Latest / The Life-First Solopreneur / 82. Money Mindset for Solopreneurs: Tips to Break Free from Financial Fears with Debra Schatzki
Transcript
- Debra Schatzki (00:00): The key is that when you have your core values or your true wealth intact, what happens is that putting together your plans and your life becomes so much easier. Intro (00:15): Welcome to the One-Person Business podcast, the show for solopreneurs, consultants and contractors who are ready to take charge of their business and reclaim their freedom. Join us as we bring you inspiring stories, invaluable insights and practical strategies from successful solopreneurs and industry experts, empowering you to create a thriving business that aligns with your unique goals and allows you to live life on your own terms. Here are your hosts, Joe Rando and Carly Ries. Carly Ries (00:45): Welcome to the One-Person Business podcast. I'm one of your hosts, Carly Ries. Joe Rando (00:49): And I'm Joe Rando. Debra Schatzki (00:50): Joe, you and I, we talk to solopreneurs quite a bit about why it took them a little bit to jump into solo entrepreneurship, some hesitations they had, and something I hear time and time again aside from marketing, which is a whole other thing that people struggled with was just leaving their employer sponsored retirement plans. (01:09): I think that's a big deal for people. People don't really know where to start or where to go for financial planning because they're leaving that big company or small company, but kind of that net that they had before. So we wanted to have our guest today, Debra Shatzki on, because she's going to walk us through all of this. So if you're in this boat, you're on the right show, you come to the right place. She's the founder of the Consulting and Registered Investment Advisory Company, BPP Wealth Solutions, LLC. Debra, this is one of my favorite stories, and I think what makes you so relatable and why we're excited to have you on. Debra grew up understanding the importance of financial planning and wealth management in a very personal way. Growing up, she would walk through the supermarket, gripping her mom's hand, hoping they'd be able to afford their groceries. (01:58): Her mom overcame her challenges going on to work for The Guardian, specializing in the design and implementation of pension plans. And, this is so cool, was impressively named their first man of the year, which is just so cool. I love that you have that story to learn from and to follow in her footsteps. Today, she's an independent advocate for her clients and her work is integral to ensuring all BPP clients receive the planning and advisory services they need to grow their futures. She caress about her clients deeply and about their families, their businesses, and their futures. Debra, I feel like you fit in so well to our audience, so welcome to the show. (02:38): Thank you. It's such a pleasure to be with you, Carly, and Joe. Thank you for having me on. It's a privilege. Joe Rando (02:41): Oh, you're welcome. Glad to have you. Carly Ries (02:43): Yeah, this is going to be so great. I actually want to piggyback off of what I said, that people are hesitant to jump into the one-person business space because they're leaving the employer sponsored benefit plans. For people in that position, what would you say should be the first thing they should do when going solo? Debra Schatzki (03:02): The first thing anybody should do, and I think doing most things in life, is have a plan. Before you go solo. It is so powerful to sit down with the professional. You can get a lot of good services all over the place. There are professionals that will do a plan and they'll budget for you. They'll tell you what you need to make, how much you should be putting or goal is to put away, and here are the different ways you can do it. It's very scary going solo. It's one of the scariest things that we ever do, but when you have an actual plan, it makes it easier because you can actually have something to follow. Carly Ries (03:44): How do people go about putting that plan in place? I know for me, luckily my dad's a financial advisor. I was like, okay, I have some guidance, but I have a lot of friends that are like, "I don't even know where to start". So where should they start to put that plan. Debra Schatzki (03:58): Well, I think the CFP network is a great place to find a planner. Let's start there. The reason that we love that is because most of the CFPs actually are skilled in different areas of planning. How you start a plan is really just put together what your expenses are. It's easier to start with your expenses, especially when you're going solo because you're not necessarily sure of what your income is. Putting in retirement plans is easy, whether it's an IRA or whether it's your solo 401K, whether it's a sep, there are a lot of retirement plans that do make it easy for people to automatically start saving when they feel that they have the ability to do that. But having a plan is really the key, I think, to everything. Carly Ries (04:50): That is so true. You're talking about tracking expenses and you don't always know your income. So retirement, aside for right now. Let's just get back to the day to day. I feel like that's huge too. How do people know what they can