Episode Transcript
[00:00:03] Speaker A: Welcome to create wealth through franchising podcast.
[00:00:06] Speaker B: And Kim Daily TV.
[00:00:08] Speaker A: I am your host, Kim Daly.
[00:00:10] Speaker B: I want to educate, motivate and inspire.
[00:00:13] Speaker A: Your business ownership journey by interviewing CEOs, leaders, sales coaches, and exceptional franchisees to learn their valuable insights and strategies that we can apply to our own business ownership dreams. Now onto the show.
[00:00:34] Speaker B: Welcome back to create wealth through franchising podcast and Kim Daily TV. Our special guest with you today, if you follow me, he is not a stranger to the studio. Chris Miles. Welcome back to the studio of Kim Daily TV.
[00:00:48] Speaker C: Hey, it's such a pleasure to be back. It's always an honor to be not just be on once, but be back multiple times. That's the biggest honor ever. Thank you so much.
[00:00:56] Speaker B: There's not a lot of people that have done daily doubles, although this could be a triple for us. So we've been friends for a long time.
All right, well, for those show listeners who are new to me, or even for those who have been here a long time, and maybe you don't remember Chris, Chris is the anti financial planner guy. All right. So the premise of this show is a lot of people who follow me and people who even engage with me are not quite ready for full time ownership, semi absentee ownership in a franchise. Maybe their nine to five doesn't afford for the flexibility. Maybe they don't have enough money for a franchise business. Well, there are other things that you can do, and Chris is the guy to tell us what we can do. So with that set up, Chris, tell these listeners, what can you do with your money when you don't have a lot of time?
[00:01:54] Speaker C: Yeah. The first thing to do is stop listening to financial advice out there. That's what I'll tell you. Right? Like, stop listening to Dave Ramses of the world, who will make you just stay broke your whole life. Right? Don't listen to those guys. Even Ramit Seti, I know he's getting more popular out he's. Again, they all have good points, right? And they teach good concepts. But if you want to take your money to another level where you want to create real wealth, not just because, here's the truth, nobody ever saves their way to wealth. That's the truth. Right?
You never see people on the news saying, man, I saved so much in that four hundred and one k, and, man, I got wealthy. No one says that. In fact, that's so amazing.
[00:02:32] Speaker B: Oh, my gosh. I had to interrupt you. Sorry. Keep going. I'm smiling.
[00:02:35] Speaker C: You can interrupt me all you want.
[00:02:36] Speaker B: Not watching a video.
[00:02:37] Speaker C: Well, it's true. Because I looked at Fidelity's stats recently, right? Because fidelity is like the number 1401K provider out here in the United States, and they have 45 million clients. Now, think about that. That's a large part of the workforce out there that has 401 ks. Of those 45 million, guess how many have at least a million dollars in their accounts. 810,000. That's it. That's less than 2%. That's really, like, just over one and a half percent. But here's the crazy part, Kim, is of those people, that one and a half or a little over one and a half percent that have at least a million dollars, 35% polled by TransAmerica said they think it'll take, quote, a miracle to be able to retire with their retirement accounts. Right. And why is that? Is because they've been told that once you build it up, and if they've been told by financial advisors that actually stay current, not the ones that teach old crap that don't even apply anymore, they'll tell you you can only pull out 3% a year, not four or not. Like Dave Ramsey says, you could pull out 8% a year, which people have given. Even financial advisors think, Dave, that's crap. You can't do that. That mathematically doesn't work. Right. But doesn't matter. Dave's not a financial expert. He's a financial entertainer. Right.
Anyways, so the thing is, if you pull out 3% a year, you have a million bucks. That's only $30,000 a year. And, Kim, you and I both know you can make a lot more than 30,000 a year investing in a franchise with less than a million bucks. Right?
[00:04:03] Speaker B: Totally.
[00:04:04] Speaker C: So I know I kind of bypassed the question a little bit. It's not because I didn't do that. I want to create context, because I can almost tell that there's people out here, their money is in competition with themselves.
They're saying, well, I want to get a franchise. But I heard I should do this. I heard I should pay off all my debt. I heard I should put money in my four hundred and one k and get that match because it's free money. Right? And all that kind of stuff. Which, by the way, speaking of fidelity, their funds that most people pick, which are the target date retirement funds, underperform the stock market when you factor in fees by 3%.
