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Welcome to personal finance for long-term investors, where we believe Benjamin Franklin's advice that an
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investment in knowledge pays the best interest both in finances and in your life. Every episode teaches you personal
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finance and long-term investing in simple terms. Now, here's your host, Jesse Kramer. Welcome to Personal
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Finance for Long-Term Investors, episode 114. I'm Jesse Kramer. By day, I work at
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a fruiary wealth management firm helping clients nationwide. You can learn more at bestinterest.blog/work. blog/work.
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The link is in the show notes. And by night, I write the best interest blog. I host this podcast. I put out a weekly
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email newsletter. All of which helps busy professionals and retirees avoid mistakes and grow their wealth by
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simplifying their investing, taxes, and retirement planning. Later in today's
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episode, Kellen Klein will be joining me. Kellen is is local to me here in Rochester, and he's the co-founder of
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the Savvy Couple Brands, a huge online personal finance platform that he runs with his wife Britney. been recognized
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by Forbes and Time and other publications. And Kellen has a really unique story. He went from working
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full-time as a a jail deputy in the county jail to paying off six figures of debt, quitting that job in the jail
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while he was building this amazing business all over the course of a few short years, especially in hindsight.
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This isn't going to be an episode where all we do is kind of sing Kellen's
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praises and and tell you to go check them out, but rather the point of this episode is kind of learn about the
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process and the risks and the planning that went into starting a business, that went into growing that business, that
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went into the the monumental decision of quitting his then career to pursue the business full-time, and also some of the
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financial planning and household financial sacrifices required to ensure that Britney and Kellen maximize their
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probability of success. And now, why are we talking about those things today? Because of the thousands of you
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listening to this podcast, I know for a fact that plenty of you have ideas rattling around in your heads to maybe
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leave your 9 to5 early, to start your own business, to pursue some sort of passionate side hustle, to start doing
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contract work or consulting part-time as part of your retirement plan. And like all major projects in life, doing one of
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those things requires a lot of planning, a lot of thinking, a lot of foresight. And I think we can all learn something
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interesting today from Kellen's successes, from the stories he has to tell us, and also from the failures
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really, from the good, the bad, and the ugly of the real life lessons that Kellen and Britney went through to start
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their brand, to start their business. But before Kellen joins us today, we do have a review of the week and then some
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monologue thoughts from me. The review of the week from Clint Money. Great for the beginner to the expert. Five stars.
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Jesse does a great job of explaining financial topics in great detail so nobody gets left behind. The guests he
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has on his show are top-notch as well. I'm looking forward to years of great
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content. Well, Clint, thank you very much for the kind words. Feel free to drop me an email at jessebinterest.blog
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and I will send you a super soft podcast t-shirt. And before Kellen joins us, before we take a deep dive into
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entrepreneurship, into owning your own business, into a side hustle, you need some financial flexibility to pull that
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off. So, I was thinking about this article I wrote in March of 2024. At the time, my friend's daughter, she was 21
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years old. She had just bought her first car, a very big financial move, and she
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had lots of options of what car she wanted to buy. Was she going to look for, you know, the used Honda, the used
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Toyota, the used Kia? Lots of frugal experts would point to that kind of decision. Uh, was she going to buy
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something was new, but, you know, maybe reasonable? That's what I did for for my
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first car. I bought a brand new 2012 Toyota RAV 4. It was new at the time, but I thought a pretty reasonable car to
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buy. I drove it for 160,000 miles or something like that. and I got my money out of it. Or was my friend's daughter
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going to go all out? There are places to be and she's got people to impress and
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she wants a cool car. Well, for better or for worse, this young woman went with option three. She bought a 2024 Ford
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Bronco for roughly $50,000. A very cool car, one of the most popular cars in America since the Bronco came back to
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life in 2021. And that cool factor, if you will, was essential for this young woman. It's what she wanted. But by
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stretching her finances with this purchase, she damaged her financial flexibility in other areas of life. That
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ability to absorb financial downfalls, to react to financial changes, to find contentment at various consumption
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levels. I think about the world of physical fitness where stretching improves our physical flexibility and
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that flexibility prevents muscle or joint related injuries or what have you. But I also think that maintaining proper
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financial flexibility helps cushion the financial blows that life will inevitably throw your way, the sudden
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expense, the loss of a job when your dog eats the tennis ball and needs, you know, emergency veterary care. Those
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kind of flexibilities are really important. And my friend, whose daughter bought the Bronco, discussed how she
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felt this great discontent with the idea of driving around in a used junky car, which I totally get. all else equal. A
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cool new car is way better and way cooler than an old junky car, but all else isn't equal. That's the problem. I
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mean, namely, the price, more accurately, that the cost per mile of the Bronco is going to be way more than
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that of the used junky car. And we all know someone who fits this mold. They just have to have the nicest stuff. And
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I think for those people, it is important that we try to hit them or or if you find yourself in those shoes. I I
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know in some places in life I might find myself in those shoes and I try to hit myself with this all-timer of a quote
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which is look around you all of that stuff it used to be money and all of that money it used to be time the
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question becomes are you content are you fulfilled are you happy and it's different strokes for different folks
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some people need that fancy Bronco while other people despise spending their hard-earned dollars on a depreciating
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asset and the question is how much of your time are you willing to trade paid for that stuff. I think it's a
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superpower to feel content and to feel fulfilled at multiple spending levels. And that idea, I don't think, can be
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emphasized enough. Overspending is typically tied to some sort of search for contentment. And very rarely is that
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contentment found, for example, behind the wheel of a car, behind the wheel of a Ford Bronco. And we are all different.
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I get that. Our contentment flexibility will vary depending on the topic. We each have areas of life where we say,
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"Hell yes." and we happily pay higher prices. And for you, it might be nice
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dinners or dog toys or a nice bottle of wine. For me, it's squash rackets or
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books for my for our daughter. Lots of books. Lots of books for our daughter. High quality baking ingredients. I like
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making a good batch of cookies. And I don't mind spending money on that stuff.
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We each have the different stuff that we want to spend money on. But if you can still be happy at various spending
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levels, your financial life is bound to improve. And to some, financial flexibility means having room in your
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budget. You know, life will throw you curveballs. Can you roll with the punches and keep your head above water?
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You've probably seen headlines before like, you know, 47% of Americans can't
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afford a $1,000 emergency expense. Now, whether that headline is true or just some sort of bastardization of polling
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data, the fact remains a lot of people don't have much room in their budgets
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and their situation is kind of like a pane of glass and it shatters under the slightest bump. A healthy emergency fund
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solves that problem by providing them with flexibility. And it's kind of ironic because their flexibility is
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created in the first place by saying no, right? We have to say no to things in order to build that flexibility in our
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lives. But then having that flexibility empowers us to eventually start saying yes to things. We have to choose not to
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spend money to to grow the emergency fund. A penny saved is a penny earned. But the benefit of our budgetary
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flexibility is eventually, hey, some sudden fun spending opportunity arises and we get to say yes. I think it's also
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worth thinking about geographic flexibility. You know, would you be happy living in New York City? Would you
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also be happy living in, I don't know, rural Iowa? If you have the lifestyle
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flexibility to move to a low cost of living area, that's a pretty amazing financial superpower. Just for kicks and
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giggles, I compared New York City to Sou Falls, Iowa. The overall cost of living
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is more than 100% higher in New York City. And if you're listening to this in
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Iowa, let me know. Specifically, New York City rent is about 300% higher than Sous City. Restaurant prices are about
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100% higher. Groceries are about 75% more. So, if you're tied down to a high
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cost of living area, tied down, literally, you're not flexible in that way, then it kind of just is what it is.
