One Year Anniversary Special: Celebrating a Year of Financial Literacy Insights by Answering Listener Questions

Speaker 1: 0:00

Happy birthday, happy birthday to us. Happy birthday to us. Happy birthday, happy birthday to us. Oh, i kind of got a little squiggly there at the end. At the end of it You are so rude Y'all it's our one year birthday.

Speaker 2: 0:23

I'm sorry for anyone who had to listen to that.

Speaker 1: 0:26

Except thanks for being here and thanks for listening to me sing. We have hit one year of the podcast, so it's like our birthday, it's our podcast Aversary, it's all the things. And I can't believe we've done this for a whole year, which, statistically, i think, puts us into technically, some crazy percentage of podcasts, because, as we talked about a year ago, most podcasts fail after like seven episodes. They just, you know, people start and then they stop, and that's not us, because we ain't quitters.

Speaker 2: 1:06

We are not. We are not one year, one year in one year in a whole bunch to go.

Speaker 1: 1:13

We need your help, though, because and we say this on every episode We need you to subscribe, we need you to share the show and we need you to hit five stars Yes, five stars and leave a written review, especially on Apple. Most of our listeners, according to our data, are Apple listeners and then on spot Spotify. So please, please, please, subscribe, rate and review the podcast. It's not an ego boost for us. Ok, this is how the algorithm in podcasting works. The more reviews we have, the more five star reviews we have. The more written reviews we have, the more the algorithm is like oh, people are listening to this podcast and we should be pushing it in front of others, so that's why we are asking for you to subscribe. Also, subscriptions on Apple. When you subscribe to the podcast, you automatically download all of the newest episodes and downloads. Again, help the algorithm. So if you're not auto subscribing and auto downloading, do yourself a favor, do us a favor and go ahead and hit that subscribe button on Apple and Spotify, please, and thank you.

Speaker 2: 2:31

Also make sure that you interact with us on social media. I would say we're most active on Instagram and that's at the Sugar Daddy podcast on Instagram. So make sure you interact with our posts. If you like them, make sure you like them and share them yourself, because that helps. The idea behind the podcast is that we want to help increase the amount of people who have a certain level of financial literacy and by you sharing that, that just allows us to reach a broader audience.

Speaker 1: 2:58

Yeah, and we've been getting such great reviews and feedback. What I think is really cool is that we don't have a huge following on Instagram or on social media in general for the podcast, but the people that are there, you guys, do interact with us and you do comment and you do slide into our DMs, which is fantastic. So thank you for those of you who are actively engaging with us and sharing. But also, it's a great opportunity to let us know who you want us to talk to, what topics you're interested in. If you see something that is kind of polarizing or out on social media, feel free to tag us in it, send it to us directly and let us know that that's something that you want us to cover, because, at the end of the day, brandon and I, we have a ton of topics that we want to discuss with you, but if it's not of interest to you, then we're missing the mark, so you have to let us know what's of interest. We don't want to be stuffy or boring. We don't just want to talk about 401k plans and ETFs and Roth IRAs, like we will cover those also, but it's important, yes, for wealth building and for your future. But we also want to be current and interesting and bring you topics that maybe you hadn't thought about. Like we have some really cool episodes coming up. So definitely again, subscribe, stick around, so you don't miss them.

Speaker 2: 4:22

Let us know so that, like I said, we can provide the content that you're interested in and that you want to see, so that you can learn more.

Speaker 1: 4:29

Yeah, so we have just to give you a little glimpse into what's upcoming. We've got a former pro NFL football player who has won a Super Bowl, walking us through his financial journey and the lessons learned. We've got Neha Wiley. She's going to talk to us about selling her almost 6,000 square foot house and moving her family into an RV and traveling the United States and homeschooling Like road schooling. She calls it road schooling her kids. We've got Steven Stack coming up. He is a self made millionaire, hit the millionaire status mark at 30, all on his own. He's a Clemson alumni. So if you're from from the Southeast, go Clemson. You know that's going to be an interesting conversation And we've got some other amazing people lined up. We're going to be talking to the prenup guy, which is going to be really exciting. So we've just got a lot of great guests coming up, a lot of great episodes planned that we hope are going to be interesting and engaging and just show you a different side of finance and wealth building and what you can do to learn from other people and learn more about the industry in general. So we're really excited. We're going to drop this episode, which is our past the sugar episode. We've had some people that have left us some voicemails with some questions, so we're going to get into those again. Reminder you can email us questions at the sugar daddy podcast at gmailcom. You can slide into our DMs or you can leave us a voicemail on Speakpipe. We love hearing your voice. You don't have to give us any identifying information. You don't have to say your name. If you don't want to, you can be totally incognito, aside from your voice, and then we'll actually pull those questions into our episodes, sometimes at the beginning of an episode. Sometimes we'll just save them all and put them into a bonus episode like this. But we are just glad that you are here with us. Whether it's your first episode or you've been with us from the very beginning, we appreciate you being here. Again, again, again. Please subscribe, rate, review and share all of your favorite episodes and this podcast with your network, your colleagues, your friends, with your family, your teenage children, your elder millennial children, whoever it is. Just share it far and wide so that we can bring this podcast to as many people as possible. Thanks for being here. Hey, everyone, welcome to the sugar daddy podcast. I'm Jessica and I'm Brandon, and we're the Norwoods, a husband and wife team here to demystify the realm of dollars. So it all makes sense while giving you a glimpse into our relationship with money and each other. We are so glad you're here. Let's get started.

