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Now, today’s podcast. We’re going to be doing a coaching call with an accredited investor. These guys seem to always, really like these because everybody we’re all the same at the table. All good savers work hard. Pay too much taxes and I want to get financial freedom safer and easier. If you guys want to sign up for the next one and kind of put yourself out there, we can make a fake name for you.
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Hey, simple passive cashflow listeners. Today. We have another coaching call with an accredited investor, Nick, who is going to be talking a lot about a lot of things. Maybe taking money out of his retirement account. We’ll start digging into it. If you guys haven’t checked out, the website has a lot of resources on there for free.
Turnkey buyers syndication investors and I think one thing that’s going to be pertinent today is, are probably gonna be talking about retirement funds and what to do with that. Maybe it’s not even an option for you. Check out the info page at simplepassivecashflow.com/QRP for all my thoughts and ideas regarding that subject.
Hey Nick, Thanks for jumping on. Why don’t you give people a little bit of context for yourself as a kind of scroll down your personal financial sheet. If those are listening to the podcast, you can check this out on the YouTube channel too. Hey Lane. Thanks for having me on. A little bit about myself.
I’m a straight W2 worker. I’m an airline pilot. But also part-time, I’m in the military and international guard. So I’m making most of my money, just the hard way trading time for money. So a little bit about myself, my family married, I’ve got three young kids. So that’s taken a lot of my time and trying to figure out how I can realize my investing goals and plans for retirement while not completely ignoring her nor my kids.
It’s a pretty big factor for me. And when I’m trying to figure out what to do next for my investments. Tell us a little bit about the military. Like what’s your path out of that? I think there’s a lot of military investing podcasts out there at platforms, a lot of those are for the enlisted dudes.
The guys whose network is under a hundred, $200,000, but you move the officer route in your definitely years outside of the military. Maybe talk about the path and where you came today because you also have a civilian job too. Yeah. So I’m a little bit different so my dad was enlisted.
I actually did a direct commission to become an air force pilot. And so I spent 12 years in the active duty air force. Just flying around the world and traveling, living all over the mainland and in Hawaii spent a lot of time overseas and in Germany, in Afghanistan.
So I was able to build up a little bit of my net worth just because I was on the road a lot of my pay was Tax-free which is nice. And that’s one of the big advantages that our military has. It’s a way for the government to limit the retirement pay that we receive.
So they classify some of our benefits, and that we get paid as a housing allowance or. A cost of living allowance or allowance for sustenance. Essentially what that does, is it classifies a good chunk? Sometimes when we live in high cost of living areas, sometimes that costs our pay is maybe 40% tax-free, which is huge.
It really lowers our AGI. But the reason why they do that is because when they pay us our retirement they pay us a percentage based on our base pay. And they don’t want to pay certain people or hire certain service members higher amounts just because they live in a high cost of living area such as California or Hawaii and so on.
So I built and I just visited. Just as an officer through 12 years of active duty. And then I realized that I was just working way too much. And the air national guard was a way for me to continue my service to not, I’m gonna say throw away, but to lose all my years of active duty service but keep them and keep building on them to build toward 20 years and qualify for a military retirement.
So I made that change at the 12 year point. Joined the airlines because it offered a much better quality of life. It’s a pretty common path for military pilots. When they see the light, they see this job that offers half the month off or more for a lot more pay and a lot less headache because you don’t have to deal with the bureaucracy and management in the airlines.
So a lot of guys in my shoes make that jump. But they still stay in like reserve status, or international guard. I hate to sound like a commercial, but it’s nice for guardsmen. We can jump back in, do our service once a month and two weeks a year and still keep accumulating points towards retirement.
And then in my situation, it’s nice that when there’s an economic downturn in my civilian job, Might not be doing well. It might be threatening for a Lowe’s or, and other industries might be layoffs. Having the military as a fallback is nice because I can work full time.
And in certain situations when there’s opportunities available and can replace my income, if I get, if I take a hit on the civilian side, I’ve heard that the big perk of doing that is like, The military will pay for your kid’s college or something like that too? Or is that, is there something like that for sure?
Yeah. It’s called the post 9/11 GI bill. And you have to do, I want to say six years of service or something like that in the military. And they’ll give four years of college for you or when you can give it to your spouse, you can give it to your kids. You can spread it.
Between multiple kids. That’s what I’ve done. And it’s, if you’re doing in-state, it’s really nice in-state school. If you’re doing a private institution, it’s huge because they’re, they cover the entire amount if you’re going to NYU or something like that, but they can offer, they can cover a big chunk, but they also cover a housing allowance basically a classified and the, you get the same rate as a.
