Q&A: The Case for NOT Paying Off Your Student Loans

24:21Paula Pant:Man, last night, can I just say last night, my dopamine need to eat at a restaurant meter was so high. It was so high. I had to reframe it into, I'm having so much fun with the gamification of eating everything in my refrigerator that I had to, in my head, get myself in a place where I got a dopamine hit from the gamification of eating leftovers. Because at first I was like, I don't want leftovers, man, wouldn't it be fun to just go to a restaurant? I'm like, well, what is this all about? It's just a random Wednesday. Like, why the hell am I going out to a restaurant on a random Wednesday? And then I thought, oh, this is just, this is just, you know, my, my, my quick fix.

25:16Yeah. Well, and Joe, you work from home and I know when I was working from home a lot, sometimes I would want to go to a restaurant just to get a change in scenery.

25:26Paula Pant:A hundred percent. Once I figured that out, then I, I joined a gym, right? Because it gave me the emotional thing I was looking for, which was a change in scenery, but the cost of a monthly gym membership is way cheaper than the cost of going to a restaurant three nights a week. It's so funny you say that because I coupled the gamification of not having food waste, which I love that game. That's such a fun game. Eat everything in the fridge is actually a really fun game. I coupled that with pop in some headphones and turn on audible and go for a walk. And I got out of the house and I saved all that money.

26:06Paula Pant:I mean, double safe, right? I didn't eat at the restaurant and I didn't have the huge third waste, the average American waste 30 % of what's in our fridge. KJ, all of that is to say, prioritize cashflow. Exception to the rule, KJ. You are the exception to the rule. Yeah, I agree. As a general rule, I don't like waiting for the government to make a move, but in this particular case, it does make sense to wait for the government to make a move. So frustrating. Yeah, exactly. And by the way, some of our analytical afforders are going, okay, why a year? Where does that come from? I want to talk about that too, because every investment at a certain point is a leap of faith.

26:53Paula Pant:Every investment is a leap of faith. When you put money into an investment, it is a leap of faith. Now, what we need to do is narrow that leap of faith gap. my goal in doing homework around an investment is to create more certainty, but also to be comfortable with the fact that no matter what I do, things can go against me. So leading with the fact that this is a leap of faith is, I think, a great place to start mentally, that everything could go against us. But when I think about six months and the rate of change for the government waiting six months to see if the government makes a move. And the fact that we also have a Supreme Court thing going on right now, and two of Trump's past things have been thrown out in Supreme Court.

27:39Paula Pant:Biden student loan stuff was thrown out in Supreme Court. So six months is too short for me. This was my thinking. In six months, you could still really stepping it with this current situation. A year and a half, just too long to wait at a 6.X % rate. I don't want to wait that long on that much debt. A year and a half is too long. So the answer is, is one year arbitrary? Yeah, it is. But it's because of the fact that six months, based on what's happened the last 20 years with the Supreme Court with executive orders is too short. A year and a half based on the interest rate is too long. Joe, you ask, is it arbitrary?

28:28There's a distinction between directionally where we're pointing and precision. I like to say one of the things I tell my students in my, I have a course on rental property investing. And in the rental property course, We walk through a lot of these formulas around cap rate and around various return formulas when you're analyzing the returns that a house could produce, a rental home. And the problem when you're crunching all these numbers on a spreadsheet and running through all these formulas is that you end up with an answer that is unduly precise. You end up often with answers that are precise to two decimal points.

29:12And when you see those decimal points, that level of precision can often get conflated with accuracy. And so one thing that I often tell my students is never conflate precision with accuracy. I tell that story because when we say a year, we don't mean precisely 12 months. from the day that this episode airs. We mean exactly, you know, 365 days from now. Like, no, directionally, you're aiming for long enough that there could be a decision that sticks, but not so long that you're letting the interest rate linger. Yeah.