Speaker 2: 7:30

Our content is intended to be used, and must be used, for information purposes only. It is very important to do your own analysis before making any investment based upon your own personal circumstances. You should take independent financial advice from a licensed professional in connection with or independently research and verify any information you find in our podcast and we should rely upon, whether for the purpose of making an investment decision or otherwise.

Speaker 1: 7:45

Hey babe, today we are going to answer some voicemails. We are going to pass the sugar for people who have called in and asked us a couple of questions. I will say pardon my voice, i might just go into a coughing spasm. I think my allergies are back and this air outside has your girl in a chokehold. Okay, so if I just start coughing, just ignore me. But we've got some really good questions that we wanted to consolidate an answer for everybody Everything from term versus whole life buying investment properties, starting the saving later in life. So if you maybe miss the boat in your 20s or 30s, we also have a question around side businesses, as well as college savings plans, specifically in Florida, which was pretty interesting. So we're going to answer those questions. Drop it as a bonus episode. Thanks for listening And, as always, remember you can slide in our DMs. Ask us questions. You can send us a voicemail on speak pipe. That is how we love to get questions, because we get to hear your voice and we get to hear a little bit about you know the inflection and is this question stressing you out, etc. And then you can also send us an email the sugar daddy podcast at gmailcom. And just in case you're not following us on social media, which shame on you. First and foremost, go click that follow button. But also we just announced that we would love to start working with couples. So any kind of couple we don't care. You know we believe love is love. So give us an email. Let us know what you and your partner want to work on. Note this is not an offer for financial advising. You need to be a client of Brandon's to get financial advising. Okay, so until you sign on that dotted line, he is not your financial advisor. But we get a lot of questions around how to start the conversation. How to start the money conversation. How do you make it not so scary, not so daunting? how can you keep the love in the conversation? And so we thought that we would do a little coaching around that, which I think is super exciting. And so if you're interested in being on the podcast As a couple who would like to learn more about how to have those difficult money conversations so that you can set yourself up for a better, happier, more harmonious future, because money isn't going anywhere, your bills aren't going anywhere then shoot us an email, tell us why you're interested and we will reach back out with some more details. So are you ready to get into it?

Speaker 2: 10:35

Yes, let's go ahead and play question number one.

Speaker 4: 10:39

Hi guys, ever listener here for question. So I basically started saving for retirement consistently in my late 30s. What percentage of my income should I be in? Should I be giving in order to catch up for the you know 18 years that I wasn't consistently contributing to a 401k?

Speaker 1: 11:10

So it kind of cut off. I think the last part was about a 401k started saving in their late 30s. I mean the reality is, if you're saving money in your 20s, you're doing great. I mean, that's just the reality. I don't think that that's the norm. It should be. I know I was not saving the amount of money that I should have in my 20s and then when I started my professional career and I started in teaching, i had a 403b that I contributed a little bit to And then when I changed into tech, i definitely started utilizing my employer match in my 401k. But I think this is pretty common, wouldn't you think?

Speaker 2: 11:49

No, i would definitely say. I think a lot of people often think that they are behind everyone else. Yeah and in reality, you are probably on par with the majority of people.

Speaker 1: 11:58

You're the norm, not the exception. Correct, even if that's not the ideal.

Speaker 2: 12:02

Yes.

Speaker 1: 12:03

I mean, we don't have any kind of hard feelings. We can't go back into the past to fix that, so let's move on and talk about the future. How much should a person who started later in life contribute? to make up, i guess, is the question for lost time.

Speaker 2: 12:19

Easy answer is as much as you can. That's just the reason. I mean that's, you know. The easiest way to put it is the more that you save, the better the scenario is going to be for you when you decide to stop working. You know there is a kind of a rule of thumb that if you're consistently saving 20% of your income, then you know you should be OK. But I always say that the more the better. Now, obviously, you want to have a happy meeting between that, as far as being able to take care of, obviously, the bills that you have today and also enjoy the life that you have today, because, as we all know, tomorrow is not guaranteed. And I'm really big on obviously saving for the future and being able to live the life that you would like to live in the future, but not at the expense of completely not enjoying today.

Speaker 1: 13:04

Yeah, you have to have a balance.

Speaker 2: 13:06

Yes.

Speaker 1: 13:06

Because you can't take it with you.

