Today, Financial Coach Audrey Faust joins me to talk about how entrepreneurs can take control of their finances, diversify their income and take their businesses to new heights. 

Audrey Faust is a financial coach who specializes in empowering female entrepreneurs to become financially literate and understand their finances so they have all of the financial tools they need to succeed.

Join Audrey and I in this episode as we discuss how you can make a bigger impact on your income, grow your business and understand your finances as an entrepreneur.  

In this episode Audrey and I also discuss: 

  • Audrey’s mission 1:31
  • The 7% rule 4:50
  • How business and personal finances are connected 6:14
  • Why your net monthly cash impact is important 13:24
  • Why diversifying your income is so important 18:36

Prefer to read this? Check out the blog: 

kickstartaccountinginc.com/how-to-manage-debt-and-build-wealth-a-holistic-approach-for-personal-and-business-finances/

Connect with Audrey:

Website | https://www.audreyfaustconsulting.com/

LinkedIn | https://www.linkedin.com/in/audreyfaust/

Instagram | https://www.instagram.com/greatwithmoney/

Connect with Danielle:

Instagram | @DanielleHayden__OH

Website | Kickstart Accounting

Facebook | Kickstart Accounting Inc. – Home | Facebook

Get Started: https://kickstartaccountinginc.com/get-started/

Full Episode Transcripts:

Danielle  0:00  

Welcome back to entrepreneur money stories. Today we have Audrey Faust on the show. Audrey is a financial expert who is dedicated to empowering women. To achieve financial independence. Audrey provides a supportive and non judgmental environment for women to learn about finances and gain empowerment. You can see why she’s on the show. We have quite a bit of alignment. Her mission is to help women build real wealth and gain financial independence, giving them the confidence and tools they need to succeed. So join me for my conversation with Audrey. Welcome to entrepreneur money stories, the podcast that will transform the way you think about business, finances, and money mindset. I’m your host, Danielle Hayden, and I’m thrilled to be here to help you take your business to the next level. On this show, we’re going to explore everything you need to know about managing your business finances, building wealth, and most importantly, developing a healthy money mindset. Throughout the podcast, we’ll share key insights and strategies that you can apply in your daily life as a CEO and business owner from identifying your financial goals to building a solid financial foundation will give you the no BS checkup on your business finances. So get ready to be inspired, motivated and empowered as we dive into the world of business finances, and money mindset. Welcome to entrepreneurs’ money stories. Andre, thank you so much for being here.

Audrey  1:30  

Thank you, Danielle. I appreciate being here. I appreciate you having me. And I’m excited to chat today.

Danielle  1:37  

Yeah, we were just jamming out on all the ways that we have synergies and our kind of mission vision values align. So I always love to have somebody on the podcast to enhance what we’re already talking about on the show. And you’re here as part of our debt series. And I’d love to kind of dig into your thoughts around debt. But let’s take a step back first, and can you tell the audience a little bit about who you are and your mission in the world right

Audrey  2:09  

now? Great. Yes. So I am a financial coach. And I work primarily with women who are business owners, and I help them understand their finances and become financially literate, as well as making sense of all of it, right? Because, you know, we’re the first generation of women really to have businesses like in the 70s. I just looked up the statistic the other day, it was only less than 5% of women had had businesses. And now we’re up over 42%. So we’re actually forging ahead in this new era. And we’re, you know, nobody taught us our parents didn’t know, right? Oh, yeah.

Danielle  2:56  

Yeah, that’s a really great insight that we don’t think that we think of very often is that this is really the first generation of women to really like we are making an impact and changing the story.

Audrey  3:08  

Absolutely. That’s where my passion lies.

Danielle  3:12  

Awesome. All right. Well, let’s, let’s jump in. You know, I talked about this in our last episode. So if you have not listened to that episode, hit pause and go back one, and then come back to this conversation. We talked a little bit about Dave Ramsey, who he is and his methods, but I’d love to hear you know, how did you learn about Dave Ramsey? And then how did you decide or clarify for yourself that his methods aren’t necessarily the best approach for everybody?

