The Road to Financial Independence: Essential Money Management Skills For Young Adults

00:00:12 - Mike Mills

Hello. Hello, everybody. This is Mike Mills Mortgage and Finance Podcast. And I'm your host, Mike Mills. And today we're going to be focusing on a little bit more of the finance side of Mike Mills Mortgage and Finance. And even though I am a mortgage professional of 13 years, today I'm actually going to be talking to you as a dad, which is really exciting for me, but not so exciting for my guests today. But we're going to kind of dive into some stuff as it relates to teen financing, budgeting, how to get your child started down the right path, to make sure that when they leave the nest, that they have some good habits in place, some good processes in place to kind of help them be financially secure in the future. But I promise you, this is going to be way more entertaining than you think because I'm going to welcome my guest to the show with me today, and that is my daughter, Catey Jane.

 

00:01:05 - Catey Jane Mills

Hi.

 

00:01:06 - Mike Mills

Hello.

 

00:01:07 - Catey Jane Mills

How's it going?

 

00:01:08 - Mike Mills

She is so incredibly excited. Okay, pull up a little bit on the mic there so you can get a little bit closer to it.

 

00:01:13 - Catey Jane Mills

Okay.

 

00:01:13 - Mike Mills

So she is really fired up about this. We just came out of Thanksgiving break, and I've kind of been preparing her this for the last couple of days. She had a friend that stayed with us, and so we got to delay it off. I would have got it done a little bit sooner, but I didn't want to take away from her friend time. So today we're going to talk about money. We're going to talk a lot about money. We're going to talk about the process of money and how we get to where we need to go. And I brought her with me because she's going to be joining me on this journey. Honestly, whether she likes it or not, quite honest, asleep. She's not really excited about doing this, but the reason that we're doing it is she just recently turned 16. Right? How was that?

 

00:01:47 - Catey Jane Mills

It was great. I had so much fun.

 

00:01:50 - Mike Mills

And what occurs when you turn 16, my dear?

 

00:01:54 - Catey Jane Mills

I got my license.

 

00:01:55 - Mike Mills

You got your license, okay. So the audience understands, what have you been doing with your newfound freedom lately?

 

00:02:02 - Catey Jane Mills

I haven't been home at all. I've just been driving and spending money.

 

00:02:05 - Mike Mills

Yes, you've been driving and spending money. Right. Now, you were lucky because your 16th birthday happened and you got a lot of money for your birthday, right? Not from us, but from family and other things. You got the car from us, so congratulations on that. So we're already kicking off on the right foot. We don't have a car payment, so that's good, right? We paid cash for our car. You got money for your birthday, right. But where are you spending the vast majority of your money right now? Tell me. Like a standard day that it's been since the holidays have gone on.

 

00:02:32 - Catey Jane Mills

Like how much money I spent.

 

00:02:33 - Mike Mills

Well, just like, what are you doing while you're running the streets?

 

00:02:36 - Catey Jane Mills

Go to Target and then no, I go to Starbucks and then I go to Target and then I go eat.

 

00:02:41 - Mike Mills

Okay, and what are you buying at Starbucks?

 

00:02:43 - Catey Jane Mills

Typically this.

 

00:02:46 - Mike Mills

Okay. For those who can't see. What is that?

 

00:02:48 - Catey Jane Mills

Strawberry, acai, lemonade.

 

00:02:50 - Mike Mills

Okay, so you have a drink at Starbucks, and how much is that usually?

 

00:02:53 - Catey Jane Mills

Like six or $7.

 

00:02:55 - Mike Mills

Seems kind of expensive for a drink, don't you think?

 

00:02:57 - Catey Jane Mills

Very expensive.

 

00:02:57 - Mike Mills

Right. So the bottom line of this is you have a newfound freedom because you have a car and you are now cruising around town in your car. And when you go from place to place, what does that require?

 

00:03:09 - Catey Jane Mills

Gas.

 

00:03:09 - Mike Mills

Gas. And now we're buying things and we're just living our best life, which is awesome. But that birthday money is only going to last so long, right?

 

00:03:16 - Catey Jane Mills

Yes.

 

00:03:17 - Mike Mills

And then we got to find a new source of money because otherwise what's going to be happening? I'll be broke and you'll be doing what? I don't know, working, staying at home. You won't be going anywhere. Right. Okay. So if you have a teenager that is starting to drive or if you just kind of want to restart on some of your money stuff, we're going to get into some really basic stuff. So the idea of this podcast today is that we're going to go through what my daughter and I's journey is going to look like over the next several months on getting her ready and prepared to be an adult. Essentially. Because now that she's driving around town and she's cruising with her friends and going to stores and having little date nights with her friends, she's going to need money for this. And she's therefore going to need to learn how to manage this money because mom and I are not the perpetual bank accounts forever and ever. So we're going to kind of walk through this journey together. Hopefully this won't be the last podcast. This will be the first of many as we kind of chronicle our steps into how to get her financially prepared because she is going to leave the nest one day. You don't plan on staying here. Why not? You don't want to live here forever?

 

00:04:22 - Catey Jane Mills

No.

 

00:04:23 - Mike Mills

You're ready to get out, ready to go somewhere. Okay. She's ready to get out and go somewhere. She's not going to be sticking around, so hopefully we can set her off on the right foot. So if you guys listen to this and you really enjoy it, please leave me some comments, leave me some information if you want me to go over on the next one. But today we're going to talk about different things like opening a checking account, savings account, budgeting. We're going to talk about investing, all this kind of stuff that we're going to be doing. And ideally, what we're going to do is we're going to go open these accounts, we're going to document that a little bit, and then we're going to check back in a couple of months and kind of see how this is going. So if we get a good response on this one, then there will be more to come. All right. Hopefully she doesn't kill me in this process, but we'll kind of see how it goes. Now, this is a science experiment, so I want to be clear. This is my first teenage daughter, so I don't have previous experience in dealing with this. We raised her in a way that hopefully works out for her in the future. I'm sure she'll have some stuff to bitch about us as an adult, but as it stands right now, things seem to be going along okay, but at the end of the day, I don't know what the hell I'm doing and just trying to figure this out. Now, the reason I'm making her do this podcast with me is because I have this punch a hole in the wall theory that I got from my brother where sometimes if you want to do something, you just got to punch a hole in the wall to get started, and you can't plan and make progress and all this kind of stuff. So ultimately, what I'm going to do is we're just going to do this, and we're going to talk about what we're going to do. And then because I did the podcast, this going to hold me accountable to make sure that we continue to do this stuff. So that way I don't just start and stop, like, happens with a lot of things. All right, so let's start with money itself. Okay. Darling dear, why do you think it's important? Why is money important to you?

 

00:06:08 - Catey Jane Mills

Because I want to buy stuff.

 

00:06:09 - Mike Mills

Because you want to buy stuff?

 

00:06:10 - Catey Jane Mills

Yeah.

 

00:06:11 - Mike Mills

That's it?

 

00:06:12 - Catey Jane Mills

Yeah, so I can have freedom, and I don't have to ask you all to do stuff and have to do stuff to get money for it.

 

00:06:18 - Mike Mills

Okay. What is the importance of freedom for you? Why is that so valuable to you?

 

00:06:23 - Catey Jane Mills

Because I like to do my own thing.

 

00:06:25 - Mike Mills

You don't like to be told what to do?

 

00:06:26 - Catey Jane Mills

No, I don't. I hate being told what to do.

 

00:06:28 - Mike Mills

It's like your least favorite thing.

 

00:06:30 - Catey Jane Mills

My least.

 

00:06:31 - Mike Mills

Okay, well, what is it about? I mean, how do you think that money is going to buy you that freedom? What does that look like in your mind as a 16 year old girl?

 

00:06:40 - Catey Jane Mills

Being able to go out with my friends and do stuff and buy stuff and not having to beg you for money for a movie ticket or dinner.

 

00:06:50 - Mike Mills

Why does it suck, begging me for money?

 

00:06:51 - Catey Jane Mills

Because you say no.

 

00:06:52 - Mike Mills

I say no. What does your mom say?

 

00:06:54 - Catey Jane Mills

She says your dad might get mad at me if I say yes.

 

00:06:59 - Mike Mills

Do I say no? All the time?

 

00:07:03 - Catey Jane Mills

No. You say yes sometimes.

 

00:07:06 - Mike Mills

Are there strings attached to my yeses? Usually.

