Pruning your rentals + Outsouring debt with Enrich Author Todd Miller

Now on this podcast, you’re going to be hearing me interview an author that wrote about, enriched about building wealth over time.  There were a few things in this interview that I clashed over. Here’s the thing, like a lot of these authors, it’s nothing to take much to write a book these days. I’ve done it. You guys can check it out and on Amazon and it ends up an Amazon bestseller. Thank you to those of you guys who dropped in on it. The title is the Journey to Simple Passive Cashflow and you can check that on Amazon by the way, but, I think the thing that we’re clashing on is, this guy was saying, you should file these properties and pay them all down, which is a very logical strategy for most people.

 

But again, you never want to be like most people, cause that’s typically maybe not the best way of doing things, And I’ve been trying to distill this down to different thought processes. Is it debt? Is it more loan to value? If you guys didn’t listen to me, some of my rants on this. Loan to value is some arbitrary number. To me, what it comes down to this year, debt, service, coverage ratio, what are your monthly payments to pay the debt service and what is your cash flow?

 

And if you want to go, how the professionals do, what the banks do when they underwrite our deals, they want to see that 1.25. you’re dead surfaces, a hundred dollars. They want to see $125 of cash flow coming in. So that there’s a bit of a margin there. Now you can artificially create that debt, service coverage higher by putting more down payment on which do you guys know?

 

That’s not what sophisticated investors do. They put the least amounts to get that cash flow and that returns as high as they can, but keeping that debt, service coverage ratio, right at that optimal point at around like 1.1, 1.25, I think that’s, one could argue that it’s better to be higher, you give up some of those returns.

 

So that’s where you are as an investor. And personally, I’ve been on this journey where I was big on tertiary markets, Which have higher caps. Now the problem with higher caps and the reason why they’re higher caps is they’re not as staple locations to invest in. I probably  was one to say that I’ll never invest in Hawaii or California because of the low caps.

 

And, they don’t cash flow in cash flow is what you need in a case of recession to hold onto the asset. But yeah. The good thing about those kinds of markets like New York, Chicago, Miami, Hawaii, Seattle, and all of California is that it’s a very stable place, people want to live there and you have to look at both sides of the argument there.

 

So where I’m thinking as you’re new, as your net worth grows over $5- $10 million. Now you start to get away from the tertiary markets. For sure, it gets to more the secondary and the primary market, probably with the primary markets overall, which is why I probably still won’t invest there at this point in my life.

 

And my journey is because there’s just so much competition in most areas. There’s so much, dump on sophisticated money in Hawaii, Seattle, LA, Where they’re just people just buying properties, reporting on it too, for legacy that those are the kind of people that push up the pricing. And that’s a second layer to this. No, there’s a few things to be thinking about. And I think this is where, you really need a network and this is all we tell people, Hey, if you’re stuck, if you’re tired of just dealing with people who just don’t understand investing on this level, join the family office, Ohana mastermind group of, or details in that go to simplepassivecashflow.com/journey.

 

And before we get going into today’s interview with this author, I had a question. It seems like a lot of the investors are worried about interest rates coming up  and I think yes, it does really impact the numbers. If you’re a buy, hold and pray type of investor. And I was a buy, hold and pray type of investor from 2009 to 2015, when I was just buying these little single family home turnkeys. if you guys want to go download the analyzer at simplepassivecastle.com/analyzer, you can download the spreadsheet and you play around with the numbers. you change the interest rates from 4.5% to 5% or maybe five and a quarter. And you’ll see that cash flow drop, maybe you’re at $300 and it drops to seventy-five bucks by making that one little move on the spreadsheet, and I think most of our investors understand this sensitivity analysis when interest rates do make these bigger jumps. 

 

But, this is why I’ve personally gravitated towards value-added types of real estate as we all know wealth comes to those who create value and value can be in the form of many things. And, but ultimately the bottom line in real estate, and how much net operating income does a property produce or in the business world, increasing your Vita. Now, when you are increasing. The value add or the, when your value adds a property, increasing  rents per se, and you’re increasing that net operating income. It makes the interest rate that holding costs less of an important factor to use in an extreme case, like a house flipper. House flippers  don’t care what he’s paying for his debt service; the good ones will, they’ll be able to cherry pick lazy investor money at 8%, maybe 10%. 

