Artwork for podcast Wealth Witches
Modern Day Money Guide
Episode 315th November 2021 • Wealth Witches • Katelyn Magnuson
00:00:00 00:16:49

Share Episode

Shownotes

Would you take money advice from a crusty old white man using technical jargon? Me neither. Finances are gate-kept and overwhelming, for no good reason.

Let's take a step back and investigate our money beliefs. For one, that all debt is bad - it's not. Debt is just a decision to borrow money, for a fee. You don't need to pay your mortgage off to be financially responsible. Long term, it's actually better to invest more into retirement than it is to pay off your mortgage early. Make sense? I'm tired of traditionalists treating online businesses like they aren't valid.

Let's improve your financial knowledge and confidence.

Join our community at confidentmoneypodcast.com where we’ll share tips and resources, and you can suggest topics for future episodes.

Enter to win a free strategy session with me! Leave a 5-star review and include your IG handle to enter.  We draw the winner at the beginning of each month. 

FTC/Affiliate Disclaimer: By using some of these links, at no extra cost to you, I may earn a small commission or referral fee, which helps me continue to produce content like this, support my business, and my team.

DISCLAIMER: I am not a financial advisor and this is not financial advice. My podcast is for educational purposes and is my personal opinion only. To make the best financial decision for your situation, please do your own research and if needed, seek the advice of a fee-based, fiduciary.

Music credit: Neon Fairies by Wolves 

A Podcast Launch Bestie production

Transcripts

Katelyn Magnuson:

Okay, so we need to talk.

Katelyn Magnuson:

I, like I said before, I am not your parents money expert.

Katelyn Magnuson:

I am not here to dish out crusty ass old advice about, oh, if you

Katelyn Magnuson:

just save your money and you just budget, like bullshit, bullshit.

Katelyn Magnuson:

We have so many other factors that go into our financial wellbeing.

Katelyn Magnuson:

In today's era, whether you are a business owner, whether you have your corporate

Katelyn Magnuson:

job, there are so many more facets that complicate things compared to our

Katelyn Magnuson:

parents or our grandparents generations.

Katelyn Magnuson:

And I'm here to walk you through the modern day person's guide to

Katelyn Magnuson:

exactly what you need to know, money and finances and accounting.

Katelyn Magnuson:

are gate kept.

Katelyn Magnuson:

They are made to be hard.

Katelyn Magnuson:

They are made to be confusing.

Katelyn Magnuson:

They are made to be inaccessible because if you don't have access,

Katelyn Magnuson:

then you are stuck in the hamster wheel of working to make money.

Katelyn Magnuson:

But then you're working so much that you pay for conveniences.

Katelyn Magnuson:

And then, because you pay for convenience as you need to work more

Katelyn Magnuson:

because you don't have any time.

Katelyn Magnuson:

And if you don't understand your finances, then you have to pay other people.

Katelyn Magnuson:

To constantly be doing things for you.

Katelyn Magnuson:

And if you do try to learn and you do try to improve yourself, the majority

Katelyn Magnuson:

of the financial advice and information out there is filled with old crusty

Katelyn Magnuson:

white men using technical jargon.

Katelyn Magnuson:

I have ran through my fair share of them, and it is so frustrating to be

Katelyn Magnuson:

working, to improve your knowledge.

Katelyn Magnuson:

And be patronized to be talked down to, to be made, to feel less than.

Katelyn Magnuson:

All because maybe you don't have background in that, you know, maybe

Katelyn Magnuson:

you're a really talented graphic designer, maybe you didn't go to business

Katelyn Magnuson:

school, but all of this information is laid out for people that went to

Katelyn Magnuson:

business school that, you know, became a CPA that became an accountant.

Katelyn Magnuson:

And there's no reason for this information to be gate-kept.

Katelyn Magnuson:

To be made so much more difficult and overwhelming.

Katelyn Magnuson:

And so I'm here to keep things from continuing to be hard.

Katelyn Magnuson:

I break it down easy and I make it so straight forward for you to understand,

Katelyn Magnuson:

you need to know how to do these things, but it feels overwhelming because

Katelyn Magnuson:

you don't know how or where to start.

