Debt to Financial Freedom Podcast Episode 6 with Philip Khao

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Welcome to Episode 6 of Debt to Financial Freedom Podcast, where we have the pleasure of hosting Philip Khao, a distinguished chartered accountant and a Partner of Solve Accounting, who also co-hosts the new and exciting podcast 'Solve to Evolve.'
 In this episode, we delve into different topics, and gain valuable insights from Philip's expertise and experience.


In this episode, Phil shares his story of buying a property as an owner-occupier at 21 and then converting it into an investment property,  which later became positive cash flow. He used the equity to build granny flats and then extracted the growth to use as a deposit to buy his dream home.

Phil stresses the importance of having multiple streams of income and using leverage to invest in property.  He also shares how his lean business model, outsourcing, incentivizing employees, and corporate structure allow him more financial freedom.

#financialfreedom #workethic #positivecashflow #homebuying #investmentproperties #decisionmaking #cashflow #outsourcing #multiplestreamsofincome

Victor Lagos, a seasoned financial expert with years of experience working with clients to build wealth, shares his invaluable insights and strategies to help investors avoid common pitfalls that can kill their borrowing capacity. He draws from his own vast experience in the financial industry to provide practical advice and actionable tips.

Grab your FREE Copy of the 5 Benefits of Investing in Commercial Property  CLICK HERE
Get your ACCESS to the Complete Suite of Finance Calculators  CLICK HERE 

Book your FREE Consultation with Victor Lagos Today CLICK HERE

Victor Lagos - Lagos Financial 

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What is Debt to Financial Freedom?

Welcome to the Debt Financial Freedom Podcast. Everyone loves the benefits of money, but so many of us avoid the hard truths about saving and investing. We wrongly assume we don’t have enough time, capital or knowledge to be able to get to the point of having passive income streams, savings, or investments.The things we really need to know about money aren’t taught in schools. Spending less than you earn, maximising your income, budgeting, taxes, mortgages, investments and passive income - if you didn’t learn these things from your family, then you’re probably like most people who rely on credit cards, buy now, pay later and overdrafts. And then when you want to invest or buy property you will be wondering why you can’t get approval.But there is no judgment from me here - I was in exactly the same situation! Huge debt, poor financial habits and no assets to my name. Step by step I turned my situation around and now, as a certified mortgage broker for 16 years with several investment properties in my name, I’m here to help you go from debt to financial freedom. Because if I can do it, you can too.In this podcast, I will share tips, insights and strategies from my own journey and experience, as well as my clients and guest experts, who share my values and mission to help others create financial freedom. My goal in this podcast is to share raw, honest, transparent, and helpful stories that you can relate to, and that will inspire you to take control of your finances. The only ‘good’ debt is debt that brings you closer to financial freedom and I will show you exactly how to achieve this. Everything shared by me and my guests in this podcast is general in nature, and for education purposes only. None of your personal objectives, financial situation, or needs have been taken into consideration. I highly recommend you seek personal, financial, legal, taxation, and credit advice before you take action on what you heard on this podcast.

Victor Lagos: Welcome to the
Debt to Financial Freedom

Podcast. I'm your host Victor
Lagos and the founder of Lagos

Financial. I've been in the
finance and lending industry for

16 years, and I've personally
made financial mistakes and

learn from them. I started this
podcast to share stories and

lessons on my own journey, and
to share insights that may help

others on their journey. And I
interviewed people that I've

connected with that share the
same values and mission to help

others create financial freedom.

My goal this podcast is to share
raw, honest, transparent and

helpful stories that you can
relate to and inspires you to

take control of your finances
and only have debt that brings

you closer to financial freedom.

Everything on this podcast is
general in nature. And for

education purposes only. None of
your personal objectives,

financial situation or needs has
been taken into consideration. I

highly recommend you seek
personal financial, legal

taxation and credit advice
before you take any action on

what has been heard on this
podcast. Welcome to episode six

of the debt to financial freedom
podcast. I'm your host, Victor

Lagos. I'm also the founder of
loggers financial finance

brokerage business, Philip Khao,
he's my next guest today. Philip

Khao is a chartered accountant,
and a director of self

accounting. He's also the co
host of a new podcast called

Solve to Evolve. Phil grew up in
a single parent household and

quickly learned the value of
money and the importance of

financial control at a very
young age. His mom would always

tell him that money doesn't grow
on trees. And it still resonates

with him to this very day, you
could say that was destined to

be a business that he was
destined to be a business

advisor. And after 15 years of
working on his craft in the

public practice, and for
multinational corporations, he

now provides business advisory
to SMEs to install financial

control and help them grow and
operate a sustainable business.

Welcome, Phil.

Philip Khao: Thanks, Victor.

What an intro. And thanks for
the plug, really appreciate it.

Victor Lagos: Oh, good, man,
thanks for have actually been

watching your podcast, I really
like it. It's very informative.

You and your business partners,
obviously, you've got quite a

bit of experience. And you've
focused on different things,

which is great. But I wanted to
share with the audience about

how you and I connected. We
connected last year through a

networking organization that
we're both a part of called BNI.

So Phil is actually the
president of the chapter that

we're in. I'm actually really
glad that we met because you

actually gave me a lot of
inspiration at the beginning

when I started my business last
year, because I was earning

earning decent money at my job.

But I knew that I could actually
do it on my own. Because I had

the support around me. And you
helped me because you were able

to, you know, look at the
numbers and project where I

needed to go and what work I
needed to get there. So I want

to sort of touch on that a
little bit. Because I feel like

there's a lot of business owners
or potential business owners out

there that don't get the
numbers. And they're good at

what they do. But because they
don't get the numbers, they

might end up creating like a job
for themselves and a hard job.

So it's actually worse than if
they're employed. Do you think

that that happens a lot?

Philip Khao: Yeah, that's right.

I think, Well, look, firstly,
congratulations on that. And I'm

glad we met as well. So look, I
remember that conversation we

have I was driving down I think
it was the end for you called me

and you said fuel. I'm thinking
about this. And I'm thinking

about oh, actually, before you
said that you said you were

asking me all these questions to
set up the right structure,

things like that. Oh, yeah, do
that. Yeah, exactly. And I was

thinking, What is going on? Why
is he asking me so many

questions, but I had the time
to, you know, chat to you just

because I was stuck in traffic.

