Do you run a successful business, but find yourself stressed out about finances?
Does it affect your creativity to the point that you aren’t making your projects the absolute best?
If your finances are a shambles, chances are your business isn’t very stable, and neither is your personal life. It’s time to make a change.
A big welcome back to Graham Cochrane of The Graham Cochrane Show as he talks about potential solutions and fail-safes to make sure that you can survive difficult times in your business and come out the other end swinging!
In this episode you’ll discover:
- Why service-based businesses should have some scaleable income streams
- How a retainer model can boost your business’ income
- What opportunities overwhelmed consumers provide
- How eliminating your fear can make you bolder, to take good opportunities and leave behind mediocre ones
- Why poor personal finance is the downfall of many businesses
- How trading up cars and paying car payments to yourself can buy you a new car in the long run
- How growing your business too much can hurt your family, creativity, or life
- How you can start to safely save money for retirement, as well as keep you – and your business – alive during spare months
- Why you should discuss financial priorities with your family to see if you are overspending or can cut back
Join The Discussion In Our Community
Click the play button below in order to listen to this episode:
“Whenever there’s overwhelm because of the internet, in any subject, there’s opportunity to make money because if you can simplify and focus, man you can make money.”
“There’s a ton of opportunities there, I think some people that are overly focused on the traditional business model might push back on that… And I think that would be a mistake.” – Chris Graham
“I think this is something that really needs to be taken seriously by every member of our community because, as entrepreneurs, our personal finance is directly tied to our studios’ finance.” – Brian Hood
The Graham Cochrane Show – https://www.podbean.com/podcast-detail/xiqst-90338/The-Graham-Cochrane-Show-Podcast
Bounce Butler – http://bouncebutler.com
Filepass – http://filepass.com
Apple – https://apple.com
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Related Podcast Episodes
Episode 46: Graham Cochrane Teaches Us How One Free Source Of Marketing Can Change Your Business Forever – https://www.thesixfigurehomestudio.com/graham-cochrane-teaches-us-how-one-free-source-of-marketing-can-change-your-business-forever/
Episode 57: How Recording Studios Can Get (And Stay) Out Of Debt – https://www.thesixfigurehomestudio.com/how-recording-studios-can-get-and-stay-out-of-debt/
People, Artists and Organizations
Jacquire King – https://en.wikipedia.org/wiki/Jacquire_King
Mark Eckert – https://www.mark-eckert.com/
Grant Cardone – https://grantcardone.com/how-to-10x-your-business/
Compassion International – https://www.compassion.com/
Steve Jobs – https://en.wikipedia.org/wiki/Steve_Jobs
James Bay – http://www.jamesbay.com/
Kings of Leon – http://kingsofleon.com/
Norah Jones – http://www.norahjones.com/
Carpet Buying Guide – http://www.abccarpets.com/new_page_8.htm
The Total Money Makeover by Dave Ramsey – https://www.amazon.com/Total-Money-Makeover-Classic-Financial/dp/1595555277/
Rich Dad Poor Dad by Robert Kiyosaki – https://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1612680194/
The Cashflow Quadrant – https://www.richdad.com/cashflow-quadrant
Graham. Welcome to the show yet again. You're the first repeat guest.
What? I had no idea. That's a big deal, man.
We're like 90 or 91 episodes in and you are our first repeat guests and for very good reason. There's a lot of things you have in that big, beautiful brain of yours and we're going to, that's the weirdest compliment I've ever said on the show. Your pig. Beautiful brain. I was going to say head, but I was like, man, that's a really, that's not the right word.
It's too forward and not creepy enough.
For those who didn't listen to you on episode 46 between now and that episode, Graham Cochran has launched a podcast. It's called the Graham Cochran show. We wanted to get them on here to a promote the heck out of that show because it's an amazing show, but be to pick his brain on some of the topics he's brought up on that podcast for our listeners because there's so much more that we can get out of him as far as knowledge info and Chris actually between then and now has also taken him on as a business coach. Yeah, so there's just been a lot of stuff that we want to bring up with you Graham, because I didn't feel like the last episode even scratched the surface of the value you can bring to our audience, so we had to have you back again.
Dude. That's awesome. I'm so honored because I was literally thinking this is the first podcast that I've personally gone back on. Oh, I've never been asked to come back. So I either screwed up all the other ones over the last decade or I never really wanted to go back on. Like, I don't know if there were many that I was like, dude, we had more to talk about. I would enjoy it. But you guys are so much fun. And uh, I feel like that was just a couple months ago, but that was almost a year ago, if not longer. So honored to be back.
Well, we're glad to have you, man. Well, let me tell you guys a story. You guys been the listeners here. So we had on, and let's see, this was what, like November or something?
September 25th. 2018.
Wow. Yeah, almost a year ago. And so it was kind of a weird time for Brian and I in that the podcast had started to take off when, you know, we've mentioned this before, when when Brian and I first started doing this in my head I was like, yeah, like maybe 500 people will listen to this podcast someday. This is just an excuse for me to hang out with Brian and to get free business coaching from Brian. All those things happened in Moore. And so we had Graham on and it was kind of really cool to have you on because you have built an audience and you knew how that impacted your own business. And I think had vision for how it was going to impact and i's owned businesses. And so for me, just as a mastering engineer, this podcast has been weird because I get hired pretty much at least once a day by somebody who listens to this show.
But it really struck me during that interview we did with you, that you knew many, many things that I did not know. And so right after we had that interview, I reached out, talk to you about being a business coach for me. And we did it. We did, we hung up six times. It was incredible. And it really challenged me. And my business has grown substantially in large part because a lot of the advice you've given me and so man, I just really appreciate you and I am so glad that I did that because my kind of thought here, at least when I started my business was all I'm going to consume a bunch of content. I'm going to read a bunch of books, I'll listen to some podcasts, I'll watch some videos and I'll self teach. And the thing that blew my mind about business coaching was that when you have someone that's been down a road that you haven't been down before, they're going to spot gaps in what you know and in what you don't know. And they're going to be able to helpfully curate, if you will, what you really need to grow. And so, man, I just, I appreciate you and I grew so much through having used a coach.
I say we should give a six figure salute to Graham Cochran, our first on show six figure studio salute. Wow. A lot of firsts. Oh man, man, dude, well I'm so glad that that worked out that we got to work together because you're like an ideal student because you're a doer. And like that's why you're successful both of you is because you guys get ideas and you don't just stay as ideas. You say, well let's try them and you do them. And so many people are afraid to try something because what if it doesn't work out? And the reason you guys have stuck so well in the podcast and all your other ventures is that you're willing to try things. And like I remember we would be talking Chris and you'd have an idea. And I said, well what about this? And your eyes would light up.
You're like, Oh yes. And I knew when I saw those eyes light up that you were going to actually go do it. You know you're actually going to go pursue it as opposed to people that just listen to like, oh yeah, sure. Whatever. You know. But I read a book, Graham, it's like, aw dude, why are you even hiring me? It's like, then go read the book. You know? But Dude, you're the best to work with and you've got so much going on right now that I'm just so pumped for. So pumped for it. So let me back up a little bit. We talked about your podcast, it's called the Graham Cochran show. Just to kind of step back for a minute, will you give our listeners an idea of what the podcast is about? Kind of your elevator pitch for that, just for people that are maybe interested in what you're talking about?