Katelyn Magnuson:

And that's the other really big part of misinformation.

Katelyn Magnuson:

You know, I'm a big fan of Google who is not.

Katelyn Magnuson:

But if you go and you Google a lot of this information, there are so many

Katelyn Magnuson:

variables, you know, state by state, individual scenario by individual

Katelyn Magnuson:

scenario should you be an LLC?

Katelyn Magnuson:

Should you be paying quarterly estimated taxes?

Katelyn Magnuson:

How should you be saving for retirement?

Katelyn Magnuson:

Should you pay all your debt off now?

Katelyn Magnuson:

What debts should you pay off debt is bad?

Katelyn Magnuson:

Which we're going to earmark for a hot second.

Katelyn Magnuson:

One of the biggest things that I am so against is the shame

Katelyn Magnuson:

culture that goes around debt.

Katelyn Magnuson:

Almost all of us have, or have had some form of debt, student loan,

Katelyn Magnuson:

debt, mortgage, credit card, car loan, personal loan, you name it.

Katelyn Magnuson:

I'm not here to tell you that you did a stupid thing or a

Katelyn Magnuson:

shitty thing or a bad thing.

Katelyn Magnuson:

You made a decision that served you based on your knowledge

Katelyn Magnuson:

at the time that you did that.

Katelyn Magnuson:

I currently have debt because debt is simply the decision to pay for something.

Katelyn Magnuson:

With an interest rate, it comes with a fee like you're choosing

Katelyn Magnuson:

to borrow money with a fee

Katelyn Magnuson:

that's literally what debt is, right?

Katelyn Magnuson:

You're you're leveraging someone else's money.

Katelyn Magnuson:

Because you've decided that the fee that you were paying is worth the opportunity

Katelyn Magnuson:

costs of paying that additional fee.

Katelyn Magnuson:

Right.

Katelyn Magnuson:

So debt's not bad.

Katelyn Magnuson:

I have a car loan, I have a home mortgage.

Katelyn Magnuson:

Um, I have, credit cards that I use all the time and I have no

Katelyn Magnuson:

desire to pay my house off early.

Katelyn Magnuson:

And this is something that, I talk about a lot with clients because

Katelyn Magnuson:

they'll come to me and, you know, They have this like scarcity your

Katelyn Magnuson:

lack mindset around like, oh my God, what if my business fails tomorrow?

Katelyn Magnuson:

In order to be financially solvent or secure or financially responsible

Katelyn Magnuson:

there's all this bullshit stories that we tell ourselves that have

Katelyn Magnuson:

been told to us over the years.

Katelyn Magnuson:

And.

Katelyn Magnuson:

You don't need to pay your mortgage off to be financially responsible.

Katelyn Magnuson:

So I invite you if you're, in that area to like take a step back

Katelyn Magnuson:

and wondering, you know, where did that information come from?

Katelyn Magnuson:

Is that truly your desire?

Katelyn Magnuson:

Because if it's truly your desire and it aligns with your financial goals,

Katelyn Magnuson:

by all means, however, If you've ever followed Dave Ramsey or you're familiar

Katelyn Magnuson:

with his teachings or a lot of other really traditional, financial information.

Katelyn Magnuson:

A lot of them will encourage you to have no debt that you don't need to utilize

Katelyn Magnuson:

a credit score because who needs debt.

Katelyn Magnuson:

You are literally losing potentially hundreds of thousands of dollars by not

Katelyn Magnuson:

utilizing debt in the course of your life.

Katelyn Magnuson:

let's take a mortgage.

Katelyn Magnuson:

For example, for most of us, mortgages are under 4% interest.

Katelyn Magnuson:

Okay.

Katelyn Magnuson:

If you were to be prioritizing paying your mortgage off, instead of investing

Katelyn Magnuson:

in retirement, for example, on average, you would be losing somewhere

Katelyn Magnuson:

around 4% in interest per year.

Katelyn Magnuson:

And then that interest would compound because your investment would have grown

Katelyn Magnuson:

you'd then have 4% interest on that.

