## Welcome and Intro from Coach David [00:00] All right, welcome everyone. Uh, my name is Coach David. I'm going to be running you through our financial aid training tonight. Uh, it is right at 5:00 on May 21st. Man, the time is flying, right? Uh, school is almost over, right, for a lot of students. I know that there's some students that have a couple more weeks, right? But we're kind of ending off the year, right? And so there's a couple things that I wanted to talk about with families so that they understand what are the things that you are going to try not to do to protect your financial aid. Okay. Now, if you can go ahead and put your child's grade in the chat, I've seen a couple people do it already. Thank you very much. Right. It just gives me a little bit more context as to who's here and how we can make these more useful for the families that are showing up to the trainings. Okay. All right. Perfect. Thank you guys for keep continuing to do ## The Critical Tax Year That Can Make or Break Your Aid [01:45] that. Okay. But let's kind of go on and talk about the kind of agenda for today, right? So in the agenda today, we'll talk about the mistakes people make. We'll talk about other things to avoid. We'll also kind of talk about how to create a plan to help, right? What are some things that you can plan ahead for so that you don't fall into the traps that a lot other families fall into, right? Uh so just a quick kind of uh kind of housekeeping things, right? Again, if you do have questions, I really welcome them. Even if you think like that it is a you know oh this is like a too basic question please ask it because I'm sure everyone else here also does not know the answer to that question okay uh so there's no question that is a bad question right I want to I want to be here to inform you guys so please put your your questions in the chat or in the Q&A right I will answer them in the order they received right if you guys are interested in having the replay for this if you're one of our coaching families it'll be on our private YouTube channel go ahead you'll be able to find it there in about 24 to 48 hours same thing for our families on Facebook, right? Uh if you're a Facebook family, we're going to make a post about it real quickly and then all you have to do is respond and then our team will get you the training video. Okay, but just a little bit about me, right? Uh my name is Coach David, right? I used to be a reader for college and law school admissions, right? I am a former lawyer, right? I went to law school. I've been working with a lot of families getting them to their college goals and also their financial goals when it comes to financial aid for the last 16 years. Okay. Uh I just realized that I've been I this is like my 16th cycle of doing this. Uh I thought I was still young but unfortunately I am getting older with each year that passes. Uh I realized that uh the students uh their birthdays are getting later and later right? 2000 2001 2002 3 4 5 right. Uh, I think this year we're going to have the 2007s and possibly even 2008s, right? So, uh, as we, you know, work with students, I'll start to see, "Wow, you were born in 2007. Wow, you were born in 2008." Right? Um, and so, uh, I'm here to help you guys. So, please feel free to ask any questions that you have. Okay? So, let's continue on here. Now, before I start with the training, I did see that there's a lot of juniors here in our kind of uh, in our audience, right? So, I always ask if you guys have started with your applications. And a lot of parents are really surprised that I asked that question this early on because they're like, "No, well, we're going to start in the fall." But that's not when you start with your applications. You actually start now. Our students are actually starting now. Right? So, if they are, please listen to this next message. Right? I I've been saying this for like the past two months, right? Some people have listened and signed up. Some people have not listened and pushed it off, right? But our college application intensives have started, right? We actually started in April. So, we're already um uh like almost two months in to having our kickstarts. Our kickstarts are one-day events to help students get to like full kind of ready drafts of their personal statement and their personal insight questions for the UC's. Those are running in April, May, and June. The second part of our college app intensive is the accelerator. Okay, those are available in July, August, and September. and those are to help our students get from draft form to final form. Okay. Uh the kickstart is a one-day event on Saturday. The accelerator is a Saturday Sunday event. ## Why Selling Real Estate Is a Hidden Aid Killer [05:00] Okay. So if you are interested uh please visit our website collegeappointensive.com. I will also have a phone number that you guys can reach out to later text or even even uh you know scan a QR code so that you guys can get more information on that as well. Okay. So let's get into the training now. Right now, one kind of like qualification I want to put or like kind of qualifier I want to put at the beginning of this training is that I understand that for some people the things that I talk about are unavoidable and that things happen and you cannot control them. There's nothing that you can do, right? But the reason why I bring these things up is so that you can understand how it affects your situation. Okay, so let's start off with some of the bigger mistakes that that people make. Okay. So the first one is with real estate property physical property. Okay. So here is usually the the situation. The biggest mistake that I see with families is when they sell real estate. Okay. One