Full Transcript: CEO of Axial Family Advisors Tunde Ogunlana On GHOGH Podcast Part 2
They discuss how QE or quantitative easing (money printing) is likely to look different in the next financial crisis in America and some tax benefits with side hustles.
They also discuss why estate planning is a selfless act.
You can listen to the entire conversation right now in the audio player below. If you prefer to listen on your phone, GHOGH with Jamarlin Martin is available wherever you listen to podcasts — including Apple Podcasts, Spotify, YouTube, and SoundCloud.
Listen to GHOGH with Jamarlin Martin | Episode 65: Tunde Ogunlana
Part 2: Jamarlin continues his talk with Tunde Ogunlana, the CEO of Axial Family Advisors, a wealth planning firm. They discuss how QE or quantitative easing (money printing) is likely to look different in the next financial crisis in America and some tax benefits with side hustles. They also discuss why estate planning is a selfless act.
This is a full transcript of the conversation which has been lightly edited for clarity.
Jamarlin Martin: You’re listening to GHOGH with Jamarlin Martin. We have a go hard or go home approach as we talk to the leading tech leaders, politicians and influencers. Let’s GHOGH! This is part two of the interview. If QE is going to look a bit different and it’s not going to be so much top down where a lot of the advantages are skewed towards the wealthy and elites. Hey, you could look at student debt, you can look at auto debt. The New York Fed, just last month, said that late payments for auto loans are at a record high. There’s never been this scale of late payments for autos according to the New York Fed. At the same time, Jerome Powell’s saying, “Hey, things look good”. But the common man and woman, they’re behind on their auto loans. But I’m thinking the debt mix in terms of, hey, if you’re going to stimulate the economy, why don’t you focus on student loans, auto debt, credit card debt, that if you’re going to help these banks make more money and you help financial institutions and the owners of access, you’re going to start buying Apple and Google, helping the people who can afford to have big portfolios and you’re going to perpetuate the inequality in the system. You’re going to exaggerate, and you’re going to have to do something this time to help the folks on the bottom, the folks who need a big chunk of that QE. So now we’re on a credit cards. Some millennials, they’ll say, I got trapped. They extended credit to me, some type of point system, no interest for the first six months, I got trapped in credit card debt. OK. And so of course the average millennial has college debt. Now these credit card companies have them trapped at the end of this economic cycle in record credit card debt. And it sounds simple. Hey, you just have to be disciplined. Don’t take out credit cards and all this other stuff. But what advice do you have to younger folks who have not been trapped yet and to folks who are already trapped because that’s a big impairment.
Tunde Ogunlana: If you’re not trapped yet, just don’t get trapped, that would be the first advice. It’s amazing because then you’re taking me back to my college days, which I remember this was before they had certain legislation about credit card companies not being on college campuses. So I remember, like City Financial, I had a credit card from them because I got a t-shirt when I signed up, but when I was 19 or 18, having that free tee shirt, I guess was pretty cool. So I got myself probably by the time I was getting out of college, I probably had, three to four grand in credit card debt that eventually I paid off after I started working. And it was a big waste of time and money. When you look back at it. I don’t even remember what I spent that money on. So, I think part of the journey for all of us. And now me and you included, even though we’re doing well and we’re mature guys in our forties now, we’re bombarded constantly by advertising and by big corporations that have spent cumulatively billions of dollars in marketing, advertising budgets. They hire PhD psychologists that know how to get and tug at our wants. And you know, we all suffer from a little bit of being in a society and wanting to be like everyone else. So we want instant gratification. And I think where we’re at economically, if that’s the case about this level of debt and things like that and people being behind on their payments, I think speaks a lot more to our culture than of the economic, I guess condition and data is just a manifestation and it’s like a view of who we are as a society right now. We’d rather just go spend money than take the time to build long-term. We’d rather be the tortoise than the hare, most of us. So I don’t know what to tell people that are already in this situation except, change your habits and start having a disciplined way to pay it off and negotiate…
Jamarlin Martin: But that doesn’t work. A lot of people know, hey, I need to live within my means. I shouldn’t take this credit card because, I think I’m not going to use it but then I end up using it.