 

00:07:08 - Catey Jane Mills

Always?

 

00:07:09 - Mike Mills

Like what?

 

00:07:10 - Catey Jane Mills

I have to do something. Edit your podcasts or freaking, I don't even know. Something stupid.

 

00:07:16 - Mike Mills

Something stupid that you're going to have to make money for. No, I understand that. So do you think having money would make you happy?

 

00:07:23 - Catey Jane Mills

Yes.

 

00:07:23 - Mike Mills

You do? Why is that?

 

00:07:26 - Catey Jane Mills

Because freedom makes me happy.

 

00:07:28 - Mike Mills

Freedom makes money.

 

00:07:28 - Catey Jane Mills

I have freedom.

 

00:07:29 - Mike Mills

Okay. I can understand that. Freedom does make a lot of people happy. And having money does buy you freedom because it allows you to do whatever you want to do without having someone else's concern. There's my favorite term. Have you ever heard me say the F word with the money? Have you ever heard me say that before?

 

00:07:48 - Catey Jane Mills

Oh, yeah. Fu money.

 

00:07:50 - Mike Mills

Fu money. Yeah. What is fu money? Can you describe it?

 

00:07:53 - Catey Jane Mills

You can have enough money to just do whatever you want. You don't have to care about anyone else.

 

00:07:56 - Mike Mills

That's right. So does that mean that money is the only thing that gets no, no. Is it the only thing that's what's the what's the line from Eastbound Down? You've never seen that show? But money doesn't buy happiness. But it buys Jet Skis. And you've never seen anyone not smiling on a jet ski.

 

00:08:17 - Catey Jane Mills

I love jet ski.

 

00:08:18 - Mike Mills

Jet skis are fun. All right. So the point of this, essentially that what I'm trying to express to her, which we've talked about in the past, is that money makes the world go round. Whether you like it or not. It is the thing that drives all things. In your case, it's literal. It drives your car. If you want to get from place to place, you have to have money to put gas in your car. In your car. We're going to give you gas once a week because you will have transportation that you'll have to transport things back and forth. But beyond that, if you want to go cruise in the streets, that's your responsibility. So that money is what gives her the freedom to go do what she wants to do. Within reason. Within reason. Can't be traveling on too many freeways. And God forbid you go to the park small. Your mom will lose a heart attack. That's right. We're not allowed to do that, but at least not yet. We're going to get there one day, hopefully. But what this money does is it affords you the ability to make your own decisions without necessarily always having to check with us. Right. And those decisions will get bigger and bigger as you get older and older and have more responsibilities. And the idea is that if we can teach these responsibilities now while they're in the home so she's going to do stupid stuff, you're going to wreck your car at some point. I know it's going to happen. I'm not going to be happy when it does, but it is going to happen. I know that you're going to spend money on stupid stuff. I know that you're going to lose your wallet. You're going to have all these things that are going to happen again, not giving you an excuse, but I will understand when it happens. These things are going to occur. But because of that, we can manage some of this stuff while she's still under our roof. But if your daughter or son is like my daughter, that as soon as they turn 18, in their mind right now, at least, they are flying the coupe, never to return. Although I think we'll probably revisit that at some point. But then you need to prepare them for this kind of stuff when they leave the house, because they have to have these kind of concepts and these tools in place to be sure that when they get out of the house that they're still going to make bad money decisions, but they don't make money decisions that are going to ruin their life, because a lot of people do that. And many times people don't ask for help. And the reason they don't ask for help is because they're embarrassed about it, because they don't understand it. They didn't learn. They don't want to seem like they're a dummy or they're broke. And so in those situations, you have many adults that don't understand a lot of this stuff but don't want to ask. Because if you don't have money, then it's certainly something that you don't want to talk about because it's not the most fun topic. But if you can set your kids up with proper education and with proper habits before they leave the house, then often you're going to put them on the right path. I mean, I do loans for people all the time. And surprisingly enough, at least within the last couple of years, I've noticed that a lot of young adults have a lot of their finances in place. They have good credit, they have money in the savings in the bank. They have all this kind of stuff because their parents have prepared them for this. So it's just an important thing that we need to make sure that our kids understand and know. And it's one of those things that I think it's an invaluable skill that you can't put money price tag on it. All right, so first off, there are going to be a couple of books that we're going to read together, okay? But we're going to take it one step at a time. Now, as a parent, I'm going to blow through this real quick, but there are three books that I recommend that I've read myself and we're going to start. The first one I would start with, honestly, is Robert Kiyosaki's book. It's called Rich Dad, Poor dad. And have you ever heard of this book, my dear? No. So basically the book is about the author and his parents. He had one dad that had money and was, quote, unquote, rich, and then he had one dad that didn't. And he kind of talks about the difference in habits between the two and what they did. I don't want to spoil it for you, but ultimately he highlights the impact that his rich dad, quote, unquote, had on him because he taught him to invest. He taught him to work for himself and not have a nine to five job where you're an employee working for somebody else and kind of showed the benefits that come along with that. And so that's probably where we're going to start. And it's actually I read it when I was 18, and it's a really easy read. It's not that difficult, but that's a really great one. Also two timeless books that are pretty easy to read and get through that your kids will enjoy or they won't enjoy it, but they will appreciate it later is Dale Carnegie's book how to Win Friends and Influence People and Napoleon's Hill book, Think and Grow Rich. So those are three books that I definitely recommend right off the top. We're going to start with rich dad, poor dad. We're probably going to do a chapter or two before we come back so we can chat about that a little bit when we get back on the next round. So you're really excited about reading books, right?

 

00:12:37 - Catey Jane Mills

So excited.

 

00:12:37 - Mike Mills

It's your favorite thing.

 

00:12:39 - Catey Jane Mills

I do love reading, but I don't not this kind of okay.

 

00:12:42 - Mike Mills

Why do you think this kind of book really drives you crazy?

 

00:12:45 - Catey Jane Mills

Because it's not interesting.

 

00:12:46 - Mike Mills

Why do you not find it interesting? That's okay. Be honest. You can be honest.

 

00:12:51 - Catey Jane Mills

What?

 

00:12:52 - Mike Mills

It's okay. Why is it not interesting?

 

00:12:54 - Catey Jane Mills

Because I don't like learning about money.

 

00:12:57 - Mike Mills

But if you want to have money, don't you think you'd want to learn how to learn about it? Yeah. So how do you justify that in your brain? How do those two things reconcile?

 

00:13:05 - Catey Jane Mills

They don't.

 

00:13:05 - Mike Mills

They don't?

 

00:13:06 - Catey Jane Mills

No. I just like, oh, this is going to suck. I guess I got to do this now and then. I'm like I hate it. I hate, hate it. I it. I hate it, but I do it.

 

00:13:13 - Mike Mills

So you go into it with bad thoughts to begin with?

 

00:13:16 - Catey Jane Mills

Well, that's usually the case.

 

00:13:17 - Mike Mills

Okay, well, maybe my job I need you to do a better job at trying to make this thing a little more interesting so that way you'll have a little bit more engagement when you read the book and enjoy it a little more. Possibly.

 

00:13:29 - Catey Jane Mills

Sure.

 

00:13:30 - Mike Mills

Probably not. Okay. All right. She's a wealth of words today, so really dragging her out of I'll try better. All right. So first thing is we're going to talk about jobs. So what have we talked about when it comes to jobs, you and I so far about work. Just tell me what you think my thoughts are on work and how you feel about it.

 

00:13:52 - Catey Jane Mills

That I should get a job.

 

00:13:54 - Mike Mills

Okay.

 

00:13:55 - Catey Jane Mills

Like right now, or just in general?

 

00:13:56 - Mike Mills

No, in general, right now. Whatever.

 

00:13:59 - Catey Jane Mills

Think I should work for myself.

 

00:14:01 - Mike Mills

Okay, I think you should work for yourself. What does that mean in your mind?

 

00:14:04 - Catey Jane Mills

That I get to choose what I want to do and how I want to do it.

 

00:14:08 - Mike Mills

Okay. And therefore how to make money?

 

00:14:10 - Catey Jane Mills

Yes.

 

00:14:11 - Mike Mills

Right. Do I want you to work for somebody else?

 

00:14:14 - Catey Jane Mills

No, I don't I don't think so.

 

00:14:16 - Mike Mills

No. Have we talked about you getting a job somewhere else regardless of what you do for me?

