04

  Second fall in Chicago. Okay. So you've at least, you've done this once before and it was big last year. So you're supposing the same thing would likely be true this year.

• 35:26Speaker 02

  Yeah.

• 35:26Speaker 04

  Okay, got it. Step one is we gotta get the emergency fund up. Well, remember, we kind of started with a context of, hey, I want a million dollars by the time that I get to 30. And in order to do that, I need to be like investing, like growing $5,300 a month. We've already uncovered, based on your current base burn, 3,500. We need to make at least $400 more so that we can have health insurance. And we need to make at least more on top of that so we can start adding this emergency fund. And then once we do that, then we can move on to the next step in the financial planning pyramid, which is investing and building and growing. And we can go from step four of the financial order of operations to step five.

• 36:03Speaker 02

  Yeah.

• 36:04Speaker 04

  Uh, so are you currently like saving to a Roth, putting money in a Roth? I see that you have a Roth IRA. How are you currently handling that?

• 36:10Speaker 02

  I maxed it out this year and last year.

• 36:13Speaker 04

  Okay.

• 36:13Brian Preston?

  Is that just a one-off?

• 36:14Speaker 02

  It was when I had bigger months, I'd just do it. I'd just take care of it.

• 36:18Speaker 04

  And for entrepreneurs, I don't hate that strategy. Now, I, I wish that would have been done after you had the fully funded emergency fund, but now you know, right? And so that's great. Uh, one of the things we love seeing, and we encourage all of our entrepreneurs to do this. While it's easy to think through, okay, man, when I get these big, when I have these big months, I have a lot of profit, low expenses. Then I'm just gonna do these like big dumps in. And that's great. That's again, a lot of, of, of nonlinear income is required to do that. But what's great about being young is would you recognize it does not take a whole lot for you to be saving on a monthly and consistent basis to make a huge impact. Right? Like it doesn't, it's not like you have to be saving $5,000 a month right now to be able

• 37:04Speaker 04

  to live the life you want to do, to hit these goals that you said, to be able to be selective in the work that you do, spend time with your future spouse, spend time with your future kids. If you can start the behavior of saving early and systematically, it's amazing what can happen. And we said, okay, well, if we can just, if we can triage Cyrus's situation and kind of get him through the financial order of operations to the point to where he's just maxing out his Roth IRA. And I think the number is $583 a month. So again, we gotta pay for health insurance. We gotta get an emergency fund. But if we could just get you to where every month, you could put $583 a month into your Roth IRA, just doing that at your age gets really, really exciting.

• 37:45Speaker 04

  And while it may not be a million dollars by age 30, what it turns into by age 30 is pretty exciting. Look at this. We said that if all you do, starting right now, you've got 51 net worth, but you just started investing in your Roth. That's all you did. Max out your Roth every single year. You'd be at $190,000 by 30. Now, this is why that gets us excited. That's not a million. But a million is sort of superfluous, right?

• 38:08Speaker 02

  Yeah.

• 38:08Speaker 04

  We say that for most folks, when you're working through the milestones you want to hit on your financial journey, if by the time you get to 30, you can have about one time your annual salary in investable assets, in liquid assets, you're doing pretty good. So at 30, at one, if you're making 190 grand at 30, that's pretty awesome. Like I would say that the business has worked. You were now successful at that point. But if you have almost 200 grand built up by age 30, how's that make you feel?

• 38:39Speaker 02

  Yeah. I mean, I've always said that I know the million number is a very big goal, but I know based off of what I've done so far and maxing out the Roth at a minimum, I'll be fine. It's like, I know that by 65.

• 38:52Speaker 04

  Oh, by 65. Okay. Not by 30, by 60. Cause we agree, you're not planning on checking out at 30, right?

• 38:58Speaker 02

  Correct.

• 38:59Speaker 04

  So this idea of I gotta do all this stuff so, so early may be a little misplaced. Cause I would argue, if you had to make a choice right now, today, and all you have is money coming in, I could either manage my risk and buy health insurance, or I can max out my Roth. Which one do you think that we're going to suggest you do?

• 39:16Speaker 02

  The health insurance.

• 39:17Speaker 04

  The health insurance.

