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Wealth Without Wall Street: The Guide To Reaching Financial Freedom With Russ Morgan And Joey Mure

October 27, 2020

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GDNI 122 | Building Wealth

The financial crisis of 2008 has proven that you can never totally rely on Wall Street, with Bernard Madoff running the biggest Ponzi scheme in history, causing cash losses amounting to $19.5B. It prompted the search for alternative avenues to invest in. On today’s show, Chris Seveney and guest host Jamie Bateman are joined by Wealth Without Wall Street partners Russ Morgan and Joey Mure. Wealth Without Wall Street provides financial insight and tools to break free of the mindset and bondage of Wall Street. With the pandemic still blanketing the global economy, the next crash may be around the corner. Don’t miss this episode for some strategies to help you reach financial freedom without Wall Street.

Listen to the podcast here:

Wealth Without Wall Street: The Guide To Reaching Financial Freedom With Russ Morgan And Joey Mure

We’ve got a special guest. We have Wealth Without Wall Street with us. Jamie, I’ll let you introduce them and take it from here.

Wealth Without Wall Street, Joey Mure and Russ Morgan. How are you guys doing?

We’re good. Thanks for having us.

I’m awesome, Jamie. Good to see you, Chris. Thanks for having us on your show.

Thanks for coming along.

Why don’t you guys start off by telling us a little about your background and what you guys are up to?

I always like to tell the bad story before Joey’s awesome story. I got into the financial business in 2004. I helped put people part with their money. As a financial advisor that was what I was good at. I became an expert at it in 2006 as the market was rising. I realized I was a financial moron in 2008. I didn’t know anything. You mentioned that there was a little known stock that you invested in that didn’t work out so well. I had a couple of those myself. I won’t mention all of them, so you guys won’t laugh at me. One of those was General Motors before it became government owners. I learned very quickly that my stock-picking days were limited. I went seeking financial advice and mentorship from people who are being successful outside of Wall Street. I came across a couple of different ideas and from that it led me to meeting Joey at church one time and sharing this concept with him, and came in as a financial hero. I’ll let you take it from there, Joey.

The whole hero thing maybe a little bit of an embellishment, but I will say this. He started off the conversation with, “I want to start sending you mortgage clients.” I was in the mortgage business and I was like, “That makes sense. I’m in.” He’s like, “First, you have to read this book.” He hands me the book and he says, “That’s going to be $20.” I’m like, “You just asked me to read the book. I’m doing you a favor. Aren’t I?” He’s like, “Yeah, but you got to pay for it.” I was a little bit put off, but I went ahead and went down the path. Little that I know that was the turning point for me because what I had been seeking up to that point financially, there wasn’t a category for it. I couldn’t figure it out. Even though I was at Wells Fargo and I was surrounded by all of the different financial instruments and vehicles that were around, none of them made sense to me. I was in a commission-only sales. My income, although it was over $300,000 a year, I always felt this need to have access to my money.

Ideas like 401(k)s, IRAs, things like that always made me nervous because I was putting money away for a long period of time without access and penalties were looming, all this thing. He had me read the book, Becoming Your Own Banker by R. Nelson Nash. I was like, “This is exactly what I need. I need to have access to my money, but I want it to grow and I want to be able to use it to create passive income.” After four years of doing this as a client, I got so compelled one time we’re at a conference. I came home and I told my wife, she’s pregnant with our fourth daughter at the time. I was like holding back a little bit because I was a little bit worried about her response. I said, “I feel like I need to change careers. I need to go and do this full-time with Russ.” I was imagining what was going to happen at that point and her immediate response was “Joey, I think you should do it.”

She’s given up over $300,000 of income. She’s at home with our four kids at the time and we’re about to have a fifth baby. I’m like, “That was pretty amazing.” That was exactly the step that I needed to take in order to walk away from that career. That was in 2014. Since then, Russ and I have built Wealth Without Wall Street to help people on that same financial journey to creating passive income, which will give them their time back. As I had over the years, more and more of my time got taken. The more my income rose, the more freedom I gave up. My phone was always at my hip. Even when I was on vacation, I wasn’t present. I needed a change. We want to give people that freedom back.

You went to your wife who was pregnant with your fifth child and told her you want to change careers. Did you get your head examined before you went and did that? I’m just curious.

I told you it wasn’t very smart. If I’m his financial hero, that tells you a whole lot. I already set the bar low early on about me being a financial moron, and there I am trying to talk him off the ledge actually on this.