of the biggest assets any family has is their family home or other properties that they own. Right? That also means that it's probably the asset that when you sell it will leave you with a net profit. Right? Now I live in California. Right? Uh, I bought my home quite a while ago, right? Um, and so when I sell it, there will be profits, right? Um, so you know, the housing market wherever you are is probably good, right? Um, but uh, in California, in the Bay Area, it's a little bit crazy. Okay. Now, one of the things that I always tell parents is that adding capital gains to your tax return is a is not a good thing in the eyes of financial aid. Capital gains are gains that are above and beyond what your normal income is, right? But again, I do understand sometimes it's a sellers market. I even got a call today that was like, "Are you selling your home?" And I was like, "Well, what are you going to offer?" Right? And they said, "Well, this much." And I was like, "Well, that seems really nice." Right? And so I thought about it for a minute, but then I was like, "Well, if I wait another six months, a year, it's going to be even higher." Right? But you also have to think about how it can affect your financial aid. So, let's talk about that. And I'm going to use an example because it makes more sense when it is an example for families. Okay? So, let's say that your family income is normally around $200,000, right? Let's say that you bought your family home 20 years ago, right? For 400K, right? It's a Bay Area home. And because of that, over the last 20 years, it has basically 4xed itself. And now it's $1.5 million. Your profit if you sell that home is $1.1 million. Right now, if you didn't do anything with that money and it went straight into your checking or your savings account, right, or your money market, whatever it is, right? Your capital gains tax on one $1.1 million. We'll look at the numbers and see what it is. Okay, if you are married, right, if you are a married family, right, you will pay $353,46 in taxes on your $1.1 million profit, right? If you're single, it'll be $373,29 on that $1.1 million profit. Remember, there is an exclusion. So, your kind of $1.1 million profit won't necessarily be 1.1, right? And these tax numbers will go down, but if you if you see, you're actually going to be paying hundreds of thousands of dollars in taxes if you sell your home and don't reinvest, right? So, there is an exclusion for single single people, ## How Capital Gains Can Inflate Your Income on Paper [08:30] right? you get a $250,000 off. So off of that $1.1 million, you take off $250,000. So you're left with $850,000 in profit. If you're a married family, right, it's going to be about $600,000 that you're going to be paying taxes on. Okay? So just keep that in mind, right? But the people are like, "Okay, well, you know what? I made a good profit, so I'm okay with the taxes. That's fine, right? The taxes are an issue, right? because of of course you don't want to be paying that much in taxes, right, off of kind of something that you have poured your hard-earned money into. But the bigger problem is that even with the exclusion, if you are a married couple, your income is increasing by $600,000 for that particular year. Okay? So while your income from your job might be $200,000, your capital gains, right, is going to show as $600,000. So, your overall income for the year is going to be set at $800,000. Okay? And you're going to pay taxes on that. Right? Now, I know that there is this old time saying, cash is king. But in today's world, it's not, right? That's not the case. If you are a $200,000 family and your income obviously goes up to $800,000 in the year that is important for your student, right? You will lose your financial aid. Right? Now, a lot of a lot of people are going to ask, well, what is the appropriate year, right? The the kind of critical tax year for students is two years before their graduation date. So, if your student is graduating this year in 2025, right? Then the tax year they're going to be looking at is the 2023 tax year. If they're going to be a senior next year, they're going to be graduating in 2026. The the critical tax year will be 2024. So if you are thinking about selling and retiring and keeping that cash in your in your accounts, right? Then you want to do it in a year that is not the critical tax year for your student. Okay? Again, if you do do this and it happens, that's great, right? Because again, you made a profit. But you have to understand that in the eyes of the financial aid offices, they're not going to look at it kindly because they see your income at such a high level. Okay? Oh. For some reason, we have two of these. I'm not sure why, right? Um, but again, make sure to plan. You want to make sure to to sell, right? Or buy or do all those different things when it's not the critical year, right? If you do need to sell, right? What is going to happen with the proceeds, right? That is a very big question. Now, a lot of families are very savvy, right? They already know about kind of like the like like kind exchanges, right? the 1031 exchange where if you buy a house or if you sell your house, right, and you reinvest in another house, then the taxes are offset, right? There's also qualified opportunity funds, right? Now, these can be anything about like, you know, environmental conservation or this or that, but they are funds set up to better society, right? You can go ahead and invest in those so that your money can grow in there. You could also think ## How to Offset Gains or Use Reinvestment Tools Like 1031 Exchanges [11:30] about offsetting gains with losses. Right? Now, I'm sure there's a lot of people out there where your