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I'm not going to tell someone to abandon New York City and abandon your family to
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save money in Iowa. But if you can move to a low cost of living area, even if you can move to a midcost of living
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area, what's stopping you? I know since co that's happened a lot around here in
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upstate New York in Rochester and Buffalo and Syracuse. I just specifically here in Rochester. A lot of
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families, a lot of younger families who maybe originally were from Rochester, they left the nest, so to speak. They
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settled in greater New York City. They settled in DC. They settled in Boston, you know, Chicago, mostly central and
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east coast cities. And then during COVID, probably because of the remote work and all the flexibility that gave
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them, they'd come back to Rochester, making us one of the hottest housing markets in the country. Because that
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same family that maybe was trying to get a pretty normal, quote unquote normal 2,000 foot house in Boston for a million
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half dollars, that million half dollars buys them one of the nicest houses in Rochester. And in fact, they can get a
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much nicer house than they could in Boston for probably like half the price here in Rochester. Anyway, it's a story
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for another day, but the point again is geographic flexibility. Next, I think about the question, does money actually
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buy happiness? One of my colleagues, Chris, when he meets with clients, he often says, I'm not sure if money buys
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happiness. Maybe it's different for different people, but money certainly buys flexibility. And for me,
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flexibility does often lead to more happiness. And I think he's got a really
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good point. Most of us want options in life and that's what financial flexibility is all about. We want the
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option ideally to afford anything but you know like Paula Pant might say if you know Paula you can afford anything
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but you can't afford everything. And that's a really important financial
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flexibility idea to take home with us. Next when I was thinking of Kellen's story what you're all about to hear from
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Kellen's story today. I think of that fork in the road that he and his wife Britney must have faced. That fork in
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the road that said do we continue? Does Kellen continue down his career of being
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a a guard at the county jail or does he go for broke and run the business? And it reminded me of a fork in the road, so
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to speak, from the financial independence movement. So, this is from an article December 2022 I wrote called
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Two Roads to Financial Independence. And I was reminded of, you know, Robert Frost's poem, Two Roads Diverged in a
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Wood, and I I took the one less traveled by. And that has made all the difference. Now, most people know of
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that poem, The Road Not Taken, especially those last few lines that I just quoted. And most people interpret
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the poem as well, Robert Frost's choice, his choice made all the difference. And
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it made all the difference in a good way. And so, Robert Frost is telling us to to break the mold, to be different,
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to create some extraordinary life, right? Two roads diverged in a wood. I took the one less traveled by, and that
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has made all the difference. So, do the the unique thing and make all the difference. But if we actually read the
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poem closely, Frost doesn't really make that claim. The road less traveled is
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neither good nor bad. He's not really passing any judgment on the path that one takes. Instead, his point is that
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the decisions we make in life, like a fork in the road. They steer us in a certain direction that cannot be undone.
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And because of that, even a tiny decision can make quote unquote all the difference. Maybe good, maybe bad, but
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it can make all the difference in your life. And I think of it, you know, one road leads to another road or one fork
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leads to another fork and then another fork and then another fork. And that Robert Frost, he would never again find
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himself at that particular intersection. His choice left or right led to these future desperate decisions, but would
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never lead back to where he stood at that moment, to that particular decision. And he says this in the poem.
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He says, "Yet knowing how we leads on to Wei, I doubted if I should ever come
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back. In the long run, a simple fork in the road can fundamentally change your life. It's a little bit like chaos
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theory or that apocryphal idea that a butterflyy's flight in South America changes the direction of a major
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hurricane over the Atlantic. That small changes in input can cause massive shifts in output. And time only moves in
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one direction. There are no counterfactuals in life. If I had done this instead of that, I would be over
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here instead of over there. You can't pretend you would know how that actually
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works out. You can't pretend you would know what would have happened if you had
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made the other choice. You can't be certain. But nevertheless, we do dwell on opportunities missed. If I had gone
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to that party in grad school, I would have met Margot Robbie and now I'd be married to a famous actress. Well, you
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can't really do that. But we never consider, we never even really begin to think about disasters that we've
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averted. I think this is a really cool thought. Maybe maybe you do, too. Maybe you've never thought about it. But, you
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know, maybe if id gone to that party with Margot Robbie, some distracted driver would have t-boned my car at the
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stoplight and and broken my leg. And just think about it. When was the last time you considered that a few mundane
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choices in your past have probably saved your life by avoiding some sort of fatal
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accident? You might scoff, but that's certainly a a train of thought less traveled. And as Robert Frost writes in
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the poem about sitting there at that fork in the road, he says, "And be one
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traveler long I stood and looked down one as far as I could to where it bent in the undergrowth, then took the other
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as just as fair." So the point being is that you can only take one path. And now
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time for the second path of this little um diet tribe about Robert Frost and and
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the fire movement, the financial independence retire early movement. It strikes me as this Frostian bargain. And
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yes, I know it's a Fouian bargain, but this is a Frostian bargain. And the basics of FIRE are pretty
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straightforward. If you earn more, you spend less. You can become financially independent, no longer tied to your
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employer's mandates. You can retire much earlier than traditional Western civilization retirement dates. Fire
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folks, they generally take Robert Frost's path. They take the path less traveled. They, you know, assue the
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common nine-to-five for 40 years career by striving usually for higher incomes, definitely by uh lowering their spending
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and by investing the difference. And that combination for them, it makes all the difference. But like those who kind
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of misread Robert Frost's poem, the FIRE movement occasionally conflates different with better. And different and
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better aren't always the same thing. And now, granted, I'm I'm cherry-picking
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these, but I I picked these five headlines from the financial independence subreddit in recent months,
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and I want to see if you can spot the common thread. So, again, I'm just going
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to read five headlines here. I retired early at 36. It's been 2 years, and I'm
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feeling lost. Your fire obsession may be a symptom of stress. I fired at 30 and now I'm lost, depressed, and don't know
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what to do. Living in the future or why fire won't make you happy. And then the
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last one is the pursuit of fire just a temporary distraction from unhappiness. And again, I did cherrypick those
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headlines. There are also many great stories of fire, financial independent success, and the road less traveled
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after all can make all the difference in both directions. But yeah, fire is the road less traveled, but it's not always
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it's not always the better road. Now, my personal story is just another example.
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Fire was a huge part of my initial interest in personal finance and investing. And that interest led to the
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creation of the best interest. It led to me changing careers. It led to this podcast. And that's just a huge
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fundamental part of my life when I think back on it. And I was full steam ahead on the fire path in my old engineering
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career. I was on the fastest path to fire that I could possibly muster. I was Mr. Rice and Beans, Mr. Coffee at home,
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brown bag lunches every single day. But stories that are similar to the the headlines, the five headlines that I
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just read. I felt something in my life that something wasn't quite right. I was
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on a better path, right? I mean, that's what I was asking myself. This is supposed to be the better path, but if
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it's the better path, why doesn't always feel better? And for years, I couldn't
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really put my finger on the problem. Now, coincidentally, the work that I'm doing on the Best Interest blog here on
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this podcast, the work that I'm now doing full-time helped me discover my issue. And simply put, I didn't enjoy
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the day-to-day work of my engineering career. And rather than running towards early retirement, I was really using
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financial independence to run away from an unfulfilling job. I found out that the mind starts to rebel when you force
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it to be passionate about escapism. That's where I found myself. But I did love the work of writing, of podcasting,
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of helping my readers and now my clients achieving their financial goals. And that's something this is something that
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I'm not looking for an escape route from. If anything, I wanted more time to
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write to podcast to help people. And now that I've been doing that, now that I've
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been working full-time in financial planning for three and a half years as I record this, I'm no longer really
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focused on reaching fire. I just really like doing what I do. And sure, I'm still watching our household finances.
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I'm still making sure that we're investing our money wisely, but I've
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really separated the FI, the financial independence from the RE, the retirement early. I think financial independence is
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something we all want at the end of the day. But I'm no longer racing to an early retirement. Instead, I'm now on
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this slow FI path. I'm saving less. I'm spending more. Yes, you heard that
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right. I'm saving less. I'm spending more. I'm still saving. I'm just not
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saving quite as much as I was when I was, you know, Mr. Rice and Beans. I'm enjoying the present rather than wishing
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it all away, rather than straining towards this supposedly better future. And in some ways, that makes me an
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outlier when I compare myself to other financial bloggers or other fire heroes or other spreadsheet nerds. I'm on the
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road less taken. But for me, it's making all the difference. Okay, that's that
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for that article. But then last the last one before Kellen joins us today. It's a
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little bit maybe off topic, but it struck me because I've gotten a bunch of emails in the last month, in the last 6
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weeks, just a bunch of emails about people inheriting money from relatives who have passed away. And based on
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demographics, based on aging baby boomers, I think that trend is just going to keep getting stronger and
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stronger and stronger. people like us, people like those of us listening to this podcast right now. We are going to
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be inheriting money in the future. So, I wanted to share this advice I gave to someone who recently inherited $600,000,
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a pretty big chunk of change. So, here are all the thoughts and the questions I recommended that she work through. So,
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in this particular case, Felicia and her husband received a $600,000 inheritance.