The financial golden rule: Those who have the gold make the rules. Click To Tweet

He did say, “You want to do what?” I told him before I told my wife.

I was thinking, “This is a bad idea. There’s no way. Are you sure? Do you realize you’re going to walk away?” Joey is very humble on this. I boast on stuff but he’s the humble guy of the two of us. He was leading a mortgage team of about 35 officers doing 20 to 30 mortgages a month himself. He had become the go-to person in mortgage in Birmingham, and he was willing to give that away. The only thing I can figure is that he looked at how bad I was doing on what I was doing. I was like, “I can improve upon this, not to mention there are lots of people that need this.” If I could come along, this got to get better.

If Russ can do it, anybody can do it. What did that look like after that transition? What were you going toward?

I can tell you one. Within the first two weeks of shifting careers, I figured out that there was this massive weight on my back that was that commission-only hamster wheel that was constantly going. I can never rest because the next month, I had to produce, and the next month, I had to produce. If I took my foot off the pedal, income drops and it all falls apart.

The one thing I would ask and I think it would be helpful because you mentioned the Becoming Your Own Banker book, and I was smart to charge you for it. If I wouldn’t have charged him, it’s likely he wouldn’t have read this. It is probably slim. If you know Joey as good as Jamie and I do, Chris, you’ll know that guy is cheap. He will make a dollar turn the corner. If you make him spend $20, I knew he’s got to read it. He’s a smart guy. He was the valedictorian in his high school class. He understands how things work. You’ve got to go get him involved. One of the things that I think would be interesting is to talk about how could you do that? How could you leave a job making $300,000? You mentioned this pressure on you, but how did that pressure not enhance when you went from $300,000 to zero? I wasn’t paying him anything.

He was cheaper than I was. The game changer for me was this becoming your own banker idea is utilizing high cash value life insurance policies to store cash so that you have dry powder to take advantage of opportunities. For four years, I had been putting over $60,000 a year into these policies and shoving that away. I used it some to pay off some debt, some to do renovations on the house, so on and so forth. I had a large amount of cash in these policies that gave me that peace of mind that said, “If I run into a bad quarter or a bad six months in this business, I can take the time that’s needed to invest in this to get up and running, and get off the ground.” If I had not done this, if I had not spent those four years capitalizing as Nelson Nash talks about in his book and I just had my 401(k), I probably never would have taken the step. I probably never would have even thought it was an option because I would have had no access to capital. I don’t know if that helps, but just to give you some background, that’s what gave me confidence.

The overall concept that you guys are talking about is the infinite banking concept. Can you explain that a little bit further?

I always like to put this in context because sometimes people hear the word infinite banking, they go out and they type it in Google, and like anything on the internet, it’s 100% true whatever you read. It’s very similar to if you went out and said, “I want to buy mortgages from people who aren’t paying for and make the payments.” That’s a good idea. Joey and I look at the world from this step by step process. I went to Auburn. I was not the valedictorian of my high school class, and so I have to break things down very simply. One of the things we always tell people is that we have to have clarity in what we want. Early on, for Joey, he wanted more time with his kids. For me, I wanted more time to create new ideas. They call me The Idea Guy on our show because I’m always trying to implement. I’ve got more LLCs than most people have shirts, shoes and other things in their closet. I love businesses. I love business ownership, how to make businesses run, get involved and let somebody else run it for me.

For me, clarity and understanding what I’m after, if I can get clear of what I need to do and why that’s important to me. This is what we do when we meet with people. We try to figure out what’s their wants. Most of the time, that comes into, “I got to get control of my money.” You guys know about the financial golden rule, “Those who have the gold make the rules.” For us, infinite banking fits square into step two, which is control. You got to have more money coming to you than going away from you. Most people understand that’s the financial diet. Everybody knows diet and exercise. It’s spend less than you make, but why is it that 99% of Americans aren’t doing that? Because they don’t have plan and process.

The things that are important or urgent today take precedent over the things that they want. The financial tools that are out there tell you to wait 30 years and delay gratification to receive it. I realized that did resonate with me. I’m an instant gratification person as well. I wanted the things that I wanted. When I got clear as to what did I want, I wanted to have access to capital so I could start new businesses and create cashflows, then by getting clear on how I use my money efficiently, that’s why he and I got connected with the mortgage because I wanted to figure out ways to make my mortgage payment as low as possible. Most people did the opposite. They get 10-year, 15-year mortgages, and so forth and make their payments as high as possible.

