With the new year rolling in, we've been stockpiling money questions from listeners, and it felt like the perfect time to finally answer them. This episode is all about financial wellness for realtors, and we want to say up front: we're not CPAs, financial advisors, or bookkeepers. There's no single right answer here, but there's a lot of value in just talking about it out loud, because most agents never get to hear what anyone else's numbers actually look like.
We get into emergency funds, retirement accounts, exit plans, and how to actually disperse a commission check, plus Alissa's honest story of owing $12,000 her very first year because she had no idea agents had to save for their own taxes. We also break down the difference between an LLC and an S corp, when it makes sense to make that switch, and a simple profit plan framework (pay yourself, rainy day, opportunity, future, fun, impact, and taxes) that completely changed how one of us thinks about money.
If you've ever felt behind on your finances, overwhelmed by all the "shoulds," or embarrassed that you don't have a five-year plan, this episode is basically permission to start small and build from here.
Here's what we cover in this episode: -Why tracking your numbers, even imperfectly, is step one of financial wellness -How much of an emergency fund fellow agents are actually saving (three to six months is the sweet spot) -Why diversifying beyond real estate investments brought real peace of mind -Retirement account basics: SEP IRAs, 401(k)s, and Roth accounts explained simply -Why neither of us has a firm exit plan, and why that's more common than you'd think -A real story about an agent who built a rental portfolio one un-sold house at a time -Alissa's real story of owing $12,000 her first year in real estate and not knowing why -How commission dispersing has evolved from separate bank accounts to one simple business account -The difference between an LLC and an S corp, and around what income level it starts to matter -Why having one business account makes bookkeeping dramatically easier -Why the standard mileage deduction beats manually tracking every mile -A simple monthly and yearly budget system for staying ahead of recurring business expenses -Capital gains tax considerations when flipping or selling investment property -The profit plan framework: pay yourself, rainy day, opportunity, future, fun, impact, and taxes -Why hiring a real financial coach isn't required to get strategic about your money
Key quotes from this episode: "You should invest in what you know." - Alissa, quoting a Gary Vaynerchuk interview "Order produces results, and the same is true with your money." - Katy "I probably should have been doing an S corp way, way, way sooner." - Alissa "You just have to start now, and by this time next year, you'll be so glad you did." - Katy "Everything's fine, all you have to do is start small, and it will grow." - Katy
Products, people, and previous episodes mentioned: -Episode 76: Karen Bond, CPA, on realtor taxes -Episode on number tracking (early 2024) -Jamie Trull, CPA and financial educator, and her PROFFIT framework -The Goal Digger Podcast
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