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The Thing We Never Talk About is an educational podcast about personal finance for creatives and other weirdos. We'll discuss managing cash flow with a lumpy income, when to save & when to invest, and how to reduce stress & build confidence when it comes to your money. No hot stock tips, no complicated strategies, and no finance bro jargon. We'll hear from artists, musicians, creative professionals, and other weirdos about how they navigate these questions for themselves. The Thing We Never Talk About is hosted by Timothy Iseler, CFP®, a former recording & touring audio engineer with 18 years experience in the music industry.
Timothy Iseler: I end every conversation
with a question for my guest, and you
asked if we could discuss when an S
corp or any other corporate entity might
be worth considering for freelancers.
Hi, everyone.
Welcome to The Thing We Never Talk About.
My name is Tim Iseler.
I'm a certified financial planner, and I
run my own independent financial advisory
business, helping musicians, artists,
and other people with weird jobs make
smarter decisions with their money.
You can learn more at iselerfinancial.com.
If you have a question about money or
personal finance, please send it to me
by visiting iselerfinancial.com/podcast,
and I will answer it in a future episode.
And if you enjoy this podcast,
please share it with a friend.
After that, you can like and subscribe to
the show wherever you listen to podcasts.
Today I'm speaking with Paul Dalen, a
tour manager based in New York City.
Paul has spent decades in the music
industry and in addition to being
a tour manager, he has worked as
a front of house audio engineer, a
production manager at venues like
The Fillmore and The Warfield in San
Francisco, and as an artist manager.
Not only is Paul in the situation of
actually being able to retire after a
career in music and a life on the road,
but he also had to completely start
over from scratch around 15 years ago.
It's a really interesting story
to hear how he went from basically
starting over at zero to being able
to retire, and I'm really happy to
be able to share it with you today.
So thank you for being here, and
please enjoy this conversation
with tour manager Paul Dalen.
How you doing, Paul?
Paul D: I'm well, thank you.
How are you?
Timothy Iseler: I'm very
well, thanks very much.
Paul D: Good
Timothy Iseler: so Paul, what do
you tell people you do for a living?
Paul D: I just say simply that I'm
a tour manager and tour accountant
Timothy Iseler: Okay.
Do you find when you say that, that, well,
first of all, do people have follow-up
questions, and if they do, what's
one of the most common ones you hear?
Paul D: Well, lots of follow-up
questions, which always lead to
interesting answers, because typically
what folks outside of music imagine
a tour manager does is completely
inaccurate, and their inclination is
to always refer to me as the manager,
and so I have to correct that.
And so then that leads to the conversation
of like, "Okay, well, if you're not a
manager, what does a tour manager do?"
And again, it's lots of things
like, "Oh, so you book the shows?"
Well, no, I don't actually book the shows.
"Oh, so you book the travel?"
Well, no, I work with a travel
agent and oversee all the travel.
Things like that.
Timothy Iseler: Yeah.
When was the last time you had a
job outside the music industry?
Paul D: Uh, when I was 16, I worked at B.
Dalton Bookseller in Prairie Village,
Kansas, in the receiving department.
Timothy Iseler: Very good.
okay, so, you got started early.
How have you seen the economics of the
touring industry change in that time?
Are there some things that are
easier, some things that are harder?
What's different?
Paul D: From my own perspective,
as I've become more established and
older, and thankfully my reputation has
grown, it's been easier financially.
as a tour manager who settles shows,
the underlying economics, quite
frankly, I find very disturbing.
So with the increase of
cross-collateralized tours or tours
that are done entirely by one of the
two largest promoters, or perhaps in
the case of comedy, there's a couple
of other players in that space, I mean,
this is a whole other conversation
presumably, but the economics, I
think, have become unsustainable.
You know, and it's nothing, it's
no great insight that I have.
This is things that e-
everybody knows about.
The cost of tickets, service charges,
ancillary fees for parking and the cost
of refreshments and things like that.
I just don't know where it's gonna end,
and I don't think it's gonna end well.
Timothy Iseler: Hmm.
If you had to imagine a scenario
where there would be a reset,
what would that look like?
Paul D: Yeah, I've
thought about that a lot.
I mean, I think the reset will be
people steering away from doing
tour deals with AEG and Live Nation.
Now, there are some, as you well know,
and a- as unlikely been discussed
on other podcasts, there are some
really compelling reasons why people
accept those offers and why those
offers are made in the first place.
so the reset, as I imagine it, would only
be just kind of a return to, uh, more
diversified promoters depending on market,
even if it's one of the two big ones.
It isn't exclusively one or
the other for the entirety of
North America, for example.
Timothy Iseler: Yeah.
On some of the tours that I managed,
we-- I've never been on a tour that
was exclusively booked or promoted by
one of those big companies, but you'd
get an AEG show every once in a while,
and it would almost kind of be like a
festival date where it'd be like, "Well,
okay, this show we're gonna get a really
big paycheck kind of regardless of how
well attended it is, and that, that'll
pay for, you know, the three days of
travel when we're in lower markets
where we're not gonna make much money."
I think e-even at the level that
I was working at when I was a tour
manager, there's this understanding
that like that money comes fromâ¦
The money doesn't come from nowhere.
Like, the money comes from other shows
that made more money and therefore
they can throw around more money.
And I, I don't know if you'll-- if
this analogy will make sense, but I was
thinking recently about how, for the
music community that I was a part of
in Chicago, there was this feeling that
the '90s and a little bit into the early
2000s was the era where an independent
artist could make money selling records.
And I only-- This only clicked for
me earlier this year that it was
also the time when CDs were the
dominant form of sales and where the
consumer was getting the absolute
worst deal on buying the good.