Yeah, absolutely. It's called the Graham Cochran show because I apparently love myself and I just couldn't think of another more interesting name. So no, but the idea is it's every week I'm talking about how to help you build your business online or your online business so that you can work less and be freed up to live the life you want to live. Give more to the things and the people and the causes you care about. So that work isn't all you do. Cause I know a lot of business owners either have a business already can't scale it somehow and so they're just stuck in it. They've built a nice trap for themselves that they're stuck in and that's awful. Or there's people that are on the outside looking in. It wasn't a lot of you listeners do, which is do cool work and have a business of your own and they don't know how that's even possible and they feel like you have to be a genius to figure it out. And I try to simplify it. It's usually how to start, how to grow work life balance and then sort of success mindsets along the way.
I've been listening to it myself just because it's right in vein with what I'm doing with file pass and with what I'm doing with the six figure on the studio. You know, we talked about before the show, I don't know how much of it is applicable to a service based business like recording studios, but you brought up a really good point in our conversation that I'd love to kind of dissect here, which is you believe that even service based businesses can and should have some form of scalable income in their businesses. And I'd love to kind of get your ideas on what that might look like for the average home studio owner or someone producing from their home or even just a a commercial studio owner trying to keep up with the times. What would you say to those people who are maybe looking to implement some sort of scalable business aspect in their service based time for money type business?
Yeah, so I think when your service based, it's hours for dollars and so you know, there's only two levers you can really pull to make more money and that is to increase your rates or have more clients and work more or really kind of what you guys have done in, Oh Chris, you've become a master. This is really sort of duplicate yourself. And so you now have other people that you delegate the work to and you farm out some of it and they take a cut, you take a cut. So you have to somehow multiply yourself and you've been really good at that. So that's one way to scale. But then that creates more complexity as well. So that's not a bad way at all. But it'd be nice if you're a service based business to have at least some element that's hands off and that can create revenue for you and that can scale depending on the demand or whatever.
But it doesn't require any more of you. So I was just thinking about, I'll try to apply this to audio in a second, but I was thinking about, I have a buddy of mine who does website design, but he's getting into web hosting for his clients and for people to buy web site templates from him. And so he's got like service based business. The templates is one thing he can sell. It's like a digital product that can scale. But even with the hosting or even designing, designing sites. And one thing that he was able to do is create sort of like a retainer model. Like, Hey, I'll design your site, we'll put it together and then we'll just tack on a fee every month. And it's like unlimited customer support, like tweaking your site if you need something like you can reach out, but it's a retainer model so it's low cost.
They feel like they have the security of, I have someone I can reach out to if I have a problem, which would have been helpful for me. Like four or five years ago, I hired a guy who designed my site and put it together and he did a great job. But then I had like, you know, some malware if somebody just destroyed my site. And like it disappeared in one day when I was at a theme park and then left a little smiley face. So recording revolution didn't exist for 24 hours. It's like a smiley face in a white screen. And I don't know anything about the Internet. I run an internet business. So I'm like, ah. And I'm trying to hit up that guy that designed my site a couple of years earlier and he's like, Bro, I don't, you know, I'm not at work right now. I don't really know.
So I felt like lost in alone. So if I had a retainer model, I would have happily paid 49 bucks a month or 100 bucks a month to be able to hit him up at any point to clean up something or take a look at something. So that was a model that worked well for my buddy. And there's something about thinking outside of the box of what else do your clients need ongoing or at least the perception of access to you in case they need you on going. I don't know if you guys even have any ideas, but that was where my head would go. Yeah. You know, I had thought about throwing this idea around for Chris Grant mastering about, you know, like an unlimited mastering per month or something like that or,
but there's a ton of opportunities there. I think some people that are overly focused on the traditional business model might push back on that and I think that would be a mistake. There's plenty of room to be like, Hey, if you are making songs in garage band, you know for one low monthly fee, you can send them to me and I'll touch them up and get your mixes in a good spot and then send you back your own session file for a certain amount. You know, each month there's an awful lot of opportunity there to add value with your skillset in a way that generates a base income. Yeah, I think that's the key is like this may not be something that replaces your dollars for our type income. We don't. Graham teaches how to create, you know, online business and strings that are truly scalable to replace your full time income with a scalable business.
But this may not be the case here, but it can be something that covers your phone bill, covers your cable bill, covers your mortgage or something, some smaller expense that helps supplement those low months you have in your business. And I saw a couple of good examples of this recently. There was a customer of mine who has, I was reviewing his website and I saw on his website he had a products page and I was like that's very interesting. On a recording studio website, he had a page for products and on that page were multiple products that were geared towards other mixing engineers and other producers. And I was thinking like is that the best thing to do? Like your customer as a mixing engineers, probably other recording studios or other bands who are looking to mix you. And so the products are not totally aligned with your audience.
But then I thought about this guy's mixes are incredible for the genre that it is. And so he probably has a lot of fans who are just mixers that are just checking out his work and then they see they have products of, you know, his bass tones and his Kemper bundles and all these other things that he's created, drum samples. And I thought that was a really unique way to supplement his income. And he probably sells a decent amount of those every month and that's a more scalable thing. When someone buys something on his site, he doesn't have to directly fulfill that order. Another guy he has a guide for is a guide for moving your career forward in pop production. This is Mark [inaudible], the other guy I'm talking about and he's got a few paid products on his side as well. That I think is a very clever way to further service your audience after you've already recorded them or even the people that you've had to turn down in the studio.
You're finding ways to monetize them through a well well done ebook, not a free like lead generation but a well written long ebook that someone pays money for or some sort of resource thing. In his case he put resources together of a bunch of different management people and people who do sync licensing and other resources like a list together. So you don't have to go find that and people are willing to spend hundreds of dollars for this resource. So those are just a couple ideas off the top of my head and if that brings up anything I'd love to hear from you guys of what that kind of sparks in your brain.
Those are great ideas and examples. And I'll give you another one that I was a customer of years ago, my wife and I wanted to put new carpet in our house and we were first time home owners and we'd never bought carpet before and we knew it was going to cost a few thousand dollars and that was a big deal to us. And we were like, we don't know even what to look for and padding and thickness and so confusing. I'm starting to Google it and it just got overwhelming looking on Google. And so whenever there's overwhelmed because of the Internet and any subject, there's opportunity to make money because if you can simplify and focus, man, you can make money. And we stumbled across some random guy that was a carpet installer in some city, not my city, who was selling a well-developed probably $14 ebook on how to buy carpet.
