The Biggest Tax Myths Lawyers Believe with Megan Robin (Part 2)

Melissa Shanahan: Welcome back to part two of The Biggest Tax Myths Lawyers Believe and Why They're Wrong. In part one, we busted some of the biggest misconceptions about tax planning. And today, we're getting into deeper mindset shifts.

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Well, okay, let's move on to myth number three, which is overpaying taxes is good because I'll get a refund. Tell us, tell us all the things wrong with that.

Megan Robin: Yeah. This one actually is most common with the younger, the college kid, kind of new hire people, because a lot of times with that demographic, you see people having a hard time to save. They have a hard time saving, and it's forced savings, and then they get this big check of free money, which is not free. It's your money that you gave and then ended up getting back because you overpaid.

And the way that I like to think about this or explain it to clients is you're giving an interest-free loan to the IRS, which we do not want to do. I had one client come in, which to be fair, she was just under $2 million in taxable income, and so her tax liability was around half a million. So it's a lot. But I looked at it, and the last three years, she had overpaid her tax liability by around $100,000, which is significant because you have a couple issues going on here.

First, the opportunity cost of that money. She could have used that money for other things, hiring in her business, growing it, adding to whatever her financial goals are. And then second, even if she had done nothing, maybe she just threw it in a high-interest or a high-yield savings account and earned, let's say, 4% interest, which you can get on today's market, that's $4,000 at the end of, you know, in interest payments, if she just left that in a bank account that was paying 4%.

And so giving interest-free payments to the IRS ahead of time and losing the access to that cash, losing that cash's ability to grow and do things for you in your life, never a good idea. So if you're getting a refund, especially if it's substantial, a little bit of a refund here and there is fine because, especially if you're making estimates, you're not a W-2 earner, but you're making estimates for a business that has income fluctuations, then you're going to be off sometimes. You're going to underpay sometimes or over.

But usually, a really good bookkeeper or accountant can iron those numbers down pretty close. They'll look at your QuickBooks right before estimate time and calculate that estimate for you. And so I really advise doing that, especially if you're like this one client where you're massively overpaying. It's really important.

And the thing is, this is a good example of small strategies can really add up. And so for her, what ended up happening is a lot and a lot of times, it's not some big, flashy, we're going to do this crazy strategy, and you're going to save thousands of dollars. A lot of it a lot of it can be these little things. It's like, oh, there's some money over here. There's a few hundred bucks over there. There's $1,000 here. In her case, you're leaving $4,000 on the table plus access to $100K of capital. It's like you're pulling little things and then altogether, it makes a big impact. And so you're not always looking for these showstopper strategies.

Yeah. And the other thing, too, is to remember is we're going to pay taxes, most people will pay taxes every year till the day they die. And so it accumulates. And so, a smaller tax strategy, maybe we only save $5,000, but it's something that's recurring. After 10 years, that's $50,000 in tax savings. And most people that are listening are going to live more than 10 years and have their businesses going more than 10 years. So this really compounds. It's the kind of thing you don't want to ignore.

Melissa: I mean, this sort of reminds me of another myth that's coming up here. So maybe we could turn to that one. Tax planning must involve complicated loopholes. Like, you're talking about show-stopping strategies, and this is sort of similar, like big things that are complex and shiny and/or sneaky, and/or like there's just I think there does tend to be a myth about someone who's helping from a tax strategy perspective.

We talked a little bit about this on the last episode, but that there's a complexity to it or a grandness to the strategies and it sounds like everything you're saying is that if you've got the right person on your side, that just doesn't … This these are pretty normal things that someone does need to have a knowledge set, like yourself, to be able to look at the full picture, but it's not a grand or crazy or wild set of strategies that are deployed.

Megan: Yeah, absolutely.

Melissa: Okay, so where do you think this perception comes from?

Megan: I think it comes from a couple places. The first is that the tax code is complex and finance in general can be really complex, especially the investing world, everything really. It's money can get very complex really fast. That's part of it. I think the other is popular culture.

So I think there's a lot of, you know, you'll see people in the media or politicians sometimes get in trouble for having these, you know, strategies where it's like the billionaires are not paying taxes or, you know, you see these news stories. And so I think this perception comes from, oh, they must be doing something really complicated that the rest of us could never do.

