What’s up investors? We’ve got a really cool coaching call with a little bit higher net worth investor today, 4 million. And I think it’d be good that a lot of you guys who are on the road to financial independence check out all the coaching calls and what I would recommend. And we have archived all this in our members site, which you guys can get free access to.
By joining the club at simplepassivecashflow.com/club. What I do is I arrange all of these coaching calls and I think there’s several dozen of them now in the archives, but we arrange them in terms of networks. If you’re a dude who’s still starting out half a million dollars in network, you start there and you work your way down.
If you’re already at 2 million, you start there and you work your way down and eventually you’ll find this call. 4 million net worth engineer, John. And then, it’s all part of the journey, right? One thing I will mention, I’ve talked to a lot of higher net worth investors, even those pass end games, which I define as four to $5 million net worth.
The reason why I call that end game is because any Bozel can invest four or $5 million and make a five, 10% of attorneys should be able to live off the bat and pass it off to your bone head kids. If you don’t teach them the right way to actually make money work for you. For money, trading time for money.
That’s what we don’t want. Yeah, if you guys join the club, you guys can get access to that. This simple pass a cashflow.com/club. And I’ll be out in Santo here a little bit. We’ll feed guys meet up in person, but check out all our email@example.com slash events. If you guys aren’t part of our family office group, basically these events are a chance for us to meet.
My self to meet you and you to beat me and get a good sense of who you are to see if you’re a good fit for the family office Ohana group, which is our inner circle. If you guys want more details on that exclusive blue go to simple passive cashflow.com/journey. But if you’re somebody out there who thinks that simple passive Castile community is the only group out there with high net worth accredited investors investing in this sort of way.
You’re right. There is that we are the only group. There are a lot of copy catters, but they aren’t that great in my opinion, because trust me, I’ve been there and this is why I created this group for this high caliber type of people. No. You cannot just mooch off of these pop-up events we have, right.
This is like your one opportunity to come and check out our community. If you really want that community, number one, go find it on your own or number two, join our family office group. Sorry, but we have always had these new investors coming in. If you take a look at the people who came through our last voyage trip, half of the people are family office Ohana clients.
And the other half is this revolving door, right? People will come in, they want to check out the group. They want to see if it’s all real. They want to see if I’m a real person. I get it. I would be thinking the same thing. But what happens is what most people will do is they’ll come in. They’ll like it, they’ll start investing, but they’ll need to put their head down, back in their work and make more money.
Eventually I would say four to five years later for most people. And if you’re $1.5 million net. You save 50 to a hundred thousand dollars to put two investments. You’re going to be financially free, probably in three to five years easily. If you implement, going into good deals, the tax strategies, infinite banking, super simple.
That’s why it’s simple, passive cash flow. And at that point, after letting that time go by, let it bake in the oven for three to five years, social connections with this kind of family office ohana group is going to be what you’re looking for. And you will probably join the family office group at that time.
But, I think this is where, what new investors do is they try it out, they jump into some deals and then they just have to go back and work and just let this stuff simmer over time, because this is not a get rich, quick stuff that we’re doing. It’s a way to get rich slowly.
That takes several years to get the momentum going. I started investing in 2009. And what a lot of people don’t realize, from 2000 to 2000 or 2009 to 2015, going from zero to 11 rentals. That was just such a slow grind for me at the time. Now, things are moving a lot quicker, network. Just money too. But what people don’t realize is when you’re in that era between, non-accredited investor status to two, to $4 million net worth, it’s a slow grind. But there are ways to accelerate, which is, building a peer network, which is why we have the family office group. But anyway, enjoy the show. Hopefully we can meet in person and here we go.
Hey folks, we’ve got another coaching call here with John Jacob Jingleheimer Smith. His name is mine too. And John’s got about a few million dollars net worth might be four, might be five. Once you get past 2 million, you’re just trying to get to that next shelf for just four and a half, 5 million.
And then I feel like the next sentence is wrong 10, just cause people are like double digits, but, we’re going to go through his personal financial sheet and see what problems he’s got and cause it’s probably something that you guys have. If you guys like these, please join the investor group at simplepassivecashflow.com/club.
And if you guys also like these go to join our family office group, where we do this with every single member and every, all the numbers each. But it’s more of an intimate group. We only have 80 people in there now. It is a closed group. Vegas rules what’s said in the family office group stays in the family office group.
But John wants you to give us some context. Tell us about yourself a little bit. Sure. I live in California and am married with three kids. I’ve been one of those guys that wanted to be a millionaire at the time I was 30, wanting to hit it in stocks, not in real estate and then lost it all.
So I had to rebound and it took about 25 to 30 years to completely rebound. Within that time frame probably bought and sold about 13, 12 to 13 homes. I’ve kept three of them. Two of them, three of them have rentals. I don’t have any rentals anymore. I’ve gotten rid of them all. We basically liquidated so we could buy a house in California because it’s really expensive.
But I think it was a good move because our house has doubled in the last three years. So from that perspective, I feel like it was a pretty good investment. Yeah, same thing. I say every time I put like a $5 chip on the hardware that it disappears every time, but when I finally get it, I tell myself that was a good move.
You just never know. So again, it’s a gamble, just like anything else, but it paid off in this case for now. Who knows what can happen in 5, 10, 15 years? You just never know what’s gonna end up happening. I’m a W2 worker but I’m a serial entrepreneur, always looking to find out the best methods, but ultimately right now where I’m at the reason I’ve connected with Lane was the passive cash flow.