So it's, it kind of reminds me of the
same thing of like when the consumer's
getting the worst deal, sometimes
on the other side the people are
like, "Okay, the money's so great.
Why would we say no to this?"
Paul D: Yeah, when an artist is pr-
that's a really interesting observation,
and I haven't thought of the historical
context or the narrative arc of what
I'm referring to in terms of how Live
Nation and AEG came to be who they are,
other than the vision of the people that
have run those companies and what they
saw and some of the things that they
did in terms of owning properties and
having owned and operated buildings.
And the quote from Rapinoe, Michael
Rapinoe, the, the, uh, chairman
or whatever the title is of Live
Nation, so many years ago when he
referred to the business model, I'm
paraphrasing, but this part isn't
paraphrased, as a river of nickels.
So that's really fascinating how this
is, instead of being based around box
office gross, um, and that's where
promoters in particular made their
money, how in O&O, owned and operated
buildings, it's a whole other thing.
Timothy Iseler: Mhm.
Paul D: Wh- a whole other
financial, uh, structure.
Timothy Iseler: Yeah.
Yeah, yeah.
Well, so you and I know a lot of the
same people and kind of ran in some
of the same circles for many years,
but we only met earlier this year.
Are you comfortable sharing
what we talked about?
Paul D: Well, you might wanna remind me or
guide this conversation a little bit, but
I contacted you because I was looking for
guidance in terms of financial planning.
Big, you know, capital F, capital P.
Financial planning and everything
that that means: saving,
strategy, taxes, retirement.
What am I missing?
You know, just everything that
goes along with having a robust
and thoughtful financial plan.
And in my instance, it was motivated
by approaching, hopefully retirement.
Uh, so I've done a lot of research
through the years, a lot of homework.
I'm reasonably well-educated about
certain things in the realms of
personal finance and savings, but I
didn't always act on that knowledge.
So when I reached out to you, it
was about trying to find somebody
to, uh, review what I was doing,
guide, fine-tune, things like that.
Timothy Iseler: Mm-hmm.
did you first realize that retirement
could be a real thing for you?
Paul D: It happened pretty quickly.
I'm not alone in that the, I don't
know if it's historically unique, but
what's happened in the stock market
in the past 10 or 15 years has changed
a lot of people's lives financially.
and I think that says it all.
I mean, without going into too much
detail, there were things that happened
in the tech sector, you would know better
than I in other sectors, that really if
you had even a modest amount of money
invested in some of these places, it, it
could have a, a rather meaningful effect.
Um, so I had some good fortune,
uh, that kind of skewed things.
I also just have had like, as you would
hope and imagine, you know, as I've
gotten older, my income has gotten better.
Timothy Iseler: Hmm
Paul D: So, you know, it was about four or
five years ago that I kinda went, "Wow, I
might actually be able to pull this off."
And also, like really paying attention
to Social Security and what a so- Social
Security payout in my instance would mean.
How much is that really?
and that was a pleasant surprise.
So somehow it seems like
it's gonna be able to work.
Timothy Iseler: How deliberate were
you about getting gigs that paid more
money, and how much was that just
sort of like your reputation grew
so bigger bands were reaching out?
Were
Paul D: Yeah.
Timothy Iseler: strategic about that or
Paul D: No.
Timothy Iseler: good fortune?
Paul D: No, no, just good fortune.
Yeah, n- yeah, I mean, I, I've always
been, I've always tried to be as flexible
as possible with, um, uh, meeting
budgets and salaries whenever possible.
But of course, that means if
it's a gig that I wanna do.
I also did something really early on that
I never ever regretted, which is, which
is, uh, there were a couple of really
important gigs in my past that started
as being rather substantially underpaid.
Timothy Iseler: Hmm
Paul D: what I would do in those
situations, and fortunately quite often
they were short runs, so what I would
often do is go, "I'd really love to
do this for two weeks at that salary.
If something happens after that,
I, I really couldn't work for that.
But let's, you know, let's get
together, let's do some shows, see
how it goes, and go from there."
That always worked in my favor, always.
Timothy Iseler: You don't have to
name any names, but can you give
an example of how, just any one
example of how that played out?
Paul D: Yeah, I mean, there's a number and
I don't mind naming at least, uh, I mean,
the one that comes to mind is Chris Isaak.
It's like I lived in San Francis- I
was still a front of house engineer.
I wasn't a tour manager.
That's worth pointing out that I've
done a few different things in my
career in music, including management
and venue production management.
I worked for Bill Graham Presents when
I lived in San Francisco and was the
production manager at the Fillmore
for a few years and also the Warfield.
But at any rate, in the c- case
of Chris Isaak, I had moved to San
Francisco, I think in around 1996,
and I got offered a short tour.
Chris's long-time, all the way back to day
one, front of house engineer had passed
and they were looking for a replacement.
They made me an offer that was, I don't
know if it-- I can't remember the numbers.
I don't know if it was considerably
less than I was accustomed to
getting paid, but it was, you know,
noticeably less, and that's what I did.
I said, "Yeah, that sounds great.
I, I reallyâ¦
That's below my norm or what I'd
like to have," however I worded it,
"but I'd love to do it and let's
see where it goes from there."
And it went well and that led to a
gig that lasted for quite a few years
Timothy Iseler: Yeah.
That's great.
You just, you mentioned something that
I think is really important, i- if you
are gonna take a gig that pays less than
you normally take, and you want to, and
you're not bitter about it, is saying
something like, "I want to do this," but
like acknowledging that this is less than
I normally charge, but I want to do this,
so, you know, I'm happy to do it, right?