Speaker 2: 13:08

Now I also challenge you to think differently. Okay, so, from a quote unquote retirement standpoint, as I said before, we don't, i don't like the term retirement. I prefer the term work optional, because I think, you know, being able to conceptualize 30 years into the future is hard for a lot of people, and the idea is that you want to become work optional as soon as possible. So the idea of retirement, you know, traditionally is growing a large sum of money and then being able to turn that into a monthly income when you are, you know, older. When you're not working, you can do that much quicker than 30 years. So you got to think about the concept between growing a large sum of money or creating cash flow, because that's really what retirement is It's taking a large sum of money that you've accumulated over time and turning into a monthly cash flow. And there are other ways to create cash flow rather than simply, you know, growing a large sum of money.

Speaker 1: 14:01

That might be another episode.

Speaker 2: 14:03

So, for example, one quick way to think about it this way is if you start accumulating rental properties and the cash flow as far as you have from the renters paying you coming in is able to cover your bills, Yeah, we talked about that in our episode with Chris Singleton.

Speaker 1: 14:18

If you haven't listened to that one yet, definitely go and listen to it. He's got now I don't want to misquote him 20 doors, not properties, but he bought a multi family unit I think it had he make it easy.

Speaker 2: 14:33

He has enough rental properties and real income coming in that he is work optional.

Speaker 1: 14:37

Well, first of all, he's definitely work optional, but also all of his rental properties cover all of his family's monthly expenses and then some. So even if you stop working today, those properties are still generating income. I know we actually have a question about rental properties, so we'll actually segue well into that one. But you have to decide what kind of life do you want to live in retirement? We also talked previously about starting now with your savings and your investments. You know time in the market is better than trying to beat the market. That's not a thing. So even if you're contributing $20 a month, $50 a month, $100 a month, it doesn't have to be thousands of dollars a month. putting something into the market as often and as consistently as possible over the longest period of time is going to yield you better results. So time in is very important.

Speaker 2: 15:35

Yeah. So as of right now, you know contributing to a 401k plan as much as you can.

Speaker 1: 15:39

Definitely get your employer match, if there is one.

Speaker 2: 15:41

But also thinking about what your actual goals are.

Speaker 1: 15:45

Yep, all right. Okay, do you want to go to the rental property question Next?

Speaker 3: 15:49

question. Okay, hello, brandon and Jeff's Cuts. Firstly, love the podcast and thank you so much for all that you do to ensure that we are financially set up for success. I have a question today. I've been hearing a lot from people about, you know, diversifying their assets and things like that and really thinking a lot about buying second properties, either to do as Airbnb's or to rent out. What are your thoughts on that as far as an investment and, if it's a good idea, what are some things you would want to think about before moving forward With that type of investment? Thanks so much.

Speaker 1: 16:35

That's a great question. All the TikTok bros online are like buy rental property, It's going to make you rich. But like there's no how to or red flags or warnings behind it, It's just go buy rental property. That's like the overarching message on the internets right now.

Speaker 2: 16:53

Yeah, and I'm type of person where I am. I'm a. I am not a conservative person when it comes to an investing standpoint. However, when I think of these things, i do want to think of what could possibly go wrong, to jumping in and making sure that if there's anything that I can do to ensure either I avoid those missteps or if those missteps occur, then I'm prepared to deal with them. That's what I want to focus on. So you know, listening to that question, first thing I hear is you know she stated two different options for a rent, for a rental property, whether you know Airbnb or just something you know, a longer term rental. you have to decide what kind of rental, what kind of renter, you want to have, because, for example, with Airbnb's, sometimes depending on where you purchase Airbnb and it's not an option there. So if you are wanting to air buy a rental property for an investment property, for Airbnb purposes, you have to make sure that you are able to, that the area is zoned and you're able to actually do Airbnb in that area.

Speaker 1: 17:52

That's the big one.

Speaker 2: 17:53

Yeah. So, for example, like in our neighborhood, we live in a regular neighborhood, not a lot of Airbnb.

Speaker 1: 17:57

Yeah, my manager has a condo at the beach. She can do long-term rentals I think they have to be six months plus but she cannot do that churn and burn week over week. You know, somebody comes in for three nights, somebody else pops in for two nights after that. That is not allowed in that neighborhood, so that's a really great call out. I think one of the other things you have to consider is is this a property that you want to use and that you want to have, you know, give access to your family, your friends? Is it going to be something where, if you break even and it's not actually generating money in excess, are you going to be happy with that, correct? Or is this something where you're like, nope, totally detached, i don't ever want to stay there. I'm not going to invite my family and friends. This is just for cash flow, because that is also going to determine what kind of property you're going to purchase. I think other things we talk about this all the time, because we would love to have a beach house in our family is, if we do rent it out, what kind of amenities are going to be important? right, we would likely buy a property that would accommodate multiple families coming together for a week in the summer. We know we would want to be close to the beach so you don't have to put the kids in the car to then take them to the beach, find parking, schlep everything. That is not an enjoyable experience. We would also want it to have a pool, because we're the kind of family that goes to the beach in the morning and then we don't go back. Once we've schlep everything back, we're at the house, so then we migrate to the pool. So those are things that we would look for because we have children. We spend a lot of time with people that have children and our needs are going to be different than if we wanted to air BNB to, maybe, corporate clients right, and we wanted to go into business with companies that are setting up transient people right. Maybe C-suite folks who are changing locations need a place for three months to find their permanent housing situation. You have to think about your consumer. What kind of person do you want to rent to and why? And that is going to help you, i think really break down Where do you want to be, what are those rules and regulations going to be in that area And are you looking for it to be something that you utilize, or you're totally disconnected from it and you're only looking to rent it out, Would you say? those are good points.