 

00:14:21 - Catey Jane Mills

Yeah.

 

00:14:21 - Mike Mills

Okay. What's the reason for that?

 

00:14:23 - Catey Jane Mills

So I can learn how to be a team member. I'm sorry. We should have discussed this before.

 

00:14:35 - Mike Mills

No, it's okay. I want your true, honest opinion on what you think. Nobody's listening right now. We're just recording it, so it doesn't really matter. But why do you think having a job and working for someone else that's not yourself, why do you think that would be a benefit if ultimately I want you to work for yourself?

 

00:14:48 - Catey Jane Mills

So I can learn how to be other people's. How to have other people work for me?

 

00:14:55 - Mike Mills

Yeah, so you can learn how to well, first off, you need to learn how working for someone else is right. Is working for someone else do you think it's going to be good?

 

00:15:03 - Catey Jane Mills

Probably not.

 

00:15:03 - Mike Mills

Why?

 

00:15:04 - Catey Jane Mills

Because they tell you what to do and I don't like being told what to do.

 

00:15:07 - Mike Mills

Exactly. We've already established that. You don't like being told what to do. Right?

 

00:15:10 - Catey Jane Mills

No.

 

00:15:10 - Mike Mills

So you have to be able to understand what that really means. And many jobs really, really suck. You know what my first job was? Did I ever tell you, like, a.

 

00:15:20 - Catey Jane Mills

Paper person, or I'm thinking of something else?

 

00:15:23 - Mike Mills

No, I didn't have a paper route. Papa G. Yeah, that was Papa G I worked at. Yeah. Yes. My first job was at Wendy's. I was frying burgers and making frosties, which is why I would die. Have you ever seen me eat a no. Do you know what my opinions on frosties are?

 

00:15:42 - Catey Jane Mills

Probably not good.

 

00:15:42 - Mike Mills

They're not good. They're really not good. No offense to Wendy's. I'm sure it's just with the frosties that I made. But when you see how the cake is made, sometimes you don't want to eat the cake. But that was my very first job. I was making 425 an hour. That was my hourly wage. This was when I was 16, and I had to go physically apply for this job in person. I had to show up to the place and put in my application. And there was no Internet, so I could search for different jobs available. My parents, they weren't exactly holding my hands. We didn't do a podcast so I could figure out how to get a job. Right. It was simply just go find a job. And then I had to hey, dude. How'd you find a job. How'd you find a job and then you have to show up to Wendy's in person, meet some 21 year old who's probably fresh out of jail, and sit there and fill out an application.

 

00:16:34 - Catey Jane Mills

I could not do that.

 

00:16:35 - Mike Mills

Yes, that's what it is. And then I worked at CC's. And then I worked at Burger Street.

 

00:16:40 - Catey Jane Mills

Oh, God.

 

00:16:41 - Mike Mills

Yes. CC's was actually the one I got fired from because I was playing baseball in high school and I had a tournament one weekend, but they had scheduled me to work, and I was like, well, but I'm playing in my baseball tournament. And they're like, well, this is your job, so you have to work. And I'm like, Well, I don't want to work because I want to play in the baseball tournament. They said, well, if you don't come to work, you're going to be fired. So I didn't go to work. I got fired.

 

00:17:10 - Catey Jane Mills

That's not good.

 

00:17:11 - Mike Mills

Yes, well, and that's part of the freedom thing, right? Because I wanted to do what I wanted to do and they told me no, so I had to go find another job, which is how I wound up at Burger Street. So my point of this is that I want you to get a job, because even if it's a crappy job and you hate it, what do you think? What lesson is that going to teach you?

 

00:17:29 - Catey Jane Mills

That I don't want to do it again.

 

00:17:30 - Mike Mills

Right. And that you want to work for who?

 

00:17:32 - Catey Jane Mills

Myself.

 

00:17:33 - Mike Mills

Correct. Right. So I'm offering you abilities to learn how to do stuff to work for me that's flexible so I can give you money and help you out. But at the end of the day, I do want you to get a job. Because if you get a job, then that helps you appreciate what I'm offering to you a little bit better, right? Because right now, I'm just your annoying dad that's making you sit in this podcast room on a Sunday and go through this stuff. But if you start to appreciate some of these lessons a little bit, then I think we'll have a different opinion on it. The point of having the job is so that you understand that it takes sacrifice in order to have things that you want to do.

 

00:18:07 - Catey Jane Mills

Yes.

 

00:18:07 - Mike Mills

Right. So what do you do right now? What are your extracurricular activities?

 

00:18:13 - Catey Jane Mills

I play volleyball.

 

00:18:14 - Mike Mills

You play volleyball? And what else?

 

00:18:17 - Catey Jane Mills

Drive around with my friends, rolling with the homies.

 

00:18:19 - Mike Mills

Yeah, that's pretty much it.

 

00:18:21 - Catey Jane Mills

That's it.

 

00:18:22 - Mike Mills

Volleyball and roll. So what would happen if you had to work one night and you had to volleyball practice? What do you think you'd do?

 

00:18:29 - Catey Jane Mills

Well, coaches rule that if you miss practice, you don't play in the tournament. So I want to play in the tournament, so I'd miss work.

 

00:18:37 - Mike Mills

Right. And if you miss work and you got fired, then what would you have to do?

 

00:18:40 - Catey Jane Mills

Get a new job.

 

00:18:41 - Mike Mills

Correct. So that's another lesson. And when you have to physically go somewhere and work and be there, like a coffee shop or a retail store or whatever, then you don't have the freedom to do other things because you have to physically be at a location. Right. So this is stuff you'll find out when you get the job. But we are going to get a job. What are your current prospects for a job right now?

 

00:19:02 - Catey Jane Mills

Well, I really wanted to work at Rally House, but they only want morning people.

 

00:19:06 - Mike Mills

Yes.

 

00:19:06 - Catey Jane Mills

So then I was thinking Starbucks or that swim school. They're hiring too.

 

00:19:14 - Mike Mills

Okay.

 

00:19:14 - Catey Jane Mills

And then there's one more place. Hold on, I'm trying to remember. I think it was like oh, Flying Squirrel. That's the coffee shop in downtown.

 

00:19:27 - Mike Mills

Okay. Do you know what they pay any of those places?

 

00:19:30 - Catey Jane Mills

I know that the swim school is like $14 an hour.

 

00:19:35 - Mike Mills

Okay.

 

00:19:35 - Catey Jane Mills

And then that's pretty good. Yeah. Starbucks is like same thing, 1213 14. And then I'm not really sure about flying squirrel.

 

00:19:44 - Mike Mills

So Flying Squirrel is a coffee shop. Starbucks coffee shop. What are your ranking of these right now?

 

00:19:50 - Catey Jane Mills

Well, probably the swim school would be first because I like because they help with the little kids, and I like little kids. But the only thing I'm nervous about with the coffee shop is making a person's order wrong, and they yell at me and I cry.

 

00:20:07 - Mike Mills

Well, most people aren't going to yell at you. Okay, good to know. That generally is going to happen. There can be people that will, but I imagine if that happens, you'll just start crying. And so usually when that happens, people will feel bad because you just started crying, not because you're a crier. Well, I mean, you are kind of. But you cry when you get mad. You cry when you get sad. Tears well up and we get upset. So I think you'd be okay there. But which one sounds more appealing with the tasks that you have to do? Like if you were like, if they said you could do any of these three, which one would you do? The swimsuit you do the swim school? Yeah. What has your process been about? How do you apply there? Do you have any thoughts on you?

 

00:20:46 - Catey Jane Mills

There's this app called Indeed, and it shows you jobs in your area and how much they pay and stuff. But I've been waiting to apply or not apply, but actually look into it till I turn 16 because that's when you have to submit your resume and all that stuff. And I was like, oh, I'll just.

 

00:21:02 - Mike Mills

Deal with your resume. Do you know what a resume is?

 

00:21:04 - Catey Jane Mills

You put stuff that you've already done. But that's the thing. I haven't done anything.

 

00:21:08 - Mike Mills

Exactly. You don't have a resume, but you.

 

00:21:11 - Catey Jane Mills

Have to submit one.

 

00:21:12 - Mike Mills

They want you to give you a resume.

 

00:21:14 - Catey Jane Mills

I'm like 70% sure.

 

00:21:16 - Mike Mills

Okay, well, sometimes they just have an application so if you had to create a resume, what would you do?