Here's what's crazy. Guess how much that 100% match actually adds onto your rate of return over time. When it's a compounding rate of return, it's not 100%. Because if you go and put in a financial calculator that you're making 100% a year, with the amount of money you're putting your 401k, you'll be richer than Bezos in 20 years. That's not happening, right? You're not going to be the richest person in the world saving in a 401k. So the real compounded rate of return of 100% match long term is only about 3%. So you do 3% worse to only make up your 3% with the match. All it does is just saying, oh, I got crappy funds that I picked in a 401k. My match just makes up for the crappy performance. I would be better off investing myself than putting into a 401k with 100% match.
I think, kim, is that I see a lot of people when we actually look at their finances, right? Because we work with clients to try to help them get out of their at race and things like that. And you're like one of those options that many of our clients will look at saying, hey, I don't just want passive investing. I want something else. I want something that maybe can align with my passions or my mission or what I'm trying to accomplish in my life. A franchise could be a great way to do that, right? Well, we have to teach them. First is one, stop dumping money in your 401 ks because it's not worth it, not even with the match. It's just not enough. Two, be careful what kind of debt you're trying to pay off, because many times people say, well, I just got to get debt free first, then I'll invest or then I'll do this thing. But here's the thing. If I know that, for example, and Kim, I know because we've looked at options together for ourselves, right?
If even it's a quarter million dollars out of pocket, which a lot of your franchises aren't that much, but let's just say it's a quarter million out of pocket. But I know that maybe in two years that could generate $100,000 of profit. That's a 40% rate of return on my money, guaranteed. I can assure you that trying to pay off your $250,000 mortgage will not make you 100 grand a year. It will not save you 100 grand a year in payments, right? If you have a $250,000 mortgage, that payment is probably going to be depending on your interest rate. If you got the really good interest rates before, you're probably looking closer to about 1000, $201,300 a month, maybe less. Depending on where you live. But even now, most people still wouldn't be paying much more than $1,500 a month. That's 18,000 a year, not 100,000. 18,000. What if you can invest and make that business pay for your mortgage, essentially your mortgage free, because it's more than paying for your mortgage and then giving you some, right? And that, to me, that's the big thing. And so there are debts that I think you should pay off. Like, there are debts where I use a calculation called the cash flow index, which just says, instead of focusing on the lowest balance or the highest interest rate, like some of the people out there will teach, which it's been overdone. Instead, I focus on what gives me the best rate of return on my money. Just like I'm looking at the franchise opportunity, right? I look at everything as what does it do for me on a monthly cash flow basis? Which one is better? So, for example, if I have two different $10,000 loans, and all I have is $10,000, so I have to pick between the 2110 thousand dollars loan is a car loan that's $500 a month and say it's up 4%, but the other is a $10,000 credit card at 20%, but it's $200 a month.
Now, almost anybody you ask, including Dave Ramsay, who doesn't really use half his brain anyways, he'll say things like, oh, pay off that credit card. It's stupid. Debt is dumb, right? In fact, pay off both because cars are dumb, too. He'll say all that kind of crap, right? But here's the thing. In real life, in the real world, which one causes you stress? Both of them are $10,000. Yeah. The credit card has higher interest by far. But is it really the high interest rate that stresses you out? Or is the payment because, remember, the credit card is $200 a month, where the car loan is $500 a month, which one really gives you more stress? And especially anybody who's a business owner. They already get this because business owners get it, right. Like anybody who's an entrepreneur knows, $500 a month gives me the most stress. Regardless of the interest rate. It's the payment that gives the stress. That's where you get your money locked up. If you're in a crunch, you much rather pay a $200 a month payment than a $500 month payment, right? Well, sure. That's common sense, right? That's the thing. When you start using common sense, you start to realize, wait a minute, that car loan actually is the thing that creates most stress. Pay that off first, because I can always take that extra 500, put it onto the $200 month payment on the credit card, and I'll still pay it off in about a year, and it won't charge me that much in interest over the course of the next year, especially as you're paying it down, people are always like, oh, it's going to cost me thousands in interest. No, not even close. It's bull. That whole interest rate is a smokescreen that banks teach you to create fear in you. So you do pay it off first so that they have less risk for themselves. They want you to pay off, despite what anybody says, they actually want you to pay off the debt faster so they can get the money back. They can turn around and loan it somebody else. But remember, every dollar you give them, they are legally allowed to lend out $10.