Speaker 2: 20:26

Yeah, those are good points. I would also point out thinking worst case scenario you purchase an investment property and you don't have any renters. Can you comfortably cover the mortgage?

Speaker 1: 20:36

Yeah, or are you going to be stressing and taking out a second mortgage on your mortgage because you can't pay for that property?

Speaker 2: 20:43

I'm of the mindset, if you were going to have an investment property, that you should be able to comfortably cover the mortgage. if you don't have renters or it's an Airbnb and people aren't coming in, that just makes life a lot easier.

Speaker 1: 20:55

And it's so much more than the mortgage. Right, it's the mortgage, it's all of the utilities.

Speaker 2: 21:00

Correct, it's the damages you're going to have to pay for different insurance You have to think of all the different costs that come into it. So you know, with an investment property, you're going to have to put down a larger down payment, to put down a larger down payment, and then also it's going to be taxed differently, so it's going to look different. When you file your taxes, as just said, you need to take into account all the additional expenses that are going to come with, you know, having additional property. I mean even taking into account the different type of insurance you're going to have to have on there, taking into account if someone, just you know, does damage to it, replacing things of that nature. You have to take into account all those different things before I personally say, before you jumping in, some people just jump in. That's not that person I am. I would think about all those things. And also, too, i always say, like, lean on people who have more knowledge than you and learn from their mistakes. So if you have, you know, friends, acquaintances, whatever it may be that you think are reliable sources that are already doing this, have a conversation with them, because they're going to be able to tell you some of the pitfalls that they experienced firsthand that maybe could help you avoid, you know, having those issues.

Speaker 1: 22:06

Yeah, and we're going to have an episode in a couple of months come out talking about exactly that. We're going to have property owners who own multiple rental properties and they're going to walk us through the highs and lows and the good and the bad and the ugly, because there's a lot of that. And again, you can't just listen to the TikTok bros telling you go by property, it'll make you a millionaire, because there's so much more that goes into it And you have to be really comfortable and understand all of the intricacies before you jump into this And I also want to kind of you know.

Speaker 2: 22:39

People say you know rental properties are passive income, they are semi passive. There's no such thing really as passive income per se, because there's still going to be some work that you are doing.

Speaker 1: 22:48

Oh yeah, so you also have to decide. do you want to hand this off to a company, a property management company, that they're going to take a cut of your profit?

Speaker 2: 22:55

Run the numbers also. You know between you know buying the property and all the fees that are going into it on a monthly basis. You know the mortgage insurance, everything of that nature, what you are. You know what you are thinking you're going to be able to get in monthly rental income and seeing what those numbers are, because if you're just you know barely you can buy, it might not make sense. You know you might have a certain number in mind that you are looking to bring home on a monthly basis initially and you need to make sure that you purchase a property that can bring that, can you know, equate to those numbers.

Speaker 1: 23:27

Yeah, you also have to think about and this will be my last point what kind of rental property are you looking for, right? Is it a condo? Is it a house? Are you looking for multiple tiny houses on a property? How often are you going to be able to rent that out? If you're buying a beach house, there's a season for that, right? Like, yes, it's nice to be at the beach in October and November in North Carolina, but that's probably not going to generate the same amount of income that you would be making in peak season in the summer. So you have to factor that in. You might have four months of really high income, but you're going to have to save that money to make up for the lull that you have in the winter months, because we all know, even though it's nice to be at the beach, it's a totally different experience than being there in the summer. So think about all of those factors.

Speaker 2: 24:14

And you can also lean on. For example, you know a real estate professional who focuses within investment properties, as well as a mortgage lender who focuses within investment properties and not just primary residence. Because it's a it's a different, you're looking at it through a different lens.

Speaker 1: 24:30

Different loan, different taxes, all the things Perfect, great question.

Speaker 2: 24:35

All right. Next question.

Speaker 4: 24:37

Do you have any resources that you can recommend for a young adult early 20s to help them with basic financial principles like budgeting, saving, retirement credit, any like resources that speak their language?

Speaker 1: 25:03

I think our podcast does a great job of that.

Speaker 2: 25:06

So that was going to be my first one.

Speaker 1: 25:07

If they're not listening to our podcast, I would start there.

Speaker 2: 25:11

Yeah, I may not be 20 something, but I like to think that I take maybe more complex ideas and don't use industry jargon and explaining just in, you know, simple terms that everyone can understand. Yeah, so I think for most the sugar daddy podcast.

Speaker 1: 25:25

Number one. I think there's a lot of fun resources out there now that are. I was listening to Berna. she's a financial educator. She just came out with a book called Money Out Loud and it is exactly for the mid to older teen, maybe early professional, and she always says that traditionally, money conversations have been oh, what does she call it? It's so funny Mail, pale and Hellestale That's what she calls it. But I mean, that's what it is.