 

Beware, If you’re one of those people who take on, lend money to house flippers, and you’re getting 15, 20%, you’re likely going through a middle man who’s selling your basic linear money through an unproven party. That’s why you’re getting paid so much but that’s a side note. I don’t want to invest in private money notes. I don’t invest with people who are less than five, $10 million net worth these days. Just net worth is a level of sophistication, in my opinion, these days for me. That’s just the class of paper that you’re buying, Because when you have those higher rates of return, even if you’re collateralized with the house flipping project, it doesn’t matter. But I digress. So getting back to my point, these house flippers, they really don’t care what they pay for their cost of, 10%, 20%.

 

It doesn’t matter because they’re buying a property say for 300, you’re putting in a hundred grand in and they’re flipping it 4, 5, 600, maybe even more so that holding cost is, maybe on the scale of 10, 20, $30,000, if in that six month project per se. So that’s an extreme case, And when they’re holding onto a property for one to five years That interest doesn’t really matter. Yes. It piles up. And it’s part of, you can definitely see it in your monthly P and L’s, but if you’re value adding that piece of property, whether that’s a home  flip in that house with burst case where their value adding at 200 grand, you can see how that Brittany trumps that holding costs, maybe even a tenfold.

 

Now, I like the approach of going into stabilized assets where there’s existing cash flow. No light to moderate value add and nothing crazy. definitely I would be on the less on the side of the spectrum of that house flipper, where they’re going after huge amounts of value add, and they could care less about the interest rates, still not to that extreme, but still this my point is that the interest rates don’t really matter as much when you’re doing value. If you don’t trust me, go look at how much money is built up through the routine equity, the net operating income divided by the cap rate in the beginning of the project, and to presume cap net operating income at the end of the project, divided by the prevailing cap rate and the difference of the money made.

 

And then see how much the debt service compares to that. And I think what you’ll see in most value add projects is the carrying costs of the interest costs. Sure. it’s hurting your monthly P and L and your cash flows, but it is a very small relation to the bigger gain. I would say these days, even with a lot of light value add projects, the majority of the money, let’s just call it two thirds, is coming from the retained equity, build up the value, add pop at the end, as opposed to the cash flow. I think back in the day, maybe like 2015, I was seeing deals like in Memphis, which are tertiary markets that I don’t want to invest in which garbage areas, but they have high cash flow and really not as much value add in a separate project because. The location sucks, let’s just call it that in those cases, you would see deals where maybe half of the returns were coming through cash flow, or maybe a little bit more and the smaller portion.

 

So a large portion is coming to routine equity through the years. But, I think that’s why some investors who haven’t caught onto this concept, they feel. Okay. These investors are a little capital area. They’re still doing stuff in the face of all these industries. but when you really look at the numbers again, what is the routine equity portion versus the cashflow portion?

 

You start to realize. Yeah,  who cares about paying a little bit more on interest payments because that’s nothing compared to the end goal of, unfortunately you have to wait maybe several years to realize that. For newer investors, lower net worth investors. They may not feel comfortable with it, but as we always tell investors,  you need to start acting like an accredited investor and more, which is more of a long term for license credit investors who don’t really care what is happening on a monthly, quarterly, or even annual basis.

 

They look at things more on a two, three year time horizon or three to five years. So they zoom out. And when you look on that side, when you’re looking from those lens, Now you’re looking at more, they care more about what is their equity, how’s their net growing over time, as opposed to are they getting their monthly cash flow so they can pay the bills because affluent people, wealthy people accredited plus investors, they got their bills.

