What Does It Take to Be Rich? (Part 1 of 6)

0:00I myself have problems. But so I think there's three levels to problems before we jump into today's episode. First one,
those dollar amounts weren't that far apart compared to what we see here. And that growth over time, it's kind it is truly the compound effect.
Brett, I'm going to tell you something right now. You'll never be rich. You'll never be wealthy. You can't deposit emotions. It just doesn't work. Going back to our problems, what problem was he solving? The higher your income does not mean you'll have a higher net worth. That's absolutely not true. other ways you could live through that. You could also live through the experience of others. We're back with the Be Wealthy Podcast. I am joined by my one and only co-host, Katelyn Mitchell. Katelyn, we've got a jam-packed day that we are going to tear into in about 30 seconds. So, I we put this together and I wrote out six episodes. Um, and it's really how the wealthy think about money. Katelyn, in this episode, we're actually going to walk you through what does it take to be rich? I mean, the fundamental thing we're solving here is I don't think people know, and we can use rich

1:02and wealthy interchangeable. I do think those are different things. We'll we'll put a pin in that. We'll come back to it. Um, but I think when Katelyn, when you're thinking about money, you first got to figure out what is being wealthy actually even look like and what does it mean? So, we're going to get into some data, uh, some third party stories, and we'll break that down. Our second episode, we're going to show what the wealthy people, Katelyn, what do they actually spend their money on? I think people think it's like some myth where it's ancient legend where the scrolls are lost in the conga uh kingdom, but they're not. They're not actually in the conga at all. We can find them, read them, and learn from what people who have the money want, we want what they're doing with it. The third episode, we're going to break down what do they never spend money on? What do they refuse to spend money on? Because just as important as it is to know what do people do, you can also learn what they don't do. You know, there's there's multiple ways to live your life out there. And one of the ways is to learn from your own experience. That's incredibly valuable. However, your experience is limited to your own experience, right? The things that

2:06you've experienced, the people you've talked to, conversations you've had, books you've read, you're limited just to that. The other ways you can live through that, you can also live through the experience of others both the both as a positive and a negative. So, let's figure out what do they refuse to spend their money on. The next episode we're going to go where do they overspend? Where are they just going crazy at overspending on? Spoiler alert, I'll tell you it's not what you think. Uh on the fifth one, we're going to walk you through how should you think about your spending and building your own philosophy around your spending and we'll release our be wealthy laws of money there. And lastly, Katelyn, in the sixth episode, the sixth part of the series, we're going to break down how do wealthy people raise kids and have a healthy relationship with money. So, I threw a lot at you there, Katelyn. just coming out swinging for the fences in our opening 2 minutes. But before we do that, you're not prepped for this. Katelyn, I got to ask you a handful of questions before we even jump in today. So, Katelyn, I happen the word on the street is that you have an upcoming trip to my home in Bise. I happen to know that cuz I was a part of that conversation. So, you're going to Bise

3:10and you're going to do some epic things and I want you to tell me how many hours have you thought about it? You thought about talking to your husband. You maybe talked to other people about it. Maybe you went to chat GPT, maybe you went to Google. Um, just give me a ballpark on this trip. How many hours have you spent so far? And how many hours do you think you'll spend total?
I think I've probably to date spent 20 hours. And I would say I'll probably spend an additional 20 hours once I'm 30 days out. So, in 4 days, starting this weekend, I'll probably get really deep in it. I love having a trip, especially something like this that you've helped me with um in the future, right? It allows us to work harder, grind harder, do everything that we need to. And so 30 days out is when I typically like to spend an exorbitant amount of time really researching and planning. But I'd say 20 hours to date. You and I talk about it a lot because I'm really excited.
Um but also another 20 hours for sure. So 40 hours. So, we're we're 40 hours to

4:15and I think that's pretty normal. I think anyone that's that's listening or watching this is going, "Oh, yeah. I went to Europe where I did my thing and I spent 40 hours." And when I go around the country speaking and you've seen me do this, I always ask people, "How long did you spend?" And I'm like, "When was the last time you spent 40 hours working on your money? You spent 40 hours figuring out what leads you to your ideal life?" And money is not everything, but it is a byproduct. Typically, it's a entry fee to some of the things that you want. And so, my point, Katelyn, here is I think people overindex on things, right? I'm not saying epic experiences because I believe that's the best investment you'll ever make with your money is in an experience. So, I'm not saying you shouldn't spend the 40 hours. What I'm saying is though, we got to counterbalance that and we've got to spend some time, you know, reading books. And I get a lot of crap for this because I'm going to tell you my belief, Katelyn, and this is very controversial these days, especially in these times where you got keyboard warriors and everybody out there. But reading a book, Katelyn, I mean, when I say book, Audible doesn't count. Podcasts are I

5:18love podcasts. I think they're awesome. They're just they're not books. That's why they didn't call them books. They didn't call them bookcasts. They called them podcasts. And so, Katelyn, this is an actual book. This is a physical copy of a book. It's not a prop. It's not doesn't have hot glue. It's not a model home, you know, where we sell home. This is an actual physical book. I have thousands of them. Uh, and I know it sounds crazy, Katelyn. I actually read them. I use them as reference manuals. Now, if they're crap, I just throw them in the trash. But if they're good. And so, my point is, I think we've all got to get a little better at spending that 40 hours. I You're going to have this amazing trip. You and I are going to engineer it. It's going to be epic. But all of our listeners out there, just really, you know, have a moment of truth with yourself. How when was the last time you spent 40 hours on living your ideal life? Building a plan, a system, what are the skills I'm missing? What are the money I need? What do I really want? The fundamental question. So, as we lead into this episode, I want you to think through that. Are you actually spending the time? And Katelyn, I think the challenge as we film this today, the economyy's in a weird spot. The world has never been weirder in my uh 45

6:20years. And Katelyn, I I came up with this thought around what people talk about. And I was having this disconnect. I was out with some friends of mine, Katelyn, who happen to be some of my most successful friends, like ridiculously success successful people. They do crazy things. And what I was thinking about right before that, I had to go online and do some social media, you know, being a influencer. Had to look at that. And I almost got whiplash from going from the online to with my friends. And I want to tell you what I mean. uh online the opinions and the thoughts and the topics are literally if you were having a pendulum they are on the far end the farthest end you can imagine from the conversations that I have with my successful friends they're like they're not even related like if you were to say that the conversation online compared to the conversation I'm having my friends it would be like we're speaking different language like we're like aliens you know or we're lost in the matrix and so I started thinking about it and and I think if you want to live a big life, this is important. And

7:22so I started breaking like why is that? And so everyone has problems, Katelyn. I don't know if you're exempt from them. Um, but I myself have problems. But so I think there's three levels to problems before we jump into today's episode. First one, Katelyn, there's what I'm going to call low-level problems. And the overwhelming majority of people are solving low-level problems. The problem of solving low-level problems, Katelyn, is you're probably going to lead a low-level life. And that sucks. And no one wants that. And what are those problems all around, Katelyn? They're all around stuff and things. I want to get a car. My car doesn't work. I need this thing. My Wi-Fi is broken. It's just stuff and things. If you just go on Facebook, do it right now while you're listening this and then immediately pop back in obviously because it's going to be a lot more valuable. But if you go there and you see the conversation thread, the low-level stuff, it's all stuff and things. Katelyn, then you go to the next level up. What I'm going to call if you want a medium level life, right? You want to be right in the middle of everybody. You know what those people talk about. Katelyn, what's your guess? What do they talk about?
Probably medium level problems.

