1 00:00:00,000 --> 00:00:14,760 Hey guys, welcome back to the Homework Assignment Podcast. 2 00:00:14,760 --> 00:00:20,840 I'm your host, RJ Patino, and today we are going to discuss a very important attribute 3 00:00:20,840 --> 00:00:26,680 or perspective to have when you are trying to discover how to balance your home and work 4 00:00:26,680 --> 00:00:27,680 life. 5 00:00:27,680 --> 00:00:35,800 So that topic is finances, how to run your finances, how to manage it and be able to 6 00:00:35,800 --> 00:00:40,560 anticipate good times, bad times, all that fun stuff. 7 00:00:40,560 --> 00:00:47,360 I've been asked how I run my finances before and I used to think growing up that I was 8 00:00:47,360 --> 00:00:50,520 kind of doing it not the right way. 9 00:00:50,520 --> 00:00:55,560 I think over time I've realized that there's obviously multiple different ways that you 10 00:00:55,560 --> 00:01:01,560 can control, manage your finances and you've got to find the best way that works for you. 11 00:01:01,560 --> 00:01:11,720 I will say from a business perspective and from the game of business or the hustle, I 12 00:01:11,720 --> 00:01:18,240 do have a very strong opinion on spending money specifically. 13 00:01:18,240 --> 00:01:23,720 I know a lot of people or one of the main things that I do hear about finances and that 14 00:01:23,720 --> 00:01:26,640 I've seen a lot on social media is Dave Ramsey. 15 00:01:26,640 --> 00:01:32,440 Dave Ramsey has had a great curriculum that has worked for a lot of people. 16 00:01:32,440 --> 00:01:38,040 I know some of my clients have used Dave Ramsey's curriculum to help them gain the money and 17 00:01:38,040 --> 00:01:42,600 the savings that they need to do a remodel or buy a new home. 18 00:01:42,600 --> 00:01:51,280 I think that works in a lot of people's situations and in what I call the normal life structure 19 00:01:51,280 --> 00:01:59,480 of 9 to 5 and having a typical day to day, Monday through Friday job. 20 00:01:59,480 --> 00:02:03,960 But I think when you are running a business, scaling a business or you are creating something 21 00:02:03,960 --> 00:02:14,120 for yourself to finance your family, that doesn't really apply as much. 22 00:02:14,120 --> 00:02:19,480 It may not even apply in a normal, ordinary job, 9 to 5 job. 23 00:02:19,480 --> 00:02:26,960 I do think, well I read this book not too long ago, it was a few months back, it was called The Millionaire 24 00:02:26,960 --> 00:02:29,880 Next Door. 25 00:02:29,880 --> 00:02:38,280 This book talked a lot about how a normal average household with an average household 26 00:02:38,280 --> 00:02:40,800 income can become a millionaire. 27 00:02:40,800 --> 00:02:48,960 I remember a specific example from this was there was a teacher and a firefighter that 28 00:02:48,960 --> 00:02:49,960 they were married couple. 29 00:02:49,960 --> 00:02:54,240 The wife was a teacher, the husband was a firefighter. 30 00:02:54,240 --> 00:03:01,480 The example talked, and this was a real life example, this wasn't fiction, they were able 31 00:03:01,480 --> 00:03:07,480 to over years bring in together about $65,000 a year. 32 00:03:07,480 --> 00:03:12,200 Now this is the early 2000s, so that's a very important aspect to understand. 33 00:03:12,200 --> 00:03:21,760 I know out here in Gilbert, Arizona, the average household income is I think over $100,000 34 00:03:21,760 --> 00:03:24,600 or just below it. 35 00:03:24,600 --> 00:03:31,360 Early 2000s, this couple was bringing in $65,000 a year and by using their money right, they 36 00:03:31,360 --> 00:03:34,080 were able to become millionaires. 37 00:03:34,080 --> 00:03:39,040 So like I said, I think there's a lot of ways that, one, you can save your money, you may 38 00:03:39,040 --> 00:03:42,200 need to, depending on what your job is, depending on what your profession is, and obviously 39 00:03:42,200 --> 00:03:43,200 there's nothing wrong with that. 40 00:03:43,200 --> 00:03:48,800 You know I'm really trying to focus on business owners and really finding that balance between business 41 00:03:48,800 --> 00:03:50,960 and work life and your home life. 42 00:03:50,960 --> 00:03:57,480 So with that perspective of running a business, and again, it depends on where you're at in 43 00:03:57,480 --> 00:04:00,280 your situation, but here's the way I've always lived. 44 00:04:00,280 --> 00:04:07,160 This is before I had an actual very successful business because it does take time to make 45 00:04:07,160 --> 00:04:12,520 money, just because you're pulling in $3 million a year in revenue does not mean you're making 46 00:04:12,520 --> 00:04:13,520 money. 47 00:04:13,520 --> 00:04:15,280 You need to make sure you're making money. 