S3E25 Russ Morgan Top 3 Ways to Create Passive Income

S3E25 – Russ Morgan – Top 3 Ways to Create Passive Income
Russ Morgan – Top 3 Ways to Create Passive Income. My next guest left his career as a financial planner and created a company that helps others achieve financial independence. In this episode we talk about the top ways to create passive income, why debt freedom does not equal financial freedom, why a 401K is holding you back, what infinite banking is, and the #1 biggest obstacle to achieving financial independence. Please welcome Russ Morgan.

Payback Time Podcast

Payback Time is a podcast for investors. The goal of this podcast is to help make investing approachable and easy to understand. We will interview beginner and experienced investors and ask them to share stories on how they got started, what challenges they faced, what mistakes they made, and what strategy works for them today. The overall objective is to provide you with a roadmap that helps you become a better investor.

Key Timecodes

  • (00:44) – Show intro and background history
  • (01:48) – Deeper into his background and career path
  • (03:22) – What is the “investor DNA.”
  • (05:53) – What types of investments does he focus on
  • (08:10) – How to achieve financial independence
  • (09:58) – Understanding his business model in deep
  • (11:15) – One of his home run investments over the last ten years
  • (12:21) – Debt freedom is not financial freedom
  • (15:16) – What is infinite banking
  • (21:02) – Why 401k is the worst vehicle for financial freedom
  • (26:03) – Why a 401k is a money jail
  • (27:41) – Cash is king, but it needs a new throne
  • (30:45) – Is it worth paying off your home or investing the money?
  • (34:46) – What is the biggest obstacle to achieving financial freedom
  • (36:59) – A key takeaway from the guest
  • (38:52) – What is the worst advice he ever received
  • (39:19) – What is the best advice he ever received
  • (40:10) – Guest contacts


[00:00:03.860] – Intro
Hey, this is Sean Tepper, the host of Pay Back Time, an approachable and transparent podcast on business investing in finance. I like to bring our guests to hear authentic stories while giving you actionable takeaways you can use today. Let’s go. My next guest left his career as a financial planner and created a company that helps others achieve financial independence. In this episode, we talk about the top ways to create passive income, why debt freedom does not equal financial freedom, why a 401 is holding you back, what infinite banking is, and the number one biggest obstacle to achieving financial independence. Please welcome Russ Morgan. Russ, welcome to the show.
[00:00:46.240] – Russ
Man, Sean, thank you so much for having me on. It’s a pleasure.
[00:00:49.050] – Sean
Great to have you here. So why don’t you kick us off and tell us about your background?
[00:00:53.990] – Russ
I’ll give you the short version. I was a financial planner, a certified financial planner. I thought I knew everything there was to know. I was probably one of those money babysitters. I know you like to beat up on Wall Street as much as we do. I was one of them. So I feel like I have a little bit of insight as to why that world is broken. But in 2008, when the market crashed, I was sitting there with my palms up to the sky trying to figure out what happened, why it happened, and more importantly, what was going to keep it from happening again. And to be honest, I couldn’t answer that question, nor could any of the so called mentors I had at that time do the same. And it sent me on a journey to try to find out ways to build cash and access to cash and ways to build passive income that had nothing to do with whether or not that market was going to crash. And it led me to building a company with one of my best friends called Wealth Without Wall Street. And now we have a podcast.
[00:01:49.570] – Sean
So, Russ, before we jump into, we got a bunch of fun questions here, T eed, I’m ready to go. I want to just learn a little bit more about your business model. So why don’t you tell us about wealthwithoutwall street. Com?
[00:02:02.510] – Russ
Yeah, wealth without Wall Street. Basically, people typically are finding us who are tired of trading time for money, Sean, as you know. I know that you have been really involved in the fire movement, and we find a lot of people who are looking to break away from their corporate jobs, the places maybe they’ve been trading a lot of time and maybe not really that passionate about it. And so our business model was built around just educating them on what is possible. How can they actually become financially free? So typically they’ll get on a call with one of our financial coaches, they’ll jump into our community, which we built off all the social platforms, and start going through a process that helps them find who they are as an investor, understanding better ways to become financially free and using those tools that exist out there to do it in a fraction of the time. And we help people who are really wanting to become financially free get there faster, and we follow a really succinct process to do that.
[00:03:00.620] – Sean
Got it. So it sounds like the financial coaching is one aspect. I’m actually going to your site now. You also have a podcast. Is there a blog or free resources people can dive into?
[00:03:11.060] – Russ
Yeah. So our community actually can go into the app store and type in Wall Street and download it. It’s a completely free app. Within there, there’s tools that are free. There’s groups that are free and everything else.
