What Stops You From Being a Millionaire

0:01Welcome to the Be Wealthy Podcast, where we bring entrepreneurs the strategies and tactics to grow your business and unlock new opportunities. Once you've achieved success, we'll teach you how to think about your money. Because wealth is about more than just cash flow. It's about freedom. Now, our host, Brett Tanner. Welcome back to the Be Wealthy Podcast with Brett Tanner. the show where we deep dive into the strategies, mindsets, and realworld tactics that unlock financial abundance. Today, I'm joined by my co-pilot, Katelyn Mitchell, and we break down the reasons that stop people from becoming a millionaire. What actually are the key things that stop people from becoming a millionaire? We look at Warren Buffett's strategy and what would he say? How does he think about opportunity? and how can you build models to optimize every financial decision that you have? Without that, without further ado, I want to jump right in to my conversation with Katelyn Mitchell as we break down what stops you

1:04from becoming a millionaire. All right, we're live with the Be Wealthy Podcast. I'm joined by my co-pilot, Katelyn Mitchell. Katelyn, I don't even know where we're at on episodes. We filmed what some say are thousands um of episodes, but we're back and today we're going to talk about what stops real estate pros from becoming a millionaire. Katelyn, there's going to be a variety of things we've got to discuss. Um and really what you learn when you think about this is you got to have a plan. You know, Mike Tyson's got the saying, Katelyn, that everybody's got a plan until they get hit. And so, uh to become a millionaire, we've got to think differently. We know we're going to study the great we're studying Warren Buffett. We're going to talk about that for a minute. But before we jump in, Katelyn, you don't know this, but I was playing golf this past Saturday morning. Uh I was out with Michael Velasco, who we filmed an episode on 1031 Exchange. He owns Exchangeable. Good buddy of mine. If you need a 1031 Exchange, you should use him. He's an incredible human. He's also incredibly talented and he could help you navigate that. But

2:07Katelyn, we're out there. We're golfing and our golf cart came across a hill. Okay. Okay. And then we're going to go down a hill. And you're very familiar that sometimes the braking system in golf carts are varying degrees of great. Sometimes they're very tight and sometimes, you know, the brakes just aren't fully good to go. This happened to be the ladder, which will be important. So, we pop over the hill. We're coming down and there is a huge snake that is about the full width of the car path. So, I start slamming on the brakes, but it's very clear we're not going to. And now, as I get closer, thank goodness, it's a rattlesnake. So, now I'd never seen this before, but it's laying flat. Katelyn, do you know what happens when they get terrified and they hear two grown men just kind of yelling and then slamming on the brakes? It they they slink backwards. Okay. And that's how they kind of coil up and create the uh striking pose that maybe you're familiar with. I had seen I think a rattlesnake at a distance. I'd never seen one um 2 and 1/2 ft from my body.

3:12Okay. I hadn't seen that. So, it it goes it coils up and has a little rattler doing a little which by the way that sound is loud. Okay. I'm going to tell you the sound is shockingly loud. I whip the cart to the far right as far as I can go because we're kind of on like I don't want to use the word cliff and be dramatic, but we're on a steady hill. You could easily flip the cart. So, now I'm hitting the bushes over here. Katelyn, I am now in Michael's lap fully extended cuz the thing opens its mouth right as we go by. You know that scene you see? And I thought it is 100% going to strike me and hit me somewhere between what I'm going to call my buttock. Okay, somewhere between my buttock, Katelyn, and my knee. Nothing happens. We're safe. We get to the bottom. We're like, "Holy cow, that was crazy." And I've got to ask Michael the question. if I get hit, are you going to suck the blood? Are you going to suck the blood out? And so I started holding my golf ball on different areas of my leg and saying,

4:15"Where where do I die?" Okay. Is it close to the knee? He said he's in there. Good friend. He's willing to suck the but as that ball as it goes up if it gets even close to my buttock. He goes, "But right there about mid thigh, I'm history." Okay. I'm goners. Um, I just wanted to know what level of friend I had, Katelyn. And the point of that story is you got to Katelyn, you got to have a plan. Okay. Being wealthy, avoiding rattlesic attacks, very, very similar in a lot of ways. We'll cover that today. But Katelyn, I just want you to know when you think about when you think about getting hit, had you ever thought about if it is on my buttock, I'm a goner. Gosh, I hope it's closer to my knee. These were just things I wasn't even thinking about prior to being in this situation.
Yeah. Brett, when you started this story, thought that maybe this is going to be one of your 10 things or or whatever your list is today that we're going to go over so our listeners would know what will stop you from being a millionaire, getting bit by a rattlesnake and dying.

