Financial Education Secrets: Achieving Wealth and Early Retirement with Chris Miles

In this conversation, Chris Miles, known as the anti-financial advisor, shares his journey from being a traditional financial advisor to discovering alternative investment strategies that promote financial independence. He discusses the flaws in conventional retirement planning, the importance of cash flow, and the need for multiple income streams. Chris emphasizes the significance of tracking finances, the benefits of passive income, and the necessity of vetting investments carefully. He also provides insights into common mistakes people make when pursuing financial independence and offers practical advice for building wealth.

Takeaways

• Chris Miles believes traditional financial advisors often provide misleading advice.
• He emphasizes the importance of cash flow over mere savings.
• Retiring early requires a focus on creating multiple income streams.
• Passive income can be achieved through various investments, not just real estate.
• Tracking expenses weekly can reveal hidden cash flow leaks.
• Investing in secure assets is crucial to minimize risk.
• It's essential to have a diversified investment strategy.
• Avoid locking money away in retirement plans that limit access.
• The 4% rule for retirement withdrawals is outdated and often unrealistic.
• Value creation is key to increasing income and achieving financial independence.

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• Website: santiagotacoronte.com
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Chapters

• 0:00 The Anti-Financial Advisor's Journey
• 5:51 Lessons from Two Retirements
• 12:34 Navigating Financial Crises
• 15:28 The FIRE Movement: My Perspective
• 21:24 Exploring Passive Income Streams
• 28:02 Unlocking Cash Flow: The 7 Secrets
• 38:22 Investment Vetting: Securing Your Financial Future
• 46:47 Rapid Fire Insights: Key Takeaways for Financial Freedom

Transcript

0:30

Chris Miles is the cash flow expert and anti-financial advisor who helps high-income earners achieve financial freedom without relying on Wall Street. After years as a traditional financial advisor, Chris saw the truth. No one was actually retiring early with 401ks and mutual funds. So he did unthinkable, left the industry, turned to passive income strategies and retired at 28. Then he did it again at 39. proving it wasn't a one-time fluke. As founder of Money Ripples and host of the Money Ripples podcast, Chris has helped clients unlock over 300 million dollars in hidden cash flow and create predictable streams of passive income. He's been featured in CNN Money, BiggerPockets and Entrepreneurs on Fire, and is an admission to help others to stop working for money and start making money work for them. Chris Miles, welcome to ProductiviTree. Hey Santiago, so grateful to be here. You call yourself the anti-financial advisor. Anti-financial advisor. What is that? Yeah, basically means I think financial advisors are full of crap. That's what it means. In a quick nutshell. um But I don't think that they're bad people. In fact, I used to be one myself. early in my career, I actually started out as a financial advisor. My whole career was going down that path. I thought I would be doing that sort of thing for decades. um And I was doing it. I was actually a financial advisor for four years. I was telling everybody to save everything. Spend nothing, save it forever, and hopefully someday you'll have something. And as I was teaching them that, of course, I was drinking the Kool-Aid, I was doing the same thing myself, I was living cheap, just like my dad taught me to do, you know, and trying to scrimp and save every dollar I had. Well, after four years, my dad said, well, Chris, when are you going to advise me? And so I sat down with him at his own kitchen table, the same table he told me to be cheap and spend nothing. And uh as I'm sitting at his table, I'm looking at his finances for the first time in my entire life. I see that he has been debt free, so he doesn't even have a mortgage anymore. He had paid that off early. He had been saving into his company's retirement plan. You know, even when they throw in company contributions and matches and everything else, he was saving into that like every good boy should. And yet at the end of the day, I had to tell him, said, dad, here's the deal. You're 61 right now. If you try to retire today, you're going to need to die in five or six years because that's when you'll run out of money. And again, this has got to save for decades. He said, okay, that's not what I wanted to hear from you. What do I do? I don't know, dad, you did everything right. Everything I teach everybody, you've done it to a T. uh My only recommendation is to save longer, save more, you know, maybe work into your seventies instead. And in fact, that's what he had to do. And I'll tell you, like that really bothered me for about an entire month. I was really questioning. And what I'm teaching right now, is it working? Is it really legit? Does this financial advisor thing work? And of course, I ended up calling a friend of mine, it was just after Christmas time. So I decided to call him and wish him a Merry Christmas. He used to work for me as a financial advisor, but then he quit to go do real estate investing. And I call him up and he says, Chris, my life is amazing right now. My dad and I have actually partnered together to do some real estate investing and we've now doubled his income. as a professor at the local university. I said, wait a minute, you've only been doing this for five months. How is that possible that you can do it that fast? That's too good to be true. He said, we're doing it. And I started arguing with him like, no, stocks are better than real estate. Real estate sucks. And he finally just says, Chris, how many of your clients are truly financially free where they don't worry about money? And I said, well, they all worry about running out of money too soon, right? Kind like we were talking about before we went on the air about you know, how long does money last? They worried that they're going to outlive their money. So I said, none. None of them are that free. Okay, good job, Chris. How about this? How many of you guys as financial advisors are financially free, not off the commissions you're earning, but actually doing these same investments? And when I realized that there was, there was financial advisors working in my office since the 1970s and they couldn't retire either, I said, well, maybe none. There's your problem, Chris. Okay, well give me the answer. I'm not going to give you the answer. You just kind of an argument with me that stocks are better than real estate. I said, listen, I'm open, know, give me something. He says, well, if you're really serious and I don't think you are, but if you are, go get this book by Robert Kiyosaki called, who took my money? It's a lesser known rich dad, poor dad book, which just tells you that mutual funds are horrible. And then go ahead and listen to this AM talk radio show, this radio show. Cause this is pre podcast era. This is 2005, right? He's telling me this. And