Ken Greene (aka the Engineer of Finance) is a financial advisor and founder of Greene Finance & Insurance. Ken began his career as a professional engineer who subscribed to a lucrative investment portfolio that included aggressive joint ventures, real estate, and the stock market. However, shortly after the market crash in 2008, he pivoted to the insurance and financial industry - where he quickly realized he was one of the few people who cared about educating their clients rather than just selling to them. He recognized that the financial industry needed to be run with precision and integrity like the engineering community he had come from. Subsequently, he founded his own company, Greene Finance & Insurance, and has developed an approach to finance with an emphasis on growing your wealth and protecting it with traditional financial principles and investments off Wall Street. His desire to continue to educate and help people led to the creation of his podcast, ENGINEER OF FINANCE, where he talks about how to enjoy today and have a wealthier tomorrow.
Oftentimes, we hear stories about entrepreneurs suddenly giving up their secure corporate job to follow their dreams and start their own businesses. While tales of nights sleeping on the couch, eating TV dinners for months, and barely scraping in pursuit of theirs dreams are definitely interesting, entrepreneurship doesn't have to be this way.
In today's episode, we are joined by the Engineer of Finance Ken Greene to bring home the idea that entrepreneurs should develop a defensive cash strategy instead of relying on credits and loans. I believe that this idealogy can make a huge difference not only when it comes to making the leap to entrepreneurship, but it is instrumental in keeping your company alive especially when faced with the unexpected such as COVID19 and the subsequent market crash.
4:42 - During times of uncertainty, just having that cash, that liquidity, creates a lot of certainty and peace of mind.
17:03 - Should you buy things in a depressed state so you can take advantage when the situation starts to improve?
25:40 - What's good for Wall Street's not that necessarily good for Main Street.
38:22 - Regardless if you have guaranteed cash flow, you still need 6 months to a year buffer for your income streams because weird things happen.
45:29 - When there's something to lose, people start to sharpen their game
56:14 - Create some certainty when you're about to do something very aggressive.
57:41 - Stress kills creativity; stress kills big thinking
1:02:59 - Ken's passionate plea to entrepreneurs
"Don't do it for the money; do it because you're passionate about it."
GET IN TOUCH:
MARK LEARY:
www.linkedin.com/in/markhleary
www.leary.cc
KEN GREENE:
https://www.linkedin.com/in/ken-greene/
www.engineeroffinance.com
Production credit:
Engineering / Post-Production: Jim McCarthy
Art / Design: Immanuel Ahiable
You're Doing It Wrong - Ken Greene
Wednesday, January 20, 2021
SPEAKERS
Ken, Mark
Mark 00:00
So we're rolling, cool.
Ken 00:01
We are live.
Mark 00:03
This is you're doing it wrong with Mark Henderson, Leary, and my name is Mike, I have a passion that you should feel in control of your life. And so what I do is I help you get control of your business. And part of how I do that is by letting you listen in on a conversation between two people who have a passion for excellence somewhere in the entrepreneurial world. And they're talking about a subject, we're talking about a subject that you probably already know something about. But this time, we're digging in a little deeper, to really get the nuts and bolts of what will help you break through the ceiling and unlock wherever you're stuck. And so today, we're talking with an expert, Ken green, also known as the engineer of finance, is a financial advisor and founder of green finance and insurance. And Ken began his career as a professional engineer. And after the market crashed in 2008, he moved into the insurance and financial industry, where he quickly realized that he was one of the few people who cared about educating their clients, rather than just selling something to them. And so what he found was that the financial industry needed to be run with the precision that he brought to engineering. And so he as the founder of green finance, and insurance, he is also the host of the engineer of finance podcast. And so Ken is here today to talk to us about finance and the things that we can bring into our finance world that the lessons of engineering and the things that are going on today. And so welcome, Ken,
Ken 01:30
thanks for having me on the show. I'm excited. Thanks, Mark.
Mark 01:33
Well, I'm glad to have you here. I know you've it's been an interesting year for everybody. What has your engineering mind learned about finance in the year of COVID, as
Ken 01:45
we wrap it up, over the year of COVID, I would say throughout my podcasts last few months, it's like, I don't want to talk about COVID anymore. But it's it's hard.
Mark 01:52
I don't either, I've got a COVID fatigue about talking about it. But you know, this is the end of the year. This is when finance decisions, we by the time this gets published, this will be the beginning of the year. So we should probably not be giving tips or tricks of the things you need to do in December, because this will be January. So in January, you've got your APR and other deadlines. You know, we're gonna have to think about some of these things.
Ken 02:15
Well, I could say something well, in who knows if 610 extension will apply for January, but I can say something that has happened. You know, I do take a contrarian approach to money and finances. And because of the cares act part of COVID. You know, one of the biggest things for clients and for small businesses and families to create is to create more certainty, right, and then a certain year in uncertain 2021. And quite often just having a lot of cash on hand, creates a lot of certainty, a lot of liquidity. And so part of the COVID, all the different release, reliefs that they created a Relief Act, the Care Act, I hate all their marketing terminology. But essentially, people have the opportunity to dip in and access up to $100,000 worth of their cash and their 401k or IRA or qualified plan, that they might not be able to touch that money until they're 59 and a half typically, on a qualified plan that money is kept if they own it, yet the financial industry and the government control it. And so it's like, Hey, this is your get out of jail free card. Now they have a place qualify plans. Typically the industry goes right to that first, for me that's ancillary for a lot of families is let's let's create a lot of cash, let's click Create a lot of control and liquidity. So they had an opportunity to get 100,000 without 10% penalty, and without tax withholding.
Mark 03:39
So let's talk about you. So I get that and really the foundation of almost everything we've dealt with that unifies everybody is the tremendous amount of uncertainty. And I've been preaching this idea like you've got to get to certainty as fast as possible, even if certainty is bad news, bad bad news, that certain is better than potentially good news in terms of confidence and being able to make decisions and avoiding paralysis. And I love that you just connected that directly to cash. But there's a lot of ways that cash manifests. And now as soon as you said cash, I started thinking about the savings rate and people spending less money and hoarding it to some extent, but then you went right to like, Well, we've got cash and other places we might have access to. And then there might be some lending components, what are the different ways that we that an entrepreneur owner should be thinking of to as both as a business owner and as an individual? Where should they be looking for cash?
Ken 04:32
Oh, well wish to get it to have liquidity.
Mark 04:36
Yeah, I guess that's a good point. So So where are we talking about liquidity? Are we talking about actual cash? Or is there a difference in your mind?
