Welcome to how to Money. I'm Joel and I am Matt, and today we're talking help for high earners with Rachel Camp.
Yeah. So, I think very few folks feel rich right like, even if they're doing really well for themselves. And oftentimes I think that has the most to do with the hedonic treadmill. We think we need a new car, or a vacation, a new house. We think all those things are going to make us happy, but we quickly return to our baseline happiness and at the end of the day,
folks definitely don't feel rich. But guess what, I think a lot of folks, especially couples who are able to share the load of some of those big expenses like housing, I think those folks would be surprised to find themselves in the top ten percent. We're very near there of earners in the US. And when you make a lot of money, or at least if you hope to, it takes a different approach to how you should handle your finances. That's why we're excited to be joined by Rachel Camp.
She's the owner of Camp Wealth who is on a mission to help her clients build, and not only build.
But also preserve their wealth.
But it's also not just the six figure earners who are pursuing financial independence. She believes that anyone can actually do that. We're going to talk about that and more today. Rachel, thanks so much for joining the podcast.
Yeah, thanks for having me. A huge fan of the podcast. I didn't get to tell you guys that before. We've been listening for a while, so I'm happy.
To be here, all right.
Well, thanks Rachel. Yeah, no, we're glad to have you. I found you on Twitter. You are one of those rare good things that comes from the devastating platform that is now called x ye. So glad that happened. Our first question to every guest who comes on the show is what's your craft beer equivalent? Because while Matt and I spend ridiculous amounts on great craft beer, top notch stuff, we are also saving and invest saying wisely for the future.
What's that for you? I know you're saving and investing, but what do you like to spend a ridiculous amount of money on here and now?
Oh?
Yeah, I mean I could go on and on about this, but I will try to keep it concise. Actually, my financial life is designed in a way where I keep fixed expenses really really low, so transportation, housing really low, and I get to splurge everywhere else that I want to, so you know, the big ones for the for daily expenses, I do love a latte. I'm very classic millennial in
that sense. But outside of that, you know, anything experiences, so like I just bought an insane amount or I'm sorry, I spent an insane amount on snowboarding, boots, anything fitness related, so everything like that.
I when I go to spend the money, I.
Just know that there's some people whould think that that is insane. But I've intentionally designed my life so I can really splurge in those areas when I want to.
I love that.
Is the latte like a daily habit? Or is this like a couple times a week? I'm curious And obviously obviously you didn't read David Box's book The Late Factor.
Right, avoided that one.
No, it's it's probably three four times a week. So actually I look at it as an investment. That's how I justify it because I work really well from coffee shops. There's something about being there that I can just tap into deep work really easily, and so of course I have to get myself a latte. I love a good Macha lte, and so it works really well for me, and I really, I truly do enjoy the latte, so it's worth the splurge for me.
Very cool.
You know that's funny. Joel and I we joke about a mutual friend of ours who is always at the coffee shop that is right here near our office.
He's like the mayor of that coffee shop.
And but I was thinking about it the other day and I thought, you know what if he is kind of one of the pros and cons between showing up there whatever he wants, being in a great spot where he can see some friends, expand his network, and all he's got to do is pay rent by buying a Lotte, by buying a coffee that can harry to a co
working space. It is so much more affordable for him to do that as opposed to, you know, some stuffy co working kind of space, which obviously they're making all those cool and they also include coffee, but it's not the same as going to the place that's got the best pastries in town.
Makes me think of JK. Rowling, who it was like cheaper instead of paying for the heat and her house. She went to the coffee shop. Matt, you and I got to go, like see the coffee shop where Harry Potter was birth like pink elephant or something red elephant, something something like that, something my elephant related. But yeah, I mean I get that, Rachel. I think I can. I can understand your reasoning on that.
Yeah.
Actually I sat down and calculated what I was spending on the lattes too compared to a co working space. And I'm coming on ahead, So yes, of.
Course you did. Rachel is a CFP that in her intro.
But and actually, am I correct?
Do you come from a long line of cfps.
It's a short line. Yeah, a short line.
Okay, I think it's your dad.
My dad's a CFP propel you into the profession.
A little bit.
Yeah, it's interesting. He honestly, growing up he was kind of more on the insurance side. It wasn't until maybe like ten years ago he got his CFP started going more into the financial planning route. But he is a big reason that once I decided to get my degree in finance, that I actually went to the wealth management space, you know, not something like investment banking. Or, which I'm really grateful for because that is soul crushing, but he is. Yeah, he was a motivator for that. But also not a
lot of young people know about this industry. It's a lot of gray hair, and so it was a little bit abnormal for me to go into the sector. And so he is a big reason for that. When I went out and got my first job, I was the youngest person in the office by far.
I believe it. Super cool, Yeah, I believe it and set you apart though. Yeah, And it's fun and interesting to see like a new breed, a new generation of cfps of people who care about this not from sort of like and they're starting their own firms, their own businesses, their own small businesses as a way, and it just seems like such a healthy approach. I think that the new generation is taking versus kind of some of the
ways that the industry used to run. I'm curious, with your dad being a CFP and like incredibly knowledgeable about the topic of insurance, what were money conversations like around your table growing up? If like, were you guys constantly having money conversations? Was it something he kind of left at the office. How was that impacting you as you were growing up.
Yeah, I think it's probably surprising. We actually really didn't have a lot of technical discussions around money. On the other side, though, my dad was very entrepreneurial and a big believer in having control over your income. So that was really what the discussions were centered around, was figure out a way to kind of create your own thing and you know, don't work really hard just to make somebody else rich. So he was really focused on that.