Staff Sergeant a mid man enlisted Amber would get a housing allowance while you’re going to school. So in high cost of living areas like the West coast, you can really squeeze out a lot of benefit from the GI bill. So it’s definitely something that a lot of guys sign up for, at least on the endless side to get that free college.
Is that kind of what makes up, like why you still stay in it? Cause it’s kinda mind numbing work, right? Yeah. I mean it’s so the carrot at the end is probably the easy answer. Yeah, I want that 20 year retirement because it’s a pension guaranteed by the US government.
And if I am certain, if you do 20 years of active service all at once you can start collecting immediately. So some of my active duty friends can start collecting maybe at 38 and then they can start a whole new career while they’re receiving a multi thousand dollar pension every month. But there’s a lot of yeah.
In satisfaction in inservice and doing something for the country and doing something for the community. And in my case, being in the air national guard, if there’s a disaster and natural disaster or something like that, the international guard is, who gets called first. And then, a lot of times, when something bad happens in your community, you want to help out and you want to do something.
If you’re a cop, if you’re a policeman or a fireman, you’re going to be on the front lines and helping out. But a lot of people, they don’t have a way to contribute rather than donate to the red cross. If you’re an air national guard, the national guard, army national guard, you’re gonna be called up, almost guaranteed.
And you’re going to be doing something to help the community, to alleviate the pain and suffering that’s going on. So I think that has a lot to do with it. I get an opportunity to leave to help out my unit and help out fellow airmen and there’s a lot of gratification that comes with that that I don’t get in the civilian job where if I’m flying my airline, I just show up. And it’s like driving the bus where I just go and enjoy my time off and go work out, eat good food at informed places, there’s not much. So it was just the balance, trying to, not, have a lot of gratification from your employment, but not get burned out and, want to pull your hair out cause you’re coming out crazy from the pace of the work demands.
I think you got to get that you got two jobs and if one goes down, you’re diversified both ways. So let’s dig into the numbers here, your net worth brought a million bucks, essentially an accredited investor salary and wages about 15,000 a month. W what does your spouse do? Which is that, or is that primarily you. Yeah, that’s all for me. My wife used to work a little bit when she could but due to COVID, she’s not really, she’s not doing anything.
I would like her to work at some point, but my kids are, my youngest is three. They’re just a handful trying to chase them all around with all their activities. There’s not a lot of free time. For her and my job’s pretty demanding, so it’s nice that my wife can just stay home and take care of the household and make sure that the ship is running right.
And everyone’s on time to where they need to be considered. Go ahead. Which is actually like an ideal strategy for if you ever wanted to do real estate professional status too. But what is her capacity for earning? What if she were to go back to a full-time day job? Where was she? She’s been out of the workforce for a long time.
So it would be hard for her to jump in and make a large salary. And then that’s why we just focused on it. Me as the breadwinner, they, and she’ll just not just, but it’s a huge job at home to take care of the kids, but who had a division of labor, as you would say it for now while the kids are young when the kids are in school, when they’re all in school, we’ve talked about looking at.
Maybe doing real estate professional status, trying to figure out if we can pick up some rental property to manage and to realize the unlock, all those passive losses. But I think we’re still a couple of years down that route. And I just don’t, I don’t think I could make quite enough money to make it work worth the squeeze.
As far as annual income, I think I will, in a couple years. So the timing might just work out where I’ll be in a couple of years, I’ll be in a high enough tax bracket where I can use real estate professional status. And then my wife might have the time and bandwidth to take on some of that work outside the home.
Yeah. So let’s unpack that for folks. Nick’s kinda got a good handle on the as, as soon as he says that, his spouse doesn’t stay at home, doesn’t make as much money as him, which is, I dunno, I see path half. I see. Sometimes it’s two doctors and it’s Oh goodness, like neither you’d need to just go to work.
Or you make so much that you guys just have to go to work. But in these situations it’s a little lopsided. You start thinking, Hey, maybe one of you guys can be a real estate professional. Of course they’re going to need a, you can’t have a full-time job. You’ve got to have 750 hours of active participation and there’s some fine print in there. Obviously, what that allows you to do is take your passive activity losses that you get via bonus depreciation from some of these larger deals and offset that ordinary income category.
But as Nick is keen to acknowledge they make about a hundred and, under 200 grand a year AGI wise, it really is. As we say in Hawaii, it’s Poho. It doesn’t make too much sense unless their AGI was maybe a little higher over 300, $350,000. Cause that’s when you really get that savings tax savings by bringing that lower.
Bringing your AGI lower, but right now, they don’t pay too much taxes. They’re not in the danger zone or the red zone for taxes. So it is an art form, and these tax brackets changed throughout the years. And I guess, Nick, how would your income go up? You would increase the civilian islet.