Ken 04:42
There's a little bit when I say cash, I mean, just having something that you can control and is safe and you can access within a couple weeks. And so specifically with the qualified plans that create a lot of peace of mind for families, because it was uncertain times. We don't know what's coming. We still don't know what's coming and Just to have money that was tied up for 2030 years controlled by the industry was a lot of peace of mind for a lot of families, because you can pay a mortgage for a long time. You know, for most mortgages, if you have 100,000, just sitting under your mattress or in your safe or in your, your favorite banks that you can access. And so, in uncertain times, just having that money, liquid creates a lot of certainties, it's peace of mind. And so other areas to get it that was just a very low hanging fruit. And it was a great option. And I'm glad that was opened up for families, other areas of getting money, my gosh, mortgages, for example, incredibly low interest rate environment. And I was just explained to a family I was working last week about explaining opportunity costs, and we have this ability to take advantage of a low interest rate environment, get a mortgage at some ridiculous rate, and who knows what it'll be in a few weeks. But I've seen areas for 30 year fixed two and a half percent 2.75. I mean, these are unbelievably low numbers. And if you're tied up in a higher interest rate environment, on a mortgage is a great opportunity that you can transfer that obligation. I mean, you have a contractual obligation with these mortgages. Now, if you can go refi and do a cash out refi equity in your home, in Chrome on equity in a house, if you plan to live there for a long time. And you have the ability to do a cash out refi lock in at a low interest rate environment at 3% or three and a half, whatever, and create that kind of liquidity stuff in your savings account. And now you have to pay a low monthly rate for 30 years. Now, a lot of people that will go against the grain because as a cash man, I just don't want to pay all the interest other people. But when you understand opportunity costs and how that money can be leveraged in other investments. For most families, that creates a lot of peace of mind, a lot of peace of mind. And just an example of a $2,000 a month mortgage, and you're able to pull out 24 30,000 after that refi and you lost your job or something weird happens. You can pay that mortgage for a long time, that creates a lot of certainty and can be really powerful for a family's financial strategy.
Mark 07:15
So so you create some liquidity in most people listen to this, I would think would be biased towards planning playing for the win. I mean, there's certainly going to people who want to understand defense that comes from having cash on hand and having some that peace of mind and wait waiting, either waiting for the next shoe to drop something bad happens, or, or a lot of people I know are just waiting for something good to happen to them, which oftentimes looks like something bad happened to somebody else, which is another thing, but I got the cash on hand waiting for a house to be half price, or that I can buy as a rental property or a business. It's almost out of business that I can grab. What are you telling people in terms of deploying capital in terms of uncertainty, investing in other businesses investing in the stock market investing in real estate? And what what are you telling people?
Ken 08:08
Well, I mean, that's as Spoken like a true entrepreneur, right? entrepreneurs are very optimistic. Typically, we're always finding ways to win, what's the angle? Where's the the positive, I'm you have to be positive to be an entrepreneur, because you're thinking all things are gonna go wrong, it's important to address, but then you're pivoting, it's like, Hey, where's the contrarian approach? Where's the, what are some phenomenal opportunities that will present themselves shortly. And so when you say playing for the win, I like that, because I was working with an engineer in the mines last year. And we're going over his financial strategy in an approach that we're taking, which is not so sexy at first, but he's a we're going to have a very defensive approach. And so that's right defenses win championships. Offense sells tickets. And so I'd like to how he made that statement, and yet, sometimes real boring, having a defensive approach and create liquidity and a lot of entrepreneurs, a lot of small business owners and just people who love chasing rates of return. Having 0% in interest pay to from the banks is painful. It feels like you're going backwards. So but the very nature of Korean law, liquidity is when you have a lot of money sitting idle, doing nothing. opportunities will seek you out. opportunities will seek you out. And so a good friend and client, I mean, just this year in real estate, did a phenomenal transaction in a seller's market, right housing in the in northern Nevada, Reno, Nevada has become very, very popular. And I think a lot of it because of the mass exodus of the wealthy outs out of California. I mean, they're moving. Yeah. And so coming into the Reno area, I mean, my gosh, they can buy a mansion for what you could have in San Jose.
Mark 09:51
Yeah. And you can imagine almost anywhere else.
Ken 09:55
And so even in the seller's market, I never would have predicted that the government California And California is such a beautiful state. I mean, it's gorgeous. But my gosh, that government is just doing everything in his power to push out the wealthy and the strong income streams. And so a lot of people are breaking says, You know what, we're out, we're out. And so the ones moving out are the ones that still can, it won't sustain itself. And then then you'll have the one stuck. But what's happening is a real estate in the Reno Tahoe area of nursing so high and titled nursing, it's so high and just keeps growing and growing. I mean, and but even in a seller's market now with real estate, I had one particular client, I mean, incredible deal on a real estate transaction. I mean, like 50% off, because he had the money and was liquid, and could close on that transaction within a couple weeks. Right.
Mark 10:50
The story you're painting and the way you've sort of phrased it really told the story because offense to me and the way I by my the nature of my energy, my personality, I do kind of look for like, okay, I want to go win today. But today, I want to go be aggressive and do something. And, and I've not found that that really works. The way you describe it is like, be prepared and don't do anything. And when and be patient. And when the thing that makes sense arrives, you will have a choice. And you will be able to really make a winning move in that position rather than taking an okay move on the day. You felt aggressive.
Ken 11:31
It's it sounds really, it sounds odd, but the opportunities will find you they will seek you out. I mean, one thing it's been fascinating this year, I mean, just look at the oil and natural gas industry. I mean, it got most of them got pummeled. I mean, they just got destroyed. I mean, the very nature of watching oil go below negative 30 a barrel, where the industry would actually pay you to take the oil is fascinating. Oh, man.
Mark 11:56
Yeah. And I call for my clients. They're sending you see the news? No, it's negative. No, that's not possible. Yeah. So
Ken 12:04
my phone was I was getting lit up. I mean, it was just fascinating. Clients are calm. It's like they've never seen that in the futures market. And just, and so but my point on that is like, you know, I represent a lot of engineers and engineers ask a lot of questions. I mean, to the point, it's almost paralysis by analysis, sometimes we have so many questions, we just don't move forward. But we really want to understand the guts, we understand it really, really well or perfectly before we move forward. And now when it comes to construction, and but sometimes, quite often, especially electrical engineers, let's use one of my good friends, he just never moves forward, right? He's just very, very safe. He wants everything under his mattress, it's very concerned about making any type of investment. Well, dude, you're losing, if you keep pontificating on this in the next 10 years that you're going to get into real estate, you're going to do this investment, just forget it. And so quite often, a lot of people make the decision by just letting time outweigh that decision, when there's timelines, they just won't make a decision by that timeline. Therefore, by default, they don't move. But what I find fascinating with developers like in land development, and construction, guys, I swear, they just fuel every up and down. Because when it's cranking, they're buying the nice trucks and the nice stuff. But then when things are tough, I mean, they're losing everything, there is no liquidity, there is no savings or buffer strategy. But I love their just the optimism and they just get it done. But it can put them in a precarious position. You look at the oil, natural gas industry, a lot of these operators, they're just pedal a metal. And they're just always looking optimistically. And they don't have a defensive approach. So then all sudden, once oil drops below 55 a barrel and 35 a barrel, 25 a barrel. They're in a precarious position, they've got a lot of money leveraged, and then they get margin calls from the banks. And then they're forced and put in a position that they have to have a certain amount of reserve. And then they're put in a position at the sell off their top assets, just to stay alive. And then you have people in the oil, natural gas space that had been sitting in for examples, Warren Buffett, I mean, beginning of 2020, he was sitting on an crona, cash, idle doing nothing. And if you watch how he buys and does investments, opportunities, seek him out. And then you make money on the buy. And then, and then he hangs on to him forever. He's not your typical investor. He's not doing the s&p 500 and just buy and hold. He that's not the game he plays. He has money sitting idle an opportunity presents itself, he'll buy a substantial discount, he hangs on to forever. I mean, that's their way. And so anyway, in that oil, natural gas space, you'll see the same thing. And same thing with developers. Back in Oh, wait, oh seven. Oh, actually oh six is when things really started taking a hit. But prior to that, there was no defensive approach. It's just like, Hey, we're going to leverage as much money with these banks and private lenders and hard money lenders. And we're going to get after it. I'm going to turn in turn in turn. And you knew there was a problem when houses are on the market for less than 48 hours after it just got acquired and it was being sold again for 10% more was unreal. And but then it all stopped. And so. So it's interesting because there's people in all the different oil natural gas has been a phenomenal opportunity by the end this year to invest in probably will be in 2021. Now, when I talk about this I'm not this is very specific for different investors. I'm not saying Everyone listen to the show go out and buy oil and natural gas at some point. But those are positioned for it and with the right partners, some incredible opportunities presented themselves in 2020 and 21. Because Yeah, these operators that had to sell their top assets at a substantial discount. Yeah, for sure. Right. So COVID. So for me, and a lot of my clients, we have money sitting liquid, and my partners in the private equity space, what an incredible opportunity to pounds. And it's presented itself and it's a win win too. Because if those if those operators didn't get their money, they're out of business for the rest of their lives. And so it's still a win win. They're they're trading the opportunity to survive another day. And it's incredible investment opportunity with were immunized his wrist and all these things. But what a great way to mitigate risk. So the timing,
Mark 16:09
I can imagine some time there's some sense of urgency coming. He's like, this is the time when things are starting to kind of feel like, oh, that the buys are out there, everything's discounted now gotta go get the credit card out and go buy the fire sale asset somewhere. What's your advice to people in that spot? Stick, you know, take some up, take the opportunity of the first quarter and stick it out. You know, what's your what's your recommendation there?
