Transcript: Financial Independence Retire Early [FIRE] for Entrepreneurs | DS634

Disclaimer: None of the content is advice for Ben or you or anyone. These are just stories. So go to your own professionals for advice if needed.

FIRE Chat Kickoff

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[00:00:04] Doug: Hey, what’s going on? Welcome to “The Doug Show.” I’m Doug Huntington, and today I’m chatting with Ben Bosze again, and we’re gonna talk finance and financial independence. The origin of this episode, we were just chatting before the, uh, previous interview that we did where we talk about Ben’s business, is Tech Lockdown. So if you didn’t check it out, definitely do it. But was giving Ben a little intro and mentioned that, like, my wife retired a couple years ago, and I’ve been, semi-retired, mostly retired for the last few years myself. He was interested, and I was like, “Oh, this is perfect.” He wanted to ask a few questions, and I thought, “Let’s just record it, and we’ll have a show.”

So Ben, welcome back. Um, I’m excited to get into some details. Now, um, people didn’t hear the other episode, they should just go back. But you run your own business. You’re self-employed. You’ve been doing it for about three years. Is that enough to give people, uh, an idea of your background? Yeah, full-time on it since, uh, three years, and I was previously in, you know, fully, uh, employed getting, like, a typical W-2 salary. So I’m really curious to see FIRE in the context of, like, I’m juggling a business. It has, it has profit. Like, what do I do with this profit? How do I be responsible as a business owner, but also think about my eventual exit?

[00:01:30] Ben Bozzay: And so you’ve got, like, the full stack for those, those answers.

[00:01:35] Doug: Perfect. One, uh, baseline that we could lay out is just our ages, and I’ll give a little bit of background on, like, the FIRE concept if people aren’t familiar. So Ben, how old are you? I’m 33

So young. Wow. That’s amazing. Yeah, yeah. I, um, we didn’t even calculate our net worth until we were, like, 35. So I’m 47, and my wife is f- I think she’s 48. and basically, like, you know, we, we had about, um… Or for me, I, I worked about 10 years in a corporate job before I got laid off, and my wife worked, I guess sh- she was closer to about 20 years. She got out of school, um, faster than I did. I took a long time in college. So anyway, she had a few more years under her belt.

The 4 Percent Rule

[00:02:29] Doug: Uh, the main idea with, uh, the FIRE movement, financial independence, retire early, you save up a nest egg. The sort of rule of thumb that will throw out, it’s a good rule for, like, accumulation, uh, the 4% rule. So you could flip it over and then look at your annual expenses and multiply it by 25.

The reciprocal is 4%, and generally there, there have been some studies that indicate could withdraw about 4% of your nest egg per year and essentially have, I can’t remember, it’s like a 96% success rate where you never run out of money, even if you consider, like, the Great Depression, or there was, like, a, a flat timeframe from 1968 to, like, ’81 or something. And then another which impacted, like, m- my timeframe, it was, like, Uh, maybe ’99 to, like, 2012 or something like that. But anyway, if you save up 25 times your expenses, you should be in good shape. And is that roughly… Like, ’cause you, you have some ideas around FIRE, like you’ve studied it a little bit, right?

[00:03:49] Ben Bozzay: Uh, yeah, I know the general concept. I think I’m hazy on quite a few details. But I guess when you say 25 times your expenses, is this annualized or is it, like, on a monthly basis?

[00:04:01] Doug: Annualized. So um, back in the day, the shorthand people would use is like, okay, if you ha- if your expenses are 80 thou… Or sorry, if they’re 40,000, you need to save ’cause that’s 40,000 times 25. That was a long time ago, and things are expensive now, so 40K Right

pretty low. Um, 80K is a little bit easier.

Just double it So if your expenses are 80K, then you would need to save two million, and that’s invested. this is not financial advice. is just, uh, stories that I’m telling. This is what, , people talk about, but none of this is financial advice to you or anyone. , Yeah, so 80,000 is probably a decent rule of thumb. Of course, it depends on, like, w- where you live. Some cities, some states are gonna be, like, way more expensive than others, and it’s just not realistic to live on 80K. But again, that’s a good shorthand. So yep, annualized expenses.

Track Spending Basics

[00:05:03] Doug: do you happen to know your– You don’t have to share it, but do you know your annual expenses?

[00:05:08] Ben Bozzay: Um, it is a fuzzy gray area. There’s, uh… I use, like, Monarch Money to try to, to track things, but, uh, it- there’s just still too much complexity there that I don’t ever… I could never tell you off the top of my head, like, “Here’s my cash flow each month, and here’s…” ‘Cause there’s volatility with my business too, right?

Like, some months are super good, um, others are just flat, right?

[00:05:33] Doug: Yep

[00:05:33] Ben Bozzay: Um, so I, I couldn’t tell you precise cash flow. Um, I have some idea of monthly costs that, that are, like, baseline, like mortgage, HOA, utilities, what they generally run. Um, but yeah, I mean, those are the stable expenses. Uh, I don’t buy groceries that much.

Um, usually my wife handles that ’cause I screw it up. Um, uh, but I went to Costco last week and, and did, like, a grocery haul, and I was like, “Honey, um, that was $350. Is this what we spend, like, for Costco runs? And is this, like, every week, every two weeks? Like, what is this?”

[00:06:12] Doug: Yeah

[00:06:13] Ben Bozzay: she was kinda chuckling about it.

And, you know, I went to the K- King Soopers recently and picked up, like, a small basket of stuff, and it was $35. So I, like, I don’t have a good concept on what things cost. I’m still in, like, 2020 prices in my head when I was, like, a, a bachelor and all that.

[00:06:32] Doug: Yeah

[00:06:33] Ben Bozzay: so yeah, I’m probably not your best pa- uh, student in that regard.

