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Financial Cruise Control by 40 🚗💰 How one couple mastered wealth, risk, and retirement planning
18 Plays14 days ago
🎙️ Episode 5: Financial Cruise Control by 40 🚗💰 How one couple mastered wealth, risk, and retirement planning.
In this episode of The Future of Finance Podcast, host Marissa Wood sits down with Sarah and Eric Taylor—a dynamic duo who reached financial “cruise control” before 40. Sarah, founder of Stay Well Massage, shares how she built her business from the ground up, while Eric, a risk management expert, breaks down smart strategies for investing, protecting wealth, and planning for early retirement.
Together, they dive into:
💼 Building wealth as a team
📈 Investing with purpose
🛡️ Using cash value life insurance strategically
📊 Understanding your numbers
🤦♀️ Lessons from their best—and worst—financial decisions
If you’re an entrepreneur, investor, or just looking to simplify your financial life, this episode delivers practical insights you can actually use.
🔗 Book with Sarah: https://staywellmassage.net
📅 Connect with Marissa: https://www.union-financial.com/
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Transcript
Introduction of Guests
00:00:09
Speaker
Hi, everyone. Welcome back to the Future of Finance podcast. I'm your host, Marissa Wood. And today we're going to be sitting down with clients of mine, Sarah and Eric Taylor, and discussing how they got on financial cruise control by the age of 40 and sharing some strategies to help you do the same.
00:00:25
Speaker
So welcome, Sarah and Eric. Thank you coming. Thanks for having Thanks for having us. Yeah. Absolutely.
Marissa's Connection with Sarah and Eric
00:00:31
Speaker
So, you know, you're clients of ours, but you're also, I'm a client of yours. You know, Sarah is a licensed massage therapist. Yes.
00:00:42
Speaker
And also we live in the same neighborhood. Yeah. We have a lot of intertwining in our paths. We both work out of 4&Co. um Yeah. it's been It's been a journey watching our lives intertwine. Yeah.
00:00:56
Speaker
And you guys, you know, i always say you are like golden clients of mine because you're really doing everything right along the way. And it's awesome to see we're laying such a really strong foundation that, you know, I think you're going to be lifelong clients and you're going to be really, really successful as well. You already are. um And so i always like to start out with how we met.
00:01:17
Speaker
And I think we actually have a kind of funny story. i don't know if Eric even knows this story. Yeah. But I'll share it. Yes, go ahead. And so we were in the Bexley Working Women yeah Networking Group.
00:01:32
Speaker
Yeah, which is just our community that we live in. And couple women would get together for a happy hour or, you know, just a just mid-morning brunch. And um just share kind of the struggles we're going through, some challenges, some ideas, just use it as networking. And The one event that they had was a happy hour event and i was running late the one day and my husband had just bought a new truck and I'm you know rushing out of the garage to get to this event. I back my car into his brand new truck. And I'm like totally frazzled. I'm like, I don't know. Should I even go to this event now? I'm all worked up. I ended up going. And, you know, the first person I see is Sarah, who's just beaming and full of good energy. And I think you were telling us all kinds of really great stories and sharing your passion with your upcoming business launch. And it just completely changed my mood.
00:02:35
Speaker
And it know it really had such an impact. It really did. And like from that point on, I was like, OK, you know, there's a reason I met this person. There's a reason I ended up coming. And it's really turned into like a friendship and a nice business relationship. And so thank you for that. You're welcome. And I remember. Sorry, Matt, for your truck. Yeah. I remember this blonde hair coming through the doors of the hotel bar area because we were down at Spring Hill.
00:03:06
Speaker
And this wild look in her eyes. And I'm like, there is a story that goes along with that. and little did I know how different of a demeanor you had that day than you normally do because you were not the reserved poised person that I have come to know. um And I didn't even know that I gave you what you needed. but I do vividly remember that moment of you just being like, and we had a good laugh about it. And I think that that transition from stress to joy can be such a powerful transition for moving through an emotionally trying ordeal. So I'm happy I was able to help you do that. And it really has blossomed into a really great um friendship and partnership. And um we educate both of each other on all of the things that we know um so well and live and breathe. So it's really been cool. Absolutely.
Sarah's Business Journey
00:04:06
Speaker
And so, you know, Eric, we'll get to what you do for for work as well, because you both have, you know, a financial background, which, you know, is one of the reasons why you're such educated clients and successful. um But Sarah, you know, you have your own business, Stay Well Massage, and it's thriving.
00:04:26
Speaker
And only what, two years? It's been two years. It's been two years and a month since we moved in here. um And that was when I opened this business. Tell more about, you know, your passion behind wanting to open that and kind of how things fell into place. My massage passion started as a senior in high school.
