It’s time to tackle one of our most requested topics: MONEY. How do you manage it? How do you save it? And how do you plan for the future?
In this episode, we’re answering YOUR questions about real estate finances, including:
How much to save in your emergency fund?
What percentage of your income to allocate for taxes, marketing, and fun?
When and why to consider an LLC or S Corp?
How to structure your commission checks and plan for quarterly taxes?
Why it’s okay to start small when building your financial safety net?
Whether you’re in your first year or your fifteenth, this episode will give you practical tips to feel more in control of your money. 💵

Key Quotes/Takeaways
“The most important thing you can do is track your numbers. Know how much you’re making and spending.”
“Start small. You don’t have to do everything perfectly from the beginning, but you have to start.”
“It’s okay to take time to figure out your financial goals—just make sure you’re moving in the right direction.”
“Pay yourself first, set aside for taxes, and keep your business account separate. Simplicity is key.”
“Don’t fall for every shiny object in real estate marketing. Keep your spending intentional.”
Products, People & Previous Episodes Mentioned
Episode 76: CPA Karen Bahn on Realtor Taxes – A must-listen for tax strategies: hustlehumblypodcast.com/76
Who Do You Know? List – Perfect for building a database: hustlehumblypodcast.com/start-here
Agent Systems Course – Get your business (and finances) organized: hustlehumblypodcast.com/agent-systems

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The following is a rough transcript provided by Otter.ai.

Alissa 0:01
I had folders inside of folders inside of folders, because I’m an over organizer, like, I want everything to be just so, but it actually made it more complicated. All

Katy 0:12
right, January is a little easier. Everyone’s kind of gotten all their spending out of their system. You’re like, okay, let’s regroup here,

Alissa 0:19
right? So starting our diet. We’re not spending money, we’re gonna just get it all together. They’re talking, they’re planning. They have quarterly they’re looking at reports. They’re looking at reports like you are ahead of the game. Hi y’all, welcome to hustle. Humbly, it’s Alyssa and Katie, and we are two top producing realtors in the Baton Rouge market. We

Katy 0:42
work for two different companies where we should be competitors, but we have chosen community over competition. The goal of our podcast is to encourage you to find your own way in business, so stop comparing yourself and start embracing your strengths. Hi, Alyssa. Hey, Katie. Welcome to episode 284

Alissa 0:59
money questions. With the new year rolling in, we sure got a lot of these money questions. We’ve been stockpiling them for a minute, and we were hesitant to answer them. Well, we’re not CPAs, yeah, let’s do some disclaimers. Yeah, we’re not CPAs. We are not financial advisor, not even a bookkeeper. There’s also no right way, per se. It’s like a lot of the questions that come in from our listeners have to do with, how much do I need to set aside for marketing? How much do I it’s like, everybody runs their business totally different,

Katy 1:36
yeah? But I think the problem is people don’t talk about it a whole lot, so you don’t have any point of reference, yeah? Like, maybe we’re just gonna give you a range. Obviously, my numbers are not the same as your numbers are not the same as someone else. And the first thing I would say about numbers, I didn’t write down this episode number, but remember the number tracking episode? Yeah, I feel like it was at the beginning of 2024, and was very well received as much as we don’t want to do them. Our numbers episodes are always very well received. Yeah, they are. But the most important thing you can do is track your numbers, understand how much money you are making, how much money you are spending. Have a budget, have like, your expenses written down somewhere. So I think step one is always have some knowledge of what’s going on. You know, have you ever seen those memes when they’re like, do I balance my checkbook? Or do I have a bookkeeper? I just, no, I just pray and click the button to like,

Alissa 2:31
check balance. You know, how much is in there? I don’t know. Click the button and they’re like, because, especially now, when people pay so many of their bills online auto draft, it’s just like, it’s coming and it’s going, and sometimes we don’t know what’s up and what’s down, yeah, and sometimes I’ll, like, be doing a good job, and then I’ll slack for three weeks where I’m just

Katy 2:52
struggling. And the longer you let it ride like that, then tax time comes. Y’all, it’s January, but it’ll be here around the corner, yes, and now is a perfect time, because you’re done with 2024 like, you have all the information you need. You can start collecting all that. I always laugh because in January is when they’re like, get your taxes done early. I’m like, yeah, those are all w2 employees, yeah, they’re excited about getting this. Where

Alissa 3:16
can I get money back? We’re like, how much do I owe? How much do I owe? And we’re like,

Katy 3:20
how long can we put this off? How long can we put this I

Alissa 3:23
get so anxious about it that I’m telling my CPA, like, hey, as soon as you can give me my number, just rip the band aid off and tell me. I just want to know. Because you’re like, I gotta know. But we do have again, we’re not CPAs or tax advisors, so we do have a good episode. If you’re wanting to dig into that a little bit more, you have it, yeah.