so I started listening to this radio show that these two real estate investors put on. I read the book. I recognized the weaknesses of mutual funds. And just a few months later, I had to make a choice. Either I stay as a financial advisor, knowing that what I'm teaching doesn't work, or I quit and keep my integrity intact. And so I chose the latter. I quit. I said, I'll never teach about money again. I'll just be a stock trader. I'll be a mortgage broker. And I'll teach ballroom dancing on the side, because I used to be one of US's top amateur ballroom dancers back in early 2000s. And so that's what I was doing. But I wanted to know what these real estate investors knew. So I started to get into that game as well. And later that next year, when I was 28, almost 29 years old, I had enough passive income coming in that I could actually quit. was what I call work optional. You have enough passive income to cover all your expenses. So you work because you want to not because you have to. And so of course, when I did that, I'm 28 years old. Everyone wants to know how this 28 year old kid is retired. Right? And so eventually in 2007, I came out of retirement to teach people how to do what I did. And then the recession hit. The global financial crisis hit us all. Right? And I went from millionaire to upside down millionaire during that time, because I started a new business. The business was almost broke. Money was sinking into that. My real estate was suffering. I mean, a lot of things were going wrong. Eventually, I was able to dig out of that hole without going bankrupt. I was able to dig out of the hole by paying off the debt, but it took me almost a decade to where finally by the end of 2016, uh December 2016 be exact, I finally had enough passive income once again to become that work optional. So you retired first with 28 and then again with 39. Did you get something? I get the point of the financial crisis. This is something that, this is a tsunami that will take businesses on the wave. But if in hindsight, if you will go back to do that again, is this something you learned from your first retirement that you applied on your second? Exactly. That's why I'm still there. Because I did learn. I joked with people that the ambition of my 20s cut up to me in my 30s, right? Because I'll tell you, I had lot of ego and pride because I believed that I had the golden touch. know, because 2006 I'm retired, you know, and nothing could go wrong. Everything I did just seemed to turn to gold, you that Midas touch. Well, eventually everything I did turned to coal. But under coal, with pressure, creates diamonds, right? And so the diamonds I created is one. One mistake I made is that the same income streams that got me to be retired, I cut off some of those income streams. Because when I started this new business with some business partners, those business partners said, hey, listen, I know you got these other income streams, but we want you to be all in on this company mission. Like I want you to be all in here, not having these other little side income streams coming in. I want you to do it all here. So for example, in addition to my real estate, I also had an income stream coming in from being a mortgage broker. Now I used to be the one that did all the mortgages. But one of my friends asked me, he said, Chris, do you like doing mortgages? I said, well, I like teaching about helping them figure out what mortgage to get, but I hate doing the paperwork. I hate dealing with all the process of mortgages. He says, well, Chris, why don't you find somebody who does like doing that? I said, is there a nerd? that likes doing that kind of thing. He says, yes, of course. And so I found a nerd, know, a guy named Clark, because if you have a name Clark, you're going to be a nerd. em so Clark and I, we partnered together. say, Clark, if I send you people that want to get a mortgage, they just need to know which one and you do all the work. Will you pay me half of it? He says, of course, if I don't have to find any clients, you just spoon feed me. I'll pay you half. And so that's what we did. And so pretty soon I would just teach, you know, friends and family, then say, good, talk to Clark. You know, and so was making like easily a couple thousand a month, just doing that alone, right? And other things too. And so like that company, when I was with them, they said, Hey, you know what? Cut off that income stream. I'd rather have you just refer the mortgages to us, to somebody else instead. And so I did. I was like, okay, I'll be a team player. I'll do that. So I started cutting off income streams. Plus my real estate, even though I was able to make profit off of it in the beginning. Still, I noticed that I was trying to be my own property manager. So I was trying to be the one renting the house and everything. Eventually I got bad renters that weren't paying me. And I'm too wussy, you know, I'm too weak to uh ask them to have conflict and then ask them to pay me. And so I'm not getting paid off my rentals when things got hard, but I didn't want to evict them either. And finally got to the point I just had to evict them. And I did. And so I realized I was a bad property manager that I should be managing my own properties, um, cut off income streams. So again, I'm getting hit from different angles. And then the business was ironic about the business is that we were teaching people how to get out of the rat race as Robert Kiyosaki teaches, right? How to become financially independent. Isn't it funny that I'm cutting off income streams that made me financially independent. And, uh, and the people we were focusing on in that business were actually real estate flippers, people that buy and sell, like buy a house and then flip it to sell it. quickly. Well, 2007 that came to a screeching halt when banks started tightening all their lending. And so as a result, they couldn't pay us. So now our business is going negative cash flow. I'm also getting paid less on my home from the home front. I'm not taking on paychecks from the business. And of course, the next thing you know, I'm in the hole $15,000 a month between the business and the personal expenses. And of course, no real streams of income coming in, you know, and that was that was what really hurt me. And so I learned that there's a few key things here. You know, like I said, one, don't cut off income streams. That's key. Have multiple streams of income, matter what. Two, always make sure you're profitable in business, right? Focus on profit. Also diversify the people you talk to if you're in business, right? Like make sure you don't just have one group you focus on, have multiple people you might help. And then three, don't just get six months of cash reserves like many people will recommend. I recommend, especially if a business owner, at least 12 months of cash reserves. Oh, and I'll give you a fourth one. Don't sink all your money into your house. um One thing I made a mistake with is that, you know, in the traditional savings mentality, they tell you to pay off your house, right? Pay down your mortgage and pay it off quickly so then you're not in debt. m