Grit Nation

Bring Home the Bacon - Show Me the Money

October 12, 2020 Jerry Auvil Season 1 Episode 5
Grit Nation
Bring Home the Bacon - Show Me the Money
Show Notes Transcript

In today’s episode we will be taking about money, the driving force of why many of us join the trades to begin with. The road to success as a professional carpenter has many stumbling blocks and personal finance management is undoubtedly one of them. 

A pre-Covid building boom led many, especially those new to our industry, to believe the good times would never end. However, our present situation illustrates how quickly circumstances can change. 

Without a sound financial plan, focusing on long and short term budgeting goals, many may find it difficult to keep their heads above water even with the substantial wages and benefits that the union provides for its members.

Our guest today is Jerry Auvil. Jerry is a retired member of the Local 146, as well as the former President of the Northwest Regional Council. 

Jerry will help us understand how to prepare for the feast or famine nature of our industry and why it is so important to build a solid financial foundation in order to better weather the unpredictable nature of our trade. 

We’ll begin our conversation by discussing the number one rule for generating personal wealth and why it is so important to implement it as a new carpenter.

Next, we will investigate the 3 different and distinct phases of financial concerns in a carpenter’s career. The transition from apprentice to journey worker and eventually onto retiree all carry their own challenges the inherent pitfalls. Knowing how to skillfully navigate each stage can definitely save you time and money along the way.

And we’ll end our discussion on finance management by giving you the resources needed to build your own personnel wealth strategy.

In today’s episode I have also included the famous movie quote “Show Me the Money” to highlight key points when they are made. 

Finally there will be an official “I’ve Got Grit” t-shirt drawing once this episode hits 300 downloads. To enter the drawing, send an email to GritNW@gmail.com. with your count of the # of times “Show me the money” was used. 

Be sure to add your t-shirt size and local number as well.

Financial Management Resources

https://www.suzeorman.com/ 

https://www.daveramsey.com/ 

https://clark.com/

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Joe Cadwell:

Welcome to another episode of Grit Northwest. I'm Joe Cadwell, President of the Northwest carpenters union and your host of this podcast. My aim is to introduce you to the various personalities that make up the construction industry in our region. Through informative and insightful interviews, I hope to help you develop a stronger understanding of what it means to be a member of the carpenters union, and how you can become a proud guardian of the deep and rich legacy that those who came before us work so hard to build from leadership development and training to politics and organizing. My goal is to engage, educate and energize you to take charge of your future. In today's episode, we will be talking about money the driving force why many of us joined the trades to begin with the road to success as a professional Carpenter has many stumbling blocks and personal finance management is undoubtedly one of them. Pre-COVID building boom led many specially those new to our industry to believe the good times would never end. However, our present situation illustrates how quickly these things can change. without a sound financial plan focusing on long and short term budget and goals. Many may find it difficult to keep their heads above water, even with the substantial wages and benefits that the union provides for its members. Our guest today is Jerry Auvil. Jerry is a retired member of the local one for six as well as the former president of the Northwest Regional Council. Jerry will help us understand how to prepare for the feast or famine nature of our industry and why it is so important to build a solid financial foundation in order to better weather the unpredictable nature of our trades. We'll begin our conversation by discussing the number one rule for generating personal wealth and why it is so important to implement it as a new carpenter. Next, we will investigate the three different and distinct phases of financial concerns in a carpenters career. The transition from apprentice to journey worker and eventually under retiree all carry their own challenges and inherent pitfalls. Knowing how to skillfully navigate each stage can definitely save you time and money along the way. And we'll end our discussion on finance management by giving you the resources needed to build your own personal wealth strategy. Today's episode, I've also included the famous movie quote, Show me the money to highlight key points when they are made. Finally, there will be an official I've got grip t shirt drawing once this episode hits 300 downloads, enter the drawing, send an email to grit nw@gmail.com, with your count of the number of times "Show Me The Money" was used. Be sure to add your T shirt size and local number as well. And now on to the show. Welcome to the show, Jerry.

Jerry Auvil:

Glad to be here. Joe.

Joe Cadwell:

I appreciate you being on the show. The theme of today's show Jerry is financial management and planning through the various stages of a carpenter's career. So would you care to talk to us about that.