As far as technical, you know, financial things. Surprisingly, it's that was more of my mom's side. Actually, one of my flexes is that my grandpa on my mom's side was an early He was an og Jack Bogel and Vanguard fit. Oh yeah, I yeah. Once I realized that, I thought that was the coolest thing ever. But he
huge fan of like millionaire next door. So a lot of that, you know, the power of compounding interest and saving your money and becoming that millionaire next door actually came more from my mom's.
Side, and then my dad's.
Was more of the you know, entrepreneur and pushing us to kind of start.
Our own businesses. But influences on both sides.
Yeah, exactly, good intersection for you to come from. But oh, I was gonna say, it makes me think of I met a recent friend and he was talking about how his mom grew up in Omaha and he had a big old.
Flex which was that?
Which is that his mom grew up with the buffet kids.
That sounds like a huge flex what.
I don't know if this should be surprising or not, but he's like, not surprising. I'm into finance as well. Yeah, I don't know. I'm like, well, that's that's like the CLIs thing I've learned from somebody in the past like year and a half, being in a new town in a new city. But we're talking about millionaires personal finance advice, Like it's often targeted to the middle class, but high earners they actually need some help saving on taxes and
maximizing their wealth building potential as well. Like what is it that made you opt to focus on that group in particular? And I guess too, Maybe it's good to sort of set the stage, like how do you define a high wage earner?
Yeah, I mean we could put a number to it, or we could personage, you know, top ten percent. Most of my clients, I'll say make at least five hundred thousand, and decent amount of them are approaching seven figures and beyond too. Yeah, so really really high earners. And I always say, you know, making money managing money are two very distinct skill sets. So when I decided to focus on high earners, I really saw distinction and the need for somebody to kind of come in and say, Okay,
you've done a great job making the money. Now let's figure out how to optimize and manage the money. And then you know, I'm sure it's not surprising to you, but there are a lot of people who make a lot of money and don't have a lot to show for it, haven't actually built a lot.
Of wealth with it. So you know, seeing some of those problems.
In my first job, you know, I was at a huge firm, was out in Chicago, and we worked with ultra ultra high networth, so at least five million in assets, you know, and we managed over a billion. So I got to see kind of that side of people to where they would come in with a tremendous amount of money.
A lot of them went through exits.
So we had some tech entrepreneurs that all of a sudden came into a huge sum of money and we're very lost about what to do with it and really didn't have a grasp on some basic personal finance concepts. So seeing that at that extreme, I knew that there was a demand for or a need for financial planners there to kind of help them start to manage this money. And then too, you know, selfishly, I've always liked to help people where I'm kind of in a similar situations.
Why I like to help small business owners as well, so being younger but also making you know, a good salary. Went into finance partially for that reason. I noticed that, yeah, that there wasn't a lot of content or planners centered around helping a younger generation manage their money. So that was a big influence on me to get into that and fill that need.
Yeah, it's also, hey, these are the things you're kind of tackling for yourself, so why not then pass the knowledge and help other people with the stuff you're already kind of working through on your own. Okay, question, what are high earners typically? What are their biggest needs when
they come to you for advice? Like, I'm sure it runs across the board, and you mentioned how like even people who have high salaries sometimes they're still spending way too much, right, they're not saving enough, they don't have a high enough savings rate. Are you even broaching the topic of like frugality with people who earn eight hundred k a year, Like, do you have to have those kinds of conversations?
You do?
You know, it's really interesting. One of the first things I look at is cash flow. It's one of the very first meetings I have, So where's our money going? When I ask the question to people, where's your money going? I never get a response. Nobody has any idea. And there's a lot of high earners too that like think they're doing fairly well. You know, they're putting away, say one hundred k into savings, but if we break that out as a percentage of their income, you know, it's
actually really low, could be like ten percent. So taking that and translating it to a percentage for them is really helpful and really eye opening. So that's one of the things that we look at. Cash Flow is really important, and if there is an issue, if they're overspending, then of course we have to start talking about that. I'm a huge fan of reverse budgeting, especially for high earners, as the money comes in, let's put it to work right away and investing, you know, paying the bills and
then spending what's left over. Now, that is a process we have to leg into that. We can't just go from saving ten percent to thirty percent. So that's something that we will work through after that. Honestly, taxes, by far the biggest thing that people come to me for, whether they're a high earner or small business owner. Usually it's I get a lot of people coming in after tax time, after they've paid their tax bill and just trying to figure out how they can spend lesson taxes.
And it's interesting too, and you mentioned this that so much of the personal finance content is geared to kind of middle class, and as a result, I see a lot of really high earners coming in and they're putting a lot of money into like wroth accounts rather than pre tax accounts. So that's a mistake that I usually see for high earners, and so it's about kind of shifting that and then finding some other avenues like charitable giving.
There's a way to do that in a tax efficient manner, and really having a big checklist and kind of going through each item to see, can we save on taxes here? Can we optimize taxes anywhere? Yeah?
I got to think that that takes a big old I mean, I don't like paying taxes. I can't imagine somebody who's like breaking in some serious money and just what that feels like. The psychological component of that is, yeah, oh my gosh, it's painful. And of course, this time of year, as everyone's getting their documents together, I'm sure it's on a lot lot more folks minds.
I'm curious. I kind of laughed to myself when you said that.
It sounds like what you're doing is putting these millionaires on budgets. Do you get much pushback when it comes to that, because I'm like, I was about to say Mint, but you know, Mint, they're running off into the sunset. But when it comes to Whinea, yeah, whiteabb or copilot, when it comes to personal budgets, it seems so quaint and I could I feel like I could see a
lot of high earners really pushing back on that. Or are they able to embrace that because they're used to seeing balance sheets and their own profit and laws statements from their business.