5:18So, if it's on your bonnet, you're out of here. If it's on your calf, get a great friend and off we go. I I think the point is, you know, we did one on relationships. You know, we're going to give you a link back to the relationships and, you know, Michael's in my inner circle, but that's the measurement tool is how high, you know, are they willing on your leg are they willing to help save your life? That's just is a question of your friend. That's how we should measure people. Okay. Well, something to think about. So, with that,
we may need to change our status or our rating on Apple to be PG-13. down now that we have approached the buttock.
Well, Katelyn, I used the word buttock. Okay, I didn't say anything inappropriate. Now, I've got to find my presentation. So, we're going to jump in. And today is not going to be about rattlesnake. Katelyn, you can see my screen now.
I can. Yes, sir.
All right. So, let's jump in. Let's talk about um let's talk about what stops people from becoming a millionaire. Katelyn, you know this. So, I wanted to study the greats. And what I love about Warren Buffett is he did not make his

6:20money. Katelyn, he did not make it from founding companies, starting them. He actually in is a true investor. He is investing his capital into other businesses. And so I've read nearly every publication about him, about Charlie Munger, uh, and Warren Buffett will go down as the business philosopher of our time, right? It's just his wisdom. He takes the beyond complicated things and makes them really, really simple. So, Katelyn, you already know the answer to this, but for those for our listeners, I want you to think about it for a moment and ask yourself the question, what is Warren Buffett's net worth today? Don't go to Google. Throw out your guess in your car. As you're driving, you're in the gym. Throw out something crazy. Just yell out, "Katelyn, the answer, it's $160 million." So, you could yell that in the gym. You're cranking on 75 hard or whatever. You could yell at 160 billion and the whole gym looks at like you're crazy. That is a ton of money. You know, Warren Buffett, Katelyn, you've got to go watch the documentary Becoming Warren Buffett on HBO. Um, he is no question a

7:26brilliant mind, but also a weird dude. And I want to draw some connectivity, Katelyn, that for most of us out there, if you go do what the average people do, you're going to get average result. And no one listening to this podcast is listening to a podcast about wealth creation to be average. And so, you're likely going to venture into weird. And you know, Katelyn, we have this conversation at our mastermind all the time. Being weird might be the secret to getting more money. Don't be weird for weird's sake, but being a little out of the norm where everyone else sits might actually be the thing that makes you successful. I think it's fascinating that Warren Buffett every day goes to McDonald's on his way into work and he makes a breakfast decision based on how he feels about the market performing that day. If he feels like the market's going to be on fire, Katelyn, he's going to spring for the bacon, egg, and sausage. He's going to go for the full thing. He's going to add the bacon. He's going to put the cheese on there. It's about $3.72. That's at the markets. Well, if it's not

8:28going to do well today, uh he just he gets rid of the cheese and bacon. We're just going to go the biscuit and the sausage. He saves about a dollar. But he makes that decision. He also drinks five Coca-Cas per day. He's And I What does he How old is he, Katelyn? I know that I can never remember even though I talked about this last week. I said 94. I know you'll give me the real answer.
I think he's 94. I think one of the most interesting things about Warren Buffett is similar to what I think so interesting about you. Often you're on stage or we hear numbers like Warren Buffett's worth 160.2 two billion and we assume that there's one big get-richqu or found a software and sold it or there's this moment where wealth happens. And the interesting thing about or the weird thing that's different that Warren Buffett's chasing and that you're executing is that a wealth plan is a long-term plan with a very long runway with the right simple decisions time