48 00:04:15,280 --> 00:04:18,280 In the beginning of your business, those are the hard years. 49 00:04:18,280 --> 00:04:22,600 Really it's going to take three to five years to actually be able to finally turn a profit 50 00:04:22,600 --> 00:04:25,800 in a business. 51 00:04:25,800 --> 00:04:33,920 So it does take time, but the way I've always lived my life is I've never worried about 52 00:04:33,920 --> 00:04:34,920 spending money. 53 00:04:34,920 --> 00:04:38,520 Okay, I think there's two things to really consider here. 54 00:04:38,520 --> 00:04:43,120 Number one, I've talked about this before, the broke mindset. 55 00:04:43,120 --> 00:04:46,920 Always bringing yourself down to zero, even when you have something, even if you have 56 00:04:46,920 --> 00:04:50,880 a million dollars in the bank, wake up the next morning, look at your bank account, see 57 00:04:50,880 --> 00:04:56,160 those six figures, get it out of your mind, act as if you have $0. 58 00:04:56,160 --> 00:05:02,360 And what that's going to do for you is that's going to keep a flame lit under you 24-7 all 59 00:05:02,360 --> 00:05:07,160 day long to go and get your money, go and get what's yours to hustle. 60 00:05:07,160 --> 00:05:14,960 And that's the number one aspect or trait in my opinion that we need to have when we're 61 00:05:14,960 --> 00:05:16,200 thinking about finances. 62 00:05:16,200 --> 00:05:22,480 And number two is understanding that money makes the world go round. 63 00:05:22,480 --> 00:05:24,480 You need to spend money. 64 00:05:24,480 --> 00:05:25,480 Now don't be stupid. 65 00:05:25,480 --> 00:05:30,680 Okay, you obviously we all have bills to pay, we all have responsibilities, but understand 66 00:05:30,680 --> 00:05:32,160 that you do have to spend money. 67 00:05:32,160 --> 00:05:34,440 Do not be scared to spend money. 68 00:05:34,440 --> 00:05:36,440 Don't be scared to invest. 69 00:05:36,440 --> 00:05:43,320 Don't be scared to just buy things that you may need for your personal life or your business 70 00:05:43,320 --> 00:05:44,400 or whatever the case is. 71 00:05:44,400 --> 00:05:47,760 Because when you spend money, that is good for the economy. 72 00:05:47,760 --> 00:05:54,320 You go to buy another dump trailer, you pay 10 grand for a dump trailer. 73 00:05:54,320 --> 00:05:55,320 That guy makes his profit. 74 00:05:55,320 --> 00:06:00,180 And if that guy knows how to spend money, he's going to spend his money and that's going 75 00:06:00,180 --> 00:06:03,200 to go to somebody else and it just it makes the world go round. 76 00:06:03,200 --> 00:06:05,040 So spending money is very important. 77 00:06:05,040 --> 00:06:09,960 When you get too many people hoarding their money, so you get a whole city that is on 78 00:06:09,960 --> 00:06:13,040 this Dave Ramsey thing and they're just saving every dollar they can. 79 00:06:13,040 --> 00:06:15,400 They're sacrificing going out to eat. 80 00:06:15,400 --> 00:06:21,040 Okay, say I think in Gilbert, I don't know fully, but let's say there's 100,000 people 81 00:06:21,040 --> 00:06:22,040 in the city of Gilbert. 82 00:06:22,040 --> 00:06:29,160 If everybody hops on the Dave Ramsey train and they're all saving going out to eat, to 83 00:06:29,160 --> 00:06:34,080 eliminate it, to maybe once every two weeks or let's say a couple of times a month, what's 84 00:06:34,080 --> 00:06:36,320 going to happen? 85 00:06:36,320 --> 00:06:39,760 There are a lot of restaurants that are going to go out of business. 86 00:06:39,760 --> 00:06:41,560 And when they go out of business, what happens? 87 00:06:41,560 --> 00:06:42,800 They don't have money. 88 00:06:42,800 --> 00:06:45,180 And when they don't have money, they don't go spend money. 89 00:06:45,180 --> 00:06:49,960 And it ends up coming right back around to you and the way you make your money. 90 00:06:49,960 --> 00:06:54,160 So understanding that spending money is not a bad thing. 91 00:06:54,160 --> 00:06:56,440 Understanding that, yes, have a savings. 92 00:06:56,440 --> 00:06:57,760 Okay, save up. 93 00:06:57,760 --> 00:06:58,760 Great. 94 00:06:58,760 --> 00:06:59,760 That's what you want to do. 95 00:06:59,760 --> 00:07:00,760 Fantastic. 96 00:07:00,760 --> 00:07:04,040 Even if you run a business, but understand that you need to spend money. 97 00:07:04,040 --> 00:07:05,040 Okay. 98 00:07:05,040 --> 00:07:06,040 Share your money. 99 00:07:06,040 --> 00:07:07,040 Hire companies. 100 00:07:07,040 --> 00:07:08,040 Okay. 101 00:07:08,040 --> 00:07:09,840 Support small businesses. 102 00:07:09,840 --> 00:07:13,960 Spread your money so that it comes back because if you hoard it and you hold on to it, it's 103 00:07:13,960 --> 00:07:15,640 not going to come back. 104 00:07:15,640 --> 00:07:17,800 And that is a very important aspect to understand. 