Speaker 3: 26:03

It's accurate, that's accurate, yeah.

Speaker 1: 26:04

Mail, pale and Hellestale. We want to get away from that. That's not our demographic, it's not fun to listen to. It's way over our head. So Berna's book Money Out Loud I haven't read it yet, i just downloaded it on Audible, but just following her content it's very relatable. I think Tori Dunlap she is the financial feminist. She has a New York Times bestseller that recently came out. We've both read that and it has a lot of great information that's super approachable. I will say that she, i would say, caters to a female population.

Speaker 2: 26:41

Yeah, but the information is still relevant. It's still gender neutral.

Speaker 1: 26:45

Yeah, we love Ramit Sethi as well. He has a podcast called I Will Teach You To Be Rich. It's where you can listen in on him coaching with a financial aspect of different couples.

Speaker 2: 26:57

I would recommend the book too. Read the book, the book. Because, all this is based on his book.

Speaker 1: 27:01

Yes, He just came out with his updated version. I Will Teach You To Be Rich. That's a great resource as well. If you follow the people that we follow on Instagram, that is a really good start. The budget knee stud with Tiffany Aliche Brown Ambition podcast.

Speaker 2: 27:17

One that I would really recommend is Earn Your Leisure. Earn Your Leisure Especially for, like I said, 20-something year olds. It's broken down into language that's easy to understand. It also speaks to brown, black people, black culture It speaks to us And it's led by males. Yes, it's led by males, but they have such a variety of topics that they cover and also experts in different industries that they bring in, so I would 100% recommend that they listen to Earn Your Leisure, whether it be the podcast or their YouTube channel. In addition to maybe joining, you know, their EYL university, so you have access to all the different videos and all different aspects of finance. I 100% recommend that one.

Speaker 1: 28:00

Yeah, we'll be sure to link all of the socials to the people that we follow and really enjoy their content and agree with their messaging, and that it's approachable and easy to consume And it takes that heaviness out of. Oh my gosh, i have to save, i have to do this, i have to do that, i have to exercise, i have got to drink my gallon of water and I've got to do this And I've got to contribute. It's like, okay, we get it. It's a lot. So I think breaking it down with you know, people that are relatable like us and some of the people that we really enjoy their content, and then making smart goals around what you're trying to accomplish, is a great way to go. Good question.

Speaker 2: 28:42

All right. Next question.

Speaker 5: 28:44

Hey guys, quick question about life insurance and term life insurance versus whole life insurance and kind of some of the differences between the two. I know there's the whole Dave Ramsey School of Thought that whole life insurance is a scam and it's a ripoff, and but yet you see people leveraging whole life to build wealth, especially the wealthy. So I was wondering what you all's thoughts are regarding whole life insurance and if it's something that should be examined and looked into in my own portfolio. Thanks so much.

Speaker 1: 29:21

Oh, i know you have a lot to say about this.

Speaker 2: 29:25

Well, it's a great question and, to begin with And I am the type of person where I tend to become skeptical of someone who says, who speaks in absolutes There's very few things in life that are absolutes where this is never use this, never do that, or always do this or always do that. So, especially when it comes to finances, because it's personal for a reason And there's so many different variables that go into, you know, putting together a plan for someone that just to simply say that, hey, it's not good for anyone, i don't agree with that. Now I can say that, when it comes to whole life insurance and term insurance, the main easy difference is that term is meant for, as it stated, a term period of time. So it's the most least expensive way to cover the basic need that, if you were to pass away during your prime earning years, you know these are accidents. It's in someone dying of old age that any type of you know responsibilities you had individuals that were relying upon your income that this income is still coming in, even if you were to pass away.

Speaker 1: 30:29

Now typically what people buy a 20 year term.

Speaker 2: 30:33

Correct, I mean like 20 years, 20 year, 30 year term for younger individuals. And the idea behind it is like the easiest way is thinking like you know, for us we have a family. If I was to pass away my whole, my, my, my term policy would provide income to just in the kids. Otherwise, if I was alive, i would been bringing in. And with a term policy, it's either you use it, which you hope you don't use it, or you lose it. So you could be paying on it for 20 years And at the end of the 20 year term period, if you know, hopefully you're still alive, then you don't get anything back.

Speaker 1: 31:07

It's just like your car insurance, right.

Speaker 2: 31:09

Yeah.

Speaker 1: 31:09

You don't want to use your car insurance, because then that means something bad happened. But you need it, just in case.

Speaker 2: 31:16

Exactly.

Speaker 1: 31:16

So and we've talked about this in previous episodes You need insurance. You need life insurance. Even if you're a single person, it's going to cost something to bury you. You need to have life insurance. Also, it's easier to get more life insurance once you've already had life insurance. So you know somebody, we all know somebody, who had some fluke, something come up medically that now might make them less insurable. So if you have the insurance in place when you're young and healthy, it's going to be less expensive and you have it in place in case something happens For us ladies, right? If we have C-sections, if we have miscarriages, all of those things are going to show up on your record, on your health record.