Yeah, it’s essentially another point on my taxes with the military. We have the FCRA service Service members, civil relief act or something like that. I can’t remember what it stands for a CRA, but it allows military members to retain their state of residence that they had before or their permanent, what they plan to have as a state of residence.
Independent of whatever, wherever they’re working on, full-time active duty with porters, which I’m on right now. There’s a couple of States out there that don’t charge state income tax. So it’s a nice advantage for military members to obtain Residency in one of those States and not have to pay state income tax.
So I got that benefit there, but talking about the pers perspective increase in pay, but do with the S the airline industry. For pilots, we just get paid on a negotiated scale or whatever the union MDC can get from the company. And so we know what we’re going to get paid based on what plane that we fly and what the position, whether we’re in the captain or first officer seat.
And if we just assume normal growth of the industry and. Those pilots have to retire at age 65. It’s mandated by the FAA, the government. There’s going to be movement ahead of me. And we’re also, I didn’t bring it up. Sorry that we are. Seat position and airplane that we fly in is determined by our seniority, which is strictly by date of hire.
And we move up in seniority as people at the top retire or get medically disqualified or leave for whatever reason. And so I can project, in a couple years I should be able to be. Move up to a captain seat, captain position and where my pay PayScale will increase dramatically.
Because it’s like that, essentially that first officer makes like half of what the captain makes. Not exactly, but just, for round numbers, it’s like that or lives at stake, essentially, right? Yeah. Bigger claims more lives. So let me, before I forget you mentioned the, I think the thing where you can go so on military orders, I think it also applies to civilians working for the government overseas.
We actually have another guy in the family office, a Honda mastermind that you’re also a part of sh remind me to connect you guys, but. I think that’s what they do. And they’ve made their residents to be in Washington or something like that is what they conveniently selected. Washington has no state tax.
Yeah, you guys should probably put your guys’ heads together on that. I don’t know where you would want to live either Florida or Washington, those are the one of the ideal States I would think. But yeah, I know a lot of people that are Washington residents for sure. Yeah, I don’t work for the government, but yeah.
Yeah. Something, yeah. Remind me again. I’ll make that connection for you. A lot of cool stuff in the film that people are doing, or you might have to buy a house up there, just buy a crappy house. I think that’s what they did, but it’s worth it right to shelter. The state taxes. Yeah, whatever we can do and not pay taxes the legal way.
I’m all for it. Yeah. So if your income does double, that’ll put you in over $330,000 AGI. So then that would definitely bring the real estate professional status into play potentially. Living in Hawaii, maybe do a short term rental, something that’s fun. Start to get, I just planted the seeds now because a lot of this takes years to really implement.
Especially, if you’re doing like a short-term rental, you guys aren’t going to do it right away and you’re not going to do it. It’s gotta be your spouse’s project. So maybe start thinking of the fun idea, having a rental property now that you guys actively manage could be fun. They would like it.
And I think maybe it shows the kids like, look, people are paying us to live here. It’s like the feedback loop is a lot better than. Boring rentals or syndication deals where you get paid on a quarterly roll up. They don’t really, kids don’t understand that type of stuff but they understand when that Ching sound comes on the app, that’s money in the bank in a week.
So just some thoughts there and then living expenses. Is this what people and kids spend a month? It was, yeah. It adds up on all the kids’ activities and they need stuff. And he, new shoes are really growing. I feel like you buy it, you buy something and next month it doesn’t fit them anymore.
Yeah. What do you guys pay for rent? Like our housing for it 4,000 which is kinda high, but here we get a lot of benefits. Yeah. And you guys, I want to highlight you guys’ rent, right? These are the guys doing it the right way. Tell us a little bit like how you did that before we met. I think, yeah.
I, and I had this discussion a lot with my friends who they know I live in a nice area close to. Close to the ocean. I’m paying for having that quality of life the way I see it. And they questioned Oh, why don’t you buy Y like you’re throwing so much money away and rent, and then I just respond, Hey, do the numbers like, look at what.
You know how much you’re paying in your mortgage and, including maintenance, CapEx includes all the utilities. I’ll include all the little things they have to pay for if you’re paying for yard, service, bug service, that just everything. And the time you have to also count for the time that you have to spend, if something breaks that you gotta deal with finding a contractor or fixing it yourself.
And I do the math all the time and try to compare it like, okay, I can buy a place and spend all this money, or I can rent. And because where I live, everybody wants to own, and we’re willing to pay for and pay the astronomical prices. The rents are cheap because there’s a lot of people that have these houses and sometimes they just buy them to lock up capital I’m guessing and, they’re fine with just making the appreciation in the long run.
They don’t care if they’re losing money on it. The rents are pretty low. To live in the same house, same area and own, I think I would have to pay, comparing all expenses, I would have to pay thousands of dollars more per month.