[00:03:22.620] – Sean
Awesome. Okay. All right. Financial freedom. We are all about it here on Payback Time. So you get a bunch of fun questions that will help us unpack your perspective and how to achieve it. So first question here is, what is Investor DNA?
[00:03:36.970] – Russ
That’s a good one. John, a lot of times people do start seeking out ways to become financially free, the first question they always want to ask is, where do you invest? Now, my business partner and I built a passive income report that we actually share with the world every single month on our podcast YouTube page, and we show all the places in which we invest and where we’ve created passive income. But I always tell people, don’t look at my stuff. Don’t assume that you have the same experience, same network, all the fundamentals that makes me unique because you have all those same things for yourself. And the Investor DNA was built around us helping people understand who they were personally and then connecting the different investment options that exist out there and how they would see it, both from a pros, cons, and then the key factors that are needed. So I’ll give you an example of that. I personally love to be hands on things. I love to have influence in the things I’m working on and love to be able to give my say so. Now, I don’t want to be the one actually doing any of the things.
[00:04:37.360] – Russ
I just like to be a part of it. So I know that you love investing in businesses. I like investing in businesses. Well, the first investment I ever made outside of Wall Street, Sean, I bought a little two bedroom condo down in a college town where I used to go to school at. And that was the worst investment I ever made. And here’s why. Because I could influence it in no way. I mean, it never e as many people as I try to tell about it, I was one small unit in a town of 20,000 units. I really couldn’t influence the outcome of what was going to happen. And it cost me about 11 years of my journey because I just assumed then that was all passive income investing because at that point in time, really my experience is investing in mutual funds, as we all know, is a scam. And on Wall Street. And my only other outlet was where you buy single family homes or single family properties and you invest in that. And because that wasn’t really working, that didn’t fit who I was, I stopped. And it wasn’t until later on I realized, well, it wasn’t that that was broken because we have clients with hundreds of single family properties that are financially free and have an amazing time doing it.
[00:05:43.650] – Russ
But that was who they were. And it wasn’t to identify who I was as an investor that I could connect the things that I should be invested in to who I was.
[00:05:52.780] – Sean
Right on. All right. So I love a few key takeaways here. Number one is mutual funds, a scam. And we have a lot of people that work in finance that listen to this podcast. And I will say that those who want to invest in a bundled product, you have the choice to go into mutual funds, ETFs or index funds. We always say try to go into index funds or ETFs, similar products, similar returns, but you don’t have the high expense ratio. So I would agree with you that being a scam. Number two is real estate. We’ve got a lot of real estate investors on this podcast. And for you to say not a great investment, because some of these people I’ll ask, where do you invest? And they’re like, well, I want to find a home that’s going to have high occupancy. So college students are always looking for homes in their colleges. So look for those locations. So you totally want the opposite direction. With this, I have to ask, what types of products or what types of investments do you and your team focus on?
[00:06:50.200] – Russ
So again, it’s me specific. So one, I think anytime you can find an instrument that will produce recurring income. We define financial freedom this way, which is completely different than the way I believe Wall Street defines it. And it was a different way in which I used to define it. It has nothing to do with how many zeros you have in a portfolio. It has nothing to do with how many benefits you’re getting from your company. It’s very specific to how much passive income do you have, and is it greater than or less than your monthly expenses? So financial freedom is passive income, money that you don’t actively work for greater than your monthly expenses. For us, when we talk about the different streams of income, there’s so many different ways. We’ve been doing our podcast since 2017, and we’ve seen hundreds and hundreds of different ways in which people are doing real estate. I used to think real estate was just single family properties. Well, now you realize real estate can be broken off into so many different areas. So for us personally, I like buying businesses, starting businesses. So we run a short term rental company, we run a land flipping company, we have an e numbers company, we have, in addition to the other companies that we run actively.
[00:08:05.290] – Russ
And so for me, I’m looking for businesses or investments that I can turn into businesses.
[00:08:10.040] – Sean
Nice. That’s exactly what I was looking at is what type of asset class or what product, in this case, you answered it businesses. Businesses that produce recurring revenue. I have to say this because I’ve interviewed a lot of people on this podcast to understand how are they creating passive income? And believe it or not, a common denominator is actually a service business, but with a pricing structure similar to a SaaS business. So for example, it could be somebody who does online marketing or podcast marketing. Or I remember talking to a guy does outbound sales calls but charges a monthly recurring fee. So it’s like a SaaS. And then he trains, he or she will train up people. So you have that. I was working 45 hours a week. Now I work 25 hours a week but make 4x, stuff like that. It’s been fascinating.