29:52Paula Pant:But KJ, overall, I love the fact that you are thinking like a CFO. Absolutely. So KJ, thank you for the question. and best of luck with that debt eradication. Coming up next, we're going to talk to a couple that's building a$1.9 million portfolio for retirement. They've got some questions about sequence of returns risk, which is that risk that you face right in the early years of your retirement. In business, there's no room for guesswork. Every shipment matters. Every deadline counts. When you're trying to keep operations running smoothly, the last thing you need is uncertainty. That's why reliability is at the core of USPS Ground Advantage.

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34:14Welcome back. Our next question comes from Anonymous. Hi, Paula and Joe. I'm calling with a question about sequence of returns risk. My husband and I are saving for retirement in approximately seven years, and we're on track to have$1.9 million saved in our IRAs and 401ks by then, which should be enough to cover our expenses using the 4 % rule. I've been thinking about our sequence of returns risk when 2033 draws closer. Other than dry powder, would working part-time be a way to mitigate that risk, or does it just kick the can down the road? In other words, if we work part-time, just enough to cover our living expenses but no more investing or saving for three years, would that solve the sequence of returns risk or would that risk still be there when we retire full-time in 10 years?

35:03We do still plan to have three years of dry powder, but I'd like to ease my anxiety about the effects of a badly timed market downturn ruining all that we've worked so hard to attain and would love to know if working part-time can alleviate the risk. Thanks so much for your insight. Anonymous, thank you for the question. And before we answer, we've got to give you a name. I've got an idea for a name, and it's a sneak peek of a guest who I am interviewing right now, but the interview is not going to be published until the end of June. we are bringing on a guest who wrote a book about legacy planning, which is a big piece of retirement.

35:47And in this book, she really dives into, in a huge level of detail, everything to think about when you're thinking through multi-generational wealth management and legacy planning. It's very dense. When I was prepping for it, I had to really slow down and read every page slowly and take a lot of notes. It's extremely dense.

36:14Paula Pant:Wow. I was very inspired. Her name is Andrea Bowman Lustig. And so in honor of that guest, let's call you Andrea. Andrea, there's the question that you asked, and then there's the question that you didn't ask that I also want to address? And I think there are also unexpected benefits. It's so many tangents in this question that I would love to address. Right. Because as you know, Paula, I've been studying retirement happiness lately. What makes retirees more happy? And I think I have some good news for Andrea there as well. Oh, I wonder, because again, you and I have not talked about our answers in advance.

36:54I wonder if we're going to coalesce on this.

36:57Paula Pant:That would suck. Please. No. Because as soon as I heard it, I'm immediately thinking, oh, oh, I hear the question that she's not asking. And the question that she didn't ask stood out to me. And I wonder if directionally it's similar to what you're thinking. But all right. Before we get to that, Andrea, let's start with the question that you did ask, which is, if you work part-time, does it mitigate sequence of returns risk or does it just push the can down the road? The answer is to think of it like this. I'm going to take at face value that$1.9 million is the appropriate amount of money that you need, you and your spouse need, in order to retire.

37:44That$1.9 million at your given withdrawal rate will cover your living expenses. If that's the case, then anything that's in excess of 1.9 million softens and mitigates a sequence of returns risk. And so by virtue of working part-time, what you're functionally doing is making that pot of money bigger. Now, you are not literally making that pot of money bigger by virtue of putting more contributions into it. So the account statement might still read 1.9 million, but you're functionally making it bigger by drawing down less of it for those first three years, which gives the remaining money that's held inside of it more time to grow and compound.

38:35And so by virtue of pulling less money out of that 1.9 million bucket, by giving that bucket more time to grow, you are in effect, quote unquote, quote, over-contributing to retirement. And therefore, you are softening sequence of returns risk. So don't think of sequence of returns risk as based on timing. Think of it as softening or mitigating the likelihood that that 1.9 million bucket is not going to be enough. Yeah.