Sydney traffic's are always
good. And so you know, I think

from there, I gave you a lot of
information and insight. And I

think, from that, the next time
we saw each other the next week,

you said, You know what, Phil,
thanks for the advice. I'm going

to jump in and do it myself and
pretty happy for you that you've

done that. And I feel like a lot
of people always think about

doing things. But then they
don't really action. It's always

thinking, thinking thinking, and
I don't do anything about it.

And you know, inaction leads to
nothing, really. So I'm glad

that you've jumped in and done
that. Now, when you say a lot of

people get into business, and
they end up working harder than

their job. It's true. And I
would say generally, in the

first year of business, it's
always the hardest. Yeah, but he

should get easier and easier,
right? If you're, if you've got

a focus, you've got a plan and
you're working towards that.

Your focus will become your
reality. But a lot of people are

fixated in just doing the work,
getting it done. What's next,

doing it without purpose. And so
what they find is in three years

time, four years time, they
continue loading up on their

workload, they don't have the
balance, they end up working a

lot higher than than they would
if they were just doing a job.

And so what they need to do is
actually ask for help. Some

people go, I guess they're
pretty narrow minded, they're

very good at what they do. So
that they just continue doing

that without thinking about big
picture as to why they got into

business. And that's to reach
financial freedom, in essence,

right? Everyone wants that work
life balance. And so, yeah, a

lot of people need to, I guess,
take a step back, sometimes look

at the progress and go, you
know, what, how do I actually,

instead of working in the
business, how do I now work on

the business? How can the
business, how can I build the

business, so he operates without
me, because right now, a lot of

business owners in the first,
second, third, maybe fourth

year, the buck stops at them. If
they're not in the business, if

they get injured, the business
is screwed, they're gone.

Victor Lagos: That's very
common. They call that key man

dependency. And it's a scary
place to be when you hire

people, and they're all their
payroll, their entire life is

based on you working and being
available. So if you get sick,

if you take a holiday, if you
have a kid, you want to travel

overseas, and the business
doesn't have you? Well, it falls

apart. So

Philip Khao: it's, it's scary. I
mean, look, there's insurance

for it, but you don't want to be
paying insurance for your life.

But it is scary. Like if you go
out in business on your own, God

forbid something happens to on
the on the ski slopes or

whatever you're doing sporting
activity, you know, how are you

going to earn that income? And
especially those not in a

service based business? They're
even more screwed, right? So

it's having a plan or for
thinking forward about? How do I

build this business? So it
doesn't need me. And that's what

a business is. It can operate
without you being in otherwise,

you're really just an employee
or family run owned business.

Yeah, and I

Victor Lagos: think a lot of
people don't plan ahead, or

don't ask for help. And they
think that they can just keep

doing what they do, and it will
get better. You know, I used to

be someone that used to put my
head in the sand when it came to

the finances. My wife really
helped me with that, to just

face to face the facts look at
and say, What are my numbers

look like? And the numbers are
literally just money in and

money out. Right? And when is
when is when a payments due? And

where's the money coming from to
pay them? It's literally that

simple. But what happens is when
you're on the tools, and you're

doing your job, and you think,
Okay, I'm doing a good job, I'm

gonna have customers money is
gonna come in, I'll be able to

pay the bill. But then, you
know, invoice doesn't get paid,

it's late, customer pulls out,
you know, anything can happen,

all of a sudden, you don't have
enough money to cover the bills.

And then you're in a, you know,
in a backward spiral at this

point, because you're chasing
your tail. And, and the whole

point of this podcast is to
teach people about financial

freedom from multiple angles. So
I did want to ask you, you did

touch on that earlier. But what
does financial freedom mean to

you?

Philip Khao: Yeah, okay,
financial freedom. So I mean,

what it means to me personally,
is, is being able to give back

to my mom, you know, you
mentioned that I was raised in a

single mother household, she did
quite a lot. For my sister and I

growing up, you know, father
left us at an early age haven't

seen him since. And so he or she
sorry, effectively worked two

jobs just to get put us into
school. And she did a lot for

us, just to give us a better
life. And I'm sure all parents

do that. So it might be a little
bit cliche, but financial

freedom means giving back to her
giving back and being able to

now support my family, so that
they don't have to go through

the hardship that one my mother
went through, and two that I had

to go through as well. So I
think financial freedom just

means and I think for most
people would mean that they

don't have to worry about money.

You can make a decision without
worrying, knowing that are not

thinking about the bills to pay
that are coming up going on

holidays, thinking about oh, I
need to budget for that. So

getting to that point. I'd be
pretty happy but I guess to take

it a step further. Financial
freedom, what it looks like for

me is actually freedom. Right?

So I think all of us talk about
financial freedom, but more so

we're really craving freedom
meaning If I want to be able to

do what I want, when I want, and
how I want. And at that point, I

can retire. And I'm hoping that
you know, in a few years, yeah,

because retirement for me
doesn't, it's not about sitting

on the beach sipping on
cocktails chilling out, I can't

do that, like, after two days,
my mind goes numb, I need

something to do. Freedom to me
is or retirement is not means to

me is where I can own there are
working different businesses own

various businesses and be able
to run that and sort of pick and

choose when I work in.

Victor Lagos: Yeah, so it's kind
of like, high level involvement.

So you don't, businesses don't
need you to operate. But you can

come in with an oversight of the
management and, you know,

someone else's handling the
operations. And you can come in

with strategy. And, you know,
just see how everything's going,

just get

Philip Khao: my it's just, it's
just to get my brain ticking.

And, you know, I guess, for me,
I like challenges. Yeah. And

that's why I kind of chose to
focus on business advisory, or

businesses, because a lot of
businesses go through a lot of

challenges and problems and
obstacles. And I like when

clients come to me with a
particular issue, and they've

got no clue what to do, or there
might have a clue, but they just

need help. And going on that
journey with them from point A

to point D, and then being able
to see the result. And how it

makes them feel is amazing.

Yeah, it's amazing.

Victor Lagos: No, no, I really
love that. You genuinely care.

That's why I invited you to come
on the show. Because, you know,

there's many people out there
that do have a business, and

they don't know numbers, and
they don't plan ahead and or

have someone to guide them
through that. But you genuinely

do that. And you you help your
clients to achieve that, you

know, I wouldn't say you hold
their hand, but you keep them

accountable. You and you create
measures to track their

progress, because there's a
saying that you know, what gets

measured, gets managed, or what
gets measured gets done, right.