Tunde Ogunlana: That’s what I’m saying, most people think that right then they don’t do it. That’s my point.
Jamarlin Martin: But how do we change that behaviour?
Tunde Ogunlana: I don’t know. I’m not a therapist, but it is true, but that’s why I’ve learned that the kind of money and psychology and our emotional state, all that stuff, it’s all really one kind of ecosystem of your mental and emotional state, money is just a manifestation of a certain part of our behavior. So it’s amazing. And I look at it through clients that I have, some who are extremely disciplined with their finances and some who aren’t. And I just look, everyone’s different. And that’s why I say, if you’ve got all those issues with debt and all this stuff, and everyone’s got a different story. I mean, someone might’ve been married to someone that ran up a bunch of debt and then left them. I mean, that’s not their fault. And then maybe their whole issue is choosing a better life partner and not so much the financial stuff. But in general, if you find yourself in a position of, in that negative state of being high credit cards, behind on car payments, I mean at some point you’ve just got to draw a line in the sand, make an assessment of what you really have, what’s your ability to earn going forward and try and somehow start cutting down and being within those means. So until you kind of have that reset moment and while you’re doing that, maybe go in and get some credit card counseling services, talking to the bank saying, “Look, I can’t pay this back”.
Jamarlin Martin: Resetting your priorities.
Tunde Ogunlana: Yeah. Just resetting.
Jamarlin Martin: I can’t get that new car until I get my credit card under control. I can’t take this big vacation until I get my credit card…
Tunde Ogunlana: You know what it reminds me a lot of is, I’ve learned to make the analogy with food and exercise, right? It’s a lot of people have similar issues with money and with food. It sounds great to go get on your cycle for an hour and go to the gym and workout. And you’re gonna eat kale and rice and just live this clean life. But then you walk into the football stadium or the basketball stadium to watch a game and you smell those hot dogs and you smell those fries and you just say, “Oh, you know, I’m just gonna take this one time off.” And what happens? Most people then just slide down that rabbit hole and it’s very hard to get back on track. And I think the same thing happens with money. It’s one reason why diets don’t work and kind of financial diets don’t work either. I’m going to do this, I’m going to do this. You just have to have a wholesale change in how you’re living your life. Just like when you want to lose weight or get in shape, it’s not about some kind of fad diet or something. You just gotta change the way you’re operating as relates to food and your exercise. And I think the same thing happens with money and that’s why it’s deeper than just a financial conversation.
Jamarlin Martin: Yeah. It’s behavioural.
Tunde Ogunlana: And that’s why I’m saying that, we’re at this point in our country where we’re arguing that the government should do this and that. And that’s what I mean, but I don’t know what the government should do. And I dunno what private companies should do. I just think everyone needs to look at their situation. And I’m not saying we’re all these rugged individuals like we’re cowboys in the old west. I’m just making the point that just like I have a family and a budget and money, I gotta live within some kind of means and everyone else does. So we just all have to, and this is interesting because our daughter, who’s in her twenties has been complaining that she can’t make enough money to live on her own because she’s living on her own. And she lives down here in south Florida with us. And one thing I told my wife is I looked at her, I said, well, neither of us, me and my wife, are from south Florida. And we moved here at a time when real estate wasn’t so inflated and the cost of living wasn’t so inflated down here, but we moved from somewhere else. And so my comment to my wife was, well look, maybe she should move. There’s other states that have a much lower cost of living where people are moving into because they can’t live in the big cities anymore. And that’s kind of what migration has been throughout the world history. People of lower means move somewhere else and start new. That’s how our country got founded by Europeans, right? They came over here when stuff wasn’t that great in Europe for them, and they made something of this country. So we can all do that in our own life too. We might not want to, you might have family ties and other things in your community, but you have a choice. You can either live stressed out financially in a higher cost of living place, or you move somewhere to a lower cost of living. I mean, at some point, I know I’m making that sound very easy and someone might think I’m a total a-hole the way I’m talking, if they’re going through a struggle right now. So I don’t mean to be, but at some point you just got to look the brutal facts in the face and move on and just make a decision. So that’s kind of where I stand with all that. That’s why I don’t really know what the Fed could do for the lower and middle class under QE. Because at the end of the day, my belief is that money and power will find themselves. So the banks are always going to have the money to spend on the lobbyists to go to the government and do this. So unless you really do something like, not to be political here, but you bring someone like a Bernie Sanders in to wield the sledgehammer to the whole financial community or Elizabeth Warren, then you’re not going to have that happen. But that might have its own consequences by having someone like that in office too. So there’s never like a perfect, I guess, solution or situation.