9:31over time compounding. Right? That's how he made all his money. Arguably, I've been sitting in the passenger seat watching you. That's how you made your money. It's all of the right decisions compounded over time. That's the weird part. You don't hear Warren Buffett running out trying to do some extreme activity to catapult his wealth. No. The weird thing about him is he's damn boring. It's the same thing day over day, week over week, month over month. And now he's sitting here at 94 worth 160 billion. And that number is not boring, but the path upon which she did to get there could be construed as such. And I think that's so true about you as well. People think that it's really a quick like, oh, I'm going to do 25 flips this year and change my whole lives and then I have Well, no, no, you can do that, but that's one step to a long-term plan. And I think that's the coolest weird thing ever.
The I love what you said there, and I

10:33think that people need to realize it's their philosophy, right? There's so much we talk about in this podcast. And we're really building people's wealth philosophy, how you think about your relationships, we've talked about that in other episode. How you how you think about time, we've talked about that in some episodes. But how you think about your money, what are your philosophies? And I just think you can learn so much from the experience of others. Right? There's two ways we learn things, Katelyn. We can go out and experience them. And you know, we we're going to all try to learn from our experience as much as we can, but we can only have so many experiences, right? So the other way we can learn is by looking at the experience of others. We can use our own, we can use their experiences, both positive and negative, to help guide the experience in our lives. And so I'm not saying Warren, he's 94 years old, uh he has incredible genetics, eating McDonald's every day and having at least a bare minimum of five Coca-Cas per day. Again, not recommended on the health plan in most diets. Yet, you could not, it'd be very hard to argue with Warren Buffett's health, mental acuity, and results in many areas of his life. All right, so next thing, Katelyn,

11:36you can see my screen, right? You can see it here for those watching. Uh, you can see this, correct, Katelyn?
I can. Yes, it's a nice tutor. Is that a tutor style, Brett? U
I believe that I believe that is a tutor style kitten. Very very uh astute there. What's fascinating about studying the wealthy, right? I spent the last 15 years of my life trying to figure out what did the really, really wealthy do different, not the flash in the pan, the people that are leveraging the leverage of risk, you know, the people that are tried and true. How do they make different financial decisions? And so, when you look at Warren Buffett, he bought his home. He bought the home on the screen right now, his current primary residence, by the way. He's been there since age 26. He had a million dollar net worth at age 26 and he bought a $31,000 home which represented $3.15% of his net worth. Now, what I want everyone listening to this or watching this think about for a minute, go back to your last home purchase. What did you buy it for? And write that number down.

12:39Get your approximate net worth of that time and divide the two. This doesn't need to be perfectly accurate. A best guess will do here. And Katelyn, I want everyone to divide their purchase price of the home divided by their net worth behind at the time and compare yourself to Buffett. The point I'm making here is that wealthy people make radically different decisions. Did you think Warren Buffett wanted to buy a home that was more expensive than $31,000 when he had a million dollar net worth? Katelyn, the answer, of course he did. Of course he would have liked to. But what did he also understand? By having a higher personal expense at home, a bigger, more expensive home not only costs more on interest and taxes and insurance, all the things we're used to, the size of your home and the area it lives in typically is in direct proportion, Katelyn, to all the expenses associated with it. Bigger home, more affluent area, more affluent stores around it. The cost of you living in that area will cost you more to live. not good or bad, but it's good to compare yourself to the

13:41decisions of others. And so, I'm I'm a big believer that we need models in all different areas of our life. We need to think differently about building models around financial decisions we make. Why do we need to do that? Is because as human beings, we are highly emotional. We make emotional decisions, Katelyn, all the time. And then we're going to come back around and we're going to justify these with logic. And Katelyn, I want to give you I want to give you a scenario. Not that it would be you, but it might be you. Have you ever had a pretty serious car repair? You go down there. Something's going to be in the $3 to $5,000 range. You take your car in. They come back out and they go, "Katelyn, you know, we got to fix the flux capacitor. We got to flush all the fluids. We got to do the whole thing. You know, we got some rotors and drums. You know, a huge car nut uh repair guy. And it's going to be $5,500." And Katelyn, in that moment, have you ever gone down this road and say, "Uh, you know what? If I spend this 5,500,

