February 21, 2025 • 40 mins
Albert Einstein called compound interest the most powerful force in the universe, and in this episode, we dive even deeper into why financial literacy is the key to building real wealth. Whether you’re just starting out or looking to strengthen your financial foundation, the principles we cover will help you take control of your money and your future.
Hosts Chris Collins and Dennis "Bobby Downspout" Siggins break down the financial waterfall system, how to build financial confidence, and why surrounding yourself with the right people can shape your success. Understanding money doesn’t just help you save and invest—it empowers you to take risks, start a business, and build something lasting.
🔑 Key Takeaways in This Episode:
✔ The Financial Waterfall – A simple system to manage your income, savings, and investments like a pro.
✔ Confidence Through Financial Literacy – Why understanding money helps you make big moves, whether it’s buying real estate or starting a business.
✔ Your Inner Circle Matters – How the five people closest to you impact your financial and business success.
✔ Lessons From Real Experience – Dennis shares personal insights from his early days investing in real estate and running businesses.
At American Gutter Monkeys, we believe in helping entrepreneurs build real wealth through smart financial decisions and business ownership. Thinking about starting your own business? Learn how we can help: 👉 franchise.americanguttermonkeys.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris (00:00):
Before we dive in, we want to remind you that this
podcast is for informationalpurposes only.
We're here to share insightsand ideas to help you think
about your financial future, butthis is not investment advice.
Always consult with a financialprofessional before making any
decisions regarding your money.
Every once in a while, someonecomes along and shocks the
(00:22):
establishment with a newinnovation in a tired industry.
From the movie Moneyball.
Here's how Boston Red Sox ownerJohn Henry put it.
Dennis (aka Bobby Downsp (00:29):
Really what it's threatening is their
livelihoods, their jobs.
It's threatening the way theydo things and every time that
happens whether it's thegovernment, a way of doing
business, or whatever the peoplewho are holding the reins they
have their hands on the switch.
They go batshit crazy.
Hello.
Chris (00:45):
I'm Chris Collins, your host.
In this podcast.
We dive into stories ofinnovation, resilience and what
it takes to shake up an industry.
Joining me is my co-host andresident small business expert,
dennis Siggins, or, as he'sknown on the Cape and Islands,
bobby Downspout.
Dennis, along with his collegeroommate, andy Brennan, founded
the Cape Cod Gutter Monkeys andtransformed the humble task of
(01:05):
gutter cleaning into a thriving,multi-million dollar business
that redefined the game.
Together, we'll uncover thestrategies, lessons and
inspirations behind building andgrowing a successful business.
So, whether you're here forbusiness insights, inspiration
or just a great story, you're inthe right place.
Grab a cup of coffee, sit back,relax and welcome to Monkey
(01:27):
Business Radio.
Hello everyone, welcome back toMonkey Business Radio and we're
on part two of financialliteracy.
Last week we covered financialliteracy 101.
And we're going to kind ofdouble back a little bit, review
(01:47):
some of the stuff we did lastweek.
As always, I'm here with DennisSiggins, cape Cod Gutter
Monkeys.
How are you doing, chris?
Doing well, doing well, dennis.
We're going to do a littlereview, I guess, of last week
just to fill in those whohaven't seen the podcast.
If you haven't, you can doubleback later.
Dennis (aka Bobby Downspou (02:02):
Last week we started with this great
recession that occurred in the70s.
Gas prices tripled over 10years.
Hyperinflation.
Americans were held hostage inIran.
We impeached a president.
It was a tough decade but, asyou pointed out to me earlier
this week, Chris, no matter howbad the economy gets, there's
(02:24):
opportunities there, and one ofthe opportunities that existed
that my parents were aware ofwas that CDs were outperforming
the stock and mutual fund marketby a large margin.
The stock market was onlyproducing well under 10% for
(02:44):
that decade.
It was averaging around 5% to5.5% per year, while CDs were
producing anywhere from 12% to18%.
Great opportunity because CDsare available to everybody right
at their own bank.
My mom and dad had all of uskids I'm one of six kids we were
putting our newspaper money,our lawn cutting money, our snow
(03:06):
shoveling driveway money.
We were loading up on CDs allthrough the 70s Just one of the
many opportunities that wereavailable.
I recall many of my neighbors,my friend's parents, starting
small businesses back then,working their full-time jobs
Monday to Friday, but startingsmall businesses on nights and
(03:29):
weekends.
My parents, who were notwealthy at all, began buying and
flipping houses in the 70s inNew England Wonderful
opportunities that occurredduring one of the most
economically devastating decadesin the last hundred years.
Chris (03:51):
Financial literacy here really adds to your ability to
seize opportunities that youwouldn't otherwise see.
Most people can throw theirhands up in the air and say,
well, nothing I can do aboutthis.
This is the worst.
Other people see opportunitythere, but it takes this
knowledge, it takes thisfinancial literacy.
Dennis (aka Bobby Downspout (04:06):
And we were blessed to have good
parents.
Chris (04:08):
Our parents were from the Depression era.
Dennis (aka Bobby Downspou (04:10):
Yeah , they were, they'd seen worse.
Chris (04:14):
They had that ability to kind of take stock of the
situation and see opportunitywhere other people would miss.
Dennis (aka Bobby Downspout) (04:20):
So , getting back to the four rules
of financial literacy, the ruleof 72.
We talked about it last week.
We're just going to do a quickreview.
The rule of 72, basically, isthe mathematical formula that
says, if you take the number 72and divide it by the
(04:40):
investment's projected annualreturn, the result is the number
of years it will take for yourmoney to double.
For example, if you expect an8% return on your money, 8
divided into 72 is 9.
It's going to take nine yearsfor your money to double.
Over the entire history of thestock market history of the
(05:07):
stock market as we know it today, the last 120 years the stock
market has never produced lessthan 10.2%.
Over any 25-year period in itshistory, the stock market is
most likely to average at least11% per year.
Over the past 10 years, it'saveraged 13.9%.
Over the last 30 years, it'saveraged 10.7%.
(05:29):
Over the last 50 years, thestock market has averaged 10.9%.
This is not a guarantee.
We're not telling you that goout and invest any amount.
We're just letting you knowthat this is part of the
financial literacy platform thatwe all want to be a part of.
We want to have knowledge ofwhat is going on in the stock
(05:51):
market, in the banking industry,in your local and regional
economic environment.
And this is a part of thepuzzle and as long as we can
invest our money comfortablyover a 25-year period and gain
11% interest per year, ourmoney's going to double every
six and a half to seven years.
(06:12):
It's not rocket science, it'snot magic, it's just old school
investing.
But at the same time, the ruleof 72 can work against you.
Let's say, for example, youcarry a balance on your credit
card and that the interest rateyou pay on your credit card is
18%.
So if you divide 18 into 72,you get four years.
(06:33):
That means the credit cardcompany is doubling their money
every four years at your expense.
So you can be on either side ofthat fence and you can choose
which side of the fence thatyou're on as we move forward.
The Rule of 64 is somewhat of anextension of the Rule of 72.
The Rule of 64 is kind of myown invention or my own
(06:54):
interpretation of the Rule of 72.
Basically, the Rule of 64 goeslike this it's a general
guideline that everything you doin your 20s will be magnified
64 times over in your retirementyears, and that's because it's
about a 42-year difference from20 to potential retirement at 62
(07:17):
.
It means that your money, ifyour platform or your portfolio,
doubles every seven years, it'sgoing to flip six times.
So money that's invested at theage of 18 will, every seven
years, double to 20, then 40,then 80, then 160, 320.
(07:38):
And at 60 years old, that$10,000 investment at age 18, 60
years old, that $10,000investment at age 18, if it
doubles every seven years, willbe $640,000.
A $10,000 investment at age 18has a high likelihood of growing
(07:59):
to $640,000.
Chris (08:00):
That's 64 times over.
There's my rule of 64.
And it's important to take thisto heart, because what happens
is, in these tough times we havethese big crashes, your impulse
is to pull your money out ofthe markets to do something
different, and so that's kind ofthe financial danger.
I think it was John Bogle.
This guy who created Vanguardsaid you know, time is your
friend, impulse is your enemy.
Dennis (aka Bobby Downspout) (08:27):
So to not worry about the 1970
crash or that crash that's goingto come around the corner.
You know to kind of ride theseout and don't change your
investment philosophies.
But also, chris, as we all know, at this stage of our lives we
change our short, medium, longrange goals.
If you're in your 20s, remember.
We're not day traders here.
We're just investing for longterm wealth building reasons.
We're just investing forlong-term wealth building
reasons.
As we approach our retirementyears, we start to move some of
(08:50):
our index funds and mutual fundsinto much more conservative
funds that maybe don't have thesame upside potential but have a
lot of downside protection incase of a crash.