But I did actually want to ask
you, you touched on your

personal story. And thank you
for sharing that. Because I

think the why is so important in
what we do, you know, give back

to our family, get back to our
parents. And, you know, I just

want to acknowledge you because
it's not an easy thing to not

have a father growing up. I
can't personally relate, my dad

has been around and he's still
around, my parents are married.

But I know many people are in
similar situations to where

they've had to put that hat on
and be be the man of the house.

And I can imagine it's a tough
thing to take on that

responsibility at a young age.

And then to get to where you are
and to be able to give back. I

think that's, you know, I
commend you for that. So

Philip Khao: yeah, it's made me
who I am. And look, you can't be

a tough childhood, I wouldn't
change a thing. Because if I, if

I did, then maybe I wouldn't be
sitting here right now. And one

of the things I'm doing right,
so yeah, look,

Victor Lagos: everything happens
for a reason. We learn from

experiences we we grow from
them. And then when we have our

own children, we get to, you
know, be the parents that we

wanted, if that makes sense.

Yeah, yeah. And you do have a
child. I don't yet my wife right

on the journey. But look, I,
from what I know of you, I'm

sure you're an awesome father to
try to. So I wanted to ask a

little bit about your
professional history, you

touched on the fact that you
focus more on business advisory,

but can you tell us a little bit
about your, your professional

history? And what led you to be
a partner at solve accounting

and focus on being business
advisory or virtual CFO for

businesses? Yeah, so

Philip Khao: I touched on why I
got in, or sorry, why I wanted

to get into business and mainly
that was motivation for my mom.

So you know, with that, in my
mind, at the age of 17, we

finished high school. At the
time, there was a lot of

accounting fears, or accounting
conventions going on, and I was

like, I didn't know what I
wanted to do. But I thought

accounting was I mean, it's
typical Asian, you know, become

an accountant become a lawyer,
but I thought, Look, it's

something that I don't mind
doing. I know a little bit about

it. So I went to all these
accounting fairs then and

decided to apply for accounting
Cadet ships. You know, the big

four the Metis was unsuccessful,
you know, failed. I was like,

Oh, well, I'll try something
else. So then I ended up getting

a job at Toys R Us. So this was
at Toys R Us paramount. I worked

there and thought this is not
too bad. You know, making a bit

of money first job. And then a
few months later before

University was going to start so
I ended up getting into Bachelor

of Business in in UTS. I got a
call For a friend named Kathy,

and she, she got a cadetship.

She called me and she said,
Phil, we've got an opening, you

should apply, you might get in.

And so that opportunity came, I
applied. The next week, I got

the job, my first job. So I was
working full time as an

accountant or junior accountant,
doing a lot of photocopying, and

mailing and admin work, right.

But that then, was the stepping
stone to my professional career.

So I was working in public
practice for the next eight

years, and now you work like
they're working like a dog, you

get underpaid. But I think even
so, you learn so much. And

without that experience, I don't
think I'd be the business

advisor I am now.

Victor Lagos: So you got a lot
of exposure to a lot of

different businesses and large
businesses

Philip Khao: 100% 100%, I think
my time at BDO was probably the

best time in terms of work and
professional. There was a lot

of, we had a lot of
international clients that would

come and look to invest into
Australia. And we will then act

as their outsourced finance
function. So set them up and

then be their finance team on
ground until they will big

enough to, I guess hire
internally. And so that's where

my business advisor experience
had come from mainly. And then

after the eight years, my wife
said to me or not my girlfriend

at the time, she's she said, You
know, I wanted to move to

London. I was like, Shit, I'm
pretty comfortable here, you

know, hanging out with the boys
and doing work focusing on my

career. But eventually, after a
bit of talking, you know, back

and forth, I decided to move.

But before I decided to move, so
I was 25. At that time, I

thought to myself, look, if I
move, I want to come back and

open my own business and do
something, what should I do? So

I was thinking about and then
when you think about these

things, there's just so many
ideas, but then there's so many

excuses that you make for
yourself, like you might work,

it's too hard. And then I
thought, You know what, why

don't I just I've been working
in accounting for eight years,

why don't I start my own
accounting firm. I mentioned

this to my mentor at the time.

And still now Chris, my business
partner. And he said, Dude, just

join me. Just join solve. And
I've already created, the brand

systems are in place, all you
need to do is get a laptop, and

I'll send you some work. So I
moved to London worked a full

time job as a financial
controller for various

companies. enjoyed my time there
getting the commercial

experience at nighttime. So a
couple of hours I work on solve.

Chris was feeding me a lot of
jobs over the time. I got to a

point where I blame him for
making me wear glasses because I

was always in front of the
computer in the daytime, at

night. And so I got glasses
aware that went away, it went to

work. And then 2019 I came back
to Australia and I had I was at

a crossroads. And a lot of
people might be experiencing

this. But do I go out? And do I
go out and find a full time job

back in the city where it will
take me an hour to get there an

hour back over a week that's 10
hours of travel, make my 150

grand whatever it is, or do I
back myself and go full time

we've solved I was earning 40
grand at that time, probably

less than that a year. I thought
about the train ride. And I was

like nah, stuff that. And so I
backed myself. And that first

year was very hard. You just
constantly back against the wall

thinking about where is the
money gonna come from? It was

scary. I was looking to also buy
a property at the time. So I was

like, how am I going to do this.

But look, in the end, I was able
to succeed, focus. I did a lot

of things. I would apply for
jobs, full time jobs, but come

in with an angle of, hey, why
don't you hire me as a

contractor or an outsourced
accounting firm to do your

finance manager role. I did a
lot of that. And I eventually

land the client, which was about
50 grand II. And that was a big

client for me at the time. And
so just the perseverance that

I've found. Being in the first
year on your own, trying to find

work, being hungry being
motivated, led me to that. I

tried a lot of different things.