39:08Paula Pant:Let me slice this a slightly different way, Paula, but come up with, annoyingly, the same conclusion that you came up with, which is sequence of return risk is a secondary risk. It's not a primary risk. It's a secondary risk because the real risk is this. It's that you end up too close. This is the main risk. You end up too close to the safe withdrawal rate and it becomes unsafe. So the safe withdrawal rate is this razor's edge, which is why all the pontification in online personal finance communities about safe withdrawal rate drives me crazy. Not because the research doesn't matter. Bill Bangen is a very smart guy and Karsten Jeske, Big Earn, a lot of people call him.

39:59Paula Pant:His research is fantastic around building portfolios a different way to increase safe withdrawal risk. All this is valuable research. But I also feel like because we spend so much time talking about it, people in the community think, well, hell, the experts talk about it all the time. We extricate from that that this must be the most important thing. And it's not. It is not by a long shot. The more important thing is to recognize what your own expenses are going to be in retirement because that can fuel so many positives in your retirement. it'll make it easier for you to invest. It'll make it easier for you to come up with a tax structure.

40:40Paula Pant:And then the third thing is you then backtrack to safe withdrawal rate research and see, am I far enough away from the razor's edge of safe withdrawal that I don't have to care about it? If I am, then guess what? Sequence of return risk doesn't even compute. It does not matter. So, Joe, we are actually coalescing around a similar answer because - We 100 % are. If she works part-time, if they work part-time, they draw down less from that portfolio. And because they're drawing down less, they're going to be, for the first few years of retirement, they're going to be so far under their maximum safe withdrawal rate that sequence of returns becomes a non-issue.

41:29Paula Pant:It 100 % does. And that's not the cool thing in my head about where Andrea is going with this. It does take her further away from the chance that she's on that edge of safe withdrawal rate, which means sequence of returns. If she ends up with a horrible sequence at the beginning of retirement, it's not going to affect her as much. But what creates a happy retiree is also a big piece of this because when you're right at that razor's edge of safe withdrawal rates, you begin worrying about every little thing, Paula. I mean, look at all the things to worry about right now. And if she retired right now, imagine you just retired and you're right at safe withdrawal and you're like, oh, my God, I've read about gasoline prices.

42:20Paula Pant:Well, I don't have to read about that. I see it on my gas pump. Yeah. But now we're seeing it in airline tickets. So all this travel I wanted to do that makes me happy, I can't travel as much. If I do, whether I take a car or an airplane, it's going to show up because fuel prices are through the roof. I've got all this government intervention stuff going on. Not sure what to do with that. That makes me worry. I got the stock market has had a nice slide for the last several months. That makes me worry. I feel like if we spend every dime, because we based our spending on safe withdrawal rate, it creates a really unhappy retirement, a very worriful retirement.

43:02Paula Pant:So that's number one. Number two is this interesting research around sliding into retirement, if at all possible. 52 % of people retire on a date different than they expected. So for 52 % of us, we don't get to choose. Our company chooses for us. Maybe our parents choose for us because we have to take care of them. A loved one decides for us. Maybe circumstances of life change so that we have to stop working today and all of a sudden we're retired on a different day than we thought we were. But for the other 48 % of us, the research shows very convincingly that if you're able to slowly move into retirement where you can back down your work schedule, it creates this really cool move into retirement because now I get to experiment with things more.

43:56Paula Pant:I feel like I get involved with my own community more versus the tendency of people to abruptly move away and cut community ties, which is often the first thing we do if we go into retirement immediately. And those community ties are so valuable for a happy retirement. So we don't do that. We get more into our local stuff. We also become a spender a little more, which is really cool because as you know, people, especially people that listen to podcasts like this one, we're not people that go blow money. We are people that have navigated either training ourself or leaning into the fact that we are a saver.

44:39Paula Pant:And we've had all these great saving habits. And now we have to create this retirement paycheck and people naturally freak out when they have to turn into a spender. And to be able to do that a little bit more at a time also creates happy retirement. So I think that going part-time for three years has all these happiness benefits that I actually judge as way more beneficial than the functional benefits that, Andrea, you're talking about. I think it's going to solve the problem you're talking about. when it comes to happy retirement, the Wall Street Journal had a piece back in January, which said that when we're looking at happiness in retirement, the money is important.