Because I think
letting someone know that you're doing
them a favor is, uh, sends a different
message than just them thinking you'll
work for cheap because you, 'cause
you'll work for anyone or something.
You know?
It's a, it's a different message.
Like, I want this, but, you know, PS I'm
taking a pay cut, but I still want it.
You know?
I think that's really important.
Paul D: Well, it's interesting.
It's very, very interesting.
I would say that a little bit
of, of nuance is required there
because I don't think it is a
good idea to send the message that
you're doing somebody a favor.
And this happened to me not that
long ago, where an artist who is, you
know, who does very, very well, but
in terms of reputation and perhaps
sales is a bit, uh, smaller than what
I've been doing the past few years.
And when I first got there, there was a
lot of talk about how grateful they were
that I was willing to do this, and that
isn't really the dynamic that I wanted.
I didn't want anybody to think that
I was there doing anybody a favor.
I was there giving my all, doing
the best job that I possibly could.
The salary was the salary.
So yeah, the message for me was, back
in the day, would've been clear that,
yeah, this isn't what I normally
get paid, nor would, uh, what I
would be willing or, you know, some
version, some diplomatic version of,
of what, what we're talking about.
That, you know, I couldn't really
do this for any kind of a long
period, but I'd love to go out, see
how it goes, and then we can talk.
Timothy Iseler: Yeah.
That's great.
Thanks for making that distinction.
It can be a, know, sometimes it's so much
about reading the dynamic of the other
person, which, used to have to be done by
phone, so you'd have no, no visual cues.
And then once they're even, like,
talking to people on Zoom or FaceTime
or something, like, sometimes it
can be really hard to tell if what
you're saying lands with them.
But yeah, there is, there's often a
fine line of, like, wanting to assert
your value without, without making
it a challenge or drawing a line
in the sand or something like that.
Paul D: And you used the word bitter.
I think that's really important too.
It's like to take a gig that before
you ever get to the first show,
you already have a resentment.
That's not good.
Timothy Iseler: Yeah.
The, it sucks.
I mean, I, I hate to admit it, but there
were gigs that I took just because the
dates lined up and the money was fine, but
I didn't care about the bands, and, it's
just like, "Oh, whatever, I'll do that."
And, and I don't know if I showed
up bitter, but every time I did
something like that where it was just
like I wasn't excited, but the dates
lined up and the money was okay, I,
I never ended up having a good time.
And of the things towards the end of my
career touring was just realizing, like,
I hated being the person on the tour
or one of the people on the tour who
is always complaining about everything.
You know,
Paul D: The worst
Timothy Iseler: it's a badâ¦
No one likes to be around that person, and
then it's just such an unhappy existence
to be every day bummed out about it.
Soâ¦
Paul D: yeah, I swore I would never
be the grumpy old roadie, and I've
been reasonably, not wholly, but
r- reasonably successful at that.
And a couple years ago, I left a
gig that was just a great, highly
sought-after gig because I started
to feel like I was a littleâ¦
My enthusiasm was waning.
Timothy Iseler: Yeah
Paul D: And it was really hard
because it was a highly sought-after
great gig, great artists.
I don't have an ill word to say about
them or anybody, but it was all on me.
It's like I was just notâ¦
I felt like I wasn't bringing it
like I once was, and it was like,
"Oops, I see where this is going.
I gotta get out of here for my own good."
And, you know, for their good,
but also for my own good.
Timothy Iseler: Yeah.
Yeah, yeah.
That's a good point.
I know-- I don't wanna make this all
about roadies, but I know so many
roadies who allegedly love the jobs
they have, but you never hear them
talk about how they love their jobs.
You hear them talk about how much they
hate their jobs or hate their employer or
Paul D: And
Timothy Iseler: catering
Paul D: there is and there has
historically been a culture of complaining
Timothy Iseler: Uh-huh.
Paul D: in touring.
And some j--
Timothy Iseler: Why do you think that is?
Paul D: I'm not, I'm not sure.
I'm not sure.
I haven't really thought about
it much other than I don't wanna
be around it and I don't wanna
work with people that have it.
You know, the, the notion that any one
of us, that the entire tour runs or
doesn't run on the shoulders of any
one person is not only inaccurate,
it's counterproductive and it's
poisonous to the rest of the tour.
And the same thing with the
overly dramatic, "Oh my God,
everything's a problem."
It's like, here's an example
I'll just give about myself.
It's like, you know, this whole
thing about, "check Master Tour.
It's in Master Tour.
Have you checked Master Tour?"
First of all, that's true.
I love Master Tour.
I'm, was a relatively early on the scene.
I think it's great.
I use it on everything I do.
I even used it on my personal
vacation with my wife.
But the n- but the notion that a
tour manager would say with any
regularity, "It's in Master Tour,"
or, "Check Master Tour," I abandoned.
I'm not saying I didn't
do it, but I abandoned it.
It's like my job is to facilitate the
flow of information to make people
feel at ease, to create a culture of
security and safety and support so that
everybody on the tour, musicians, crew
members, transportation, management,
booking agent, and all the, uh,
publicist, everybody else on the
team is taken care of and feels good.
So if that's the case, which it is, for
me to say, "Have you checked Master Tour?"
It just doesn't fly with me.
It's like somebody has a
question, I'm gonna answer it
Timothy Iseler: Mm-hmm.
think it also assumes a lot generally
about humans, not to say musicians
or touring people, but most people
don't really read the emails they get.
They don't really read
the PDFs they receive.
Most people just don't.
And when you find someone who does,
that's awesome and, and it makes it easy.
But I think the idea that, the people
who thoroughly read emails is the
majority, I think that's a wrong idea.
Paul D: Yeah.