It's so niche and random. It was so niche and it was like, look, you're shopping for carpet. I'm like, that's me. You're so confused about what to even ask the dude at the carpet place. You're afraid that they're going to try to sell you their whatever. They get the most commission off of carpet and you're not gonna know the difference and here's like what to look out for when you go shopping. And he had some kind of promise of like if you do these things, you're likely to save 500 bucks to 1000 bucks on your next carpet purchase. And I'm a carpet installing expert and it's like 14 bucks. I was like, dude, I'll spend 14 bucks to just like get the scoop on a guy that just does carpet all day long. And we bought this boring ebook and it was very helpful linking the description.
Exactly. And now I'm an affiliate for a carpet install ebook. No, I get 50 cents. But that's a great example of the dude's job is installing carpet and selling carpet. But he's probably got this machine and some SEO key wording on some certain blog posts that leads to some sales every day. And I love how you said it, Brian, about think about what could it replace, because again, there's nothing wrong with a service based business, but if you can have your rent and mortgage covered every single month by this passive income thing, that just feels cool. That feels real. And like you said, I think in the low months it takes the stress and pressure off you needing to get more clients and every business, even if you're not a client based business, needs that stress to be removed because everyone has low months. June historically is one of the worst months for me and Chris, we were talking about this, June is like always bad and I was like, dude or your June's bad. You're like, yeah. And on both of my businesses, they're bad. My wife's June was awful. I was like, maybe just people don't buy stuff in June and so I need to have something to sustain June. So anyway, having some element, even if it's 500 bucks a month coming in without you doing anything, that is a good step in the right direction because if you can get it then it can be.
Keith, I want to go back and touch on something you talked about Graham, a really good quote that I marked in pro tools and I'll have James pull out and put on the show notes page, but you said where there is overwhelmed there is opportunity. Like that is such a great way of looking at it and something as mundane is like carpet shopping, which is like you're not passionate about shopping for carpet. Your soul is not tied to what carpet you pick. Your feet might be happy with which carpet you choose over another, but your soul is not, but the souls of your feet might like, right. Yeah. That was one of the best horrible pun jokes we found on the plant. Get even guys even got Graham. There's a lawsuit here. Oh Man. I'll pause and appreciate that one. Chris, I'll let you have that one.
Thank you. I appreciate that. So to get back on track here you are willing Graham to pay 15 bucks for an ebook on carpet, which is like the most ridiculous thing I've heard in like a long time. But it makes sense cause like, I don't know the first thing about carpet, I don't have a single bit of carpet in my entire house here so I don't even know what carpet is anymore. But when you go into the audio world, if you think about the amount of oneself they put into music and then they have to choose a studio and they're thinking like this person, are they just going to try to sell me on things I don't need? Are they going to try to use some techniques that don't match what I'm trying to do? Like how do I choose the best studio, the gear?
Does the gear even matter anymore? Does it matter where I go as the name, the important thing or is the price? They have all these questions in their head and no one's really thinking through the point of view from a very confused, isolated person who doesn't have any experience in the studio. What they're going through when the first time they're choosing a studio that is in a very confusing point that has a lot of opportunity attached to it. Yeah. There's a lot of people trying to figure out how to get an on the ground floor. That was a dead joke by the way, that that was such a bad one. I didn't even, it didn't even register, leave the carpet. The time had passed. It had gone, sorry, I apologize. They hadn't passed. In your mind though, that's all that matters.
So if you're in a service based business, if you have a studio, if you're a producer, engineer, mixer, a mastering engineer, you have a awesome skillset and tons of knowledge and you have so much knowledge that you take it for granted. And that's where the opportunity is because the average person doesn't have as much knowledge or experiences you have. So they're stuck at like basic questions that you forget. And so you don't think the beginner mind anymore. And so you almost probably even think there's a level potentially there where you have insecurity that do you even know enough to be charging for what you're doing? That's how advanced you are, that you're looking to people even more advanced than you and you're like, but I, I don't, I don't do what they do. I don't do what they do. But like to the beginner person that's never had their stuff mixed before, there's so much that you already know that you take for granted.
Like what an ECU is. Like you know what an NICU is. And so there's something about stepping back and realizing you need to know this by interacting with mere mortals, interacting with regular people that don't talk and Dork out over the stuff you do all day long, realizing that they are so much, they don't know. They have so many questions that are simple to me. And it almost makes you realize you have so much more to give if you're interested in sharing it. And that's Kinda like my story was like I was trying to create content to just drive more leads for freelance work. I was never trying to be a passive income business. I didn't even know what that was. And it wasn't certainly trying to be a youtuber or blogger because I didn't have time for that crap. I needed to make money.
And I didn't think bloggers made money. I was wrong about that too. But the little shows, I was little that I knew, but I thought, hm, there's probably people that are brand new to recording that would just love some help on like, what am I supposed to buy? Do I need protools ht to make a demo? Because I know they asked that because my friends would ask me that grandma had got my Sweetwater cart open. I've already got approached with HD rig. I'm like, Bro, what are you gonna use that for? He never recorded anything in your life. Like, yeah, but it's supposedly the best. And like, but you don't know what you're doing, you know? And so I was talking people off the ledge in real life. I realized there's lots of other people that need to be talked off the ledge and I can certainly help them with that.
And so I started putting out content and it just, the fact that the recording revolution took off the way it did was an indicator that there's so much confusion and overwhelm even 10 years ago and it's even more confusing and overwhelming now. Is there something that you know in your expertise that you could simplify for somebody? So if I'm a mastering engineer and Chris, I think maybe we maybe talked about this, I'm a mastering engineer and I'm getting mixes all the time. I feel like there's so much opportunity to educate. The people who are doing the mixes are mixing their own stuff to prep it for me so that it becomes a better master. And that could be a ton of content that might just be helpful free stuff, but actually could lead to a mixing course or it could lead to, or heck even affiliating someones else's mixing course, you know, it's like look before you send your crap song to me by So-and-so's mixing course and mix a better mix and then send it to me. Me, you could be kidding. 50% off of a deal or something for someone else's product. I love that strategy. You know what I'm saying? Where can you add value that doesn't involve, you haven't trade time for dollars. Yeah,
and let's kind of go back to this carpet illustration because I think there's a lot we can extrapolate from this that would be helpful for people to imagine what it would be like if they were able to pull something like this off. I love that the carpet story is our base camp for this episode. We keep going back to, I'm so ashamed. It's also a great dad joke topic. You know, just carpet ponds and floor plans. So I'll see if I can get at least one more in. But let's talk about this guy. So he's a carpet installer. I'm going to guess that he probably has busy months and slow months and the same way that people in our industry do, probably June is not a super great month, but probably say December when people are tracking like muddy water, you know, or whatever. Snow not down there in Tampa and your neck of the woods grand. But definitely up here in mind and so I would imagine that he is busy months and he has slow months and so he decided to come out with this resource. He spotted that there was an issue in the marketplace that people didn't understand. There was overwhelm, there was a vacuum in the carpet sales process vacuum. Anyways, got him.
I applied the smoothness in which you insert that in without pausing or thinking it just came to you.
