Dumping your 401k, Helocs, 529s, IBC, Spouse Help Accredited Investor Coaching Call

Hey, simple passive cashflow listeners. Today, we are going to be doing a coaching call where the topics are going to be withdrawing money from your 401k. Should you do a 5 29 plan for college savings? If not, what should you do? And a little bit review on infinite banking. I know a lot of you guys have been asking about that.

If you’re like, what the heck is infinite banking? And if you guys want to hang out with more of the folks, just myself and the person you’re going to hear on this next coaching call. Join us in Hawaii in January.

Go to simple passive cashflow.com/ 2022 retreat. And we’ll see you there.

 

 

Hey folks.

He just went to this syndication e-course. Why don’t you give people a little context before we get going through some of your questions?

Sure. I’m just looking to understand the syndication laddering. I jumped in there’s a little bit of a lag before I start cash flowing. And I’m dealing with spouse support, so she’s in this wait and see game. I am also looking at my 401k, I’m 41 years old. I’m pretty heavy in my 401k accounts. So what I’ve been looking at is what’s the option as far as borrowing and paying myself interest.

And I wanted to see if that’s what relates to this infinite baking concept that you’ve mentioned before and some of your content. And one of my other questions which I put these together about a week ago. You posted something about 5 29 plans and infinite banking. I have two toddlers and I’m trying to go after I’m thinking capture this time. This time my kids are four years old trying to do like a 50% discount on college so I am heavy in my 529s.

How about we come back to the college 529 savings after? Just a quick teasers. The 5 29 plans are like 401ks. 401ks are like investing for the clueless, 5 29 is they’re essentially the same.

Everything we’re gonna talk about 401ks carries over to the 5 29 plans. I don’t know why anybody does it quite honestly. Just because something’s labeled a retirement plan or education plan, doesn’t mean that’s what necessarily you should use it. If you just want to do what everybody else does, it gets killed and has a bunch of garbage options go with a 5 29 plan or 401k.

First things first, like taking money out of the 401k retirement plan. Let’s kinda talk about that first because it’s a very common thing. Most people don’t have too much in their checking savings account. Why would you, that’s just not good use of your money.

But then they started investing and then now they have to go. They start to realize that this alternative investing is real and now they start to go look for low-hanging fruit. So the order of operations is money in your checking and savings, your liquidity, your home equity, and you can get a Heloc or a cash out refinance.

And then in conjunction somewhere in there it might be tied in order of operations. But your retirement fund possibly getting a loan or just similar to like HELOC in that you can put it back, should all this not work. But most people start to get to this stage and they’re like, yeah, screw that 401ks stuff.

Because the issue that I have it is it’s retail investments. It’s all the stuff they want you to invest in so they hit you with these high fees, carried interest. Vanguard, I used to be in that stuff a long time ago and I thought, whoa, it was these are low expense ratios, right?

That’s nonsense! Like you don’t see all the hidden fees behind it, the marketing the salaries, expense, accounts and that’s the problem with the 401ks you’re trapped with that stuff.

I do have a HELOC and it’s untapped. Between the HELOC and the 401k loan. I figured the 401k loan I think now the maximum borrow is 50% or a hundred grand, whatever is, lower, I believe.

Most people take it all at up to 80 to a hundred percent actually, but you must have what’s your house worth now? And what do you owe on it?

My house is worth about 1.8, live in the bay area and I just refiled pulled cash out. I owe about 1 million.

Okay. So you have a pretty good equity position, which is actually not good in our world. Because we’ve got to get that moving. There’s a lot of people in the family office group that are running around trying to find the best HELOC banks.

Usually it’s just a community. They usually can be in like the 3, 4% range easily at 80% on the value so you have some shopping there to do, to go find that community bank.

Yeah, I went with my local credit union and I got a 3.2.

You could probably do better. It should be a lot lower rate for 50% of the value should be able to take it up to 80. But for now you’re good. You’re not going to blow through 500 grand a million dollars. But put this on the docket to be your next three to six month project is to go find that next HELOC . That’s going to get you 80% and that’ll keep it rolling for another six months to a year maybe two, depending how much you want to deploy.

Got it! And so I just figured though that the 401k borrow would be better for me because I’m paying myself interest.

That’s what people say in theory. You’re paying yourself such a small percentage that doesn’t really matter and you’re prepared to pitch yourself repair. You just throw it down the drain in my opinion. Again, follow the numbers. All of this stuff is just, what other people say. If your coworker saying this type of stuff, you need to stop it, question it.

You’re paying back yourself the interest, but then what you got to really think about is the sunk costs or the opportunity loss of keeping it in there. All this money is not making anything right especially the format. I dunno, you can make an argument either way, right?