00:04:47
Speaker
um So being 41, that was quite a while ago. And i did my senior thesis in high school on a local massage business. And then coming out of college, I went to school for massage um and really realized that I was kind of put on this planet to do this. It was more than just a passion. It was something that came very naturally to me.
00:05:11
Speaker
um And then, you know, 18 years of working in other jobs and always having that in the back of my life or in the forefront in some cases, I collected knowledge from people along the way on financial planning and business tips and tricks and everything. So As I was dreaming this business up for 18 years, all of those little thoughts were formulating in the back of my mind on what I wanted it to be, even who I was as a massage therapist.
00:05:45
Speaker
um And one of the reasons why... the passion has become such a successful business. What I believe is that I was very humble and almost in overwhelm at points in planning the business. And I realized that I knew a lot about the things I knew a lot about, but recognizing when I didn't and finding those like resources and the people um that were centers of those areas and leaning on them or outsourcing to them and putting my pride aside and accepting like, I don't know enough about this was really a powerful shift to being successful because you don't know the questions you don't know to ask. And a lot of the people that I leaned on, whether it was podcasts, podcasts were a big thing for me, um helped prompt me to ask those questions.
00:06:41
Speaker
And then once I asked those questions of myself, I was able to drill down a little bit more detailed on what I wanted that component of my business to look like. And when I launched, I hate change. I think everybody hates change. So when I launched...
00:06:56
Speaker
I had thought everything through very thoroughly. And to this day, i haven't changed anything. And that's not because i haven't, like, there's there wasn't any change that was necessary. was ah The only thing I've changed is added to my skill set. Yeah. And hours. Yes. Finding that work-life balance.
00:07:20
Speaker
But yeah. So what would be some tips for someone that, you know, wants to go out on their own venture and and launch their own business? Do you have any things that you would definitely recommend them doing or definitely avoid doing that first year? Yeah. So definitely find a resource where it outlines like the steps to opening the business, like all the components. Do you want a website? Do you want online booking? Do you want um A customer facing storefront? Like, do you what are what do you want your business to look like? And write down the things within that landscape that you know how to execute and then put yourself into that when you need to feel that joy. And when you're starting to feel like.
00:08:07
Speaker
as if you need to look a little bit more towards the things that you don't. As soon as the overwhelm hits, you know to lean on a resource.
00:08:19
Speaker
But having an outline of all of the details that you need to have helps you to narrow down the areas where it might come easier to you and might be more difficult. And knowing that you just don't know everything. You know, some of the things that I've noticed, at you know, being a client of yours and And knowing a lot of people that are clients of yours, you really do try to customize that experience from the music to the aromatherapy to, you know, do you want the shoulder heating pad ahead of time or after? what do you want to drink? You know, there it does feel really customized. And I think that's what everyone wants. We all want to feel understood and like,
00:08:59
Speaker
You know, in any business, even in our business, we want to feel understood and like we are an important client. We're not just another number or another transaction. Yeah, you're a person. And like just like financials need to be specific to that person. I feel like in massage...
00:09:16
Speaker
Too many times the provider is looking to do what they do for other people and they don't customize. That's the biggest complaint I have is that they feel as though the massage therapist is just going through the same routine that they did on the last person. And not only would that get boring for me, but that's not helpful.
00:09:37
Speaker
Absolutely. If you did the same investments for someone at a different time in their life, it wouldn't be appropriate as what you're doing for us. So everything in life needs to be a little bit customized to the individual or it ends up falling short of a need in some way. Sure. Absolutely. Now, you know, Eric, you work in risk management, kind of the financial sector. And I know Sarah always worked in the financial sector before moving into massage therapy. Tell me a little bit more about, you know, kind of your investment philosophy. where Are you more of a spender, a saver? What's important to you when it comes to saving and investing for your future?
Eric's Investment Philosophy
00:10:16
Speaker
So from an investment perspective and as a risk manager, I feel like your typical risk manager is a is a no person. No, it can't do that too risky.
00:10:29
Speaker
um My philosophy, and Sarah hates it, is no risk it, no biscuit. So the the instead of no, it's how. So for me, risk management is all grounded in strategy. What is my objective?
00:10:47
Speaker
Is this action going to help me achieve my objective or is this wasted energy, wasted resources? So really defining the the strategic objective and then how can I achieve that objective and what are the things that can prevent me from achieving that objective?
00:11:05
Speaker
So you are somewhat of a risk taker, but you want to make sure that you have a safety net or you have some risk mitigation tools laid out at least. Correct. So I understand the, based on the the strategy, the levels of risk that I'm willing to take and can optimize the the choices based on that.