I do what I can. I had been saving that for like five minutes, but anyways, he saw this problem and he said, I'm going to create this resource. I'm going to charge a small amount for it and he probably sells a very consistent amount of that. It's probably a lot more consistent than his actual business and so I would imagine like let's just pretend these making $750 per month selling this ebook. It's not like this massive explosion with this life changing thing, but all of a sudden a couple of interesting things happen. One on his slowest month, he can pay his mortgage, which is fantastic too. He's braver now to raise his rates and to begin to experiment with other business models because he knows if he quotes high and says, you know, well, I'm really hands on, you know, offer the best service. Yeah, we're not the cheapest in town, but we do the best work.
He's going to have the courage to make those sales pitches because he knows his basic necessities are covered. That's where this really gets interesting. What I've seen is I've been doing coaching with people that are in the recording space, whether they're mix engineers or producers or whatever, is that there's a lot of fear around raising your rates and I completely relate to that grant. That's something that really helped me break through was this idea that, oh, I don't want to raise my rates because what if I break the whole business and all of a sudden I make no money because I, you know, made a misstep. That was your fear for so long. So long it haunted me and now I can see that that was super stupid and I left a ridiculous amount of money on the table by keeping my rates low for so long. But now back to this carpet guy. You got to put yourself in his shoes and imagine that wasn't a dad joke, but it's sort of, it's close enough, unintentional. You gotta put yourself in his shoes and imagine what it would be like to just have that small little pad. This is ridiculous. These jokes,
Greg is never coming back to this podcast again. Sorry. Yeah, regretting my decision to come back.
That pad makes a big difference in his ability to try new things in his business. Creates courage.
And that's huge because what you just described is true for all business owners. The moment you increase some certainty or set another way, you would decrease some uncertainty. You become bolder and when you become bolder, statistically better things happen for you. That's the magical thing. So there's a couple of ways this can happen. I was coaching another guy and he's a service based business and product based business, very successful with stressed out all the time. Good money was coming in but a stressed out because his expenses in life and just like he just felt like he had to keep everything rolling. The conversation led to like, well bro, why don't you just pay off some of your debt? Like you've got all this money coming in, why do you still, why do you have this massive car payment? Like why don't you just pay it off?
Why do you still have the house payment? His income could get rid of some of these things and I was like, what would it look like to have more certainty in Your Life, Aka your bills are lower now. You don't need to perform as much. And the ironic thing is that you become bolder and you can actually perform more in your business and grow your business because you're like, dude, I don't need the money. It's like when you don't need the money, you find ways to make the money. It's like banks when you don't need the money. That's in the Linden to you. You know, it's like, yeah, it's so much psychological and you're so right that when you're on a service based business, we're already afraid that we're not good enough. All of us, myself included to this day, struggle with insecurity and imposter syndrome and you think it would go away and it certainly hasn't for me.
And so you're dealing with that internal battle, then you're dealing with like literally sometimes you don't have a lot of clients and it dries up and there's not much you can do at times. And then the fear of undercharging, cause you don't want leave money on the table overcharging, but then they're all gonna run to the guy who's cheaper. There's so many fears. If you could eliminate some fear, have a little bit more certainty, how much more bold could you be to take cooler opportunities and be able to say no to mediocre opportunities so that you're freed up to say yes to the better opportunities. And that's why I feel like you get that big point of your business where it can skyrocket because you're not playing the safety game anymore. You're a little bit of safety, allows you to step out and do the cool things. Love it.
I think there's a really good time to kind of transition to talk about personal finance cause this is a topic we haven't really talked about much on this podcast. We've touched on it on a few episodes. Chris has talked about his journey. We had an episode about paying off debt probably 10 15 episodes ago, but I think this is something that really needs to be taken seriously by every member of our community because as entrepreneurs, our personal finance is directly tied to our studios finance because we are in most cases, solo entrepreneurs. So our business and our personal fans is our, honestly one in the same, they may be different bank accounts, they may be different business entities, but at the end of the day, one affects the other. So I think personal finance is a topic that I think Dave Ramsey's a good person to look to with some of these things. And I'd love to get your input, Graham, on some of your best practices when it comes to personal finances as a
entrepreneur. Yeah, this is a much needed topic because the entrepreneur trap is just make as much money as I can. It's the human trap too, but especially entrepreneurs because we can control our income and we think that's the solution. That's the solution to anything. The stress, if I made more money it wouldn't be stressed out. I did a loose Instagram poll last fall to my followers and I said, DM me if you're willing to let me know how much money you currently make and how much money you would like to make to feel like you are kicking butt.
I remember you talking about this and this blew my mind when I saw what you were posting about with those numbers is really interesting.
Oh, it was great. I was like, I'm not going to share your name and does not on my public, but if you wanted let me know. I'd be the only person that knows and I got a wide range. I think the lowest somebody was making was like $20,000 a year. The highest was some couple of, they're making $250,000 a year, so a wide range. I just put a spreadsheet. Everybody's what they make everybody what they want to make and then what's the average and what's the median and what's the percentage. I just want to know the percentage of more. How much is more is enough. No matter what you make, and the number was 94% more. I just had 94% more money, basically double. I'd be happy. And it was the same for the 50,000 person as it was for the 100,000 person person making a hundred cases, one to 200 k the person make it 50 is like if I could have a hundred incredible.
And so all that shows is that we think more money is the solution. You called that lifestyle creep, right? Where it's like the more money you make your lifestyle slowly but surely catches up to that income amount until that's the new norm in any money you make on top of that, it's just going to bring your lifestyle up to that number into where you now you need more to keep up with that. Is that kind of what you're talking about here? Oh, it's true, but people don't believe it. They say, no, not me. If Dude, if I make, if I then people shamed high income earners, if I made a hundred k I'd be so happy. No you wouldn't. You would at first you would at first, but eventually given enough time, maybe a year or two or three, like you said, it'd become so normative that you would still feel that urge.
I need a little bit more. It's human nature, so if that's an ongoing battle that we're all gonna fight, there's another battle that we're not worried about, we should be worried about, which is what are your expenses? Let's say your, what are your business expenses? I'm all about a business expenses. If they grow the business or free up my time or enhance my customer experience, which is good for my brand and then that's good for sales in the future and their tax write off. So I'll reinvest in my business but I don't want to spend money just because I can in my business. If I can keep my expenses low in the business, right, there's more profit. Same thing in your personal life. If you can keep your expenses lower, where you live, how much you spend, eating out, whatever you spend on your cars or whatever your thing is.
If cars are your thing, that's great but then don't eat out all the time. My parents, I always laugh at their grocery bill cause they're empty nesters and they spend more on groceries than I do with a family of four. And I got two young kids and they're buying avocados left and right and wine and cigars. And you could look at their budget and be like, Bro, you spend way too much money, mom and dad on groceries for just two people. But they go to one restaurant a year, they go out to eat once a year on their anniversary. They don't pick out lunch or dinner or breakfast, never. They just don't like eating out. So they save a ton of money there. So the whole point is you get to pick where you spend your money, but you have to reduce your expenses if you want that peace and stability.