We have some money in our banks and I’d like to just get it to work for me a little bit better. I found a couple of investment opportunities. Some are risky but they’re paying off and they’ve been paying off in the last year and a half, two years. So that’s been good, but.
And it’s been a pretty good pretty good return on that per month type thing. But I’ve been really cautious and only put $10,000 into that risk. That being said, I hate paying taxes. I hate paying taxes. I, and I hate paying the government and I hate paying them off you here in town for things that they do.
I’ll pay for things when they’re fair and so forth. But I feel like there’s a lot of things here that are just ridiculous. And anyway, let’s talk about how we can do this legally. So paint the picture for folks, net worth 3.9 million. If you guys want to check this out on the YouTube channel, you guys can check it on the YouTube channel and follow along as we go through the.
Cash on hand. Let’s go through the bottom left quadrant, salary and wages about 18,000 commissions and bonuses. What do you, is this mostly you or is it your spouse? How is this? I was just me. I haven’t included my spouse stuff. She’s a teacher as well. She doesn’t really contribute to this portion of it, although she does contribute heavily because she takes care of the kids and so forth.
But long story short was now this money is just mine. I’ve been fortunate enough. I’m a director of engineering and, for a pretty, a great company. And they pay me well, the commissions, that’s a bonus. It’s just a bonus. I get a 15, 20% bonus every year. It’s been pretty consistent, but it’s not guaranteed.
All right. So you make about 20, 25,000 a month. Let’s take a peek at the expensive side. Nope. You guys spend, what about 15 grand a month? You have a family of three, right? Expensive living in California because you hang around with the Joneses to the left and the Joneses suckers, like to spend some money.
Huh? We don’t, we’re pretty, pretty conservative. So we, this is for sports for our kids and, club ball and that kind of stuff. So no private school. Okay. And then the day, it doesn’t matter how much you make, but it’s what should net. But still you guys are able to net about 13,000 a month, which is a hundred.
50 a year. So awesome. Like I think a lot of people in our group think that, the younger ones, they’re able to save 30 to $50,000 a year, the more senior folks like yourself with already assets producing income, you guys are out there, above a hundred, 150,000 a year.
So you can go into a couple of deals every single year. Yeah. That was my plan was to look at trying to do two homes a year is what I wanted to do. But then, I ran into you and we talked. I’ve been watching you for three years, obviously, you know that, but it’s been one of those things it’s like just pulling the trigger.
And one of the things that I’m trying to understand is a self-directed IRA. Do I need to create trust? How’s that? How’s the best way to invest with you? Yeah. Let’s go back there. Let me just so I want to break down the. This is 3.9 million just how it’s made up. So you’ve got a bunching, you’ve got about 10% of that in cash.
You’ve got about another 10 to 15% of that in various stock accounts and the 5 29. And then you got another big chunk of that in, but 800 grand in various retirement IRAs eight, just adding this up off the top of my head. That’s about half of your net worth. Whereas the other half are looking for it, the houses you got about a couple of million of equity in there.
Okay. So yeah, that sounds about right. Cool. Where have you started investing in deals or rentals or any non alternate? I’ve had this all year, Lane. My goal was to get into some wholesaling. We put a couple of bits on a couple of wholesales. They fell through. We never did get those.
I’m trying to do it with a partner. We started doing that. I knew that it was just, I just don’t want to deal with the ugly. He’s less than I am, but he’s a real estate guy. Yeah. It sounds like a classic case of, he just got lucky working with some rich guy like yourself and Greece. This is what I don’t like about doing those types of deals. You’re working with some broke guy. It’s just a matter of he’s got, he lives here in California.
He’s a saint, he’s with just his wife. They’ve done pretty good. He’s got two condos that he’s rented out and we just recently got this other one, We invest together. My plan was to handle the finance portion of it. And then he got the real estate license, which he just went and got his real estate license.
So that was the other thing that we’re trying to accomplish. But it’s John, you make this much at your day job. What are you doing dicking around with Polson? Exactly what I thought that hit the nail on the head. I do this for six months and I’m like, what am I doing? This is a waste of my time.
Yeah. And this is the epiphany. I think a lot of people are right? Like at the end of the day, as much as we say, we’re not trying to, we’re all chatting time for buddy. You make a good amount of money trading time at whatever this engineering direction. You do things that you’re not gonna, you’re gonna make more money doing that than taking on the risk of what are your wholesaling things.
Okay. But I think we’re in alignment right there. Okay. But no rental properties thus far. Okay. But no that’s but that’s good. That’s good. You said you had a bunch of these prior, right? So let me get my wealth. I think that was one of the things. Yeah. I think that’s a lot of times, that’s what I like to see.
I like to see people who own property too, because it checks the box. Because when you, before you start to invest in this stuff as a passive, it’s nice to know what the heck is in the black box, yeah. You mean like where you mean you don’t, can’t please people up during the holidays.
What the heck? It’s the slow season. No, man. People don’t really move around during the holidays, I mean at the end of the day, you wanna, you want to bring, you want to be able to be smart about your taxes and you want to invest in the right stuff. And that’s why I really like your approach, my lane, as far as passive investment, I’m probably one of those guys that wants to be that guy.
I just want to sit there and get 12 to 15% per year. Yeah. But you’re also an engineer and not only are you an engineer, you’re a director. So your worst analysis paralysis, what is it that’s holding you up? Cause you’ve been even stocking this thing for three years now. It’s still in business.