Debt-free, in my opinion, is not a bad thing per se. But the process to getting debt free can be a very dangerous thing. Most people are taught pay extra on their loans. Well, if you pay extra on a mortgage onto your house, you can't just pull it out whenever you want, unless you have some sort of line of credit against it. And even then, in the last recession, people that had lines of credit, it got cut back so they couldn't access their equity. So the banks were trying to tighten all their lending. They wouldn't let you get to your equity. What happened to me is I had a house that I had a lot of equity in and I was paying money. down into the house, I figured worst case scenario, you cause I was trying to pay off my debt, right? I figured worst case scenario, if I never needed the money, I can just cash it back out. Cause I'm a mortgage broker. I should know how to get a mortgage. But in middle of 2007, in the United States here, well, that changed, that all changed because in 2007 also the bank said, sorry, we don't like lending to business owners anymore. And especially if you want to take cash out, they're definitely not for that. And so because they restricted their lending so much, that's what brought the real estate values down. So even though I had all this equity that was in there, that made me feel warm and fuzzy as the real estate market dropped because they couldn't lend one, I couldn't access that equity because they wouldn't let me. But as a result, the real estate prices dropped. I lost all that equity. And then they even dropped a little bit more to where now I have, if the house is worth less than what I owe even. And then of course, when I try to, you know, ask permission from the bank to do what's called a short sale. They wouldn't let me do that either because the bank that owned my mortgage was Lehman Brothers who made big news that failed big time in the United States here, right? And so they wouldn't let me get it out. So they pretty much committed mortgage fraud against me. I did get a $300 uh settlement check from the lawsuit uh from that company. That was it. um But anyways, long story short, um I couldn't even sell the house anymore because they wouldn't let me. So eventually I had to foreclose. I ended up losing the house to auction. And they sold my house for almost $200,000 less than what I could have sold it for if the bank would have let me. And so by 2009, I mean, I'd lost the home. I couldn't make payments anymore. I wasn't too much in the hole. I'd already turned in my cars. I was already selling off everything I could during that time. But I'll tell you, if I would have had my cash liquid, and this is why I teach people, get lean, get liquid, and get out. So get lean means be a wise steward of your money. You know, make sure that you're tracking your money every month, right? Actually not even every month track it weekly if you can, right? Track your money. How much is coming in? How much is going out? Understand what's happening with your money real time. That's important. I've found so many people that just by doing that one thing alone, by tracking their money every week, they'll find hundreds, if not thousands of dollars every month that they're leaking in cashflow. So that's important. See when I was. Had so much cash flow coming in passive income and everything else I never bothered looking at my money because it was like it was like air You know when you have so much air you can breathe You don't really count the number of breaths when that air is taken away. You count every breath. Don't you and Instead of waiting till you have no money to then count your dollars Do it even when you're abundant even when there's lots of money coming in especially during that time Count your dollars, you know, you don't have to be cheap. I just be wise with your money A get liquid means that you get the money out of what I call out of prison. You know, in the United States here, we talk about locking your money away, set it and forget it, you know, put into that, that retirement plan and just let it sit there for decades. Don't touch it. In fact, when the market goes down, don't look at it. Don't look at the stock market because that makes you depressed. So just trust that it's going to be there someday. We hope. And, and so people will lock it in prison there, or like in my case, I locked my money in prison in my home equity. which I couldn't get to. So instead have cash in your liquid control. And then when you have more cash in your control and you have more than enough to cover for emergencies or whatnot, then get it out into investments that pay you income. That's the important thing. Rather than try to set it for decades away, get it in places where it actually pays you income. So then you can become work optional faster. Whereas we talked about before we went on the air, you're younger, you can become fire, right? You can become financially independent and retire early. Financial independent. The fire movement is often accused of being extreme or only for high earners. What's your take? Who's fire actually for? I think anybody can be home fire really. But I see why some people say that. Because if you look at the fire group, remember I became fire twice. I was able to retire twice by the time I was 39. You think that that group would welcome me with open arms. You think they'd say, Chris, teach us how you did it because that's what we're trying to do. That wasn't the case in that group. In fact, I got booted out of the Facebook group, the fire group, because I told them, because a lot, here's the assumption. Here's what the basic fire movement's been teaching and it's different than what I teach. They teach one, live as cheap as you can, spend nothing. This might mean you don't even get married or have kids, right? You just gotta be dirt cheap. And finally, if somebody doesn't want to get married, that's one thing, but don't think that just by being dirt cheap that you're really financially independent, right? um But people will try to get as dirt cheap as possible, get their expenses down as low as possible. And then two, you save all your money into the S and P 500, right? Or whatever index, you know, stock market index you choose. Um, and here's the problem. And I, and I had this problem happen with one of my friends who's 30 years old and, we went out to lunch and he said, Chris, I'm fire. I said, really? How do you know? says, well, I've got a million dollars and I can live on 4 % because they, they talk about this 4 % rule, right? That if you have a million dollars, you can live on 4 % or 40,000 a year. He says, yeah, I have over a million dollars and I can live on about 45,000 a year. I said, well, congratulations. That's awesome. However, did you know that that 4 % rule got debunked years ago? That's not even a real rule. In fact, you'd have to be because people are living longer and inflation is higher than it used to be. Now they calculate 4 % because they always recalculate. There's actual like big institutions, financial institutions that recalculate this every year. They think it's closer to the age 70 if you're to live on 4%. people