But I agree with what you say.
Don't panic.
You and I we've been throughthe 08 crash.
There was one in 01.
(09:11):
Remember we had Y2K, followedby 911.
Challenger disaster.
One after the next, they'reconstant, they're ongoing.
Albert Einstein very famouslyquoted the most powerful force
in the universe is compoundinterest over time, and there's
a lot to be said for that.
(09:31):
But getting back to sort ofwrapping up on the rule of 64,
basically everything we do inour 20s is magnified 64 times
over in our retirement years.
So every $10,000 or every $10you get into the bank in your
20s is going to be magnified 64times over.
But there's another side tothat fence.
(09:54):
The rule of 64 can also workagainst you.
A single $10 pack of cigarettesin your 20s is $640 that you
don't have in your retirementyears.
A $10 per day cigarette habitequals $70 a week or $3,650 a
year.
Over 42 years this becomes morethan $2.7 million that will not
(10:18):
be available in your retirementyears.
This is knowledge that we shouldall have so we can make
educated decisions in our teensand 20s, because those decisions
are going to dictate a lot ofwhere we land financially down
the road.
And it's a simple matter ofeconomics and the rule of 72.
(10:38):
So being financially preparedis just knowing this stuff.
Be aware of these two rules therule of 72 and the rule of 64,
and how it applies to you.
Some people go to where thepuck is.
I want to go to where the puckis going to be when I get there.
Keep your eye on the future andmake good decisions in your
younger years.
Chris (10:59):
All right, sounds good.
So that's kind of a review oflast week.
I think we're going tointroduce a couple of new
concepts here.
I think the first one youwanted to kick off with is 80-20
rule.
Dennis (aka Bobby Downspout (11:10):
The 80-20 rule.
This is the Pareto principle.
Again, getting back to our oldfriend Albert Einstein, he's
also quoted as saying he whounderstands compound interest
earns it.
He who doesn't pays it.
And remember the 80-20 rule.
The rule we're about to talkabout has very little to do with
annual income and everything todo with process and execution,
(11:35):
the 80-20 rule, which is alsoknown as the Pareto principle.
It applies to wealth andbusiness and finance and it
basically claims that 80% of thestuff is owned by 20% of the
people.
Dr Joseph Duran.
He's an American engineer, abusiness consultant, who's
widely recognized for his workin creating the Pareto Principle
(11:55):
, the 80-20 rule.
80% of the problems are causedby 20% of the people, 80% of the
land is owned by 20% of thepeople and he applied his rule
of economics to money, tobusiness, to sports, health and
many, many other areas.
Chris (12:10):
Very interesting guy.
He was actually instrumental inintroducing quality management
practices to Japan after WorldWar II.
No kidding, yeah, yeah, he waspart of that TQM sort of wave
that came through.
When I worked for big airplanemanufacturers in California, tqm
was the rule of the day.
But yeah, wow, interesting guy,very interesting.
(12:31):
And the 80-20 rule came PhilFred Pareto.
Yeah, yeah, he was a European.
Yep, he came to the conclusion80% of the land in Italy was
owned by 20% of the people.
Yeah, that's where it comesfrom.
Dennis (aka Bobby Downspout (12:43):
And a 2016 study featured on
Statistacom showed that thewealthiest 20% of Americans own
88% of American wealth.
Incredible, let me say thatagain the wealthiest 20% of
Americans own 88.3% of Americanwealth 88.3% of American wealth,
(13:11):
while the remaining 80% ofAmericans own just 11.7% of the
wealth.
And one really shockingstatistic shocking to me that
this study also revealed thebottom 50% of Americans own just
1.2% of the wealth.
Chris (13:23):
It's incredible.
Dennis (aka Bobby Downspout (13:24):
And the bottom 30% of Americans
have a combined net worth ofnegative 1.3.
And again, I'm going to saythis a lot today the 80-20 rule
has little to do with annualincome and everything to do with
process and execution.
The choices we make in ourteens and 20s will have a very
strong influence in determiningwhich of these categories we
(13:48):
belong to the wealthiest 20% orthe remaining 80% or the bottom
50%.
I mean, it's all aboutdecisions that we make and
remember for today's discussions.
We're talking about thewealthiest 20%.
That's just one in five people.
We're not talking about MarkCuban, we're not talking about
(14:10):
billionaires, elon Musk.
No, we're talking about thewealthiest 20% one in five
people.
Chris (14:16):
Yeah, the guy sitting next to you on the freeway in
the car next to you.
Yeah, we're talking about theguyiest 20%.
One in five people.
Yeah, the guy sitting next toyou on the freeway in the car
next to you.
Dennis (aka Bobby Downspou (14:18):
Yeah , we're talking about the guy in
the Dunkin' Donuts having acoffee and a donut.
This is the wealthiest 20% thatwe're talking about today.
Do remember that wealth.
We're talking about the top 20%.
And when we say poor, we're nottalking about people who earn
less money.
We're talking about poor beingthe people who don't have a
(14:41):
financial process in place, sotheir money tends to not stay
with them.
They tend to go through theirmoney quicker.
Chris (14:45):
By following these principles and being financially
literate, you can choose whichcategory you can be in.
Now there's always outsidethings that can happen to you in
your life and things like that.
We're not ignoring those, butwhat we're saying is it's a
choice, a choice because of yourfinancial literacy.
What are the things you'regoing to do to try to achieve
being in that upper 50%?
Dennis (aka Bobby Downspo (15:05):
Chris , I want to talk about income,
many different types of income.
Earned income Earned income ismoney received as pay for the
work we perform, such as wages,salaries, bonuses, commissions
income.
It's the hardest to come bybecause we got to go out there
every day and earn it and whenyou do, it's taxed at the
(15:27):
highest rate of all the incomesand that's a variable within
itself.
Within that earned income,we're going to talk about
disposable or discretionaryincome.
Discretionary income is theamount of money left over after
all your household necessitiesare paid.
Chris (15:47):
Which makes necessities is the important.
How do you define that?
So yes, so how do you definenecessities?
Dennis (aka Bobby Downspo (15:53):
Needs versus wants, when it comes
down to One of the things myparents taught me as a young guy
, as a young kid, 10, 11, 12years old was we had two bank
accounts.
All of us kids I'm one of sixkids we all cut lawns and we all
shoveled driveways and we alldid yard cleanups and painting
of fences and just odd jobs.
(16:16):
And then we all had regularjobs too.
I had a job at a local farmwhen I was 11, 12, 13 years old.
I had a job at a restaurant.
I mean, we're always workingand our parents taught us we
have two bank accounts.
It's the small bank and the bigbank and half the money goes to
the big bank, half the money tothe small bank account and the
small bank.
(16:36):
We could use that for anythingwe wanted and the big bank was
for college and by 1973, 74, atthe latest now it is earlier
than that 72, 73, cds wereoutperforming Wall Street.
So our big bank account gotpushed into CDs every year
(16:57):
around Christmas time and my momset it up on one year CDs or
one year terms that came duelike around the December 28th.
So we would work all year longand build up that small bank
account and maybe back thenmaybe I made $3,500 that year,
(17:18):
maybe back then, maybe I made$3,500 that year Christmas week
I'd get out of the bank and wewould pull out $3,000, maybe
keep $500 in the bank and push$3,000 into the next CD, into
the next year, and we'd lock itdown at 12% 14%.
Eventually CDs reached 18% bylike 1980.
It was crazy, but it was thebeginning of what I call the
financial waterfall and this hassustained me for my whole life.
(17:42):
So the financial waterfall lookslike this we all get a paycheck
most of us and you receive yourweekly paycheck, either maybe
by direct deposit, or youdeposit the weekly paycheck into
your checking account and youkeep a certain amount.
I like to keep three months ofearnings in my checking account
(18:02):
at all times, or you can go withthree months of expenses,
whatever your waterfall is.
When the checking account growsbeyond that three months, then
you make a deposit into yoursavings account months, then you
make a deposit into yoursavings account and I recommend
every three months, everyquarterly, you visit this, and
(18:27):
so in a perfect world, you havethree months of earnings in your
checking account and threemonths of earnings in your
savings account.
The checking account managesyour household funds and the
savings account is your safetynet funds and the savings
account is your safety net.
Additionally, you have aretirement.
Maybe you have an IRA, a SEP, a401k, whatever form of
retirement you have.
When that savings account growsto be more than three months so
(18:50):
maybe every, let's say, everysix months you visit your
financial planner and you havean extra one or two or $3,000 in
there, above and beyond thethree months that you require
you deposit that additionalmoney into some form of passive
income, let's call it into yourIRA.
And that's how the waterfallworks.
(19:11):
Your checking account is usedfor your household expenses and
you keep enough in there for anemergency, maybe if your washing
machine breaks or your car hasa breakdown.