Jamarlin Martin: Okay. So I want to jump to potential tax advantages for side hustles. Hey, I work full time, but I do coding, consult on the side, I have another kind of business on the side to supplement my income. What are some tax advantages for side hustles?
Tunde Ogunlana: I appreciate you changing the subject because this is good. I can give clear answers to this one. So the advantage to side hustles is pretty great from a tax perspective. So let’s just put a fictitious character out here, Mrs X, who has a 9-5 job where she’s earning $100,000 a year or some number like that, but then starts a side hustle to your point, and starts earning enough that it’s starting to put more income on the tax burden, right? So maybe she’s had the hustle for two years and then the third year she started to make $75,000 or $80,000 on the side hustle. So now the total income is close to $200,000, which is driving the tax rate much higher. If this side hustle was just a straight side hustle, then what I would recommend is incorporating, whether that’s an S Corp, LLC, that would have to be be dealt with with the tax advisers, and looking at the individual business. Starting to put things like cell phones, cars, other expenses that are used to deal with that side hustle in the name of that corporation so that then they can be written off as expenses. Because, let’s say you’ve got the cell phone bill is a couple of hundred bucks a month and you’ve got your internet at home because your side…
Jamarlin Martin: You’re working at home.
Tunde Ogunlana: Yeah. You’re on the internet and all that. Maybe you’ll have two internet lines just to be sure you’re being very clear with the IRS that I’m paying, one is the business kind of line and one is the personal. You have a car, an automobile, so you can write that off because you’ve got to get to and from your locations. You’ve got things like mail, you might be sending a lot of things through the mail depending on what kind of business it is. That can be written off. So, there might be certain clothes, uniforms.
Jamarlin Martin: New computer.
Tunde Ogunlana: Computers. Exactly. Tablets, the whole thing. So all those, if they’re legitimately used for your business, they can all be written off and one can do those kinds of write-offs without a corporation. But after a few years, the IRS does prefer to see that we’re not just these sole proprietors doing these hobbies. They do want to see some sort of formal corporation and a little bit more formality in the way taxes are done.
Jamarlin Martin: Yeah. So on that, in terms of what can be written off, if you have a good thing going with your side hustle where you can legally write stuff off, legitimate business expenses. Many accountants advise, “Hey, if you have something good going, don’t get greedy.” That’s going to trigger the audit. Meaning that a lot of people would get in trouble with their taxes and managing expenses with their side hustle. They want to write off every single thing and then they run into trouble. They get greedy, they become a pig, and then now they’re in trouble and they’re under audit.
Tunde Ogunlana: Exactly. And that goes back, I think, to just going back to personalities, right. Some people are like that. They just, whether they think that they’re above everything or they just want to push until they can’t push it anymore. Others kind of understand the idea of living within some sort of equilibrium. And that’s a good point. I mean, definitely you don’t want to be dishonest in how you’re doing your taxes. Put it that way. If you really are pushing it to the limit and you’re spending a lot and all that, obviously you can put it in there because you can back it up with data if you get audited, but you’re right, at every turn, you don’t want to be a greedy pig. You want to have some sort of, you know, pragmatism to the way you’re operating.
Jamarlin Martin: Yeah. So for the audience, two main takeaways is you want to make sure you track and you can defend the expenses on your side hustle as it relates to taxes. There’s apps now that you can download that make it really easy for you to track these qualified business expenses, and then also don’t be greedy.
