Evolving Business Minds

The Secrets to Wealth with Chad Hufford | #120

• Andy Silvius • Episode 120

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Unlock the secrets to a richer life, both in your bank account and personal growth, as we sit down with financial guru Chad Hufford. From the unexpected journey of a biochemist turned finance phenom, to the transformative power of understanding your profit and loss statements, this episode is a treasure trove of wisdom for anyone looking to elevate their financial game. Chad and I peel back the layers of fiscal management, illustrating how mastering your money is a pivotal step towards achieving freedom and flexibility in every aspect of your life.

Ever felt like your business is running you instead of the other way around? Learn how my first hire revolutionized the way I work, and discover how you too can harness the art of delegation to scale your venture's most valuable aspects. Chad and I go beyond the balance sheets, discussing why entrepreneurs must craft a personal financial plan that stands firm, even if their business wavers. This conversation is your blueprint for constructing a robust financial future that anticipates every turn on the road to success, ensuring you're prepared for life's transitions, both in and out of the business.

But what does it mean to be truly wealthy? This episode doesn't just hand you the keys to financial success; it challenges conventional notions of wealth and consumption within the entrepreneurial world. Hear how savvy saving and early investments can cement the foundation for long-term prosperity, and why a disciplined mindset trumps any hot stock tip or market craze. And with AI shaking up financial strategies, we discuss the importance of a patient approach to building your empire. Tune in for an episode that will inspire you to cultivate financial wisdom and craft a legacy that lasts.

Episode Sponsored by: Olive Branch Bookkeeping, Inc

Message from our sponsor: A profitable business needs a tailored financial solution for growth. Understanding your needs and what matters most to you is our #1 priority. We have put together a bookkeeping service that will allow you to take control of your business and future growth.

📲 Schedule a discovery call with Olive Branch Bookkeeping, Inc here: https://calendly.com/caryn-23/discover_conversation

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Andy Silvius:

All right. Welcome to a new episode of the Evolving Business Minds podcast. Today's guest is a bestselling author of the book Forging Financial Freedom. He has over 17 years of experience owning and operating a financial planning firm that manages roughly half a billion dollars. I want to welcome Chad Hufford to the show.

Chad Hufford:

Andy, thank you so much for having me. It's a pleasure to be here and to speak some wisdom into your audience.

Andy Silvius:

Absolutely, man. I'm looking forward to it Before we get going. If you want to give everyone a kind of a heads up where they can connect with you If they're interested in your services, that would be great.

Chad Hufford:

Our website is Veritas Alaskacom and we were founded here in Alaska. We work with folks all over the U? S, but we we kept we kept Alaska in the in the URL there, cause that's some cachet to it. So Veritas Alaskacom. And then on Instagram we're Veritas dot Alaska, and they can find me on LinkedIn as well. Just look at Chad Hufford, there's not too many of us, so Perfect, and we'll link all that in the show notes as well.

Andy Silvius:

Perfect. I am curious because we my wife and I and our family recently moved. We were living in Northern Idaho. How's the weather up there in Alaska right now?

Chad Hufford:

You know what, right now it's not too bad, so there's actually some sun trying to come through in South Anchorage. North Anchorage is pretty cloudy, but it's been a long, rough winter. We've actually broken some snowfall records Really, and in Alaska when you're breaking snowfall records, that means something. Yeah, that's a lot. You've had a harsh winter, so we still have several feet of snow up at our house man, I don't know.

Andy Silvius:

I mean, and alaska is way more harsh than where, where we came from. We came from northern idaho, just um, if you know where quarter lane is I don't know, but I couldn't deal with the cold winters anymore. So my hat's off to you for dealing with it up there, and you've lived up there your whole life right, yeah, but I was in phoenix last week it was 95 degrees, so that's where I'm at.

Chad Hufford:

We're down here near phoenix, we we break it up. Um, I'm going to be in dallas this, this next week. Um, I was in nashville a couple months ago doing some stuff with dave ramsey. Uh, we took the family to hawaii the month before that. So, okay, I mean, building my business in a way that allowed me freedom and flexibility was really important. I didn't have to be in Alaska all the time. We actually looked at moving to Phoenix a few years ago, nashville and there's more than a few years ago, like 12, 15 years ago, but realizing, no, alaska is probably going to always be home for us, but we don't want to have to be here year round because the winners, the winners aren't even that harsh in Alaska. They just it's just long, like at least where I am, and there's very harsh places, but in Anchorage it's we don't get. We don't get even as intensive weather as like Buffalo and Chicago and stuff like that. It just lasts a lot longer and it just it just wears you down over time. So we.

Andy Silvius:

That's how I felt about Idaho. Yeah, yeah, Um, cool. Well, I I want to dive into your story and I was wondering if we could start with your background and just how you got started on the path of becoming a financial planner.

Chad Hufford:

Well, I started my path as a financial planner. Uh, getting a biochemistry degree, which is probably not the way most people get started, but my it's a little it's a little different.

Chad Hufford:

My pursuit was actually medicine.

Chad Hufford:

I was not planning to go into this industry, but I grew up in it and I saw how finance impacts lives in such a huge way, well beyond just finances.

Chad Hufford:

So when people are confident with their finances, when they're intentional, when they're living purposefully, that carries over to other aspects of their life and their business, and I think a lot of how we deal with finances has a ripple effect into our life and our business overall. On the flip side of that, if somebody has a poor relationship with money and it brings them anxiety, they're stressed out. That stress does not stay just in their finances. It creeps into their physiology, it creeps into their emotions, it creeps into their business, and I just saw how important it was to have a good handle on finances and have a better relationship with money and investing and really create a better relationship with the future version of yourself. That's what I saw this business as being able to do, and so I had a really big pivot in my mid twenties, shortly after getting married, and I'm glad I got the biochem degree. But yeah, definitely, definitely took a different path and very grateful for it.