and can't afford? I know that when I was working for a company, it's like, oh, I know I'm making this amount of month, so I'm going to go grab my Starbucks and I'm going to go do this. This podcast is not sponsored by Starbucks, by the way, but I'm going to go get this. It's just so easy. Then when I first started being a solopreneur, I was like, oh wait, should I get my cup of coffee here or should I make it at home? Which you should probably do anyway, but how do they know what they can and can't afford? Debra Schatzki (05:33): That is why I say you start with your expenses. It's so much easier to start that way because you have them. You already know what your basic costs are, what are you spending for your rent or your mortgage or your car and all the different things that you're already doing. So if you can actually just simply outline, and we have a program that we use that makes it easy for people to put in to the program actually all of their expenses, whether it's taking the charge cards or just allocating it to the different categories, but start with your expenses. And expenses include your savings. Expenses include savings not only for retirement, but travel . Expenses include if you want a Starbucks, maybe you put in having a Starbucks every day, but then you see that your cashflow isn't keeping up with what you want your expenses to be, but at least you can start somewhere. (06:33): I always tell people that it's better to start with a good budget, meaning one that allows you to do what you want to do and then figure out what the income you need to fulfill that is, than to start skimpy and then try to grow it from there. Because if you're filling up your buckets of what you want, it's much more satisfying. And if you can't do it, you have to know where you can cut. So if you have a budget, this is what I want, this is what the necessities are. Then at least you have the ability to figure out what it is that you're going to do. Joe Rando (07:10): Can I get a clarification on what we talked about a minute ago? It flows into this and I think the rest of the conversation, but you said something about CFP. It was someplace to go to find a certified financial planner. Debra Schatzki (07:27): Yeah, the CFP network. So if you go to the CFP Certified Financial Planning Network, it will actually give you financial planners in different communities that you can find. Then you can reach out to them and interview them. I will tell you, after you speak to a couple of them, you'll know who you want to work with. Joe Rando (07:51): There's something, and I don't know the details of this which is why I want to ask you, because I'm sure you do. There are some people that work in this industry of helping advise you on investing in finances that are fiduciaries, meaning they are obligated legally to have your best interests at heart and some aren't. How could people tell the difference? Obviously, I think you want to work with people that have your best interest at heart. That's kind of where I come down anyway. How do they determine that? Are all CFPs fiduciaries? Debra Schatzki (08:20): That's why I said to go to a CFP. A CFP like having a CPA. You cannot be a CPA or CFP and not be a fiduciary. You are really run by the bylaws of our certificates, and you need to keep up with a lot of planning every year. You have to do a lot of continuing education, and you have to run your business always with the best interest of the client first. Joe Rando (08:48): Thanks, Debra Schatzki (08:49): Joe, that reminds me of our realtor versus real estate agent conversation. Joe Rando (08:55): That's a little more branding. That's a little different because they're both doing the same job. It's just a realtor has a designation. I don't know if it's training or something, but it's kind of a trademark. That reminds me of one of our previous podcasts. It's a trademark term that you cannot use if you're not a realtor. But moving on. Debra Schatzki (09:13): The difference with the CFP is CFP is a hard exam. People who are CFPs actually studied hard to make sure that they know what planning is, what budgeting is, what cashflow is, what taxes are, what pension plans are, the type of pension plans, the type of insurance policies, different investments, even going to property and casualty, what the laws are on estate planning. So the CFP program is very involved. To get a CFP, like I said, is not an easy task. And to keep your CFP, you have a lot of continuing education you have to do each year. So that's what provides us with the ability to be fiduciaries. We're constantly training and keeping ourselves fit. Joe Rando (10:06): Makes sense. Carly Ries (10:06): We were talking about expenses before this, but Joe, those were great questions. And I would assume a lot of places where people have their downfalls is not tracking expenses and just not having that budget. But I feel like one of the best ways to learn is to learn what not to do. In your experience with your clients, what are some other mistakes you see people make that you would advise against? Things that may not be second nature for people. Debra Schatzki (10:32): Having too many charge cards. You should really have two, a business and a personal. You should not really have a lot of charge