And so I just, it’s just not to mention the quarter million dollar down payment. That you got to lock down. Yeah. Just last year I had a fridge that went out and an oven, a range that went out and there in Kobe, you couldn’t find them. I went to the appliance store, one of the appliance stores to see what they had because our landlord let us pick out the replacement and they had two in stock and they were like that.
The high end, 4,000 or not 4,000 early things, but $2,500 model ones. And you’re just like, man, this is nuts. But I didn’t have to deal with it. I was like, Hey, this is all I see. And, let me know what you find. And they’re probably like, don’t Sue me, Nick, you don’t have a refrigerator. That’s exactly what it is, right? People. For, from them, from the lay person, what kind of idiot? Rents? People like you and me, right? That’s why we get such a good deal on it. And then the quarter quantifies the quarter million dollars sitting there as debt equity.
But it’s not a, but it’s not hard, it’s not, I’m not saying I’m going to rent forever. If it flips and it’s Cheaper to own then I’m going to go buy a house, tomorrow I don’t, I’m not tied to, I’m not married to a certain strategy, rent or own I’ll do whatever makes more sense.
What will save me money in the long run, and then maybe at some point I’ll decide, I want some stability. I don’t want to, I don’t want to move in, because my landlords. Decide to sell or whatever I made, maybe I’ll buy, but hopefully I’ll be in a much better position where I won’t care about making as much money anymore.
Yeah. I think you get to that. You just get used to it. And you enjoy the freedom. If your landlord makes you move well, you just pay a couple thousand dollars to get Island movers to move your stuff for you. And you go on a little vacation, come back and here you’re in a brand new place that you don’t have to upkeep again.
But I’ve thought about that. When do you, when the heck do you buy, right? I don’t know, maybe in Hawaii, how the quality of houses, don’t really, there’s a big gap between $1.5 million and below and something a lot bigger and nicer. I’m more of that delayed gratification type of guy.
And just, if I’m gonna buy a house, I’m gonna buy something like 400. Formula and above do something like that. And as a means to just lock up the equity, once I max out my infinite banking thing, but that’s a while from now, I think, definitely. I’m not a good, hard and fast rule guy, but I think people shouldn’t buy their house until their net worth is really into a few million dollars.
Which is crazy, right? Because most of your neighbors, their net worth is barely a quarter million, but they own 1.1, $1.5 million houses within what they’re doing out there. Yeah. I also think people’s needs change too. What you want might be different 10 years from now, right? More people live in your house right here.
Exactly. And maybe you want to send them to school somewhere else or get them into another school district. You have the ability to move around, maybe have to, something I’ve thought about. I was like, why not have houses that you rent one near their school? One? I don’t know. Just, these are the ideas that you have when you think outside the box, you’re going to have to spend all your time commuting.
It’s especially with a short-term rental option where you can make the house, do something for you and while you’re not in it. There you go. Buy that house in Honolulu that you live in and then work it out on the weekend. They don’t guarantee a middle run out guarantee. Yeah. And then you can justify having somebody clean the house for you two times a week with you with that, your house cleaner.
That’s actually not a bad idea. Looks crazy. A lot of crazy families, but all right, so let’s dig in so I’m going to go into your liquidity and kind of the goal of this exercise is like, all right, what, where are we going to invest first? Or what you’ve already been investing in syndication deals, but where’s the next money coming from?
This is the deployment plan. Maybe take, you’ve probably got a good idea. What was your plan of attack here? You got about 180 in liquidity. Some, a lot of checking most in the cryptos stable coin accounts. You’ve got some. Retirement plans, Roth IRAs 401ks five 29 is about 370 in there. But yeah, so if one or two deals come up, where are you going to take the money from?
What’s your plan? So the easy way is just take it out of the, some of the checking. Some I haven’t checked in. Obviously I have to keep some of it just for living expenses. What is your what’s your how much do you want to keep in the checking just as your emergency fund?
Probably about 25,000, just to cover, cause I’m not worried about not having money. It’s more, I just don’t want to, I got everything automated, so I don’t want to check the balance because they just. Cool too much money. Yeah. Yeah. Yeah, it’s very common, right?
We all got this stuff automated. So when it messes up, it’s a huge freaking train wreck. And not now you’ve got five, like NSF fees piling up and you don’t know who to call first to ask for forgiveness. Yeah, I get you. Yeah. Most, I don’t know what your guys’ credit card bills are, but. I have a lot of business expenses.
So mine sometimes can be like 20 grand or more a month, but I’m all I play the points game. Ops and I haven’t done it in a little while, but I’ll sign up for credit cards and get the bonus offer and rack up 50 to a hundred thousand points for airline miles or whatever, and then turn the next card.