 

00:21:21 - Catey Jane Mills

Nothing. I don't know. I have nothing that could go on.

 

00:21:24 - Mike Mills

Well, how would you figure out how to create a resume as a 16 year old with no work experience?

 

00:21:27 - Catey Jane Mills

I'd look it up.

 

00:21:28 - Mike Mills

Okay, where would you look it up?

 

00:21:29 - Catey Jane Mills

Probably Safari. And if that didn't work, then TikTok.

 

00:21:33 - Mike Mills

So you don't know? Not Google. It's interesting to me that you said Safari and not Google.

 

00:21:38 - Catey Jane Mills

I don't know. Safari is on my phone.

 

00:21:39 - Mike Mills

That's just the one that's on your phone?

 

00:21:41 - Catey Jane Mills

Yeah.

 

00:21:42 - Mike Mills

Okay.

 

00:21:42 - Catey Jane Mills

I have both.

 

00:21:44 - Mike Mills

So either Safari or TikTok on how to create a resume. And what would you think would be on a resume for somebody who's never worked before?

 

00:21:54 - Catey Jane Mills

I don't know, man.

 

00:21:57 - Mike Mills

Where you go to school, perhaps? What kind of extracurricular activities you've been involved in? What kind of volunteer work you've done? Like, what is something that you've done in the past that would look you think would look good on a resume for teaching little kids?

 

00:22:09 - Catey Jane Mills

I was a cheer coach.

 

00:22:10 - Mike Mills

There you go. See, that's something you could put on your resume. That is okay. See, we're just solving problems left and right. Look at that. All right, so we got the job thing. We're going to be working on that. We're going to report back on how that goes. One other thing to parents I could recommend to you and something that we're going to do maybe because we haven't done real good on our follow through, what we've agreed upon so far. What was our agreement that we had a little while ago about work and.

 

00:22:36 - Catey Jane Mills

Money with me editing your thing? That I would work a certain amount of hours a week and then I'd get paid for that.

 

00:22:45 - Mike Mills

And how's that gone so far?

 

00:22:48 - Catey Jane Mills

Well, I've done it, but also like last week, I worked like 6 hours.

 

00:22:52 - Mike Mills

Did you? Five. I never got any looms.

 

00:22:56 - Catey Jane Mills

I keep forgetting to send them but I did the thing.

 

00:23:00 - Mike Mills

Okay, so what was your job responsibility.

 

00:23:03 - Catey Jane Mills

To republish the old podcast.

 

00:23:06 - Mike Mills

Right? And how much are you getting paid.

 

00:23:09 - Catey Jane Mills

To do that like 15 /hour right.

 

00:23:13 - Mike Mills

And then what are you supposed to do on all those send a loom right? To show that you'd actually done it? Correct. That's your version of clocking in now what I'm doing with that for anybody listening is I'm taking that job and I'm actually going to my wife and I have an S Corp that she's a realtor. And we created a while back to manage some of our properties. And we're actually going to create my daughter as an employee of this scorp so we can pay her a w two wage under a certain amount. So she doesn't really get taxed on it, but we do pay taxes on it, and then she gets a refund at the end of the year. So it's kind of like a little savings account, and then it's. Also a tax deduction for us for stuff that we're already paying out to her anyway. So if we're going to be giving her money regardless, then you can use it as a tax deduction to help offset how much taxes you pay at the end of the year, because I'm giving her actual jobs and tasks to complete as part of that company. She's doing marketing and advertising for the podcast for me, which is helping kind of grow this, and that's how we're paying her. So that's another little hack that you guys can do, and I'll give you a report on how that goes once we set it up, but we're going to set that up at the first of the year. But basically, again, it's just you get a tax deduction. She's a w two employee for our company. She'll get a tax refund, which is like a savings account. It's a great little great little way to do it. All right, so let's talk about school. All right, so right now, what is your primary job?

 

00:24:30 - Catey Jane Mills

School.

 

00:24:31 - Mike Mills

And what is your requirement at that job, per your household requirements?

 

00:24:34 - Catey Jane Mills

I got to have all A's.

 

00:24:35 - Mike Mills

You got to have all A's. Do you get rewarded for A's? No. Why do you have to have all A's?

 

00:24:41 - Catey Jane Mills

Because so I can get into a good college.

 

00:24:44 - Mike Mills

Okay, but but what is my general expectation on don't get rewarded for but why?

 

00:24:49 - Catey Jane Mills

Things that are expected.

 

00:24:50 - Mike Mills

Okay. That's your expectation, right?

 

00:24:52 - Catey Jane Mills

Yes.

 

00:24:52 - Mike Mills

Do I think school is hard?

 

00:24:54 - Catey Jane Mills

No.

 

00:24:56 - Mike Mills

Do I think school is hard for you?

 

00:24:58 - Catey Jane Mills

No.

 

00:24:59 - Mike Mills

Is school hard for some?

 

00:25:01 - Catey Jane Mills

Yes.

 

00:25:01 - Mike Mills

And if that was hard for you, do you think I would allow you to get B's and C's?

 

00:25:05 - Catey Jane Mills

Yes, maybe.

 

00:25:09 - Mike Mills

Our requirement in our house is that she and her brother have to make A's and A's don't get rewarded. A's is what the expectation is. Only because the way that I look at school is school is like a job for kids. You're going to learn how to read. You're going to learn how to do basic math. But outside of that, most of what they retain is memorization, or most of what they learn is memorization. They're not going to retain any of it. So what I look at school as is it's completing tasks. You have to show up. It's it's just training you to be an employee, whether you know it or not. You have to show up to school at a certain time. If you're late, you get in trouble. You have to do certain tasks. If you don't do them, you get punished. If you step out of line at your job or your school, then you have to really get punished. Right. And then, however you do your grades, get determined what it looks like at the next level for you if you get a promotion right to college. So I look at school very much like a job in that it's just a system of completing tasks, learning how to get along with people, learning how to interact with people, your peers. So that way when you do get out into the workforce, you're a competent adult and not somebody that's difficult to deal with. So my job is to make you not be an asshole, right?

 

00:26:16 - Catey Jane Mills

Yes.

 

00:26:19 - Mike Mills

Sure. You've heard that me say that many times.

 

00:26:21 - Catey Jane Mills

Many times.

 

00:26:24 - Mike Mills

The other part about school though, is we've been saving money for college, right?

 

00:26:28 - Catey Jane Mills

Yes.

 

00:26:28 - Mike Mills

Okay. Now we're not going to talk about how much it is, but we have money saved for you right now. And what have I told you regarding that money?

 

00:26:34 - Catey Jane Mills

That if I get a scholarship, then the money is mine?

 

00:26:38 - Mike Mills

Correct. If you can pay for school school, then the money belongs to you. Right now there are certain tax restrictions on it because I do have it set up in a 529 account, and that has to be paid for school. But this is stuff we're going to kind of deal with down the road because there are some legislation that's changing for some of this stuff. But I do currently have a 529 account set up for her. I've started it when she was probably a little bit later in life. I probably started at about eight or nine years old and started growing it from there. But it's grown to quite a bit amount, and my expectation is over the next four months there'll be quite a bit more or four years, I should say two years, I guess. Really? You're a sophomore, so we're going to be getting there quick. We should have quite a bit in there. But one of the things that tell me what you know about scholarships, just in general, that you can get them.

 

00:27:24 - Catey Jane Mills

For lots of things.

 

00:27:25 - Mike Mills

Okay, that's great. I wasn't expecting that answer. Okay. What kind of things can you get them for?

 

00:27:29 - Catey Jane Mills

Sports, academics? There's like so many random little things. There's so many random little things that you can get them for like, essays and stuff you can write and you can get like $500,000. You can apply for a bunch of them.

 

00:27:42 - Mike Mills

Have you looked at any of that yet?

 

00:27:44 - Catey Jane Mills

I mean, I see like it comes up on my feed or whatever, and I look and it's like, oh, here's this. I don't know, this is like a random brand. They give you like hershey's scholarship, and you have to write an essay about something, and you can get $400 that go towards your college.

 

00:28:01 - Mike Mills

So if I were to say to you right now, if you write an essay for me, I'll give you $500 in cash, would you do it?

 

00:28:09 - Catey Jane Mills

Yes.