cards. People already don't track what they spend so it just makes it easier. The easier you make your life in tracking what you're doing, the better it is. I would say you need to absolutely make your life simple. You use only a couple of charge cards. Same thing with accounts. People have things all over the place. (11:06): I can't tell you how many times we pick up people's statements and they worked at this firm and that firm and their 401K is ind places all over the place. It's important for us all to consolidate what we have and to streamline our method of operating. Bank accounts shouldn't have many different accounts. The faster and better we are at organizing ourselves, the better it is that we can actually see our progress or lack of. Joe Rando (11:41): I just want to extend what you said. So when you have as few accounts as possible, you have a personal checking and a business checking, personal savings, business savings, don't mix those. Just like you said with the credit cards. Yeah, that's such good advice. It gets so messy if you don't separate those. Debra Schatzki (12:04): It really does. And it becomes so overwhelming. It's hard enough to have your own business. It really is a big job to have a business. The reason we do it is because we want to control our future. That's how most of us do it. Carly Ries (12:20): That is so true and to piggyback off of that, the audience that we try to target aren't people that are "let's get rich in a morning, in our pajamas and blah, blah, blah". We try to cater to lifestyle solopreneurs. People like me. I like being able to take my kids to school and things like that. It's just a lifestyle thing. It's funny, we're talking about simplifying. I feel like that ties into lifestyle so perfectly, who wants a complicated lifestyle. My question for you is, you talk about true wealth in a lot of your content, (12:58): I'm curious, it sounds like that fits into this conversation, but how can that be measured? Debra Schatzki (13:04): It's really amazing. Since we started practicing the true wealth, the impact that it's had in our family and all the families that we're working with. It really taps into what are the core values that you want your kids, your grandkids, to really know about you? Who are you? For us, education is important. Now what does that mean? Does it mean that they have to go to Harvard or Princeton? No, it means that we really recommend when anybody in our family is trying to do something, we ask them to look where they can find who's doing it really well and learn from them. Is there a class, is there a lecture? Are there podcasts? It's so important that you identify. If you say education is important, then you expand on that. So education as a true wealth family first for many of the families that we're working with, including ours. But the key is that when you have your core values or your true wealth intact, what happens is that putting together your plans and your life becomes so much easier. Because, if you're saying that family is first and smart spending, education, fun and adventure, people have different core values. When you identify what the core values are, then it's really easy to talk about true wealth. Because then you start to live your life planning to make sure that you are actually in line with what you say your true values are. (14:45): If I'm saying that family comes first, then how am I spending my week? Am I working 80 and a hundred hours a week or am I doing what you said? Am I making sure that in my schedule first, I always put Williams' school schedule in my calendar. I always make sure any games, any things are in there because I want to go to those. And I think that if we plan well and we have our core or our true north, our values in line with our planning, it's amazing what happens. Joe Rando (15:19): This ties incredibly well to kind of where we're coming from. It's right in line. (15:29): Carly and I created something called the Solopreneur Success Cycle, and it starts at step zero, goals, what's important to you? Why are you doing this? Then we keep circling back to those. Every time you make a change or think about changing something or evaluate how it's going, look back at those goals. Debra Schatzki (15:48): I'm so glad that you guys did that because it's really the best way. Carly Ries (16:00): Well, you actually put a pen to this too. In your book, Chaos to Joy, you tell stories of women facing financial crisis and how they can get out of it using your security income planning, which I want to talk about in a second,but how they moved into living a life of happiness and financial success, which is everything we're talking about. Could you give a little preview into this book and tell us one of those stories and how it might apply to solopreneurs? Debra Schatzki (16:25): Absolutely. It was really interesting because I have so many fabulous clients. This book is all women. The next one will be all men. Chaos to Joy is a book of five amazing women that really had awful situations and didn't know how to do it. Miraculously they were referred to us. We started at the beginning with them and we start with what their dreams are. We don't do goals only because goals are too simple. I really try to push them to dreams because if I can get