[00:06:39] Doug: No, I mean, a lot of people are in that boat. Again, like I had no clue until, you know, a few years ago really. Again, like we didn’t calculate our net worth until I was 35. So, um, should be fairly straightforward figure this out. So you probably use credit cards or some electronic payment like, what, 99% of the time?

[00:07:05] Ben Bozzay: Oh yeah, yeah

[00:07:07] Doug: All you need to do is, um, download. I think you should definitely look at at least a year. Two years is even better. Um, but just download the CSVs from your credit card, wherever the transactions are at, right? There’s always some anomalies, but, I mean, y- you’re good at spreadsheets. You should be able to do this pretty quickly. If, if you’re not and s- someone out there is like, “Ah, like that sounds pretty difficult to like pull all that and sort through all the data,” I mean, people will be like, “Oh, look at the last quarter, look at the last couple months, and that’ll give you

[00:07:46] Ben Bozzay: Yeah

[00:07:47] Doug: The thing is, there are annualized expenses that don’t pop up all the time, so will miss stuff if you don’t look at a couple years. And then for you with kids, I mean, it’s a little lumpy, right? Like you don’t

[00:08:00] Ben Bozzay: Yeah

[00:08:01] Doug: what’s, you know, all the costs that are gonna come up. But like, you can just pull those CSVs down, and then you could lightly categorize where… I mean, you already know some of the essentials, which are like, housing and some insurance and whatever, car payments or something like that, where those are gonna be like kind of essential. And then there’s other discretionary things where you’re like, “Well, we spent whatever, eight thousand on, ten thousand on vacations last year, but the previous year we only spent six or maybe spent fifteen or whatever.” So there’s some stuff where like those are discretionary and you could, you know… It’s not gonna go to zero.

You would probably never not take any vacation, but maybe the scope changes to, you know, you’re going camping or you’re gonna visit some relatives, and that makes the cost go down quite a bit. So super easy. I mean, it should take you like an hour or something like that to just figure out your annual expenses. And then boom, could multiply that by twenty-five, and again, it’ll give you like a ballpark number of what you need to accumulate.

Accounts Taxes and Exits

[00:09:07] Doug: Now, for you, one question is, um, so you have your business. You’re the sole, um, owner and employee, right?

[00:09:18] Ben Bozzay: Yes. I, I have a contractor, but yeah, I’m the only, like, employee

[00:09:21] Doug: Okay. Another time where this is not advice, but are you, um, classified as an S corp already?

[00:09:29] Ben Bozzay: Yeah, so last year I switched over to S corp

[00:09:32] Doug: Great. Do you have a solo 401already?

[00:09:36] Ben Bozzay: Yeah, I did. I contributed to it last year. Um, I don’t think I have it anymore this year ’cause I s- I canned the relationship with the company that was managing it. Um, so yeah, I think I’m back to, like, a SEP IRA through Fidelity ’cause that’s, like, the thing I can manage myself. Um, but yeah, the, the– Sorry, are you saying tax deferral accounts are, like, a core part of the strategy, like maxing those out basically?

[00:10:04] Doug: Um, necessarily. I mean, it’s a very good thing to do. and we can kind of… I’m not– There’s a lot of ways to do it, but the reason why I asked that one is as a self-employed person, you could put in a lot more than the normal limit for, like, a 401. Um, I don’t know the exact limit, but it’s on the scope of, um, it, you know, it’s your normal If you’re not self-employed, you could only put in, like, twenty-two thousand. But as a self-employed person, you could put in the twenty-two thousand as an employee, but you could also put in another tens of thousands of dollars as the employer. I can’t remember what the limit is, but it’s something like seventy thousand dollars.

So instead of just being able to put in twenty K, you put in, like, sixty-nine K or wh-whatever it is. It’s pretty high. Are you familiar with that portion of it?

[00:11:07] Ben Bozzay: Yeah. That, um, I wasn’t, I don’t remember, yeah, the exact number or how high it was, but I do, I do remember thinking like, “Okay, the SEP IRA is like kind of a small amount.” It’s basically what you would contribute as an employee, but you don’t get the employer match on it. Maybe I’m wrong. This, this could be totally wrong.

Um, but then the solo 401k, like that was what I was reading was the, was the move. Um, but my concern was always like, okay, if I, if I lock up this cash in a retirement account, there’s this penalty if I withdraw it, if I need it now. If I’m trying to buy a house or my business has problems, I need to, I need to inject some cash, like do I, if I defer too much money, I’m actually, you know, potentially shooting myself in the foot here.

But if I can see like on the horizon like, okay, my, my 25X goal is achievable in 10 years in my current run rate, I might think a little dif- differently about it. Um,

[00:12:05] Doug: Yeah

[00:12:06] Ben Bozzay: but I’ve never put those thoughts together actually. It’s the first time I heard those me- those numbers.

[00:12:11] Doug: Great. Um, yep, and you’re thinking about it exactly right. So Another thing to mention, I, I’m gonna, I’m gonna lay out more foundational stuff, and then I’ll jump back to that. Um, the other is around, like, a Roth IRA. So a Roth IRA is great because, you know, you pay the taxes now, then you invest it. You can’t get to it until you’re 59 and a half easily, uh, just like a 401or an IRA. However, it grows tax-deferred, so you don’t have to pay taxes on it later, where a traditional IRA or 401, you do have to pay taxes when you withdraw it 59 and a half or later. That said, um, you can get to the pre-tax, tax advantage accounts. You could pay a 10% penalty, which bad. You have to pay taxes also. At the same time, like, if you’re leaving it in for, like, a decade or more, there’s a chance, like, even with a 10% penalty, like, it’s still a good financial move. There’s also something called the 72t, where you can withdraw money, um, uh, on a r- I think it’s annually. It’s a fixed amount. It’s a little bit more complicated, but it’s a way to get to that money beforehand a penalty.