So they're connected in that. Like I'm a big fan of keeping my business expenses low and then anytime I've got good months, like big profitable months, you never want assume that's the new norm. You always want assume that that's just you just got either really lucky or you did really good work and that was a good month. What are you going to do with that? I would like that month to not just be a happy month that I had and then it becomes a happy memory. I'd like that month to be a stepping stone to further prosperity and financial security so that it's always beneficial to my life. So that means either paying off debt, which is one of the easiest things you can do, that instantly goes to your bottom line or investing in something that will grow or both. So you get, like you said, Brian, it's all so connected that you at least want to be having the conversation and thinking about what are my personal expenses look like and how did those affect how much money I feel like I need to make in my business because it's amazing how little you need to make if you don't need much to live off of.
There's so much unpacked in just what you just said there, but I think there's two different things I want to talk about and I'd say we should tackle this one first. What are the things you tend to see people waste money on? And I get the whole fact of like you pick what is important to you. That's one of the things that my wife and I sat down and talked about before we got married, which is like what do we value and what do we not value? We don't value vehicles. So like I have the same car I've, I bought in 2010 I paid off in 2013 he's got 160,000 miles on it and it still runs. Her car is the same deal. It's paid off, it's old, it's gross. Like we just don't care about cars. But if you saw what we spend on restaurants every month for our date nights or to get good food in Nashville, like healthy food and like good restaurants, we spent an absurd amount on that. But that's what we value. So I understand the fight between those things. But overall, where do you see people really, really getting the spinning portion wrong where they're improperly increasing their overhead on a personal finance basis?
Yeah, I mean I think housing is the biggest one. Obviously none of us can control the housing market if you're a homeowner or a renter cause they're connected. When the house values go up, rent goes up. I mean that's just the same thing. So you can't control the economy, but you can control in a large part where you live. And that means having hard conversations. You might not be able to live as close into the city as you want and that might increase your commute time and all those are effects. But I felt like obviously the largest chunk of your budget is your housing expense. And that's not the easiest to change one day to the next. But it's the one that has the biggest effect. And I see that people who are willing to make changes in their living situation, all of a sudden I have breathing room, our piano teacher that teaches our kids our girls piano, she comes to the house.
They literally are just moving a half a block away, sold their house to buy a cheaper smaller house and they have three kids because it's going to free up 500 bucks a month on their mortgage payment because they couldn't save any money to get ahead. And so there are like going to a smaller house and they're like, you know what? But we like it though. It flows better. It saves us money and they were willing to do what. I've never heard anybody do downsize as a young, as everyone's like starter home and let's get bigger and bigger, bigger. They're in their early thirties and they're downsizing already. So, um, do whatever it takes.
That kind of goes against the American mindset of like you should always be moving up and getting to bigger and better and bigger and better and like keeping up with the Joneses. And I feel like it takes a special kind of humility to be willing to downsize in order to save money to put away. I've heard of
different like types of frameworks or ratios of income to expenses for living expenses for like your home or rent or mortgage. What sort of numbers do you like to go by when it comes to what percentage of your income should be your living expenses? Yeah, it's going to vary on where you live. If you live in Manhattan or San Francisco or San Diego might be a little different than this, but pretty much I tell people, and I keep to this myself, that your housing expense bay, your rent or your total mortgage payment, including taxes, insurance should be no more than 25% of your take home pay. So after tax, what you can actually spend in your budget. If you can keep your housing costs at 25% that's what's gonna allow you to do other things like save and pay off debt. If it's 30 40 50% I just read a statistic in my city in Tampa, I mean there's a good chunk of people, it might be half where housing costs are about 50% of their take home pay, and that's a dangerous combination of housing prices have finally gone way, way up and incomes have not kept up.
So a lot of those people don't have much of a choice. They're just trying to find something to rent. You can't get ahead when 50% of your money's going to live in costs. So that's the biggest one. Again, 25% of your take home pay. If you can do that, you have a chance of winning and then it's cars are the other big culprit. I personally don't believe in car payments, not just because I don't want to have them and they're annoying, but because it's a game that everyone's playing so that the car manufacturers can make more money. It's really sad that the banks can make more money and it doesn't make a lot of sense to have to pay a, my opinion, a car payment every single month to have a car because you can buy a car cash, it's not gonna be a nice car, but it's already lost all its value.
So it's not going to depreciate much if you just drive a crappy car for a year and the money that you saved because you don't have a payment, you pay yourself into a savings account and then in a year you sell that same crappy car for what you paid for it and you trade up with extra money you saved and you do that for another year. Another year, three or four years in, you'll be driving a 2020 $4,000 paid for a car and you just live that lifestyle of paying yourself a car payment. So I have a quote unquote car payment. I pay myself two carpets, but I pay myself those payments and I invest them in index funds and they grow. So I get to earn interest on my quote unquote car payment. And then have a big fund that as it grows every 10 years when I need to replace a car, just peel off some money and I pay cash for a used car and then move on with my life.
So not having that expense is huge because cars are already expensive to fix, put gas in insurance. So it's usually automobiles and housing expenses. And this is all normative. Like when you tell people don't have a car payment, they're like, you're crazy. But I think what you said about values is the most important thing. If we're in business, it's like, why are you working? Why are you working so hard? And those are questions you should always ask. Right? And so if you get to the bottom of that, what do you value? Do you value cars? Even eating, I love eating out and spending money on good food, but what I value even more than that is my life and having choice and having some freedom in like as a dad. Simple things like being able to take my kids to school and pick them up or being able to just stop work if I don't feel like it for a week and just take it last minute trip or to do whatever I want to do.
I value that and if that means that costs me something else, living somewhere cheaper, not having a car payment, not being able to drive as nice of a car is my neighbor. Even though I could afford the payment or whatever it would be, I'm willing to make that cost cause I value something greater, which is no stress. I can endure low months of business and I have freedom like it's all a value thing and I know we value lots of things, but when you can get to what you truly value, it might change the way you live.
I think that's a very important thing you bring up, which is there are tradeoffs but in your consciously and unconsciously making decisions on I value travel, I value food, I don't value cars, I don't value my living situation that much and so I'm willing to make sacrifices. And you're making those same conscious choices in your brain, but I think the average person never sits down and thinks about those things or discusses those things with their spouse or significant other.
Yeah, totally. I think one of the other things that's important to point out is that debt has a psychological impact. When you live beyond your means, you are aware that the bank needs the money back. And not only that, but there's an intense kind of violent aspect of this. If you don't pay the bank on time, they're coming to get their stuff. You know, they're coming to take the car back, they're coming to kick you out of your house. And here's the thing, we're creators. We make art for a living. And that in the back of your mind that someone could come and take your stuff, it's going to affect the art that you make. You know it's going to limit your creativity. So there's not just this ability to, hey, I've got a little more income. Hey, I've got a little bit less debt.