I wanted mine as low as possible so I could get more cashflow going towards assets and producing income. That’s where infinite banking falls in. My cash has to have a place to reside. It’s going to flow through my hands, how much am I going to be able to earn from it. The way this Infinite Banking Concept works is that I store cash into life insurance policies. When I’ve used that term, I don’t mean the one your local State Farm agent or Northwestern agent has shown you or sold you in the past. I’m talking about ones like Wells Fargo, the bank that Joey used to work at has. Most people don’t realize that banks are the largest purchasers of cash value life insurance. Wells Fargo Francis has a little over $18 billion in cash value life insurance and all the banks do this.

I was like, “I got to get my money there so that I can control it.” If I can control it, then I can make the decisions with it from that point. Infinite banking is the process of using those dollars in those cash value policies to go do things with it. Our thing is step three, which is creating a path or creating a course that is doing lending like you guys do with note investing. You’re buying real estate and doing the traditional, the short-term route, the land flipping route, or it is investing in businesses whether passively or actively.

I know enough to get myself in trouble with this. I’ve looked into it in the past and I understand the concept of you get that life insurance, but how do you get your money back? Can you explain that process and how it works a little more?

When you say, “Get your money back,” what do you mean by that?

GDNI 122 | Building Wealth

Building Wealth: Your goal shouldn’t be life insurance. It should be creating passive income and making sure your cash is not rotting your whole life sitting in a checking account.

 

I’ll explain how I understand it, and then you can tell me I’m all wrong because I did Google because Google is always true. Wikipedia is another one that’s always great for information. It’s my understanding that you get a cash value life insurance policy where you dump so much cash like $50,000 a year into this thing for five years, and then it’s got a death policy on it. You can also take loans or something from that policy, but it still accrues interest or something along those lines. That’s where it lost me a little bit. I like to think I’m a smart guy. I was homeschooled, the only kid that’s still not a valedictorian but that’s okay. Could you explain how the process works? I also hear things, “It’s only for people with a lot of money. You’re paying too much in fees to people and it’s not worth it.” Those are some of the things that I feel like almost I’m a politician on one side, and people were throwing stuff at you, and then you got the other side throwing aback. I like to hear from people who are in it.

Thank you for clarifying because I could have gone down the wrong path on the answer. I would compare this to something that you already know well. In your note business, you’re going to take capital from someplace and you’re going to invest in a note. I’m going to sound like the moron trying to explain note investing, so we’ll trade hats here for a moment. Let’s say that it’s $50,000 for a note, that maybe low or high. If I have $50,000, that money has to come from somewhere. It could be from a checking account or savings account where you have liquid money. You put that money to work in a note, it’s going to create cashflows back to you in the way of a monthly payment.

That money has to flow somewhere. Where’s that money going to? Probably right back where it came from. I’m going to compare it to a checking or savings account. If I have built up any amount of money in there and then I’ve put it to work by purchasing that note, now I’m going to replenish it with the money that’s coming on it monthly. One day, if that money gets paid back in full, I’m going to put all the rest of it back into the bank account. In a policy, to follow the whole process, I’m putting in premium dollars, which are deposits. Think about those as deposits into your bank account. That’s going to get credited as cash value that I can then borrow against. Think about that as equity in a home. If I go to a bank and I say, “I need a line of credit against my home,” they’re going to lend me their money and my house’s equity as collateral.

The same thing is true with your policy. As you build cash value, you can go to the insurance company and say, “I need to borrow some money.” You don’t even have to tell them what it’s for but in your mind, “I’m going to go invest in this note.” They say, “Where do I send the money? We’re going to use your cash value as collateral.” They lend you the money, you go purchase the note, and now the cash that’s coming from that note has to go somewhere. All we’re going to do is we’re going to put that back into your policy as a loan repayment. You’re paying back the insurance company’s money with the cashflows from that note investment.

The reason why this is huge and the difference maker is compare that to your bank account. If I took $50,000 from my bank account, what happened to the $50,000? It had to be removed from the instrument or the vehicle that was giving it credit or interest. I know it’s laughable right now like a bank account is 0.01% or whatever crediting. It doesn’t feel like you’re losing anything. In a policy, I’m able to consistently earn 3% to 5% over the entire lifetime. As I’m borrowing against it, my capital is still at work at that 3% to 5%. This is not a get rich quick scheme. This is keeping capital liquid, using it for the investments I was going to do anyway and then returning that capital back to home base as loan repayments in this case and continue to expand over time.