8:25
Yeah, but specifically great. Yes, they talk about medium level problem. What's a medium level problem as an example?
Probably things with like
career um kids not like my internet. But
you nailed it. They talk about people. The mid-level problem. All you talk about. Why are they doing that? I don't understand why Sarah cut me off when she was picking up the kids today. Right? Or I don't understand what Bill's thinking, right? They that this is they consume their lives with what everyone else is doing. Like I don't care what Super Bowl halftime show you worked. I don't have time to think about it. I'm too busy. I got real stuff I'm doing. I wouldn't even I who cares? Um and then you've got highlevel problems and these people live the incredible lives. So we're going to go to word of my friends land. They're solving and you know what all those problems are at the highest level, Katelyn? They're the problems associated with actually living your dreams. They're dealing with problems, but they're dealing with stuff like how do I scale this business to the infinite level?

9:27Who's the Now, they might talk about a person, but in the context of their dreams, not bitching what Sarah did. They're going, who's the person I'm missing that could transform my organization? Who's the coach I need in my life that could take me to the next level? And so as you go through in a time where we're filming this where the world largely seems lost to me, I think if you go back and ask yourself, what problems am I actually solving? Am I solving low-level problems around stuff and things? You know, am I solving problems around people that whether they do it or don't has no impact on your life? Or are you solving highle problems that are related to your dreams? And I think about it a lot, Kale, because the things that I spend my time on, I really look at go number one, in this conversation I'm having online or offline, does it improve my life in any way? Right? It's a great I mean, will I use any of this information in the future to improve my life? If the answer to those are no, what are we talking about? And it just gets very confusing. So, I I wanted to start with that today because I think

10:28people need to think about their problem. And as you go through today's episode, I want you when you hear it because you're going to hear about money and we're going to break down. So we're going to take Katelyn, what does it take to be rich at every level? And to do that, we're going to talk about net worth, your income, your passive income, and your whole in your home value. And we're going to break it down, Katelyn, in today's dollars, what does it actually take to be wealthy or rich? Either way you want to say it. Today we'll make those interchangeable. Maybe in the future we'll film a podcast on the difference because I have, excuse me, I have a very uh opinionated view on the difference between rich and wealthy. So, Katelyn, is there anything that you need to tell us or we need to talk about before we jump into what does it actually take to be rich in America today? I think that where you started this with the three different types or the three levels of problems is the perfect mental paradigm shift that a lot of us need going into this conversation because we do typically spend a lot of our times on

11:30the low-level problems. We may spend a lot of our time and that may be something that we solve on our own. Then we may spend a lot of time in groups talking about mid-level problems, other people, things that are happening that aren't really going to enhance our lives. And it's the shift of um how to go from being the average, which is what you're going to show us, to being truly rich or truly wealthy in each of these age brackets by changing the what you're actually spending your time solving. And I think a big portion of that is absolutely in your mental paradigm of how you're thinking about it, the people that you're surrounding yourselves with, and the conversations and research that you're having. So, I think this was the perfect um transition point or or um paradigm to help us in order to be able to absorb this in an actionable way. You're going to share a ton of data with us, but ultimately with this data, what changes are we actually going to make in our lives? So, I'm super excited to jump

12:31in. I think this six-part series is going to be incredible. Um, I understand why you built it and how you built it. Uh, and I think that our, uh, viewers and listeners are going to absolutely love it. So, let's jump in. I agree with the episode on what it actually takes rich takes to be rich at every age.
All right. So, we're going to break down four main categories. Your net worth, your income, your passive income, and your home value. But then we're going to use four categories. We're going to do the the median. So the average person, not average and median, but I'm going to use those words interchangeably for the sake of the median. So in the 50th percentile, we're going to use the top 10%, the top 1%, and the top 0.01%. All right. So net worth, uh net worth is your total assets minus your liabilities. This should all be done on a balance sheet. It should be tracked every single month. And if you go to the show notes below, we will have a balance sheet that you could download and start tracking your net worth. My mentor to me early on asked me, "Brett, do you track your net worth?" I said,"Absolutely." He said, "Do you do it every single month

13:34at the exact same time?" This is like 15 years ago, maybe 20. I said, "No." He goes, "Oh, let me get this straight. You do it on the months when it up when you're having positive things. You're doing all that." And I was like, "Yeah, obviously." And he goes, "Brad, I'm going to tell you something right now. You'll never be rich. You'll never be wealthy." And this was like not a private one-on-one conversation with your mentor. This was like kind of in a group. Um, and it was a little shocking, a little embarrassing, and it was brutally honest and it was true, right? If we're not measuring where we're at today, where we want to be at some distant point in the future, uh, there's no way to there's no check-in points, right? People don't miss their goals, Katelyn, and I've said this a lot on this podcast, they don't miss their goals because they got off track. Every successful person has been off track. People miss their goals because they got off track for so long. They had no check-in point. and over the course of 10, 20, 30 years, they went so far off to the destination. And sadly, if you do 30 years, you may be able to not get back on track of what you originally wanted. You could still set big goals and and pursue it in the future, but

14:36you're not going to get those 30 years back. So, Katelyn, imagine if we're running a marathon and it's 26 miles and we're running that and we get about, let's just call it halfway. We're 13 miles in and but we have no mile markers, so we've just been running. Do you think there's a chance, Katelyn, that you thought that you've ran further than you have?
Uh, well, I've ran a marathon and that's 100% a chance.
I'm always going to think most likely in something hard or difficult, I'm further along than I am. And so on the marathon, you're like, man, I'm on, you might think you just hit mile 13. In your mind, you're on 19 or 20. Same thing happens with your money. People think that they're a lot further ahead than they are because they choose not to measure it. And then they'll use an emotional feeling for the month like gosh, I'm really really doing well. Sadly, you can't go to Wells Fargo and deposit emotions. I've tried tried to do it a ton of times and you can't deposit emotions. It just doesn't work. So, we've got to have data. So, you need to download this balance sheet and you need to put in your assets up top. Every single item on a different line, if you got 15 bank accounts, you're going to

15:39have 15 lines. And every month, you're going to put in all the data. I know there's a bunch of online tools. Let me tell you something. If you want to be rich, you need to start doing this yourself. And it's going to be hard. Figure out some basic formulas, get into Excel and actually learn it. You can't outsource it to chat GPT because Chad can know everything about your net worth, but if you don't know anything about it, it's not going to be very very helpful to you. And so I want to start with net worth. And Katelyn, all of this comes from the Federal Reserve Survey of Consumer Finance. All right. So Katelyn, if you're 30 years old, if you're listening or watching this, and you're 30 years old, the median net worth at age 30, which means you're in the 50th percentile, means 50% of the population has a higher net worth than you, 50% has a lower net worth. Katelyn, what do you think that number is? Where would you guess? Now, I know you're you might be looking at my show notes, which is tricky for you. So, don't look at the future ones because I'm going to like we're just going to pull
Yeah. I would guess at the age of 30, I would guess that that net worth maybe 50,000.

16:46
Okay. Uh now, this is including just to be clear, we're including retirements and home equity, which I would exclude the way I do it.
But well, so the I'll give you the answer. the the median again 50% above 50% below $90,000. So you're 30 years old. If you are listening or watching this and you're 30 years old and you have a $90,000 net worth, kabam, you're in the dead middle. You're you are absolutely average. You're the average place that you're supposed to be. I get it. Quote, it's not the average, it's the median, which means we drop one off on on each side till we get to the middle. Math nerds, I do know what a median is. Um but I like to say it that way. All right, Katelyn, if we want to be in the top 10%. Top 10% $540,000 net worth. So you've got a net worth higher than 90% of the population. So if you're around a half a million and you're 30, got to tell you, you're you're a top 10enter, right? Things. So you start thinking about what are the

17:47activities that I'm doing that are causing me to outperform my peer group by 90%. Right? there's something you're doing different, unique. Maybe the way you're raised, maybe your saving pattern.
If you think about it, that's an impressive number because let's say you go to school, you go to college, right? And you you now may have some student loan debt, but you've also had eight years to earn. You got out, you know, you graduate high school, call it 18, graduate college, call it 22. Now you have had 8 years of earning and you've made a lot of right choices to be to have a net worth of 540,000 8 years into your earning potential post any school expenses. That's a pretty impressive group if you ask me. I would bet some of that did, to your point, come from home equity,
home equity growth,
but that's an impressive in that top 10 percent. That's awesome.
If you look at the LA, especially if you look at the last eight years, right?