What’s going to go off the stocks or the house. Both of them is a kind of a crap shoot to me. But most people they go on raid the home equity first because most people were really skiddish about taking money out of their retirement. They say it like that because you’ll get really freaked out when you start to do that type of stuff.

But if it were me, I would feel a lot more skiddish with money in my retirement plan right now, because that all that stuff is just pumped with money. Equity in your home I feel like there’s a little bit more secure, not just because in 2008 real estate, what the hell? That was a real estate crisis. That’s what triggered the recession in 2008. But typically it’s like most times it’s a crash the stock market with home equity values.

Yeah, I agree. I think that a hedge on the 401k with the market would be the way to go as far as pulling money out of that.

 

Before we move off the house, are you guys going to stay, you got a younger family, you guys going to stay in the house for the next five, 10 years or at least 15?

Yeah. All I gotta say is most people in my community. They say, screw the house. Let me go get like a little bit smaller, like rental or apartment that has a really sweet luxury pool. And let me spend my time instead of screwing around in the yard where somebody else cleans my pool for me but just saying right because you can unlock a lot of equity that way.

Shoot with a million dollars of equity right now, you could put into something AHP. I would have put all my money in there. That’s for sure. But that could give you a hundred grand passive income a year . That pays for 1, 2, 3, 4 kids college today. I’ll be four college kids in the future. There you go! That’s your 529 done. But they’ll choose to just keep it locked up in our home equity, Jack.

Doing the home equity loan, pulling money out that way and not moving.

For the time being that’s a great plan. I think you’re fine with that for the next couple of years. But if I ask that question and some people have that hint of Hey, I want to move in to a bigger house or a smaller house.

Then I say move out now and just dump the equity up now. But if you’re going to stay there long, What I would say is just refinance the whole damn thing right now and suck out all the equity, do a cash out refinance, suck it all out as much as you can. But of course, I think you’re still in the beginning stages, right?

So that’s where you want to use the HELOC a little bit longer just to make yourself a little comfortable. But at some point, you drain the equity because the HELOC can only get you so far. It can only get you to 70, 80% of the value in most cases.

Yeah. I will shop that. I’ll look into that and I’ll even ask my credit union, the next month or so rates are really good right now, too.

What do you think about the syndication in the laddering with the development at county line?

Developments I would personally go to more of a stabilized cash flowing asset, especially if you’re new to this type of world. You think of in deals in terms of risk adjusted returns, right?

Stabilized assets is like buying an existing lemonade stand with existing profit and loss statements. You can see what it runs or a development is just a shot in the dark in a way. Technically, if you could build it there’s more margin room for error but you have to wait a lot longer to see the egg hatch.

The way I did it and the way I preach general wealth building to people is start off with singles and basics. And in the syndication, that is more stabilized assets that give cashflow quickly and have lighter value add or in the rental property world for people under half a million dollars net worth just go buy rental properties one by one like how I did.

Yeah, I think in my situation though, I need to be a little bit more passive. I’m not going to go out and buy individual properties. That’s what makes your multi-family deals attractive to me because I can be passive.

I just have to say it because something Dawn, who is a young, kid’s going to listen to this podcast and then think they’re going to go into an apartment deal and they have no money.

And so I have to say that. But yeah, if you’re an accredited investor, in my opinion, people joke about this all the time in my groups. Can you really tell me any good reason to own a rental property, debt in your name, the headache, the fact that you’re getting abused as a robot rental? Let’s not get started with all this BRRR stuff, right?

I think that general strategy is going into intermittent deals, spacing it out and just dollar cost averaging, same technique they taught you with stock market investing.

My biggest challenge now is just negotiating it with my spouse because the conventional way to invest is just through the 401ks and all these other vessels to invest. I’ve got to convince her that this is going to pay off and be able to produce some passive income but the current deal is two years lagged.

You screwed yourself. You shouldn’t have done that, man!

I know I screwed myself but I think that county line projects going to be fun to watch and be a part of. This is why I’m going back to the 401k, because I think it’s a good strategy with Harton negotiating with her that it’s, if I wanna retire early let’s, use some of my retirement and not really hit the fan.

Which is just an emotional thing, right? Whether it’s retirement or money on your wallet, it’s all the money at the end of the day. I think where people get gummed up, they emotionally feel like 401k, Roth IRA, that’s your retirement. And I even have like sophisticated investors earmarking things in their own mind that way too. So I get it. They think one is more, long-term. One is more short term, but to me, it’s all the same.

You figure out what your asset allocation or time horizons are and money is money.