Audrey  3:46  

Yes, great question. So I actually, when I decided to become a financial coach, a friend of mine suggested Dave Ramsey’s program. I’m like, okay, great. Let me do this. So I signed up for his certification program, and I went through the whole thing. And because I’m a finisher, I had to finish it halfway through though I’m like, Yeah, this isn’t how I grew my wealth. Oh, like, I don’t agree with everything. And that the one particular thing that kind of just threw it all in for me was, there was a case study in his certification program, where this couple and he this was the right thing to do. According to him, this couple sold their home, their primary home and started renting to be debt free. And I’m like, that does not make sense to me at all. I’m like, I can’t promote something like that. So you know, I talk a lot about the 7% rule. What is the

Danielle  4:50  

7% rule? Can you touch our audience a little bit about what that is?

Audrey  4:54  

So the 7% rule I talked about is if it’s over seven, pay it off, okay, your interest rate, so pay it off, that’s not great debt to have, um, if it’s under 7%, you can invest your money that you will be paying towards that debt instead. And make a better outcome, if you’re investing in a mutual fund, not necessarily a savings account, but a mutual fund. So like, the average rate of a mutual fund is double digits. So that’s kind of where I go the 7% because you have to pay taxes on the investment and things like that. And, you know, 10% for a mutual fund is low, you’ll typically get, you know, 12-15%, depending on your risk.

Danielle  5:43  

Okay, so your approach for business owners, your stance is that if someone is taking out a loan that is over 7% interest, we would want to prioritize paying back that debt facility that’s over 7%. But if we’re taking out debt that’s under 7%, do you feel comfortable with them, keeping that debt in their business and, and using that debt facility as a way to find new opportunities?

Audrey  6:14  

Absolutely. And, you know, yeah, we are speaking about business, we’re speaking about personal too, right? So I kind of talk about both business and personal because it’s so connected. Typically, and I heard you say this on your podcast, like how we do one thing is how we do everything, right. And if we’re handling our finances one way and our business, typically, it’s the same, in our personal, right, it’s kind of both and I look at both aspects as a whole picture to grow your wealth. So

Danielle  6:47  

we don’t want to be paying off debt and reducing debt to the detriment of our business and our cash reserves, both personal and in business, right. So we don’t want to be using all of our cash to pay off debt just to be Debt Debt Free. We really want to prioritize our high interest debt, and then continue to use our low interest debt to continue to fund new opportunities, new investments and business. So I summarize that kind of perhaps where you would agree. Yes,

Speaker 2  7:19  

That’s, you know, that’s a great point. If you’re a growing business, there’s two reasons to have like I always say, if you have a staff member, you have to pay whether it’s an employee or subcontractor, and they’re required to pay them on a regular basis, you should have a line of credit, because you can’t not pay your staff. Right. And if cash flow is an issue, then you need to pull it from somewhere. Yeah, or they’re not going to work for you anymore. And then.

Danielle  7:52  

Yeah, let’s talk about credit cards. So this is one area where we see a lot of our clients use credit cards almost as a line of credit. It can allow for clients to get an extra 30 days of space between the expense and the actual cash and back to their business. What’s your stance on on credit cards in both business and personal? Do you believe that credit cards have a have a place or should we stop using these debt facilities so that we can be debt free,

Speaker 2  8:22  

they absolutely have a place and I’m the queen of finding the best credit card with the best rewards and like doing the 0% interest, if I want to invest in something big, I’ll open a new credit card and do 0% interest for 12 months. So as I’m learning or investing in that business coach, I’ve done this with a business coach, they’ll give you like a 20% discount, if you pay up front so I’ll pay up front, put it on the 0% interest and then pay it off over the 12 months. So there are a lot of times where you need to use credit to invest and grow your business. I am typically one though I don’t want to pay that 20-25% interest that’s on a credit card. So either I’ll use a line of credit or I’ll pay the balance off at the end of the month. Or I’ll have some sort of 0% credit card in my pocket that I can you know, pay it off and make a plan right so you’re not at the end you’re not like okay, now I got now I gotta pay this off and make a plan to actually make payments every month to that as if and then you save 20% Because a lot of the coaches will tack on 20% to pay them to make the payments so that’s different ways and in personal like I love you get cash rewards on a lot of these credit cards. So that’s a lot of fun, right? You get to put every as long as you’re able to pay that off every month. Great way to add extra cash in your business with a cash flow. Words card.