Ken 16:31
What are you specifically to what I was just talking about the energy sector? Or? Or I'll just,
Mark 16:36
you know, I, the way I see it is you can you can imagine pretty comfortably that we'll see a summer recovery.
Ken 16:47
Well, I hope I pray
Mark 16:48
Yeah, I think it's up to me, Well, I can speak for myself, I don't necessarily know what anybody else says. But to me, it looks like that's, that's pretty good math, not 100%, it's not 100% math at all, we could have other viral viral variants that kind of knock us off our horse. But if you're a betting man, then I'm a woman, that I could think that you can make a reasonable case that we will see a significant uptick by summer and certainly by fall. And so that means this winter, is your opportunity to buy things in a depressed state. So you can somehow ride that wave up? Or would you? How much leverage would you recommend somebody take now in a strategy like that? Or would you? Or how would you guide somebody to calculate relative risk in terms of taking advantage of that?
Ken 17:33
Well, I would say that talking about you know, opportunities presenting themselves and, and forecasting, and it just shows how none of us have a crystal ball, right? We have no idea Oh, actually, I joke all the time, I say I know exactly what the stock market is going to do tomorrow, I know exactly what's going to do is going to go up down or sideways. Right? And any expert out there pretends differently. Unless it's like, you know, the Treasury and BlackRock making all the decisions right now they know what's going to happen. But everyone else we're just kind of opportunities will present themselves. So let me see a way of the best way to answer that leverage. Leverage when it's working, your favor is a very powerful mechanism. And so prior to me getting this industry boy did I take away Take advantage of leverage, but it also destroyed me. And so I'm very, very cautious. And so I'll step back to a couple things on purchasing and leverage and some opportunities will present themselves. For example, I'm watching real estate closely. I thought for sure, a couple years ago, prior to the Trump administration's tax cuts, that real estate was in for a correction in the Reno Tahoe area. But little did I know when these tax cuts for the high income tax states like California and New Jersey, New York, that especially here on the west coast, California, I mean, they can only limit that deduction, their state income tax by 10 grand I mean, all sudden, that just creates, again, more momentum. They're getting for most people, it was a tax cut. But for some high income earners and high income tax state, it was brutal. And so immediately, real estate started pumping up again in the Reno Tahoe area, because you have this mass exodus out of California. And so I predicted that one wrong, but eventually I think you're gonna see the impacts of what's going to happen in 21, I think for a lot of families is going to be very difficult, that were deemed non essential by our leadership by our politicians. And so we've got this lag, it's kind of like you see the traffic, you know, it just it doesn't take much of people looking at accidents all sudden create this huge line of traffic that lasts for hours. Right. So I think we're gonna have a lag there. And so I don't honestly think now, but I think potentially in the summer, some very interesting opportunities are going to present themselves for acquiring real estate. That's my feeling. You're gonna see especially in the commercial side, Already right now they're getting crushed on the commercial side of the retail areas in certain areas of the country. And so and you've got people investing, and so now, multifamily has become very interesting for people invest in. So that's pumping that market up. And so I might answer that, I don't know, I do know that what has presented itself in the energy sector, I mean, my gosh, I mean, stuff that was very attracted people to invest in was profitable at breakeven at 55 a barrel, right, as an example, all of a sudden, can be very profitable at 15 to $20 a barrel. To me, that is really good risk mitigation. Now, for me, personally, I don't like leverage too much. The way I give my permission, myself, and a lot of clients that work with permission to spend is that, Hey, you got six months to a year worth of liquidity, for your business, for your family expenses, etc, just as a buffer, and then all this other money sitting idle, okay, now, that's your permission to invest. There's your permission to start chasing raise return. And so real estate, I think, you'll know when the opportunities present themselves, but you'll know it's a good deal you build to, to look at things. Relative I mean, if your average median home in Reno, for example, I don't know what it is, we're up at $450,000. And all of a sudden, a year from now is 300. Well, that's probably good. Still might keep going down. But your chances of success success are probably way better if you're acquiring a 300. And then then if you could leverage that, and to stick in these mortgages with these low interest rate environments, that's a great example of other people's money using other people's money to leverage. But area areas that it can't bite you in if you have a lot of buffer. And so that would be a good example, oil, I think is still going to be a nice window over the next quarter or two. Because we just haven't seen yet what's going to happen. But like in the oil, natural gas space, that's not going away for a long time, my opinion. And it'll eventually get replaced as it transitions to fully renewable over the next few decades. Natural gas, and then, you know, until this battery issue is solved. I mean, I'm a huge fan of electric motors. They're fascinating. I mean, you got I mean, compared to internal combustion engine. I mean, electric motors, I think is down the road, we'll have a great opportunity. But my gosh, and I'm a fan of Tesla right here in our backyard. The Gigafactory is moving to Austin. So they have the Fremont factory, I believe they said, we're out peace out a great job, California. I mean, seriously, and I'm not attacking residents of California, but the politicians? Are you kidding me? I mean, you're gonna watch that disappear in the faith and the belief in that company. I mean, for me, personally, I'm terrified to go invest in. In Tesla, I mean, at 1400 ups earnings per share. That's, that's outrageous. And who knows what will beat next week. But there's I don't I don't want to get long winded on that answer. But I would say forecasting wise, I agree with you in the fact I'm very optimistic, I am craving for the world to start turning again in June. And right now it's not turning yet. So I think areas to pounce on now could be the energy sector that could be very fascinating. And area to pounce would be in. If you could tie up money through equity lines of credit, at least have it available to you to pounce. And then for the older generation, that sitting in home that they never leave you, my gosh, it sounds like a bad word saying reverse mortgages, but there's some phenomenal opportunities where they can lock in, I haven't really use it, but lock in that guaranteed line of credit, to extend their ability to enjoy more of their money and not outlive it and during retirement. And so those are some areas I find fast I think the stock market I mean, one of the best times to pull from the stock market is when it's at a historic high. It's at a historic high, one of the worst times to pull is when it's a historic low. And so, I mean, anything you can do to diversify and not have everything sitting in one asset, I think are phenomenal opportunities take advantage of. And so and again, I don't know exactly jump into but I do like the energy sector a lot as it stands today. I do think I'm priming for I do think some interesting opportunities in this year two are going to present themselves in real estate. I really wish I could be more specific. But then I'm just guaranteeing myself to be wrong because it's just too hard to predict. didn't predict some, you know, virus getting out and this pandemic, but boy in December, January last year when I started reading a lot what was happening in China, and they're shutting down that that world there. I mean, my gosh, whether this thing's real or not. They're taking it seriously. And it's going to have profound impacts on the US and I was warning about on my podcast that hey, if you're happy with your returns in the market might make sense to hit the pause button. And boy was that an epic ride down in March?