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She said they earn modest incomes. They live pretty modestly. They don't know
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what to do with the money or how to best handle it. They have about $40,000 of student debt at a 5% interest rate. They
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have a apartment, but they'd like to buy a house. Their ideal home would cost
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$500,000. They already have $50,000 set aside for that. They contribute to their
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401k accounts. They contribute to Roth IRA accounts. They've never earned enough money to be able to max them out.
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And they're at a loss in a few areas when it comes to the inheritance. What don't they know, right? We don't know
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what we don't know. And what are the big things that they're likely missing? They
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have questions about taxes. Do they need to be worried about taxes this year or in future years? They're thinking about
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spending, right? $600,000. This seems like a really big chance for them, but they're scared. In her words, in
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Felicia's words, they're petrified of spending it and ruining their future.
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But at the same time, again, in her words, they don't want to die on a pile of unspent cash. And then last, of
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course, is investing should her investing strategy change. So, what an interesting question, and again, what a
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question that will likely apply to a lot of us over the coming years. So, let's
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start with taxes. Taxes are pretty easy one that we can tackle quickly. And we'll start with inheritance taxes. And
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it's important we're going to differentiate here between inheritance taxes and estate taxes. Inheritance
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taxes get charged to the recipient of an inheritance like Felicia. Estate taxes get charged to the estate of the
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deceased person prior to the money being distributed to the inheritors. So in Felicia's case, she already dodged the
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estate taxes. Estate taxes might have applied to the person who died in Felicia's case, but not to Felicia
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herself. Anyway, we're going to go back to inheritance taxes, those that get
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charged to the recipient like Felicia. Thankfully, there is no federal inheritance tax. Six states, although I
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think actually one of the six states, I don't remember which one. I think it's
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only five states now. I think one of the six states recently ended their inheritance tax. But either way, five or
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six states charge inheritance taxes. Nebraska, Iowa, Kentucky, Pennsylvania, New Jersey, and Maryland. So,
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inheritance tax, estate taxes, we'll go on to estate taxes, as I said before,
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get charged to the estate of the deceased person prior to money being distributed to the inheritors. There is
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a federal estate tax, but it kicks in at enormous amounts of wealth. $14 million
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for individuals, $28 million for couples. And then some states, though, it's important to have estate taxes as
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well. Now, I believe this is a a pretty comprehensive list of the the states that have estate taxes. Washington,
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Oregon, Minnesota, Illinois, Vermont, Maine, Massachusetts, Rhode Island, Connecticut, New York, New Jersey,
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Maryland, Delaware, Washington DC, and Hawaii. I think that's it for state estate taxes. But either way, if you
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live in one of those states, it's worth understanding what your state's estate
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taxes are. or even if you don't live in one of those states, you might just want
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to double check and make sure that I I got that right for your state. Capital gains taxes. How do capital gains taxes
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apply to inheritances? Usually, they don't, especially at the time that the inheritance is given. But if the assets
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in your inheritance, maybe stocks or a home, if that appreciates in value, you will probably eventually owe capital
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gains taxes if and when you decide to sell that asset. So again, if you inherit a house from grandpa, if you
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inherit stocks from grandpa, you don't owe any capital gains when you inherit
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that asset. But if you choose to hold on to that asset for a long time and that asset grows in value and then you sell
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it, you will likely owe capital gains taxes on the difference between the price you sell it at and the value when
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you inherited it. And then last, income taxes. Again, income taxes generally don't apply to inheritances except in
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one very common case, which is an inherited 401k or an inherited IRA. The deceased person likely never paid income
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taxes on any of those traditional retirement account contributions. So, the IRS mandates that the person who
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inherits the account, that's us, pay income taxes from their inherited IRA. As of this recording, you know, moving
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forward, I should say for non-spouses, when you if you inherit an IRA from someone other than your spouse, the
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current tax code stipulates that all of the assets in that inherited IRA must be
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withdrawn within 10 years of the deedent's death and that uh you, the inheritor, will pay income taxes on
00:22:49
those distributions based on your income tax rates. So, let's move on to spending. Felicia's next concern. and
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her concern over spending, I think, is the epitome of personal finance, right? $600,000 is a lot of money, no matter
00:23:01
who you are, but especially if you've come from a modest background, like Felicia said, and I think she's right to
00:23:06
see this inheritance as a really big financial opportunity. But I really want to dispel Felicia's feeling of being
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petrified. This inheritance is an opportunity for good, for flexibility, like we just talked about. It's an
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opportunity for choice, for some fun, and and just ask yourself, would you rather have $600,000 or zero? And the
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fact that we all have the same answer to that question suggests that Felicia's
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inheritance, at least financially, is a positive thing for her, right? Not notwithstanding the fact that someone in
00:23:34
her life died. I realize that's a negative thing again, most likely. But the fact that she has the $600,000,
00:23:40
that's a positive thing. So, where do the negative feelings come from? It sounds like part of Felicia's fear is
00:23:46
the potential, and again, the potential future regret if she and her husband somehow screw up this scenario. uh they
00:23:53
never thought they'd get this lucky to inherit $600,000. So what if they don't
00:23:57
seize that opportunity, right? What if they let themselves down? What if they let their family down? It's like Uncle
00:24:02
Ben in Spider-Man. With great power comes great responsibility. Maybe there's the same thing here. With great
00:24:08
inheritance comes great responsibility. And I think this is why financial planning matters. You know, Felicia and
00:24:12
her husband, they need to build a plan for their assets. Something like the financial order of operations is a great
00:24:19
starting place based on the details that Felicia shared with me that I shared with you at the beginning of this little
00:24:25
uh reading. Their plan should probably include somewhere in there a small amount of money for immediate fun use.
00:24:32
Now, there's no hard rule, but something in the ballpark of, I don't know, 5% of
00:24:37
the total or or $10,000, something like that. It's like, Felicia, go take that
00:24:41
trip you've always been wishing for or whatever that is for you. The financial
00:24:44
plan should probably also include some debt payoff. Considering Felicia brought it up, I would recommend she immediately
00:24:50
pay off the $40,000 in student debt. Especially, you know, assuming that payments have started up again for her,
00:24:56
there's not really any sense in paying off loans while the payments and interest are deferred. I think it'll
00:25:00
ease her burden. Again, she cared enough about it to mention it in your question.
00:25:05
And that payoff is is the equivalent to a 5% return on those assets. It doesn't
00:25:10
mean that debt payoff should always be part of all inheritance scenarios, but in this case, I think it's smart advice.
00:25:16
I think Felicia should probably also earmark some of the money for a home purchase. She talked about $500,000
00:25:23
being their home budget. 20% down is a typical home payment. She should earmark $100,000 for the home payment. Granted,
00:25:30
more is probably better. There are, you know, pesky closing costs. And if Felicia's home purchase timeline is
00:25:36
ASAP, if she and her husband want to buy a home as soon as possible, I'd recommend she set aside at least
00:25:42
$100,000 today into a high yield savings account for that specific purpose. The next thing I think should be part of her
00:25:48
financial plan is what I call endowed spending. She talked about the desire to avoid dying on a pile of unspent cash.
00:25:55
And I think it makes sense for her to pre-plan a small percentage of spending every year. Maybe something in the 1 to
00:26:01
2% range. you know, $5,000, $10,000, $15,000 feels about right. Felicia could spend it on fun. She could spend it on
00:26:08
making many small facets of life a little bit better. And to accomplish this, I think Felicia should think about
00:26:14
money, again, I called it endowed spending, almost in the same way that a college thinks about its endowment. She
00:26:20
could take a chunk of money. Maybe it's $150,000 or $200,000 today. Invest it
00:26:26
into a conservative diversified portfolio for the specific purpose of annual purposeful spending. And we'll
00:26:33
talk about that idea again down when I when I mention investing. And if you're
00:26:36
keeping track at home, we've earmarked maybe 300 to 350,000 of Felicia's
00:26:41
$600,000 inheritance. We talked about maybe 10 $20,000 for some fun right away. We talked about $40,000 to pay off
00:26:49
college debt, $100,000 for a home down payment, and maybe $150 or $200,000 for that ongoing endowed spending. But now
00:26:58
the question comes up, what do we do with the remaining 300,000 or 4 million? And that remainder of Felicia's
00:27:04
inheritance should be, in my opinion, invested for the long haul. But other portions of her quote unquote spending
00:27:10
assets should probably be invested, too. Now, what do I mean? Well, her specific
00:27:14
investing allocation depends on the unique goals, the unique timelines of her life and of her assets. So, for the
00:27:20
home purchase, we already covered that the $100,000 should be invested, maybe deposited is the better word, into a
00:27:27
high yield savings account, earmarked for the home purchase. It's in cash. It's safe uh insured by the FDIC earning
00:27:34
something like 4% in today's interest rate environment. Now, the endowed spending that maybe she sets aside $150
00:27:40
or $200,000 for that annual purposeful spending, that money should be invested. Now, truly invested. I don't think it
00:27:47
should be in cash. Now, why is that? Well, some of the $150,000 certainly is short-term. You know, again, if she's
00:27:54
spending, call it $10,000 a year out of this endowment, one of the $10,000 chunks is going to happen this year, and
00:28:01
that's short term. But a lot of those $10,000 expenditures are going to be long-term. And if we think about that
00:28:07
$150,000 as a true endowment like a university might, then the $150,000 in principle should mostly be left alone.