Yeah, that’s where my current head is at in as far as the syndication deals, you have the one presentation coming up today. I think it’s a Rora.

Do you see the fluctuation or the opportunities to tailing off or increasing? What do you see as far as the market conditions?

Right now, it’s getting’s good, right? Because the residential market has gotten really overheated in my opinion, because of low supply. I think demand has even gone in lower, but because supply has dropped so much, that’s what dictates the prices, which is very emotional driven.

That’s why I don’t like residential properties. But in the commercial world, we haven’t had that big run-up yet. But you’ve seen rents rise the first half of 2021. It’s all completely obvious what’s happening and cap rates are dropping. You’re having cap rate compression.

But it’s not to a p lace where, your average internet investors like jumping into commercial properties quite yet. Right? Maybe this time next year, for sure. There always be deals because what makes for investment? The banks lend money at X and the cap rates are Y and there’s always a difference between X minus Y.

There will always be a differential or always be a difference and when you apply leverage and that’s how you make yield. The cap rates will always be making yielding more than interest rates in a world where gravity works. I’m sure it could go backwards for a little bit.

I don’t think it ever has, but that’s what makes the world run right. I think what you’re getting to is Hey, what if I wait? If you wait, the best time to do anything was yesterday. They always change, like for example, infinite banking they always change the rules.

Best time to get it was yesterday, the best time another one was yesterday. It’s just constantly going to be that, you guys are just like making it tough for your guys doing this. Just be prudent, stoic, and just constantly dollar cost averaging into stuff that makes sense.

And it’s difficult now because you’re getting started. But to me, that’s the outlook that you have, you don’t need to be like me and have a hundred percent of my stuff in alternative investments. That’s for sure. I totally respect if you want 20 to 50% into paper assets.

That’s fine! But over time, the kind of the percentage definitely goes to alternative asset size. You look at I seen as a tiger 21, it’s all $10 million dollar families and above all paper assets. They don’t own like mutual funds and stuff like that.

I do think that we’ll always try to be conventional in some manner from our perspective. But I have a job to do and just convince my spouse that this is legit and try to jump into one of these like more conventional deals with you.

Let’s talk about that a little bit. Your spouse do they work too, or what did they do? You guys single income?

She works. She makes more than me and she’s in tech.

Good for you, man!

She’s really involved in our finances and that’s good I have to say.

Did I send you those videos from our bubble event where we had like a spouse’s panel? I can send. Shoot me an email later and I guess everybody listening, you guys want this spousal tips and webinars. Shoot me an email with the subject line spouse, and then we can send it off to you guys too.

The takeaway is everybody does it differently. It’s just like sick parent. You never tell another person that wants to do cause they always just turn around to get their own way. And you shouldn’t talk about it. But we talk about in our group and we acknowledged the fact that everybody has different marriage structures, different ways of dealing some your spouses, involve, which I think is good.

Some don’t care but tell you absolutely you can’t do anything that’s the most frustrating thing. So I guess be grateful that’s not the case. Sometimes, you have to make deals, right? Like marriages and negotiation. Did your spouse out of your family and their family which have more money growing up?

It was about the same but our backgrounds are completely different. I’m coming from a farm. She comes from the bay area. We have similar backgrounds.

Whenever you’re working with differences and people, it’s always cool to understand the backgrounds of the people then you understand more. Some things I noticed a lot of times is when like the spouse, if they didn’t come from money then they’re really gonna like in the scarce mindset kind of way. Again, not a bad thing. That’s just how they are. They want to cling onto the house so that home equity thing is a big thing.

Which doesn’t seem like the case here. I think that’s the cool thing with people who had money, lower middle class, we’re not talking like low, low end. But they know that there’ll be okay. So they’re okay with you doing things like, taking money out of your HELOC and refinancing or renting. Not owning, you don’t need to own, right? But in this case, there might have an issue with the retirement fund.

I don’t know if you’ve ever had that discussion. Okay, if I were to do one of them take a couple of hundred thousand, which is a very small minority of the whole net worth out of retirements or our home equity. Which one would you prefer? That’s a good starting point. And why?

Yeah, and I do think it’s going to towards the 401k because it affects me and my potential retiring early. And it may be more like palatable to her to accept that.

Something I’ve picked up from Chris Voss seminar he’s said, never split the difference. Funny! He puts you in a high stakes like hostage negotiation. One of the tactics in the book you can pay attention is like, when you negotiate and you’re in a negotiation in this case. Get you label the other side. So then you asked the question, it’s that doesn’t mean that you rather have the security in your house is what I’m hearing.

