Why Most High-Income Families Stay Broke: The Cash Flow Problem Nobody Talks About

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(Transcribed by TurboScribe. Go Unlimited to remove this message.) Hey, and today we're going to talk about,

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okay, cashflow management.

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And a guest today is a young gentleman

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who has actually been crushing.

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I think I've known for five, six years,

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probably about five, six years.

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His father, Trent, this is Brock Fortner, first

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of all, his father, Trent is actually my

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coach.

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And so I'm excited.

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He's become a really, really, really strong advisor

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in his own right, crushing it.

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And then, so for y'all young people

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looking at a career stuff, he is proof

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positive that you can come in looking like

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you're 15 when you first come, he looks

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better than that, you know, he looks older

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than that now, just a tad, but it's

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still crushing it.

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It's a few things that I think impress

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me.

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He's the youngest, or he might not still

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be youngest, but he's the youngest person.

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There's a great podcast called the Lifestyle Investor,

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and he was the youngest person to join

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that.

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And now as a fixture in that community

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with Justin Doll, I highly recommend checking out

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that show.

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And so Brock, tell them about yourself, tell

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them what I didn't tell them, and then

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let's help these people get control of their

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money.

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Thanks for having me on, Curtis.

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I would say that you covered it pretty

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well.

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Yes, I've been in the industry for 10

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years now, come September, which is crazy.

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But I mainly work with families, business owners

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who are making over 450 grand in a

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couple of different areas, cashflow protection, and then

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growth, and making sure that we align everything

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so that as we build your wealth, you

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can enjoy retirement or your distribution years, and

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be able to spend and enjoy all of

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your money without the fear that you're going

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to run out of money, and then be

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able to pass that on to the next

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generation, up to 100% to who you

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want, how you want to, and when you

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want to.

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And so I work all across the country

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in a virtual practise, and I'm in Nashville,

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by the way.

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Yeah, I'm in Nashville.

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I know you love Nashville.

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I love Nashville.

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So any excuse I get to go there,

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Copperhead's there, it's like, all right, if I

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can get there, I'm there.

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That's right.

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Brock will take me down there.

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Broadway.

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Broadway.

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That's right.

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Usually, I stay out longer.

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I say, all right, let me go.

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I can get back.

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That's right.

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That's right.

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But now, I just moved closer to the

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city, so who knows what might happen now?

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All right.

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We'll know.

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I'm coming back.

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So I want to kind of tee you

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up and start this off.

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So most advisors talk about investments, rates of

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return, and retirement, but you say all wealth

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stems from free cash flow.

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That's right.

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Wow.

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Tell me, elaborate on that a little bit,

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so I want them to get the frame

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of where you're coming from.

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Great question.

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So I always say all wealth is created

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through free cash flow, because if you took

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everything out of wealth and just boiled it

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down to one equation, it would be inflow

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minus outflow equals free cash flow, right?

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So income coming in, income minus expenses equals

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free cash flow, whatever's left over, right?

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And if you don't have any free cash

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flow, no wealth is being created.

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It doesn't matter what you look at, right?

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If a business spends as much as they

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make, there's really no business.

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There's no wealth that's being created.

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If you buy a mutual fund and the

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return doesn't outpace the fees, there's no wealth

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being created.

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If you win the lottery and you spend

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the lottery, there's no wealth created, right?

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And so in our own financial lives, I

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always talk about the fact that at the

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end of the day, it all boils down

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to inflows minus outflows equals free cash flow.

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And what does that mean to you and

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how does it show up in your own

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financial life?

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What's the difference between being wealthy and simply

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having high income?

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I think that's a great question.

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So first, when I talk about wealth, I

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think my definition of being wealthy is your

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ability to be present.

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Right?

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I'm glad you brought that up, your ability

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to be present.

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Yep.

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How present can you actually be in a

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moment with the things in life that you

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actually enjoy the most, right?

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And so a high income doesn't always mean

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you're rich or doesn't mean that you're wealthy,

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right?

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A high income just means you've got a

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lot of money coming in, but if you're

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spending all that money, that just means you

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don't have nothing, right?

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Because I know people, I work with families

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that just this week, the family, it's a

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husband and wife, they don't have any kids

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yet, but they make just north of $50

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,000 a year and they save, let's see,

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$28,000 a year.

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They save a lot.

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Now, they live in a part of America

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that doesn't cost that much to live, but

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I also work with a doctor who makes

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$1.4 million a year and they don't

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save that much, right?

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And it's not because they live in New

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York City and have to pay all this

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money to taxes and all the things.

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No, it's because car payments, eating out, all

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the things that add up over time to

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where, hey, we had this thing called lifestyle

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creep show up and every time our income

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increased, our expenses increased and a luxury once

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enjoyed became a necessity and now they have

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a high income, but they're not rich and

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neither are they wealthy.

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That's a good idea of being present.

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I like that too.

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If I go away, if I'm still need

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to feel me to talk to the office

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or I'm thinking about, you know, instead of

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playing in the beach with my kids, I'm

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worrying about this thing over here, I'm not

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present, right?

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That's my whole, and I'm better, but I'm

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still that way a little bit.

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And I, you know, my goal in working

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and working with our clients is to help

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you be present, you know?

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And so that's the thing.

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If I took away someone's pay cheque for six

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months, the question is, I'm starting to ask

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is would your financial system survive?

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And most times it...

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No, not at all.

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That's a good question.

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So they're not wealthy.

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What does Robert Kiyosaki say?

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Wealthy is how long you can maintain your

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standard of living with no income coming in.

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That's well, so if you got a month,

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you're one month wealthy.

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That's right.

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That's right.

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Yeah, I think it is him that says

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that.

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So let me ask you a question.

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So why do so many six-figure earners

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still feel financially stressed and sometimes even insecure

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in your opinion, based upon your, you know,

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your work?

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Oh, you're asking some incredible questions, Curtis, wow.

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So the way that I think about this

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is...

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I'm a bad man.

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Yeah, you are.

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So when you think about it, right, I

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always talk about, and I think I actually

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got this from you.

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I may have gotten it from somebody else,

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but what you become aware of, you can

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measure, you can track.

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And what you can track, you can improve.

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The reality is most people aren't aware of

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what's going on.

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Because if you ask most people, right, oh,

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you know, how much money is coming in

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your door?

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They'll tell you what salary is, their gross

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salary, and what they signed up for.

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They say, oh, well, I make, you know,

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$200,000 a year.

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But what actually hits their account might be

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$140,000 a year.

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But if you're living a $200,000 lifestyle

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and $140,000 of income, we have a

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problem.

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And so when I think about this, right,

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the way that most people have their cash

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flow structured is when they get their pay cheque,

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they receive their pay cheque, it gets deposited into

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their checking account.

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Now that checking account is the account they

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pay all of their expenses from, they pay

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their credit cards from.

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And then, you know, if we labelled that,

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it's an expense account.

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It's not to hold money.

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It's not to do really anything other than

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pay for expenses.

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And so as you go through life, you

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might say, oh, okay, well, you know, I

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need to save some money.