45:29Paula Pant:And you asked a question based on the money. We answered it. The healthcare piece is important. You didn't ask about that. But as you know, that's a whole different thing. But before all that is this concept of mattering and lifestyle design by far is what creates a happier retirement than either of those two things. Joe, that was not where I thought you were going to go with that, but I like the answer. Well, you're welcome. But that was not even remotely where I thought you were going to go with that. Yeah. I was super excited to hear the question because I think this is a great approach. I think it's a fantastic approach for reasons she didn't ask.

46:08Wow. Okay. So you have an answer to an element of her asked question. And I have in my head a question that she did not ask. And the question that she didn't ask is, is she over preparing for those first three years of retirement? Because what I heard in her question is she's got three years of cash saved, right? So she's got that bucket for the three years of cash saved And on top of that, they're also planning on working part-time. So I actually wonder if that's over-preparation for the beginning of retirement.

46:48Paula Pant:Monetarily, maybe. And if that wouldn't then give them the optionality, the flexibility to either retire a little bit earlier or not work part-time for as long if they don't want to. Right. If maybe that three year bucket could go down to a two year bucket, if they're also going to be supplementing that with part time work, because when she says three, I assume that's three years without factoring for the part time income. Yeah. So if that's three years without factoring for the part time income, then once you factor for the part time income, then that's you're overfunded. Well, she kind of factored for it because she said, then I don't touch the portfolio for three years.

47:33Paula Pant:I make enough money that I cover my living expenses so I don't touch the portfolio. So in that way, she is factoring it in. But I see what you mean. She's only factoring it in partially. You factor it in completely then. Right. I think the question not being asked is, what do I really want to do for those first three years of retirement? Given that it sounds as though she's planning for multiple levels of protection, right? There's the cash savings plus the part-time income. So there's redundant levels of protection there. And given those redundant levels of protection, I think she's got more flexibility than she realizes.

48:18And given that she's got more flexibility than she realizes, that then opens up the question, what would the best possible use of those three years be? And that goes back to happiness.

48:31Paula Pant:I'm on board with where I think you're headed, which is financially, I do think it might be a little overkill. Right. And if it's overkill, then does she want to work part-time? Does she want to work maybe part-time for a portion of the year, maybe seasonally part-time, but then seasonally take some time off and travel? But I do think the benefits of working part-time, happiness-wise, are all there, assuming that that's what she wants to do. Yeah. Yeah. Or maybe they take part-time jobs that are lower paying, but more fulfilling or more interesting, lower paying than what they're currently factoring for.

49:07Paula Pant:Well, and if money's not an issue, talk about more fulfilling, it could even become committed volunteer work. Right. If they want to, if money isn't the issue. I would also look at what's called a Monte Carlo simulation here and see what the probability of sequence of return risk would be based on what they want to spend. Because, you know, Paula, if it's in the 90 % range, meaning 90 % of all of the outcomes. So what a Monte Carlo simulation is, everybody, if you're not familiar with this, is it's a financial planning tool where it goes through all kinds of sequences of returns based on what your portfolio, how your portfolio is built.

49:48Paula Pant:and it gives you a probability of success. And some Monte Carlo simulations look at a thousand different ways that the sequence might happen. Some look at way, way, way more than that, but it will assign then a percentage of the time that you were okay. Amateurs, when they use a Monte Carlo simulation, they always want it to be 100, right? A professional will tell you if it's 75 % or higher, you're really looking good. If it's 80, 85%, you're really, really, really good. And the reason is, is that we already know this to be true, just based on the fact, Andrea, that you called us to ask about this means that you are by nature somewhat of a planner.