 

Take care of, they’ve got that cash flow already. If you’ve got that bass. So their primary concern is, of course, keeping their money, which is why they invest in real estate because it holds its value. And it goes up with the pace of inflation. But they like it because they can add value, and they can realize these huge racks of big gains, but they gotta wait for it. But, I think that’s a difference between, less sophisticated investors who really enjoy getting those monthly paychecks from the rent checks, from their tenants, and all that type of stuff to more of a sophisticated investor who is able to zoom out the little detach, but really compare the two investment strategies on a longer time horizon. 

 

But yeah, I’m pretty confident interest rates will come up a little bit more, but, I think things will subside and that is why we’re taking a little bit of a break. And especially because we’re seeing a lot of newbies getting into real estate and investments and apartments and like the other day I saw like a deal going up for like 120,000 a unit.

 

And the pitch deck was saying, they’re going to value adding it to you. It’s 200,000. I’m like, dude, that’s not going to happen. And that’s the kind of the stuff that’s happening all the time makes me think,  maybe the king of the door has closed, or it’s, just operate what we got.

 

But then again, like you always got to do something, I think that’s the mistake is to, yeah. Especially coming from new investors  who haven’t done Jack or at any point is they’re always looking for that excuse not to do anything. And I think that’s the one thing that inflation has really illustrated to a lot of folks, myself included, that you just can’t stick your money in the bank account, doing nothing.

 

Now the next level up is putting it into an infinite banking plan, making 5% tax-free. I think that’s better than nothing. And I think as somebody who’s pretty conservative, I think that’s the next great option. If you don’t know what infinite banking is, check out our free. I think it’s like a three hour eCourse at simplepassivecashflow.com/banking. you got to sign up to get access to that e-course but there’s a little info page for you guys to read up on the concept, but, enjoy the show guys. And if you guys have any other questions, please submit it over and we’ll see you next time. 

 

Today, we have the author of Enriched, Todd Miller. We’ll be talking about various topics surrounding wealth, time, money and meaning, but Todd, why don’t you quickly go over your step journey towards financial independence from the beginning.

 

Hi Lane, sure. Happy to do that. And it’s really a pleasure for me. Be a part of this community and to be here with you this afternoon, by professional background, I am an entertainment executive. I’ve worked for an, in Hollywood for half of my life and my career rocked and I actually did not realize the importance of creating and accelerating financial security.

 

Until years into the career. When I had successfully reached the proverbial corner office and was miserable and I was handicapped by my financial insecurity. And that’s when I recognized that financial security is foundational and most people think of it as the end point. The ultimate prize for a long and perhaps even punishing me professional path.

 

And to me, it’s the starting point. And the sooner a professional can accelerate financial security, the more and the quicker and better that one can scaffold a life of meaning and importance and relevance and enrichment, which is ultimately where everyone wants to be. I retired about two years ago and don’t look back. 

 

What is it that you can look back on that kind of pushed you over the edge and pissed you off? Or what was that thing? People always have that thing that they could point to. I think we have to back up and I’ve been obsessed with the work-life equation and how to maximize that equation, really for twenty-five decades.

 

And I would say that my whole journey with optimizing work in life, that began in my final semester at Columbia business school, when I was flabbergasted, how many of my brilliant classmates seem to be making an incredibly foolish and short-term career decisions based on us, based on the size of a signing bonus.

 

In other words, choosing company A over company B because company A gives a couple more thousand dollars upfront and that is really puzzling. No, that was widespread behavior at the time. And I thought, can we be bought so easily? Am I missing something in this? And the deeper I progressed in my career with a Hollywood studio, I guess I was fortunate to have a series of events which caused me to be hyper aggressive about getting work and life to work together. 

 

And I quickly figured out the work-life balance thing and my life rocked, my career rocked and everything was going well until my priorities changed. My company also changed. And, I just found that the higher I climbed on the corporate ladder, just the more distant I felt from all the things that attracted me to the business and to the industry and to the role.

 

I guess for me, the pivotal moment was I was hoping to get fired and to receive a parachute. Yeah. So where did this idea come from? Why did you want to get fired?  I was miserable and I no longer enjoyed my work. But yet I was addicted to the paycheck. What was worse? The people or the job work that you did?