them to start talking about something actually beyond what they would normally talk about, it's amazing what we find out people want to do. Then we do a cashflow analysis, which is so critical to finding out what their cashflow and what they can afford. The one that I'll talk about is Michelle. (17:21): Michelle's was part of a company. It wasn't a solopreneurship, but it was a company that was already operating that her husband owned. Her husband at age 50 had a coronary and that was it. They had three kids and she really didn't work. All of a sudden now she was the Owner, with her mother-in-Law, believe it or not, of a company and had no clue what to do. I mean, it was truly devastating. The President, thank God was my client. It was my client for years, and said to Michelle, "please call Debra. I promise you she will walk you and help you through this." And when I met with Michelle, it turned out her husband actually knew he was going to die. And he went on a spending spree like you couldn't believe. (18:21): He bought really fancy cars. He bought a boat. She knew that he was off the rails. She didn't know what to do with it, and they were fighting like crazy because he didn't tell her he knew that he had a problem. So unfortunately, she was saddled with not only her husband being gone, but now all this new debt. She thought she was going to get this life insurance policy from the company. But he racked up so much debt that the death benefit of the life insurance actually went to the company to pay off the debt. So you can't design a war situation, I don't think. Not many. I wound up spending a lot of time with her. We worked out again, what her cash flow was. And with somebody like that, goals is not even part of the agenda. You are in disaster planning at this point. (19:20): I did her cash flow. She brought everything that she could find. She put it together, and then I called the president of the company and I said, this is the salary we need in order to cover what she needs. Pay her bills, to pay back debt, to save money, to put money away in a retirement plan, pay her kids' education bills, and to be able to survive. Can the company afford this? Now, in her situation, she was lucky that the company could afford it. In other situations, that's not the case. Just the relief of her knowing that the company could afford to pay her, and she decided to go to work because they can't just pay her. You can't get paid unless she goes to work. Otherwise it is a dividend. So she went to work. (20:16): We created a role for her. We did some testing and created a role for her that she would be really good at. And she started to work and she started to pay off the debt, and she started to get really unbelievable confidence about the business. She knew about the business. It's been a family business forever, but she never worked in the business. All of a sudden she started really moving forward and getting into an incredible momentum of being a vital part of the business. It was incredible to watch. The business would've gone out of business. When you think about what would've happened without the proper intervention of a good planner, the company would've been out, the employees would've lost their jobs. She would've had much less money, much less. Instead, we wound up working through her issues. It did take us a couple years, I'm not going to say it was easy, but we just kept moving forward and doing everything we could to make sure we were paying attention to what was critical. And she got out of it so much so that her goal was 10 years after the death of her husband that she'd be able to retire. That private equity firm came in six months before and bought the company. So she retired. Carly Ries (21:46): How amazing, you sound like you had a plan in place to get her out of this situation. You have a proprietary process called security income planning. Did that factor into this, or what is that exactly? Debra Schatzki (21:59): Well, that's always what it is. We don't do anything for anybody unless we do a security income plan for them. The reason being is because when I ran accounting firm, wealth management and financial services divisions, it became really clear to me, no matter how rich or not somebody was, that if they're clear about their cashflow and the vulnerability of the cashflow, it's really amazing. I created this system where you start off first with your goals, dreams. We push 'em, like I said, to dreams, then to do an honest accounting of your finance. And I mean honest. We get the tax returns, we make sure the charge card statements are in line with what they say they're spending. Some people spend a lot more on clothes than they say they'll spend, or there's always something. We get an analysis of really what they have. Then based on that, we put in their income, we get their paychecks, we get everything that we need to show them where they actually are. For some clients, they can't even figure out how to do it. So we just have them send us all of the stuff and we'll input it. Most clients are getting better at figuring it out, but we still get a copy of the charge cards and the other stuff just to make sure. Once we get their cashflow done, then we look at their investments. Unfortunately, one of my big projects