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Cash Flow Unfolded With Chris Miles

Episode 421: Cash Flow Unfolded With Chris Miles

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REIS 421 | Cash Flow Unfolded

 

Financial advisors are really just salespeople in suits, and there are things that they are not telling us. A cash flow expert and an anti-financial advisor, Chris Miles is on today’s episode with Mitch Stephen to reveal those things with us and how we can get our money out and work for us not only once but twice. He shares with us the acronym CRAP (Can’t Retire Anytime Properly), infinite banking concept, mutual funds, and the key difference that help create people’s freedom. Join Chris and Mitch in this conversation to learn more about how we can control our own future and make the kind of returns that make sense as cash flow gets unfolded.

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I have Chris Miles with us. This guy is a cashflow expert and he’s an anti-financial advisor, which I like a lot. I like anything anti-traditional because the way I look at it is if it isn’t broke, break it. He’s a leading authority on entrepreneurs, entrepreneurship, and professional. He teaches professionals how to get their money out and working for them. The Chris Miles Money Show has been featured in US News, CNN Money and EO Fire. He has been proven to help people get their money out and working for them. He’s going to teach us how to make your money work for you twice. Chris, how are you doing?

I’m fantastic. I’m glad to be on here.

We’re running rough now. I don’t know why. Sometimes it’s firing on all cylinders, and other times I have trouble getting a word out of my mouth or something. It’s one of those mornings, but we’re going to get jumped into it one way or the other and get it going. I like to pay homage to my sponsor, TaxFreeFuture.com. If you do not have a tax-deferred or tax-free account in which to grow your finances, please check out TaxFreeFuture.com. There are 37 little video vignettes. I can show you how I’ve taken the minimal investment of $250 at the time, and how I never put any more money into these accounts and took them into accounts that anyone would be proud to have. Check it out. You will not believe what your financial advisors are not telling you. That’s a good segue to you, Chris. What are our financial advisors not telling us? Why are you an anti-financial advisor?

When I was on the show last time about a year or so back, we were talking about the fact that financial advisors are salesmen or saleswomen in suits. It’s not that they’re trying to do anything wrong. They’re not trying to hurt you or anything like that. They’re trained by institutions that are selling you CRAP. It’s an acronym for Can’t Retire Anytime Properly. They’re telling you that there are these big returns. I used to be there. In 2002, right after 9/11, I joined being a financial advisor. I did that for four years. The reason I left in 2006 and went more of the real estate route and following more alternative investments was that when I looked at real numbers, it was dismal. It was depressing. You’re always taught and trained that the market does 10% or 12% average for the last two billion years since the dinosaurs roamed the earth and all that stuff. In truth, the S&P 500 only average a real yield of about 7.4% to 7.6%, depending on the day.

I knew that somehow. My favorite thing is I get off people’s money at 8% or 9% or 10%. I give them this fantastic piece of collateral. They’d be better off if they got my collateral. Fortunately for me, no one’s ever gotten my collateral. They’re telling me, they’re making 15%, 16% rate of return in the stock market. I said, “Okay, so you’ve sold.” They’re like, “No, we haven’t sold.” You haven’t made crap if you haven’t sold because it’s all a pipe dream until you sell. The question is, when are you going to sell? Are you going to sell while it’s a 14% ROI?

The last ten years have averaged about 14% real return, which means that if the 30 years has been 7.5%, that’s the equilibrium where we’re headed. We’ve got to come back into balance again. It would be the worst time to try to be in the market after it’s been so good for the last ten years.

I would say like right now, go ahead and sell. Make your 14%, 15%, 16%. Give it to me at a flat 10%, and then you’ll average out somewhere in the next 5 or 7 years at 12% or 13%. That’s almost double or way up there from the average 7.5%.

Here’s the other thing that people don’t consider when they look at it. This is what got me out of the industry. I’m selling a bill of goods here because 7.5% is the average of the market but remember, your fees have to come out. They don’t factor that in. Even if you invest in the S&P 500, you still have to pay fees. You’re lucky to maybe pull off a 6.5% return.

That’s not even counting the fee deduction.

That’s just the return of the actual S&P 500. You’re down to 6.5%. Unless you’re investing that piddly amount in a Roth IRA, which they won’t let you put much into anyways, you’re going to pay taxes later. If you’re dumping money in your 401(k), which matching your 401(k) only adds an extra 2% to 3% compounded return a year. That’s it. If you were about 6% a year, you’re maybe getting 8% or 9% with a full company match, and then you have to pay taxes on it. Even with a company match, you’re lucky to get a market return.