00:28:15
Should be left alone at least as much as possible. So something like a 50% bond and 50% stock allocation for that
00:28:21
$150,000 combines Felicia's need for both short-term capital, but also for this
00:28:28
reasonably conservative long-term growth. And then last, we have Felicia's true long-term money. The remaining
00:28:34
$300,000, $250,000, again, depending on our math, should be invested for the long long run. Depending on Felicia's
00:28:42
specific risk tolerance, a stock allocation of 70% all the way up to 100% is probably appropriate with the
00:28:48
remaining assets, the difference from 100% those assets and bonds. Or maybe she's seeking further diversification,
00:28:55
real estate alternatives, what have you. Now, for now, we can say she invests those assets at 80% stocks, 20% bonds.
00:29:02
And again, if we depending on the exact numbers that we use here, we can see that Felicia's total portfolio kind of
00:29:09
from the bottom up is roughly 25% cash. So, if we add up the the assets that were already on Felicia's balance sheet,
00:29:16
plus the decisions we've made with this new $600,000, we see that Felicia's
00:29:21
total kind of liquid portfolio becomes approximately 25% cash, 25% bonds, and about 50% stocks. Now, that might be a
00:29:31
big change from Felicia's prior investing allocation, but our logical investing framework from the bottom up,
00:29:37
right, that ought to work for just about anyone at just about any crossroads in their life. First, we identified her
00:29:43
goals. Then, we applied dollar amounts to those goals. We determined timelines to reach those goals. To reach those
00:29:50
dollar amounts and then we invested appropriately. Shorter timelines demanded lower risk assets. Longer
00:29:56
timelines demanded higher risk assets. So, from the bottom up, we built this portfolio. So, what else? What else did
00:30:03
Felicia and and I potentially missed so far? Well, Felicia and her husband should certainly start maxing out their
00:30:09
Roth IRA every year. She mentioned that they contribute, but they've never maxed
00:30:12
it out. If nothing else, they should pull 13, I guess $14,000 from their long-term taxable money, deposit that
00:30:20
into their Roth IAS to make sure they're maxing out uh their Roths basically
00:30:23
every year going forward. Should they also max out their 401k? Well, they should definitely get the match, right?
00:30:28
Always get the employer match. It's free money. But beyond that free money, I
00:30:32
think they can weigh the pros and cons, the benefits, the detriments of the 401k
00:30:36
tax advantage against the cost, the illiquidity of locking up their money until retirement age. And I have some
00:30:43
some articles that I I break down that math. And now that Felicia and her family have have some assets, they
00:30:49
should certainly revisit their estate plan if they had one in the first place. Talking with an estate planning
00:30:53
attorney, a CFP, financial planner, great places to start on that front. And then last, I think it's important to
00:30:58
point out, you know, Felicia seems to be doing a pretty good job of doing her homework, of right, of of figuring out,
00:31:04
of taking her time, of putting a plan together, of asking for help, especially with such large sums of money involved.
00:31:10
You don't want to rush into these kind of decisions. You also, in my opinion,
00:31:14
don't want to delay too long. You need to take your time. You need to do your
00:31:17
research, but then you need to execute a plan. And I think Felicia is doing a great job there, too. Here's a quick ad,
00:31:23
and then we'll get back to the show. Did you know my written blog, The Best Interest, was nominated for 2022
00:31:30
Personal Finance Blog of the Year, and it's been highlighted in the Wall Street
00:31:33
Journal, Yahoo Finance, and on CNBC. I love writing, especially when that writing is to share financial education,
00:31:40
and I usually write one or two articles per week. You can read them all at bestinterest.blog.
00:31:47
Again, the web address is bestinterest.blog. Check it out. But now without further
00:31:53
ado, I want to welcome Kellen Klein here onto the show. Again, Kellen's the co-founder of The Savvy Couple, a very
00:31:58
successful online personal finance brand. But today I I really want to focus with Kellen on some of the
00:32:04
interesting decisions, choices, plans, successes, and failures that went into not only starting his business, but
00:32:11
eventually leaving his old career entirely, going, you know, like like Hernand Cortez, uh when he landed in
00:32:17
Mexico, despite all the terrible things he did, burning the boats behind him and
00:32:21
just going whole hog into into this new venture. So, I think we have a lot of exciting and interesting things to learn
00:32:26
from Kellen. [Music] Kellen, thank you for being here today. And as I explained in your little bio
00:32:37
read just now, I mean, you've got a a really cool business that you started from scratch. And part of your business
00:32:43
model is helping others kind of pursue some similar things in their own lives. So, I'd love to start with this kind of
00:32:48
big question, which is, how do you think that entrepreneurship, running your own
00:32:52
business, can fit into someone's long-term wealth strategy? >> Great question. Thanks for having me on
00:32:58
the show, Jesse. Excited to talk money, personal finance, financial freedom. This is right up my alley. So, yeah, I
00:33:03
think just starting side hustles. I think my wife and I kind of realized with our nineto-ives is kind of dead
00:33:09
end. We were going to be able to kind of get that 3% raise every year, but we really wanted to make sure that we were
00:33:14
living the life that we wanted to. And the way to do that is to use leverage and get as much income coming in as
00:33:19
possible to cover our expenses, but not only cover our expenses, but have enough
00:33:23
that we can invest in the future, start early and often, and uh and really kind of just scale that gap between our
00:33:29
living expenses and what we're taking in each month. So, we're all about creating
00:33:33
as many additional income streams as possible and and and increasing income as much as possible as well.
00:33:38
>> You used a couple words there. One was leverage and one was scale. What do
00:33:42
those words specifically mean to you in in this entrepreneurial uh lens? >> So, with a 9to-5, and I'm sure a lot of
00:33:49
your listeners have nineto- fives, you're kind of limited on your scale because you're trading your time for
00:33:53
money, whether it's a salary or an hourly job. That's kind of what you're
00:33:56
going to make. Where as in business, it's really unlimited depending on the type of business you run because you can
00:34:01
leverage other people's time, you can leverage tools, you can leverage pricing
00:34:04
models, reoccurring revenue, all sorts of different things. So the nice thing about you know trying to reach financial
00:34:10
freedom quickly which was our goal is that you can you know when you break free from the 9 to5 and really get into
00:34:15
this world of entrepreneurship you see all the possibilities out there and you get to use that leverage and that
00:34:21
leverage helps you scale your hourly rate to a spot you know we were able to scale it like way higher than we ever
00:34:27
thought was even possible in our lifetime and really use that leverage to scale our income and scale our freedom.
00:34:32
>> I mean you you offered before we started recording you offered that you'd be
00:34:36
willing to share some numbers. I mean, let's talk about that hourly rate or just that power of scale and leverage a
00:34:40
little bit. I mean, do you mind sharing absolutely >> over what kind of timeline you guys have
00:34:44
been doing this and then where you were before you started and and where you are
00:34:49
now? >> Sure. So, I'll give a quick background. I was a jail deputy before we started
00:34:52
being entrepreneurs. Um, I I kind of did online business and drop shipping and just selling stuff on eBay all the time
00:34:59
when I was growing up. So, I always had the the H for entrepreneurship. went to school for business and finance and uh
00:35:05
anyways got into to the jail deputy role and really kind of fell into a deep depression and and realized I need to do
00:35:10
something more out of life. I need to be in control of my time. I I really value
00:35:13
my time like crazy. So from there I was making like 26 an hour. I think I could have topped out near 100k, you know, you
00:35:19
know, six figure job, but this would have been, you know, 25 years in the jail and it would have been miserable.