00:11:25
Speaker
So when Sarah decided to, you know, start a business as a risk manager, did you say, you know, okay, well, we need to have x amount in reserves first, or we need to know, you know, exactly what your expenses are going to be. And can we cover that? Is that kind of how that conversation went? To to a certain extent. So i've I've been lucky enough that my my salary covers the the necessities. So we had the the luxury of of her business of having the ability to fail without any material impact. So the that's good yeah the threshold for that was
00:12:06
Speaker
cover your rent, you know, if you can cover the bar for me, I had a much higher bar for me than he had for me. ok He was like, just don't lose money. And I was like, really? You're like, you have no idea how good I am. You have no idea my plans here. um And when I finally did let him in on the plans, he was, I think, a little more surprised at how ambitious or how into my numbers I was. ok I mean, you you have the accounting background. So i knew that you would understand the things that go into operationalizing the idea. So being able to take that and –
00:12:46
Speaker
truly know where you needed to be at from a client supply perspective to be able to have threshold. Yeah, like I knew the number of clients I would need in my book to hit the numbers that I wanted to hit. I just didn't know how long it would take me to get there.
00:13:07
Speaker
Okay, but that's so important because I think a lot of people don't even know their own metrics. Knowing your numbers is one of the things I have listed. You have to know your numbers.
00:13:18
Speaker
and And you have to look at them in different ways in every capacity, even as
401k and IRA Strategies
00:13:23
Speaker
the business that is our household. Like knowing your numbers and like knowing how they change over time and what components are changing. Your biggest variables is a big thing to running a successful business, running so a successful retirement plan, et cetera. Absolutely. Absolutely. You know, recently i've I've started telling people that because people will, you pre-retirees and retirees will say, you know, well, can I retire? I want i want to retire by 62 or 65.
00:13:55
Speaker
Retirement is not an age. It's actually a number. It's a dollar value. Yeah. You know, you can be 65 years old and if you don't have enough assets, you are not retiring versus, you know, someone could retire at 50 if the dollar amount is there. um And so that's, you know, that really is the mindset. It's a number.
00:14:13
Speaker
It's not an age, really. um And so. you know, one of the investment strategies I want to talk with you both about, and it is one of the first things that we implemented together, is rolling over a 401k.
00:14:28
Speaker
Why it's important for Even if you like your current 401k or it's performing well, or you have, you know, a decent investment background, which Eric, you did, you still do. um And when we first spoke about this, you know, Eric had changed jobs a few years ago and,
00:14:48
Speaker
you know We discussed the importance of repositioning that into something that's going to be actively managed. And one of the strategies we spoke about is having dividend-paying stocks inside of that and reinvesting those dividends to still take advantage of dollar-cost averaging.
00:15:06
Speaker
And for our listeners that are not familiar with what dollar-cost averaging is, that's when you're buying in on a consistent basis. Usually when it's a four zero one k you're buying in every two weeks. because that's when you're contributing to that 401k.
00:15:20
Speaker
So every two weeks, you're buying in shares. Dependent upon what the price of the shares are at that time, you might buy more or you might buy less. But throughout the course of the year, you're going to have an average share price that's going to be lower than someone adding to their account one time a year, subject to wherever the market is that day.
00:15:41
Speaker
Yeah, so I think the thing the concept of dollar cost averaging is so powerful because often you're putting in the same dollar amount on a predetermined schedule. So when the price per share falls, you get more shares for the same money at the lower price. So effectively, your average price is better than... Because you're buying more. That is the the day the market falls. i'm like, oh, man, I hope it's payday. I hope I'm putting money in today to the 401k because that whole buy low, sell high philosophy plays really in your favor when you're putting money in on a consistent basis. Which is why it's a problem when someone leaves their job and they're no longer contributing to that 401k. And if it's not being actively managed, which I got news for you any one part of a big company, it's not.
00:16:30
Speaker
By having some dividend-paying stocks that are being reinvested rather than paid out to you, you're buying new shares on a consistent basis still. Even though you're not putting money in on a regular. Yeah. So often under the 401k plans, you have a targeted fund that is set for your retirement age. And often in those targeted funds, because retirement is so far off, they are more aggressive, but they're not dividend-yielding stocks. securities. And you know one of the misconceptions is that a 401k needs to be reallocated it the moment that you move it to someone. The reality is you often transfer it just the way that it is without selling anything until it's at the new location. So just because you've now put an an actual advisor and face to your 401k asset, which is now a traditional IRA when you roll it over, doesn't mean that you need to change any of your investments. It just gives you the ability to do so much more easily and with a person that you now are working with on stretch strategizing. Exactly. Not a taxable event, not necessarily even an event where you're selling anything or you know changing the funds that you hold. Absolutely. you know and And I appreciate that you both understand that because you know we all change jobs constantly. Well, not myself, but most of our clients change jobs constantly. And the other aspect is you know consolidation and organization jobs.