Financial advisors are really just salesmen/women in suits. Click To Tweet

You then have to know what the company says, and maybe the company is not paying attention that much.

Most people never even get close to market returns in their 401(k)s. The truth is you’re lucky to pull off 4% or 5% average return a year after you pay taxes and everything else. That is why advisors are telling you, at least the ones that are more up to speed with things. Some still go by the old, “You pull out 4% rule.” That was old numbers back when there are higher interest rates. There are low-interest rates right now including the bond market. Those only live on no more than 2%. Think about it. Even if you happen to save up $1 million, which is hard when you start throwing those numbers, you’re only living on 2%. That’s $20,000 a year. You retire below the poverty level as a millionaire. That is the problem with financial advising. The returns aren’t enough to get you to where you need to go.

They are certainly not in a hurry. They’re always like, “At 65.” Screw 65, I want to do something while I’m 50, and still can climb trees, jump off of mountains, crawl back up and do it again.

I didn’t mention inflation, did I? If the real rate inflation is not 2% like they’re trying to tell us or convince us.

It’s at least 3% if it’s not more. Look at a loaf of bread and a steak down at the local grocery store. I don’t even need a calculator to know it’s over 3%.

I would say it’s at least 4% or 5% a year rate of return. That means your lifestyle has to double about every fifteen years, give or take. That’s not too unrealistic to say, “I have to pay twice as much money now than I did back in 2005.” That’s not too far off the case, with everything else, with all the lifestyles, goods foods you mentioned, and all that stuff. When you factor all that stuff in, now you’re saying, “If it is 4% inflation and that’s it. If I’m only making 4% or 5% after taxes with my stock market returns, I’m never going to be able to retire.” That’s true because you’re just breaking even. For example, somebody has a twenty-year retirement goal to live on a $60,000 a year lifestyle now. Factor in for inflation, you’ve got to save up about $8,000 a month. That’s about $100,000 a year you’ve got to save up so you can live on a $60,000 a year lifestyle, then you have to do that for twenty years straight. It’s not happening that way. That’s why people are banking on Social Security, even now, even the Baby Boomers. They’re moving into retirement. They still need Social Security because of the retirement they have, unless they die quickly. Let’s say hope for COVID. They kill them off faster, they’re going to be there.

That’s the other thing. Social Security was never meant to live off of. I don’t know where anyone got that idea. It was to supplement an old person for their prescriptions and some doctor visits. It wasn’t for people to live off. I don’t know where people got in their minds that you’re supposed to be able to live off of Social Security. You were supposed to do something for yourself in your entire life. You were supposed to get off your ass and do something. The world is going crazy.

From my experience as a financial advisor, you need every dollar you can get because if you run real honest numbers, you’ll start to realize, “This is not working. This can’t happen this way.” It’s the same thing as I showed somebody. They were a young couple. They’re about 30 years old each, 29 and 31. I said, “Let’s look at what you’ve done.” They’ve already started to stuff money in their 401(k)s. They were trying to not quite max fund it, but they’re getting there. They have a low lifestyle with their income. They’re putting away $3,000 a month in the savings, outside of the stock market, whether their dumping in $10,000 a year in their 401(k) plus a match.

I ran the numbers. I said, “Let’s look at this in the next six years,” because they have a ten-year retirement goal. They want to have $100,000 a year retirement goal. Even six years out on their 401(k), they would only have about $400,000 if they could even get through the money, which they can’t because they’ll have to wait for 59.5 without penalties. Even if they could get to it, they would have only about $300,000 after taxes. You live on 2% of that, that’s $6,000 a year. I gave them an example. I said, “What if you bought an investment property like a turnkey property.” It’s something simple because they’re starting out young, getting and going with a little bit of money. I was like, “Start doing that.” They start buying about 1 to 2 properties a year with the extra cashflow they have and reinvest in the cashflow. In six years with the same exact scenario, the difference was they could have about $3,500 to $4,000 a year in net profit. If you look at that number, that’s over $40,000 a year versus $6,000 a year in their 401(k) with a company match.

Also, that house is keeping pace with inflation because it has appreciation and it’s going right. Your balance isn’t getting paid down so it’s creating a spread. You then get some tax benefits that you’re probably not even figuring into this right on the sketch, and then there are games to play and things to do. You might get lucky because who knows, you can’t get hit by the money truck if you’re not standing in the middle of the highway. When you have all these properties, there’s always that chance that the one corner that you bought out in the middle of nowhere, it’s now not a corner in the middle of nowhere. Twenty years later, it’s $1 million corner. You can’t have those things happen to you when you’re not in the game when you’re not standing in the middle of the road.

