KKOS Lawyers Founder Mark Kohler shares powerful, actionable strategies to secure your finances and build lasting wealth. From tax-free investments and smart debt management to maximizing the benefits of side hustles, Kohler covers the essentials of financial freedom to help you achieve the American dream. Don’t miss his insights on personal finance and how focusing on your own economy can pave the way to a secure future!
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Mark Kohler 0:00
This is the gateway drug to the American dream. Quit worrying about what candidate for president saying about this, or what tax strategy might come or, Oh, inflation. Worry about your own economy. Don’t be afraid. Just take a little baby step. Just take action.
Andrew Brill 0:20
Well, in case you didn’t know, this is financial planning month. Yeah, it’s October, but it’s financial planning month. And welcome to wealth. And I’m your host, Andrew brill, and I’m here with my friend Mark Kohler, who is a lot of things, and I’m gonna let him tell you, I would list them off for you, but I know he’s a lawyer, he’s an accountant, but he’s a guru in financial planning and setting you up for life. Mark. Tell us a little bit about you and what you do
Mark Kohler 0:45
well. Thank you so much. Yeah, tax planning season, right? Not only just, you know, financial planning month. So this is, you know, for us accountants, this is the Super Bowl. You know, we’re really excited about it. So,
Andrew Brill 0:56
no, I don’t get the ring at the end,
Mark Kohler 0:58
though, you’re just tired. No, I am so grateful to be here with you. I have spent my whole career in tax and legal industry and helping small business owners live their dream from small business to medium business to rental property to the side hustle to the side gig, and now I’m training accountants around the country with a tax pro program and helping them become more advisors. There’s so many business owners and investors that are just starving for a good tax advisor, and I want to answer that call the accounting industry could just do such a better job. And that’s where I’m at. That’s my world. So
Andrew Brill 1:32
Mark, let’s get into financial planning a little bit and talk about, you know, personal finance. And I know that you’re you’re from a tax planning perspective and from a legal perspective, personal finance is right up your alley. And when you start and I know you start early, I’ve tried to start with my kids about financial talk about financial situations, more than planning out their future, because they’re still young. I have one two in the working world, one still in school, so I’m still footing that bill. But how do we how do we start that conversation, figure out goals and get you on the road to planning your financial future? Because it’s it should start earlier than most of us do.
Mark Kohler 2:15
Oh no, for sure. And the angle we’re normally taking is from a tax perspective and an asset protection perspective, when we’re helping clients with their financial planning and not deciding so much what they invest in, but how they’re investing, is so important, but starting that conversation early is so important. I i did plan on telling you this, but we we have a family board meeting every year. I think it’s an important strategy for every small business owner to get the kids around and have a board meeting, even with your simple little LLC or S corporation for so many side giggers in the country. But in that family board meeting I started about three years ago, I said, Okay, we’re gonna have a contest this year, and I opened up apps for the kids for their Roth IRAs, they some wanted TD Ameritrade, some wanted acorns or whatever. And I said, Okay, here’s the deal, whoever saves the most, and they’re a Roth IRA, this year, I’ll match it, and I’ve got four kids, and it’s about two or three years ago, and and then I didn’t say a word. And then, all year long, I’m just kind of watching their accounts, you know. And then it was the next Christmas. I go. Okay, board meeting. Okay, let’s see your Roth IRAs. And two the kids were like, you’re serious about that? I was like, Damn straight, and so I matched the two kids that had really taken it seriously, and it sent such a great message, because it was a chance to really involve them in the process. So now we have contests. Who’s going to save the most and talk about the Roth IRAs and my kids have got to know what a Roth IRA is. They can’t graduate from college. You know, that’s
Andrew Brill 3:44
funny, because my sons have, I think it was even before the summertime had maxed out their Roth IRA. So they’re like, Okay, love it. I’m Max am. That’s the first thing I’m going to do. I you know, one son was working. He said, I’m not going to even get paid. Just send it all to the Roth IRA and we’ll figure it out. So
Mark Kohler 4:01
you’ve arrived as a father now you’re like my kids are shaving in the Roth IRA financial
Andrew Brill 4:06
they’ve done okay. You know what? You know my therapist says I still need to work on that, but we’ll go from there. How do you define your goals when you’re thinking about financial planning? How do we define our goals? Well, I
Mark Kohler 4:18
what I the main goals I’m teaching my kids in that process, that we’re when we have these conversations, is, number one, the conversation about debt. I mean, it’s you can’t build wealth and and teach financial planning if your kids don’t know how to manage a credit card and they’re strapped in debt, and it’s such a slippery slope, it can sneak up on all of us. You know, we’ve all probably done a debt snowball in our life, and so I so I like talking about debt, and I try to make it fun too. We need credit cards. We need to build credit scores, and I love to talk about point management. We have a lot of fun with that. The points guy website I make. All my kids follow him. He loves that. They love that. But my kids are traveling on points now. They’re learning about. That. But I think you can make talking about debt creative and and make it fun when you start incorporating the benefits of of certain types of credit cards. And then number two is that constant saving. It’s everybody wants to jump to the investing. What crypto Are you buying? What stocks are you buying? I’m like, Whoa. Why don’t we just save first? Let’s get our Roth maxed out, because you can’t even invest if you don’t have something there. And I want them saving for a home or saving for trips and not going on a credit card, but in that middle section, they’ve got to be thinking that long term. So I’ve already said it 10 times now, the tax free growth, the tax free withdrawals, and teaching the kids that you’re going to need this, and you just don’t know it, so let’s just start doing it now and then making having the investing side be the fun part after the saving. So that’s the goal. I keep it short, like just, let’s just save. Well, let’s not worry about a million or big numbers, because it can seem so far away for them.