 

I would say it was the culture because of the politics. What exactly? Trying to peel back the onion here, trying to get some emotion and get, not get high level, like where we are. Look the higher you go, really the less exposed you are to the actual business. And I found that I was spending most of my day, every day, on a lot of nonsense internal issues.

 

Most of it was political issues. Just as such as territorial control. Hey, this is my responsibility, or, differently in Hollywood, there are many ambitious executives, everyone’s trying to grab a piece of the pie from someone else and jump over other people.

 

And just a lot of the days were spent in corporate in basically survival mode, trying to take down someone else, and just really just trying to score points internally, as opposed to actually advancing the business and looking at the situation that I am describing in a particular Hollywood context.

 

It’s relatable to many industries in a corporate America, whether it’s Silicon valley or wall street, that at some point in particularly at more senior positions, the political dynamics tend to outweigh and overshadow  the real business of the business, and that was what I found myself in, and I found that the company made decisions, not based on meritocracy, but really, because someone shine someone’s shoes.

 

And I was just, I became disillusioned with that situation, and that led. Increasingly that just led to a disconnect between what I wanted, and the reality of this job, but I couldn’t walk away from the job because I’ve benefited from a very hype high paycheck. And I have mouths to feed, and a family to support, and so the reality of having to grin and bear it, so to speak, that really. It really tended to overshadow everything else. And as much as I had worked on a work-life balance, because I did not have this financial security, I was not in a happy place. And so I was expecting, hoping to be fired and looking forward to the occasion.

 

A kid looks forward to Christmas. And rather than that, it was business as usual and more of the same, and I And I remember this one, it never rains in Southern California, but on this particular day in Los Angeles, it was a downpour. And I left the studio around 6:00 PM. I got in my car, I’m driving to my hotel.

 

I called my father and said, I didn’t get fired. And I was just, explosive and that’s really, it’s a very mentally unhealthy place and unhappy place to be in. And after I basically extricate myself from that very toxic situation, I then made accelerating financial security a primary priority.

 

And I was able to fast track that in a relatively short amount of time, and that changes everything, and so the point I’m trying to make to you and to this audience is that often many professionals subscribe. To the trappings of professionals. So success and career aligning, and it’s often that we don’t recognize the importance of creating financial security as quickly as possible because there’s this solution sometimes correctly, sometimes fall asleep.

 

That one has the security of a great and well Payne. But tying financial security to job security is a very risky business and particularly so for very successful professionals. And so the biggest insight that I’ve learned is to always, not depend upon, any other organizations.

 

For my livelihood. So you didn’t get fired. So what kind of transpired, cause eventually you’ve mentioned, you got to FII about five years. How did you make Pasadena. Yeah. So I took, it took several weeks after that, that horrible experience in Los Angeles for me to extricate myself from the company, but I did, I went on sabbatical which was just an incredible experience, and basically reset myself, reset my.

 

My career, my aspirations, joined another company as chief executive and began a second professional life in a business, in an industry that I truly enjoyed at the time. And so as soon as I was on that second career, I then prioritized building financial security through real estate.

 

And while all this was transpiring, I was living and working in Hong Kong. Yet I managed to build, house by house, a modest single family, real estate portfolio. In the United States. And, so I took many trips to the U S. Some of these were family trips and many people went to Disneyland while the Millers went to California and we went house hunting.

 

We left with the souvenir to have a house under contract on business trips to Los Angeles. I wouldn’t leave LA until. Had a house under contract. And so trip by trip year by year, I was able to establish this portfolio of single family homes that really created the foundation for me to achieve FYI and to no longer have to work, in order to.

 

To support my family, I got more sophisticated as I got along, but certainly the pivotal point was building that property port portfolio by remote control from Hong Kong. How many assets, average rents, average or just price a little bit. Did you do any rehab or anything? No.

 

So I very much focus on, oh, w let me take a step back. I always believe in focusing on where you want to end up and then working back to the. And generally whether it’s a financial goal, whether it’s a personal goal or a career goal, I think that’s a good process to adapt. And so my objective in building this property portfolio is to build layers and layers of passive cash.