REIS 421 | Cash Flow Unfolded

Cash Flow Unfolded: Financial advisors are trained by institutions that are selling you CRAP—Can’t Retire Anytime Properly.

 

One thing that people can do if nothing else, tell me what you think of this, at least learn how to loan money on collateral that you understand, whether it be Corvettes, mobile homes, lots and land, houses or small apartment complex. Figure out to loan on because then you can put yourself in a position to where, “I’m only going to loan $0.60 on the dollar. If I happen to get the property back, I made an extra 40% on top.” Not that that’s the goal to take houses away from people or anything, but I’m saying, crap happens. Sometimes you are the beneficiary of some good stuff if you know how to play the game right.

That’s a great point. Look again at what the traditional stuff had done. When I was an advisor, I would tell people that the number one investor to build credibility in the stock market were banks and the financial institutions.

What do they do?

That’s the thing I never went to the next step to say, “What money are they investing?” They’re not investing their own money in the stock market. They’re investing your money in the stock market. That’s why they’re the number one. As you said to your point, what are banks actually doing with the money? They’re doing exactly what you said. They’re taking their money. They’re loaning it out. We’re telling you, why don’t you become the bank? Why don’t you do the same thing that banks are doing to make money?

Our sponsor, TaxFreeFuture.com. You won’t believe what your financial advisors aren’t telling you. What they’re not telling you is that there are better ways to make money, but that’s what they’re doing. You need to stay out of that. We loan money to people and we have collateral that if they don’t pay us, we get rich. They’re loaning out your money. If you drive to any big town USA, population 1 million, 2 million, whatever, look at the tallest building and look at what name is on top of it. It’s always a bank. They’re taking OPM, Other People’s Money and they’re loaning it out. They’re making an arbitrage. I had so much private money at one time. I couldn’t buy enough houses using my underwriting. Just because you have a lot of money available, it doesn’t mean you start making crappy deals and adjust your underwriting.

I stay with the underwriting that I had twenty years ago. I still have it. It’s the same exact deal. If it doesn’t fit, don’t buy it. I couldn’t find enough houses because I had too much private money. I opened up a hard money loan company. I started loaning it to my competitors who found deals before me. I averaged loaning 58% of whatever that property is worth. That’s what I average in a first lien position loan. It’s a safe loan. I make 15%, 16%, 17% on those short-term loans. That’s not passive. I have to go out and look. If you want to make 16%, 17%, 18% on your money and be in control, it’s probably not passive. If you want to make 8% or 9% or 10% on your money, you can probably find someone like Chris or myself who has a reputation and we’ll give you good collateral. It is pretty passive. Do you loan private money?

Yeah.

I was throwing my hat in the ring, but the goal of this show and my whole podcast is to define what works for you. If I work for you, great, pick me. If Chris works for you, pick him. I don’t care who you pick, but pick somebody and start taking control of your own future and making the returns that make sense without killing yourself. If you want to go into the business that we’re in, we’ll teach you that too but it’s not passive.

I love the point that you made too. You talk about the underwriting. You’re like, “I get money. I always get too much.” The cool thing is if you get too much, and you say, “I’m closing this fund. I’m taking in more private money. I’m going to master what I have right now and then do it.” You’re not going to sacrifice your underwriting guidelines to do bad plays. You’re going to make sure that worst case you shut the money off. Think of a mutual fund money manager. Do they ever shut the money off? Never. They know this. They know that they’ve done bad stuff. You’re going to see a big sell-off with the stock market because of the fact that many of those companies bought into the hype because they were fearing of missing out on Apple and Tesla.

Tesla’s numbers are so ridiculous that there’s nothing there tangible to justify their stock price skyrocketing, and most of the tech companies too like Amazon and all these companies. You’re starting to even see like we’re starting to see a little bit of a sell-off. That’s happening because of that fact. Now the money managers are saying, “It’s almost the end of September. I can’t show I have this dumb stuff on my record that I bought these Apple and Amazon stocks because that’s what dumb people buy. I’m going to sell off.” All the people left Apple and Amazon stocks are going to be whole none screaming down the rollercoaster. You don’t do that. They do. They’ll keep buying crap because they know they have to keep using your money. If you keep throwing money at them, they’re going to buy more crap.

You have a hundred percent chance of failure if you follow the mainstream traditional financial advice. Click To Tweet

Just to be clear because I don’t want to get any trouble here. I don’t have funds. I don’t comingle any money. If I have a $100,000 house, I’m borrowing $58,000 on average. I’m one person, I’m giving one lien on that one piece of collateral. There are only three parts. There’s the collateral, there’s the borrower, and there’s the lender. The lender gets the first lien and I owe it. If I don’t pay him, he gets the house. If you don’t like the house, then don’t loan them money. If you don’t like that collateral in exchange for whatever money, then don’t do it. That’s why I borrow very little against my houses because I try to make it a no-brainer for people.

