33-Year-Old Straight Up Isn’t Paying His Taxes

27:19That's not even a question. What the f***? I canceled that. Good. Your credit card payment's not in here. I usually, so what I do is May budget, right? So I screenshot this in the middle of the month. So what I'll do is I'll take all of this, I'll paste it over here, and then I will add whatever I need to onto that. So it's just kind of my way of doing it. So once it comes out of the bank account, then I cross it off this list. Okay. I do that at the start of every month. Health insurance, you don't have it. Pet insurance, you don't have it. They're on here and you say upcoming. You need health insurance.

27:59Health insurance is crazy. It's$300, something like that a month. Yeah, but it will save you hundreds of thousands of dollars if something goes wrong. If you get hit by a car going fording in a neighborhood. Yeah. I mean, then I have, I don't know. I've looked into it. Of course,$300 a month is just a lot of money. It's a lot right now, but I would rather you be safe. Safety comes first. And safety also includes going to the gym, making sure you're fit. You know me. But it's a part of that. That's why therapy is applicable in these type of situations for everyone, really, but for the vast majority.

28:35Okay, so the credit card, that's, so we're going to, well, student loans are about to repay, so I'm going to add$550 to this budget and$164.13 to the budget of which is the credit cards, Meaning, in order to survive, it's$3 ,965.13 is required for you to survive on a monthly basis with Hulu cut, with YouTube cut, and with your music subscription cut. Actually, I did not minus 15 for Hulu, so we're at$3 ,950.13 in order to survive. It's a lot of money. And guess what? Of your incomes that have come in, none of your months hit that except for the one month where you did well. And with sales, I did sales before this.

29:24Well, then I was product manager. And then I did sales. Or I did sales first. Whatever. Either way, I understand sales. There's going to be up and down months. There's going to be months people just don't want to buy solar because it's like, ah, it's cold this month. Why would I buy solar? It doesn't make sense. They're in the stupid mindset of just stupidity. You know? Because they just can't picture it. You're going to have good months and you're going to have bad months. Right. Because that's just how sales works. Yeah, summertime. And not to mention, at your other sales job, you only bought in$40 ,000 a year.

29:51Yeah. I get paid better here. Yeah, I'm glad this is going better. But does that mean I have confidence in the$9 ,000 a month? I'll be honest, I don't know. Yeah, I mean, that's fair. It's only been one month. It's only been a month. It's like if I went and just went crazy based off my best month on YouTube. Or like I started making income on YouTube, and then I just based my entire life off of that. Yeah, yeah. You've got to see what the ebb and flows are because everything ebb and flows constantly. So like what I said in the beginning, like I have pretty good confidence that I'll be making at least$7 ,000 or$7 ,000 to$10 ,000 throughout the summer.

30:30And it's just because I've gotten better at what I do. My skills have developed. And then I'm working hard. I'm working 10 hours a day. I think in the summer you're going to do well. I think 7 to 10 seems reasonable in the summer. I think winter, you'll see a psychological drop. Yeah, that's different. Yeah, absolutely. But what we have to do in that situation. Hopefully this is all fixed by December. I mean, it will be. The debt, I see what you're saying. Yeah. But what we need to do in that situation, I mean, with everything marked up, the debt is barely, well, the student loans makes up a big part.

31:06But the special finance and the credit cards, in terms of minimum monthly payments, that's not what's driving the vast majority of this. So it's just everything combined because there's so many things that stack up, stack up, stack up. You need to give yourself an extra. You should give yourself an extra$100 for like toilet paper and toothpaste and crap, crap, crap. So I'm going to add an extra$100 for that, meaning you're at$4 ,050 because you need to be able to do that. So add that into the budget because you need that stuff. teodorant's important all that good stuff shampoo yep highly recommend so

31:43yeah we're about four thousand dollars in terms of what you need to survive okay okay i mean the minimum wait one second i'm confirming the math i think i added extra thousand dollars on it that might be because yeah i think okay no you're You're at$3 ,000. Sorry about that. Yeah, because it's, what,$2 ,365? So with the student loans and then the total paper, you're at$3 ,050. I added an extra number on there. It's a little high, yeah. Okay, but either way, what I was trying to get to in general with the down months and where you need to survive, let's say$3 ,000 or whatever, you know, probably like$2 ,250 after the minimum monthly payments for debts are gone, something like that, something like that.