00:35:25
And I saw the writing on the wall with law enforcement. My my goal is to get to road patrol and I didn't want to do that
00:35:29
either because I wanted to be home with my family on nights and weekends and holidays and not miss things and not
00:35:34
have that stress of that that job. So, I went from 26 an hour down to 13 an hour
00:35:39
working as an office manager at Robert's Westland Christian College near us. And
00:35:44
uh kind of reinvented myself and found my identity again. And and then we launched our blog, the the Savvy Couple
00:35:49
in 2016. And I worked for basically 9 months not making any money. And I feel like a lot of entrepreneurs are willing
00:35:57
to do that. They're willing to lose money and work for free for an extended period of time because they know long
00:36:02
term it's going to pay off. I'm sure same thing with with your podcast here.
00:36:05
So took a huge dip and was making, you know, next to nothing and and realizing I'm going to start this business. We're
00:36:11
going to figure it out. I'm going to leverage, you know, my skill set and continue to de develop that. So anyways,
00:36:16
the ninth month I made $50 online. It was a light bulb that went off and I I went to Britney 2 weeks later and said,
00:36:21
"Brett, this is my chance. I can make it happen. Let me quit." And I wasn't
00:36:24
making much at the time anyways. So she's like, "Sure, please. I I'm tired
00:36:27
of you complaining about jobs." I quit my job pretty quickly after that and
00:36:31
then went full-time into freelancing and and running the business and scaled it.
00:36:35
The first year I think we made 50,000. The second year we made mult or we made six figures and then the the following
00:36:42
year we made multiple six figures and then my wife quit her job as a teacher to join me full-time. continue to really
00:36:50
develop the business and develop the blog and develop the traffic and the skill set and continue to invest in
00:36:56
ourselves, which I think is the best investment you can have in investing in your own self because it really helps
00:37:01
you scale your income and and just your ability to multiply your income through investing. But anyways, to get to the
00:37:07
numbers, I currently in our business make over $1,000 an hour, which is insane. I I really don't work too many
00:37:13
hours a day. Uh, I try to stick to like a 4-hour window and I do really productive, really high quality, high
00:37:21
EHR task, which is effective hourly rate, and really focus on CEO stuff and let our team kind of do the rest. And
00:37:27
it's been mind-blowing. >> It's a pretty pretty long journey from $13 an hour at Robert's Wesley in
00:37:33
college. But it is something I was thinking and one of the questions I sent to you beforehand is is you hear the
00:37:37
story, especially now that we're kind of midway through the story. I'm not going
00:37:41
to say you're at the end of the story, but you're midway through the story and
00:37:44
it is emotionally tempting to be like, "Oh, I want to do exactly that." And
00:37:48
when you found yourself working in the was it the county jail, the city jail, it was probably emotionally tempting to
00:37:53
be like, "I just want to get out of here." >> But how can a listener right now who
00:37:57
maybe wants to escape the 9 to5 or they just like the idea of entrepreneurship, how can they realistically start to
00:38:03
evaluate whether it's financially smart or not for them to follow your path? So
00:38:08
yeah, a lot of times, like you said, I'm so glad you asked this question. A lot
00:38:11
of times people hear these stories and be like, "Oh, I'm going to do it." And
00:38:13
then it's like they don't have any plan in place. They haven't gotten their
00:38:15
finances in order. They don't even talk to their spouse and get them on board,
00:38:18
which is probably the most important thing. So, first off, get excited, get motivated, get inspired, but also slow
00:38:24
down and let's create a plan. So, the thing that we did was we sat at a dinner
00:38:28
table, and I remember it so vividly cuz it was probably the most life-changing conversation we ever had in our
00:38:32
marriage. And I was like, "Brett, this is not working." Like we had this plan
00:38:35
that I was going to be a police officer, you're going to be a teacher. We were
00:38:38
going to have, you know, summers off and travel with our family together. I'm
00:38:41
miserable right now. Miserable. I need I need a change. So, how do we figure out
00:38:45
how to get more freedom in our life? And, you know, number one was figuring out what our vision look like together.
00:38:51
So, how much money do we do we need to be making? Does it need to be passive? How much cash flow needs to come in?
00:38:56
What do our expenses look like? How much debt do we still have? We still had student loan debt. So basically got
00:39:02
everything on the table and kind of created our dream life together and and really, you know, put it on pen to
00:39:07
paper. And it was huge to be able to visual visually see that together. And then we really dove into the budget.
00:39:13
Where are we spending our money that we don't need to be? It's kind of wasting
00:39:16
our hard-earned money, especially if I'm trying to quit. I want to, you know,
00:39:19
have our budget absolutely dialed bare minimum. And we suffered for at least 6 months like really trying to save and
00:39:24
pay off debt and just get a big nest egg for me to quit my job. So for about 6 months there was no eating out. There
00:39:31
was no going out to the bar. There was, you know, no going out to entertainment,
00:39:35
anything like this. And we were in our 20s, no kids. So we were just like, we're going to grind it out for 6
00:39:39
months. Pay off as much debt as possible. Grow this nest egg of I think we had like 40 or 50,000 at the time,
00:39:45
which is a really good nest egg for us. And you know, let me do this entrepreneur thing, entrepreneurship
00:39:50
thing for a full year. And that gave us kind of the window and the runway where I could dive into it full-time and not
00:39:56
be worried about finances. You know, we were living off Britney's teacher salary
00:39:59
at the time. So, we really took our budget down to one income, which was awesome. It allowed me to have the
00:40:04
freedom to explore different things and make good sound financial decisions and,
00:40:09
you know, decisions with investing in the business and where to scale and where to, you know, focus my time and
00:40:14
energy and not be so wrapped up in, oh my gosh, I got to make money right now. It kind of gave me that that freedom.