[00:09:01.980] – Russ
Yeah, totally. There’s so many different ways. You use the skill set in which you possess and you figure out a way to turn it into skillet to where it can create cash flow that you don’t necessarily have to keep going and work for. So passive doesn’t mean uninvolved. A lot of times everything that we did, we had to be involved early. But as Robert Kiyosaki talks about with the cash flow quadrant, it’s how do we move from that S quadrant to the B quadrant? How do we move into that I quadrant as an investor? So both of those are really important. And those are things that align with me. Some of the people that are listening and connecting our community just want to be pure investors. We want to be super passive. So they’re looking for operators that are in syndications, for instance, and investing in those types of things. And then there’s others like myself who are looking to find businesses to scale those businesses, put in key people into those businesses, and then let those businesses run and produce income going forward. Now, I want to drill into.
[00:09:58.580] – Sean
That a little further. In your case, do you guys invest like a venture capital or private equity firm, or do you provide a service or exchange in equity? Sometimes you’ll see that with accelerators out there and be like, hey, we’re going to provide you X amount of hours over the next 3 to 6 months and then return, we get this amount of equity in the business. How do you structure that? Yeah, for us, we’ve actually.
[00:10:23.040] – Russ
Just invested our own cash. So we are basically an educational platform. We are in the process of building a fund because we’ve had so many of our community say, man, could we just invest alongside of you? And for a long time, I did not want to do that coming out of the Wall Street model, I did not want to build a fund. And it’s just been constantly asked of us over and over. So this summer, we’re actually having our passive income Mastermind meet down in the British Virgin Islands. And the whole event is about building our fund. And so that is something that we’re going to do. But up to this point, Sean, it’s really just my business partner and I, we built an investment holding company and we invest in all our own deals. And we talk about what we’re investing in. And there’s lots of people are investing in similar things and following us sometimes into those deals. But we.
[00:11:14.340] – Sean
Have not taken any outside capital to do it. Sure. I want to drill in a little bit further. You don’t have to name the business name if you don’t want to, but what has been one home run investment you’ve made over.
[00:11:27.660] – Russ
The last 10 years? Oh, man, I’m glad to name it. We have one sponsor to our podcast, and the only reason that there are sponsors is because I love what they do so much. And it’s been such a benefit to all of our people, including us first. And that is land flipping. We started flipping land back in 2020. And if you don’t know what that means, we buy little small pieces of raw land and turn around and sell them on owner finance terms. So for a car payment, like 200 down and 200 a month for the next 60 months. And so this is stuff that private equity, the large groups out there are not touching, and there’s billions of acres of land. And so we did that. We started in 2020, and we have 5 X what we’ve put in there. We’re producing about 25,000 a month in cash flow reoccurring right now from that business. Brilliant. I love the example.
[00:12:18.570] – Sean
That’s awesome. All right, let’s zoom out and let’s circle back to some of these questions on the list here. This is a fun one. So debt freedom does not equal financial freedom. And I’ll just make another comment here. There’s the Dave Ramsey super fans out there who are all about removing debt, and then they stay in that lane their entire lives. And I think if you struggle with debt and you need help getting out, sure, he’s a good coach. Maybe you’ve got a coaching service that helps with that. But there’s financial coaches everywhere. But I always tell people you don’t want to sit there. You want to graduate beyond that and start looking at how do you increase your income or create passive income? So I’d love to hear your thoughts on that debt freedom versus financial freedom.
[00:13:02.840] – Russ
Well, I tell people if they’re going to listen to Dave Ramsey, do exactly what he does, not what he tells you to do. If you look at Dave Ramsey, he has made all of his money building out a humongous business and has been super successful in that business, has scaled it at a high level. I think on a recent podcast, I heard him saying that the majority of all his wealth is in those three huge buildings he has there in Nashville, Tennessee, or just south of Nashville, Tennessee. So do that. Build businesses and buy real assets. What he tells people to do with their money and opposite is not necessarily getting people closer to financial freedom. So why is debt freedom not financial freedom? Because you can’t pay off the cost of living. Financial freedom is defined by passive income greater than your monthly expenses. And while you can trim fat off your budget, and there’s probably things that we all spend money on that we shouldn’t. And I’m not here to tell you to cut or I definitely don’t want you telling me to cut. But I think what people forget is that they start cutting so much that they start cutting into muscle.
[00:14:12.310] – Russ
They start cutting into the things that are supporting them. And so for us, we think one of the big three mistakes people make is they focus on paying off debts instead of finding ways to build assets that produce passive income. Right on.