105 00:07:17,800 --> 00:07:24,480 And I'm not, I don't know a lot about economics, the statistics or anything like that. 106 00:07:24,480 --> 00:07:27,960 I'm not really into any of that, but I do understand how money works. 107 00:07:27,960 --> 00:07:32,360 And I do understand that cashflow is very important for an economy because I know it's 108 00:07:32,360 --> 00:07:33,360 important for my business. 109 00:07:33,360 --> 00:07:40,040 That is the number one thing that takes priority 98% of the time on a day to day basis is making 110 00:07:40,040 --> 00:07:41,040 sure that I have cashflow. 111 00:07:41,040 --> 00:07:42,040 Okay. 112 00:07:42,040 --> 00:07:43,680 Because if I don't have cashflow, what happens? 113 00:07:43,680 --> 00:07:45,240 I can't pay people. 114 00:07:45,240 --> 00:07:46,400 All right. 115 00:07:46,400 --> 00:07:50,740 So understanding that money makes the world go around. 116 00:07:50,740 --> 00:07:54,360 It's a circle of life and Benjamin, he's all up in there. 117 00:07:54,360 --> 00:08:00,560 So if you are trying to save money, like I said, that is great. 118 00:08:00,560 --> 00:08:04,960 But going back to my experience, I really have kind of always sucked at saving. 119 00:08:04,960 --> 00:08:07,040 I've always spent money. 120 00:08:07,040 --> 00:08:12,160 And I think for me personally, and again, this is an opinion when I'm spending money, 121 00:08:12,160 --> 00:08:13,960 I know I got to make more money. 122 00:08:13,960 --> 00:08:14,960 Right? 123 00:08:14,960 --> 00:08:17,640 So if I, my wife's fantastic. 124 00:08:17,640 --> 00:08:19,880 First and foremost, I want to make that very clear. 125 00:08:19,880 --> 00:08:26,520 She was with me when I was making $3,000 a month and had a beat up truck till now. 126 00:08:26,520 --> 00:08:34,680 And so she she's never been very high maintenance from the day that I met her. 127 00:08:34,680 --> 00:08:39,440 I think that I may have turned her into a little bit of high maintenance, but that would 128 00:08:39,440 --> 00:08:43,720 be more of my my issue more than hers. 129 00:08:43,720 --> 00:08:51,200 But I know for a fact that she being with me from the beginning, she knows how to live 130 00:08:51,200 --> 00:08:52,920 without money or with no money. 131 00:08:52,920 --> 00:08:54,760 And now she knows how to live with money. 132 00:08:54,760 --> 00:09:00,400 And the one thing I like about our relationship is that I know my wife is, you know, she's 133 00:09:00,400 --> 00:09:05,360 going to spend money and in turn, I know because she's spending money, I need to go get money. 134 00:09:05,360 --> 00:09:08,360 Okay, it's it's and again, this is an opinion. 135 00:09:08,360 --> 00:09:09,360 Okay. 136 00:09:09,360 --> 00:09:14,080 This doesn't may not work for many people, but for me, this is just this is my experience 137 00:09:14,080 --> 00:09:15,800 is what this is what drives me. 138 00:09:15,800 --> 00:09:16,800 Okay. 139 00:09:16,800 --> 00:09:21,680 If I know my wife's getting eight packages from Amazon a day, what do you think I'm doing? 140 00:09:21,680 --> 00:09:25,720 I'm not sitting on the couch moping, yelling at her not to spend money. 141 00:09:25,720 --> 00:09:27,280 That's one way to go about it. 142 00:09:27,280 --> 00:09:29,200 No, in turn, I'm going to work. 143 00:09:29,200 --> 00:09:33,560 I'm like, okay, I need to go land six more contracts because my wife is about to go order 144 00:09:33,560 --> 00:09:37,240 a freaking thousand dollars worth of baby clothes that we don't need that my daughters 145 00:09:37,240 --> 00:09:39,520 are going to grow out of in a matter of a week. 146 00:09:39,520 --> 00:09:45,360 So and I of course, there's limits that I you know, we've had great conversations about, 147 00:09:45,360 --> 00:09:47,480 you know, our finances and where we need to be. 148 00:09:47,480 --> 00:09:53,040 And you know, my wife's not out there blowing $4,000 on Louis bags every single week. 149 00:09:53,040 --> 00:09:55,000 Okay, so that's not my point here. 150 00:09:55,000 --> 00:10:01,720 My point is that allowing a little bit of freedom in your finances can have some benefits. 151 00:10:01,720 --> 00:10:05,160 Number one, just like we talked about the circle of life, the economy, what you give 152 00:10:05,160 --> 00:10:06,600 comes back around. 153 00:10:06,600 --> 00:10:12,800 And number two, it keeps you aware that you constantly need to be bringing money in. 154 00:10:12,800 --> 00:10:17,960 Okay, so finances can be tricky. 155 00:10:17,960 --> 00:10:23,300 And I think number one, if you are in a relationship, you have a spouse, you I mean, having that 156 00:10:23,300 --> 00:10:25,520 communication is super important. 157 00:10:25,520 --> 00:10:28,960 If you guys are not on the same page, you guys are going to have problems. 