Katelyn Magnuson:

And then 4% interest on that.

Katelyn Magnuson:

And then 4% interest on that and it continues to grow.

Katelyn Magnuson:

So for example, say your mortgage is 4% for a really straightforward number.

Katelyn Magnuson:

And your average return on investments is 8%.

Katelyn Magnuson:

For most of us, they fluctuate between four and 12, but anywhere between

Katelyn Magnuson:

six and eight is kind of an accepted norm for an, an annual average.

Katelyn Magnuson:

If your interest rate is less than like six or 7%, you should generally be

Katelyn Magnuson:

prioritizing investing that money over, paying off debt that is lower than that.

Katelyn Magnuson:

So for many of us that is a car that is a mortgage, and that is some.

Katelyn Magnuson:

Federal student loan debt, depending on the interest rate there.

Katelyn Magnuson:

Now, the reason being there is a psychological benefit

Katelyn Magnuson:

for sure, to not having debts.

Katelyn Magnuson:

And if that benefit is the most important part for you or you're looking to retire

Katelyn Magnuson:

early, or you have chronic health issues, or you don't know that you're going to

Katelyn Magnuson:

be able to work for as long as you need, or you don't have as high of a living

Katelyn Magnuson:

expense or cost of living for a year, then paying your mortgage off

Katelyn Magnuson:

or paying your car off may make more sense, or you're planning to go back

Katelyn Magnuson:

to school or have your income drop.

Katelyn Magnuson:

All of those, you know, are really personal reasons that you may want

Katelyn Magnuson:

to consider doing things differently.

Katelyn Magnuson:

However, for the average person that I talked to that is wanting to.

Katelyn Magnuson:

Basically make more and maximize our investments instead of prioritizing

Katelyn Magnuson:

an extra 2, 3, 4, or $500 to paying off your mortgage early, you should

Katelyn Magnuson:

be investing that money instead because that money will out-earn.

Katelyn Magnuson:

Cause if you take 8%.

Katelyn Magnuson:

Return on investment on that, then you subtract the 4% that you're

Katelyn Magnuson:

paying an interest on your mortgage.

Katelyn Magnuson:

You're still coming out ahead 4%.

Katelyn Magnuson:

And again, this is really, really simple math, but for most of us,

Katelyn Magnuson:

we should be investing that money.

Katelyn Magnuson:

Now, the worst thing that you could do.

Katelyn Magnuson:

Is make the decision that yes, I'm going to invest this extra money.

Katelyn Magnuson:

Uh, I'm going to, you know, earn this great, and then not doing it because

Katelyn Magnuson:

then you're not only not paying your debt off any quicker, but you're

Katelyn Magnuson:

also not maximizing the years of compounding returns on your investments.

Katelyn Magnuson:

And that is the biggest mistake that you could do.

Katelyn Magnuson:

So if you're going to prioritize investments and overall earning, get

Katelyn Magnuson:

that money started, get investing.

Katelyn Magnuson:

You can use robo advisors, you can.

Katelyn Magnuson:

use something like, you know, betterment, Ellevest, I don't love Robin hood,

Katelyn Magnuson:

but betterment has been really great.

Katelyn Magnuson:

So has ellevest it is specifically for women, and has, you know, relatively

Katelyn Magnuson:

low fees, all things considered, and it is better to get your money in

Katelyn Magnuson:

there as soon as you can, because the more time that your money can

Katelyn Magnuson:

sit, the more time it can grow.

Katelyn Magnuson:

And the more time that growth will compound and speed up

Katelyn Magnuson:

your investment growth.

Katelyn Magnuson:

That was a big sigh.

Katelyn Magnuson:

The other biggest area that I see people running into problems here is so many

Katelyn Magnuson:

business owners are trying to learn finances from people who don't understand

Katelyn Magnuson:

modern day or online businesses.

Katelyn Magnuson:

I've worked with countless clients that have come to me and their business has

Katelyn Magnuson:

been downplayed or they've been treated like an afterthought because they're an

Katelyn Magnuson:

online business and a lot of old school accountants or financial professionals

Katelyn Magnuson:

don't think that they're legitimate.