I tried BNI at that time as
well. I wasn't good at it. But

that job board application or
the job board angle was really

Successful

Victor Lagos: actually like that
you looked at a different angle

you applied for jobs that were,
you know, advertised for

employees. But you actually went
in there with a proposal and

said, rather than hire me as an
employee, I still stay self

employed, you don't have the
obligation of payroll tax,

superannuation and all these
changes, and then you created an

opportunity for you so. So I
think that's a really powerful

thing for people out there that
that are hungry, and they do

want to go out on their own,
there is a way to still have

that security of the recurring
income, like you're employed,

but still have a bit of your
freedom because you can have

multiple employees, right? Does
that? That's exactly right. It's

just about balance of time,
right? Because when you contract

out to them, it's not
contracting out for 40 hours a

week, it's contracting out for
work. Right, right. So as long

as you complete the work, they
don't care about the hours that

you get, it's

Philip Khao: a bonus to the
employees there a soldiers

because they wouldn't have to
pay for full time staff. And you

know, I'd come to them and say,
do you really need you know,

someone full time This job can
be done in three days, per week.

So I did have about five
interviews or so and was able to

get one and that kind of set me
up for the rest. And then I was

like, Okay, well, I like doing
this type of stuff. I like

working with businesses, I was
doing taxes as well. But I

thought, Look, I don't really
like tax too much. I enjoy more

working with clients and
creating value, or adding value

forward looking. So that's kind
of what motivated me to focus on

business advisory over the last
few years.

Victor Lagos: Okay, yeah, that
makes sense. And you did mention

about wanting to buy a property.

So a lot of my listeners, they
are property investors are on

the journey to to grow their
portfolio. Do you own investment

properties? And did anyone help
you? Or did you do it all

yourself?

Philip Khao: Yeah, good
question. I think, for me, I

purchased my first property in
2011. I was 21 at the time, and

then you know, when we're 21,
we're going back to back

clubbing nights, Friday,
Saturday nights getting wasted

having fun, right? But my mum
actually pushed me. So thank God

for my mum. She said, Well, at
the time there was free stamp

duty on property purchases, and
she said, You need to take

advantage of this. You're
working full time, go get a

property. So she helped me
purchase my first property was

in Fairfield. Was it a

Victor Lagos: guarantor loan? Or
did she come up with a deposit

or you had a deposit she she
acted

Philip Khao: as a guarantor. But
I suggest to secure the

mortgage, and I made repayments
moving forward. So that was in

2011. And it's look, it's very
important for people if they're

able to get into property,
because it's a stepping stone to

wealth. That was in 2011, a few
years later, I decided this,

there was no equity in the
property. And I decided, You

know what, I'm gonna put some
equity out and build a granny

flat at the back. Did that and
then the property started paying

itself off, was so positively
geared, didn't have to worry

about it 25 of the time, before
I left to London, so that was

amazing for me not having to
think about the repayments, or

transferring money over. And so
that was amazing. The next or

four years after that, I made
another purchase in Central

Coast. This time it was an
apartment, there wasn't a lot of

capital growth compared to the
land I purchased in Fairfield.

So for me for going through that
personal experience, I now tell

friends and family and sometimes
clients when they ask, you need

to buy that. Like, that's where
you're gonna get the capital

growth. There may be some
anomalies where apartments may

go up a bit more, but majority
of the time, it's going to be

land. Why do you think that is?

I think it's just the demand.

Everyone wants, he probably
would have seen this with COVID

as well, right? Everyone was
kind of locked in their houses

in their homes, and those that
were locked in their apartments,

couldn't go out to your
backyard. You couldn't get fresh

air, you couldn't go to the
front yard, couldn't go for some

walks. And so that probably, I
guess, was the big reason as to

why the property market surged
just ordering COVID and post

COVID Because a lot of people
were locked in their homes and I

thought I need the perfect home
or jail home at time to be able

to kind of live freely and not
be confined in an apartment. So

that's probably the reason

Victor Lagos: it would make
sense the other way. My

understanding is that if you
think about supply and demand,

the more obviously the more
supply there is. Its prices are

going to drop will be fairly
stable, right? But if there's

less supply it, it's scarce. And
but if there's a lot of demand

that will push prices up, land
is scarce. You can't just keep

making Keep more land, right?

You know, you can rezone land,
but it's usually further out.

Whereas when you're building
apartments, you can just keep

building up and up. So that
airspace Exactly. So you don't

actually own the land, right?

You're paying council rates for
your entitlement of it, but you

don't own the land. So you just
own the airspace, you don't even

own the walls. So you can't even
you know, knock it down, or, you

know, add another room, you need
to get permission from the

strata, body corporate. So,
yeah, too, I think as well, that

helps learn to appreciate more
than the unit.

Philip Khao: Yeah, and as I was
saying, you know, land or

property purchase is effectively
a stepping stone to wealth, when

I got back from London in about
in 2019. And I was going out my

own work and my own and the wife
and I and needed to get out of

our parents place. But because I
had those previous investments,

there was equity there for me to
then utilize and make a purchase

of a main residence in the area
we want. Now, at the time, the

interest rates were about 2%, I
think they will low 2%. And I

couldn't get enough funding
because the market was surging

at the time, and everything was
going through auction, so

everything was overpriced,
whatever it was guided that, add

another one 200,000. And so the
property we were going for, it

was gone at a certain value, and
we're like, okay, that's

probably going to go over. And I
need more money, but the banks

wouldn't give it to me. So I
decided to go with alternative

lending, which I think is might
be important to your listeners

there. And the reason why I'm
mentioning this is because the

alternative lending was more
expensive. The interest rate was

about 5%, I had to pay an
application fee of about 20

grand or so I held that
property, my main residence for

the next 12 months. So really,
that property purchase cost me

another 50 grand, roughly 4050
grand. But when I decided to go

or make that decision, I
thought, like it's my main

residence, I'm gonna stay here
for some time. And 50 grand is

nothing when you think about
being able to live where you

want, in a house that you want.

And I thought that's just a
small price to pay. And a lot of

people overlook that. They go,
Oh, interest rates are too high,

I can't I don't want to buy that
property, or I've got to pay an

extra 20 grand, I don't want to
buy that that's the I guess

they're kind of losing sight of
the bigger picture. Because I've

made that decision to spend that
extra 50 grand before refinance

for that, right? You know, that
property itself has gone up by

70% in two, three years. And so
you know, 50 grand is nothing,

it's a drop in the ocean.

Really?

Victor Lagos: Would you say that
was a bit of luck in terms of

timing, that it went up 70%.