158 00:10:28,960 --> 00:10:33,640 If you are stressed at work, and you know, going back, for example, to the times I mean, 159 00:10:33,640 --> 00:10:35,240 my wife have talked about finances. 160 00:10:35,240 --> 00:10:40,240 There are low points in business, you know, nothing stays great and smooth 24 seven. 161 00:10:40,240 --> 00:10:41,740 That's just not reality. 162 00:10:41,740 --> 00:10:45,680 If you are expecting that going into building a business or scaling your business, you are 163 00:10:45,680 --> 00:10:47,000 being fooled. 164 00:10:47,000 --> 00:10:49,200 That is not going to happen. 165 00:10:49,200 --> 00:10:51,720 And I'm gonna go on a tangent there in a minute on that. 166 00:10:51,720 --> 00:10:52,760 So I'm gonna put that over here. 167 00:10:52,760 --> 00:11:01,520 But if you can understand how to have freedom with your money, you will be able to create 168 00:11:01,520 --> 00:11:03,040 a better life for yourself. 169 00:11:03,040 --> 00:11:07,040 And again, I'm speaking on experience, and I believe if it works for me, it can definitely 170 00:11:07,040 --> 00:11:09,040 work for other people. 171 00:11:09,040 --> 00:11:17,680 And going on to this tangent about, you know, high and lows, there's a lot of people and 172 00:11:17,680 --> 00:11:21,760 I was I was a little bit subject to this. 173 00:11:21,760 --> 00:11:26,200 I had a little bit of understanding from a mentor of mine of how it works. 174 00:11:26,200 --> 00:11:30,520 But you really don't understand anything until you experience it, right? 175 00:11:30,520 --> 00:11:32,320 You can learn it all day long. 176 00:11:32,320 --> 00:11:33,760 You can hear about it all day long. 177 00:11:33,760 --> 00:11:38,480 But until you actually get some experience with what that is, you don't fully learn it 178 00:11:38,480 --> 00:11:40,480 and understand it 100 percent. 179 00:11:40,480 --> 00:11:44,800 So when you when you're building a business, a lot of people, they may have a great business 180 00:11:44,800 --> 00:11:45,800 idea. 181 00:11:45,800 --> 00:11:46,800 You know what? 182 00:11:46,800 --> 00:11:47,800 Okay, we're going to take 20 grand. 183 00:11:47,800 --> 00:11:51,280 We're going to put it into this pizzeria and we're going to just make a bunch of pizzas 184 00:11:51,280 --> 00:11:55,640 and we're going to get customers and have them come in and you know, our profit and 185 00:11:55,640 --> 00:11:56,640 we need this much revenue. 186 00:11:56,640 --> 00:11:57,880 We're going to profit this much. 187 00:11:57,880 --> 00:11:59,120 Everything sounds great and dandy. 188 00:11:59,120 --> 00:12:03,040 And you guys, your plan is guaranteed on, you know, 10 people a day buying an extra 189 00:12:03,040 --> 00:12:05,920 large pizza and you guys will hit your profit margin. 190 00:12:05,920 --> 00:12:09,240 Okay, you could have the most solid plan in the world. 191 00:12:09,240 --> 00:12:15,200 But if you are not accounting for the low points, if you are not accounting for the 192 00:12:15,200 --> 00:12:22,200 unpredictable life and world we live in, you are going to fail immediately. 193 00:12:22,200 --> 00:12:24,200 Okay, nothing goes as planned. 194 00:12:24,200 --> 00:12:27,000 I don't care how bulletproof your plan is. 195 00:12:27,000 --> 00:12:29,200 I don't care how bulletproof your finances are. 196 00:12:29,200 --> 00:12:34,960 You need to expect the unexpected and it's hard to do that because it's going to be unexpected. 197 00:12:34,960 --> 00:12:36,280 You don't know when it's going to hit. 198 00:12:36,280 --> 00:12:37,460 You don't know how it's going to hit. 199 00:12:37,460 --> 00:12:41,240 You don't know what's going to happen and you need or you're going to have to be ready 200 00:12:41,240 --> 00:12:46,520 to deal with it and find a solution to limit your, you know, your profit believe or limit 201 00:12:46,520 --> 00:12:48,160 your losses. 202 00:12:48,160 --> 00:12:55,360 And so I've seen a few people have amazing ideas and they get started super strong and 203 00:12:55,360 --> 00:12:58,000 some of them even get lucky and have a great couple years. 204 00:12:58,000 --> 00:12:59,560 But what happens? 205 00:12:59,560 --> 00:13:07,720 Okay, these unexpected events come into play and they go right under and they go quick. 206 00:13:07,720 --> 00:13:14,280 Let's take COVID-19 for example, okay, when we were signing contracts pre COVID, I had 207 00:13:14,280 --> 00:13:21,040 a lot of contracts going on, a lot of money out there and COVID-19 hit and a lot of businesses 208 00:13:21,040 --> 00:13:22,040 shut down. 209 00:13:22,040 --> 00:13:25,760 That stopped a lot of the cash flow going on for a little bit period of time. 210 00:13:25,760 --> 00:13:28,160 I don't know if Arizona got hit as hard on some other places. 