Andrew Brill 5:56
So I think we need to get you a hotline to the federal government to talk about debt and figure that all out, but my question about that is the economy, how much does that play into your planning?
Mark Kohler 6:10
I know this is going to sound a little flippant or crazy, but not at all. I have so many conversations with clients where I’m like, quit worrying about what candidate for the President saying about this, or what tax strategy might come or, Oh, inflation. Worry about your own economy. Are you in debt? What’s your side hustle? What’s your side gig? Do you have a rental property? Have you maxed out your Roth or your 401, K if you’re not doing these things on a regular basis, just a little things, then who cares? What’s going on in the country? Let’s worry about our own economy. This is your Switzerland. What are you doing about it? And again, it’s so easy for people to get just stressed out and consumed with everything going on around them. Just bring it down a notch. And I know that may sound, again, a little flippant, or I don’t know the right adjective to use, but I think it really rescues a lot of people that are overwhelmed, and then they go into analysis paralysis. They do nothing, and that’s the worst thing to do. So just freaking take action.
Andrew Brill 7:06
So is there I agree, and it’s the action that we have to worry about. But when you’re talking about saving, and obviously people have expenses, your kids are grown, some of mine are grown out of the house. They have to worry about rent. They have to worry about maybe a car payment, or gas or whatnot. Budgeting. How important is budgeting and figuring whatever drops the bottom line is savings, if there is anything there,
Mark Kohler 7:31
yeah, and that’s where I’ve referenced the side gig, or side hustle. A little bit, 50 million Americans now have a 1099, a side hustle or side gig. And so many of them see it as a burden, or I have to work this other job, or I have to do this side hustle or side gig, and I’m like, Oh my gosh, what a blessing. This is the gateway drug to the American dream, because taking that, and this was where it goes, is if I can take that side hustle or side gig, and let’s say, make 1000 a month, just 250 bucks a week doing something, driving, Uber, DoorDash, whatever, a little side consulting, a little 1099, on on Upwork. I don’t care. Whatever it is. That’s the money we don’t use to increase our lifestyle. That’s the money we use to save to get out of debt. So that 510, 15 years from now, we’re living like other people want to live, and so I can make that $1,000 tax free. Easy schmeezy, with a small business making 1000 a month, I’m going to be writing off home, office, auto dining, travel, computers, electronics, cell phones. All of a sudden, that 1000 is tax free, and that increases your bottom line. And then just with the Roth IRA, we’re talking about seven grand. That’s 500 600 bucks a month. I if I can take my side hustle and realize it’s for a bigger goal, short term pain, for long term gain. Let’s just, let’s get stay focused on that, that side hustle. And you,
Andrew Brill 8:54
when you said side hustle, I kind of heard every one of our viewers go, Oh God, this guy wants us to get a second job, but it’s not, it’s not a second job. It’s something that, it can be something you really enjoy doing. You know, just for example, my son has a side gig. He actually set himself up as an LLC. Love it. Love it. He’s an essay consultant. He helps kids write college essays. So he gets paid for that, and that goes into his LLC now he can write off a piece of his apartment that he pays for in Chicago, where he’s living. He can write off office supplies and he has to buy to help these kids. He can write off part of his internet because he do does zoom meetings. So it can be a passion of yours, something you’re good at, something you really enjoy. It doesn’t have to be a second job. Your side hustle can be something that you
Mark Kohler 9:40
love, yeah, and I’ll just give two quick examples too. It could be something that you already have a skill set for, that you don’t realize is that valuable. Remarkable. You may have the day job in corporate America, but you’ve got a skill set. And if you go out on Upwork and find out how many this you know the side gig website of all time, and go out there and start to offer some. Consulting services on your specialty, you could be making two, $300 an hour something around the world, providing some sort of skill set that you didn’t realize is extremely marketable, and you have no glass ceiling. Now you can just work when you want and work remotely, and dial it up, dial it down. Another one that was fun. I had a friend. We were at a campfire once. I He was a scout master with me, and he was like, Yeah, I got a side hustle. I’m like, what? Because my account says it’s a pain, we don’t even report the income. I’m like, wow, what are you talking about? And so he had wrote an essay on how to catch a fish. Everywhere he went, he knew how to catch a fish. He’s like, I wrote this essay. I sell it on, on online for about $30 people take pictures, send them in. And I’m like, how much you making a month? I make four or 500 bucks a month. And I go, that’s awesome. And I go, now you can write off your fishing gear, your fishing trips, your fishing boat and all that. He was like, like, hold it. That’s it. Yeah, that’s a side hustle. Saying, let’s start doing a product. Let’s start doing this. Let’s start selling How To videos. And he’s like, boom, because he just had, was passionate about something that he could make extra revenue with. And then we’re going to, part two, drive that revenue into the saving, into the financial investing, so that we can now see a future.
