Mark: Today on PowerTips Unscripted, we talk to George Kall, owner of Metro Building and Remodeling Group in Ashburn, Virginia. Building wealth and financial security is something everyone wants to achieve. Unfortunately, it’s something that many of us put off because the needs of today are more pressing. George is here to share tips to start planning for your future financial security today, and we’ll hear how to do it in just a minute.

George: Come up. When you buy a house like this so much, you get a free bowl of Super Bowl. Oh, it looks good on you. You.

Victoria: Hi I’m Victoria Downing and welcome to PowerTips Unscripted where we talk about tips, tactics and techniques to help you build a strong, profitable remodeling company. And I’m here with my co-host, Mark Harari.

Mark: Hi there. Ho!

Victoria: How are you doing?

Mark: Good. How are you?

Victoria: Great. It’s summer. What’s not to like?

Mark: The heat.

Victoria: The heat? Oh, no. I still like it. Bake me baby. You know, I think I’ll have to move to Florida or Arizona or somewhere when I retire.

Mark: I don’t mind the heat when I’m at the pool or at the beach, but, you know, walking around. It’s no fun.

Victoria: Now give me some heat. Right. So, speaking of retirement, you know, that’s.

Mark: Where we where we just speaking that I did.

Victoria: I blacked out for a minute. Yeah. You like did say I have to move to Florida. Arizona when I retire. Oh, okay. There’s that little bridge near.

Mark: Missed the Segway. Yeah.

Victoria: And, you know, and really, in order to be able to do that myself and lots of other people need to build personal wealth, right? Yes. Let’s see the little Segway, I got it.

Mark: That was awesome. Well done.

Victoria: So I’m really excited about this topic today because it’s dear to my heart. You know.

Mark: Yes. You got me all screwed up on that. Yeah.

Victoria: All right, well, why don’t.

Mark: We talk to. Why don’t you talk to George?

Victoria: Okay. Here we go. So our guest today is George Kall, owner of Metro Building and Remodeling Group. It’s a design build firm just outside of Washington, DC. George started the company just over seven years ago, and now he employs a team of nine. He was recently ranked 107 on this year’s Remodeling Magazine list of largest remodeler. So that is some amazing progress.

Victoria: And only seven years. Welcome, George.

George: Welcome. Thank you, I appreciate it.

Victoria: Hey, you know, it was kind of interesting because you’re our guest, because, one of our other roundtable members said you got to talk to George about building personal wealth. Like, how cool is that?

George: That’s very cool. I’m very honored. And I’m glad that another member thought that highly of me. And hopefully I can provide some good insight today for other listeners.

Victoria: So just in general, why is building personal wealth something that is of interest to you?

George: So I actually went to college as a financial planner, and that’s that was my intent when I got out in the world, was to be a financial planner, and I interned at Merrill Lynch my last summer in college. I love every aspect of that business. But I didn’t grow up having money. So for me to come out of college and to try and start advising people on how to spend their money, when I didn’t know anybody that had any money was not going to be an easy career choice.

George: Oh, okay. So randomly I wound up in the construction field, but still have a great financial background to to fall back on and still really enjoy the aspects of that part of the business.

Victoria: So did you have in mind to build a business that would incorporate, financial planning tools for your employees when you started it, or was that something that was added on later?

George: Something that was added on later. So the goal was always to to grow the company smart in a way that could sustain itself. And so I told all my employees as I brought them on, there were early kind of employees of the company that I will put all those systems in place. I just needed the time to make sure that the company had the backbone and support to, to make that stuff all coming into place.

George: So where we put the, 41K company plan in place, I’d say about four years ago. So it took about three years to where I could get to a point to where I felt comfortable bringing that platform home for all the employees.

Victoria: Was it important to you to have tools like that for your employees, or why was it important to.

George: Extremely important, not only for trying to be able to recruit and sustain some employees that would last and be good candidates, for our company, but also so that to more or less create that true family atmosphere of you’re part of my family, I want to make sure your future is protected and mine is as well. So again, it kind of plays into company culture.

George: If you’re not willing to give somebody those types of benefits, then how can you really treat them like a family if you’re not offering them stuff that’s in their best interest?

Victoria: You know, first of all, I think it’s kind of rare for remodeling companies to have 401 kids. I don’t I think a lot of our roundtable members do have them, but outside of that, I think that it’s kind of rare. Do you feel the same?