are living longer. In fact, of a couple, two people that live to be age 65, at least one of them will live to age 92 is the statistics. And so 70 is the 4 % rule. If you're going to retire at 70, if you're about 60, then it's a 3 % rule. But if you're trying to become fire, it's a 2 % rule. And so we say, Chris, so you're telling me that I have to save double the money now? I said, yeah, you do. I refuse to believe it. That's fine. Whatever. said, okay, that's fine. But just so you know, I've been, I've invested in the stock market and teaching about money since you were in first grade. So just so you know, I've seen how markets react and you haven't seen anything yet. You've only seen an up market. So you think that things are going to be perfect, but I've seen differently. I've, saw Y2K personally, I was a financial advisor when Y2K happened and we saw the tech crash. I was alive during the global financial crisis. You were still in school, you know, you were still in high school at the time Actually, I don't think he was even in high school, but uh, was maybe middle school by that point But that's the thing is like is like you haven't seen anything you don't know but whatever life will teach you correctly at some point But that's the thing if you want to retire fire based on using mutual funds It's a two percent rule if you're trying to do it before the age of 40. I would say right now There is an answer. There is way to do it that you can actually do it without having to save up that much money. And that way is like, this is why I teach people to do alternative investments or Main Street investing versus Wall Street investing. Wall Street investing is always about throwing your money in the stock market. In fact, those companies are so big and have so much money, right? That they literally spend billions of dollars advertising to you that the only investment you have is the stock market, which is not true, right? Or the bond market, you know, if they want to diversify, which by the way, stocks and bonds are not diversifying. They're actually the same asset class. They're both paper assets, which is why you lose money on both at the same time. But I teach people how to do it outside of that. Things like real estate investing, oil and gas, or other commodities like gold and silver, things of that nature, which have been proven to work over time. Even business, know, like franchises or things like that, or other types of businesses that have a cashflow model. I teach people how to create income. So to give you an example, I had one client, he was 60 years old, had exactly million dollars after he retired and um and his financial advisor told him he says good you're 60 at at this age you can live on three percent a year so this financial advisor actually taught him the right percentage he says you can live on three percent a year to which my client replied he said no i can't live on three percent a year that's 30 000 a year and i live in the state of california homeless people live on 30 000 a year he said i can't do that And so he started looking for answers. found my money repos podcast, you know, and so he started listening to my podcast and then reached out. Well, when we started to get him investing, we got him away from the stock market, started doing things like he bought a couple of rental properties. And just like what I did for myself to get myself financially free, I got a property manager on those. And so he got a couple of duplexes that have property manager that was paying them cashflow every month. He also got some oil and gas investments. So he's getting paid mineral rights and royalties from that. He was also doing things within like apartment buildings and things of that nature where he's pulling his money with other investors to have a percentage ownership in apartment buildings and the next thing you know his Million is not paying him 30,000 a year, but now it's paying him over a hundred and thirty thousand dollars a year and And that's the difference is that it's not about how much money you have It's about what kind of income can you produce with that money and that's the real the real secret here Let's talk a little bit about passive income. You're a big fan of passive income. And you mentioned real estate. Real estate has a high toll. It has a high entry. Not everybody can buy a property in real not even mortgaging. What other income streams, passive income streams, you see for people that is not yet at the level of acquiring perhaps rental properties or real estate, what can they do? Well, if you want true passive income where you're hands off investing, you need to have money. I would recommend you have at least a hundred, $150,000 that you can use to invest to have true passive income. um And just so you know, rental properties aren't that expensive. mean, even now, I mean, like in the U S for example, you can do a down payment of maybe$40,000 and have a rental property, you know, and have an asset that's certain pay you. Yes, it's not cheap. It's not like you have a thousand dollars and you do it, but I'll tell you, I get so many people all the time to say, Chris, I got my first 5,000 or $10,000. What'd do with it? My answer? Nothing. Do nothing. Because let's be honest, do the math. Let's just say you have $10,000. Let's just say you happen to make 10 % on an investment, right? Most of our investors pay double digit returns, at least 10%. But stock market, by the way, the stock market has never averaged 10 % long term. Stock market's been averaging for the last 30 years. The S &P 500, specifically in the US, it's averaged 8.0%. 4-5%. That's the highest I've seen it in 20 years as a 30-year average. Usually it's between 7 and 8%. So when people think, oh, I'm to make 12 % stock market, no, you don't. I used to teach that as a financial advisor, but when I looked at the reality, I realized I was lying. Not knowing I was lying, I was just regurgitating information I was taught to or taught by financial institutions. But it's not true. It's not 12 % that you're making. You're making closer to 8%, right? So think about it, even if you made 8 % on $10,000, you made $800 bucks that year. That's not going to move the needle. Going from 10,000 to 10,800, you're not going to get rich. So what you really need to do first is one of two things. One is you just keep working hard. You do keep saving, but save it in safe places. I mean, you could do a bank savings account, but you're not going to make money there. In the US, I talk a lot about what's called, what we refer to as Max ROI, infinite banking. where you actually save inside of a life insurance policy that right now is paying 6 % a year tax free, much higher than any of the banks are paying right now. And it's no risk. So I teach people to do that kind of thing to help at least earn better than 0.0 % in our bank accounts, right? That's one option for sure. You can do it to help build it a little bit faster. But again, for the passive income, don't do it that way. Just keep building, keep working and saving. And eventually you get to the point where it does feel like a long haul. But if you do keep