What, again, what is it? Or it might be a multitude and then let’s walk through. Yeah. So a couple of things, obviously I told you earlier, I want to be a millionaire. By the time I was 30, I was very close. I lost everything due to, stupid not having an exit plan, so to speak, not knowing anything, being stupid about, things and it took forever to come back.
And so then the other part of it is just trust, right? It’s really difficult to trust people, especially now that you’re at that point. And so that’s what you call it stocking, but that’s why I’ve been stocking. Here’s what I, here’s what I would do, right? Trust no one doesn’t trust me, John don’t trust me, but look what the name of the game is, or what I tried to do when I first started to do this is like you build relationships with other passive investors, other accredited people that don’t have a dog in the fight.
And you got to, of course you got to make sure that they’re legit a little bit. When they don’t have any kind of skin in the game, they’re not getting any referral fee for sending you over. You start to build deeper relationships with people, right? Some people, what they’ll do is they’ll come on the retreat and they’ll start just banging out questions.
What do you work with? What should we stay with? Has this been returning? And I think that’s the wrong way of doing it, that people see through that. And they know that you’re just out for themselves, relax, spend a day or two in Hawaii, get to know people, get to know them, build a relationship with, and then let that test stuff organically come out because people hold that stuff to the chest a lot of times, because it took them a lot of time, money and risk on their own part to get that precious information.
They’re not going to just give it up to some random person. But to me, that was one of the, what I did when I started to interact with people, started to build a long-term relationship. Another hack that I did is I also built relationships with the lawyers doing the paperwork, too. Some of them were working with somebody that was a little shady.
They probably informally took me off to do that, but that was how I went about doing it. How are you interacting or finding people of that caliber in the past? It’s really tough. It’s really tough. I’m in the process right now, trying to find a tax strategist. I’m trying to find what’s the best method I’ve known about this bank on yourself, the type of thing that you guys talked about, but I really want to talk to your guy and build that bank on your own plan where you can get money quickly to start investing into this.
I really want to do that. I want to also talk about re-divesting the five to nine. And getting the kids involved with, potentially, modeling or whatever, so I can give them an IRA and that kind of stuff. So I want to start planning at that level. John, don’t worry about that yet.
You’re going too far ahead of yourself. Those two things you mentioned are absolutely the most unimportant things for you right now, right? The order that we do this stuff is first go into deals that you don’t get your money stolen with the right people. That is the priority. Number one, because priority two is from those deals.
So you might make some money, hopefully you do, but you’re going to get the passive losses to play different games in your taxes. That’s where you could potentially say hundreds of thousands of dollars several years. If you’re doing a little infinite banking policy, you get your $70,000, 5 29 be directed. That’s nothing, man. Don’t waste your time on that type of stuff.
And I think that I can already tell this is why you’re so successful at your job, right? You’re a technical guy. You focus on things and you just grab a whole other thing. That’s right. I do. And I solve problems. I solve really difficult problems and I’m like a bulldog, once I get in there and I tear it apart, like you said, I’ve got that engineering mindset.
So I sit there and tear everything apart, down to its base. And then I tried to build it up, but I don’t have this background, and this is something that of the approach. I’ve been on my own since I was 12 years old, I was a kid who lived in low-income housing. So it’s not like I had a silver spoon in my mouth.
And I’ve done everything by myself, but that’s the hard part right? In this financial maze. There’s a lot of noise out there such as the self-directed IRA thing that we’ll talk about here in a little bit, but just before we go there, infinite banking, it is a classic. Sometimes in the family office group, we’ll talk about this thing for hours.
We’ve had literally four to five hours of calls over the quarter on this one topic. And we joke because it’s like, guys, just stop optimizing this stuff. It’s a creaking commodity at the end of the day. It works. And if you optimize it, it doesn’t move the needle for you that much.
So that said, for people listening, go to simple, passive cashflow.com/banking. Put your little email in there and then get the free infinite banking. E-course it’s two or three hours, I think, going through that. But Jeff didn’t go. Don’t do it yet. I know you, you’re focusing on the wrong problem right later on, when you’re in a few deals for several months, then you have the time then go back.
But just trust me on this. It’s not going to move the needle that much for you. I believe, you’ve done a really good job laying, I’ve been following your career kind of thing, so to speak. If you’ve earned my trust. Okay. So if I were to trust and we’re going to put in a hundred or a few hundred thousand dollars into some test investments, where are you going to get it from?
W what I’d like to do is I have, I just basically divested, I have an IRA that has a hundred thousand dollars in cash. I just wanted to use that directly. And move that into, that’s why we talked about self-directed IRA, because I want to move that over and use that as a hundred thousand dollars.
I would use this liquidity first, you have 400 grand on liquidity. You do it with that first, but that said, let’s just make believe you don’t have any liquidity. Just making the problem hard, right? Yeah. Because as somebody who sits in my checking account and I’m earning 0.1, nothing.
Yeah. So this is what you invest first. Okay. So let’s fast forward six months and you’ve blown through this stuff. Whereas they’re going to come from next. I think it should actually come from the non IRA stuff first.
And you’ve got another 400 grand really? You don’t need to make these properties art or that’s all in stock though. That money is in stock right now. I’ve been chilling in stocks lately, but again, if I sell that I’m going to be hit with a huge tax. So that’s what I’m a little concerned about.
Either way you are right. Whether you physically data from the IRAs to get out well, not if I do it with a trust through SD IRA at that level, then there’s, or let’s talk about this. So people, I’ve done many coaching calls like taking money out of your retirement accounts, which is what I recommend for most people, because you want to pay our taxes on this stuff today, as soon as possible and not wait until the future, when your tax bracket will go up.