Andy Silvius:

That's awesome and I don't know if you have seen some of our stuff, but we own a bookkeeping firm so different not on nearly the same level as what you guys are doing at all but it is amazing how many people you know, cause we work with business owners. So how many people run a business and don't understand the financials of their business? And, to your point, bad financials in a business will leak into your personal life. Lack of discipline with money just affects all areas and it creates stress between your business and your personal life and everything else. And it's also I think it's very difficult for people to grow their business if they don't understand their finances.

Andy Silvius:

And I'm not a bookkeeper that's my wife's area but I do know we've run multiple businesses now and if it wasn't for us consistently looking at our P&Ls and understanding where our money was going, we would have made very poor decisions. And it's allowed us. It just gives you the confidence to make better decisions in your business and know what's working and what's not. What marketing are you wasting money on? What's actually performing?

Chad Hufford:

You're exactly right, and it'd be like you know, as a business, you're on a journey somewhere and a lot of people don't even have a destination. They don't even know where they want their business to be in five years. But let's say you do have that, but you're not paying attention to your finances. It's like trying to make this long journey without looking at a map, without looking at your phone or without even looking at the road ahead. You're just making random turns and accelerating, decelerating, but you have no feedback, Nothing telling you what's working, what's not.

Andy Silvius:

It's usually based on feeling too, not facts.

Chad Hufford:

It absolutely is. And then we try to find the facts that reinforce the feelings that we're already having. Yeah, yeah, are you, are you familiar with Mike Michalowicz? Profit first.

Andy Silvius:

No, I'm not necessarily familiar with him. I understand or know about the profit first, and I just had a guest on recently. His episode hasn't come out yet, but we were discussing profit first and then a separate thing was bank on yourself by using whole life insurance.

Chad Hufford:

Mike Michalowicz wrote a wonderful book on this subject specifically for business owners, basically lighting a fire under people to pay closer attention to their finances and their numbers. You don't need to be an expert, but you do need to pay attention. I tell people, financial health is just like your physical health If you ignore it, it only goes downhill.

Andy Silvius:

Yeah.

Chad Hufford:

You can't ignore your physical health and expect to get in better shape, get healthier. Nobody got six pack abs on accident Right and nobody has a flourishing, thriving business on accident. And if you don't pay attention to your financial numbers, they will deteriorate.

Andy Silvius:

Yeah, just passion. It requires crystal clear financial insight. That's where our company, olive Branch Bookkeeping Inc, comes in, offering not just book cleanups for those behind on taxes, but also comprehensive monthly bookkeeping, payroll management, corporate structuring and the key to informed decisions detailed profit and loss reports. Imagine this your financial record, spotless and strategic, paving the way for growth without the headache of entangling years of bookkeeping yourself. With Olive Branch, you're equipped with financial clarity to steer your business forward. So if the thought of sorting out your finances feels overwhelming, let Olive Branch Bookkeeping lighten the load. They're more than just bookkeepers. They're your financial clarity partners.

Andy Silvius:

If you'd like to see how our team can help you and your business, I'll include a booking link and contact information in the show notes so you can schedule a free discovery call. And I think that's why I think it's one of the reasons I don't think it's the only reason, but I think it's one of the reasons why we have such a large failure rate in businesses. I mean, I don't remember the exact stats, but the majority of businesses fail within the first five years, and I think I wish more of this was integrated into our school systems and teaching people how to understand finances and understand money, and even if they're not going to be a business owner, just running their personal lives. Most people don't have a good relationship with money, and if you're family, if you're raised in a family that doesn't have a good relationship with money, typically you're going to end up following the same path subconsciously and then teaching your kids bad habits about money.

Chad Hufford:

Well, and the other part of that too is a lot of households and thankfully my household was not like this, but a lot of households. The money is only brought up when it's bad news, like when somebody's lost their job or somebody spent too much money or we can't pay the bills or it's under stress and duress. That's when finances are brought up. So if that's how you were raised, by the time you're 21, 22, every conversation you've heard around money was when mom and dad were screaming at each other or maybe that's why mom and dad got divorced, fighting about money. I mean, that's a big part of it, right? So if that's our context for financial discussions, it's no wonder that people don't like to talk about money and again, we can't afford to ignore it anymore.

Chad Hufford:

So I think a big step for people, whether you're a business owner or not is just normalizing conversations about finances, because if you have a question, if you're struggling with something, I guarantee you there's people in your circle. They're struggling with the same thing and there are probably people in your circle that might have experienced victory in that thing as well, can offer some help and some feedback and shoot, if you've experienced some victory. There's people in your circle that need to hear that story too. So I just think it's important for folks like you and I, andy, to normalize conversations around money finances, which obviously is a huge part of your business and my business but it needs to go beyond just business conversations and people need to build some community, have people that can hold them accountable, ask difficult questions and you're right, it's a huge reason why businesses fail, because businesses are often run as a hobby, not as a business.

Andy Silvius:

Yes, I swear we're going to pull that out as a quote, because that is a I mean, that's a great, great way to put it. Most people run their business like a hobby and I came from the so years ago as a mechanic, worked for multiple companies and then I went into real estate and you see it, a ton in real estate. People don't treat it as a business, they treat it as a hobby. It's like, oh, we'll go sell some houses here and there, but like they don't ever operate from a place of like a business owner, um, which I think really holds them back. And I think there's a lot of community. I think that you can find a lot of community around talking around money.

Andy Silvius:

I think most people just avoid it. It's like it's like putting the dirty laundry in your closet. You just don't want to open it up because they just don't want to face it. They already know they're in trouble with it. But I think it's just a matter of like understanding that you have to start somewhere and I'm not an investor by any means Like. This is my. My experience comes from running businesses and making bad mistakes and financially, you know, sometimes it's things have worked out, sometimes it hasn't, but I know that it's typically been typically been looking at profit and losses and knowing where we're at and knowing where we're going to go.

Chad Hufford:

Yeah, and it's. You're right. I think there are venues to have those conversations, but it is vulnerable. Those are vulnerable conversations, but I think if we're going to grow as individuals and grow as business owners, we have to be vulnerable. We have to be willing to say I'm struggling with this, I, this isn't going well.