00:18:04
Speaker
all your company retirement plans, right? Right. So the culture that we're moving into with the younger generation, they're not staying at their jobs for 20, 30 years. There's no pensions involved that they're leaving behind. So every time you leave a job, presumably you're leaving your 401k behind. Mm-hmm. What's the likelihood that you're going to forget you have that money? Like you move, then you have to change all of those addresses on all of those little amounts. And if you have a financial advisor that can roll over each of those 401ks into one traditional IRA for you, You only have one account that you need to keep track of and they're not all in different places with different companies. It's an organizational thing as much as it is an accessibility to the money and a putting a face with it as well. And there's a financial impact too. Typically, the 401ks do have fees associated with them that a lot of times are picked up by the by the company. Mm-hmm. That when you leave that company, they're no longer paying those those fees. So if you're not paying attention to it, typically there is a quarterly management fee. And you can eat up a little 401k pretty quickly with fees and why pay fees. guarantee you 99% of our listeners did not know that. Yeah.
00:19:21
Speaker
So thank you for shedding some light on that.
Life Insurance and Asset Protection
00:19:23
Speaker
Now, another strategy that we've recently implemented in your plan is utilizing fixed index universal life insurance, permanent cash value life insurance that has living benefits you can use while you're still alive, the best kind of life insurance. Now, you know, you both felt as though it was it was a great fit inside of your portfolio. Can you kind of share with me why you felt that way, what you like about it So first, I think it's important to recognize that I was in the financial industry for 18 years And this is one of the most powerful reasons of me acknowledging what I didn't know. I had been removed from the industry for five years when I met you, and I didn't know all of the new options that were available. The financial industry is constantly creating new products. And this is one of the things that I would have had no idea was available unless I came to you And admitted, hey, I haven't been connected to this industry. i know it, but I don't know it now.
00:20:28
Speaker
Okay. So you want to talk about why it's such a good fit? Yeah, so I mean from a from a strategy perspective, the as we age, we're collecting assets and being able to protect those assets.
00:20:45
Speaker
for For me, as the primary salary driver that covers the expenses, if anything happens to me, I want to make sure that Sarah and the kids are you know financially benefited. Well, not benefited, but they can stay afloat. Yeah. yeah um So that, you know, they they don't have to rush to sell the house and liquidate the assets if they're if there's a you know anything that happens to me. So it covers that that base. it It also sets the the groundwork for the the base layer of the retirement strategy. So having... A certain amount of income that I can count on forever that don't need to worry about market fluctuations, asset allocations. It's just there. It's a piece. It's, you know, taxes one leg the stool. No taxes was was a big piece of that.
00:21:47
Speaker
um And then the other, as that asset grows, we have the ability to borrow against that and pay ourselves the interest instead of to to a bank.
00:22:00
Speaker
Absolutely. Yeah. I mean, when we say risk mitigation, it checks off everything. You know, it's protected from creditors, lawsuits, taxes. It's also like hidden under FAFSA.
00:22:13
Speaker
So as i mean, we're and our kids will probably not. we're fine We're lucky enough that our kids will probably not have to worry about. And they're brilliant, so they might get, you know, the STARS scholarship. It's just helpful to know that a little bit of it is sheltered. Absolutely. I mean, yeah, for those with children approaching college age, um you know, not only can you use it to borrow against to pay for their college if you want to assist them with that, but, you know, it's an asset that you can –
00:22:44
Speaker
Yeah. Shield from that FAFSA. Analysis. Yeah, absolutely. um I mean, for anyone that's in their 30s and forty s using cash value life insurance to plan for retirement while build assets, you know, have that death benefit, it really checks off so many boxes. And we've been trying to incorporate it in so many plans.
00:23:10
Speaker
If you You know, the finances allow it and your health allows it because ultimately not everyone can get this because it is life insurance. But, you know, I'm thrilled that you both see the value. And, you know, I think you're going to really love it in the future when you can start pulling that tax free income. That's an awesome conversation to have. Yeah.
00:23:32
Speaker
um Now, the other major thing that we recently accomplished together was doing your retirement analysis, cash flow projections for the future.
Retirement Analysis
00:23:43
Speaker
And, you know, I don't know that everyone is even aware that this tool is out there for them.
00:23:50
Speaker
And you know just to give our listeners a little background, it's essentially a snapshot that we can project out into the future. we plug in what your expenses are right now, what your assets are right now, your income right now, so everything you know currently. And then we project it out with inflation to see, are you on track to be able to cover your expenses in retirement?
