Fuller Wallet Media

Fuller Wallet Media

Fuller Wallet Media

How To Build Passive Income With Chris Miles

FWM 18 | Passive Income

 

You’re working hard all day for an employer, just taking your precious time away from you. You don’t want that life for you and your loved ones. What’s hindering you from achieving your goals and becoming financially independent? Listen to our guest Chris Miles as he shares his knowledge and insights on how you can build passive income in the real estate industry. He discusses the importance of a cash flow mindset and having true financial freedom. Learn how to generate passive income now and get out of that prison where you’re paying 401k and others that drain the life out of you.

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How To Build Passive Income With Chris Miles

Welcome back to the show with myself, Gem, and our host, Julie Houston, and our very own wonderful guest, Chris Miles. How are you doing?

I am fabulous, Gem. Thanks for having me on.

Why don’t you tell us a little bit about yourself and what you’re into right now?

My name is Chris Miles, the Anti-Financial Advisor, for those that don’t know who I am. I’m the Owner of Money Ripples. The primary thing we teach people to do is what the sign says., how to live life now, not tomorrow. In other words, when it comes to money, how do you actually have money today, so you work because you want to, not because you have to. We’re focused on cashflow passive income, making sure that you’re in a place you actually have true freedom because the truth is that unfortunately, in the financial world, they teach you more how to delay gratification until you’re dead. At that point, you finally get rest. You get to rest in peace hopefully, if he could afford the box, it depends on how broke they make it.

That is very true. I know so many people that in the last ten years have retired, didn’t get the pension they were supposed to get, it’s just insane.

It’s not like trying to be a downer to start the show, but congratulations, your life could be a failure. I’m just kidding. It’s not going to be that bad. My dad, for example, he’s the one that inspired me to go this direction. Not exactly on this direction, I didn’t intend to go into money initially. I actually was a Sociology major in college with a triple minor in Psychology, Japanese and Ballroom Dancing. Those courses go together naturally.

I was the first one in my family to actually go to college. Even though my dad taught great values growing up, the thing is he was the ultra-penny-pinching saver. He was like the guy that Dave Ramsey wanted to be like. He was like the role model for Dave Ramsey because he was cheap as cheap can be. He was saving all he could. He would pay off his debt early. That’s what he told me. He was like, “Chris, you save everything.” That was pretty much my financial education as a kid.

He also would say things like, “We can’t afford this. Money doesn’t grow on trees. What do you think am I, made of money?” or even worse, “I’m going to work until I’m dead.” That’s not the life I want. Like every rebellious kid or teenager, you’re like, “I’m not going to live that life. I’m going to be different than my dad.”

I went to college. While I was in college, I was going to become a business consultant. I thought, “If I’m going to have that business, shouldn’t I have real life business experience not just have a degree?” I looked around, “What kind of entrepreneur activity or business could I do?” The first thing that came up that sparked something in me was becoming a financial advisor. I didn’t know at the time, all you had to do is just pass a test with 70% and have a heartbeat and not have a criminal record, then voila, you’re a financial advisor.

I thought you’d have to have some expert a gift. I thought you had to be like Alex P. Keaton, if you guys remember Family Ties back in the ‘80s, that TV show. It’s Michael J. Fox’s character. I thought it was so cool. You could drop money on a table, and he’s like, “$0.73,” things like that. That’s what I pictured, people being economists when they became financial advisors. The truth is they’re just salespeople in suits.

FWM 18 | Passive Income
Passive Income: If you ignore passive income and just focus on accumulating money, you’ll never know that there’s this whole other world where millions of us have been doing this strategy for years.

 

After a few years of being trained in there, the tables got turned. The next thing I know, my dad’s asking me to come visit him at his kitchen table. He’s saying, “Chris, I’m 61 years old, Y2K was rough. What do you see? What can I do?” I’m looking at the situation, I said, “Dad, if you didn’t have Social Security, you better hope you die in five years because you will run out of money.” Granted, he had done everything by the book, everything correctly, yet it wasn’t enough. He paid off his house early. He was so proud of it. He’s packed in the money and his 401(k)s, yet he was still at a point where he wasn’t able to retire comfortably.