It’s awesome leverage.

That being said, I’ve never given a house back to anyone. I’ve never been foreclosed on. I never filed Chapter 7 or 13 or anything, but my deal is simple with my private lenders. If you have $400,000 to get out or $1 million to get out, it’s one deal at a time. I need $60,000 for this house. It’s worth $120,000. Do you want to do it or you don’t want to do it? Now we only got $340,000 left to get out. We do one deal at a time. They all stand on their loan. It’s pay as agreed or get my collateral. My promise is if I could ever not pay for whatever reason, which hasn’t happened, I will walk my position on that property over to you. You will not chase me. You won’t have to file foreclosure. I’ll walk it to you. It’s never happened but that’s my promise.

As a result, do you even have to have accredited investors?

No, I don’t. That’s why I want to make sure no one sees. I have $26 million out on the street. Most every loan is secured by one piece of real estate. I never borrow over 65% of whatever I can sell it for at the time of the loan. That’s why it works. That’s why I’ve been in business. That’s why people like you and me stay in businesses. We don’t overleverage. Just because we have excess amounts of money we could use, it doesn’t mean we go out and do stupid stuff with it.

That’s my point. That’s what you’re not seeing in the traditional world. You’ve got to get away from that stuff if you want to have a chance of success. I guarantee, there’s 100% chance of failure doing the mainstream traditional financial advice. I’ve run the numbers. It’s impossible to make it work.

There’s never anything as no risk. It’s against the law for anybody like me or Chris to say that I’ll guarantee you 10%. I can’t guarantee that this planet will even be here tomorrow. I can’t guarantee anything. Given that notion, there are no guarantees. Who knows? I don’t know. A pandemic might happen. Who knows?

At least you have a real asset. That’s the difference.

You know what’s going to happen in the worst-case scenario.

You have something that’s tangible and it’s real. People can go and touch it where you can’t touch a stock. You can even say, “I have an ownership in this company?” No, you don’t. You’re buying a copy of a copy. It’s not even the master copy. It’s not the real thing. I always think of the Michael Keaton in Multiplicity. When he clones himself, but then the clones decide to make a clone of themselves and the guy is a total idiot. That’s what stocks are. It’s that clone of a clone. It’s a copy of the copy. It’s less quality.

REIS 421 | Cash Flow Unfolded

Cash Flow Unfolded: The problem with financial advising is that the returns aren’t enough to get you to where you need to go.

 

What’s the signature strategy that you like? What’s your signature? What do you do?

There are a lot of different things I do. When I work with clients, I work as an anti-financial advisor helping them create the plan and looking for different strategies and things like that. Your stuff is a great fit for a lot of my clients who want that collateral but they don’t necessarily want to become landlords. They want that freedom and there’s a huge market for that. The other thing I do is active because I’m semi-retired. I was able to get out of the rat race a few years ago. Now I work about twenty hours a week. I try to cap it right there. Although demand keeps trying to push it higher. The other thing I do is if you’ve ever heard the infinite banking concept, that sort of thing as you mentioned at the beginning talking about getting your money to pay you twice.

Rather than people save money in their taxable point-nothing percent savings account, I’ll say, “Instead, let’s get your investment money to stay here where it’s tax-free protected from lawsuits and creditors, even up to the millions. You can access that money quickly and get a much better return like 4% or 5% a year.” That’s inside of a whole life policy. Here’s the key, going back to traditional financial advisors, including traditional insurance agents. You do not want to buy that crap because most insurance agents are going to try to focus on what pays them. If you’ve tried to buy a traditional whole life insurance policy where it’s great, it builds up cash inside of it, the problem is that you’re going to pay fees for the first few years and have no cash.

It’s about 4 to 7 years to outrun the fees.

In most of the cases, it’s usually fifteen-plus years before you finally breakeven.

I was looking at one and I thought seven years was a long time.

You start seeing gain but by the time it catches up to what you’ve put into it like if you put in $10,000 a year for seventeen years, you probably have about $170,000 in a traditional plan. Mine, I do it differently. I minimize those costs and cut them all the way down, which most agents don’t do. I’ve had a license for almost nineteen years. I wasn’t used to handing it off, but every time I handed it off, there was always that person’s profession. They always needed the money, where I’m out of the rat race, I don’t. When I figured out how would I design it for me? How would I get the minimal cost to get a maximum ROI? You can get that money out the first year and going to invest it, and essentially make money in two places at the same time, because the money is still in there. They count while you borrow from the insurance company like you’re talking about creating leverage. You borrow from that bank and you use that to go and invest. You then take the returns and pay back towards that loan or that line of credit you get. What happens is that unlike a home equity line of credit, where you only pay interest, this one pays you tax-free interest at the same time while you’re investing, while you’re making money over here. You actually make an extra.