00:40:18
But yeah, align with your marriage, get a vision together, master your money, and get it, you know, your bare bones
00:40:23
budget. And then instead of just jumping into it full-time and being like, "Hey,
00:40:27
I'm quitting my job. I hate it." Sometimes that's necessary if you're
00:40:30
like really struggling. Like sometimes quitting your job is a must just for mental health. But there's always other
00:40:36
opportunities. I think the biggest thing is create the side hustle first. Like spend the extra time instead of Netflix
00:40:42
every night. You know, 4 hours of binging Netflix. like prove the concept whether it's an online business or
00:40:47
you're you know you're starting a pressure washing business you know one
00:40:49
of those boring businesses that cash flow really well whatever it may be like start it and prove that you can make
00:40:54
some money with it and then scale it to the point where hey if I actually put all my time and effort into this could
00:40:59
far outseed how much I'm making at my job and then that's the time you kind of
00:41:02
jump safely or you can do it like me and do it after you made 50 bucks. I I get from your point of view, you almost kind
00:41:08
of like burned the ships as they say, right? Like there's no going back. I I
00:41:12
suppose you always could have decided to stop and go back, but when you quit your
00:41:15
job and committed fully to this, you really decided to not go back. But yeah, that whole proof of concept thing, I
00:41:22
think, is really big. At the same time though, there's this, you know, if you
00:41:26
go down the proof of concept path, you're kind of leaving yourself a little wiggle room to to back out and make an
00:41:31
excuse for yourself. So, I don't know. Do you have any tips or tricks when it
00:41:34
comes to like, okay, maybe you don't want to take the huge risk of quitting your job right away, but at the same
00:41:40
time, if you're going to do this proof of concept, you still want to make sure
00:41:43
you do it well and you focus on the way that it can actually work out for you in
00:41:46
the long run, and you want to prevent your own ability to make excuses and quit early. So, I mean, any thoughts on
00:41:51
on that front? >> Yeah. Yeah, I think everyone's different. I was at the point where I
00:41:55
was six six jobs in after college and like every single one I came to this conclusion of like this is not for me. I
00:42:00
have to do something on my own. Plus, I'm pretty, we can talk about it. I'm
00:42:04
very riskaverse. Like, I realize we have one life and I am going all in on things. And like, if it works, great. If
00:42:09
not, I'll, you know, collect the pieces and build something else. I think it's
00:42:12
important to kind of lean into your personality and and yeah, go with what feels comfortable with you. And but
00:42:18
yeah, I think it's it is important to potentially have a plan B in place. The
00:42:23
the the worst thing you want to do is like go all in on something, it doesn't
00:42:26
work, and then you're homeless. Like, make sure you can keep food on the table
00:42:29
and a house over your head and then you're in good shape. Well, let's talk
00:42:32
about that risk aversion then because I on the one hand absolutely the idea of quitting your job after making 50 bucks
00:42:39
online sounds like a huge risk. It is a huge risk. It was a huge risk. But at the same time, you and Britney, right,
00:42:45
you you set aside this emergency fund. You planned out your monthly expenses. You built a safety net into this plan
00:42:50
that certainly derisked you. So, what are your thoughts just in general? I mean, owning your own business is such a
00:42:58
big risk. So what are your thoughts about risk in the business place in entrepreneurship? How to take these big
00:43:03
swings in the world of entrepreneurship while maybe maintaining some level of conservatism overall in your in your
00:43:09
finances. >> It's important to have kind of a blueprint. And looking back, we our
00:43:15
timing, we were really blessed with the timing of all this. You know, we had no kids, which I can't imagine, you know,
00:43:20
starting a business with a full-time job with kids. It's going to be that'd be
00:43:23
really hard. We have a lot of people that follow us that do that. But, you know, we had it super easy because we
00:43:28
could put all of our time and effort into that without kids. And then, you know, my wife just got her teaching job,
00:43:33
so she was getting paid pretty well. We had good health insurance. Like, the timing of it was absolutely perfect. So,
00:43:37
I think entrepreneurship, there's a lot to say about timing. You know, realizing
00:43:40
patterns and jumping on them when they arise. We derisked as much as possible by having, you know, our barebone
00:43:46
budget. And we knew my wife's salary could cover our living expenses. So, we're not going to lose the house. We're
00:43:52
going to always have food on the table. And worst case, I have to get another job that I hate. And then I do that for
00:43:56
6 months and try something else. It really comes down to money. Unfortunately, money makes the world go
00:44:01
around and money is the tool that gives you the freedom and gives you food on your table and a roof over your head and
00:44:05
a car to a drive-in. So, it's really being able to master your money and, you
00:44:10
know, know to the dollar on a budget where things are going and how much money you need coming in. And once you
00:44:16
can understand that and you can control your spending and your investing with kind of discipline, um the rest becomes
00:44:22
really easy. If you want to use leverage and get in entrepreneurship, you know, you got to take risks to earn more money
00:44:28
and and leverage and increas your income. But a lot of times entrepreneurship is not for everyone. I
00:44:34
used to have the mindset that like, oh my gosh, anyone can do entrepreneurship. Like I don't know why all my friends
00:44:37
aren't doing it. Like there's so many people around me that I see have skills
00:44:41
that could monetize them and and impact the world. But a lot of times I'd say
00:44:45
I'm a big proponent of 8020 rule. I think like 20% of people are really meant to be entrepreneurs and 80% love
00:44:51
the security of a 9 to5 and that's totally fine. I know so many friends that love their job and they get a ton
00:44:57
of fulfillment from it and it provides for their family and there's nothing wrong with that and they invest their
00:45:01
money smartly and they're going to retire and have an awesome retirement. But you know the people that that's not
00:45:06
for like myself that needs to have more control and more time freedom to kind of
00:45:09
set my own schedule and and spend time with the family, it's definitely worth
00:45:12
pursuing. >> Going back to the topic of risk and spending a little bit more. So, now that
00:45:17
you're on the again, you're in the middle of your story, I'm saying, and as
00:45:21
you said, you said your your effective hourly rate is is literally in the four figures, $1,000 an hour plus. So, my two
00:45:27
questions for you are one, have you loosened the purse strings on the budget a little bit since when you started? And
00:45:32
then two, in order to build more conservatism into your family, into your personal financial plan, do you find
00:45:38
yourself taking some of that very large income that you're receiving and diverting it into some sort of
00:45:44
diversified way or just into some sort of conservative backs stop to make sure that you know even if the business, you
00:45:50
know, sputters from here, you don't have to go back to being a prison guard.
00:45:54
>> Yes, the purse strings have definitely uh increased. It was I'm not sure if
00:45:58
it's having kid I mean, you have a child as well. Yeah, >> kids for some reason make you spend a
00:46:03
lot of money. They're not cheap. We definitely uh have seen our budget from when we first got married till now. Uh
00:46:10
probably 2x at least, just a bigger house, nicer cars, but we still live a very normal millionaire next door
00:46:16
lifestyle. Like we are not flashy in any way. We don't have Lambos or anything
00:46:19
like that. That's not what we're about. We're about time freedom and spending
00:46:23
time on the family and spending as much time together, quality time together. So, but yeah, as far as like eating out,
00:46:28
we definitely eat out more than we used to. I love the ability to not really look at pricing. If I want a steak, I'm
00:46:33
gonna get a nice stake. That's just kind of the luxury of making more money. And
00:46:36
we still have a budget that we stick to. We This was actually Mint closed down what, two years ago now?
00:46:42
>> Yeah, about that. Yeah, a year and a half. >> Yeah. We were huge, huge users of Mint.
00:46:46
Like loved them, used them from when we were in college up till, you know, living together and and getting married.
00:46:52
They closed down. I was like, let's, you know, we're making really good money.
00:46:54
Let's try not budgeting and see how that works. And for 6 months, we did that.
00:46:59
And I just kept looking at the credit card statements going up up up and I was like, "Wait a second. We need we this is
00:47:04
ridiculous." Like our name is literally the savvy cop. We need to get back on a
00:47:08
budget here and live the the life we're preaching here. So we reign things way
00:47:11
back in. And just getting on a budget, I think we were we took our spending down
00:47:15
like $3,000 a month, which is like wild and not too surprising, honestly. Without a budget, you know, your
00:47:21
spending goes crazy. So yes, the purse strings have definitely uh opened up, but we're definitely still smart with
00:47:27
our money and and make sure that we're spending it in the areas that bring us
00:47:30
the most happiness and joy in our life. And then as far as uh you talked about diversification,
00:47:35
>> yeah, diversification or conservatism or just building some cushion into your
00:47:38
life. >> We started the blog in 2016 and it kind of peaked about 2 years ago.
00:47:43
Unfortunately, you know, with AI and Google updates, our traffic has gotten hit quite a bit. So we've been kind of
00:47:49
pivoting since then. We started uh investing in real estate last year, taking the cash flow and the extra
00:47:54
income that we had with our two online brands and you know obviously we're maxing out our Roth IAS every year.
00:48:01
We're putting money into our SEP to continue to grow that as well. But on top of that, any income that we had, we
00:48:06
were putting towards real estate. So we found a partner that used to work at the
00:48:09
jail with me who's actually our class captain and went through the academy with me. He became a real estate agent
00:48:14
and was crushing it. And we went to a conference together, you know, invested in our own skill set and learned more
00:48:19
about real estate and got comfortable with what a partnership would look like. And we actually today, earlier at like
00:48:24
two or three or I'm sorry, it's three now. Earlier today, we closed on our
00:48:27
seventh long-term rental together. Super diversified. We're definitely, you know,
00:48:31
got tons of money in the stock market and we got a rental portfolio that's cash flowing really well and we're
00:48:36
getting all the benefits of real estate. So, and then on top of that, we're pivoting, going all in on AI with all of
00:48:41
our online businesses to continue to find growth. >> That's awesome. That's awesome. Staying
00:48:46
on the cutting edge. And speaking of that, just speaking of kind of always looking for the best use of your time or
00:48:52
the best use of your capital. Here's a quick ad and then we'll get back to the
00:48:56
show. I love getting your questions and some of you ask me questions about the wealth management firm I work for in
00:49:01
Rochester, New York. Others ask about the best interest blog and this podcast, Personal Finance for Long-Term
00:49:06
Investors, which operate without advertising, without pushy sales, and with no pay walls. How can the blog and
00:49:11
podcast stay afloat without me dumping my own money into it? Well, to answer both those questions, I want to point
00:49:16
you to episode 78 of Personal Finance for Long-Term Investors. I intentionally recorded episode 78 to shine light on
00:49:22
those topics and inform you how you are actually helping and can continue helping these projects carry forward.