Then there was that big a-ha, awakening, “Crap, my integrity is questioned at the moment,” because it wasn’t just him. I realized that as I looked at my own clients, none of them were financially free either. Even if they had decades of advice from financial advisors, they were in the same boat as him. Then I looked around my office with other hundreds of financial advisors. There were guys working there since the late 1970s that still could not retire.

I remember one of my friends, he brought up a really powerful point that hit me right between the eyes. He said, “Chris, how many of the guys in your office are financially free? Not off the commission they earn, but actually doing these investments.” As I thought about it, I was like, “None of them.” In fact, I’m not either, even though my plan was to retire early by 40 living on $60,000 a year because I thought that would be the highlight back in the day many years ago.

I’m realizing there’s no evidence. There’s no one that I could see and point to say, “That person took our advice as financial advisors and actually became financially free doing what we asked, hacking money and 401ks or IRAs.” That moment I realized, “Do I keep teaching this and know the truth and essentially take the blue pill and go back to sleep and there’s no more Wonderland? Or do I go tumbling down the rabbit hole and try to figure out how to actually do it?”

I took the red pill. I quit being a financial advisor. I vowed never to teach about money again. I would just be a mortgage broker and teach ballroom dancing on the side. While I was doing that, I had to learn to know what these other guys were doing at work, because I would see these other guys doing real estate investing in their 20s and 30s, and they were financially independent, retired and happiest as can be. They were basically living the Rich Dad, Poor Dad life that I had read about. As I started to learn from them, next thing I know, I was able to become financially dependent myself when I was 28, almost 29 years old, and I was blown away. It wasn’t from doing what I had been taught as a financial advisor. It was essentially by doing the opposite. That’s what led me down this path of what I’m teaching today.

How is it easier to become financially free by doing what you said, the opposite? How does that work?

You have to switch the mindset. I know people talk about mindset. You might go, “Great, here’s another mindset person that doesn’t teach me how to do any strategies,” but that’s not true. It’s a one-two punch. You’ve got to have both. You do have to have strategies of course, but you also got to have the mindset to be able to see and implement the right strategies.

For me, the biggest shift that had to happen going from a financial advisor mindset to then becoming financially independent, AKA actually the real deal versus all the fake crap from the financial advisors, the way to do that is I had to switch to a passive income cashflow mindset. As a financial advisor, you’re always taught to essentially be a squirrel. You’ve got to save up all those nuts for the winter time. You accumulate them all. Here’s an interesting point. About three quarters of the nuts that squirrels save up, they lose, which is like people in retirement, funny enough.

All that hard work.

It’s a ton of hard work. For example, I had that $60,000 a year massive lifestyle goal as a financial advisor. Some people say the 4% rule. That’s dead. The 4% rule does not work anymore. We can live on 4%. Even I questioned that as a financial advisor, and I wanted it be true. The Wall Street Journal came out saying, “It should be more like 3%.” I would say, if you’re in your 30s and 40s trying to retire early, that should be 2%. What that means is if you have $1 million, you live on 3%, that means you live on $30,000 a year. Think about it. You’re a millionaire, and now you’re living below the poverty line at $30,000 a year. You’re a broke millionaire. That’s horrible.

You can't see what you're not seeing. Whatever you put your attention to will expand and grow. Click To Tweet

For me, to live on $60,000 a year, I have to have double that. I would need to have $2 million saved up. I was going to be cheap, save up everything, which was essentially the same stupid strategy my dad had done, and it still didn’t work. I was following in his footsteps, even though I was trying to do the opposite. That just doesn’t work. If I want $60,000 a year, I tell people, “That’s pretty easy.” You get $600,000, $700,000, and you make at least a 10% or 12% rate of return in passive investments where it pays you income, and not just trying to live on less than the interest. Now I can do it with a third or a quarter of the money that I’d be able to do it otherwise. That blew my mind.