18:48What happened, right? That's a, you know, to your point, home equity and retirement would have driven a lot of that. So, by the way, that's not luck. There is no luck in this game. I mean, there's there's luck in the casinos. There's luck in other areas. There's not luck in getting there unless you, you know, literally won a small lottery. You know, you won the you didn't hit the power ball, Katelyn. You hit all the other numbers. So, all right. Now, we're going to go what does it take to be in the 1% at age 30? Age 30 1% is 2.6 million. So, if you want to be, you know, 99% of the people you're ahead of them, 2.6 million. Now, here's what's interesting, Katelyn. That didn't double from the top 10%. It didn't triple. That's a 5x jump between being in the top 10% and the top 1%. And I think you would see that, Katelyn. And I think that would relate to more things than money. The people that are in the top 1% or the top 10%, everyone's like, "Oh, it's only Katelyn. Obviously, it's only 9%."

19:51Yeah, but it didn't just get a little better. It got five times better.
This is crazy. Look back at this. So the median net worth age at 30 was 90,000. Then to go from median to the top 10% it was a 6x increase to go from 90 to 540. Right? Is that right? 9 * 6 is 54.
I was a kumone kid, Brett. I was a kumone kid. I'm good at basic arithmetic.
I can do single single digit addition, subtraction, multiplication. It's kind of my thing. Then again, you have another 5x to go up that additional 9%. Which is pretty impressive.
Well, now we're going to go to the top level. 01%. And Katelyn, the numbers get weird here, right? All that mean one in 10,000 people. You are now 1 in 10,000 people. Now, the data is not perfect here because we've got such a small group. I mean, you're 30 years old and you're one in 10,000. Um, they give a range here. Now, we're moving out of

20:54hard numbers, Katelyn. We got to move to ranges. But I'm just going to use the lower end of the scale. You got $25 million. So, basically, you you went from 1% to 0.01 and it's another 10x. And so, at this level, right, if you're 30 years old, something you did to create 25 million, budgeting really doesn't matter. You're playing on a whole different level. This is ownership. You you're going to own, provided you do it right, you are on a trend line that will be ridiculous. uh that would actually at that age would exceed Warren Buffett's uh net worth at that age. I happen to know uh we study and we teach that. So here's what's interesting, Katelyn. There's a Jeff Bezos, there's a story about him and for years in Amazon, Katelyn, for years and years and years, he paid himself $80,000. He paid himself 80 grand a year, but on paper he was making tens, hundreds of millions, even billions of dollars. My favorite story about Bezos, he was driving, Katelyn, I wonder if you make sure you know this. He was driving a

21:571997 Honda Accord while he was worth over 25 billion. So, Katelyn, I think it's important to look at what Jeff Bezos did. He's making $80,000 a year. And yet, at that point, when he was paying the $80,000, he was making in his in his company, right? 80,000 his salary, but his stock was worth tens, hundreds, even mil billions of dollars at that point in time. He was driving a 1997 Honda Accord while he was worth 25 billion. You can go on the internet right now, go to YouTube, type in Jeff Bezos 1997, and they're actually interviewed him. How do you drive this car? What are you doing when you're worth $25 billion? I mean, this guy's in the 0.00001% for his age, his peer group. and he literally looks to the interviewer and says, "This is uh this is a great car. I don't understand. This is just a great car." Going back to our problems, what problem was he solving? He wasn't on stuff and things. It's not talking about people. He was doing the problems attached to

23:01his dream. So, if you're listening or watching to this and your net worth is, let's say, $100,000 and you have a $70,000 car, I'm not here to judge you, but Jeff Bezos would say you're crazy and insane and he would look at you like you're completely nuts and overspending. Actually, Katelyn, if we study the ridiculously wealthy, I think like Warren Buffett had a net worth of $2.6 million and bought a home for $100,000. So, the point I'm making here is the wealthy are doing something radically different. radically different.
You shared with me and and I think I've even heard him tell the story as well. Gary Keller has a really similar story as far as reinvesting back into KW, working to grow that business and continuing to drive uh what what car was he driving? It was a
he was driving I I believe I I want to say the color that I made up my mind. I know it was a Ford Taurus. Um, I believe it was like a maroon Ford Taurus when the executives were like, "Hey dude, hard to sell the dream when you're rocking the Ford Taurus." And his mind

24:04was like, "I'm ridiculously wealthy. What a why does my car matter?" I think it was Mo Anderson was trying it reminded Mary trying to sell regions and they were like Gary it is not inspiring when you show up as the CEO and founder of Keller Williams where everything is possible and you can grow incredible wealth and invest in the company and you show up in your 15year-old car not helpful to sell the dream. Um, however, what he was doing is the same thing as Bezos, right? He was looking to build a business, build his equity percentage or excuse me, his equity uh rates of return, but his net worth on paper was one thing. He was taking very little in income and reinvesting it back into either the business, but also his additional investments and assets on the outside. and Gary Keller today could probably buy the majority of he could probably buy the Ford uh manufacturing plant at this point um several times over because he made those choices then I think that's the big piece it was two

25:07choices one solving the right problems and building something larger than your income today and then number two looking at the expense load of what you're allocating toward your life such that you have the excess capital or the excess income to go make those investments and actually solve those right problems. I think it's that balance. If you spend all of your money on the Ferrari, you don't have the money to go solve the bigger problems. I think it's that balance of solving the right problems and reserving the funds to be able to solve them as well.
I al it's all of those things. It's a brilliant takeaway. The the other thing I think that they realized that their happiness in the future wasn't going to come from stuff and things from low-level things. It just wasn't going to happen that way. So like when he's driving that car, his mind is like, I don't even really think about what I'm driving because I'm focused so much on my dreams that it doesn't matter. I heard a recent uh analogy, Katelyn. So when you go to the restaurant, and

26:08there's no judgment to you in this comment, but I'm going to put you on the spot. If you go there and let's say you go to a Mexican food restaurant, Katelyn, and you order the chicken fajitas, and they bring you a steak burrito, what are you going to do?
Um, well, I really love a steak burrito, Brett, so I'd probably just eat that, too. I'll be honest.
Would you say anything? Would you say
someone else might say like
No, this isn't someone else. What would you do? You just say, would you just eat it or would you say something?
I would probably just eat it because I really like steak burritos, too. I like both. They're delicious.
Well, you pass the test. So, I was watching this video and the guy's like three really successful piece people people. And the guy's like, "What do you do when you get it?" They ask, you know, I ask me, I go, I just whatever they put in front of me, right? I ordered the chicken feet. Perfect. Steak burrito. Nailed it. Great job. And I don't say anything. I go, you know, I do not like mayonnaise. I think it's the devil's past. It's not my thing. And it's a joke, by the way, online. Don't go crazy. I'm just joking. I just don't happen to like mayo. And today you are with me and they bring me a mayo encrusted just nightmare of a thing. I