Andrew Brill 11:12
So when you’re talking about financial investing, I know you’re you talk about Roth IRAs. Do you talk about a traditional portfolio as well? Because we’ll go back to my kids, example. They have a traditional portfolio, but they have their Roth IRA. And I know the Roth IRA is a fabulous vehicle to not only tax savings, but because it’s post tax dollars going into your Roth IRA, there’s a way to take that money and invest it and continue to make money tax free, isn’t there? Oh, yeah.
Mark Kohler 11:41
So with So, the way I would approach it is, I love first and foremost, the Roth IRA. And this could be the Roth 401, K the mega backdoor Roth. Hey, you want to talk we can you drop 50, 6070, grand in the Roth accounts every year? It’s, it’s insane. And you that’s at any income level with and we’ve just got to use that side gig to get us there, or even after tax contributions at work. So many options there. But the point is, I once you have that Roth account, you can invest in real estate notes, small business syndications, Wall Street. It’s called self directing. If that world is unknown to you, you’ve got to start learning about it. This is what Peter Thiel is getting beat up for last year. Is investing his Roth IRA. He started with five grand in 1990 in 1999 now it’s worth 3 billion or more. They asked me so but it’s just you. Every time you pass go, you can put your six or seven grand in, and then you can invest in what you know best, the after tax money or the pre tax money, that just that traditional personal investing. I love it in real estate. I love rental property. I love Airbnbs. I love the short term, long term rentals, self rentals, renting property back to your business and maintaining a portfolio because you want to be saving up for that first home purchase or saving for the trip. So we’re going to have that personal saving going on. But for me, that’s the short term acquisitions, or that real estate piece, the Roth, the Roth 401, K, that’s where I’m going to game it out for for the long haul. Anyway, that’s my take. I just just, I seen that because as a tax planner, that gives me stuff to work with, right? See, I say I got an end game here. I want to save you taxes, and one of the best ways to save you taxes is to create tax free income and write offs with real estate and passive tax free cash flow.
Andrew Brill 13:25
When they tuned out after you said second job, they now tune back in when they said tax savings. Because everybody you know, I’ve heard someone actually once a taxes are your friend. If you’re you’re making money if you owe taxes, but if you owe, if you’re making money and you owe less taxes, people are happier. Yeah, yeah. So the strategies for retirement planning and tax savings, a Roth 401, k or a Roth IRA is for retirement purposes, but you don’t always look at it that way, because you’re looking at as a vehicle to grow your money until you get to that point.
Mark Kohler 14:03
Are you? Oh, yeah. I mean, I want to snowball that Roth of five to seven to eight grand, or using the Roth 401, K, 20, 3040, grand a year, and just snowball it into that half a million, into the million. We have to be really active in investing. What we know best, if you know stocks, bonds and mutual funds, if you know options, great. Do it. You know cryptocurrency and the metaverse and nfts. Do it. You know real estate. Do it. You know notes. Just invest your retirement money the way you understand and know best to make the best ROI don’t leave it to someone else. Don’t just give it to someone else. And absentee management, you’ve got to be engaged in this process, and you can get incredible rates of return, so that when that time comes, you’ve got an exponential retirement. It just it just grows so quickly.
Andrew Brill 14:53
Again, I’ll ask the question about the economy. Does the economy play a role in any of this? Because right now, the economy. Um, depends on who you ask. You ask an economist the world is ending. You ask an, as you know, an investment person, they’re gonna say, Oh, the economy’s great. Look at how the market’s doing. So are there times to worry a little bit about what you invest in, or times when you say, okay, you know what? The economy’s not so great. That’s not a great investment. Let me put some something here. Not that I need. I’m asking you specific places, but are there times when you’re careful about certain things?
Mark Kohler 15:27
Yeah, it’s really interesting. Your question, I would say, when we invest, when I my clients, and I’ve helped so many, I’ve done my 10,000 consultations over the years. I myself am an investor, and every asset class, because I want to show, you, know, forge the way for my clients. If I’m going to talk about it, I better be doing it too, at least to some degree. To me, investing is very localized. You’re when you invest, you’re looking at a specific asset class in a specific area of the economy or area of the country, geographically. And you may say there’s a certain industry that I want to invest in, because you know it well, the overall economy. Who the hell cares? And what can you do about it? You can’t do anything about it anyway. So find what you know. Know how to get the best rate of return. It’s going to be very personal to you, and specific and localized. And in some ways, that’s your economy, that’s your Switzerland. Do what you know and take control. Be the captain your ship. You’re going to have first mates, you’re going to have a financial advisor, you’re going to have a tax advisor, a legal advisor, but you’re going to be the one in control and talking about it, and you’re all on the same side of the table, this back and forth where you’re just giving away the control or not understanding what’s going on. That’s kind of stopped that that’s when you really start investing, is when you get at the table with your advisors. So
Andrew Brill 16:49
what do you do with the person who’s not comfortable this? I go, I don’t know stocks, I don’t know real estate. I do my own job, whatever that is, but I’m not comfortable doing these other things.