You labeled them so you get the conversation going, right? No, I’m not. I just think that, and then the retirement stuff is more your longterm thing and you’re, you would retire and that type of stuff, and that’s what our family wants. And then you draw out the information, as opposed to each side stonewall.

But it sounds like you have it sounds like a totally functioning relationship to me. Just got to figure out, you’re not going to go balls to the wall in the first year or two, for sure. But which of the two is the lesser and in this case, it’s the maybe leaving the home equity alone a little bit and going after retirement.

I think that’s what I’m going to do.

Good segue! We’ve talked about the home equity. So what’s your plan of attack is probably the whole the retirement fund. Like you said, you can take a loan on it. I don’t buy the whole thing about paying yourself interest. It’s just like a HELOC that the interest paid as a wash anyway. Next investment you’re just gonna take a loan, the retirement or something like that. Is that the plan?

Yeah, I guess my options would be withdrawal penalty with a penalty or take the loan and then I have my current employer’s account and then I have my own self-directed IRA so those are really like the options I’m playing with.

Okay. You have some IRA, 401k money that has with a previous employer that you haven’t gone over yet? I think one, one rule is you never really want to roll it over. You just want to keep it how it is, because once you roll it off through the existing employer, now it’s probably stuck there.

Actually what I did was I rolled it over into my own self-directed IRA so none of my previous employers have my 401ks.

What’s your plan and that’s talk about it with what the tax implications are?

Currently, my plan would be to take the loan out of my current employer. There’s very little risk that I’m gonna, I’ll work there at least five to 10 years. I had to have to pay the loan back either a time of when I’m terminated or terminate the employment over the life of the loan. I think it’s like a 10 year term.

Again, we’re talking about loans, right? We’re not talking about withdrawals. Okay. So for the folks listening your loans, you’re not taking it out, right?

It’s the withdrawals that now triggers the taxable event shows up as income. What we’re doing here is we’re dancing around it and which is fine for now. If you were more gung ho about this stuff, I would say just take it out. And in this case if we were, let’s just play that scenario out.

What approximately is your adjusted gross income?

Mine’s about 250, individually.

What about combined? Married.

Okay. Sorry. You guys are screwed. You guys are in a tough spot because ideally what you want to do is married filed jointly right now. We try and keep people under 330 cause that’s when you really start to get hammered with taxes. And again, you guys are listening to this in the future, these things, the tax brackets dance around a little bit, but the same idea of poppy ship prevail.

You want it to leak money out of your 401k slowly as withdrawals so you don’t go into that next higher tax bracket. it is whatever, if that’s your plan, but ideally you’d like to stay under there. If you guys made $200,000 a year, married filed jointly, you could take 130 out theory and not be too bad. That probably be a good bet because you’re probably paying less tax brackets today than in the future more than likely.

So I need to encourage her to take a pay cut or change jobs and take a pay cut.

Yeah. Both of you guys make high salaries and for those you guys, in that situation, it might make sense to just suck it up and just work, for burning the candle on both ends a little bit longer.

As opposed to some of our plants that have like disproportionate incomes like doctors and stay at home spouses, that’s the ideal strategy right now. They can do real estate professional status strategy, use the passive losses to offset income. Of course, there’s a lot of hoops to jump through with that rep status strategy.

And we’re not going to get into that now, they have a little bit of options where you guys. Good news. You’re gonna make a lot of money. As far as tax is options there isn’t too many, right? And I think now you start to look at less desirable options or exotic options such as like land conservation easements.

Are you on the lookout on these next solar credits? Coming out with the next infrastructure bill who knows what happens with that. But that’s where I would be looking out to next. Or, if one of you guys are burnt out, our time, right? Like I said, you guys have enough dry powder pretty, you should just be able to make a hundred thousand dollars a year.

The fact that you guys are not is on you guys. That’s just a choice that you guys are making, but you should have that much income coming in that I think that will sustain life for you guys. Most people in our group are pretty frugal. I don’t know why you guys are going to work tomorrow, but you are.

But that just takes a time to understand how this all works because right now, this is what frustrates me. Everybody’s stuck in these 401k, 529 garbage investments and that’s why you all are still working right now.

Make more. And then you try to defer your salary to no, yeah.

Paying at our tax bracket in the future. That’s exactly what the government wants. I don’t think they meant to do that cause I don’t think the government is that smart, but in a way they have a pretty much blank check on all your money right now, the retirement on the 5 29 and not 5 29, because technically you can use it for education expenses.

They can’t touch it. But your 401k, you got to pay taxes on that eventually in your IRA.

And who knows what that is at the moment, we won’t know until I retire.

But I’m betting, that’s going to be higher than what you are now. But the game is what we’re going to try and take it out or withdraw at some opportune time from now to the next few decades, when the opportunity to jailbreak it out, the word tax needs is there.