27:10just eat it. Whatever. Uh it's not worth I've got so many things I'm focusing on that what I'm eating in that moment is not going to interrupt my life and I'm going to go to the person and then they're going to mess it up again. I'm going to it's going to cause this whole friction situation. Not saying you should get ran over. I'm just saying when you're focused on your dreams and everything sometimes the little trivial stuff and things doesn't really matter.
I real quick on that just one one thing to recap on. I think there's every single day you have the bandwidth and capacity to solve a specific amount of problems. You can choose if you want to solve the fajita burrito debacle or you can choose to solve something else. I believe that there is a finite amount that a human being can solve in a day. Some of us more, some of us less. You can solve more problems than I can in a day. I like to think it's because you're significantly older than me. However, we have a certain amount that we can solve. Our time and energy and brain power is a

28:13resource that can be depleted. You get to make the choice of where you apply those and that's how you started this discussion as well. So, I'm I'm a firm I'm a firm believer in that. So, I eat the burrito and choose to solve something else. I I actually think, Katelyn, when it comes to the energy required to solve a problem, I don't think there's any energy difference between solving do I eat the burrito and I'm going to go deal with that or how do I make an extra $100,000 in my business or an extra million dollars a year in my business. I believe the energy that it takes from you as a human is the same. And what keeps people average in the med medium and lowlevel problems is all their energy is solving that. And so I I spend none of my I spend none of my time solving the low-level stuff. And yeah, does it cause some problems sometime additional problems? Sure. But those are things that I can go I can write a check for. I can get someone else to do it. Whatever that looks like, because if you spend your days, regardless of where you're at, where you start your journey

29:14and you're listening to this or watching it, it's you need to solve bigger problems what you're currently doing. And what happens over our lives, Katelyn, this is like a center. If I drew like circles, imagine there's three. your goal. Everyone starts by the way in the beginning of my career, what problems do you think I was solving? Or at the beginning of my, you know, when I was getting my life together, I was solving low-level problems on stuff and things. And then you your goal is to stretch your capacity. You're growing it. And for those that are listening, I'm growing my circle and expanding it. And so that you could solve bigger and bigger level problems. Now, you're just making sure that the things that you're solving relate to your dreams. And it's all the same energy. It's just where are you aiming at? So, one thing that you helped me with here and when you shared it with me, we were talking about business noise, but since then we've actually discussed it several times and it applies to every area of our lives. About two a month ago, was it just a month ago? We went on a walk and um I really needed some help on how to

30:17properly determine where to spend my time and energy as a resource for our companies. There were an unbelievable amount of low-level problems coming at me. Call it stuff and things. There were an incredible amount of people problems coming at me. call those team members, client concerns, people I care about who need more from me than I have the capacity to give them. And I call it a 10-hour workday. And then I had some really big gnarly, hairy, need to solve it, major problems that could either grow the company or uh reduce friction in the existing organization. And when I say friction, Brett, I mean stress to the organization due to inefficiencies or friction due to lack of clarity. So I had these three types of problems similar to how you started this. And my question for you was, how do I determine where we should spend my time as an resource of the company? take me

31:20emotionally out of who's pulling at me and what does this look like and do I like Johnny or is Susie more important as a resource to the company and you as the CEO, how do you want me to think through on a daily basis and build a mental model for how to allocate my time and resources because I can't do it all and even if we hired 46 people, it's still going to exist. So Brett, if we can spend the next hour on this walk to build out a model so I don't have to come to you every five seconds and say, "What are my priorities?" How do we do that? And you gave me something that was wildly liberating, not just in business, but in my financial world of the problems I'm solving along with my personal world. And here's, you know, obviously you remember, but for for those listening, here's what it was. Brett shared with me that the problems you're solving or or where what you're looking at first every single day when you when you look at the time block for it is what problem can I solve right now that will have a compounding effect in the future. The term Brett used was how

32:25can I get was it little gifts? What was it that it's going to give me a gift in the future?
I I give gifts to future Brett.
Oh, you give gifts to future Brett. So, what can I spend my time doing today that's a gift for future Brett? So, one of them could be, if you're listening on this, Paul, if you when you first set up your personal balance sheet, man, that's a pain in the butt. It's a pain in the ass. It's going to take you probably two to four hours to get it set up the first time, but that's a gift you can give to yourself in the future because now on the first of every month, it's going to take you less than an hour to fill out your balance sheet and set your whole allocations for the month. It's awesome, right? So, spending four hours doing something compounding like that is going to be a lot more valuable than something that wouldn't be. So now in business, when I look at how do I choose to spend my time to solve the problems that'll compound or give me a gift in the future, it makes total sense to me. I'm spending those time blocks building a system, building a a model to train

33:28someone, building a a automated onboarding system that many members can go through. It's going to be something that's going to compound and grow and stay with the company versus before I didn't have that determining factor. Before it was whoever's the loudest in my inbox got my attention and a lot of times that was the lowlevel that was the stuff and things that was the people issues it wasn't the things that would compound over time so when you think about Bezos he wasn't spending time figuring out what was the coolest new car that he should drive he was solving the larger problems that compounded and I would say Jeff has given himself a lot of gifts in the future right same thing goes in your financial world. When I look at my personal balance sheet now at the first of the month, the problem I'm asking myself really isn't, you know, how can I cut my one-time spending this month? Maybe I'm looking at how could I go ahead and hire a company like Energy Ogre to go out and hunt all the

34:32different utility companies and get me the lowest possible rate that's going to save me every single month? or how can I find the one thing that I could implement, study, train to make an additional $100,000 this year that then I can invest and move forward. So, when you're thinking about your your challenges as you're listening to this and and maybe you're in your you're 30 years old and you're saying, "Hey, I'm at the $90,000 net worth. How am I going to get to that one top 1% or 0001%." And you're saying, "Brett, I get it. I need to solve bigger problems." use the tool that that really changed things for me. What problem can I solve right now? That may not be the loudest problem. It may not be the problem that puts me in pain today, but it's the problem that's going to compound over time and pay me gifts in the future. It was the biggest game changer for me. So, I want to make sure we share that with our our people today. Well, it was so I just it was so good what you just shared and thank you for

35:35uh the kind words. But it's how I think about life, right? How can I how can I give myself a gift in the future on the work I'm doing today? And so right now what I need to do, Kane, all of our listeners, stop what you're doing. If you're at the gym, you're on a walk, maybe you're on a walk about like I was with Katelyn, do us a favor, click follow so you never miss an episode of this because we're going to go through a six- part series. I don't want you to miss it. Your life's busy, things are going on right now. Take out your phone, click follow, and do us a favor. If this is adding value to you, leave us a review. This is our give back to the world, and we would appreciate your reviews are the fuel that keeps the fire burning. So, Katelyn, we're going to we've got to get better at making decisions and everything you outlined in that compounding effect, right? Are you're solving the problems related to your dream. Those are the ones that compound. It's not stuff and things, right? Stuff and things, you fix it one time, you're done. So, let's go on. median net worth age 40 goes up a little bit 130,000 bucks so 50% of the people higher 50% of the people below if you're

36:3640 years old I'm 45 as we're filming this uh the average person the median 130,000 now when we go to the top 10% 1.1 million almost 1.2 2. So we'll call it was 1.18 to be exact. So 90 you're in the 90th percentile. You're you're ahead of 90% of the population. You have a $1.2 million net worth. So about uh so roughly a 10x. Now we go from the top 10% to the top 1%. Now you're ahead of 99% of the people, Katelyn. 7.8 million. Little over 7x now. And then to be in the top 01% 100 million or more hundred million dollars a little over another 10x it almost flows. It's pretty close. 10x 7x 10x or more. And so at that level so if you're 40 and you're right in the middle $130,000 if you're in the top 10% 1.8 million. Now let's go Katelyn to age 50.