So if you pay extra to that credit card, they love it. Because if you pay an extra $1,000 on that credit card, they now have the ability to loan out 10,000 to somebody else. Right. That's how they create speed of money. It's actually just like what you probably teach as a business owner, having a franchise, right. It's acceleration of money, not just accumulating it and letting it sit and be stagnant.
So that's the real thing, is that you need to get your money out of prison. That's my whole point here, is, oh, getting back to the cash flow index. So I finished that thought. I closed that loop at least, right? Is that the cash flow index is just this. You take the balance of your loan, divide it by the minimum monthly payment, and it'll give you a number.
The number that's the lowest is the one you pay off first. So in those examples between the car and the credit card, remember, the car loan was 10,000 divided by 500. It's 2020, by the way. Anything below 40, you do want to probably accelerate and pay off sooner. But notice that the credit card is 10,000 divided by 200 is a 50. So 50 isn't horrible. All right. No, it's not great either. I mean, if you pay it off, it's like getting a 24% rate of return on your investment. This is why when people are like, well, I'm paying money in my four hundred and one k and getting that match, it's 100% return earn. No, it's not. It's like you're lucky to get eight or 9% long term. You might even happen to pull off 10% a year even with the match. However, if I pay off even that credit card that has a higher number, I wouldn't even pay it off first. But it still has an index of a 50. I pay that off, I get a guaranteed 24% a year return on my money. Why? Because it's 10,000 making $200 a month or 2400 a year. 2400 into 10,000 is a 24% rate of return based on my cash flow. Your 401K will not beat that. I'm sorry.
[00:11:23] Speaker B: Hey, daily Coach fans, if you're loving.
[00:11:26] Speaker A: This episode, please do me a quick favor and leave me a five star rating and a short review. Your feedback fuels my growth and rankings and shows others that this podcast is valuable. Now back to the show.
[00:11:43] Speaker B: I want to share with the listeners a little bit of my personal story, which will help you kind of, like, I think, take this even further. So I know there's a lot of people out there who are probably, like, scratching your head like it blows your mind, right? Because you've been taught something totally different. And I totally get it because I was the same way until about maybe ten years ago. I really got active in building cash flowing assets. About 2018, it took me some time to say, okay, I hear you people. Like, what happened is you start getting around wealth builders. And to Chris's point, none of them have 401 ks. They're all business owners of multiple businesses and passive investments, and they think about money in a totally different way. And I immersed myself in this kind of universe, and I'm the one sitting over here, and everybody's looking at me as an expert in franchising. And then quietly, I'm like, but I have all this money in my self employed pension plan. And so I always dreaded people asking me, well, where do you invest your money other than in your business? Because it wasn't the same. And so finally, I had to woman up, put on my big girl pants, pull that money out, and let me tell you, I can retire from work today. Like, I started in 2018. It's 2024. So I have enough passive income coming in that work for me. All the money I make in my business, it's totally optional. So whenever I'm freaking stressed out of my mind because of my business, and yes, 22 years as a business owner, you can still get stressed out of your mind, right? Because I want to grow and I want to achieve. But whenever I find myself and my nervous system all out of whack, I just start laughing at. I literally do. I make myself stop and go, Kim, this is self imposed because you don't have to work. And then my attitude is completely corrected. I mean, how freeing is that? It's the same money that I had sitting in a sep and now it's all invested in different passive streams of income.
And it's cash flow to me that literally pays for my life and then some. And with that extra, then some and the money I still make in my business because I didn't retire, I've been building more assets. So acceleration of money, it's all about that velocity. So anyway, I could keep rambling too, but now you, Chris, like volley back to you. This is what you're talking about. So tell us a little more about how people can work with you to get into this type of and address the mindset of we understand crossing that bridge is like, it's scary and you don't do it all at of. If you were like me, I tiptoed over, now I'm all the way over.
[00:14:38] Speaker C: I don't even look know, Kim, what you just described is why people like us. And I say people like us. I mean, there's a lot of us people that have either kind of gone against the status quo, right? Like we're business owners, we're entrepreneurs, or even just investors for that matter. And when you start to hear people talk about their 401 ks, this is why we kind of internally laugh, right? And not in judgment, but just like when people are like, oh, it's so awesome, you're like, well, that's adorable. It's like when my kids start telling me things about life that they're learning, it's like, I love that they're learning, but at the same time, it's kind of like, oh, just you wait. Especially where I have eight kids, right? It's just like, just you wait. And sometimes they'll even say, don't you think this is good, too? You know what you're going to learn? I can tell you until I'm blue in the face, but until you learn it for yourself, you won't know. And that's what we've realized, Kim, because I remember somebody asked me on another interview, they say, chris, you were able to retire when you're 28 years old because of this very thing, right?