Katelyn Magnuson:

This is the new wave of business.

Katelyn Magnuson:

And it's starting that new right.

Katelyn Magnuson:

This has been 20 plus years.

Katelyn Magnuson:

Now that we're looking like people are making 6, 7, 8 figures as online business

Katelyn Magnuson:

owners, like get with the program, we need to adjust our teachings accordingly.

Katelyn Magnuson:

And so many people have not.

Katelyn Magnuson:

So the reason that so much of this information and so much of our tax system

Katelyn Magnuson:

feels overwhelming is because we're still working in an archaic system that

Katelyn Magnuson:

is built for brick and mortar stores.

Katelyn Magnuson:

I always say our tax system is built.

Katelyn Magnuson:

Like it's the 1950s.

Katelyn Magnuson:

It's based off of your prior year.

Katelyn Magnuson:

Like they don't expect you to see more than 10% a year in growth.

Katelyn Magnuson:

You know, there's a lot of small little things that are not taken into

Katelyn Magnuson:

consideration that if they were taken into consideration, which is what we

Katelyn Magnuson:

do, you would have a really different.

Katelyn Magnuson:

Set of teachings.

Katelyn Magnuson:

And so, I had a client that for example, was working with an accountant.

Katelyn Magnuson:

Old school, uh, they were working on quarterly estimates.

Katelyn Magnuson:

Now the traditional or the accepted way to do quarterly estimated taxes is

Katelyn Magnuson:

to base this year's tax payments off of your prior year's tax liability.

Katelyn Magnuson:

So, if you look at your 10 40, for example, and you go down to, I want

Katelyn Magnuson:

to say, it's like line 17 and you look at your total tax liability.

Katelyn Magnuson:

There will be a number on there.

Katelyn Magnuson:

That number is how much money you needed to pay to the IRS in

Katelyn Magnuson:

taxes based on your earnings.

Katelyn Magnuson:

That's not necessarily.

Katelyn Magnuson:

What you owed at the end of the year, because you may have paid in via jobs

Katelyn Magnuson:

via quarterly estimates, et cetera, but that was your tax liability for

Katelyn Magnuson:

the year based on your earnings.

Katelyn Magnuson:

So the accepted way to do your quarterly estimates is to take that number

Katelyn Magnuson:

from the previous year divided by four because of quarterlies and pay.

Katelyn Magnuson:

For equal installments based off of your prior year's taxes.

Katelyn Magnuson:

If you make more than $150,000, you need to actually pay 110%.

Katelyn Magnuson:

So you add an extra 10% overage.

Katelyn Magnuson:

So let's give an example.

Katelyn Magnuson:

Let's say you owe $10,000 last year as your total tax liability,

Katelyn Magnuson:

we would divide that by four, you would be expected to pay $2,500 per

Katelyn Magnuson:

quarter in quarterly estimated taxes.

Katelyn Magnuson:

That's all well and good.

Katelyn Magnuson:

If you were over $150,000 in adjusted gross income, you'd be expected to

Katelyn Magnuson:

pay 110,000, which would be $11,000, which would be $2750 per quarter.

Katelyn Magnuson:

Right.

Katelyn Magnuson:

So just a little bit more here's where the problem lies.

Katelyn Magnuson:

So this client was doing that with her accountant.

Katelyn Magnuson:

Right.

Katelyn Magnuson:

So they're going along, they're making these payments.

Katelyn Magnuson:

She thinks she's totally good to go because she's been paying her

Katelyn Magnuson:

quarterly as, as the year goes along.

Katelyn Magnuson:

She gets to the end of the year and she owes an additional $12,000.

Katelyn Magnuson:

It almost put her out of business.

Katelyn Magnuson:

Why does she owe the extra money?

Katelyn Magnuson:

She owes the extra money because her business made more this year than the year

Katelyn Magnuson:

that the quarterlies were based off of.