32:28I don't know,$2 ,200. Yeah, probably, yeah. You need to make sure we have enough money that your overall budget is, at that point, saved up as well. Yes. So money needs to be set aside now to subsidize the lower months. Yes. I'm not talking about an emergency fund. I'm talking about you're going to count that towards your income, the money that you set aside at some point, because you have to. Okay. So let's say it drops like, again, we made, say,$4 ,000, which is better than any month you've done except for this one month. So$4 ,000, let's say that's what it drops to. Let's say you need$5 ,000 to hit your 50, 30, 20 after the debts are gone comfortably.

33:10Then you need to set enough money aside that you can withdraw from a special savings account whatever is extra that's necessary to hit that. Yes. Okay. Yeah. So, yeah. Say you make$4 ,000, but you need$5 ,000, so you need an extra$1 ,000 on a monthly basis. Right. And we're setting that aside in our good months. And that's, yeah, and that obviously goes in the 50-30-20 rule, right? Yeah. That should. Eventually, once the debt's gone, with this, I don't know how to. So this is. I'm just going to be conservative. I listed these in terms of priority. So I'm just going to go down the list. Yeah, IRS before the fam.

33:51Okay. That's how you listed it? Yeah, I think I did. But yeah, student loans are last because they're not asking for it anyway. Not yet, but they will be here in a second. Of course. So honestly, what I would do, what do you have in savings? $1 ,000. $1 ,000? Okay, this next month I would put an extra$2 ,000 in there because you need$3 ,000 to$5 ,000. So if something happens, you're covered for a month. So you can figure it out. Yeah, yeah. So right now I think I have about$4 ,000 in my checking account. 4 ,000 I'm talking emergency savings on the side I'm talking emergency savings on the side not just left in our checking account because we always want a few thousand in our checking account that doesn't even count so I'm talking in savings we save up to$3 ,000 so do that this month then probably also cut the IRS a check and they're done this month and that's assuming that your income is fantastic that's just assuming that your income is fantastic then the next month we pay off their parents and we pay off probably a portion of the special financing.

34:52Yeah, I actually told them to send me a payoff balance because I really would like to get... I know I don't probably have it immediately, but I want that gone because it's$320 a month and it's a huge burden on me. So yeah, I plan on cutting these smaller debts out very quickly. And then month number three, you're probably paying off the rest of the special financing and then hopefully half the credit card. And then month number four, paying off the other half of the credit card. I think Verizon. What's going on? I'm Arch Manning, Viore athlete and college quarterback. Whether I'm running, training, traveling, or just unwinding at home, I love doing it in my core shorts from Viore.

35:34With a breathable boxer brief liner, they're quick to dry, super versatile, and stand up to even my most intense training sessions. Plus, they come in three inseams and a ton of colors. Ready to try a pair? go to viuri.com slash arch and get 20 % off at checkout. I think you're going to love them as much as I do. That's V-U-R-I dot com slash A-R-C-H and get 20 % off your first order. Exclusions apply. Visit the website for full terms and conditions. Not only will you receive 20 % off your first purchase, but enjoy free shipping on any U.S. orders over$75 and free returns. Have a great day. Usually, I don't know, I would need to look at your contract.

36:14A lot of that stuff is baked in from the front. So it's like if you pay it off, probably paying whatever their extra stuff is anyway. So we're probably just doing it until it's done. Look at your contract. See what it is. I know that's how it was when I did it. You're saying you can't pay it off early? No, no, no, no, no. So when I was getting – I haven't financed a phone in forever, so I do have some ignorance on this. But when I did a long time ago, it's like whatever their financing fee and everything that's baked into it, it's like, okay, if you go pay it off early, you're still paying whatever that finance fee is.

36:43They're just breaking that down on a monthly payment. Yeah. But I don't know. I could be wrong. It also could depend on company again. So you need to look at your contract for that because I haven't financed a phone in a very long time. Well, I'm planning on switching carriers anyway. Verizon's service. I'd love to do that. So you're thinking about you out of the contract and then just save up what's necessary to just get a phone in cash, even if it's a little phone for a little bit. Yeah, that's fine. But if the contract is what I think it is, then minimum monthly payments until they're paid off or just do that other thing if you switch.