[00:14:26.200] – Sean
Let’s take a quick commercial break. If someone tells you to buy a stock, the last thing you should do is buy that stock. The first thing you should do is ask why. Unfortunately, a lot of influencers on YouTube, TikTok, Twitter, Reddit, and really the list goes on are giving really bad stock recommendations and investment advice. The question is, how do you determine if what these people say is good advice or bad advice? That’s where Tykr can help. Tykr can quickly and easily determine if a stock is a good or bad investment, and it helps you manage your investments with confidence. But don’t take our word for it. Check out our Trust Pilot reviews to see what people are really saying. Go ahead and get started with a free trial. Visit Tykr. Com. That’s TYKR. Com. Again, Tykr. Com. All right, back to the show. Here’s another question. I’ve heard other people talk about this concept called infinite banking. And one of your questions here is infinite banking a scam. So first, could you tell us what it is and then tell us why it’s a scam?
[00:15:30.390] – Russ
Yeah. Well, so one, infinite banking is a concept. I think a lot of times people think it’s a product. And for instance, the Dave Rangels of the world will say, oh, because it uses a tool called whole life insurance, it is a scam. The way they’re going to do is scam you out of the money. So it’s one thing it’s not a product, it’s a concept. It’s a process of how to take our cash and get it to work for us to producing other income streams. So it was an idea that was written and identified in a book called Becoming Your Own Banker by Arnel SeNash. I had a chance, Sean, to actually meet this gentleman. He was in his late 70s when I met him in 2009. It was right after the market had crashed. I’m sitting there in Orlando, Florida, and here this guy is talking about how you can take your money and utilize the same concepts that a bank uses, meaning putting money on deposit and then lending it out and you making money in the middle. And that’s really the way that you’re doing it. Instead of using a bank, he was using a mutual whole life insurance company.
[00:16:32.750] – Russ
He was just talking about the simplicity of life of avoiding all of the shakedown that you get every time you need to go borrow money from a bank or anytime you needed to access money. It wasn’t in your 401, it wasn’t in home equity, which is typically the reason why most people are financially free is they just don’t have access to cash. And it seemed too simple to be true. But I spent probably the next 6 to 9 months researching it and had a chance, actually. Little did I know that gentleman lived in my backyard, lived in my hometown. And even though I’d seen him speak all across the US at different events, I didn’t know he was here until I dug in deeper and so I had a chance to be mentored by him. And it’s something that we’ve identified within our world that the way that we became financially free, the way my business partner and I were able to build over 50,000 a month of passive income is because we had access to cash and we had been following that model of storing it into those contracts, those whole life insurance contracts and building out.
[00:17:30.000] – Russ
So it is not a scam. But what is a scam is just the idea that it’s a product, not a financial savior. It’s not going to earn more than your mutual fund. It’s not going to earn more than your real estate. It’s not going to earn more than the investment because it’s not an investment. It’s just a place that your cash could be used and then leveraged against to go buy other assets that produce income.
[00:17:50.700] – Sean
I want to drill into this a little bit further just so I’m clear because I’ve had one or two other people on the podcast talk about this infinite banking through whole life insurance products. An example, and please correct me if I’m wrong on this, but I’ll use raw numbers. Let’s say I take out a policy that’s $100,000. I have to have the $100,000 up front. I open the policy and let’s say the policy is earning me something like 6 % per year returns, I can then put in that $100,000, but then I can actually take it all out and that account will still generate the 6 % returns and I can go use the cash to invest in businesses or buy real estate. Is that what you’re talking about?
[00:18:37.260] – Russ
Essentially, yes. Obviously, what we tell people, one is that you got to identify what are you doing it for and why is it important? So there’s a long term benefit and there’s a short term benefit. So if you put $100,000 in year one, Sean, you’re going to have access to maybe 65 to 80,000 of that hundred. So for most people, especially for me early on, it was like, this is stupid. The first time I heard this concept was at an event in New Orleans in 2005, and somebody told me whole life insurance. And then I looked into it and I saw that example where you put in 100 and you had access to 70,000, for instance. I was like, that’s dumb. The only reason somebody would do that is they’re not smart like me. They don’t have a security license. They’re not a financial planner. They wouldn’t know better. That was my naive understanding of it. But what happened over time is that I really dug deeper, especially in 2009, when I didn’t know what was going on. Everything I thought to be true, it turned out not to be true. So I was really willing to learn.