I was like, “I’ve been telling people for years, ‘If you want $60,000 a year, you get to build up to $2 million.’” By the way to do that, you usually have to save like $50,000 a year, especially with inflation and everything else. You have to save whatever you want to live on in retirement. If you try to use the mutual funds traditional path of 401(k)s and IRAs, you basically have to save the same amount per year that you want to live on because inflation is kicking your butt. What I should have known was if I want to live on $60,000 a year in 30, 40 years, I have to save $60,000 a year. That’s just not realistic for people. That means you have to be living well below your means, like living dirt cheap.

Eating cans of tuna.

That’s even too expensive for some people. It’s like, “Tuna, that’s fancy. I’m going for ramen noodles and potatoes.” You can get those for $0.50 for a 500-pound bag. That’s how you die quickly in retirement, you just eat ramen noodles and spuds, and you’re dead. It’s not exactly the retirement plan people want, but it’s an option.

It’s crazy because people are really living like this every single day. They think that this is the American dream.

I think you hit really hard noting that mindset plays a big role in our focus and energy, what direction we go.

You can’t see what you’re not seeing. I know that sounds redundant, but whatever you put your attention to will expand and grow. Whatever you ignore will never show up. It’s like my teeth. If I stop brushing my teeth, I’m going to no longer have teeth. If I stop focusing on my marriage, I’m not going to have a marriage. If I ignore my kids, I won’t have my kids. If you ignore your money, you won’t have money. If you ignore passive income and just focus on accumulating money, you’ll never know that there’s this whole other world that millions of us in the US have been doing this strategy for years. We are living proof of it.

Give me somebody that’s living proof that all they did was save up in their 401(k)s or IRAs, and are living the high life right now. I don’t mean the highlight, meaning you’re sitting on the front porch because you can’t afford gas right now type of highlight. I’m talking about you’re not sipping Country Time Lemonade, and even then you add too much water because you can’t afford it.

It’s funny because I did some research on this. I actually put mutual funds under trial. I said, “There’s got to be evidence. There’s got to be witnesses, so where are these witnesses?” I looked it up and I found an article, and I’m trying to remember which publication it was. It was a big one. I can’t remember. I looked it up and I found four stories of retirees that retired with over $1 million.

Here’s what’s amazing. None of them saved only in those places. Even then, they had a $100,000 a year type of consumption typically. The crazy thing is almost every one of them had a pension or they need a Social Security. Even though they had a pension and Social Security and about $1.5 million, $2 million in their retirement accounts, every single one of them worried about inflation. They were worried if they would have enough money.

FWM 18 | Passive Income
Passive Income: You can still enjoy life, but be responsible too. Find ways to eliminate unnecessary expenses that really don’t enrich your life, especially if they’re preventing you from getting your goals right now.

 

The only one that wasn’t worried about that was 84 years old who had $1.8 million. He was okay. He’s like, “I’m probably okay,” because he thought he was going to die in a few years. Everybody else were still worried. Just so you know, the average 401(k) balance is about $280,000 maybe. Actually, that’s the average. The median is the one number that you should focus on, not the average, because the bottom could be in the millions depending on the 401(k). The median is only about $90,000 for a 65-year-old. Do the math. $90,000 living on 3% a year is $2,700 a year, of course they’re going to need Social Security, of course they can’t make it. That’s the middle American person right there. That’s sad.

On that note, I hope you guys have no more hope and the show is over. The mindset has to shift and then the strategies have to follow, and that’s where we talk about investing in real assets, things like real estate investing. It’s funny because a lot of people say, “Chris, I’ve looked at that,” like somehow they’re the authority of every investment in the world, “I looked at it and some of these rentals don’t pay me anything.” “Let me guess, you live on the Western half of the United States.” “Yeah.” “That’s why. You’re based on your limited little knowledge. It’s not that you’re a dumb, there are very intelligent people trying to figure this out. It’s about having the right connections, the right relationships, knowing where to look.