It’s almost like a home equity line of credit. You’re getting this benefit out of it. You’re living in the home, which you normally don’t have to pay for. It’s paid for now but you’re still living in it. You still get this benefit, but then you’re going to borrow against this so you can invest. You’re getting two uses out of this pot of money. It’s tied up in this pot called the house, but you’re getting a home equity line of credit. You’re putting it out here but you’re still living in the house. You’re like double-dipping. I love double-dipping. The scenario that you were talking about, I ran the traps on this about a year ago. It’s called be your own bank or something, where you bank and you buy insurance.

The problem was people like you and me or people who are dealing in hands-on real estate investing, we make such a high ROI from what we do. It doesn’t make any sense to do it. I couldn’t figure out what I was missing, but when they’re telling me all this stuff, they had all the graphs and charts and I was looking at all. I’m not the smartest guy in any room ever when it comes to this stuff but I have this intuition. I go, “Something’s not right.” I went over to my partner, Raymond Braun, who I’m partnered with on the hard money business. He was a managing partner of Coopers & Lybrand, which is now PricewaterhouseCoopers in Austin for fifteen years. He listened one time through it and goes, “Here’s the problem. You make way too much money to even think about doing that because you’re used to making 15%, 20%, 25%, sometimes 40% when you get lucky returns on your money.” These people are trying to help someone who’s struggling with how to make 2% or 3% or 4% get out of that 1% box at the bank.

The infinite banking concept, that’s the thing. There are different levels of it. Most of the people who do infinite banking do a better job than traditional life insurance people. I still run the same problem. You still get this extra cost coming out, but you can minimize those costs. For example, instead of losing 100% of your money to cost in the first two years, you could do it to where you get about 85% of your money in there within first two years. That’s the only cost. The net cost only happened in the first two years. After that, it’s a net gain. By year five, you have just as much money as you put into it, but then it’s exponentially growing beyond that. You minimize costs. You then get that extra leverage when you do invest because you cannot retire off these insurance policies alone.

If you’re going to buy assets, buy something real. Don't buy into paper that you can't touch, taste, or feel. Click To Tweet

It’s impossible. It’s the same thing I said about mutual funds. You can’t do off life insurance but when you use it with the investments, it’s like the type of stuff you’re talking about here. We start using it there and flowing the money back through. It’s becoming your tax-free super-charged savings account. It’s tax-free, make a better return, and it’s protected from creditors and lawsuits where they can’t access that money in most states. The cool thing is now you’ve got this extra protection, this layer that can make you more money by putting it back in your savings account to reinvest again. It’s flowing the money in and then back out. It’s always this flow, always investing it, billing and gaining those assets.

The river starts to build momentum.

I’ll give you an example. I ran a scenario for somebody doing a real estate deal. I said, “Let’s compare this to doing your normal savings account.” They’re going to use like $95,000 for the properties. That $95,000, if you put that money, they’re getting from the cashflow back to a savings account or wherever. After nine years, they’re back up to $128,000. Using the strategy I was using did the same thing. It wasn’t $128,000. He had yet $178,000. He made an extra $50,000 of gains because it’s tax-free and it’s earning a much better return than point-nothing percent in the bank, which is even worse now.

I’m not even sure how solid banks are these days. I get a kick out of it because I create my own notes. I buy a house, I fix it, then I sell it for 2x and I seller finance it. They called me a nontraditional lender. I said, “No, you’re nontraditional.” People have been loaning money to their neighbors since caveman times. I’m traditional. You’re not traditional, but you’ve named me nontraditional because you’re not selling me. You don’t want me to be traditional. You’re selling this nonsense where everybody goes to this big place in New York and they have all these computers and that’s traditional. No, traditional was, “I’m going to loan you 50. If you don’t pay me, I get your house. Let’s shake hands and sign this piece of paper.” That’s traditional.

We refer to it as mainstream like mainstream stuff. When is mainstream ever been good? Mainstream money is definitely never been good. Mainstream health has got us all sick as Americans. We’re like, “I was told bread was the biggest food group of the day. Now I’ve got a leaky gut and I can’t even lose weight. I’m dying of diabetes, heart disease and all this crap because of mainstream advice from professionals.”