• 39:18Speaker 02

  Yeah.

• 39:19Speaker 04

  But if you can just get some money working, some money saving, what that's able to do for you in the future becomes really, really exciting. And then what's even greater is you know that at age 30, when we think about like the wealth multiplier, if all you did was have $190,000 at age 30, do you know what that turns into by the time you turn 65? If you don't save anything else, it's wild. We know that the multiplier for a 30-year-old is 23. So just that $190,000 is on the way to be $4.4 million. If all you did, I'm going to rephrase this. If all you did was save, max out your Roth IRA from this year until age 30, and then stop saving, $4.4 million. Think that you and your spouse and the future kids would be okay?

• 40:03Speaker 04

  Like a four and a half million dollar portfolio?

• 40:05Speaker 02

  Yeah, I mean, we'll see what inflation does over the next 40 years.

• 40:09Speaker 04

  Okay, let's go, let's just, okay, then let's say at age 30, you don't stop doing your Roth.

• 40:13Speaker 02

  Yeah.

• 40:14Speaker 04

  What if you just keep maxing out your Roth all the way to 65? You know what that turns into? $7 million.

• 40:20Speaker 02

  Yeah.

• 40:21Speaker 04

  Just, and you look, our goal is we want you saving 25% of your gross income.

• 40:25Speaker 02

  Yeah.

• 40:26Speaker 04

  But rather than you trying to save all of that right now today, or as Brian pointed out, 95% of your gross income.

• 40:32Speaker 02

  Yeah.

• 40:33Speaker 04

  Just doing something as simple as starting early and being okay with that, puts you well on the path to like $7 million by the time that you get to retirement age.

• 40:43Brian Preston?

  Real is, Cyrus, you're still in the first year of this enterprise. So when, when Bo asks you all these questions, how we're going to do this, I think it's back to your original thing that got you here is I'm going to bet on myself. Because you're still in the, I love it working with entrepreneurs when they start hitting their stride and starts, things start popping. And I think you've got that coming. I, I really do. So I did the math. I was like, okay, so Bo just showed you $7,000. You're already doing that. You've already told us you did it last year. You did it this year.

• 41:09Speaker 04

  Out of order, but doing it.

• 41:10Brian Preston?

  We need to do more. And so if I add more, I was like, well, the next thing, if you're doing the financial order of operations, we're going to talk about maxing out retirement. Well, you're self-employed. We could talk about solo 401Ks, other things. So any type of 401K, you could do $23,500 plus the Roth IRA up until, you know, his income starts getting over the threshold. And then we could consider doing a backdoor Roth contribution. Just putting that amount of money for just the next eight years, if you just did a 401k plus your Roth, you would be like $483,000 by the time you were 30 years old. So not a million, but holy cow.

• 41:49Speaker 04

  How much was that?

• 41:50Brian Preston?

  $483,000. $482,851.

• 41:55Speaker 04

  You know what that turns into based on a wealth multiplier of 23? $11 million.

• 42:01Brian Preston?

  As an entrepreneur, I mean, you're starting to catch some success. How are you structured? I mean, what's all the business things that you're doing? Are you like a sole proprietor or are you a C corp? What, you know, or an LLC? How have you structured the business? So is that okay to talk about?

• 42:15Speaker 04

  Well, I was gonna ask, do you have questions around that? Obviously, being a new entrepreneur, a relatively new entrepreneur, you're still pretty early on. Are there questions that we might be able to answer for you that would be valuable or be helpful as you're thinking about building this business?

• 42:29Speaker 02

  Yeah, I mean, so I am an LLC that's electing as S corp. And so that's where the $35,000 salary comes in. So like I was telling Megan, I, for the most part, what I do is that salary, once taxes are taken out and everything, it becomes a not livable number for me.

• 42:49Speaker 04

  It's like 25, 2800?

• 42:51Speaker 02

  It's like 23, 2400. And I just save that and then I live off distributions.

• 42:57Brian Preston?

  Now, who told you to structure that way?

• 42:59Speaker 02

  I just went down a deep dive of YouTube videos.

• 43:02Brian Preston?

  But do you know the why? Why do S corporations have to have salaries?