14:44how long is that really going to last? I'm going to be doing repair after repair. This thing's going to have another one for pretty quickly. I got another six grand, another eight grand. What do I should I do? Trade it in. Get a new $75,000 car because I got a $5,500 car repair. It's time to just trade it in." Katelyn, have you ever thought that or heard anyone make a decision like that?
Brett, I'll be candid. I've made that decision. I've done it.
You You've done it. Well, we all have, right? And what you look at is that decision is completely illogical because in that moment, Katelyn, we know that all that we know is you have one repair for $5,500, right? That's all we know. Now, depending on the mileage of your vehicle, there's other things that go into this equation. But let's assume, Katelyn, you got 40 to 50,000 miles on your car. Putting $5,500 into that makes a lot more sense than having a car payment if you was paid off or going and buying a much more expensive car. Yet, people do it all the time. So, let's take that same logic and let's say what is our model, right, to buy our primary

15:49residence, Katelyn? We have different things we're to buy in our life. Our primary residence is one of the biggest investments most people will make. And yet, I don't think most people even consider any of the economic models. They call their lender up. Hey, what's the maximum amount I can qualify for? Right, Katelyn? As a real estate agent who's sold now in his career about over $5 billion worth of real estate, you know what I've never asked someone ask me? What's the minimum they could qualify? Like what what actually would put them well, how do the wealthy make this decision? I don't get that. What's the maximum I can qualify for? As human beings, we're preconditioned to the max, right? What's the maximum depth I can go scuba diving? What's the maximum distance I can hit my drive? What's the maximum? We want Katelyn, we want extra strength, Tylenol even. We want take what's the strength that would kill me and then just back it off a little bit, right? I want the maximum of everything. And so instead, we need to figure out what decisions actually will take us to the destination we want, which is we're figuring out our 30-year plan. We're figuring out what we want in our lives

16:50at different points in the future. and the amount of capital that we can deploy in our investments to create the cash flow to get us where we want to be. Our primary residence guides one of those decisions. And so Sam Dogen, he wrote this book called Buy This, Not That. And he came up with this 3033 rule. Really simple, really straightforward. Number one, spend no more than 30% of your income on a house payment. Now, Katelyn, the the banks will let you spend far more than that, right? They will let you just pay it yourself to death. But we should limit it. Why do we want to limit it? Because we want to have more income to put at the things that actually get us free. Next, Sam Dogen recommends saving 30% of your purchase price for the home. Not to put 30% down. You're going to put 20% down. And he believes saving 10% for the repairs that could come up over the first several years of ownership is a really good way to think about it. And lastly, the most difficult one. Limit the purchase price to three times your

17:52income. My addition to this, Katelyn, three times the average of your income for the last 3 to 5 years. Let's take an average of years. Let's not make financial decisions off your last best year. Let's make them off the average of the last 3 to 5 years. So, we're getting a better example. So, let's look Katelyn here what that might look like in Phoenix, Arizona today. Let's assume we're going to go out Katelyn and we want to buy a really nice house. house. What to buy a million-doll home? Okay, there's the minimum, reasonable, and ideal incomes. And then on this chart that you're seeing on the screen, there's the minimum, reasonable, and ideal. So again, no one no one is listening to or watching a wealth-b buildinging podcast to be average, right? We're doing it to be exceptional, and all of our listeners are. And so if you want to buy a million home, Katelyn, your income ideally should be $333,000 to do that. Your net worth should be 3.3 million. If you do that, you've got enough capital left over so that you can invest it in the things you want to

18:56ultimately get free. And so as that goes up, you can see how that plays out. If you want to go a buy a $5 million home today, you're buying it today, right? And this would Katelyn not be off what did the value climb to over the course you owned it, but at your time of purchase, if you wanted to buy a $5 million home, you need to be making $1.6 $6 million a year, assuming you're going to follow his 3033 model. And then you want you'd need to have a net worth of about one uh $16 million.6.6 million. And so again, we're it's a check-in point. If you violated these rules entirely, are you destined for failure and you could never hit your goals? Of course not. That's not the case. It's just your wealth plan. You're going to have less income to put towards getting to your freedom number to creating that passive income. So you may have to cut back in another area of your life to offset that. Right? Life is all about costs, right? There's cost no matter which way you go. You get to choose when you pay them. And no, understanding how to think about your primary residence is one of those key drivers. Katelyn, when you look at this