“That diet we told you five years ago, we’re changing it again. It’s not right. It’s so wrong.”

We’re trusting experts about a virus. We can’t even trust the experts about the daily food groups. That’s the crap we deal with. We can’t trust experts with the financial realm because they’re all incentivized by money. 

You’re making a great point though. I got where I’m at by using common sense. I’m not a smart guy. I don’t test well at all. I can’t test. When I test, it’s like, “Here’s the question, answer A, B, C, or D.” I’m like, “If you tell me more about it because it could be almost any of these answers, but you didn’t tell me enough.” I always get screwed up, so I common sense. In my common-sense way of thinking to be independent at some point in my life, I knew I was going to have to have my day job. If I want to have my day job, I was going to have to get on some side hustle. I was going to have to become an expert at something that would maybe in my wildest dreams outrun my paycheck, which turned out not to be that hard. When I got out from under the brainwashing that I was under, it turns out that outrunning, my $3,000 a month paycheck wasn’t a challenge hardly at all.

It took me 6, 8 months to find this thing, to bone up on it, to get sure of myself, to convince my wife and my parents and everybody that I wasn’t looney because they’re all in the box. I’m trying to tell them, “Let’s look out of the box.” “No, we don’t even want to look out of the box.” I said, “Look over there. There’s some stuff going on.” “No, we don’t want to look out of the box.” You then finally get up the nerve to go against the grain, against the mainstream. I replaced my job in 6 or 8 months. I don’t remember exactly but it wasn’t that hard.

Mainstream results create mediocre broke people. I guarantee if they’re reading this, as they listen to your show or as they listen to mine, they don’t want mediocre. They don’t want the same old results or the same old crap over and over. There are plenty of people like the Suze Ormans and Dave Ramseys of the world that tell you, “Pay off all your debt and save all your money in these dumb mutual funds. Someday you’ll be like us.” The truth is they don’t even invest in those things. That’s the thing.

REIS 421 | Cash Flow Unfolded

Cash Flow Unfolded: There are two places where people lock their money up, but they’re not seeing. One is their house, and two is their savings or retirement account.

 

Dave Ramsey would have completely lost his crapola with me. I bought my first hundred houses on credit cards because many years ago in San Antonio, you can buy a house for $15,000. You get that off of 1 or 2 credit cards and then you get a cash advance for $10,000 off another card and you do the rehab and then you sell it. You’d have $25,000, $30,000 in it and then you’d sell it for $60,000.

That’s why anywhere in the world is for free.

It got me divorced because I was not going to try to explain this to my wife, but I had $250,000 worth of credit card debt that I was going to the mailbox before she would see it. You learn lots of things like that. I learned quickly that your wife is going to find out about everything. Don’t even worry about it. Don’t even try to hide it. Thirty days after we’re married, we’re about to get divorced because I racked up $250,000 worth of credit card debt. It didn’t seem to matter to her that I had $500,000 worth of free and clear houses. That was irrelevant.

It’s like stepping over $1 to pick up that $0.25. It’s like that $1 doesn’t count. That $0.25 is what matters.

I looked at your bio before we’re going in. It doesn’t say that you’re selling anything but you offer something to people. What do you offer to people?

The main thing I always tell people is to follow my podcast. Go follow The Chris Miles Money Show because I teach a lot of these concepts there. There are a few people that will resonate with that message and say, “This is great.” There are some people I’ll reach out. If it’s good, I’ll hand-select those people. If they seem right, I’ll do one of two things. One either I work with them as a client like actual consulting or an advisor, but more as a consultant to say, “I’m going to look at your whole situation here, see what your stuff is doing, where your assets are, where you could find assets.” A lot of people don’t realize that they have them locked in prison. How can we unlock those assets, get them out, and get them working for you so you don’t have to keep working for money? That’s one thing I do. As I said, I designed those. I like common max ROI infinite banking plan. It is like, “How do we get that money working with coordination with all the investments and stuff?” Rather than a tug of war like, “You throw your money here or here,” it’s like, “No, how do we do both?”

My advice to people is to listen. If it makes sense to you even though it might be a little scary because it’s out of your norm, delve into it, call, do some more research and talk to people. You don’t have to do anything to listen to. You can listen and find out if something makes sense to you. What’s one of the primary places people have money locked up that they could do something with, but they’re not even seeing it?

There are two places primarily. One is their house or their home equity. Especially right now, this is the golden opportunity because house prices are high. There’s a bidding war going on right now. It’s incredible.

Interest rates are low on many loans. It’s like 2.75% or something. I don’t know.