Another way I was thinking about going through this is it sounds like it’s almost similar to if I had a 401(k), I can take out a loan against it, I have to pay back at interest. In this instance, it’s a life insurance policy that I’ve put the cash in. I’m pulling it back out and then replenishing it, and it’s collateralized by that policy.

It always goes back to compared to what. What are we trying to do with the money? Joey, one of the things that he lacked to share in his story and I’ll share it for him because I thought it was cool at the time, is he needed to replace income. He could spend some of the dollars and his cash values if he needed to, but he wanted to be smart with his money. One of the first things he did when he transitioned out of the mortgage business is, he got into the note business. What he did is he did a couple of private notes to people who are buying homes. He became in essence the mortgage company on a couple of notes. He took a loan against his policies and turned that into cashflow, which you guys are super familiar with.

It created a performing note that was paying about 10%, which was well backed by 70% capital or loan to value from the property it was lending against. He created a monthly income stream. The monthly income stream that he didn’t spend that month because he was able to make a few clients with my help, then he was able to take that extra cashflow and replenish or reduce the lien against the cash that he had in his insurance policy. We all know for 401(k)s, there are limits to how much money we can borrow against. Joey knows this very well because he took loans against his 401(k) to start an insurance policy. There are limits to what you can do.

In an insurance policy, the only limit is access to how much money you have in there. It’s no different than your checking account. They say, “How much money can you take out of your checking account? What’s your balance?” That’s the same way these life insurance policies work. That’s why the design of them are important. We got off a phone call with a client who had been referred to us. They do very well and they were looking at setting some stuff up. They said, “This whole infinite banking thing, we think we’ve heard something like that. Our existing advisor has been telling us to do that. You think that’s a good thing?” I said, “I think it’s a great thing. I put a well over $250,000 a year in these policies every year. I feel like it’s good. This is what I do with my money.”

They were like, “You think we should do it?” I said, “I think you should show me what they’re proposing. That way, if you’re going to do it with them, that’s fine but I want to make sure it’s set up.” This is where the financial market falls apart. This is where a lot of the horror stories that we find a line that says, “This doesn’t work.” It’s mostly because the design, the setup and the follow-through isn’t there. They were looking at putting $80,000 a year into two insurance policies. One of them, the husband and the wife. Between the two, it had a total of $9,000 of cash value available in year one. I’m sitting there talking to them that their goal was to protect their lifestyle if their business went away.

In order to do that, we’re going to have to go buy assets that are going to produce income. How much cashflow do you think we can create with $9,000? Not a lot. In year two, after putting another $80,000 in, they had whopping access to about $19,000 of cash value. They’ve put $160,000 in, and they got $20,000. I was like, “Does that look like that would work?” They love their financial advisor who is a friend of theirs. I’m not saying he was doing anything bad, but this is the typical financial advice that’s given out there. I said, “That’s a problem.” What I would say is we’ve got to design these policies to where we have the highest level of cash value available.

There are limits and that comes where our training and our coaching work in. I said, “Let me show you as an example. The same example where you put $80,000 a year into these policies, we’d have access to roughly about $50,000 of that cash.” That’s five times more than you’re going to have here. The thing is that Joey and I don’t make as much money doing that. That flies in the face of everybody says, “The reason why you sell life insurance so you make these huge commissions,” but we do our best to cut our commissions as much as we can because our goal isn’t the life insurance. Your goal shouldn’t be the life insurance. Your goal should be, “How do I create passive income? How do I make sure my cash is not rotting my whole life sitting in a checking account from a bank who’s making a good living off of me?”

You got to have more money coming to you than going away from you. Click To Tweet

Full disclosure, I am a client of Wealth Without Wall Street and I’ve been on their podcast. Speaking from my experience, it did take me a couple of months. I had researched infinite banking years ago a little bit and dismissed it. Once I discovered you guys, I started researching it further and it did take me a little while to wrap my head around it. One of the things that sold me on it was that compared to a 401(k) loan, I’ve never taken a loan against a 401(k), but I don’t think that that amount of cash that you borrow against is still growing. Whereas in the policy, it is still growing the entire time. Although it’s not the same dollar, the cash value is the collateral that you’re borrowing against, but that policy is continuing to grow and grow no matter what I’m doing over here on the other side with the loan and the money that I’m using.

