What is up investors? Now on today’s podcast, we’re gonna be doing another doctor coaching call, like how we did a couple of weeks ago. But if you haven’t checked out, I think it was Brian on that coaching call, sometimes we change the names , and then that, I think that goes for if anybody wants to do these, Free coaching calls where we go into your personal financial sheet.
We’ll send you the blank personal financial sheet to fill out so that it helps expedite things and people on feedback. Do people really like to look at people’s personal financial sheet as financial voyeurs is the term. If you guys are listening to this on the podcast form, go on the YouTube channel to find this podcast, if you really want to follow along on the personal financial sheet and see all their numbers and a lot that we don’t talk about, I had a lot of questions and feedback over my analogy that I had a couple of podcasts ago, I believe, and then go back to Brian’s one for the full discussion. But this whole concept of, you know what, all right, we’re investing in deals. We are playing these different tax strategies, or at least learning it, maybe doing, getting some passive losses artificially that you don’t have to recapture through the new Taxal fund and you’re doing a little bit infinite banking or a new accredited.
or a new accredited investor banking, which you guys will probably learn as we rolled that out this year. Let me know if you want to try it out, but, it’s working, but alright, people are moving down this path and I think everybody here pretty much, they’re not trust fund kids.
They made their own money and they’re still working. working hard in their jobs or as 10 99. So their small businesses and what is the path forward and how do they keep working? Do they titrate down? Do they work, do they spouse work? How do you implement rep status? And I introduced this Raptor, Toyota or Ford Raptor gas guzzler versus the Tesla model versus the in the middle hybrid.
Prius model of kind of different paths to doing this. Of course, all this is personal finance and what I really urge you guys to do is sign up for the club if you haven’t, and even if you are scared, book that call with me. I won’t rip your head off. I’m really nice when you get to know me. , we get on one-on-one and you.
Let’s go through this and let’s see which one of these paths really fits well for your family and or at least give you some what the options are. And let’s try and. Compressed time cycles for you because time is really the most important thing out there. But if I’m not gonna go into what the heck this analogy was, but what I’m gonna say is go back to the previous podcast that we did coaching call with Brian.
He was also a doctor. I go over this loosely, if not shoot us email, maybe we’ll do more. But certainly if you’re on the YouTube channel, put a comment below. We’ll answer, this is, this kind of, it’s real quality of life questions and personal finance questions, and this is ultimately what I really like because this changes lives.
Like going into a deal, doubling your money, whatever. That’s cool. Tax savings. Yeah. That’s amazing. When, a lot of the doctors will save 150, $200,000 in their first year by doing some of this stuff, and you. , of course. That’s, if you guys heard my kind of confession last week, sometimes when you have a lot of money, that may not mean too much, but you know when your net worth is under a million, a couple million dollars.
This is. Big life changing moments and maybe can be the difference between you having a second child or third chat, or even kids at all, or even, going down a different path in life, whatever you choose. But again, go check out that order podcast and if you have any questions let me know. Or if we ha you haven’t burned up your free intro call with me.
I urge you guys to do. Let’s get you guys going or at least get you a different viewpoint in so you don’t just screw around for the next 30, 40 years of your life, putting your money blindly into the stuff that they want you to do and enjoy the coaching call.
Hey folks, we have another hard work in a professional. Who’s going to be a volunteer to do a coaching call here. So Derek is a doctor. And if you guys like, like you guys are really liked this, I don’t know why people get like financial warism when they appear in on these things. But the truth is not many.
There’s not too many different profiles. And if you’ve gone to the YouTube channel and look for the coaching call playlist, or got an access to our members portal, which is free, you just got to sign up@simplepassivecashflow.com slash club. We actually align all the coaching calls based on networks.
So you can just find yourself and fit right in and find some of the past coaching calls people in the lower net worth than you. And some of the higher ones that you’ll get to at some point, but Dick in here, there. Thanks for doing this. Why don’t you quickly go over a little backstory to get the people that get to know you like.
Sure. Yeah. Thanks for having me. I’m excited to do this coaching call. As far as my background, so typical working or professional kind of investment background. I met my wife in medical school. We were both physicians and busy with training and residency and all that. So we just went down the typical route of basically doing retirement accounts and funneling all our money into stocks and bonds.
We thought were pretty smart cause we were doing mostly low fee index funds. So we weren’t picking individual stocks. We were doing a lot of just basically Vanguard mutual funds. And we’re doing that for basically 10 to 15 years. Cause we had two children along the way. And then just recently, actually earlier this year brother-in-law got me turned back onto real estate.
So went down a really deep dive into the podcast world and bigger pockets on your podcast. And really just started to look into this indication space and rental property space. And this year we actually purchased two rental properties. So one that’s for a longterm property where we actually have some in-laws staying in it.
So it’s not like a typical rental property, I would say. And then a second was a short-term rental property that we got in the mountain area in North Carolina. So we did all that this year. And then now I’m at the space where I really want to start more looking at passive, truly passive, so syndication type deals and maybe even starting to look into like infinite banking.
So basically just trying to get more sophisticated away from just mutual funds, stocks and bonds actually start. Getting some more investments into real estate. And then where are you guys at? Age-wise you guys got kids? So I am 40. Unfortunately the other complicating factor of my personal history is my spouse passed away suddenly like a few months ago, which complicated the issue.
So it’s just me now as a single father with two kids who are six and nine that has also led to this push very recently to really try to simplify my life and simplify my investment strategy. Obviously I want it to be high yield and useful, but I just really want simple. Sorry to hear that.
I know it’s something that all of us as we’re trying to get our stuff together, we never know what’s going to happen. It could be you, it could be them. I was kinda thinking the other day, if it was me. What’s the point. If I’ve gone, it’s all done the simulation ends, but that’s not a good way of looking at it, but yeah.