37:12Now, at this point, we're five months in. We have student loans. We have$3 ,000 saved up. Student loans is what's left. And the phone thing we're figuring out depending on the situation. So what I would do for the student loans, and this is where you and me and your boy, Dave, disagree, which I love Dave, by the way, but either way, where we disagree just on math because I think math is the most important thing because you need to take advantage of compound interest. Now you're in your mid-30s. We have nothing saved for retirement. No. Oh, yeah. That's what scares me. No, this is a disaster. So we need to start taking advantage.

37:46Time is your best friend. You know, he often says, well, your income after you pay off your debts, your best friend. Right. What's even more important than that is time. Right. Come on growth. Right, right. So what we're doing for the student loans, whatever is sitting at 4%, we're doing minimum monthly payments until they're paid off. Okay. But anything above that, especially approaching that 5%, 6%, that you are just going crazy and you're paying it off. Okay. You're paying it off, especially the ones close to 6%. So what I would do for those is the avalanche method. Yeah, yeah, yeah. I would do highest interest rates first all the way down until you only have the ones that are left at like around 4%.

38:19Okay. Slightly over is fine. And then those are minimum monthly payments until those are paid off. Once you're at that point where only those 4 %-ish interest rate loans for the student loans are sitting there, then the phone thing is whatever. That's where, say, 2 ,200 is necessary to survive. well yeah I mean that makes sense let's save up 12 to 15 thousand hours for an emergency fund as quick as you can 6 months of expenses this is where it gets complicated because we're doing so much on hypothetical income I mean I want you to grind and you can probably do well this summer but we probably also need to be setting aside a thousand hours a month for adding a thousand hours a month throughout the next 6 months Let's say six months good, six months bad.

39:07You know, hopefully it's not like that. I don't know. But either way, haven't had the track record. Yeah, I mean, that's fair enough. But like, it's, I'm getting, I'm getting good and I work hard. No, I believe that. I believe it's, I'm going to make a pretty good amount of money. I'm fairly confident about that. So confidence is good. I can understand how you, you know, there's not a lot of data points. I just have to be realistic about it and be conservative about it. Because being anything other than that would be bad. Yeah, being a little conservative with everything so that it helps. So that's why I was talking about some of these debts being paid off a little slower than what it would look like if you put all your$9 ,000 towards it.

39:45Because you're probably putting an extra$1 ,000 aside on a monthly basis for the slow months. Also, are you setting about 30 % aside for taxes? Yeah. Are you? No, but I will. Well, f*** you start doing that. Yeah. Yeah. I understand that. Yeah. I'm throwing everything I have at debt. so and you know I know you probably think I'm spending it on energy drinks but yeah highlighter doesn't lie but either way yeah you need to start doing that immediately did you do that for the 9 ,000 passed that you made? so you need to make up for that this next check so 60 % of the next check is set aside which sucks because you're not going to make any progress but for a month because you don't want it to turn into future debt and the IRS is not someone who f***ed.

40:36We're doing that, so that takes away from it. We're also taking away$1 ,000 to save for the future. We're really starting to dwindle away this nice paycheck, even if it's $9 ,000 every single time. That's why I'm calculating it's going to take a little longer than you probably think to pay this off because we're going to be smart about it and not get ourselves into a stupid situation where we're first to get more debt anyway. Of, let's say, half the student loans, no, subsidize them, subsidize. student loans of the$50 ,000, let's say$30 ,000 are the ones that we want to pay off. If you're able to put, you know,$3 ,000,$4 ,000, let's say$4 ,000 because I'm just going to be optimistic with you.

41:14$4 ,000 you can put towards it on a monthly basis. That's still going to take seven and a half months. So we're at a full year before we start saving. No, we're at a year and a quarter maybe before we start saving an emergency fund. Then you want to do the emergency fund. That's probably going to take an extra quarter. So a year and a half. In the incredible situation of you're just doing great, great, great. Of which we only have one month. So you're doing great, great, great, and it's a year and a half. If you're not, maybe it's like a three-year process. But either way, you can do it because you have the control to grind in the sales position.

41:40And you can go find a better sales position if you ever need to, if this one starts to not be working out. Right. So I think it's going to take a year and a half to three years. You've obviously shown that you're starting to cut back on things. So I'm not super concerned with that aspect. Usually I have to dig in, make sure people know they have to cut back on everything. Right. Your main concern is the income situation. Yes. Yeah. If it's good, year and a half. If it struggles, three years, four years maybe. But what you need to do when you have the fully funded emergency fund and you're still doing the minimum monthly payments on student loans that are 4 % or less, you're far behind.