And the general tax bracket for everybody will be going up in the future. Therefore, And you want to get your money out so that you’re complaining that you paid too much taxes or the only way you’re going to be able to do that is to, I’m not paying now though. That’s the problem, right?
Lane. I’m not paying any taxes because it’s just sitting there in these accounts, but you will, when you take it out. And so let’s like, it’s a two-part test. So first I look at your income. You’re already, what is your AGI about just gross income right here? My, is that what, when we take home is, maybe minus maybe 20, 30 grand usually is what it is.
What’s your take? No, not to take on your total income. What’s your salary and bonus? Two 15 plus 30, call it two forty five, two fifty. And then you add your spouse. She has another 50, so over 300. Okay. Okay. So unless you’re above three 30, which is the highest tax bracket. So we’ll look at the tax brackets, right? You’re slightly under that big jump from 24 to 32.
What I would do is I’d be freaking out a little bit every single year to take you right up to that. Or maybe overflow a little bit. No big deal. Hold on one second. There’s kids going in there. Give me one second pass. If you follow why, I mean that your AGI numbers will change here or there, but I just want to make you understand what you’re trying to do. Yeah. Okay. I’m trying to understand what you mean by AGI. So that’s an adjusted, let’s say if 1 27. It’s not 1 27. No it, yeah, they go look at your taxes and just search AGI.
It’s probably really dang close to 300. I don’t believe that’s the case, but we’ll look, I’ll look okay. Yeah. But for this example, let’s just assume it is. So you’re going to leak out a small amount, but like you have so much, it’ll take you, if you were to leak out 30, 40 grand per year, it’s going to take you 10 years to leak all this stuff out or not. It’s going to take you 20 years to leak all this stuff. And you explain to me what you mean by that I’m not falling in there.
Take it out of your retirement account. Pay the taxes, pay the penalty. Oh really? Okay. Yeah. Most people will look at, be like, oh, he said, you gotta take the penalty. Who cares? You’re a faint 10%. If you’re going to make that back in a year or two, and then it’s all gravy after that. Interesting.
You pay taxes on it. You’re going to have to do it one way or another either now or later. Yeah. But if you take it out, I thought, you know what the distribution is, obviously the 401k always talks about it as if you take out your minimum distributions and you’re lowering the tax rate. So I’m going to ask what they say, but I don’t know how, because you’re broken mult.
They’re talking about how most people broke in a few. That’s what I thought. I haven’t talked to anybody. That’s rich. That’s retired about this. Never talked to anybody about this, to be honest with you, this is the paradigm shift. But this is not that complicated. A guy certainly likes a guy like you can’t understand, right?
And this is where, if this is your job, you’re not looking for tax strategists. You’re looking at them in the mirror, visit your job at Fred. I know, but it’s so difficult. There’s so many things that are tax IRS codes. No, it isn’t real there. Don’t look at the tax brackets and try and estimate where your AGI is going to be at.
That’s how much taxes you’re going to pay and should teach glee. Do you want to bump it up or do you want to bump it down in a year? It’s not hard. What’s hard is what you do at your day job, John, that’s the hard part. This is. I just wish I could see it that way. It’s really difficult for me to understand that.
But for some reason, I’m just not sure that paradigm shift has not happened here. It’s just, you need practice, right? You make, let’s just say your adjusted gross income was 200 a year. So right then the prudent thing might be to take out a hundred, 150,000 every year, following the income to really get up to that, those higher tax brackets.
What do you mean by taking out your retirement money? Okay. Because once you go over such an ATI model, this changes every year, right? It says slightly go up every year, but I’m teaching you the principles. Yeah. Once you get up to that higher about now, you’re blowing red, right? It’s you’re paying more taxes for the dollar that you take out.
The key is to leak it out slowly. So you don’t go into the red, you don’t redline your engine. Some people, it’s your money. You can take it all in one year. If you want, you can say F it let’s take out all your hundred. Your AGI will balloon up to a million dollars and you’ll pay a whole bunch of it at the 50% tax rate. That just does not make sense. Yeah. That doesn’t. And I wouldn’t do it unless you were super confident.
You had another tax mitigation strategy and you want it to really be aggressive. But what I’m saying here is let’s be prudent. Let’s take it up to that, that, that part, where things get really rough in terms of your tax breaks. Under 330 is what you’re saying. Got it. So you take out enough to cover up.
So where, when I bring out enough, so let’s say 200, I bring out 130 or 125 columns. I’d pull out 125. I take that tax kid at 24% on as opposed to the other duties, taking it out at 32 plus right now, this is different for everybody. And I’m still shooting it from the tip. You’re not giving you any tax advice here, but this isn’t rocket science.
And we don’t know what’s going to happen in the future in terms of tax brackets, but our hunch it’s going to go up and things are in there. That’s going up, it’s going up. Trillions of dollars, it’s definitely going up, but this is just, you, we make a prudent plan. We follow it.
But even at this place you’re so close to that highest tax bracket already. It’s going to take you fucking forever to jail, break this stuff. So maybe you might want to be more aggressive and you might want to pop into that higher tax bracket a little bit every year,
but now you have the ability to ponder this right on the right thing. You know how these things work. I was almost like you would think that there’s, I’m a spreadsheet kind of guy, right? Understanding this, like I, I’m a process guy. It’s gotta be a process that we go through.