211 00:13:28,160 --> 00:13:31,940 We kind of went through a construction boom in my, you know, in our industry. 212 00:13:31,940 --> 00:13:36,920 So I don't know how bad it really got out there, but I know in Arizona, it did affect 213 00:13:36,920 --> 00:13:38,920 that cashflow a little bit. 214 00:13:38,920 --> 00:13:45,240 And that was an unexpected precedent or event that happened. 215 00:13:45,240 --> 00:13:50,840 And I remember trying to, you know, hey, I was prepared for something that was a little, 216 00:13:50,840 --> 00:13:51,840 I mean, that was different. 217 00:13:51,840 --> 00:13:56,600 I feel like I was prepared for some normal scenarios in my head, things that like, you 218 00:13:56,600 --> 00:14:01,480 know, have been common enough that I need to be prepared for it, whether it's ultra 219 00:14:01,480 --> 00:14:03,680 tragic or not as bad. 220 00:14:03,680 --> 00:14:09,160 COVID-19 was just an absolute, I mean, game changer. 221 00:14:09,160 --> 00:14:13,780 And on top of that, during this boom, so many places shut down. 222 00:14:13,780 --> 00:14:17,840 So one of the main things that happened in construction is the price of materials shot 223 00:14:17,840 --> 00:14:19,000 through the roof. 224 00:14:19,000 --> 00:14:20,000 Okay. 225 00:14:20,000 --> 00:14:26,880 In Plywood, for example, 17 or 20, $25, you know, it always ranged a little bit per sheet 226 00:14:26,880 --> 00:14:31,280 and they shot up to 75, $80 at one point. 227 00:14:31,280 --> 00:14:34,000 I even think it got higher than that. 228 00:14:34,000 --> 00:14:35,840 So what happened with our contracts? 229 00:14:35,840 --> 00:14:42,240 Well, I signed an addition or a new build, whatever it is before COVID-19 and we're building 230 00:14:42,240 --> 00:14:46,000 and all of a sudden COVID-19 hits and what happens? 231 00:14:46,000 --> 00:14:49,360 Well, all my prices of materials shoot up. 232 00:14:49,360 --> 00:14:58,780 So there was only a few options, stop production and wait, charge the client more money or 233 00:14:58,780 --> 00:15:01,660 me build with what I have and lose money. 234 00:15:01,660 --> 00:15:05,640 And I got to deal with each and every one of those scenarios and I got dealt by each 235 00:15:05,640 --> 00:15:07,360 of one of those scenarios. 236 00:15:07,360 --> 00:15:09,360 So number one, stop production. 237 00:15:09,360 --> 00:15:10,360 Okay. 238 00:15:10,360 --> 00:15:16,040 We had to breach or terminate our contract because the client couldn't afford it and 239 00:15:16,040 --> 00:15:20,960 it was just outrageous and it wasn't, you know, I couldn't afford it to be able to pay 240 00:15:20,960 --> 00:15:22,880 for those materials. 241 00:15:22,880 --> 00:15:26,760 Number two was, you know, the client was like, hey, you know what? 242 00:15:26,760 --> 00:15:28,480 Okay, we'll pay for it. 243 00:15:28,480 --> 00:15:32,280 And this client was absolutely fantastic in that. 244 00:15:32,280 --> 00:15:36,040 And I think they were very prepared for what actually had happened. 245 00:15:36,040 --> 00:15:42,160 And number three was, hey, there was a couple of jobs where, you know what, it wasn't as 246 00:15:42,160 --> 00:15:43,160 bad. 247 00:15:43,160 --> 00:15:45,040 I did lose some money, but I was able to keep the relationship. 248 00:15:45,040 --> 00:15:46,880 I was able to keep that job going. 249 00:15:46,880 --> 00:15:50,120 And so I was able to experience all three of those situations and I was able to find 250 00:15:50,120 --> 00:15:52,000 solutions, but either way it still sucked. 251 00:15:52,000 --> 00:15:54,240 I lost a lot of money during that time. 252 00:15:54,240 --> 00:15:55,240 Okay. 253 00:15:55,240 --> 00:16:01,680 And if I was constantly having this business formula of where everything was based on all 254 00:16:01,680 --> 00:16:06,800 things going to plan, I can promise you, I would have went so far under it would have 255 00:16:06,800 --> 00:16:09,760 been absolutely traumatizing. 256 00:16:09,760 --> 00:16:16,640 But because I was prepared for inevitable event or unexpected events, I was ready for 257 00:16:16,640 --> 00:16:19,280 the unknown as ready as I thought I could be. 258 00:16:19,280 --> 00:16:21,480 I was able to limit my losses. 259 00:16:21,480 --> 00:16:26,160 I was able to deal with this situation and each of those cases and be able to find the 260 00:16:26,160 --> 00:16:31,040 solutions for it and come out winning or come out with that lease, being able to go forward 261 00:16:31,040 --> 00:16:32,480 without having to go backwards. 262 00:16:32,480 --> 00:16:38,000 And so when we're building businesses and we're talking finances, okay, we have to be 263 00:16:38,000 --> 00:16:39,000 prepared for the unknown. 