stock portfolio, there is that one stock that you've been waiting for for the last 18 years to try to go up and you just have not seen it make any movement. It is a loser, right? It's not going to ever change, right? You might want to get rid of that stock, take the loss so that it offsets that gain. Okay? But reinvestment is usually the path that most people take so that they don't have to pay a huge amount of taxes and their capital gains do not show as much on their tax return, right? Because if you reinvest the capital gains portion, well, you don't have any capital gains for that year. Okay? So, keep those things in mind. Okay? The other area that I I hear a lot about is like inheritances, bonuses, and commissions. Okay? Now in the best case scenario if you could control everything I would say I don't want any of these during the critical tax year right but for again life happens right you cannot kind of control when you get an inheritance uh for a lot of people they don't have control of when they get their bonuses when they get their stock options when they get their commissions it's all run by the company it's on a set deadline right but there are some ways to make the best of these situations Okay. So, let's talk about inheritances first, right? So, you know, a long-lost uncle leaving you a gift, right? Or, you know, ## Inheritances: Why Timing and Recipient Matter [13:00] grandparents pass away, great-grandparents pass away, right? Uncle Bob, right? Whatever it is, right? These are things that happen a lot, right? Um, now there's a couple considerations to take into account here. The first is who is the inheritance going to, right? If it's going to the student, it's going to be a bigger problem for financial aid purposes, right? If it's going to be a parent, it's less of a problem. And here's the reason why, right? If a student all of a sudden is sitting on a million inheritance, right? This the colleges look at that million and see that, oh, well, we can take 20% of that for the purposes of college expenses. So, they can take $200,000. Now, if let's say a UC was going to give you money and they were going to give you a full ride, but all of a sudden you have this million-doll inheritance and now you have $200,000 that they can use towards college. Well, you just paid for college yourself. They don't need to give you anything anymore because the cost of going to a UC is roughly around $180,000. Okay? Now, if it's a parent asset, it is assessed at a lower value at 5%. So, even if it is a million, right, then it's only $50,000 worth. Now, if they were going to give you a full ride to, you know, UC Berkeley, let's say, right? Well, that's around $45,000. Now, you have $50,000 that you can split over over four years. So, that means that they can take $12,500 each year, right? So, your net cost will be around now 32 $33,000, right? You might or like you're you're kind of the net aid that you would get would be around 32 $33,000. So it gets reduced a little bit but again at the end of the day it's a less of an effect as if or if it was the students. Okay. So what you do when you hear about you being kind of like oh uncle Bob left you something right? Aunt Sally left you something. Right? What you do in like the next like you know two three four five six months is going to change what your payments can be in college. So it's very important. So listen up closely. Okay. So again, it's all about planning, right? The for inheritances, right? The best way, the best thing to do is to take it out of the equation for the critical tax year. Okay? Now, what does that mean, right? Well, inheritance and kind of like it depends on how things are being kind of, you know, divided, right? But if it's going to probate, which is kind of like it needs to go to court, the court needs to decide how things are going to be split up, well, that takes a long time. Sometimes it takes months and even years, right? Uh but at the very least, let's say that it's not in probate. There was a very straightforward kind of like, you know, last will in testament, right? And it says, you know, my granddaughter Sally who's going to college next year, I want her to have $250,000, right? You can say, "Thank you, grandpa. I'm going to wait until the next tax year." Okay? So waiting until the after we pass the critical tax year will help immensely because that ## Student vs. Parent Assets... What FAFSA Really Sees [16:00] asset will no longer be there right uh for the purposes of the first year of financial aid possibly right now in future years will it affect it? Yes, but it's going to affect it to a a lesser uh kind of a lesser degree because colleges once you're in college they're a lot less strict about the process after you're part of their family. Okay. But right if it happens the first year that critical tax year it will affect you and that effect will continue on in years 2 3 and four. Okay. The other thing is understand what you are going to inherit, right? A lot of people are like, "Oh yeah, the cash value. I just had a family and they are actually getting an inher inheritance this year, right?" And they I said, "What are you actually getting?" Right? And they said, "Oh, well, like the cash value of everything we're getting is like a million dollars, right?" And I'm like, "I don't care about the cash value. Tell me exactly what you're getting." The reason why I wanted to know exactly what they were getting was because there are things that are non-reportable, right? One of those non-reportable things are retirement accounts, right? Another thing that is non-reportable is your family home. So, let's say that you know, Uncle Bob or Aunt Sally bequeaths unto you their their home and you now make