Katy 3:47
Episode 76 was we interviewed Karen bond. Karen is a CPA, so she has the appropriate education and certifications, and her husband is a realtor, yes? So she does his taxes. She’s very familiar with realtor taxes, so she gave us some really great advice and tips in there. So 76 is where you need to go. How about I just start giving you some of these questions. Okay, let’s just dive right in. Number one’s pretty easy. How much emergency fund are fellow agents saving three to six months or more. I

Alissa 4:23
think it’s good in our industry to have at least six months. I think that aside,

Katy 4:29
a great tip, I have been struggling and working on this for my entire adult life. I do not have a six month emergency fund. That’s okay. I would be excited if I had a solid never moved three months, okay? And I think that if you are like, I just kind of, you know, live on the edge here, right? I’m living on the edge, yeah, but I think that if you had three months at least, you should have, even with a real estate cycle, a closing you. Somewhere amidst, you know, like, if you had a three month, but three to six sounds, right? Yeah, more than 16 is, like, too much.

Alissa 5:07
I know. I just have an anxious soul when it comes to Yeah.

Katy 5:11
Do you have more than six? Yeah, yeah. I just get nervous. Is it like I can’t touch this money?

Alissa 5:19
So fascinating to me. I know because, you know, with inflation and again, no expert, your money is losing value. Well, Tanner made me move it into an account. Okay, thank God. Tanner was like, this. Can’t sit here. We must move it to somewhere that will at least get the level it out. I know, and it’s so interesting. I’m so I have, like, a I need money therapy. Okay, great. Okay, so podcast therapy. We’re having, like, a money therapy. Episode, I have my MBA. I went through all these business finance accounting classes. Majority of the time when I sit down with any kind of financial advisor, I’m like, I have no idea what you’re talking about. Okay, and so I get so straight over your head, and then you what they do. But I also I’m like, I don’t trust you because, like, so I’m my guard is up, and I’m like, Are you just trying to take your money? Huh? Okay, okay. So then I’m like, I’m just gonna keep it all, because I don’t want you to take it now. Interesting. All of this to say, if you’ve been a listener, you know that I’ve dabbled in like investment properties and things like that. At the current moment, just with life and rising cost of insurance and interest rates are high, I haven’t had the itch or come across a deal that was enough that made me want to buy an investment property. Okay? So two years ago, Tanner and I got a referral from someone who we do trust, who is a very much like an investigator, okay? And was like, go use this person, you know, go talk to them. And it was the first one that Tanner and I both felt like comfortable with, okay? And we handed it all over, and it’s being managed. And I told Tanner, I don’t want to look at the app like, I can’t I don’t want the app. So that’s on you, like you have the app. He loves it, he he loves to check it every day, check on things, what’s up, what’s down? Like, how is things looking? And I’m like, so then I will look at it in 20 years. Great, good, good plan. You have basically a financial advisor investing money into the stock market, yeah, and other things, I guess. Okay,

Katy 7:36
I will say this, because what you said at the beginning of that was you used to use all your extra money to invest in real estate? Yes,

Alissa 7:43
because I understood real estate well, you’re gonna love this quote, and I could control it.

Katy 7:47
I was watching Gary V interview, an old CEO. I don’t remember what company, but he had been around forever and ever, and was had a hedge fund, I think so. He was in the financial world, okay? And he was saying, you know, people come to me all the time and ask me, What should I invest in? And people ask Gary that as well, because he’s been notoriously a great investor in, like, companies and, like, he was an early investor in Facebook and Twitter and all these things, yeah. So they both said, like, literally, at the same time, I always have the same answer, you should invest in what you know, yeah, period. If you don’t know it, then that’s not like, it’s just, it’s okay to invest your money anywhere, yeah? If it’s something you know, then you’ll have a better outcome. Well,

Alissa 8:35
my thing with real estate, too, is like, even if a house, like, didn’t bring in what I thought it would or something. I even understand that, yeah, you know. So it was like, I want, there was never any surprises, really. But I will say, you know, having things so Tanner made a good point, you know, we have to diversify an idea of real estate. Well, you’ve got it, yeah. And then, like, we were having some issues with insurance on our rental properties and just the rising cost. And then tenants call, right? And it’s like, we have little kids. We both have full time jobs. So what we did diversify. And Tanner likes to update me on the good days. I’m like, I don’t want to hear when it’s down. Please do not send me any screenshots. You know, so funny. So he knows like you. He only messages me with good news. Great. I’m like, I can’t I’m not touching it till I’m 50 or 60. So I’ll, it’ll become important then. So watching it now is futile. But what’s funny is it has certainly had like spikes where I’m like, That’s how much I could have made on a rental property. But now I don’t have to replace a route. You’d have

Katy 9:47
to do anything. I didn’t have to renovate it. Your money is just to manage

Alissa 9:51
it. So I want to share that, because this was something I was very afraid of, right? I don’t think you should go. I. So as you can tell, I’m very conservative, so I don’t think you should go do something drastic, but I do think diversification is good, yes, and I have felt more at peace knowing it’s diversified and I’m not just banking on real estate, like all of it, yeah, that’s

Katy 10:19
a great idea. This next question plays directly into this, what wealth building investment accounts do people like retirement question mark, I am not good at this, but I will say I do max out my step every year, because that is also helpful when it comes to your taxes. Like, do I want to give this money to the IRS, or do I want to keep this money for myself and get a tax break, right? So I always and your your CPA or tax person can tell you what your max is to put in your step?