That’s definitely gets you on the right path or at least tell you what I think. And great. But but right now you’re still working, right? Yep. I work full time W2. I know I’ve listened to a bunch of podcasts, yours included where there’s talk about like real estate status, professional, all of that.
I am not going to qualify for that. And that’s probably years out because the place I work at is actually pretty cool place. It’s a fun startup and I’m definitely, I think, going to continue it at least for the next few years. So I don’t really have any, that’s not in the immediate future to shut off my W2, if that makes sense.
So just a quick snapshot for people listening on the podcast. We also do this via screen share on the YouTube channel. So if you guys want to flip through some of the personal finance sheets as we go through, I’ll pop on over there later the net worth about two and a half. But what I wanted to dig in on, so assets first, right?
You S you mentioned a lot of it is just traditional stocks, bonds, mutual funds, et cetera. So at what I’m seeing is about 800 grand in that stock bonds mutual funds stuff. And then you’ve got a lot of equity in the rental and the primary residence that you guys live in that equity might be wrong. I might have filled out the sheet wrong.
So the equity is probably in the primary residence, I would say between three to 400, depending on what it’s going to sell for in the market. Okay. Know, you didn’t, you did it right. You did it right. You have the this is what it’s worth now that the Delta is, this is the mortgage on it. So I think you got it, right?
Yeah. So it’s three to 400 probably in my primary. And then the two rentals were just purchased within the last, six to eight months, the equity. And that’s definitely not quite as high, although the market is probably somewhere between 50 to 75,000 for each of those. Okay. So we will we’ll circle back around them.
Like we’re going to invest what money we’re going to use first in one particular order, which is always a very common question that comes up, but let’s figure out what your philosophy at this point. So what is your kind of your adjusted gross income? What do you guess it’s going to be this next year?
So right now, my wage is 265,000 per year. For that comes to after taxes. It used to be, my, with my spouse working as well as closer to half a million, but that’s obviously going to keep and then your expenses, right? Not cheap having a couple of kids, but luckily. The wonderful state of California, a little bit cheaper where you’re at, right? Yeah. North Carolina is not too bad. Although the area man is a little bit more expensive than the typical North Carolina, but it’s definitely, yeah. I lived in the bay area before, too. It’s not like San Francisco, other California areas. Yeah. Did you move over to the Carolinas for work or kind of her family?
So I was in the, I used to be in the military, so we were in California, then Colorado, which I actually really loved, but a lot of my wife’s family is from the Northeast area, so we just wanted to get closer to them, but didn’t want to go to an expensive New York or Massachusetts area. So that’s how we ended up in North Korea.
Okay. So what would you say you guys, monthly burn rate for expenses? You use it utilizing daycare or, yeah there’s afterschool, so our kids are in school, but we have to put them in after afterschool or after care. My wife has some car payments. Cause she got a new car. A couple of years ago.
We have our mortgage taxes, groceries, all that stuff. It’s probably around 10,000 give or take 10 to 12,000, depending on the months I used to track the budget a lot more closely. And then that kind of went away the last year or so, but that’s probably about it and that’s including like our, we would set aside money to go on nice vacations and stuff like that.
We lump that in. So probably 12,000 a month would be Yeah. And I think, this is 12,000 burn rate every month. And so you net about 10. So you’re spending at least a hundred grand a year. Maybe that’d be a couple of investments every year. As long as you for you guys, as long as you can stay above 50, 75,000, I think you’re good enough.
You can let off the gas a little bit, whereas some of the folks that are under 1000001.5 million they might want to tighten the belt a little bit. Going at a pretty decent clip here. It’s just a matter of being smart to work with putting the money. I think that’s my next big step is just being smart with deploying all the capital out for sure.
Yeah. I’m not a big personal finance guy anymore, saving the coupons, that type of nonsense. But you guys are doing pretty well. I’ve talked to some people in California where they make more than you yet. They’re barely able to save 30 to $50,000 and I’m like, dude, what’s going on.
It’s typically private school for kids is what flips that up or extremely big outs. But I think, your house is pretty big for North Carolina. You got the salary to support it and that’s actually something I’ve already been in the process of looking at, I put an offer in, on a townhouse that would be smaller to downsize.
Like I’m already looking at a way to either, do a cash out refi or just selling downsides. So I’m actively looking to pull the equity out of this house. Yeah. Let’s so let’s do this. Let’s go over the deployment strategy first and then we can loop back around to like kind of life choices or transitions.
Maybe I can just be a sounding board for you because at this point I know where you’re going at a certain rate, and I know where you’re going to be in the next four or five years. And most times I think you folks and myself included at one time, you operate as in scarcity mode, right?
You think we’re not going to be able to get there. So we’re pinching pennies, but if we make the right moves and especially if you want to downsize that gives you a lot more. Pushes you further down on the financial independence road. So that said, let’s talk about where so let’s look at this 800 grand in your retirement accounts, you had it broken down one of these sheets, IRA versus RA, right?
I think down here. So let me see here. You’ve got the Roth stuff is about 150,000. 401k 4 0 3 BS. That’s the majority at five 50. And then you’ve got the IRA miscellaneous stuff at one at night 90. So one thing I’ve looked at or I’ve reached out to a company it’s like ERP or something was like one of those trying to tap into specifically that 4 0 3.
Is my wife’s. So now I’m, I was beneficiary now it’s mindset. I’m still trying to look into if that’s yeah. Everybody’s trying to sell you a bunch of stuff, huh? Yeah. All right. Here’s my thing. Retirement counts. You’ve heard me say at night, if you just add them, like I think you’re better off paying your taxes on it today while you’re in a lower tax bracket today.
Look, you’re at two 50 or under the three 40, right? And then especially if you believe taxes are going to be going up in the future, especially if you think your financial picture’s going to be going up the future, that argument where to put it into these self self-directed accounts or qualified retirement plans is what they’re technically called.