You still have to pay taxes, you can get to it ahead of time. All that to say, the other option, which you’re, you know, exactly, um, thinking about it the way we did. So at some point, I was like, “I don’t wanna keep working until I’m 59 and a half.” So you can invest it in a post, post-tax brokerage account, which is just, like, an investment account. Mine’s at E-Trade. My wife has one at, um, uh, Merrill, I think, like, through Bank of America or something like that. But, um, you just invest there, and it’s taxed, whenever you it, you have to pay capital gains on it, on how much you’ve sold. But I think the limit for a married couple is something like $96,000, so you’d have to have, like, over 96,000 of capital gains before you get taxed.

Again, none of this is advice, but

[00:14:38] Ben Bozzay: yeah, I’ve heard that.

[00:14:39] Doug: Yeah.

[00:14:40] Ben Bozzay: Yeah. Okay

[00:14:41] Doug: So, uh, I mean, like, it’s, um, it’s something to pay attention to, but most likely, depending on when you invested and how much the capital gains are, ’cause you’re not taxed on the initial investment. You’re only taxed on the gain. for example, I’ve sold something like, uh, say, $45,000 of, um, equities this year, and the capital gains portion was only, like, 23,000.

[00:15:12] Ben Bozzay: Yeah, and since, so since you’re re- you’re retired, you don’t have, like, your, your, your tax bracket is basically there, right? ‘Cause you don’t have the, like, the W-2 income that you’re paying taxes on every year. It’s basically if you… Correct me if I’m wrong, but if, if you sold 100K and you profited 20K, your, like, tax return basically says 20K for what you owe the government, but you’re, you’re not reaching that 96K threshold

[00:15:40] Doug: Yep. In the ’90, generally, yes, we do have a, an accountant. So like I understand the main concepts, but, um, generally yes. the other thing is like our investments are large, like you could im- imagine. So like we have dividends even though they’re not dividend stocks, they’re just Vanguard index funds basically. Um, still pay off like tens of thousands of dollars in dividends, so we don’t reinvest that anymore, and that counts as income. So it’s like whatever we sold plus the dividend, dividend income from those equities

[00:16:22] Ben Bozzay: Right. Okay. Yeah, so from a, from an investment standpoint, are you taking very conservative, um, investment approaches where you’re basically buying like maybe like the S&P index as, as like part of your portfolio, and then some of it’s dividend stocks so that you have, uh, consistent cash flow?

[00:16:41] Doug: No dividend stocks. So like generally that’s a worse, , th- a lot of debate on the internet, but I don’t pay attention. , We just have index funds, so s-super simple. , I think I have total market, VTI, some international, about 30% of the equities are that. And then I think between my wife and I, we have like, , the total bond probably about 25%.

I can’t quite remember. So roughly conservative, no intentional dividend stocks. So we… The funds that we have, some of them do pay dividends, but it’s like 1% or something like that. Very low. And typically, when people are looking at dividend stocks, they’re like, they don’t grow as much, but maybe they’re paying like 5 or 6% or something like that. But they don’t… I mean, people have different approaches. They don’t grow as much. The returns are lower overall if you look at dividend stocks. A lot of debate on that, but yeah

[00:17:48] Ben Bozzay: Right. And so I gu- I guess another question I have floating around, you’re clearly not at retirement age. Um, so is FIRE is not necessarily take a solo 4- 401, max out retirement completely, put everything into retirement, and hit this age. Like, do you declare retirement? I, I feel stupid asking this, but, like, is it an age thing?

I hit 59 and a half, and now I have this tax, uh, situation that I can finally draw on these accounts?

[00:18:16] Doug: Like the definition of, like, retire or whatever?

[00:18:20] Ben Bozzay: Yeah, like what does that mean?

[00:18:22] Doug: For, and, and I mentioned probably in the other interview, like, my wife is way more conservative financially, but, like, she needed to feel really comfortable to leave her corporate job. She was like, “I n- I don’t wanna ever go back. I don’t wanna have to go back ’cause we made a error in our spending or something.” So for her, it was like, “I’m quitting my job, and I don’t… Like, I don’t need the job anymore, don’t need the revenue, income, whatever.” , So for her it was That For me it was it’s fuzzy because I was self-employed since 2015, and I reached a point, I think it was around 2020 or so, where I was like, “I think I wanna do a little bit less.”

So looking back, I probably did about 20% less each year. Um, not intentionally. I was just like, “I don’t like doing that activity. I’m not gonna do it anymore.” And a- a- for a while, like, the revenue stayed about the same, but through changes in the industry and my motivation, like, revenue went down a little bit, which was totally fine.

I mean, I was like, “We’re gonna retire early.” The other thing is, like, I was hanging out with, like, entrepreneurs and stuff, and, like, they were interested in growth and doing more, and I was like, “I don’t wanna, wanna answer emails anymore.” Like, we got introduced via email, like, three months ago. I just emailed you yesterday. Horrible.

[00:19:56] Ben Bozzay: flex, by the way. I was like, “Whoa, this guy actually made it. Like, he can optionally turn off email for three months.”

[00:20:04] Doug: Crazy. And I tested it along the way, and, um, appreciate that, by the way, but, like, in… I turned 40 in 2019 and, like, went on a trip to Alaska for, like, six weeks, like, everything ra- Like, I set everything up to go. I brought a laptop, but I, like, only popped it open here and there. I would check in, like, once a week, and it was awesome. So I, like, tested it, and I was like, “This is intoxicating. This is amazing,” to not have to be, like, checking things all the time.

[00:20:40] Ben Bozzay: Man, that’s my fantasy. I’m- I, I really hope I’m there someday. That’s probably my biggest complaint is, uh, I don’t wanna be at a certain place at a certain time. And even when you have your own business, you still have that partially, right? You have more control, but you still have to do that. And I don’t wanna be, like, on the hook for answering customer emails and things like that.