 

And I w I put a premium on passivity, which means that I want this experience to be as hassle free as possible. And as a result of that, I focused on the ideal demographic that I wanted to rent to. And then I asked myself, what kind of property would appeal to that demographic. And as a result of that thought process, I focus on middle to upper middle class, single family homes.

 

And, depending upon where you are in the country, that means different things in different places. But I started originally in Southern California and, and I completely outsource everything with respect to the actual running of these homes. Again, my goal is high pacivity and Melissa and over the rents being brought down average.

 

Yeah. So starting in Southern California, the purchase prices range because I did this over a number of years from $330,000. Ultimately to about $430,000 and the rents associated with that, range from 2200 or so to to currently about 2,600. And so it’s, and I have a number of properties that fall within that range in terms of the cash on cash yield. It has been less spectacular than other parts of the country where I now invest.

 

But the appreciation on those homes in California, and particularly at the timing of the. That’s been quite good. And so once I purchased a number of homes in California I felt that doing that, building that portfolio in California had run its course. And so I then started building a secondary portfolio in Kentucky.

 

How many houses did you get into California before you moved? So I kept at four. And then and right now they’re doing 80% on the value debt. No I am, I have a toxic relationship to debt. And we can talk about that, but I am all like, Okay. So you’re a hundred percent cash in those types of things.

 

Yeah, let’s talk about it. Most times out, I like to use as much debt as I can, as much as I cash it all. But yeah, walk me through the thought process. Wouldn’t you be able to take, you had maybe what, a $400,000 five policies. How much equity was there two mil to two in California?

 

Yeah. So the whole goal, again, you have to think about what the outcome is, what the desired outcome is. And for me, it was important to build financially. And so let’s talk about what that means. Most people think that financial security is a number, a goal, but actually financial security is an emotional state. It’s how you think about money. And for me,

 

I do not want to have it. Or have any anxieties about, about owing something to a third party. And so part of what enables me to sleep well at night is to know that I have zero down. And that helps me sleep well at night. And that is a personal choice, but I went to business school and I completely understand the financial benefits of leverage, which is why I outsource my leverage.

 

So I try to harness the benefits of leverage without that being in my book. And so in addition to these single family homes, I also invest in private placements, both equity and debt, as well as some closed end funds and all three of those financial categories, they utilize that. And if I’m doing a PE investment, I would much rather prefer.

 

That the sponsor gets institutional rates and gets the benefit of debt and have that debt on their books rather than on my books. And so through these private equity, private debt and closed in fund investments, I outsource this level. And so that’s my way of trying to harness some of the benefits of leverage without compromising, ultimately my peace of mind, which ultimately affects my financial security.

 

Yeah. And I think that’s exactly what a lot of our community does. Most of our credit investors are getting rid of their rental properties, going into private placements, that syndication circles, the key principle. Name what are your thoughts on, another reason why they do that, so they don’t get dead in their own name, but it’s also the liability, because right now, even if it’s an LLC you’re pro everybody knows right where to see you. They can look it up and they know exactly where your equity is and how much you have. What is your thought process on that side? Yeah. Yeah. And so it’s important to basically. Wrap these assets into a couple of protective layers.

 

And so one would be some kind of corporate entity, and legally that’s hard to puncture, but not impossible. And then on top of that to get some umbrella insurance, at a pretty high level. And so those are the two ways that I’ve been able to do that, to try to insulate myself. Again, going back to that demographic point that I was making, because I focus on middle to upper middle class homes.

 

That also attracts a certain kind of demographic that hopefully mitigates some potential litigation risk because I would respectfully disagree. That’s why we invest in workforce health. These, it’s not in the state of California, which is the litigation capital of the country, but also a lot of our tenants, they just are not, they just can’t muster a lawsuit.

 

And a lot of times the lawsuit it’s, whoever can power it and pay most for low legal fees. Yeah. Yeah. So I look, I have great tenants. I’m a good landlord. Most of my tenants have been with me for very long stretches of time. All of my properties are very professionally managed.