264 00:16:39,000 --> 00:16:40,520 We have to be prepared for the unexpected. 265 00:16:40,520 --> 00:16:43,920 And I think that goes into the same thing in your home life. 266 00:16:43,920 --> 00:16:49,000 Even though I try to have that mindset to spend money and not worry about money knowing 267 00:16:49,000 --> 00:16:53,200 that it's going to come back to me, I do still have to be prepared and make sure my family 268 00:16:53,200 --> 00:16:54,200 is taken care of. 269 00:16:54,200 --> 00:16:55,800 And so I do have a plan. 270 00:16:55,800 --> 00:17:02,600 I do have finances set aside, but at the same time, I'm just not very, like I said, I'm 271 00:17:02,600 --> 00:17:03,600 not strict on it. 272 00:17:03,600 --> 00:17:04,760 I'm very free with it. 273 00:17:04,760 --> 00:17:06,800 I kind of just, we just do what we want. 274 00:17:06,800 --> 00:17:08,800 We go with what we want. 275 00:17:08,800 --> 00:17:12,360 And that is not to say do not know your finances. 276 00:17:12,360 --> 00:17:17,160 That's another great, you know, tangent to go on with this topic is that if you do not 277 00:17:17,160 --> 00:17:21,120 know your finances, you're already on the road to failure. 278 00:17:21,120 --> 00:17:23,620 You have to know your finances. 279 00:17:23,620 --> 00:17:27,200 You can be, like I said, you could be pulling in 3 million a year, but if you're making 280 00:17:27,200 --> 00:17:33,280 0%, all that money just looks good for a fraction of the time. 281 00:17:33,280 --> 00:17:34,560 That's it. 282 00:17:34,560 --> 00:17:36,160 You have to know where your numbers are. 283 00:17:36,160 --> 00:17:41,320 If you're pulling in 3 million dollars in revenue, okay, gross, what is your profit? 284 00:17:41,320 --> 00:17:42,760 What is your overhead? 285 00:17:42,760 --> 00:17:48,580 What are the, you know, the unsolicited charity in a business that's super important for those 286 00:17:48,580 --> 00:17:53,200 of you who don't know what unsolicited charity is in construction, it's easy to point out. 287 00:17:53,200 --> 00:17:54,960 It's, oh, you know, we're doing a job. 288 00:17:54,960 --> 00:17:57,000 Oh, hey, can you add an extra light fixture over here? 289 00:17:57,000 --> 00:17:58,720 Run a cable and add a fan right there? 290 00:17:58,720 --> 00:18:01,120 Oh yeah, no problem, Sam. 291 00:18:01,120 --> 00:18:02,120 I'll do that. 292 00:18:02,120 --> 00:18:07,440 It cost me $450 for material and labor and overhead and insure, but yeah, I'll go ahead 293 00:18:07,440 --> 00:18:08,440 and do that. 294 00:18:08,440 --> 00:18:09,440 No problem. 295 00:18:09,440 --> 00:18:10,440 Those little things add up and guess what? 296 00:18:10,440 --> 00:18:15,120 End of the project, I'm giving away 6, 7, 10 thousand dollars without even knowing it. 297 00:18:15,120 --> 00:18:16,120 Okay? 298 00:18:16,120 --> 00:18:22,000 10, you know, whatever, 5, 3% of, you know, the total contracts gone in unsolicited charity. 299 00:18:22,000 --> 00:18:24,200 It's easy to give those little things away. 300 00:18:24,200 --> 00:18:25,880 So you have to be very cautious. 301 00:18:25,880 --> 00:18:28,720 You have to be cautious with, you know, your unsolicited charity. 302 00:18:28,720 --> 00:18:30,440 You have to know your numbers. 303 00:18:30,440 --> 00:18:31,440 Okay? 304 00:18:31,440 --> 00:18:34,600 Know what you're pulling in, know what you're giving out, know what's going out. 305 00:18:34,600 --> 00:18:35,600 And it's hard. 306 00:18:35,600 --> 00:18:39,600 And if you are scaling a business right now and if you're growing faster than you can 307 00:18:39,600 --> 00:18:43,760 run like I experienced, it makes it even tougher. 308 00:18:43,760 --> 00:18:44,760 Okay? 309 00:18:44,760 --> 00:18:49,840 Because when you're, you know, for me and my company, we had this outrageous boom because 310 00:18:49,840 --> 00:18:52,240 we, you know, we put systems in place. 311 00:18:52,240 --> 00:18:54,680 We had great quality and we made great relationships. 312 00:18:54,680 --> 00:19:00,480 We did great work and that led to great referrals, quick referrals, which are easy sales because 313 00:19:00,480 --> 00:19:02,920 someone already trusts somebody and they're saying to use you. 314 00:19:02,920 --> 00:19:07,640 And so, you know, our schedule just loaded up and deposits were coming in left and right. 315 00:19:07,640 --> 00:19:13,400 And so it's hard to really care about numbers when you start seeing all, you know, all this 316 00:19:13,400 --> 00:19:16,400 kind of money that you're not used to into your account. 