As far as back to note investing and how this could play into a note investor world. Note investing is similar to real estate investing and other businesses. Chris knows this very well. It boils down to essentially three parts to your business. One is raising capital. One is sourcing deals, finding notes. The last one is managing your assets, your asset management. I see this as another source of raising capital. Although, it does require your own funds going into the policies for sure. It’s not just money coming out of thin air. To me, that’s where it fits into my business. It’s another way of accessing capital to fund the note business.

Other ways that can be done are selling partials, doing joint ventures, other people’s money, but the IBC for me plays into that one leg of the stool for my business. One other point that I wanted to make is that IBC is bigger than the policy. The policy is what you’re using for infinite banking. This well-designed policy happens to be the best tool that you’ve found for infinite banking, but they’re not equivalent. They’re not the same thing. It’s part of infinite banking. It does take some time to wrap your head around it and I’m not trying to sell it to anybody. I’m not suggesting it’s necessary for everyone but for me, it’s been good so far.

I know there’s going to be a lot. We don’t have time to go into all the details on a show like this. If people have interest in this and they want to get more information, we have a course specifically in our community. You can join now at WealthWithoutWallStreet.com/GoodDeeds. If you go there, you can get access to our Infinite Banking 101 course. It’s 10 or 11 videos, something like that and you can do it at your own pace. You can gain information because when you can see numbers and you can hear what’s going on and then compare it to what you’re doing, only then should you see, “Does this help me get closer to my financial freedom or farther away?” It’s not for everybody, but if it is for you, we want you to be informed. We want you to work with somebody that can properly structure these for usage once you get started off on the right foot.

What’s the minimum investment per year someone should have to invest in one of these things?

We get that a lot, Chris. That’s a hard question to answer and it would not be appropriate for me to give previews or forecast toward what that looks like. The thing is that everybody’s scenario is different. The way we start this process off with people is we take them through a very simple formula. We try to find out where their cash is going and how much is going out the door. Our coaches are trained in ways to look at their cashflows and find dollars that they’re giving away unknowingly or unnecessarily. I don’t mean like Joey’s Starbucks fetish that he has. I’m talking about tax dollars that are going out the door and they didn’t understand that they could come back. The way that they’re paying for their mortgages, the way that they are putting in money potentially in qualified plans, the way they’re paying off debts.

We have all these courses and our coaches are trained to help people walk through to get better organized in our cashflows. What comes out of that is that they’re making a lot more money than they’re spending. We say, “That’s a good starting point.” It’s different for everyone. The person that comes to us that’s making $3,000 a month and is spending $2,000 a month. That’s $1,000 that they’re starting with. The couple that we were talking to before we got on the call with you, they’re making $85,000 a month and they’re spending $25,000. That difference is much bigger. What I love is helping people accomplish their goals. This is not about how big the policies are. When I was first in the business, that was what it was. I needed every sale just like every brand new business owner did.

Joey and I do this now because we love it. We want to see people reach their destination. When we get off this call, I’m heading to Orlando for a week, he’s heading for the beach for a week. We’re going to go enjoy the life that we’ve been creating because we’re living this. It’s not just the life insurance policies. We’ve created passive income streams. Chris, your question is a valid one. How much can someone start with? It’s dependent on their situation. When you go about this, and I dislike a lot of things about Wall Street. One of the mindsets that exist in that world is I believe a scarcity point of view. When you watch the savings rates as I have since I’ve got in the industry many years ago, you notice that during the timeframes where we’ve had abundance and the market’s going straight up, what happens to the savings rates? They go straight down. You see the lowest savings rates when we’re at the highest points in our economy.

What that means is that they say, “I was earning 10% of my money and I was putting in $10,000 a year, $10,000 a month, and all of a sudden the market went up and it’s already 20%. I could put in half as much and get the same objective and that’s what I’m going to do.” When the markets are bad, they’re thinking, “I’m not earning as much. I better put twice as much in there in order to get there.” It always starts with that minimum mindset. It’s the way I was going through high school. The reason why I was the valedictorian was I was trying to put in the minimum effort and still get a C. Whatever C look like, that was my effort. Whatever I need to make on that last test and get a C, that’s what I’m going to do, but that’s not the approach.