• 43:06Speaker 02

  So last year, I was just solo, single member LLC and had to pay a substantial amount of taxes all at once. And I knew that I wanted to do just self employment tax on the salary and then just pay.

• 43:19Brian Preston?

  So let me, because I, working in public accounting, preparing taxes for over 16 years, I do want to, because I think this is something really important for business owners to understand. It is a unique thing when you have a subchapter S, you're putting yourself in two silos. You are the employee of this firm and then you're also the owner of this endeavor. You're supposed to, if I was the, if the IRS would tell you this, I'm just telling you, so you keep yourself on, ask yourself, what would Brian tell me to do in this scenario? Well, I'm going to tell you to do what, pretend the IRS is sitting across the table. What would you have to pay somebody to do your job within the business? As the employee of the business, doing the work within the business?

• 44:01Brian Preston?

  And if you can honest, answer that honestly, the IRS is going to be okay with it. That leaves Cyrus, the business owner. Yeah, there's going to be a premium that you get for taking an investment, going a path less traveled. And if it worked out well, the IRS has no problem with you just paying only income tax on that. But if they find out that you're shortchanging them on the labor and working in, they have a problem with that. Because just looking to see if we can avoid payroll or self-employment taxes, they kind of frown on that as being the why. It doesn't mean that you don't try to balance it, but I just want you to always, that's why I think I was a good CPA, is that I would try to educate my clients to know the why, so that we could honor what the desire for the IRS is,

• 44:46Brian Preston?

  but also think about as a business owner on how we maximize this tool of being both an employee of the company, as well as the owner of the company. When you're dealing with entities that can just legally take your stuff, if you, if you go wrong, treat it with a level of respect. Don't be cavalier with it, don't, just because you saw a YouTube video where somebody said, you can deduct anything, you know, because there's all kinds of videos out there. What was the react we did to a TV show, which I thought was so good?

• 45:13Speaker 04

  Shit's great.

• 45:14Brian Preston?

  I loved how they set that up, where it was like, he was deducting facial cleansers, he was deducting lamps in his house. Don't fall prey to that culture. There, there needs to be a why. And if you can structure your business that way, you're going to be so well-served in the long term.

• 45:30Speaker 02

  I picked that salary number based off of some of my fellow studio mates and what they were paying themselves. And they had larger gross incomes than I do, so.

• 45:40Speaker 04

  That seems reasonable, $35,000. Yeah, that does not seem, that doesn't seem unreasonable to me, not knowing a ton about your industry, but I don't think that seems out of line. An escort probably, or an LLC electing as an escort probably makes a lot of sense from a business structure standpoint. So I'd say you did, you thought through that well. What else could we answer that might be valuable for you?

• 45:58Speaker 02

  Yeah, I have a few written down.

• 45:59Brian Preston?

  Oh, look at this, I love it.

• 46:01Speaker 02

  Okay, it's funny. My first question was, is my emergency fund strong enough?

• 46:05Speaker 04

  No. You guys answered that.

• 46:08Brian Preston?

  No, we, but Tombo. I mean, out of here.

• 46:11Speaker 02

  Okay, so as being my own employer, at what point in terms of my business's income, does it make sense to do a solo 401k?

• 46:19Brian Preston?

  Oh, look at that.

• 46:20Speaker 02

  I know the concept of being able to put into it as the employer and the employee.

• 46:24Speaker 04

  Hmm. Financial order of operations is the guide for you on this. I think step one, you gotta build up your emergency fund. You gotta get to step four. I think then you get to step five. I think you gotta be maxing out your Roth IRA. Great. Once you've done those things, if you find, and I've still got some discretionary income, I can go open up a solo 401k. And what's great about solo 401ks, as Brian already alluded to this, is not only can you do salary deferral contributions, but you can also do employer profit sharing contributions. But one of the unique things about being an S corp is that your retirement plan contributions are only going to be based on the salary that you pay yourself. So if you pay yourself a $35,000 salary, you can defer $23,500 and then the profit sharing will be based off that $35,000 salary. Hmm. So the answer of when does it make sense to do that is when you have additional

• 47:08Speaker 04

  capital that you can save and invest for the future. And the beautiful part is now they've gotten easier. You can go back in time with solo 401ks now, meaning like even if you don't open it this year, you can open it next year for the prior year. And some custodians allow you to do Roth solo 401ks where you might not actually get a benefit on the tax side this year from doing a pre-tax salary deferral, but you can do a Roth salary deferral. And if that makes sense in your circumstance, it can be a fantastic planning opportunity long-term.