No, I think they embrace it. I've rarely had somebody say I can't do that. I can't make those changes, because that's what they're coming to me for. You know, they know that there's some thing in there that isn't optimized. They're worried that they're not building wealth in the best way or building enough wealth. So if they come to me and that is something I notice that we're spending a bit too much, they're very receptive of it. And you know, I'm very careful with how I approach it too.
It's not a matter of you're spending you know, seventy percent of your income, We've got to cut that in half. It's more of let's walk through it, see where the money is going, and kind of figure out a plan to how it can shift it more to savings. So and there's several different ways to do it. Like I said, I love to show them on a percentage basis where their money is going. They hate to see the percentage that is going to taxes.
But when you.
Approach it or bring it up in a way, especially with taxes in a tax efficient manner, because even if we're talking about just a taxable brokerage account, there's a lot of.
Tax excuse me.
There's a lot of tax advantages within a taxable brokerage account. So if I frame it in that way, in a way that we're building wealth and we're going to be saving on taxes this way, they are much more receptive to it. And then many of them too, have a goal of generational wealth, so it does really bother them if they're not putting enough money away to where the next generation can't carry on this wealth. So it's just about framing it the correct way, making sure that it
aligns with their goals. Once they figure out their goals, it's very easy to say, if we want to hit these goals, this is how we kind of have to shift the money. So it's all about lining it up with what they first tell you that they want.
Yeah, it's probably also going to have a mindset shift on just kind of how we think about taxes too. I think oftentimes it's like taxes are the enemy, and in some ways more paying more taxes mean our goal.
They're the enemy.
Paying more taxes means hey, you're crushing it, right, And so it's like nobody in the right mind would take a two hundred thousand dollars pay cut in order to pay less taxes. And so I guess we have to kind of have that shift too and just realize, okay, cool or taxes might mean more success might mean higher investment returns and just a higher paycheck. Two. So that's one thought. But okay, talk to me too about investment accounts. Yeah, you mentioned the WROTH and that is something that Matt
and I talked about regularly. For middle class folks. The roth Ira is you know, a gotcha. It's incredible, Like everybody you know making average money should be contributing and hopefully maxing out the roth ira or let's say the WROTH four O one k. But if you if you're making five hundred and fifty k, well, the WROTH four O one k probably doesn't make nearly as much sense as the traditional because you're able to take a big
tax break now. And what yeah, what other accounts? How else would you steer high income earners into specific account types.
Yeah, I don't want to say that I steer them away from WROTH because that's not the case at all.
I mean a high earner.
To tell them that we can put money into an account and we get tax free growth. That is, you know, a huge benefit, something that all higher owners should know about. But it's really it's zooming out a bit and looking lifetime tax rate, not the year tax rate. Everybody's obsessed with how can I bring down taxes this year. What we should do is dooom all the way out and say, how can we pay the least amount you know, legally of course in taxes over our lifetime? And that's where
we and of course we can't. The variables that we don't know, like what's your future income? What are future tax rates?
Makes this a.
Bit complex, But there are some things that we do know, So what is your tax bracket today? And then maybe do we have an estimated guess of how that's going to change. So say somebody's making five hundred K, but they're very young and anticipate making over a million someday, maybe a wroth makes sense for them. It's hard to say who should go into what account until we look
at that person's individual life. I will say I'm a big fan of for high earners of this combination of doing pre tax four oh one ks and then a backdoor wroth. So for many of them they can't directly contribute to the there is a way to get around it as long as you don't have money in any IRA accounts. So that combination I love because those people can't make a deductible IRA contribution anyway, so we might as well fill that up with the backdoor wroth. So
I love that that combination. We don't completely exclude the wroth, but we bring it in when it makes sense. And that's one of the times where I see it makes the most sense, is complementing a traditional four one K contribution makes.
A lot of sense. Okay, I kind of want to walk this back a little bit, Rachel. I'm thinking about a second ago you were talking about generational wealth and how that's oftentimes either a goal for a lot of folks or maybe something that they're having a hard time kind of wrapping their heads around. Do you talk with a lot of clients about that, like more from like a philosophical point of view, like whether or not it makes sense to leave large sums of money to their kids.
I'm thinking about I read a history basically on the on the Vanderbilts and how one of them basically said that, like in HERI died, wealth is like cocaine to ambition. Essentially, Yeah, for the individual, because when you know you've got these literally life supporting sums of money coming your way where you literally don't have to work a day in your life, it changes your outlook. It changes how it is you approach your school, your education, It changes how you approach
just everything. And I'm curious if you've had any conversations like that with folks, or if it's more about hearing what their goals are and applying the nuts and bols to get them there. Do you ever kind of dabble in the is this a good thing for us to be doing in the first place?
Yeah?
No, And I love those conversations because one of the things I think is a little bit unique about my approach is that I really do like to bring the behavioral side to it. So we have a goal of generational wealth, you know, making my child a millionaire. Things like that I do I love to bring in. Okay, what are other ways we can do that that's not just passing on money? So obviously a great one is to pass on good money habits or a good work ethic.
I think those things should be priority number one over passing on money, because your point, most wealth is lost by the second generation when we look at generational wealth, and that's because we're passing on money without passing on the habits that the parents had to use to get that money. So if I had to pick one to pass on to my children, I had to pick one to inherit, it would definitely be the mindset and the habits.
Now, one thing I have.
To look at quite a bit is sometimes people have this goal and they over prioritize it over themselves. Even so they may not have built up enough wealth to someday be work optional quite yet, but they are shoveling money away into their children's accounts rather than their own. So there's the problem of you know, we have to be very careful with how we pass money on to our children and to make sure that it doesn't kill
their motivation or their drive. The other problem is we have to balance it with how we're saving for ourselves. So I see that problem. It's one of the most common problems I see is saving for your children before you save for yourself.