What we find is that when people come to us, they realized that this is much more than just the little bow at their savings because they’re spending dollars in taxes. They got mortgages, they’re buying properties, they’re renovating properties, and they’re doing all these things. They’ve got all these dollars and those dollars are flowing through our accounts. We say, “What if we could capture some of that flow in addition to your excess and help you start benefiting from it.” This is what led Joey within the first year to starting three different life insurance policies because he started seeing a little bit bigger.

It’s what led me over the last 10 to 12 years to having now 21 and about to have 24. We’re buying a policy on three new business partners that were getting involved with. It is like, “How can I do more?” I want to put as much money on these things and not as little. I know that’s foreign because that’s not the way we’re taught in life. We’re all Walmart shoppers, but this is a different approach. I don’t know if I didn’t answer your question exactly, but I wanted to give you context. That way when people do interact with our brand, they see it from that perspective because I see everything abundantly.

I think you answered it from a standpoint of there’s no minimum. It is based off on every person’s situation. There’s not a minimum to get into the good old boys’ club. It’s not like, “If you don’t have $100,000, we’re not even going to talk to you,” type of thing. I know there are people out there that bring up that stuff too because the ever knowing all Google sometimes says, “If you’re not wealthy, this isn’t something you should even consider.” That’s why I wanted to throw it out there. It sounds like it can be catered to anyone’s situation. It’s not a one size fits all. Jamie who makes five times more than I do is going to have a different perspective than how I play.

We have people that got their first job, learned about this from one of their parents. They start a policy putting in $250 a month and they’re 22 years old. We’ve got clients in the seven-figures and it’s crazy, but it is independent. It’s individual to that situation. Our goal is to help them apply at the same way regardless of where they are.

GDNI 122 | Building Wealth

Building Wealth: Three parts of a business: raising capital, sourcing deals, and managing your assets.

 

What’s the minimum age? Could my kids have one of these policies?

It’s seven days. You can have one. Clients when they have a new baby, they fill out an application for the new kid, not too long after they get home. The baby needs to be seven days old. That’s how young you can have one.

The policy’s on the baby but the owner needs to be an adult.

What are you guys focused on now? I listened to a lot of your podcast episodes as far as your brand and your business. Besides your own personal policies and that kind of thing, what is Wealth Without Wall Street focused on? Beyond helping other clients, what are you investing in? What are you up to?

Two things, then I’ll jump into our own passive income report. One, we have found that people historically over the years have started policies and they’ve not done anything with them. There’s been inaction. Even though they came to us and had these big goals and aspirations that they wanted more time and freedom. They want to go pick up their kids after school or drop them off in the morning and not have to worry about asking for time off. They have not taken action. We are building and starting to enroll people into a coaching program where people are in group settings, ten or less. They will be working with a coach over six-month period of time to implement all the things that you can do on your own. When we’re left to ourselves, a lot of times we don’t take the action necessary. We wanted to build that coaching program that people can invest in themselves by doing.

Secondly, we have a larger like an elite mastermind for passive income that we are also going to be launching in 2021. That will be for those who are looking for access to deals and opportunities that are more done for you passive income ideas. They’re looking for networking opportunities with some of the best of the best, the top dogs. Those that can use a personal CFO that will help them implement, essentially hold their hand at each step of the run. When they leave the mastermind, it’s an in-person two-day event, they’re going to have a list of things they want to do. We want them to have a personal CFO to help them make sure that those happen whether it be high-value strategies and taxes, whether it be setting up certain passive income ideas or any of those types of things. We’re building that elite mastermind that people can be a part of. Those are two things that we’re excited about as a company. Russ, do you want to share more about what we’re doing on the passive income side?

Joey and I, like most business owners, we get so focused and excited about what we’re doing. We spend all our time, all our waking hours and even on vacation, thinking of ways that we can grow our businesses. Sometimes our personal finances take a backseat. Even though we’ve been great at saving money and putting money into life insurance policies, what we realized is that we weren’t getting closer to financial freedom because accumulation is not freedom. It’s cashflow. It’s money that comes in regardless if you go to work or not. We made a big focus many months ago to start focusing on creating passive income streams for ourselves. Several months back, we said, “We need to start sharing this with our audience so that they can see our journey and hopefully inspire them,” because they’re like, “If you guys can do this, surely I can do it.”