50:30Paula Pant:And all 85 % of the time means is that in 85 % of the cases, you never had to plan again, that you were good. But in the other 15 % of cases, it doesn't mean you were screwed. I think the average amateur using a Monte Carlo simulation looks at 85 % of, oh my God, 15 % of the time I didn't make it. No, it meant 85 % of the time there was more planning to be done. There was planning that was to come in the future. I might run a Monte Carlo simulation as well to give you a little more confidence if you're feeling like, oh, I might be too close to that edge. Yeah. The fact that both Joe and I, without discussing it in advance, both had the sense that there's a possibility you might be overprepared.

51:17I mean, that's a good position to be in, especially given that retirement is still many years away and you've got time to make plans, time to adjust, and time to think through what does happiness in those first three years look like. So thank you, Andrea, for the question. We're going to take one final moment to hear from the sponsors who make this show possible and allow us to bring this to you at no cost to you. When we return, we're going to hear from a gentleman who he and his wife are in their early 70s. They want to get a place that they can live in part-time and then use as an Airbnb for the other part of the time.

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54:06Welcome back. Our final question today also comes from Anonymous.

54:15Hi Paula. My wife and I are retired and in our early 70s. We recently bought a secondary home to be close to our grandchildren. We will be living in this house for less than 180 days a year. We would like to Airbnb the house out for the remainder of the time using an Airbnb management company to manage the property. My first question is, should we have the Airbnb business under an LLC or S corporation? Second question is, can we expense all our purchases for the house like furniture in the proportion of time it is rented out? I appreciate your input and your help. Thank Thank you. Anonymous, thank you for the question.

55:08And congratulations on this second home close to your grandchildren. All right, let's talk through your questions. And I'm going to start with your second question first, which is around, oh, we have to give

55:19Paula Pant:you a name. We can't talk to somebody who's anonymous. We're all friends here, Paula. Oh, okay. So what should we call him? Well, I've got a great name. You know, so often, really since the pandemic and Hollywood shut down, I think most of the blockbusters have been kind of eye roll. The blockbuster movies have been okay. All right. Few are decent, fairly good, but nothing that really truly lit me up. I saw a movie last week that really lit me up, and it's called Project Hail Mary. It's the same writer who wrote The Martian. Oh, Andy Weill. Isn't that his name? Yes. Yeah, yeah, yeah. I love The Martian.

55:56Paula Pant:Absolutely fantastic film, great book, and Project Hail Mary, same thing. But Ryan Gosling does a phenomenal job of playing the guy who's going to go out and die in space, essentially. The whole movie is so well done that I walked out of that theater going, finally, maybe the first since the pandemic, big time movie, which I didn't go, yeah, it was okay. It was fantastic. It was really, really good. And this is a fantastic question. So let's put Fantastics together. Let's call him Ryan. All right. Ryan. We'll put them together. He'll be Andrew Ryan. You got to counterbalance the Ryan with the Andrew.

56:41Andy Ryan just doesn't have the same ring to it. No, it's Andrew.

56:44Paula Pant:It definitely is Andrew. It needs the dual syllable of Andrew to counterbalance the monosyllable of Ryan, right? That's what you're going for. And he sounds dignified in his question, so it's a more dignified name. So Andrew Ryan, in terms of deductions, what makes it interesting, as you've sort of intuited, is the fact that you are using this for two purposes. You're using it sometimes for a rental and sometimes as personal use. If your personal use is greater than either 14 days or 10 10 % of total rental days, then it's going to be treated like a mixed use vacation home rather than like a rental property.

57:32So those are the two IRS thresholds. So again, if your personal use is more than 10 % of total rental days. So let's say that you're, you know, you said you'll be in that home for less than 180 days. Let's say that you spend 175 days a year in that home, right? meaning that you have it available for rent 190 days, you would very much meet the threshold of it being a mixed use vacation home rather than a pure rental property. And so I say that for the benefit of everyone who's listening, because there are some people who are wondering, if I have a rental property, but during a turnover, I crash, therefore it's out of town.