 

00:28:09 - Mike Mills

But why is it that you say if you see it, if someone says, if you give me an essay, I'll give you $500 in school scholarships, why is it not as appealing? Well, like, have you done any of them yet?

 

00:28:22 - Catey Jane Mills

No.

 

00:28:22 - Mike Mills

Do you have desire to do any of them yet.

 

00:28:24 - Catey Jane Mills

No, but I will.

 

00:28:25 - Mike Mills

Okay, but you don't right now. Right, but if I told you right now I'll give you $500 if you write me an essay, would you do it?

 

00:28:33 - Catey Jane Mills

Yes.

 

00:28:34 - Mike Mills

Okay, but you won't do it if it's something in the future?

 

00:28:37 - Catey Jane Mills

Yes.

 

00:28:37 - Mike Mills

Okay. So how do you think we can bridge the gap in the disconnect between the money that you have saved, which literally means if you get $500, you get $500. How do we reconcile that in your brain so that way that becomes a priority for you?

 

00:28:52 - Catey Jane Mills

I don't know.

 

00:28:54 - Mike Mills

Well, I just mean, like, we got to have you want to do these things, right? Because I can't force you to do it.

 

00:29:00 - Catey Jane Mills

I'll do them. I'll do them.

 

00:29:02 - Mike Mills

Okay. When should you start doing them?

 

00:29:03 - Catey Jane Mills

Probably now. I guess I'll start now then.

 

00:29:09 - Mike Mills

So hostile. So hostile. Okay. The thing about school and what I'm trying to do here is another thing that you have to get your kids to understand how to look at school as a way to make money, not just a necessary thing, especially when it comes to college. Now, not everybody has the ability and wherewithal to be able to save for school for their kids. And that's completely understandable. It's very hard to get by these days with everything being so expensive. We've been fortunate that we've been able to do that, but not everybody's in that situation. And that's why the scholarship things make such a big difference. Because do you know, my dear, do you know what right now the average American has in student loan debt? I know you don't, but if you were to guess, what would you think?

 

00:29:53 - Catey Jane Mills

I don't know. Semester is like probably like 100,000.

 

00:29:59 - Mike Mills

Oh, you think 100,000?

 

00:30:00 - Catey Jane Mills

Maybe less. Like 80,000.

 

00:30:02 - Mike Mills

That's a lot. I mean, the average American has about 40,000. Because you got to remember, it's an average. Some people didn't pay a lot for school or went to trade schools or less expensive stuff or whatever. But do you know how much $40,000 costs you every month to pay off and how long it would take?

 

00:30:17 - Catey Jane Mills

That's a lot of math for me to do. I know.

 

00:30:19 - Mike Mills

Just guess. I don't expect you to know.

 

00:30:21 - Catey Jane Mills

What do you think? I don't know. Like $1,000, $400 a month.

 

00:30:28 - Mike Mills

So, yes, it's about three to $500 a month is what you have to pay. Okay. And that three to $500 a month. Here, take this calculator. Okay, so three to $500 a month, and that takes 20 years in most cases to pay that off. So you'll be paying three to $500 a month for 20 years. So do me a favor. Put in $15 times 40 hours a week times 52 weeks. What does that equal?

 

00:30:56 - Catey Jane Mills

31,200.

 

00:30:57 - Mike Mills

Now divide that by twelve. How much is that?

 

00:31:03 - Catey Jane Mills

2600.

 

00:31:05 - Mike Mills

So that's $2,600 a month. Now take multiply that by 0.7. That's 30%. Let's say for taxes.

 

00:31:14 - Catey Jane Mills

1820.

 

00:31:16 - Mike Mills

So $1,820 a month. So 500 of that goes to pay for student loans, and then all you have is what's left for the entire month to get gas, groceries, food, utilities.

 

00:31:27 - Catey Jane Mills

1320. That's crazy.

 

00:31:29 - Mike Mills

That's not a lot, right?

 

00:31:30 - Catey Jane Mills

Not a lot, no.

 

00:31:31 - Mike Mills

So is student debt a good idea?

 

00:31:33 - Catey Jane Mills

No.

 

00:31:34 - Mike Mills

So you don't want to have to pay student debt. Right. So having dad help you pay for college and finding scholarships to apply for is going to be a benefit. Correct. All right. Now there are sites out there that you can find. I'll try to reference some of those that you can, and that'll be maybe a homework assignment for us is to give some sites that we can find these scholarships at.

 

00:31:52 - Catey Jane Mills

Okay.

 

00:31:52 - Mike Mills

So we can start applying for those, because where we have with volleyball at this point, you can be honest.

 

00:32:01 - Catey Jane Mills

I don't know. I don't think I want to play, but I haven't made up my mind. I guess I need to soon.

 

00:32:08 - Mike Mills

Yeah, you probably need to decide pretty quick what you want to do because otherwise you'll be behind the eight ball on it. So maybe volleyball? Probably not, but maybe then we have a little bit saved. So then the academic side, hopefully we have really good grades and good scores, but then we need to find all this little extra money wherever we can then. Right. So that's the benefit of the school side of things, is that you want to get them early, started figuring out how they can pay for college. There are a ton of scholarships out there if you look for it, and they don't have to do anything in many cases other than meet certain qualifications and then apply and usually have to write an essay or something in order to get that. But there's a ton of them out there. But the sooner you start looking for them, the better, because if you try to do this their senior year, many of those are already going to be out or taken or not have access to. So we're going to figure out ways to pay for college. Number 1. Second thing we're going to do is we are going to work on a budget. Okay. Tell me what you know about budgeting.

 

00:33:04 - Catey Jane Mills

It's how much money you pay for or like you set up, how much money you should spend for certain amounts of things for however amount of time.

 

00:33:14 - Mike Mills

No, that's okay, that's fine. I'm trying to find out what you know. So there's two main parts of a budget. Okay. There is something that comes in and something that goes out. Do you know what those are called?

 

00:33:26 - Catey Jane Mills

I know that is what no.

 

00:33:29 - Mike Mills

So the first one is income. Right? Income. That's the money that you're making.

 

00:33:35 - Catey Jane Mills

That's okay, I know what that is.

 

00:33:36 - Mike Mills

We're getting used to it. You're talking on a microphone right now. So it's getting a little used to. You have income and then you have money that goes out, which are what starts with an E. It's like expenses. There we go. All right. We're just freezing up because we're on the mic. So income and expenses. So what type of expenses do you have right now?

 

00:34:01 - Catey Jane Mills

Just gas.

 

00:34:03 - Mike Mills

Gas?

 

00:34:06 - Catey Jane Mills

Target.

 

00:34:07 - Mike Mills

Target. We have a line item for Target.

 

00:34:09 - Catey Jane Mills

Yep. Food. I get food a lot.

 

00:34:13 - Mike Mills

Get food a lot. It's a big player of it. So right now, you don't need a ton of income because you don't have a ton of expenses. Right. But when we do this budget, we're actually going to include expenses you will have in the future. So you understand how much money you don't actually have right now, because do you know other things that you will have to pay for in the future? We've already talked about some of them already.

 

00:34:32 - Catey Jane Mills

Food.

 

00:34:33 - Mike Mills

Okay.

 

00:34:34 - Catey Jane Mills

Clothes.

 

00:34:34 - Mike Mills

Clothes.

 

00:34:35 - Catey Jane Mills

Phone bills.

 

00:34:36 - Mike Mills

Phone.

 

00:34:37 - Catey Jane Mills

Rent.

 

00:34:38 - Mike Mills

Rent.

 

00:34:40 - Catey Jane Mills

What did I already say? Like lights and electricity.

 

00:34:44 - Mike Mills

Electricity? Yes. Water?

 

00:34:46 - Catey Jane Mills

Yeah, that kind of thing.

 

00:34:48 - Mike Mills

That's good. No, you're good. There's one other big line item that relates to your car.

 

00:34:54 - Catey Jane Mills

Insurance.

 

00:34:55 - Mike Mills

Insurance? Yes. Insurance is a big player. So these are things that we'll include so you understand the cost of them. But ultimately, at least that'll show you that you have to find that bigger income line item to grow a little bit. Otherwise you're not going to be able to pay for all these things.

 

00:35:08 - Catey Jane Mills

Yeah, right.

 

00:35:10 - Mike Mills

So we're going to go through a budget, kind of learn how that is all put together, and kind of do an episode, a little more in depth episode on that one. Perhaps one of the parts of your budget will be savings. Have you ever heard of something called an emergency fund? Do you know what that is?