00:49:28
So, if you've ever been curious about the business of my blog and podcast, or
00:49:31
if you're curious about my day job in wealth management, please check out episode 78 and let me know what you
00:49:36
think. Kind of pivoting back to the whole side hustle entrepreneurship, have you found that certain side hustles,
00:49:41
certain small businesses tend to have a better return on an investment, whether it's financial or time-wise? Again,
00:49:47
thinking back to our listeners who might have limited bandwidth and they only have time to pick one thing right now.
00:49:52
Is there some places that are just better uses of your time than others? >> Certainly. I I think, you know,
00:49:58
especially if you have limited time, you know, you're married, you have a full-time job, you have kids, I think
00:50:03
it's really important to look at stuff that has an high a high earnings per hour or something that you can scale.
00:50:10
So, you know, take for example Uber Eats or Door Dash. Those are like your F tier
00:50:16
side hustles that, you know, you're putting wear and tear on the car, you're
00:50:18
paying for gas, you're paying for insurance, and you're making at the end
00:50:21
of the day maybe 10 bucks an hour. Plus, you have to drive out there. So there's
00:50:25
time that you're not getting paid. So we've always been big proponents of
00:50:29
online side hustles. And the ability to put the kids to bed, hop on a computer for 2 hours, and make money or at least
00:50:36
learn the skills to make the money because online is open 24/7. So with the right systems and the right traffic
00:50:42
coming in, you can make money 24/7, 365. So whether you're on vacation, sleeping,
00:50:46
whatever it may be, you're not putting wear and tear in your car. It's super
00:50:49
flexible. You can work anywhere you want. You can even I mean don't say I said this, but you can even do some at
00:50:54
work if you have like an extra lunch break or you know you're doing a little
00:50:57
multitasking, you get a little work in on your side hustle. I definitely did that. Hopefully Ryan doesn't hear this.
00:51:01
I'm sure he knows. He's my old boss. But yeah, online income is definitely the
00:51:07
one that we always promote. And what does that look like? We're big proponents of affiliate marketing. So,
00:51:12
if someone's trying to get into making money online, the easiest by far way to
00:51:15
make money online, especially with cell phones now and Tik Tok and all that stuff is just affiliate marketing. So,
00:51:21
you're basically promoting and selling a product that you don't even own and you
00:51:25
just send people to a link. So, you create value, get them interested. Maybe it's a product on TikTok or a program
00:51:30
that you purchased about AI and you learned a lot from it and then you're going to promote it to others because
00:51:35
you got a lot of value in it. And then you get a kickback, a commission. And it's super easy because there's no
00:51:40
fulfillment. You're not, you know, returning orders. You're not uh handling
00:51:43
customer service. You're literally just creating content and getting a kickback
00:51:46
with commission. So, it's sales and marketing, which is super leverable. >> So, let's dive in a little bit more into
00:51:51
this online world because it's really it's the world of your and Britney's
00:51:54
expertise. I could see a listener sitting there right now cuz I certainly felt this way 6 years ago when I was
00:52:00
like, "Well, man, the internet is already saturated. There's so many creators. There are so many websites.
00:52:05
How am I going to break into this space?" And personally, at least one thing I think to myself is this term,
00:52:11
you know, there's riches in the niches. And every time out there I see someone
00:52:15
who their brand is, you know, I talk about personal finance for attorneys under the age of 30 who are still in law
00:52:22
school debt. I'm like, "Oh, that's a really nice niche cuz you're you're
00:52:25
speaking to a very specific audience." But then again, I mean, you're the
00:52:29
expert here. So, I'm curious to hear if you're breaking into this world in 2025,
00:52:34
where do you start and where do you focus? >> Yeah, it's true. the riches are in the
00:52:37
niches. That's something we've always struggled with. I don't know if it's my
00:52:40
ADHD and wanting to like solve all problems and like just capture everyone and not have that limiting mindset of
00:52:46
like I can only serve this person, but when you can serve that individual way better than serving everyone, that's
00:52:51
when you're going to make way more money. But to answer your question, I really love there's like it's a ven
00:52:56
diagram. It's got three different quadrants. One of them is the skills that you already have. So what skills
00:53:00
from work do you have, books that you've read, whatever experience, education?
00:53:05
What skills do you already have? What are you passionate about? Whether it's
00:53:08
personal finance, fitness, relationships, those are kind of the top three niches that people are going to
00:53:12
make money from. And then what are you already good at? So, what like comes natural to you? And for us, you know, we
00:53:18
kind of did that ven diagram and the middle led to personal finance. So, we originally started just teaching people
00:53:24
how to be savvy with their money, be really frugal with their budget, save, invest, and then it kind of switched to,
00:53:30
wow, we I actually been making money online since I was 13 years old. Like, I know this stuff. I know marketing. I
00:53:35
know sales. I know how to create content on a blog post that will kind of convert. So, we switched to like let's
00:53:41
teach people how to make more money. Cuz we realized in our life, it's great to
00:53:44
invest. It's great to save money, but you can only save so much and then your
00:53:48
life becomes miserable. And we got to that point a couple times in our kind of debt payoff journey. But we also
00:53:53
realized saving money is great and you want to do that and you want to be disciplined with your budget. But if you
00:53:57
can increase your income and have an extra th000, 2,000, $5,000 per month coming in, like that is monumental
00:54:03
compared to trying to save in your budget. So developing those skills and and making money off of those on kind of
00:54:08
those three quadrants and figuring out what niche to get into and then just get out your phone and start making content.
00:54:14
And an easy kind of another thing to do after you've kind of pick your niche is,
00:54:19
all right, what problems does that avatar have? So I'm going to pick a >> Yeah, when you say avatar, explain that.
00:54:24
I mean, I know exactly what you mean. What does that what does that mean? So, it's your ideal customer, ideal viewer
00:54:29
that's going to be viewing your content. So, we'll pick like a niche of like
00:54:33
30-year-old married men that have, you know, a newborn that are trying to stay in shape, you know, super niched. And
00:54:40
there's a lot of them that just they put on just as much weight as their wife
00:54:44
during marriage. I was one of them. I like I don't know why I stress eat, too.
00:54:47
Figuring out ways to all right, what problems do they have? Okay, they need to learn how to track their calories.
00:54:52
Maybe they don't h know how to get in the gym or they're not self-con they're
00:54:55
too self-conscious to get in the gym. They don't have a workout routine. Maybe
00:54:58
they think that it's going to take too much time. You know, list out all their
00:55:02
problems and then go to Chad GBT and literally say, "Okay, create me an A2B
00:55:07
map to transform this person's life and give me 20 different Instagram reels
00:55:11
that I can create." And then bingo, you're already off to the races. And
00:55:13
then you're just you're literally recording stuff that you already know about and you're an expert in.
00:55:17
>> I I love that idea. I think about that and I'll I'll open up the hood to
00:55:21
listeners. I mean, I think about the people who I want to speak to. I think about the problems that they're facing.
00:55:26
I think about people who I work with as clients at work. And in my mind, I have these avatars or ideal client profiles
00:55:32
that kind of there's a few different buckets of of people who I tend to help.
00:55:36
And there's a reason why I tend to focus my content on some of the more complex
00:55:40
ideas. I tend to focus my content maybe on more retirement focused ideas. I find
00:55:44
those interesting. It's that ven diagram that you were talking about, Kellen.
00:55:47
Yeah. I find it interesting. It's intellectually stimulating. I'm good at
00:55:50
explaining these ideas. It helps me at work. It helps me produce content, etc., etc., etc. And then whenever I'm
00:55:56
struggling for content ideas, I just think back to like, well, what are the problems that my listeners are facing?