folks on, if I could save 10,000 a year, 20,000 a year, if you could keep just trying to save more to build that up and then protect it, you'll get there a lot faster to financial independence than you will someone who takes their 10 grand, they gamble it, lose it all. And they have to start all over again. And that's, and that might've been a year or two years of their savings that they took to do that. Right. So don't go and fall into that trap. Now that's the one option, right? That's a safer option. There is another option you can do that could It won't be passive because here's the truth. If you want income coming in, either one, you get your money working for you or two, if you don't have money, use time and energy. Right? So here's one way you could do this. And this is something that we do a lot in the U.S. um Although it's getting tougher now, but still it's still working, is you can do what's called a house hack, right? Where a lot of times you hear people talk about the BRRR strategy, like B R R R, you know, strategy, which is buy you know, renovate, rent, and then refinance, right? You hear that all the time. um But what you could do, you could do that, or you could do a house hack, which is you buy a house that either has multiple rooms or units, something like that, maybe it's a duplex, you rent out one side, and then you rent one side for yourself, and then rent out the other side to someone else. And you can turn your house into a rental. It might just be a bedroom. That's becoming much more common lately. You might just rent out a bedroom. Say I got a three bedroom place. I only need one bedroom. I'll rent out my other one or two bedrooms for somebody else. And then you're making cashflow off of your house and essentially they're helping you pay for your mortgage. That's one way. And especially if there's any appreciation on your house and things like that later on, can refinance the house, get the cash out. Then you can invest that money. Right? So that's one option. The, the BRRRR method. Might require you to do more, but here's what most people do with the burn method. They'll buy the house. They will probably fix it up most likely with their own human labor or they hire somebody out slowly to help renovate the house, get it in nice condition. Um, while they do that, after they've done that, if there's a lot of equity, cause maybe it was an, you maybe it was an ugly property, right? They buy an ugly property, they renovate it, they make it look pretty again. The value is higher than they could refinance. They can take the cash out of it. So then they have money to invest. but then they can also rent it out. the nice thing is if you're uh owning the house, you can put a smaller down payment. So for example, in the United States here, you can do what's called a uh FHA loan, which is a three and a half percent down payment. So if you buy a house, even if it's say a half a million dollars, you really only need to put down roughly about, uh you know, 18,000 bucks, give or take, right? So you can put down about $18,000 on that house, buy it, you can start to renovate it and do that kind of thing. Um, and then if you do build some equity, you could refinance it, but even if you don't, you could still just move out of it, rent it out, make it into a rental property. And then of course, make cashflow off of that, hopefully more than whatever your mortgage payment is. And so that's one strategy that people can use again, lately, it's not been as good of a strategy that burst strategy. have to be very, you usually have to buy a really ugly property, like a property that you buy for cheap to make that work. Cause then if you buy it for cheap. renovate it, it's worth more, you can rent it for more, and you can possibly refinance and get the cash out too. But that does require time and energy. So if you don't want to be hands-on like that, then go back to the other option, is just save until you get, I would say, least $100,000, $150,000. So then you can diversify, even though you can do it with less, like I mentioned with real estate, still diversify and do it a little bit safer than just trying to go all in on one investment. What are the 7 secrets to free up cash today that most people overlook? Yeah, I mean like I said, like there's at least seven. Um, by the way, this is stuff I learned when I went broke. Um, so what funny story I stopped teaching me how to get out of the rat race because I was back in it because I was broke again. So I can't teach something I don't do, but I did start teaching people how to find money. Um, that they probably didn't know they had because the truth is people would come to me still when I had that coaching business, they'd say, Chris, I wish I could pay you. This is in the depth of the recession. They say, I wish I could pay you, but money's really tight right now. I just don't have the money to pay you. Now, quietly in my own mind, I would say, well, I can find the money. I wish I was as good well off as you are because I'm more broke than you are. I wouldn't tell them that verbally because that would be business suicide. uh So what I would say verbally is, hey, listen, if I can help you find the money, will you pay me? I said, yes. I said, great. Here's where you can find the money. ah So of those seven secrets, like I already mentioned about tracking your money. That's a big one, right? That's always the first step. another one that many people don't realize is, for example, um, stop contributing to your retirement plans. You know, so many times I saw people going broke or even like in the hole each month, raising, you know, having credit card balances yet they still keep putting their money away into the retirement plans. And to me that's ridiculous because one, like I said, if you're trying to invest in the stock market, it's not going to beat the amount of interest on a credit card, for example. Right. I can't tell you how many times I saw people that. would have a bunch of like, you know, a bunch of different loans and debts, but then also have the retirement plan they're still contributing to. And I was like, listen, you've got a hundred thousand in this retirement account. You know, in fact, I actually told this to a one guy in particular, this guy was 62 years old. He was a business owner and his practice, his medical practice was starting to become less and less profitable to the point he was burning out. And I said, I said to him, like, okay, here's the deal from when I'm seeing your whole situation here. You know, I see that if we can refinance your house to a lower payment because he was paying it off, he was, he had that loan for quite a long time. If we refinance and reset it for a 30 year term, we lower the payment. and actually at that time we even could lower his interest rate a little bit too. I said, but we can also pay off some of these other loans that you have to, whether it's a car loans or credit cards or whatnot that he'd started to accumulate over time. Cause he was very disciplined. He, he had saved a half a million dollars in his retirement account, but he still had all these loans. I said, listen, if we can refinance your house and pay off some of these loans with a hundred thousand dollars, we can free up $4,200 a month. That's $50,000 a year. said, he's like, where would you get the cash? From your retirement account. But how am going to retire? Here's the deal. What's the whole point of retirement? Cashflow, right? Yeah. This gives you cashflow now. And it's guaranteed. It's not even, hope I make money in this investment. You're making a guaranteed return on your money. Yeah, but how am going to retire? Let me put it this way.