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So in that checking account, you'll do some

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mental calculations, you'll move the money from your

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checking into your savings account, life happens, and

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then you move the money back from your

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savings into your checking account.

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And you're living in this world of unconscious

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consumption while trying to manually save.

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Now this, back to, you know, you'd have

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to think about this a little bit, but

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it goes back to your childhood days, right?

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If I look at my childhood, I remember

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I would go to the bowling alley or

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a field trip or the ballpark or somewhere

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and my parents would hand me money and

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they'd say, hey, this is your spending money,

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right?

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$5, $10, $20, this is your spending money

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for the day, for the weekend, whatever it

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is.

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So in our brain, we knew, hey, this

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is meant to spend, this is meant to

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take care of the things that I need.

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And it didn't happen one time in our

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life, it actually happened like multiple times over

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and over and over and over again in

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our most developmental years of our life.

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And so in our brain, you can think

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of it as like a little ski slope

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over and over again, we built this ski

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slope in our head that says when money

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is handed to us, we're supposed to spend

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it.

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And so as we got older, all we

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did was we just went from parents to

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payroll and now what's happening is our payroll

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is handing us that same money at a

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bigger rate.

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And so as our brain sees it show

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up in our expense account, our brain registers,

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hey, we can spend this.

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00:09:49,680 --> 00:09:54,240
So most six-figure earners, when they started

273
00:09:54,240 --> 00:09:55,660
off, they didn't have a six-figure income,

274
00:09:55,720 --> 00:09:57,520
they started off with a low income and

275
00:09:57,520 --> 00:09:59,040
it built over the years, but as it

276
00:09:59,040 --> 00:10:00,320
built over the years and it went into

277
00:10:00,320 --> 00:10:02,740
their checking account, so did their expenses.

278
00:10:03,280 --> 00:10:05,800
And now their expenses are rising to the

279
00:10:05,800 --> 00:10:07,200
same level as their income.

280
00:10:07,200 --> 00:10:09,900
And because they're not aware of it, that's

281
00:10:09,900 --> 00:10:11,220
where a bunch of the stress comes in.

282
00:10:11,280 --> 00:10:12,620
But once you actually get to take a

283
00:10:12,620 --> 00:10:14,800
step back and say, I know how much

284
00:10:14,800 --> 00:10:16,900
money is actually hitting my account, I know

285
00:10:16,900 --> 00:10:20,040
how much money is leaving my account, it

286
00:10:20,040 --> 00:10:21,520
becomes a lot less stressful.

287
00:10:23,540 --> 00:10:26,240
I saw this quote, I'll say from I'll

288
00:10:26,240 --> 00:10:28,700
give the who I got from Myron Golding,

289
00:10:28,720 --> 00:10:33,500
he says, if your outflow exceeds your inflow,

290
00:10:33,500 --> 00:10:35,340
then your upkeep becomes your downfall.

291
00:10:35,340 --> 00:10:36,220
That's right.

292
00:10:36,620 --> 00:10:40,400
And people don't track it, we don't like

293
00:10:40,400 --> 00:10:43,960
budgeting, but if you're running a household, like

294
00:10:43,960 --> 00:10:45,500
I always tell people, you're the CEO of

295
00:10:45,500 --> 00:10:46,040
your life.

296
00:10:46,260 --> 00:10:48,840
And if you're not a good, what business

297
00:10:48,840 --> 00:10:51,120
you know that doesn't track what comes in

298
00:10:51,120 --> 00:10:53,100
and what goes out, how long are they

299
00:10:53,100 --> 00:10:53,900
going to be in business?

300
00:10:55,840 --> 00:10:57,120
And what's the difference between them and you?

301
00:10:57,500 --> 00:10:57,940
Nothing.

302
00:10:58,840 --> 00:11:00,180
And you can't tell.

303
00:11:00,400 --> 00:11:02,840
Listen, when we talk about, we'll go back

304
00:11:02,840 --> 00:11:04,340
into it, I'll come back to that because

305
00:11:04,340 --> 00:11:05,640
I, well, let me ask you this.

306
00:11:05,960 --> 00:11:09,240
So do you think in terms of their

307
00:11:09,240 --> 00:11:11,700
gross revenue and you say, all right, well,

308
00:11:12,420 --> 00:11:15,000
we model, one of the models he works

309
00:11:15,000 --> 00:11:17,840
with is about saving 15% of your

310
00:11:17,840 --> 00:11:18,800
income.

311
00:11:18,920 --> 00:11:20,760
Do you do that on gross or net?

312
00:11:21,400 --> 00:11:21,820
Gross.

313
00:11:22,100 --> 00:11:22,340
Okay.

314
00:11:22,560 --> 00:11:23,180
I do that too.

315
00:11:23,280 --> 00:11:24,760
I was making sure I was thinking in

316
00:11:24,760 --> 00:11:25,160
the right way.

317
00:11:25,280 --> 00:11:25,580
All right.

318
00:11:26,060 --> 00:11:29,400
And what, as we both kind of rail

319
00:11:29,400 --> 00:11:30,980
again, I don't know if I should say

320
00:11:30,980 --> 00:11:32,860
that, I'll say, you know, kind of go

321
00:11:32,860 --> 00:11:36,400
against a little counter intuitive to traditional financial

322
00:11:36,400 --> 00:11:36,740
planning.

323
00:11:37,320 --> 00:11:39,440
And, um, what do you think the biggest

324
00:11:39,440 --> 00:11:44,420
mistakes traditional financial planning makes with, with, with

325
00:11:44,420 --> 00:11:45,640
a lot of the clients that might be

326
00:11:45,640 --> 00:11:47,380
hearing this, if they don't work with us

327
00:11:47,380 --> 00:11:47,760
already?

328
00:11:48,620 --> 00:11:48,920
Great question.

329
00:11:48,980 --> 00:11:49,940
They only have two solutions.

330
00:11:50,120 --> 00:11:51,100
They might have three.

331
00:11:51,100 --> 00:11:51,500
Right.

332
00:11:52,120 --> 00:11:54,740
So when I, whenever look at traditional or

333
00:11:54,740 --> 00:11:57,780
typical, I like to say typical, typical financial

334
00:11:57,780 --> 00:11:59,000
planning, right.

335
00:11:59,000 --> 00:12:00,160
You're going to go in and you're going

336
00:12:00,160 --> 00:12:01,540
to figure out how old are you today?

337
00:12:01,880 --> 00:12:02,720
When do you want to retire?

338
00:12:02,940 --> 00:12:04,300
How much do you want to retire on?

339
00:12:04,640 --> 00:12:06,660
And how much do you currently have that

340
00:12:06,660 --> 00:12:06,840
way?

341
00:12:06,840 --> 00:12:08,480
They could plug it into their calculator, future

342
00:12:08,480 --> 00:12:10,920
value calculator, grow it out and then say

343
00:12:10,920 --> 00:12:12,880
at that age, here's how much you need

344
00:12:12,880 --> 00:12:15,100
to support the lifestyle you think you want.

345
00:12:15,480 --> 00:12:16,800
And then how much you need to save

346
00:12:16,800 --> 00:12:17,120
current.