 

00:35:25 - Catey Jane Mills

I mean, I feel like it's self explanatory.

 

00:35:27 - Mike Mills

What is it?

 

00:35:28 - Catey Jane Mills

The money for an emergency.

 

00:35:29 - Mike Mills

Okay, I know you don't know the answer to this, but if you were to guess, how do you think they figure out how much money you need to have in your emergency fund?

 

00:35:38 - Catey Jane Mills

What?

 

00:35:38 - Mike Mills

The general rule of thumb is, would you guess?

 

00:35:44 - Catey Jane Mills

I don't know how much money it would cost if you had to go to the hospital.

 

00:35:50 - Mike Mills

Now, that's a good way to look at it. So typically when people talk about financing and budgeting, what they look at is they say, my monthly expenses total. Okay, whatever that is. All right. Most people say about six months. So if every month you have a total expenses of $2,000, then how much would you need to have in your emergency fund?

 

00:36:12 - Catey Jane Mills

2000.

 

00:36:12 - Mike Mills

2000. $12,000. So you can do math. You got that part?

 

00:36:16 - Catey Jane Mills

Barely.

 

00:36:17 - Mike Mills

School is getting us there. So we're going to talk about emergency funds, how to put that together. Then we are going to open a checking account. Okay. Now, there's a couple of accounts that we'll talk about briefly on what we're going to look at opening. The first one is going to be a checking account. So what do you know about checking accounts, just in general? When I say checking account, what do you think of checks? Checks? Have you ever written a check?

 

00:36:39 - Catey Jane Mills

No.

 

00:36:40 - Mike Mills

Do you think you'll ever have to write a check?

 

00:36:41 - Catey Jane Mills

Probably.

 

00:36:42 - Mike Mills

Probably?

 

00:36:43 - Catey Jane Mills

I mean, yeah.

 

00:36:44 - Mike Mills

Really? I don't think there's too many things that you have to write checks for. These I haven't written a check myself. Well, I'll take that back. I wrote one the other day.

 

00:36:49 - Catey Jane Mills

Mom writes checks all the time.

 

00:36:50 - Mike Mills

Yeah, but she's living in 1990. She likes writing checks. She still writes stuff on postit notes and staples them to her phone.

 

00:36:57 - Catey Jane Mills

Okay, that's true. I probably just like Venmo, right?

 

00:37:03 - Mike Mills

They have all kinds of accounts.

 

00:37:04 - Catey Jane Mills

Maybe not.

 

00:37:05 - Mike Mills

So it's really just your checking account is going to be a suppository for your money. So, like, money that comes in, it's kind of like the hub of your money. So a lot of companies, they'll do direct deposits into your account. So when you get a check every month, instead of you getting a physical check like we used to get, you actually just goes right into your account. So you used to back in my day, we had to get our check. We had to write on the back of it. Then we had to take it to the bank, physically show up to the bank. We had to fill out a deposit slip, and then we had to give those to the teller. We had to wait in line around behind a bunch of other people that had all kinds of problems with their bank account because God forbid you get there on a Friday, you are a hose. All right. You're going to be sitting there for hours. Then we would have to give the money to our teller, and then once they deposited it, you usually had to wait a day or two before it showed up.

 

00:37:53 - Catey Jane Mills

Yeah, I don't want to do that.

 

00:37:55 - Mike Mills

Sounds awesome. Well, have to do that anymore. Now the technology is such that that's not necessary. Now your money just shows up in your bank account immediately, and you can use it right away. So there's a benefit to that.

 

00:38:05 - Catey Jane Mills

But.

 

00:38:08 - Mike Mills

When we get her checking account set up, my anticipation with that is we're actually going to do it at a bigger bank. I'm going to take her to we use bank of America. So we're going to have a checking account set up there because then I can have Custodial control over it, make sure if we need to move money and out, I can monitor it, that kind of stuff. And at the bigger banks, it's just a little bit easier to make transactions sometimes because they're all over the place. So if you go out of town or you're in a rural area ODS are, you can find a bank of America ATM or Chase or Wells Fargo or whatever bank you use. That's the one we're going to start with. Then we're going to have to have an account for savings. Her savings account. I'm probably going to take her and set up at a credit union. Okay. Do you know what a credit union is? Nope. So credit unions you usually have to be members of in order to have accounts. It used to be a little more I don't even want to use the word exclusive because it really never was, but it's just one of those things where you had to have certain stipulations in order to be a member of that credit unit. To live in a certain area, you had to be a teacher, you had to do whatever. Well, with these credit union accounts, they're good to have because they give you access to better terms on loans later on down the road. Smaller banks usually are going to give you better terms on like an auto loan. If you want to buy a car, you get a better interest rate. The process is much easier than doing it through the dealership. But the downside on some of the credit unions is that their user friendly online accounts access and stuff is a little less smooth, it's a little more clunky. But I want to do your savings account at the credit union. So based on what I just told you, why do you think that I want to have your account? Two different accounts at two different spots, checking at an easy transactable bank of America savings at a little bit harder, credit union.

 

00:39:52 - Catey Jane Mills

So I can get good credit?

 

00:39:54 - Mike Mills

Well, yes, sort of, but it's difficulty in accessing your money. Okay. If we put your savings account in an account that's a little bit harder to pull money in and out of and move it around, how likely are you to mess with that money?

 

00:40:09 - Catey Jane Mills

Not very likely.

 

00:40:09 - Mike Mills

A little bit less likely. Probably if you get desperate, you never know what you're capable of, but a little less likely. Right. Okay. So we're going to do the savings account at a credit union. We're going to do the checking account at a bigger bank, savings account, credit union, simply because it makes it a little bit harder to move the money in and out so we don't have access to it as much. Now this is where we're going to put your emergency fund. Okay. So that money that you can't get to, we have to build up to that. But something's going to take a little bit. And anything that goes beyond our emergency fund, we are going to invest it. Okay. Now, there is a little bit of money that I have saved for you already that I'm going to give to you that we're going to put in an investment account for you. Okay. Now, do you think I'm going to allow you to touch that?

 

00:40:55 - Catey Jane Mills

No.

 

00:40:55 - Mike Mills

No? Okay. You're not going to be allowed to touch it. However, you are going to be able to see it and access it because I want you to see it grow. Now the investment account that I'm going to use, I use Vanguard for my personal one. We're going to use Vanguard for her. They have custodial accounts that you can set up for your kids that they can get access to and see online and be able to tell what's happening. Now the reason that I'm doing this is because when that money goes in there, I want you to check on it periodically and see how much it's growing. Because if you see the money going.

 

00:41:23 - Catey Jane Mills

Up, then I get more money.

 

00:41:26 - Mike Mills

Right, but is that an encouragement or a discouragement?

 

00:41:29 - Catey Jane Mills

Encouragement. I like money.

 

00:41:31 - Mike Mills

Right. So if you can see that money growing, okay, then that's what we're going to use. Now the two things that we're going to put our money into that we'll explain later on too, are going to be an index fund. Have you ever heard of an index fund? Do you know what that is?

 

00:41:44 - Catey Jane Mills

No.

 

00:41:45 - Mike Mills

So what an index fund is, is it is a group of stocks that are bundled together in one group and when you put money into that fund, you're basically betting on all of those stocks cumulatively. So if some go up and some go down, but overall they go up, then you get a benefit rather than betting on one particular stock. So generally speaking, index funds earn a rate of return of anywhere between 4% to 6%. Well, really? Like 6% to 7% somewhere in that neighborhood a year. Okay. Now, do you know if you had $5,000 to start with and we invested it at 6% interest, don't even worry about your calculator because it's not going to work on this one. And then every month you put $100 towards that money, how much do you think you would have in 50 years? Just guess, you're not going to know the answer.

 

00:42:40 - Catey Jane Mills

30,000.

 

00:42:41 - Mike Mills

$500,000.

 

00:42:43 - Catey Jane Mills

Oh Dang.

 

00:42:44 - Mike Mills

Oh, Dang is right.

 

00:42:45 - Catey Jane Mills

It's a lot of money.

 

00:42:46 - Mike Mills

It is a lot of money. So 5000 to start with, $100 a month every month for 50 years.

 

00:42:54 - Catey Jane Mills

Oh, I did not do that math even close.