Because that's a huge spike in a
short amount of time, when you

made a decision. When you made
that decision, to spend an extra

50 grand pay the higher rate,
did you have that in your mind

that it's going to grow in value
in the short term, or it was

more the fact that you're going
to live in the property. And

that was something that was
important to you willing to pay

the price for that? Look, I

Philip Khao: didn't think in the
short term had grown by 70%. But

I knew over time that I that I'd
be holding that you would grow

substantially, maybe not 70, but
substantially, but because of

that now that's going to help me
facilitate or facilitate my next

purchase of an upgraded main
residence. Yeah, but because I,

you know, in my mom, thank God
for her once again, pushed me

into getting that first property
purchase land. So much equity

was there was so much equity
over time that it was able to

then I guess, facilitate my next
purchases, it keeps going up.

And I've been once I get to the
ER, once my wife is happy with

the home that we live in, then I
can start you know, thinking

about making other property
purchase for investment. Yeah.

Victor Lagos: No, no, that's,
that's really great. Thanks for

sharing that because there's a
couple of things I wanted to

touch on with what you
mentioned. A lot of people want

to get the home first, and then
buy investment properties later.

When you want to buy the home
first, you're limited with what

you can get into because usually
the home you want is in the area

that you want to live in. It's
somewhere you might have grown

up. And if it's in Sydney or
Melbourne, that price can be

unreachable right now. But you
went in on the angle of I want

to go in at 21 By the way,
that's it's very impressive that

you're able to buy a property at
21. And, you know, great that

your mom really helped you to
get in. And I'm sure there's

other people that can get that
helped them their parents, but

you bought it as an owner
occupier, but then you moved to

the UK, so then it converted to
an investment property. So then

you went up in value you access
the equity and you built granny

flats and now became positive
cash flow. And then because it

went up in value even further,
you then extracted that growth,

the equity, use that as a
deposit to buy your home. So

yes, you did buy it initially as
an owner occupier, but you were

21. So you weren't buying the
dream home, you're buying

whatever you can get to get the
government stamp duty

exemptions. So if you are
listening, that's another angle

to look at it. Because now Phil
has got a couple of properties

up his sleeve, he's looking at
the next. And he's also a

business owner. So this is what
I always talked about to people

that you've got to have multiple
streams of income. And if you

want to create a small fortune,
you got to do a bit of both two

things. One is spend less than
you earn and invest the

difference. And then use
leverage to buy property, which

is what you did, and to create,
and or provide something of

value that other people are
willing to pay for. And that's

having a business. So
accounting, so you're doing

that, too. So what I wanted to
ask you is, what are some of the

things that you're currently
applying itself that are helping

you create more of this
financial freedom, and let you

do more of what you enjoy?

Philip Khao: Good question, I
guess more specifically to solve

the business and what we're
doing, we we currently, we have

a lean business model on lean
structure. What that means is we

don't have fixed rent an office
space, we use a co workspace. So

that's pretty helpful. The fact
that we're a service provider,

having zoom allows us to
communicate with our clients

without having to travel, waste
time traveling, or having an

office space. We also outsource
most of our data entry work and

compliance work to the
Philippines. And they've been

pretty good in terms of getting
the work done from start to

finish. People over there really
hungry, the employee market in

Australia it's it's it's pretty
dire at the moment you can you

probably hear across all
industries that it's very hard

to find someone good. And if you
do find someone good, you're

probably going to have to really
overpay. So now that we've kind

of in a world of I feel like
it's globalization is has kind

of taken over. And you can
actually find really good

motivated people in the
Philippines or anywhere else in

the world. Not a fraction of the
price but a better price. And be

able to do the same work because
they're hungry. And I can relate

to that, because I went to the
UK, I had to learn a bit of the

local legislative tax laws
there. And the only takes you if

you're willing to you can do it.

Alright, so those are the two
things. And I think the third

thing as well as being able to,
I guess, pay your employees

differently. So we all were
quite, we're quite used to the

traditional way of paying them
gross wage. This is what you're

gonna get, that's your package.

But it's now about
incentivizing, incentivizing

them, giving them a bit of you
know, skin in the game so that

they're working as hard. And
they feel a part of the team and

not just the unemployed grinding
away. So that might be putting a

commission or bonus scheme in
place. But that helps to retain

as well. So we've got that in
place. We also have a different

corporate structure to most we,
Mr. Business partners. We don't

take a wage. So a lot of
business. A lot of people that

get into business think okay,
how do I extract cash out of the

business, I've got to pay myself
a wage. But for us, we don't do

that we issue dividend access
shares to the partners. And we

extract fully franked dividends
from that small tax efficient.

And from that we can still get
loans, we can still refinance,

you know, as a broker, you may
have come across those that

either earn salary or those that
earn dividends. So those are the

couple of things that we do
specific to solve that allows us

more financial freedom to do
things that we want to do.

Victor Lagos: It sounds like
you've applied what you teach

others to do in your own
business, which I think is

really powerful because you're
sharing real life experience and

wisdom that can translate into
any business. You know, of

course, you know, the way you
hire staff and outsource and the

way you train them is also
another piece to that right. And

we can always go deeper and how
you do that. When someone's

overseas. That's a challenge to
someone. How do you train

someone to do do the job and you
can't even meet them face to

face. If you come from a
corporate background, which I do

as well. I used to work at
Macquarie Bank. You get trained

And with a buddy system. So
someone will show you the ropes

face to face, you can ask
questions, take notes, and you

get to practice on the job kind
of like a cadetship. But when

you're training someone
overseas, you need to be pretty

proficient with Zoom or, you
know, Google meet or, you know,

teams or whatever it is. record
that, and then create a process

manual as well.

Philip Khao: Yes, standard way
of operating. Yeah, yeah. Like,

I guess I'll add a bit more to
that, like five other things

that we do as well, but would
probably apply to most

businesses. The first one is to
understand their cash flow, or

the cash money going in money
going out. And you touched on

that before. But if you have an
understanding of how that all

works, you're able to plan ahead
for the future. And you can make

strategic decisions that won't
impact your bottom line, or the

business at all, in an adverse
way. Having financial controls

is another part of that. The
second thing is having in we've

mentioned that just now, but
having a standard way of

operating, that's going to bring
so much in efficiencies in the

business. When you think about
training staff, whether that's

you know, domestically or
overseas, you're going to train

them, you investing your time,
you might be 234 months that you

spend with them. And then
another four months later, they

decide I'm done with this, I'm
gone. Now you just wasted four

months training them, now you
got to wait another two months

or so finding a replacement,
then spend another four months

training then the new person.