Alissa 10:52
Yeah, and that’ll all vary too depending on how you are operating your business. So are you an S corp? Are you an LLC? Are you just an individual? What are you anything you’re gonna get to that? Please don’t go there. Okay, okay, so I agree, based on what you are, they tell me at the end of each year, once they were, if you’re if you want to max out your retirement accounts, these are

Katy 11:17
your what kind of retirement accounts do you have? You had those prior to getting a financial advisor?

Alissa 11:23
Yeah, it was from, I guess, like a previous financial advisor, yeah.

Katy 11:27
So you had, did you accept 401? K, do you know how to Sep, okay, which is a, I’m

Alissa 11:34
not gonna even do them, yeah? We’re not those people, yeah, Sep, Sep, IRP, go Google it higher, right? Yeah. And then I have a Roth, and I think that’s it, okay. And then Tanner’s like, so those are three words, yeah, that’s so nice. They just do it for you, man, you know it’s like, you get so many great benefits that when you work again, w2 employee,

Katy 11:58
oh my, they also do say, show up right now. What do

Alissa 12:03
you mean like, you can you guess? Yes, you’re late. Things are, I know one, you’re late, what I like to call pros and cons. Yes, you must request off from vacation. They’re like, you only get two weeks. I’m like, but you do get great insurance. Yeah,

Katy 12:13
uh huh. All right. Next question, right in line, what is your exit plan? How are you not going to or not having to work in your 60s, 70s, 80s, 90s, this person has given us all the decades I have a not funny, somewhere beyond the age of 60. Are you planning not to work? Alyssa Jenkins, what do

Alissa 12:32
you say? I am a worker bee. I’m also in a season of life where I barely have a five year plan. Yeah, I’m just in the trenches of getting Tate like, it’s too soon

Katy 12:45
retirement. Yeah, it’s funny that you’re like, I don’t know that I will retire. I’m like, but you sure are doing a lot of planning for something you’re not sure you’ll

Alissa 12:54
do. I think I will certainly slow down and be way more selective. But I don’t know what life looks like if I’m not producing right, something that’s part of your identity. I enjoy it so much. Like, I really feel like, even when I get in seasons of slow, slow times, I get in the worst funk, yeah, like, just, I guess I just don’t have the motivation to, like, Yeah, but the busyness keeps me going. That being said, I want to make sure that I have the option to slow down. Yeah, my grandpa and my dad. I think all this come I don’t know both. Both sides of my families are worker bees, but I look at my dad and my grandpa, who were both appraisers, right? And, like, my grandpa, you know, lived a long time, and he did his last VA appraisal in April, and passed away in like, October, so, like, he still was working. Yeah, he was still so my grandpa was the first licensed appraiser. His license number was 0001,

Katy 14:04
in Louisiana or in the I don’t know. I’m not sure either way. He’s been doing it.

Alissa 14:08
So it was like he got to where, instead of doing all the appraisals, he only handled the VA, okay, and my dad worked with him. And, you know, I’m looking at my dad now, yeah, who’s approaching 70, right? And he’s still going super strong. And, yeah, loves it, but also goes duck hunting all the time. And right? He can do as much as he wants. Yeah, that’s good. So it’s just different, you know? Yeah, you’re

Katy 14:35
so there you go. But, but your exit plan, you have all of these investment properties. Tell them about is it Jennifer, who has all of the properties, and she just sells them off to fund her retirement?

Alissa 14:48
Yeah? Like, yeah. So a lady in my office in her 20s was a single mom, and she’s in her 70s now, yeah. So she just. Just when she moved from her first house to her second house, she just never sold her first house, yeah, and then continued doing that and built this huge rental portfolio, yeah, anything from like a one bedroom apartment to big houses that would bring in four or $5,000 a month. So I remember she told me this story about when her daughter was getting married. You know, she’s the only parent, and so she put a sign up in three of their yards, and the first one that sold, she’s like this. She paid for the wedding and gave the other half as a wedding gift and kept the other two. She just, like, took the signs, took the signs out, not for sale in Jay. I just needed to sell one. I didn’t care which one, whatever one sold first. I love that. Yeah,

Katy 15:41
that’s a really good plan. That’s a great exit plan. All right. Next, do you have an exit plan?