Chad Hufford:

Somebody else has again struggled with the same thing. You don't. You don't have time to make all the mistakes yourself. Learn from other people's mistakes, and I think there's a. Our ego gets us a lot of trouble because we want to pretend like everything is going well and to have that, that vulnerability and just being somewhat, you know, naked about your business, saying like we cannot hold good employees or our debt is out of control or whatever it is. Just putting that out there because your employees already know where you're weak. Your customers probably know where you're weak. Your customers probably know where you're weak. Why not just put some of those stuff, some of those things out in the open and then you start chipping away because you can't solve a problem that you pretend doesn't exist.

Andy Silvius:

Yeah, and you can't always do it by yourself. I mean majority of time you can't do it by yourself. I shared a quote from Simon Sinek the other day and I don't remember it word for word, but it was something along the lines of like, if you knew how to do everything yourself, we wouldn't, we wouldn't need each other, and it was like about business, and I think a lot of times we want to go at things completely by ourselves and just figure it out and and it's hard to admit sometimes like you just don't know what you don't know, so you go find the professional that does.

Chad Hufford:

And I think for a lot of entrepreneurs there's also this sense that, well, I can figure this out, like, that's the type of person. I'm just going to figure it out, I'm going to pin my ears back, but you don't have to figure it out. You can delegate. You can pay somebody who spent 10 years figuring out that problem so you can do what you're uniquely best at. I think a lot of business owners, especially in the financial industry, get caught up doing very efficiently things that don't need to be done at all, or at least don't need to be done by them, and they justify six, seven hours a day being spent on things that they shouldn't be doing because it looks good or it feels good or it checks some box, but it really isn't what they need to be working on. But really focusing on what they, as a business owner, like what can you uniquely do that nobody else can take off your plate? That's what you need to focus on and learning to delegate.

Chad Hufford:

When I hired my first employee about eight or nine years ago, I wasn't sure if I could afford her. After about three months I was like I can't believe I didn't do ago. I wasn't sure if I could afford her. After about three months I was like I can't believe I didn't do this. I can't afford not to have her. It was such a game changer and I realized I was doing a lot of $20, $30, $40 an hour type tasks, trying to earn six figures.

Chad Hufford:

But doing tasks that were only worth 20 bucks an hour, like this, doesn't make any sense. So even if it's even if it's a hundred dollar an hour task, if you're somebody who's trying to earn half a million dollars a year, you cannot be doing a hundred dollar an hour task. You have to be pushing it off. Let somebody else who's an expert in that thing Like. I'm not going to try to do social media. I don't. I don't even know if I can spell Instagram, but I have other. I have other people. I've got a millennial who's awesome at that and she loves it. You know I don't need to figure that out. Sorry, get this off on a rabbit trail there, but no.

Chad Hufford:

I think you're up.

Andy Silvius:

I agree with you. I actually talked about this in a podcast. Uh, back with my buddy, mike mall, and just delegating because, um, because we as business owners should be focused on the 20% of activities that brings 80% of the results and myself I'm guilty of this too. You just get caught up in doing things that you go man, why am I spending my time doing this? This doesn't actually push the business forward. It's maybe something flashy or some marketing thing, but it's not actually bringing in money and so it's just been a.

Andy Silvius:

It's always like fine tuning that right, like I, I delegate things out, but there's something about like, when I start a new project, it's like I feel like I have to have hands on with it, and then I have to. Then I realized like, oh, what am I doing? I'm trying to. I'm doing this all over again. So then I had to hand it off. But I am curious what are some trends you're seeing in the financial planning area for entrepreneurs and business owners? Do you see people actually planning their finances, or I guess? I don't know if I asked that correctly, but what are some current trends that are out there right now? I don't know if I asked that correctly, but what are some current trends that are out there right now?

Chad Hufford:

I think as business owners the tendency to be so focused on the business that a lot of the planning Well, first of all, a lot of businesses don't plan. A lot of people don't have a long-term plan in their business. But for the ones that do, a lot of them don't have those plans outside the business. And one of the things that can get business owners in trouble is when everything revolves around the business. There's no independence outside that. What I mean by that is, let's say, just take you guys. Let's say you have this bookkeeping company and you build this up and I don't know what the valuations or multipliers are in a booking business. But let's say you build this thing up, all your time and money is going into this and you can't afford to retire until you sell it because so much of your net worth is wrapped up in the business. You don't have the assets outside of that.

Chad Hufford:

Now, for some people that's fine. They want to sell business, walk away, do something completely different. But for a lot of people they don't. They still want to have some attachment to it. Maybe they bring on a partner, they sell a part of the business or they want to just work a role in the business but not completely release it, but if you don't have assets in a plan outside of the business, it just doesn't work.

Chad Hufford:

And and I also think too, if, when, think too, when you're planning outside the business, it's easier to see the world from not you as a business owner view, but just you as a human being view, and even to pivot the business, because, just like owning having all your retirement in a single stock is incredibly risky, having a lot of your net worth in your own company can be very risky as well.

Chad Hufford:

Now, there's the balance there, especially as you're building a business. But I think people have a tendency to get so just hyper-focused on their business that they forget to think about what does life after my business look like? And our identities get wrapped up in business. I mean, it's our baby, right? We? We birthed this thing, we've raised this thing. But thinking about, like you know, what would life look like if I didn't, if I didn't work in my business anymore and in planning that trajectory, is something not enough business owners are doing and and making themselves somewhat irrelevant in the business, kind of like what we just talked to Having redundancies in place so they don't need to be part of the day-to-day. They can give themselves some distance and buffer.

Andy Silvius:

I think those are exercises that are often overlooked. Now, obviously, there's a range of businesses and stages that people are in. I think that a lot of business owners I speak with they're in the growth phase but they're not yet making enough money to where they feel like they can go do anything right. Their whole focus is just wrapped up into bringing in new clients, making more money, the next sale. So what would you say to those people?