And so all that time adds up.

And that's a lot of cost,
because time equals the money

that doesn't show up on your
financials that you've just

wasted, or that's gone. But if
you've got a standard way of

operating, you've got procedures
in place, if you have the right

systems in place, you've got
automation as well, that's gonna

save you a lot of time, because
when that person leaves, the

next one can come in, they can
you can train them once, it

might take them a month, but
they've got kind of like a Holy

Bible to refer to in terms of
how to do their job. So it's

very important for growing
businesses to have a standard

way of operating, so they can
save the time. The other thing

is the is having a retention
plan for the biggest asset of

your business, that's your
employees. If you have that in

place, you know, the good ones
will generally leave but you're

able to make their life as easy
as possible, as fun as possible,

and then make good money,
they're not going to want to

leave you. The fourth one is to
understand your business model.

So your business grows every
year, you as a business owner

would know what you were
thinking about what you thought

about your business two months
ago has now changed today, it

changes every day as a business
owner. So every year you should

sit back and go, Okay, what does
my business look like now? How

am I generating revenue? What am
I spending on? What am I

investing in. And at that point
in time, if you have a really

good understanding of your
business understanding of where

you are now you're able to then
set goals and plan for the

future, which leads to my fifth
point, being able to sit there

annually or maybe every half
year, set your goals. What do

you want to achieve in the next
five years? 12 months, six

months, three months? a month?

The most easiest way to do it is
through a 12 month strategic

plan. What do you want? What are
the four things you want to

achieve that year? Put it in
quarters, and then break it

down. Okay, what do I need to do
to achieve that every month? And

what you'll find is, and we've
done this ourselves, you will

progress because you're focusing
on one thing, not on many, if

you focus on too many, you're
just everywhere. You're not

gonna make any progress. But if
you're consistent, and you

follow your plan, you will make
the progress.

Victor Lagos: Yeah, no, that's
really powerful. Thanks. Thanks

for sharing that. Because
there's a lot of people out

there that are like that, right?

They've got the energy, they've
got the enthusiasm, but they

spread themselves too thin,
right? They go for the shiny

object, and they're trying to do
a bit of everything everywhere.

But they don't really hone in on
that one thing that's going to

change everything they master
that, then everything else

becomes easier.

Philip Khao: Yeah, I'm not gonna
lie. I was lucky that I would

hear about an ID in the
automated look into this. And

then we look into that. But then
I just thought, when I look back

over the last year, I'm like, No
way like I achieved nothing, or

archieved something but not well
wanted to go. Alright, so

definitely plan ahead and
focusing

Victor Lagos: and having that
target that goal that you're

working towards. It keeps you
focused on what's important. So

if you're doing a lot of things,
and then you analyze saying is

that actually bringing me closer
to that target And that goal, or

is it very meat away from it.

And if it's bringing you away,
then you can call it you can,

you know, put it on hold, you
know, for your spare time if you

have any, and then focus in on
what's more important, and get

it to that goal. And then by
working with someone like

yourself, you can sit down in
six months time and say,

Alright, this was the goal that
I said, Where am I now? Did the

actions I took bring me closer
to it? Did I exceed those goals

wanted to raise the bar? Or was
I, you know, way off the mark?

And if I was, what were the
actions I took, that didn't

allow me to get there? And what
actions can I take for the next

six months that will allow me to
get there, or reduce that, I

guess, at Target write something
more realistic, because if it's

too far, you don't end up
working at all? Because it's

like it feels impossible to do.

So it's got to be a little bit
outside your comfort threshold,

but not too far out that you
just tell yourself, it's

impossible, right?

Philip Khao: Yeah, that's Ryan.

And look, if you have a goal,
you need to have a plan. And if

you don't have a plan, then you
you've got no direction. You

just kind of aimlessly trying to
do these things to try and get

there. And as you say, you need
to hold yourself accountable.

And if you can't ask for help
seek someone else to hold you

accountable. Otherwise, you're
not going to make the progress.

Victor Lagos: You mentioned
before that your business

partner was your mentor. I
didn't know that. So would you

say that having a mentor early
on was a key part of your

success?

Philip Khao: Yeah, what I would
say is, I think most of us go

through when we're working,
especially in corporate, or

maybe even as a trainee, or
whatever it is, if you're

working in a bigger company with
a lot of people, you generally

do have that senior that mentor
that you would always refer to.

So I would say, like later,
later down the track, when I got

out of this, when I got into
business by myself, and Chris

was there definitely helped make
me who I am today. But you know,

over the, over a couple of years
that over the first two years

where I was working with him,
and you know, using him as a

mentor, I learned a lot from
him. But then, you know, I kind

of then started doing my own
thing. And focus on business

advisory and he was more tax, so
I couldn't really go back to him

on business advisory stuff. So I
think it's important as a

business owner, if you're
operating on your own, it's

important to have that mentor.

And that's why I decided to sign
up with a business coach to work

with them. Work with someone
that's done it before, and be

able to pick their brain. And
you know, my first conversation

with the business coach was
enlightening, because all the

things he was saying was what I
was thinking. But I couldn't say

that to Chris, because Chris
wouldn't get it. He just thinks

about tax all the time. And so
it was it was I was really very

happy to have that in place.

Just because I can now refer or
downside of these and be able to

build what I want to do with all
the things in my mind thinking I

could have done this for myself,
but it would have taken me two

years because I've got to do all
the tests and trials before

getting there. But with him in
place, it's it's definitely, I'm

definitely getting there
quicker. So having a mentor in

place with you, you're asking
for help is important.

Victor Lagos: Yeah, I think it's
for the audience that are

listening, I think it's
important that you, you really

hone in on what Phil just said
there, which is having a mentor,

but also investing in a business
coach, they're two different

things. Some people think a
mentor, and a coach are

interchangeable. But a mentor
usually doesn't charge you,

right, there's someone that you
look up to someone that can give

you advice in their particular
field, they may not know how to

operate and run a business, but
they may be good at their

particular skill. And that might
be the profession that you're

trained in a coach a business
coach doesn't really have, they

may not even know your industry.