Timothy Iseler: Yeah,
Paul D: I think it's also important
to acknowledge that I, I'm saying
this from the luxury of being on tours
where they're really well-staffed.
Timothy Iseler: Oh yeah, that
Paul D: You know what I mean?
If you're the one-person army, you're
the tour manager, the production
manager, the tour accountant, the
front of house engineer, and you're
also helping with merch, I get it.
You just don't, perhaps
you don't have time
Timothy Iseler: Yeah
Paul D: to, uh, deal with the
dissemination of information
in multiple channels.
Maybe you really do have to say that.
But at any rate, uh, just for myself,
it's like that's why I'm here.
Timothy Iseler: So let's-- I
wanna steer the conversation back
to this question of retirement.
So you mentioned something like
maybe four to five years ago it
started to seem like a real thing.
If-- How were you thinking
about it before that?
Like let's say maybe 10 years ago, was
it something you wanted but just didn't
know, or did you just kinda think you'll
work until you couldn't work anymore?
How were you thinking about it?
Paul D: Well, i- in my circumstances,
m- my story is that, I don't know,
maybe 15 years ago, I was broke.
Like broke, broke.
Like almost lost the house,
declared bankruptcy broke.
And that's because I changed fields.
I went into artist management.
I was a manager.
I had an amazing client roster, but
they were all the types of artists
who were artistically respected but
ge- didn't generate a lot of income.
So when I ran that into the ground and
then went, "Wow, I have to figure out
how I'm gonna pay the bills," and I
returned to touring, it was, uh, not
something that I did enthusiastically,
and I kinda had my tail between my legs.
I mean, I, I think I
was like 55 years old.
It's like going back on the road?
Holy crap, I didn't see this in my future.
Well, it turns out I liked it very
much, and I continue to like it.
But to answer your question, 15 years
ago, I kinda just started from zero.
It's like how am I ever
gonna pull this off?
So I became more fiscally responsible by
doing all sorts of things that anybody can
find out about and that you probably coach
your clients in, in terms of budgeting
and being responsible with our finances.
And then it also came to a time
where luckily I went back on the
road and people wanted to hire me,
and I was getting really great gigs.
So does that answer the question or does
it at least start to answer the question?
Timothy Iseler: it definitely does.
having an experience like that where
you, where you try something new and
you put yourself out there and then you
fail in a way where there's, there's,
you know, there's no way you can spin
it that that was a success, right?
I think so, like, that's horrible and I
don't want people to have those kinds of
experiences, but I think that often that
leads to a very different perspective
life and career and what's important.
And I wonder, in your opinion, how
much do you feel like getting back
into touring after that experience was
because you had gotten into, like, such
a, such a bad financial place or because
you had your tail between your legs?
Paul D: integral.
That was a huge part of it, and I
think it's im- I mean, now we're, we're
getting into the notion of personal
growth, which is great and important,
and an important part of being a
person, a person in our industry.
it's really funny, I just pitched an idea.
You know, the conference
in Lititz every year
Timothy Iseler: Mhm
Paul D: that Marty Hom and, and
Stuart Ross, uh, and whoever
else kind of do, I just pitched a
panel to them something along the
lines of, you know, you're fired.
What hap- you know, what to do with
these types of what people would
rightfully refer to as setbacks.
So in my case, yeah, it had
everything to do with that.
You know, being humbled in
conjunction with being humiliated
can, can be a great teacher.
Some people become bitter.
S- some people feel cheated.
Uh, there's lots of different reactions.
If a person chooses to see these difficult
times in their lives, whatever they are,
health, loss, trauma, seeing those as
opportunities for personal growth, which
I know can be extremely difficult, that
makes all the difference in the world.
So yeah, when I went and returned
to touring, whatever ego I had
had been deflated considerably.
And so yeah, it was really
helpful to go back in and just
go, "Yeah, I'm, I'm starting over.
I'm returning to touring.
I'm a 55-year-old guy who, like, doesn't
have a touring gig on his resume for the
past," whatever it was, "10 or 12 years.
Now what?"
So yeah, it, it was a huge part
in, in getting me refocused
Timothy Iseler: Yeah.
mentioned that some of the things that you
tried to get right or, or set right were
things like budgeting and, and, you know,
building up some stability in your life.
And then you mentioned that, because
of the way the stock market has
been over the last 15-ish years,
how you've been able to turn that
into something really meaningful.
How did you get started investing?
Was, was that something you kind of
always knew about, or was there a
point where n- when it was new to you?
Paul D: There's kind of a version
one and a version-- or part
one and a part two of that.
For whatever reason, in the '80s,
I became in, uh, more interested
in being fiscally solvent.
I think I ranâ¦
I mean, I don't think, I know, although
I don't quite remember when I ran into
problems with the IRS as a young person
where I got, like, paid as a 1099 employee
and spent all my money, and then taxes
were due, and I didn't have taxes, and
then I didn't file for a few years.
So, like, once you go through that magilla
of the extremely unpleasant experience of
having to deal with the Internal Revenue
Service in, in that way when they're
coming after you for money, I realized
that I didn't want that to happen again.
So, I just dove in and decided
to learn everything I could.
Again, this was in the '80s or
'90s, so the resources available
for personal finance weren't as,
uh, broad or easily accessible.
So what I started doing was
watching whatever CNBC was
called before it was CNBC.
So, like, whatever the first ever
cable channel having to do with finance
was, I watched it all day, every day.
And I read a couple books, like from
Peter what's-his-name, the guy from
Templeton who, like, invented mutual
funds, and some of these early folks
who talked about f- the very simple
principles of dollar cost averaging, n-no
load index funds, things of that nature.
Um, and that kind of set
me on the trajectory.