So you have enough money in thechecking account that you can
accommodate an emergency and thesavings account becomes the
safety net in case somethingterrible happens and you need
(19:33):
that extra layer of protection.
And then everything else justwaterfalls down into your
retirement account or yourinvestment portfolio.
Chris (19:42):
Yeah, and the interesting thing to point out here too, is
where wants ends up on thislist, right?
So you have your essentials,your savings and your debt, then
your investments, then yourwants.
At the end of that then youhave maybe some surplus Again
you can put towards a savingsaccount or something along that
line.
Dennis (aka Bobby Downspou (19:58):
Sure , and that's where the
discipline comes in.
What is necessary If you areparents of 2.4 children and
you're going back to schoolshopping, it's up to you, the
parent, to budget that.
We are going to budget X amountfor back-to-school shopping.
Now, is that $200 per child?
(20:28):
I don't know.
Is it $300 per child?
I don't know.
But whatever that dollar amountis, stick to it.
Choose a manageable dollaramount for, let's say, in this
case, back-to-school shopping,and you stick to that amount.
That will help keep you onbudget.
Another thing, too, about, let'ssay, 401ks and such.
Chris, a lot of companies havea matching 401k up to, let's say
(20:50):
, 3%, 6%, 9%.
Some companies are moregenerous in that area than
others.
If you work for a company thatoffers a matching 401k, I
strongly recommend you take 100%advantage of this.
Yes, it's free money.
It's free money, yeah.
So let's say you earn $50,000 ayear and they have a 6%
(21:15):
matching.
Well, 6% of $50,000 is $3,000.
If you invest $3,000 of yourpay, the company matching
program will kick in anotherthree grand.
It means your investment justdoubled in one day.
It's guaranteed to double.
There's nothing else out therelike it.
So I strongly recommend taking100% advantage of everything
(21:38):
that your company has, that islike that.
Chris (21:41):
There's other things too.
Health savings account Greatthing to get into, especially
with kids Comes off your incomebefore it gets to taxes, so
you're not paying taxes on thatamount.
There's a lot of other things.
Maximize all your deductionstoo.
Just look at your W-4 form.
People make big mistakes on W-4forms.
They pay way too much tax, waytoo early.
Government holds onto it.
You might get it back, but youmight not if you don't fill out
(22:04):
your taxes correctly either.
So check your W-4 as well.
Dennis (aka Bobby Downspout (22:08):
And just continuing on good
financial habits, Chris creditcards Don't let them run over
into the next month.
Pay that credit card off everymonth.
Don't use your credit card asyour safety net.
The credit card is a financialtool.
Use it as such, Take advantagesof the.
Chris (22:26):
You do that, then you take advantages of the points.
I mean again I fly on SouthwestAirlines because we use a card
Southwest Airline card we payeverything on that card and we
get free flights.
Dennis (aka Bobby Downspou (22:37):
Yeah , use your credit cards properly
.
Don't ever carry a balance.
This is one of my favoritefavorite financial tools
Physically, walk into your bankonce a week, once every two
weeks, whatever is necessary.
We've become accustomed toe-banking.
Everything's just directdeposited, automatic withdrawal.
I got to tell you I still walkinto my bank once a week and
(22:59):
every once in a while I'll runinto a unique situation and you
know what.
They all know me personally andwe can circumvent, we can
navigate any situation overthere because they know who I am
.
Yeah, Walk into your bank oncea week.
Chris (23:13):
Yeah, they also have very good financial help there too.
Dennis (aka Bobby Downspou (23:15):
Yeah , they do Questions or whatever
about what you should be doing.
Chris (23:17):
You can go in there and review your finances with them.
They usually have a CFP inthere that can help you out.
Dennis (aka Bobby Downspout (23:23):
CFP is a certified financial
planner.
Chris (23:25):
Yep, they usually have a guy in there that can help you
out.
Very low cost, if any cost.
Dennis (aka Bobby Downspou (23:29):
I've always, always used the
financial planner from my bank.
That's interesting, it's thatsimple.
Chris (23:38):
I never thought of it really until we were preparing
for this podcast, but startedreading up a little bit about it
.
Dennis (aka Bobby Downspou (23:44):
It's a staple of my life, absolutely
.
I went in there the other day.
We had some things we had to doand Tim and I are on a first
name basis.
Again, walk into your bank.
Get to know those people.
Opportunities will presentthemselves to you simply by
knowing these kind of people.
Don't complicate your investing.
(24:04):
Keep it simple.
Don't get overly fancy on yourtechnology.
Use one financial planner.
You don't need three or four,remember.
Unless you're a real, true stockinvestor, a day trader, anybody
like that, which 99.9% of usare not then you're all
investing in the same stuff.
(24:25):
We're all investing in thestock market, the Dow, the
NASDAQ, the S&P, and we're allinvesting in American funds.
It's just which ones do youinvest in and how do you
approach it?
It's just which ones do youinvest in and how do you
approach it.
Find a good financial plannerthat shares your strategy and
your philosophy.
Don't complicate it.
I check my progress.
(24:46):
I check my platform quarterly.
I don't visit it monthly,weekly, daily.
Absolutely do not.
I just check it quarterly.
We make minor adjustments asneeded and that's it.
Focus on your strength.
Play in your own sandbox.
My strength is my company.
(25:06):
That's where I can have themost influence, not just on my
company and my coworkers, butalso on my financial platform.
A lot of my personal wealth, ifyou will, is wrapped up in the
companies that I own and that'swhere I spend the most amount of
time, because I am an expert atthat.
I'm not an expert on WallStreet, absolutely not an expert
(25:30):
on Wall Street.
I'm not an expert investor.
That's why I use mutual fundsand index funds real, simple,
basic, conservative processes.
And again, chris, what aboutpanic?
Chris (25:47):
right.
I know personally that I am tooemotional about money, too
emotional about vesting, so I'mbetter off not being so daily
involved in my financial statusat the moment.
So for me I do about twice ayear Maybe I'll go to a
(26:09):
financial guy and we'll reviewmy accounts, and I'm much better
off doing that because I know Ishould not be in there kind of
monkeying around Because whenthe shows hit the fan which it
has quite a bit in our lifetimeit is yeah, yeah, I'm just too
emotional about it.
So yeah, for me these rules arevery important and I wish I
knew a lot of them, actuallyyears and years before.
It would have been a big helpin some of those panics.
Dennis (aka Bobby Downspou (26:32):
Well , and that's the beauty of
learning things when you'reyoung.
Nobody learns skateboarding atthe age of 50, right?
No, kids learn to skateboardwhen they're five, before
they're they.
They learn to do it beforethey're afraid of getting hurt,
right.
Chris (26:50):
Yeah, it's coming back to that.
It's keep.
The earlier you learn thesethings oh my gosh, so much
support.
But on the other hand also wealways have to make the point
you're never too late, never toolate.
So if you don't know theserules and you're older, you've
got a couple of kids, whateveris going on in your life, it's
never too late to startimplementing these.
You don't have as much runway,but at the same time, you'll be
far better off than not.
Dennis (aka Bobby Downspout (27:12):
And your kids and grandkids will
too.
Chris (27:13):
Yeah, yeah.
Dennis (aka Bobby Downsp (27:14):
That's right, and they'll pick it up.
My final rule one of myfavorite rules of life is the 20
minute rule.
This is the belief thatdedicating 20 minutes each day
to a task will eventually resultin your becoming proficient at
that task.
Imagine if you could dedicate20 minutes a day to playing the
guitar.
You play a guitar, right?
I do play the guitar.
I wish I had 20 minutes everyday, but I should, I should, and
(27:35):
, and I play the guitar you playa guitar.
Chris (27:36):
right, I do play the guitar.
I wish I had 20 minutes everyday, but I should, I should.
Dennis (aka Bobby Downspout (27:40):
And I play the guitar too, and I
haven't much recently.
But to me it started 20 minutesa day.
That's how I learned 20 minutesa day, shooting, pool
exercising.
Eventually, if you exerciseyour 20 minute, maybe two mile,
two and a half mile run willturn into a 25 and a 30 mile run
.
You get the idea.
You start playing your musicalinstrument 20 minutes a day and
(28:04):
maybe down the road.
You can't play it 20 minutesevery day, but you jam for two
hours on Saturday.
You grow into it and imaginenow what you could accomplish if
you simply dedicated 20 minutesa day to your financial future.
Right, right, 20 minutes a day,five days a week.
Chris (28:23):
Yep, and there's plenty of places to go.
There's all sorts of.
There's podcasts, there'spodcasts like this, there's
websites.
There's books to read.
I think we threw a couple ofbooks out last week.
The Wealthy Barber was one thatmy dad gave me.
Yeah, fabulous book, reallyreally great book, things like
that.
So, yeah, there's a lot ofresources out there for you.