19:58model, because we talk about a lot, we train on it. You know, what goes through your head as you look at the numbers as they play out here. Um, I really love that whether it it applies to this with the 3033 rule or many of the other things that we train on is that you're able to take a model to make your decisions. You take all of the emotion out. So, for example, right here, you're buying a home. Whether you, no matter who you are, buying a home for your family or for you to live in has some emotional component in it, right? And when we have a model in front of us that literally is giving us minimum requirements, reasonable requirements, and ideal requirements for both income and net worth, we now have a model that will allow us to know exactly what to look at on the market and to make a decision that'll fall within our wealth plan. You always make this statement and

21:02it's that our life is the sum of our choices. nothing more and nothing less. If we take emotion out of choices, we almost always will make the right choice. There's only two reasons we get it wrong in my opinion, Brett. Number one, we don't know any dang better. But if we're listening to this podcast, we do. Number two is because emotion gets involved. Those are the two reasons we make wrong decisions. Ignorance or lack of education and emotion. right here. This removes that for us so that our primary residence or the home that we're looking to purchase, which is one of our biggest investments that we make, we ensure that it's a sale, not an anchor in our wealth journey. To your point, if we make the wrong decision here, it may seem like a small choice and, you know, we'll figure it out along the way, but to your point, every $1,000 extra, every extra amount that we put into purchasing our primary residence is

22:07less pressure that we're able to p put on achieving our wealth plan. So, let's say your mortgage payment is $500 more than what is laid out here, right? that based upon your income and based upon what you're buying, it's it's 500 or excuse me, $500 a month in difference. The difference long-term that when we put that into your be wealthy wealth calculator is like tens of millions of dollars over a 30-year period when invested correctly. So, it's these small decisions compounded over time make an incredible difference. So for me who can make, you've heard me say before, I can't make a decision right now. My emotions are running too high. Someone who has higher emotions can now put some barriers into place to make sure that they still achieve their plan. So long-winded answer, Brett, I love that this gives us a red light, green light to know exactly what to do to make sure that we make the right decisions. But let me ask the other question that people may not, you know, call in to ask. Let me ask the question that a few

23:11people on this podcast may be asking. If they're in the wrong primary residence home based on these numbers, if they look back and say, "If I averaged out my last five years income and my home price, my ideal income, and my ideal net worth do not line up, what would you recommend that they do, Brett?" So, I think that's that's a really interesting question and I think you've got to decide, okay, I've got a couple of choices and here's how I would think about it. Number one, do you want to go do the work to raise your income? Everyone should do that. Katelyn, I think that's where if you said, what would be my recommendation? I would immediately go say, what's the gap between where I am now and my ideal income per this model? And I would go put a plan together to raise my income. And you know, I always look at you can cut your expenses, right? There's a finite amount of things you can cut. In other words, Katelyn, you can keep cutting your expenses, but if you're spending, as an example, $15,000 a month to live your life. We know that you can

24:15only cut 15,000 would be the total, and no one can cut 100% of their expenses. So, the amount we can cut is somewhat finite, right? It is completely finite. There's only so much we can cut. However, when we look at our incomes the other way, how much can you grow your income, Katelyn? Is there a ceiling? It's truly limitless. There's no limit on income as an entrepreneur. Right? So that's the game. So I would say instead of cutting uh firstly I look at how do I grow my income so I get beyond the ideal stage of this chart. Second thing I would do if I say hey I actually want to I want to do both things. I want to grow my income and I want to get there faster. You may look at that your home radically appreciated and it's time to do a mass reset in your life and go reset back to the numbers. really get clear on what you want and realize the cost of that home, right? Would you be further ahead to sell that home? You know, if you're married, you get a half a million dollar exemptions. You could sell your home, buy something that would be again on the ideal side based on your scenario, freeing up a,000, $2,000 or $3,000 a month, Katelyn, to go attack