00:56:02
There's a reason listeners why I ask you guys for AMA episodes. I mean, these
00:56:05
episodes, they're great. They're so much fun to put together, and it's nothing
00:56:08
but problems that you guys are telling me you're facing. And then boom, here
00:56:12
are the answers. So, it's just this really fun and kind of generous flywheel
00:56:17
of content that spins around and around. But back to you, Kellen. We haven't
00:56:20
talked about it quite yet. You've alluded to it once or twice, but going back to the whole niches things. You
00:56:24
started as a savvy couple kind of, right? This very kind of family focused. Any family in America could benefit from
00:56:30
that. Well, that's not very niche. But then I know Britney, your your wife, she
00:56:34
niched down into the savvy mama, which is a lot more focused on mothers and and from what I gather, kind of like younger
00:56:40
mothers, right? People, you know. So, how's that project been? >> Yeah, it's been good. We kind of took
00:56:45
what we did with the savvy couple with kind of running a blog and you know affiliate marketing and we knew the
00:56:50
writing on the wall of like eventually we're going to lose traffic from Google
00:56:53
from the savvy couple and affiliate marketing and we need to go more YouTube and we need to get reoccurring revenue
00:56:58
coming in cuz we don't want to our businesses to die if the traffic dies. We started the savvy mama and she helps
00:57:03
moms control the chaos in their life with meal planning, meal prep, budgeting, cleaning binders, all this
00:57:08
stuff that kind of gets them organized, gets them in a good routine and and gets
00:57:12
them to be the CEO of the house. And then on the back end of that, we had a salesunnel that was getting a lot of
00:57:17
traffic from the blog and from social media and paid ads. And then one day we we hired a a business coach and he was
00:57:24
like, "Well, why don't you guys just put a membership button on like one upsell
00:57:27
page?" So, you know, you're checking out and there's like an offer, a one time
00:57:30
offer that pops up. We're like, "Sure, we'll do that." We turn it on and like
00:57:33
within a week, we had like 15 people sign up and we were like, "Wait, wait,
00:57:36
wait, wait. Something something. We're on to something here." So, it's super
00:57:39
low ticket. It's like nine bucks a month, but she's got like 1,200 members
00:57:42
in it and it's just an awesome reoccurring revenue and it's super hands-off for her and you know, the moms
00:57:47
are getting tons of resources to help them within the house. So, it's been really good.
00:57:51
>> That's so cool. And yeah, I mean, I can allude to that. I think I see do you use
00:57:55
Kit as your email provider? >> I was going to say I I joined Kit a couple months ago. Kit's got so much
00:58:01
cool functionality. And this might be too much in the weeds for the average listener, but all I'll say is it allowed
00:58:06
me to experiment with some things including some white papers that I put together like helpful educational white
00:58:11
paper. Download this white paper. It's a lead magnet. People will end up subscribed to my email newsletter. And I
00:58:17
saw it kind of click and work and I was like, okay, I need to refine this and make it better and better and better and
00:58:22
better. When you see something like that in your business, kind of on your entrepreneurial journey, it's such a
00:58:27
unique feeling to like optimize and make it better and better. Speaking of the entrepreneurial journey, not everything
00:58:33
goes well. I wanted to ask you whether it's just the most common mistakes that
00:58:38
you've seen from others or and maybe this is two separate questions. I'd love
00:58:43
to know something that you and Britney really thought was going to work up front or something you thought about
00:58:48
entrepreneurship up front but that now you've completely changed your mind on.
00:58:52
So take that either direction you want or both, Kellen, but whether it's mistakes that you've made or just big
00:58:56
lessons that you've learned along the way. Yeah, I think the questions go hand
00:58:59
in hand. So, our biggest mistake is we kind of saw a ton of growth with blogging and like SEO and we got really
00:59:06
really good at it and had a team and was using AI and it was really scalable. We
00:59:10
could leverage it quite a bit. So, we at one point I think had four or five blogs. Some of them were brand new side
00:59:16
projects and then we kind of condensed them all into the two. And the problem that we ran into was just lack of focus.
00:59:25
Like I I was so scatterbrain on like okay this blog needs this, this blog needs this, this team needs this, this
00:59:30
system needs to come into play. So I think the biggest mistake that people make in entrepreneurship is shiny object
00:59:35
syndrome. A lot of people that start in entrepreneurship and start a business, they're very much like me and have ADHD
00:59:41
and they just see all these these cool things that we can do. you know, when we really buckled down and just focused on
00:59:47
the savvy couple and that was our one thing, that's when we saw exponential growth over time and really saw it blow
00:59:52
up and have that hockey stick kind of growth. So, I think it's being really really focused and setting up quarterly
00:59:59
goals where these are the three goals that we're going after and then break those down into like a couple KPIs.
01:00:05
you're getting over over people's heads for probably key performance indicators
01:00:08
and then yeah just breaking it down into like daily tasks that move the needle and just staying super hyperfocused on
01:00:14
on those things and not getting distracted. >> That's a great tip and that's a great
01:00:18
tip for just people in their financial plan too. I mean the number of times an investor now generally we we try to
01:00:24
avoid things like investing in individual stocks or you know chasing the hot stock this or that we you know
01:00:29
the long-term investor focuses on other things but I mean we've all heard the
01:00:33
story those kind of stories from investing of well I I heard from my bowling partner that I should be doing
01:00:37
this thing or I I saw a commercial for this business and I think I should invest in it and the investor who just
01:00:43
chases the shiny object almost always ends up worse off for it. >> I have a story on that. So, I did some
01:00:49
stock trading back in the day with Robin Hood, did some options trading, and I I'm a pretty emotional person, kind of
01:00:55
ride my emotions. So, getting into the weeds and like doing that and seeing the numbers go up is like exhilarating, but
01:01:01
then seeing it go down is like, oh my gosh, my life's going to end. So, I've
01:01:05
found and I by the numbers like the numbers stay say strictly like I should not I don't do any kind of individual
01:01:12
stocks investment anymore. I do super broad index funds and set it and forget it type of investing and in it for the
01:01:18
long haul on companies that I believe in and it's super diversified. So I I definitely recommend that approach when
01:01:23
it comes to investing. Obviously, you want maybe, you know, one to five percent where you're taking home runs
01:01:28
and on stuff that you truly believe in, whether it's, you know, Bitcoin or an
01:01:32
individual stock, individual company, a company you're starting. But overall,
01:01:36
uh, set it and forget it. And boring investing is the way to go 100%. And and the numbers show on my Robin Hood
01:01:42
account for sure. >> Yeah. No, that that is the way to to build that path towards financial
01:01:47
freedom. And and speaking of building freedom and freedom builders, I see the word freedom on your t-shirt and I
01:01:52
wanted to give you a chance. I know you guys are working on this freedom builders concept. Can you tell us a
01:01:57
little bit about this, Kellen? And then just to wrap it up, how can people reach
01:02:00
out to you and and and start following along? >> Yeah. So, we're on Instagram pretty
01:02:04
actively. We do daily stories and and post quite often. It's just the savvy couple. And yeah, we recently realized
01:02:10
that we don't we've always had people reaching out like how do we get one-on-one time with you or coaching
01:02:14
with you? And it's like we don't offer that. You know, our time's too precious
01:02:17
and and we just don't have the time to do that. But it's been more and more in
01:02:20
our hearts to kind of create this community of people that are wanting more out of life. They're wanting more
01:02:25
than a 9 to5. They're wanting to reach financial freedom quicker and have a game plan to do so. So, we are starting
01:02:30
a uh weight list for a community called Freedom Builders. And it's going to help
01:02:34
married couples basically get aligned with their or with their vision for their life and then master their money
01:02:40
and then come up with a blueprint to create income online and create additional streams of income whether
01:02:44
that's affiliate marketing using AI with local businesses, real estate, and we're
01:02:49
going to have weekly coaching and and just have this awesome community of freedom builders. So, that's kind of
01:02:53
what we're working on. >> That's awesome. Can we get a link? We'll
01:02:55
get a link to that and throw it in the show notes, but how how can people find it? We're putting together the weight
01:03:00
list now. It's like something brand new. So yeah, I'll give you the link after
01:03:03
this and and they can click it in the show notes. It'll most likely be thesavvy couple.comfreedombuilders
01:03:08
weight list. >> Awesome. Awesome. We will keep an eye out for that and include it in the show
01:03:12
notes. Well, hey Kellen Klein of the savvy couple and more and many different projects and sidehustles. Thanks for
01:03:17
joining us on Personal Finance for Long-Term Investors. >> Thanks so much. Appreciate it.
01:03:21
>> Thanks for tuning in to this episode of Personal Finance for Long-Term Investors. If you have a question for
01:03:27
Jesse to answer on a future episode, send him an email over at his blog, The Bestin Interest. His email address is
01:03:34
jessevebestinterest.blog. Again, that's jessevestinterest.blog. Did you enjoy the show? Subscribe, rate,
01:03:42
and review the podcast wherever you listen. This helps others find the show and invest in knowledge themselves. And
01:03:49
we really appreciate it. We'll catch you on the next episode of Personal Finance
01:03:53
for Long-Term Investors. Personal Finance for Long-Term Investors is a personal podcast meant for education and
01:03:59
entertainment. It should not be taken as financial advice and it's not prescriptive of your financial
01:04:04
situation.