$100,000 frees up $50,000 a year. That's a 50 % rate of return on your retirement money. That's a no brainer. How am going to retire? Finally, his wife said, because it's always the women, the women get it first before men do. They're like, this makes perfect sense. It's common sense. Do it. You know, you're still going and you still have $400,000 we're not touching. So you can still retire. And so he said, all right, fine. I'll do it. So he did it. And guess what? Freed up 4,200 a month. Just like I said, here's what's cool though. And this kind of goes with some of these other, uh, cashflow secrets, right? Is that because he did that, he started to relax a little bit. He started to breathe more. Um, in addition to that, we also found ways to save them on taxes. Most people, especially business owners I've noticed in the United States. Overpay on taxes and not know it even with an accountant. They still don't take advantage of all the tax breaks And so we saved him about 20,000 a year of tax breaks So one we free up 50,000 a year in debt payments Two we free up 20,000 a year and overpaid taxes from different tax strategies. That's 70,000 a year Could you imagine how much more he relaxed by framed up a 70,000 a year? That's almost six thousand dollars a month on average. So guess what happened? He relaxed. When he went to his office, his medical practice, when he started talking to people, he started to convert more patients because he wasn't so stressed about the money. He relaxed a little bit and people started to say yes, which is a big secret as a business owner. If you want to get more people to say yes to you in business, improve your cashflow at home and you'll find out that you relax more and you sell more as a result. And so he started to get more patients in. Just without more patients coming in. He just got more patients to say yes, they become patients of his. And I asked him, said, well, how much more are you making per month now? Because it's not like you're getting more patients coming to you, you're just converting more of them. And he said, I'm probably making another 2,500 a month. And I said, that's 30,000 a year. Your $100,000 just made you $100,000 a year. Do you just realize that that's way better than anything? would have got. In fact, you would have been lucky your 500,000 would ever make that much. And then the light bulb went on. It took a month to figure it out. But then it's like, oh, and I'm getting it now. I don't even have to retire. That's right. You can get it now. And I think that's one thing that people miss on some of those cashflow secrets, right? I also tell people, I said, like, you know, like part of that is stock contributor retirement plans. Like you said, you can pay off debt instead, but often we can take those retirement plans, money you're contributing. What if we put into cash flowing investments, right? Which is like one of the seventh point is how do we actually do passive investments too, to make more money, not just save on money, right? So that's a big one right there is how do we stop putting money away, locking in prison where it may or may not make money to where we can actually make cashflow right now. um Another one, speaking of debt, um I'll kind of end with this one, because this one's a tough one for people, is I tell people to ignore the interest rate. Ignore the interest rate when it comes to paying off debt. The interest rate is not what kills you. It's the monthly payment, isn't it? If you ask anybody, if you really get down to the core of it, what is it they hate about quote unquote debt or loans? They hate that they have to make a monthly payment. And so I, when I was going broke and I had very little cash, I had a lot of debt that accumulated as a result. And I had a choice. Do I take my cash and invest it for passive income or do I pay off debt? And so kind of like what I did with that guy, I started looking at debt of the payment as the cash flow, almost like your passive income, right? How much money do I free up with? How much does it cost me to free up that much cash? So for example, say that I have a $10,000 credit card, that's $200 a month. Then I also have a $10,000 car loan, that's $500 a month. Now let's just assume the credit card had the highest interest rate. Most financial experts will tell you, experts I say in quotes, right? Most financial experts will tell you, pay off the high interest credit card. Okay great, you pay off the high interest credit card, you free up $200 a month. But what happens if something stressful comes up? Would you rather be paying $200 a month or $500 a month when your money is stressed? I'd rather pay the $200 a month, that would be the credit card. So the best thing to ensure that I'm financially secure Instead to pay off the $500 a month loan even if it's a lower interest rate Because it gives me the best bang for my buck I get the best rate of return on my cash because think about it $10,000 if I can free up $500 a month, that's $6,000 a year of cash flow I freed up that's a 60 % rate of return on my money And so so many people are trying to focus on trying to their money in the stock market hoping and praying to make eight or ten percent a year maybe and by the way Vanguard actually predicts that the stock market will only do between 2.8 and 4.8 % average for the next 10 years because we're already overinflated on the stock market. So there's no real room to keep growing. So think about it, you might make if you're lucky, four or 5 % where here you pay off that$500 a month car loan, even if it's a say a 4 % interest rate, doesn't matter. You've increased your cashflow by 60 % a year on your return of your cashflow. Even then, of course you figure out the $500 month. Guess what you can do? You could still pay off that $10,000 credit card within a year and free up the other 200 a month. And now you free up 700 a month, right? That's, and that's what I did. I started to pay off. call it the cashflow index to make it easy rather than calculating ROI to make it easier for most people. I just take the balance of the loan divided by the minimum monthly payment and I get the cashflow index. So for example, 10,000 divided by 200 is 50 on the credit card. 10,000 divided by 500 on the car loan is 20. My rule is pay off the lowest cashflow index first. In fact, that 20 to compare to the 50 just means it's two and a half times better for me to pay off that car loan than it is to pay off the credit card. And so I do that. And then after I pay off that lowest one, I go to the next lowest one and pay it off. The only time I'm worried about the interest