25:18your wealth journey. So, two different ways to think about it. One way would be growing your income. The other would be let's go back into alignment and get back into expenses. So many people out there um are playing these goofy games. Katelyn, I saw this meme the other day and it said, "You know what happens when you play a stupid game. Katelyn, you win a stupid prize, right?" And so many people are playing stupid games. The stupid game being look at me, look at me, I'm playing a status symbol game, keeping up with the Jones game online. And the stupid prize you get is that you end up broke and with a lack of money to go get and live your dreams. And so I think about all the time and so what areas of my life am I playing a stupid game to try to win a stupid prize? So long-winded answer back at you is just I would think about do I want to radically change my income which everyone should do or do I want to attack it from both angles and I'm going to grow my income and get my expenses right. But that's how I would think about this. When you think about cars, right? We don't we don't talk about this, you know, enough, but the cars are

26:20a loser in terms of economics, right? We buy a car, Katelyn, you buy it at $100,000, you drive it off the lot, you try to sell it a year or two later, it's probably depreciated 40 or 50% in the first two years, right? It'll be on average most cars. So, what is the best way that I believe to buy a car? buy something two years old with less than 20,000 miles on it and then drive it as long as you can until the repair cost far out exceeds uh repair the repair cost starts getting extreme to where it actually makes sense and you know depending on the car that might be between 100 and 150,000 miles as a model right so on this I would have everyone go down write you know write what you paid for your last home what was your average income for the three years prior and what was your net worth and start looking at that and do some reflection based on the chart So, so Katelyn, we've given him a couple models, the model for the house, the model for the car. Now, let's take a look at how your your money philosophy and how wealth grows over time. So, we know that Warren Buffett's net worth today is $160 billion. Now, we want to go back. He's 94. We're

27:24going to get in our time machine and we're going to rip back to when Warren Buffett is age 43. What was his net worth? We're throwing out the guesses in our car in the gym. That answer, $34 million. So at 43 years old, one of the richest people on the planet was worth 34 million. Now $34 million is a lot of money. It's a tremendous amount of money, but Katelyn is a percentage of 160 billion. It's almost nothing, right? It's almost comp. It's such a small percentage. Um, and so on the screen right now, I've charted Warren Buffett's net worth for a variety of years. And for those that are just listening, from age 0 to 43, it took him 43 years to get to a $34 million net worth. His first reported net worth that we could find was $6,000. At age 15, by age 21, he had a $20,000 net worth. Age 30, he had a million dollar net worth. So 0 to age 43, he gets to he gets to $34 million. Katelyn. And what I think's really

28:28interesting is you look at that on a chart relative to his net worth today and it looks like he was literally nowhere, right? And I actually believe that Warren Buffett would tell you at that moment he felt behind. And you've Katelyn, we go to our events. We just got back from New Jersey last week. And I get the question in every room. I give this presentation. We do like a six-hour workshop. And at the end of it, someone will raise their hand. They go, "I feel like I'm behind." And I always go back to Warren Buffett because I'm like, I guarantee he felt like he was behind at age at age 43, right? But what he was doing is he spent the first 43 years of his life setting up the next half, setting up the next 45 years or longer, right? He was reading, learning, compounding, building relationships, getting all the skills. And how I know that to be true is because what did he do in the next four years? His net worth nearly doubled. believe it went from 34 million to 67 million in the next four years. Right? And that's what's possible for everyone listening and hearing this

29:30right now. It it does not matter at all where you are today. You are exactly where you're supposed to be. Right? I get that question. I feel like I'm behind. I feel like I should be further ahead. Nope. Everything you know, believe, and have done, your life philosophy is getting you the results you're getting right now. And in five years time, Katelyn, you could be anywhere you want to be. As human beings, because we're highly emotional, we radically overestimate what we could do in a year. We will set goals in one year that are likely unachievable. Yet, we will underindex. We will lower that goal so dramatically over five years. And it's so interesting because Katelyn, we're all focused on the short term and we forget how compounding actually works in the long term, right? that compounding is truly is the eighth wonder of the world. Albert Einstein's quote is those who understand compound interest earn it. Those who don't understand it pay it. And that's just so true. If we understand compounding in all things, relationships, I mean money, no doubt, but in relationships have just as many compounding benefits as capital. Then