Speaker 2: 31:59

Yes, but we don't need to talk about that aspect because that's not necessarily what they're focused on for life insurance underwriting.

Speaker 1: 32:04

Not at all for term. No, because with life Yes, for whole life, no, no. Okay, i see.

Speaker 2: 32:12

So you're getting a little bit into the disability insurance aspect. As compared to life insurance, disability insurance is looking at anything that could. You know it's much deeper dive.

Speaker 1: 32:21

But like when I had my thyroid surgery, wasn't that a factor? Not at all, No no no, okay, i must have not been listening.

Speaker 2: 32:28

Life insurance is simply looking at any health issues that you have that you could die from. That's it.

Speaker 1: 32:33

But you can die from having a child.

Speaker 2: 32:35

I understand that, but that's not what they're looking at. Like you could, unless you unless you?

Speaker 1: 32:40

what if you ride a motorcycle or you go parasail?

Speaker 2: 32:43

Well, yeah, that's going to be on a life insurance application.

Speaker 1: 32:45

Okay. So if you're doing risky things, risky behaviors, not medical, yes, You're, you're kind of detouring. Sorry.

Speaker 2: 32:53

So what I was going to say is you know you have your term insurance there. Least expensive way to cover that need Whole life insurance. The main difference is is that you know, as a state, it's for your whole life. Now, not to get too much into the weeds, just kind of keep it on the surface level. With a whole life policy, you're going to use it one way or another. Reason being is that the premiums that you're paying on, you know, a monthly, annual basis, however you choose to do it, portion of that's going to pay for the life insurance, but then also another portion of it is going towards a cash value that you can actually access while you're alive. That's the most basic way. Now, life insurance can be very complicated And that's why I want to kind of keep it surface level for the sake of this conversation. But can whole life have a place in someone's overall financial portfolio? 100% Do? I think it's often implemented too early. Yes, and that's where I think Dave Ramsey is trying to go, but he likes to be sensational and just say that it it's a scam, it's not a scam.

Speaker 1: 33:52

But doesn't he also offer term products? So he's like don't buy whole life, but come over here and buy my term. So like pay attention people. Because I mean people will be like, don't do this, don't have this credit card, Oh, but you can open my savings card right over here, Like just be careful of the snakes Whole life.

Speaker 2: 34:11

If whole life insurance and term life insurance where the exact same costs, everybody would buy a whole life because it's the much better product. It's just that it costs more, and so, therefore, that's why I don't think it should be the first thing that you implement by any means. Term will cover the need that you have in that scenario. Now, once we take care of everything else, we'll be able to do it. If you still have a budget left over, then whole life can make sense, and that's why wealthy people use it.

Speaker 1: 34:38

And the Asian community is big on whole life. Right, i would say.

Speaker 2: 34:43

I would say I would say a lot of community communities outside of the United States because they understand the value of it. So, as I said before, be wary of someone that always says that speaks in absolutes.

Speaker 1: 34:54

Right, great question. Thanks for calling that one in.

Speaker 2: 34:58

All right, thanks for watching.

Speaker 4: 35:01

So I'm looking to start a side business for income but also like tax savings. What type of business do you recommend? anticipating maybe $10,000 in income annually and not quite sure what the best business structure model will be for that?

Speaker 1: 35:32

I'm loving all these questions. I think that was the same voice as before, so keep them coming. This is great. This is what we want is for you to engage with us. This is a great question. So I think the question is what? LLC S4.

Speaker 2: 35:47

She's asking me you know how to structure the business and maybe what the quote unquote tax implications of that.

Speaker 1: 35:53

Okay, so $10,000 is the goal for a year one.

Speaker 2: 35:55

Yeah, so I would recommend having an LLC, and the reason for that is that it's a liability protection. I'm not sure what type of business you're starting, so you don't want to necessarily open yourself up to the possibility of being sued. And if they're doing your business and you have an LLC, it is basically sold to the business as compared to being able to go after your personal assets.

Speaker 1: 36:21

Uh, segue or backtrack, let's rewind. If you're going to do the rental property thing, those should be in an LLC, right? Yes, so that again if something goes wrong. It affects the LLC and not your personal finances and your personal accounts. Right, correct, okay, just wanted to interject.

Speaker 2: 36:43

Now with the LLC, how its tax is based upon the structure of the business and like how much money you have coming in. So with $10,000 is you know, being the estimate of what you think you're gonna bring in first year, it would just be an LLC tax as a sole proprietorship, which basically means that the $10,000 would be taxed at your ordinary income tax rate. So there would be no, like you know, business taxes or anything of that nature is just going to be as if you as an individual earned an additional $10,000 of income for that year. So let's just say, hypothetically, you know your regular job brings you in 80,000. If your side also brings you in the additional 10, it is going to look as if you earn $90,000. Now one thing I would recommend doing is, in that scenario, even though you know you have the LLC and I'm assuming that maybe with the side business that you're hoping to grow it go ahead and start off on the right foot. So when things are simple, it's much easier to put all the proper things in place as compared to backtracking when the business is bigger and more complicated. So you know you do want to, you know, set up a separate business bank account. That's going to make it much easier for you to track any of the expenses you have that are associated with the business so that you actually use it as a write-off. You're also going to want to, you know, maybe get a business, you know credit card. That makes, like I said, once again easier to track all those things and keep it separate from your personal side. but then also maybe set up quick books So that's once again easier tracking of your business expenses and also the money of coming in and also just helps overall from the business standpoint of being able to maybe do some projections and just see a clearer picture of the business.