I just, like, I wanna be able to just space out and not have all these stressors in the background

[00:21:08] Doug: It’s great on the other side. You’ll get there. you’re young and you got a lot of stuff going. It, it’s really awesome. So to, I guess to finish the answer, for me, like I slowly did less and less, and then I Turned off my marketing, and then I turned off, like sunset the courses.

So at some point, I was like, “Building websites is harder than it used to be. I’m not learning anything new, and it’s not fun.” So I was like, “Ah, if I don’t have to do it, then I’m not gonna do it anymore.” And then the material in my courses was not relevant anymore, s- niche sites, content websites. So I was like, “You know what?

I’m not gonna sell it anymore.” And then a year later, I shut them down. I gave everyone access that asked for access, so they have like the videos and materials. But, um, I mean, there’s some ideas that are m- more evergreen, but like the core concepts, I mean, it’s not, it’s not helpful. So I

[00:22:13] Ben Bozzay: Right

[00:22:13] Doug: shut all that down.”

So for me, I was like comfortable saying I retired when I turned off the revenue. And for, you know, for my own engagement, like I enjoy doing these podc- like I have a couple podcasts. That’s fun. There’s still overhead. I mean, there’s still like… I’m like, “Ah, I have to schedule it,” and I question like, “Is this doing… Is this still fun?” I could quit at any time, and it doesn’t hurt revenue or anything like that. The other thing, we’re currently in a weird situation where, um, healthcare is kind of expensive, there’s healthcare subsidies if your income is low enough. So basically, if I earn a little bit too much money, we have to pay back those subsidies, which are we’ll just call it like $7,000, give or take. it’s not nothing, and we could afford to pay it, but it’s also like a weird game. And, and it’s not a progressive prorated situation. It’s like if we go like $1 over, we have to pay 6,000. So I’m like, “Well, I can’t earn too much money.” And then it also impacts… This is a dumb, stupid problem, but it’s like we also, if we sell those equities that I mentioned before, that can push us over from a capital gains perspective, um, which is separate th- from the 96,000.

Like we’re trying to thread the needle, which you don’t have to worry about for a little while, but it is like a weird thing where we’re, we’re like trying to optimize around this subsidy that’s worth about

[00:23:56] Ben Bozzay: Right

[00:23:58] Doug: And it’s like, is it worth it to do this even though, like it would be easier if we could just sell more?

‘Cause we can go up to 96,000 from the capital gains perspective. But anyway

[00:24:11] Ben Bozzay: So to, to even make that possible, you, you can’t just have investments then, right? Because you have to liquidate those things to access the cash. So you have like a s- you have a savings account, I’m guessing, that you’re trying to … You’re not trying not to exceed 96K a year, and that savings account, along with selling those equities and your expense, uh, and your, your cash flow is en- is enough.

Like, it’s, is, is that it?

[00:24:37] Doug: Yeah, I mean, we, we can because we’re trying to thread the needle there, um, with the ACA subsidies. That is challenging. Um, but, but yes, we do have like sort of a, buffer, which, you know, there’s some debate. On my other podcast, my, uh, co-host m- he was like, “Yeah, well, I have like a month in there.” And I’m like, “Dude, that is so, it’s too lean.”

But he’s been retired for like 20 years, so.

[00:25:08] Ben Bozzay: Oh my gosh

[00:25:10] Doug: some people have a, um, a very large cash buffer. So I have another f-friend who’s older. He’s about, , I think he’s about 60, but he’s been retired for about 10 years. And he, I think he may have like 10 years of cash because, like, the market has been returning more than he anticipated. So he has, like, way more cash what most people would recommend at all. But he’s like, “I don’t wanna think about it.” All that to say we have a good buffer. , We don’t… If I sell something, I don’t need that cash immediately. It’s for a few months ahead of time. And just overall, we have about a year of cash, if that’s

[00:25:55] Ben Bozzay: Okay. Yeah, that is, that is helpful. Yeah, it do- it does sound like, you know, on the surface FIRE is like, oh, set aside all this money. But there’s actually, there’s actually a science to, you know, how you portion things out, w- how much you’re putting in certain accounts, which ones are tax advantage, which ones are pre-tax and post-tax.

So yeah, I can see why, like, you have an entire podcast around this, ’cause you could probably talk endlessly about all the nuances and decisions you should make, and should you exceed 96K on a year to, to build up more of a savings nest egg for the following years ’cause you’re planning some purchase. Um, yeah

[00:26:34] Doug: Y- y- you got it. And the thing is, like, you know, you have years where you’re gonna keep working, so you can slowly build it up k- knowing, like, “Hey, you’re gonna retire in five years,” so you’re like, “I’ll save a little bit more here.” Um, and two points I wanna make real quick, and then I’ll, I’ll make sure to let you ask questions, ’cause I’ve sold a couple things over time, and I could tell you a little bit about, like, the revenue over the years as far as, like, the percentage breakdown. A couple things I wanna mention here. I talked about the solo 401and only wanted to bring it up because you have a very good opportunity to set that up and put, you know, large chunks of money into that. I only did it for one year, so it was completely not necessary. I happened to sell a big website, so I just had a lot of money to invest, and I was like, “Oh, this is a good way to put away money and not have to pay taxes on it.” , So that’s one area that I could talk about quickly, and you could ask some questions. I built some websites, and I sold a few. Never, , super huge. I always sold a little bit too late. There was always something that, like, dropped revenue, like, while someone was looking at it. one I partnered with a friend, and we sold it for about, I think it was, like, two thirty-five or so , I was very small minority partner in that. , And th-that was great, so that was a decent little payday. And then another one I was the sole owner, and I think I sold it for, uh, it’s been several years, I’ll say around one sixty or so. So that was a good little chunk as well. And then over the years, I sold a few smaller ones under twenty thousand, say. alongside that, I had the online courses, over the years brought in, tens of thousands per month sometimes, and other times it was much lower. And roughly the breakdown was, I mean, it was about fifty-fifty or so. Um, there was always a little bit of other revenue coming in from different partnerships or maybe affiliate stuff. But, I always made less from the courses than everything else, if that makes sense. So that’s one area where you, you hear people online, they’re like, they do one little thing, they just sell courses, and that’s how they m-make most of their

[00:29:09] Ben Bozzay: Yeah,

[00:29:10] Doug: Mine was always, you know, pretty well-balanced.