Mark Kohler 16:59
Well, I think I as an unlicensed investment advisor. Let me just tell you, as a CPA and attorney open clients around the country. I mean, when you don’t know what to invest in, I’ve always taken Wall Street, and I know this may piss some of you off, but I’ve always said Wall Street is where you park your money until you find something better. And the S, p5, 100 an index fund. No load. Drop your money in there, free. That’s what Warren Buffett says, And he outperforms half of the fund managers. So go there first, and then start going to some conferences, going to some classes, studying online. I’ve got a great podcast. Your podcast is great. I mean, there’s so much out there to learn that find what really does excite you. And it may be a small business taking your money and investing in yourself that can be one of the first best investments. And before you just put it into some asset class you don’t understand. And maybe it’s not real estate. Both of you and I are handy. We love to get our hands dirty in real estate, but not everybody likes that. They might be more drawn to the crypto NFT world, which is really exciting for some, and there’s a lot money maybe there too,
Andrew Brill 18:07
so ETFs, you can park your money there, and probably do pretty well. I mean, the S P is done well, I think it’s up considerably this year. So there’s, there’s ways to take care of that. And it’s interesting. You said, go to conferences Now, if you’ve got your side hustle, that conference is now a write off. Yes, absolutely. See how this works. It’s you now have a little bit of a write off because you’ve gone to educate yourself and become clear about some of the things you want to invest in. Yeah. It’s amazing how that works.
Mark Kohler 18:38
It is. And this is where I alluded to this at the beginning. For all of you business owners out there with a with an LLC, your LLC should have an operating agreement, Articles of Organization, a corporate book and board meetings. We call it a board of advisors. Every LLC we set up has that you may have not gotten that at your Legal Zoom setup where you went, click, click, click, online. So let’s get your LLC dialed in and specific to your business, so that LLC can have a board meeting in the holidays. That board meeting might take place with some holiday travel or a conference or a continuing education course, an investment class, or some sort of workshop that you want to learn more about a certain investment strategy. Well, now you’re combining your small business with investing with your family. It’s all connected, and it’s all a write off. So we’re gonna write that whole damn thing off, and now you’re any money you do make in your side hustle or investing tax free. We can put fairy dust on it and just make it tax free,
Andrew Brill 19:39
so that now, when we’re using the Roth IRA and your IRA, and you’re thinking about retirement in your financial plan, and you said before that you don’t like to back into a number, but do people, should people have a number sort of in their back of their head saying, You know what, I would be comfortable retiring on this. Amount of, Oh,
Mark Kohler 20:00
absolutely. I mean, earlier we were I was more focused on getting young people, in their 20s, even 30s, to just think about saving because they think they’re gonna live forever. We were there, right? Saving what I’m gonna live forever. But for young people, I don’t. I wanna use whatever it takes to motivate them. And if I can say, hey, you can have a million dollars in 15 years from now by just putting away $600 a month and investing it with x rate of return. It’s incredible. And the models, Dave Ramsey, does it. We all do it. I have, you know, models on my website too, where you can put in, how much can I save every month or every year? And how much is that going to be 20 years from now? It is, it is unbelievable. It’s all about just consistency and that little saving every month, every month. So I like to put those goals out there. And you want to be thinking of what’s your current cost of living, you know, and work backwards into what needs to be in the bank to create that cost of living. And is it pre tax or after tax, and it doesn’t take much, and any good investment advisor or tax advisor is going to be able to back you into that number. And then you can say, Alright, there’s my nut. I want to be retired in 20 years, 10 years, 30 years. That’s the number I want you work backwards. There’s much, how much I should be saving every month, every year, and it’s not rocket science, people and and then you’d get to work on it. And if you’re like, I don’t have that money mark. Did you notice the economy sucks right now? I can barely keep up. Well, what are you doing to expand your income? What is that side hustle? What is that passion? What is that idea? Let’s unlock it. Let’s unlock that American dream for you, because it’s real, and you can have it, and we can do it tax preferred, and all of a sudden you’ve got a future that you’re excited about.
Andrew Brill 21:43
Hi everyone. I’m one of your hosts here at wealthion. Andrew brill, in these weird economic times where the market is up and it could go down, a lot of people calling for a correction. Some people think it’s just going to keep going up. But if you need help being financially resilient, head over to wealthion.com/free, and we’ll give you a free, no obligation. We don’t expect anything from you. We’ll just help you evaluate your portfolio and let you know what we can do to help. Again, head over to wealthion.com/free for a free, no obligation portfolio review, and let us do the heavy lifting for you. So let’s get into tax planning a little bit, because we’ve talked a bunch about tax planning. But I feel like, when you know, and this is, like you said, this is your Super Bowl, this is the time when you really this is like, if you haven’t funded your Roth IRA, fund your Roth. Ira, now get your money into the places it has to be. I feel like more than half my salary goes to taxes. There are ways to avoid this. Yeah,
Mark Kohler 22:44
I I’ll, let’s get it out on the table. The first blunt reality is, if you have a and I know this isn’t you entirely, but if you have a day job, I’m in corporate America, I have a w2 my spouse has a w2 we own a home, we pay our taxes. I have nothing for you. You can fund your retirement account. Please do save, stay out of debt. But tax strategy, tax planning, I got nothing. Give me that side hustle. Give me that rental property. Give me a little side gig. Give me a little 1099, because freaking a I can wipe out a lot of that as taxable income, and then we can deploy it where it needs to go. Tax Strategies again, all the hot buttons I want to look at, the home office, the cell phone, the dining the auto, the travel, the electronics, computers, the family members. Because if your kids are helping you in your business, quit paying taxes and giving your kids money. You take a write off. Pay them. They probably aren’t going to pay any tax at all, so you’re planning your tax picture as a family, moving income into the lowest tax bracket. Now this is if you’re helping your kids anyway, but when my kids are going to college, I’m buying rental properties where my kids are going to college. I know you’re looking at stuff like that. It’s super powerful to have your kid in a rental property paying rent back to you and learning how to own a rental property. You’re taking tax write offs for depreciation, and you’re building a portfolio and teaching your kids about it. I mean, don’t give me sorry. I’m so excited about this stuff, because I think once we unlock that vision of what you can really do as a family to build more wealth, now I can save you taxes. Now we get around the table, and we’re talking about S corporations and payroll and health savings accounts and Roth IRAs, because we have something to work with.