Not some marketing term or whatever. They’re all the same thing. Solo 401ks. If that works, if you’re investing in non tax advantage, Okay, like crypto stops, but if you’re investing in real estate, the damn thing should be tax free. Anyway, because you get the losses from the tax advantage asset.
That’s the key thing that people glaze over all the time. So I guess my first question is, are you going to be investing in real estate or do you want to be investing in stocks, bonds, which are funds crypto? So I’m still trying to figure out like what I ultimately want my asset allocation to be. I know that I want to, like currently I’m very heavily in stocks and bonds, and I want to shift that and probably get anywhere from 40 to 50, maybe 60% of my total net worth than real estate, probably 20 to 30 ish and still stay in stocks and bonds index funds.
The crypto piece is the one that I’m still figuring out. I actually listened to one of your webinars that you did. I forget who the person was, where they were, making the point that he thinks Bitcoin is. However many million per Bitcoin and all that. And I have some friends that are pushing Bitcoin hard as well.
I’ve gotten a tiny bit into that space. I wasn’t anywhere on the worksheet, but I think 10 times and crypto dabbling slowly and a little bit, a bit pointed, Ethan, I’m trying to determine is that going to be like 1% of my net worth? Just so I have a tiny stake versus five to 10%, and I’m a little bit more aggressive in the crypto space.
So I’m still doing a little bit of research on that and that’s what makes us hard, right? Because if we’re before we start to decide on self directed IRA, solo, 401k, or take it to cash, you got to figure out what that end asset allocation pie chart is going to look like, but you don’t know what the hell that looks like at this point.
Like I have some ideas. I’ll just shoot you. What most people in our kind of mastermind group we’ll do at your network? They might do like pitfalls five, 10, 5% into crypto. The crazy ones will be doing 10%, but as you can see, it’s, you’re not going balls to the wall with this type of stuff.
The St. Wall street bets type of stuff. So sounds a little bit like more reasonable to me. Yeah. I, and then most of ’em based, they start off with that 50% alternative asset idea, which I think you’re hitting down over time. I think that it creeps over to the majority, but I think most people they’re always going to have order or third of the traditional garbage, if you will.
Personally, I don’t have any of that stuff, but I’m not normal. And I think it’s prudent to have some of that stuff so that you’re always in it. So you’re learning. So the idea is you build the alternatives, get your net worth up to five, 10 million, and then possibly come back to the traditional space is the idea.
But if you leave them the traditional space, you’ll never, you might as well stay on the alternatives because that’s what you got you there in the first place. But let’s just go with, you’re going to in the next several years, we’ve transitioned to half alternatives, half, I don’t know, 40, 45% traditional stuff.
So we’ll leave half of this stuff alone in a way. Are you counting like syndication. Yeah, those are what I call alternatives. Yeah. So real estate is alternatives of crazy. Where did I actually be more comfortable with 65% alternatives, 30%, 5% crypto. That seems like a reasonable starting.
Yeah. And I think that’s, again, that’s no, that’s very typical. The people on the family office group that are, have that kind of mindset, but of course you got to get to your 50, 51st. So let’s have that to be an intermediate goal these next few years, and then get to that once you get proof of concept, but that in mind, of course I’m aggressively pushing you to move this stuff around.
What I would probably do in that case is let’s see again, 800,000 of various pre-tax post-tax various IRA, 4 0 3 B 4 0 1 K stuff. First thing we always do is we don’t touch this stuff first. We, you got liquidity, right? You have full equity first. Yeah. So I have home equity and then there’s a decent amount that I have in checking and savings.
And then also I’ll I got a lump sum for the life insurance, a supplemental life insurance benefit. So what would you say like that liquidity with some up to about like several thousand? It’s about 700, although I like to keep some in reserve, like I’m one of those people that probably wants 75 to a hundred.
And so deployable capital right now, I would say comfortably between six to six 50 that I could deploy pretty quickly. So there’s two paths. Ideas I’ll give you like first is what I’ll do. Cause I’ve already know it works personally. And then there’s the one that most people will do that I see, which has all of a C takes him to the count.
The whole let’s try this stuff out first, before we go crazy with this stuff, to make sure it’s real, let’s get proof of concept, call me crazy. Like when I bought started to do out of state turkeys, I bought one property first and then I bought 11 very quickly, but I think it’s prudent to get proof of concept.
Although we’ve had people invest a million dollars in nine months by joining the family office group and building relationships with other peers and then quickly moving in, which makes me stressful for them. But now they’re happy with, 10, 10, 5 figures of monthly passive cash flow. Now, two years later, those are the two goalposts to think of.
I would say normally I’d be more on the cautious side. I think the one thing that makes me think I might be a little bit more aggressive about deploying the capital is just the inflation that’s already here. And it seems like it’s not going to slow down. I don’t want to just sit on this pile of cash for two or three years and have the purchasing power.
Yeah. So let me, those are the two goals, right? So what I’m going to propose just so we don’t have too many things floating around out here is just the bare minimum conservative one, the bleeding and slowly. So what I would do, so there’s a shoot, there’s three things going on here that I’m thinking in my head first, we got to deploy the liquidity first because that’s the stuff that’s not doing Jack for you.
Then what I want to do is I want to take, I want to leak money out of these retirement accounts slowly so that your right now, your adjusted gross income is about two 50. What I want to do is take, gosh. Wow. You’re married file single now. There is some sort of, I think I can technically still file married jointly for the next two years.
I believe my CPS. Yeah. And that was the same for you. That’s part of the reason too. I’m thinking of selling the house. He said it was like 24 months after she passed that thing. I can still get the full half a million tax-free when I sell the house versus the that’s fair. That’s good. So here’s what I’m thinking.
Say that, that is the case, right? If you’re making two 50 and then you leak out the retirement funds slowly to take you up to this three 40 number about right. So you’ve taken a hundred grand out every year for the next couple of years. If it’s unlucky where you don’t get that treatment then I, then you’re already topping up at the higher tax bracket.