I didn't do it for the longest time, and
then when I got into financial difficulty
and management, I wasn't able to do it,
and I had cashed out everything I had.
You know, whatever gains I had had in
terms of a very, very modest 401k that
I had from when I worked at Bill Graham
Presents and whatever, all that was gone.
So I had to start over.
But I still had that, you know,
what I would call very robust and
some of those proven pathways to
stability and growth in finances.
Timothy Iseler: Mm-hmm.
if you were to imagine somebody who's
maybe, maybe where you were 15 years
ago or maybe in a, a better spot,
but just a touring person sort of 15
years younger than you, what would
you wish that they knew about money?
Paul D: I'm sure people have said
it far more eloquently than me, but
that it's a tool and a resource.
It obviously can have dramatic effects
on, uh, how we live our lives and
certainly how we live our lives as we
get older or if we become disabled and
can no longer work, which happens toâ¦
I mean, I don't think
it's an exaggeration.
It happens to 100% of us at some point.
The issue is whether that disability
comes sooner rather than later.
Uh, and, and also that it's not com-
it doesn't have to be complicated.
So the information that I got and the
information that most people get when
it comes to financial planning can
sometimes be, uh, feel overwhelming.
And what many people don't understand
is that someone who isn't a certified
financial planner and who doesn't
have the word fiduci- fiduciary
in their title, correct me if
I'm wrong, that's a salesperson.
If they're not a certified
financial planner and they're not a
fiduciary, they are a salesperson.
So some of these large houses that do
finances, the point is to generate income.
We live in a capitalist society.
That's how it works.
So that can be a little confusing
and daunting to, to people.
So I guess what I would wanna say, uh, is
that it doesn't have to be complicated.
It can be quite simple.
Start somewhere.
Just start anywhere.
Start somewhere.
Like, even if you do end up with
assets under management and you're
paying a commission, that's better
than not doing anything at all.
It may not be what you wanna do five
years or 10 years after you enter
into that relationship with a, you
know, with one of these companies.
But just, like, get, get started.
Now's the time.
It's never too late.
Timothy Iseler: Yeah, that was my own
experience when I started investing.
I had always been pretty good about
saving money, but as a kid growing
up, I didn't know it was even a thing
I could do, and it was much back
then for ordinary people to do it.
But when I, when I actually started
investing for the first time, I
was really, really surprisedâ¦
I kind of thought, like, someone's gonna
tell me I'm doing it wrong or something.
Like, I, I literally, I remember I was in
Denver, Colorado, at a cafe on tour, and
I looked up, "How do you start investing?"
And it was like, "Open an
IRA, buy an index fund."
And I did, and I was like, "Wow."
in o- you know, one hour, I've done it.
This was, it was so easy.
And, and, and I know it didn't used
to be that easy, but to your point, I
think a lot of people want to wait until
they're very positive about what's the
right thing or, or, or optimi- make sure
they know how to optimize everything.
And I think if you can just
start with whatever's easy and
whatever you can stick with.
Paul D: Absolutely
Timothy Iseler: as you get
comfortable with it, maybe you
can up the amount of money.
Maybe, maybe you add some diversification.
But just whatever you can start with
and whatever you can stick with, I think
is, is great, a great way to start.
I wanted to circle back.
I don't know that it's exclusively
everyone who doesn't have the, the
initial CFP or the word fiduciary in
their description, but those are things
that sort of indicate that the person
you're talking with is obligated to,
at the very least, minimize conflicts
of interest and also not accept
things like commissions or any kind
of trailing sales fees, which most
Paul D: Yep.
Timothy Iseler: know about, but that
Paul D: Yep
Timothy Iseler: in the
industry, these trailing fees.
Paul D: Yeah
Timothy Iseler: And so, there is, there's
lots of very well-known investment
houses in the business of selling
products because it generates commissions.
And That doesn't mean they're choosing
bad things for their clients, but there's
a conflict of interest because if they
are recommending investment A because
they get more money for investment--
for selling investment A, that's not
necessarily always in your best interest.
So, uh, certified financial planners
and people who use the word fiduciary,
fiduciary means you have to act
in the interests of your clients,
Paul D: yes
Timothy Iseler: so, for me, I never
receive any kind of commissions or
kickbacks, and there are situations
where I have to recommend something that
is financially not advantageous for me.
Or I have to acknowledge, "I think this
is a good idea, but if you do that,
that means I will make more money."
So I have to acknowledge that up front.
Like, you know, that might
not be why I'm making the
recommendation, but there it is.
And, and I guess back to the same
issue of complexity, I think a lot
of times, also just sort of like diet
and fitness and things like that,
like the simplest plans are often the
best because you can approach them.
So
Paul D: Agreed.
Yep
Timothy Iseler: idea, spend
less money than you make.
You know?
Like set a little money aside for taxes.
Really, really basic things that
don't require a ton of complexity.
And I think everybody can get
really, really far with just a
handful of basic rules that you
don't even hardly need to write down.
You know?
Just really intuitive stuff, and if you
can stick with that, you might never
need to work with professional like me.
Paul D: Well, there's great value in
working with, with a professional.
You just have to know what
the professional is all about.
And not to belabor the point, but yes,
if you're working with a firm who's
creating extremely complex investments,
which I would argue have a great deal
to do with trying to make sure that you
don't leave because it some- becomes so
complex that you're baffled and you don't
know how you could ever get out of it,
even if you would want to, and you're not
working with companies that are selling
you or pointing to you, pointing you
to proprietary products that, like you
said, they get not only sales commissions
for, but ongoing trailing payouts from.
As long as you're avoiding
that, that's great.