That’s why I liked Sankey. I use a lucid chart every day at work to show what we’re trying to accomplish. And I think that the sand chart is very similar to what that is or a sand key, I just haven’t grasped that, but I guess I wanted to see that process of what do you do?
And then you can run different scenarios. It’s like the Monte Carlos, not the scenario. You do that for you, it’s very similar to that. So one of the things you’ve, and I think I’ve told you this is, Six Sigma in data is something that is very near and dear to my heart.
And so I would say I’m a master black belt in six Sigma methodologies, and it’s got us make sense. It’s got to have the data behind it. And so the strategies that you’re talking about actually make sense. It’s got to put it, I gotta put that down on paper to see it or play it. Let’s just walk through it.
Let’s play it on our head, make a few different options. And then luckily this isn’t going to, you need to make a decision now, or in the next couple of years, this is all in front of you. And you can have your subconscious mind work on this a little bit. But yeah, you’re trying to eat, trying to get this 800,000 ounce so you can invest in cash so you can get the passive losses from it.
Because when you invest through this type of stuff, you aren’t getting the passive loss. I see you got some crypto up here and not much. Nevermind. It’s pretty negligible just screwing around with it. So forget it. But that’s what you use the IRA money for non real estate tax event stuff like crypto, or I don’t use the IRA for non tax events and stuff.
No. Crypto is going to be taxed and, or like private money. That type of stuff. Non text then type of stuff. Yeah. Yeah. Obviously we’re trying to get away from that type of stuff. We’re trying to go to the passive investor, passive income plan for the active board. But, the other thing is the only other reason why there’s two reasons why I would probably prescribe a.
Qualified retirement plan or a self-directed IRA is if they’re already in the highest tax bracket, which I would consider you in there. You’re not like in there, like you’re making 400, $800,000 a year, but you’re in there. The second reason is if somebody already has a significant amount in their IRA, what I call a significant amount is a quarter million to half a million dollars in their IRA.
But you do have it here. It’s not like you’re not as bad as some of these other guys doco. Some of these other guys, their networks are like 1.5 million way less than yours. And they have a million dollars in their IRA plus, and they make a boatload of money to that’s cause that’s what though that’s what everybody tells you to do.
The world tells you to do, and we become puppets of the world, right? This is what you’re taught in school. Some better, some better puppets than others, right? Yeah. For you, like what I would suggest, I wouldn’t decide anything here now. Maybe try and leak out fifth, just take your stuff up to 330 or that next higher tax bracket every year.
But what’s that doing? That is a non-decision is still punting it for, because you have so much in there. But you have so much time to think and ponder if you’re going to con you know, increase that or stop that because, or just don’t even take money out of here just to stay frozen for now, because you have so much other investible funds, you have 400 grand here and your 400 grand a year, get that stuff deployed.
First, you have proof of concept with us, we are investing. What you’re investing in first to restore before you start messing around with this IRA stuff. I know you mentioned you want to get it going first, but I would say full doll,
because one thing is one thing I’m thinking of you have so much money here, you deployed this need to put a million dollars. This could possibly, you could retire on this if you wanted to. I still go part-time. My ultimate goal is, one of the things that we talked about was when you want to retire, my plan was to retire when I was 57, that’s four years from three years from now, almost.
That’s probably not in the realm of retiring with kids. No, it is. It certainly is, is it just right now? All these soldiers are not doing Jack for you right now. That is actually the stocks and bonds, so let me just tell you that I put 120 into the stocks. I took it away from my financial advisor.
I took it away from my financial advisor because he was charging me $85 to do a trade and it pissed me off. So I bought some Teslas with them. I told them, buy it 300. Even though he didn’t get it until three 40 or three 50, he still charged me $80. And I was like, there’s free charges everywhere.
So I took it away from home and it was a hundred and 121,000. In the last three or four months, it’s gone to 3 21. So I’m doing it myself right now. And I moved it, to, to something that doesn’t cost me anything to be trading. And I’ve bought certain things like, I’m in the industry of things and I know what’s going on with a lot of different companies.
And I’ve invested wisely. So those, I guess my point was, it’s still getting. But even investing in, in syndications is a gamble. Let’s not worry about this yet. It’s working, it’s doing something the big priority is let’s get the, let’s get that’s up on top. Yeah.
I’m ready for 150, 120, $150,000 to give right there. And just and not only this is the home equity, right? The two mil equity. That’s what I’m thinking of too. That’s your lazy equity that you said you got a couple of million. Oh, yeah. In the house. Yeah, I haven’t done any. Yeah. So get a heat lock on that.
Start deploying that. He locked on that really? Cause I’m at 2.75 right now. It doesn’t matter. It’s not what that’s not wealthy think about. That’s what broke people think about. Interesting. So get a heat lock on the house and then do what with it makes more than like nothing. What you’re thinking in the house. It’s just going up with the pace of inflation.
Th this is the big, these are the rocks, right? This is all the sand right here. Worry about the rocks first. Gotcha. Interesting. Yeah, that’ll keep you busy for the next two years, so we don’t really have to mess around any of this yet. Okay.
So can you expand a little bit on the hilar a little bit? Yeah. So you know, you’ve got your home. What’s the market price on your house? 2.1 to 2.3. What do you owe on it? Okay, so you have about a million or so equity you’re at like around 50%. So you could probably borrow about 800 grand. I’m guessing.