Tunde Ogunlana: And one more thing I’d add to that, I find that I’ve even done this with some of our clients that start something on the side, which is to have a qualified plan attached to it, to help you with your taxes as well. So again, if Mrs X had her job, her nine to five that she already had a 401k. With this side hustle, she’s making, like I said, the $80,000 or so per year, then she could also open a SEP IRA or maybe a solo 401k because the IRS allows a person to put a maximum amount, I believe this year of $54,000, into what they call a defined contribution plan of which IRAs and 401ks fall under that classification. So if you’re maxing out your 401k at work, which for under age 50 is $18,000, people over age 50 have a catch up provision of a few thousand more so they can put away $24,000. Let’s say your company doesn’t match, maybe you’re profit sharing. So let’s say all in you’ve got $30,000 that year put into your 401k from your own salary plus the profit sharing and match from the company. You still have a corridor and room of another $24,000 or so to put in to a plan for that year to escape taxation for that current year. And so you could open a retirement plan on your side hustle business and also use that to shelter money from current taxation from the IRS. The other advantage of that too is that that money is creditor-protected. So if you ever got sued or at the file for bankruptcy, in most cases, I mean there’s, I’m sure someone can pull out some legal case where they were able to pierce that, but in most cases, all retirement plans are creditor and, and asset-protected. And, on the sense that I’ve done this with some entrepreneurial clients with a solo 401k, if you have that on your side hustle, you can actually borrow against it if you get in a jam down the road without having to go to a bank and show tax returns and all that. So there’s a lot of advantages of just kind of really, if those listening, if you have that kind of side hustle of really just taking a look at some of the things we’re talking about to see if they make sense for you and can help you with taking more advantage of your situation.
Jamarlin Martin: You mentioned asset protection. As it relates to my business fails or get into trouble and creditors are coming after me personally and I want to protect my assets and, something can happen in the future where people come after me, lawsuits or whatever. Can you share with the audience what type of instruments you would be thinking about to protect assets from creditors in terms of annuities and just different types of instruments, how would you go about asset protection strategies?
Tunde Ogunlana: So that’s a good question because just each situation is unique because I guess the real desire for asset protection means that you feel you have some sort of exposure for liability, right. So, but that’s different. I’ve got clients that are surgeons, their exposure to liability is obviously if they screw up in the OR and they cut someone the wrong way or whatever, but their first line of defense is malpractice insurance. I’ve had clients that are professional athletes for example, and we’ve been able to manage their asset protection through things like, just getting better liability coverage and increasing liability limits on their cars and their homes and things like that. So you can use strategies like insurance. You can use strategies like I mentioned just now about a qualified plan or retirement plan and shoving assets in there. Like you said, in certain states, like we’re in the state of Florida here. Annuities and life insurance cash value are fully protected from creditors in this state. So that could be another vehicle for someone. Also in our state of Florida, your homestead is protected up to $15 million. So if your primary residence.
Jamarlin Martin: So a lot of the strategies depends on the state?
Tunde Ogunlana: Yeah. But that’s why our state attracts many people running away from something else. Or ex-felons. But we have a lot of white collar criminals in Palm Beach. But the thing is, I say it with a smile, but they work right? Meaning these tactics and these strategies. So that’s why I think it, at first I would start with asking someone, what is your exposure and what’s your potential liability? Because I remember with the professional athletes, especially guys that are in the NBA that look the part, when they step out of a car, the guy is six 10. It just, you know, sometimes I can’t tell a guy that’s five foot eight running back. If he’s just dressed normal walking out of his car, you might not know that guy who was an NFL player. We can all kind of tell sometimes what an NBA player looks like, that guy’s, 6′ 10″, built like a rock. Most people don’t look like that. So when I’ve had clients like that, what we’ve done is we’ve really increased their auto limits, honestly, because my thought was if you get an offender bender, the little tap on a bumper, a guy like me gets out the car, the person I might have tapped, just get out and look. And if they see no damage then okay man, you know, “I’m glad we didn’t get hurt and we’ll be on our way.” And if there was a little damage, we take each other’s info, maybe the cop gets called just to record that the police was at the scene and then we both leave. But if it’s the gangly 6′ 10″, 6′ 11″ guy climbing out of the clown car almost and the person sees them, all of a sudden they might say, “Oh, you know what, my neck hurts, my back hurts.”