at one of the firms was, when I joined the firm, they had a lot of Madoff clients before Madoff fell apart. One of my jobs, I went around to all of the clients to tell them that I was concerned about what the percentage of investments in Madoff, not because I knew it was going to be a disaster, but because I knew the percentage was way too much. They couldn't afford to lose it. (24:08): If you're invested in one thing like that and you can't download the investments, it's private equity or hedge fund, you need to know that if you lose it, you're okay. We do a really good deep dive of people's investments, and if they're not good, we'll tell them why we don't think they're appropriate based on their cashflow. A lot of people don't have Madoff investments. I just want to be clear about that. Joe Rando (24:34): I have to ask a question though about that because it's so interesting. When you told them about that, were any of them able to get out of that investment? Debra Schatzki (24:41): All of them told me the same thing. They all said, "you don't know this is Madoff." And I said, "I will tell you, my education tells me that if you can't download the statements, there were Excel spreadsheets, and I can't figure out how they're coming up with the returns, then I have to warn you. I'm concerned that if you lose it, you won't be able to pay your bills. And all I care about is the vulnerability of your cashflow." Not knowing anything else so that was really it. A lot of our clients have hedge funds, I'm fine with hedge funds. I just want to make sure that they understand the vulnerability of any of their investments and how is that cashflow going to protect their future because their cashflow is what they rely on. (25:33): Most people don't have trust funds. Let's just be honest. Even if you have a trust fund, you still need to know what the vulnerability of that cash flow. The second thing we do is review the investments. We do an analysis of the quality of the investments. There are a lot of programs that you can easily do this. Then once we finish their investments, we go over their insurances and then we go over their documents. It amazes me how many people don't have signed wills, don't have signed durable power of attorneys, don't have signed healthcare proxies. And the reason being is because I believe that a lot of attorneys don't push clients to sign things. They draft them, but they don't push them. So as part of the security income planning, which is all about building, protecting, preserving wealth for generations, which is what BPP is, build, protect, preserve, we make sure that we're doing that. So we're constantly closing the circle. Building your cashflow, your investments, protecting your insurances, preserving your documents, and making sure everything is aligned and in good order. That's how I developed security income plan, have a process that was reliable. Because of what I saw people go through and the fear to stop that. We have so many tools, we have so much skill, and we have so many professionals that are good, just let's work together and make people's lives easier. Carly Ries (27:03): Perfect segue into our second last question, which just blows my mind because I feel like we could talk about this all day. You spend your life helping people find financial success. So we have to ask you, what is your favorite quote about success? Debra Schatzki (27:20): I was thinking about it and there's so many great quotes, but for me, I think the biggest quote is one that I say to everybody to "dream big, create a plan, find your team, and make it happen". Life is so short. I forget who it was that said, don't wait till you're 65 before you start doing your planning. Really, life is so short and priority of time is really one of the only things that we have control over, at least I think. It really makes a difference when you actually put a plan in line with the priority of your time and then then the money and everything else. So that's what I would say. That would be my quote. Carly Ries (28:13): I want to be respectful of your time. But Debra, where can people find you if they want to learn more or give you a call? Debra Schatzki (28:29): It's really simple. Our website is www.BPPwealth.com. Our website will allow you to see what we do, learn about us, learn about my team. I happen to have a phenomenally brilliant team. It happens to be all women. That's not always the case, but my team is all unbelievably brilliant women, and that's the easiest way to find us. Carly Ries (29:00): We're so happy you joined us today. This has been so beneficial for me personally. I think our audience will feel lthe same. Debra Schatzki (29:07): Well, thank you so much. Joe Rando (29:09): Thank you, Deborah. This was great. Carly Ries (29:12): And listeners, thank you so much for tuning in today. We will see you next week on another episode of the One-Person Business podcast. See you soon. Closing (29:19): You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes running a one person business and figuring it out as they go. So why not connect with them and learn from each other's successes and failures? At LifeStarr, we're creating a one-person business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at community.lifestarr.com.