But in reality, a lot of the strategies that work for the ultra-wealthy also work for regular people too. And a lot of times, you get the most bang for your buck by having good clarity, good goals, a good structure, a good strategy in place. It doesn't have to be this crazy, exotic loophole or anything like that.

Melissa: Okay, what are some examples of tax strategies used by rich and famous that are might be interesting?

Megan: So these are actually really fun. The one I want to start with is Jeff Bezos. So some of the listeners might have heard of a lot of these because they were in the news. But he's the owner of Amazon, obviously. And what he did was what's called the buy, borrow, and die strategy, which is a fun one.

So essentially, he had a lot of value built up in his Amazon stock, and so they were worth a lot. If he sold these stock, he would have to pay capital gains, right? To sell it, turn it into cash, and buy whatever he wants, a yacht, I don't know. If he did that, he'd be paying capital gains.

But instead, what he went out and did is get a lot of loans using the stock as collateral. And if you get a loan, a loan money is not income. It's not taxable income. And so the idea behind this buy, borrow, and die strategy is if you have highly appreciated assets and great credit and all of these things, then you borrow a bunch of money, you use that, and then when you die, all of your assets get stepped up to their fair market value at death.

So if you bought, even a normal person, say you bought a stock in Home Depot for $50, and it's now worth $1,000, you don't have to pay any gain on that. At your date of death, it's now worth $1,000. And the idea is so that your heirs are not saddled with this insane tax bill that they couldn't afford anyhow. You get a fair market step up. And so when you die, all of that gain that Jeff Bezos has in this Amazon stock disappears. And so, and he's living off of all of the loans essentially.

So it's kind of a fun… people are like, what, you know? And it's not something you would do every day. I mean, obviously you're paying interest on these loans, and there's there's nuance to it, but it's one that makes headlines. 

Another fun one that you see is Warren Buffett is famous for gifting appreciated stocks and things like that, as well as living mostly off of his capital gains from his portfolio. So for someone like him with really high income, he's in a 37% tax bracket. That's the highest bracket. As of currently, it's 2025, that's the highest bracket you can be in, whereas the highest capital gains rate bracket is 20%. So a lot of wealthier people will try to live off their capital gains, have really low salaries, and have their salary is super low so that they're not getting a ton of income at that 37% rate. And then they pair that with a gifting strategy. So if you have a really high, something that appreciated a ton, where you would trigger a lot of gain.

So it's kind of like our Home Depot thing where, oh, I bought it for $50, now it's worth $1,000. Instead of recognizing that, you gift it. And when you gift something, you get the fair market value of the gift. So even though I only bought my Home Depot stock for $50, the gift is worth $1,000, and I get a $1,000 deduction for that gift. So basically, if you get a deduction for it, which lowers your tax liability.

Melissa: If you have a partner, um, a life partner, and you, your name is the only name on that stock or whatever, you're going to have some capital gains that are realized, then you could gift it to the partner, and you guys still get the benefit because it's staying in your circle. Am I… I don't have the same lingo that you have, but do you get what I'm do you pick up what I'm laying down?

Megan: Yeah, yeah. So it can be complicated. There are rules about like related party rules, to make sure that the transaction has economic substance. And so with your gifting it to your partner, she's not a charity, so you're not going to get a deduction. That's what Warren Buffett is on, you know, he's trying to get the charitable deduction on his tax return to lower his income.

And the second, wealthy people usually have hit the estate and gift tax limit. So that's $15 million for an individual; you double that if you're married. But someone like him, every gift that goes over that limit, so if you give to a person, so charities don't count for that, but it like your daughter or your wife or your partner or anybody really on the street, that counts towards your gift limit, and anything over that limit gets taxed at 40%. And so you're getting absolutely hosed at that point. Which is why you a lot of times see really complex structures with the wealthy, with wealthier people where they're putting things in like charitable remainder trusts and irrevocable trusts, which have very different rules.

So when you go to your estate planning attorney, they're giving you what's called a revocable trust, meaning you can change it at any time, you can get rid of it, whatever you want to, you can change anything. But in irrevocable trust is it's no longer even in your name, which is why it avoids tax because it's no longer on your tax, you know, return or anything. It's you're giving up ability to control those funds.