[00:19:38.240] – Russ
And what I found out is, yeah, for the first couple of years, you put in a dollar, you get access to 60 cents or 70 cents or 80 cents and then 90 cents. But what happened in year five is when I put a dollar in, I had access to a dollar five. In year 10, when I put a dollar in, I had access to maybe a dollar 60. In year 13, where I am now, because my oldest insurance contract, I started January 2010, I put a dollar in, and last year I had access to about two dollars and five cents of that. Well, now that became really interesting because no matter what asset I’m buying, I can buy a lot more with that scenario than I could if I was just putting in my checking account, turning around, taking the money and going to buying X investment. And so that’s where this concept is. Yes, it keeps growing the whole time because you’re not taking it out. You’re literally leveraging. Most investors understand the power of leverage. They understand using someone else’s money in order to grow theirs. Well, that’s all we’re doing is we’re utilizing insurance company’s money and allowing their portfolio to continue to grow at whatever the compounding rate is.
[00:20:43.350] – Russ
I don’t think it’s 6 %, by the way. I think it’s a half that. But it’s not the interest rate. It’s the fact it’s the environment in which it grows tax free and I get access to it no matter what and I can put it back anytime I want to.
[00:20:57.170] – Sean
Right. Yeah. Thanks for that. Deeper dive definition. I appreciate that. Yeah, totally. Here’s another good question. We’re going to take some swings at 401s here. So your comments, it’s more of a comment. 401s are the worst vehicle for financial freedom.
[00:21:15.110] – Russ
You like that one?
[00:21:16.500] – Sean
I do. Although I will say this, and I want to hear your thoughts on this. My wife works for a large financial institution and they have a 401. So one of her strategies is to go into that. But the match is really solid. She’s pretty much just for keeping it in place. She’s getting paid and we’re letting that compound. So that’s one of our investment vehicles. We’re letting it do its thing on autopilot. I’ll stop there. You go ahead.
[00:21:44.760] – Russ
All right. Well, Sue, it goes back to everybody defines financial freedom differently. For us, financial freedom is passive income greater than monthly expenses. We don’t deviate. That’s our North Star. So every single investment that people make, we go through this really early in our process with them, we write it down and we ask the question, Is it producing the passive income for you? So if they’re talking about their 401, is it producing the passive income for you? No. No? We say, Well, is it reducing the monthly expense for you? No. They say, No. And we go, Okay, so there’s only two answers to this question. Is the 401 getting you closer to or further from financial freedom based upon the information you just gave me? Right.
[00:22:30.820] – Sean
The answer to that is a resounding no, it is not generating passive income. And I like that you get the two criteria there. We knew those expectations. We decided let’s pursue it. But keep in mind, we, fortunately, we have multiple streams of income, both in a good spot.
[00:22:49.060] – Russ
I just gave you that specific thing. But here’s where typically people come to us. I’m a business professional in my 40s. I have kids that are growing up faster than I anticipated them ever being the age in which they are. And every single day, I feel like I’m losing. We interviewed a guy on our podcast. He wrote a book called 18 Summers. With each kid, we have 18 summers. And for most of us, I have a 17 year old, 17 of those summers are gone. I have a 10 year old, 10 of those summers are gone. And so we start trying to think about what is the most important thing to us? And a lot of times it goes down to those moments. And sometimes our jobs, not always, for some of us, our jobs are amazing and we have ultimate flexibility. But for those of you who don’t have ultimate flexibility, you say, Man, my job is keeping me from the thing I want. Then now it gets really clear to say, Well, I want to be financially free as fast as possible. And I go, Okay, well, great. Well, when is that? And the person who’s 40 says, I want to be there yesterday, but how about three years?
[00:23:54.190] – Russ
Is there a plan that could get me there to three years? And I go, Okay, great. Well, let’s evaluate what we’re doing with money. And I’m just going to use your wife as an example. No, this is not her, but this is an example. I’m talking to her and she says, I want to be financially free in three years. I don’t have a husband that has built a SaaS company that’s producing passive income to exceed their monthly income. I don’t have all those things. You have things that the average person hasn’t built, right? That they would aspire to build. And so she’s like, how do I get there as fast as possible? I’m like, well, we need to take our cash and start buying assets to produce income. Where’s your cash going right now? And we start going through it. Well, one of those places inevitably is the 401. And I’m going to say she’s getting the best match in the world. They’re giving her 10 % on her money, right? Whatever. Is any dollars she put in that account going to help her become financially free in three years? The answer is it was sounding no, it can’t.
[00:24:48.080] – Russ
It doesn’t matter the match. Every dollar she puts there is one less dollar that she has to put somewhere else that actually could produce a passive income. And so for us, we say it’s the worst financial instrument to helping you become financially free because it is in direct conflict with your goal. If your goals have become financially free and you’re not 59 and a half yet, I don’t have access to the money. If I’m still working at the company, I still don’t have access to the money because I used to be in the financial industry before all the crash in 2009. There used to be such a thing as an in service withdrawal, meaning if you had a half a million dollars in your 401 and you decided at this point I don’t want it in there more, we could do an in service withdrawal, move it into an IRA, and we could do whatever we wanted to with it. Those rules have gone away. They don’t exist anymore. You go to your company with your 401, I don’t care how much money you have in there, and you say, I want access to it.