37:42We all know how money works. It it compounds. And so typically, if you've done everything right and you've built the skills in your 20s, you've harvested that in the 30s, you've you've utilized in your 40s, and now you're in your 50s and you're in that sweet spot of your earning years, right? It's where they say most incomes peak in the mid-50s. That's been a historical number. So look at this median net worth, right? We're right in the middle, Katelyn, age 50, $270,000. So we went from 90 at age 30, 130,000 at age 40 to 270,000 at age 50. So we we made some growth. Now I would argue though it it I would argue it a it that growth though, Katelyn, what I would say is if you got I think it's way harder to have 90,000 at age 30 than it is to have 270,000 at age 50. You know what this this sounds like to me? When I look at it and I look at those growths, it sounds to me like it's all W2, meaning it's income growth with a

38:48percentage of savings in a retirement account over time. Um, you know, and you interchange the word median with average, although math nerds, we get it. Those are two different things. We get it. But if you interchange it for a second, the average person in the United States is making a W2 income. They're putting away X% into a retirement account that ideally is matched by their employer. And this truly is their trajectory. What is crazy to me is retiring on a $270,000 net worth is challenging. if not impossible. And so at age 50, you know, if if you're at age 33 right now and you're you're at age 40 and you're playing the game all in W2 with that traditional retirement plan and you're falling into these categories, you can

39:51make some changes to solve some bigger problems. And that's where you're seeing these huge divides between the median net worth that's playing the W2 game and now your top 1% at 13 million in net worth. Like that's that's a different game. They're they're they're not just a W2 employee. That might be a portion of their income, but they're not a traditional W2 employee.
And I think Katelyn, that's how most people are going to look at this data. what I would say, but just because you're a W2 does not mean that you can't be in the top 10% or top 1% or top uh now you might not be in the top 01 because that might have required some ownership and something to go faster, but you could for sure get in the top 10 or top 1%. But Katelyn, you're going to have to stop acting like a W2 like that. Like we've got people we got people in my organization that have been with me a long time that are W2. Um that exceed these numbers dramatically in the terms of the top um the top 10% for sure. Um some are close

40:57to you know you know
that's why you use that word though. That was really key and I'm glad you pointed it out. in the median net worth where they are primarily W2 is their income and they're utilizing the standard retirement plan that's put in front of them. The people who are in the top 10 or 1% may be W2, but they're not using just their W2. W2 income is awesome. Get income in every possible way that you can. If you're a W2 employee, that's fantastic. increase your skills, grow your W2 income so you can take that money and go become an investor and create the future for yourself by solving other problems. If you're a high W2 income earner, that's fantastic, but you need to be playing another game alongside it.
That that it's a huge point. I would tell you if I looked at my net worth today, everyone's got a day job, right? So, you're a W2 person, got a day job. I currently have a day job. I'm a CEO. I get paid just like anyone else would,

41:59right? I get distributions for for pay to be the CEO. That's usually, you know, that's twice a month or whatever. And then I get some distribution of profits because I own the company. But that alone isn't what got me where I'm at. I had a separate thing. That's my money was a business. And so the money I earned that I didn't spend and torch on stuff and things went to other things that allowed me to grow this massive net worth over time by buying assets that produce more income that I can invest back and buy more assets. So that's what the difference between most people are almost no one unless your income is insane like Elon Musk is going to make all of their wealth off their day job. It's going to be what you did with your money. So if we go back to the 50-year-old right the average median person $270,000 top 10% Katelyn 2.5 million. We get to 2.5 million. So about again about a 10x to be in the top 1% if you're 50 years old, you need a net worth of $13 million. And we didn't go to the top 01% because just insert hundreds of millions. But here's what I

43:02the point I want to make on the 50-year-olds, Katelyn. Between ages 30 and 50, the median person gains about 180 grand over 20 years. Let's think about that for a minute, Katelyn. I mean, that's not a lot because even if they like, first of all, they're getting the lift from the growth. So, if you 20 years, it's literally a little less than $20,000 a year, but it's way worse than that because there's compounding nature in this. So, they're really that person that's doing that is putting like $3 to $5,000 a year away. Um, I don't care how much money you make. Every person can save $300 a month. If you can't do that, get a side hustle. There's 50,000 of them. And so, the gap, here's the thing, right? That's the challenge here. Why the top 1% Katelyn, the gain is over $10 million. So the average person is going $180,000 north. The top 1% are going $10 million north, right? It's not that the wealthy 1% play by some super, you know, slick set of rules that again were

44:05encrypted and only a few can figure it out. They're just not buying stuff and things and crap and getting their money to work for them. Right? That's the difference. Everyone watching or listening this can be ridiculously wealthy provided you understand the economics that drive it.
It's really crazy. At 30 the separation it seemed like a lot because we were like, "Oh, it's five, you know, it's six times between the median and the top 10% then another five times." But those dollar amounts weren't that far apart compared to what we see here. And that growth over time it's kind it is truly the compound effect where over time that J curve for the top 10% the top 1% and then obviously the 0001% it grows astronomically. So those habits and behaviors change drastically within at the at the 50-year age mark 100%. And so you think about right so now let's look at how really wealthy

45:06people did it. You know, we told the story about Bezos. So, Oprah, Oprah, right, did not become a billionaire, Katelyn, because of her day job. She had a very successful show, but how did she become a billion? There's there's a bunch of people that have had successful shows on TV. Ironically, Katelyn, almost none of them are billionaires.
Why is she a billion?
Here's her direct competitor, Ricky Lake.
Ricky Lake is not on any Forbes top net worth list. I mean,
all the h the biggest shows ever.
Pick your person. Ellen De, you name the greatest talk shows of all time, probably the vast majority of them have a sub$10 million net worth, uh, if not less. And one of them is a billionaire. Did she do it from her day job? No. She invested and she actually owned her own production company. So, she took her money, put it into the investment company. So, she owned the content distribution. So when she was done with her show, the income didn't disappear.

46:08It kept going and going. And so that's the difference between someone who who has a massive net worth. By the way, is everyone listening that's going to become a talk show host and own their own production company? Probably not. However, can you own the house next door to you? Can you own the business adjacent to yours? Can you own the distribution of something? Can you own more real estate? Can you own part of a company? Yes, you could do all of those things. And owning stuff, stuff being assets, not the low-level problems. Owning assets that have passive income attached to it is how you get free. Um, all right, Katelyn, we wrapped up net worth. I'm going to go I'm going to go back. We're going to go to the second thing, second part, income. Now, let's look at the income. Okay, this is the metric people flex, right? All the bro dogs on social media making billions and trillions. They got to invent a new number because a trillion isn't enough anymore. Um and it but for overwhelmingly right people when they stop working their income stops. So if you're 30 years old and you're in the

47:11median 50% of the people have more than you 50% of people less. Katelyn you're making 90 grand a year. 90 grand. Top 10% you're making if you're 30 years old you're making 150 to 180,000 bucks. Right? I gota be honest today. right now. I think that's first of all, you you could get ridiculously wealthy on that, but not if your bills if you make 180 and your bills are 220, which is overwhelmingly what we see. Well, you're going nowhere, right? Um top 1%. If you're 30 years old, you're making 320, you are in the top 1%. Now, what I would ask you to do if you're watching this, go up to the last thing we talked about. Does your net worth match the income level? If you're a top 1% in your income, are you top 1% in your net worth? If not, I'll let you figure out what's not working now at 320, right? It's going to feel like a lot. If you put it away, you could be ridicously wealthy. Right? So now, Katelyn, top 01%. You're one in 10,000. You're 30