George: I would agree with that. And again, that’s what probably sets up a lot of us apart as Remodelers advantage members is, is we truly are trying to do what’s best for our company and in order to do what’s best, it means retaining the best employees. And you’re not going to get the best employees if you don’t offer them a benefits package that makes them want to come work for you and to continue working for you.

Victoria: So in addition to the 401 K plan, do you do other things to help your employees become more astute at financial planning and thinking about their money?

George: So we do offer health and vision and dental as well. So again, again, part of the whole package. Most of them don’t understand the financial planning process that well. So a lot of them come to me and ask me, hey, what plan should I enroll in? Most of my guys are on the younger side.

George: My guys range in age from 35 to 50 years old. So I tell them they have the time to be more aggressive with their 41K plan, and they don’t really need to change to something that’s less aggressive until they get closer to retirement. So they basically follow all that and again, we, we have our stuff set up through ADP.

George: Okay. So ADP has different programs that you can more or less set your target retirement year. And you know they based their their aggressive plan on that. So it’s a good tool for them.

Victoria: You know I don’t want to get too far into the employee thing. But one last question around this. Do you do you have a lot of your employees that participate? Does everybody participate?

George: They all do, yes.

Victoria: Oh, good. That’s good for you. Yeah. Because so often I’ll see somebody will offer something and an employee won’t be taking advantage of it. Especially with the 401 K. Do you match?

George: We do. We do up to a 3% company match.

Victoria: Okay, great. I mean, it’s free money, right? They do what you do. That’s awesome. So how does that plan affect positively affect you and your family?

George: So my accountant actually brought the idea up for years and again until I felt comfortable, you know, having that offered to everyone in the company. My accountant really pushed it for the sake of me being able to use it as a way to help defer some of our taxes. And then at that same point, I also brought my wife on as an employee so that she could also take Max out before one day.

George: So right now I think the yearly limit is around $20,500 I believe. So both my wife and I are completely maxed out on that.

Victoria: Good for you.

George: For you. And most of my employees are maxed on as well. There’s a couple of carpenters that aren’t quite maxed out, but they they’re all trying to get themselves as high as they can so that that they are properly planning for their future.

Victoria: So what else do you do for yourself and your family to make sure that you have the money set aside that you’re going to need?

George: So aside from that, I think Mark had a great segue into starting the whole show is, you know, we’re all extremely busy. And so it’s very easy to put the financial planning aspect on the back burner. It’s one thing to have for one K and set that money aside. But that’s really kind of retirement money. And it doesn’t really help you with a lot of your other strategies.

George: So my company is set up as an s-corp, which means I can take draws, but my payroll, aside from the money that automatically goes into the 41K, all of that other money goes into a separate bank account. So my wife and I have our weekly paychecks go into a bank account that we don’t even touch. Oh, wow. So all that money is purposely set aside.

George: We don’t even spend it. Once a year, we look at you know, what, it’s accumulated, and then we’ll either decide to pay something off, whether it’s something with an interest rate or send it to. We use Merrill Lynch for financial planning or make a contribution to Merrill Lynch for whether it be for our kids college education or for our future retirement.

George: But that’s essentially what we do because again, you get too busy wrapped up in the day to day stuff that if you don’t put automatic systems in place to have that money go somewhere, right, you can’t get it. No, you can’t touch it. It becomes too much of an issue when people burn through it. And if you see it there you’re bound to spend.

Victoria: Right.

George: So we live off of company draws. We’ll take company draws each month as we need it to pay our personal bills and finances. But all that other money is going straight into another checking account that we don’t even check.

Mark: Charge. What are your thoughts on using credit cards and business loans and that type of thing? Lines of credit.

George: Again, kind of my my conservative approach is to not really take out any loans. I hate loans. I think they’re they they serve their purpose and there’s, there’s good, good loans at certain times. But to me, if you’re taking out a loan, it means you can’t afford what you’re doing in the first place. So that’s just my personal approach to it.

George: I know there are certain loans that have low interest rates that are potentially worth taking out, but in my personal opinion, if you’re taking a loan, you can’t afford it. And if you’re taking a loan, why are you behind on your draws in the first place? Maybe you’re not charging enough as a remodeling, you know, business that that you’re not getting the market that you’re behind in the first place?

George: The credit cards. I was dead set against that for a long time as well, although about a year or so ago we did start using a Capital One credit card because of the 1.5% interest that, you know, payback that we could get from it. So that, to me, is free money. And again, knowing that our business is set up in a way that we have cash reserves and, you know, we don’t have to necessarily worry about being behind on a payment.