Yeah, filling up those five twenty nine before you've really contributed to your own retirement.
Accounts enough, yep, And yeah, we have to look at it in the context of their children again to really help to say, do you think your children want to be put in a position to where they might I frame this very carefully, but do we want to put your children in a position to where they might have to help you someday, because that's a very uncomfortable and awkward position to be in.
Or do you think your children would prefer.
You to take care of yourself and to be sure that you are self sufficient in your later years as well? So I have to frame that conversation very carefully, but it is extremely important to make sure that we get those priorities.
Sets the old airplane oxygen mask scenario right, yeah, and put it on yourself first. Talking about insurance, you mentioned your dad was an insurance guru. Rachel, it sounds like it passed the genes. You've got the same You've got the same mentality and a lot of the the same intelligence when it comes to money. What about insurance coverage for high income earners? Like being underinsured can be insanely costly, and so what insurance mistakes are high earners often making.
This is another one of the biggest mistakes I see is that they are really under insured. So we can look at life, disability.
Umbrella insurance.
Those are you know, the big three when it comes to protecting wealth, protecting your family.
So life insurance.
A lot of high earners, you know, accept what they get through their work and then don't really think about it after that. And you know, you get a little bit through your work, but usually not enough, especially if you're a high earner. So life insurance is really important to look at to make sure that if something were to happen to you, that your family is taken care of.
And I'm a huge fan too of getting life insurance on both spouses, even if one is just you know, the homemaker, not bringing an income, because what people often don't consider is that if something were to happen to that spouse, now we have a lot more expensive is that that spouse was taken care of like homemaking, you know, cleaning and taking care of the children, and all of these expenses are now going to come up if something
were to happen to that spouse. So people always think about protecting the spouse that is bringing in the income, but often don't think about the spouse that is taking care of a lot of expenses by being a homemaker. So that is a big mistake that I see is that we if we have one spouse insured, we don't have the other one insured. And the disability insurance, I think this one does not get enough attention. Life insurance gets all the attention, and we can talk about why big commissions.
But disability.
You know, you're far more likely to be disabled than you are to die prematurely. So disability is what's going to come in and pay you if if something, if you were to become disabled and not work anymore, not be able to work anymore. And the thing with disability you have to be really careful of is the wording of disability. There's own occupation, which is the premium wording, and disability just means if you were to be disabled and you can no longer work in the job that
you were just in, then you'll get paid out. So a lot of doctors need disability insurance because what could happen if you have a lower form of wording with disability insurance is you become disabled and the insurance company looks at it and says, well, you could work the front desk even if it's one fourth of your income or less, and they won't pay out because it's a poor definition of disability. So that is the one I really I don't see enough people having adequate coverage. And
then umbrella insurance. This is one that's really important for high earners or anybody with the significant net worth. So umbrella insurance is the insurance that sits on top of
auto and home. So auto and home has some coverage limits, and if something were to happen, if you were to get sued, or your child were to get in trouble, or your dog were to run out and bite somebody, your coverage with auto and home might not be an enough to cover, you know, beyond what somebody might sue you for, and then they can start going for your assets. Umbrella is what sits on top of that and covers the rest of your assets in case you were to
get into a really bad situation like that. So I rarely see anybody have umbrella insurance. And you can get a decent amount of coverage for for pretty cheap. So I always look at those. Those are the big three for high owners.
I love it, yeah, And it's the rare individual who is over ensured when it comes to some of these different to see that those are the financial.
Have like dialed it in.
It's just like, buddy, why do you even have this? And because they're got things a little too buttoned up. Honestly, that kind of makes me think of the Fire Movement, where folks have kind of gotten like where the cart's gotten ahead.
Of the horse a little bit.
And so we actually we want to talk to you a little bit about that that in addition to maybe entrepreneurship will get to all of that. Right after this, while we're back, we're still talking with Rachel Camp, specifically talking about how high earners can make more progress with their finances. Rachel, I know, I don't know if you would call yourself like, oh, a Fire adherent or if you're just kind of, like, you know, tangentially related to
the movement. I don't know where exactly you fit. But you've talked about kind of delayed gratification and how important that is. But then you also recently wrote about the downsides of delayed gratification, which is not something the Fire Moment movement is prone to really admitting.
It seems like this is something that you're wrestling with right now. Though as we speak, like the balances finding that balance first going to extremes. What are your thoughts and where do you kind of land right now?
Yeah, so I can tell you a little bit of my history with the Fire Movement. I actually became really obsessed with it, I guess you could say.
With my first job.
Didn't love the first job and had a little bit of just an obsession with money and the way. I viewed it as a way that I could have control and freedom over my life. And Fire Movement kind of found me or I found it at that perfect time where I was looking for a way to regain control of my life and to potentially look at, you know, shifting out of this job. So I found the Fire Movement and honestly just fell in love with it. I loved,
you know, your money or your life. I love all the people in the Fire Movement and I still have. I still appreciate it for what it's done, but I will I will say I was at one end of the spectrum there and now I've kind of come back
to the middle to more of a balance. My issue with the Fire Movement is what you mentioned, which is I think it delays too much gratification, and it became more and more apparent to me when I started working with clients actually and seeing that they had some of these goals like I want to take a trip with my family, or I want to move to a different city I don't love the city, and they were delaying all of it in the name of building up their
net worth. And being able to view them as an outsider really made me realize that we don't always we're not always really logical with money. Many of these people could have taken that vacation with no impact to their fire or minimal impact to their financial freedom number. So that really made me start to reflect on my own life. And then of course the book Die Was Zero came around and made a huge impact in the financial independence community. I felt like that book was written for us, like.