347
00:12:18,000 --> 00:12:19,760
And every single time it's going to say,

348
00:12:19,860 --> 00:12:21,520
oh man, you are off.

349
00:12:21,960 --> 00:12:22,320
Right.

350
00:12:22,900 --> 00:12:26,640
So we, as a team needs a budget,

351
00:12:26,920 --> 00:12:28,500
cut a bunch of expenses out of your

352
00:12:28,500 --> 00:12:31,740
life so that you can save more, or

353
00:12:31,740 --> 00:12:33,600
we could take on more risk.

354
00:12:34,280 --> 00:12:36,500
So for typical financial planning, those are really

355
00:12:36,500 --> 00:12:38,040
the only two, right?

356
00:12:39,600 --> 00:12:41,740
Budget, cut your expenses, sacrifice today.

357
00:12:41,860 --> 00:12:43,900
So you can save more and maybe hopefully

358
00:12:43,900 --> 00:12:44,540
have more later.

359
00:12:44,620 --> 00:12:47,620
Or, Hey, we need to increase your return,

360
00:12:47,740 --> 00:12:49,720
your risk and get a higher return some

361
00:12:49,720 --> 00:12:50,100
way.

362
00:12:50,220 --> 00:12:50,320
Right.

363
00:12:50,320 --> 00:12:52,180
They might also throw in there every once

364
00:12:52,180 --> 00:12:52,500
in a while.

365
00:12:52,760 --> 00:12:53,840
I could do it for cheaper.

366
00:12:54,560 --> 00:12:56,160
Or they might say, Hey, you just need

367
00:12:56,160 --> 00:12:57,080
to grow your income.

368
00:12:58,040 --> 00:12:58,140
Right.

369
00:12:58,180 --> 00:12:59,860
Well, if you grow your income and you

370
00:12:59,860 --> 00:13:01,340
don't have the right structure in place, we

371
00:13:01,340 --> 00:13:02,400
already see how that's worked out.

372
00:13:02,560 --> 00:13:05,220
You're then going to have more expenses.

373
00:13:05,780 --> 00:13:05,900
Right.

374
00:13:06,640 --> 00:13:08,920
If you look at most people's financial lives

375
00:13:08,920 --> 00:13:10,260
today, right?

376
00:13:10,300 --> 00:13:12,180
Let's say that you're an average American and

377
00:13:12,180 --> 00:13:13,100
you save 4%.

378
00:13:13,100 --> 00:13:14,420
And I'm not making that up.

379
00:13:14,460 --> 00:13:15,040
You can look it up.

380
00:13:15,400 --> 00:13:17,240
Average American saves 4% of their income.

381
00:13:17,240 --> 00:13:20,660
If you look at somebody that is making

382
00:13:20,660 --> 00:13:23,660
a hundred grand and they're saving 4%, that's

383
00:13:23,660 --> 00:13:24,440
96 grand.

384
00:13:25,060 --> 00:13:25,160
Right.

385
00:13:25,720 --> 00:13:27,980
If they want to save 15% of

386
00:13:27,980 --> 00:13:30,240
their income, they have to go from 96

387
00:13:30,240 --> 00:13:31,700
% to 85.

388
00:13:31,960 --> 00:13:33,980
Sorry, 96,000.

389
00:13:34,380 --> 00:13:34,700
Right.

390
00:13:35,100 --> 00:13:36,160
That's $9,000.

391
00:13:36,740 --> 00:13:39,160
Just, I mean, I don't know too many

392
00:13:39,160 --> 00:13:41,200
people that could just be like, boom, that's

393
00:13:41,200 --> 00:13:41,460
easy.

394
00:13:41,680 --> 00:13:42,300
$9,000.

395
00:13:42,580 --> 00:13:43,780
I can cut that out of my lifestyle

396
00:13:43,780 --> 00:13:44,440
right now.

397
00:13:44,700 --> 00:13:45,000
Right.

398
00:13:45,280 --> 00:13:45,480
Yeah.

399
00:13:47,380 --> 00:13:49,900
Budgeting is only good up to an extent.

400
00:13:50,320 --> 00:13:53,620
And what's funny, typical financial planning, like everybody

401
00:13:53,620 --> 00:13:56,600
wants to talk about certified financial planner, CFPs.

402
00:13:56,700 --> 00:13:57,420
This is kind of funny.

403
00:13:57,820 --> 00:13:59,060
Total side tangent here.

404
00:13:59,740 --> 00:14:01,100
Budgeting used to be a part of their

405
00:14:01,100 --> 00:14:02,500
curriculum for the CFP.

406
00:14:02,900 --> 00:14:04,180
Guess what's not a part of the curriculum

407
00:14:04,180 --> 00:14:04,540
anymore?

408
00:14:05,140 --> 00:14:05,580
Budgeting.

409
00:14:05,840 --> 00:14:06,720
Because it doesn't work.

410
00:14:06,940 --> 00:14:08,760
It's proven like it does not work.

411
00:14:08,820 --> 00:14:09,660
It's a good exercise.

412
00:14:09,820 --> 00:14:10,580
It just doesn't work.

413
00:14:10,900 --> 00:14:11,820
So they actually took it out.

414
00:14:11,820 --> 00:14:16,300
So when I think about typical planning, that's

415
00:14:16,300 --> 00:14:18,280
the only thing that they can do is

416
00:14:18,280 --> 00:14:22,200
budget, which doesn't work, or increase your rate

417
00:14:22,200 --> 00:14:22,580
of return.

418
00:14:22,700 --> 00:14:24,600
So all of it always comes back down

419
00:14:24,600 --> 00:14:26,580
to- Which LOA do that's to take

420
00:14:26,580 --> 00:14:27,100
more risk.

421
00:14:27,460 --> 00:14:27,860
That's right.

422
00:14:28,260 --> 00:14:29,740
And all they can talk about is product.

423
00:14:30,320 --> 00:14:33,080
And we view risk as probability of loss.

424
00:14:33,140 --> 00:14:34,760
It doesn't mean that you're going to make

425
00:14:34,760 --> 00:14:35,020
money.

426
00:14:35,160 --> 00:14:36,440
It means you're just taking more risk, which

427
00:14:36,440 --> 00:14:38,140
means you're more apt to do it.

428
00:14:38,140 --> 00:14:40,800
All he talked about there, in our system,

429
00:14:40,920 --> 00:14:43,460
we call it the accumulation theory, which is

430
00:14:43,460 --> 00:14:47,260
based on- We tell people, look, we're

431
00:14:47,260 --> 00:14:49,100
not in the lifestyle reduction business.

432
00:14:49,200 --> 00:14:50,620
So I'm not here to tell you can't

433
00:14:50,620 --> 00:14:52,200
go to Starbucks or whatever.

434
00:14:53,660 --> 00:14:55,340
So the segment I'm calling it, these are

435
00:14:55,340 --> 00:14:56,820
the questions I'm asking why I call the

436
00:14:56,820 --> 00:14:57,460
wealth lie.

437
00:15:00,020 --> 00:15:02,420
This is a variation on the first question,

438
00:15:02,540 --> 00:15:04,620
but can someone have a million dollar net

439
00:15:04,620 --> 00:15:06,500
worth and still be financially fragile?