George: My biggest fear is somebody that, you know, is using a credit card as a way to just buy them time, and then when their credit card teams do, they’re they’re struggling to figure out how to get money. But if you are in a good financial position, there’s no reason to take that into, excuse me, 1.5% interest rate and accumulated, I’d say, in the year and a half or so that we’ve been doing it.

George: We’ve almost gotten close to $50,000 of free money from Capital One. The cards paid off in full every month, so we never have an interest payment and literally have picked up all that free money in cash.

Mark: Going back to the the loans, though, I mean, because right now there are because of what’s going on and stimulus and all that. I mean, there’s some really, really well, you know what they’re saying cheap money out there and and they’re just I mean, we’ve we’ve had opportunities where it’s just the banks basically giving us money at such a low rate that I’ve had people say, you’d be crazy not to take advantage of that.

Mark: It’s, it’s it’s so cheap to have it. Is it just a personal thing from, like a risk averse position that that you don’t think we should do that or.

George: It’s. Yeah, it’s for my personal standpoint, I personally don’t like owing anybody money. And again, because I’m so conservative with my money, I have the cash that I don’t need the loan. Right. I know, again, business business culture will tell you if you can borrow money at 3%, 4%, but you know, you’ve got to return an investment on it.

George: I’ll say 12%, 15% then. Yes. Go ahead and take that money. But if you don’t know your numbers and don’t know what you’re actually getting as an ROI on that, then, then you should not take it.

Mark: Yeah. You gotta know what you’re doing.

George: Correct.

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Victoria: Okay, so we talked a little bit about what you’re doing personally to make sure that you have the money and so on. And I’m totally with you. Pay yourself first. Get it someplace where you can’t see it. I get all I have automatic monthly payments going to my investments every month just to make sure I don’t see it.

Victoria: But what do you do in your business to make sure you have the money so you don’t have to take loans? If an opportunity were to arise?

George: So something very similar as I do in my personal life, I have my checking account set up to automatically pay my savings account every month. So once a month we have a drawer. Right now it’s again, I like it to be a little bit higher, but we send $5,500 a month from our checking account to our savings account.

George: So I know every year I’m roughly accumulating 60 to $70,000 in savings automatically.

Victoria: Okay.

George: It’s set it and forget it.

Victoria: But that’s awesome. Except that it sits in your bank account and you’re on your own. Escort flows through your I assume you’re on cash basis for taxes, so you’re paying taxes on the money you save?

George: Essentially, yes.

Victoria: Some people would say not to do that. Not me.

George: But again, you know, if you’re trying to build a backlog of, say, six months of savings for your company, again, this Covid is a perfect example of why you need to have cash, right? And not put yourself in a position where you have to take a loan. Now, again, the pep loan was a no brainer. Everybody should have taken that if they could.

George: But you need to have a good six months of cash in reserves to have that. And and again, that’s where you can start playing around with different avenues of how to get some interest on that money, for example. Now the interest rates have dropped substantially. But right before Covid hit, we signed a deal with Capital One to get 1.85% on our savings account.

George: So while it’s not necessarily earning a lot of money, it’s still 1.85%, which is which is really good for your money sitting in the in the business, which I believe should be sitting there anyway.

Victoria: How many years have you been doing that monthly draw into savings.

George: From the beginning.

Victoria: So you’re making you’ve got quite a bit stashed there now. And of course, as your company is growing you have to continually add maintain that six month amount.

George: Yes. Yeah. And and I don’t really want to have it beyond six months. I know some people would encourage you to take it to a year. But kind of as a get on, this is a good example for people to follow. But when Covid hit and the stock market dropped and plummeted, I saw that as an opportunity.

George: And I took that opportunity to pull a lot of cash out of our business and personal finances and put it into the stock market. You know, I’ve I’ve been able to get a 34% gains from it so far. So it’s been the right move. But knowing knowing my numbers allowed me to do that. I knew that I had the cash there.

George: I knew what I was going to make on upcoming projects, that I felt comfortable enough cutting those those accounts as tight as I could to pull it into another investment opportunity, which again, I’m really glad I didn’t it it’s it’s been a great opportunity that I would not have had had I not have the cash reserves to do so.

George: Okay.