Melissa: Okay, I've heard that there's certain stories politicians have huge IRAs. I don't know if that can, if that's like rich and famous, but in some cases it is. Do you have any examples of what I'm talking about?

Megan: Yeah, so this is interesting. There was a couple people who were famous in the news for this. Mitt Romney was he had several million, I think double digits, maybe like $25 to $125 million, some large amount in an IRA. And then Peter Thiel famously actually also had a huge amount, like multiple millions in I think it was a Roth IRA, now that I think of it.

So it's interesting because Roth IRAs, people were a little bit outraged about this because they're never taxed again. So he had a ton of money in the Roth IRA, and people thought, how is this fair? And it actually popularized a strategy called self-directed IRAs.

So you don't have most people when they get an IRA or a retirement count of any kind, they will put it in a stock and bond portfolio, usually through an advisor or an intermediary like Schwab or Vanguard, or one of these. But you can also direct your IRA yourself. You can invest in anything you want, which is most people don't know that. It's kind of interesting. I have to say the rules around it are incredibly strict, and there's a lot of nuance, and you can really step in it, you know? So you have to be very, very careful if you decide to go that route.

But Peter Thiel, what he did was he had some early-stage kind of stock in companies, I think it was PayPal, that grew a ton. And so when he put this these stock in his IRA, they weren't worth a lot. And they grew to massive amounts. And because they were in a Roth growing, they grew tax-free, and he could take it out tax-free. And so people were like mind blown because they're like, oh my gosh, he escaped taxes on this massive, you know, appreciation.

Melissa: Cool.

Megan: Yeah.

Melissa: Those are the fun the fun things stories that people do. I love it. Okay, so what are some straightforward strategies that law firm owners may overlook, but maybe worth sharing?

Megan: Yeah, so the number one thing, it's always the boring advice is the best advice, like the simple stuff. When you go to a health person, you want them to say, here's a magic pill, but then they tell you sleep more, drink more water, eat broccoli. And you're like, really? Is there anything else I could do?

So it's the same thing with finances. You really need to get your foundation solid first. And one good way to do that is listening to the last episode, this episode, a lot of the things we're talking about are building that great foundation.

As I mentioned on that last podcast, I have a checklist, my Keep What You Earn Checklist, that I really recommend going through that, and just, it's really high level. It's just hitting the main categories. But if you don't have that set, then you can't really do anything further. It's kind of like you can't drive the Ferrari if you haven't learned to drive just any car first. So, getting the foundation set. And then after that, if other strategies, more advanced strategies make sense, then I'll let you know or whoever is advising you can let you know. But foundation is pivotal.

Melissa: Yeah, you know, there's so many things running through my head. The first thing that I should say that was running through my head was that a strategy is to hire someone who can help them. That's something that they can do that's in their control.

I do think the checklist is a great idea, but I'm a huge, huge believer and huge fan in finding the right partners in your life and in your world and in your business. And I think it'd be great if people talk to you, but regardless, I think having a partner that is meant for tax strategy is important because if you own a law firm and you have an established business, it's probably worth just getting organized and making sure that you are up on creating your foundation, if nothing else.

I think who you have in your corner matters. And a lot of people think, oh, I'll just do it on my own, but who has time to become the expert that you need to be in order to give yourself the best advantage? So I'm just a huge advocate for find the right partners, find the right team that's in your corner so that you can thrive and do what you're here to do, right?

Megan: Yeah, and my hope with the checklist is to help people ask the right questions because a lot of times that's the hardest part is knowing if the team that you have or that you're interviewing is competent.

I remember this kind of a funny story is I took a couple years off for maternity leave to stay home with my kids, and we were doing a bunch of stuff on the house, but we didn't hire a general contractor because I thought I'm home, I can interview people. I'll just be the general contractor. And I realized I don't know the right questions to ask. Like what do you…?

And so one of the like kind of tricks that I did was I would look, whatever it was coming, so if it was an electrician, I would look up like words that an electrician use. I would Google “electrician lingo.” Like what are certain things? Like trade language that they use. And I would drop those throughout the conversation. So he would be like, wait, she knows what a conduit, whatever. You know, and then they don't know how much you know. So they're like less likely to screw you because they're like, wow, if she knows what a conduit thing is, like I can't pull the wool over her eyes. 

