Wealth Formula Podcast

Let’s talk, for a minute, about how a bank works. You deposit money in the bank. These days, they pay you less than 1 percent interest. Because they are a bank, they are able to lend out most of the money you deposited. This is called the fractional reserve system. It’s complicated and best addressed in detail on another episode. However, in a nutshell, this is how it works. The bank only needs to keep a tiny percentage of what you deposit and can lend out the rest. So, say you deposit $10. The bank lends out $9 and keeps your $1 in the bank. Of course you never told them to do that. You assume your money is in the bank and that you can access it anytime you want. And…in theory…you can. That is as long as everyone wants there money back at the same time.

So, when the bank lends out your money to a borrower, they charge a much higher rate than what they are paying you and they make a lot of money. Did they pay you for putting your money at risk? Hardly.

Wouldn’t it be nice if a bank told you what it was doing with your money? What if they said, we are going to take your deposits and lend them out as secured loans. Furthermore, instead of paying you a nominal negative rate on your deposit, we will let you keep the majority of the profits. That might sound more interesting right?

Well, that is pretty much what real estate debt investing is. Learn all about it on this week’s episode of Wealth Formula Podcast as we talk to Rick Von Der Sitt from Tower Real Estate Fund.

Wealth Formula podcast is not a real estate show. However, we do love real estate! Why? Because real estate is real. It’s not a piece of paper and it’s not a digital equity that you trade on Ameritrade that goes up and down with the whims of global emotion. It is an investment that allows us to own something that has nothing to do with Wall Street.

We also love it because it can provide us with one of the pillars of wealth…cash flow. In addition, it provides us with great tax incentives.

I believe every high earning professional should be invested in real estate. If the idea of owning real estate yourself is daunting, invest along side others and enjoy the same kind of cash flow and real estate advantages as those in the trenches.

In this week’s podcast I talk with a prolific real estate syndicator who puts together big deals and lets others participate in the cash flow. Whether you want to take it to the next level and become a syndicator yourself or just invest with one and get real estate exposure in your portfolio, today’s episode of Wealth Formula Podcast is for you.

Over the last several podcasts I have been impressed by the increasing number of listeners that are tuning in to the show and am really excited about the community we are growing together. For that, I thank you. This week I’m traveling but thought it would be a great opportunity for me to share more about myself with you.

A few weeks back I was interviewed by Lane at “Simple Passive Cashflow Podcast”. He asked some interesting questions that I thought might interest you and help you understand more about me. Lane asked me about the good and the bad and it made for some very interesting conversation.

Solving the wealth formula is dissociating time from money. In other words, you no longer need to actively work in order to maintain a particular lifestyle.

It is important to know that entrepreneurship is not required in order to get to this point. In fact, if you already have a high-paying job, your quickest way for you to gain financial independence may be to keep your job and focus your attention on making smarter investments in cash flowing assets.

The way I think about this is that you have to have a “motor”…something that drives lots of cash in your direction. If you already are a high wage earner, you’ve got that covered for the most part. Your time may be best spent figuring out how to use that income generating motor to quickly create ongoing cash flow to replace your current time dependent income rather than learning how to start a business.

The reason to be an entrepreneur is because it gets you excited and makes you feel alive. That’s what it does for me but…that’s me. I also love Minnesota Vikings football. Not everyone does. The point is that you are who you are and you have to be true to that.

Quickly figuring out whether or not you should be an entrepreneur or stick to cash flow investing is important. If you figure out entrepreneurship is not for you, you can stop buying online courses and seminars that you never finish and start sharpening your investor skills through education and hanging around in the right community (mine!).

After listening to this week’s episode of the wealth formula podcast, I bet you will have a pretty good idea in which camp you belong.

I approach everything in life similar to the way I approach business. One of my cardinal rules as an entrepreneur is to avoid working IN a business so much that I stop working ON it. For example, if you have a bakery, you don’t want to be the one who is baking, doing accounting, and sales at the same time. If you do that, you become too busy to do anything else but daily tasks and, as a result, you become extremely myopic. It is important to be able to step out of your business and look into it once in a while. When you do that, some of the obvious glaring weaknesses or areas of needed improvement become obvious.

High wage earning professionals are often experts at the details but can’t see the proverbial forest for the trees. They are simply too busy to see anything else other than the next client, the next patient, or the next work day. There is essentially no time for introspection or evaluation of the most important asset than any one of us has: our lives.

When was the last time you stepped out of your life for a moment and looked at it critically? What were your dreams when you first started down this journey of “success”? What are they now? Why aren’t you living your dreams?

Now I’m not talking about the kinds of dreams that you know, for obvious reasons, will never happen. For example at 42 years old, 20 pounds overweight, and 3 spinal operations, I am pretty sure that I will never play in the NFL. Those are not the kinds of dreams to which I am referring.

I am referring to the dreams that I hear all the time from people around me. Some people want to live somewhere else. Some people want a different kind of job or want to start all over in another field. Others simply want to have more time with their children. It simply breaks my heart to see my hard working, high paid professional friends living like zombies with hopes of stockpiling enough cash away for the next 20 years to finally begin “living their dreams” in retirement.

Why not take take a moment to look at your own life critically? You may find that with a little introspection and a little bit more courage, that some of those “dreams” you have might be able to come to fruition sooner than you thought with some small but critical adjustments.