Dennis (aka Bobby Downspou (28:43):
Just spend 20 minutes a day on it.
And again, if you need to beginat square one, it's the
creation and management of yourhousehold budget, and all that
takes is a friend, a mom, a dad,a family friend someone to help
you create a budget that'sdesigned around your income and
your needs.
And what this will do is it'llgive you the platform to create
(29:07):
discretionary or disposableincome.
If you're a person who livespaycheck to paycheck, you may
believe that that paycheck isdesigned to cover all your
expenses every month, but if youfind living paycheck to
paycheck is very uncomfortablewhich it probably is ask a
friend.
You don't need a to help you dothis.
(29:33):
A family member, a familyfriend, can help you create and
manage a household budget, andthis will allow you the platform
to create discretionary income,which brings me to the next
step establishing the financialwaterfall process so you can
begin investing yourdiscretionary income, and that's
(29:56):
what we just talked about youand a friend.
After you create and manageyour household budget, you've
now created a discretionaryamount of income that will start
building up your checkingaccount Within three to five
months.
There's going to be some extramoney there that you're going to
need to invest in a savingsaccount.
(30:16):
It's not that you're earning alot of money in a savings
account.
It's not that you're earning alot of money in a savings or a
money market account.
But savings and money marketaccounts are not designed for
their investment potential.
They're designed as a financialtool and as you start to grow
into that, it's going to take ayear or two before that
financial waterfall reallystarts to function.
And step three of that processyeah, this is when you're going
(30:39):
to need to contact or get incontact with, a certified
financial planner.
He's going to help you open upthat window to Wall Street and,
as Chris and I said earlier, heor she is available at almost
every banking institution acrossthis country.
They have a CFP in-house.
(31:01):
And there's your starting pointto get from your checking and
savings account to Wall Street.
And again, this is all just 20minutes a day, five days a week.
You're not going to be managingyour household budget 20
minutes a day for the next 10years.
Once that becomes a part ofyour normal routine, you don't
(31:21):
have to spend time on thatanymore.
It's all built in place and youcan move on to building your
financial portfolio.
And step four is expanding yourfinancial platform.
That's where you might need anaccountant to help you, maybe an
attorney, and pretty soon youwant to diversify.
That's when you need the fullinner circle your attorney, your
(31:45):
financial planner, your bank oryour accountant, your business
associates.
That's why you want to be on afirst-name basis with everybody
in your inner circle.
Because step five isdiversification.
You need some mutual funds,index funds.
Maybe you want some real estatein there.
Maybe you're going to want toinvest in a business, a business
(32:05):
that a friend has, or maybe youwant to get investing in stocks
individual stocks.
I have friends that do that.
It takes a while to learn thatskill but as that 20-minute rule
kicks into place for you,financially you're going to grow
from working with a friend toworking with a financial planner
, to adding an accountant, anattorney, a banker.
(32:28):
You will grow into it and,believe me, it's fun, it's
interesting and it's well worththe effort.
Having a high level offinancial literacy is like your
brain is on financial steroids.
I started buying real estate asa young guy.
I was very, very young at thetime.
By the time I was 23, 24 yearsold.
(32:49):
I never felt inadequate in aroom with lawyers and bankers.
I mean I was a little gun shythe first one or two properties
I closed on, but by the time Isold those two and added one or
two more and flipped another one.
It didn't intimidate me at all,I wasn't scared, I was very
(33:12):
confident and as I grew I almostfelt like I was an equal to
everybody in this room thelawyer, the bank or everybody.
I didn't feel like anybody hadthe upper hand on me and that's
because I had financial skillsthat were equal to everybody in
that room.
Chris (33:28):
Yeah, you built up your financial muscle.
It's kind of interestingbecause you are a runner, right,
I still am to this day, yeah,and you're actually a really
good runner.
Dennis (aka Bobby Downspo (33:38):
Thank you.
Chris (33:39):
So what's interesting because you've talked about this
, I've heard you talk about thisbefore and that you were
running with some really bigname runners in college and as
you built up your running, youbecame more comfortable running
with these guys.
Yeah, that you could hang withthem.
You always talk about how youfound that you could hang with
these guys.
Yeah, that you could hang withthem.
You always talk about how youfound that you could hang with
(34:01):
these guys, and it's sort of thesame thing in finance that your
ability to start off.
You might feel like you can'thang with these bankers and
stuff like that, but after awhile you've built up your
financial muscle, Sure.
Dennis (aka Bobby Downs (34:11):
Because if you've owned eight or 10
properties and maybe you've hadone or two that fall through,
the amount of experience thatyou gain is immeasurable.
And by the time I was 28, 27,28,.
I really felt like sometimes Iwas the smartest guy in the room
(34:33):
.
I'm not so much the smartestguy at everything, but let's
face it, if we're here for aclosing on this house, this is
my world.
I want that house or I'mselling that property.
So I had a little bit of anedge over everybody else in the
room and I wanted it more thanhe or she or they did.
Yeah, having a strong financialplatform, having great
(34:56):
financial literacy, it's a realempowering thing.
It really is.
And to wrap up, chris, thepersonal, the inner circle this
is my world.
My attorney I have twoattorneys.
I'm on a personal basis.
I mean, each one of myattorneys has had dinner at my
(35:17):
house.
My financial planner, tim he'sa great guy, I know him really
well.
My banker I'm on a really goodfirst name basis with not only
the tellers but the bank, thelocal manager and then the loan
officers.
My accountant is a formercollege teammate of ours.
You want to have this circlearound you before you need them.
(35:38):
You don't want to scratch alottery ticket and win a million
dollars and not have afinancial planner or an
accountant in your backyard.
You know, because things canhappen.
And remember you and me, chris,we're average people.
I'm an average guy.
You know what I'm an averageguy.
You know what I'm an averageguy.
I'm an average of the fivepeople that I relate to closest.
(36:02):
That's my average.
Everybody in this world is anaverage.
Of the five people that yourelate to the most, who are your
five?
Are they the guys that are inyour fantasy football league?
Are they Facebook friends?
Are they cyber pals?
Are your closest five?
(36:23):
Your business associates, yourinner circle, your local network
of business owners?
Set yourself up.
I always want to be the dumbestguy in my group.
If I'm the dumbest guy in mygroup, they're pulling me up,
they're raising my level everytime we get together.
And when you do this, when youstart this at a young age, it
creates opportunities down theroad.
(36:43):
The platform for opportunitiesbegins early in life by creating
a financial process that willmature as we do sure, as we do
and as you.
If you start this in your teensand twenties, you know, by the
time you're in your thirties,you've got some financial clout
behind you it it.
It allows you to take advantageof opportunities that other
(37:05):
people don't see.
It allows you to seeopportunities that other people
don't see.
A mature financial platformwill create opportunities
throughout your life that younow have the opportunity to take
advantage of and other peopledon't.
How often do we?
This happens to me real often,chris.
A lot of people who want tostart a business call me.
(37:27):
They know me or they knowsomeone who knows me, and I
would say nine out of 10, thefirst time we sit down and we
have a meeting and I'm talkingpeople anywhere from 18 to 50,
they just don't have thefinances to start that business.
They have a great idea, they'reout ahead of it.
Maybe they're in the foodservice industry and all they
(37:49):
need is $50,000 to buy a foodtruck and really take off with
this great idea that they have,but they don't have the 50 grand
.
Chris (37:57):
Yeah, we see this in American Gutter Monkeys.
When we're looking atfranchisees, a lot of them are
great people, a lot ofmotivation, they're almost the
perfect person, but the financesare just not going to allow
them to proceed and it's reallytoo bad, because they wouldn't
make great franchisees.
Dennis (aka Bobby Downspou (38:12):
Yeah , I mean, how many times do you
see a good real estate deal comeout there and you're able to
jump on it Right?
How many times does a goodopportunity come along and
someone sees that they justdon't have the financial backing
to get onto that?
But you know, if that personhad even just a small amount of
money and he had a goodrelationship with his banker and
(38:36):
with his accountant and hisfinancial planner, they have
ideas, they can get you throughthis.
But if you're not on that firstname basis with those guys,
you're kind of out there on yourown.
There's nothing like anoutstanding team around you all
times.
It can help you in so many ways.
So I'm going to kind of closewith this Two things Be
(38:59):
financially prepared.
Some people go to where thepuck is.
We want to go to where the puckis going to be when we get
there.
And the other thing I just sortof want to wrap up with is
remember the 80-20 rule has verylittle to do with annual income
.
Very little to do with annualincome.
Very little to do with annualincome, but everything to do
with process and execution.
(39:21):
And on that let's wrap it up.
No monkeys were harmed in themaking of this podcast, all
right.
Chris (39:27):
See you next time.
Thank you for tuning in toMonkey Business Radio.