Andy Silvius:

Is it maybe not investing right away, but just getting the plan together, getting together with somebody to actually have that roadmap before they get there, because most of them are going to wait. Most people are going to want to wait until they hit some threshold, like, oh well, when I'm making more money, then we'll plan it, and not to go on a side tangent but we deal with this a lot where people will say we'll have a proposal meeting with a customer or potential client and they will say that they can't afford bookkeeping yet, but when their business is doing better than they will, it's like, okay, you don't go to the doctor after you had the injury, and you know what I mean. Like you go to the doctor when you're hurt, to have them know what I mean, like you go to the doctor when you're hurt to have them help you fix it.

Chad Hufford:

It'd be the same thing as somebody saying like I know I need to get in better shape and go to a gym, but I'm going to wait until I lose 20 pounds before I joined the gym. Yes, and, and you have to start. So, to answer your first question, I think a great starting place is beginning with the end in mind. So I don't, I don't care if you're 22 years old. You're six months into this new business. What do you want your life to look like when you're 40, when you're 60, when you walk into your house, what do you want that to feel like? What do you want the energy to be like? Who's there? And it's okay for all these goals to change. But think about yourself 20, 30, 40 years in the future. What do you want that person to be like? What are they doing and who have they become? That might sound a little esoteric, but those are important questions, Because if you don't know where you want your life to go, it's really hard to find the right directions to go, the right directions to follow. So, coming up with a destination and again, this destination can evolve, that can move, and then you reroute the map, you recalibrate the directions, that's fine. But coming up with long-term objectives for where you want to be, what you're doing and who you want to become. But the next thing I would say kind of to your last point, Andy is you just have to start. So, even if you're in the beginning stage of a business and you're just trying to make payroll next Tuesday, you still have to start by paying your future self. Right, Maybe it's 10 bucks a week. We're really involved in our local church. We hear people talking about tithing and giving and saying, well, I'll be more generous if I make more money. No, you don't. More money makes you more of who you are. If you don't have a game plan with a little bit of money, you're not going to be a planner with a lot of money. You have to choose to start planning now. You have to choose to start making margin now.

Chad Hufford:

I had an attorney come in not picking on attorneys, necessarily, but he comes in he was bragging about the fact that all these millions of dollars that he had made over the last few years and he was consistently making $750,000 to $750,000 to low seven figures every year had almost nothing to show for it except for a bunch of vehicles and a bunch of debt and he told himself like I will start doing these things when I start making more money. But there's always another threshold for what more money looks like. There's never going to be a comfortable time in your business plan. You're like, oh, this is the time to sit down with a bookkeeper, hand over all this stuff, Just like there's no convenient time to start going to the gym and sweating and aching and getting sore.

Chad Hufford:

You just have to start with where you're at what you have right now, because you're creating habits and you the biggest habits in the world, the biggest impact. They still start small and it also is a. There's a book by James Clear called Atomic Habits book by James Clear called Atomic Habits. So positive actions, even if they're small, are a tangible evidence that you're the type of person who cares about X, who cares about their business, cares about their future, cares about whatever X is. But you don't wait until X gets bigger or more important or more profitable. You have to start making the steps in that direction, because it's tangible proof to yourself that I'm the type of person who does these things.

Andy Silvius:

Yeah, I think I've read that book, but it's definitely I need to go back and read it again because that sounds like a good one. So I don't know if this is really in your area, but what are some common financial challenges that new entrepreneurs face and how can they overcome them?

Chad Hufford:

I think a lot of new entrepreneurs don't have enough buffer between their business and life, buffer between their business and life, and they're often too quick to bring on debt, which, in debt, is an accelerant. So if you're going in the right direction, everything's going well. It can help but also increases your risk factors. And it's really hard to know that because debt can also cloud decision-making you are. If you're just signing a loan document, you're not going to be thinking about those financial decisions quite as carefully. So you just just imagine like you have to drive up to Flagstaff. How long of a drive is that?

Chad Hufford:

Like three hours two and a half hours, three hours, okay. So if you're going, if you're obeying posted traffic laws, right, okay. So if you're going, if you're obeying posted traffic laws, right. So if you go 110 miles an hour, that three hour drive might be like two hours. But you also increase the chances that you never get there at all because you greatly increase the chances of getting into a wreck, having some major, negative, catastrophic outcome prevent you from ever getting there.

Chad Hufford:

That's what debt is like in a business. If everything goes perfect, yes, it can get you that destination faster. But, andy, as you and I both know, nothing ever goes perfect in a business and sometimes debt just allows you to wrap yourself around a telephone pole that much faster. So I think avoiding debt is huge and having a nice cash cushion. So when you can try things, you can try a new marketing tactic, you can try a new product, and it doesn't have to work right away because you've got a cash buffer and that takes some time to build. But I also think that a lot of that goes back to our lifestyle, and are you familiar with morgan housel? He wrote a book called psychology.

Andy Silvius:

Sorry, there are a lot of books of you oh, that's good, because I'm gonna have to go back and find them okay.

Chad Hufford:

So psychology of money I think every business owner should read this. Honestly, atomic habits is great it's, even though it's not a business book. Every business owner should read that too, because it's about creating a purposeful and intentional life, and business owners probably could benefit from that more than anyone. But in Psychology of Money, morgan Housel, he talks about wealth is created with the difference between your income and your ego, and as a new business owner, we have to have a really small ego. We're not driving new cars, we're not going on fancy vacations. We're not on Instagram pretending like everything is going great. We're probably eating beans and rice and riding our bike because we're trying to pay ourselves almost nothing so we can fuel the business. But too often people, their lifestyle, consumes their business and it doesn't even give their business a chance to grow. It just chokes it out while it's still a little sapling.

Andy Silvius:

Well, and something you said a little bit ago about signing a loan, doc, and you just it's almost like, most of the time people already have the bad relationship with money and then you get a loan because it's the easy route and instead of saying no, I'm not going to go get a loan, how can we make this work? How can we increase cash flow in the business within the next 30, 60, 90 days? And I have people very close to me that have gone out and gotten loans because it's like, oh well, we got to do this, we have to have a loan, we owe all these people money. It's like, well, here's a suggestion. Why don't you go back to the people you owe money to work out payment plans and figure out a way that's not going to cost you 50 an interest on this crazy, you know loan that you have to pay back in nine months or whatever it might be right? And um, I think it just it's kind of like that thing when you say you can't.