Melissa: Yes.

Megan: And it helped me a lot of times they would launch into more sophisticated answers because they thought, oh, okay, she's not just checked out with the baby. She's engaged, she wants to know, she wants, you know, to give input on these projects.

And so I think the same thing goes with this checklist or getting just enough savvy enough to ask good questions so that the advisors, if they're they if they have no idea or they say, I don't do, you know, asset protection or I don't do I don't know anything about retirement plans or whatever, it just signals you that, okay, maybe I need somebody who understands my type of business or my goals or the fact, you know, some people specialize in different areas. So if you have a lot of real estate, you might want someone who knows a lot about that and how to manage that and maximize that. And so that's what I for that yeah, the checklist.

Melissa: That’s such a good point. And also using AI to kind of arm yourself with some good questions that you can walk in or language that you need to be aware of or I mean, that's just true for talking to a mechanic, talking to a real estate professional, if this is something new to you, talking to an accountant about tax strategy to see like, are we on the same page here? I and then maybe even to equip yourself if you're going to go into a consult call with an expert that you are looking for a partner, knowing how to ask the right questions to make sure that, oh, this is aligned, you know. It's a great use for AI in our world.

Megan: Yeah. Oh, I love AI. It's the best. It's so helpful.

Melissa: Yes. It is the best. I also was just thinking you were talking about getting your foundation right, and if like that's step one, then, what ironically, I don't know if you know this, but the only way to work with Velocity Work when you come in is a program, it's a short-term engagement called Foundation. And it's that. It's kind of getting the lay of the land, current state analysis, and then being able to build on that. So it's just important. Foundation is important. And so it makes sense that's step one in your world as well.

Megan: Yeah, absolutely.

Melissa: Can you share an example of a really simple shift that had a big impact for a law firm owner?

Megan: Yeah, I think the biggest one, which we touched on in our last episode, is seeing your law firm as the income-producing asset that it is, as the investment that it is. Because a lot of times, there's too much focus where the financial advisor or the investment advisor is really optimizing from a tax perspective and from a portfolio allocation perspective. They're really working hard on your stocks and bonds or you are if you're doing it yourself, or with your real estate. A lot of real estate investors get really into it with the depreciation or maximizing certain aspects.

But then we forget our biggest asset, which is our law firm. And so I think thinking about it as the asset it is and making sure that your law firm is as tax optimized as the other things in your financial life.

Melissa: Yes. Yes. That is my, probably my favorite thing that you and I have talked about so far. For me, even that was a good mindset shift, just that language that, you know, I don't think that hardly anyone thinks of their firm as the asset that it really is. It's more, you know, because they lifted it off the ground, and they weren't thinking of it as an asset when they started that. So it really is a mindset flip to start thinking that way when you have a firm that's really bringing in money.

Okay, there's another myth that tax planning is only for the wealthy. And I know we've talked about some strategies that the wealthy deploy that, you know, others may have heard of before. But why do you think so many law firm owners think that and business owners in general, right, think that tax strategy is um out of reach for them or it's not the right time, it's really not necessary yet. Um, I don't know if you if you can speak to that.

Megan: Yeah, it's so unbelievably common. And that I think that's because historically it has been. Really, so much has changed. We are in kind of the informational age where knowledge is everywhere. But I remember I spent a ton of time with my grandma growing up, and she helped raise me, and to she had stocks, like big company stocks, you know, and she would have to go to an intermediary in person, you know, buy the individual stock. She didn't have this whole suite.

Whereas now you can log on like Vanguard or Schwab or any of these other, Fidelity, and see hundreds of different kinds, buy something with a click of the button. It's so easy. But in the past, you would have to go in person, you would have to hire someone, the paper, I remember the paper prospectuses would come in the mail, she would open it and read it and then vote by mail and mail it back. And this is a fascinating thing. But things have changed.