Alissa 15:47
Like, what do you want to I know you’re loving your teaching, and I don’t know what my exit plan is. Isn’t that weird? We need, like, a vision retreat, or I don’t have an exit plan

Katy 15:57
because I’m not a saver, so, like, I have to keep working to sustain my lifestyle. Well, we’re exact opposites. So maybe one day, if I’m able to save some then I’ll have a decision about exiting. But as of now, I just have to keep working. But do you enjoy it? Or do you? Of course, I choose the work that I like, I know, but I also like to work, but I, you know, I having I’m 47 Yeah, I don’t have an exit plan. So please, if you’re listening to this and you’re like, I don’t I it’s too late for me. Yeah, I don’t have that. I didn’t do that. Not too late at all. No. And also, people can work a lot longer, like for sure. You know, retiring at 65 is a very arbitrary

Alissa 16:41
number. Oh, yeah, you’re fully functional and able to work well beyond that. Yeah. So, like, I could, I could even see being like, I don’t want to sell anymore. I’ll be the office secretary. You could. Like, the thing with real estate is, I think there’s so many options to stay involved. Yeah, yeah, I don’t know. We’ll have to

Katy 17:03
revisit this. I’m not concerned right now. I’ll get back with you later. This is

Alissa 17:07
such an honest conversation, I

Katy 17:09
would say, Okay, well, that’s why we can’t rely on what should we do later on this

Alissa 17:13
episode, for a long time, because we felt like we needed some magical answer, but this is just real life. I

Katy 17:21
think that’s what people need to know. They just want to have permission to keep and not feel bad about it. Just, you got to do the best you can. Yeah. Also, things are very expensive. Now, I was like, you know, you save money.

Alissa 17:31
We are, both of us are in stages where we have two kids in private school. Ainsley’s gonna drive soon. Like, keep saying that. I’m like, expenses are so, yeah, she has braces, yeah, bra, oh, man, yeah, Caitlin’s gonna need those. Yeah? Tate, I think won’t, but

Katy 17:49
yeah. Well, all right, let’s move on. How are fellow eight fellow agents dispersing each commission. US agents have to be responsible to take out all taxes, retirement, etc, from each check. And I recently had a come to Jesus moment with finances and how to break down each commission. And it has been nothing but liberating. So I’m curious to hear from others if they do something differently or better. Okay, do you want to tell us how your commission check gets broken down? So here

Alissa 18:18
do you want to share? Here’s my journey, please. You know, I’ve said before, when I teach the email class, like, the reason I keep it so simple in my email is because I used to not. I had folders inside of folders inside of folders, because I’m an over organizer, like, I want everything to be just so, but it actually made it more complicated. All right, so my first year of real estate. I’ve shared this story before that I didn’t save anything because I didn’t understand as a 20 year old that I had to pay my own taxes. Yeah, that was like, I had never filed taxes before and not gotten money back, right? So my first year, when they were like, You owe $12,000 I literally, I asked the tax person, like, oh, who pays that? I asked that question. That’s how in the dark I was about this whole thing. Did you have $12,000 No, I did not have this $1,000 too.

Katy 19:14
I did not, no, not at all. No,

Alissa 19:20
I probably had, like, nine, oh, that was pretty good, because I was hoarding, and now I have to come up with three. You were like, oh, yeah, it was terrible. You were

Katy 19:30
like, I went from having money to needing money, yeah. How’d that happen in a quick

Alissa 19:34
second? And very quick, I was so proud of that savings account you were and it was just like, bam, there we go. But

Katy 19:41
imagine that same thing happening to you, but you weren’t a saver, and so you had zero in that savings account, and then you all of a sudden, you were like, I gotta find the whole 12.

Alissa 19:50
Yeah, yeah. And that’s when I miss bartending, yeah, because I worked my booty off to just you. Work as many shifts as I could. I exhausted myself, yeah, to just get it out the way. Yeah.

Katy 20:06
Okay, so what was the rest of the journey?

Alissa 20:08
So then go to the office. I’m like, Okay, what do people do? Like, and they so our office does have a thing where they can withhold your check for you, and then they just cash it out to you every quarter when taxes are due. So you basically just send it straight to the IRS. They’re saving it for they’re saving it for you. And then, you know, some people made a good point, well, you could just save it yourself. Yeah?

Katy 20:30
Sometimes some of us don’t want to have access to that. Yeah. It just depends

Alissa 20:33
on I like that. What comes into my account, it’s just yours. It’s just mine. Yeah. So the first year, I did 20% and that went okay? And I didn’t, I think I, like, broke even, okay, perfect. And then the second year, as as my business grew, 20% was not enough, right, right? So then I went to 25 and then I still owed money, and then I went to 28 and this is with good write offs. Like, yeah, I’m a writer offer, okay? And I’m do as much as I can, but I right now I’m at 30. That’s what they take out of your check. They take it, and I probably need to go to 35 okay. And then I thought, maybe I should just tell them to take 50 and

Katy 21:10
then have extra when they give it to you. Yeah, okay. But the money, people will say you should have your money working for you, not because I don’t know where they’re keeping it, but like, if you put your money into, like a savings account or something at the bank or your checking account, let’s say not even in a savings account, the bank takes your money and uses it to make more money, right? Why? But you should be using your money to make more money, right? Right? So I like this list, so the reason I brought up the folders. About the folders? Yeah, is that before this is back, like baby Alyssa, okay, no business account yet. Okay, before I had a business account, I thought I’ll just make all these different accounts. This is the marketing account. Oh, my God, at the bank, you had different accounts. Well, the app

Alissa 21:58
made it way too easy to just have all these accounts hold up. You had a marketing account. I was just like, so dumb.