00:24:13
Speaker
Is there going to be a gap? When do we project those assets running out, if ever? And so that we know, you know, OK, we have the next 20, 30 years to make the changes that we need or not. Or we can go, we're on cruise control cruise control. And, you know, lucky for me, lucky for you guys, when we had that conversation, it was, hey, we are completely on track.
00:24:38
Speaker
If we just keep doing exactly what we're doing. So, you know, tell me about how that made you feel and what the experience was like putting together that plan. So um the experience of what it was like, I'll leave to Eric because he does all the work in getting all of the information to you, which I really yeah was that a challenge, Eric. I mean, it was it was a lot of info, I will say. It was a lot of information.
00:25:00
Speaker
if i didn't have it organized and already sort of structured myself, i it could have been a decent homework assignment. Because we send out an Excel document and you're plugging everything in, which...
00:25:15
Speaker
is good exercise, though. goes back to knowing your numbers. If you know your numbers, you know what you need to know at where find it. And if you don't know them, now you've got know them. And that's always a great exercise for people. It's like, okay, wow, I really could pay attention. And it can be your first step to organizing everything. Once you have it organized for you, it's organized for yourself as well. Yeah.
00:25:37
Speaker
Right. Yeah. so, you know, so let's talk about how you feel. um Accomplished. So starting in the financial industry, coming out of college, it was i was seeing all of these people that maybe, yeah, they were a a little ah older than we are. But getting to this point where they're like, wow, like all that work, all that hard work that I did, like has paid off. And like, here's what I have to show for it. And that sense of accomplishment.
00:26:08
Speaker
at our age was amazing. And it also made me feel relaxed. It takes the pressure off. So Eric didn't put any pressure on me with the business, but I put it on myself. And now looking at our finances, I can relax and enjoy this moment a little bit more. And to be able to enjoy the moment when our kids are still so young and not have to stress about it is really, really nice and relaxing.
00:26:31
Speaker
That's good. Because, I mean, we even overestimated some some of the expenses, which, you know, it's important to do that because some months you're going to spend more. um But, you know, it's a testament to starting early. You both started saving early.
00:26:45
Speaker
And so now you're not going to be in your 50s saying, oh, my gosh, we have to really play catch up, play catch up and start doubling down. No, you know, we have the benefit time. You know, you're really going to have a lot of surplus in your 50s and 60s because you already put it away.
00:27:03
Speaker
And, you know, now it's just sitting there compounding. Yeah. The benefit of time. That was my biggest note was starting the 401ks young.
00:27:15
Speaker
And not even noticing the money missing. Yeah. I mean sort of that to that cruise control perspective is is having those things deducted as early as possible. So 401k, having it come out of your paycheck so that the only money that you see is already you know incorporates that you know savings into it.
00:27:36
Speaker
um So having that and a lot of 401ks will also allow you to increase your percentage contribution annually and typically tied to um merit increases. So where I want to increase it 1% every year.
00:27:55
Speaker
It might – my salary might increase 2 percent. So I'm still seeing a salary increase. I'm also and increasing my savings percentage and I'm not feeling the impact of putting more money into into savings. That's a good tip, you know, adjusting what you're saving as you start making more, you know, because a lot of us, we we suffer from that lifestyle inflation where we start making more. And so we start spending more, but we're not saving more also. um And it's, you know, it's about that balance. You know, I want you guys to spend and live the lifestyle you're living.
00:28:32
Speaker
But just, you know, let's make sure that we're still hitting our savings goals, which I know you guys will. But there's always room for improvement, too. And there's always room to put yourself a little bit under a microscope or take a pause on the Amazon orders for like two weeks and just be like, you know what, let's see like if I pause.
00:28:51
Speaker
It's a challenge. It is. But practicing that is really, really helpful. um How did you feel? so from my perspective there's the the risk management aspect of it so at this point we have essentially the the coverage that we want to to retire comfortably at the age we want so now the bit the potential the likelihood of impacting that base is low.
00:29:24
Speaker
So my risk appetite goes through the roof and i i can see what asset categories am I not invested in? Are there things that might be a little bit riskier but have a higher reward potential?
00:29:38
Speaker
Those are the sort of things that we can do to say, okay, I have my set age. By the time I'm this age, I'm going to have this kind of income.
00:29:50
Speaker
can I move that needle earlier? Can I go from 65 to 62? Can I go from 62 to 59? Like how how far can we push that needle? And what are the things that we can do with that?
00:30:03
Speaker
and So it kind of motivated you to to do badger better. Yeah. Which is cool. It's funny that he even says that because that was my entire drive to hitting my numbers more. Because he's like, okay, we'll just break even. Because we did an analysis six years ago, similar to this. yeah And we saw that we were basically there already. But I'm like, but if I make more than break even, i can move his retirement age earlier. I'm like, i want more time.