Had got the freedom to experiment with raising my rates or with saying no, or with using some of that walkaway power to get a better project arrangement, a better contract, whatever. But there's also this component of when you're making music, you're making music about your life experience. Whether you're the mix engineer, the mastering engineer, the musician, the session musician, whatever it is, what you live is going to come out in your music. And if what you're living is fear that you won't make your payments on time, or that you're going to get something repoed or whatever, even if it's only a small percentage, that's going to have an impact on your art. Whereas if you're living this, hey, I'm, you know, I'm no debt. I don't have a whole lot of expenses. I know I'm going to be okay because I've managed my finances well, that's going to translate into your creative work.
And for some people that's going to be their music. For some people that's gonna be the type of business they build because building a business is creative work. It's nothing but creative work. And I think some of the pushback I would imagine that I would've had to this conversation years and years ago would be, oh well, but there's no more room, you know, for me to use my skills to uh, you know, make tutorial videos, grams already totally annihilated that market. Like there would be some push back from there. And I would say, well the problem isn't that there's not enough demand or that other people got there first. The problem is creativity. The problem is using your creativity, which guess what? If you're listening to this podcast, you're probably a creative person because why else would you be in this industry? But using that creativity to find ways to cut corners on your expenses or to find ways to make a small amount of money in a consistent way that can scale and doesn't use your time up like
a book about selling carpet. Well, and I think that's what's so cool about this conversation. I'm glad you guys wanted to talk about this because at one point someone might be like, what does personal findings have to do with freelancing as a recording engineer? It's like everything because everything affects everything, which is for some reason either we don't understand that or I'm wondering if there's even a cultural shift. That's a message that's saying the opposite that wants you to just compartmentalize. You know, we're business owners and we dork out of our business stuff and so you know, we've probably read all the same books and the books are written and they're compartmentalize how to, you know, 10 x your revenue. You know like why in the world would you ever read a book called how to 10 x your revenue and if the book just only talks about how to 10 x your revenue, like trusted, you can't trust it because that's a compartmentalize book.
Like, well if you 10 x your revenue, it's going to cost you something. That's, that's a great point. You know it's going to cost you your marriage, which is very common. Damn you. Grant Cardone. I didn't want to name names, but you know it's grant, but you know it's going to cost you something and unless we view everything we're doing in context with how it affects everything else, then it's just kind of a pointless use of our brain space. I could have a great strategy to 10 x my business, but I've, I've never considered how it will affect my marriage, my kids, my health and my creativity because that's something I struggle with in 10 years of doing this. I've made decisions at times that were best for business growth but not best for my creativity. And then I'm like a Zombie of myself or a shell of myself, which then I'm not very much used to my customers or students.
So it's making these compartmentalize decisions that I think will kill us. So it's better to have like more holistic conversations. That's why when people say like, why are we going to talk about work life balance? That's so dumb. They can't be balanced. That's like, well, it's how they affect each other. Everything's in concert. So yeah, if you have work, it's going to affect your life. And if you'd make life changes gonna Affect your work and your health and your hobbies and your community. Like, man, there's so much focus on let's say business growth and even work in like life, like growth in Your Business and growth in your family, but not even emphasis on your community. Like there's such an individualistic nature to at least American culture where it's like I'm, my business is growing and my, you know, immediate family is happy but I don't talk to other humans of the four people in my home.
And it's like, well, is that even healthy historically for all of humanity, we're a community oriented species and yet, you know, in my world and everywhere I see it's all about you get yours, you do you. And as long as you're happy and your immediate family's happy and your business is good, you're good. And we're not. In talking about the community aspect, we'll, do you have any friends? What about your extended family? Do you have a church? Do you know anybody on your street? Do you know your neighbors? And most of us are like, no. Why does that matter? What does that have to do with my life? But that's a huge part. And if I'm working all the time and I can't adjust my community, they all affect each other. Same thing with a debt. Same thing with personal finances. And when you see that connection, I think it's a little more exciting because then you realize, well it's not just like the only goal is to grow this business as big as I can because that's crushing man.
Cause what if you're not the guy or the gal that can grow it really, really big. Not everyone is going to have that drive or that temperament or even that luck or opportunity, you know? So if that's your only goal, that could be a crushing goal as opposed to a well lived life or a successful life, which includes how much income do I actually need to live off of. That's a better question. That has cause then that'll tell you how much revenue you need after taxes and expenses. And that might be a lot lower than you think. And you might be a lot happier than you think and you might work a lot less than you thought you needed to. So you could just see how they all affect each other.
Totally. Well, I think a fun exercise for everyone that's in our industry to do is to imagine it's five years in the future and there's two scenarios here. You're five years in the future and your mindblowingly successful. Everything that you had hoped and more has happened. And then to ask yourself to put yourself in future use shoes and to say, well, how did that happen? And to work backwards from there. This is some I do a lot when I'm doing coaching calls with people is, well, what did you do that made that happen? And frankly, the only reason I'm talking to you guys today is I did that with the mastering business before I went full time at mastering and it looks like, well how did that happen? I was like, wow, I made this website and it had a before and after player in, oh my gosh, I'm going to build a before and after player boom.
And that was really the spark that lit this business. What is the book that has begin with the end in mind? That quote in it. I just love that quote and I can't remember who to attribute that to, but that's basically what you did. You started with the end in mind. Totally. I'm here. How did I get there? Well, and here's the flip side of that. It's five years from now, your business has failed and you work in a job that you hate. You're no longer doing audio for a living, you're no longer making music. What happened? I'll tell you what happened is it's the same for pretty much everybody. It didn't manage your personal finances. That's it. That's 99.9% of people's story. I didn't manage my personal finances. I got into too much debt. I couldn't make my payments. I got kicked out of the studio cause I couldn't make rent.
It's all personal finance, sales figures into that. But the personal finance thing is really what gets out of control. And I love what Dave Ramsey said. I've been like freaking listening like crazy to his stuff lately. Just obsessed with them. He's like the personal finance anti debt guru. What's the book you just start read? Well I'm not done yet, but it's total money makeover. It's incredible. My wife and I are thinking a lot about some of the things he's been saying and even this like pay off your house idea. We're, I think we're going to do that. We're still processing. We're still like in the middle of the book, but we're both really into it. And one of the things that I think is interesting that Dave Ramsey talks about is he calls credit cards the cigarettes of the financial world and it's this idea that like we all know cigarettes are really bad for you.
We all know a long term addiction equals a 50% chance of early death as a result of using cigarettes. And we're kind of in this, what was he saying or recently the, it's like 1984 in regards to cigarettes of where we are with credit cards right now that people are like this, ah, I see a lot of people's lives getting ruined by these. Maybe we should scale it back with the credit card usage and so people are starting to realize that this is a toxic product that's designed to psychologically like take advantage of you. I think it's hilarious because you see people like, oh the 1% blah blah blah. Well like if you've got a problem with the 1% don't use a credit card, you're paying them, you're paying the guys on Wall Street in order to use the money that you haven't been paid yet and then it can go obviously way out of control. So yeah,
on a practical level, I think a couple of things that might help out business owners listening in with their personal finances in terms of just like here's a couple of checklists you could do. The areas that people get into trouble that I see. One is what we've been talking about, which is like your expenses are just so high, your personal expenses and that's a conversation you need to have with yourself and your spouse or your significant other about what are we spending personally that's making me feel the pressure potentially if you're honest with yourself to make a certain amount of money in your business and if you haven't vocalized that to yourself or your family, it's a good thing to do would be like I feel pressured to make a certain amount of money. What if we didn't need as much to live off of?