440
00:15:06,900 --> 00:15:07,760
Ask me that one more time.

441
00:15:07,760 --> 00:15:09,860
Someone have a million dollar- Net worth

442
00:15:09,860 --> 00:15:12,720
and still be financially fragile.

443
00:15:14,140 --> 00:15:14,660
100%.

444
00:15:14,660 --> 00:15:16,060
Because you think about it, right?

445
00:15:16,180 --> 00:15:19,020
Everybody wants to talk to you about your

446
00:15:19,020 --> 00:15:20,060
net worth.

447
00:15:20,500 --> 00:15:21,280
That's the goal.

448
00:15:21,340 --> 00:15:22,460
How do you have a nest egg, a

449
00:15:22,460 --> 00:15:25,160
net worth at retirement of a million dollars,

450
00:15:25,660 --> 00:15:25,840
right?

451
00:15:26,120 --> 00:15:30,440
So let's say that you make 100 grand

452
00:15:30,440 --> 00:15:33,380
today, you spend the 96,000, right?

453
00:15:33,380 --> 00:15:35,940
But on average, let's say that your income

454
00:15:35,940 --> 00:15:38,940
grows at 4% and your expenses grow

455
00:15:38,940 --> 00:15:41,000
at 4% over that 20, 30 year

456
00:15:41,000 --> 00:15:41,260
period.

457
00:15:41,480 --> 00:15:43,380
Well, if you save up and you end

458
00:15:43,380 --> 00:15:45,840
up at retirement with a million dollars, but

459
00:15:45,840 --> 00:15:50,140
you spend $150,000, that money is not

460
00:15:50,140 --> 00:15:53,740
going to last in your retirement for more

461
00:15:53,740 --> 00:15:56,280
than 10 years, even if you're earning a

462
00:15:56,280 --> 00:15:57,460
rate of return, right?

463
00:15:57,920 --> 00:16:00,140
Which most people try not to take more

464
00:16:00,140 --> 00:16:01,720
risk when they get to retirement because they

465
00:16:01,720 --> 00:16:02,980
need that money to last.

466
00:16:02,980 --> 00:16:03,420
Right?

467
00:16:04,340 --> 00:16:07,580
And so, yeah, you can absolutely be financially

468
00:16:07,580 --> 00:16:10,080
fragile with a million dollar net worth because

469
00:16:10,080 --> 00:16:13,100
if your income stops and you need to

470
00:16:13,100 --> 00:16:14,880
start spending that net worth, how long is

471
00:16:14,880 --> 00:16:16,160
that net worth going to be around for

472
00:16:16,160 --> 00:16:16,300
you?

473
00:16:16,380 --> 00:16:17,820
Is it going to last as long as

474
00:16:17,820 --> 00:16:18,200
you do?

475
00:16:18,360 --> 00:16:19,440
Or are you going to run out of

476
00:16:19,440 --> 00:16:20,220
money before life?

477
00:16:20,780 --> 00:16:20,920
Right.

478
00:16:21,520 --> 00:16:21,740
Right.

479
00:16:21,920 --> 00:16:23,280
I always say you can't eat equity.

480
00:16:23,800 --> 00:16:24,460
Can't eat equity.

481
00:16:24,580 --> 00:16:24,820
That's right.

482
00:16:25,080 --> 00:16:25,280
Can't eat equity.

483
00:16:25,820 --> 00:16:28,360
And so let me, so the last, I

484
00:16:28,360 --> 00:16:30,100
put these into my mind.

485
00:16:30,340 --> 00:16:33,640
So why do real estate investors, what do

486
00:16:33,640 --> 00:16:36,920
you, in your opinion, understand about cashflow than

487
00:16:36,920 --> 00:16:38,980
most families don't?

488
00:16:39,180 --> 00:16:40,700
What do they get than regular people?

489
00:16:41,460 --> 00:16:42,720
You know, they get that.

490
00:16:43,300 --> 00:16:46,120
They own what we call cashflow engines, right?

491
00:16:46,200 --> 00:16:49,700
Things that produce income taxed more efficiently than

492
00:16:49,700 --> 00:16:50,400
your pay cheque.

493
00:16:50,800 --> 00:16:52,320
Well, for a real estate investor to have

494
00:16:52,320 --> 00:16:55,520
income, their rents, their inflows on their property

495
00:16:55,520 --> 00:16:59,420
have to be more than their outflows, mortgage

496
00:16:59,420 --> 00:17:00,660
and expenses, right?

497
00:17:00,660 --> 00:17:03,099
So they know, like, they can't support their

498
00:17:03,099 --> 00:17:05,119
lifestyle or they can't create the income that

499
00:17:05,119 --> 00:17:07,660
they want unless their rents are higher than

500
00:17:07,660 --> 00:17:08,359
all their expenses.

501
00:17:08,960 --> 00:17:09,060
Right.

502
00:17:09,619 --> 00:17:11,480
So I think that's kind of the one

503
00:17:11,480 --> 00:17:15,359
of the- From our, like, I always

504
00:17:15,359 --> 00:17:16,359
tell people, this is what I've heard.

505
00:17:16,480 --> 00:17:19,500
Like, if you're buying and hoping it goes

506
00:17:19,500 --> 00:17:21,339
up, you're just speculating.

507
00:17:21,599 --> 00:17:23,200
You're not a good investor.

508
00:17:23,319 --> 00:17:24,400
You're hoping for appreciation.

509
00:17:24,579 --> 00:17:25,480
That's what amateurs do.

510
00:17:25,819 --> 00:17:28,020
And you need the cashflow from the get

511
00:17:28,020 --> 00:17:28,420
-go.

512
00:17:28,420 --> 00:17:30,500
If it doesn't, it is a pencil out

513
00:17:30,500 --> 00:17:31,700
from the door for you even.

514
00:17:31,920 --> 00:17:33,840
I know investors that look at it will

515
00:17:33,840 --> 00:17:36,080
run the numbers and pass because they can't

516
00:17:36,080 --> 00:17:37,000
zero pencil out.

517
00:17:37,660 --> 00:17:39,180
And so this is for my investors out

518
00:17:39,180 --> 00:17:39,320
there.

519
00:17:39,520 --> 00:17:40,400
Cashflow is everything.

520
00:17:40,840 --> 00:17:41,500
Cashflow is everything.

521
00:17:41,620 --> 00:17:43,220
And I think when it comes to investing,

522
00:17:43,460 --> 00:17:44,660
side danger, we'll get back on it.

523
00:17:44,760 --> 00:17:47,380
But we talk about in my group, the

524
00:17:47,380 --> 00:17:50,880
Lifestyle Investor Group, that you want to have

525
00:17:50,880 --> 00:17:53,880
JOMO a whole lot more than FOMO.

526
00:17:54,460 --> 00:17:56,280
So JOMO is the joy of missing out,

527
00:17:56,340 --> 00:17:57,940
while FOMO is the fear of missing out.