Again, it’s good right now for you guys. You don’t have very many, right now. But what we do know is like the money is in there now. It’s not making Jack it’s just retail investments, but the idea is to take it out slowly to get it into good stuff, which is still trying to land on your feet a little bit so I get that, but just do it in a tax smart way.

Some people are like, screw this is messed up I’m gonna take all my money out of that stuff, right? Whoa. I don’t know if you can invest that quickly and you just want to be a little smart about this, that’s just going to balloon your adjusted gross income.

You’re going to pay a boatload of taxes on that. Just fly under the radar, stay under a certain threshold, leak it out slowly as the idea. But, for now you’re just going to do alone. And that’s fine. You don’t really trigger taxes at that point. Another hangup people get emotionally is they’re like have to pay to make these loan payments right.

To myself, that’s just an emotional thing for me. If it really bothers, you just set aside a certain amount to extra, to pay.

Yeah, that doesn’t really bother me. It’s just, it’s moving money around in different pockets, right?

Yeah and I think that’s the hard thing , first of all they get emotionally tied that this is a retirement plan. You’re taking money out of your retirement and make no mistake. We’re not doing that. We’re not going and buying like fun vacations with that money for long-term savings in retirement. But it’s not going to be an account with a government for your future.

In regards to the loan, do you know, and there’s certain requirements that I need to abide by to take the loan, right? Or can I just take the loan freely?

I’m not sure on that, but usually they want you to have some kind of hardship thing or you’re buying a house, which should not. So I would think the only thing you guys have is the hardship. I think at this point, it’s going to be hard for you guys. Good luck you can get the loan! All roads just take the thing out.

Yeah we’ll see if we can get it. If not, I guess we’ll do withdraw.

I’m pretty sure you can take a long where your guys at there’s no there’s opportunities for that type of stuff. I’ve seen people like lie, say we’re using it for our home equity because something broke the kitchen bathroom bottle and then turn around and use the money for something else.

I don’t know how legal that is, but whatever I guess. You’re probably not gonna lie. You’re probably come back alright loan is eliminated as sort of option. So you gotta either choose it, withdraw money from your retirement or take a loan from your HELOC. So when you come back to your boss, which is your wife, what do you think?

I’ll be optimistic. She was gung ho for the county line and I think she’ll go for it.

For the loan, HELOC? Yeah. And I would recommend doing that.

I think what I’ll do is I’ll just lay it out, then I’ll try to sacrifice my 401k temporarily, and then that probably won’t work out and then I’ll land into the HELOC.

Yeah, loosening her in a way.

I just can’t share this with her.

Yeah, don’t worry. We’ll probably released this months later so you’ve got a lot of time.

I’ll just look, to hopefully, I can draw on that HELOC that I already set up now any time and when I see a good deal, come by, I’m probably going to jump in.

Yeah and what you have right now, I’m sure it will get you going for the next six months to a year. But you got a lot of equity there so , I would shop around. There’s a lot of disparity between rates and all the values. But what you’re looking for is like 80% on the value, the same rate or better for the most part.

And I think there’s another emotional thing people are like, oh my goodness, this guy’s got 3.2%. I want three, I want to get that. I don’t want to get 4%. It doesn’t matter. Playing a different ball game than most people, because you’re using the money for something else to make more money. I think that will probably get you bonded for a couple of years.

And I think once we get into the first deal and we get that first check, I think it’s going to help me with my negotiations with the boss.

Yeah. I hope so. I really hope so. Yeah. So are we’re good on that subject?

I think the next thing on your list was yeah college savings. So you’re a new father father I’ve taken a conventional road and with the 529 plans and you recently posted about that, right?

Yeah, 529 plans they’re just like 401ks, right? The jacked up thing about them is they keep you within a set of options that they want you to take because they’re high fees. They’re crap. And that’s my only beef with it. If you can self-direct you can self-directed retirement funds. That’s fine. I still don’t recommend doing that. I think you can self-direct your 5 29 self, it’s very limited. If anything, the Coverdell is better. Coverdell is like a self-directed 5 29, there’s more options that you can invest in.

But if you’re investing in real estate pros, tax free anyway, I think that’s why you do real estate. So the gates, all the reason for using this stuff, that’s my opinion. I just think if you invest in cash, you can pay so much less taxes. If you’re smart, because you get the passive to be losses that it negates any of these types of traditional, conventional things.

If you haven’t been tipped off yet, you guys that’s when you get slaughtered with the cows, it’s not a good plan to go conventional in my opinion, but what I would do for education is I would do like an infinite banking policy and just have that as your mark money, especially the kids are a little bit older, just put it in there for safe keeping. But now your kids are younger and my kids like the youngest thing yet for the most part now is the time where you want to be more aggressive, right?