I had a relationship with Merrill
Lynch for a number of years, which
means I had assets under management,
and there was nothing wrong with that.
And it was great until it was time
to move on, and then I moved on.
So, you know, I'm with you.
Just there's a handful of really
simple things that can people do.
I'm sorry I didn't mention IRA, SEP
IRA, Roth IRA earlier, but you brought
that up and yeah, that's integral.
That's a huge part of, you know,
creating who we're going to be
financially, what, what the picture's
gonna look like as the years go by.
Timothy Iseler: Yeah.
What's something you love
to do that's cheap or free?
Paul D: Oh, almost everything.
Well, that's not true.
There's a lot of things I like to do.
I really like hiking, uh, I really like
reading, and I really like exercising.
And in my case, I-- the gym
I belong to in New Yorkâ¦
I live in New York City, the gym
I belong to is like a community
center, so it's not very much.
I mean, I have friends that belong
to these giant chains that pay, like,
$175-$200 a month to belong to these gyms.
So there's lots of things.
Again, I'm older, so it's like my
need for excitement is pretty low.
But I mean, going to museums and going for
walks and enjoying the company of my wife.
You know, just to step back to a
part of the conversation earlier,
one of the things that led me to
contemplate retirement, uh, more
seriously was the lockdown, was COVID.
Timothy Iseler: Hmm.
Paul D: mean, I didn't pivot to anything.
I mean, I took classes.
I became a COVID compliance officer.
I took a number of different
courses that I never used, but it
was still great knowledge to have.
I sat at home for two
years, and I loved it.
In my case, I loved it, and it worked
very, very well in my relationship.
So that was when I kinda went, "Huh."
You know, I love being a, a, a macher
tour manager and flying around in the
front part of the plane and staying in
five-star hotels w- on tours when that
happens, but I don't love any of that as
much as I love being at home with my wife.
So that's when I started to
think about, like, "Wow, I,
I want, I want more of this.
I'm ready for more of this."
Timothy Iseler: there's so much of it that
I can't tell if it's just like me getting
older or the career change or whatever,
but there was definitely a point where I
was like, work forever, like taking time
off is, you know, why would you do that?
And now I'm like, oh, you
know, build my life around my
life and not around my work.
Paul D: Absolutely.
Can you hear the rain?
Is it too noisy?
Timothy Iseler: Nah, it's all right.
I don't
Paul D: Okay
Timothy Iseler: What's something you love
to do that's expensive but it's worth it?
Paul D: Um, theater, vacations.
So travel c- which, you know,
isn't, doesn't have to be
expensive, but can be expensive.
Uh, meals now and again.
I mean, we don't eat out much, which
is probably worth pointing out might
have something to do with the fact of
being financially solvent, is that we
don't, we don't eat out all the time.
I try to buy tickets to
shows that I wanna see.
I really try not to ask for guest
list slots if at all possible.
And so y- you know, sometimes that
can add up, you know, depending
on what show you're going to
Timothy Iseler: Yeah.
Paul D: But sorry, no, at this
point, no th- there are no things.
It's all experiential.
Timothy Iseler: Great.
Paul D: There aren't any things.
Cars, I don't care.
None of, none of it.
Timothy Iseler: Yeah.
You mentioned not going
out to restaurants as much.
has that always been that way
or is that a recent development?
Paul D: No, it's pretty much, I mean,
thankfully I enjoy cooking, but my wife is
really a good cook and enjoys it as well.
and she has had, for the past number of
years, enough time on her hands to kind
of do that, so that's been very helpful.
But at one point, up until right before
the panic, we owned a second home up
near Woodstock, uh, and that was great.
But, you know, I don't n- I mean, owning
two, owning a place in New York and
owning a place in Woodstock and having
two mortgages, you don't go out to a lot
of expensive restaurants in New York.
I mean, you can, but
you're gonna regret it.
So that kind of set the tone too.
It's like that wasn't, that wasn't
our priority, going out to fancy
restaurants or expensive restaurants.
Timothy Iseler: Yeah, yeah.
That makes a lot of sense.
Uh, I want to be respectful of your
time, I end every conversation with a
question for my guest, and you asked
if we could discuss when an S corp
or any other corporate entity might
be worth considering for freelancers.
And before I share anything about that,
do you want to add any color or context?
Paul D: Well, what I realized
after submitting that is it's very
possible you've already covered
that territory in another podcast.
But no, that's really about it.
I would just add that I had an S corp
for a number of years, and I think about
five or six years ago I shut it down.
I'm embarrassed to say I can't remember
exactly what led to that other than
the advice of my accountant saying,
"This is no longer beneficial for you.
The tax law has changed," or something.
Timothy Iseler: Okay.
Yeah, that, that's very helpful context.
so before I start talking about S
corporations, I wanna lay a little
groundwork and this, it's, this is
essentially a conversation about
taxes, so that's why your accountant
was giving you that advice.
And at a very basic level,
there's different types of taxes.
I think everybody understands that there's
sales tax, there's property tax, you
know, I pay tax on my vehicle, and there's
income tax, which is what you file with
the IRS every April, and then there's what
we can call employment tax that pays for
things like Social Security and Medicare.
And when you have a W2 job, that's called
FICA, and when you work for yourself,
it's called self-employment tax.
And it's the same thing.
It's a slightly different amount,
but it's basically about 15%.
And one thing I wanna point out w- with
all those types of taxes is they don't,
they don't really influence each other.
So whatever I pay in sales tax does
not make my income tax less, and
whatever I pay in employment tax
does not make my income tax less.
Because I think that's an
issue that related to S corps
that is confusing to people.
So when it comes to business entities,
the most basic kind is called a sole
proprietor, and anybody who gets a,
a 1099 is a sole proprietor, whether
they know it or not, or whether
they have a business name or not.