If you enjoyed today's episode,please make sure to subscribe,
like and follow us wherever youget your podcasts.
It really helps us reach moreaspiring entrepreneurs like you,
and if you got a question ortopic you'd like us to cover,
leave a comment or reach out tous on social media.
(39:49):
We'd love to hear your thoughtsand keep the conversation going
.
Don't forget to leave us afive-star review if you found
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We'll see you next time.
This podcast is produced byAmerican Gutter Monkeys LLC.
Build real wealth throughbusiness ownership.
For details, visit us atAmericanGutterMonkeyscom.
Before we dive in, we want to remind you that this
podcast is for informationalpurposes only.
We're here to share insightsand ideas to help you think
about your financial future, butthis is not investment advice.
Always consult with a financialprofessional before making any
decisions regarding your money.
Every once in a while, someonecomes along and shocks the
(00:22):
establishment with a newinnovation in a tired industry.
From the movie Moneyball.
Here's how Boston Red Sox ownerJohn Henry put it.
Dennis (aka Bobby Downsp (00:29):
Really what it's threatening is their
livelihoods, their jobs.
It's threatening the way theydo things and every time that
happens whether it's thegovernment, a way of doing
business, or whatever the peoplewho are holding the reins they
have their hands on the switch.
They go batshit crazy.
Hello.
Chris (00:45):
I'm Chris Collins, your host.
In this podcast.
We dive into stories ofinnovation, resilience and what
it takes to shake up an industry.
Joining me is my co-host andresident small business expert,
dennis Siggins, or, as he'sknown on the Cape and Islands,
bobby Downspout.
Dennis, along with his collegeroommate, andy Brennan, founded
the Cape Cod Gutter Monkeys andtransformed the humble task of
(01:05):
gutter cleaning into a thriving,multi-million dollar business
that redefined the game.
Together, we'll uncover thestrategies, lessons and
inspirations behind building andgrowing a successful business.
So, whether you're here forbusiness insights, inspiration
or just a great story, you're inthe right place.
Grab a cup of coffee, sit back,relax and welcome to Monkey
(01:27):
Business Radio.
Hello everyone, welcome back toMonkey Business Radio and we're
on part two of financialliteracy.
Last week we covered financialliteracy 101.
And we're going to kind ofdouble back a little bit, review
(01:47):
some of the stuff we did lastweek.
As always, I'm here with DennisSiggins, cape Cod Gutter
Monkeys.
How are you doing, chris?
Doing well, doing well, dennis.
We're going to do a littlereview, I guess, of last week
just to fill in those whohaven't seen the podcast.
If you haven't, you can doubleback later.
Dennis (aka Bobby Downspou (02:02):
Last week we started with this great
recession that occurred in the70s.
Gas prices tripled over 10years.
Hyperinflation.
Americans were held hostage inIran.
We impeached a president.
It was a tough decade but, asyou pointed out to me earlier
this week, Chris, no matter howbad the economy gets, there's
(02:24):
opportunities there, and one ofthe opportunities that existed
that my parents were aware ofwas that CDs were outperforming
the stock and mutual fund marketby a large margin.
The stock market was onlyproducing well under 10% for
(02:44):
that decade.
It was averaging around 5% to5.5% per year, while CDs were
producing anywhere from 12% to18%.
Great opportunity because CDsare available to everybody right
at their own bank.
My mom and dad had all of uskids I'm one of six kids we were
putting our newspaper money,our lawn cutting money, our snow
(03:06):
shoveling driveway money.
We were loading up on CDs allthrough the 70s Just one of the
many opportunities that wereavailable.
I recall many of my neighbors,my friend's parents, starting
small businesses back then,working their full-time jobs
Monday to Friday, but startingsmall businesses on nights and
(03:29):
weekends.
My parents, who were notwealthy at all, began buying and
flipping houses in the 70s inNew England Wonderful
opportunities that occurredduring one of the most
economically devastating decadesin the last hundred years.
Chris (03:51):
Financial literacy here really adds to your ability to
seize opportunities that youwouldn't otherwise see.
Most people can throw theirhands up in the air and say,
well, nothing I can do aboutthis.
This is the worst.
Other people see opportunitythere, but it takes this
knowledge, it takes thisfinancial literacy.
Dennis (aka Bobby Downspout (04:06):
And we were blessed to have good
parents.
Chris (04:08):
Our parents were from the Depression era.
Dennis (aka Bobby Downspou (04:10):
Yeah , they were, they'd seen worse.
Chris (04:14):
They had that ability to kind of take stock of the
situation and see opportunitywhere other people would miss.
Dennis (aka Bobby Downspout) (04:20):
So , getting back to the four rules
of financial literacy, the ruleof 72.
We talked about it last week.
We're just going to do a quickreview.
The rule of 72, basically, isthe mathematical formula that
says, if you take the number 72and divide it by the
(04:40):
investment's projected annualreturn, the result is the number
of years it will take for yourmoney to double.
For example, if you expect an8% return on your money, 8
divided into 72 is 9.
It's going to take nine yearsfor your money to double.
Over the entire history of thestock market history of the
(05:07):
stock market as we know it today, the last 120 years the stock
market has never produced lessthan 10.2%.
Over any 25-year period in itshistory, the stock market is
most likely to average at least11% per year.
Over the past 10 years, it'saveraged 13.9%.
Over the last 30 years, it'saveraged 10.7%.
(05:29):
Over the last 50 years, thestock market has averaged 10.9%.
This is not a guarantee.
We're not telling you that goout and invest any amount.
We're just letting you knowthat this is part of the
financial literacy platform thatwe all want to be a part of.
We want to have knowledge ofwhat is going on in the stock
(05:51):
market, in the banking industry,in your local and regional
economic environment.
And this is a part of thepuzzle and as long as we can
invest our money comfortablyover a 25-year period and gain
11% interest per year, ourmoney's going to double every
six and a half to seven years.
(06:12):
It's not rocket science, it'snot magic, it's just old school
investing.
But at the same time, the ruleof 72 can work against you.
Let's say, for example, youcarry a balance on your credit
card and that the interest rateyou pay on your credit card is
18%.
So if you divide 18 into 72,you get four years.
(06:33):
That means the credit cardcompany is doubling their money
every four years at your expense.
So you can be on either side ofthat fence and you can choose
which side of the fence thatyou're on as we move forward.
The Rule of 64 is somewhat of anextension of the Rule of 72.
The Rule of 64 is kind of myown invention or my own
(06:54):
interpretation of the Rule of 72.
Basically, the Rule of 64 goeslike this it's a general
guideline that everything you doin your 20s will be magnified
64 times over in your retirementyears, and that's because it's
about a 42-year difference from20 to potential retirement at 62
(07:17):
.
It means that your money, ifyour platform or your portfolio,
doubles every seven years, it'sgoing to flip six times.
So money that's invested at theage of 18 will, every seven
years, double to 20, then 40,then 80, then 160, 320.
(07:38):
And at 60 years old, that$10,000 investment at age 18, 60
years old, that $10,000investment at age 18, if it
doubles every seven years, willbe $640,000.
A $10,000 investment at age 18has a high likelihood of growing
(07:59):
to $640,000.
Chris (08:00):
That's 64 times over.
There's my rule of 64.
And it's important to take thisto heart, because what happens
is, in these tough times we havethese big crashes, your impulse
is to pull your money out ofthe markets to do something
different, and so that's kind ofthe financial danger.
I think it was John Bogle.
This guy who created Vanguardsaid you know, time is your
friend, impulse is your enemy.
Dennis (aka Bobby Downspout) (08:27):
So to not worry about the 1970
crash or that crash that's goingto come around the corner.
You know to kind of ride theseout and don't change your
investment philosophies.
But also, chris, as we all know, at this stage of our lives we
change our short, medium, longrange goals.
If you're in your 20s, remember.
We're not day traders here.
We're just investing for longterm wealth building reasons.
We're just investing forlong-term wealth building
reasons.
As we approach our retirementyears, we start to move some of
(08:50):
our index funds and mutual fundsinto much more conservative
funds that maybe don't have thesame upside potential but have a
lot of downside protection incase of a crash.
But I agree with what you say.
Don't panic.
You and I we've been throughthe 08 crash.
There was one in 01.
(09:11):
Remember we had Y2K, followedby 911.
Challenger disaster.
One after the next, they'reconstant, they're ongoing.
Albert Einstein very famouslyquoted the most powerful force
in the universe is compoundinterest over time, and there's
a lot to be said for that.
(09:31):
But getting back to sort ofwrapping up on the rule of 64,
basically everything we do inour 20s is magnified 64 times
over in our retirement years.
So every $10,000 or every $10you get into the bank in your
20s is going to be magnified 64times over.
But there's another side tothat fence.