At least 700. See that you could add that to your 400 right here, or you got at least 1.1, 1.2. If you can deploy the next day, if you want to. And that $1 million, if at 10% that’s a hundred grand right there, tax fee
How does the heloc work? I guess maybe I don’t understand that because then I’ll be paying if I borrow that 800, my, my payment goes up considerably, doesn’t it? Yeah. So this is a mindset thing, right? Sure. That he locked. There’s a payment associated with it, but who cares if you’re making, if you’re paying 2%, but you’re making 10 full percent at the neck, and this is the same thing that people have.
The same thinking with infinite banking policies, right? If I’m paying four or 5% on my infinite banking account, there are payments occurring, but you’re not supposed to worry about it because you should be making 10, 15% in the other investment. It’s just the Delta between two, it’s just a mindset thing.
Yeah. My mindset was to be a Strat tax strategist. I’d rather pay a tax strategist $10,000. If he saved me 10,001, if you do not, you can pay yourself 10 grand. Now. I’m just like you, this, these, this stuff, what to do at this is a hard decision, but you don’t need to make them yet. But what I’m thinking is you have so much money that you could probably just place this in your home equity, make an extra $10,000 of passive cash flow tax free every month. And you’ll be good. I think.
I’m not actually following what you’re saying, their lien on the home equity thing. You can take 800 grand out of your home equity and put it into deals or investments. And you can put another 300, 400 too. So that would be 1.2 million. Yeah. 1.2 at 10%. That’s 10 grand a month. Yeah. So you pay the 10 grand you get, so you actually get the 10 grand and then that actually allows you to pay the additional costs on the house that you increased. Yeah. But which is negligible. Let’s call it eight grand living. Harrison, me, John doing the engineering thing again. If you have, let me ask you.
Your personal finances are pretty well. We’ll go back to the summary tab. This is what’s happening. You’re still netting 13,000 a month. If I added another eight onto here now you’re netting $20,000 a month. After deploying out those funds, does that change your life? Are you still going to work?
What’s happening? My old plan was if I ever met in 20 to $25,000 a month, that was going to retire. That was my plan. Shoot. What are you doing? What are you going to work next week for? But that was like, so that’s my whole point, right? Like you have so much money and you’re so inefficient right now. If we just did that with you and we’ve replaced this money and then the 800 grand equity, your FYI will be close to zero gravity, zero cheat. Your network would continue to grow and you can quit your job. I don’t even need to deploy any of this stuff.
Is all overkill and therefore, this is what’s fun, right? Because now I’m like, all right, John, if you don’t need this stuff, I’m just going to leave it here. So you never need it. And this is what you can give your kids. You can give up an IRA, Roth IRAs, but then I’ve also had clients where their parents pass away and their parents give them an IRA or Roth IRA.
It’s a complete pain in the butt. Cause you got to take mandatory distributions from it. But that’s another story, like you don’t have to touch this money cause you don’t need to eat it. Leave it in the IRA. And that’s a very rare circumstance. Interesting. Okay. No, I like, I liked the idea of doing the 800.
So how do I go get this Wheelock? What’s the approach to do without any bank? It’s pretty much a commodity man. Yeah. I don’t know if there’s some folks in the foam or like a kind of optimize and find that one, wrap them, spear bank. I don’t know what it is. Cause I don’t get key locks personally, but you can go to whatever bank you get, whatever grade really doesn’t matter.
All the rates are the same and the heloc. What is the hilar actually doing? I guess I’ve not really done it yet. So the bank, okay. Your house is worth X right on the market. You don’t hold that much on it. And your bank is like, all right, yo, John we’ll lend you that based on. Yeah. And they’ll take it all day.
That’s an easy loan for them. That’s why the rates are so low and that’s why it’s a kind of a quantity. Okay. And then once you take that though, so now you are paying additional money on that 800 K. Yeah, but it’s pretty negligible in some easy locks. They’ll just make it like interest only, or they’ll take it from your equity from the house, which is negligible too.
But at that point, cause then you’re taking that money, plus let’s call it 200. So I’d like to put $200 and then they call it 200 out of this. My wife is one of those rainy day people, right? She’s oh, what happens if that’s what infinite banking comes in, but don’t worry about that yet. You got to convince my wife on this one on somebody, you know that she’s that person that is very conservative, extremely conservative. This is where I would design you a more holistic plan, which kind of takes those concerns and which isn’t as optimized, but it’s more conservative to appease those concerns. Just to get it to show one year. And then the next year, like I told her, I was going to take $10,000 into Z for, we call it.
And it was a crypto thing. And she’s oh, should we? I’m like, yeah. And then I’m getting 10% back per month on that. Look at the big picture. You got 800 grand in your house, not doing anything. You have 400 grand, you not doing anything cares about what you made on that $10,000.
The strategy we were thinking of is we were going to try to find a house that we could just fix up. We’re going to sell this one for 2 million, pay it off and then have a million dollars, and then basically live in California for free and not have to pay any payment. That was the strategy we were thinking of.
That was like a lot of pain. But the process though it is, and the whole process, you got, a $1.2 million house cures junk nowadays. So she doesn’t want to do that. She likes the house here. We have a pool, and that’s where you have to like straight within your own household, right?
Meaning you got to negotiate with some people, it sounds like maybe you just offer a pay. We’ll just keep the house and I’ll keep at least half a million dollars of equity in there. But Hey, let me try and get proof of consequence and this other stuff, maybe that’s and from their perspective, yeah.
It’s not going to keep the house and we stay up all the bones, the value. Yeah. Try it out. That’s not how it goes. This is great. So let me ask this question. Do you provide guidance there? How does this approach work? And this is all just let me do something real quick for you right now.