Katy 22:06
That’s not dumb. That’s not dumb. You were trying to be like, thoughtful, yeah.

Alissa 22:09
But it backfired, because it was too complicated. Now keep in mind I wasn’t highly, producing at this time, like, I would get a check, like, every now and then, right, you’re

Katy 22:25
like, and then I would try to, like, disperse it into five different accounts, right?

Alissa 22:28
Which is dumb. And then I, and then, when I got to where, well, I knew quickly that wasn’t working. This is not going to do it. So then I got a, I had a sketchy CPA that we had, like, he was, he was like, you could write off everything. You don’t need to document anything. And the IRS doesn’t care, you know? So I quickly realized we need a new one, you’re like, so I got a new one, and that’s when I became an S corp and I opened my business account, yeah? But I want to answer her question a little bit. I like her idea of, okay, let’s say you get a $1,000 commission check. 30% goes to taxes, okay? Now you have $700 10% goes to marketing. Now you have $600 like, I don’t know, you know we here at hustle, humbly, keep it so very super simple, because my expenses for my business are so low because I don’t do a lot of big extra

Katy 23:31
paying for leads or a Billboard Marketing. I don’t

Alissa 23:35
pay for staging. Yeah, like I do my own staging. I would say my biggest expenses every year are professional photography, videography, things like that, okay? And then, like my cleaning lady, oh, okay, because I’m just like, always using her, sending her, whether it’s a closing gift or to get a house ready,

Katy 23:54
okay, but

Alissa 23:57
be mindful when you’re feeling like you need to allocate every everything that sometimes that causes like you want it to fit in a box, but in real estate, it doesn’t always fit in a box, and then every house is different. You’re gonna spend a lot more money on a listing that sits for six months than a listing that sells in the first week. So don’t put too much pressure on yourself. But I like the idea that you know what you’re

Katy 24:22
Yeah, we’re gonna, actually, there are a couple other questions that are gonna dive into this again. Oh, good. So just, well, that was very helpful. Next up, let’s go back to the business basics. They said, What are the business basics? I need to know I got my license now, what LLC or S

Alissa 24:37
Corp? Well, I think you have to make money first, right? Making money

Katy 24:42
is crucial, yeah, so I don’t think you need either of those things. From the jump, you can just be you, and that’s a sole proprietor, from my understanding, okay, you filed personal tax return, you put your income on there, you will end up having to pay self employment taxes. And you know. So there are some more. Taxes because you’re self employed, fine. Once you get to making money, then you would probably want to be an LLC, okay, LLC, it’s just now your business has a name. You’re going to

Alissa 25:16
open a checking account just for your business. You should do

Katy 25:21
that from the beginning. Yeah. Now, while you have five or however many accounts you had, you need the one,

Alissa 25:26
right, one business account. By the way, you need

Katy 25:29
the one business account. And it that’s going to come into play later when someone asks us another question. But you need the one business account. So basics. And actually, in the Karen bond episode number 76 she talks about this in great detail, yes, so you need a business account, a number one, then you can decide if you are going to be an LLC, which at some point you should. And I feel like in that episode now it’s been a few years, she says somewhere around $70,000 if you’re making more than $70,000 then you could maybe start to think about the S corp election. Okay, okay. Y’all, all S corps, for my understanding, are LLCs. It is not a different entity. It is a tax election. You are saying I’m going to file my taxes as an S corp, which is a business. Yes, through my LLC, you still have to have the LLC. I’ll have to look into that. Yours, says Alyssa Jenkins, Realty, I assure you it does. They’re not two separate things. You’re not an LLC and an S corp. You’re an LLC that files as an S corp, is my understanding. I don’t know. Okay, so Anywho. But when people say, Are you one or the other, they mean, are you filing as one or the other? Like, how do you do your taxes? Okay, so we both do our taxes as an S corp, but the most important part of that is now, as an S corp, you are required to pay yourself a salary, yes, which means the whole reason why people elect to do the S corp, from my understanding, in our line of work, is to avoid the higher self employment taxes correct that you pay when you are filing as a sole proprietor LLC, not as an S corp. Okay, yeah, so you avoid these. I will also tell you, from personal experience that my first two CPAs didn’t even recommend that to me, because I feel like they just don’t want to do it. It takes a little bit more work. It means filing two tax returns, because you still have to file your personal and now you have to file the business one, yes, okay, and I should have been doing S corp way, way, way, way sooner. Okay. I didn’t do it until like 2019

Alissa 27:42
I’ve heard a lot of people lately talk about how they need to switch CPAs. They need to switch, switch, switch, and they just don’t, because it takes effort, but you are leaving so much money on the table if you don’t have a good one,