Andrew Brill 24:25
So if someone has a Roth IRA and a 401, K, there’s a way to take some of your 401, K, money, put it into your Roth IRA isn’t there, and use that money and have that build tax free.
Mark Kohler 24:38
Oh, yeah. So I wasn’t then I was then I was wondering if I was going to tell this story. I was literally on a phone call out on the street here, before we came into your building. Wrapping this up. This was a strategy with a client this year that last end of 2023 we did a Roth conversion. December 31 is the buzzer for Roth conversions. So if you have IRA money. Uh, 401, K money, that’s traditional. You can convert that over to Roth at any time, at any age, no matter what your income is. People are like, well, I can’t do a Roth. I make too much money. My accountant told me that, please. They are they are wrong. They are uneducated and uninformed. You can still do a Roth at any income level through a backdoor method, and you can convert your other IRA money into a Roth at any time, any age, December, 31 the deadline. So to help this client, we converted in one fell swoop, close to 600 grand of 401 K money into a Roth. That’s pretty hefty tax, tax bill. But at the same time, we employed three Airbnb strategies with and took some money from a stock sale on another piece of the portfolio, bought three Airbnbs, met the material participation rule. It’s a loophole right now. You don’t even have to be a real estate professional, and wiped out the entire Roth conversion with depreciation from the Airbnbs. I just got off the phone with her, she paid $15,000 in tax on a million dollars in income. Now that was a strategy you can’t play employ every year. It’s not for everybody, but it’s using these strategies of real estate and Roth conversions. In that one situation, there’s oil and gas, there’s solar, there’s small business, there’s equipment leasing. There are so many strategies out there that people, and it’s not the wealthiest middle income America, are using it. Small business owner,
Andrew Brill 26:26
and I’m listening to our viewers now, and I hear them saying to me, Oh, Mark, I can’t afford a second home. I can’t afford a rental property, but you can if you have that. Roth IRA, couldn’t you?
Mark Kohler 26:38
Yeah, yeah, buy a rental in your retirement account. I could do that. Yeah, you can’t do it at Merrill Lynch, but you can move money from old employment, an old 401 K an old IRA. If you’re currently employed right now, you’re going to be locked down to what their portfolio choices are. But once you have some of that old retirement money that maybe you rolled over from another job, you can go grab that and roll it back out. It doesn’t have to stay at your current employer, so once you do that rollover, tax free, no penalties, into a self directed account. Now I can go buy that rental property. Now my kids can’t rent that one from me. That’d be prohibited, but I can rent it to someone else, you know. So our podcast, the directed IRA podcast, I highly recommend it if any of you want to learn more about that. And it just, it’s so powerful when you know the power of your retirement account.
Andrew Brill 27:23
And where can somebody open up self directed Roth IRA,
Mark Kohler 27:28
you bet it directed ira.com that’s our trust company. We started six years ago. This year, we have $2 billion of clients, money that is self directed. We don’t make any financial advisory money on that. It’s your money. You roll it over to the Trust Company, no pentacles, no tax, and it’s HSAs coverdells. That’s college savings accounts, 401, K is Roths. And then you deploy it where you want. So directed ira.com is you could have a new account in 30 minutes online, and
Andrew Brill 27:56
that you college saving is one of the things I wanted to ask you about, because that’s all part of financial planning. People have kids, they grow up, they hopefully go to college, if that’s what they want to do. Mark, how are we paying for that these days? Because college, look, trust me, I know college is not cheap. Well,
Mark Kohler 28:12
the first thing I want to say is how we’re not going to pay for it. And this is a reality check for some of you parents that have visions of grandeur for your kid going to some ivy league school, or even just a big 10 or a PAC 12, if it still exists, it drives me crazy. You may not be able to buy that super expensive school for your kids. Maybe they have to start out at community college first, because the last thing I want you doing several things, is not draining your retirement account to pay for your kids. College. Do you have oftentimes, I see that it’s just it’s devastating to see parents draining a retirement account to pay for their kids college. Number two, taking out home equity loans to pay for their kid’s college. Or third, going into student debt, which is a trillion dollar crisis in America right now. So Holy crap. If you can’t afford the school, they can go to community college. All of my three of my four kids went to community college first. I’m like, great, you get a scholarship. Knock yourself out, but I’m not paying for it. You’re going to graduate with a small business. You’re going to graduate with a Roth IRA and no student debt. After that, you knock yourself out where you won’t ever want to go to school. You don’t have to go to the big freaking school. Education is education, and there’s more street smarts than book smarts.