Maybe the pressure would go away even if the money stayed the same. So how much do you to live and maybe you could reduce that number and free up a lot of pressure. So it's our living expenses or what we're spending on and then our partner practical level too. It's cashflow management, which is just like for some reason we have the brain space to create revenue and our business and create valuable services and products, but we don't use any of that amazing brain to like just manage our cash flow a little bit more strategically. And the best thing we can do, if you haven't already talked about this on your podcast and I apologize, is minimum you need to have separate bank accounts, right? You need a separate business bank account for lots of reasons. But one of them is because like we've been talking about months are good, months are bad.
And so when you work for yourself, you need to wear two hats. The employee hat and the owner hat. And so the owner hat would never just give his employees the profit the moment he had a good month. Be like everyone's getting bonuses, you know this month because that owner is smart, knows well next month we might not have very much money come in. So I need to have enough money in the bank for next month if it's try to keep paying my employees. So let's just hold some of it back and uh, we'll just pay them their nice steady salary the same every month. And that way I can afford to pay my employees every month because the owner takes on all the risk. That's why when I tell people if you have a steady paycheck, it's because your owner of that business, your employee is taking on a lot of risk to employ you because he or she is guaranteeing you a paycheck even though they cannot guarantee consistent revenue every month.
Right? So you've got to have that owner hat. I'm like, let's keep some money in the bank. And then the employee hats, like what's, I need a certain amount of money every month to live off of. But since you're also the owner, you kind of like want to cheat yourself and pay yourself as little as possible, you know? So you had to like find that balance where you can pay yourself the littlest amount possible to have some safety for those up and down months. And when you have some killer months, you just accumulate that excess, which is great. So that when the lean months you can keep paying yourself. And then two related to that is you want to have a separate account, another business bank account. It's just a savings account and it's your good old fashioned emergency fund. The Dave Ramsey talks about, but it's for your business.
So when I take my business expenses and I times them by six and I say, what does it take to run this business website costs, if there's any advertising costs, if I have any contractors, whatever tools I use, whatever accountant, whatever you hit pay for every month times six because what if I don't make any revenue for six months? Like no revenue. I still want to be able to keep the business open so that I have a chance to create some revenue during that dip. Right? So you've got to keep the doors open. So I have six times my business expenses in a separate business account and that's not including the extra cashflow in my checking account. And that helps you with lean months, helps you with big expenses. So it just kind of flows. You don't overdraft your account and just sort of do what you gotta do and watch the numbers.
And that goes back to what you say, Chris, about the psychological aspect. You feel a lot better when you've got a hunk of cash in your business account and hopefully the same thing in your personal account, an emergency fund for your personal expenses where you can endure those lean months because you've just created your own line of credit. Basically. You can tap into no interest, no fee, no application, no risk. It's your own line of credit. It's worth starting with even 1000 bucks in the bank for your little emergency fund. It's worth getting something there to psychologically feel like there's a gap between me and the reality of life.
I love that there's something about that too about having that emergency fund, which I'll be honest, I don't have yet. You know, this is something as we're learning about this, like have we really need to lock that down. But it makes me think about, especially from the perspective of what we do for a living, which is essentially provide a service to an artist and hopefully tell that artist the truth. Hey Man, your vocals too loud. Hey, you're flat, hey go get a guitar tuner and let's Redo this take. Those are awkward conversations and when you do that, you risk losing the client. But if you want to make awesome work, you need the courage to tell the client the truth. You can't have the courage to do that if you're living month to month or if you are thinking, man, I gotta make that minimum payment on that credit card or else, ah, going to get, you know, negative points on my credit score or something like that. So that courage of having that emergency fund might be the difference between you making. So, so records or making amazing records.
I got to agree with that. Like a a hundred percent. I read total money makeover probably a couple years ago and since that point I think I might've had a month of runway in my bank account at that time. Since that point I have more than two years of runway just sitting partially because I've saved very aggressively in those good months that Graham talked about and partially because I have kept my living expenses so ridiculously low for the income level that I'm at and because of that, especially in going to this season of marriage, I'm a newlywed, I've been married four and a half months now. It's taken that stress of money away. There's still stresses in life. There's still things you have to worry about, still things you have to do, but it's taken one of the like three biggest factors of marital disagreements and stress is taken one of those major factors out which is allows me to focus on the other parts of marriage and my life and my business that I'm extraordinarily grateful that I don't have to worry about.
I do have a question for you. You mentioned on this really good months, this question is kind of self serving to me a little bit, but when you have those really good months and you're putting the money aside for the potential bad months, can you kind of give us an overview of how you handle those funds? If you put a percentage into a savings and some an investment or some into assets that you can liquidate quickly? Kind of the dry powder thing that I've heard people talk about where it's still earning some sort of interest on it, but it's a little more quickly liquid datable than something like a retirement fund for example.
Yeah, that's a great question. So the way I view it is like I need like a threshold of like safety and so that's, you just come up with that like for is it, I need six months of expenses in the bank for personal and business and that makes me feel better. Some people it's 12 months. It sounds like you've got two years. I think it's more important to figure out what would be enough to feel like you have enough of a cushion. And obviously more would always be better, but at some point you're losing buying power by keeping all your money in cash. Right. See I wouldn't want hundreds of thousands of dollars sitting in a just a checking account or savings account. But that's a personal preference cause some people would, and they're fine with that. For me it was like six months in each and then I also have another six months in my business checking account just for like cashflow purposes when bills come and go or whatever.
So for me it's like setting the threshold. So those are kind of one and done. Unless you have a really bad season, we start to drain those and you should never feel bad if you have to use them. It's like, oh I had to tap my emergency fund. It's like, well that's what it is for. But praise the Lord you were smart in the past because otherwise you're having to go into debt during those months. And that's what we do. That's what we do. And before we had credit cards, you are screwed. That's why the credit cards make it easy to, why should I save? Because I've got a credit card, the credit card will bail me out. So other than having to use it in the Phillip back up, it's a one and done event where it's kind of boring. It's like insurance for yourself.
You sort of self insure that I can keep things running for at least six months if they ever have bad six months after that I have financial goals and you can rank them in order. So well every month I'm always putting money into my 401k and every one listening you can set up your own individual retirement account. As a entrepreneur you have more options as a self employed person than an employed person. It's incredible. So you can have an individual 401k or a Sep Ira and there's much higher contribution limits. So if you have a killer, great year, you can shove a ton of excess profit into it and tax defer, which is really, really cool. But I'm always, you know, maxing out the 401k. I also use a health savings account, which is kind of Dorky, but it's like a backdoor 401k. So I'm doing those things.