Kind of like a classic cold water to the face to the face, you know, just like, hey, what are you guys doing?
Yeah?
Yeah.
Bill Perkins came around and said, we're all being a little insane, So that was helpful. But he made some just great points, which is while our you know, our accounts are and our investments are growing and compounding, our health and energy are doing the opposite. So there are only things that we can do at certain points of our life. And one of it might be because our health and energy are going to decline, but it also might be because, you know, maybe you're aren't going to be
this young forever and they aren't. They're going to grow up. So those family vacations that you really want to take it may be the only time you can do it.
Taking your kids to Disney World at twenty two is it very different than taking them at like, you know, eight.
Yeah, I don't think they'd be into it two quite as much.
So, yeah, I mean things like that that you have to think about. And I was. I realized that.
I was putting off a lot of you know, vacations like that myself. I've always wanted to backpack Southeast Asia, and I've continued to put it off, you know, also building the business. That was a big reason for it too.
But finally, you know, reading the book and just doing a lot of reflecting on delayed gratification, I realized, I probably am not going to want to do this when I'm sixty years old, So let's bring it to you know, the front, make it a priority now, and if it hurts my savings rate a little bit, I'm fine with that. I have come to terms with a lot of the money that I'm saving and investing right now probably will never be spent by me. So again we look at
the extremes. We have this obsession with oversaving and then this obsession with spending everything that we've saved. I kind of want to land in the middle again and not have any obsession with money. If I leave behind millions of dollars, I've come to terms that that is fine. You might go to charities, might go to my future children, but I don't really care either to die with zero. So I've landed in the middle of kind of both of these extremes.
I like it, and I like what you said there too.
About he says something along the lines of realizing that there is there are only experiences, that there's only things that you can do today, Like there's a limited window of time to take advantage of some of these things.
And what's crazy is that we do that all the time when it comes to money, Like it makes me automatically think of a four to win K match with an employer, and it's like, what we would say is that if you don't take advantage of the match, you're being an idiot like that, money is not going to be there tomorrow, so you have to pounce on this opportunity.
That is what we say, But we don't.
Think in those same terms when it comes to life experience, and especially I mean you mentioned in the kids like that totally hits home having four kids, and that has allowed my wife and I to feel a little more empowered to like we're in a smaller home and we're like, should we renovate? It seems kind of ridiculous to add add onto the house, but we're like, well, now's the time because our oldest is ten. Yeah, in six years, she's not going to really want to hang out with
us anymore. So maybe we should go ahead and make this thing happen and I can continue to work. But as far as the kids being at home, like there, like you said, there's a there's a closing window of time that you have to keep in mind.
Yeah, and you know, we talk to bring it back to to generational wealth. Another thing that he talks about quite a bit and Die with zero is how people receive an inheritance at not an opportune point in their life. So usually once they're much older, fifties sixties and really
don't need the money at that point. So he makes a really compelling argument that we should be giving or helping our children when they most need the money, so maybe for their a down payment on their first home, or for student loans.
Something like that.
I do like the idea of that, and also donating during your lifetime to to be able to see your money be put to work. So there's something to giving your money away during your lifetime that I think can be really satisfying rather than just waiting to pass it on, you know, as an inheritance.
You're not maximizing the dollars and cents allow Warren Buffett giving it away, you know, after your death, but you are maximizing some of the joy that you can receive from seeing those dollars. And I think you can have a little bit of both again some balance the donor advice fund, stocking that up a little bit and then letting that money grow, but also giving it giving it away at like while you're while you're alive, while you're
still living. Okay, you've talked about building your business, and you know you've done a really good job with that. Owning a business can be beneficial too from a tax perspective. So can you talk maybe about some of the low hanging fruit that self employed folks can and should be taking, you know, taking advantage of.
Yeah, I mean, you know, obviously a big one is being able to deduct business expenses that you could not deduct as a W two employee. So home office not something you can deduct as a W two employee anymore, even a portion of your cell phone. All these things that before there is no deduction for you now get to deduct as a business expense as long as it
is an ordinary and necessary business expense. You know, again, we want to pay the least amount of tax possible, but always make sure that it's legal and above board and that we're tracking everything too. Now, after the business expenses, there's entity selection, which is really important. It's not going to be as important in the beginning, but once you start bringing in a serious amount of revenue, you might look at something like electing s Corp. Which can help
with deducting self employment tax. So that's something that was a milestone in my business that was really excited for when I was able to electes Corp and receive tax benefits from that and then two my favorite probably is self employed retirement accounts. So the awesome thing about a self employed retire account when we look at a solo for oh one k, for example, is now you get
to contribute as the employee and the employer. So if you're putting away a lot of money for retirement, or we just want to receive, you know, a big tax deduction, a solo for oh one k is a great way to do that because you get.
The employee contribution limits, but now.
You get to add in the employer contribution limits as well and put away you know, twenty twenty four. I think the total limit is sixty nine thousand, as long as you have the revenue for it and the cash flow, of course, but it is a way too for a lot of these high owners who are also business owners to receive a big tax deduction and put away a ton of money into retirement accounts.
That's right.
Yeah, And you've talked about how one of the reasons
you started your own business. Not only does it make sense financially from a tax deduction standpoint, but again kind of going back to kind of the fire mindset, can you talk about some of the other reasons that you to start your own business, because like, one of the things you encourage your listeners and your readers to do is to think about their ideal day and talk about autonomy and being able to kind of run the shows what your life looks like.