24:59
Yeah. Sure,
Ken 25:01
but But yeah, I would say I mean, I think down the road, it'll be interesting to see what is proposed by our government, who knows, we'll be running things till after we see this re election and January 5, the Georgia piece and so Wall Street's been on a tear now interesting if you look at things, so the world has shut down, and the stock market is at an epic, high. Interesting. So in a way, in a weird logic, the world will really be turning again in June. So therefore, the market will take a huge crash. Be really interesting. And also keep in mind, I mean, what's good for Wall Street's not what's necessarily good for Main Street. I mean, I mean, billionaires become even, like, more multi billionaires, because of the bailouts, how a lot of this money has has pushed into the stock market. So, but a lot of families not so good. And so this huge chasm has been created, and then the inflation and potential hyperinflation of money down the road. So I still at this moment in time, maybe metals, currency crypto, but I mean, my gosh, you want to talk about risk? What's happened and especially in Bitcoin has been fascinating. But for me, personally, my stomach doesn't, I don't like losing money. And so for those that what their financial strategies like, if you want more certainty, that's it could be a dangerous strategy. But if you have like an investment that you believe in, and has the potential for a huge run, it could be Bitcoin could be, but boy, who knows what the government might decide to do on that one?
Mark 26:36
So you know, I do want to pair that up with this idea of the internal risk threshold, you said six to 12 months, that's a not an uncommon bracket of liquidity. But it's 100%. Different from itself, right? Six to 12 months, that's similar between x and two X, how does somebody you know, calculate that six is fine versus 12 is fine. And once they do, how do they kind of pair that up? You know, what Bitcoin day? How do you how does how do they? How do you think about the balance there?
Ken 27:05
Well, I did, the reason why I give the such a safety factor between six months to 12 months is it kind of gives permission to the more aggressive, it's just it literally, that just breaks down to the individual. I mean, I couldn't believe I think it was about 10 years ago, I was listened to a speaker talk about I've never lived in Switzerland, I haven't visited yet. But they're acceptable. If I understood my takeaway, and I might be ruining this was that in Switzerland, they feel real comfortable. And they have 10 years worth of savings, right? So I mean, my gosh, so. And when I talk about savings, I'm not talking about savings, retirement plans are about money, it's liquid, and you can access within a couple weeks. And so it is a big buffer, and it is almost right when you're looking up for savings. But I like having that variance between six at least six months, right? And so it's just giving people who are more aggressive. If I can get six months worth of savings versus paycheck to paycheck, you'd be amazed at how many American households, and how many small businesses. And apparently big ones, like our airlines are paycheck to paycheck. Right. And of course, a lot of our tax code creates that incentive, at least for the big corporations, they may be modified a little bit. So it encouraged them to, Hey, why don't you have a year worth of an emergency fund here, because not everyone might be flying all the time, something might occur that could literally flip it on its head. So yeah, it is a big discrepancy by like saying six months to 12 months, because naturally, you'll see the type of individual and personality will gravitate towards it. I would say a lot of families, I work with the husband, and wife, one is very conservative. And one can be very aggressive, which is a great hybrid, because you got one that keeps you out of trouble. Right? Yeah. And then you have other
Mark 28:56
though Yin and Yang, here's, you know, a little
Ken 28:58
debate. And when they're in alignment, but then you have the other says, Hey, gives you permission to hit that gas pedal once in a while. And boy, can that create a lot of wealth from those families? You know, those spouses are working together? So the ultimate financial partnership. But yeah, I don't know how to answer that one. It's just like six months for me personally, because I was incredibly aggressive. I mean, he looked at me back and oh, four, I was like, 11 on 10 on the wrist side. But you know, when you get purged of everything, and he thought at the time, Hey, can I still live with it? I always look at your exit strategy, right? When you get into investments, or any type of savings, or well, any type of investment strategy, you could be in a bulletproof investment. But boy, because you have a lot of liquidity risk, right? You do this great five year note that just this cash cow for you. That's great. But if you needed that money in two years, you got a serious liquidity problem. That's a poor investment, even though it was performing well. And so what's your exit strategy? And for me, I'm looking at all these aggressive investment Back in oh four, I had no savings. He was why would I make zero made no sense to me. So it was leverage leverage leverage, as I'm investing in all this stuff.
Mark 30:09
Right? Yeah. Lazy dollars, I'm gonna work in dollars, get
Ken 30:12
them out there. For me at the time the fear of missing out, I didn't want to be that person that's like, oh, if I only invested in that land if I only did that energy investment if I only did this, I would have had all this money. And so for me, my educators decisions like okay, well, if I lose all that, can I still get up in the morning go to work? And my answer was yes. And but what I didn't account for is like, Okay, if I lose all the, if I lose all my investments, and also my real estate becomes worthless, too. Oh, and I lose my strong engineering income, that part didn't kick in. You can live with all those things, a perfect storm just go into the garbage, right? Where if I just had six months, sitting in savings, and even better yet a year, and and I don't know, six months didn't seem like enough anymore. After this year. I was like, Oh my gosh, I remember doing a podcast in March or whenever this was really hitting hard. Everything's getting shut down. We knew it was coming here locally with the stay at home for they said two weeks. I'm looking at all the data we had
31:16
two weeks, two weeks at forever. How are we going to last two weeks?
Ken 31:20
I hey, I was like that is BS. I said, Well, I said, Hey, I told my wife, I said, the government's telling us two weeks, I'm telling you right now, that's Bs, because there's gonna be four weeks, because everything I'm seeing is coming out from the CDC, the who, which you don't know what to completely trust, because they can't seem to change their mind. But this is novel, they didn't know what they're dealing with. To the most part was like, well, they must know a lot more than me. And but I told my wife said prepare for a month, this isn't going to be two weeks. And but I was just like, man, imagine all these businesses they had six months, or even better a year like double up? And how, how much it how little impact in many ways would have across our nation if that that kind of savings was implemented? And what a buffer. Now six months, I thought would have been plenty. But what do I know? My gosh, I mean, look, what's happened, this thing has dragged on for forever, forever and ever six months when I've cut it? So that's my loose answer. I don't know how to say that. Why I say between six months to a year. I think it's just to begin a conversation working with businesses and families. And then you just see where they resonate. And, and obviously
Mark 32:29
described to help me actually because I think that there's there's probably three vectors, and one is, if you don't have at least six months, then you probably shouldn't be thinking about it at all. If you have 12 months, and you're not deploying your 13th month capital somewhere, it's a fair conversation to say Where can we do this? And you should have an internal conversation about where you land between six and 12 months and post COVID You know, it makes a case for at least nine months.
Ken 32:54
Yes, it does. I mean, it does and I just know for an hour last one I do anything that I don't do myself I lead through actions and boy what Wouldn't that be nice all these politicians, these executives lead through actions they tell us to stay at home and they get caught doing something important.