They may they may not. But what
they should know is how to

operate a business, and how to
look at your business and create

a pathway for you. So with
business advisory, it's a little

bit of coaching, but it's more
around the numbers and the

strategy on getting there as
opposed to what would you say

like it's not? Yeah,

Philip Khao: I guess the
difference between a business

advisor and a coach is the coach
will tell you what to do. But

the business advisor will help
you do what they tell you.

Right. So I'm a bit more I would
you would say I'm a bit more

hands on. I do. Get stuck in in
do a bit of the work with the

client, help them implement
things, help them, talk to them

about you know, their numbers,
their performance and then going

Okay, well let's implement this
and show them and do some work

for them. So it's working with
that business owner. Whereas the

coach is more, I guess, teaching
you how to do things.

Victor Lagos: No, no, you know
what I want to share something

now that you, you sort of broke
down the differences. A lot of

people out there, they, and I
was in the same position where I

started business. And this is
not my current company, when I

started in 2016, I invested into
coaching programs, right

courses, and the content is
great. They usually put you in a

program, whether it's a few
months, or sometimes it can be a

year, but you're committed to it
financially. And you're

committed to it, where you, you
turn up and you learn the

content. And you know, there
might be some exercises that you

do, but you don't really apply
it in your business, because the

stuff you're learning may be too
advanced compared to where your

business is up to. So it's all
knowledge. So you're just adding

in all this information. But the
execution is the most important

piece, because they say
knowledge is power. But

knowledge that isn't applied
doesn't do anything. It's really

nice action need action.

Exactly. So the reason I
mentioned that is because this

time around, it was more around
the action rather than, you

know, gaining more knowledge.

And by working with a business
coach, yes, told me what to do.

But it was up to me to do it. So
it'll keep me accountable.

Working with you, Phil, in the
beginning, you did the numbers,

you plugged it out for me, like
if I had to build that

spreadsheet that you put
together for me would have taken

me hours. And it wouldn't have
even been close to what you put

together. It's because it's what
you do day in day out. So you

understand it. So yes, you have
to pay for this service. But if

it's doing work that you don't
know how to do, and it's higher

level, and it's going to
actually allow you to achieve

your goals. Well, that's a good
investment. But if you're just

investing into courses or
knowledge, what that can

actually do for a lot of people.

And it did that for me as well
is it gave me more on my to do

list. So it added more mental
baggage. So it creates more

pressure, it's like, oh, now I
gotta do that too. And you still

got to do your day to day. So
it's always good, I think to use

a business advisor that will
actually execute,

Philip Khao: you use the right
word investment versus cost.

Some people see, you know, coach
or a marketing person or an IT

person or an accountant as a
cost. But they should think

about it as an investment in
their business, because it's

going to free up their time to
do other things, and not working

the business but you know, work
on it, so that they can build it

to a point where they can step
out. Right? So the right word

investment.

Victor Lagos: Now, I love that
you touched on that. Because

sometimes people think about
business, and they don't realize

how powerful it is when you have
access to revenue before tax. So

give you an example. If you're
earning say 200 grand a year, at

your job, gross before tax, what
would you get after tax 120,

maybe or less than, yes, you get
120 grand, then, if you want to

invest into professional
development, or personal

development, things that's
gonna, you know, the highest

high value skills that are gonna
allow you to earn more, or allow

you to get time back later, you
now need to justify to the tax

office that that was required
for you to do your job. So you

can justify that you're still
using the 120 Grand to spend on

it. And then you're trying to
get the money back after tax

right and your tax return. But
you've only got access to 120,

not 200 You still got to pay
your mortgage or your rent and

all the other expenses and see
Do you have anything left to

cover that cost to invest in
your future? Well, on the flip

side, if you're self employed,
you're making 200 grand first.

So now you can invest that 80
grand that you would have spent

in tax earlier on these
expenses. Investments, I should

say, that's gonna give you more
time it's giving you more

development, allow you to, you
know, upskill yourself that you

can earn more. And all of this
is tax free expenses. So it's

like people don't see it that
way. They're stuck in this, you

know, it's a cost or whatever.

But that's that's a lot more
accessible money that you have,

which is a legal tax deduction
you're allowed to you're

supposed to, because that's
gonna allow you to earn more

later. And then the taxman gets
paid at the end, rather than

first.

Philip Khao: Yeah, that's right.

A lot of people don't see the
opportunity costs. It's not

tangible. But if you really sit
down and think about it, you

know that $2,000 investment in
your business advisor or your

marketing team will be worth it
because you're not going to see

the results now, but that's why
it's an investment. You'll see

the return later down the track.

And if you don't, then you know,
try and get your money back.

Victor Lagos: Exactly. Alright.

So for the people out there, you
know, business owners,

entrepreneurs or even employees
with a sign hustle that, you

know, things that they don't do
straight away. And we touched on

the coaching part, but what do
you think there's some tips that

we can give them that would
actually help them succeed? If

they did it earlier.

Philip Khao: Yeah, I mentioned
some of these points already.

But for those listeners
specifically, it's it's

understanding their numbers and
cashflow. If you have a real

understanding of how you're
going, you're going to be able

to make better decisions. The
other thing is having goals. It

sounds cliche, but you need to
have goals, like you need to set

something for yourself to
achieve because if you don't,

you're just aimlessly doing what
you're doing. And you know, as

we touched on earlier, you're
going to over time, just going

to be end up working harder than
you were as an employee. And the

third thing is asking for help,
why that's so important. Like,

when I first started business, I
had an ego, I thought I knew

everyone knew everyone thought I
knew everything. But when I

decided to, you know, start
networking, and start investing

in a business coach, I realized
that I didn't know that much.

And it's always good to be the
dumbest in the room, right now,

because then you're gonna learn
so much, you're gonna get so

much out of that and be able to
apply that moving forward, I

hate being the smartest in the
room.

Victor Lagos: When you say, it's
always good to be the dumbest in

the room. Like, that's very
deflating to the ego. Because

you enter a room and you feel
dumb, you feel, you know,

uncomfortable, but I get the
angle you're coming from.