Katy 27:56
yeah, and if you feel like it’s they’re gonna the next one’s gonna be more expensive if they save you more than they cost you. Yeah, it’s not more expensive. It’s actually cheaper, correct? Okay, so I’m an S corp. You’re an S corp, you have to pay yourself, which means you’re paying your actual salary, you know? And you’re paying those employment taxes in that salary, right? Your bookkeeper does that, yeah? Girl, me too. No way. I’m gonna do me too. So I have a CPA. I will tell you full disclosure. The CPA does my pay, and then now we have, you know, and another employee being paid, paid for the podcast. So the CPA is doing both of those and doing my monthly bookkeeping. And that costs $300 a month. Okay? I am fine with that because, and it was 250 for a while, because I don’t want, if I don’t have them do it, it won’t get done, right? And they’re doing all the payroll reports, because I don’t want to do any of that either. And they’re doing my, you know, paycheck. It’s done once a month. I only pay myself once a month. I don’t need to do it any other way, because you can take a draw anytime. Yeah, you can move the money anytime. So that’s how that works for me. And then they do still have to charge me for my taxes when they do the tax returns, but it’s like 500 bucks or less for each of my returns done because she’s done it, keeping already done all the work. They’ve already done all the work. So that’s the story with that

Alissa 29:21
mine is almost identical to yours, so I won’t dive into the details. Okay, great. Let’s

Katy 29:25
take our next one quick book hacks for keeping accounting streamlined. Do you enter clients intact? This you’re gonna see why I’m reading this. Do you enter clients and tag expenses and mileage to them in tracking profit per client? When to involve a bookkeeper. Best Use of a bookkeeper versus DIY? Well, I think you’ll all just caught. Neither one of us are DIY ing. It not for this? No. And my next answer to this would be, there’s no reason why you need to know profitability per client, right? None at all, right, unless you’re just a freak for. Data. It’s not going to change anything in your business, right? Some houses are cost more than others, so you automatically,

Alissa 30:07
you make more, make more. Some clients take longer, but they make you that’s what you say. Take longer, but they cost make you less. You know,

Katy 30:15
my CPA is using QuickBooks to keep up, but I’ll tell you how we do it. Every month, she sends me an email. I was like, send me your statement from the bank, and then they just do it. That’s how that’s the importance of using one account. Yes, it’s very easy for them to just because you’re not going to have that much out of left field stuff. It’s repetitive. So they’re like, Oh, I know whatever Joe signs is the is an advertising and, see, they code it for me. Yeah, I’m not coding it right, but you if look, if you can’t afford a CPA, of course you can DIY your bookkeeping, but I don’t think you need to dig into the like, how many miles went to that person? No, and for years and years and years. Y’all, the way I tracked my mileage was just on a notepad in my car. I wrote down the starting mile and the ending mile, then I try to do that mile IQ, which people like it? I hated it, and I deleted it. And then I found out from Sarah that there is a standard deduction for freaking mileage, and now I don’t even do my mileage at all. I just take the standard deduction. Oh, because I’m like, I don’t want to, yeah, I don’t want to do this. I don’t want to do this anymore, maybe because it was pretty $40 it was pretty close, pretty close. I’m like, I don’t need to record, but all I have to record is my mileage at the beginning of the year, my mileage number at the end of the year. Okay, that’s it. Okay. So moving on from that. I was struggling with keeping up with expenses. How do you track all of that, looking for a budget template or something just,

Alissa 31:41
I feel like having a business account is the template. Yeah. So when my bookkeeper emails me at the end of each quarter to say, hey, I need your statements, I download them from the chase app into a spreadsheet and I do label them. Do you have to label them at all? She does it for me. I feel like I have to label them to be like, that’s what this was for. She she does

Katy 32:02
them for me. And there’ll be, like, four that she doesn’t know, and then she’ll ask, Oh, I see, so it’s saving me time. I see,

Alissa 32:09
I like to label mine. She brought, I don’t even know if she needs that, but it’s like, it’s all there, yeah,

Katy 32:15
it just now keeping up with expenses. I have a monthly budget, and the monthly budget shows me what bills I have to pay in my business, I have a personal page of the budget, and I have a business page of the budget, and I put in when they’re due, if they’re paid automatically, or if they’re paid just a spreadsheet, yeah, and I give the template for it in agent systems. It’s part of all of the tracking that we do, but I have to have that. And I visually, y’all know, I like a piece of paper. I have to print it, I have to look at it, and I have to cross it off when it gets paid. This is the only way. This is going to work for my brain, right? This is the only way. So I do track it in that way, and it kind of helps you to see, okay, these things are recurring. And then I have a section that says yearly, because that’s my biggest thing about real estate. You have a yearly MLS fee. You have a yearly maybe even E key. Maybe you have a something like you’re obviously your board dues. Maybe you pay for a year. You get have Canva Pro. And all of a sudden, these things are hitting at all these different months that you were not expected, and you don’t even realize it, and you’re like, oh, man, another 150 bucks out the window. Yeah. So I keep the yearly section, and in the yearly section, it’ll say Canva, MLS, dues, well, but and I put what month it’s going to be due, brilliant, so that I know what month to be expecting. It did

Alissa 33:38
the tracking money episode have a freebie. I think it did okay. I think to go back and look

Katy 33:44
at that. Yeah. I mean, I’ll go, well, we need, we need to look up what episode number that is. But there is some trackers in there. Yeah, there was okay. Next, we’ve answered some of these in this sweet friends question last year was my first pretty successful year, and I was completely blindsided by the amount I ended up owing in taxes. Welcome been there. I had paid in quarterly and still owed quite a bit. I am especially interested in how Alyssa structures this with investing and flipping houses. I flipped one house and the capital gains tax on that was a huge bummer. It’s huge. I feel like I could have done something different or smarter. I want to know what others are doing to set up their business, protect their personal assets and other helpful practices to help me guide other investor clients. Got any thoughts?