Mark 33:12
He goes don't visit your family. Excuse me. I gotta catch a flight I
Ken 33:15
gotta print. Let me just not is that crazy? It's just nonstop it's infuriating. Say guys, you want to piss people off and all sides of the aisle don't care if you're republican or democrat or, or just hate Republicans and Democrats. You know, who I kind of line up with that one, I just I hate these parties, period. Because it just always seems like they're not acting in our best interest. It's always in their best interest first. We're ancillary. And and they're more equal than us. They're telling us not to go do something. Okay, we'll respect you. We're gonna listen, right? We're very humans are very adaptable creatures. I think that's what distinguishes us from animals. Right? You know, we have that higher consciousness, we don't have just that lizard brain. And so we're going to listen it just but believe through actions just do. We'll do what you're doing. But if you're out going flying out to Mexico, or you're going to do this, you're going to do that. And you're telling us to stay at home Go pound sand, you're not going to get by in that way. That's just what a horrible way to lead. And that's me going on a tangent, but yeah, the six month 12 months, it's a b COVID is obviously made that, hey, maybe six months is not enough, for sure is way better than zero. And as sure is way better than paycheck to paycheck. And I think for a lot of families that come in. It's an interesting spectrum. I have a lot of just natural Savers, they'll come and see me But then I also have very aggressive entrepreneurs with phenomenal income streams. It's like Hey, what's working for you? Oh, we make this much. That's phenomenal. what's not working for you? We're tired of being paycheck to paycheck. Right? And so if we can dip in and start polling the mind right I mean, if you sat down with me back in like she's Please sit down me obviously like you know for and tell me I need to have six months to a year like you say, you have to have a year in savings to me. Before I can do any type investments, I'd be like pouncy. And I'm not gonna listen to that. But maybe you tease me a little bit, hey, we're gonna build up to six months, and then to a year, well, now it's kind of like a rubber band. Now we're starting to stretch and, and obviously was very open minded that I realized that I thought I was so smart as an electrical engineer, you know, Bachelor science, electrical engineering, minor mechanical, got my BS in civil as well, so I can get my professional engineering licenses. And so I thought I was so smart. And but just because you're really good in one area, doesn't mean that transfers over to money. And I never had a good financial advisor or mentor,
Mark 35:42
other than my mom says, Hey, Russians have a challenge, I think to tell me if you think this resonates. If you're a doctor, if you're a lawyer, if you're an engineer, your your career, your credentials don't translate to next year's job. It translates mentally to a whole lifetime earnings. And you're spending money you haven't you won't make for a decade, like you're buying a house that you're going to live in as an engineer, that's 1015 years down the line is that is there truth to that, because as an entrepreneur, I'm like, I'm not sure I'll have any money next year. So I have to approach the risk vector, but I'm a doctor, I think it's reasonable to assume I'll be working next year is that there? Is that mentality that
Ken 36:18
matches with that? Oh, you mean, like mentality of
Mark 36:22
like, loans are no big deal? Like, why would Why would I pay cash for a car? Because, you know, my income is basically guaranteed for the rest of my life, because I'm a professional. And as opposed to like, as an entrepreneur, I'm like, I, you know, I'm gonna do really well this year, and things may change next year, well, I might not make any money. So I'm gonna think in terms of if I've got the money now I can spend it now. I don't want to spend next year's money, because next year is a whole other universe as far as I'm concerned.
Ken 36:48
But it's tied to that. I yeah. Yeah. So I mean, obviously, especially specialists in the medical industry, phenomenal income streams. And to your point. Yeah, I mean, if you're making millions of dollars a year, why not? And you have this strong income, you've got strong investments to pay and who you're partnered with? Why not take advantage of that leverage? And I think that's a great example. You could but still it, you know, shit happens. And there are surgeons who get disabled. Yeah, yeah. And all of a sudden, you know, that wasn't part of their financial picture. You know, a lot of advisors that these individuals work with is they're very optimists of themselves. And they're very myopic to investment advisors, they're looking at chasing rates of return. They don't step back and say, hey, what if we do? Let's have engineers love redundancy and safety factor? And I'm sure you've heard the term like over engineering, right? Oh, yeah. You know, anytime I do a project at home, my wife knows the shed I built is two times stronger than the house, right? And so safety factor redundancy, redundant systems. And so it's like it, it helps taking a different, sidestepping or having this person on the side who say, hey, this all makes sense. I mean, you want to, yeah, great. You're going after compound rates of return of 10%. Plus, you've got this and cash flow shirt. And if you can go get a loan at 2% to go buy your supercar. Why not? I mean, that's, that's just taking advantage of spread. That's smart money. But you still should have a six months to a year buffer of your income streams, because weird things happen. By the way, what happens you come to disabled, then what? Now your million dollar your income, if you don't have any disability insurance just went to zero. And now not only are you still alive, but now you guys are on the street. And then you get to watch your spouse and your children suffer in poverty as well weird things happen? Or what if you're put out of work? I mean, my gosh, how about all these surgeons that weren't defined as essential, the orthopedic surgeons, the neurosurgeons this year, that couldn't do their practice for months, because all opened up, and it was empty the summer and the hospitals, you know, and they couldn't, they couldn't do any surgeries, elective surgeries. So all of a sudden, those strong income streams aren't there anymore. But guess what, that car payments still there, that mortgage is still there. But if they got just having that buffer, for six months to a year, you can pay that mortgage for quite some time. And so it's just and rules are meant to be. It's nice just having some type of foundation to work with. And then you just find out what resonates for you. I mean, my gosh, my mom so concerned she probably want the five to 10 years just sit in savings before any type investment, right. But then you got others like it just drives me nuts that we got to get this money moving. And for me, it just made no sense back and afford having things sitting liquid right. So Gosh, I can leverage this. I can leverage that. You can create these phenomenal, rich return. But yeah, then then just something slaps you that you weren't thinking about. And then you're on the corner single engineer for food. I mean, weird things happen. And so and it's just Sounds so boring. I mean, I remember this one guy was asking me about Bitcoin A few years ago, I was buying, I was buying, I was looking at buying a smartphone. And so in his own home in your investment advisor, hey, what can I invest in blah, blah, and said, Hey, you want to create a lot of money? He's like, Yeah, man, I want, I want to be a millionaire, I want to have I want to do this, I want to do it all these trips, as if you want to do something really profound that's going to distinguish you from the majority of American households in this country, start saving 10 to 20% of your gross income, and get six months of seeing liquid. And I was like, obviously, that was like the most boring answer to me want to hear anything I had to say. So, but But yeah, and others are here.