Speaker 1: 38:18

Yeah, that takes a little time up front. I didn't do it when I wrote my two books and I regretted it after the first book and then after the second book, but life was life-ing We were in the middle of the You mean that I had to go back and do all of it? Yes, also that. But we were in the middle of a pandemic. Life was hard. We had two young kids Like I just was like this is more of a hobby, not a business. And then when I sold, you know, my first thousand books, i was like, oh, and then I was buying swag and stickers and postcards And I mean I spent thousands of dollars in postage alone, right, so I did end up getting the business credit card, so I was getting points back. But yeah, the quick books, you know, maybe talking to a bookkeeper, depending on again.

Speaker 2: 39:10

I don't think you need to be depending on the top of business Things to maybe think about. Depending on the business, because the biggest thing also, too, is that when you're starting a new business, sidehouse or whatever it may be, you want to keep it as lean as possible on expenses.

Speaker 1: 39:21

Yes, but it's something to think about Like, hey, if this business grows faster than you anticipated, is there somebody that can help you stay organized? Do you need to bring in an accountant who understands small business ownership and LLCs and entrepreneurship and the benefits and the tax benefits that they should be looking at? right? Not saying go out and get a bookkeeper step one, but something for forethought. right? Because in the first year, let's say you do make $10,000, you're going to be like, whoa, i made $10,000. What else can I do? How can I double that? How can I triple that? Because seeing that money come in is motivating. So you're probably not going to just say, yeah, i'm happy with $10,000. You're going to say I can, i did $10,000. What else can I do?

Speaker 2: 40:07

Yeah, and they'll also be able to help you. So once you start bringing in more income that maybe, instead of being taxed as a sole proprietorship that you may be might want to switch to being taxed as a Nescore. Not going to go into the details of that, but once you reach a certain income level, it may make sense to do that because it would help from a taxation standpoint.

Speaker 1: 40:23

Yeah, another great question. Okay, I think we have one more. We're going to try to keep this episode brief, briefish.

Speaker 4: 40:32

What do you guys think about college savings plans? And my state, our state's, college savings plan is you basically lock in the cost of tuition today so you can pre-pay. That's what it's called Florida pre-pay. You pre-pay for the cost of tuition based on today's rates. You don't get any benefit. Plan makes You. You know the plan gets all of that. You just get to lock in the cost of tuition at today's rate. What do you think about that type of plan?

Speaker 1: 41:15

Okay, if there was a glitch in the middle. we're in the state of Florida and we're talking about locking in tuition in today's rates. So we're pre-paying college tuition with today's rates. Ready go So what she's got nothing.

Speaker 2: 41:32

So what she's referring to is pre-paid tuition, and there are only certain states that actually offer this. We live in North Carolina. They don't currently offer that as an option, but it's one way in certain states that they allow you to save for college education. Most people are familiar with the 529 plan, where you're, you know you're putting money in It's growing. You're putting money in after tax, it's growing tax deferred, which means you're not paying taxes on it, and then when it comes time to use it for qualified college expenses, then you don't have to pay any taxes on the growth. So essentially, what pre-pay tuition is is similar to a 529 plan, in the sense of you are giving them money and they actually are investing it to pay the difference, you know, as far as to grow the alumsum of money, but what you're able to do is lock in the cost of tuition today. So, for example, say you have a three-year-old, you're gonna be able to lock in the cost of tuition today as compared to what tuition would cost maybe 15 years from now, which is a huge benefit because, as we know you know, college tuition is increases dramatically each year.

Speaker 1: 42:33

Wait, I have a question How are we locking in this rate Like? is it an aggregate of tuition costs across the country or just in the state of Florida Public colleges? and universities and universities, not private. So the current cost of public colleges and universities in the state of Florida. They are taking that average and that is what you are paying on, So you're paying into that. They're gonna take your money, invest it, make a profit and that profit is allowing you to stay at that rate.

Speaker 2: 43:10

Correct Okay, they're not making it. So what they're doing is that they're investing it so that, essentially, it's making up for the difference of what today's cost would be as compared to the future cost.

Speaker 1: 43:22

Hmm, how long do you pay into that, like if you have a three-year-old? It depends on.