Yeah, so I mentioned, you know, my first job, and the thing that was challenging for me was a big thing that was challenging was my work environment. And I was in a room with five other guys. TV was on and it was so hard for me to be focused. And then on top of that, a lot of my performance was measured by you know, hours in a chair, so was she there eight to six rather than output I So all of that I really was not the biggest fan of when it comes to translating how I
was doing with my work. So I always wanted to be able to control my work environment, be able to control the hours that I want to work. You know, ironically I work way more now as a business owner, but it doesn't feel like quite as much because if I need a break at noon to go work out or go take a walk, I can do that and I can work later, and those things are so so
important to me. I think if There's one theme that I can point out when it comes to me and my view of money is control and control over my schedule and my time. And I know too when they look at when they research human happiness and what contributes to that, a big component of it is do we have control over our time and our schedule. And so when it came to starting my own business, that was really important to me. But also in the wealth management industry,
there's a lot of you know, traditional financial advisors. Like I said, it tends to skew at an older age, and I just was excited about kind of a newer and different way of doing things, one of that being a big emphasis on financial planning rather than investment management or insurance sales. I realized, you know, I could find a firm that does that, but there weren't that many out there, and the firm that I wanted to build, the idea I had behind it is to create a firm in a way where it's how.
I would want somebody to help me with my money.
And the only way I could really do that is to completely start my own thing, to have control over the process, to have control over how we operate. I knew the best way to accomplish that was to do it on my own, so that was a big motivator as well.
Yeah, I think I think of that as being the number one benefit of being self employed is kind of being able to steer the ship. And so, yeah, the time flexibility is great, but the ability to kind of eat what you kill and make more money is great too. But I think more than anything, it's kind of the creative oversight that you have and no one else can
be like, no, don't do that. I guess Matt can if it really sucks, if my ideas for your omnie, yeah, yeah, he's like a sorry, dude, that's not going to work. But for the most part, like yeah, it's it's a decision between the two of us and and nobody else has the oversight. And in all my previous jobs, it was somebody saying, yeah, nah, maybe six months down the road or actually that idea, we're not We're not driving with that, so let's now we're going to put that
on the back burner or the never burner. I'm like, oh man, that's it's so nice to be able to kind of have a lot more oversight over that. I'm curious to hear too your thoughts on debt, Rachel, because we haven't really talked about that. How do you help clients think through whether or not they should prioritize eradicating
debt from their life verse accomplishing other financial goals. So we talked about how, okay, cool, Maybe you actually don't need to be or some of your clients need to be investing a lot more, others might be overdoing it. But what about debt payoff? How does that factor in? And how how do you have those discussions?
Yeah, so you know, debt is an interesting one in personal finance. There's a lot of really strong opinions on it. And again, I one of my biggest pet peeves is blanket advice in the personal finance world. So I don't believe in old debt is bad, and I don't also believe in overleveraging yourself. So it's again a balance and it always depends. But when it comes to debt, I
never ignore the behavioral side of it. I always ask people what their opinion of debt is and how they feel about having debt if they do have it, and there are a lot of them that just hate it and it can be really low interest rate debt which could be three or four percent, and it still bothers them to have that outstanding debt. So I believe every decision we should start with the numbers and then we
should look at the behavioral side. So when it comes to paying down debt, you know, of course I'll run the numbers on this is what it looks like if we pay down the debt versus invest the money, and here's, to the best of our abilities, how we can translate that to a dollar amount or an opportunity cost. And so they'll look at that, and then I'll say, but I don't want to ignore the behavioral side of this.
And if it really bothers you to have this debt then and we're still funding all of your other financial goals and those are on track, then I'm fine with going ahead and paying it down. Now, if we have a discussion where we're struggling with financial goals, we're struggling with not investing enough, and they want to pay down their two percent debt, you know that is something that I might push a little bit more to the investing side.
I certainly don't want to ignore the numbers, and I do believe people hire me to really optimize the numbers for them and optimize building wealth. So I'm not afraid to push people in one direction, but never at the expense of their peace of mind. I never want anybody to stay awake at night thinking about something if we can easily fix it. So, like everything, it's a balance, but with debt, I consider both components to it and we just go from there.
Nice.
Okay, So, speaking of bespoke a financial advice, we're going to talk about how you recommend for folks to approach hiring a financial advisor, and we'll get it's a that and more with Rachel Camp.
Right after this our we're back. We're still talking with Rachel Camp, and Rachel I want to talk about financial advisors. Let's get a little meta. We're talking to a financial advisor about financial advisors. Obviously you're going to say, don't ever hire a financial advisor. They're terrible. No, that's a default, right default answer. Well, you don't seem like the kind of person who's going to have this hard pitch sales pitch for someone who comes to you like here's why
you need to hire me right now. But like, yeah, what do you tell folks who are thinking of hiring you, And what would you tell somebody out there who is thinking hiring a financial professional might make sense at this point in my financial journey, but I'm just not sure. How do I know if I'm ready?
Yeah, you know, in another way that I built my business was I never wanted to have to do a hard sell. I only wanted to be able to help people who I really thought I could help. So sometimes I have people come in and they're kind of taking care of the big things. There's not a way that I can see that can really optimize, and so we'll decide not to work together. So I'm not afraid to, you know, turn people away who I don't think need a financial advisor yet.
So you might just look at their numbers, look at their and say you're doing a great job. Go on your marry way, keep it up.
Yeah, unless there is something you know that they really want me to help with, like a behavioral side to it or starting a business. But yeah, I'm not afraid to turn people away and say I or say I don't think I'm the best person to help you. But maybe there's somebody else that specializes more and what you're
looking for that can help you. I'll be honest. Most of the time it's younger people who are kind of just starting out, and that I say, I usually recommend a book to them or some other resources, but I don't think they're at the stage quite yet where they need a financial advisor.