I just don’t have any time to do it right now, but I’ve done that before, but not now, but I’ve gotten to the point now where if I buy anything, I want to use a credit card because I want to get the points because it’s free money. I know I’m going to pay down all the balances every month.
And I get so much protection from the credit card issuer as far as extended warranties and the charged record section in case I get ripped off. So I try not to use cash for anything. The 2%, at least the double cash cards or I use the American express one’s for 2% and then the 5% swans for gas groceries, those categories.
Yeah, you’re like a lot of us in our group. We kinda, it’s fun in a way. It is a little bit of a waste of time. I’m sure you probably draw the line at the manufacturer spend level, right? You’re not buying $10,000 of mint quarters, sending it to your account, walking it over to the bank of Hawaii and depositing it.
Or I used to do that. Okay. That makes sense. We used to buy, I used to buy like the special edition dollar coins from the US mint and then I’d have $10,000. $1 coins in my house. I’m like, okay, I got to use this. So I’ll go to Home Depot and I’ll buy you know how every time you go to Home Depot, I used to be a homeowner, but so every time I’d go, it’d be a hundred dollars.
And I use the self-checkout cause I don’t want to wait in line for the cashier. So I scan my things and then I get to pay and I’m literally putting one coin in at a time. Into the machine. I’ve got like this sack of coins and the people behind me think I’m crazy. And then, what are you buying?
I’m really quarters. Yeah. And the receipt counts every coin as a separate line item. So I get this long, like Walgreens, a CVS kind of receipt at the end. I don’t play those games anymore. Yeah. But no, it’s very common. I think a lot of us in the foam, we did. Craft like that in our twenties, maybe early thirties for the late bloomers.
Sometimes I still do that stuff, but yeah, definitely draw the line at, like a lot of the kids these days, they do the manufacturer spin or are they the last one? I heard that they’ll buy a really expensive laptop, like a five, $6,000 laptop from Apple. They’ll pay a hundred bucks with a debit card and then they’ll use the same, like they’re using a.
Visa debit card. They’re using visa credit cards to pay the manufacturer. So the, so it’s like a split tenor purchase. And then the next day and the return, the laptop would put it on that a hundred dollars debit card. I think that’s a little unethical in my opinion. I don’t know.
But that’s just what people do, that’s I don’t know. Yeah, you got all the time in the world. If only if you’re single and you have no kids, you could just do that all day long. You’d be at the mall, buying yourself all of the free Java juices and. That type of doing that type of stuff all day long, all day.
But yeah, I would agree, maybe drain the stout to 20, if you can. And then you’re planning. How long have you been doing like the stable coin and then the crypto investing? So you’ve got 30 grand and the stable coin and a hundred grand and more like Bitcoin Ethereum, the mainstays. Yeah. And I, it was at an accident because my plan was put it on to a stable point and maybe dabble just like 10, 20 grand in Bitcoin, just, just is more as play money, not as a serious investment, but then I saw that the, some of the exchanges I was trying to use were charging a lot of fees for the stable coin because obviously they want to get, they want to get paid. And then I realized, Oh, I can buy Bitcoin. Instead it and not have to pay the fees and then I can just exchange it to trade it for a stable coin.
I did that. I started doing that last month, bought Bitcoin and Ethereum and then it took off and I’m like, Oh man. Now how much did you put in there originally? Oh, I want to say I want to say Maybe like Haiti or something like that. So it’s gone up 10, 20 grand.
Like I can’t, I don’t remember exactly. When I started, I stopped trying to watch it. Yeah.It’s just kinda crazy. It’s fun but it’s not a good long-term strategy. I don’t think I’ll just keep some and just cause it’s fun just to speculate, but.
I’m not going to buy any more. I want to try it. I think I want to try to move some of it out into a real estate syndication, or maybe move it into a stable coin. I don’t know. It’s just hard, right? Because there’s so much hype and on those cryptocurrencies, everybody’s excited, I think.
And it’s going to go to the moon and I think it’s a nice time now. Not that it’s like that. It’s definitely past the early stages, but the nice thing I think is that the institutions have signed off on it and they’re involved. So that brings another layer of stability to this whole thing. But my thing is keep it between one and 10%, 1% of your lower net worth 10%, if you’re higher net worth or above.
I think that’s my goal post personally. Maybe I’d play around with 1% at this point. But it takes bandwidth to learn it and. That’s what we’re talking about in our group, right? It’s, you don’t need to know anything, a father, which is dangerous too.
I do. Th the speculative coins they’re no, they’re the rational part of my brain tells me it’s just dumb, right? There’s nothing back in it. It’s not like real estate where real estate actually can be cash flow and asset but the stable coin, I a little bit, because the Eagles are so good.
At one point I was getting 12% on my stable point, which is a dollar peg cryptocurrency and that’s, and it’s super liquid. I can just sell it whenever I want. So it’s just a man. It’s hard. There’s a little bit of risk there in that. I don’t know if the exchange could get hacked or whatever.