And the reason this matters is
because the IRS considers 100% of
the profits from a sole proprietor
business to be compensation.
And so all of it is eligible for
self-employment tax, and all of
it is eligible for income tax.
Okay.
If somebody decides they want to maybe be
a little more formal with their business,
the next step is usually to register an
LLC, which is a limited liability company.
And as the name suggests, an LLC limits
the liability between what the business
owns and what the business does and what
you, the owner, personally own and do.
And, uh, a great example for why you might
want this is, like, a lighting designer
who designs some kind of a rig to go
out on tour, if there's something unsafe
about that rig and somebody gets hurt and
they decide, "I'm gonna sue the person
who designed this," they could sue your
LLC, and your LLC might be wiped out, but
your personal assets would be protected.
So you wouldn't lose your house
and you wouldn't lose your bank
account and so on and so on.
Paul D: Which was one of the reasons
I started my S corp, although
there, as you know better than I,
there are different, uh, abilities
to shelter your personal assets.
Timothy Iseler: Not everythingâ¦
Like for example, a lot of times
if you have an LLC and you wanna
get a business loan, the lender
will require a personal guarantee.
So there is the ability with an
LLC for the business to have a loan
and the owner to not be responsible
for it, but depending on what your
business is, they may require that.
But just at a, a legal
level, that's what it is.
And one thing that trips a lot of
people up is that an LLC is a way to
organize a business, but it is not
a tax structure, and LLCs are taxed
exactly the same as sole proprietors if
there's only one member, or partnerships
if there's more than one member.
And in fact, the IRS considers a
one-person LLC to be a disregarded entity.
Paul D: Yes.
Timothy Iseler: for it.
Paul D: Yep
Timothy Iseler: And so, uh, one thing I'll
hear a lot of people say is like, "I set
up an LLC because it's good for taxes."
It's not good for taxes.
It doesn't influence taxes at all.
It's just about liability.
There is a thing though called a
subchapter S corporation, and that,
whereas an LLC is a business organization
and not a tax structure, an S corp is only
a tax structure and not a business entity.
So a business entity has to be
registered, and then it can choose to
have the IRS treat it as an S corp.
And the reason that's important
or the reason anybody would ever
choose to do that is once you have
an S corp, an S corporation, you
can treat yourself as an employee.
And what that means is that part of
your business profit can be treated as
compensation, but a portion of it is
not treated as compensation, and that
means that whatever portion is not
compensation avoids employment tax.
So whatever portion doesn't get treated
as compensation is taxed roughly
15% less than all the rest of it.
And it has nothing to do with income tax.
S corporation does not
influence income tax.
It only influences your employment tax.
And those just-- Everything I've said
right there is already, I think, pretty
confusing for people because I've talked
to people where they have a, an S corp and
they're like, "How come my, you know, how
come that didn't change my income taxes?"
And it's like, well, it doesn't
have anything to do with income tax.
It's just the employment tax.
And so getting, kind of getting
around to your question about when
this might be worth considering.
So anybody who has a registered,
w-what would be called a registered
corporation, but like an LLC would be
considered a registered corporation,
can choose to be treated as an S corp.
You, you fill out a form, send
it to the IRS, and they will
treat you as an S corporation.
There's no requirement that it,
it's of a certain size or certain
amount of revenue, et cetera.
So you could have-- you could launch a
business with zero dollars in revenue and
no clients, and you could choose this.
But there is a requirement that you
pay yourself as a W2 employee, so
you're gonna have some ongoing payroll
costs, and there are extra bookkeeping
requirements, and At the end of the
year, you have to fill out a form and
send it to the IRS, and even though the
entity does not get taxed, you still have
to file extra paperwork with the IRS.
So it is extra work, and that
work typically costs money because
you're typically hiring your
accountant to do it for you.
And for that reason, it doesn't
make sense if you're not making
very much self-employed income.
So if you're getting, you know, ten
thousand dollars in ten ninety-nine
income, it's not even worth the paperwork
involved to save a little bit of money.
And you're only saving on employment
tax, so it really only makes sense
if your profits are large enough
that that number is large enough.
And I don't wanna get too numbers-oriented
about it, but just roughly speaking, if
you're making less than a hundred thousand
dollars, I don't think it's really a
priority to choose the S corp election,
because whatever you're gonna save is not
gonna be a huge amount of money anyway.
I think it's really when you start to
get into that, you know, hundred K plus,
especially if you're in a realm where
you're making like hundred fifty, two
hundred K, then you're in a position to
save a pretty significant amount of money
by designating a portion of your profit
to be, uh, excluded from employment tax.
Does that make sense so far?
Paul D: Completely.
And my recollection, not to interrupt
you, is that when I decided, when I
opted for S corp versus LLC, and I don't
know if LLP was even being discussed, I
don't recall, um, I didn't understand it,
and I literally just took the advice of
my, my accountant who said, "You, you,
here's what you wanna do and here's why."
And I went, "Okay, I'm not really
sure if I understand the differences
between one and the other, but I
trust you, and you know what you're
doing, and you're a professional."
And so I opted to, uh, become an, a
subjector, subchapter S corporation
Timothy Iseler: Yeah, and it's the kind
of thing, if you h- if you're working
closely with a CPA and you've got a
good relationship, it is the kind of
thing that you can choose, you know, one
year I wanna treated this way, the next
year I don't wanna be treated this way.
You can do that, but it requires filing
the correct paperwork with the IRS in
a timely manner, and so that's oftenâ¦
It's not that you can't do it yourself,
it's just, you know, it's awfully nice
when you have someone like a CPA to
say, "I think this year it's gonna make
sense to do this," or, "I think next
year it doesn't make sense to do that."