[00:25:40.880] – Russ
They’re going to go, Are you buying your primary residence? No. Is somebody in your family, did they just die? No. There’s a few options. And outside of that is no way, Jose, do you get access to the money as long as you’re still working here. And so for us, we would say that’s why it’s such a poor tool to become a financial free, regardless of the match. You brought up.
[00:26:03.620] – Sean
A good point there. Let’s say somebody wants to move the 401, what options do they have? If they’re still.
[00:26:10.850] – Russ
Working at the company, typically zero. My business partner, he was a client of mine for four years. He was a mortgage professional in his late 20s, making over $300,000 a year, was doing really good. He got super passionate about what I was teaching him. He was utilizing this infinite banking system and started doing some private loan investing. He had a mortgage background, so he started doing loans to people. And he was like, Man, the only problem is I don’t have access to as much money as I want to. Here I got several six figures in this 401. I’ll just go to them. And so he calls them up, calls his custodian and he’s like, Hey, I just like to get access to about 150,000, 200,000 of that. I got some deals I want to do. And they’re like, Yeah, no, that doesn’t exist. You can take a loan for up to 50 grand, but here’s the payback schedule you have to have. But as long as you’re working here, you can’t touch it. And that’s where most people are. They don’t realize they’ve put money in a place that’s truly jail until they leave the company.
[00:27:09.050] – Sean
Yeah, thank you for that perspective. And I have to be honest, I did not realize that. What this tells me is, and this is a good lesson to the listeners out there is, if you want to achieve financial independence and you’re still working at a company, maybe you like your job, you want to stay there, probably your option is to throttle back. Don’t put as much into it and take your income and start applying it to areas that do produce passive income.
[00:27:35.470] – Russ
Yeah, I like that. Yeah, there.
[00:27:37.580] – Sean
You go. Now we got a solution. We’ll have a conversation about that offline now. All right, let’s keep going here. Here’s another fun comment. Cash is king, but it needs a new throne. What does that mean? Yeah.
[00:27:52.110] – Russ
So we’ve been taught, like, we need access to cash, but we also know that inflation, right? The expansion of the money supply is like termites in our wallet. It’s constantly eroding away the purchasing power of our dollar. And because of that, we don’t keep access to as much cash as we should. But when we do, we put it in checking and savings accounts. And there’s an old saying, I don’t know if you’ve ever heard it. Have you ever heard this saying that you finance everything you buy, Sean? I have, yeah.
[00:28:22.450] – Sean
[00:28:23.070] – Russ
For those who maybe haven’t heard it, I’ll help you understand that purpose because most people would say, Well, wait a second, no, Russ, I’m one of those cash guys. I pay cash for everything. Well, we all could recognize when we borrow money that we pay interest to someone for the privilege of using their money. And their statements, right? Here I am. I’m sitting looking at a home equity line of credit statement, it can tell me exactly the amount of interest that I paid last month for this specific thing. It was $1,344. 81. We get a statement like that. But how many times have you ever gotten a statement for the cash that you spend?
[00:29:01.060] – Sean
Meaning that.
[00:29:03.090] – Russ
Our cash was in an account, and if it wasn’t earning interest, it should have been, it should have been in a better account. But if it was in an account that was earning any level of interest, when we pay cash, we give up the ability to earn interest on that forever. Most people have never done the math to see it. We just got back from an event we were talking in Las Vegas, and we showed an example of this group. They’re in the real estate world and they earn typically 50 % to 70 % returns in their real estate business. Now, these are experienced people. And we showed them an example. If you put $25,000 in year one and earn just 20 % in your business over the next 25, 30 years, they were going to end up with millions of dollars. But we said, Let me just show you what the power and cost is of using cash. And in year four, we took a $20,000 withdrawal out of that account and bought whatever. It doesn’t matter what we bought with it. And then looked at the end of that same time frame, what was the balance of the account?
[00:30:01.150] – Russ
It was over $920,000 difference. So that $120,000 withdrawal out of that business that was producing had now cost them $920,000. And we said now, do you see that cost? Most people have never done the math, but now you see it. How good do you feel about where your cash sits and how you use it? And so that’s where the conversation of where should I put it? It needs a new throne. And that’s where we were talking a second ago around infinite banking. The way that I’ve been storing multiple six figures for the last almost 10 years now, a little over 10 years, is in those whole life insurance contracts because my cash not only grows the whole time, but then I get to use it without interrupting the compounding effect. Right.