And they still have insurance too. It’s all new and uncharted territory I think. Yeah. During the block five one, I think they give me like 8.6% on the stable coin, but you’re doing the other one then. Was it? Yeah. Celsius is at one point it was paying 12 for the stable point.
Now it’s around 10 and a half. Nexo pays pretty well also for their stable coin interest. I don’t know how they do it, but I probably should understand a little bit. Yeah. My understanding of Blockfi is probably the most secure of ’em right there. More the most. Financially like solvent when they’re there, they have insurance more than the others.
To me, I was like I don’t know about this stuff. I’m just going to go with the biggest one. I don’t care about making 10, 12% as opposed to 8.6 is good enough. As long as they don’t lose the whole damn thing. Yeah. That’s why I stayed with that one. So Let’s say a deal comes up 50 grand.
Are you taking it from here? Or where are you taking it from? Or this retirement fund? So I would meet, I kinda think that the Mark, I don’t know, the market scares me. Yeah. More than the crypto. Okay. Yeah. So I’ve got a 401k That I want to pull money from. It’s the government ‘s called TSP thrift savings plan.
And I don’t like how I don’t. Their performance is not, has not been as good as my civilian 401k and my IRA, which has just been in a target retirement fidelity fund. And so I would like to pull money out of my TSP 401k account. But, some things considering it’s a Roth account.
So a majority of the balance should already have its taxes paid. So I’ll just have to pay the taxes on the gains. But I’m going to have to pay a 10% penalty over the entire amount. Did you do the care act thing last year? I maximized that and I did that for my wife too. And so I was a huge benefit.
I’m glad you mentioned that there was. It was like a get out of jail free card. I hope they do something like that again, this year. I think they will. I hear more stimulus plans coming and I’m sure they’ll stuff that in there somewhere, then it’s getting confusing for the average person to understand it at this point.
There’s multiple of those. Get out of free jail cards. I think that’s the government never, it never makes things simple. So this TSP is Roth, then you’ve already paid the taxes on it. So this is where there’s really no path. There’s an art form. What I’ll normally say to people is like investor liquidity, except you’re investing in freaking crypto, which defies gravity.
But then I, at that point, I usually listen to what you said. I feel I get a sense of fear for this stuff. I agree with you, take this stuff out, right? Just if nothing, for quality of life and peace of mind, because I would agree with you. I think all these stocks and I mean their all time highs, just basically because of four or $5 trillion pumped into the system this last year.
The thing is, if I’m going to pay the taxes on it, I’m probably going to be in a higher tax bracket, in a couple of years. So take my medicine. Now. It won’t be as bad as later. Just something I’m thinking about. And I think because as we said earlier, your income is going to go up aggressively in the next three to five years, I would.
The plan I would recommend for you is to take as much out to get right up to that higher tax bracket. I think it’s about $330,000. AGI is the magic number. I think you want to shoot for it every single year. So that means leaking out. Maybe you’re at one 50 now, so that’s 180 every year.
Yeah. I don’t know if that’s the meth, that’s the perfect number, but that’s the idea of post tax money or if your tax, bill stacks, the one, the non Roth stuff, right? Yeah. Yeah. So I think that’s, so this is your 401k stuff, like 170 grand. So you should knock that out next year, Ben, right?
Yeah. Understanding it right. Yeah. I’d like to and a lot of my pay right now is not taxed on my W2 job. There’s a little bit more space there. And also, yeah, you got a lot of investible funds, so maybe the real plan I would suggest is like a plan on leaking this one 70 out in two years.
Okay. So go or maybe 50 in three years. There’s really? No. Cause you can take, if you get in trouble and, or not really in trouble, but if there’s like the after, do you have to deal three deals coming on in a row, just take it out of the Roth or you already paid the taxes on it, but have this, you’re on the three, four year plan to take this out.
And then this is being your get out of jail card or not bill bail you out in case there’s a lot of deal flow. But what are you doing? You’re doing that like an infinite banking thing. I think you should do that, man. Yeah, I’ve got some quotes and I’m trying to figure out how much I want to put as far as for the writer to do the additions.
But the way it was explained to me is that I should try to get a big policy now, and then I don’t want to put in the max that’s okay. As long as I’m putting in the minimum for the, of course the insurance salesman is going to say that. Yeah. I would like to, I’m learning a lot. Yeah. More about it.
And I’m still trying to figure out the strategy. I get it, like you have this cash value in there and then you want to buy a car and you just pull it out and you have a lot of benefits. Like you can not have you can self-insure and I have, comprehensive inclusion insurance and, get your insurance rates down.