Jamarlin Martin: Hey, he has a Bentley.
Tunde Ogunlana: Correct. So, what we’ve done with those type of clients is make sure that their auto limits their liability policies on their home because they might have something where they have a party or they have guests at the house and someone’s hurt. But because of who they were, now they want to sue him for all this stuff. That might be something different. I might not recommend that to the surgeon because again, the surgeon gets out the car and the person that’s looking at them doesn’t really look at them as someone they can go after.
Jamarlin Martin: Yeah.
Tunde Ogunlana: So that’s just sometimes how we’ll deal with asset protection is really looking at the individual client situation and saying, out of all these tools that are out here, and sometimes we recommend irrevocable trust planning. So it depends on just the situation, but all those tools are out there that can help someone protect assets from certain things. But I want to be clear here, there’s a couple of things that aren’t protected. It’s almost impossible for anything that I mentioned to protect from divorce, IRS fraud, or if you are found to have put the money in those vehicles after having committed the crime. So, it’s just very clear. Meaning you can’t do something…
Jamarlin Martin: You have malintent.
Tunde Ogunlana: Correct. Yeah. So if on Jan. 5 you did the malintent thing that caused you to get sued or have litigation against you, and on Jan. 15, you shoved $8 million into an annuity thinking it’s going to be safe. The court’s going to say you might’ve had a bad intent with the way you did that. So I want to be very clear that these aren’t, I don’t want anyone saying that they’ve got me recommending that they do something else and then they go to jail because of this podcast.
Jamarlin Martin: Okay. Yeah. Would it be fair to say that when people think about asset protection or when people talk about buying real estate, like why would you want to own a home.
Tunde Ogunlana: Yeah.
Jamarlin Martin: Can you talk to, one of the reasons that’s not talked about in the mainstream, why you may want to own a home is because your home is protected from creditors in some states. Could the home be part of the asset protection?
Tunde Ogunlana: Yeah, that’s what I said. The homestead.
Jamarlin Martin: A creditor can’t go attack your home in certain states. So, rather than having a certain amount of cash in a banking account or something like that, if the value’s in a home, the creditor could come after that, but they can’t come after your home.
Tunde Ogunlana: Correct. So that’s what I was saying. In Florida, they call it the homestead exemption, which is basically that your primary residence, your homestead is exempt from creditors, litigation, things like that. Bankruptcy. Obviously the only one that can go after you would be the mortgage, if you have a mortgage at that bank. That’s the only one. That could be an avenue. But again, if, let’s say you had a $1 million house and you had a $600,000 mortgage, and again, now my example on Jan. 5, you committed some sort of felonious act, which got you sued or chased by creditors and on Feb. 1 you shove $600,000 into your house by paying off the mortgage, that might not fly.
Jamarlin Martin: Yeah. Got It. So, you’ve been a big advocate of the digital estate planning. Can you explain what that is and how that is beneficial?