Jerry Auvil:

The first thing that I really want to cover your talk about are the main keys to financial wellness. And the first is that you know, as a carpenter, you work you develop you develop good work skills and habits that helps you become productive and efficient. And that applies to financial skills and habits as well. So understanding a lot of our listeners are just getting started in the career as a craftsperson. Maybe they're an apprentice, what is the number one thing Jerry, you can think to as far as advice,to get them off on the right foot? Well, at the very beginning, you know, you need to work on building up your skills, building up your attitudes, like when you are able to develop good work skills and habits and having a good attitude. You're able to be productive and efficient. That's how you earn work. That's how you earn money is by being by making the company you know money, keep you employed, if they keep you employed, you're able to provide for yourself and later for a family. So So the very first thing is really make yourself a good, efficient, productive and efficient journey person. That's the basic building block of this whole thing. Show me the money. So it sounds like it's hard to manage money if you're not making money. Yeah, absolutely. Like just being able to bring in that steady paycheck, because they want you on the job. And that you are a person that not only is productive and efficient, but that you work well with others that you're a good team player that you help the team be stronger and more productive because you're on it. That's the one that's the person that they are looking for. teachable that works hard with it works well with others. It's just the that's the that's the engine that creates dollars to be, you know, for you to be able to build all these these next steps that we're going to talk about. The second is you really have to have a plan and a plan is something something just Just like a critical path, having a five year goal or 10 year goal, you have an idea of where you're going. And so your plan helps you get there. And the key to this whole thing about plans is that things change over time. So with that plan, you need to be purposeful, that just means discipline, just like at work, you know where you're going. So you steadily work to, to create the the skills and those habits in your in your own life. And then, as soon as you look at that plan, you need to make sure you review and you're refocus. So periodically do that, you know, am I on my track on track for my five year goal, the next thing is be willing to adapt, you need to learn from your mistakes, just like at work, it's how we get better. And then the last real key to financial success is making sure that you and your family comes first. So looking at the various stages of carpenters career saying starting off either as an apprentice or someone who's just brand new to the to the trade, it can be pretty exciting for them to come in and start making that livable wage right off the get go and finding that they have more money than they know what to do it. So what's your advice there? At the very beginning, whether it's your whether you're a first term apprentice, or whether this is the first time you've been in working as a carpenter in the UBC under a contract, you're going to be making good money. The first thing you need to understand is that the average Carpenter over time, works 75% of the time, what that means is you're going to work nine months out of 12. So so whatever you want, when you first start, you need to put away that that that fourth check to and live on three checks out of four, Show me the money,

Joe Cadwell:

Jerry as seasonal workers to some extent we have to be prepared for those for those dry times when the work goes away. And we're left with with no security, no promise of the next job. That that is a difficult reality of our of our industry.

Jerry Auvil:

Yeah, many, many carpenters will work for work steady for for 18 months, two years, three years, we've just been on a really good time before the Coronavirus had. And now the economy and the work and everything's been broken up and intermittent. And people are being unemployed for long periods of time, once you realize that your budget is really three weeks at a for the next one is to identify how am I spending my money. So I suggest that you track your spending for 31 days. And in that budget, you need to make sure you build an emergency reserve. That's being tactical. So your budget is purposeful and strategic, because it's going to work for you month in and month out month after month after month. And emergency reserve. And that's where that 25% that you, you know that you're setting aside from the get go. You build your emergency we're reserve with that with that 25% first. And that's being tactical because at times, you may need to draw on that emergency reserve. If you're very, very fortunate, you may not need to, but most everybody will have times of unemployment. Lastly, under this first section is identifying either contributions into a 401k or Roth IRA. Show me the money. So something about why in my 20s, what I want to start saving money for something's going to occur 40 or 50 years from now, here's the biggest reason. Every, every dollar you save in your 20s is worth somewhere between four and eight times as much than if you were going to save in the last save those that same dollar in the last 10 years before retirement. So $10,000 in your 20s. If you're able to save$10,000 in your 20s that $10,000 grows to anywhere from 40 to$80,000. By the time you're in your 50s. So prior to retirement, if I if I wait 40 years, I only have $10,000. But if I do it in my 20s I have 40 to $80,000. So the compounding interest of those investments early on really do matter later on when you start looking at retirement. Yeah, there's there's you know, it's like every somewhere around every 10 to 12 years, your money is going to double. That's why it becomes so important to start when you're young. You really should be at least looking at something like that. But you need to build into It knowing you're going to get those raises. So sliding off a little bit, I started with 50 cents, and ended up eventually becoming$7 an hour going into my 401k. For our apprentices just getting started off, that might be a tough one to handle, though I mean, there, you're already looking at getting started off in life. And it's difficult to make the rent payments, the car payments, but you're you're advocating that take 50 cents an hour, and set that aside in a 401k. For a long term outlook, a long term strategy to financial independence later on in life. Yeah, it depends on where you are. Because if if you're if you're dealing with, you've got too much money on your credit card debt, and you're not able to pay it off every month, okay, you need to get that worked out. Before you start this credit card debt, my definition of buying on credit, is spending more and paying for longer for something that you don't really need. If you bought something for $1,000. And that interest rate on that credit card was 20% made the minimum payments, it would take you 4.2 years to pay off that thousand dollar bill. And that thousand dollar item all of a sudden becomes $1,472. That's how I should actually cost you. But if if over the next five years, with 12 different raises, you're not able to start a 401k or a Roth IRA, your plan, you know, you're too short sighted on your plan. So you know, it's like, you don't have to start off with it. But if your plan says in year two, after my fourth raise, I'm going to put 50 cents in, you know, that's a great start, because you're still in your 20s, you're still at the beginning of your career, however old you are, it doesn't matter if you're in your 20s. Or if you're in your 40s as a as a first bracket apprentice, the more money you put in sooner, the more money you'll have to have choices later on, show me the money, these next things apply to anyone after about three years into the industry. Because once you've gotten a couple of years under your belt, you know, you're probably able to save money in your budget, you're able to start making some decisions on some larger items. So whatever that is, whether you're in your 30s, or whether you have put aside, you know some money and now you want to reward yourself, and you certainly deserve to be rewarded work as hard. So the first thing is, in this middle section of your career vehicles, you know, do I buy new do I buy used? You know, it's really about what can you afford? And what does your budget allow you to do? If you have the ability to get a buy a new vehicle and pay it off, you know, within two years, you know, so great if you need to do three years, okay, but if you have to have a six or a seven year loan to buy the vehicle that you need, know that you're going to be paying about twice as much for that vehicle, because you're not getting, you know, you're not you're not being charged credit card debt. But that but that debt, that interest rate on that loan, is going to increase the cost of your vehicle more than 25% 25 to 30%. For sure, once you get into five years or more. They know this because I did it, I bought a truck for five years, and ended up spent spending of$5,000 more on this $12,000 truck, because I wanted to have it. That's one of my lessons that I learned not to do. Again, I've seen it as well, with a lot of folks again, coming flush with a lot of cash quickly out the gate. And the first thing they do is buy a vehicle a truck that probably you know stretch their budget to the to the end. And it's important to have dependable transportation by all means to get to work, to to have somewhat of a status symbol, but again, not to get yourself so stretched out financially, that when things finally do slow down, again with the seasonality of our industry in mind, that you're not finding yourself having to sell that vehicle at a loss. So it's really important to to really adapt the mindset of, of staying within your budget early on, in my opinion, right. It's like if you have your budget, if you've been contributing to your emergency reserve fund, so you have protection against when you're not working. If you have actually saved put aside money in your long term plan for a large major purchase like a truck or you know, we're talking about houses to then you're ready but if you are if you've maxed out your ability to make a house payment or a truck payment and you're laid off You don't have that emergency reserve, you're basically setting up yourself to have to sell what you