Danielle  10:01  

Yeah, well, we have vacationed every year on points. And so I’m a big believer of the game. So I really encourage our clients to do the same, you know, kick started counting, we have a set of business cards, and then I have personal cards as well. And I do believe in using those cards to fund the business and fund our personal lives. And then we we use those points in a really smart way to continue to invest back, can you talk a little bit about as a business owner when we look at, you know, for somebody who has debt in our business, but we also want to start to create wealth, your as our business is growing, we’re bringing in revenue, and we’re we’re bringing on additional debt to fund new opportunities. How do we find this balance between repaying our debt? And then building wealth and investing in our business? How do we find that balance there?

Audrey 10:59  

Why do we say make sure you’re paying yourself, right? Because I’ve come across a lot of business owners that are focused on the top line. And they’re not focused on I mean, I had a client who was a seven figure business owner, who wasn’t paying herself anything. Whoa, that’s all. Yeah. So like, I’m like, Whoa, wait a minute. And a lot, it’s and that was actually, what we found out was based on mindset that had been programmed in her when she was a child and her father had a business who would grow these businesses and then, like, accumulate so much debt and put everything back into the business, and accumulate debt, and then end up going into bankruptcy or have to close the business end up more in debt. So you need to be very careful that you’re paying yourself, you’re investing personally, whether it’s in a retirement account, or you know, a personal investment account, you’re not just throwing everything back into the business. And the best way to look at it, as you know, Danielle, is your net profit, right? Like, take a look at your net profit, make sure that net profit is good. Also, many business owners don’t look at their cash flow statement. And if you’re not looking at that cash flow statement, you’re not going to see those principal payments that you’re making on your loan. So you’re not going to see all the money that’s going out of your business. So you know, I like to have business owners create a plan. I don’t like to call it a budget, I like to call it a plan, a lot of people get scared of a budget, the word budget, create a plan and include that debt payment in there, right? Because it’s not going to show up on your profit and loss. And most people are only looking at their profit and loss. So when I create a plan, aka budget for my clients, it includes the debt payment in it. And we can look at that and say, Okay, this is how much cash was leftover at the end of the month. And this is what I call they’re not, this is your number, this is the number you need to make every single month in order to make sure everything’s taken care of. So including yourself.

Danielle  13:15  

Yeah, that’s great. So we call that your net monthly cash impact. So

Audrey 13:21  

not to I love that.

Danielle  13:24  

It’s a really important number. You know, we’ve talked a lot on the show about having your three months worth of that number saved. It’s not your sales number. It’s not your operating expenses. It is what is the cash impact of running your business month over month, that’s what we need to have saved as a cushion that needs to become our rate reserves. So then once we have that in reserves, we can start to think about how we want to allocate funds towards debt? How do we want to allocate funds towards building wealth or getting paid? So that’s, that’s really great, great advice. Now, I know you have some action steps, you know, for somebody who is listening to this and says, yeah, yeah, yeah, I got it to pay down, pay down my debt. Paying myself can build up a cash, I got it ladies, easy for you to say, I’m drowning in debt. I have no money. Like, what does that person who’s listening to us kind of rolling their eyes? That is drowning, maybe feels like the weight of the world on their shoulders? What are some action steps for them to be able to take right?

Audrey  14:36  

I’ll get to them in one second. But I want to share a little story for those of you who are there because I’ve been there. I guess it’s been about 20 years ago now. Maybe a little, maybe a few more years. I had a family of four at home and two little ones to which I was not making enough money. I didn’t have my accounting degree at the time. I was not making enough money to afford daycare. So I was home with him. And as a family of four with a home, I’ll never forget, it was the first year I ever did my tax return because that was the first year I got, I’m like, Okay, well, I need to find a job that’s like I can do at night. So I learned how to do taxes. And I did my tax return. And my income for that year was $24,000, our joint income. Now, you would think I wouldn’t be saving anything at that point. But I had read an article in a Money magazine a few years back that said, this couple put $100 a month away. And in like, 20 years, they had $100,000. I mean, that was a heck of a lot of money to make back. Yeah. You know, well, I can’t afford 100. But I’m gonna do 50. So I’m like, because $50,000 At that point would have been an amazing amount for me. So even that year, and that was kind of a turning point for me, too. That was when I decided I had to educate myself, I had to make a change, because I actually qualified for an earned income credit that year. And I was like, which, you know, but our audience may not know is a credit that you get, because you’re below the poverty level. And I was, like, ashamed and embarrassed that, like I was in that position, but I was still saving $50 a month. You know, and I think back at that, because I treated that $50, like a bill, like it was an electric bill. And I was best, that’s when I first started investing in mutual funds. And it was, like, I look back at that now. And I’m just like, shake my head. It was like, Oh, my gosh, but you know, we’ve all been there, right? We’ve all been in that place. My parents were paycheck to paycheck, people, like I didn’t come from any kind of money. So I just knew that I wanted a different life for myself. And that’s when I started making changes. So I was doing a workshop the other day in a coaching group. And somebody called it an electric bill. And she said, call it your self love bill. And I thought so yeah, so just, you know, even if it’s just $50 a month, you know, start there. So I’ll go into the strategies now. So the first thing you know, I really love to tell people is know what your net worth is. And I have an amazing set of calculators that helps you calculate it. So what is your net worth, it’s your total assets, if you own a home, a car, any kind of property you own, minus your debt. So any kind of money you owe to anybody else, whether it would be your mortgage, your car payment, or all of that, you subtract the assets from the debt, and you come up with your net worth. That’s like getting on the scale. When you’re going on a diet, right? You need to know where you’re starting from. So that’s why I always say that’s the first step.