Tunde Ogunlana: Yeah, that actually is kind of personal for me because unfortunately, we lost my mom, she passed away of bone cancer in 2015, and losing someone like that is obviously a stressful situation. And I remember when I went to her place first or the day after she died and started looking through things in a desk and all that kind of stuff, even though my mom was 70, she was a big techie and she scanned everything so I couldn’t find any bank statements, any wills, anything like that. And I realized I was very fortunate because she did not password protect her Macbook Pro, her cell phone, her iPhone or her iPad. And so I was able to get into all that stuff quickly and easily and find everything that she scanned and was able to kind of direct traffic after her passing. And that was the first time I started thinking about this because I realized that had she had that password-protected, I would have pretty much been out of luck. I’ve never checked, but I don’t know if Apple has a policy that if I were to call them and say, here’s my mom’s death certificate, can you help me get into her phone? I don’t think they’d help because I remember when, unfortunately those people, Isis sympathizers, did what they did in San Bernardino, California and killed 14 people. I remember Apple didn’t help the FBI to get into their phones just to see if they had any accomplices or if this is going to happen again. So I don’t think that there’s a system really in the digital space for dealing with our information that’s out there. And I’ve thought about that with my own family. I mean, I think every picture I’ve taken since probably 2008 is now digital. So again, when I was cleaning out my mom’s stuff, I’m finding all these old photo albums because of course, she had photo albums going back to the 70s. And I kind of realized, I was thinking a few weeks after that that if I drop dead tomorrow, my kids, my family is going to have no records of any of the thousands of pictures I’ve taken because they’re all buried in my phone and on the iCloud. And so there’s been some simple techniques people use, which is just writing your passwords down, kind of keeping them in that envelope in the drawer. And if something happens to me, you tell your family, hey, you know, look in that drawer and you’ll have all my passwords. But then the concern that I have is that some institutions, like some banks and financial institutions will require that you change your passwords once every three months for security purposes. So unless you’re that discipline that you remember to always write down an update somewhere, something else. And then I’ve been paranoid about leaving passwords in my phone because I think about if someone hacks my phone, they get all my passwords. So there hasn’t been a good answer yet for how to deal with these things. And I think that it’s becoming more and more pronounced. Recently, I know we’ve talked about this, there was a situation or a cryptocurrency that was run by a Canadian gentleman. I guess he died earlier this year. I think it might’ve been in January. And he was the only one with the passwords to whatever his software was. And apparently $197 million of cryptocurrency buyers or investors is just locked up because no one can get into this guy’s system to get, I guess, their currency out. So yeah, digital estate planning is a concept. There’s no perfect solution yet though, because technology is kind of constantly evolving. But it’s an interesting topic and something I think everyone needs to pay attention to.
Jamarlin Martin: Going back to Snoop Dogg’s comment after Prince died where Snoop said, “Hey, I don’t care about having a will. I’m not going to be here. What the f–k would I care? I’m not even gonna be here. That’s why I don’t have a will.” When I think about a digital estate plan, I think it’s right in line with an estate plan in terms of it’s a selfless act, meaning that, if something happens to me, it’s not about me, my family and stress in terms of trying to put the pieces together and unwind this stuff, that I would have to be a selfless individual to think about, hey, there needs to be a roadmap to make it easier on my kids and my family in terms of putting the pieces together. So when you think about estate planning, think about it as a selfless act. A selfish person may not do an estate plan.
Tunde Ogunlana: You’re right. Yeah.
Jamarlin Martin: It’s all about me. I can’t think about how other people could be digging for six months and may not even find this stuff that they’re looking for.
Tunde Ogunlana: Yeah. And it’s interesting because in doing what I do for a living, I’m on kind of this side of the table. And the client would be, let’s say on your side, and you made a great point because you see really sometimes people’s kind of base psychology when it comes to estate planning, because you’re right, I’ve had people that, they’ve got families…
Jamarlin Martin: Me, me, me, me, me.
Tunde Ogunlana: And they’re like, yeah, I don’t care. I don’t care what happens here. I don’t care. No one helped me when I came up. I don’t care. But you see it and then you have others that are very altruistic and they want to leave money to future generations. And they’ve got their hospitals and museums they want to name in their estate plan and whatever else that they care about. And so, again, I think you make a great point. An estate plan is a very personal thing and it’s a reflection of who you were after you died in a sense and how people can think of you.
Jamarlin Martin: You can revisit another great interview I had with Tunde. That’s episode 39. You can go to iTunes or you can go to the Moguldom website with the GHOGH episodes and check out episode No. 39. That’s the previous interview with Tunde. Where can they find you online and possibly contact you for advice?
Tunde Ogunlana: Sure. I appreciate it. Our website is http://axialfamilyadvisors.com/. And, I want to say this, I’m learning you’ve gotta give people their roses while they’re alive. So I thank you. You’re doing a great job on the show.
Jamarlin Martin: Thanks everybody for listening to GHOGH. You can check me out @JamarlinMartin on Twitter and also come check us out at Moguldom.com. That’s M O G U L D O M.com. Be sure to subscribe to our daily newsletter. You can get the latest information on crypto, tech, economic empowerment and politics. Let’s GHOGH!