[00:30:42.620] – Sean
You’re killing two birds with one stone. To take a step back, I’ve had these conversations with people that let’s say they run into a circumstance where they want to either pay off their home and they could be locked into a mortgage rate. Maybe they did a refi a few years ago at 2.75 %, 2.9 %, 3.0 %, or put it into investments that earn. We’re all about 15 % or more a Tykr. We actually, a lot of our customers aim in between 15 % and 50 %. I’m like, Why would you pay off your home? That’s an opportunity cost situation where you can be deploying that capital. Let’s say it’s 100 grand. You can pay off your home. You could put that into the market and that would look really nice at 15 % over the next five years, over the next 10 years. And then they’re like, Well, still, I want to pay off my home. And then you got to actually put it into an Excel sheet, break it down. What does that number look like? So similar circumstance.
[00:31:39.250] – Russ
One of the things that… There’s a key word that you kept repeating in there. It was called home. There’s a difference, though, between our home and our house. Have you ever thought about that? Our home is the place that we have our memories. A home is the place that we have pictures on the wall. It’s the place that maybe our spouse and I had our first child or our second child. That’s where the last time we saw a parent, it has memories to it. And most people are way attached. Emotion makes us make decisions that aren’t necessarily rational, especially logical when it comes to finance. But house is like financial things. That’s the mortgage, that’s the equity, that’s the appreciation. That’s all this stuff that most people don’t really care about and not emotionally. And so what we need to do is definitely defer those things. And to your point is our whole concept. We get asked this question all the time. Should we now it goes into pay off, fill in the blank, or fill in the blank, and we say, okay, let’s go back to our North Star. Financial freedom equals passive income greater than monthly expenses.
[00:32:51.800] – Russ
So to your point, Sean, if I had $100,000 and I could go ahead and pay off the rest of my mortgage, what would that monthly payment free up? That would make the right side of that equation go down by whatever that dollar figure, if it was $1,000 or $2,000. Okay, great. That’s a known instrument. If I have $100,000, what passive income could it produce? There is if I invested it? Now, some people out there, they don’t know what to do with money. They need to become a better investor. They need to know who they are as an investor. Maybe in that would then help them make those decisions. But to your point, for people who understand what they’re doing with money and can make greater returns than what it’s ultimately costing them, they see that this is actually getting me further away from financial freedom. And again, we just do it as a percentage. Right now, you know how close you are to financial freedom. If you do this, you take the passive income that you have. So if it’s $1,000 and you got 10,000 a month of expenses, you take the number on the left and you divide it into the number on the right.
[00:33:49.580] – Russ
So 1,000 divided into 10,000 is going to tell you I’m 10 % of the way there. Well, every decision you make, do the math, see if it’s getting you closer to or further from that percentage. And that helps you decide what you should do with the money. Yeah, good call.
[00:34:03.670] – Sean
Love it. Let’s take a quick commercial break. Hey, this is Sean. I’d like to say thank you for taking the time to listen to this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for taking the time to listen to this one. I have a quick request. If you have a moment, could you please head over to Apple podcasts and leave a five star review? The reason is the more ratings we get and the higher those ratings are, the more Apple will share us with the world. So thanks in advance for doing that. And then I have a quick comment. If there are any questions you want me to ask the guests, please head over to our Tykr Facebook group. You could drop a question right there. I’ll go ahead and make a note and I’ll do my best to ask that question on the podcast. All right, back to the show. All right, we got one more before we jump into the rapid fire round. What is the biggest obstacle to achieving financial freedom? Man, I.
[00:34:55.410] – Russ
Feel like I’ve answered a lot of these questions ahead of time. I get ahead of myself, but it’s lack of access to cash. It really is. It’s lack of access to cash. People don’t realize they have million dollar opportunities all around them because they just don’t see them. We know that there’s a little thing in our brain called this reticular activating system. And even if you didn’t know that was the word, you know what I mean? There’s something that you recognize became important to you. Like when I was a kid looking at a digital clock and seeing it was 11 11. To this day, when I look at the digital clock and I see it’s 11 11, my brain says, hey, Russ, look, 11 11. For you, it may be, oh, I just bought a new red silverado truck. It may be, oh, I just bought an engagement ring for my fiancée. And you start noticing that thing. Well, why is that true? It’s because now you’ve told yourself that that’s important. And so that particular activating system is constantly filtering out all the stuff that is saying, this isn’t important to you. This isn’t important to you.