(09:54):
The rule of 64 can also workagainst you.
A single $10 pack of cigarettesin your 20s is $640 that you
don't have in your retirementyears.
A $10 per day cigarette habitequals $70 a week or $3,650 a
year.
Over 42 years this becomes morethan $2.7 million that will not
(10:18):
be available in your retirementyears.
This is knowledge that we shouldall have so we can make
educated decisions in our teensand 20s, because those decisions
are going to dictate a lot ofwhere we land financially down
the road.
And it's a simple matter ofeconomics and the rule of 72.
(10:38):
So being financially preparedis just knowing this stuff.
Be aware of these two rules therule of 72 and the rule of 64,
and how it applies to you.
Some people go to where thepuck is.
I want to go to where the puckis going to be when I get there.
Keep your eye on the future andmake good decisions in your
younger years.
Chris (10:59):
All right, sounds good.
So that's kind of a review oflast week.
I think we're going tointroduce a couple of new
concepts here.
I think the first one youwanted to kick off with is 80-20
rule.
Dennis (aka Bobby Downspout (11:10):
The 80-20 rule.
This is the Pareto principle.
Again, getting back to our oldfriend Albert Einstein, he's
also quoted as saying he whounderstands compound interest
earns it.
He who doesn't pays it.
And remember the 80-20 rule.
The rule we're about to talkabout has very little to do with
annual income and everything todo with process and execution,
(11:35):
the 80-20 rule, which is alsoknown as the Pareto principle.
It applies to wealth andbusiness and finance and it
basically claims that 80% of thestuff is owned by 20% of the
people.
Dr Joseph Duran.
He's an American engineer, abusiness consultant, who's
widely recognized for his workin creating the Pareto Principle
(11:55):
, the 80-20 rule.
80% of the problems are causedby 20% of the people, 80% of the
land is owned by 20% of thepeople and he applied his rule
of economics to money, tobusiness, to sports, health and
many, many other areas.
Chris (12:10):
Very interesting guy.
He was actually instrumental inintroducing quality management
practices to Japan after WorldWar II.
No kidding, yeah, yeah, he waspart of that TQM sort of wave
that came through.
When I worked for big airplanemanufacturers in California, tqm
was the rule of the day.
But yeah, wow, interesting guy,very interesting.
(12:31):
And the 80-20 rule came PhilFred Pareto.
Yeah, yeah, he was a European.
Yep, he came to the conclusion80% of the land in Italy was
owned by 20% of the people.
Yeah, that's where it comesfrom.
Dennis (aka Bobby Downspout (12:43):
And a 2016 study featured on
Statistacom showed that thewealthiest 20% of Americans own
88% of American wealth.
Incredible, let me say thatagain the wealthiest 20% of
Americans own 88.3% of Americanwealth 88.3% of American wealth,
(13:11):
while the remaining 80% ofAmericans own just 11.7% of the
wealth.
And one really shockingstatistic shocking to me that
this study also revealed thebottom 50% of Americans own just
1.2% of the wealth.
Chris (13:23):
It's incredible.
Dennis (aka Bobby Downspout (13:24):
And the bottom 30% of Americans
have a combined net worth ofnegative 1.3.
And again, I'm going to saythis a lot today the 80-20 rule
has little to do with annualincome and everything to do with
process and execution.
The choices we make in ourteens and 20s will have a very
strong influence in determiningwhich of these categories we
(13:48):
belong to the wealthiest 20% orthe remaining 80% or the bottom
50%.
I mean, it's all aboutdecisions that we make and
remember for today's discussions.
We're talking about thewealthiest 20%.
That's just one in five people.
We're not talking about MarkCuban, we're not talking about
(14:10):
billionaires, elon Musk.
No, we're talking about thewealthiest 20% one in five
people.
Chris (14:16):
Yeah, the guy sitting next to you on the freeway in
the car next to you.
Yeah, we're talking about theguyiest 20%.
One in five people.
Yeah, the guy sitting next toyou on the freeway in the car
next to you.
Dennis (aka Bobby Downspou (14:18):
Yeah , we're talking about the guy in
the Dunkin' Donuts having acoffee and a donut.
This is the wealthiest 20% thatwe're talking about today.
Do remember that wealth.
We're talking about the top 20%.
And when we say poor, we're nottalking about people who earn
less money.
We're talking about poor beingthe people who don't have a
(14:41):
financial process in place, sotheir money tends to not stay
with them.
They tend to go through theirmoney quicker.
Chris (14:45):
By following these principles and being financially
literate, you can choose whichcategory you can be in.
Now there's always outsidethings that can happen to you in
your life and things like that.
We're not ignoring those, butwhat we're saying is it's a
choice, a choice because of yourfinancial literacy.
What are the things you'regoing to do to try to achieve
being in that upper 50%?
Dennis (aka Bobby Downspo (15:05):
Chris , I want to talk about income,
many different types of income.
Earned income Earned income ismoney received as pay for the
work we perform, such as wages,salaries, bonuses, commissions
income.
It's the hardest to come bybecause we got to go out there
every day and earn it and whenyou do, it's taxed at the
(15:27):
highest rate of all the incomesand that's a variable within
itself.
Within that earned income,we're going to talk about
disposable or discretionaryincome.
Discretionary income is theamount of money left over after
all your household necessitiesare paid.
Chris (15:47):
Which makes necessities is the important.
How do you define that?
So yes, so how do you definenecessities?
Dennis (aka Bobby Downspo (15:53):
Needs versus wants, when it comes
down to One of the things myparents taught me as a young guy
, as a young kid, 10, 11, 12years old was we had two bank
accounts.
All of us kids I'm one of sixkids we all cut lawns and we all
shoveled driveways and we alldid yard cleanups and painting
of fences and just odd jobs.
(16:16):
And then we all had regularjobs too.
I had a job at a local farmwhen I was 11, 12, 13 years old.
I had a job at a restaurant.
I mean, we're always workingand our parents taught us we
have two bank accounts.
It's the small bank and the bigbank and half the money goes to
the big bank, half the money tothe small bank account and the
small bank.
(16:36):
We could use that for anythingwe wanted and the big bank was
for college and by 1973, 74, atthe latest now it is earlier
than that 72, 73, cds wereoutperforming Wall Street.
So our big bank account gotpushed into CDs every year
(16:57):
around Christmas time and my momset it up on one year CDs or
one year terms that came duelike around the December 28th.
So we would work all year longand build up that small bank
account and maybe back thenmaybe I made $3,500 that year,
(17:18):
maybe back then, maybe I made$3,500 that year Christmas week
I'd get out of the bank and wewould pull out $3,000, maybe
keep $500 in the bank and push$3,000 into the next CD, into
the next year, and we'd lock itdown at 12% 14%.
Eventually CDs reached 18% bylike 1980.
It was crazy, but it was thebeginning of what I call the
financial waterfall and this hassustained me for my whole life.
(17:42):
So the financial waterfall lookslike this we all get a paycheck
most of us and you receive yourweekly paycheck, either maybe
by direct deposit, or youdeposit the weekly paycheck into
your checking account and youkeep a certain amount.
I like to keep three months ofearnings in my checking account
(18:02):
at all times, or you can go withthree months of expenses,
whatever your waterfall is.
When the checking account growsbeyond that three months, then
you make a deposit into yoursavings account months, then you
make a deposit into yoursavings account and I recommend
every three months, everyquarterly, you visit this, and
(18:27):
so in a perfect world, you havethree months of earnings in your
checking account and threemonths of earnings in your
savings account.
The checking account managesyour household funds and the
savings account is your safetynet funds and the savings
account is your safety net.
Additionally, you have aretirement.
Maybe you have an IRA, a SEP, a401k, whatever form of
retirement you have.
When that savings account growsto be more than three months so
(18:50):
maybe every, let's say, everysix months you visit your
financial planner and you havean extra one or two or $3,000 in
there, above and beyond thethree months that you require
you deposit that additionalmoney into some form of passive
income, let's call it into yourIRA.
And that's how the waterfallworks.
(19:11):
Your checking account is usedfor your household expenses and
you keep enough in there for anemergency, maybe if your washing
machine breaks or your car hasa breakdown.
So you have enough money in thechecking account that you can
accommodate an emergency and thesavings account becomes the
safety net in case somethingterrible happens and you need
(19:33):
that extra layer of protection.
And then everything else justwaterfalls down into your
retirement account or yourinvestment portfolio.
Chris (19:42):
Yeah, and the interesting thing to point out here too, is
where wants ends up on thislist, right?
So you have your essentials,your savings and your debt, then
your investments, then yourwants.
At the end of that then youhave maybe some surplus Again
you can put towards a savingsaccount or something along that
line.
Dennis (aka Bobby Downspou (19:58):
Sure , and that's where the
discipline comes in.