Alissa 34:36
I do feel like we’ve answered a lot of that, but I mean, with the flip houses, it’s like I am writing off everything. Yeah, if I had to buy a $12 combo lock box to put on the door for the contractor, it’s going on the expense. Do you have a separate bank account for those? No, it still runs through your business account. Yeah. Mm, through your personal account, yeah, so you have to go find all those expenses. Well, I keep a running spreadsheet, as when I flipping a house, yeah, I do have a folder that I get all the receipts. I keep all the receipts in a folder for that address. And then every time I spend something, I’m putting it in on the spreadsheet, like, immediately, okay, you’re just self tracking, self tracking.

Katy 35:25
But I am like, I do feel like when you did the two in a row that were featured on the show, yeah, I feel like when you went to buy the second one, you actually had to ask your CPA what the capital gains were gonna be in order to make sure it made sense. Yes. So it was really a question you have to ask sometimes on the front end,

Alissa 35:46
yeah, I mean, it’s a huge chunk of money that you have to pay for capital gains if you’re not going to live in the house for two years, right?

Katy 35:53
I actually really love that investment plan. The people that buy and live in it for two years and then sell, because you avoid that. I know that was truly our intention before we moved in this house, because we built that one, lived in it two years, and then built this one, and then when we got here, we didn’t want to leave. I’m like, shoot, you can’t leave here. Shoot, shoot, I’d be doing a lot better financially, though. I know the things we do to keep our family All right, let’s move on. Thank you for your information on that. I was actually going through your library of episode of episodes today to try and find an episode that could help me with a specific need. Oh, I couldn’t find one, but please tell me if I overlooked it, I’m trying to maybe it was one of the ones we mentioned. I’m trying to better understand how to analyze and break down my yearly business financials. My bookkeeper and I were reviewing my overall numbers year to date the other day, and after four years in real estate, I’m organized, organized enough now that I have my various expenses broken down into the proper categories for my CPA and I have a quarterly yearly income statement. However, I don’t know if there’s a recommended certain percentage of my overall gross income that I should be putting towards things like marketing and advertising, networking, supplies, etc. I’m not sure if I’m overspending in some areas under spending in others. I’m also not sure how much I should net after all of my expenses, splits, etc. I’m just going with my gut on things financially, but I’d really like to be more strategic with these types of decisions for my business in the future. Wait, this is where it gets interesting. I’m told a coach could help me with these percentages and recommendations, but that’s money that I’m not really interested in spending. Good for you girl, especially when I feel I can get more out of listening to your podcast than hiring an actual coach, for sure. She does say, I recently signed up for agent systems, but haven’t had the chance to go through all of it. So if there’s something in there, whatever, let me know. I want to share something I found. Okay, while you take that in, I know that was a lot. I listened to an episode of gold digger with Janet Kucher many years ago with Jay me, troll, T, R, U, L, L, I do not know the episode number, but Jamie is a CPA financial planner, bookkeeper. She is an online educator now, okay, so she teaches, especially small businesses, how to do these things people are asking us, okay, Jamie came on that episode and explained her profit plan, p r o, F, F I T, so 2f not spelled correctly, but profit p r o, F, F I T, and it was such a light bulb moment for me. Okay, okay, so I’m going to tell you what they stand for. P, this is how you’re going to divide up your income. This is what we’re doing. P is to pay yourself. Okay, R is rainy day reserves for emergencies. And she says this one maxes out. So if you’ve decided that your emergency fund is three months, then your R is going to percentage is going to change. Yes, okay. Oh, opportunity, strategically reinvesting in your business, what will save you time or make you more money in the future, example, upgrades or your website or some type of some equipment, okay, oh, that’s opportunity. F is future, save for retirement or debt payoff. And that really helped me, because I’m like, I have this old debt, but I feel so guilty about not saving for my retirement. Y’all, if you’re in that boat, pay the debt first. Yeah, that they say, get rid of the debt, then worry about the retirement. But that’s the F future, okay, then the next F is fun, fun, something that will be fun. So, like a family vacation, a tangible motivation. So you’re saving for something fun. Okay, okay, I impact. This is charitable giving, and you could start small and work your way up. She said. It, yeah, and then T is your taxes, yeah, okay. Should be somewhere between 25 and 35 depending on your tax price, right? Yeah, 25 to 35% so you can kind of work backwards from there. If you put 25 towards your taxes, you have 75 to split between the rest of these. Okay, now, her sample was for her personally, she was doing 35% to pay herself. Zero was in rainy day because she’d already got her whatever her merge. It was fine. She was done to allocate anymore. Once it’s done now, if you had to dig into it, then you’d put it back in right to replenish. Okay, fine. So hers was at zero for rainy day, her opportunity was at 20 because she was growing her business. Okay? Future, she had at five, fun she had at five. Impact, she had at 10, and taxes, she had at 25 so you have to pay yourself, pay your taxes and do the opportunity that’s to grow your business. Yeah, those are the first ones you’ve got to do. I just thought that was really helpful.