I also think historically, yeah, it was for the ultra wealthy, but now a lot of these strategies have entered pop culture, which is why people who don't work in tax know about the S Corp election or they know about real estate professional status, etc. There's pop culture books about it, there's YouTube channels about it, there's courses, there's seminars, all of that. And so I think there's a big need for it and people are starting to engage and want it, whereas in the past, I don't think there was as much knowledge about it. People weren't seeking it out. And so things have really changed and so there's a lot of opportunity now.

I think there's a big gap in the market like we've talked about. There's not a ton of people who are offering it on a comprehensive scale. So a lot of people are doing it in little bits and pieces, siloed in their expertise. But it's a great opportunity for people who want to bring their business to the next level. I see it as a competitive edge because if you are paying less in taxes than your competitor, then you have more money to drive back into your business and reach your goals. And money that's leaking five grand, 20 grand, etc., a year in overpayments, they're just not going to keep up with a firm that's not.

Melissa: Absolutely. Okay, Megan, we've covered a lot today. I am curious with the myths that we have talked about, which one do you think causes the biggest financial damage, but maybe even not damage, but barriers to progress for a law firm owner?

Megan: So the biggest thing that I see causes damage with most people, law firm owners, and everyone really, is not so much a myth, but a giving up. So when people just hand off things, they say I'm too busy, I can't handle this, other people understand it more than I do, and they stop asking questions.

Melissa: That's really like abdicating responsibility.

Megan: Absolutely. And since we've done some pop culture references here, if you've ever seen movies like The Big Short or The Wolf of Wall Street, or any of these, those are movies that perfectly showcase this. So these are instances where people assume that another expert has it all figured out. They give up ownership of what's going on. So especially in The Big Short, it was people saying, no, no, no, it's fine. We can finance these mortgage-backed securities. These are good investments. And no one except for the main character in that movie was asking questions saying, well, are you sure? Because that's not what I'm seeing, that's not what I'm hearing, etc.

And so it's finance is because they're complex, it leaves a lot of room for bad actors because they can come in and always don't assume that confidence is the same thing as competence. Because a lot of times, like in these movies, obviously they're actors and they're dramatizing this, but what happens is people come in and say, I know better than you do, this is too hard for you to understand, I can handle this for you and take you off your plate. Oh, rest, peace of mind.

Which ironically, my mother-in-law asked me to sit in on a sales pitch that a financial advisor had done. She was thinking of hiring this person. She was like, I want another side of eyes. And I won't name any names, but this individual advisor put on the whole dog and pony show. And their number one core message throughout the presentation was, you don't have to worry about a thing. We have it covered. Relax, we're handling this. You don't have to worry. And that's very soothing, I think for a lot of people. Money feels really overwhelming and confusing and people are really afraid of making the wrong choice and losing everything, etc.

And what we walked away with is this advisor at the time wanted tens of thousands of dollars to manage what I thought was pretty straightforward, kind of passive index fund level investment, like a broad index thing. And I, and she was like, well, I'm afraid to do this and move forward. And I said, honey, this is the way I think of it is, I didn't call her honey because she's my mother-in-law, but like in my mind, the way the way I think of it with clients is that you so say an advisor like this is giving you that dog and pony show and they want to charge, I don't know, $20,000 a year to do so. The way I look at it is you could make $15,000 worth of mistakes managing it yourself and still be $5,000 ahead. So take some of that fear away.

People are afraid to click the button and buy that S&P 500 index to put their retirement money in or whatever. Obviously, if you know nothing and you have no time and you're totally blind, I'm not against getting help, and I'm not saying that people should not use advisors, etc.

But there are times where you shouldn't you should second guess, you know, do I really need to spend that much? Do I need to believe every word that someone's saying? And anytime where you're handing away all of your power and assuming that everyone else knows more than you do, which is funny because as business owners, we get to see behind the curtain. You know, when we open, we realize how there's moments where I'm sure even you as a business owner as well, you'll say, oh my goodness, like it's the forward-facing part of the business, sometimes it's like the phone broke down or the toilet's clogged or all these things that people don't see. So you realize nobody's perfect. There could be a dumpster fire in the background, and we're all still showing up at work and all of that.