Suz. Does that make sense? So you’re going to have to walk this path down the road with your CPA. Okay. But the idea is we want to be leaking out or retirement funds as quickly as possible, but not to go over this red line here. That makes sense. Do you understand the logic? Yeah. Gotcha. And is there like what, like a rank order of how you think those out?
Yeah. Good. Quick question. But let me get back to that school. So
the one thing that Roth IRAs are you’ve already paid the taxes on it and you can take out the contributions tax free penalty fee. So that’s your, you could always be taking that out in a way. But you have so much money, liquidity wise that you don’t have to touch this probably for the next several years.
And like I said before, I’m still considering keeping, a quarter to a third in stocks and bonds. I could, yeah. I, for you, and this is very personal for your situation because you have all this other liquidity at this. I would probably leave the Roths alone. Okay. You probably don’t have to touch them.
So to answer your question your current one, your 401k with your current employer, all, they can’t touch that. So let’s just leave it alone. The next one would possibly be the four old we B from the previous employer, spouses or this IRA
probably do. The 4 0 3 BS, because my logic is you have crappier options, like IRA, you have a bit more choices with it. And these are typically more of a pain in the ass to manipulate. So let’s get it up now. So I would say,
yeah, I would split a number here first would be the, this would be the first year, because if you’re going from 250,000 to two, try, do this year. And you can, there’s a couple more weeks left, but I still have my spouse’s income for most of this year. And then they also paid out like some months for the, yeah.
The income for this year is going to be well over half a million, but it’s going to be married, filed jointly. So next year is really. Got it.
Got it. Yeah, let’s ear mark that for 20, 22. And then we chip away at this 420 23, 20 24, 20 25 and 26. And is it thought that I’m just slowly drawing it out, stay below the next highest tax bracket and then redeploying the money into like syndication deals? Yeah. Yeah. Of course, people are, will tell you, they said the best thing.
It’s you’re going to have to pay the taxes on it at some point, and you’re not getting the tax benefits today. Yeah, that makes sense. Okay. And then the 401k would be probably you could probably, I’m thinking you’re probably going to quit your job. 20 probably. Yeah. The place I’m at, it’s like a startup and just the trajectory of it.
Like I think the interesting work will be done by then hopefully, yeah, actually 20, 27 with IRA and then 20, 28 for the later. You’ll probably come to a couple of hundred sheets by then and you’ll probably, maybe do a backdoor Roth at that point. A lot of this will change in the next three years anyway, but that’s let’s get you going down the path first.
And I would probably recommend. I can’t the only reason where I might make sense to do a qualified retirement plan is if that doomsday scenario where you are limited to single joint or that 170 max, then you might like, again, like for people listening, the only reason that stuff makes sense in my humble opinion for that tax attorney.
But there’s no right answer for this stuff, as it is if two things apply, number one, you’re already in tax Breck, highest tax bracket, which you are, and number two, you have a boat load and your retirement, which you do. Like I’ve seen people with more like a million million, half in their retirement accounts, you certainly have more than half a million, 600,000.
So that kind of satisfies that. And the reason being is it’s oh shoot, what do we do? Let’s just kick the can down. It’s punting and football, right? In a way, unfortunately, in the things you have to balance. And the reason why I’m not super keen on is these damn things cost a lot of money.
I like your plan. I’m slowly drawing this out as you noted. And then you did mention like the backdoor rods. So that was something we had been doing the last couple of years of my spouse. I didn’t do it this year, but is that something you typically the recommended for? For most people know, because they got to get their stuff together and get their cashflow bucket filled today.
Then when you’re already cash laying 10, $20,000, then Danielle do your backdoor Roths after that people do it all backwards. It’s your scene. So you have the general idea and it sounds like you have a pretty good understanding of, leaking things out. If that would be the conservative way of doing it, if you want it to be a lot work or.
You take it out two times as fast and you start to supplement with some some other more exotic tax strategies and stuff like that. Like land conservation, easements, that type of stuff. Then I, I think at that point it probably makes more sense to join the family office group, talk to other doctors, doing that type of stuff.
See who, with operators that they’ve been working with that, at that point, we’re going to save you 10 times as much as your initiation before a group like that. But again, that’s not for everybody, right? I think you have a pretty dang good like conservative middle of the past strategy right here that you could probably implement, but if you want it to be optimized that’s the way you go to, and then you can unlock all this money and get it deployed right away before the great recession happens, I do have a question about the infinite banking concept, which I know you’ve mentioned on some of your podcasts, like webinars and stuff. Is that something I should consider with starting one of those policies since I do have so much cash that yeah. And that was the other thing I wanted to, so that’s always people always geek out on infinite banking.
And then if people want to, I would always say check out the free, if in a banking e-course we have, you’ve got to sign up a simple passive castro.com/club. Or I think if you go to simple pass to castro.com/banking, you can sign up directly for just that e-course, but it would probably make sense in your position because you have so much that you have that 700,000 just sitting there.
And it sounds like you’re on board to leaking out your retirement accounts quickly. So here’s how I would like mind model this thing out like 28, 22.
So I start to build these like timeline deployment plans and then motto how much liquidity you have. So right now you’re starting with 700 of liquidity. And this let’s just say this line is like how much you’re going to invest. How much money are you going to, you think you’re going to invest in 2022?
I guess it would depend on how comfortable I am findings. Yeah, I’ll say like most people they’ll do at least a hundred, 200,000. Again, I see people do a million the first year, so those are the two ends of the, kick the football. Yeah, I think it will come between anywhere between two to 300, depending, whether that’s $200,000 deals or a few $50,000 deals.
He’s probably a good number to put on that. Yeah. So what I’m doing here is just not figuring out how much liquidity you’re going to be left with. And let’s just say, you go with the same thing in 2023, you’re going to have 200, but you’re also speaking out number were leaking out a hundred thousand each year from IRA.