But, , yeah, that’s o-one area that you wanted to ask about a little bit as far as, like, you know, , big exits or anything like that.

[00:29:22] Ben Bozzay: Yeah, I mean that very relevant to my situation, especially the multiple income stream because, like, I have a web a- web agency that failed, but actually I still run it, like, very part-time, and it- it’s like 3,000 a month in cash flow, something like that.

Selling Your Agency

[00:29:40] Ben Bozzay: And I’ve thought, like, maybe I should just sell this thing and get it off my plate, but I, I have no clue how that even starts, and you’ve sold, like, three websites, so I’m curious, like, how did you get a buyer?

Did you list it on a marketplace? Like what– like how did you know to sell it?

[00:29:57] Doug: Yeah, so I, I went to marketplaces typically, , and I, I’m trying to remember. I think Yeah, there, there’s a few out there, and there are, you know, buyers out there looking. That said, I mean, the market has shifted over the years where, um, you know, now interest rates are a little higher. People don’t have as much money, and it’s more expensive for them to borrow it.

So the market has definitely changed. But, you know, from that standpoint, you know, we talked about it in the last interview, one great way to approach it is from competitors and the strategic acquisition. Totally makes sense. They get more value out of it than, like, some random person that just has, like, a nest egg that, and they’re like, “Oh, told me I should buy a business, an online business,” and they don’t know anything about it.

Like, the competitor will get way more value from it, and they’ll pay more subsequently. But, know, for me, uh, in hindsight, I’m like, I always sold a little bit late. And I think that’s… I mean, it seems typical from what I’ve seen, and I think it always looked better, o- only later when… I mean, I feel like you should sell something when people are like, “You’re crazy for selling right now,”

[00:31:24] Ben Bozzay: Yeah. That’s what I’ve heard

[00:31:26] Doug: Okay. Yeah. And like, that totally makes sense because, like, it also, like, gives the buyer, like, some growth trajectory, hopefully. yeah, like, once it looks very clear to everyone that you should sell, then everyone is selling. And then, like, y-

[00:31:42] Ben Bozzay: Right

[00:31:43] Doug: volatility out there. So a tough decision to make.

And, you know, when I… I don’t– Obviously, I have no idea what your financial numbers are, but you’re like, you’re doing the, um, the agency on the side. You’re making money. It’s good. Probably doesn’t cover your expenses. A- again, we live in the same metro area.

[00:32:03] Ben Bozzay: Yeah, yeah

[00:32:04] Doug: not cheap around here, you know? But I’m like, “Ah, if you, if you sell, if you sell the, the business, and then you’re still able to get some cash flow on the side,” I’m like, that covers, like, a pretty decent chunk of probably what your expenses are annually.

And d- does your wife work currently or…?

[00:32:26] Ben Bozzay: No

[00:32:26] Doug: Okay. So it’s like, you know, you gotta, you gotta cover a lot. , At the same time, you know, you guys are young, and, like, maybe she wants to go back to work, , or start working or something like that sometime in the future, whatever, like eight, years or something like that. then, I mean, you’re a scrappy go-getter, right? I mean, you don’t wanna sit around and do nothing.

[00:32:49] Ben Bozzay: Yeah

[00:32:49] Doug: lot of people say. even if you, like, decompress and chill out, in a few years, you’ll get bored, and you’re like, “Oh, I wanna start this new thing now.” Probably, you know, you can’t predict what it is and, , but you’re motivated, so like surely after some time you’d be like, “Oh yeah, I wanna do this other thing.”

So

[00:33:10] Ben Bozzay: Yeah, I think, um, ’cause I, I have that alongside the, like my full-time business and, uh, another partnership. So it’s like, uh, it used to be a more significant cash flow stream where I was like, “Oh, this is great. Like, I can take a little more risk ’cause I know I’ve got this cash flow from the, from this agency.”

But now I’m starting to measure like context switching, context switching, and sure that I’m getting cash flow from this, but it’s a big interrupt every once in a while where I can’t focus on the things that have more leverage ’cause I gotta go work on this thing, and my upside is capped on it. So I’ve thought about if I could liquidate it, it would c- it would be helpful just from having one less thing on my plate and being able to focus on the, on the real w- uh, things that I wanna focus on.

[00:33:57] Doug: Yeah

[00:33:58] Ben Bozzay: so I… It sounds like– But you didn’t sell like eight, you didn’t sell… You sold websites that were probably like marketing machines where someone could literally just take it and plug into it rather than like a human r- a, a, a business that requires a human to really run it and operate it, right?

[00:34:15] Doug: Yep, correct. Yeah. And, know, that is something ’cause you’re doing like the, essentially the account management, the client management stuff, right? So it’s

[00:34:25] Ben Bozzay: Yeah, it’s like host- it’s, it’s basically like, uh, maintenance, you know, like the typical maintenance stuff. A IT company could do it pretty easily, but you know how it is when someone’s worked with you for a long time and you’re like, “Hey, I’m passing you off to this other place.” And, you know, they might lose the client, and then the business loses the, the value overnight.