00:30:34
Speaker
Or you could spend a little bit more now. You can do... Yeah. You know, those extra cruises you can do, you know, those extra trips with your family and spending. And we're doing about 50-50 of that. That's good. No, that's really good. Because tomorrow's not guaranteed. And I think that that's also an important component of this financial plan – Yes, planning the best, but also mitigating the risk of if tomorrow, unfortunately, is not promised, everything's going to be okay.
00:31:04
Speaker
And that is where the value of the life insurance was for me. I didn't realize how much I was worrying about what ifs until I didn't have to worry about it anymore.
00:31:14
Speaker
Yeah, the perfect plan prepares for what if I die too soon? Okay, and what if I live too long? You know, like we have to find that balance of saving and spending, absolutely. And and now that we have that plan in our software, every year we can update it based on you know what you've saved that year or how well the market's done, you know we can adjust it and update it and tweak it now that it's it's in there. And so you know making little changes are easy now. And you know for anyone that is a visual person and wants to see, am I on track?
00:31:48
Speaker
What will I have you know if I keep doing exactly what I'm doing 20 years from now, 30 years from now, you know, it's just a projection, of course, but it can give you that peace of mind to enjoy today a little bit more. Or the drive to make some changes.
Financial Decisions Segment
00:32:05
Speaker
Or it might be a bad forecast. I've seen some of those. But the empowerment of knowing where you might be hemorrhaging more money, like knowing that a pause on Amazon needs to be longer than two weeks. Yeah. like is a powerful tool to not sticking your head in the sand for too long.
00:32:26
Speaker
The sooner you do it, the sooner you can make the changes to shift everything in the right direction. Absolutely. Yeah. And I mean, yeah, I thank you guys for for shedding that light because – Although you are very successful, I think a lot of our listeners will relate to you and and feel like, okay, you know, I'm in a similar situation. How can i get on that cruise control too? yeah um And so now what I'm going to start doing on all of our podcast episodes with guests is I want to ask two questions. You know, your best financial decision you've ever made and your worst. And you can answer this together or you might have separate ones.
00:33:05
Speaker
um And of course, you know, we're not going to judge you for your worst. Oh, no. This is a relatability question. Yeah. I'll go first with my worst because it's interesting. So one of the big things we talk about with financials is time. Taking advantage of time, managing time, like it's a constant. um So it's very easy to look at as something that whether or not you can control. But timing is another component. And my worst financial decision ended up not being as terrible as I had initially thought because of time. So I bought a condo in 2007. in 2008, the mortgage happened.
00:33:43
Speaker
and in two thousand and eight the mortgage crisis happened so not only and this is so the Short is I use an interest-only mortgage to get into my first property. And at that time, I was very young and much less educated than I am now. And i look back at my 20-something-year-old self, and I wonder how I didn't understand interest-only mortgage was me paying interest only. Yeah. Like, how did I miss that? A lot people were doing that, though, at that time. Well, it was a good way to get in to a what was presumably a rising real estate market. yeah um And the assumptions were that the value of the home was going to rise, that my income was going to rise, that I would be able to pay more on principal.
00:34:34
Speaker
separately, but trust was the barrier for me there. um And trust but verify is now my new motto. So trust but educate yourself. Yes, I can lean on you because you're the you know subject matter expert, but I'm still going to do my own due diligence.
00:34:54
Speaker
um So buying the condo, the bottom falls out, but time and time is a beautiful thing. We still own the condo. And the benefits that we've gotten from that um going through COVID, I ran a 401k from my first job.
00:35:12
Speaker
Basically started it right around the same time that I bought the condo. And I ran that 401k parallel and I forgot about it until it paid off the condo. wow So I got out of what I had refinanced into a 30-year mortgage by just wiping out my 401k under the COVID withdrawal parameters Which important to know, the 10% early withdrawal penalty was waived during COVID. It is no longer waived. Yes. And that, like I said, the benefit of timing. um
00:35:43
Speaker
We had refinanced out of the interest only before that, but I was still in a 30-year mortgage chipping away at something. And it was our highest interest rate for loans. And we just decided, you know what, this was a good trade-off. um So not as bad as it could have been thanks to time. But I'm grateful that that was my worst. yeah If that's the worst, that's right. Buying real estate at 20 something, it was my worst decision. Like, I don't think that's necessarily such a terrible decision. But yeah, time heals a lot of those, ah those bad choices. If you have the grace of time, can I mean if if you have the luxury of time, you know it goes back to some of the things that we've touched on before like with the dollar cost averaging. Looking at the market now, you know it's been – will say volatile. um So having – looking at that – if I were to check my 401k balance and be like, oh my gosh, I lost $7,000 today. you know Well, you didn't because you didn't sell anything. you know the The value is down. When we refinanced the the condo, the market that was available to ah assess against came back with an appraised value of $56,000 for a three-bedroom, one-and-a-half-bath condo. Wow.