Just to shoot it from the hip, what I would do, they announced that I hear that your spouse has like that. What I would do. I’m going to build an infinite banking policy for her. So what I would do is I would throw in a quarter million dollars every year for six years, whether that’s on her or you probably her, cause she’s a woman and she’s cheaper than I would, yeah, I would throw it up.
If at banking policy we put in quarter-million dollars every single year, you max fund that thing for at least a couple of years, you only ever need to max fund it for one year. So it doesn’t decay on itself. It’s 150,250 again. Yeah. For after the five, six years there’ll be a million dollars in there, but the whole where’s that money come from.
That’s what she’s going to ask. So the first year is going to come from that liquidity. And maybe even the second year it was going to come with liquidity. But the whole idea is you invest through. It’s a pasture. Yes. You’re paying the fees, but the fees make sense.
There’s a break even point usually around your tour, five, somewhere in there. But that’s kind of your base, right? You can point to that as always being there it’s a lot more safe than these bank accounts. And then I can get rid of this term life insurance, right? These terms.
Yeah. Because you’re buying boat insurance way better. Yeah. You can get rid of that term, the 400 bucks a month. And then just keep the one that works. Yeah. And then does that go to both of us? How does that work with this infinite? Oh, it’s only going to go to her Uber as the policy. You can get a $5 million policy in BJU and put in one 50 each too.
But if you want the insurance part. It just makes sense to me. If you wouldn’t want me to yeah. Talk to the agent about that, go to the, yeah. We’ll connect you. The, but it’s just just moving forward on this, right? Like then maybe next year, 20, 22, you start investing into several deals at a hundred.
You get that proof of concept going, so this is going to take a long time to really deploy all this money. But by doing that big initial stuff of infinite banking, Alicia makes four or 5% tax free on that money. As opposed to not doing anything like how it is right now. Yeah. It’s true.
It’s literally, I’ve had this conversation with him before. It’s literally driving me nuts and it’s just. And then you invest that in the next, you keep doing that for another year and then another year. And then you’re for the most fully deployed at that point, you’re in 10 deals, you’ve got $750,000 cash value, which your friends were there.
Probably your cash value will go down because you start to invest that money, which is what you want to do anyway. And then that lane, so one of the questions that always comes up is, what happens if you lose your job? If I lose my job down the road, there’s always, you can get the, you can get the cash value and you should take a few days to get it back into your bank account.
Yeah. It’s pretty much instant liquidity. Okay, cool. And that concept is like banking from yourself. Like it’s technically not a bank, but it is, it’s almost secure, but that’s the idea, right? Your personal fault, you start investing your in, That, this is how I do things, right?
Like it would be irresponsible for you to listen to a guy on the internet and just take his advice, even though you understand what the heck is happening in terms of taxes, which you’re trying to do long term. And we’re trying to get to, to get this passive income portfolio. And that’s where the mastermind comes in.
Like now you go talk to, I’m just talking to six or seven different couples, similar backgrounds, similar income, similar networks. Yeah. There’s 80 of them, go talk to four or five of them and learn the lessons learned, have them answer, everybody has different hangups, and they can talk you through it. The more important thing is that you go through this process, and you start to build relationships with these people, because these are the people that you’re going to put your head together with, as you’re saying. Transfer that wealth to those few roadblocks that you just talked about, right?
When they grow up. That’s what I try and do is trick you guys into interacting with each other, to build those long-term relationships. But then, you come back six months later and you’ve talked to all these people and you’ve changed my strategy a little bit, but you’ve taken ownership over it and that’s what I want.
And then we go connect you with the right service, professional CPA tax attorney, lawyers to make this happen. That’s the process. Okay. I keep on getting calls left and right from the folks in Las Vegas Toby’s group. Yeah. But do the work yourself, empower yourself to have the right conversations.
But part of that is building relationships with other passive passenger colleagues and building your own family office. Family offices are made for people that are a hundred million dollars brighter. What y’all do, but what do you do when your net worth is one to $10 million? You need a peer group, you need to coach it together.
And that’s what the family office, Ohana mastermind is all about. Yeah, but that’s the procedure. Let me make sure I’m understanding. We’ve talked a little bit about things. So from a strategy standpoint, obviously you said you talked to folks in the mastermind, you’re coming to Hawaii, right? When you sign up, when is it?
January 14th, the 17th. I’ll be in Florida at that point from work maybe next year. But I’ll definitely come to Hawaii cause we love Hawaiian. We went there. We try to come there at least once with your points. I believe that the key is other people, right? Accredited investors, pure passive investors. That’s what you need to meet. Can you put me in contact with people here in California so we can like the trademark? No, you got to join the mastermind group, man. It’s pay to play with no outsiders only.
That’s how it works. Because if everybody thought that everybody knows about simple passive cash, now a lot of people loved the group. Yeah. You’ve been marketing yourself pretty well. How are you doing well, you guys like today, I don’t have to do anything other than, I spend a lot of money on Facebook ads and stuff like that. But as far as me doing any analytics, do anything, you guys tell your friends, half of all the people that come in today are referrals.
Guys run with the group, right? So let me make sure we’ve talked a little bit about things. So you’re saying, go look at doing a hilar and then also do the infinite banking as well. Is that what you’re saying? Yeah, but that’s what I would do if I was like looking over your shoulder, but I know that’s going to gum you up and you’re not gonna get anything done through me wrong.