 

The management companies proactively make sure that the properties are in good order, and I invest in the property. And ultimately, and I believe that if you try to conduct yourself in the right way, ultimately that’s the best that you can do. Yeah, no I would agree with that.

 

But the rental property is just one small part of the portfolio. You mentioned private placements, to what would you say would be the asset allocation X between the direct owners. Too. I like your terminology, the outsource kind of debt or the outsource asset management.

 

I, so I truly put a premium on passivity and I belong. I believe in relying on professionals who have much more specialized expertise than I have. Whether that be tax professionals or whether that be property management professionals, insurance specialists. And I essentially, after I started building these single families and after massing about a dozen single family homes, I basically hit a threshold where I said, No.

 

W when I ask myself, do I want to make this bigger? And I could very much make it bigger and I can double the number of doors, direct doors that I have, but I don’t want to create another job. I left a very high paying job. And so Y.

 

I sold them off. Yeah. Let’s hear it. Why create that? But having said that, I, I like, and maybe it’s my Asian background, where people really. Prize and respect, physical real estate. That’s why I keep the single family homes as part of the portfolio. And I would say that part of the portfolio in terms of my income, because that’s really how I measure things accounts for about 40% of my.

 

But on top of that, I then layer it with private equity, private debt. And I have a very strong position in fonts, and so overall about two thirds of my portfolio is positioned and weighted toward real estate. But I also do invest in them primarily. Muni bond funds. And that is for liquidity and for diversification, just because so much of my portfolio is otherwise committed through long-term real estate investments, whether that’s private placement or during.

 

Okay. So the rental properties are just a bit of a tip of the iceberg in a way. I’m assuming, do you ever look to sell any of them or prune the prune, that part of the portfolio a little bit? I do. In fact, I’m in the process of doing, or at least staging one cell now. I am pruning the California properties.

 

For some of the reasons that you’ve mentioned before, the properties have appreciated extremely well, but they’re just not cash flowing relative to other productive uses for. For that value, like that is contained. And you’ve got a portfolio and Kentucky, as you mentioned, are you thinking about making it more into California properties or different geographic locations?

 

So I very much believe that one should try to have a little bit of specialization, early on. When I was building my portfolio, I actually thought I’d buy a place in LA. I’ll buy a place in Seattle. And basically, every market of the day, I thought, let me buy a place.

 

But I realized that’s crazy and for a small retail individual investor, it just doesn’t make sense. I very much believe in creating some modest economies of scale, which is why for direct investments, I focused on those two geographies and on nurturing an ecosystem of trusted experts.

 

That I can completely lie on and rely on to manage them. And so I am in the process of, and this is a multi-year process of exiting my California exposures. And, I don’t think I’m going to add any more. To Kentucky, because, currently in terms of a diverse diversification perspective, I’m concerned about concentration risk.

 

And so I’m trying to figure it out. As we speak, what to do, where to basically direct that money. And I haven’t conclusively landed on, on, on that last year. And by remote control because I was locked down in Thailand, I did a 10 31 from California and I bought sight-unseen three investment homes and.

 

And I did that because I had this reliable network of professionals who I’ve worked with now for a number of years, that they could be the boots on the ground. And that enabled me to do that 10 31 and basically convert one California home into three Kentucky properties, and that’s the way the math works.

 

So still on the fence of, you’re going to sell some of the California rentals one by one slowly, but you haven’t decided yet if it’s going to go back into more California properties or a different tertiary market or secondary, it definitely will not be recycled into California.

 

And so ultimately I will Lexic California, any couple markets, you’ve thought. Yeah. So I’m looking at Birmingham. I’m actually looking at DC, which is where I am at the moment. But I am also looking at DSTs at Delaware statute, statutory trust as well as opportunity zones as an alternative to buying direct properties.

 

And so I am in a diligence process on all those options. Yeah. So this is for folks listening, like DC is definitely a primary market like California, we’re very low rent to value ratios, lower cap rates. For Todd, this is a very different situation, right? His end game scenario is not an immediate growth.