And really, that's true of the advisors too. You know, so they're not some God coming down from on high. And same here, like things that I'm sharing with you and saying like, I'm not coming in here, you have to do this, and you have to, you know, I want to be a partner with my clients, and so I tell them, hey, here are the risks. Here are the pros and cons. If we go this direction, you're closing these doors, you're opening these others. At the end of the day, they're in the driver's seat. I'm not here to boss anyone around or tell anyone what to do, or, I never make decisions for them. I am not an investment advisor, you know, I'm an attorney. And so at the I'm doing risk assessments. If you do this, this is what will happen. If you make this choice, this is what you're going to pay in taxes. And so always staying in the driver's seat. That is one of the biggest things that I implore people to do.

Melissa: You just made me remember when I was in my 20s, my early 20s, maybe 24 or something, I went, it was my first financial advisor. I had an appointment. They did a lunch and learn at the office that I worked for. So I went to go have a meeting with them. I wish I could be in that room now. Just, I'm older, I have more experience under my belt. I'm not as afraid to ask questions as I was maybe back then. But anyway, the dog and pony show. I mean, the main investor, his name was Chaz. Seriously.

So the main investor that was like going to be my investor. At one point, like his superior came in and was like all over these whiteboards, and he was like, and so what do you have when you like expecting me to answer the question, what do you have when you know, add these two things together? And I was like, I was so lost. It was so lost. And I think that was the strategy.

Megan: Yeah, it is, though. Yeah. Like when I sat in on that one with my mother-in-law, they were doing really complex, like variable annuities with caps. So it's like you, I don't want to go into it, but essentially, like they were capping losses, capping gains, doing all this. I'm like, why? What? Like it was no, you know?

Melissa: Yeah. Yeah, I did it does but it did make me feel like…

Megan: She thought everyone else on the call knew what was going on, so she was nodding along like, okay, yeah, you know. And not asking because she was like, and she was probably like, oh, I'll just ask Megan later, you know, but like I think a lot of people feel that way where they're like, okay, everyone around me in this seminar is nodding along, so I guess this is people know about these, you know, these products and

Melissa: It's like everything you just said, it just brought it back. And I was like, that's exactly what it was. It was a dog and pony show. I've never had that language for it, but um, and you better believe I paid them. Like I signed up because I thought, well, I don't know what I'm doing. This is a good thing I have them. Like that's kind of the, you know…

Megan: Yeah, cuz that peace of mind and that people want clarity, they want someone to lead. They want someone to give them answers and especially in murky areas.

Melissa: Yes.

Megan: And some of the most excellent sales people I've ever met are in the world of finance. It's like they really draws that, you know, the two best sales people are real estate, usually, and finance. There's a lot of money to be made. And so you have to be very careful.

I see it a lot in the most, if you do anything, read your contracts for any kind of lending. Those get wild. So if you're borrowing money from anyone, usually a bank, that's and that's what you'll see a ton in credit card contracts too. So it'll come, you know, all these fun, shiny things like you're going to get cash back and. But if you read the contracts, it's like if you miss one payment, you're paying 40%, or you know, insane stuff, and like all these penalties and all of that. So that's a great place you can use AI. So put that contract, like your credit card…

Melissa: I was going to say, like who reads their credit card agreements?

Megan: They're wild. It's unreal.

Melissa: I can't wait. Now I'm going to do it for every single one.

Megan: Yeah. Scan it for numbers. Like, you can see if you just scan it for like numbers, you'll see like if you miss a payment, it's crazy. It's like 37% or something. And then like hundreds of dollars in interest. It's unreal, the stuff that they're allowed to put in there.

But you can do that. Like put it up in AI and say, what are the money, the things that affect me from a financial perspective? And with contracts with financial advisors like the one you talked to, I always look for fees. Google the word or not Google, what is it? Control Find the word conflict because they're required if they have a conflict of interest, so they're selling you a fund that they owned, they're required to say that in the contract. So Control Find for that. I would Control Find any kind of fee, penalty, etc. I scan it, and then Control Find because that's where you get people get stuck.

Melissa: That's fun. Yeah. Absolutely. Okay. Before we close, what is one piece of financial advice that you find yourself giving over and over again to clients, to friends, to family? Is anything stand out?