• 47:34Brian Preston?

  You know, and our savings goal is 25%. And for most 20-year-olds, that's very aspir- 20-somethings, that's very aspirational because we don't, I don't really count that you're going to be able to get to 25% that young. But I think you do have the opportunity. And just what I was using in my assumptions, once your, your business income plus your salary is $122,000, if you take 25% of that number, it's pretty much the salary deferral portion of the solo 401k plus the, you know, Roth IRA contribution. That's amazing. So if you just, if a base level, as you start separating from what your living expenses are. Hold yourself accountable, but at least be saving and investing 25%.

• 48:15Speaker 02

  Recently, my car broke down in Chicago and I'm lucky enough to be in a position where I don't need it. So I'm selling it for dirt cheap and I don't need a car.

• 48:25Speaker 04

  Or car insurance.

• 48:26Speaker 02

  Or car insurance. So saving money there. I'm looking to purchase a car coming next summer because I plan on moving to Austin where I'll need a car.

• 48:35Speaker 04

  Okay.

• 48:36Speaker 02

  Do I aggressively save enough money to buy something in cash? Or do I do the 238 and just like get a smart car loan?

• 48:44Brian Preston?

  Have you done any 3D glass planning? You put a lot in that question. I mean, you said, hey, I don't need a car now, but I probably will in a year from now. I'm also going to be moving to Austin. We know because we have the additional context from the earlier in the conversation, going to be getting married. You've got a lot of things that are about to change again.

• 49:04Speaker 02

  Yeah.

• 49:05Brian Preston?

  You loaded up. I can't answer that, but we could model that. You really do need to get some spreadsheet out and start modeling. Hey, this is what I got going on now, but in a year from now, this is what I'm going to have. Two years from now, this is what I think. Three years, I wouldn't go too much further than three to four years. But I would start and then I'd do the treatment. For those who don't know our content, when I say put on my 3D glasses, I want to know the dream plan. That's where everything's crushing it. Everything's working. Run a spreadsheet with those scenarios over this three to four year period. And then I want to have the down to earth. This is what I think will happen, even with some bad things from life happening, but good things happening. And then don't skip the do do plan. Cause what happens if you moved Austin, you know, and all of a sudden your work dries up,

• 49:50Brian Preston?

  but you've gone and financed this car even with 238 and it all is just not working out like you thought. I'd rather you be able to address those things on paper than in reality. Do you have something to add to that?

• 50:03Speaker 04

  No, no, I think. You appropriately laid out all the variables that would change. I do think that what will make sense is you will have to increase your emergency fund higher than what we suggested. And then at that time, you'll have to make the decision, okay, are we married? Are we living together? Can we be a one-vehicle family? If we can't be a one-vehicle family, do I need to buy a car? What kind of car do I need to be? Will I be using it for work? Based on the price of that car, is it something that I can pay cash for? Or is it something based on interest rates and the cost of the car where 238 makes sense? So it's like, you need to start saving for additional capital now, but you won't be able to answer the how question until you actually get there and fill in some of those other variables.

• 50:42Speaker 02

  My next question is, in terms of my Roth investments, how aggressive should I be inside of that account? Because I've just been doing like SPY VTI. But I'm not sure, because obviously there's tax benefits to that account. Should I be more aggressive in that account? Or is that something to just keep in my brokerage account?

• 51:00Speaker 04

  I think that being aggressive inside of Roth makes tons of sense, right? You want to, you're super young, you want to maximize your tax-free growth. So buying a really low-cost index fund, US Large Cap, whatever, it makes a ton of sense. Another thing that you could consider, again, based on your age, is a long-dated target retirement index fund. If you were to go pick a Vanguard or Fidelity or Swop, something out to like 2060, 2065, the vast majority of that holding is going to be in US Large Cap anyways. It's going to be a low-cost S and P 500 index. I don't think there's anything wrong with that. Right now, with where you are in your wealth-building journey, I don't think I'd be thinking about allocation at all. I just want to be thinking about how much can I save and start putting that money to work.