42:11Yeah. 50, 30, 20. Sure, 50 % can go to needs. 30 % is going to investing. 20 % is going to wants. Awesome. It might be 35%. I'm okay with that. Start doing some compound growth math, just using a compound calculator and do 8 % for the market. Okay. And figure out what you need to hit a number that you're comfortable with and then take 3 % off for – 3 % to 4 % off for inflation as well to see what it would be like in today's money. See, this is one of the reasons I want to reach out to you because, like, I don't know. Like, do I go with an IRA? Do I go with a Roth? You might – well, if the income is as good as you think it might be, you might have to do a backdoor Roth anyway.

42:51But yes, yes, you'll want to do that for sure. Okay. And then you can just do a brokerage. If you set up like an... Are you a contractor? Yes. Yes. 1099. I mean, you can take advantage of some self-employment options. Oh, I'm trying to figure it out because you're a contractor for a company. If you form your own... Well, we can loop back to that when that happens. But you're for sure doing at least a backdoor Roth IRA. and then if your income's not as good, hey, just Roth IRA. Okay. And then whether or not you have a self-employed 401k thing set up or you're connected to your LLC in a way similar to what I do, then if you don't have that, then just brokerage.

43:46Okay. Just brokerage. Okay. And I won't tell you what to invest in. I'll just say for myself, I do low-cost index funds. and those are target retirement funds, which are good as well, which starts off more aggressive and then weans to more conservative as it gets closer to that retirement date. Those are fine too for myself. Gotcha. Nice. So, yeah. And also, so one of the big things I wanted to ask you was, so I was in the military for five years. I was in the Army, so I have a VA loan. Yeah, for home. Right, right. PJ's Wholesale Club makes holiday hosting so easy, we called in the ultimate host to talk about it.

44:21Mrs. Claus here. You think Santa has it tough delivering all over the world? Try cooking for hundreds of elves. Good thing BJ's offers low prices on all the menu must-haves, plus free same-day delivery on your first order of$100 or more. No more squeezing in trips to the store. The only squeezing here is the big guy into a suit after dinner. For terms, visit BJ's.com slash holiday and get the same great prices online as in-club. So I was thinking at the end, I didn't know because the student loan payments are going to start up. That's a lot of student loans to pay off. Right. Yeah. But you can write off the interest that you pay, right, on your taxes.

45:04Depends on your income. Right. Yes. Yes. I think your income is going to be to a point where you can't write off the interest. Okay. I did not know that. That's good to know. Yeah. I wasn't able to write off the income for my student loans once I got my social edition because I did pretty well in sales. Okay. So should I be – because I wanted to buy – if I fix all of this, I want to be able to get a house. I want you to get a house too. Our main concern is obviously getting another debt. And then I need you to do 30 % towards investing because you can have a house all day. But if you don't have any money to supplement what you need to survive outside of that eventually, then there's no point.

45:39So we're definitely saving up for retirement 30%. Now what you could do is try to get your needs to like 40%, cut your wants to 10%. Then you can save up a total of 20 % in a separate savings to, you know. Well, if you VA home, well, it's hard. I would still, I'd still want you to put money. My fear is, my fear is getting a home, nothing down, everything. Take advantage of the good situation. Fine for fine. Minimum monthly payments. Yeah, exactly. Is what starts to make me nervous, especially with a... Because it'll raise your payment up. And then you're getting a smaller or worse house. And your income is very fluctuating depending on things.

46:20So when you do, make sure you either take advantage of that loan on a house that you can afford, or you're also putting money down on a house you can afford at a more expensive cost. But either way, you're just going to have to figure that out as that comes.

46:39What should I be looking at for a mortgage payment? I don't know, dude. Because first of all, you're probably not going to do it for two or three years in the best case scenario. So we need to see what income is at that point, what the job situation looks like, what does solar look like at that point? Are you still even in that same position? If you are, is it going as well as you think it is? There's so many variables at that point. So many variables. Don't be afraid of a starter home. One of my friends is afraid of a starter home here. Don't be afraid of a starter home. 20 years out of date is okay.

47:1130 years out of date is okay. Do some small fix-ups. That's okay for a first home. You don't need to get into a perfect home. I'm not saying you're saying that, but I know a lot of people are crushed when they can't get their dream home as their first home. Yeah, I'm not worried about that. My first home was incredibly out of date. Really? And that's okay. Yeah. I mean, even this place is still out of date. Yeah. Cool. That's where the home purchase comes in. I wouldn't think about it right now. Okay. We're getting to the point where you can start setting money aside, but you're not even 50, 30, 20 right now anyway.