58:17and during a turnover, I crashed there for a week. Would that make it a mixed-use property? No, it wouldn't because you're there for less than 14 days. But in your case, it's different. In your case, you very much meet the threshold for it being a mixed-use home. When it's a mixed-use home, you prorate expenses based on the proportion of rental use versus personal use. What that means is that for any kind of shared expense, like property taxes, utilities, furniture, mortgage interest, right? All of that gets prorated between personal use and rental use based on the number of days that it fits under each category.

58:59Now, there are certain expenses that are fully deductible. So you mentioned that you're going to have a property management company that manages it. That property management company is a direct rental expense. So that doesn't get prorated. You can completely expense that. You're going to use Airbnb. Airbnb has platform fees. So all of the Airbnb fees that you pay are fully deductible. Likely your management company will charge you for a cleaning service that they probably subcontract to. Either they have their own cleaners in-house or they have a subcontractor. And the cleaning that comes from your property management company that is specific to a guest turnover, that's going to be fully deductible.

59:43So those types of direct expenses are fully deductible, but then those shared expenses like buying furniture for the place, that's prorated.

59:53Paula Pant:I think it's important then to really focus on what do you need to do record keeping wise. I think keeping the purchase date, cost of the furniture, rental days versus personal use days. And then, you know, folders of receipts showing properties condition before or after rental use if you're going to do depreciation schedules. Yeah. You know, and the use of the balance of rental days, personal use days versus rental days. And I should note, rental days are days it is available as a rental regardless of whether or not it's rented. Yeah, good point. That in particular, I don't know if you've ever had the experience of moving from one state to another state mid-year, and you're trying to establish partial year residency in both states, particularly if you're trying to get away.

1:00:44let's say you live in a place where there's both state and local tax, but local tax is only assessed on full year residents. And so you're trying to not pay local tax by establishing yourself only as a partial year resident if you're moving mid-year. If you've ever done that and you've needed to create a paper trail in which you are documenting partial year residency, then there are a couple of things, a few best practices. One, of course, is for the purposes of state residency, you have an app on your phone that pings a cell phone tower that notes where you are every single day. And so that app will track your location.

1:01:27And so you'll have a record. And if you get a really good app like Moneo, it's a fully auditable record. Some of the paid apps that are very, very robust. Moneo is expensive. It's a thousand a year, but like that's a paid app. It's super robust. It has passed a hundred percent of audits of known audits, I should say. And it allows you to establish that residency. So you want to take a page from that playbook and do something similar with tracking your personal days versus your rental use days for the Airbnb. Because the The Airbnb platform itself is not designed to track availability dates that are not filled.

1:02:16So the Airbnb platform directly will track the dates of occupancy, but it's not going to track the dates of availability. So what you want is a separate solution where you are specifically tracking dates of use, dates of availability. I would look to see if there is an app that does that. I'm not aware of any because that is more of a specialized use case. State residency is much more common, which is why there's a proliferation of those. But if you can't find an app that does it, then you want a spreadsheet and you want to be updating that spreadsheet routinely. That should just be part of your normal weekly process is update that spreadsheet with a day-by-day tracker of today was a personal use day or today it was available but unused, available but unrented, or today available and rented.

1:03:12So you want to be just updating that very, very meticulously in whatever tracker system you're using. That's one thing. The second thing is I would recommend setting up an email alias, because you don't want this like cluttering your inbox, but set up an email alias where, you know, it could just be Airbnb at whatever.com. Every shred of documentation, every plane ticket to and from the location of this rental, or every gas receipt that shows that you filled a tank in the location of this rental, every email that you've sent to your management company saying, this month, we're going to be staying here only on these dates.

1:04:04And for every other date, it's going to be available for rent. Like every single shred of documentation, forward it to that email alias. And so that way, at the end of the year, You have one concentrated place where every shred of documentation lives, and then you can go to your accountant and say, boom, here's my spreadsheet or here's my app with a meticulous day-by-day, 365 -day tracker of personal use days versus rental use days. And in addition to that, if you need secondary documentation that corroborates this information, here's the login where you can look through every single piece of, you know, every airline ticket, every train ticket, every gas receipt, every shred of documentation that corroborates what's on that spreadsheet or what's in that app tracker.