Megan: Yeah, absolutely. This one's really good. It's stuck with me. So if you want to really be wealthy, which is a lot of business owners are trying to grow their wealth, make impact, etc. Here is the one thing. So when times are good, so bull market, your business is thriving, when times are good, save, and then when times are bad, buy everything that's not nailed down. And so this is what the truly wealthy do.

So people who never really get there, when times are good, they go out to dinner, they go on vacations, etc. They spend money. And when times are bad, they tighten their belt, they make smart choices with their business. They're not doing anything wrong. But if you really want to push it to the next level, then when times are good, you are hoarding. Like you are a squirrel with nuts. You are just… everything.

So that when you hit a recession, so maybe like the housing crisis in 2008, 2009, if you had been hoarding right before that, you could have bought all these houses on foreclosure and short sale for pennies on the dollar. And then now those same houses, if you look again, are worth double, especially here in California, where property prices rise really fast and appreciate in areas. That's just a real estate example, but the same goes when the stock market crashes.

So if you have a ton of money, a lot of people get spooked when the stock market is crashing, but people who've been hoarding their money, they see that as a fire sale, a discount, the Nordstrom anniversary sale, you're buying everything. And then when the market rebounds, you have massive gains, your portfolio is huge and bloated. So that would be the biggest kind of secret that the wealthy keep, is that's what they're doing. And that's how people level up.

Melissa: Yeah. Yeah, I love that so much. Just the opportunity that you have, if you if you've given yourself the chance to have an opportunity when things are… like when COVID hit, there were certain people that they were in such a good position to figure some things out for their business and invest in their business and because they had a bunch of space, they weren't having and it wasn't business per usual.

And others were just freaking out and in a really tough spot where others had prepared themselves to be able to capitalize on the opportunity. They weren't, they weren't pumped about it. You know, they don't wish that, but they had an opportunity to capitalize and that's just what you're saying is like give yourself the by when things are good, be a be a squirrel with nuts and then and then when it's time, when everybody else, when the world shifts or when everybody else is tightening their belt, you can you can have the opportunity to create a very different scenario for yourself moving forward.

Megan: Yeah, and it is one of those pieces of advice, it's like an it's in the category of eat your broccoli. It sucks. Like when times are good, you want to go on vacation. You want to do all these things. But it's just like if you can get there and get the discipline and have that deferred gratification, if your goal really is to level up on that level, which everyone's different, you know, everyone's goals are different.

Some people have their business just for a lifestyle business. They just want the extra cash, have fun with their family. They're not trying to do anything crazy. I get it, you know? So it is an eat your broccoli strategy, but if you've been curious, like, how do these people do this? You know, cause I have people who come and say like, what is it? Like, what's the secret sauce? A lot of times it's that.

Melissa: So that is one that's really stuck with me. And when people are really trying to level up, that's what I tell them. Even if you, you know, you're saying some people are just like they'd rather just spend the money, have fun with their family. They're not trying to level up in that way, but even if you put a percentage, just with that mindset, even if it's, you know, maybe you're not the best nut hoarder, but you're doing enough that it's going to you still will have a different opportunity for yourself because you've been a little more aggressive about setting to the side than you would have been otherwise. I imagine even that has an impact.

Megan: Yeah. And if nothing else, then you have a safety net, ‘cause when times are bad, you have savings. You're not a lot of times when things go bad, they get worse really fast because if you don't have that nest egg of like that emergency fund essentially, then you get into those crappy loans with crazy interest rates or taking clients you don't want to take. You know, like it really pushes you into a really, it can push you into a bad place, really fast. Yeah. It's kind of that concept of, what is that saying? When preparation meets opportunity. I don't know. There's a saying.

Melissa: People call it luck.

Megan: Yeah, there we go. Yeah.

Melissa: Luck is when preparation meets opportunity. I think that's the saying. I don't know.

Megan: Yeah. Something like that. It's like, well, you can make yourself lucky. You know, you can make yourself bulletproof or recession-proof. 

Melissa: Yes. Create your own luck.

Megan: Yeah.

Melissa: Yeah. Well, Megan, thank you so much for coming back. I'm going to have you back again because there's something else I want to talk through with you that I think listeners will find interesting. But thanks for your time today.

Megan: Yeah, thank you. This was fun.

Melissa: This content is for informational purposes only and does not constitute legal, tax, financial, or investment advice

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