Victoria: I’m going to ask you one question that I’m going to come back to another in a second. How do you feel or how important do you feel it is for people to have a professional financial planner involved?

George: Extremely important. Again, even though I have the finance background and I’ve, I’ve seen the Merrill Lynch platform as an intern, the, the tools that they have to calculate what you’ll need for the future, everything that estimates your health costs down the road to calculate inflation, to kind of take your lifestyle and say, hey, how what is it that you want to be doing when you retire?

George: You want to play golf once a week? How many vacations are you planning to go on? They can put that all into their computer generated algorithm and spit out an answer for you. And no matter how good you are at planning with your own numbers, you can’t replicate that computer program that they have. So it’s something that I feel very strongly about.

George: It’s somebody that you can even use as a sounding board.

Victoria: Yeah.

George: I know some people get leery when they say that you have to pay a financial advisor, you know, 1.25 or 1.5% fee. It’s kind of like our own business. You get what you pay for.

Victoria: That’s right.

George: That it’s it’s money well spent. It’s it’s I want to say it’s definitely the right thing to do, but I don’t I don’t see why somebody wouldn’t do that.

Victoria: I, I’m with you.

George: Totally future.

Mark: Now 100%. And nothing’s nothing. Right.

Victoria: We’re going to do that. So you know, some people would say that they that those of us that are more conservative because I sort of follow your your lead here might be sacrificing today’s fun. Today’s excitement, today’s living for tomorrow’s retirement savings. How how would you respond to that?

George: I, I agree with that sentiment. And my wife and I still try and strike a really good balance between the two. Again, it’s like you have a business plan. You should also have a family plan. So we have, a family cash flow that again, goes month by month, the same way that our business does. That outlines all of our expenses.

George: And we know what’s left over at the end of the day. We still, in my mind, travel very well and do the things that we want to do without sacrificing the now. So a lot of that goes back to living within your means, which is kind of a whole separate conversation. But there are a lot of people nowadays that that live beyond their means and are stretching themselves too thin that right.

George: As long as you have a house that you can truly afford and are truly setting aside money and planning for that accordingly, there’s no reason you can’t strike a balance between the two.

Victoria: You know, you’re sort of a unique bird in this industry, because you do know your numbers so well. What are some of the tips or the things that you look at that you find most useful for you in, you know, understanding your numbers and being able to make these moves?

George: I think some of it is just even having a good time. A lot of people, as their company grows, might be too slow to hire somebody to put them in the field so that they can free themselves up as business owners, because the second that you stop looking at your numbers and knowing if your jobs are coming in profitable, or knowing if you’re selling them at the right amount, that’s when you know a downward spiral can start quickly.

George: So I think a lot of it is really just making sure that you as a business owner are putting yourself in a position to analyze everything properly the way that you should. And again, that also that all starts with the things that Remodelers advantage preaches of having a known markup and knowing what you need as a GP to survive and having your, your business, you know, cash flow set up for the year, that you know, all these things, but I worry that too many remodelers again, just stick their nose down and just go, yeah, and aren’t really sitting back to analyze the data.

George: And that’s and that’s where things get you in trouble quickly.

Victoria: So if you were to give remodeling company owners are listening to this one piece of advice for building their personal wealth, what would it be?

George: It would be to start planning now, because no matter how much you can set aside, set something aside. Because again, all the compounding interest, even if, you know, some people worry about the stock market collapsing, like, oh, well, if I had started this six months ago, I’d be in trouble right now. Well, it’s already rebounded. Yep.

George: And and it will rebound and time is on your side. So the sooner you start, the better. And it doesn’t matter what you save, but save something. And if you can set up A41K to get your company going and get yourself some tax savings there, and it forces you to do it, then do it. And if you can’t set up A41K with your company, at least create a separate bank account or savings account that you can ship money to that you never look at and you never touch except for maybe at year end.

George: And you decide as a family what you want to do with it. But I would still recommend putting it into some sort of account that whether it’s a Merrill Lynch or something that is going to compound over time.

Victoria: Yep, yep, I agree. You know, you made one comment there. I just want to expand upon a little bit. And that is the concept of compounding interest. Oh my God how powerful is that. I remember teaching that to my 11 year old daughter, you know, and she and her cousin were in a summertime, and I made her read these kids documents about it.

Victoria: They still remember today about learning, about compounding interest. It’s just a fascinating thing.

George: Correct? Yeah, it really is.

Mark: And I would like a minute for rebuttal if.