I look at properties, we make at least 10% cash-on-cash, and that’s it. There’s no appreciation. I won’t have to bank on that at all. Not even counting that my renters pay down my mortgage for me, which gives me more money. I go for a minimum, at least 10% cash-on-cash return on my money. If you do the math, you have $1 million saved and you make 10%, that’s $100,000 a year. That’s a very different lifestyle than trying to live on $30,000 a year.

What would be something like your three key takeaways that you would want our audience to know?

Get that cashflow mindset, that’s number one. Number two is the advice I give. There are three parts for number two. It’s get lean, get liquid, get out. That’s my advice. What I mean is you definitely want to be a wise steward of the money you have. Don’t go blowing it all. I don’t say live on rice and beans. I’m not saying that like our good old buddy, Dave Ramsey. What I am saying is you can still enjoy life, but be responsible too. Find ways to eliminate unnecessary expenses that really don’t enrich your life anyways, especially if they’re preventing you from getting your goals right now.

Get liquid means ensuring that your money can be touched. When you save money, don’t save in places where it’s locked up in prison. That’s places like your 401(k), home equity and places like that. Don’t put your money in those places, but stay liquid. Even if it’s just a simple, crappy savings account making point-nothing percent, that’s still better than doing something else. I even have a lot of our clients do a strategy called infinite banking where they’ll keep it inside the life insurance savings, where they make more than point-nothing percent and it’s tax free. They make a lot more interest in their savings account.

Get out means get away, get out of prison, get your money out of prison. This is a disclaimer on this show. We’re not giving investment advice. We’re not telling you to sell off mutual funds or stocks or bonds. What we are saying is you’ve got money locked up in home equity, in your retirement accounts or in savings just doing nothing, or mutual funds doing nothing, especially if you’ve lost 20% so far this year in those places. You’re gambling with your money. Find ways to get that money out and then use that money to redeploy, to generate passive income now.

To give you an example, I had somebody where he had about $1 million tied up in his retirement plan. He was at the point of retirement. He’s saying, “Chris, I don’t want to live on $30,000 a year.” I said, “Let’s not.” We got him investing in different places. He bought a few turnkey new construction rentals. He had a duplex and that was great. He invested quite a bit in oil and gas, but oil and gas in a sense where it’s more mineral rights. They’re more leasing the land to the oil companies and get paid for the land, plus the well. You’re double dipping. You’re getting the benefit of the rental real estate and you get the benefit from the oil and gas drilling. He did a bunch of that. He also put some money in some apartment type syndications and things like that where he’s pulling money together with other investors.

After all was said and done, he got the money deployed when I re-interviewed him for my podcast as a follow-up interview. He’s at a net $11,000 a month. We went from $2,500 before taxes, to now $11,000 a month where he’s getting some tax advantage income from that too. It’s a very different way of seeing it. He even used some of his home equity. He’s like, “Screw the fact that I’m 60 years old. I’m going to use this dead equity in my house. I’m going to use that too.” He got a couple hundred grand from that, invested that, and made an extra few thousand from that.

Actually, I’ve heard stories of people that have private lenders, and they will keep remortgaging their home and that’s what they live off of.

Real estate is about having the right connections and relationships. Click To Tweet

I have some people that will try to go debt free, but the thing is if you’ve got this home equity doing nothing, why not get that working for you now? Especially if you’re afraid of doing something wrong with it, don’t do that. That’s why you need help or guidance. If you’re going to invest anywhere, invest in real assets.

Sometimes maybe the husband is all on board, but the wife is scared or vice versa. Why don’t you just take that money from your home equity and put it into other home equity? Buy real estate with that so that you know at least you have a real asset that has real value. It’s not like you’re gambling it in a stupid stock market, hoping that GameStop is going to do something or Bed Bath & Beyond is going to go another 20% in a day. You’re not going to do that. If you’re going to put it in a place where they don’t have those kinds of market swings and then generate income off of that too, it’s actually doing something for you. It actually pays your mortgage payment for you.