317 00:19:16,400 --> 00:19:21,380 And so, you know, there, I'm not gonna lie, there was a time where I didn't know my numbers 318 00:19:21,380 --> 00:19:24,720 and when I finally did taxes, guess what? 319 00:19:24,720 --> 00:19:27,720 I found out what my numbers were and I'm like sitting here. 320 00:19:27,720 --> 00:19:28,960 Wow. 321 00:19:28,960 --> 00:19:31,400 We only made this much money. 322 00:19:31,400 --> 00:19:39,080 You're telling me I pulled in millions of dollars and I made less than 5%. 323 00:19:39,080 --> 00:19:45,320 I mean, that is a little bit heartbreaking because it's not just the jobs. 324 00:19:45,320 --> 00:19:50,720 I mean, it's all the time, all the stress, all the blood, the sweat, the, you know, the, 325 00:19:50,720 --> 00:19:53,120 the lows that you go through. 326 00:19:53,120 --> 00:19:57,760 And then you look back and you're like, how much more of that money could I have made? 327 00:19:57,760 --> 00:20:03,840 I can tell you I lost hundreds of thousands of dollars just for not knowing my numbers, 328 00:20:03,840 --> 00:20:05,240 for not job costing. 329 00:20:05,240 --> 00:20:06,240 Okay. 330 00:20:06,240 --> 00:20:07,440 How much did this job actually cost me? 331 00:20:07,440 --> 00:20:14,760 If I am anticipating 30% of, you know, revenue, 40% revenue, did I make that? 332 00:20:14,760 --> 00:20:15,760 Was I less? 333 00:20:15,760 --> 00:20:16,760 Okay. 334 00:20:16,760 --> 00:20:21,480 You know, were my guys at Home Depot for 18 hours that week when they should have literally 335 00:20:21,480 --> 00:20:23,640 been there for three? 336 00:20:23,640 --> 00:20:24,640 Are they taking longer? 337 00:20:24,640 --> 00:20:27,000 You know, there's so many profit bleeds. 338 00:20:27,000 --> 00:20:29,400 And again, I'm talking about construction and construction. 339 00:20:29,400 --> 00:20:32,600 There's so many profit bleeds and it's very hard. 340 00:20:32,600 --> 00:20:37,920 And I think, I think every company has profit bleeds, but I do believe construction has 341 00:20:37,920 --> 00:20:42,760 as a GC, we have more profit bleeds than I, than I think we can really count. 342 00:20:42,760 --> 00:20:45,880 And so it's even more important for me to know my numbers, know where we're at. 343 00:20:45,880 --> 00:20:47,320 And I am nowhere near perfect on this. 344 00:20:47,320 --> 00:20:52,200 I guarantee I'm still losing money right now as I'm sitting here due to profit bleeds. 345 00:20:52,200 --> 00:20:53,200 But you have to start somewhere. 346 00:20:53,200 --> 00:20:54,680 You have to start knocking them out. 347 00:20:54,680 --> 00:20:58,960 You got to start identifying them and you'll be able to obviously solutionize them, right? 348 00:20:58,960 --> 00:21:00,080 And make the system better. 349 00:21:00,080 --> 00:21:01,360 There's always going to be profit bleeds. 350 00:21:01,360 --> 00:21:05,560 There's always going to be someone who wastes a piece of my material, throws away a roll 351 00:21:05,560 --> 00:21:07,800 on accident or breaks a window trying to transport. 352 00:21:07,800 --> 00:21:11,000 I mean, there's always going to be that, but you have to anticipate it, right? 353 00:21:11,000 --> 00:21:18,800 So understanding your numbers and your finances is a huge part to everything. 354 00:21:18,800 --> 00:21:22,080 And I wish I were learning that early on in my business because I didn't have a bookkeeper. 355 00:21:22,080 --> 00:21:23,960 You know, I was doing all my invoicing. 356 00:21:23,960 --> 00:21:30,840 I was doing all my projected, you know, costs and revenue and profits and all that. 357 00:21:30,840 --> 00:21:34,500 And I had no idea what I was doing. 358 00:21:34,500 --> 00:21:35,600 So go hire you guys. 359 00:21:35,600 --> 00:21:37,480 Go hire somebody if you don't know what you're doing. 360 00:21:37,480 --> 00:21:39,920 Hire somebody who does know it's going to save you a lot of money. 361 00:21:39,920 --> 00:21:43,680 It took me a while to figure out, OK, I'm going to hire a bookkeeper for two or three 362 00:21:43,680 --> 00:21:46,440 thousand dollars a month or whatever the case is. 363 00:21:46,440 --> 00:21:50,920 And you know, realize it's actually going to save you money. 364 00:21:50,920 --> 00:21:53,680 It really it really is because you're losing that somewhere. 365 00:21:53,680 --> 00:22:01,000 So, again, knowing, knowing your numbers and knowing your finances and where you guys stand 366 00:22:01,000 --> 00:22:05,880 and making sure that you're not making dumb decisions with your money and reinvesting 367 00:22:05,880 --> 00:22:11,900 into yourself and spreading that money out, go to places, go to other businesses, support 368 00:22:11,900 --> 00:22:13,720 local businesses nearby. 369 00:22:13,720 --> 00:22:16,880 They're going to go around and support local businesses. 370 00:22:16,880 --> 00:22:19,240 And that, like I said, that money just comes back around. 