48:16years old. This is a big number. They're making 8 to 12 million a year. Crazy. I I at 30 I was like, man, that's that's I just think there's so few people doing it that there's a there's a few people that are radically skewing that data. Um, but that was mindbending. But so K, let's think of like let's let's talk let's speak to the person who's in the top 1% 30 years old making 320. Uh, they're kind of I'm going to relate them to a sports figure, right? And when you study NFL players, they make the average NFL player, Katelyn, makes $200 to $3 million a year. Okay? 70% of them after the a few years after retirement, dead broke. Made two to three million a year for whatever period of time, boom, 70%. They're not broke. They face massive financial distress is the way they word it. But again, if you made $3 million a year for whatever 6 years, you shouldn't have massive financial distress within 3 years of retirement. So why massive income, short career, no

49:22ownership, you were on the treadmill of income and it stopped? Like Michael Jordan did not become a billionaire from his basketball ability. It was his deal with Nike, right? Think about like though if you study George Clooney, right? I'm not picking people. This isn't a political statement. George Clooney, the money he made off Kasamigos as opposed to all of the earnings for the history of Earth of his movies and the Broadway and all that stuff, nothing in comparison, right? That all the money was made in the liquor, right? So, you go to John Paul Deorio, Paul Mitchell, right? He did this massive thing. What made him a billionaire? Not his day job of being the greatest, you know, hair product, style, all that stuff. No, that wasn't it, right? Patone, tequila, right? So, ownership something different. All right. So, Katelyn, let's go to you're age 40. So, we're going 10 years ahead. To be in the median, you went from at age 30 was 90. Now, you go to 106,000 bucks. So,

50:26$16,000 increase. If you're 40 years old, the top 10% you make 220. The top 1% 480,000. and top 01% they kind of the the ang the gap was the same about 8 to 12 million bucks right if you're and I think it's because there's so such little data that it gets skewed dramatically at the higher numbers but let's speak to um you know the top 1% again they're growing it over time they locked into a great career they have a day job it's it's they're doing the right things with their skills to grow that over time I mean that all makes sense all right let's go to 50 these are your peak years okay that we told we talked about for in the 50s incomes peak in net worth should be rising pretty dramatically. Now net worths are that thing that just it's over the course done right. Your net worth should be the absolute highest when you're old at your very end of your life if you do it right because you've kicked off so much income and so much net worth you can't actually spend it. Your net worth has grown so

51:27much that you spending $2 million a year or $3 million a year is irrelevant, right? Because you're earning 10 in passive income. So age 50, the average person, this is where it gets tough. Average person is making 50 grand. Over 20 years, they went from 90,000 to $117,000. I'm sorry I said 50 grand. The average person median income age 50 $117,000. Top 10% goes to 2 $255,000. Top 1% 550,000. 01. It's north of 10 million. And so you look at I think what spoke to me here, Katelyn, I thought was interesting is if you're at the median, your income grows the slowest. It grew very little over that period of time. The the 1% grew quicker, but still was nothing like we saw in net worth. Incomes went up, but pretty consistent. Like you could draw lines between 30, 40, 50. yet net worse

52:32it was massively different. Why do you think that is Katelyn? Well, I think it's what you've been trying to tell us for the past 45 minutes, and it's that your day job can produce the income, and you can continue to grow your income over time, but you won't be able to exponentially in the same way grow your income. Like if we had a a line graph, your income growth, no matter how excellent you are at it, will not grow with the same exponential or compounding effect that your net worth will. And so when you invest your money today, what it pays you in the future is significantly more as it compounds. Whereas I have to get back on that income treadmill every year to recreate that income. That's number one. But number two, I can only grow that so much. There's a cap on income is what it seems like. Now, I'm sure obviously

53:34Elon's going to make his what is it? A trillion dollar bonus package um in the future, and that income does not seem capped, but for normal day jobs like yours and mine, the income somewhat capped as a CEO of a company or as a revenue growth, like you're capped. There's so much that you can do. And yes, you could double the business, but your income is only going to grow so much. Where you have that huge zoom or that big J curve is truly in the net worth gap. So when you look at the net worth numbers we talked about at the beginning of this, they grew wildly quickly and the gaps between the one at the age 30 versus age 60 were so incredibly different. But overlay now the income isn't that different. So your W2 or your day job income, it's not determined there. You do need to grow your income so you have extra money to go and invest, but you will not

54:37make the difference in your income. You cannot run fast enough on that treadmill to make it count.
So Katelyn, I I just looked up I pulled up a stat here. I'm going to and you obviously could not possibly know but I want to anchor your point because it was so good and I want everyone to get it. So income Katelyn I just picked Coca-Cola company everybody knows. What was the base salary of the CEO of Coke? What's your guess for 2025? This is James Quincy chairman and CEO.
Chairman and CEO Coca-Cola base salary not including any perks.
Nope. This is just his base.
That guy's making 550. Maybe a million higher than that. 550 to a million. Yeah,
he he's making 1.6 million, but I think everyone on here, you guessed low because it was very smart. I think most people like, "Oh, they're making 10 20 million a year. That's why they have all these net worths." No. Now, is there an incentive package? Yeah. If he goes and finds a way to get Coke to grow by 20%. Sure. Does he get a spiff of $20 million bonus? Yeah. But you can get the same spiff in your investments if you get

55:39them to grow exponentially, too. So the point I love you're you're making is income is not correlated to net worth. Everyone should write that down. Your higher your income does not mean you will have a higher net worth. It's absolutely not true. I know people, friends of mine who make north of $2 million a year and are worth less than $2 million. And you might say, Brett, how is that even possible? How could you make more than two and have a net worth of less than two when you're making the two every single year? Super easy. You spend you spend $150,000 a month on crap on lifestyle. There's nothing left to invest. You're making two million. You torch it all. Overwhelmingly, the influencers are famous for this on the social medias. Crazy high income earners. No net worth. I'm from the country, Katelyn. You know what we call that? It's all hat, no cattle. That's a uh that's going to b that's going to crush the internet. We're going to break the internet with that one. All right, Katelyn, I want to move to our next category. Okay, passive income. The data on this is hard to get. You know why

56:41it's hard to get? Because people have so little of it and it's there's not a data point we can go to grab it. So the median person, remember what the average person's passive income is, Katelyn? The average person, the median has zero.
What?
Shocker. They No, they have zero passive income. Now, I don't understand their plan of how they think they're going to get free with zero, but that's the average person. They have zero. So, we can't even do the median because it doesn't exist. So 30 40 50 don't have any. Let's get to the top 10%. If you're 30 years old, top 10% 5,000 bucks.
These are annual.
These are annual passive income. If you are 30 years old and you're in the top 10%, you got 5,000. At 40, you've doubled it. You've got 10,000. This is to be This is to be further ahead than 90% of the people. At age 50, you go to 20 grand. Age 60, you go to 30,000. Now, having some passive income, Katelyn, is better

57:43than zero. Um,
but higher on that.
You're not free. That's the point. You're you are you are shackled in a prison and you don't even know that you're in it. You can never get out of it. It's work till you die. Your life is worse in the future than it is today. It's super dark and I don't want anyone to have that experience. But it starts today. You got to go back and take that income. So now let's So even in the top 10%, how do you get out of it? Now this is passive income. People could own Tesla stock, which would not be included passive income. Unfortunately, that doesn't always work out. I want to tell you a story. Katelyn, you never heard the story before, but um I went to college and I didn't graduate. I I went to the graduation because I was six credits short of my degree. Um my whole family was there and I got a little, you know, the the cap and gown and I bought the little diploma. Mine's just a diploma holder cuz I'm just minus the degree. I never went back because it was stupid. Uh and I didn't want to do anything with my degree. But my parents