 

00:42:56 - Mike Mills

Okay. No, it's okay. At 6% growth, you're going to have close to $500,000 when you're done. And that's if you don't invest anything else. Okay.

 

00:43:05 - Catey Jane Mills

Wow.

 

00:43:06 - Mike Mills

So the thing that grows your wealth the most, what do you think it is? Do you think it's money?

 

00:43:12 - Catey Jane Mills

No.

 

00:43:13 - Mike Mills

What do you think it is?

 

00:43:14 - Catey Jane Mills

Investments.

 

00:43:15 - Mike Mills

But what is it about investments that makes your money grow?

 

00:43:24 - Catey Jane Mills

I do not know.

 

00:43:25 - Mike Mills

Time? Oh, well, yeah, time, okay. Because if you start now at a young age, you have a lot longer for that money to compound. And think about every year it gets bigger, it compounds on the total before. So if you start investing when you're 30 and you start with this and you only have 30 years versus investing when you're 18 or 16 and you have 50 years to grow it, then it's going to grow that much bigger. Because those last 20 years that you have is now growing off of a much bigger balance than what somebody would when they started at 30. Okay. So it's super important that we start early and let it sit and grow, because then by the time you're 50, even if you're doing other investments, you may not have to work again if you don't want to. You will have what kind of money?

 

00:44:08 - Catey Jane Mills

Fu money.

 

00:44:08 - Mike Mills

Fu money. All right. That's what we're aiming for, right?

 

00:44:11 - Catey Jane Mills

Yes.

 

00:44:12 - Mike Mills

Okay, so the other thing that we'll look at doing, and I'll have you research some of this too, is stocks that pay dividends. Okay. Have you ever heard of a dividend? Okay. A dividend is when you buy certain stocks like Apple or Walmart or any of these, they have profits every year that they make as a company. And if you own a portion of their company, then you get a portion of their profits.

 

00:44:34 - Catey Jane Mills

Yes.

 

00:44:34 - Mike Mills

And those profits are called dividends. So if I own $1,000 worth of stock in Apple, and let's say I get 1% dividend, okay, that's $10. Well, then they're going to give me $10. And then what you do is you set it up to reinvest that $10 into that account, and then every single month, it just pays you money, and you're just getting money for it's. Like earning an interest on that investment, but it's the profit from that, so it just continues to compound and grow on those. So we'll do an investment or index fund, and then we'll do a couple of dividend stocks so you can kind of see how those two things grow and move. This is going to be in your Vanguard account, which we're also going to set up and see how that works.

 

00:45:13 - Catey Jane Mills

Okay.

 

00:45:13 - Mike Mills

You're real excited, aren't you? I know you've been yawning this whole time. This is riveting for you. And then the last thing we're going to do is a credit card.

 

00:45:23 - Catey Jane Mills

Okay.

 

00:45:23 - Mike Mills

Are credit cards good?

 

00:45:25 - Catey Jane Mills

Yes.

 

00:45:27 - Mike Mills

Why are credit cards good?

 

00:45:28 - Catey Jane Mills

Because you can build credit.

 

00:45:30 - Mike Mills

Okay, but should you use credit cards?

 

00:45:32 - Catey Jane Mills

No.

 

00:45:32 - Mike Mills

Okay, but here's kind of the catch. How do you build credit if you don't use credit cards?

 

00:45:38 - Catey Jane Mills

Investing. I don't know.

 

00:45:41 - Mike Mills

No credit. Do you know what credit is?

 

00:45:44 - Catey Jane Mills

I just hear that you got to have good credit. That's about all I know about that.

 

00:45:48 - Mike Mills

Okay. When you hear you got to good credit, why do you hear you got to have good credit?

 

00:45:53 - Catey Jane Mills

Usually I got the credit karma ads, and it's for buying a house.

 

00:45:57 - Mike Mills

Okay, but do you know what good credit gets you when you want to buy a house or buy a car or something like that?

 

00:46:02 - Catey Jane Mills

It makes it easier to get a loan.

 

00:46:04 - Mike Mills

That is true. But do you know what else it does?

 

00:46:07 - Catey Jane Mills

No.

 

00:46:07 - Mike Mills

So when you get a loan, the bank's giving you money in return for what? Why would a bank just give you money? They don't do it because they're nice, right?

 

00:46:20 - Catey Jane Mills

Yeah, because they get more money back.

 

00:46:23 - Mike Mills

Okay. What's that money called?

 

00:46:25 - Catey Jane Mills

Interest.

 

00:46:25 - Mike Mills

Interest, okay. So when you get interest on a loan, your interest rate, how much interest you pay, is often very heavily weighted on what your credit is. Okay. So having good credit means that when you borrow money, which we don't want to do very often, typically we want to borrow money, probably have to borrow money for a house. We really don't want to borrow money for a car, unless I haven't borrowed money for a car in a long time until recently, with your mom's car. And then we don't want to have any credit card debt. Okay. But we want to use credit cards and use them responsibly because that builds our credit score up. So then we do need to get those big loans. We don't have to pay as much interest on it, right?

 

00:47:02 - Catey Jane Mills

Yes.

 

00:47:02 - Mike Mills

All right. So the way we're going to do the credit cards is we're going to do one authorized user. So we're going to put you on one of our cards that you'll be an authorized user on. It won't be one of yours originally, but do you know when you can actually open up your own credit card?

 

00:47:16 - Catey Jane Mills

When I'm 1818.

 

00:47:17 - Mike Mills

Yes. So when you turn 18, we'll open your own, but in the meantime, we'll give you an authorized user. Now we want to open it when they're 18 because the biggest impact on your credit score in many cases is how old your oldest trade line is and how long you've had it. So if you open up a card at 18 and you never get rid of that, that's a big boon to your credit score. It makes a big difference on that, especially if you're not making a bunch of late payments and all that kind of stuff, too. But when you turn 18, we're going to open something called a secured credit card. Okay. Do you know what a secured credit card is? No. So a secured credit card means that if I open up a regular credit card, then I go to Visa and I say, okay, Visa, I'm going to apply. And they're like, well, you don't have a credit score, so no, right. They say you can get a secured card because an unsecured credit card, which is what most people have, just means I have a credit limit of, say, $10,000, and I pay interest on that, but I don't have to do anything else with a secured credit card. It means I don't have a history of credit. So now I have to give them $300 for them to give me, like, a $300 line of credit. Then over time, if use it and pay it and use it and pay it, then they'll raise my limit without me having to put in more money. So then. I'll get a $500 limit, then $1,000 limit, then a $10,000 limit. But the initial security is to say, okay, well, if you don't pay this, we're covered. Okay. That's what a secured credit card is. Then after you have that for a little while and your credit score is up, then you can get unsecured credit cards and use those because they do have benefits. If you use a credit card for like miles and you get travel miles, you can get our American Express. I get Home Depot gift cards all the time, and I use those and I buy stuff for the house to do work around the house. Because when we spend on our American Express, we get points, and then I can use those points to buy stuff. So there are benefits to them if you use them. But you don't want to hold a bunch of debt because the average interest rate right now, like when we bought our house, we got it for 2.85. Okay. If you want to buy a house right now, it's close to 7%.

 

00:49:15 - Catey Jane Mills

Oh, wow.

 

00:49:16 - Mike Mills

And if you have a credit card, your credit card interest right now is 25%.

 

00:49:21 - Catey Jane Mills

25%.

 

00:49:22 - Mike Mills

25%. So it means if you have $100 in debt, you're paying $25 a month, and that doesn't even pay off the amount that you borrowed. Wow. Yes.

 

00:49:31 - Catey Jane Mills

That's a lot of money.

 

00:49:32 - Mike Mills

That's a lot of money. So should we have credit card debt? No, but we do need to know how to use credit cards properly so that way we can take advantage of the benefits that they give without going into debt. Right. Because we don't want to pay a bunch of money on that. So secured credit cards or excuse me, authorized user first.

 

00:49:49 - Catey Jane Mills

Okay.

 

00:49:49 - Mike Mills

Then secured credit card when you turn 18. But we're just not quite there yet. So a lot of this will be used for necessities. You have to put stuff down. If you rent a car, you travel. You need a credit card in most cases in order to do that. And then again, the interest that you'll having, good credit will bring your interest rate down on anything that you choose to do in the future, which will save you tons and tons of money. And then lastly, we're going to do a finance app. So we're going to put on your phone so this will track all of your accounts. So once we get everything set up, you'll actually have an app on your phone so you can see where everything is. It'll have your budget, it'll have your investment account, your savings account, your checking account, everything.