I think I got my, all my rules messed up here, but I see what you’re doing. You’re going to have 300, right? Yeah no. You’re going to have, okay. So the dude that you’re going to start off with four. Yeah. If you have 700 and you invest that, now you go down to five 50. And then you pull out another hundred, but you invest that you basically went down by four by a hundred thousand each year,
or yeah, down one 50 a year, investing two 50 employees, maybe this year, you get really go crazy on this year to go 300, but you’re still, yeah, I like this. I see what you’re doing. This makes a lot of sense. Like then I get more comfort investing in these deals and then what their deals are.
This is why I look, I like working with smart people. You guys catch onto this stuff. It’s still frustrating, but what does that mean? Think my head against the wall. If I can’t, I don’t know a good communicator, but this is what I’m. So you’re going to invest another 300 this year. I actually think what we’ll probably do is an east each year you might even two X, this investment probably was going to happen.
But yeah, I think you’re probably right. Cause I’m really starting to lean into learning more about this and I’m strongly considering joining your mastermind group, but really getting a strong network of like good syndicators and understanding this space more comfortable. Let’s just say let’s just bump it up a little bit.
Three 50. And I think that went to three 50. Let’s just say you do get a little bit more aggressive, like we’re saying, that was 3 50, 4 50. I think that’s how it is. Okay. So you’re going to, you’re going to basically burn through your past liquidity in three or four years. Okay. So what I’m trying to do is I’m trying to motto how much cash liquidity you have and then how much. So it’s two things. My Jew, this is just real general rule for how much money should I put into my infinite banking every year for six to seven years.
So my general rule is take one third of your annual debt. So for you guys are saving a hundred grand a year, so that’s 330,000 or 32 grand every year, but you have a big amount of liquidity, which we’ve modeled on it, estimated this line, what it’s going to be. What I want to do is estimate, I want to utilize this so that by the year, by the middle of the policy, you should be using this up.
Best as you can. So this is really, this is where, I’m just shooting darts out there to the universe a little bit, but my gut tells me that I’d like you to put in at least a hundred grand because that your liquidity is so high. So I would say on the low end, 130 grand every year, 130 grand every year.
Okay. Yeah. But you want to know what I would do? So this is the, this all depends how you create the policies, how much commissions the agent wants to take, right? So you can crank down the commissions, but, and what that does is cranks down the life insurance portion, the 10 to 20% is the best practice.
If you don’t want to gouge their clients with permissions. Which most people do. It’s like a 50, 50 split. The other good benefit to doing that is you don’t have. You may sign up to do a hundred thousand dollars a year, but only $10,000, really what you have to quit in that year. So that’s the beauty of it.
And I, that took me like three years to latch on because out here we’re all, you’re going to be our good as citizens are like if we save with a life insurance company, we’re going to put in 200, should we have to put in that every single year for six years to a total of 600,000.
But in reality, all we have to do is put in 60, maybe a hundred grand and shoot, we fit that in the first year. Yeah. I haven’t been in talks with somebody who does this and it was, I forgot what the once it’s topped up to one 30 or whenever you’re done the policies. Self-sustaining.
Yeah. And as long as you hit that, if it was a 90 10 split with 10% of the it being insurance premiums, once you hit that, you’re good. You don’t have to worry about the policy cannibalize. Or for the longest time I thought oh, you got to put in the whole thing, not necessary. But if it was configured in a jacked up way where it was 50, 50, 50% of it.
So on the 600,000 fully commit policy for six years, a hundred grand every year, you have to put in 300, that’s a bigger nut. You have to keep funding as opposed to 60, the more important number on these is basically what’s the total amount I need to put in to get past the point where it can cannibalize itself, like where the fund is self-sustaining and if I stop funding it I’m okay.
The policy still, right? Ideally you want to create the biggest container size without losing such container. So for you, you could probably, you have, I just add up this line here R. And you’re going to have it. I’m just looking like on average, you’re going to have maybe 50 at time.
Again, this is the low end one 30 every year.
You know what? I would get just get a max 10, $10 million policy. So $10 million is an important number because at that Eagle higher than that, you got to show a whole bunch of BS documentation to get higher than that. And really you don’t really eat more than $10 million because $10 million typically is a payment of 50 K or six or seven years.
I would just again, this is just what I would do, right? This is more of a progressive way of doing it. I would just start off with a 250 K a year. And then you fund that, maybe you. Backdate it, if you’re a, depending when your birth date is and you fund that first two years right away or worse, probably what’s going to happen.
You go to 50 and then you go to 50 and then you start to just fund the insurance premiums from there on out, but you’ve already hit your watch to your minimum lot. So it doesn’t cannibalize in their first year. So good. Yeah. That kind of answers the question that I had just jotted down to ask you, which was like, where am I going to park my money now?
Cause obviously you don’t get anything on savings or CDs. And I had I have to open a bunch of separate bank accounts. I’m not above the FDI seat limit. So I kind this option. If I can, fund those basically double fund and deploy some of that capital that funds taken care of. And then if I put all that money in pretty quickly, then depending on how the policy is written from my.
With anywhere from a month to six, I should be able to start borrowing a decent amount from that policy to put into. You can do it the next week, get the money back out next week. So this is one of them. This is this one’s funny, right? Because it operates like a hilar account. But it’s still like people, even in the mastermind group, they’re oh, I got to pay interest payments to myself.
I don’t want to own, that stresses me out. That’s $400 a month. It’s no, that’s just a mindset thing. You’ve got to get over that. It’s just the way you’re supposed to use this thing. If you put in two 50 and now your cash value goes down to 200, and then you put in the next two 50 the next year, maybe it’s worth for, I don’t know, four 50.
It’s just call it that the next year you, what you want to do is you want to take out that four 50, and put that into deals or crypto. Whatever. I’m assuming you guys have good contacts for these infinite thinking. Yeah. Yeah. Just yeah, go through the e-course and then, I would say just it’s a couple hours for do that.