1:05:02it sounds like a lot of work when i'm saying it but it's actually when you get into the habit of

1:05:06Paula Pant:it it becomes second nature yeah i'm actually thinking the opposite paula which is that what you just introduced is a bunch of systems that are going to make your life a lot easier over time it used to be that i wasn't very diligent about tracking my expenses for the irs and i would just take out whatever credit card gave me the most points and i was like i'll solve this later Well, not only did having smart people in my corner slap me into shape on that in terms of if I get audited, like having that one place, but even better, it's so much easier to track all this stuff just by having systems that funnel it to the place where I'm going to need it later versus me spending a week before tax day trying to go through four different places where I might have spent money on this and putting it together, which is what I used to do.

1:05:59Paula Pant:It's just going to make your life a lot easier later on. And you don't want this to be onerous. You want it to be additive. Yeah, exactly. And speaking of that, yeah, set up an LLC. That way you have a separate bank account. You can seed it with some money. And then that initial seed money, which you mark as an owner contribution, can be spent on the upfront costs, such as furniture. And then because it'll be a separate bank account with non-commingled funds, all income and all expenses come from that one particular bank account with one specific business credit card that's linked to that bank account.

1:06:36And then all of that goes to QuickBooks. So boom, boom, boom, you're done. There is a completely separate account in which all of your Airbnb related costs are segregated from the remainder of your personal spending. And so to go to your question about LLC versus S-Corp. Taxation-wise, it's the same. They're both pass-through entities. LLC is much simpler. And I mean, if you really start making big money, you can always elect to have an LLC that receives the tax treatment of an S-Corp because even that is simpler than actually setting up an S-Corp. But I don't think you're, unless this is a very, very high-ticket property, I don't think you're going to have so much revenue through just this one property that you would even need to have an LLC that elects for S-Corp tax treatment.

1:07:28I think you can just do an LLC and be good. I realize that what I just said, like talking about the state residency tracking apps, using that as an analog for either finding an app or setting up your own unique custom management system. when I say it, like I hear myself describe it and it sounds like a lot of work when you're expressing it in words. Once it's set up, it's super simple. Once it's set up, all you need to do is once a week, every Friday for 10 minutes, you update it and boom, done. And that's it. And then same thing with the email alias. The beauty of it is that it's so simple. It's just when anything comes in, you just, it becomes muscle memory.

1:08:19You automatically forward it to that email address. And then you never have to think about it again. That means that at the end of the year, you're not hunting down the paperwork. You just auto forward everything to one very particular email address. And then you can just give your accountant the login. because you've got the tracker, no one's going to have to Sherlock Holmes detective work where you were. The whole point of keeping all of that documentation contained in one email cluster is so that in the event that you get audited, you've got a paper trail.

1:08:58Paula Pant:And I think this applies not just to this or to business owners. I mean, this idea of turning the potential problem into a system, I think is the way to think about your financial life in general, because the main goal here, I don't think is to contemplate more every money move and to spend more time. It's how do I efficiently spend as little time on this as possible and still make a nice, significant contribution to my success. Yeah, but I'm excited for you. I hope that the complexity of describing it hasn't scared you off, because once it's set up, it's very, very simple to run. and you get this great place that's an Airbnb.

1:09:51It's offsetting most, if not all, of its cost. And then you get a place to hang out with your grandkids that mostly, if not entirely, pays for itself.

1:10:05Paula Pant:Sounds like a great retirement. I hate the word hack. But a great retirement technique to defray the cost of spending time with your grandkids. Of course, over the short run, the purchase of the property and maybe furnishing it like he's asking about is much more expensive. But I think, man, if you're going to keep it there for a while, this could really make visiting the grandkids much easier because the cost of going there, you have to check on the property from time to time. So your travel expenses are covered to check on the property. Of course, you want to run all this by your accounting team.