And then beyond that, one of the things we would call an investment our family is giving. So we invest in charities and we invest in causes. So a lot of our profit goes to, in full disclosure right now it's about 35% of our profit goes to either my church or compassion international, which is an organization that we love and partner with. And we sponsor a bunch of kids. But we love the organization. We fund projects with them directly. Nobody linked to that in our show notes page. Yeah, it's an awesome organization. And then we have a third category, which we call undesignated giving and it just goes into a bank account until we see a need. And that could be as simple as like these people having a hard time making the rent and we just helped them out in the friends of ours too.
And again, not bragging, but it's as cool when you're a business owner, when you have this in place, you can buy bought people cars. We've fixed people's acs. You know, we've done all kinds of stuff. We've helped the friend's adopt a kid cause they needed to raise more money. It's like, oh you need 10 grand, here you go. I grew up in a pretty like poor families. So like I've been on the receiving end of those sorts of like gifts before. So like I'm all about that sort of thing. Like truly appreciate people like that. Oh that's awesome. Well it's one of the greatest opportunities you have as an entrepreneur is when you create more wealth is you can give it and that's an investment. The IRS sees it almost like an investment. You get a tax break, which is kind of cool. So you reduces your taxes, but you get to invest in people and then people can grow.
So I view that as an investment. So it's like retirement and giving. And then the biggest thing we've been doing the last four years was paying off our house, which is another invest. So we paid it off last fall and then paid off a rental property a couple of months ago. And so that's investing in debt. And so that's how we did it. But that's because we didn't have any other consumer debt. If I had credit card debt, I would have paid off that thing first. I had car loan debt or student loan debt would have worked on those first. And there's kind of an order of importance of debt. And the house was the last thing and the only thing we had. So investing in that, which reduces our expenses, it takes away a lot of pressure. It's a guaranteed rate of return and all these different things. So that's kind of how I view it.
And then beyond that, there's taxable accounts where I can invest in the same kind of mutual funds inside of my retirement account. But now I have access to them if I need to liquidate them. And so I have college funds for my kids. Taxable account for car replacement. I'm saving up for weddings. They have two daughters. So I invest for weddings because they're getting expensive. But that's how I view it as pretty much I keep cash at the minimum for business expenses for six months and then in the checking account there's additional buffer beyond that, it's paying off debt and investing in the future. You in a rental real estate, we bought another property earlier this year, but real estate, stocks, bonds, whatever you want to invest in other businesses. If you have a friend, you want a partner in their business. That's another way to leverage your money and your capital is to have passive income through someone else.
Work in a business that you become an investor in. If you trust their idea, like if Chris, you were like bounced, Butler's going to take over the world and I need 20 grand to pay this developer and I don't have it, and we came up with a deal. I could give you 20 grand and then you give me a cut of bounce months. I don't have to do anything, but it's my money making money. It's helping you get your idea off the ground. So there's a million things you can do and a lot of that might sound, you know, way far down the road for a lot of people that just trying to pay the bills, but I love your analogy, Chris, of like what would it look like in five years to be successful? Would I be doing in five years? And you need to think about when you are successful, when you are making more than you need, what will you do with that money beyond having some fun?
What will you do that will ensure that your family tree is changed? What will you do to ensure that your life even selfishly is okay if your season of business that was great for even a decade dries up every month, my wife and I had this conversation. We don't assume that the recording revolution is going to stay successful. We never have from day one. It always seemed like a fluke. I think it's just the healthy mindset to have within reason though, because you're preparing for something to end financially. Absolutely, which is, I'm not a negative person. I'm not fatalistic, but I'm realistic in the sense that nothing can stay good forever. You know, Steve Jobs eventually died in apple is sticks. They're making money. But how much longer is that going to last if they keep making the same old thing? There's nothing new or innovative. So nothing good lasts forever.
So why not be strategic and take those good months and do something. Whatever you decide would be beneficial permanently for your life. And that's why I think investing and or paying off debt are those things that can be permanent, that even if you had a great year and you invest it and paid off all your student loan debt, but then your business dried up, you're like, well thank God I don't have student loans and I have some money and some investments, it's better than nothing. And that's how I'm always thinking. And that can be whatever you want it to be. But it's just the mindset of take this asset that I've created this business and to put it into other assets cause I'm not going to bank on my business, even if that's the biggest cash cow for me. I know there's people that believe in just bank on yourself, invest in yourself. I'm all about that to an extent, but I don't trust myself as being untouchable. I'm going to make a mistake or the market's going to change or I'm just gonna get tired of doing it and that's a fair thing to think about. So have that in mind and make sure you're sort of diversifying into other things that will last long after your business dries up.
I think it's a good goal for people to look towards, which is like if you have good years, if you're making hay right now, why the Sun Shining? Put that into areas that can sustain you to where now that your home's paid off and you have all these investments out there, rental properties, my goal is to get to where my passive income can sustain my low level of living, my expenses that I already have low. The cheaper you live, the easier it is to hit that point where your money's basically, you don't have to work anymore if it came down to that or you don't have to depend on your business anymore. If things go absolutely sideways. So I think that's a good place to be as an entrepreneur. Yeah, and one final resource that might be helpful to people and I just talked about on my podcast was Robert Kiyosaki's cashflow quadrant. It was a good episode on your podcast. It means that
interesting guy, he wrote Rich Dad, poor dad. That's probably what he's most famous for and he and I don't agree on everything and that's probably true about every book I read, but one of the things that's brilliant about his concept in the cashflow quadrant is the idea of there's four ways people make money and you're either an e an employee, an s, a self employed, and he talks about like doctors and lawyers. You have your own practice specialists, specialists, service based business, which I think a lot of your listeners are in the s quadrant or your a B, which is a business owner, meaning you just own a business that runs other people work and you're not really in it. Or an I an investor, it's either e s B or I and you can make a living and you can build wealth in all four quadrants. But he talks about the benefits of being on the right side of the quadrant, which is the B and the I, the business owner and the investor. And I think for a lot of us it's like we've gone from an employee land maybe to like I want to work for myself, which is the self employed land and there are some benefits there but also it's not much different. You just own your job
sometimes. Now you have hundreds of little bosses pocketing around and you're like bands hiring you. Yeah. And you work work
harder and you work longer cause you care about it. And it's like man this is harder work than it was being employed by someone else. But I think maybe the challenge and maybe where this conversation was going is to get people to think about how can I move from being self employed to having income come in from two other areas, passive income element of my business. That would be maybe the B side investments, stocks, bonds, real estate, other people's investments, whatever, private lending, there's different things you could do where money's making money or you know, my business is making money without me. That's a sweet place to be. Even if, going back to the very beginning of the conversation, if you use those two quadrants just to pay your rent or just to pay your minimum living expenses and you still worked for yourself, it's leveraging and diversifying and not banking on yourself. What if you get sick, but if he can't anymore, what if something else happens? So the cashflow quadrant might be an enlightening book to get people to think about, Huh? What are different ways I can get revenue in my life, get income in my life outside of what I'm doing with my freelance business?
I think a shortcut to that book would just be going to listen to your episode on that Cochrane Show, which will have a link to in the show notes. Go to the six figure home studio.com/ninety there will be a link there to that episode.
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