 

00:50:23 - Catey Jane Mills

Okay?

 

00:50:23 - Mike Mills

So that way you can track everything and see where it's at on a daily basis and you don't have to stick your head in the hole so that we become more familiar with the money. Then we are going to open a crypto account as well. Okay. Only because I don't recommend this to anybody else. Unless you want to. Only because I know a lot about crypto, because I've been studying it for a while. I do think it is the next iteration of where our financial system is headed, and I do think you do need to become familiar with it. So in our house, we will be talking about this so she understands what it is, because I do think there's real opportunity in the crypto market in the next 15 to 20 years to make a lot of money if you know what's going on. But it's something that not everybody's comfortable with, and you can still get scammed these days with it. So I don't recommend it unless you have a good feel for it. And then when you turn 18, we're also going to open up something called a self directed retirement account.

 

00:51:16 - Catey Jane Mills

Okay?

 

00:51:17 - Mike Mills

All right, so this is an IRA. There's something called a Roth IRA. Have you ever heard of that anywhere? Seen commercials or anything? So what it is is there's two ways to save for retirement, okay? One way is the money gets taken directly out of your checking account or excuse me, out of your paycheck before you get it, before it's taxed, and it goes into an account, so there's more money. Okay. The other way is that they take the money, you put the money in after taxes. Okay? So ideally, which one do you think sounds so far? Which one do you think sounds better? Before taxes or after taxes? Before taxes. Right. That's called a 401K. So now the trick is, though, when you put it into the 401, when you go pull that money out, you pay taxes then.

 

00:51:58 - Catey Jane Mills

So you pay taxes either way.

 

00:51:59 - Mike Mills

You won't pay taxes. That's another lesson we'll learn through all this, is taxes, taxes, taxes, taxes. All right.

 

00:52:04 - Catey Jane Mills

Okay.

 

00:52:05 - Mike Mills

Everybody hates taxes. You're going to pay sales tax, you're going to pay property tax, you're going to pay income tax. You're going to pay all kinds of taxes. Yes, exactly. You can see your face. You can see what that is. Sounds good, right?

 

00:52:19 - Catey Jane Mills

No, not good.

 

00:52:22 - Mike Mills

So with the IRA, though, or excuse me, the Roth, all right, you put the money in after taxes, but then as it grows and you take the money out, at a certain age, you don't have to pay taxes on that. Oh, so you get the benefit of having the money grow and not paying taxes on the growth versus having more money and paying taxes later. Okay, so we're going to do that one, because at least for you, because there are limits, you can only put so much towards it every year. And then once you make a certain amount of income, you're not allowed to contribute to a Roth IRA anymore, but you can still keep it. You just can't contribute. So if you get really successful and make a lot of money one day, which you will, right?

 

00:53:02 - Catey Jane Mills

Yeah.

 

00:53:04 - Mike Mills

You won't be able to contribute, but if you start young and contribute while your income is still low, then you can take advantage of it much further down the road.

 

00:53:10 - Catey Jane Mills

Yes.

 

00:53:11 - Mike Mills

Okay. So that's called a self directed retirement account. We're going to do that, but you can't open one of those until you're 18, so we'll have to do that at that point. Okay. All right. That's it. That's a lot. Right? So we're going to come back again, and we're going to tell you how it went on. We're going to do a little bit of a book report. We're going to talk about how our job went on the job search in a month or two. We're going to talk about some of the school stuff, the scholarships that we're looking to apply for. We're going to tell you how budgeting went, checking account, opening went. These are one time deals we won't have to do again. Savings account, credit card, and then your investment account. All right. Talk about our app. Talk about crypto maybe a little bit down the road when you get older. We'll do the self directed retirement account. So what kind of questions do you have, my dear?

 

00:54:03 - Catey Jane Mills

I mean, I don't have a whole lot. I think you covered most of it.

 

00:54:06 - Mike Mills

What do you think about all this? Honestly? You can be honest.

 

00:54:10 - Catey Jane Mills

I think that it's a lot, and I don't really want to do it, but it'll probably be helpful later on, so I'll do it anyway, and I don't think I have a choice.

 

00:54:18 - Mike Mills

No, you don't have a choice. So the young brain in you doesn't want to do it, but the logical part of your brain understands that it's a good idea. Yes. It's kind of like eating pancakes.

 

00:54:27 - Catey Jane Mills

I love pancakes.

 

00:54:29 - Mike Mills

What is it about pancakes? Why are those two things similar?

 

00:54:32 - Catey Jane Mills

I don't know. I don't like making them. I like to eat them.

 

00:54:35 - Mike Mills

Well, they taste really good, but I.

 

00:54:39 - Catey Jane Mills

Can'T eat a lot of them. They hurt my stomach.

 

00:54:41 - Mike Mills

Right. Why is that? Because everything in there is bad for you. Yeah, but they're so good. They are. They're delicious. But you got to do the hard work sometimes. And the hard work is I don't want to eat pancakes because even though they're delicious, they're terrible for my body. Right. And the hard work in this is even though I don't want to learn about money, the more I learn about it, the more it's going to benefit future Catey Jane. Right. Future CJ is really going to appreciate present. Present Catey Jane is not Catey. Whatever you want me to call you. Present Catey is not fired up about this, but future Catey will be grateful. Do you?

 

00:55:17 - Catey Jane Mills

Yes. Yes, I agree.

 

00:55:18 - Mike Mills

Mostly I agree. Maybe.

 

00:55:20 - Catey Jane Mills

I agree.

 

00:55:22 - Mike Mills

All right, well, thank you for everybody that fought through that one with us. Hopefully she'll have a lot more to say as we move down the road a little bit.

 

00:55:29 - Catey Jane Mills

I feel bad for the people listening. I probably should have talked more.

 

00:55:32 - Mike Mills

That's okay. So this is our first time doing this. I kind of sprung it on you, so it wasn't like you were ready for it.

 

00:55:37 - Catey Jane Mills

I was just playing fortnite.

 

00:55:38 - Mike Mills

I know you're a gamer girl now.

 

00:55:40 - Catey Jane Mills

I am a gamer.

 

00:55:41 - Mike Mills

This is a new development, actually, this is a new thing. But I want to leave you with this. The most important thing of all this is I'm doing this with my daughter because I feel like that this is going to hold real value for her in the future. And it gives me an excuse to spend time with her because like she said in the very beginning, she's going to be running out the door as soon as she possibly can. So if I have to force her to spend time with me by teaching her something like this, then that's what I'm going to do. But at the end of the day, what we're trying to do is we're trying to create a life that is enjoyable and happy for our kids because that's what we want them to have. And we all know as adults, because we live every day with all of our money problems or money successes or whatever they may be, that if we don't set our kids future up for something that's going to give them success, we don't want to put them through the same trials and tribulations that we had. I think this is universal for every parent out there. So if you want to follow along with us on this journey, we welcome you to we're going to come back and report how this is going. We may even add a few other pieces to this as we go along. We'll see how willing she is to participate with me on some of this stuff. But I'm doing this because it's going to make me follow through with it and make sure that I keep doing it. Because just like everything else, we all have good intentions, but sometimes the follow through isn't the greatest. So whether she likes it or not, this is part of the process for me so I can make sure that I teach her all these lessons because I don't want to have regrets when she's gone. Yes. Okay. Are you excited?

 

00:57:06 - Catey Jane Mills

So excited.

 

00:57:08 - Mike Mills

Not really. No, not really. That's okay. We're going to improve that as we go along.

 

00:57:13 - Catey Jane Mills

Okay.

 

00:57:13 - Mike Mills

All right, well, thank you to everybody that stuck around. Catey Jane's going to edit and publish this as part of her job a little bit later and come up with a title. She's so excited about that. Yeah. Well, I'll show you how to do it. I know how to do it well. We're going to use a different software, but anyway, yes, she's excited, and then maybe we'll have a little bit more chatter next time. And like I said, if you guys hear this and have any comments or questions or anything else you'd like us to address. I'd love to hear from you. Otherwise, everybody have a great holiday. I hope you had a good Thanksgiving, and we will see you in a couple of months.

 

00:57:44 - Catey Jane Mills

Bye.

 

00:57:44 - Mike Mills

Say bye.