Andy Silvius:

If you train your brain to not say you can't, like, how can I make it work? It's kind of the same philosophy in my mind. It's like how do you, how do you figure out how to do this and become more disciplined without signing on a loan, doc. And then to your point. You know having cars and bad debt. You know depreciating uh, liabilities. That's never going to put you anywhere and I'm guilty of that. We've gotten new cars. When I was in real estate, we went out and bought new cars. I've got side-by-side and stuff like that that I used to have payments on. And it does cloud your judgment when you are making money because you're thinking about all these things.

Chad Hufford:

You have to pay Well and so a couple of things. You touched on some great stuff there and and just know that this is coming from a guy that loves cars. So I was just down in your neck of the woods last week. My brother works for BMW and BMW North Scottsdale is owned by Penske Penske Racing and they have a Lamborghini dealership, they have Ferrari dealership, they're all in a row right there. My brother's like hey, we'll arrange for a tour. You bring your boys out there. So we have six kids. I brought, I brought half of about three of the boys and expose them to unbridled consumerism. And we loved it. You know they're, they're beautiful, they're awesome, but but it's just. I was talking to my boys on the way home and it just how people can. It doesn't have to be a car, it can be vacations, it can be whatever, but there's things that we do because we think we're entitled, we think we deserve it, we think this is what wealthy people do. And the problem with wealth.

Andy Silvius:

Is that wealth?

Chad Hufford:

is hidden. Wealth is not a half a million dollar car. You need wealth to be able to buy that, or a lot of debt. But wealth is what is hidden. Spending is what we see. We see consumption and that's what our world has started to celebrate as wealth. Oh, that person has a 5,000 square foot house and a $200,000 car, like they're wealthy. No, they might be rich, they might have a lot of cashflow, but that's not wealth. That's the opposite. Wealth that is actually the spending or the decumulation of wealth, to put it into things, because if you spend the money on the things, you no longer have the money you have. The things. About debt, specifically, is it? Also? It cheats us out of creativity. And if you don't, if?

Chad Hufford:

you are trying to figure out how to cashflow something. You're gonna do it slower, you do it more intentionally and you will be more creative. And there's a lot of big businesses out there, like Google and and what was the other one? I think Apple might do this. They actually artificially constrain projects and say if we only had X amount of dollars to fund in this project, how would you do this? Now they have more, but they want to see how far I'm just making up a number. They might have $50,000 allocated to a project. They see, if we only had 20 grand to do this project or 10 grand, how would we do it?

Chad Hufford:

Because what it does, it does helps you identify what are the most important factors, like what, what can, what is non-negotiable. That must be a part of this and and some other things aren't as important. So the bells and whistles kind of get pushed to the wayside. And then we figure out once we have a game plan, do we want to pull some of the stuff back in? But when you, when you bring in debt, like like you said, Andy, it's too easy You're just throwing money at a problem instead of actually trying to fix it. And if you want an example of people throwing money at a problem and problems not being solved. Just look at our government. That's what they do.

Andy Silvius:

Oh yeah, A hundred percent. It doesn't matter how much more money they want, more and more and more, and you'll give them more. That's a great example, because you'll continue giving them money, they'll raise taxes, they'll they'll source it and they will spend it and blow it and then want more again.

Chad Hufford:

Yes, yes, and the tendency again you can do this with cash as well, but with debt, it's easier to keep doing more of the wrong thing and expect different results. Yeah, it's easier to keep doing more of the wrong thing and expect different results. If you're, if you're paying, if you're writing a check for your business strategy or for your new directive, you're going to be. You're going to be much. You have a lot more scrutiny around what you're doing and you're going to be much. You're going to be much more likely to look at potential pivots and not just continue to throw money at what isn't working, hoping one day it's going to magically produce something for you.

Andy Silvius:

So that's my two cents.

Chad Hufford:

I'm sticking to it.

Andy Silvius:

No, I like it. This has been a great conversation so far. So how should entrepreneurs approach investment to support both their personal and business financial goals?

Chad Hufford:

So you already kind of mentioned it. I mean you have different people at different stages in their business. Like I said, I think it's important to start the habit, even when you're just getting going, getting your business off the ground, of paying yourself, paying your future self. Whether that's in a retirement account, that's through the business, it could be an IRA. Whether that's in a retirement account, that's through the business, it could be an IRA, it just could be a separate bank account. But where you create the habit of taking money out of your business first as one of the primary light items, rather than waiting until the end of the month and saying is there anything left? But paying your future self first is a really good habit to start with. But it's getting really clear about what you can afford to put towards an investment outside of you, outside of your business, because early on in a business you don't want to choke out the business, you don't want to starve the business. But there is that balance. I think it just goes back to what you said knowing your numbers and knowing you know what is the 20% that we're spending that is making 80% of the impact. How can we put more into that 20, but take some of that 80 over here and put it in some other long-term things. So I started saving for retirement at the very beginning stages of my business and I was putting in. It almost seemed insignificant, like what is the point of this? It doesn't even do any good, but what it was, it was the habit. It was the habit. And the other thing, too is if you have a young entrepreneur 25, 30 years old and you're putting in a couple hundred bucks a month into some sort of a retirement entrepreneur 25, 30 years old and you're putting in a couple hundred bucks a month into some sort of a retirement account, that's going to have the impact of your 50-year-old self putting in a thousand or more a month. So you're going to have to pay the price at some time or another. The price is lower if you pay it sooner. So not only do you build a habit, but that that money has more time to work for you.

Chad Hufford:

But again, it just goes back to long-term goals. One of the things that we really try to help people do is create a roadmap, something they can follow that attaches their current actions to long-term goals. So if you have a goal, okay, andy, you want to be financially independent at 55. You want to be able to walk away from your business, not have to sell it, but be able to be independent outside your business and never need to work another day in your life. You probably will, because you and I were the worst types of people to not do anything but financially independent at 55,.