that your family home. That is no longer reportable even that on the FAFSA, even though it was an inheritance that was given to you. Okay? So if you move out of your home, move into Aunt Sally's home, that will make that now your family home and you're all set. Okay? So you need to understand exactly what you are getting, not just the cash value, right? Because there are certain types of retirement accounts, certain types of stocks, certain types of securities, this and that that are not reportable. So keep that in mind. Okay? Now, bonuses and commissions, right? Sometimes there's things that can be done, sometimes there's not, right? Especially in the case, right? I live in the Bay Area. I I've talked to a lot of families that are that have Silicon Valley compensations as I call them. Right? Usually what it is is base salary plus bonus plus stock options, right? Unfortunately, at most of these companies that they do not give the company any discretion about when they receive their bonus or when their stocks vest or when they receive their stocks, right? So that is why we have to be careful about how we receive things. Right? But there are slight things that you can do when it comes to bonuses and commissions. Right? Again, right? I've seen a lot of families where they like their base salary is like $250,000, right? Their bonus is like I don't know $400,000, right? And then uh or like let's say their bonus is like another $250. So they're at like half a million and then their stock options are like $600,000, right? So there's a there's a huge situation where they're paying taxes on like a million dollar plus, but their cash flow is actually only 500,000, which leaves a lot of people cash strapped, right? Um, but the one thing I'll say is this, for companies in ## Bonuses, Commissions, and Stock Options... The Tech Family Dilemma [19:00] Silicon Valley, there's nothing you can really do about your bonuses and commissions. The only thing that you might want to talk about with your company is are there ways that we can receive bonuses in other ways, right? And again, I thought about the different ways that people can get them. And I was like, there are different ways that people could get bonuses that aren't necessarily need to be reported, right? Because they're called fringe benefits, right? So, here we have like cash, vacations, meals, lodging, theater, or sports, right? Uh tickets, and securities, right? Again, some of these do need to be reported, some of them do not need to be reported. But if you're a huge, I don't know, I live in the Bay Area, so like a Golden State Warriors fan, 49ers fan, Giants fan, and you ask for 10 years of season tickets. Well, that might be your bonus, right? Um, but again, there's sometimes there's very little that we can do here. The reason I brought it up is to show people, I understand your situations, right? There's a lot of families that on paper make a lot of money, but in actuality, when it comes to cash flow, that's not necessarily the case. I've been able to help those families get financial aid even in those situations. Okay, the third piece, retirement accounts, right? We're going to talk about retirement accounts because I've seen too many people dip into them, right? I get it. Life happens. There's emergencies. We need to get money from somewhere. We need cold hard cash, right? The only place that we can think of is retirement. But let me tell you why this is the worst thing that you can possibly do if your student is in that critical tax year, right? The first is right obviously we don't want to be dipping into your retirement account because that's for kind of like later on in life, right? Um so uh we want to kind of understand what it means if you do dip into your 401k or your IRA, right? So on top of the income tax that you will pay on the amount that you withdraw, you're also going to be subject to a 10% penalty for early withdrawal, right? So this is what it looks like. Okay, another example to make it easier for you guys. Your income is 200k. You decide to take 50k out of your 401k. Your income will now be considered at $250,000, right? But you also have to pay taxes on that 200 on that additional 50,000, right? So whatever percentage that is, right? Let's just call it 20% for ease. So that's going to that's going to take another what 10 grand off, right? And then you also have to pay a 10K penalty, right? The 20 or like the 10% um so this actually be should be 5K, right? The penalty is 10%. Right? So that's another 5k off. So while your income is going to be calculated at 250,000, the money that's actually in your pocket is actually only going to be 235,000. That's it. Right? So every step of the way, if you take money out of your retirement account, you are losing money. Even before you pay for anything, you've already lost 15 grand. Okay? So that's the worst way that you could go about taking money out, right? There's other assets that you can use in your life. And again, I understand if that retirement asset is the only asset you have, but if you have a family home, a heliloc might be the most taxefficient ## What Are Fringe Benefits and How They Could Help [22:00] way because the interest payments on your HELOC are also taxdeductible in a lot of situations, right? The other thing I always tell parents is your retirement is yours, right? You did not save for retirement so that you could pay for your kids's college tuition, right? So, let's try to save it to the best of their abilities, right? There's also other loans that you can take out against securities that you own or life insurance that you have, right? But again, the kind of retirement is the last place you should be pulling from. That's where you're