So I just… I don’t see how to sell it, honestly

[00:34:48] Doug: Yeah. Well, I mean, what’s the alternative though? It’s just like you shut it down. So it’s like

[00:34:54] Ben Bozzay: Y- y- fair point.

[00:34:55] Doug: result. , Whi- which is a re– I mean, that is a reasonable way to look at stuff where it’s just like, okay, what’s the next most likely conclusion that we can, outcome? like, well, you may as well try to sell it. and then, I mean, from that perspective, I mean, I have heard really interesting stories about people with agencies selling those, especially if it’s like systemized really nicely where someone could come in. Again, a competitor does make sense just from that standpoint, but be a little bit unclear.

I- is it, um, is it any sort of location-based, uh, does the geography matter? It could be managed from anywhere.

[00:35:40] Ben Bozzay: Yeah. I mean, it’s, uh, it’s a remote agency.

Valuation and Multiples

[00:35:44] Ben Bozzay: It’s, uh … I’m, I’m partnered on it, so my, my cashflow from the, my side of the partnership’s 3,000 a month. Um, so yeah, it’s, the actual cashflow is about 6,000. And, um, I think the other partner’s, like, way too busy with other stuff. And, um, even the customer that we have that’s giving us the cashflow wants to pay us f- f- for more stuff, and we just basically have to, like, defer and push it out and say, like, “No, we can’t do it.”

And I feel b- I feel bad for the guy. Um, but he doesn’t wanna work with … He doesn’t want, doesn’t want us to not keep maintaining his, his stuff. And we have some smaller clients too that are, like, hosting and, and all that. So those were from the glory days, man, like back when agencies were a little, a little

I don’t know where they are now, if they’re as viable, but, um, yeah, you could sell hosting and all that. It was the glory days.

[00:36:38] Doug: It is cr– yeah, yeah. L- looking back, um, things have changed so much. yeah, very interesting problem ’cause some people would be like, “Oh, I would love to have, like, the side income,” and they’re, they would be like, “It would be amazing to have, whatever, 3,000 per month plus more work that you guys don’t even have time to do.” Um, and you have a partner, ’cause I was like, “Oh, sell, sell to the partner,” but he’s, he’s busy too.

[00:37:07] Ben Bozzay: in the same boat. We’ll probably try to sell to each other at the same time, like, “Hey, why don’t you buy me out?” And then he’ll try to say the same thing

[00:37:16] Doug: Yeah, that’s crazy. Yeah, I don’t know. But I mean, I assume like there would be some value and I mean, it’s making 6,000… I mean, you should be able to sell it for like whatever, couple hundred thousand dollars, right?

[00:37:32] Ben Bozzay: I have no concept. I,

[00:37:34] Doug: like that

[00:37:34] Ben Bozzay: uh, yeah, I would, I would have to do so much research. I don’t know what anything’s worth anymore. And, um, yeah, I mean, when you sold, you sold a site for, did you say 225?

[00:37:45] Doug: Something like that, yeah

[00:37:47] Ben Bozzay: So what was the, uh, ’cause it was probably a combination of MRR plus, like, your marketing assets, right? Like, you probably had a good amount of search engine reach

[00:37:55] Doug: Yeah. And it, this was a long time ago, and that, that was the one that I partnered with a friend. , So again, I was just minority partner in that. But it was, , classic, , niche website with Amazon affiliate was like the main thing. , And this was in 20… Long time ago, 2017. So again, the glory days. So those were big commission rates.

It was getting a ton of traffic, and, , it was, know, just for that cash flow. So it was just the, the monthly revenue times whatever, like 36 or something like that

[00:38:36] Ben Bozzay: 30, uh, 36 multiple?

[00:38:38] Doug: Uh, yeah, something like that. So that’s like three X annual

[00:38:43] Ben Bozzay: Wow. Yeah, that’s, that’s amazing. I mean, but also I was, I was watching all these courses for, like, niche sites probably around the same time period, and it, it helped… Like, you could have sold… You, you absolutely had the credibility to sell those courses because you had actual, like, an actual track record.

And the worst thing was getting a course from someone who was like, “I’m not sure if you actually were successful, like, did you… Or if you’re just really good at selling the course.” So at least the, like, that’s a great, uh, thing about your, your history, honestly. Like, you have, you’ve had skin in the game, you’ve practiced what you’ve preached.

Like, that’s great, man

[00:39:22] Doug: Thanks. Yeah. You know, look, I, I actually have a video idea, um, ’cause I, I still watch a lot of YouTube, and I saw someone, pretty young guy, , but he was just like, “I f- I made, uh, $10,000 in two months,” or whatever, and I’m like, “Oh, no.” So I started watching a little bit, and I couldn’t, I couldn’t stomach it, by the way, but I was just like, “I think he’s just telling people how to, like, grow a social media following and have, like, some brand deals.” And then I think he has a course or a community, and I’m… The main idea of this, and I’m like, “Was I a scam artist by selling these?” ‘Cause I’m like, “I don’t trust this motherfucker.” I, like, I don’t know what this guy’s talking about. but his, you know, the video’s blowing up pretty crazy on YouTube. He only has, like, s- maybe 700 subscribers. The video has tens of thousands of views. It’s one of those, like,

[00:40:19] Ben Bozzay: Yeah

[00:40:20] Doug: just shot on the iPhone, I think. Pretty, um, authentic looking. But yeah, it made me question, again, of those things where I’m looking back and I’m like, “Did I come off like that when I was selling those?” But it’s kind of you to say that at least I, I had some track record out there.

But it’s tough. Make money online, super weird industry.

[00:40:43] Ben Bozzay: Yeah, and, and like I, I can see why, why you would do that because it’s the natural next step. It’s like, okay, I hit the jackpot with like I figured something out that nobody else figures out. Like just nobody does. That’s really hard to do. But I need to hedge a little bit because I don’t know where this is gonna be in 10 years, where the industry’s gonna be.