Chad Hufford:

Here's what you need to do every month between now and 55. What that does is it gives you a tangible, measurable target for where you need to be at 55, but also what you need to do before July and in August and September to actually get there. Right, because now it's no longer as well. I need to save as much as I can. It's. I have a specific monthly target where every month, I'm going to take this amount of money out of the business, out of paycheck, whatever, pay my future self. But I don't need to do any more than that because that's enough to pay my future self. Now I'm going to pay my current self and funnel the rest of that back into the business. But I don't think a lot of people have meaningful, measurable targets. They just they kind of dump money willy-nilly into things and maybe they're writing a check to their retirement account at the end of the year to save on taxes. And yeah, it'll do that. That's just not a super intentional way of executing.

Andy Silvius:

Yeah, there's a lot of people that just kind of let life happen to them and myself included at times right, like if when I'm not on track it does, it just kind of goes anywhere you give attention to. I want to touch on the habits thing, like something that we did when we were running our real estate business and we're still in real estate, but our business has shifted, obviously with running the bookkeeping firm. But every commission check that would come in we had a percentage. We had four bank accounts and we would divide up every single commission check to split that up. So we would put it into our investment account, just like stockpile cash off to the side investment account.

Andy Silvius:

Um, we had our tax account, our operations or expense account and then just a um, I can't remember what the other one was but every single commission check that came in we had a percentage that would get split up and go to each pot, basically just to be able to separate it, and we just didn't touch a couple. Like the tax account was like hey, that's in there for payroll taxes and everything else for our employees and our taxes. The investment account. Our goal was that we'd have it stocked up and then be able to use that to go buy properties and just disciplining ourselves around it. Because a lot of people you have commission checks come in and I'm not saying you're always going to get commission checks this high, but sometimes they're, you know, 10, 15, 20 grand and a lot of people go oh cool, I got 20 grand in my account, let's go buy something yeah, not to say I didn't go buy dumb shit or wasted on marketing.

Andy Silvius:

You know things that I was like oh, this is going play. You know this is gonna pan out and it didn't. Um, but back to the pnl thing. I could. I could quickly know what.

Chad Hufford:

What was working, what wasn't and there's so much psychology behind what you did. I don't know if you you realize it when you did it, but if you have a, you said like twenty thousand dollar commission check, you have twenty thousand dollars all in one spot. You're like, oh yeah, I don't need to be careful, like we're rich. You know, you think that right. But if you're okay, twenty thousand, so five. That immediately goes to taxes. I can pretend like that doesn't exist, because if I don't give that to irs they're going to come and take it. We don't want that fight, right. And then you know two thousand dollars goes to your rent or or whatever. And then you're marketing and you're partially on it, so you're dividing this out. So it isn't 20 grand sitting in one chunk, it's small little pieces. And you realize how quickly $20,000 gets divvied up when you start putting jobs attached to it and then there might be some leftover.

Chad Hufford:

But I think having everything in one big pot makes people feel like they have more money than they really do. They forget how many places that needs to go. I mean, you've heard, I'm sure you're familiar with Dave Ramsey, but one of the big reasons a budget works so well is because it categorizes everything and you see how much needs to go to groceries, how much needs to go to advertising, how much needs to go to groceries, how much needs to go to advertising, how much needs to go to insurance, and, like man, there's. These things add up. We don't think about it as little as a hundred dollars here, hundred dollars here, but you add it all up. But when you divide out your money, it just, it allows you to see more clearly what it again. It goes back to intentionality. You're you're telling your money where to go, so you don't end up wondering where it went.

Andy Silvius:

Well, and even if you have the greatest budget, I'm a visual person. So, like you said, if you go into your account and you had it all in one spot, even if you have a budget, I think you still visually look at your account and think you're doing better than you are. And there was a lot of people who I was working with in the field that made a lot more money than I did and they would say, yeah, I just have it all in one account, or they didn't even have a corporation right, so now they're losing tax benefits and everything a whole other realm of stuff. But I don't know. I don't even know where that came from for me.

Andy Silvius:

I think I've always been good about saving money, from the time I was a little kid, and that goes back to my parents making forcing me to save. I think the bad relationship I think I had with money, or something I wish I would have learned more of, is like how do I separate money like that and save it, but know what to spend and what not to, because I will go overboard on just saving and then I get I pull back and get nervous on investing or something that's going to help it grow. Does that make sense?

Chad Hufford:

Well it does, and I think that's where a budget can be helpful to just compartmentalizing those those things. Like you know, this money goes to investing that's its only job. This money goes towards paying down debt that's its only job. And you can compartmentalize that and I think it's easier for us to conceptualize, wrap our minds around it. The other thing, too, that I was just going to mention, kind of around that is like you wouldn't. I mean, you're obviously very involved in real estate, but so many people run their businesses and run their lives without a blueprint. There really isn't any plan or strategy connecting where they are now and where they want to be five, 10 years in the future.

Chad Hufford:

And just being intentional, being on purpose, waking up and living life on purpose is so important and you already said it so many people are not doing that. The folks that are willing to do that are automatically way ahead of the rest of the pack. Even if you're doing something that isn't necessarily correct, you could be wrong, but you're going to, you're going to realize it faster. If you're being intentional and personal, like okay, I got to pivot. But if you're just kind of meandering around, like again, businesses, great businesses aren't grown by accident.

Chad Hufford:

There are great businesses that had huge mistakes, but they were planned. Not the mistake itself, but the action was planned, it was researched. They got some things wrong. They learned from it. I always tell people the only difference between failure and experiment is whether you're willing to learn from the experience or not. But they were intentional and, and I think for for business owners, for individuals, being purposeful and having an intent to your actions is just so important and it keeps us on the path. It keeps us from being distracted by the craziness of life, the craziness that each of our industries I'm sure has. So we can say, ok, this is what I'm standing for, this is what I'm doing. I can ignore these other things out here because we live in such a distracted time. Oh yeah, I think it hurts businesses a lot, yeah.