[00:35:55.780] – Russ
Well, opportunities are the same way. Is once you tell yourself that investing is important to you. Becoming financially free is important to you. Looking for passive income is important to you. Then you’re going to start filtering information that you never saw before. You’re going to start listening and hearing conversations. Well, if you don’t have access to money, it doesn’t matter. So what we tell people is that the biggest obstacle coming to financial free is lack of access to cash. Where have you been storing your cash? Why I say 401 is a terrible investment. One, because it’s usually the largest place. To your point a second ago, why should we not pay down our house? Because then that’s a big chunk of money that we can’t use to go buy assets to produce passive income. So for us, constantly focusing on how do we keep access to cash? And that’s the only reason we utilize that whole life insurance concept is because it’s a storage place for money. It’s just an alternative to our cash account. And it allows us to then utilize that. And there’s story after story after story for our community members. But for me personally, I wouldn’t have been able to do deals had I not had that access to cash.
[00:36:58.000] – Sean
Sure, right on. All right, one more question here. I lied here. I want to get it and fit one more in before the rapid fire round. What is one key take away you can give our audience today?
[00:37:10.760] – Russ
I would definitely just go back to what we said earlier, just reemphasizing the investor DNA. Know who you are as an investor. The best way to become a better investor, which is what we should do. Robert Kiyosaki, the Rich Dad, Poor Dad author, says there’s no good or bad investments. There’s only good or bad investors. And if you don’t know who you are as an investor, how do you know you’re going to be able to make good investment decision? So learn who you are. Knowing who you are is going to help you better understand the decisions that you’re making. And again, you can’t measure against every single person next to you because they were built differently than you. And so for us, better understanding who you are as an investor will help you make better investment decisions.
[00:37:52.920] – Sean
Great advice. Thank you. All right, let’s dive into the rapid fire round. This is the part of the episode where we get to find out who Russ really is. If you can, try to answer each question in 15 seconds or less. You ready? Okay.
[00:38:08.150] – Russ
All right.
[00:38:08.720] – Sean
What is your favorite podcast?
[00:38:10.530] – Russ
Business School by Sheran Shrivatsa.
[00:38:13.460] – Sean
All right, nice. What is the recent book you read and would recommend? Recent book I read…
[00:38:20.250] – Russ
Oh, man, I have to look this up. I should have done this ahead of time. You would have told me this. I love A udible. The latest book in which I was listening to is Talk Less, Say More. Talk Less, Say More.
[00:38:36.660] – Sean
I think somebody else recommended that as well. I have to check it out. All right, what is your favorite movie? Man, this is an.
[00:38:44.920] – Russ
Old one. Gladiator. Russell Crow, Gladiator.
[00:38:47.860] – Sean
  1. Great film. Great film. All right, business questions. What is the worst advice you ever received? Worst advice.
[00:38:59.260] – Russ
Ever is that I should invest in this bridge loan group that ultimately turned out to be a billion dollar Ponsy scheme.
[00:39:11.360] – Sean
I love stories like that. They are so unfortunate, but people get suckered in. Yeah. All right, flip the equation. What is the best advice you ever received?
[00:39:23.010] – Russ
To seek mentors. Mentors have created more opportunities in my life in all areas than I would have ever had. Nice.
[00:39:33.620] – Sean
Great advice. All right. And the time machine question, if you could go back in time to give your younger self advice, what age would you visit and what would you say? I would have gone.
[00:39:43.890] – Russ
Back to age five. That was the first year I started trying to play baseball. It’s probably the first year I decided I wanted to become a professional baseball player. I wouldn’t have spent those 13 years focusing on trying to become a professional athlete. I would have applied myself in a lot of other ways that could have expedited my process to where I am now so much faster. Sure.
[00:40:08.330] – Sean
That’s funny. All right. And where can the audience reach you? Yeah, you go to.
[00:40:12.960] – Russ
Wealthwithout wall street. Com payback time. And you can connect with us there and also get access to our community. Or if you want to jump on a call and ask questions, you’re more welcome to do that. Right on.
[00:40:25.300] – Sean
And to the listeners out there, we have a link in our show notes just make it easy for you. All right, Ross, thank you so much for your time. Yeah, thank you.
[00:40:32.660] – Russ
So much, Sean, for having me on. All right, we’ll talk to.
[00:40:34.870] – Sean
You later. See you. Hey, I’d like to say thank you for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for spending some time with me. Also, if you have a moment, could you please head over to Apple podcast and leave a review? The more reviews we get, the more Apple will share this podcast with the world. So thanks for doing that. And last thing, if you do hear any stocks mentioned on this podcast, please keep in mind this podcast is for entertainment purposes only. Please do not make a buy or sell decision based solely on what you hear. All right, thanks for your time. Talk to you later. See you.