E-course but it should get you set up and then yeah, we can refer you out from there. What’s your kind of studied up, but they’re commodities, right? They’re all with the big major companies, that’s really what you want. But the question is where are you going to put the money?
And that’s really up to you. You can put it into deals. Some of what some people do is they, I think a mistake that I see, especially for somebody in your cases, like they want to leave their dry powder. And only take out. You don’t have like that, dude. That’s not what this is for. You got to take it all out.
Unless you’re a business owner that needs a lot of dry capital for yourself. 20, 50 grand and checking 50 grand is way more than you need. But 20 grand just to float your monthly expenses every quarter and then maybe 50 grand to leave it in here. So you deploy 400 in this case, that’s really the way you want to play this.
And then if you want to do 300 of that 400 and deals and then a hundred crypto, that’s how you do it. Okay. I didn’t even, I hadn’t even looked at infinite banking for crypto. I was just looking at it for syndication. So that’s good. No, you can use the money to go to Disneyland. You want it to, obviously you’re not going to do that.
People who listen to this podcast, don’t do that stuff. And, or you could use this as a way better than 5 29 plan. Hell of a lot better. I don’t know why anybody does a 5 29. Oh, I even forgot to put that down. We do have 5 29 plans for our kids, but we shut them off, I think six months ago, after listening to your podcasts and other ones, like those have been shut off, they each have 10,000 in it okay.
Yeah. Just shut them off because just, I would just withdraw it just for simplistic music. It’s today I was trying to get rid of my health savings account because I got 15 grand in there, but it’s like what, a pain in the plug to have this thing. And it got a PM through chip bucks every year.
Like really a 2% adds up all the time. Yeah. 300 grand for, do you have any thoughts about the, like the lump sum? What are they called? MEK plans are like for infinite banking, like the life insurance policy where you can do the lump sum. Instead I spoke to somebody the other day and they were like, oh, some of the.
Drawbacks are that? I think it was, if, the distributions were not taxable, I believe, versus in the other one, they are, there was some differences with it, but I had never even heard of the lump sum thing until I spoke to somebody. I don’t know if that’s something we’re going to have to talk to our experts on that one.
That just, there’s all these kinds of other like variable life. That’s, like they miss the point. They’re like don’t you want higher returns, right? No, we want like liquidity so I can go invest it better stuff. I don’t need six, 7%, once your net worth goes over five, 10 million, then you may come back to that type of stuff.
That’s I think when it makes more sense, but there’s a lot of. Shady stuff, especially in the IUL people’s trends stuff, missions on that are extremely high. There’s a lot of like breasts of salespeople running around saying nonsense for that. But some countries companies actually like really aggressive of teaching the agents.
They have this like farm school where they teach people because it’s such like a obscure product with high commissions that it makes sense to just train trainers or just make real estate agent armies. And out there one in a hundred will actually sell a policy, but it’s pretty good commissions for them at the end of the day.
But basic IPC. This is what it’s for. Once you go over 10 million, I think that’s a little overkill, especially because, you want to get this money working at four or 5% tax free. And then another thing to think about is because you’re the only one for your kids now.
I mean it’s, it would probably be prudent, single point of failure at this point. Now that’s true. That is another good benefit of opening up one of these. And that’s it. You guys have, you have a trust build and all that stuff dating? Yeah. I’m in the process. I got to read it. We were in the process of getting it set up and then my wife passed away before all this stuff was notarized and finished.
So it’s a little bit of a mess. So then I was obviously not in the right state of mind for quite a bit. So I’m finally getting my brain back from brain fog and I’m going to start cleaning that up. Yeah. Yeah. I think that’d be a good to talk to other people too. I mean the questions and like what, who watches your kids?
I’m not giving any advice on that and the cyclist. No, I don’t know. I wouldn’t even trust myself with my own kids.
But yeah, it’s, these questions come up. And it’s hard to find other people doing the same thing. Yeah. You technically just listen to your attorney, but I don’t know if that’s super prudent, you need other viewpoints too, but getting back to the numbers here. If you do that large of a policy, once you fund it up to you, you have that 500, 300,000, you’re going to fund it halfway.
That’s well past the point that it’s going to collapse on you, black hole one on you. So you’re good. And what’s potty going to be happening around year three or fours. These deals are going to start to refinance, or it will be full cycle at that point. And I think that’s the point where it’s a kind of a, make it a break.
It’s if you don’t fund the policies anymore. Cool. That’s fine. I think what’s probably gonna happen is you get that windfalls and you’re like, oh yeah, let me just find the policies the remaining of the three years. And now you’re set up. I like it. That makes sense. Cool. Yeah. But bare minimum, one 30 and I think what most people do is like they, they get up small balls.
Like when I first started to do this, I did a $50,000 policy every year for six, seven years. And then it was just cool to use it and be like, oh, this is like a heat lock. Oh, what is that thing on my portal? And saying, I owe $5,000. Oh, that’s just the interest. I don’t care about that because my cool friends actually know about money.
Don’t freak out about it. And then you add a zero on top of it, once you get the hang of it right in a few months, you, you withdraw money, you pay it back. And then some people in the family office group work doing this site, instead of getting the loan from like Ameritas, Penn mutual guardian, they go to a third party bank instead of paying 5%, they pay 3%.
If you’re doing a larger policy, like how you are, like that adds up, 1% on 600 grand adds up.
Yeah that’s the IBC thing for you. And I think, if you want to play it more conservative, only go into a few deals at the minimum on the investing side, I’ll play more rested on this stuff. Okay. That makes sense. Yeah. And I think as far as the investment side, like I’m willing to ramp it up.