Andy Silvius:

I think it hurts businesses a lot. So I'm curious how does the state of our current financial economy impact financial planning strategies for businesses. Or businesses or you know what. Let's just say open that up for people in general, like the economy, while they want to keep saying that the inflation is only 3%. We all know that things are worse off than they really are. So how does our current economy affect that for people?

Chad Hufford:

So inflation has always been an issue. It's gotten our attention recently, but the average person retiring this year, according to Bureau of Statistics, was born in 1962. Some were older, some were younger, but on average, people retiring today born in 1962, the value of a dollar has decreased over 90% since then. So it yeah, it costs almost $1,100 to buy what $100 did back in 1962. So inflation is not new. It's not going anywhere.

Chad Hufford:

Whether it's 3% or 5% or 2% or 1% next year, whether it's 3% or 5% or 2% or 1% next year, we need to plan for. I think three is a good long-term planning measure. Short-term, we don't worry too much about that because a lot of these things migrate back into, they regress to the mean, they go back to kind of average numbers and who knows, for the next 20 years 3% might be too low but I think it's a good planning number. But with 3% inflation our costs are going to be about double in the next 20 years. So if you're living comfortably on 100 grand right now, in 20 years you will need about 200 grand. All of the things being equal.

Chad Hufford:

What is your plan for making that happen? And that's how we plan. So we don't put a lot of emphasis or credence on the current economy. Because, number one, the economy is very fickle. A lot of economists are really good at making up a story to tie statistics together, but there's so many variables that a lot of times it's guesswork, and that's why they spend much of their time explaining why they said was going to happen didn't happen, or why they thought the cause of XYZ event was this. But it was actually this and there's really not much value outside of understanding your industry.

Andy Silvius:

Yeah, Everyone's trying to be like the guy from the big short who predicted the crash right and you know what.

Chad Hufford:

And even that same guy predicted a lot of other crashes that never happened. Yeah, so, and and you know you have enough people somebody is going to predict right, but nobody's predicting consistently. And even if you could predict the economy, you still couldn't really put together an investment strategy based on that. Back in 2008, 2009, when we had the financial meltdown, we had one of the slowest economic recoveries on record. If you looked at GDP, real job creation, all these different metrics for the economy, you'd say I'm not going to invest anything. But the S&P 500 went from below 700 in 2009 to over 1600. And I think just by 2012 or 2013.

Chad Hufford:

But if you're looking at the economy, if you had a crystal ball showing the economy was doing big, I'm not investing in any of this stuff. Not real estate, not stocks, none of it. So the economy, the short-term economic outlooks, can really distract us, and this is getting a little long-winded, but we'll go back to the house metaphor. You're building a financial house based on the climate that you want to live in, not what you think the weather is going to be next week.

Andy Silvius:

Yeah, it's a good analogy. That's the best way to think of it.

Chad Hufford:

So it's what are going to be the long-term issues you have to deal with. Inflation is going to be one of them. You don't need to know what it's going to be next week, next year. We just have to know. Okay, over the next 20 years it's going to be significant. We have to plan for that. But invest for the climate that you're in, not the temporary weather pattern.

Andy Silvius:

So this next question I don't know if this is maybe too vague you may have too many variables to answer this, but what do you typically look for with your long-term investments, then that makes it feel like a sound investment for people's money. Is there any key indicators or something that you're looking at that says, hey, this is, this is a long-term strategy that I think is going to work? How do you guys look at that and what are those? What is it?

Chad Hufford:

So all strategies, all strategies are based off of individual financial plans. So the plan dictates the strategy and the tools and the tactics. Again, just like you're building a house, the design of the house would dictate the individual tools and tactics that you would use to build a house. A lot of people invest the other way around. They collect tools and materials and then they try to figure out how to build. And that's when they usually come to us. They're like hey, I've been saving for 25 years, I'm going to retire in three years, I have a council over the place. I have no idea what any of this stuff means.

Chad Hufford:

I read the Wall Street Journal and it tells me what I should be afraid of, but I don't know how to get all these pieces to fit together. We want to actually reverse engineer that. Let the goals dictate the tools. But as far as what do we look for in the tools, it will be dependent on the individual, what they're trying to accomplish. We don't believe in a one size fits all type approach. We don't use target dates, things like that, because one size fits all means ultimately it fits no one ideally. But we look at things with really long term track records, so we're not worried about what is working next. We're looking more for what has always worked.

Chad Hufford:

How can we use tried and true principles and apply it to this individual or this family specific situation? We're huge on diversification. We never want to have enough money in any one thing to make a killing, which also means we never have enough money in any one thing to get killed by it. It's a little bit boring, but it works really really well. Investments themselves should not be exciting. The financial freedom investments allow you to have that's what's exciting the independence from not needing your business or your paycheck anymore. That's what's exciting. And for that reason, we don't use individual stocks, we don't use options. We don't. We don't trade in currency. Trading or investing are two different things. Investing is hey, I'm going to, I'm going to plant these trees for the long run and I'm going to pick the fruit. Trading is I'm going to dig up this tree in three days or in three hours and try to sell it for more than I bought it for.

Chad Hufford:

Quick gambling yeah. Don't gamble and speculate. Yeah, If if you're buying something that you aren't planning to hold for 10 years or more, don't buy it.

Andy Silvius:

Not to cut you off or interrupt you at all, but there's a a lot of people I know were pushing me to get into crypto and I know a lot of people that have made a lot of money in crypto, whatever in crypto, whatever you know, they've done great I I was starting to feel like that, have that FOMO, feeling like hey, am I missing out on something I should be doing?