Depending on the state, there are HELOCs you can get for sometimes around 3%, 3.25%, 3.5%. That’s cheap money. If you can beat 3.5%, congratulations, which we already know because we’ve already talked about this stuff, the kind of deals you do. People already do that and they’re buying real assets. I think that’s the key. If you’re going to do that, buy something real. Don’t buy into paper stuff that you can’t touch, taste or feel. Don’t buy your crappy Bitcoin. Don’t go buy into the stuff that you can’t get a hold of. It’s got to be something real.

Real tangible assets that pay you cashflow pay you real returns. That is going to be the key difference in creating people's freedom. Click To Tweet

Tangible like the house or a piece of property. If it goes to zero, there’s something definitely wrong and your money is not worth anything anyway. We’re all picking up guns and we’re going somewhere. That’s what I like to say. The day that this house zeroes out in downtown San Antonio, we’ve got problems. Your money wasn’t worth anything a long time ago. Heaven forbid, you were in the stock market because if this house isn’t worth anything, the stock market must have evaporated. It’s gone a long time before that.

Property is real. It’s something you can do. That’s one place. Definitely, home equity is a key and it’s cheap money right now. Number two is usually savings or retirement accounts or things like that. If somebody has a retirement account, I can’t legally tell them to cash out the retirement account. Here’s the thing 2020 has a unique year. Besides the fact that the market hit all-time highs, even though we’re in the middle of a recession. If that’s anything to tell you, this is a warning point. Maybe not that to be in the market. In 2020, if you’ve been affected by COVID in any way, shape or form, either you or immediate family members were ill with the actual virus or two, your job, your income, or your business was affected because of COVID, you can access up to $100,000 of your 401(k) or IRA money with no 10% early withdrawal penalty. If you’re not 59.5 yet and you’re saying, “I’ve got money locked up in these plans, but I have to wait until I’m 59.5,” the good news is you can get that money out up to $100,000, no 10% penalty, and you break up your taxes over three years. You don’t have to pay for all the taxes here. You break it up over three years even. It allows your money to work for you now. The markets are all-time highs, it won’t stay that way forever. I guarantee it will not stay up where it is unreasonable.

That opportunity won’t last forever either.

Possibly get your money away from the market, get away from gambling in those stocks, to then go into real tangible assets that pay you cashflow, pay you real returns. That is going to be the key difference in creating people’s freedom.

I had this one lady who has been loaning me money for a long time, over twenty years. She’s up in her late 70s. She surprised me about a few years ago when she comes and goes, “I’ve got another $80,000. I want to loan you.” I said, “You told me a month ago you were tapped. What happened? I don’t see where we paid anything off in bulk here.” She said, “I went and got a home equity loan on my house.” I thought that’s a pretty bold move. I would never ask people to do that because that’s a personal thing. That’s home. A lot of people got a stigma about it, “That’s the one thing I got.” My wife was that way with my house, “You’re not borrowing against our house. Can you leave one thing sacred for God’s sake, Mitch?”

She came in and I said, “What’s the plan?” She said, “I got this 3.5% or whatever interest rate, and you’re paying me 10%. I’m going to make the spread off of the money that was sitting there.” I thought that was a pretty smart lady. She had a long track record with me. She’s not waking at night worrying about any of that after twenty years. It does take a little different thought process sometime to take your home equity and do that.

It’s a hard leap for people because you’ve been entrenched in that mainstream advice of paying it off, which is what the banks taught you because they don’t want you to keep a loan with them.

They only want you to make the payments for the first half, then when it gets down to where there’s no interest due, now that’s a good time for you to pay it off.

That’s why fifteen-year mortgages are lower. They want you to pay it off faster. As any good investor, you want to get your principal back as quickly as possible so you can go and do it again and create velocity and acceleration of money. That’s not what we’re taught. We’re taught to do the opposite to fill in their little buckets.

I have always that struggle. It’s like, “There are five years left on this loan on this storage facility. Let’s pay it off.” That’s the only years that I’m not paying hardly anything in interest. It’s the only years, why would I pay it off now? I earned my way all the way down to the point where the payment is almost all principal, and then I’m going to pay it off early and give them a reason to celebrate over there. It’s a weird phenomenon of how it works. It plays right into the bank’s hands.

REIS 421 | Cash Flow Unfolded

Cash Flow Unfolded: If what you’re doing makes you feel like you’re working for a paycheck, then it’s a job that you’re earning every day with your anxiety and your frustration.