Paul D: The actual filing of the
documents in my case, getting set up
as an S corp, and I used QuickBooks,
my recollection it was onerous.
But I also remember that once it
was set up, it was a piece of cake.
It's like, it's time to fillâ¦
It's time to send in your 940.
It's time to send in your 941.
It's like it was all prompted.
The forms were generally filled
out based on everything that I had
put into QuickBooks already, um,
and that part was pretty simple
Timothy Iseler: Yeah.
Yeah.
If you have any kind ofâ¦
QuickBooks can run your payroll for
you, there's another platform called
Gusto that I use that it's just a plat-
uh, payments platform, it doesn't have
any-- Like, QuickBooks has the benefit
of being an accounting softwareâ¦
gusto doesn't have that.
But yeah, once it's set up, you
can just say, "I wanna pay myself
X amount of dollars per month or X
amount of dollars every other week."
And, and then it is easy, and it will,
yeah, it will automatically fire off
those reports to the IRS or to your state,
you know, state department of revenue.
But, you know, it's more
hoops to jump through.
So again, if it's not-- If you're
not making a significant amount of
money, I don't think it matters.
there is one thing I wanna mention,
which is a little bit of a nebulous
gray area, which is the IRS requires
owners of S corps, who are called
shareholders, requires them to pay
themselves "reasonable compensation".
Paul D: I remember that now.
Yeah
Timothy Iseler: that's the specific
wording on the IRS documentation,
"reasonable compensation".
But there's no rule about
reasonable, uh, what reasonable is.
So if you're a chef,
there's no guideline for
Paul D: this
Timothy Iseler: much is
reasonable as a chef, but this
much is reasonable as an author.
There's no guidance on that.
And so what I would say is I would
avoid getting too cavalier about how
lean you want to make your payroll
and how big you wanna make the,
the, uh, the remaining profits.
Th- this is all just kind of ballpark
rule of thumb stuff, but if you're doing
50% payroll, 50% profit or anything below
that, I think you're gonna raise some red
flags and you might get into some trouble.
I think if you're more in the ballpark
of, you know, maybe 75% of it goes to
payroll and 25% goes to profits, I don't
think that's gonna raise any red flags.
But again, there's no hard and fast
rules here, and that's another reason
you would really want a CPA to sign off.
I was actually just meeting with a
prospect the other day, and they asked
me about tax planning, and this is
always what I say to people is like,
"I know, I know a fair amount about
taxes and I can share my opinion
about taxes, but I'm not authorized
to represent anyone in tax court.
And there is also no, like,
advisor-client privilege."
So if, if, you know If you get
called into IRS tax court, I
cannot withhold anything, right?
Whereas with a CPA, their job is to
be an expert on tax law, and so if you
have a question about, "Is this legal?
Can I do this?"
They can answer that, and they
can also keep that conversation
private should you ever get audited.
So if you wanna do-- if you wanna
choose an S corp election, first of
all, it doesn't make sense unless
you're making a lot of money, but
also I would really, really strongly
recommend looping in your CPA and
getting them to, to sign off on whatever
amount of payroll versus non-payroll.
Paul D: Yeah, that's great.
I mean, one of the reasons that I
selected the S corp when I had it,
although it sounds like perhaps I was
incorrect in this, was shielding personal
assets to some degree because I was
working at a lot of festivals, Bonnaroo
and Outside Lands and Electric Forest
and the list goes on and on, and felt
that if anything happened, um, that
I could be included in a lawsuit and
that somehow having an S corp might
allow me to protect personal assets.
Timothy Iseler: Well, the S corp requires
you to first register a business.
So it's, you know, I don't know
this, but it's likely that you first
registered an LLC and then that LLC
elected to be treated as an S corp.
Paul D: That's not my recollection, but
it's very well could be, and maybe the
state of New York is different than-- Or
is this a federal thing or a state thing?
Timothy Iseler: a federal thing.
Paul D: Yeah.
Okay.
Timothy Iseler: yeah, it has to do with,
Paul D: Got it
Timothy Iseler: taxes.
Paul D: Well, this has been great.
Thank you so much.
Timothy Iseler: Yeah.
Well, thank you so much.
I really appreciate it, and it's nice to
catch up and to hear more of your story.
Paul D: Uh, I hope I'm down in
your neighborhood again before too
long and we can meet face-to-face.
Timothy Iseler: Yeah, please let me know.
I'd be happy to come out and say hi.
Paul D: Will do.
Timothy Iseler: All right.
Thanks, Paul.
Paul D: Thanks very much.
Timothy Iseler: Bye.
Paul D: Bye
Timothy Iseler: thank you to
Paul for speaking with me today.
As a former touring professional myself,
I know how distant or unlikely the idea
of retirement can feel when you don't even
know who you'll be working for next year
or what kind of money you'll be making.
And I really appreciated Paul's honesty
about having to start over in his
mid-fifties and how that experience,
as painful as it was, turned out to
be exactly what redirected him towards
a more intentional financial life.
I hope it's useful for anyone in
a similar position to hear that
it's never actually too late to
get pointed in the right direction.
That's it for today.
Next week, I wanna talk about an
interesting perspective I picked up
from a book by a person named Cullen
Roche called Your Perfect Portfolio, and
that is the idea that diversification
within your investments is sort of
like insurance against the various
quirks and risks that come with
each individual type of investment.
It's a little nerdy, but I think this
framework really makes it clear what
roles different types of investments can
play in building solid financial health
and why diversification is important.
I will see you back here next week.
The Thing We Never Talk
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I appreciate you.