Is that because more of their money should be going towards investments than paying for the advice and the help of an advisor.
Yeah, I don't ever want somebody to pay me and I can't provide more value than what they're paying me. Now. I can't guarantee that, of course, but if I can't see a way that I can provide multiples of what you're paying me, then I don't really want to take you on. That'd be stressful for me, and of course
it wouldn't be helpful for you. So a lot of people when they're just starting out, it's really hard to provide that value because it's just a matter of you just got to put more money away, get more money invested. And once they've reached that, or they've reached a certain point where their lives are just a bit more complex, like having a family, is a great time to look more seriously into some financial planning. Starting a business is
a really important time to do that too. And then too, you know, say somebody is a little bit older and they haven't put enough money away and they really need help with figuring out how to carve that out. That's something I can help with as well. But for somebody who's on the fence or who's thinking, you know, I feel like I've got a good handle on things, I'm just not sure I'm optimized. I hear that all the time.
I offer one time financial plans, and I have a lot of peers who offer them to who are great, And for a lot of people that makes a lot of sense for them to kind of come in, pay a financial advisor a one time fee, and the plan, you know, barring anything really drastically changing in their life, should hold up for a good five to.
Ten plus years.
So that is something if I meet with somebody and I think, you know, ongoing, I don't know if I can provide a lot of value, but I do think we could set up a good financial plan for you and you'd get a lot of value from that. So a lot of people on the fence, I usually recommend they a they meet with a financial advisor. Most people have complimentary consultations and they shouldn't be sales y. If
they are salesy, then you can just leave. But after that, you know, you can always start with a financial plan and see if you think it's really helpful to you.
Nice. Okay, so you just said that these financial plans should be good for like maybe five to ten years, which is a timeframe. That just made me think of something. So let's talk about fund selection for your clients. Like, we know that you're a fan of low cost funds passive investing, but how do you help clients think through which funds they shouldn't and specifically when their asset allocation
should change. Because you get to a certain point and you're starting to look ahead, I don't know, I would like to hear your inswer here. Maybe five maybe ten years and as folks are thinking about I might be needing to access some of those funds. What's your uh yeah, what's your time frame there?
Yeah?
So shifting more into the fixed income side again, you know, I hate to say it, as always it depends, but with a client, we're going to look at first income streams. So I have a lot of clients where they might have some real estate investments or just some income coming in from other sources that even if they were to
fully retire, they would continue to get that income. So we look at that first because sometimes you'll have clients and I used to work with a lot of retirees and one of the issues I saw is they had pensions coming in in Social Security, and all of those income streams were more than covering for their living expenses, and you know, they were all fixed income streams, so they could actually afford to be a bit more aggressive, and they were a bit too conservative when you considered
these fixed income streams coming in. So that's something that I look at. But let's say somebody has no other income streams, then really you know, a good rule of thumb is as you get within ten years of retirement, we start fifteen to ten years, we start to shift more into fixed income. And once you get to the point where you're really close to retirement, we might be looking out a seventy thirty portfolio, and then say you're ten years into retirement or fifteen years into retirement, then
we're going to we might start to shift to sixty forty. Again, very basic rules of thumb what's more important here is what do you need from the portfolio? So if you have a really big portfolio, but you're not spending that much or you're not requiring that much, then we can actually put a significant amount of money, leave it in the equity side. As long as we've got a good ten years in the fixed income side for your income, you.
Know, we should be good.
So I like to start with that is what's the income that we're going to need. But if you're just relying on rules of thumb seventy thirties, where I see most people enter into retirement.
With, okay, So you talk to me about just kind of the services financial advisors offer. Now, it seems like those offerings have changed in the past fifteen or twenty years that the financial advisors almost in my mind, resemble more like life coaches with a ridiculous amount of knowledge about money and investments and tax planning and so. But I feel like at times in the past, the financial advisor's role was kind of like I'll handle your investments
and you've got to figure out the rest. But that there's just a lot more that the modern financial advisor can offer to a person. Do you think that's true.
Oh yeah, So I think the modern financial advisor kind of came from this need for tax planning.
First.
So one of the biggest complaints that I see is somebody will come to me and say, my CPA doesn't help me at all with tax planning, and by the time I meet with them, you know, all the things that I could have done, it's too late to do.
Now.
Most CPAs or accountants are just going to file your taxes unless you ask them for something else, and if they offer that, that is primarily what they do.
So financial plan has.
Really stepped in to kind of fill that role to be there with you throughout the year to take a proactive approach to tax planning. And when it comes to adding value, that's where I see some of the most value added. And then too we talk about risk management or insurance. There is a lot of risk that people
are exposed to that they're not aware of. So a good financial planner should be looking at your risk management, insurance, but also cash you know, insurance for your business, all these different things that you might not be thinking of. Cash Flow planning of course, figuring out where you're mind is going and how to optimize it. Retirement planning. That's what financial advisors should have always been doing, but it's shockingly more of a thing now. You know, education funny,
any financial goals planning, but a good financial planner. And what I think we're doing now is taking just a much more holistic approach to it. You know, when I first started out, what we asked for were your investment statements from a client. Now the document checklist is really long. It's tax returns, it's employee benefits handbooks, it's paced ups, it's auto and home insurance policies, it is Yeah, it's everything. So really it's they should be the CFO of your life. Yeah,
that's the approach I like to see. And yeah, I have so many peers and people who are kind of coming through the next generation that see this shift, and
it's really fulfilling work too. I was out to dinner with somebody who is in more of a he's really young, he's younger than me, and he's in a traditional advisor role still, and he was talking about how he wanted to shift more to you know, what I'm doing and what some other people are doing, and I told him it's once you've had the experience of being in the role where you're primarily an investment manager and now you shift over to a financial planner and being a CFO of somebody's life.