Mark 40:44
And I think that's part of the effect, right? It is so boring. And it doesn't, it doesn't fit the narrative doesn't have the American dream. It doesn't, it's not a quick win. And so yet really, I've experienced this myself having to really change my thinking to I do think you nailed it. And I use a million sports metaphors and and I had never really so clearly put the you know, defense wins championships mentality into into finance. And it's exactly that. It's really just holding still than and not losing ground, doing everything you can to not bet against work against yourself in the future with interest is worth doing the wrong things. And I know you talked about so boundaries can can be beneficial if you're creating real liquidity but really mortgaging The future is what we do by habit. And even right now we know what the economic stimulus the one of the big problems with the stimulus checks is that people save them. Like people who don't have a need for that, to stimulate the economy, you gotta go spend it for it to do its thing. And it's like, well, that's for those individuals like, yeah, cool. Everybody else goes bad it. Me and my friends and family don't
Ken 41:53
like yes, I would say, to your point that a lot of people saved it. Yes. You know, my family. Well, I should say, my, a lot of my families that qualified. Yeah, anything that was came out, the families that represent it was, you know, they went to savings. Right. Yeah. Or wipe out debts. They're just destroying them. And that was not necessarily the intention. Right. Right. But it was great that they did that. Now, I would argue that not everyone did that. Because I thought for sure that a great I know a great opportunity not to buy it was like travel trailers. I thought for sure. We're going to just get crushed this summer. Oh, my gosh, everyone's afraid everyone's gonna be saving their money. No, they're like, those, the markups on those things are huge, I believe, like 30 40% markup. So I'm all geared up to finally buy my wife a travel trailer. She's been on my butt forever years to get one. And I thought for sure we'd be primed to go get one for a phenomenal deal. And one of the major dealers like hey, we're out in the Bay Area. I mean, they're all gone. Well, what are you getting? He's like, we're getting late 99% of asking retail price, sticker price, like, Oh, my gosh, I mean, hats off to you because everyone's going nuts. They couldn't go on their trips to Europe. I can't do this where they do, like, Hey, we're not. So I would argue that a lot didn't save it. I think too many also just took advantage of the fact that we can't spend it on trips. So we're going to remodel our homes. I mean, you go to Home Depot during this pandemic, pandemic, it was crazy. Home Depot, Lowe's, I mean, the lines are outrageous, everyone's remodeling their homes, they're stuck in it might as well improve their kitchen, get their bathroom done. Can't go on this trip. So let's go buy a travel trailer. You know, now I have a strong feeling of what could be fun buys not necessarily great investment, but maybe Ingress a great investment for your time with your family. As I have a strong feeling we're gonna see some phenomenal deals on travel trailers this summer. That was completely wrong last year. I have a good feeling I'm gonna be right this year.
Mark 43:53
This is a really good example. Because what you're describing is a I've got the cash, I'll deploy it. When and if it makes sense, as opposed to what do Can I get today? And you'll determine You know, this with if the play materializes, I'll take it if that play doesn't materialize, I'll do something different as opposed to every day there's a deal I'm missing and let me get my my cash deployed and therefore I don't actually end up having excess capital on the day the deal shows up the real deal.
Ken 44:25
Yeah, chasing deals. I mean, you have to lay out and I just think having a paper and having someone mentor you to that just see things from a little bit different angle. You know, I kind of love equate to like tennis. I used to love competing in the USTA tennis tournaments years ago and NorCal Grand Prix It was a blast. And it just really sharpened my brain mentally because it's one thing we just playing for fun hitting. It's amazing how great I don't know if you play tennis smart but
Mark 44:55
rolling the ball back and I've gotten the ball across the net a few times. But then once I remember not got along well, maybe 10 years ago, I played with somebody who really played and it really no.
45:06
It's also
Ken 45:08
like physical chess, I love it. It's just such a fun sport and, but it's just when you're playing a game, or you're hitting for fun, and he hit way better, but then all sudden, when there's this fear of loss, it's a tournament and there's not even any money on the line. It's, it's just a tournament, it's a match. It's just like, Hey, I came in whatever plays, but it's amazing, when there's all sudden, something to lose, like, you might not make it to the next match, your game can really tighten up. And so you got to really sharpen your brain. And you got to really pivot to the positive and you got to have a game plan, and how you're going to adapt. And you got to look for weaknesses, you got to use your strengths against your opponent's weaknesses, and just have a lot of fun doing it. And but what's amazing is around that court is really hard to see what you're doing wrong sometimes. Where if you've got a friend or a mentor, or anyone who understands the game sitting in the bleachers on the sideline watching, they know exactly what you're doing wrong. our egos our consciousness is very interesting. We will hide our flaws sometimes for ourselves, right? But so it for everyone a good measure on if I'm doing something right or wrong, I have a great mastermind around me. And a lot of it will be my wife. Thinking about ideas like any time investment, we do an investment, anything or purchase for my family, anything 100 bucks, I was run by her
46:25
over 100 bucks, and she's
Ken 46:27
even at over 100 bucks. Now, that doesn't work both ways, by the way. But I just like running up buyer, and she always says yes, although this little Miata one a few years ago, I didn't earn it yet. But just because we've had the garage space for but I've always wanted this little Miata, which by the way on that title, something on that is a Yeah. So it's just it's great. Having someone to bounce ideas off that is that you really look up to or is a mentor because it'll you'll just see it's easy for them to see an area to that you're blind to. Does that make sense? Yeah, that's for sure. And, and so anyway, but yeah, I think, I don't know. I can travel trailers. But I think you were talking about savings and is like, Yeah, I don't think everyone saved because you good luck in and travel trailer. And then also look what's happened. I mean, the homes have been to the roof. So I'm not going to pay a fortune for a house right now. But there's a lot of emotion people want out, it's really weird year 2020 It wasn't just this COVID thing. I mean, there's a lot of opportunities. I mean, this, the riots, the protesting, just all of it, man, and so that we've, a lot of people don't want to be downtown and Midtown anymore, they want to be further away. And so it's just amazing what's happened, I never thought land would become. I mean, my gosh, when my clients had their property on the market wasn't even like five minutes and Amelia getting a cash offer on just vacant land. That's like usually a crappy investment. Doesn't cash flow, it just sits there. Good luck trying to get a loan on a piece of land banks don't want that. Right. So it just opportunities are gonna present themselves. It's as exciting as I can make savings sound right? It's just, you have that kind of money sitting liquid. There, just the opportunities just gonna find you, right, you build it and they'll come. And one thing I was gonna say about giving permission just to be boring. I love I love for me one racing, right and so my clients just love going to the track and I'm just enjoy. I'm too cheap, spend the money on those cars, but I get I love it when I get invited to go on the track and, and the speed at which they drive is phenomenal. And every time I get to go ride, I'm like, Okay, I'm not gonna be it was. I know, they're gonna make this corner and churn. And I know they're gonna make it but sure enough, that first corner, like we're not gonna make it, we're not gonna make it right. And of course, we make it there. And I'm trying to put my foot to the fire to the wall, my firewall, and just like brake, brake brake. But you know, the way these guys become a good friend of mine years ago, he used to raise Ford, Formula Ford. And so he won. You know, this was long time ago, but it's really impressive. But He's, uh, he can if you want to go fast, you got to start slow. You want to really learn how to race a car. You don't start with a Porsche or Lamborghini or, and that was excellent Lamborghinis. Anyway, but you start with a Miata. You start with a car that's well balanced, way underpowered, and then you start learning inertia. And then you start learning how to change gears. You learn how to pick lines, you don't allow horsepower to be your crutch. So it just goes back to savings to go fast. You gotta start slow. You got to create a strong foundation. You got to create redundancies. A lot of these businesses that go out of business isn't because of a lack of knowledge and a lack of work ethic. You know, there's a lot of them are very intelligent people. And great companies, you got intelligent people and you have great systems. You have a phenomenal company but quite often not have enough money because things go weird. A lot of entrepreneurs are going to overestimate revenues and underestimate expenses. Yeah. And so a lot of great companies just go away because they don't have enough money. It's also I find Tesla so fascinating, because they've gotten so much money now, just because of a belief. I mean, it's not a profitable entity yet, really. But it but it's a phenomenal idea. They're great cars, the motors are phenomenal, the batteries, the weak link, that code gets cracked, which is that on the energy side as an investment opportunity, I'm very optimistic that that code will get crack soon. And so we have batteries, that's the weak link, if we can solve the battery issue. Boy was some opportunity, fastening opportunities will present themselves in a couple years in that area too.