• 51:42Speaker 02

  My next question, I have a lot of questions, sorry. In terms of like the certain purchases that I know I'm going to make in like 12 to 18 months. For example, not necessarily what I'm about to do, like a car or a ring, because I already plan on keeping those in my high-yield savings accounts that I have at SoFi.

• 52:00Speaker 02

  Let's say like down the road, I know I'm gonna buy a house and have a down payment. What's the timeline where it makes sense to keep that money in a brokerage account, getting bigger returns than a high-yield savings account?

• 52:10Speaker 04

  In our view, probably 60 months. And I'm being, I'm being very specific there, but five years or somewhere around that is probably the threshold. So if you think that in the next five years, four to five years, you're gonna be using the capital for a down payment or some intermediate term expense, I think there's nothing wrong with just parking it inside a high-yield savings account. Once you get past that four to five year timeframe, then I think you could probably use a brokerage account. You could dollar cost average, you could allow those dollars to potentially have some higher earning potential.

• 52:39Speaker 02

  That was my last question, so.

• 52:40Speaker 04

  Awesome. Are you ready for your homework? I bet you can't guess what the first one is.

• 52:45Speaker 02

  First one is calling mom.

• 52:46Speaker 04

  You need to call your mom, you need to get some sort of healthcare coverage.

• 52:50Brian Preston?

  How much do you offer her extra with Divemo? You know, you give her 20 bucks, 30 bucks, 50 bucks?

• 52:54Speaker 04

  He's enterprising, he's gonna ask for a discount. Mom, I know this costs you 200, but I'll offset the cost by 100 bucks.

• 53:00Brian Preston?

  He's gonna use that love consideration to get a discount.

• 53:02Speaker 04

  You could obviously look at group insurance on your mom's plan. You could go out to the marketplace and you could look at coverage there. And you could also get some sort of medical, medical sharing program.

• 53:12Brian Preston?

  Metashare's better than nothing.

• 53:13Speaker 04

  So having some sort of insurance coverage in place makes sense. Next thing is we think you ought to build up your emergency fund, get it to a fully funded six months of living expenses. That's gonna be $25,000 to have a fully funded emergency fund. But then also need to think through, am I gonna have some of these other intermediate term expenses? So maybe that 25,000 needs to be even a little bit higher based on the move to Austin and the automobile and that sort of thing. One of the things we'd love to see you do is turn on monthly automatic savings. You know, even if it's just maxing out your Roth IRA at the 583 a month, or if you can't do that, just starting at 100 bucks a month, just to get that money working for you systematically. As you close out this year and you look at your total profit from the business, it may

• 53:55Speaker 04

  make sense to begin investigating solo 401K or SEP IRA, some sort of retirement plan contribution as a means to create some tax incentivized growth. And then really put together a plan around what next year's car purchase looks like. Okay, how much? What will be my circumstance when it's time to buy the car? And if that is my circumstance, what's going to be the best means and mechanism to get the car? And what I need to do between now and that point to be able to do it?

• 54:21Brian Preston?

  Bo, if other people want to come on Making a Millionaire, what do they need to do?

• 54:25Speaker 04

  If you'd like to be a guest on Making a Millionaire, you can go to moneyguy.com/apply. Or if you want to check out any of our free resources, go to moneyguy.com/resources.

• 54:34Brian Preston?

  Guys, I'm your host, Brian, joined by Mr. Bo and of course Cyrus, Money Guy team.

• 54:38Speaker 04

  Out. Making a Millionaire is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners at Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through Making a Millionaire. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss. The guests featured on Making a Millionaire are not clients of Abound Wealth Management at the time of recording.

• 55:19Speaker 04

  Their participation should not be considered a testimonial or endorsement of Abound Wealth Management.

• 55:26Speaker 05

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• 56:15Speaker 06

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• 56:17Speaker 07

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• 56:23Speaker 06

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