What is necessary If you areparents of 2.4 children and
you're going back to schoolshopping, it's up to you, the
parent, to budget that.
We are going to budget X amountfor back-to-school shopping.
Now, is that $200 per child?
(20:28):
I don't know.
Is it $300 per child?
I don't know.
But whatever that dollar amountis, stick to it.
Choose a manageable dollaramount for, let's say, in this
case, back-to-school shopping,and you stick to that amount.
That will help keep you onbudget.
Another thing, too, about, let'ssay, 401ks and such.
Chris, a lot of companies havea matching 401k up to, let's say
(20:50):
, 3%, 6%, 9%.
Some companies are moregenerous in that area than
others.
If you work for a company thatoffers a matching 401k, I
strongly recommend you take 100%advantage of this.
Yes, it's free money.
It's free money, yeah.
So let's say you earn $50,000 ayear and they have a 6%
(21:15):
matching.
Well, 6% of $50,000 is $3,000.
If you invest $3,000 of yourpay, the company matching
program will kick in anotherthree grand.
It means your investment justdoubled in one day.
It's guaranteed to double.
There's nothing else out therelike it.
So I strongly recommend taking100% advantage of everything
(21:38):
that your company has, that islike that.
Chris (21:41):
There's other things too.
Health savings account Greatthing to get into, especially
with kids Comes off your incomebefore it gets to taxes, so
you're not paying taxes on thatamount.
There's a lot of other things.
Maximize all your deductionstoo.
Just look at your W-4 form.
People make big mistakes on W-4forms.
They pay way too much tax, waytoo early.
Government holds onto it.
You might get it back, but youmight not if you don't fill out
(22:04):
your taxes correctly either.
So check your W-4 as well.
Dennis (aka Bobby Downspout (22:08):
And just continuing on good
financial habits, Chris creditcards Don't let them run over
into the next month.
Pay that credit card off everymonth.
Don't use your credit card asyour safety net.
The credit card is a financialtool.
Use it as such, Take advantagesof the.
Chris (22:26):
You do that, then you take advantages of the points.
I mean again I fly on SouthwestAirlines because we use a card
Southwest Airline card we payeverything on that card and we
get free flights.
Dennis (aka Bobby Downspou (22:37):
Yeah , use your credit cards properly
.
Don't ever carry a balance.
This is one of my favoritefavorite financial tools
Physically, walk into your bankonce a week, once every two
weeks, whatever is necessary.
We've become accustomed toe-banking.
Everything's just directdeposited, automatic withdrawal.
I got to tell you I still walkinto my bank once a week and
(22:59):
every once in a while I'll runinto a unique situation and you
know what.
They all know me personally andwe can circumvent, we can
navigate any situation overthere because they know who I am
.
Yeah, Walk into your bank oncea week.
Chris (23:13):
Yeah, they also have very good financial help there too.
Dennis (aka Bobby Downspou (23:15):
Yeah , they do Questions or whatever
about what you should be doing.
Chris (23:17):
You can go in there and review your finances with them.
They usually have a CFP inthere that can help you out.
Dennis (aka Bobby Downspout (23:23):
CFP is a certified financial
planner.
Chris (23:25):
Yep, they usually have a guy in there that can help you
out.
Very low cost, if any cost.
Dennis (aka Bobby Downspou (23:29):
I've always, always used the
financial planner from my bank.
That's interesting, it's thatsimple.
Chris (23:38):
I never thought of it really until we were preparing
for this podcast, but startedreading up a little bit about it
.
Dennis (aka Bobby Downspou (23:44):
It's a staple of my life, absolutely
.
I went in there the other day.
We had some things we had to doand Tim and I are on a first
name basis.
Again, walk into your bank.
Get to know those people.
Opportunities will presentthemselves to you simply by
knowing these kind of people.
Don't complicate your investing.
(24:04):
Keep it simple.
Don't get overly fancy on yourtechnology.
Use one financial planner.
You don't need three or four,remember.
Unless you're a real, true stockinvestor, a day trader, anybody
like that, which 99.9% of usare not then you're all
investing in the same stuff.
(24:25):
We're all investing in thestock market, the Dow, the
NASDAQ, the S&P, and we're allinvesting in American funds.
It's just which ones do youinvest in and how do you
approach it?
It's just which ones do youinvest in and how do you
approach it.
Find a good financial plannerthat shares your strategy and
your philosophy.
Don't complicate it.
I check my progress.
(24:46):
I check my platform quarterly.
I don't visit it monthly,weekly, daily.
Absolutely do not.
I just check it quarterly.
We make minor adjustments asneeded and that's it.
Focus on your strength.
Play in your own sandbox.
My strength is my company.
(25:06):
That's where I can have themost influence, not just on my
company and my coworkers, butalso on my financial platform.
A lot of my personal wealth, ifyou will, is wrapped up in the
companies that I own and that'swhere I spend the most amount of
time, because I am an expert atthat.
I'm not an expert on WallStreet, absolutely not an expert
(25:30):
on Wall Street.
I'm not an expert investor.
That's why I use mutual fundsand index funds real, simple,
basic, conservative processes.
And again, chris, what aboutpanic?
Chris (25:47):
right.
I know personally that I am tooemotional about money, too
emotional about vesting, so I'mbetter off not being so daily
involved in my financial statusat the moment.
So for me I do about twice ayear Maybe I'll go to a
(26:09):
financial guy and we'll reviewmy accounts, and I'm much better
off doing that because I know Ishould not be in there kind of
monkeying around Because whenthe shows hit the fan which it
has quite a bit in our lifetimeit is yeah, yeah, I'm just too
emotional about it.
So yeah, for me these rules arevery important and I wish I
knew a lot of them, actuallyyears and years before.
It would have been a big helpin some of those panics.
Dennis (aka Bobby Downspou (26:32):
Well , and that's the beauty of
learning things when you'reyoung.
Nobody learns skateboarding atthe age of 50, right?
No, kids learn to skateboardwhen they're five, before
they're they.
They learn to do it beforethey're afraid of getting hurt,
right.
Chris (26:50):
Yeah, it's coming back to that.
It's keep.
The earlier you learn thesethings oh my gosh, so much
support.
But on the other hand also wealways have to make the point
you're never too late, never toolate.
So if you don't know theserules and you're older, you've
got a couple of kids, whateveris going on in your life, it's
never too late to startimplementing these.
You don't have as much runway,but at the same time, you'll be
far better off than not.
Dennis (aka Bobby Downspout (27:12):
And your kids and grandkids will
too.
Chris (27:13):
Yeah, yeah.
Dennis (aka Bobby Downsp (27:14):
That's right, and they'll pick it up.
My final rule one of myfavorite rules of life is the 20
minute rule.
This is the belief thatdedicating 20 minutes each day
to a task will eventually resultin your becoming proficient at
that task.
Imagine if you could dedicate20 minutes a day to playing the
guitar.
You play a guitar, right?
I do play the guitar.
I wish I had 20 minutes everyday, but I should, I should, and
(27:35):
, and I play the guitar you playa guitar.
Chris (27:36):
right, I do play the guitar.
I wish I had 20 minutes everyday, but I should, I should.
Dennis (aka Bobby Downspout (27:40):
And I play the guitar too, and I
haven't much recently.
But to me it started 20 minutesa day.
That's how I learned 20 minutesa day, shooting, pool
exercising.
Eventually, if you exerciseyour 20 minute, maybe two mile,
two and a half mile run willturn into a 25 and a 30 mile run
.
You get the idea.
You start playing your musicalinstrument 20 minutes a day and
(28:04):
maybe down the road.
You can't play it 20 minutesevery day, but you jam for two
hours on Saturday.
You grow into it and imaginenow what you could accomplish if
you simply dedicated 20 minutesa day to your financial future.
Right, right, 20 minutes a day,five days a week.
Chris (28:23):
Yep, and there's plenty of places to go.
There's all sorts of.
There's podcasts, there'spodcasts like this, there's
websites.
There's books to read.
I think we threw a couple ofbooks out last week.
The Wealthy Barber was one thatmy dad gave me.
Yeah, fabulous book, reallyreally great book, things like
that.
So, yeah, there's a lot ofresources out there for you.
Dennis (aka Bobby Downspou (28:43):
Just spend 20 minutes a day on it.
And again, if you need to beginat square one, it's the
creation and management of yourhousehold budget, and all that
takes is a friend, a mom, a dad,a family friend someone to help
you create a budget that'sdesigned around your income and
your needs.
And what this will do is it'llgive you the platform to create
(29:07):
discretionary or disposableincome.
If you're a person who livespaycheck to paycheck, you may
believe that that paycheck isdesigned to cover all your
expenses every month, but if youfind living paycheck to
paycheck is very uncomfortablewhich it probably is ask a
friend.
You don't need a to help you dothis.