58:44like get a college degree because that'll really help you. And that was, you know, reasonably good advice based on what they thought. So I go get at one point then I'm like, you know, I was trying to be an entrepreneur and I'm figuring stuff out, but I'm like, you know what? I'm going to get a job for a little bit. I'm going to be So, I went to the Fortune 500 company, uh, Insight. And basically, you're selling stuff via the phone. They're like, "That's this computer has access to the internet. This is a phone. You look up, you know, people's names and phone numbers on the internet." And then you call them on the phone. Who's confused so far? I was like, "Oh, wow. This sounds incredible. I love all the sophistication." And you just had to make like 300. It was crazy. And you had to get to the person purchas in the purchasing department and then you had to work this whole thing. Well, my third day there, lady been with the company 20 years. She retires. Okay. Huge celebration. All of her retirement was inside stock. Boom. It was at a peak, right? Things are awesome. She they celebrated her, you know, Meredith, you did it. About 4 days later, Meredith was sitting next to me in the cubicles

59:46where the people that started 3 weeks ago were. And I'm like, "Meredith, didn't they like celebrate you and people were hosting you up and we were celebrating?" She goes, "Uh, yeah. I don't know if you saw the stock. It crashed. Stock went down like
retirement
like 50%." She goes, "I I can't afford to retire. I got to sit here and work until the stock goes back up." And you could go back and track that. That's the early 2000s. And look at it. And so, I had a huge aha in that moment. Now, first question I want to ask her, which wouldn't be helpful. I did not ask this. I want to say why at your age did you have a 100 first of all you have 100% of your net worth in one thing not smart two you had no way like if that didn't work plan B was starve to death right I would never engineer your world at the end of your working years with no chance to recover to have 100% of your items in a growth stock right that's why she should have played a different game my point being Katelyn that's not unlike a lot of people right they got their entire net worth trapped up in some stock or stuff at the in their old and there's no chance to recover. So why do

1:00:50it that way? That's a choice. Now I didn't have the heart to tell her like all of that was a choice and it was self-inflicted. But she now she stayed there another eight months, nine months. Stock got back up to where she could get out. But I never forgot that. Right. So we've all got to have a plan and your plan will determine your outcome. All right. Top 1% passive income. Katelyn, if you're 30 years old, you had a hundred grand a year in passive income. 30 years old. I gotta tell you, it makes sense that you're you're doing better than 99% of the people. And I would agree with you. That's a that's an awesome number. And what's so cool about that number, 30, you were going to go on to be one of the wealthiest people you've ever met. You've already done the work, laid the track, made the decisions, you have a saving philosophy. Instead of buying crap, which is what your peer group does in their 20s, you bought assets that were producing income, and bam, you're there. Top 1% at age 40, it triples, Katelyn, 300 grand. you get to 300 grand at age 40, unless you have a crazy spending problem, a gambling addiction, or some other weird stuff, you're going to be in a really

1:01:53good spot. And at age 50, if you do this right in the top 1%, it's $5 to $700,000 a year. If you can't make a go of it, living a great life at $5 to $700,000 a year passively, I think you're solving the wrong problems, right? You care too much about what other people think, as the great philosopher Jim Carrey once said. So top 1% Katelyn, we can't really do it because it's just millions a year. We get it. It's millions and millions get a year. So what's interesting, I got a couple points here, Katelyn. 4% of the households receive over 80% of all the dividend income in America. In other words, passive income is concentrated in such a small group. But why it everyone could do it, right? Everyone can buy Coca-Cola stock. They could. Yet not everyone will. So look, some years, Katelyn, when you think about, you know, passive income or income, Warren Buffett in some years makes over five billion dollars per year. That's from dividends. Coke, Apple, American Express, and he

1:02:57hasn't worked, he'd never worked these companies. He didn't invent these things. I mean, the craziest thing to think about Warren Buffett, like Elon's going to be a trillionaire, and he recreated four categories, right? Right, we're going to go. I got SpaceX, we got Starlink, we've got Tesla, we got so this guy's like building the craziest companies ever. Warren Buffett invented nothing. He literally just bought great companies doing great things. Crazy, right? Again, 4% of the households collect 80% of all dividend income. It's overly concentrated. I want to give one more example to you, Katelyn. Rihanna. I don't know if you're familiar with uh the rapper or I don't know, hiphop.
Rihanna.
Umbrella. One of my favorite songs.
So, will you do me a Google while I'm going through this? What did she earn lifetime from all the music from all of her music career? What's a lifetime Rihanna earnings? Because what's interesting is many don't know this. The reason why Rihanna isn't pumping out music these days because she doesn't have to. because she's a billionaire from her beauty skincare line Fenty,

1:04:02right? So, she doesn't have to tour all the time. She can if she wants. She's doing it for love of the game. She used her she solved the problem, built a brand, and actually became a billionaire from it. Is that easy to get, Katelyn, or should we?
Yeah. So, it's pulling up right now. So, her net worth as it exists today, they believe it's 1.4 4 billion in total net worth. But because of Savage and Fenty, um the majority of it from that, her overall music only lifetimes earnings was 300 million, but she's worth 1.4 billion.
Sales are big numbers, right? So she made more money doing something else than she did her four times more doing something else her day job. Four to one. So my point being, Katelyn, it's what we do with the money that makes us rich. All right, Katelyn, let's go to home value. So what we're trying we started with with net worth, right? Where do you where are you at? Then we went to income. Now let's go to your home value.

1:05:05Uh now some people Katelyn, this is your primary residence. Um for most folks, it's going to be the largest asset they ever own. I am a huge believer. It's very controversial and I think Robert Kiyosaki gets like half of it right, half of it totally wrong and it's a story and it's not even his real dad. It's made up story, but uh I don't want to get off lost on that, but uh he argues that your primary residence is not an asset. And I would agree with that. Does it probably go up over time? We hope. Sure. Can it appreciate? Yes. The reason why you own a primary residence, there's only one reason, Katelyn. The goal is to lock in your long-term fixed housing costs. Rents raise over time. You've got a 30-year mortgage. If you paid it equally, then at some point, you don't have a payment anymore. You've locked it in for the period of ownership or for period of working years. Then you don't have it. That's the reason. Now, what do people do? They refi every 7 to 10 years, use their home as an ATM machine. Well, you're not going to be wealthy unless you're using it to buy income producing assets. But I don't believe it's an asset. Here's why. I Katelyn about a year ago put an outdoor pickle

1:06:08ball court at my home. Now, can I afford it? Yes. Did I do it in cash? Yes. Did my wife want it? Sure. Does the next person love pickle ball the way Taylor Tanner loves pickle ball? Probably not. That might be a liability and they might offer me less on my home because they got to tear out the pickle ball court. In other words, an asset, you put money into it that grows in net operating income that makes it more valuable. on our primary residence. We end up doing all sorts of things with our weird taste and our own internal desires. Stuff that the next person may not want. And Katelyn, I do it too. But I don't trick myself and telling myself that my home's an asset. It's a liability. Why? Because the bank has it on their side as an ass. It can't be on both of our assets spreadsheet. So when I do my net worth tracker, I look at my investable capital. I exclude the stuff that doesn't make money. Why? Because it doesn't make money. it's not investable capital. So, that was my rant, Katelyn, on the primary residences. I want to go here. If you're in the median, again,