Yeah. So unfortunately I did get aggressive with 529 so at this point, I don’t know how I could get out of the 529 without taking a penalty.

What do you got in there?

I’ve got two kids about 80 grand each.

It is what it is. You can just leave it in there. Start to do, what’s going to do. Not everybody needs to be a 100% like alternative investments. If you want some stocks, there’s your stocks right there. I think that the risk adjusted return isn’t that great. But if you’re trying to satisfy some diversification in terms of different asset classes, there you go.

I would say, maybe stop doing it. You could take it out too, but you already have money to invest, so just leave it where it’s at for now. Just, I wouldn’t put more to it. Does that sound like?

That’s pretty much where I’m at now and I do just designated as like diversification against alternative.

I got some flack for that post, cause like people are like, you’re such a a-hole dare you get rid of your kid’s education fund. Like dude, chill out, man. I have my other retirement and I’ve got all these like money elsewhere just because I don’t call it a 529 plan that you know, it’s not a 5 29 plan.

It doesn’t mean I don’t have a kid’s college, like I’m not heartless other people I don’t know anything about kids. Yeah. So you never want to give parenting advice, but people are like it’s so like it’s very true. Yeah. Very true. Yeah. So for the record folks, I do have a college saving’s plan.

I just don’t put it in that 5 29 plan and I’m sorry if I offend you guys for saying that stuff is nonsense, but it is. You’re putting it in exactly the stuff that they want you to put in with all these big brokerages and their cafeteria garbage options. I’m okay with the 5 29 idea in general, but I’m not okay with the options they gave you to invest.

Very limited!

Yeah, but even with that said, I don’t like the 5 29, because what if your kid doesn’t go to college too? Yeah, to worry about it just make a boatload of money. Something I got really frustrated the other day. A lot of people, especially here in Hawaii. Have a million dollars equity in their houses that are grandparents.

Their goal in life is to pay off their mortgage a million dollars, put it into something I always use AHP. They sponsor the show too, but there’s just an example of a very lazy type of investment fund where you can get 8% I think now when you speak 10%, you speak 12% actually.

Long time ago, if you have a million dollars equity at 10%, that’s a hundred grand a year. That pays for college for three kids today, at private and I forget how much school costs. But I’m like, why don’t you like grandma, grandpa why don’t you get a whole home equity loan and get your money working.

They’re just don’t know about this stuff too but to me is a little selfish because it’s like they’re putting their security higher than they could be paying for their kid’s college today or that could be growing just so much more 18 years from now.

It’s probably bad that I call it selfish. It’s just they’re ignorant to the fact that you can do this type of stuff and if we’re all brainwashed to do exactly what they’re doing right, but I just got frustrated the other day, this is very prevalent,

Very true. Just taking advantage of that gift. You know the gifting.

It comes down to being good stewards with wealth, right? Some people have wealth and they don’t do anything with it. They just squander it for the rest of their life. Other people you know , they understand the risks and prudent debt and they able to have it grow or stay where it’s at.

90% of people or 90% of wealthy family and two or three generations for reason. Alright, good point. . If I were you I know you got other investible funds. I’ll just leave it where it’s at. It is what it is 160 grand in 10, 20 years. Isn’t going to be enough.

They say Stanford and 18 years will be $450,000.

Apparently the side doors closed no, I watched that Netflix special. A bad joke though. The one where all these, like the rich parents were paying for their kids to get in to the colleges. You got to go in the back door and that’s really expensive. It is what it is, with the college stuff for you.

Yeah, I just I’ll look into if I ever need to what’s your on 10% penalty, it’s some money, but it’s not a whole lot.

It’s very similar to some people like have really bad life insurance policies, right? The whole life policies that were just configured the wrong way, their long lost college, high school friends that they never taught. Yeah, it takes them off the lunch, puts them into this really bad policy. Most cases, you can just 10 35 into a new infinite banking, more friendly policy. But in some cases it’s just better just to throw the baby out with the bath water.

Another bad joke too, to just get rid of the life insurance. So the same thought process with the 529. Keep going with it. It is what it is as opposed to withdrawing and starting over again. Yeah. Like the infinite banking comes in because, especially if you have a skeptic spouse, at least that gets your money working 4 or 5% tax-free.

You can sell them on the idea that it’s off the table, litigators, who doesn’t like that and it’s not like you’re putting the money out to an investment where there is perceived risk on, investing in some dishonest person to infinite banking stays. It’s way more I probably shouldn’t say this, but it’s way more secure than any bank or any mutual fund.