Andrew Brill 29:24
So how do you integrate the tax planning into the financial financial planning process? You
Mark Kohler 29:30
bet now those are the things not to do. But I do love the Coverdale. I’m a big there’s we use a three pronged approach if I’m going to start saving for the kids college. So we want to save I know some of you are behind the eight ball that that ship has passed. So sorry. I was a little tough on some of your viewers here, but the if I’m moving forward, I want to use a three prong approach, the Coverdale or the education savings account, the Roth IRA, believe it or not, because and I’ll explain to all three and the 529, I there’s pros and cons of all three. You. I want to use the three pronged approach, three bucket approach to this. Let’s go backwards, 529 if grandma and grandpa want to give you money for the kids, great, say, put it in the 529 it’s you have no control over the investments. Grandma and Grandpa can gift however the hell much they want. It goes into the 529 Great. Leave it alone. You. I want you funding those kids, Roth IRAs, because any contribution to a Roth can come out, tax free for college, the growth, the growth stays in, snowballs. But if we have to, I can pull that Roth out, penalty free, tax free, pay for college. So we want to start those Roth accounts again, the Coverdale, yeah, you can only put two grand in there every year, but you can self direct it. So I’ve had, I had a client three years ago open up the Coverdell, a crypto Coverdale, and went and bought two or three kind of off the wall tokens with their two to four grand, because they funded it into the year, and then the new two grand, and that four grand turned into 40 grand. And just with a little crypto investment, and we see people do that with stocks and options. It’s not just crypto, but you can take the Coverdell and self direct it, and then next year put another two grand into it. So this is that taking control concept again. So between the Coverdell, the Roth and the 529, if I have parents that are looking 10 years out, we can pay for college. Let’s just, let’s get on it. It doesn’t have to be a big burden. It’s doable.
Andrew Brill 31:22
It’s a big burden. Trust me, been through it twice. I’m either going through it again and then I have medical school to pay for it, so we’ll be talking later. So insurance, how do we fit insurance in? Life insurance, health insurance, long term care insurance, is there? Are there vehicles? Should we worry about this in our financial plan?
Mark Kohler 31:46
Yeah, well, each one of those is a different animal. As you know, health insurance I love to talk about because I love using the health savings account, the Health Reimbursement Arrangement, 105 plan, if you have a small business, I can make all of your medical tax deductible. Easy schmeezy. The Health Savings Account is available for anyone with a high deductible plan. I love the HSA. I own a rental property in my health savings account. I think I own a crypto mine. I bought some cows in my HSA at one point, sold those off farmers like, you know, John Dutton and Yellowstone, they keep their cows every year. That’s not good. You want to sell them when the price of beef is up. Anyway, whole other story. But anyway, you can self direct your HSA as well. Health insurance is one of the areas I think most people have a lot more opportunities to plan for than they realize, because health insurance is completely deductible in a small business, it’s not for the average w2 the money have to pay for their own health insurance. So again, that small business so
Andrew Brill 32:39
powerful estate planning, the whole picture. You start out financial planning. Everybody thinks, oh, estate planning is something I’m going to do later on in my life. As I get older and worry about my estate, but your estate starts to grow as soon as you start to work, doesn’t it? Yeah, yeah. And
Mark Kohler 32:56
everybody needs a revocable living trust and a will. I don’t care if you’re 22 years old or 82 years old, if you have any investments at all, from a home to a rental property, whether you have kids or not, you’re starting to build wealth soon as you leave college and you’re out into the world, what happens to your stuff? You know, you’ve probably already got a 401 K growing at work. Who gets that? Where’s it go is, do you have a plan for your your own home and equity? And of course, as you have kids and start to build more wealth, it becomes more and more important. But I love the revocable living trust, very affordable, simple, that’s the foundation or legacy portion of your plan. I call it the trifecta. I want to put your operations on the left, your assets on the right, and it all comes down into your your trust, your we can do privacy planning, asset protection planning, and when we have a picture, a picture says 1000 words. So many of us think this is esoteric and I can’t understand my account or lawyer, let’s put it on the board. So if you ever work with any of my tax lawyers, we’re going to build you a trifecta all my tax advisors around the country anyway,
Andrew Brill 34:01
so I had that came up to another question. Is, a lot of people look at their home as sort of a retirement savings. You know what? I’m going to and we’ll get to debt, but I’m going to live in my home. I’m going to continue to pay off my mortgage. I’m going to pay off my mortgage as soon as I decide to retire. I can sell my home, put some of that money away buy a smaller house. Is that the wrong way to look at your real estate? Or is that a good way to look I