Katelyn Magnuson:

And her accountant did not properly educate or explain to her that what

Katelyn Magnuson:

they were doing was simply paying enough in quarterly estimates to avoid any

Katelyn Magnuson:

underpayment penalties or interest, because that is all that number is.

Katelyn Magnuson:

So that's all well, and good.

Katelyn Magnuson:

If you were a brick and mortar that has growing, you know, 10% a year, right?

Katelyn Magnuson:

You might owe a thousand dollars in taxes, something along

Katelyn Magnuson:

those lines, nothing insane.

Katelyn Magnuson:

But for online businesses, service businesses, we can grow 50, a hundred,

Katelyn Magnuson:

200, 300% one year over the next.

Katelyn Magnuson:

And if you are not estimating your taxes based on your current year's projection,

Katelyn Magnuson:

you can get to the end of the year and owe tens of hundreds of thousands of

Katelyn Magnuson:

dollars in taxes, depending on how much.

Katelyn Magnuson:

Your income has grown this year over the last year.

Katelyn Magnuson:

So you have to work with someone that understands your business.

Katelyn Magnuson:

Are you a photographer?

Katelyn Magnuson:

Great.

Katelyn Magnuson:

We work with tons of photographers, wedding, industry vendors.

Katelyn Magnuson:

Are you a copywriter or content writer.

Katelyn Magnuson:

Fantastic.

Katelyn Magnuson:

Your business is legitimate.

Katelyn Magnuson:

You can make six, seven plus figures.

Katelyn Magnuson:

I had a client who had a family member that was an accountant

Katelyn Magnuson:

doing her taxes, and he literally like patted her on the head.

Katelyn Magnuson:

This is a mother of two children making six figures.

Katelyn Magnuson:

As a technical copywriter, he patted her on the head and treated

Katelyn Magnuson:

her like her business was so cute.

Katelyn Magnuson:

You know what a cute hobby you have and I'm over it.

Katelyn Magnuson:

I'm so fucking over demeaning those around you because you don't see

Katelyn Magnuson:

their business as being viable.

Katelyn Magnuson:

So.

Katelyn Magnuson:

I understand why you're feeling stuck.

Katelyn Magnuson:

I understand that you've probably gotten so much information and a

Katelyn Magnuson:

lot of it's not applicable to you.

Katelyn Magnuson:

No one's ever broken it down and made it easy to understand

Katelyn Magnuson:

you don't need traditional.

Katelyn Magnuson:

You need information built for today's business owners.

Katelyn Magnuson:

And I understand this from a women's perspective and a business

Katelyn Magnuson:

owner's perspective, and I'm done with the gatekeeping.

Katelyn Magnuson:

I'm done with the shaming I'm done with the bullshit.

Katelyn Magnuson:

I am here to make this fun, to make this easy, to build your

Katelyn Magnuson:

confidence and set you up with a set of action items that you can take.

Katelyn Magnuson:

And with very little time.

Katelyn Magnuson:

If you buy into this and you're willing to put in 10 or 15 minutes every day,

Katelyn Magnuson:

you will have a completely different financial life in 3, 6, 12 months from

Katelyn Magnuson:

now because the compounding effects of the changes that you can make

Katelyn Magnuson:

diamond, it's like anything, right?

Katelyn Magnuson:

Get up and move your body for 15 minutes a day, prioritize writing

Katelyn Magnuson:

content for 15 minutes a day, wherever you choose to focus.

Katelyn Magnuson:

You're going to see vast improvements and vast changes.

Katelyn Magnuson:

So I challenge you to improve your financial, understanding

Katelyn Magnuson:

your financial confidence.

Katelyn Magnuson:

And if you are feeling like you're lacking information, you're lacking knowledge.

Katelyn Magnuson:

It's okay.

Katelyn Magnuson:

We're here.

Katelyn Magnuson:

And I want you to.

Katelyn Magnuson:

To drop comments, give me a five star review.

Katelyn Magnuson:

If you found this really useful and also send me an email, go to confident

Katelyn Magnuson:

money.com and reach out with your questions because we're here for you.

Chapters

Video

More from YouTube