528
00:17:58,420 --> 00:18:01,120
It is a whole lot better to miss

529
00:18:01,120 --> 00:18:02,780
out on a thousand good deals than it

530
00:18:02,780 --> 00:18:04,600
is to get stuck in a bad deal.

531
00:18:05,820 --> 00:18:06,960
That's a bar there, guys.

532
00:18:07,040 --> 00:18:09,120
I hope y'all don't replay that one.

533
00:18:09,320 --> 00:18:10,060
That's a bar.

534
00:18:11,120 --> 00:18:15,260
I see, because I'll take people through a

535
00:18:15,260 --> 00:18:18,480
whole cashflow, and we call it economic model.

536
00:18:19,080 --> 00:18:21,000
And one time I was speaking at a

537
00:18:21,000 --> 00:18:22,760
real estate conference, like in last fall.

538
00:18:23,360 --> 00:18:25,780
And I was in between a hard money

539
00:18:25,780 --> 00:18:27,740
guy and a guy that helps people get

540
00:18:27,740 --> 00:18:28,520
business credit.

541
00:18:29,060 --> 00:18:32,080
And so it's a clip ID somewhere, or

542
00:18:32,080 --> 00:18:33,340
I think my wife recorded me.

543
00:18:33,440 --> 00:18:36,360
And I said, you know, I want you

544
00:18:36,360 --> 00:18:39,220
to get business credit, but you should have

545
00:18:39,220 --> 00:18:39,980
your own bank.

546
00:18:40,420 --> 00:18:42,360
When I say your own bank, just a

547
00:18:42,360 --> 00:18:43,760
pool of capital that you control.

548
00:18:43,900 --> 00:18:44,940
So you have the choice.

549
00:18:45,280 --> 00:18:46,360
Do I want to use my money or

550
00:18:46,360 --> 00:18:46,780
their money?

551
00:18:46,820 --> 00:18:47,780
Because here's what I see.

552
00:18:48,080 --> 00:18:50,000
With I'm getting all this business credit, I

553
00:18:50,000 --> 00:18:50,640
am the one.

554
00:18:50,920 --> 00:18:51,600
This is how I said it.

555
00:18:51,600 --> 00:18:52,280
So I'm going to say, like I said,

556
00:18:52,320 --> 00:18:53,020
in the meeting.

557
00:18:53,500 --> 00:18:55,060
I'm out here, back here, cleaning all this

558
00:18:55,060 --> 00:18:56,000
shit up, right?

559
00:18:56,000 --> 00:18:58,980
Meaning that I'm looking at your financials.

560
00:18:59,000 --> 00:19:02,580
And I see $100,000 of the business

561
00:19:02,580 --> 00:19:05,300
debt, but no business, no business revenue.

562
00:19:05,940 --> 00:19:08,240
You know, so now you're, you've got no

563
00:19:08,240 --> 00:19:09,260
cashflow engine.

564
00:19:09,440 --> 00:19:11,640
And then you're, you might have a job,

565
00:19:11,760 --> 00:19:13,880
but now you're paying for your personal debt.

566
00:19:13,880 --> 00:19:16,780
And you're, the business day where you didn't

567
00:19:16,780 --> 00:19:18,560
get any business with it, you know.

568
00:19:18,700 --> 00:19:21,120
And I see that day after day after

569
00:19:21,120 --> 00:19:21,840
day, crazy.

570
00:19:21,840 --> 00:19:24,660
Cause you, I typically get your financial advice

571
00:19:24,660 --> 00:19:26,280
from TikTok, you know, from ID.

572
00:19:27,360 --> 00:19:27,820
Correct.

573
00:19:28,040 --> 00:19:31,180
You cannot, that, that is a recipe disaster.

574
00:19:31,500 --> 00:19:31,980
Disaster.

575
00:19:32,180 --> 00:19:32,480
Right.

576
00:19:32,680 --> 00:19:34,960
So less about now and I want to

577
00:19:34,960 --> 00:19:37,640
get out and spend a few cashflow control

578
00:19:37,640 --> 00:19:40,540
and, um, we kind of hit this.

579
00:19:40,820 --> 00:19:44,300
So, but there's a difference between, I don't

580
00:19:44,300 --> 00:19:45,180
think people know the difference.

581
00:19:45,200 --> 00:19:47,420
I think they're the same thing between budgeting

582
00:19:47,420 --> 00:19:49,220
and cashflow management.

583
00:19:50,100 --> 00:19:51,500
What is that difference to you?

584
00:19:51,840 --> 00:19:55,160
I think that budgeting is looking at the,

585
00:19:55,700 --> 00:19:58,380
is when I think, right, that is a

586
00:19:58,380 --> 00:20:00,900
lot more of like, let me report what

587
00:20:00,900 --> 00:20:01,760
I've done.

588
00:20:01,760 --> 00:20:02,160
Right.

589
00:20:03,120 --> 00:20:06,960
Cashflow management is the actual structure and the

590
00:20:06,960 --> 00:20:09,000
reality of how your money moved.

591
00:20:09,500 --> 00:20:09,980
Right.

592
00:20:10,060 --> 00:20:11,420
So what I talk a lot about is

593
00:20:11,420 --> 00:20:12,980
like, most people put their budgets on Excel

594
00:20:12,980 --> 00:20:13,440
spreadsheet.

595
00:20:13,820 --> 00:20:14,120
Yeah.

596
00:20:14,840 --> 00:20:18,220
Budgets live on spreadsheets while cashflow management brings

597
00:20:18,220 --> 00:20:19,640
that spreadsheet to life.

598
00:20:20,320 --> 00:20:21,240
I love that.

599
00:20:21,240 --> 00:20:21,620
Okay.

600
00:20:22,080 --> 00:20:23,340
What does it mean?

601
00:20:23,400 --> 00:20:25,960
So this will get into what we, we,

602
00:20:26,040 --> 00:20:28,080
uh, it's kind of de facto mentor on,

603
00:20:28,160 --> 00:20:30,140
on a tool we call occurrence, but what

604
00:20:30,140 --> 00:20:32,580
does it mean to not the fact that

605
00:20:32,580 --> 00:20:33,540
I don't know why I said that, but

606
00:20:33,540 --> 00:20:35,840
they, uh, what does it mean to disconnect

607
00:20:35,840 --> 00:20:39,580
and why is it important to disconnect spending

608
00:20:39,580 --> 00:20:40,780
from income?

609
00:20:41,420 --> 00:20:41,880
Great question.

610
00:20:42,000 --> 00:20:43,760
And I think that goes back to the

611
00:20:43,760 --> 00:20:46,080
financial treadmill that I talked about a little

612
00:20:46,080 --> 00:20:48,320
bit earlier, where your income is deposited into

613
00:20:48,320 --> 00:20:50,500
your checking account, where all your expenses come

614
00:20:50,500 --> 00:20:53,180
out of, and you're unconsciously spending while trying

615
00:20:53,180 --> 00:20:55,600
to manually save, like it shouldn't be lost

616
00:20:55,600 --> 00:20:58,640
on us that corporations, financial institutions in the

617
00:20:58,640 --> 00:21:00,980
government literally spend billions of dollars a year

618
00:21:00,980 --> 00:21:03,140
on marketing just to figure out how do

619
00:21:03,140 --> 00:21:04,640
you, you can spend money better.