1:07:1050% of the people own a home less expensive than you. 50% of the people own a home more expensive than you. 350 to 400 grand and you're in the medium. Okay. Now, as we sit here, I'm in Phoenix, Arizona. You're in Dallas. I'll be honest, a 350 to $400,000 home is harder to find today, right? Like, that's not uh that's not living large. I was going to use a country analogy that I I keep it very cleaner. I can't use it. Uh it has something to do with tall cotton. I'll let people, you know, Google that on the internet. So, all right. The medium the top 10%
guys, that will not be in the show notes for everyone.
That will not be in the show notes, but people can look it up. I'm blank. I'm blanking in tall cotton.
Google at your own leisure.
Google at your own leisure. So, all right. Top 10%. If you're in the top 10%, $700,000. So 90% of the people own a home less expensive than you if you're 30 years old. Top 1% you're 1.5 to 2 million and top you're one in 10,000 people you're 30 years old you own a $10 million plus

1:08:12home. Okay. Age 40 the average med again the median home 500,000 bucks didn't change a lot between 30 and 40 right? You probably bought the home at 30 still own the same home at 40. Uh top 10% you own a million dollar home or more. I'm sorry. At 40 years old, 900,000 to a million. Top 1% goes to 2 to 3 million. The top 01 15 million plus. And then we go to age 50 to 60. Katelyn, the the median again 500 to 550. Pretty similar. Top 1%'s you know that same one and a half 2 million plus. Top 10% top 1% goes to 3 to 5 million. And if you're 50 to 60 in the 01, it's 20 to 25 million. Point being there though, you should ask yourself like one of my secrets, Katelyn, um to how I got here um in my 20s and 30s. Number one, and I've told this story before, I've partied more, and I don't party a lot, but I bet I've had more drinks in the last year, okay? And I don't I don't drink that often,

1:09:15but I bet I've had more drinks in the last year than I did from age 20 to 30 by a by a huge margin. Can I do you a favor so that the rest of the audience doesn't have to?
Yeah.
Having two high noons on your patio after a round of golf does not constitute partying, Brett. So partying. Most people think we're talking glow. I mean glow sticks and you
drinking some green glowing stuff and dancing like an animal. So I don't really pour Yeah. Yeah.
Yeah. I would say Yeah. I have two high noonses on my debt. But my point being I why did I not do it? Then I had to get my money right. I was working. I was getting ahead. And during that period of time, all of my friends were buying stuff, crap, material things. I was buying houses. And I mean, I I've told the story of this podcast before. My wife's like, "Hey, how come everyone we know is doing better than us?" And Katelyn's like, "Oh, easy. They're not, but they're just flashy. They are showing like they have a really cool

1:10:18car. All I know is that he has a $100,000 car he can't afford. We don't I drive a piece of crap. I have the 100 grand in that house over there, you know. And then you fast forward, you know, two and a half decades in and they wonder how you did it. I just did different things. And so everyone watching or listening to this, stop getting caught up chasing someone online that you don't know, who's probably not living a life that you want, who probably doesn't have what they say. And I'm not saying everyone's a liar. There's some really great stuff out there. But Katelyn, you're good. You got to play your own game and you got to shut out the noise. Now, this one's controversial, Katelyn, so I'm gonna use, you know, the Kardashians, which I know happens to be one of your favorite shows ever.
Um,
please, I'm just kidding. But but everyone thinks they made it, right? They made a lot of their money from the show, and they did make great money from the show. They also bought a lot of Prime LA real estate before it exploded, and they own tremendous amounts of real estate. the real estate did as much work for them as the brand, right? So, it's just

1:11:20interesting when you think about it. You get again, LeBron James, crazy income earnner, owns a lot of income producing assets, right? So, the point we're making here, Katelyn, income doesn't determine where you land. Raw intelligence does not determine where you land. All things equal. You would rather be smart versus stupid. But there's some of the smartest people out there, Katelyn, that have no net worth and low income. And I know some people that are I mean the dumbest people I know who are ridiculously wealthy and make a fortune. So income isn't the game. It's a set of principles you learn to live by. So Katelyn, here's what we here's what we broke down today. If you're 30 and you got 90 grand net worth, you're normal. If you're 40, got 130, you're normal. If you're 60 and you got 390,000, you're normal. Wealth's not income. It's the effort you put into it. And wealth is determined by ownership over time. Katelyn, we threw a lot at people in in the last hour. I think that they all can go back and look at where are they

1:12:22playing? Change the game they're playing. And before we wrap here, what are your thoughts as we get ready to wrap this podcast?
Well, I have three action items for anyone who's listening to this that's saying, no matter where I fall on the scale, I want to do different or better. I want to go back and start solving the problems that matter. Not the low-level problems of the stuff and things, not the midlevel problem of people and drama and things that are happening around us, but really those highlevel things and Brett, how do I start on that? That's what we constantly have questions that come to us that say, "What are my action items now? I get it. What do I do?" So, there's going to be three key steps, and we're going to include these in the show notes. The first is what Brett talked about. If you are not tracking your net worth on your balance sheet on the first of every single month, you are not in the game. You will never be rich. You will never be wealthy. It doesn't happen by accident. Track it. Good months, bad months, it doesn't matter. That's the

1:13:24first thing to do. And just start tracking it every single month. You can print it out, share it with your partner. Hopefully, you're moving in the right direction. Brett mentioned to a couple of our members at one of our last masterminds that said, "The worst is when you go backwards." Brett said, "I actually love it when my net worth, if it went backwards, now I get to dive in and ask the question, why was it spending that change? Was it a different part of, you know, capital allocations? What changed that caused that?" Such that I can make those tiny pivots to make sure I stay on track. Track your net worth. Do not be afraid of the bad months because that's where the opportunity exists. Number two action item, you are going to be able to download the actual wealth plan of how to build a $50 million wealth plan. And Brett challenges us to do it in 30 years. The reason that he does that, spoiler alert, you're going to find out that based on the medianish or top 10% income levels he just went over, you'll

1:14:29be able to set money aside to make the right investments to be worth $50 million in a 30-year period. Almost every single person listening to this podcast will be able to execute it. But if I had told you at the beginning of the podcast that Brett was going to or beginning of this episode that he was going to show you a really simple way to be worth $50 million, you probably would say, "Not me. That's too much money. How is that ever going to happen?" Do the exercise because you're going to see it's very small habits over a 30-year period that can make sure your net worth grows the exact same way as what he showed here. that when you're 30 and your net worth maybe is just the median, how do you make sure at 50 or at 60 that your net worth's that top 1%. And that exercise is going to show you how to do it. And these episodes that are coming up are going to show you how to do it even faster. So, you're going to see very easily you could do it on your own in a 30-year period, but now by listening to Brett and implementing these strategies, you'll be able to

1:15:31compress that timeline. Third action item, Brett, is going to be an exercise we're going to share with them that we have covered in previous episodes. So, we're going to have the link to the previous episode as well as the worksheet. And that's a path of money. Really understanding how does the money flow inside of your home so that you can start seeing and tracking that progress. So, three action items. Number one, balance sheet. Make sure you download it, track it, do it monthly. It's a date with yourself that will pay you gifts for time to come. Number two, create the wealth plan. And guys, spoiler alert, you're going to go, "Holy crap, I can actually do this." And then number three is going to be to start watching how the money flows inside of your household. If you do those three things before next week's episode, you will absolutely be crushing it. And guess what, Brett? We'll be solving the problems that are going to make our lives epic. Katelyn, that was incredibly good. We will drop all of that in the show notes. Our next episode, we're going to cover

1:16:34what the wealthy actually spend their money on. We had a huge episode today. I hope you took a lot from it. Please do us a favor. Follow our show. Leave us a review. That's Katelyn Mitchell. This is Brett Tanner. This is the Be Wealthy Podcast. Go out there, think big. You can have it all. We'll see you all here next week. Burgers.