(29:33):
A family member, a familyfriend, can help you create and
manage a household budget, andthis will allow you the platform
to create discretionary income,which brings me to the next
step establishing the financialwaterfall process so you can
begin investing yourdiscretionary income, and that's
(29:56):
what we just talked about youand a friend.
After you create and manageyour household budget, you've
now created a discretionaryamount of income that will start
building up your checkingaccount Within three to five
months.
There's going to be some extramoney there that you're going to
need to invest in a savingsaccount.
(30:16):
It's not that you're earning alot of money in a savings
account.
It's not that you're earning alot of money in a savings or a
money market account.
But savings and money marketaccounts are not designed for
their investment potential.
They're designed as a financialtool and as you start to grow
into that, it's going to take ayear or two before that
financial waterfall reallystarts to function.
And step three of that processyeah, this is when you're going
(30:39):
to need to contact or get incontact with, a certified
financial planner.
He's going to help you open upthat window to Wall Street and,
as Chris and I said earlier, heor she is available at almost
every banking institution acrossthis country.
They have a CFP in-house.
(31:01):
And there's your starting pointto get from your checking and
savings account to Wall Street.
And again, this is all just 20minutes a day, five days a week.
You're not going to be managingyour household budget 20
minutes a day for the next 10years.
Once that becomes a part ofyour normal routine, you don't
(31:21):
have to spend time on thatanymore.
It's all built in place and youcan move on to building your
financial portfolio.
And step four is expanding yourfinancial platform.
That's where you might need anaccountant to help you, maybe an
attorney, and pretty soon youwant to diversify.
That's when you need the fullinner circle your attorney, your
(31:45):
financial planner, your bank oryour accountant, your business
associates.
That's why you want to be on afirst-name basis with everybody
in your inner circle.
Because step five isdiversification.
You need some mutual funds,index funds.
Maybe you want some real estatein there.
Maybe you're going to want toinvest in a business, a business
(32:05):
that a friend has, or maybe youwant to get investing in stocks
individual stocks.
I have friends that do that.
It takes a while to learn thatskill but as that 20-minute rule
kicks into place for you,financially you're going to grow
from working with a friend toworking with a financial planner
, to adding an accountant, anattorney, a banker.
(32:28):
You will grow into it and,believe me, it's fun, it's
interesting and it's well worththe effort.
Having a high level offinancial literacy is like your
brain is on financial steroids.
I started buying real estate asa young guy.
I was very, very young at thetime.
By the time I was 23, 24 yearsold.
(32:49):
I never felt inadequate in aroom with lawyers and bankers.
I mean I was a little gun shythe first one or two properties
I closed on, but by the time Isold those two and added one or
two more and flipped another one.
It didn't intimidate me at all,I wasn't scared, I was very
(33:12):
confident and as I grew I almostfelt like I was an equal to
everybody in this room thelawyer, the bank or everybody.
I didn't feel like anybody hadthe upper hand on me and that's
because I had financial skillsthat were equal to everybody in
that room.
Chris (33:28):
Yeah, you built up your financial muscle.
It's kind of interestingbecause you are a runner, right,
I still am to this day, yeah,and you're actually a really
good runner.
Dennis (aka Bobby Downspo (33:38):
Thank you.
Chris (33:39):
So what's interesting because you've talked about this
, I've heard you talk about thisbefore and that you were
running with some really bigname runners in college and as
you built up your running, youbecame more comfortable running
with these guys.
Yeah, that you could hang withthem.
You always talk about how youfound that you could hang with
these guys.
Yeah, that you could hang withthem.
You always talk about how youfound that you could hang with
(34:01):
these guys, and it's sort of thesame thing in finance that your
ability to start off.
You might feel like you can'thang with these bankers and
stuff like that, but after awhile you've built up your
financial muscle, Sure.
Dennis (aka Bobby Downs (34:11):
Because if you've owned eight or 10
properties and maybe you've hadone or two that fall through,
the amount of experience thatyou gain is immeasurable.
And by the time I was 28, 27,28,.
I really felt like sometimes Iwas the smartest guy in the room
(34:33):
.
I'm not so much the smartestguy at everything, but let's
face it, if we're here for aclosing on this house, this is
my world.
I want that house or I'mselling that property.
So I had a little bit of anedge over everybody else in the
room and I wanted it more thanhe or she or they did.
Yeah, having a strong financialplatform, having great
(34:56):
financial literacy, it's a realempowering thing.
It really is.
And to wrap up, chris, thepersonal, the inner circle this
is my world.
My attorney I have twoattorneys.
I'm on a personal basis.
I mean, each one of myattorneys has had dinner at my
(35:17):
house.
My financial planner, tim he'sa great guy, I know him really
well.
My banker I'm on a really goodfirst name basis with not only
the tellers but the bank, thelocal manager and then the loan
officers.
My accountant is a formercollege teammate of ours.
You want to have this circlearound you before you need them.
(35:38):
You don't want to scratch alottery ticket and win a million
dollars and not have afinancial planner or an
accountant in your backyard.
You know, because things canhappen.
And remember you and me, chris,we're average people.
I'm an average guy.
You know what I'm an averageguy.
You know what I'm an averageguy.
I'm an average of the fivepeople that I relate to closest.
(36:02):
That's my average.
Everybody in this world is anaverage.
Of the five people that yourelate to the most, who are your
five?
Are they the guys that are inyour fantasy football league?
Are they Facebook friends?
Are they cyber pals?
Are your closest five?
(36:23):
Your business associates, yourinner circle, your local network
of business owners?
Set yourself up.
I always want to be the dumbestguy in my group.
If I'm the dumbest guy in mygroup, they're pulling me up,
they're raising my level everytime we get together.
And when you do this, when youstart this at a young age, it
creates opportunities down theroad.
(36:43):
The platform for opportunitiesbegins early in life by creating
a financial process that willmature as we do sure, as we do
and as you.
If you start this in your teensand twenties, you know, by the
time you're in your thirties,you've got some financial clout
behind you it it.
It allows you to take advantageof opportunities that other
(37:05):
people don't see.
It allows you to seeopportunities that other people
don't see.
A mature financial platformwill create opportunities
throughout your life that younow have the opportunity to take
advantage of and other peopledon't.
How often do we?
This happens to me real often,chris.
A lot of people who want tostart a business call me.
(37:27):
They know me or they knowsomeone who knows me, and I
would say nine out of 10, thefirst time we sit down and we
have a meeting and I'm talkingpeople anywhere from 18 to 50,
they just don't have thefinances to start that business.
They have a great idea, they'reout ahead of it.
Maybe they're in the foodservice industry and all they
(37:49):
need is $50,000 to buy a foodtruck and really take off with
this great idea that they have,but they don't have the 50 grand
.
Chris (37:57):
Yeah, we see this in American Gutter Monkeys.
When we're looking atfranchisees, a lot of them are
great people, a lot ofmotivation, they're almost the
perfect person, but the financesare just not going to allow
them to proceed and it's reallytoo bad, because they wouldn't
make great franchisees.
Dennis (aka Bobby Downspou (38:12):
Yeah , I mean, how many times do you
see a good real estate deal comeout there and you're able to
jump on it Right?
How many times does a goodopportunity come along and
someone sees that they justdon't have the financial backing
to get onto that?
But you know, if that personhad even just a small amount of
money and he had a goodrelationship with his banker and
(38:36):
with his accountant and hisfinancial planner, they have
ideas, they can get you throughthis.
But if you're not on that firstname basis with those guys,
you're kind of out there on yourown.
There's nothing like anoutstanding team around you all
times.
It can help you in so many ways.
So I'm going to kind of closewith this Two things Be
(38:59):
financially prepared.
Some people go to where thepuck is.
We want to go to where the puckis going to be when we get
there.
And the other thing I just sortof want to wrap up with is
remember the 80-20 rule has verylittle to do with annual income
.
Very little to do with annualincome.
Very little to do with annualincome, but everything to do
with process and execution.
(39:21):
And on that let's wrap it up.
No monkeys were harmed in themaking of this podcast, all
right.
Chris (39:27):
See you next time.
Thank you for tuning in toMonkey Business Radio.
If you enjoyed today's episode,please make sure to subscribe,
like and follow us wherever youget your podcasts.
It really helps us reach moreaspiring entrepreneurs like you,
and if you got a question ortopic you'd like us to cover,
leave a comment or reach out tous on social media.
(39:49):
We'd love to hear your thoughtsand keep the conversation going
.
Don't forget to leave us afive-star review if you found
the episode valuable, and makesure to share it with anyone who
might benefit from our tips andstories.
We'll see you next time.
This podcast is produced byAmerican Gutter Monkeys LLC.
Build real wealth throughbusiness ownership.
For details, visit us atAmericanGutterMonkeyscom.
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