620
00:21:04,820 --> 00:21:07,960
Like you don't, you don't think that Apple

621
00:21:07,960 --> 00:21:11,260
was talking to all these other corporations to

622
00:21:11,260 --> 00:21:13,160
say, all you have to do, we're going

623
00:21:13,160 --> 00:21:13,960
to put this on the iPhone.

624
00:21:14,100 --> 00:21:15,440
All you have to do is double click

625
00:21:15,440 --> 00:21:16,880
the side of your phone and, and you're

626
00:21:16,880 --> 00:21:17,340
good to go.

627
00:21:17,340 --> 00:21:21,000
Like they all know the best thing to

628
00:21:21,000 --> 00:21:23,300
do is make it easier to spend your

629
00:21:23,300 --> 00:21:24,300
money, right?

630
00:21:24,640 --> 00:21:26,160
Because most people, when you look at their

631
00:21:26,160 --> 00:21:29,760
life, all the friction is on saving money

632
00:21:29,760 --> 00:21:31,160
for you to save money.

633
00:21:31,280 --> 00:21:32,240
If you don't have the right structure in

634
00:21:32,240 --> 00:21:34,620
place, you have to do the mental calculation

635
00:21:34,620 --> 00:21:36,340
to figure out what you need to save.

636
00:21:36,460 --> 00:21:38,020
Then you need to log into your bank

637
00:21:38,020 --> 00:21:38,340
account.

638
00:21:38,900 --> 00:21:41,480
So open your phone, look at your phone,

639
00:21:41,680 --> 00:21:44,260
open your phone, find the app, open the

640
00:21:44,260 --> 00:21:46,560
app, log into the app, go to the

641
00:21:46,560 --> 00:21:48,960
right bank account, figure out again, how much

642
00:21:48,960 --> 00:21:49,920
you're mentally going to save.

643
00:21:50,380 --> 00:21:53,400
Then go to the move money tab, then

644
00:21:53,400 --> 00:21:55,680
transfer the money to whatever account you think

645
00:21:55,680 --> 00:21:57,460
that you want to transfer it to type

646
00:21:57,460 --> 00:22:00,860
in the number, mentally justify it again, and

647
00:22:00,860 --> 00:22:02,100
then finally hit the transfer button.

648
00:22:03,900 --> 00:22:06,640
Whereas spending, you walk into the store, you

649
00:22:06,640 --> 00:22:09,580
pick this thing up, you double click, and

650
00:22:09,580 --> 00:22:10,200
then you're good to go.

651
00:22:10,380 --> 00:22:11,560
Thank you for your service.

652
00:22:11,760 --> 00:22:12,380
We'll see you tomorrow.

653
00:22:13,230 --> 00:22:13,520
Right?

654
00:22:13,900 --> 00:22:17,800
So much friction is on saving money rather

655
00:22:17,800 --> 00:22:19,200
than spending money.

656
00:22:19,420 --> 00:22:21,960
And so the reason we want to disconnect

657
00:22:21,960 --> 00:22:27,520
spending from your pay cheque is it's the first,

658
00:22:27,600 --> 00:22:29,600
I would say the first key component of

659
00:22:29,600 --> 00:22:30,980
an optimal cashflow structure.

660
00:22:31,160 --> 00:22:32,700
But the reason we want to do that

661
00:22:32,700 --> 00:22:34,760
is so that the friction point now is

662
00:22:34,760 --> 00:22:36,780
on spending rather than saving.

663
00:22:37,020 --> 00:22:38,600
And if we can put more friction on

664
00:22:38,600 --> 00:22:41,320
spending than saving, we can get to financial

665
00:22:41,320 --> 00:22:42,280
freedom a whole lot faster.

666
00:22:42,880 --> 00:22:43,740
I love it.

667
00:22:44,000 --> 00:22:48,640
What happens when income gets centralised instead of

668
00:22:48,640 --> 00:22:50,400
scattered across accounts?

669
00:22:51,660 --> 00:22:54,100
So when you talk about that, so like,

670
00:22:54,140 --> 00:22:57,040
let's talk about, you know, are we talking

671
00:22:57,040 --> 00:22:57,980
about a husband and a wife?

672
00:22:58,060 --> 00:22:59,160
Are we talking about a bunch of different

673
00:22:59,160 --> 00:22:59,480
assets?

674
00:22:59,520 --> 00:23:00,200
All right.

675
00:23:00,420 --> 00:23:01,220
So let's two things.

676
00:23:01,260 --> 00:23:02,480
You brought up another thing, right?

677
00:23:02,760 --> 00:23:08,620
So I was thinking reservoir concept, but before

678
00:23:08,620 --> 00:23:10,700
we go there, this is another issue I

679
00:23:10,700 --> 00:23:10,980
have.

680
00:23:10,980 --> 00:23:13,620
Well, this is my money and this is

681
00:23:13,620 --> 00:23:16,260
her money and never the twain shall meet.

682
00:23:16,860 --> 00:23:19,420
And it's, I get, I'm getting, I, you

683
00:23:19,420 --> 00:23:22,220
know, sometimes I don't know how to deal

684
00:23:22,220 --> 00:23:22,740
with that.

685
00:23:23,060 --> 00:23:23,560
It's tough.

686
00:23:23,780 --> 00:23:24,120
It's tough.

687
00:23:24,680 --> 00:23:24,940
Yeah.

688
00:23:25,100 --> 00:23:27,120
Let's first talk about the structure, like the

689
00:23:27,120 --> 00:23:27,460
optimal.

690
00:23:27,640 --> 00:23:27,780
Yeah.

691
00:23:28,000 --> 00:23:30,180
So when I think about an optimal cashflow

692
00:23:30,180 --> 00:23:32,060
structure, there's three things that I'm looking for.

693
00:23:32,120 --> 00:23:35,140
Number one is separation of income from expenses.

694
00:23:35,200 --> 00:23:37,360
And we do this by setting up what

695
00:23:37,360 --> 00:23:38,800
we call a cashflow reservoir.

696
00:23:39,360 --> 00:23:39,680
Okay.

697
00:23:39,840 --> 00:23:42,000
And we, we label it.

698
00:23:42,040 --> 00:23:44,020
We that because what you don't label, you

699
00:23:44,020 --> 00:23:45,700
can't change it.

700
00:23:45,760 --> 00:23:48,640
So we label your account, your cashflow reservoir.

701
00:23:48,860 --> 00:23:52,340
So now number one, separation of income income

702
00:23:52,340 --> 00:23:54,260
is separation of income expenses.

703
00:23:54,680 --> 00:23:57,140
Your income is deposited into your cashflow reservoir.

704
00:23:57,540 --> 00:24:00,240
And then we only put in your checking

705
00:24:00,240 --> 00:24:02,960
account the money you need to spend out

706
00:24:02,960 --> 00:24:03,500
of your reservoir.

707
00:24:03,780 --> 00:24:04,180
Okay.