rate is when there's two that I have to choose from that are really close to each other. If you say there were a few points of each other. Then yes, then I go for the highest interest rate because say that they're both like 30 or 33 but the 33 is a 18 % interest rate versus a 6 % interest rate. Then yes, I'll pay off the 33 first versus the 30. So there are times I will jump around a little bit with nuances, but that's only when they're like really close to each other. But for the most part is just pay off the lowest index first, roll that cash flow into the next one, to the next one, up to a certain point, especially when you get to about 40 or 50, after you get to 40 or 50, you might stop doing that as much and start trying to focus on investing instead. Chris, uh today there are many, many, many millions of types of investments from vertical avocado farms in California to properties in Turkey. You can find absolutely anything in the market. How do you vet your investments so you also don't get scammed first, but also they are profitable? Yeah, that's a great question. mean, one, I like to make sure that whatever investments I'm going into, one, it's actually secured by a real asset, right? It's just like a bank. Think about banks. Banks really are big investors. And if you think about a bank, they literally bank on you. mean, pun, I guess there's a pun there, but they do bank on you in the sense that they have to trust you. And think about the due diligence they do on you before they give you a loan, right? They'll, uh, they'll make sure that you have a good payment history, right? So you have a good credit history. They want to make sure you have cash reserves. If you're investing, say you're buying a property, they like to incentivize you by having a larger down payment, right? So they will try to get you to have a larger down payment. So there's less risk for them, not for you for them. And if you could put a larger down payment, they'll say, great, thank you. We'll give you a better interest rate. They'll also too, if you try to pay it off faster, um, because you're not trying to drag it out. They'll also give you a better interest rate. That's why I tell people banks don't want you to have long-term debt. That's risky to them. They want you, they give you lower interest rates on short-term debt. So they get the money back faster and they can accelerate and velocitize your money faster and make more money off of you essentially. That's why it's risky for us to do short-term debt. It's better to stretch out the terms of the debt payment. So again, they're looking at how can you pay? Do you have cash reserves? know, they want to, they want to make sure of course that Ultimately that you have enough income coming in, right? That your cash flow is in a good place. So they look at those three things. It's usually cash reserves, credit history and income, you know, that you can, you know, be able to pay those debt payments. No different when I look at investments, it's very, very similar. I'm looking at one, is there a secure asset here? Because I don't want to be essentially loaning money like it's a credit card, you know, where it's unsecured. I want security. So is there a real asset there? um I also want to know too, I... Here's one thing I tell people all the time. You're not just betting on the horse. You're betting on the jockey, right? Referring to horse racing. Because the horse can be a great horse, but if you have a bad jockey riding that horse, they may not win the race. And so the jockey sometimes is the one that is the X factor that makes that horse win. Well, same thing here. Who's the person doing the investing, especially when you put money with other people. It's one thing if I'm buying my own property, right? Like it's if I'm the one that owns the property, control it. That's one thing. The only thing I worry about is having a good property manager. I have to make sure they're, they, they have a good track record themselves. But when I'm investing my money with somebody else, say it's a project that you're saying, if I'm trying to buy, you know, houses in Turkey, you know, what if I'm trying to like, had, remember I had, I got pitched, uh, about, um, buying, you know, doing a development project in Belize, you know, for, vacation properties and things like that. I'll tell you the one thing I'm, when I looked at Belize property, as I said, wow, that looks awesome. I just want to, I just want to stay there. Do I have to invest in it or should I just stay in it? That's what I was looking at. But I'll tell you, when I looked at it, I said, okay, let's look at this, the person that's actually taking my money, who are they? Have they done this before? So like with the Belize property, is this their first property? It was. They've never actually done a property development in Belize nor anywhere else. Well, that means I'm their guinea pig. I don't want to be their guinea pig because people always learn over time, the ins and outs. I also looked to see how long they've been doing that kind of investing. one, oh not only just, you know, what's the investment, but how long have they been doing this kind of investing, right? Like, this been for at least, in my opinion, at least 15 years is what I look for. I want to see, have they been investing since the last global financial crisis, since the last big recession? um For example, in the United States here, I saw so many of my friends, right, that came to me. They said, listen, you've got clients that you can, you know, that you can connect us to. Because hey, we've got some amazing, amazing real estate projects you should have them invest in and we'll pay you big, big interest too. I said, well, that's great. When did you start investing again? 2017. And we've never lost money on a deal. Okay, that's good. I look for track record. Have you ever lost money on a deal? Great. And I'll get back to that one in a second. I said, here's a deal. Everybody, their dog made money in real estate since 2017. You don't have to be an expert to make money. When was there a hard time that you made money when real estate wasn't good? So for example, in the United States, your last few years, I mean, we saw 2022 when interest rates skyrocketed, a lot of people, in the apartment space, lost a lot of money. Even good operators lost money because the interest rates went too high, too fast, and their values, even though they had equity, tanked, and they lost all their equity, and then they couldn't refinance, and then they were stuck, and they had to just sell or give up the property with no profit. So then people lost their money. That was even in a good market, right? Or supposedly good market as we thought. But it wasn't. I so I saw so many of same friends that were around since 2016, 2017 lose everything and go bankrupt during that time. So you have to be careful. You want to get people that actually have had a lot of experience. And by the way, just so know, 2022, 23, 24, when apartments got hit really hard, I had friends that were investing for the last 20 or 30 years also lose money. on some deals, you know, not all of them, but they