Danielle  18:06  

Your base, it’s your starting point, we have to know where we’re starting to know where we’re going. I really liked that analogy. That’s, that’s, that’s a great one, let’s step on the scale for the first time, yet our starting point. Okay, let’s start. Yeah.

Audrey 18:18  

And then and than that helps you focus on growing that. And when you can make financial decisions, say, Is this going to grow my net worth? Or is this going to take away from my net worth. And then step two is optimize your debt strategy G with the 7% rule, which we talked about earlier, right. So are there you know, your mortgage, if you have a home and you have a mortgage, most people, it’s under 7%. So I have this other amazing calculator and what I call my wealth building bundle. And I think you’ll be able to share that in the notes. And I just before we got on this call, I put, I did a simulation in here in this wealth winning calculator. And if your mortgage balance is 250,000, and your interest rate is 5%, and you have a 30 year loan, you know how they tell you a lot of people say pay an extra $100. And then you’ll pay that mortgage off early, right. So if you pay that mortgage off early, if you’d put did that, put that extra $100 in there and pay that mortgage off early, you would save 4.25 years on that mortgage, and you would save 30 Almost $39,000 in interest. Now

Danielle  19:34  

$39,000 in interest,

Audrey  19:37  

but listen to the opposite. So I tell people not to do this. And here’s why. If you took that same $100 and invested in a mutual fund over 30 years, the length of your mortgage, just $100 a month, and you got a 12% rate. Take a wild guess at the end of those 30 years how much you would have. I can’t even imagine. For $338,000, you would have more than your mortgage.

Danielle  20:04  

Now what about if I have $200 a month? Do I put $100 to the debt and $100 to the investment, you think you put $200 in the investment,

Audrey  20:13  

put $200 in the investment, if it’s under 7%? Because it’s, it’s just gonna be even more,

Danielle  20:20  

I just want to change the mindset of people, right? A lot of us have been trained to think, pay off your mortgage, pay off your debt. And this is a big, big mindset shift. So run the count, calculator, run, run your numbers, and decide where you want to invest your money. Is it being debt free? Or is it having a true investment that’s going to build you income?

Audrey  20:45  

Yeah, and create assets and build your net worth, right. So and, you know, it doesn’t even have to be just a mortgage, it could be a car loan, I mean, they give really cheap car loan rates out. Now, it could be a student loan, you know, everybody is so focused on paying that debt off, but you’re actually hurting yourself if the interest rate is low, when you could be building your wealth and building a bigger net worth by investing it in something like a mutual fund.

Danielle  21:15  

It’s great. Any other steps? Yes.

Audrey  21:17  

So that’s step two, step three is to diversify your income streams. So what do I mean by that have that mutual fund, also, you know, maybe have an investment property, that’s partly how I grew my wealth is, you know, I started with mutual funds and started investing that money and that grew and grew, and I already what am I gonna do with this, so the housing market crashed in 2008. And we bought our first property then, because we had that money in the mutual fund from giving us the self love bill. And we will take that step and actually take advantage of that housing market. And that was the first time we got into it and we didn’t know anything. My husband, I really didn’t know anything about renting a property. I mean, it was all just like, jump in and figure it out. So we did and, you know, we ended up the first, you know, it was so easy, they had the house rented, within a couple of weeks, we hired a company, and it paid for itself. Every single year, we had it. So then, you know, we did it again. And again. So and you know, every house that we’ve had pretty much paid for itself. In the end, sometimes people look at investment properties because they want the income, it’s not really what that’s about right, you’re not gonna get a ton of income from an investment property, but if it pays for itself, mortgage included you somebody else is paying the mortgage on it, and you’re you’re getting the the appreciation of house, then you decide to sell it on two different properties, we doubled our money from the investment and all we invested was that original 20% So that was the only money we took out we got mortgage on the rest of it, and then doubled our money when we sold them. So for somebody