It’s a life insurance it’s backed by some of the most like credit rated companies that’s been around since the civil war. If you want anything more secure, let me go to a life insurance company, the good ones, right? The top rated ones, not one of these.

That can be a way, like for somebody in your shoes who has a lot of dry powder. That you’re going to responsibly deploy over the next several years, at least, you’re probably antsy to get it done, but your spouse probably wants to pump the brakes. But as a compromise, maybe just do 50 grand- 100 grand a year into one of these infinite banking policies and invest out of it.

But at least your money is working in that and it’s building up that cash value over time. Everybody over a dollars net worth should have one of these things. It’s a no-brainer. And again, we’re talking to you non- accredited investor who has no money. Don’t do infinite banking.

Don’t get caught up in all the podcasts, marketing hype. It’s not for you yet. There are some fees associated, of course, but in the long run, it makes more sense than that.

Yeah. Cause you’re new to this stuff and share all these ideas. We want to get moving, but yeah, got the ball and chain in a way. The infinite banking is a very logical idea. I think that is very prudent and safe.

Do you have any content on that as far as the background of infinite banking

Yes simplepassivecashflow.com/banking is the place where I through all the webinars and stuff like that. But if people want more in-depth we’ve recorded some FAQ’s, and then if people need like referrals to folks, they can shoot me an email just put IBC in the subject line and I can send that to you.

Yeah, it’s a rabbit hole though. First, like when people come into the mastermind group, is trying to get them to get educated on syndication deals, right? Because the syndication deals is, first of all, you don’t want to invest in a bad deal, with somebody who’s going to steal your money.

So that’s the first thing we try and mitigate. So that’s always like a third of the pop curriculum. Like your first few months are focused on that and then taxes. Especially for somebody in your kind of, income level tax is a big thing, but infinite banking is at the end of the first year, Pete more, most times people who like to lone Wolf and do all this stuff themselves, which I think is dumb because good buck, I’ve took me so long and mistakes and wasted money to learn on my own in my whole, that’s why we have the family office group. Fold your hand and kind of teach you exactly what to do. And then we set you up with people within the group. Who’ve done it already. So you can both build a relationship and a process with that person that you can carry on forever.

Talk, whatever investing or deals do you want to talk about, or, and more importantly, the soft subjects, right? How do you pass this off to your kids? Without them becoming nincompoops.

But then, you talk with them, the pros and cons, how they did their infinite banking policy, why they did $75,000 instead of 25,000. But why did they do $250,000 a year, for example. And then you come up with your own idea, you formulate it, and then we send you off to all the tax legal guys after you’ve already had your plan, because in most cases, if you go off to a professional.

They’re just going to sell you what they’re trying to sell you. There’s so there’s so many things in this financial world, that’s just a bunch of products. You really need somebody who’s going to architect it and that’s going to be you. You gotta be educated in power to talk intelligently and to know what you don’t want.

But yeah, the infinite banking is at the tail end of it. It’s a huge rabbit hole for sure. Huge in terms of burning it. No most people who’ve done it. Say, there’s sort of stuff on it, but just get it then. And don’t complicate it. Just get get like a policy. Like my ch my golden rule is start off with a third of your annual net.

So you guys, I don’t know how much you guys net at the end of the year, but maybe you guys net $120,000 to savings. You could put that to me. Four houses a year. If you want it to, if you want it, if you didn’t value your time and energy, you could buy four axles with that. But my general infinite banking and start off with Elisa third of your debt every year.

And then that way you learn how the infinite banking works. You take loans from that. You invest it, then you have more money. You put it back in there and you learn how it works. And so it’s always good to start off with a little bit of a test investment first and then then go bigger.

My, my first one that I did for myself was $50,000 a year. And then I did bigger after that, after I got the hang of it. But yeah, if you guys net one 20,000 after income minus expenses for a year, do 40 grand every year, but because you have. Like liquidity in a way I think based on the little bit, I’ve refreshed myself in this last, 30 minutes hour talking, I think you should, you guys should probably do 50 to a hundred thousand dollars a year, right?

Because you have all that fullback equity not to check, which you want to do is take that and put it into here for now. You can take it right back with the next day as opponent. That’s the whole point. That’s what you’re trying to do in banking. Yeah. So in fact, I would probably do a hundred grand just shooting from the hip or at least 40 grand a year for five to six years.

I always like to do the shorter period personally. The insurance salesman is always going to try and get you the longer ones. So they get requisitions. They don’t have to deal with you less, every 10 years instead of every six years, but that’s yeah. That’s just my take on it, but we’ve got a lot of content on it.