still lost money on deals. So does it guarantee that you get somebody with a lot of, a lot of good track record, you know, they've been paying out consistently for 20, 30 years. It doesn't mean that you're going to get paid out every time, but it does minimize your risk a lot more. Um, here's another one that's, that's not often taught. If you want to lessen your risk, it's actually better to be the, the creditor versus the owner. What I mean is it's better to have a debt position than it is to have an equity position. See, in traditional finance, they always teach you that ownership is the ultimate goal, right? You should own everything. Don't have debt. Don't lend your money. Don't do that kind of stuff. You should have equity. I used to believe the same thing. And then I saw the genius behind those that were smarter than I was, especially in real estate and places like that, is that the people that always get paid back first. are those that lend their money to investors. So think of it this way. When you own a property and you have a mortgage on that property, when you finally decide to sell, who gets paid back first? Is it you or is it the mortgage company? It's always the mortgage company, right? They get paid back first. So therefore it's like, oh, well that means I'm as the owner, I'm last in the pecking order. So if there's no equity, I get paid nothing, but the person that has the debt that lent the money, that person does get paid back first. And so even lately I've started to have a mix. I do have some equity investments, but I also have a lot of debt investments where I lend my money to investors knowing that I have to be the first person paid back. I'm in what they call first position. I it's like a first mortgage. I want to be the first one paid back before everybody else. Then of course, if there's extra equity, the other people get paid too. Most people, especially novice and amateur investors, will always try to go for the equity play every time thinking that they're going to make all this money, but they may not. They could be the very people that lose all their money, where me, I get paid back first. So I don't care about just getting a return on my money. I want the return of my money. I want to make sure my money comes back to me. So that's why a lot of times I'll take debt positions. I'll be the person that gives them debt so that I get paid back first. Chris, let's do rapid fire questions, rapid answers. Let's do five of them. Number one, what's the first thing you will do if you had to start your fire journey from scratch? First thing I would do is focus on value creation. You know, I would build up my income again, build up my income, control my expenses and start to put away every dollar I could save it and save it. But not just try to focus on safe, safe, save, which is, or reduce my expenses. Cause you don't go so far. The unlimited potential is your income. And the way you create more income is that dollars follow value. How do you go about serving people, solving problems or adding value in such a way that money is the natural exchange. the more valuable you are to the person that pays you, whether it be your employer or your customer or client, the more you get paid. And so focus on that. How do I create more income now? Which by the way, I had to do twice, right? So I get it. That's what I did to help me get out. That was the number one thing is increase my income as much as possible, keep my expenses low and save it all. Number two, one passive income stream you would never touch again. that I would never touch again? When it comes to me, I would never touch again. um If in constrain you won't you don't want to go back again to Hmm. If there's any income stream I wouldn't want to go back into, it would probably be starting a starting a business that I don't control from scratch. Um, for example, um, I've done things like with network marketing or other types of businesses where I'm just a contractor. have no control over my pay. And of course I have to build it from scratch still. Um, if it doesn't align with my passions, especially I don't do it. So the one kind of income stream I want to do is just work for a paycheck. Right? I just work for money. I want to make sure I'm working that aligns with my passions and my talents. If I can do that, I make more money. Number three, what's the most common mistake people make when chasing fire? Most common mistake is they try to invest their money in the stock market. And that's a bad, bad place to be. It's been great the last 16 years, but watch for the next 15, 16 years, it won't be as good anymore. Therefore, what's one book, a resource every aspiring fire should read? If you haven't already Rich Dad Poor Dad, you should read that, right? oh Robert Kiyosaki, Rich Dad Poor Dad is just like the good place to start or Cash Full Quadrant is another good one. I'll say this though, if you do want to become fire early, there is a book called Work Optional Blueprint that's coming out in September by a guy named Chris Miles. I know him by the way. um It actually talks about my whole journey and how I was able to do that. What's one thing you do better than most financial gurus out there? I've actually done it. You know, I always tell people that if you're to find a mentor or somebody to follow, follow somebody who's been there, they've done it and they're still doing it today. Most gurus, they might have been there and done that if they've done it at all. um Many times they haven't. um But the thing that I've seen missing a lot of times, they're still not doing it today. Be careful of influencers on Instagram and TikTok where they're like 30 years old. They've only done one thing. And they're saying, hey, this is what you do. But they've never lost, right? They've never had that wisdom they've gained from experience. They're just getting lucky. The people that bought Bitcoin, you know, 10 years ago and they're saying, this is what you got to do. What if Bitcoin doesn't make more money in the next 10 years? Find somebody who actually has been there, done that and still doing it today. And they've done it for years. Chris, how can people know more about you and get in touch? Anything Money Ripples, moneyripples.com, at Money Ripples on social media, or you can check out the Money Ripples podcast that we have also on all platforms. Thank you for the masterclass. I'm taking away three things today. The number one is that the retirement financial system is broken or it's outdated or at least what they teach us to do is outdated. There are new rules. We have numbered many of them. Number two is that you can get unbroke if you think and if you use your money wisely. People say, I'm broke, I'm done. And people do terrible things because they get desperate. I think that they need to think, and you gave also good examples. And um the number three is that the stock market is so-so. and that we need to find ways to put our money to work for us that are less traditional and less conventional perhaps. Chris Miles, thank you so much for being with us today and for teaching us so much. It's been a pleasure, appreciate it.