Danielle  23:08  

who is running a business today, if they feel at capacity, right, because I get it as a business owner, we are already wearing so many hats and have so many balls in the air if finding an investment property feels completely out of reach. What other strategies do we have to start to think about diversifying income? I’m thinking our specific business brings in new revenue streams expanding product lines service offering maybe a second second business but those all feel really time consuming. So is there anything else that we can think about there?

Audrey  23:47  

I mean, well my favorite way is investing in mutual funds because that’s not time consuming at all. You just like set it and forget it right I dollar cost averaging works to your advantage by putting in that monthly thing and every single month you just put the money in you set it and you forget it and you know you’re you’re growing your wealth even if it’s just $50 a month you know, but it’s only for long term a lot of people think you know they want to get in for a year I say five year minimum like to see the really see the returns that you want on that money and keep investing every single month even if it’s just $50 So

Danielle  24:25  

any other steps that we can take right now. I mean game

Audrey  24:29  

as your pro around you knows to gain an education around your finances because you know Knowledge is power. And the more financially literate you become and the more you understand, the more power you gain in growing your wealth and and and growing your business and growing your personal things. So education is key in my part. I am always in my professional development line as well. I saw my p&l, because, you know, that’s, you know, I think it’s important to keep educating yourself and keep growing as a human around your finances, as well as around your business. And then the last thing that I love is, you know, celebrating your milestones and, and helps you stay motivated. So if you’re able to do that, $50 a month for an entire year, like, celebrate that, you know, now, don’t go out and take all the money out and blow it, but, you know, celebrate it in some way. Like, don’t deprive yourself, it’s just like a diet, right? If you deprive yourself from certain foods, or you know what you can eat, like, all of a sudden, you’re just gonna say, it’s not worth it, and you’re gonna give up. So like, have small celebrations on the way, plan out whatever they are, as you start changing and growing your wealth.

Danielle  25:57  

Great, thank you so much for those very clear action steps. And I think that last one is really important. As business owners, we are always moving the bar further and further down. And we forget that we need to actually stop and celebrate and just be grateful for how much we’ve already accomplished. We don’t have to always have more and more and more, let’s stop, be grateful for what we’ve done. Create a checkpoint for ourselves and celebrate as we move forward to our next milestone. Yeah, is there anything else that I didn’t ask you today that you wish I would have?

Audrey  26:38  

Yeah, I guess I’ll just say a little bit more about celebrating. So I have a certification in neuro coaching and celebrating actually creates positive chemicals in your brain. So your brain will then react and want more. So the more you celebrate, the more your brains gonna react, and the more you’re going to continue to succeed. So and I love the last thing I want to say is I love to kind of look back at where you were five years ago, like, think back today, and then think back five years ago, and think back where you were, most of us will be like, Wow, I never thought I’d be in this place. I know myself, like, I never thought I’d be in this place that I am five years ago, like I exceed and take a minute to like revel in that right and, and celebrate that.

Danielle  27:34  

That’s great. Thank you. Where can the audience continue to stay in touch with you and find the calculators that you mentioned?

Audrey  27:42  

Great. Yes. So I’m on Instagram, great with money, Facebook, great with money. My website is where you can find the free wealth building bundle, which has all three calculators, the net worth calculator, the wealth winning calculator, which shows you the difference between paying off the loan early and investing in a mutual fund. And then just an investment inspiration calculator, which just will show you how your wealth will grow over the years you can put in if I put in $50 a month and this is you know, for five years, this is how much I’ll have in the end. So you can find those calculators on my website, which is Audrey Faust consulting.com/wealth building bundle.

Danielle  28:28  

That’s great. Well, thank you so much for being here. This is a hot topic that I’m excited for the audience to dig into, and start to wrap their mindset around. So thank you for being a wealth of wisdom.

Audrey 28:43  

Thank you, Danielle. I had a lot of fun here. Thanks for having me.

Transcribed by https://otter.ai