They're like, what's your next goal? I said, well, honestly, I don't really even worry about too much, but I said, if really you're looking at my passive income goal, I'm already over 40,000 a year, about a half million a year. I'm like, it'd be cool to hit 50,000 a month. That'd be cool. Get up to 600,000 a year. They're like, why? I'm like, just because I could, and I don't even need it. It's just like, because I could. And I like to keep growing my income because inflation is going to go up whether I like it or not. So I might as well.
And that's the thing, is that 401 ks, I've never looked back. I used to use a 401K, but then I cashed it out because of the same reason that you realize, Kim. And so when I did that and when I realized that, yeah, there's some debts I'll pay off because it improves my cash flow a lot more. And by the way, banks love it. So if you're looking to get bank lending, like when you're working with Kim, you're trying to get bank lending. They do like that. Your debt to income ratio is at a good level. Well, guess what improves your debt to income ratio the most? The cash flow index does. It's actually focused on debt to income ratios because they're looking at what's the payment. They don't even care about the balance. They want to know the payment compared to your income. So if you go for the ones that you can pay the least amount of money, invest the least amount of money to pay off to free up the most income, your debt to income ratios go up, which means your options open up and you get better interest rates, you get better terms. They think you're sexy. And, hey, this is sexy if you do it right. And getting good money is sexy. And so I would just say this is that although we teach at money ripples about other passive investments, like real estate investments and things like that, I get residual income from business, but I also get a lot of it from real estate, too. And I'll tell you, when you have both those things, I know, Kim, you're in the same boat as we're like, we're like brothers and sisters from another mother that way.
Exactly. Two p's in a pod, two peas on a riverside recording here and podcast. Right.
But yeah, that's the cool thing is that you want to create those options because that's what really creates freedom, and that's what we really teach. Like, I have the Money Ripples podcast. We teach the same kind of stuff that way.
I'll say this because I know, Kim, we're kind of at the end of our time here, but here's the number one question people always ask me when we start poo pooing all of our 401 ks, right? They'll say, yeah, but, Chris, where do I save my money? Where am I going to hold it? I don't want to put it in my bank savings account where I earn zero point nothing percent. I don't want to do that. And I say, well, that's where a lot of our clients will talk about using. What's a strategy called infinite banking? Not the traditional type that you hear about out there and even on YouTube, just because we couldn't find anybody who does it really well, we brought it in house in our own company to do it more as what we actually trademarked to be Max Roi infinite banking. Which means how do you pay the least amount of fees to that life insurance company so that you can get the best returns on your money possible? And so there's ways to actually grow your money faster than you do in a bank.
[00:18:30] Speaker B: Hey, daily Coach fans, if you're ready.
[00:18:33] Speaker A: To begin your own journey to find the perfect franchise, please email me right now at inquire at KimDaily TV. My services are totally free for you. That's inquire at KimDaily TV. Now back to the show.
[00:18:53] Speaker B: Actually, yes, I have two. I opened them four years ago, and that's where all my money flows through that and all my investment money flows in and out of that. Out of my two banks of daily.
[00:19:04] Speaker C: Exactly. The BoD, right? Bank of daily. Right.
[00:19:08] Speaker B: The daily bank.
[00:19:09] Speaker C: It's like, that's a nice BoD you got.
[00:19:10] Speaker B: My kids think it's, like, always existed.
[00:19:15] Speaker C: No. And that's a great strategy because for two reasons. One, of course, you get that double dip effect, which we won't go into detail here on this show, but you can actually get your money to pay you twice, especially when you use in business, and actually almost like three times, because the interest that you're paying on the money on that line of credit you get while they're also paying you interest, is also tax deductible because it's a business expense. So you actually get this huge deduction. You make more in interest than you would just letting it sit in a bank savings account or a checking account, for that matter. So when you do it that way, there's lots of things. And on top of that, any money you have in there is, in most states, 100% protected from lawsuits and creditors. So even if you get sued in the business, even if you've got, you do all the things to make sure you have the right llcs and things in place to protect you. And you've got insurance, liability insurance policies like umbrella policies and things like that, that helps. But if it ever goes above and beyond, and they can actually put liens against your assets, like your house, or take money, literally pull it out of your savings account, if they win a judgment against you, guess what? That won't happen if you have this infinite banking life insurance type of policy.