Mark Kohler 34:26
think it’s great, and it’s a piece of your retirement. This is the home. Your home equity is an investment. I have always believed in that. Now, whether you want to pay off your mortgage super quickly or not. I don’t know if I’m a fan of that as much. I’d like to see you again saving and buying rental property and building a well rounded retirement plan, but because once that equity is tied up in your home, it’s tied up, it’s done. I mean, it’s not making you money, it’s just sitting there so that can. Be a drawback of that concept, but it’s also can be safe, you know it’s there. You need to look at your asset protection rules for your state and some states, you could get into a car accident, texting and driving, lose your home. I you the home you’ve got it. Have an active approach to protecting the equity in your home depending what state you live in, so be careful there. But no, I like it. I think it’s important to own home ownership when possible, is powerful, and pay down the mortgage methodically. I don’t think we want to rush to the
Andrew Brill 35:31
let’s talk about debt a little bit. I know debt is part of financial planning. There’s good debt, I guess there’s bad debt, credit cards, bad debt. Where does everything fall? How do we manage it? Like Like you said, don’t rush to pay off your mortgage. You can always refinance it when rates come down and save a little bit of money and continue to just pay it off. But what are we doing about the debt? Well,
Mark Kohler 35:55
if we take Dave Ramsey’s approach, all debt is bad, pay off everything as fast as you can. And for many people, that strategy is changed lives. It’s a lifesaver. There’s people that don’t have the mental wherewithal or time or capacity to really do a lot of investing, and if they can save in the retirement account, pay off their home and stay out of debt, and look at what Dave Ramsey’s done. He’s changed America in that way. But my I have some clients that want to build wealth. They want to have a little something better in retirement, and the way you get there is with good debt. Good debt, I argue, is debt that makes you money, and that’s rental property, having a mortgage on a rental property that cash flows. Now I’m using the bank’s money to make money. I love that having an SBA loan to build your business that creates more cash flow to build wealth. I have no problem with that. And having debt on your home with a good interest rate and paying it off methodically, not just putting it all and paying it off and having it just sit there exposed. And I think, obviously, credit card debt, student debt, consumer debt, we got to get rid of that. But I think there’s a place for good debt, and people that build wealth use it wisely, and you shouldn’t be afraid of it, but it’s it’s a loaded weapon, and you got to know the rules. You got to be careful with it and understand and teaching that to your kids, as we talked about earlier, right out of the gate is so important, and it’s
Andrew Brill 37:21
about finding the right advisor that knows their stuff. Mark, how do we like I know you. I come to you and I say, Mark, help me out here. How do we find the right person?
Mark Kohler 37:31
Well, I think we have to realize it’s a holistic approach. You want to have a good tax advisor who’s not going to be your investment advisor. They’re going to be two different people. They have two different two different skill sets. And you’re also going to have your legal advisor, because you’re going to be setting up entities. We’ve got the new boi report that’s due before December 31 oh my gosh, again, so many deadlines coming up, but you’ve got to have your legal support, your financial support, and your tax support, and if you could get all three of them coordinated, now you’ve got a superpower, and I’ll solve your tax advisor problem I’ve got now we’ll have close to 1000 tax advisors around the country that I’ve trained over the last two years. They’re an army of tax advisors trained under 12 modules and 70 strategies. Meet with me weekly and they speak Mark Kohler. So anything I’m saying here, they’re going to know you can interview them, hire them. I don’t make any money on that. So check out my tax advisor network on the legal side. Finding a business lawyer is about interviewing and talking about just things that we talked about today. If you go to interview a legal or financial advisor and you bring up just these topics alone, and they look like a deer in headlights. Move on. Get in the right networks, the right groups, the right clubs, and our websites, our podcasts. You have so many incredible guests. I have great guests on my podcast, you’re going to be able to find that network of people that speak your language, and then that investment advisor is there again, outside of what you’re investing in, if you know what you want to invest in, you can be your best advisor. You can also be your worst advisor. So you want to get support and have an investment advisor that can help you with the Wall Street products that you want to invest in, life insurance, not a bad thing at the right time. That could be an important piece of this, but I don’t know. As you get that group together and you start talking and planning, it just opens up the universal open up to you. It really does.
Andrew Brill 39:27
How much of financial, financial planning Do you work in an emergency fund? Say, you know, some, some, some money on the side. They say, You know what, for a rainy day, catastrophic car accident, or my roof falls in and it’s not governed by insurance stuff like that.