Mark 50:53
Well, so there's always somebody wanting to hype up the best investment. And the what's fascinating to me is is really the mindset just below that, which we've been talking about a lot of. So it's you've decided as an entrepreneur, business leader, whatever your you've got your means and you said it, you know, six months, that's my minimum, and you work towards it. And then you got you know what, there's my six months, I'm there. And now I'm in anytime that feels like there's opportunity, which is the same as really any time I think, especially for entrepreneurs, you got six months cash in the bank, you're probably gonna feel like there's opportunities flying by you every minute that you're not taking advantage of, what what do you do with the money? And what's the mindset that you want people to sort of absorb? Like, it's six months, cash reserves, plus one day, what do you do every single day accumulating cash, putting it in certain types of vehicles, that it's it's liquid, semi liquid, or what's the mindset you want people to sort of take with them into that day,
Ken 51:47
for like, for businesses, or families, or both?
Mark 51:52
To me, it's the entrepreneurial business owner, it's a no some, somebody owns a business, they run a business, they're in the business, and they're making money out of the business in some in some formula. So they have a business that they run, that makes them a fair amount of money that they get to use personally.
Ken 52:06
Well, you're best in my opinion, your number one best investment is typically your own entity you're going to create that's going to crush my opinion, almost anything the stock market's going to do is because you're creating a business, your entrepreneurial mindset, you know, turn right Velocity of Money, transaction after transaction after transaction. That just kicks the crap out of compound interest all day long. Not that that's not a component for creating wealth, but it is in so I guess I'll use myself as example. Just like you know, I've been running. I've been in this industry since of end of Oh, wait. But, you know, when I first got in, I absolutely hated it. And it's like, gosh, I'd rather shovel horseshit, then go out and knock on doors and go sell auto insurance and just get treated like crap. I mean, it's just me like being I like being in the corner engineering, and designing. And I'm, I've had the social distancing thing down for decades, right. I don't like big crowds. I don't like lines. I like who I like. But I don't like all the different variables. And humans can be incredible people, but they can also be really nasty people too. And so, you know, it's like Christmas. What a horrible time to go shopping right now. I mean, you should see our malls, right? We're supposedly locked down and 25% occupancy right now in restaurants. And it's you see what's going on the malls and Walmart. It's like, it's just packed. Right. So, but apparently, I won't go on that tangent. But apparently COVID ceases to exist on airplanes. Because I had to fly out to Texas a couple months ago, or a month and a half ago. were packed in there like sardines. Everywhere else, I have to be six feet apart and all this other things. And so anyway. But when I was talking about Sorry, I went off a little tangent, but the
Mark 53:57
that mindset, which is t plus day one, you got six months, and you know, where's your mindset for how to how to think about not spending or spending and investing?
Ken 54:07
Well, it's gonna make fun of myself. And so my point was on that is that I was engineering like, I hated the industry. Still many areas of financial industry, I just absolutely hate. I just love my clients. I love what I do. I love showing a different way to play the game. And so environmental engineering came back and so and I thought I was done with the financial industry A long time ago. But there's a part I just love teaching, I couldn't walk away from it. I just want it's like, I gotta teach this to the world. And so good friends, select clients, after hours after I'm done with all my engineering work. I'm teaching them on on financial strategy saving strategies. You know, that's what I talked about my podcast, the Bank of Saurus and in it's just so passionate about even care if it made me money or didn't make me money As long as I broke even. But what happens like oh my gosh, I got all this extra money over these years. For us doing the side hustles at night. I was always number one again. accountable to my engineering job. That was number one. And I was never gonna violate that. And so numerous times, I had to cancel meetings at nights, I'm out at a mine, or I'm doing some environmental site assessment. But eventually, my wife, my son was coming, he turns five, he's four and a half now and a few months, you know, in a March, he'll turn five years old. And so January 4 of five years ago, I decided to run my company full time scared the hell out of me. But I was optimistic. But what I did to get my permission to do that, a, my wife's like, you can't do both, there's just no way you have a son coming. Or you can't just be working nonstop, and through the weekends. So what I did is I just had a spreadsheet, I looked at all the expenses, what I knew what we needed for our family, right in our budgets, ran reports on a pole and piece of paper. And then I looked at extremes, I said, if I don't make $1, for a whole year, we'll still be in business. That gave me the courage plus my wife back me through and through to want from a guaranteed income stream and engineering right after it came back to run my company full time. And so I think with entrepreneurs, I hope that helps answer at least on that piece, to give yourself create some certainty to do something very, very aggressive. Is, is like, what, how can you fail? And how are you not going to fail? And I hope I answered that piece, you know,
56:34
what I yeah,
Mark 56:35
what I'm hearing you say is that, and there's a lot of people who have said something to this effect, Tim Ferriss talks about this in a different way, he talks about the muse, and he says, if you've got an income stream, that's you don't have to spend a lot of time on you can start making much better decisions in life. And you can you can slow down at this point, like there's, you're not in a hurry. And so what you're saying there is that if you've got a year's worth of runway, you can make a year's impacting decision, like everything, your risk in life is lower, like if you're, if you're going to run out of money in a month, and you make a decision that could cause you to not have money for a month, that's existential. And so if you've got a year's worth of money, or two years of the money and you make a month impacting decision, it's inconsequential, it's a risk, you can easily take, and you can weather the storm and figure it out. So your ability to make a decision about doubling down on your business, expanding your business, making a higher in the business, starting a new business, you know, whatever it with that one year is just like the only critical ingredient you must have to make the very best decisions.