I remember, after I quit being a financial advisor, that blew my mind that was even possible because I couldn’t make it work as a financial advisor. When my dad said, “What else can I do?” I’m like, “You’ve got to pay off the house. You could use the home equity somehow.” “What would I put it in?” “Nothing I offer because what if the market goes down?” I wouldn’t feel comfortable telling my dad, “Here, lose your money in the market. Gamble in there when you have a paid off house.” If someone can go and buy a real asset with it and makes more money than the payment, so that essentially it’s paying the mortgage for you, it’s a no-brainer.

You make it sound so simple too.

Mentally, it is once you get it. Even for him, once he got it, he was like, “Oh my gosh.” I’ve had other clients the same way. I had another couple from Minnesota that had a bunch of money sitting in cash, but then they said, “We’ve got a house that has ton of equity. We get an office building that we use.” They’re medical professionals. “We can get cash out of that.” They did all of that, and now they’re netting $280,000 a year passively. That’s after they make their payments. For them, do you think they care? No. Once they got it, they’re like, “This is dumb.” If somebody had a big issue with it, I could always tell them, “If that’s a problem, you can always sell your house, get all the equity out anyways, have no debt, and just rent.”

I never hear people like Dave Ramsey saying, “If you want to be debt free faster, just go rent.” He didn’t say that. He still says, “You should have a house that’s really not an asset.” Because you still have to pay taxes on it. If you don’t pay taxes, they will foreclose on you even if you have no mortgage on it. You can be foreclosed on if you don’t pay your tax debt. If you don’t pay your homeowners insurance, you’re unprotected there. You just have to maintain it and keep it up. It’s a cost. In fact, in some ways, if you want to think about it this way, rent is actually cheaper than owning a house. You just don’t get all the benefits of that potential ownership that control or the benefits of possible appreciation.

I bet you feel like you won the jackpot whenever you started getting into this.

It’s almost like the ‘80s song, “I’m walking on sunshine.” It sounds like that. When I first started to get it, I’m like, “This is so much different.” That’s what got me into teaching people about it. I quit being a financial advisor. People were wondering what I was doing and they even asked me financial questions like, “Can you set up this mutual fund?” “Not anymore, I quit.” “What are you doing now?” “Nothing, I’m selling drugs. I don’t know. I’m a mortgage broker and I’m doing this.”

That’s the thing, as a mortgage broker, once I caught that, I was telling people to pay off their house early. I teach them this. I’m like, “Here’s what I’m learning.” I was just learning, I wasn’t teaching it per se. I was just saying, “Let me reteach what I’ve just learned,” almost like you listen to this show. That’s what I was doing at time but it was Talk Radio, listening to real estate investors there.

Even then, I’m like, “Imagine what you can do. You can pull out the equity for your house, and if your mortgage is only 5.5% interest, which at that time was low, then you can make more money. You can make 10%, 12%. You’re basically making money like the bank. You’re making higher interest rate than what you’re paying the bank. You just made infinite rate of return on your money. It’s huge.” It just blew my mind that banks have been doing the same thing for years. Why aren’t we doing this and becoming investors ourselves like the bank to do the same kind of strategies?

FWM 18 | Passive Income
Passive Income: If you don’t pay your homeowners insurance, you’re unprotected there. You are stuffed to maintain it and keep it up.

 

For our audience, if they want to get more information about everything that we discussed, you can go to FullerWalletMedia.com/moneyripples. Gem, do you have any other questions?

I don’t. You’ve gave some great nuggets, great information on this show. I want to say thank you for joining us.

It’s always a pleasure. I love being with you ladies here. It’s awesome to be with people that get it. You just have to use some common sense and this stuff makes common sense.

We appreciate you. Thank you for being on our show.

It’s an honor. Thank you.

 

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About Chris Miles

FWM 18 | Passive IncomeChris Miles, the Cash Flow Expert, and Anti-Financial Advisor is a leading authority teaching entrepreneurs and professionals how to get their money working for them TODAY! He’s an author, podcast host of the Chris Miles Money Show, has been featured in US News, CNN Money, EOFire, and has a proven reputation with his company, Money Ripples (http://www.moneyripples.com/) getting his clients fast, life-altering financial results. In fact, his personal clients have increased their cash flow by over $200 Million in the last 10 years!

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