And then for deals, I can just. But 50 grand into my cash policy and then take the 50 grand now as a loan and invest in a deal and then just have that money out and we recapitalize it. But yeah, I don’t know. I definitely am. Think it’s something I want to do. I just, I’m just trying to figure out a day-to-day strategy on using it.
I would disagree with this insurance salesman and I would say the first one you want to do is a little smaller. So you can understand the field for this thing and then size up to the one that you want to do maybe a year or a few years later. And just layered on top of the current one there, the reason why the salesman wants to do it is because most Americans are lazy and once they do something, they’re likely not going to do something again, as they continue to binge on Netflix and whatnot. So that’s why the insurance sells my hair. They want to get paid. So they want to load you up with the biggest thing right off the bat.
I think for you personally you have a lot of liquidity lying around, I don’t know how you, how quickly you want to deploy this into deals where you’re at, you’ve already had some deals. Maybe plan on deploying, one a quarter at most, maybe. I dunno, but. Nothing crazy. So like you’re at a good, good, a good steady state you’ve been investing for about a year now and to alternative assets. So what I mean. I’m kind, kinda like the fortune teller here Hey, tell me a little bit about yourself before I read your Palm or I like real estate.
I like being in real estate. I want to be as good as I can. How much were you thinking about putting into your life? The infinite banking every year for the five or six years. I was thinking something like 40 grand a year. I’m just throwing it out there, but it’s not really paced on anything other than I can just, I know I can hit that.
I can hit that number without it. I like that number. So here’s one, one general rule. What I’ll do is I’ll take this net cash flow, which you’re making, you’re able to put away 80 grand a year and I get one third of that. Or I come up with that real just trust me. But one third of that is like 30 grand, right?
Yeah. That’s I would say that’s the low end for you, but because you have a lot of liquidity lying around here and you already telling me, you want to take this out and you have 180 here, I would push that a little higher. So I like how your initial. Guests were 40 grand higher than that. 30 grand.
But maybe if you want to go that cool. Like I said, you can always size up and put another one on top of that. I think at the bare minimum through 30 or 40 a year. Okay. But I think I don’t know. Maybe we just do 50, just do a round number. If you want to do it, you could do a hundred, I think, but I would rather you guys size into this stuff and get us.
Get a feel for this thing. Because there are downsides of it. The downside is it’s heavy fees at the beginning, right? So for the lower net worth guys with no liquidity who are listening, don’t do this. You’re not like Nick, but I don’t know. Maybe munch on that. Yeah. The other thing I was considering is the guaranteed return of 4%, that was going to go away at some point.
Because rates have been so low for a long time motivating me to get a policy now, but I guess it would take a while to make that change. Yeah, I don’t understand. I don’t. I hear you guys talking about that to me. That’s just kind of noise because you’re not doing it for the rate of return anyway, where there goes down to two from four, I don’t care.
You don’t care, like all this other money, other places, right? This is just a place to start. Yeah. If that rate goes down, wouldn’t the rates of borrowing it. Go down to. One would assume. Yeah, you’re right. You’re right. It doesn’t matter. It’s the way I’m looking at it, but I dunno, don’t let it, I think you should do this thing, but don’t let that’s just more sales tactics to create urgency is what I see.
Yeah. Yeah. Everybody’s got to get theirs. Yeah. Yeah. No nobody does anything unless there’s some sense of urgency, even smart people, you got to trick them to do the right thing, but yeah, I would do it. I don’t know. Yeah, like the 40 grand, I think you’re good with that. I really think if you wanted to wholeheartedly trust me, I would say, just do a hundred and you’re gonna take the money right back out and invest in any way.
But if you just wanted to set it and forget it, we’ll go with 30, 40 a year. Yeah, cause what you’ll do is you’ll drain out your liquidity and you’ll place it right back to where it was essentially, because there’s going to be a couple years, at least where you’re going to be really fat with money and you’re.
And another reason why I’m saying that higher number, like a hundred grand a year your income is going to be greatly increasing too, which is why I think you can be more aggressive with it. But yeah, get that done man, in the next six months. I’m pretty close. Like I did the medical exam and just knocked that out. And so I think I’m just to wait for the underwriter to do their thing and then they’ll come back to me with paperwork.
But yeah, the only other thing, if you’ve got any other topics, the only other thing like me personally, and not saying that you should do this. But I think that’s why you have people around you that understand the stuff that you can have, these types of conversations, whether you and ICI or agree I will, if it were me, I would feel uncomfortable with it.
And a theory. Bitcoin or non-stable coin. That’s a lot of money there. What I would be doing is I would be sliding half of this and to a stable coin. And then I don’t know, that’s a big number. That’s 10% of your net worth into something new where you could like the news. If you lost half of it, that’d be 50 grand. You would feel like crap. That’s just how I quantify it in my head. I want to know what’s the magic number where like you lost 25 grand in this maybe.