Alissa 41:08
I think that is really, it’s a, it’s a very good guide, yeah. And when you were reading this long question from our listener, first of all, I feel like she’s already so ahead of the game, 100% so much one. She already has a bookkeeper. They’re talking, they’re planning, they have quarterly they’re looking at reports. They’re looking at reports like you are ahead of the game. It almost sounds like where I used to be when I was trying to over organize the organization. At some point, it’s sucking your time? Yeah, don’t, and it’s no longer efficient, and it’s actually costing you money because you’re trying to over complicate it. And there was also a lot of shoulds in that message. I know, how much should I do? How much should I do? I’m like, Well, what does your family need, right? What are your expenses? What is your Are you a dual income household? Is it just you like, all of these things is all huge matter, and that’s also why we can’t just, like, give you the answer now. So I’m super glad that you shared Jamie’s, because that’s a good little template.

Katy 42:13
It just helps you not forget anything. Also, yeah, because it I will tell you what money is for me, very overwhelming. I have trouble with scarcity. I grew up in a household that had money, didn’t have money, had money, didn’t have money. So, like, because my dad was self employed, yeah? So I have seen this my whole life, so it was helpful for me to be like, Okay, it’s really not that overwhelming. These are the this is it. These are all the buckets. If you fill all these buckets, you’re good, yeah, everything’s fine. All you have to do. And I like the fact that you’re like, these buckets don’t all have to be filled at the same time. They don’t all it’s okay, like you got to do what you can do. Yes, and you start small. That’s the nice thing about money. You can start very small, and it will grow. And doing little things makes a difference. It does. Yeah, those were all of our questions. Great. I feel like this was very helpful. Do you I mean, going into a new year, it’s always a great time to like, I love Sarah does no spend months, which I think is very impressive. But January is a little easier. Everyone’s kind of gotten all their spending out of their system. You’re like, okay, let’s regroup

Alissa 43:25
here, right? So starting our diet, we’re not spending money. We’re

Katy 43:29
gonna just get it all together. But if you could even just start planning how you’re gonna spend those coming commissions, like, Where does the tax money go? Do you have an account set aside? Can your office keep it for you. That’s such a nice feature. What’s the best way to handle this? Yeah, how will we make it through this year? Because I will tell you the first time I showed up at my current CPA and was like, I need to get pay myself. I need to do all these things. After doing it for just one year, it was like a totally different Oh yeah, it was so much easier, much easier. So much easier. So you just have to start now, if you haven’t, and then by the by next, this time next year, you’ll be like, Wow, I’m so glad I did that. Also changing, like your tax election, like doing an S Corp is easier now, so you can do it for the whole year, right? Don’t wait. Make it complicated. Yeah, very complicated. Very, very complicated. That’s all I have. This was great. Okay, great. Yeah,

Alissa 44:30
it’s easy to spend money when you’re in real estate. Oh,

Katy 44:32
and they’re trying to sell you something all the time. And they know

Alissa 44:37
all the trick stuff, so much good free stuff. They know

Katy 44:40
all the tricks. These leads are going to be the leads that get you all the business change your life. Don’t you want to have money in your account on the regular? Yeah, they’re going to try and sell you something, right? Advertising, oh God, there’s so many goods, the grocery carts, the like, they’re always reaching out about the one. Country cub pamphlet. I’m like, the magazine, come be in our magazine. Oh, my, hey, we’ll put your listing in on the on front page of our magazine for $1,000 I’m like, well, that’s like, yeah, it’s like a fifth of my permission, right? What will you do? No, all right, you guys have it? Okay? Well,

Alissa 45:19
let’s move on to a toast. Love it. Goodbye. Hi. This

Speaker 1 45:22
is Kim McDonald from Nashville, Tennessee, and I am toasting Wendy green today. Wendy is my partner, partner in crime, partner in real estate. She is just amazing. She’s always, always pumping me up and giving me new challenges and helping me grow my business. So I want to give a big shout out to Wendy green with green property brokers. Thanks, Wendy.

Alissa 45:49
Love you. Thank you so much for tuning in to the hustle humbly podcast.

Katy 45:52
If you enjoyed this episode, please go to rate this podcast.com/hustle. Humbly and leave us a review or drop a comment if you’re listening on Spotify.

Alissa 46:01
If you have an episode topic or someone you’d like to toast on the show, please email us at team. At hustle humbly podcast.com, find

Katy 46:08
us on social media at hustle humbly podcast, don’t forget to find all of the free resources at hustle humbly podcast.com/resources,

Unknown Speaker 46:17
see you next week. This

Unknown Speaker 46:20
is the good life.