I also think it’s a good idea to do that ’cause you’re advertising, “I’m successful with this thing,” and maybe someone wants to buy it from you, which might have actually helped you sell it, right? Like you had this whole thing, and then if you sell this thing, you still have the cash flow from the courses, and you have the credibility behind it that you’ll never lose because you actually did it.

[00:41:25] Doug: Right. Yeah, yeah. Yeah, it was so long ago. I can barely remember it. I think I worked hard in those days. Uh, it was, it was something else. A lot of caffeine.

Housing Plans and Mortgages

[00:41:35] Ben Bozzay: Well, um, on a s- slightly unrelated, so g- going to, you know, we’re talking about like s- you know, sometimes you might need to, to hold onto more cash and maybe exceed income threshold some year. That’s for like bigger purchases, right? You’re … Are you currently happy with where you’re, you’re living and you and your wife have decided like, “Okay, we’re here.

We’re here for a long time. We’re not gonna move”? Or have you factored in like, “Let’s go live in some other fun place for a while. We’re gonna sell our house,” and like have you any- anything like that on the horizon for you?

[00:42:13] Doug: We like the town that we’re in a lot. Uh, more in Longmont, and we have a ton of friends here. There’s a great community. You know, walk outside, you can see the Rocky Mountains, like, right there. Do you have a nice view from where, where you’re at, right? I mean, you could

[00:42:28] Ben Bozzay: Yeah. No, it’s, it’s, it’s hard to leave this place. I, I can’t really see that happening

[00:42:34] Doug: Yeah. We, um, have… So no imminent plans. I think, like, at some point we would move, but there’s no, like, driver, and it would maybe be to go, like, closer to the mountains. So we have, um, we have some friends that they actually have, like, a second house in Breckenridge and go visit sometimes. But it’s just like you walk out the door and the trails are right there.

Like, it’s

[00:43:02] Ben Bozzay: Yes

[00:43:02] Doug: and you could walk for forever, you know? there is something cool about that. That said, you know, managing two households is, like, a lot of admin work and, you know, the

[00:43:15] Ben Bozzay: Yeah

[00:43:15] Doug: a house. So we have talked a little bit about, like, moving closer to the mountains, that sort of thing. We– In the past, we’ve done a lot more slow travel. We don’t have kids, but we have a dog that loves road trips, so we have taken, like, some slow travel things over the years. , But it has been a while. , So roundabout answer, not 100% sure, but our house is, like, very comfortable. It was built in 2020, so we don’t have, like, the n-normal maintenance that pops up after, you know, 15, 20 years, that kind of thing. So pretty comfortable. Eventually we’ll move. We don’t have a timeline or anything.

[00:43:55] Ben Bozzay: Yeah, that’s… Yeah, so you’re not gonna go, you’re not gonna go sail around, you know, the continent or anything

[00:44:02] Doug: Nope, uh, nothing like that. , That said, like from our… We, we hired a financial advisor when my wife was about to retire just to have due diligence done by a professional and have like a sort of a mediator in between us, because we have different philosophies around some things. So that, that’s helpful. And our, our estimated budget and expenses are e- essentially it’s, it’s a little higher than what we actually spend. So all, all that to say like we have a lot of slack in the system. In the last, whatever, 15 years, the returns have been higher than what you would expect,

[00:44:49] Ben Bozzay: Great

[00:44:49] Doug: oversaved. Like to your point, like, you know, if for you, e- for example, like maybe you wanna upgrade to a bigger house, maybe you need a little bit more room, like how do you budget that in?

And it is just one of those like, I think we might need… Like our expenses would change, and we have to pay more. Maybe the interest rates aren’t as favorable, that sort of thing. Um, but for us, like we’ve kind of oversaved. Like we could’ve stopped working sooner. which, I mean, I hear that from a lot of people, ’cause like people are conservative, and we try to

[00:45:22] Ben Bozzay: Right

[00:45:23] Doug: … We wanna avoid the risky scenarios, , so you end up oversaving a little bit. Which I mean, it opens it up where you’re just like, okay, like you can make different decisions on how you’re spending money, what you find valuable, and I you could test things out and see if you like it or not.

[00:45:40] Ben Bozzay: Well, so, so you, so you bought in 2020, right? Is that what you said?

[00:45:45] Doug: Yep

[00:45:46] Ben Bozzay: Um, so rates were like sub three I think then. Like, they’re, those were, those were the days, right?

[00:45:52] Doug: Yeah.

[00:45:52] Ben Bozzay: Um, so when you were going to… Oh, so you, so you financed. You, so yeah, that was the next thing I was gonna ask. Like, all right, you went into that home purchase where you’re like, “All right, we’re paying this thing off in cash so that we don’t have this mortgage hanging over our head,” or, “The rate arbitrage is so clear for us to just, like, finance it as little as possible, and then we just have this mortgage for the next 30 years or something.”

[00:46:16] Doug: Yep, the latter. Yep. I mean, 3.25 is great. We may not see that again for so long. So, so yeah.

[00:46:24] Ben Bozzay: Yeah

[00:46:24] Doug: I think we did w- normal. We put 20% down, so that was fine.

[00:46:30] Ben Bozzay: Okay. Yeah, that, that makes a lot of sense. I think I’ve talked to … The only reason I ask is I’ve talked to some people that are like, their number one goal is paying off their house. And then I’m like, “What’s your, what’s your rate?” And they’re like, “2, 2.25.” And I’m like, “Do you realize, like, a money market account is, like, 4%, like, cash flow on that?

Like, you…” And then I’m, I start to second guess myself. Like, am I the crazy one? Like, am I just, like, too, uh, like as I’m too open to risk that other people aren’t open to? Or is that even that much risk? Like, to me it seems like very low risk, honestly.