I’ve been trying to get this money, other money, this basically, checking account and savings when I’m earning 0.1, nothing. And it’s pissing me off. I hate that. It’s just sitting there earning nothing, but I want to be taxed. I want to use that to cover my taxes and then also have a real, it should be pissing off, man.
Like 400 grand at 10%. That’s 40 grand, 40 grand a year. What does that, what is 40 divided by 12, $3,000. Yeah, and this, I always use this analogy. It’s every, what is 30 days a week? That’s 300. What is 3000 divided by 3,000 bucks a day, a hundred bucks a day. Every day, you drive a little bit extra to go to Costco, to save $20 on gas, cheaper. You’re pissing away a hundred dollars every day that you don’t deploy this, but it’s worse than this.
You not only have this, but triple that in your home equity serves. So triple this. So it’s three more like $300 a day, six grand a month. Yeah. I don’t know. What is something you waste your time on? This is the whole thing about throwing money at the problem you got the money just haven’t transitioned to.
No, it has nothing to do with ambition. It’s just time, man. You don’t understand with three kids and a full-time job and it, it just wears on you. I spend, and we’ve been trying to do this real estate thing, and that was the, you bring up a really good point probably should just exit out of that.
Yeah. Cause we are trying to look at buying pretty homes. Just try it out, right? Not saying we’re not saying make wholesale changes right away, but this is the reason, this is the motivation that you’re not picking up having that six, $900 every day that you’re pissing away, but it’s going to be slow. You’ve been doing it. Been focusing on the wrong thing, keeping it you’re really good at keeping yourself busy.
Sure. It’s just understanding the right focus on this. I understand that. And if it makes sense to do it. It’s just like you said, being an engineer no, one of the worst, man, I actually, I’m very not engineered life. Natural reality. Yeah. No engineers read everything.
I don’t read anything as long as my lawyer that I trust as my back, I don’t read a thing. So that’s my point. I want a CPA and a lawyer that I trust and do good. That’s exactly what I want. Not out there. We’re not going to help out the average investor.
So how did you end up finding your team? I’m a rich uncle. I run school, pass the cash. So they found me. And my advice, my CPAs and my attorney, not, I wouldn’t say this feud, CPAs icon. I’m just in the same boat as you, right? Like I tell them what I want, signs, know what I’m doing.
I don’t know everything. I don’t know all the forms, that’s their job. But I’m an architect. They’re the engineers to go do this stuff. Here’s what you want to say. I want to make 10 points. I want to make 12% per month on the, no, that’s not their job. Your job is to be like, Hey, here’s what I’m trying to do.
Like you noticed, HCI is 300, but I want to be specific, we push this up to three 30 by taking all this stuff. This is the, what the, why I’m trying to do that. Can you look at how much passive activity losses I had? Maybe we can use some of this. We didn’t really get to the real estate professional status with you yet, but, yeah, when you joined the family office group, that’s what people are always trying to implement, especially with a spouse, being a teacher that doesn’t make that much money.
It’s ideal for you guys. It’s a complete no brainer, but you guys wouldn’t like that. That’s not your CPA’s job. Your job is to talk to the CPA, say, Hey, we’ve already put ourselves in this position to do real estate professional status inside quantified my siblings hours. Here’s a log book. If you need it.
What I would like to do is I would like to use a hundred thousand dollars passive activity losses. So I can cut to this much because of this. What do you think of it? Let’s have an educated conversation. Just like how we’ve done it here. If you’re seeing most CPAs. If they’re smart, they don’t want to work with you because of your pain. So there’s an art to this.
I think that was a good call. We got you down the road a little bit. I don’t want to overwhelm you too much. No, you’re not overwhelming me at all. And then there’s stuff that I’ve been talking through all the time. And I appreciate this. It’s just one of the things that really helps is trying to find what the next steps are.
Understanding that. So it’s this process that you talked about, right? So it took me forever to try to get all of this information here for you because it’s scattered all over the place. And so it was actually a good exercise because I had done it before differently, not on this level, so to speak, but I wanted to track it all for my wife to, in case anything ever happened, she would be able to find where all the skeletons are.
So to speak. Yeah, 70, 20 10 rule. Real my friend that you’ve just digged into the 10%, which is the academic stuff. The 20% is the people building relationships with other passive investors, for hackers to build relationships for passive investors, just in case he dies.
She knows where the 4, 5, 6 people to go to, to confer and get guidance from people don’t have any skin in the game that aren’t their CPA. That isn’t their lawyer. That, in my opinion, is the former law. If I die, my wife kinda knows who to go to, who to trust. And of course take the data points and come up with her own decision.
But then the other 70% is doing it, getting down the road, doing it. You’ve done the 10%, but you got to work on the 20th. So yeah. That’s the difficult part right there is it’s just carving out the time to go do that kind of stuff.
If it was just my wife and I’d have all the time in the world and I would totally be knocking this out apart. If you’re spending more than like a few hours in this passive investor thing a month, you’re doing incredibly wrong my friend. Really? Okay. I’d spend a few hours a week.
You’re doing it wrong. You’re not efficient with your time. And you’re probably not interacting with the right people. People ask like the family office group, I don’t have that much time to say all you need is four to five hours at most a month good. We designed it so that it’s for busy people exactly like you, multiple six-figures families. Yeah. So we cut the crap, we get rid of all this stuff you don’t need. Okay. All right. If you guys like this send an email to the firstname.lastname@example.org and we’ll see you guys next time.