708
00:24:04,420 --> 00:24:07,320
So money flows in money flows, income number

709
00:24:07,320 --> 00:24:09,880
one, key component number two, key component is

710
00:24:09,880 --> 00:24:12,880
automation and the right automations, not the wrong

711
00:24:12,880 --> 00:24:13,080
ones.

712
00:24:13,120 --> 00:24:14,040
You don't want the wrong automation.

713
00:24:14,180 --> 00:24:15,000
Do you want the right automations?

714
00:24:15,360 --> 00:24:15,540
Okay.

715
00:24:15,900 --> 00:24:17,400
We want to automate the money coming into

716
00:24:17,400 --> 00:24:19,780
your reservoir and we want to automate a

717
00:24:19,780 --> 00:24:22,160
fixed dollar amount, leaving your reservoir to go

718
00:24:22,160 --> 00:24:23,640
to your checking account for spending.

719
00:24:24,260 --> 00:24:26,200
And then third is we want a feedback

720
00:24:26,200 --> 00:24:26,500
loop.

721
00:24:26,580 --> 00:24:28,480
That's the third key component is a feedback

722
00:24:28,480 --> 00:24:31,740
loop to tell us three things.

723
00:24:31,740 --> 00:24:35,340
Number one, how close to or above are

724
00:24:35,340 --> 00:24:39,480
we to our emergency fund or our reservoir

725
00:24:39,480 --> 00:24:40,740
target, right?

726
00:24:40,840 --> 00:24:42,880
Three months of expenses is a good goal.

727
00:24:43,240 --> 00:24:46,200
The second is how much free cashflow do

728
00:24:46,200 --> 00:24:48,140
we have on an ongoing basis?

729
00:24:48,600 --> 00:24:49,340
Are we positive?

730
00:24:49,540 --> 00:24:50,180
Are we neutral?

731
00:24:50,340 --> 00:24:50,900
Are we negative?

732
00:24:51,340 --> 00:24:52,800
If it's negative, we've got a problem.

733
00:24:53,000 --> 00:24:55,680
If it's positive, are we close to our

734
00:24:55,680 --> 00:24:56,600
15% goal?

735
00:24:57,180 --> 00:24:57,300
Right.

736
00:24:57,840 --> 00:25:01,000
The next is, I think the most important

737
00:25:01,000 --> 00:25:02,980
is deviations.

738
00:25:03,320 --> 00:25:03,420
Okay.

739
00:25:03,680 --> 00:25:06,960
We have a regular baseline spending that most

740
00:25:06,960 --> 00:25:09,300
people operate on each month, right?

741
00:25:09,440 --> 00:25:12,300
A regular baseline to allow you to live

742
00:25:12,300 --> 00:25:13,540
the life that you're living right now.

743
00:25:13,700 --> 00:25:16,200
And when you spend over and above that

744
00:25:16,200 --> 00:25:18,560
baseline, that is what we would call a

745
00:25:18,560 --> 00:25:19,100
deviation.

746
00:25:19,280 --> 00:25:21,300
Now you need to know on this deviation,

747
00:25:21,420 --> 00:25:22,920
was this a one-time deviation?

748
00:25:23,340 --> 00:25:24,820
Like the washer and dryer went out and

749
00:25:24,820 --> 00:25:26,300
I got to pay for that, right?

750
00:25:26,300 --> 00:25:28,920
Or is this an ongoing deviation?

751
00:25:29,220 --> 00:25:31,600
Because we just looked and we realised, man,

752
00:25:31,620 --> 00:25:35,000
we've been spending $250 more than our baseline

753
00:25:35,000 --> 00:25:36,000
for the last three months.

754
00:25:36,180 --> 00:25:37,340
And we need to adjust.

755
00:25:37,440 --> 00:25:40,180
We either need to realise like that's our

756
00:25:40,180 --> 00:25:41,520
new normal and we spend that.

757
00:25:41,780 --> 00:25:43,940
So we need to adjust our baseline or

758
00:25:43,940 --> 00:25:46,500
we got to cut this out.

759
00:25:46,960 --> 00:25:48,360
Like we got to rein in and get

760
00:25:48,360 --> 00:25:49,880
back on track to what we actually want

761
00:25:49,880 --> 00:25:50,240
to do.

762
00:25:50,540 --> 00:25:54,560
And so that's the most optimal cashflow structure.

763
00:25:54,560 --> 00:25:57,500
Separation of income and expenses, having the right

764
00:25:57,500 --> 00:26:00,640
automations, and then having a real-time feedback

765
00:26:00,640 --> 00:26:00,880
loop.

766
00:26:01,440 --> 00:26:01,980
I love that.

767
00:26:02,260 --> 00:26:02,440
Okay.

768
00:26:02,820 --> 00:26:06,000
Can you tell me, I follow Brock on

769
00:26:06,000 --> 00:26:08,740
LinkedIn, writes some great articles about a client

770
00:26:08,740 --> 00:26:11,920
or two that were making good money, but

771
00:26:11,920 --> 00:26:14,180
was constantly wondering where it all went.

772
00:26:14,480 --> 00:26:16,120
And I say that because I have a,

773
00:26:16,260 --> 00:26:18,240
we haven't got, hopefully, no, it will be

774
00:26:18,240 --> 00:26:18,900
done this month.

775
00:26:18,940 --> 00:26:19,160
Right.

776
00:26:19,240 --> 00:26:22,260
But then the topic, the title is, where

777
00:26:22,260 --> 00:26:23,140
did my money go?

778
00:26:23,840 --> 00:26:26,060
Because when I run into people, I don't

779
00:26:26,060 --> 00:26:30,020
care if they make $50,000 a year

780
00:26:30,020 --> 00:26:31,700
or a half a million dollars a year.

781
00:26:32,420 --> 00:26:34,100
That's the, I don't know where money goes.

782
00:26:34,360 --> 00:26:34,460
Right.

783
00:26:34,540 --> 00:26:37,060
Which is why we both think cash key

784
00:26:37,060 --> 00:26:38,100
is cashflow control.

785
00:26:38,240 --> 00:26:39,340
You know, all money is a result of

786
00:26:39,340 --> 00:26:41,600
all wealth as a result of cashflow.

787
00:26:41,960 --> 00:26:43,240
Do you have a few people that come

788
00:26:43,240 --> 00:26:45,960
to mind examples of this?

789
00:26:46,340 --> 00:26:47,340
Do I have a few?

790
00:26:47,580 --> 00:26:47,820
Yes.

791
00:26:48,820 --> 00:26:49,920
Majority of people, right?

792
00:26:50,320 --> 00:26:51,580
It is so common.

793
00:26:51,760 --> 00:26:52,380
So common.

794
00:26:52,380 --> 00:26:54,260
Funny as I was watching a training video

795
00:26:54,260 --> 00:26:56,680
from the early, it was either the early

796
00:26:56,680 --> 00:27:01,220
2000s or late 90s where this training video

797
00:27:01,220 --> 00:27:02,960
was with a client, an advisor and a

798
00:27:02,960 --> 00:27:03,220
client.

799
00:27:03,800 --> 00:27:06,580
And the client said, you know, they were

800
00:27:06,580 --> 00:27:08,060
walking him through like, what does he do

801
00:27:08,060 --> 00:27:09,140
for work and all these things?