Once I feel more confident in how I can bet, sponsors and deals and have a good network of people who have invested as a past and. And then also, like we said, you could really ratchet this up by getting more aggressive on the withdrawals from your IRAs, right? Mitigate the higher income by conservation easements or something like that.
If it’s still around, if you’re willing to, be careful and work with the right people at that, of course it’s on the list of transactions freaked out. I got a Google debt and this is naughty. Oh, I don’t personally do it. Because I’ve gotten to the point where I don’t have active income, it’s all passive.
And that’s where you’re going to get to at some point. But how can we bridge you to that promise land in five to six years when most of your stuff is passive, so it can offset passive losses. Okay. We got a plan on the IRAs a little bit. You’re such, this is a good call. Your situation is confusing and there’s a bunch of things moving around, talked about IBC. Let’s talk about like lifestyle and just cause that may increase your, if you sell that, you’re gonna stay in that house.
You guys live in now or downsides or, but the plan is to try to sell I’m a little bit constrained in that. A lot of our family is close by and they’re the ones helping a lot with the kids now and they’re in a good school system. And so like I can’t just pack up and go wherever. So a little bit constrained in the market where I live.
It’s quite hot, which is a double-edged sword in that I think my house would go pretty quickly for a good amount without having to do a lot of work to get it ready. Then I have to find something to replace it with. But yeah, the ultimate goal is like, our house is a decent sized, a lot of land and just way more work than I need.
And it’s too big for just one adult and two kids. So that’s definitely something that I want to do is downsize get some equity out. And that would also have the function of reducing my payments, monthly mortgage payments. Anyway. Yeah. I would just say from a, you don’t need to downsize, like some people I’m like under half a million dollars net worth, I’m like, you need to do, you’re already behind in the game, right?
You’re already in your forties and fifties, you have to do this stuff, but for you, you can keep living there. That’s cool. Again, they say you never want to listen to the wherever the heck they are, but they say don’t do anything like drastic for the first year or whatever. But I will say that speaking from the experience from some of the other folks who’ve downsized, they’ve gotten away from living in the big house.
And they’ve gone to one of the luxury condo where now they enjoy it because now they’re hanging with their kids. They got the pool, they don’t clean. It’s just simple, simpler, living, less headaches, nothing breaks. So if you’re going to the more simplistic life, that’d probably be the way of doing, that’s not a bad way of doing things.
I actually personally I think I might like the condo life a little bit better, less nonsense. Don’t have to clean my own pool. That’s what I’m looking at a other con condo or townhouse where there’s community pool and they take care of all like yard maintenance. And it’s just, and again, just getting back to the simplifying things like it’s become clear.
Like I don’t need a lot of stuff, but I just want, time with my kids and possessions that I have enjoy and travel and. Yeah, you, in that primary residence you have now you got to worry about half a million of equity in that thing. So we’ll depend on. So we got, it was a 0% down cause we had a physician’s loan, which was nice.
But the, and we only bought it just under six years ago, but the market’s gone up so much that I’ve talked to a couple of different agents and looking online. It would probably be between three 50 to 400, depending on what it sells for is about equity that we would get. So one thing, this is a tax thing, right?
You’re only able to write up like the exempt from what a $4 million of that’s what I thought too, because it’s just me now. But my CPA said within 24 months of my stuff’s passing, I should be able to get the full half a million. So you’re not thinking you’re not maxing that out. Yeah.
Not quite, but yeah. If I stay in this house for another couple of years, then I’ll be above, the half the quarter million max for myself. Cause then it’s going to revert to it’s just me. It would just be the, yeah. Like it kinda has a good tax need, because you have, it’s something I wanted to do actually, even before this happened, I had already been talking about Hey, we should simplify.
So it’s if the right house comes along, that I can get, I think I’m going to do it. And that’s yet another windfall and more cash that I can do. Yeah. Because if you don’t vote before the year two, you’d use that double tax exemption thing. Yeah. For me, I am, I don’t want to push you either way, unless that’s, before I heard that, I’m like, yeah, you got to just move out, move out and buy it back again.
Feel that’s what you want to do. I don’t know if you can do that. It’s not like a wash sale, but. Yeah, no I think it’s a strong possibility. And even where we live it’s a, it’s more of a isolated subdivision and there’s not as many kids around and there’s plenty of neighborhoods where a lot of their friends from school are that would be cheaper and smaller and have a lot of the things we talked about.
So yeah, it’s definitely on my radar. And that would just accelerate what we talked about. Give me more cash to put into these funds. Yeah. But maybe think about it, I think wait until the spring time or summer, that’s when the Marcus pulls the hottest the world doesn’t end before then.
Yeah, no, I got, yeah, I got my I’m like, I’m looking now to potentially hop on something. If somebody putting something on in December or January, but my goal is probably listing my house in the spring. Cause that’s just, it looks the nicest, it’s the hottest market. But it stinks like, fuck Matthew he’d dump out for a hundred grand.
You put it into an even bigger infinite banking follows. Are you just doing the banking right away at 5%? No. 2020 grand a year. It’s a couple of grand, a couple of grand a month. You always want to do this equation and think how does that two grand a month changed my life if you had to use it?
That could be a lot of less home cooked meals eating out less the more time, right? If you can use that $2,000 every month, that is time or for time. That’s money will work. That’s a good move to create that cashflow and that’s everlasting cash. Let’s just not just running through your pile.
That’s how I would look at it. So you get to live in the condo, get the free, free maintenance on the pool. But what are the downsides of that? I don’t know. Is there a downside of. The only downside is less privacy. Like a lot. I have it’s great. Private lot. It’s gorgeous. Like you’re by nature and it’s very private, very nice.
But I think the positives of moving outweigh at though the just simplifying life, getting a bunch of equity out and redeploying it, getting my kids in the neighborhood with a bunch of their friends, I think definitely outweighs the privacy concern. That’s why I asked cause some people, when they talk to the spouse and they’re like what’s the downside if they can’t communicate because there is a, you just don’t want to do it, which is silly.