 

I think of a real-life scenario. I had a client that I worked with years ago. They came back to me ten years later. He said, “I’m in a different position. Here’s my goal. I want to pay off my own house in San Diego and my investment property in California,” which whenever I hear people say they have an investment property in California, I was like, “Sell it.” You haven’t seen the numbers. I guarantee it’s high equity and no cashflow and it always is. That’s even true on the whole West Coast for that matter. He told me his investment property. His goal was to take all the money and reinvest it to pay down his mortgage on both properties. That was a six-year plan. What it would do, that six years of finally paying them off, it would free about $4,500 a month. I said, “That property there, that investment property has got over about $500,000 of equity trapped in there and you’re making $200 a month. Sell it.”

You can make $4,500 a month and you only need to make one move.

That’s why I told him like, “Sell the property and get the equity out if you only made $400,000 after sales fees. Let’s say you sold it for less than what you hoped for, $400,000. Plus, you’ve got equity in your house, cash out $400,000.” It would only add about $1,000 a month to his mortgage payment, but he gets $400,000. I said, “Now you’ve got $800,000 to invest in.” Even if you only earn 10% on that money, that’s 80,000 a year. In truth, you’re netting over about $70,000 a year by not doing that. Here’s the cool thing. That $70,000, you take it and keep reinvesting it. Keep buying into these kinds of things like we’re talking on this show. When you do that for five years, his cashflow goes from instead of trying to free up $4,500 a month in six years, he’s now got over $10,000 a month of passive income after those same 5 or 6 years.

That’s why you need a second set of eyes sometimes because you’re too emotionally tied to your crap. I get my partner who says, “Here’s the spreadsheet of what I owe and what I’ve got coming in and going out. Where am I? What do I do with this? There’s like 900,000 things I can do. What’s the smart move?”

It’s always case by case. In your case, your smart move is going to your expertise and keep drilling. No pun intended but if you do oil and gas too, but you’re drilling and mining your own investments. You’re trying to create as much acceleration as you can. As well as creating residual passive incomes and things like that. It’s no different for the rest of us. Each one of us has our own unique recipe that we do. Every person has their own combination of what might be the right investments for them. One key point I teach is don’t do an investment that you wouldn’t want to have when you’re retired anyway. If it’s something that drains you or keeps you in fear, it’s not the investment for you. Even if it pays you lots of money, if you wouldn’t want to do that, even if you were financially free, that’s not the investment for you. That’s going to make you feel like you’re working for a paycheck. It’s a job.

That’s good advice. You’re earning that every day with your anxiety and your frustration. I want everyone to go to 1000Houses.com/miles. There will be contact information over there. There will be a link to The Chris Miles Money Show. Check it out. As always, all of us podcasters could use a like or a follow or something. That helps us a lot. You get over there and see if you can grace us with that move. Is there anything you want to say to people before we wrap it up, Chris?

I’ll say what I say to everybody. There’s more hope than you probably realize. You probably have more freedom within your control than you probably realize. You’ve just got to be able to see differently and reject the mainstream and start focusing on what has been proven to work since back in the days when there were farmers. It’s like doing the same thing that worked.

It’s like the cavemen, “I’ll let you buy these three rocks if you give me four rocks when you come back in a year.”

Principles always work, strategies change over time. If you follow the right principles with the right strategies, it’s going to work. That’s the key.

If it doesn’t make common sense to you, then you’re not ready yet. It should all fall in line when you talk to somebody who knows. It should make sense to you. They may not be advertising it in between your favorite show on TV, but it doesn’t mean it’s not right. We’ve been with Chris Miles. I’d like to thank you for stopping by to get you some Chris Miles. Check it out at 1000Houses.com/miles. You can probably get a consult with him and see if you all are a fit or not. If you’re a fit, he’ll let you know. If not, he’ll guide you one way or the other. You know how to find me if you need to find me. We’re out of here. I appreciate everybody. Bye now.

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About Chris Miles

REIS 421 | Cash Flow UnfoldedChris Miles, the “Cash Flow Expert,” is a leading authority on how to quickly create cash flow and lasting wealth for thousands of his clients, entrepreneurs, and others internationally! He has been featured in US News, CNN Money, Bankrate.com, and has a high reputation for getting his clients life-altering financial results in his company, Money Ripples.

After working as a traditional financial advisor and stock coach for several years, Chris came to a stark realization that the financial advising industry was not showing anyone how to quickly and safely become financially prosperous today.

After leaving that industry, Chris was able to retire when he was 28, and has since worked to teach his effective, unique strategies, for companies like Freedom Fast Track and Garrett Gunderson, and now Money Ripples, while exposing the popular myths around money that have kept so many from enjoying financial freedom and peace of mind.

Chris consistently practices and teaches small business owners how to do what no other financial advisers can or will – achieve financial prosperity, now and in the future, spending time doing what they love most.

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