Speaker 2: 43:26

Well, there's options, so it depends on one the type of payment plans, because they do have, you know, monthly, yearly or alumsum. So, for example, let's just go with the monthly one, which is the one that probably most people choose. It's gonna be based upon the age of the child And then they also have different plan options. So, you know, do you want to pay for, you know, two years of college, one year of college, a four-year college or four-year university? Because the difference between a college and a university is that a university has graduate programs, so that could be different. So they have a couple different options and, based upon the option package that you choose and then based upon the age and also the payment frequency, that determines the amount that you pay in on a monthly basis. So, for example, i hopped on Florida's website to see you know what it looked like, because we don't have one in North Carolina, so it wasn't necessarily all that familiar with it, but I put in our youngest son's age and we would be paying around $155 a month for, like, a four-year college option.

Speaker 1: 44:23

Wow. So then again, because we're talking about the state of Florida, that child then has to go to school in Florida.

Speaker 2: 44:30

Incorrect, so I'm only going to speak to Florida because each state there are, like I want to say, there's maybe about 10 states that have them, but each state is specific, so this is not applied to all of them. This is simply to Florida that it will pay for in-state or out-of-state, public and private. So, for example, if you were in Florida and you had one and you want to go to school in Georgia, it'll pay whatever was going to pay for the Florida school, for the Georgia school. So if that covers the entire amount for that Georgia school, then you're good to go. But if there is obviously if it doesn't cover the entire amount, then you have to come up with a difference.

Speaker 1: 45:05

Wow, this sounds really great. Okay, so what happens if you're paying in paying in five years, 10 years? something happens, something changes in your financial situation and now you can't pay into it anymore.

Speaker 2: 45:18

You can quit anytime with that, With the Florida plan, you can stop, you can quit the plan and then your money just sits there or you get it back. Well, you have options.

Speaker 1: 45:26

Okay, so you're not going to lose it.

Speaker 2: 45:29

No, there's Florida's guarantee that you will not lose your principal.

Speaker 1: 45:33

Okay So it sounds like it's low risk.

Speaker 2: 45:36

Yes, it's very low risk as far as $155 a month sounds way better than like.

Speaker 1: 45:42

Here's a $40,000 bill for year one.

Speaker 2: 45:45

Yeah, so with the Florida plan the nice thing that I saw about it where is that? So you have to be a resident of Florida for the previous 12 months before you're eligible to use it. Good call, all right, so you can't use it from out of state to be a Florida resident. Now the nice thing is is that if, once you're a Florida resident, you start paying into one, if you move out of Florida, you still have access to it.

Speaker 1: 46:07

So you're like grandfathered in, grandfathered in.

Speaker 2: 46:09

And also the nice thing is is that let's just say that you were living in Florida, paying to the plan, and then you moved to North Carolina, where we live. But you know, you lived five years in North Carolina now and it's time for your child to go to college. They would still be considered in state tuition for Florida. They wouldn't pay out of state tuition with the plan.

Speaker 1: 46:29

Well, this sounds like a win, win, win.

Speaker 2: 46:30

Yeah, and, as I said, the hard part is is that it's not offered to majority of states.

Speaker 1: 46:35

Don't have this option, and also well, with the things that Florida is doing. I don't know who's going to continue to live there, but this sounds nice.

Speaker 2: 46:45

But it's a great option. I you know I wouldn't you obviously have to look at your complete financial situation, because the biggest thing I would say for people that are saving for colleges don't save for your child's college at the expense of being able to become work. Optional slash retirement, because you can't read, you can't borrow money for a quote unquote retirement, but you can borrow for college. And then also, i'm a believer that I don't know what college is going to look like. You know, we have a. Our youngest is three years old and 15 years from now, i think college is going to look very different, because it can't really continue the way that it is, in my opinion, because the return is not the same that you're getting on it.

Speaker 1: 47:18

Yeah, but we can't predict the future, so and I'm also a big proponent of multiple.

Speaker 2: 47:22

You know options, so you know whether that's. You know the prepaid tuition you can also support taking a 529 plan. You can also even put in there. You know a unit, an account, a universal transfer to minor account. So I think there was a multiple options And I think you know in the case of college, with so much unknown, it might be beneficial to employ multiple strategies as compared to just one.

Speaker 1: 47:42

Yeah, well, i think that is the end of our questions. Those were all really fantastic, so thank you for calling those in. It means a lot to us. Please tell your friends and family that they can leave us a voicemail. The next time somebody asks you a question that has to do with money and finances that you can't answer. Send them our speakpike link, exactly like you just did, and then we will address those questions either in a bonus episode, like we're doing today, or we'll tag them onto upcoming episodes. We've got some great guests coming up, so make sure you're subscribed to the podcast so you never miss an episode And we will talk to you soon. Thanks so much. Don't forget Benjamin Franklin said an investment in knowledge pays the best interest. You just got paid Until next time. Thanks for listening to today's episode. We are so glad to have you as part of our Sugar Daddy community. If you learned something today, please remember to subscribe, rate, review and share this episode with your friends, family and extended network. Don't forget to connect with us on social media at the Sugar Daddy podcast. You can also email us your questions you want us to answer for our past. The sugar segments at the sugar daddy podcast at gmailcom or leave usa voicemail through our Instagram.