1:10:47Paula Pant:But I think there's just a ton of upsides, Paula. Yeah. Oh, by the way, there's one more thing that we should probably say in the context of tax planning, which is you can't deduct more than you make. So your deductions are going to be limited by the Airbnb income that you have. And any excess deductions are going to be carry forward. Well, that's a bummer. Way to end it on a sour note. I know, right? Way to end it on a bummer note. They're not going to send me money back for deducting extra. Yeah, exactly. Well, and that's what makes this different from a standard rental property, a full-year rental property.

1:11:26Yeah. Well, Andrew Ryan, thank you for the question. And congrats on this new place. Joe, we've done it again.

1:11:37Paula Pant:It was every bit as textured and as fun as I thought that was going to be. Joe, where can people find you if they'd like to know more? Man, we got a great, great discussion coming up. And like you do, I love some of the greatest minds that you and I get to talk to, these amazing people. A gentleman named Jim Murphy a number of years ago wrote a book that athletes around the world took to immediately, but also then business owners. His name is Jim Murphy, and he wrote a book called Inner Excellence. he has a new book out. We don't, of course, on Stacking Benjamins, we don't really talk about the book, but the ideas around living your best life, which is what his new project is all around, is often, and this gets to what we talked to Andrea about, yes, you need the money to get there, but the reason you need the money is to live your best life.

1:12:33Paula Pant:And how do you live more of your best life? And a lot of that, as you know, Paula, is in your head. So because many of our afforders, many of our Stacking Benjamins listeners are well on the road to the systems to solve the money game. A piece that you and I both want to help them solve is the, how do I think about this game? And Jim Murphy is a very contemplative, a very thoughtful guy who coaches people on living their best life. So we're having that discussion, which was so wide ranging when we recorded it. I just can't wait for people to hear it. So that's tomorrow on Stacking Benjamins. Oh, amazing.

1:13:11Well, Joe, thank you for spending this time with us. And thanks to all of you for being afforders. If you enjoyed today's episode, please share this with your accountant, your bookkeeper, your Airbnb management company,

1:13:25Paula Pant:your sports team coach, the guy that wrote the book that you love about Martians and going into outer space. Share it with Andy Weil and Ryan Gosling. There could be other people. Yeah. Share it with the actor who plays the guy. Sure. Which it doesn't have to be him. Just, just Ryan, you know, Matt Damon played the guy, the Martian. So you share it with Matt Damon. Oh, I get really, you could share it with any of the staff on the movie, right? There's the, the key grip and the dolly grip and you know, what are like there, there's the PA, right. Who, ran out and got extra makeup brushes when they were running low.

1:14:03Paula Pant:All those people important to making it work. Yeah, exactly. Taking care of those day-to-day details. Yeah. Share this with them. Just the people who do the day-to-day details in your life. There's so many people around you. Share it with your postal worker. Yeah. And the guy who fixes your dryer when it breaks. Share it with your student loan processor.

1:14:28Paula Pant:share it with your friend with student loan debt. Who's not thinking about it the right way. Share it with anybody with grandkids or anyone who is seven years away from retirement. Share it with anyone who's got a part-time job. Share it with anyone who's dense.

1:14:45There's a, there's a joke in the after show. You'll, you'll understand why that's funny when you hear that. So share it with all of those people and more, because that is the single most important way that you spread the message of F-I-I-R-E. We've got a newsletter, affordanything.com slash newsletter. I've actually started this new thing. It's called Three Things Monday, where every Monday I write three things. So if you subscribe to that newsletter on Mondays, you hear about three things that you need to know. Could be about the economy, about retirement, but it's three things every Monday. affordanything.com slash newsletter.

1:15:31Thanks again for being part of this community. I'm Paula Pant.

1:15:34Paula Pant:I'm Josel Cihai. And we'll meet you in the next episode. I had to read this three times because it was so dense. Either that or you're really tense. Oh my God, don't put that in.

1:15:52A decision that sticks, but not so long that you're letting the interest rate linger. Yeah.

1:16:01Paula Pant:It's my great contribution. Yeah. Correct. Affirmative.