And you’re like I’m going to go to the beach and not worry about it. So if that’s the case, then head your number down and your position down. I don’t know. I wouldn’t feel comfortable with this amount, but you can do what you want. You’re also going this, what? This will probably double and you’ll just rub it in my face and buy me dinner one day and say, don’t worry.
There’s a. 10,000 more dinners that I could buy you because I didn’t listen to what you said, crypto devil in the next six months. But that’s just how I would do it. I don’t know. Yeah. And your religion at this point, the way people believe in leaving cryptocurrency replacing the dollar or replacing not the dollar.
The dollar too, but I guess a more logical one would be gold as a store of wealth. I’m coming around a little bit. I don’t fully believe in it, but I definitely use it. It was a haphazard way to invest that money. It wasn’t, I didn’t intentionally go into that big on it. Yeah. Yeah. What would you do if these are your currents and vacation holdings, if this was like triple right.
What would you do at that point? And would you just throw more into that or, I think that’s what you need to think where this is going. This is all, everything. Is an interim solution. So we get to the end game, but the end game never gets there because then ideally these deals should cash out and give you more money at that point.
But this it’s just, but then I think that at that point you get more and more ballsy with the stuff like once your net worth goes to $3 million, I think then this amount of money is appropriate right there. Like I said, For the guys who are in the lower net, net worth spectrum, I think a smaller position in crypto is appropriate, but as your net worth increases, yeah.
If you want to go to 5%, 10%, I think that I’m just thinking of him from a theoretical perspective, right? Like you want something very volatile, high risk, high reward. It greatly increases as your net worth increases. I think. As a percentage, it’s just, I would look at it, but then again, you don’t get broke if you don’t take some chances
It’s hard. I fully believe both sides of the coin. Half of me thinks man, that is stupid to be having all that money in Bitcoin. It’s not real. It’s real, but it’s not based. It’s not, it. It’s not cash flowing. No assets. It’s just soft, pure speculation. I just look at the game. Look at how people believe in it.
Like they think it’s like the second coming of Christ. Yeah. This is a conversation I had multiple times last year when we’re doing that Chase Creek development deal, where I was like you guys who don’t have a good job, like if back then people were worried about their day jobs, right?
Especially the oil and gas guys. And I was like, if you have to worry about where your money is coming from, maybe this isn’t the deal to go into, maybe you’re looking for more of a cash flow deal, but then if they’re, they’re. But then I was like, how else are you going to get above, accredited status and beyond.
And if you don’t take some chances now, so I don’t know if those are two ends of the spectrum, make your own decision. Good luck. I definitely think you got to, you have to make some calculations. Risks and figure out where we’re willing to accept it. Cause if you go set no risks, it’s I dunno, you think about the guys who are scared to put money into anything and they have it all in their savings account, getting 0.5% high interest savings.
It’s wow that’s the worst thing that you could do. That’s just so you get nowhere with that. But then before you buy crypto and it’s completely opposite of the spectrum no. What I think is wrong, there’s only one rule that’s certain here is to use the analogy of say we were like gambling in Vegas.
We need to have a certain set point on where to take the overflow of profits to at some point, because if we keep playing the game in the Las Vegas casino, we’re going to lose. That’s how the odds are paid. Now, maybe crypto isn’t the same type of game, but I think it’s prudent to like, maybe if this doubled.
The next six months, you have a pre plan to take some of that overflow into real hard assets. I think that’s the prudent thing to do. Like at least you set the terms, so you don’t get money drunk with all these returns. Cause in a way that might be what is happening here. You had a little nice 20% return, but that’s nothing like a lot of these kids have 10, 20, 30 X on their money.
Right now. But this stuff. Yeah, I, and I liked the strategy of having a diversification plan where certain assets, investment categories, you’re only going to have X amount of percent. And so crypto for me was 5% and I went way over that accidentally. And I, yeah I definitely see a lot of value in trying to.
Push that back down closer to 5% that might net worth and not go over more than over that. Because then I won’t cry at night if I use it. All right, you’re now you’re the, you’re up. You’re up on the house, but make sure you don’t lose, yeah. Cool. Yeah. We’ll wrap this up here.
If you guys like these, we have all these YouTube channels. And if you guys sign up for the club there’s also a page with all these in order of networks. So you guys can see, find where you are in terms of net worth and start listing from there on and see what else is ahead of you guys.
Thanks Nick for putting yourself out there. I think a lot of people got some value out of this. If not, they’re just going to invest in crypto because they saw one guy do it. No, don’t do that. Don’t do that on my account, please. Financial advice. We’re here to get your own profession.
All right. Thanks guys. Okay. Thank you.