We started putting in passive income report that shared some of the strategies that we were implementing. I’ll highlight a couple of good ones and bad ones. A couple of good ones we’ve had is we got involved in land flipping, which is a raw land, inefficient market where we buy properties at $0.20 to $0.25 on the dollar. We turn around and sell them on terms. It’s similar to the wholesale market and the creative finance market. People do it with houses, we’re doing with raw land. We’ve seen that business explode. We partnered with the group that’s doing it that. We’ve got about almost $6,000 a month now and cashflow that’s coming from those notes and constantly using those note dollars to buy new properties. Our goal is to constantly grow that.

Another thing that we did, we interviewed a bunch of people in the short-term rental space where people were putting properties on Airbnb, VRBO, Booking.com and things like that, and realized that that’s an inefficient market. The world is changing. People don’t want to stay in hotels anymore because they’ve become germaphobes like my wife or they have 6 or 7 kids like Joey. They’re looking for a bigger place to spread out. We started looking at that and realized that, “There’s a way to take an arbitrage and use it in our favor.” We rent places and put 12, 18-month leases on apartments and condos, then turn around and rent those to short-term travelers. People who need to come to town for business travel, for medical travel, or sometimes for pleasure and not a whole lot. We live in Birmingham. We’ve seen a lot of success in that in a very short period of time. We’re over a little bit of $4,000 a month of net cashflow after paying everything right now. We’re adding seven more units.

Those are two of the things I would say that we’re having success in. I always like to point out that we have failures too. You guys mentioned syndications earlier. I’ve got a syndication. I invested in a multifamily that didn’t work out the way they said it was going to do. They didn’t pay the guaranteed payment every single month and come in regardless. They’re accruing it. Whether or not we’ll ever see those accruals, we’ll see but COVID hit that complex. They had thirteen different complexes. It hit them hard. I think they made some bad decisions accounting-wise, and we’re seeing implications of that. We started a business that is in the cattle world. We thought we were going to be the next one selling sperm for the next bull.

Joey and I think watched the movie Secretary and got excited that there was an opportunity to make money on that stuff. We got into that world and think we were going to play that game but realized that we’re the dumb ones. That was one of those joint ventures. Do you guys ever heard the details of a joint ventured money with somebody with the experience, and by the end of the deal they switched spaces? We were the ones with the money and those guys got it now. Those are a couple of things that we share in our passive income report. We put out our numbers, show our expenses, and show how much further we have to get to our goals but that’s a lot of fun doing that too.

In your group, how many clients do you have overall?

Accumulation is not freedom. It's cashflow - it's money that comes in - regardless if you go to work or not. Click To Tweet

In our community as a whole, we’re a little over about 3,100 and clients we’re probably north of 500.

That’s big size in that perspective.

What we’ve done, Joey and I are at a point now, and thankfully for everyone reading, you don’t work with us because our talent is not follow up and follow through. One of the things that we did over the last 12, 18 months is we’ve had a lot of clients. People in the industry reach out to us and have come aboard and become coaches. We have a fairly large team now that is able to help people implement all of the things. They let Joey and I get on podcasts like this and share our vision.

Do they have to have any special licensing because there’s insurance involved? I don’t know if you’re selling insurance. I’m curious if there’s licensing and stuff like that they have to go through?

All of our coaches do a couple of things. One, they get an insurance license because that is a big step in our process. That’s what we’re known for. It is helping set up the infinite banking process. We don’t give financial advice and investment advice. We avoid all of the securities laws because that’s not what we want to do in any shape or form. Also, one of the things that our coaches do is we want them to be certified in the infinite banking process. Nelson Nash, the author of Becoming Your Own Banker created an institute to ensure his legacy was not going to be watered down by people who wanted to sell insurance and do it the wrong way.

We send all of our coaches through that program. It’s a stout program because it’s not led by a bunch of insurance agents. It is led by one of the most written Austrian economists, Bob Murphy. Another pretty stout guy that’s been in the financial space, Carlos Lara and Nelson Nash’s son-in-law. They go through this program. They learn a lot about Austrian economics and about the way insurance companies work, but then they understand how these policies should be designed. We send them through those as well.

We could do real quick rapid fire to finish it off. Whoever wants to jump in real succinct answers, and then we’ll wrap it up. Most of these questions revolve around infinite banking specifically. First question with infinite banking, why isn’t everyone doing this?

Number one, I don’t think it’s widely-known. Number two, people that have life insurance licenses are not taught this. This is countercultural. If they’ve been trained by an insurance company, they typically do not teach this. There are several different reasons for that. There’s a reason why Russ and I send people through the practitioner’s program with Nelson Nash is because we want them to have the right education.