Because if you're the dumbest in
the room, then you get to learn

from your peers. And say that
you're the average of the five

people you spend the most time
with. And that's on, you know,

intellectual level, it's on a
financial level. So you got to

upgrade your, your inner circle,
let's

Philip Khao: remove the ego. And
you're right, you got to change

your environment, like I was in
an environment where I would

share my business stories and
trials and tribulations and

successes, and no one would
really care about it. Or they

might say, yeah, great work. But
there was no feedback or insight

back and I just wanted I was
yearning for that. Just the same

energy that and so that's part
of the reason why I joined BNI

because then I was able to
surround myself with like minded

business owners like yourself,
and we had this conversation

before. But now we can share our
stories. And that then creates

more motivation for us to then
grow our businesses, because you

might tell me something. And I
might say, You know what, that's

actually a good idea. I'm going
to use that too. Instead of all

great work. Yeah. So that's,
that's, that's something that I

really enjoyed. Not really had
to do. It was hard. But you

know, once again, putting
yourself in that environment,

you're gonna end up achieving
great things or doing the same

thing that everyone else is
doing in their environment. So

Victor Lagos: yeah, no, I'm glad
to share that because that was

really powerful. Me too, I
reckon, I recognize that being

part of that network was so
powerful, because I was around

like minded people. And when
you're an employee, and you

spend time with other employees
that don't think like this, then

it's harder to think bigger.

Because everyone else is
thinking smaller, even though

you want to think bigger,
they're just reminding you that

they don't think that way. So
then when you start talking

about your business ideas, or
what you want it to do, that the

conversation doesn't flow, they
don't relate to you, they don't

know what you're going through,
they can't give you advice or

give you motivation. If
anything, they'll probably try

to bring you back to their level
and say, no, no, you know, stick

to the job. Like having you
around. That's true, you know.

So that was one of the questions
I wanted to ask about people

that are thinking about leaving
their job and starting a

business, but they're worried
about the security for their

families, like what advice would
you give them?

Philip Khao: If any, if anyone
is thinking about that? I mean,

before you dive into it, you
have to be smart about it. So

you know, start, have a have a
have a conversation with your

wife or husband first. Yeah, let
them know what's happening.

They're important. But then it's
saying, Okay, well, I'm gonna do

this. Let's be smart about let's
firstly, take care of our

financial budget, the family
budget, sit down, do the budget,

how much money is coming in
without my full time job? Or

what money is going out? That
will be a hit in the face.

They'll slap in the face of
reality like, oh, okay, maybe.

And they must start thinking,
Oh, maybe I shouldn't do this.

But I mean, before you start
looking at expenses, think about

what you can cut down. Look at
your insurances. Go get them

recorded. Bring the premiums
down. Do that exercise for your

expenses, have a real
conversation about yourself. So

that's the starting point. The
second then is stop making

excuses. I was speaking to a
friend who was trying to get

into businesses as well, and all
I could hear was excuses coming

from him, like, Oh, I better go
on holidays. Got to wait till I

get my 10 year long service
leave or go to do this and that.

And I was just like, dude, all I
hear is excuses, just, you know,

get into it. And so he actually
got into it now, thanks. He said

thanks to me, which is great,
I'd love to see that. But yeah,

stop thinking about it. And if
you've been thinking about for a

long time, then stop thinking,
start doing start doing right,

there's no excuse to stop making
excuses. And I said before,

like, your first year is going
to be the hardest year, but it

will put your back against the
wall. And you're going to be so

hungry and motivated to try and
achieve what you need to achieve

or generate the revenue you need
to survive, to take care of your

family. That's important. And
that's kind of what led me to

then apply for jobs and then
spin it so that I could just

contract to them. You're gonna
find yourself thinking outside

the box when when you do and
you're kind of thrown into the

wall. And then, when you do
start it sits, being telling the

public about it, no, not the
public, but telling your friends

and families, whether that's B,
whether that be social media, or

conversations, but tell everyone
in your network, Hey, I've gone

in full time, your true friends
and family will be the first

ones to support you. Whether
that's sharing, or letting

everyone else know, or being a
customer, or client. And that's

going to give you a little bit
of stability to start. The other

thing is then to remove the ego
and start networking and start

asking for help, because you
don't want to be on your own and

other people that have done what
you're doing right now. And

that, you know, five years down
the track, they're successful,

ask them for help, whether
that's just tips and tricks, or

how they're structured, how
they're generating revenue,

connections to people within the
same industry, to try and build

your business. Those are the
main things, but what I would

say is if you ultimately fail,
in the business idea that you've

gone ahead with, just know that
you've got a safety net to fall

back on, and that's to go back
to your job. Right? They're

gonna make a lot of money there.

But at least if you've planned
ahead, you go, Okay, well, I've

got six months or 12 months,
where I can work by myself or

work tomorrow on this business.

And if I fail, I won't have
money, and I'm going to need

money will apply for a job
you'll get, you'll probably get

a job in two months, especially
given the market market

conditions now.

Victor Lagos: That's really,
really good advice that you

gave, that's probably better
advice. And I can think off the

top of my head, but not really
thank you for sharing that. One

thing I do want to just add to
that is when you work for

someone, and you're good at what
you do, people, or your employer

will recognize that, and they
will give you a pay increase,

regular increase, and they may
even give you incentives to

stay. But no matter what, or how
much they pay you, you're

helping someone achieve their
dreams, not yours. And if you're

good at what you do, and they
recognize that, then maybe it's

time that you recognize that
you're good at what you do. And

you apply that to achieve your
dreams. So I'm gonna leave it at

that. I want to ask you, how can
people find and connect with you

and your team itself?

Philip Khao: Yeah, so they can
find me on LinkedIn, Phillip,

Cal, pH i and IP, k h. Au.

Otherwise, they can email me at
Phillip that solver

counting.com.au Or do a Google
search. I think it's pretty easy

to find people now.

Victor Lagos: Awesome. Thanks so
much for coming on. I really

appreciate it. And I'll see you
next week.

Philip Khao: Thanks for having
me, Victor. Appreciate you

having me on your podcast.

You're doing great things here.

And I think the long goal, the
long term vision for you here is

going to be massive just because
you're doing great things to

help other people try and get to
financial freedom.

Victor Lagos: That's the goal
and one episode at a time.

Awesome. Thanks. Thank you.

Thanks, everyone for listening.

Stay tuned for the next episode.

See you soon.