[00:20:16] Speaker B: I had no idea of that. Wow.
[00:20:18] Speaker C: Yeah. That's the number one reason that most business owners, especially as they grow their wealth more, they say, that's why I want it. Yeah, I can invest with it, make my money in two places at once. That's cool. But they're like, honestly, I love it because I have the flexibility. I'm liquid because I have money I can use. It's like a savings account. It's like a tax free savings account, really, that pays me more than zero point nothing percent. But it also is 100% protected from lawsuits and creditors. It also, if you have kids trying to go to college, qualifying for scholarships, it doesn't count against you. So when you're building your wealth, people are like, oh, the rich people don't get any scholarships. That's not true. You can actually still get funding from colleges when you have things like this where they don't count it as an asset. So the cool thing is, it doesn't count as an asset when you don't want it to, for taxes, liability, for college scholarships and things like that. But when you go get a loan with the bank, it does count for you, because if each ever try to get a loan for a mortgage or a business loan, it actually counts as an asset. So it counts when you want it to, but it doesn't count when you don't want it to. That's the cool part.
[00:21:18] Speaker B: That's really awesome. We'll end on this. My infinite banking policy allowed me, I have this piece of land next to me that is very coveted because I wanted to be able to own it, to control it. Who's going to go there? It abuts my property.
And finally it went up for sale. And because I have an infinite banking policy, it's a very expensive piece of land. I live near the ocean.
The day that I saw the realtor over there putting the sign in the land, I walked right over and I said, I'm a cash buyer. Take the sign down. I want this. And I was able to close in like two weeks because I had money in my infinite banking policy that I could withdraw and have within 24 hours or whatever in my bank. And I closed on that piece of property, which is now mine. And so now you're taking money out of your infinite banking. I'm putting it into land, which is very safe.
Like they say, they're not making any more land. And now I look at it when I walk my dogs, I go, oh, look at my land. I tell my kids, look at our land. I've never cared too much about land. But now that I own that piece of land, I'm like, ah, no, crazy neighbor.
[00:22:26] Speaker C: You pulled a Walt Disney, didn't you? Like when Walt Disney was secretly trying to buy land in Orlando, and then the bank just wouldn't give him money. He actually leveraged not just a line of credit against his house, but he also leveraged his life insurance policy, the cash that was in there, to then get the banks to give him more money so he could finish the project with Disney World. So Disney World, if you watch any documentary, was actually built on doing the same kind of infinite banking type strategy.
[00:22:50] Speaker B: Oh, that's awesome. I didn't know that, but it works. Guys and gals listening, it works. And it's not as complicated as you may think when you're just hearing it for the first time. Trust me. When I first learned about all this, I was so overwhelmed. I'm not a finance person. All the limiting beliefs, and then it's just, you just have to crack the door open and start asking questions and talking to experts who can simplify it. And like I said, I didn't jump all the way in. In the beginning, I was still a little skeptical. I still had 1ft over here on the bridge of 401, self employed pension plan, and 1ft stretching toward true freedom. And then once I got a little taste of it, I was like, oh, get your foot all the way over there. Cross the bridge, Kim. And I've never looked back. And look, now I'm able to, quote, say I could retire, even though that's not a thing in my mind that will ever happen. So, Chris, I appreciate your expertise, your enthusiasm, your passion. Everybody listening wants to reach out to you. So where do they go? How do they do that?
[00:23:50] Speaker C: Yeah, you can follow our podcast, the Money Ripples podcast, or go to moneyripples.com.
[00:23:55] Speaker B: That's it. Moneyripples.com, Moneyripples podcast, Apple and Spotify. Thank you so much for being my special guests here today and just wowing the people out there. I can see them scratching their heads. They are mind blown right now.
[00:24:09] Speaker C: I had to get there too. I get it.
[00:24:12] Speaker B: Thank you so much. And for anybody who is interested in beginning your journey to figure out what is the next investment, whether it's passive or something a little more active in a franchise, you know that I want to be your daily coach. Please follow the email on the screen right now or reach directly out to inquire at Kimdaily TV. That's inquire at Kimdaily TV. And until next time, my name is Kim Daily and I want to be your daily coach.
[00:24:46] Speaker A: You can find more content just like this on my YouTube channel at KimDaily TV. And if you're inspired to take the next step to explore franchises match to you, please email me right now at inquire at Kimdaily TV. That's inquire at KimDaily TV.