[00:47:05] Doug: It’s pretty low risk, especially over, you know, if it was a short timeframe, five years, un- seven, something like that. But I mean, if you’re like, you’re gonna live there for 10 years or something, which I think is like average or seven to 10 or something like

[00:47:19] Ben Bozzay: Yeah

[00:47:20] Doug: before people move. But, but yeah, yeah.

Very– I mean, people, , are really a- adverse to the, you know, having any debt, I think they lean in that direction. And then I do have a set of friends that, , in the FIRE community, they retired early, and they’re just like, “I will… You know what? I’ll pay off the house.” Like they have the, the money to do it, and they’re like, “It makes me feel a little bit better.”

They sleep better at night. But for us, it’s, um, it’s totally fine, and like the, the arbitrage is so clear generally, , with the ra- A-and you bought a little bit later, is that right?

[00:47:55] Ben Bozzay: Yeah, I bought in, um, ’21,

[00:47:59] Doug: OK

[00:48:00] Ben Bozzay: still got a three, 3.2 rate

[00:48:02] Doug: Oh, awesome. Yeah, yeah. Keep that. Yeah. Just st- stick with it. Yeah.

[00:48:08] Ben Bozzay: Yeah.

Retirement Number and Wrap Up

[00:48:09] Ben Bozzay: Well, I, I guess my, so my last big question that I, that I have on my mind, um, is like knowing what you know about like the area we live in, um, if, if you just had someone off the street that, you know, I’ve got a house, like typical, uh, profile, what’s my, what net worth do I need in order to like retire?

Not like a timeline or anything, but just a range that you can think of knowing the cost of living, like what, what would the net worth number be, you think?

[00:48:40] Doug: Hmm. Great question. So I’ll, I’ll make a couple quick assumptions, which could be a little bit off, So I’m gonna guess you’re, , like an average pers- Well, I will say… I’ll just make it up for you. Is that fair?

[00:48:55] Ben Bozzay: Sure, yeah

[00:48:56] Doug: , Expenses annually, , 120 to 130,000. And let’s see the… It’s always a bad idea to do math on the air, I’ll pull up the calculator here.

[00:49:12] Ben Bozzay: Yeah, great. This is exactly what I want.

[00:49:17] Doug: times 25, 3.1 million

[00:49:20] Ben Bozzay: Total net worth or like liquid investment accounts?

[00:49:23] Doug: , Yeah, i- invested. So forget your house. Don’t worry about that it’s not revenue generating, right? So about

[00:49:31] Ben Bozzay: Right

[00:49:32] Doug: and again, this is a good ballpark number to aim towards. So about three point one with that, that assumption that I made

[00:49:41] Ben Bozzay: Yeah, that seems fair. Uh, that, that sounds about right, especially given the current… Like, maybe the number would’ve been l- way less than that in 2020, but I, I feel like inflation’s, like, double since then.

[00:49:55] Doug: Right

[00:49:56] Ben Bozzay: so that sounds about right to me.

[00:49:58] Doug: Ja,

[00:49:58] Ben Bozzay: That is a wor- That, that is a depressing thing is, like, people are always like, “Oh, so and so is a millionaire,” or whatever.

And in my mind, I’m thinking like, a million dollars is not that much money anymore. Like, you can’t retire off of that. Like, I don’t… Like, a house costs, like, a million dollars now. Like, something that used to cost 400K is, like, a million now. So yeah, I think you have, I think you have a very realistic perspective.

[00:50:23] Doug: And the other way that you could look at it, ’cause like a lot of people are probably listening and they’re, they’re like, “Ah, fuck you guys, 3.1, like that’s insurmountable.” If you could… Well, and I don’t know if this makes it better, but let’s say a, a family has one million invested. You can look at that as about 40K per year income. So it means, say you have a job that you hate, like, you know, y- job was stressing you out. I hated my job. If I had like a million invested, I’m like, “Oh, that’s worth 40K.” It means I could my own business that only makes 60K, and that’ll put me at about 100, which is, know, great, respectable, then I don’t have to earn as much, or I could get a job somewhere else and make 60K I mean, I think you could probably make that working at a fast food restaurant these days.

[00:51:26] Ben Bozzay: Yeah

[00:51:27] Doug: and that covers you. That’s 100K like coming in basically. so I mean, it changes the math if you’re like, “Hey, I’m willing to work. I’m not, I’m not saying I don’t wanna work.” You could just be employed in a different level or run your own business that doesn’t happen to earn quite as much

[00:51:45] Ben Bozzay: Yeah, that’s a good way to frame it. I think so. It’s like you get a little more autonomy with your time, but you’re not– you don’t have 100%. And there’s nothing wrong with, like, working part-time. I think having, not having to commute every day, it, like, that’s a great quality of life improvement. Um, and Cost- Costco’s paying, like, 35 an hour and giving, like, crazy benefits now.

So,

[00:52:08] Doug: Right. Yeah, yeah.

[00:52:09] Ben Bozzay: you can do pretty well

[00:52:12] Doug: Yeah. Any other questions you have before we wrap up?

[00:52:15] Ben Bozzay: I, I think that was a lot of questions that I’ve never even thought through, and I appreciate you going through, especially your history and, like, the overlap that, that we have from the self-employed perspective. So, um, it’s given me a lot to think about, and I feel like I should be paying you for consulting right now ’cause this is, uh, like something an advisor would, would tell you and…

But it’s different hearing it from someone that’s living it and gone through a somewhat similar path. So I really appreciate it

[00:52:45] Doug: You’re welcome. Yeah, just to reiterate, none of this was advice. But, um, yeah, yeah, super fun. Like I said, I could talk about this stuff all day long, and There’s a lot of people in the FIRE community, but there’s not as many, like, entrepreneur overlap, , stories out there.

So

[00:53:01] Ben Bozzay: Right