I’ll just shoot me an email, the subject line, and then I can give you the videos and then I’ll connect you once. You’ve studied up. Okay. Yeah. That sounds good. Yeah, you do something right? Because it’s fun. Stuff is fun. It’s different. And it’s, but it’s totally different. Like we talked about this stuff, cookie. Yeah. I’ve, haven’t heard of it until now. So yeah. It’s interesting stuff. Yeah. And that frustrates frustrating is like everything in mainstream financial advice. If you look up Dave Ramsey, he absolutely heres this whole life thing, afar, he says it’s a total scam. And I’m like dude, you’re not even we’re not even configuring it the way you’re talking about.

And we’re using it for something totally. He says, we’ll get it. If it’s for, if it don’t get whole life, get term life, that’s that’s, what’s like it transformed, but it’s dude, we’re doing it for a totally different way. The wealthy use things very differently. They’re doing this as a way to put money in it.

Suck it right back out as a law firm, ourselves and taking money off the table litigators. That’s all we’re doing. And the fact that it’s like insurance that’s because we can keep it under this what’s called back level. We don’t have to pay taxes. So it’s texting people is what it is.

It’s a text loophole that the Congress people and progress Spain that were just falling if we’re not done. So it makes you wonder who Ramsey’s representing to to poop, right? He’s not representing any. I think he, I think he does a good job. Am and sees the army. A lot of these people, they just cater towards majority of people, the conventional, traditional people, the conventional traditional people are horrible with their finances.

They just can’t seem to save more money than they make. And, or they just don’t make more than $50,000 a year. And I’m sorry, if that’s you, I went to college and I was lucky enough to go. And I’m in the situation where I am. And I think some people in this world are in the same situation, but they play by a different set of paradigms than the people who are still at financial one-on-one level and all that.

So I think Dave Ramsey, I think their heart is in the right place, but it’s totally guided towards other people. Argument about buying a house, not buying house. Like I, I personally believe that you shouldn’t buy a house unless your net worth is two times, three times greater than what the health support.

So if you, if your house is $2 million, you should buy a house to your net worth of 6 million. That’s very unconventional thought. Yeah. House is a Dre. You need to be investing, bring your money. And so sinking in at a house. Not too much just going with the pace of inflation, but for the Dave Ramsey, Susie Orman, and people on the world, a house as a forced savings account, it’s something that they put, a thousand, $2,000 a month to, if not, they’d spend it like little kids. There’s just, there’s paradigms in the world. You need to figure out which side of the paradox.

Yeah, that’s a good point. Yeah. But just do the math. The math, the other day, the math to tell you what to do. Just need to go in with a very different lines. So yes. Bring that paradigm a concept up when I’m negotiating with the boss. Yeah. I do it to myself all the time.

Like I think the biggest thing that I see successful people have is an open mind and they look at something very, without any emotion or prejudices attach, like something that happened to me lately. Like I’m doing this for fun, like this exotic car hacking force. It’s kinda, it’s really cool.

But like the whole idea of leasing a car for some reason, I thought that was a good idea. And that’s too long ago and at least a car a year or two ago, I thought it made sense to me, especially because I was using it for business and I was able to write it off, but what they show me, it was like they showed the numbers, they show how wrong that thinking was.

And the whole premise of all our hacking is there’s a depreciation schedule and it closed and then you want to buy it, but it’s low and that maybe when it comes up or it doesn’t just bleed depreciation as heavily, that’s essentially a hacking at all. But yeah, I was really gung ho about thinking that he says, we’re good now I see the light and I’m sure my ideas would change in the future.

So I reserve the right to change my night. Fine. This is not financial advice. Yeah. But but yeah, anything else? Yeah. The family office mastermind I’ve looked into that. I’m considering it. I don’t think I’m ready yet, but I will probably eventually I don’t think they never ready for it.

I think you just need to do that now. In fact, now’s the time to be doing like you’re starting from square one. Yeah. It’s like shooting arrow. Now’s the time to figure it out, get something with a shooting in the right cow .

I’ll let you know when I am ready and hopefully it’s sooner.

When you got five hours a month to dedicate to something that’s when you know. We have over 75, 80 people in there. It’s not for everybody. Do you want to just keep doing it on your own? That’s cool too.

For me, it’s just deploying my capital. First I got to get through the boss and then I got to put some numbers together, how that investment would return in our household.

I think we have like at least a two X, maybe three X guarantee that you get that first year back.

Cool. Appreciate it! We’ll stick this in the archives with the other coaching calls and then if you guys want to learn more about that family office group go to simple passive cashflow.com/journey and I’ll see you guys next time.

 

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