What is the one thing you wish you had done differently in your own personal IBC journey?

This self-fulfilling, but I wish I would have started bigger policies earlier, and not being able to envision what we were going to do and the amount of cashflows that were going to come. The old Chinese proverb, “The best time to plant a tree is twenty years ago.” These insurance policies, the oldest ones that you have are the most productive. My oldest policy, I bought January, 2010. The premium I pay last year and the growth on, it was twice what I put in it. We compare that to any checking account that makes me go, “I wish that number had a couple more zeros behind it.”

Who is this not for?

This is not for someone who spends what they make or more than what they make. There is an element of self-discipline that is necessary. That’s why Nelson talks about in his book, a lot of the human elements. If you can’t get that side right, this doesn’t work for you nor does any other financial program or vehicle worked for you either.

This is a little bit tangential, but what is wrong with a self-directed Roth IRA in your view? I know it’s not financial advice.

GDNI 122 | Building Wealth

Building Wealth: You see the lowest savings rates when we’re at the highest points in our economy.

 

Everybody’s different. I’m going to tell you why it’s wrong for me. I want freedom. Freedom happens today. It doesn’t happen at 59.5. Any type of IRA qualified plan means I’m postponing the use and access of that money. If I wanted to spin it, I know I can use a self-directed IRA to do investment deals, but I can’t consume any of that money without all the penalties and stuff involved. For me, it’s postponing freedom and you can’t make enough money. You can’t force me to postpone my freedom for twenty years.

How do the insurance companies view infinite banking? I’m sure you guys help create more policies for them. That’s good, but you’re not necessarily using the policy may be in the way it was intended. Maybe I’m wrong about that, but how did they view IBC?

I would say a couple of different things. One, there are certain companies that are anti-infinite banking. That’s why we want to work with somebody who’s a practitioner that understands which companies are good for you and which companies are not. From a liability standpoint, there are some of the bigger players out there, especially like stock companies and things like that, which you don’t want to work with anyway. They would shy away from it because they don’t know what that agent out on the street is telling people. They think that there’s more chance that they could be telling them something wrong around this concept and get them in some lawsuit or something like that. In general, we’re not doing anything. Here’s the peace of mind. If we were doing something that was like this loophole that the insurance company wasn’t aware of that was happening, you should run for the hills.

This is a bad idea because you don’t want to have all your stock in the possibility that something could go wrong down the road. This is something that insurance companies have 100% allowed to happen. It’s part of a contract renewal relationship with their policyholders. In times like now, it’s a benefit because when they can get a 5% loan rate from a 100% collateralized place like an insurance policy for someone’s life that they have, they’re reducing their risk and potentially even enhancing their portfolio by having that 5% known rate coming back to them. For all intents and purposes, it’s a good thing for them. It just has to be treated correctly.

I have one question too, tax implications.

This is a part that sometimes sold as a benefit of why to use these life insurance policies. If they’re done correctly, not only can the growth be tax-deferred, but you can access the money later on whether that’s 6 months, 6 days or 60 years without paying tax on it. Life insurance has been afforded one of those law rules under the Tax Code 7702, that if you avoid this guideline premium test, you don’t have to pay tax on access to the money but the tax implications are. If I don’t set it up correctly or if I put all this money in take way more out than what I put in, and then I cancel the policy at some later date, you could have to go pay back taxes as if you had sold another type of investment. That’s why it’s important to understand how these policies are designed and working with a group who knows how to make sure that none of that ever happens.

Thanks for that. Jamie, any other questions?

No, sir. I’m good to go.

Thank you, guys for joining us. Let people know how they can reach out to you and how they can learn more about the infinite banking. Relay that information to everyone.

Thank you, Chris and Jamie, for having us with great questions. Joey and I would love to share this as something that we’re passionate about. If you want to learn more about this, go to WealthWithoutWallStreet.com/Gooddeeds. There’s a link right there where you can join over 3,000 people who are on the same journey. Take the Infinite Banking 101 course to understand. You can jump into the financial freedom course if you want to go through that process. There are other ways that you can get involved, but everything would be in that link.

Thank you, Russ and Joey, for joining us on this episode. As always, you can follow us on iTunes, Stitcher, Google Play, Amazon, iHeartRadio. I forgot the names of all of them, but go listen and leave us a review. Thank you all for joining us and go out and do some good deeds.

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