371 00:22:19,240 --> 00:22:20,440 It's like karma. 372 00:22:20,440 --> 00:22:23,160 What you put out comes right back at you. 373 00:22:23,160 --> 00:22:31,760 So I think, yeah, I think for finances, I mean, it's it's very it's a very sensitive 374 00:22:31,760 --> 00:22:36,800 subject and I know you guys have to find the best way that works for you. 375 00:22:36,800 --> 00:22:40,700 And I guarantee there are very, you know, all these other successful people that I know 376 00:22:40,700 --> 00:22:43,000 out here, you know, they may do it differently. 377 00:22:43,000 --> 00:22:45,000 But for me, that's what works, guys. 378 00:22:45,000 --> 00:22:48,280 I have freedom with my money. 379 00:22:48,280 --> 00:22:56,640 I know my numbers and I'm able to understand that money is what makes the world go round. 380 00:22:56,640 --> 00:22:58,840 So don't be don't be greedy. 381 00:22:58,840 --> 00:22:59,840 Dave Ramsey. 382 00:22:59,840 --> 00:23:01,240 Hey, you don't work for me. 383 00:23:01,240 --> 00:23:05,720 You may work for other people, but not for me, because the more you teach people to hoard 384 00:23:05,720 --> 00:23:09,800 money, the less money goes out into the world. 385 00:23:09,800 --> 00:23:20,000 So that, yeah, all in all, finances, guys, are super important and I think, you know, 386 00:23:20,000 --> 00:23:26,560 cash flow and your your business specifically has to be a top priority because again, if 387 00:23:26,560 --> 00:23:30,680 you do not have if you don't have money to pay people, you're not in good shape whatsoever. 388 00:23:30,680 --> 00:23:34,720 I mean, you're you're on the path to to fall it apart. 389 00:23:34,720 --> 00:23:39,780 You need to have a good amount of cash flow and you need to be able to control that cash 390 00:23:39,780 --> 00:23:40,780 flow. 391 00:23:40,780 --> 00:23:42,200 That is very important. 392 00:23:42,200 --> 00:23:50,080 So all in all, guys, homework assignment for this podcast today is figuring out if you 393 00:23:50,080 --> 00:23:51,860 actually know your numbers. 394 00:23:51,860 --> 00:23:53,780 Go home, go to the office. 395 00:23:53,780 --> 00:23:54,960 Do you know your numbers? 396 00:23:54,960 --> 00:23:56,000 What are you pulling in? 397 00:23:56,000 --> 00:23:57,000 What are your overhead costs? 398 00:23:57,000 --> 00:23:59,560 Are you accounting for your your rent space? 399 00:23:59,560 --> 00:24:02,000 Are you counting for your Wi-Fi bill? 400 00:24:02,000 --> 00:24:03,000 That's one hundred dollars. 401 00:24:03,000 --> 00:24:04,000 But guess what? 402 00:24:04,000 --> 00:24:05,320 You better know where that's coming from. 403 00:24:05,320 --> 00:24:08,520 You better know what account leaves out of and you better know how much it is to the 404 00:24:08,520 --> 00:24:10,160 dime. 405 00:24:10,160 --> 00:24:13,760 Are you tracking your expenses on food? 406 00:24:13,760 --> 00:24:16,360 Are you tracking your mileage and your expenses on gas? 407 00:24:16,360 --> 00:24:19,840 Again, as we go through everything, it sounds very overwhelming. 408 00:24:19,840 --> 00:24:22,880 Hire somebody who knows how to track this. 409 00:24:22,880 --> 00:24:27,440 Job cost, product cost. 410 00:24:27,440 --> 00:24:31,480 Track everything you possibly can and you will realize that you're losing money in places 411 00:24:31,480 --> 00:24:34,120 you never thought you were losing money. 412 00:24:34,120 --> 00:24:35,320 And when you find that, guess what? 413 00:24:35,320 --> 00:24:36,880 You get all that money back. 414 00:24:36,880 --> 00:24:39,880 Then you guys can go out there and you can go spend more money. 415 00:24:39,880 --> 00:24:42,640 Come hire me for a remodel project in your bathroom. 416 00:24:42,640 --> 00:24:43,840 I'll take those funds. 417 00:24:43,840 --> 00:24:44,840 I'll live off them. 418 00:24:44,840 --> 00:24:46,040 I'll spend it. 419 00:24:46,040 --> 00:24:50,200 And then that customer is probably going to come right back and buy from you again. 420 00:24:50,200 --> 00:24:51,680 This is the way the world works. 421 00:24:51,680 --> 00:24:53,580 OK, this is a homework assignment, guys. 422 00:24:53,580 --> 00:24:57,680 If you haven't followed us yet, please go follow us on Instagram and Facebook, as well 423 00:24:57,680 --> 00:25:01,120 as our Elder Contracting page @ Elder Contracting Co. 424 00:25:01,120 --> 00:25:02,120 We also have a tik tok. 425 00:25:02,120 --> 00:25:03,280 We're a little goofy. 426 00:25:03,280 --> 00:25:06,000 We have some great videos and we also have some great product, great quality. 427 00:25:06,000 --> 00:25:11,040 And we work with some amazing people as well as we work with amazing clients. 428 00:25:11,040 --> 00:25:12,400 So please go follow us. 429 00:25:12,400 --> 00:25:39,040 And until the next time.