 

But that’s why you invest for low caps for security and capital preservation in those types of markets. I would say today, if you were going to do that in DC and buy these higher end homes, it wouldn’t be a bad idea to do a cost SEG before 2022, before long, lock in those losses, just bank it on an 82 84 form for now.

 

But I know it seems like you’re still undecided, whether they’re going to go, the lower Capri type of market or Birmingham, I am. And I have a few months where I have a runway for me to figure this out. Yeah. I’ve got a couple of properties in Birmingham. I’m sure. Love to unload if you’d like to buy.

 

Yeah. So Birmingham was one of the markets where I originally bought rental properties, but I’m on private placements, syndications that mostly operate at this point. Great. These are like the conversations pruning our portfolios that want to be safe, siphoning it around a little bit, never staying stagnant, but never making wholesale changes.

 

I, one year I sold two properties in Seattle, bought Knight out of state. That’s a little, wholesale change right there in line change if you hockey fans out there. But these are the, what Todd is doing is very. Prudent and if there are ways to do it right, it’s very good, it’s very incremental.

 

It’s cautious, it’s defensive, but it works. And again, I think every investor has to ask, do I want to build a business or do I want to build a financial sector? And those are two different things. And depending upon how you answer that will then dictate how you scale and structure your investments.

 

So again, Todd is the author of Enrich. What are like a couple of big takeaways from the book, just to give people a little teaser to talk. Sure. So Enrich is about creating wealth in time, money and meaning, and because I’ve been obsessed with this work-life equation for a quarter century through my research, I identified three very common and pressing goals, which tend to.

 

Just Sapp, the life out of life for professionals. And these three core challenges are financial insecurity, time, poverty, and a disconnect in priorities. And so we’ve discussed financial insecurity and how to pay a paycheck. And job security does not create financial security in terms of time poverty. This is a pervasive problem among professionals Ernst and young says that insufficient time accounts for four of the five biggest hurdles that professionals face.

 

And so the third core challenge is this perpetual disconnect between how professionals wish that they could spend their day versus how they actually spend their day. And there’s this demoralizing gap between what we wish that we could be doing. And you know how we actually live our days. And that explains the deep funk that I was in when I was working at that Hollywood studio.

 

And I was demoralized when I thought it’s fire, because just how I was spending my days didn’t relate to what was important to me at that time. And so with those three core challenges, what I encouraged. Readers of this book want to create optionality. So that work becomes a choice and not an obligation and to take control of their lives through intentionality, which is, can you give an example?

 

Of intentionality, right? Yes it’s really about being deliberate and purposeful in how you spend your time. And so a great example is, and what I encourage every listener of this podcast to do is to wake up the most. And ask yourself what will make today a great day, not a good day, not another Wednesday day, but what will make today a great day.

 

And to consider that question on our personal dimension, on a professional dimension and on a financial domain. And then with deliberateness to go about and to accomplish whatever it is that you identified that will make this day a great day. That’s what it means to live intentionally. And so goals and goal setting and goal achievement.

 

They all keep, they actually occupy about a third of. And I dive deeply into the science of goal setting and goal achievement, because it’s so important, but it’s especially important at this moment in time to take control, because one of the biggest facets of this pandemic has been a perceived loss of control.

 

Where events and situations just tend to undermine and supersede everything. And at an individual level, particularly in lockdown, we have a little control. And so at a time when the world seems out of control, it’s mighty important to take control. Where we can in our lives. And that is the power of intentionality.

 

So maybe just give us some examples of you shoot, you’ve seen people make, because I think people understand so liberally that yeah, I got a great life. How I want it today. This is the ideal. But the problem I think people run into is myself included. At some point we’re just running on autopilot and we just lack the imagination to know what those things are, right?

 

Like what, there’s a governor on a lot of us. Yes. I call that the default setting and most of us are not aware of that default setting. It sets. Usually around college time when we’re in college and when we’re in college, we’re directed toward careers. And once we start climbing the ladder, we then spend much effort climbing as fast and as high as we can.