It is ten.
Times more fulfilling because you feel so good about the work you're doing and you can really see all the value you're adding, which investment management, it's a little hard to see the value there.
So just the number going up, you're like helping families achieve the goals they want. I get that. Yeah, the smile on their face.
More of an impact that you're going to be able to have knowing that that you are involved in all these other areas of life and that you know that they're helping them to achieve that. It goes back to like we're saying at the beginning that hey, maybe you need to show up with your budget as well, be gus, let's talk about your spending. Yeah, but Rachel, I mean, I think it's an awesome job that you're doing and specifically how you're approaching financial planning with your specific clients.
But yeah, where can folks learn more about you? And want you share a little bit too about your new project the new podcast.
Yeah, so just launched Becoming Work Optional. With my co host Matt Garrisik. So we have right now episodes coming out every other week. We're kind of easy into it. We both have businesses that we run as well. But you mentioned Twitter. I'm most active on Twitter, Camp Underscore Wealth. I do have an Instagram, not very active there, Camp Wealth, but my newsletter. I love my newsletter as well, which you can sign up on my website, Rachelcampwealth dot com.
Awesome, Rachel, thank you for joining us. We'll pull links all those all those assets in our show notes and yeah, I hope to have you on the podcast again one of these days in the future.
Yeah, thanks so much for having me.
All Right. That was Rachel Camp of Camp Wealth fame Like honestly, I love.
She's like a Taylor Swift of wealth management.
I love how she's approaching personal finance with the client's Oh I think I've got my big take so I'll.
Pitch it to you. What's your big takeaway?
Because I almost almost.
Ran away with it. You could have if you wanted to. I don't want to be selfish. You first, Oh, well, thank you age before I don't know, so I think my biggest segaway or there was a lot of good stuff in this episode, especially if you are a high oncome earner. I think there's a lot of like practical
takeaway knowledge. But when she mentioned that the latte that she gets, however many times a week, is an investment, I initially bristle against that because just ask my mom, like every time she's like, my mom is way too many times called an inanimate object or consumable an investment. And I look at her, I give her the stink and I'm like, what are you thinking about an investment?
Don't call it an investment, mom. And so when Rachel called the latte an investment, I was like, yeah, come on, it's not, it's not.
I had a muture mic Joel's like shum.
And so I was initially bristling, But then when she ran the numbers and guess what, it is true, Like, the more I think about it, you can consider that. I think an investment or at least a discounted way to work somewhere. I guess, substitute, you got to get out of your home office sometimes, right, And so yeah, I guess I need to be less judgmental. I realize that. But also I think, yeah, yeah, I guess you can call that an investment and I'm not. So that's my
big takeaway. I'm growing as a person that you're.
Just less judging of other people around you and what it is that they call investments and spend money.
On slowly, but sure, look I'm getting there, all right.
My big takeaway is going to be when she was talking, I can't remember what we asked her, but what she said in response was that one of the one of her biggest pet peeves is blanket advice. And it's so true because there are I think it's when we're talking about debt, because that's one of those one of the topics that people are always like, oh, you can never have debt, or oh you have to always use debt to its fullest advantage, to your fullest advantage if you're
trying to optimize. But so much of it comes down to the individual. What's going on in their personal finance situation, what's going to weigh on their mental health, like, what is going to speak to them as a person. And this is going to be a plug for folks to send in listener voice and memos to for ask kind of money episodes because what I realized when she was saying all of that.
Was that, man, that is exactly what we're.
Able to do when it comes to answering listen questions on our Monday episodes because we're able to take into account some of those additional details, some of that nuance that provides, well, shoot, had you said this, we probably would have recommended to go ahead and pay it off. But you you said all these other things, and with that knowledge, with that in mind, we're going to say keep it around. In this example, debt is the is the topic.
But I agree there's a there's a whole lot of people in the personal finance advice space and they treat everything like a hammer. It's like it's always debt is dumb, or it's always invest sixty percent of your income whatever I mean that that would be the fire crowd or whatever.
Or you're an idiot and not consider using credit cards to take advantage of the of the perks and the benefits and the op It's it's personalized, and.
So you and I I know it's not quite as doesn't make the headlines in the same way the shades of gray sorts of things that we the kinds of things that we weigdhe into here on this podcast on a regular basis. But that's what we try to do is kind of take all and really kind of even when we're spouting something that we think is true, we try to give the caveats every time because it's not always true for every person at all times, and we do our best to kind of cover that game. And
Rachel does that too. She the thing that's ever answered work couched like that, And that's just the sign of someone who's who's smart and has lived some life and has encountered a bunch of people who have different sorts of financial situations going on.
You know, man, all right, our beer was all citra everything. This was a beer by other Half. This was another one that you picked up while you're out there in New York?
Is that right?
What your thoughts?
Do you diget? This one was juicy, not over the top, a nice approachable ipa but like but still heavy in that New England juicy realm so good. I loved it.
I was just bummed to that this is one that we shared as opposed to us each having one.
But it was bright, it was citrus case couldn't hold anymore, man, I get it. Super citrusy Bright had all this like it wasn't bitter at all. If you are turned off by the.
Bitter ipa like those West Coast IPAs, you got to look into some of those New England.
I pas, specifically Other Half.
They make some incredible ones that drinks more like orange as I was gonn say adult OJ So good glad you know I did get to enjoy one of these today, buddy, But I think that's gonna be it for this episode. We'll make sure to have links up at our show notes at how to money dot com, but Buddy, that's gonna be it until next time.
Best Friends Out, Best Friends Out,