bought at a loss. So we talked about vehicles. Another thing I want to talk about is houses, to rent or to buy, you know, some people, they rent their whole life, there's nothing wrong with that some people choose to buy a vehicle or buy a house, there's, there's resources, we're going to refer, refer you guys to, to help identify some better ways to do that. But understand that, you know, if you can afford to buy a house, and live within your budget, hopefully, you can get it on a 15 year loan, as opposed to a 30 year loan, you know why you pay less interest on a 15 year loan. And then once you get into buying that house, if you're able to kick in a little bit more money than that payment, you're able to save yourself and create more opportunities later on by reducing the length of that loan. So Jerry, understanding a lot of our members are at a point in their life, where they're probably considering buying a home starting a family, what advice do you have for those members? Well, as as you as you begin to have kids, you just need to understand that the children expanding your family, it takes additional money. And what that meant for my wife and I was that we didn't buy any new vehicles, while we were raising our kids. And then once they were raised, I was finally able to get a new rig, but you know, pretty much the money that was going would have gone for new rigs went into other things like clothes, school things, and, and college expenses. As you get toward your late late career in your 40s, or 50s, you know, all of a sudden, your kids are grown, and they're out of the house. And I gotta tell you, it gets really quiet in the house, when you've had, you know, multiple kids friends, you know, it's like, it's like, what's going on. But what that does, it gives you and your spouse, an opportunity to prioritize your life a new, you can start doing things for yourself that you you hadn't been able to do before. take vacations go places, you know, just gives you a chance to reset. But along with that, you begin to identify, hey, I physically won't be able to do this job forever. And here is where your former actions will dictate some of the choices that you have. Show me the money. If I've been disciplined and progressive about working my plan, adding to the different accounts, building your 401k, then that choice, those choices allow you to be able to retire when you choose. I was able to retire at 58. Because I was because I chose to that man, I was ready. You know, I've been eligible for several years. But yeah, but I wasn't ready. And as I had learned about Social Security and Medicare, the costs of early retiree medical costs, you know, it's like I realized that it was going to take more money for me to retire than I actually thought. Because when you retire and you're not 65, you actually have to spend anywhere from eight to $1,000, even with the early retiree credit on early retiree health care. And, you know, health care in this day and age is absolute necessity for your family. So how I choose to retire? You know, it's like, here's where you can make your choices, you know, do I choose to retire? Or because I have made good choices? I'm basically retiring because I have to one of the selling points is you know, of being a union member is the pension and the possibility of retirement with dignity along with the level wages, benefits for yourself and your family, the access to training, safer working conditions and representation. We all look forward to that pension, that ability to retire down the road, have a pension. All along the way, though, you've been you've been advocating for supplementing that that pension. Is that true? Absolutely. It's like your pension regardless of where you are in our council is designed to try to replace your income level with a 25 or 30 year career, if you're able to work 1500 hours a year 25 to 30 years. Your pension plan with you know with keeping up with contributions should be able to provide you with you know replacement income close to it, if not by itself, certainly whistle security, supplementing it with a 401k or an IRA or an IRA or Roth IRA, or other means of, of income, like, you know, some people choose to do rental homes. But supplementing your income allows you to retire before social security because social security is going to be 25 to 35% of your income. And that's not going to come at the very beginning until 62. supplementing your retirement income with the individual, some kind of individual account, whether it's 401k, or an IRA, allows you to have choices so that when your body starts to break down in the mid 50s, first for a lot of us that you're able to make choices about when you can retire because it's just not comfortable working anymore. Instead of having to. That's how my brother went out. He had to retire. I was able to choose to retire. Show me the money. So Jerry, this has been a fantastic conversation. You had mentioned earlier that our listeners had some resources available to them. What resources are you referring to? Well, what I was referring to was there's three speakers that are fairly well known Suzy Orman, Dave Ramsey, and Clark Howard. Each of them have websites have huge amounts of podcasts and FAQs, to be able to identify answers to questions that you may have or helps to do things like budgeting, how to get out of credit card debt. The one caveat I would say is that they also sell a few things. So be careful to make sure you're buying things that you need. And not just because it sounds good and don't use them. So like tools, buy good tools. They provide good tools, a cut, they cost money, but don't just buy them and have leave it leave it in your toolbox. All right, I'll make sure to add those to the show notes at the end of the show. Jerry again, it's been great having you on thank you so much for taking your time to be here. I know our listeners appreciate it. It's been my pleasure. Thank you Joe. Our guest today was Jerry Auvil, retired Carpenter from local 146 find more information on financial planning Be sure to check out the links in the show notes at Grit Northwest website. Also remember to submit your account of the "Show Me The Money" quote the grid nw@gmail.com be entered to win an official I've got grid t shirt once this episode hits 300 downloads. Well that wraps up another edition of Grit Northwest. you enjoyed today's episode, make sure to hit the subscribe button. Be sure to share it with a friend color partner or family member. If you haven't already done so please take a moment to post a review on Apple podcasts. We'll help others find the show. Until next time, this is Joe Cadwell reminding you to work safe, work smart and stay union strong.