Victoria: You don’t think it’s so fascinating to your heart.

Mark: Sounds really exciting.

Victoria: Oh, no it is. What do you.

Mark: It’s about what was your daughter?

Victoria: She was like 11.

Mark: Oh, they.

Victoria: Still remember it.

Mark: Oh, I’m sure they do.

Victoria: And I remember once also sitting, having a cocktail with a friend of mine, and he’s like talking about the doubling of a penny. If you double, if you took a penny and you doubled it and doubled it, how many times did you have to double it for? You got to like $1 million. And it was amazingly low number.

Victoria: That all feeds into that concept. So I just I think people need to really understand the power of that concept.

Mark: So George, you’re clearly an awesome planner. You got you got everything going for you on that front. So I’m hoping you planned for the lightning round.

George: But I hope so as best as I can. Anyway.

Mark: Oh.

George: And now here’s a reminder that Advantage Lightning Round. It’s a draft.

Mark: Okay, let’s put 60s on the clock. Here we go. What’s your favorite business book and why?

George: This is going to shock you, but I actually hate reading. And so I don’t have any favorite business books. What I have done over the years, though, was I love related reading all the remodeling magazines and getting some there certain experts that I like to follow, and there’s great tips within those. So that’s essentially what I read as opposed to I don’t have the it’s the time or patience to sit down and read an entire book.

Mark: If you weren’t a remodeler, what do you think you’d be doing?

George: I think at this point in my career, I’d probably would be back to being a financial planner. And I’ve always kind of had a passion for that and love being able to give people advice and guide them in the right direction. So I think I ultimately wound up back there at some point.

Mark: What are you not very good at?

George: My wife would agree with this wholeheartedly. I’m not good at all. I cook, I, I don’t have the patience for it. I love eating great food, but I don’t have the patience to make it.

Mark: Your room, your desk or your car. Which would you clean first?

George: Again, my wife’s probably saying none of them, but, I would say my room would probably get cleaned first.

Mark: How many pancakes do you eat in a year?

George: Not very many anymore. I guess maybe ten.

Mark: What’s the first four letter word that comes to your mind?

George: Man, you don’t know that. I mean, you got me on the clock. I have to pass on that one little thing.

Victoria: George, this has been really great. I really appreciate you taking the time to come on and talk to us about this. I agree, no matter where you are in the spectrum, starting now is the the thing to do, right?

George: It is for sure. I mean, time is on your side, especially if you’re young, that let that time compound your interest and really make something for you. So I would definitely encourage people to to start that clock sooner than later.

Victoria: So this sort of ties in. But I do want you to specifically share your five words of wisdom and why they resonate with you.

George: So it’s interesting. I’m going to throw a curveball in you here. I was originally going to go with a saying a plan for your future now, but tech kind of based on the show that we had, I still believe in a motto that I was taught when I first started working, and that’s, work hard, play hard.

George: So if you are planning properly and you work hard, your eight nine hour days, some people longer, you better, better take the time to enjoy it. That’s right. Go ahead and work hard and play hard.

Victoria: That’s great. You never know how much time you’ve got to do that.

George: Correct.

Victoria: So thank you again George. This has been wonderful. I appreciate you being on and we would love to have you on again one day.

George: No problem. Thank you. I appreciate you having me as guest. Say that.

Victoria: Bye.

George: Right.

Victoria: You know I really agree with George. But then again, I’m also pretty conservative with my money.

Mark: Yeah, you’re a little conservative.

Victoria: Not as much as my sister, man. She’s tight as a.

Mark: Well, yes, you’ve got. And maybe it’s my influence. You’ve loosened up a little bit over the past few years, but when I first came on board it was, wow.

Victoria: Well, I wanted to be sure that I could live till 100 and to do what I want, which is a lot of travel. Once we can do that, once again, assuming we’ll be able to someday.

Mark: Yeah, that’s good.

Victoria: But yeah. So now it’s start to live and find that balance.

Mark: That’s the fun part, right? Yeah. Do you put in the the time and effort early on. And then at the end you can just relax and kick back and enjoy fun right. Yeah. Right. That’s what it’s all about.

Victoria: Yeah. So it’s a good episode.

Mark: All right. Good. Well we want to thank George. Call for being here and sharing his insights on planning for the future. And of course, we want to thank you for joining us week in and week out. I am Mark Harari.

Victoria: And I’m Victoria Downing. See you next week.