You’ve obviously been able to voice your concern, just privacy. But so what if you took $2,000 a month and you bought the penthouse instead of the other one, right? You rented the penthouse instead make $2,000 pumps you into much higher or exclusive community. So think about it like that. The term life, you could get that big of a policy.
You don’t have to pay this anymore. So that feeds up.
That’s been done then.
Yeah. Think we covered a lot here. Any, anything else you want to? No, I don’t think so. This is very helpful. Thank you. I’ll play with helpful to people listening and then I will definitely check out that e-course on the infinite bank. Yeah. I think
trying to think what is the first domino that’s got fall here, but either the house, there were three things moving out of the house. I think you can delay that to the spring or summertime. So that’s third on the list. You already have liquidity, so you could have the, and then you don’t have to do the taking out of the retirement accounts quite yet.
It’s a rough situation, but if the banking seems to be the first domino here, which you’re listening on the podcast, that’s typically not it. If you’re screwing around in front of banking stuff, doing and wasting your time, especially your net worth is under a million dollars. You haven’t invested in anything.
Yeah. I agree though, in this case it makes sense. Cause it gives me a little bit of time to deploy some of this extra capital and then I can get spun up on what’s indications. I want to invest in, educate myself. The house can come later in the year and then slowly peeling away. Some of that retirement stuff can start happening at any point in 20, 22.
Once I have a better idea of my adjusted gross income as well, and then decide how much I’m going to pull. Yeah. And I think once you get moving down the road, once you deploy a million, you should be making. A fraction of your salary. And then when you double that, we should be able to start to see the light.
Once you deploy about a million or 2 million, you start, it should start to see the light on when exactly you’re going to wit yeah. That, that dovetails nicely with where I’m at now, again, the place I’m at, it’s a lot of fun to work at. I enjoy it, but I reading the tea leaves, I think four to five, maybe six years at the most actually doing what I’m doing and then be ready to you write out the the startup or five years that, but you don’t want to go back to practice.
I don’t want to do like a typical family practice. Seeing 20 patients a day, every day, that’s too much. They would want to do that, but it’s something like that. It would be part-time or it would be like part-time remote. There’s a lot of, remote providers where you can work anywhere you want in the world and do telehealth.
And I could do that. Part-time and supplement with my past. Pretty much lifestyle. Yeah. Yeah. I think you’ll have enough at that point where you don’t really need to make a hundred, hundred 50,000 a year. Part-time right. Type of thing. Yeah. But I know you’re you being close mode going 70 miles an hour at that point, but then we’ll see in the next several years, we’ll see if you get bored or not.
You want to yeah. That’s the thing, like I, I do like healthcare, it’s fun working in healthcare. The U S healthcare system is so broken. So if there’s cool projects or companies to work on to try to fix stuff like that interests me. But it would be nice to be in the position where I can decide, what’s project or work on.
I want to take on. And if there’s nothing that’s interesting or exciting or what the work I can. Yeah. If you’re the current employer, the startup thing, is it pretty time intensive or is it. It’s hit or miss. It depends. So it’s actually, like some days are less than others. It comes in fits and starts like a typical startup.
So it’s not a lot of patient care for me. I’m doing a lot more project work, data work, and all sorts of things where sometimes a big project comes along and I’m spending a lot of time one week and then the next week it’s relatively slow. That’s awesome. If would you being the primary caregiver, I would manage if you can’t handle it, you need to step back.
You could. Yeah. If you stuff all this money into infinite banking and you get maybe a quarter million, half a million into deals making 10%, you probably have enough to definitely sustain your costs of living. If things get too busy, like I know you have the option.
To do that. Yeah. Right now it’s not too bad. And the good thing is most of the time I actually get to work from home, which is nice. So even though, even if it’s busy, still have the time with the kids. And then a lot of the work I can do at night when the kids are asleep, just the nature of the startup and I’m doing it.
A lot of it’s project work worker, things I can literally do at 10 o’clock at night while they’re asleep, I can just sit there and get my stuff done. So it’s actually not too much of a hassle. And we have a lot of family nearby that spending time with the kids and watch them a lot and hang out with them.
So far, it’s, I think I’m in a good spot, at least for the next couple of years, if things they are you is a family decently well off where you the, you guys have more wealthy folks and the rest of the family is pretty well off. At least the ones close by. So like my mother is about ready to retire.
Like she does pretty well for herself and she’s transitioning, she’s going to probably transition to working. Part-time she’s. My wife’s parents. I’m not super well off, but they’re fine. Like they’re the ones actually in that long-term rental property we have, and they’re paying well below market rates.
That’s when we’re basically it’s cashflow negative. Like we bought the property, they’re paying the HOA and the mortgage it’s cashflow neutral for us, but it’s building up equity and it has them in a nice spot basically under market. So that’s like a win-win what is their long-term like, they’re going to agent place at least for now.
Yeah. They’re healthy enough and doing well enough. I don’t think there’s any imminent plans for them to go to letter like that. And then also my brother-in-law lives close by as well. And he has his own marketing company and does pretty well. Okay. Not, I live in Potts basement, sealer chat. Okay good.
Yeah, because some of the people that, they’re like obviously the most, often their families, so they have to also keep in mind, providing or in a way, thankfully everybody else in the family is fine. Yeah. Everybody got their stuff together, so that’s good. That’s good. But yeah.
Yeah. Yeah. Any, anything else Derek you guys want go over or? No, I don’t think so. I think that was, yeah, very thorough and super helpful. Okay. Thank you. Cool. Yeah, folks, if you guys like this, you guys wanna volunteer the stuff shaped the folks that email team at simple passive cashflow dot.
And if you haven’t yet joined the club, I book your free onboarding call before I start to outsource it out to the team. I won’t go as in-depth into this type of stuff, but we’ll try and knock it on 15 minutes or 20 minutes or so.