47:41You're just trying to pay off the debts. Yep. And the student loan's not great. Credit card, very bad. I will say this. I think there's a hopeful thing here that we're all feeling. I think people in the audience are as well. I don't want to be the Debbie Downer. with where the debt is at the almost$7 ,000 of credit cards, owing parents, owing the IRS, not setting money aside yet in taxes and where the student loans are as well and the special finance. If this income is not what was last month and it comes down to$5 ,000,$4 ,000, we start getting into a tricky situation where this starts to get paid off.

48:19And that's where I'm a little nervous. So prove us wrong. Absolutely grind your ass off and go crazy. Make$10 ,000,$15 ,000 a month. Yeah. Do it. I have nothing else to do. But I am nervous of that because sales can happen flow. Well, I am too, but it's, you know, it's not worth thinking about, you know, getting. Sure. Yeah. I mean, you don't want to be in your own head. But yeah. Also, I mean, but from just sitting on the side of the table, just saying, okay, everything's going to be perfect. I don't know. So just keep in mind, do side hustles if you have to. but there is certainly a path out of this and a path towards you being a homeowner in like your late 30s early 40s and being a millionaire by the time you retire but yeah that things need to continue well in order to do that and that's your biggest variable right now yeah so what would you say is the number one number one thing is it is it stop stop obviously stop spending so much but is like yeah well you can't spend so much i mean that's something you just have to take control of but obviously the biggest variable right now is the income what's it going to be yeah right right you can sell your off but if people just start for some reason like subsidies go away from solar for whatever reason um like i don't know i think you're that could happen but it's not going to anytime soon maybe i don't know we could we could have someone come in and the state administrations and federal administrations who just want to move away from solar.

49:46Like, for whatever reason. I don't know why it might be. I don't want to get political, but anything can happen in the political level that is beyond our control. And if that happens, people are less inclined to do solar. Because it still impacts their wallet. The wallet is going to be what wins at the end of the day. If they can get comparable rates to just whatever the local energy companies are, than financing or doing a massive purchase of solar, something of which you have to eventually replace, something of which is a pain in the ass when you have to get your roof done, then there's a lot of variables.

50:23I'm not saying that's going to happen. That's the biggest variable. You ask what the biggest variable is, that's what it is, is the income. The better you can control it, the better you'll be able to control the whole situation. Yep. Yep. Well, I mean, that I plan on making when I, when I started the year, when I started out this year, I was, my plan was like, okay, well, I'm going to make a hundred thousand dollars this year. The first a hundred K. Um, so, and it, you know, it took a slow start. I knew it was going to be slow, but I wanted to focus on one thing and get good at one thing and not be so spread out.

50:58Right. With like a random business over here and doing roofing over here. I wanted to just focus on one thing and get really good at it so that I could start generating the most amount of money I could. So and it's it's it's getting better and better every week, every month. So any final thoughts? I think that's that's everything we talked about the house and then we talked about retirements. That was a big question I had. What should I do about an LLC? Should I form an LLC? It's an easy way to manage your business expenses if you have any. I'm sure some of the stuff you can write off. It's used as a pass-through, essentially.

51:47But I think what's best in those situations is, especially now you are your own business more than ever before, get a dedicated tax person. And they're going to help you with that. Yeah, CPA. Yeah. Cool. That's what's going to be best. Sounds good. Sounds good. For Michael, again, I don't want to be a broken record, but it just all depends on the income and then the discipline around his spending when it comes to that income that's coming in. For his Hammer Financial Score for right now, his spending, especially according to all the income we've seen except for that one month, it's pretty bad.

52:17It's also not the worst we've seen. Three out of ten debt, very bad. Owing personal people and roommates and IRS, come on. Zero out of ten retirement, there's nothing. Zero out of ten. Merchants fund, he did get$2 ,000 But obviously that's far from the full$15 ,000 We'd want to see, 2 out of 10 Real estate, not even a part of the conversation Yet, but I think it will be in 5 to 10 years 0 out of 10, right now, Hammer Financial Score aggregate, 1 out of 10 If you want a free$5, sign up for Acorns using the link in the description below If you sign up using my link, you get a free$5 I get a free$5 and we all Win, don't forget to follow my Instagram and Twitter, thanks