Andy Silvius:

And I went to some of my friends that had a lot of um, a lot of investments, real estate stocks, like they do very well and, uh, clients of mine actually and he just told me he's like, no, don't do it. If you have the money to take a portion and put it in there and be willing to lose it, then fine. But he just he steered me away from it. But I see the uh, when you said investments should be boring. It's the financial aspect, financial freedom, that should give you the excitement. I think a lot of people are like wanting to play this like fast paced game where they go oh, I'm going to go in and I'm going to make a bunch of money really quick, and what you're saying is the slow path is like the guaranteed path to actually bring you wealth where you're not risking everything.

Chad Hufford:

And and the the quick strategies, even if you're lucky enough to get a lot of money. And again, you have to get lucky and you can make money gambling. Don't get me wrong. There are people that make money gambling, but those are the only ones we hear from. Nobody brags about man I just lost my house in Vegas last week. Yeah, that's great. We hear about the guy that made 100 grand off 10 grand in crypto. We had somebody in the office just the other day lost $200,000 in crypto. You don't. We had something in the office just the other day lost $200,000 in crypto. So much money, 200 grand. Yeah, we hear those stories, but that's not what's out there.

Andy Silvius:

That's a down payment on a Lambo.

Chad Hufford:

It is yeah, maybe get a 20 year old one, but it's called survivorship bias, and we only hear the few stories of the people that got lucky. But even those that got lucky you you probably can't maintain that wealth by doing the same things that that got you there. So just what?

Andy Silvius:

you're saying is that you don't develop the skillset right.

Chad Hufford:

Yeah, yeah, yeah, you, you don't develop the discipline it you were to wave a magic wand and turn somebody into an Adonis. You know, perfect body, perfect build, and they were 300 pounds before. And you know, now they look like Brad Pitt in Troy or something like that, you know. But they go back to all their old habits. Pretty soon they're going to be back to 300 pounds. Their habits will will pull them back to the presets they already had in their life, just like a, just like a thermostat would. So you put a block of ice in a room that's set at 80 degrees. It will temporarily cool down the room, but pretty soon the ice will melt and the room will be back up to 80 degrees.

Chad Hufford:

I've never used that metaphor before, but it works. So if you take a block of wealth and put it in somebody who's life who doesn't know how to manage wealth, it will only be a temporary thing. Their habits will eventually erode at that wealth. So you have to change your habits, you have to change your mindset, and slow and steady wins the race. There's a proverb that says wealth gained hastily will dwindle, and I've seen that way too often. And people need to not be afraid of doing it slow and steady Again. Don't try to get to Flagstaff in an hour and a half. It's a beautiful drive. Let it take the whole three hours Well don't tell my wife that.

Chad Hufford:

She already tells me I gotta slow down.

Andy Silvius:

All right, I got a couple more questions. We're just about ready to wrap up, but I'm asking everyone this question because it's been kind of the everyone's attentions on it, it seems like, for the last couple of years. But so, ai, what are your thoughts on AI? How do you think it's affected business owners, entrepreneurs currently, and how do you think it will affect them in the future?

Chad Hufford:

Well, I think it's. First of all, it's amazing in a creepy sort of way. Sometimes, yeah, I don't utilize it near as effective as I should. It's something I need to learn better, but the ability to sift through research and things like that is amazing. So a lot of our portfolio managers are using it and, um, no, it's, it's the, the. The technology is mind blowing, and just what it is capable of doing in allowing us to work efficiently and more effectively is is really exciting. But I also think, just like the internet has allowed people to work more efficiently, more effectively, it's also allowed people to be much more distracted. So I think, with any new tool, the tool is only as good as it's being utilized, and we need to make sure that we don't let that tool become a distraction in our business, and I'm saying that as a little bit of I mean, I need to learn how to use it better. We're not using it enough. So I'm probably on the far end of that spectrum, but I think we need to make sure that it becomes our servant and we don't serve it.

Chad Hufford:

I'm not talking about robots taking over the world, but I've seen new technology, especially in the financial industry, because the financial industry. We love chasing the newest, flashiest, hottest. Fomo is huge in the financial industry, but the tendency is to distract from long-term tried and true principles, and in my industry, nothing is more important than sitting in front of somebody face-to-face, eyeball-to-eyeball, talking about their future and what means the most to them. The AI and the algorithms can work all the numbers in the background. That's great. It takes off my plate. That's not something I should be doing. So AI can give me more time to be doing my most valuable activities, and that is connecting with my clients, deepening my connection relationships with them.

Andy Silvius:

Yeah, yes, I agree with everything you just said. That was a great outlook. I think that we'll also always want the human aspect. I think there's a lot of people that think it's going to completely take over everything, and I had a guy on earlier today actually who that's his realm is AI. He's been in AI since like 1996. And he had a good outlook on it as well. It's just, it's to what you said. He said the same thing. It's only as good as the, the person using it and the, the intentions behind it. So, all right. One last question if you could leave listeners with one actionable item that would have a positive impact on them today, what would it be and why?

Chad Hufford:

I would ask them what is the one thing that you know you need to change and what is the smallest step that you can take to change that? So I think, as business owners, it's really easy for us to suffer paralysis by analysis. There's so many different things. We got to research, we need more information, we need to read more books, we need to go to more conferences, but all of us have one thing that we know we need to change this. Like it's black and white. We're procrastinating, we're delaying. What is the one thing that you know you need to change? You need to do differently. That would would get you out of the way of your own business and then look for the smallest step you can take in the right direction.

Andy Silvius:

Yeah, it's great advice, man. I appreciate you being on here today. It has been a great conversation. I think you asked me at the beginning how long the show normally goes, and I said somewhere between 30 and 45 minutes, so we're about at an hour. I feel like we could keep talking for the rest of the evening if I just let the camera record, but obviously we can't do that. So thank you again for being here. I appreciate it.

Chad Hufford:

Andy, it's been my pleasure. I appreciate the opportunity to be here and really enjoy chatting with you as well.

Andy Silvius:

Absolutely, and anyone listening to this if you guys want to get your business on track or your financial just everything in your finances make sure to go in the show notes. We'll have all his links there. I want to just thank you guys for listening today. If you've enjoyed the show, I'd like to hear in the comments what stuck out the most to you. We'll see you on the next one. Thanks for watching.