802
00:27:09,420 --> 00:27:10,820
And he was a pilot.

803
00:27:11,120 --> 00:27:13,600
And he said, man, you know, I thought

804
00:27:13,600 --> 00:27:16,400
that when I would make this money one

805
00:27:16,400 --> 00:27:18,920
day, all my problems would be gone and

806
00:27:18,920 --> 00:27:19,780
I'd be good to go.

807
00:27:20,080 --> 00:27:21,780
Like all my money worries would be fine.

808
00:27:21,780 --> 00:27:24,880
But where I'm at, I'm finding that I

809
00:27:24,880 --> 00:27:26,420
feel like I have more money problems and

810
00:27:26,420 --> 00:27:28,000
I don't know where more of my money

811
00:27:28,000 --> 00:27:28,360
is at.

812
00:27:28,680 --> 00:27:30,880
And I see that over and over and

813
00:27:30,880 --> 00:27:31,320
over again.

814
00:27:31,680 --> 00:27:34,980
Nowadays, where you, you know, you, you can

815
00:27:34,980 --> 00:27:36,340
do up to where you thought all your

816
00:27:36,340 --> 00:27:37,560
money worries would be gone.

817
00:27:37,940 --> 00:27:40,220
And you thought, man, life is going to

818
00:27:40,220 --> 00:27:40,720
be good.

819
00:27:41,560 --> 00:27:43,160
But no money, no problems.

820
00:27:43,340 --> 00:27:43,920
That's right.

821
00:27:44,240 --> 00:27:44,520
Right.

822
00:27:45,560 --> 00:27:47,360
And they have no idea where their money

823
00:27:47,360 --> 00:27:47,740
is at.

824
00:27:48,200 --> 00:27:48,640
Right.

825
00:27:49,060 --> 00:27:50,780
Because they aren't aware of it.

826
00:27:50,780 --> 00:27:51,820
They haven't been tracking it.

827
00:27:51,900 --> 00:27:53,220
They haven't been measuring it so they can

828
00:27:53,220 --> 00:27:54,020
improve it.

829
00:27:54,100 --> 00:27:56,380
And as that income continues to increase, and

830
00:27:56,380 --> 00:27:57,520
I say that I feel like I say

831
00:27:57,520 --> 00:27:59,400
this way too much to people, but as

832
00:27:59,400 --> 00:28:02,120
your income increases, your expenses will increase if

833
00:28:02,120 --> 00:28:03,460
you do not have the right structure in

834
00:28:03,460 --> 00:28:03,720
place.

835
00:28:04,200 --> 00:28:05,300
So I love that.

836
00:28:05,440 --> 00:28:09,680
So the, um, let me segue into.

837
00:28:11,480 --> 00:28:13,460
So we both talk.

838
00:28:13,680 --> 00:28:16,320
Well, so I first, first, one of the

839
00:28:16,320 --> 00:28:17,420
things I talk about, you tell me, I

840
00:28:17,420 --> 00:28:18,420
think you do the same thing.

841
00:28:18,420 --> 00:28:20,100
Probably say it differently, but you got to,

842
00:28:20,200 --> 00:28:21,740
you know, you got to say, say 15

843
00:28:21,740 --> 00:28:23,120
% or more of your, of your, of

844
00:28:23,120 --> 00:28:23,900
your gross revenue.

845
00:28:24,380 --> 00:28:26,960
And then we talk about, okay, well, if

846
00:28:26,960 --> 00:28:28,400
you're going to save it, you know, I

847
00:28:28,400 --> 00:28:30,160
got this, but this question from Kim Butler,

848
00:28:30,300 --> 00:28:31,520
where do you store your cash?

849
00:28:31,680 --> 00:28:34,320
And then where's the best place to store

850
00:28:34,320 --> 00:28:36,180
the majority of your cash?

851
00:28:36,320 --> 00:28:39,260
So now, you know, in, in your process,

852
00:28:39,620 --> 00:28:42,740
we did, you've helped identify free cashflow.

853
00:28:44,260 --> 00:28:45,480
What's comes next?

854
00:28:45,480 --> 00:28:49,400
Well, if I'm thinking about from an engineer

855
00:28:49,400 --> 00:28:50,260
perspective, right.

856
00:28:50,760 --> 00:28:52,420
If I'm building a building, I need to

857
00:28:52,420 --> 00:28:54,080
have a building with structural integrity.

858
00:28:54,220 --> 00:28:56,040
If I'm building a financial model, I need

859
00:28:56,040 --> 00:28:57,860
to have economic integrity, right?

860
00:28:57,900 --> 00:28:59,100
I got to have a plan that's going

861
00:28:59,100 --> 00:29:00,820
to work under any and all circumstances.

862
00:29:00,820 --> 00:29:02,960
So in my head, I roll through a

863
00:29:02,960 --> 00:29:03,620
rules, right?

864
00:29:04,060 --> 00:29:05,600
So rule number one is, can I save

865
00:29:05,600 --> 00:29:06,620
15% of my income?

866
00:29:07,280 --> 00:29:07,680
Right.

867
00:29:07,880 --> 00:29:10,740
That's my goal is just save some income,

868
00:29:10,780 --> 00:29:11,000
right?

869
00:29:11,060 --> 00:29:11,880
But my goal is 15%.

870
00:29:12,420 --> 00:29:14,860
The next is, do I have three to

871
00:29:14,860 --> 00:29:15,820
six months of expenses?

872
00:29:16,320 --> 00:29:18,980
The next is maximum protection in all areas,

873
00:29:19,640 --> 00:29:21,860
mainly against the three catastrophic risks of life.

874
00:29:23,060 --> 00:29:24,700
Lawsuits, disability, and death.

875
00:29:25,340 --> 00:29:27,640
The next is I'll go to my debt.

876
00:29:27,980 --> 00:29:28,980
Do I have bad debt?

877
00:29:29,040 --> 00:29:31,160
If I have bad debt, can I make

878
00:29:31,160 --> 00:29:31,960
it to no debt?

879
00:29:32,020 --> 00:29:33,880
Because I have the cash to support that.

880
00:29:34,120 --> 00:29:34,780
Can I make it no debt?

881
00:29:34,860 --> 00:29:37,080
If I can't get no debt, how do

882
00:29:37,080 --> 00:29:39,600
I restructure, refinance, or renegotiate so that it

883
00:29:39,600 --> 00:29:40,760
becomes good debt, right?

884
00:29:40,760 --> 00:29:42,660
And to me, when I think about good

885
00:29:42,660 --> 00:29:45,380
debt and bad debt, bad debt is rates,

886
00:29:45,880 --> 00:29:47,840
short pay periods, and not deductible.

887
00:29:48,400 --> 00:29:51,240
Whereas good debt is long pay periods, small

888
00:29:51,240 --> 00:29:53,240
interest, and it is deductible.

889
00:29:54,420 --> 00:29:54,680
Right?

890
00:29:54,760 --> 00:29:55,860
So those are the things that I want

891
00:29:55,860 --> 00:29:58,980
to roll through and get into with some.