00:37:08
Speaker
on the the bridal trail in Connecticut, beautiful complex for $56,000. And you know at the time I'm like ah beside myself with like,
00:37:20
Speaker
My car cost as much as that. how you know How is this possible? And at the time, it didn't matter because of the tar plan. We were able to refinance it even though it was underwater.
00:37:36
Speaker
The rate, like Sarah said, wasn't great. But it was something that allowed us to where if she were to try and sell it, she would have gotten a lot more than $56,000, but not nearly what it's worth now. yeah So being able to sort of weather the storms and base extremely important. We have the luxury of doing that, yeah.
00:37:59
Speaker
Eric, what would you say your worst? The worst – I thought about a bunch of different things and there were some cars that I bought that were not the the brightest decision. it's like, oh, I got a Mercedes. Like, yeah, it was like just a money pit. But I think the worst financial decision I ever made was I bought a case of beer.
00:38:25
Speaker
and that case of beer cost me like $100 because it it was – this was in college. hadn't paid attention to to anything. didn't really understand how banking worked. So that case of beer overdrew my account, caused another caused another check to bounce that wouldn't have bounced if I hadn't bought that case of beer. my gosh. And that $20 case of beer ended up costing me $100 because not only did I have to pay the bank for the bounce check fee, I had a fee from the person that the the check was for. So that just, you know. That $80, you'd be retired now. You know.
00:39:13
Speaker
I'm thinking, seriously? Yeah. The Mercedes was definitely a worse word. That is funny though. But it it it boiled it boiled down to that like willful ignorance where – it's irrelevant at the time. It is. could yeah Should I have known that I didn't have the money for the beer?
00:39:33
Speaker
you know Yes. um Should I have known that there would have been other consequences? Absolutely. um But it was just that – you know Concept that, you know, it it that doesn't matter. Let me pay for it. I should be fine. And then, you know, not paying attention to all the things that are that are happening.
00:39:56
Speaker
That's amazing. I love that. I love that story. Me too. I think it's it's a good thing to note, though, that early in your life is the time to make those mistakes. And as long as you learn from them, you can end up.
00:40:11
Speaker
Clearly, I were still thinking about it all these years later. When he said I remembered my similar one. So we all do it. yeah um But overdraft line of protection on a checking account is not something to scoff at. Have you heard about this? yeah So some banks will allow you to have um a line of credit that is linked to your checking account that it will draw from if you overdraft. And you have the same interest rate on it as you would like I mean, ah it's typically a lot lower. It's a lot lower than a credit card. OK.
00:40:48
Speaker
But it buffers you from those $25 to $36 overdraft you just bank for that? Yeah, you just ask for an overdraft line of protection on your checking account. and Because what we do is we don't put all of our money in checking. We have it in savings because it's yielding money. So you need that buffer if you're going to thread that line and and approach that zero. But yeah, and ODP.
00:41:13
Speaker
ODP. ODP. Overdraft line of protection. That's a great tip that i'm sure majority don't Every college student should have them. Yeah. And it should be in the payoff of the overdraft line should be linked to their parents checking account. Just a tip. tip. OK, so those were not too bad. Now, what would you say your best is? And you might not have made your best decision yet, but so far in life.
Early 401k Contributions and Real Estate Benefits
00:41:40
Speaker
There's a lot, I'm sure. the For me, it has to be if I would make a recommendation to anybody else, something that they could mimic that we did, it would be hiding that 401k money from yourself in your early 20s.
00:41:51
Speaker
Looking back, you don't necessarily realize when you get your first job at 15 or 16 years old, you don't necessarily realize how long low your expenses are at that point. And you do end up spending a lot of that money on what later is perceived to be frivolous things. Like my DVD library when I was like 21 years old was like on point. Do we even have a DVD player right now? Are all those DVDs still sitting in boxes because of the investment I made in them?
00:42:24
Speaker
If I had been had access to a 401k when I started at my first job at 15 or 16, or my parents had set me up with a savings plan that went into something that later I can make, let's say, Roth contributions with, I would have been...
00:42:40
Speaker
even more ahead of where I am now. So early 401k, like from the moment you sign those paperwork for your first job, sign the paperwork before you even get it. You can start an IRA.
00:42:55
Speaker
Yeah. You know, that pulse. Yep. Yeah. Start something young and start just hiding that money from yourself. You will never miss the $25 per paycheck.