Ken 57:41
When you have stress kills creativity, stress is going to kill like big thinking. And so if you can remove that element out of it, then you can make some very smart choices. You can be very passionate, do things the way you want to do it. And if you just look at experiences, I mean, I remember going to my gosh, it's been like I think this was like 10 years ago, I remember flying down to Vegas. And there is a speaker at a financial suppose him talking about forget technical analysis. Just look at the experience that you have with some of these, if you just invested in these companies based upon your experience, how top notch it was, I mean from it, you would have had phenomenal returns. And so Apple was one of those examples. Starbucks at the time was one of those examples. I mean, just doing things that are way better level. And so in I kind of apply that and I think great companies, I mean, I apply it for my company, I see a lot of great companies just like you know, forget the numbers once you get that piece out. And don't worry about the revenue piece. And just, I mean for me just treat people like you want to be treated and I'm pretty high maintenance, right? I mean, I like things done. Just do it perfectly. And I'm a piece of cake, but you're gonna have asked something then don't do a project for me. Because I don't want anything to do with it. What I absolutely hate mediocrity and boy are we surrounded by it. But boy do I love when you see people do things at an incredible level and are thinking big and think bigger and bigger. The way they're able to do that a I think they just they remove that uncertainty piece out they're not focused on the money piece on because that that buffers there. Now they can be creative and then now they can do what resonates for them. And I'm a huge believer that like attracts like, I mean, one of my favorite books I got to reread against haven't read it for a while, was a I believe the author's name is Richard Bach. And it's called illusions. He talks about like attracts like, yeah. And and, and I'm such a believer in that. And so if you like things that an extraordinary level, if you like nice things you like nice trips and you don't want to do mediocre you want to do it. You just want to perfect. You You treat people that way those type of people will be attracted to you and then look at what I don't even know how you put a number on the rate of return on that. That's how you create phenomenal ROI, I think, is that at some point of time, because Stop being so analytical, and you just go down to what resonates for me, what am I passionate about? What kind of service do I want to provide for others? What I loved when I got in this industry full time is like, I knew because I had that year plus, I mean, that's extreme, right? I mean, no money for a year and will will survive. Yeah, it was pretty likely money was gonna come in. But the very but but also what I wanted to do is I didn't want any type of conflict of interest. I think a lot of people regardless of what profession, if they're struggling for money, they might make some poor, they might provide poor advice for their client. There might be a bias there. There might be mindshare. That's not in the best interest of the client. Yeah, for sure. And, and so but then now it gets you into me, I don't have me at home is me at my company. I just believe in pure transparency. I don't think there's these dual lives for me. I hate it. Like, I mean, that's also I'm not really on Facebook or anything. I'm marketing people put stuff up about the company, but But apparently, my wife is explained, there's a lot of people put stuff out on social media like Facebook, that is their second life. Like that's not really them. I was like, that is so weird and confusing. And how do you keep up with that crap, right. So I just think, I think it could be at a big corporate level. I mean, my IT company that I chose is I just love the messaging from the CEO. I mean, the guy ran the whole thing, all the way down to who's answering the phone, one of the best ways. I like I know how I'm gonna invest in a company or be a part or align myself with a company is I want to hear how that phone is answered. And everyone's equals in the company, but they have different roles, obviously, CEOs will be paid way more, or principals will be paid way more than whoever's answering the phones. But for even at that level, it tells me everything from up top, if they're answering the phones well, and the people put paperwork together, I don't care if it's an investment or real estate, but from beginning to end, everyone in between is done at a phenomenal level that that just is everything about high right, that says everything about a company. And and I think the way you get that is again, just chasing what you believe in. And if you're not worried about the money component, and you just work on your, your monthly habits, your weekly habits, your daily habits, it's all on, you know what?
Mark 1:02:25
Absolutely,
Ken 1:02:26
yeah, that's where you're going to create incremental value, and then the money will come, the ROI will come.
Mark 1:02:32
I love that point. And we made several really good points. And you know, we've covered a lot in the last hour. And I think that this idea of what it's all about, earthing kind of ties it all together. And so I'd love it if we could kind of end on that point. And I'd love you to kind of sum it up in maybe what I would call your passionate plea to entrepreneurs right now.
Ken 1:02:59
My passionate plea, like like next steps,
Mark 1:03:04
printers, if you're listening to me right now, here's what I want you to take away from from now and into 2021. You know, what, what do you what are you asking them to do that they might not do?
Ken 1:03:14
I had a great meeting with entrepreneur yesterday. Like they're trying to make a big move for 2021 brilliant mind young family entrepreneur. And so it very mirrored a lot of the ways I think and maybe this will be my, I'll let I'll hit on a few things. Is that okay? Jeff? Yeah, my plea is a don't do it for the money, do it because you're passionate about it. Because then it's fine. If it's something that crease and Chroma joy, it will feed itself, you'll be you will end with more energy than you began with. And then so if it's got it's gotta be I think something you're passionate about something that has meaning to you. Not like hey, I love tennis, but I can't be a professional tennis player. That's not what I'm meaning like I look for something you're really good at you're really skilled at and something you believe in, that'll be very rewarding. And then you're getting paid to do so over time. So I will say for entrepreneurs, a number one, what's your exit strategy, you got to figure out your exit strategy. You want to get into this company you want to create this company. I think you need to understand how you get out first, hey, getting out five years 10 years. What is the long term thinking? Also, boy did we beat on it a lot today, but I can't overemphasize enough is like you got to have liquidity you got to have where you got to have that money readily available. Because when you have that kind of certainty, you're in control the money you're not in a position to be financial slave right? You're not a predatory position where you're prey. And so is like really find a way think of extremes. What can you do, what sources can you have so you haven't Cremona liquidate around you. So that You can outlive some trying times with your company. And then also surround yourself with a team, you're not going to be an expert, the one area you're an expert in, there's a lot of other pieces there. I mean, you know, as an entrepreneur, you're gonna have to have a good tax attorney, you have to have a good and by the way, your CPA, but most CPAs, don't focus on tax strategies. They just love auditing and doing books, and then kind of do the paperwork as a service, but you're going to have a strong tax rate, you want a strong financial strategy, you're going to want to have some good mentors, peers, a mastermind, to in that area to to bounce ideas around. Because there's things that might be super simple that you just didn't think about that that mentor or that mastermind, were bringing to your attention. So I think having that kind of a close network, people closely aligned that have an invested interest in your success would be a great ways for entrepreneurs, I think that's my plea is, is don't try to do it alone. Don't be alone on Island, be passionate about it, make sure you've gotten incremental liquidity, and it can be formed like equity lines of credit, cash, good people that you know, will lend, right that you trust, anything you can do avoid banks is great, in my opinion, unless you got some good connections there. But I would say those are pieces to really consider love it, man. And
Mark 1:06:21
it's great stuff. And the one thing I really think was worth highlighting and all this stuff was great. But one of the things we don't hear enough about I don't think for entrepreneurs is protecting your defensive money strategy. I think a lot of entrepreneurs thinking it's all about putting on the credit card, having me betting it all on red, sleeping on the couch. And there are some great stories that people have done that. But the pressure that is put on an entrepreneur to make decisions and desperate decisions, especially in subsequent years, the first year is sometimes the hustle. And some of the things that throw you into entrepreneurship can be any number of scenarios that maybe it's maybe you had no choice, and maybe you had no money, and you for whatever reason didn't have a job and had to start and so I get that. But if it's in year two, or year three, and you're still running this idea that I don't have cash, because I'm an entrepreneur, that's not helping you be at your best and really understanding how to create a defensive strategy around cash to take the pressure off of things going wrong. Being so catastrophic, I can't emphasize that enough. Well, I can't I'm so grateful for the everything you shared tons of stuff in here. And I really loved the mindset the way we kind of created this, I talked about this defense wins championships and really beat that drum because I cannot stress that enough. I work with a lot of companies who really are struggling to get their mindset out of the invest every dollar every minute every second into a possibility that leaves them sort of without anything to invest with something really big comes up and they always are kind of at that edge. So I'm grateful for that. If somebody wants to hear, continue the conversation with you, how do they find you?
Ken 1:07:54
Best way reach out to me two things. Just learn more about what I teach my approaches and my rambles and ideas. You know, I host the engineer finance podcast, you can find that and all the big players, right, apple, Spotify, etc. And also just go to if you want to just you have a question, you want some help to take the next step, go to my website engineering, finance comm there's a button in the upper right hand corner it says you know, scheduled time to talk with me and I'd be more than happy to talk to you for 15 minutes and see what I can do to help. And those are the two best ways to reach out to me engineer a finance calm and just listen to my podcasts engineer finance podcast, you can hear all my rants on that area. Awesome and ideas. Well, Ken, I'm
Mark 1:08:35
grateful and I'm sure that'll be helpful for people. That's it for today. Everybody's been listening. Please don't forget to subscribe, share with friends give us the feedback. The feedback is so important for us good and bad. Everything you got bring it to us. It's super valuable to us and get this podcast link into the hands of the people who can benefit from it. And so that's it for today. We'll see you next time on you're doing it wrong with me. Mark Henderson, Larry,
VO 1:08:59
this is you're doing it wrong with Mark Henderson Leary for more episodes and to subscribe, go to lyric.cc