going to get dinged the most. Okay? Now, again, I've been able to help families in all different types of situations. retired families, families that think they have, you know, VA benefits, but they're they're not full VA benefits. I've been able to help families that are higher income, lower income, right? Uh that own businesses, don't own businesses. So, I've seen every situation under the sun. Okay? So, if you feel like you have a little bit of a complicated situation or if you feel like you're not going to get anything, right? It's like, oh, well, you know, I'm probably not going to get anything. Well, then this is perfect for you because I will tell you at our first meeting if I can help or not, right? And I've turned away hundreds of families because it's like, well, I can't really help in your situation. Your situation, I don't need to help, right? I'll also tell you if I don't need to help you, right? Um, but again, it's a free consultation. Show up, right? We'll talk and then we'll see what happens from there. Okay? But I just wanted to show you some of our results, right? This family, right, around 350. I was able to get their family around $30,000, 35, 37 at different schools, right? I was able to save this family close to about I think it was right around $40,000 a year at a UC, right? And this family they make they make over $400,000, right? And I was able to get them $42,000 at Baylor. Okay? So the results are real. They're happening all around us, right? But a lot of people just kind of turn a deaf ear and kind of like don't think that it will happen for them, right? You don't know until it happens. And another thing I tell parents is, well, there's no situation where your family loses because we have a full money back guarantee, right? So, if I'm not ## Why Tapping Into Retirement Accounts Is the Worst Aid Move [24:00] successful for your family, well, you get your money back, right? And if I am successful, well, then everyone is happy. Okay? So, I want to make sure that I kind of open up for some Q&A, right? So, if you guys do have questions, go ahead and start putting them into the Q&A or into the chat, right? But I did want to make sure that you guys have have multiple ways to reach out to us. Okay? So, the QR codes there, there's two different ones. The one on the right is for our college coaching programs, our college app intensive, right? And we also have a college application service which is a longer term program that helps students with their essays all the way until the fall. Okay. If you're interested in our financial aid edge program, please you can go ahead and use the QR code there or you can text money to 949775865. You can also text college to that same phone number and get more information about our programs as well. Okay. But if you guys do have questions, I'll kind of open it up for that and then we can, you know, answer them and then, you know, we'll we'll end off for the day. Okay. All right. So, just waiting for those questions. Um, one of the things that I do suggest is that uh for families that have not kind of seen us about kind of like college coaching or college admissions, right? We just uh just two weeks ago or was it last week? No, it was the week before. No, it was last week. Just last last Saturday, right? Not or actually two Saturdays ago, we had our uh California College Summit. Okay. So, at our col California college summit, we had a lot of our different coaches talking about different pieces of the puzzle, right? We talked about kind of, you know, admissions trends. We talked about academics, we talked about kind of the importance of, you know, showing uh your personal flare in your activities. We talked about uh all these different pieces. We also talked about financial aid. So, if you're interested in in kind of getting the replay of our summit or learning more about our summit that we just had, uh you can also reach out to our team uh with that uh college uh or that QR code on the right right to get more information and possibly get the replay about that. They might still be working on cutting the replay to make it look a little bit prettier, but uh we should be close to done with that. Okay. All right. So, I don't see any questions, right? Uh, one of the kind of things I will say is that uh, we I I wasn't able to prepare for today, but we will be having a little bit of a Memorial Day kind of like sale next week, right? So, if you are interested in kind of talking to us, make sure you sign up for a consultation so that we can get you in for that or you can go ahead and send me an email um, and then I can try to find a time for you that works for us uh, in the next week or so. Okay. Uh, but our email, I'm going to go ahead and put it in our in the chat here so that you guys have it. Um, but it's just finelock.com. Okay. Um, but it's only going to run basically until the end of next week, right? So, get on kind of like getting that consultation booked. If you can't find a consultation spot, go ahead and reach out by email. I will ## Smarter Funding Options (HELOCs, Life Insurance, Securities-Based Loans) [27:00] find you something whether it's earlier or later. Okay? All right. Thank you guys for joining me tonight. If you guys do have any other questions, uh, reach out to us here in the QR codes or text us so we can provide more information. Okay, it is getting warm out there, so everyone stay cool. And then if you guys, uh, need the replay, uh, we'll be posting about that in just a little bit. Okay, I'll leave this up for a little a couple minutes so that people can take a screenshot or do what they need to do. And I look forward to seeing you guys next week. Okay. All right, everyone. Have a great night. Bye-bye.