00:43:06
Speaker
Eric, what would you say your best choice has been? So far, it's been the capitalization on timing. So when we bought our house, we signed the contract in November 2019. This was before COVID. So the prices in this area were still relatively reasonable. You're going to make sick right I'm sorry. I'm sorry. I know. The prices were still relatively reasonable.
00:43:39
Speaker
the The interest rate at the time in in November 19 when we signed it was still was still great. I think when when we had gone under contract, it was like three and a half.
00:43:50
Speaker
um Then COVID happened. We... were impacted by the do impact on the builders because we're the the builders in communities like this normally have like 10, 15 houses going at a time. So they'll they'll be they'll have all the trade workers, you know, sort of bouncing around with COVID. They had implemented a rule where you could only have one trade at a time.
00:44:18
Speaker
So they had to go in and do the plumbing. Then they had to go in and do the electrical. And then they had to go back and do whatever plumbing needed the electrical. And then it was a very critical path dependent process. So it ended up.
00:44:34
Speaker
benefiting us in that even though it was completely different than anything that it had have ever done, we ended up getting into the house about two weeks earlier than they had planned the bill to be done, which had a perfect overlap of two days with the apartment that we were renting.
00:44:57
Speaker
So it was out of the apartment and into the condo. Not to mention your property value has doubled. Well, that's icing on the cake. the The best part from the time that we signed the contract to the time that we closed was that with COVID, rates had gone into the basement. we So I was happy with the three and a half rate.
00:45:21
Speaker
It had gone down to two and a half by the time that we closed. wow So that's just $80,000 to the bank that I don't have to pay. wow. you know It doesn't impact the property value or anything like that. That's just more more money in our accounts.
00:45:39
Speaker
Then like you mentioned with COVID, everybody wanting to get out of the city, wanting to have more of the suburban sprawl and and space. And you know the property value has gone up quite quite a bit since since that in a in a very short amount of time.
00:45:59
Speaker
And i just look back that that is is part of that base. That's the the essential piece of housing and comfort that we're paying a ridiculously low amount for that even if we were to try and replace, I think if if we were to purchase our house now, the the expense would be quadruple what we're paying now. yeah Yeah. Thank you. That's going to be me.
00:46:30
Speaker
It's Eric Taylor luck. I just hitched my cart to the right horse. It's amazing. And I mean, you know, no one can time the market, whether it be the real estate market or the stock market perfectly.
00:46:40
Speaker
But there's going to be points in your life where things do work out perfect. And that's awesome. We got to celebrate that. And, you know, it couldn't happen to better people. You know, you both deserve it. And so that's kind of, you know, rounding out.
00:46:55
Speaker
your current strategies that have gotten you on financial cruise control. And, you know, I hope to our listeners that this inspires you.
Contact Information for Stay Well Massage
00:47:03
Speaker
And if you have questions or you want to, you know, see if we can implement some of these strategies for you, we'd be happy to have that conversation. Now with Sarah, with Stay Well Massage, if any of our listeners, you know, are local to the Tampa Bay area and want to get in touch with you, how can they reach you? So I have a website that kind of details a little bit about me and all of my services and who I really customize best to, who my ideal client is. And it's staywellmassage.net. And there's book here buttons all over that website that will launch you into my online booking. And you can see my schedule. um
00:47:42
Speaker
Just know I book out in advance. So plan. If you're not a planner, you're not a good fit for me, unfortunately. um But there are always those last minute available options. And I do have a wait list. So um if you want a last minute appointment, I have a wait list as well.
00:47:58
Speaker
Great. Well, thank you so much. You're welcome. So thank you both for coming. And for everyone that was listening today, thank you so much for tuning in to another week of the Future of Finance podcast. If you have questions or want to schedule a phone call or a meeting with me, feel free to go to our website, union-financial.com.
00:48:16
Speaker
You can click the book a meeting button and it'll take you right to my personal schedule and we can schedule a time that works for both of us. And I'm your host, Marissa Wood. Thank you, Sarah and Eric. We look forward to seeing you all next time.
00:48:31
Speaker
investment advisory services offered through brook stone capital management lc a registered investment advisor bcm and union financial services are independent of each other insurance products and services are not offered through bcm but are offered and sold through individually licensed and appointed agents the opinions expressed by marissa wood and guests on this show are their own and do not reflect the opinions of this radio station All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involve risk and otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned and may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation. This program is designed to provide accurate and authoritative information with regard to subject covered. Indexed or fixed annuities are not designed for short-term investments and may be subject to caps, restrictions, fees, and surrender charge as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the insurer. Please refer to our firm brochure, the ADV 2A item 4, for additional information. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by Brookstone.