 

Without ever surveying whether or not the ladder leans against the right wall. And part of this default setting is that we implicitly subscribe to a 40 year ultra marathon. To create some degree of financial incision of financial freedom. In other words, we embarked upon our careers in our twenties and we hope to exit if we’re lucky sometime in our sixties.

 

And then we think we’ll be able to live the life that we wish we could have been living all along. How crazy is that? But that is the default setting for which most people unconsciously operate. And so the first step is to recognize the default setting and to recognize that often the juice doesn’t justify the squeeze and then to reject.

 

That default setting, but to be able to reject the default city, you’d need to have something aspiring, something inspirational to work too. And that’s where the notion of life planning and goal setting and goal achievement come into play. Let me give you a great example. So I was in my mid twenties, a few years out of business school.

 

My life was rocking. My career was rocking. I had just paid off all my student loans and I had just spent this amazing three week holiday in Africa with my family. And life, Life was almost perfect. And I was headed back home after this amazing vacation with my family and I was in Dubai at three o’clock in the morning about to board a flight back to the real world.

 

And I asked myself though, do I just go back to more of the same. Or do I go back with some intention and some purpose because I just felt directionless. And so on a scratch piece of paper on the floor of the airport, I scribbled out very long-term aspirations that I had. And once I got back into the office, a few days later, I really looked at that scratch piece of paper, made a couple edits and those aspirations became the first iteration of a life plan.

 

And. I’ve enlarged and developed this life planning system over a number of years, but it’s now become my central operating system and the whole process about making the time to understand what you really value. To understand what your priorities are and then to identify what makes an enriched and meaningful life for you just going through that thought process and articulating a few key aspirations that in itself is a very powerful process.

 

And by the notion of. Laying out what the biggest priorities are in life and then directing your focus toward those priorities. That really is the essence of living intentionally and creating this life of time, money, and meaning, which we all aspire to. What observation there you got out of your noble setting, right?

 

On occasion, you’re able to get out of your default setting. God gave you that traction to do that little exercise. Yes. But I think more than more importantly until that moment, my goals had been, career. Get rid of all my student debt, and I had kinda, and those were modest goals, but I had knocked them all off.

 

And without some team larger for me to work toward too, it was that feeling of directionless, NUS. And yes, getting out of my comfort zone was a great catalyst to recognize. But, I think that we all need to know what we’re working toward because to paraphrase Yogi Berra, if you don’t know where you’re going, you just might not get there with the Trisha CAC. Jessica the cat said something similar, right? You don’t know where you’re going. I can’t tell you where you go, where you are. Something like that. Cool. Yeah, folks want to check out the book. Enrich is the title by Todd Miller, website enrich one-on-one dot com. But any parting words, thought, look I think that, we as investors, we as a nation have been through a traumatic experience over the past year and a half. 

 

And the partying concept that I would like to leave for your audience is do we return to normal or do we aspire to something richer and better? And I would encourage everybody to begin to incorporate the practice of intentionality in their daily lives so that we can go as individuals and as a community to a richer and better normal.

 

Well said yeah. I think most people listening, you guys have already realized that there’s something might be better out there. If not, you wouldn’t have Googled simple passive cashflow, you and haven’t downloaded a podcast. So I think a lot of you guys are heading in the right direction, but keep going on that momentum and pick up Todd’s book Enrich.

 

Again, like Todd says, you have to find something that pulls you, but you gotta figure out what the heck that is. Do the exercises. I also have you guys go to simplepassivecashflow.com/goals. There’s a little worksheet there that you guys can download. And I think we did this in 2019 and 2020.

 

I did a video tutorial. You guys can pull that on the website. I will also say that in the book that I include 11 exercises that relate to different aspects of many of the themes that we have discussed, but that really this book Enrich, goal setting goal achieved. Is such an important process to actually fulfill and create the life that we all aspire to.

 

Everybody. Thanks for listening guys. You only take this stuff so far on podcasts and books. Join the community. Simplepassivecashflow.com/club. See you guys out in real life. One of these days. And if you haven’t yet connected with me, shoot me an email at Lane@simplepassivecashflow.com. Book your onboarding call, and we’ll see you guys next week.