Mark Kohler 39:43
Well, I, in my book financial freedom, I talk about three stages of emergency funding. The first one is and just go back to Dave Ramsey, because I love a lot of his concepts, and I’ve made this happen with all my kids. I want them to be out of debt and have a month of living expenses in. The Bank, not on a credit card, not on a home equity line, but cash in a bank somewhere, not the normal checking account they use that I have a month set aside of emergency account. That’s phase one. Phase two is where I really like to bring in a three month cushion. And that could be also part of your business, your small business, needs to have a three month cushion. As you have cash flow issues, you may have rental property, and you want to make sure you’ve got three months of cash flow if you need it, and then the last bucket would be a year’s worth. Now here’s somebody going man or nine months or a year, that seems like a lot more, yeah, but it’s also an opportunity fund, because when deals come along and you’re like, oh my gosh, I could pull the trigger on that, or, oh, I want to buy a rental property, or I want, where’s your cash, you know? And so it’s also, it’s an emergency fund and an opportunity fund that you’re actively deploying and bringing back and using, and you’re very actively involved. And I saw for many Americans right now, that’s a bridge too far. I get that, but we want to be thinking down the road of building that financial stability, and it’s doable. We can get there. So
Andrew Brill 41:10
the bottom line, as we wrap up, is, find your passion, turn it into a side hustle. Doesn’t have to be every day. Can be once a month. You can just get paid a little bit, but the tax implications of that are immense. Yeah, the tax
Mark Kohler 41:25
oper, tax planning opportunities, the wealth building the finance, because I really think that’s the secret sauce. It is kind of the gas in the engine that makes this whole machine work and and running towards it with the excitement, rather than being befuddled and frustrated and sad and no, this is, this is, this is a wonderful thing that the pandemic was such a terrible time for us in our country, but it was almost also unlocked a lot of new vision and opportunity too, and this ability to work from home, the power of zoom, the power of side hustles, the power of personal planning, and people getting more engaged in their own planning, that was exciting side benefit, or, you know, silver lining of of of that situation. And so I think we can embrace that, and it’s going to unlock so much opportunity.
Andrew Brill 42:21
And I’ll bet talking to people, talking to clients, prospective clients, you have found that people have things that they’re good at, that they didn’t even could make a little bit of money, yeah, that they had no idea they could
Mark Kohler 42:32
no illegal and legal talk about the illegal stuff, no. And I think when people realize we just we’re human nature, right? We keep our head down, we stay in the weeds, we just take care of but when we can sit back and look and go, Oh, I’ve got some ideas, I’ve got some passion, I’ve got some ideal, you know, some skills. And for a corporate employee that you might have been for years and years, it can seem very scary, kind of going out and starting a small business or starting to create that side income. Well, knowledge takes away fear, and my Main Street business podcast is a great one, where we talk about all the little things of building a business. And there’s so much out there. Again, the education you provide people, don’t be afraid. Just take a little baby step. Just take action.
Andrew Brill 43:26
What have I missed? What am I what? What have I missed in the whole financial planning picture? If anything,
Mark Kohler 43:31
wow. The secret to life,
Andrew Brill 43:35
you’re the dream maker.
Mark Kohler 43:38
I you know, I just, I don’t think you, of course, missed anything, but I’ll reiterate is, and you’ve talked about it, is talking about it, staying educated, taking action, even if it’s small, that’s it’s just so important. I think the fear, the analysis paralysis, the fear of the economy, it can hold so many people back from just learning and getting educated. And so I would just say, stop the noise, just eliminate the noise, and focus on what your goals and plans are, and just take a little bit of action every week, dedicate a little time on the weekend or one night a week, or this or that. I’m going to read a better book, I’m going to pick up a couple new podcasts. I’m going to just those little things. Can can change your life.
Andrew Brill 44:27
So where can we find you? I educate me. Where can we find you? Either on social media, where can we find your podcast? Where can we find your website? Where can we find Mark Kohler? It’s
Mark Kohler 44:36
pretty easy, but if you just Google Mark J Kohler, you’re going to see all these different resources. My website, March a kohler.com. Is a great launch pad for the law firm, the Trust Company, my tax pro network. If any of you are a tax advisor listening, please go do a demo and just see what my tax advisory program is all about, because I know that’s the holy grail for you tax advisors out there, moving from compliance to advisor. Advisory. Oh, it’s just, it just unlocks again. So much happiness for the accountant that are just stuck in the tax season grind. But on the social media market caller, get out there. My podcast, Main Street business podcast, is a great area to also just start your education. And remember, nerds make the world go around. It’s easier to save money than make money. So tax planning does not have to be laborious and ugly boring. It can be so exciting.
Andrew Brill 45:28
And can podcast we found on any old all the podcast, yeah, all the
Mark Kohler 45:32
platforms, Main Street business, Mark J Kohler, you’ll find me real quick, and I hope to be, I know I’m we’ve created a great relationship here. But for many of you, the listeners and viewers, find your tax and legal source. It’s not me, that’s fine, but find someone, because if you want to unlock this tax planning loophole, if you will, and the side hustle and the side again, American dream, you’re supposed you’ve got to have a tax on legal advisor that you believe in and can make sense to you. So give me a try. Start following, and I promise you we’re going to share incredible information with you, but this has got to be a part of your education mix. Well, Mark, thank
Andrew Brill 46:09
you so much for joining us. This was informative and educational for me, hopefully it was educational for our viewers. And look, you can lower your tax burden, you can save money, you can make money and you can you can actually think about your future, which a lot of people are afraid to do these days, but we could actually do, yeah,
Mark Kohler 46:26
thank you so much for having me keep doing Keep up the good work. You’re spreading the good news.
Andrew Brill 46:30
I’ll do my best that if you do need financial help, head over to wealthion.com backslash free for a free, no obligation, portfolio review, and please like and subscribe to the channel. You just you know that would help us out a lot, and don’t forget to turn on notifications, so you know when we post new videos to the channel, and you can find people like Mark there. And of course, social media. Follow us on social media, all the links are in the description below. And until next time, stay informed. Be empowered, and may your investments flourish.