30:34you look at what happened at Warren Ruff and education's another one of the compounds, right? The things sometimes you've got to learn the things I'm doing today, right? I learned on single family rental properties. I'm just applying them to resorts, larger complexes, triple net commercial, but it was the reps in that space. Then you take Warren Buffett. He's 47 years old. He's worth $67 million. And in the next 6 years, he 10xes his net worth from 67 million to $620 million. And so, Katelyn, we've got to go do the work today as we sit here and film this uh episode towards the end of 2025. And what's really interesting, Katelyn, is things are getting weird in the market, right? It's getting weird out there. We've got credit card, consumer debt at an all-time all-time high, right? It's off the charts. Consumer savings is at an all-time low. So, it's likely that something's going to happen sometime in the next 12 to 24 to 36 months that things would go on

31:38sale. And Katelyn, we study Warren Buffett. He has he has the best quotes that we should be fearful when others are greedy and greedy when others are fearful. And so, the opportunity of fear is coming. If you look what's going on, Bitcoin, as we're recording this, is around $88,000 off of its high and the $120,000 per coin, right? Things are getting weird, Katelyn. And what works for Warren Buffett is he's got the reserves. He's done the work. He's done the education and he's putting himself in a position to take advantage of what's coming, right? We can all learn so much. They have the highest Birkshire Hathaway has more cash today, I believe, than any point in history. It may not be the highest, Katelyn. We could look that up, but I believe right now they're sitting on more cash than ever. Why? Waiting for opportunity. And so, Katelyn, we've all got to think, we got to think differently. Where are we at in the journey? And this is why it's so important to look at your wealth building in decades, not days. Because Warren Buffett, it wasn't a question of he was going to be ridiculously wealthy.

32:41He already knew that. And for all of you listening, you will be wealthy. You can actually plot out where you're going to be at different points in the future using our calculators, which we're going to get to in a second. But realize your world looks like this chart on here. It's going to seem like it's going really slow, like you're pushing the snowball uphill as you're building your net worth, you're building your passive income, and then Katelyn, that starts rolling and it really gets exciting as that starts rolling downhill. So, any thoughts or anything you want to add to that, Katelyn, before we switch gears?
So, I went and looked and you're exactly right. B B B B B B B B B B B B B B B B B B B B Bshire Hathaway's cash position as it sits today is estimated to be at 381.7 billion, which is their record high. That's well over anything they've held before. And it's all held in cash and cash equivalents and very short-term investments like US treasuries, um even huge tech giants like Apple, Microsoft, Amazon, and Alphabet combined, Alphabet being Google. Um we they far exceed Berkshire far exceeds

33:47all of their cash on hand by over 30%. Which is crazy.
So So think about this for a moment. You have one of the smartest investors of our time, one of the smartest people on the planet as it relates to money, understanding business, understanding reserves, opportunity, who's been through more cycles in the game, right? 94 years old, still the CEO and chairman till the end of this year, and he has the highest cash position ever, right? It it it gives us an indication of how we should be thinking today. Wouldn't I want my cash position to be the highest as well, Katelyn, to take advantage of opportunity? He's not doing it because he doesn't believe opportunity is coming. He's doing it because stock valuations are off the chart. They many don't make sense. A lot of real estate investments don't make sense today, right? the debt costs relative to what we can get returns are out of line. So, we got to work harder to find great deals. But when the greatest investors of our time are bulking up cash, it's a time where we need to ask, why aren't we doing the same thing?

34:49
This ties in perfectly with how you started this conversation. Um, and well, not the rattlesnake portion, but perfectly into the housing portion of when we look at our fixed expenses and the choices that we make on our lifestyle. While your primary residence is an investment, it's a lifestyle um component. If we make the right decisions there, it allows us to keep the cash on hand such that we now have the ability to go and invest. Unless we make those right decisions and what I think you're about to share with us um with some of these other rules or or ways that we should be looking at things. If we make the right decisions, we'll be able to gain incredible wealth. If we're making a lot of the wrong decisions, they can compound for us in a negative way that stops us from achieving these things.
That is uh one of my favorite books that I I read nearly every single year is The Compound Effect by Darren Hardy. And Katelyn, it talks about the thing you

35:51discussed. We always think about compounding in a positive way, right? My relationships done right compound positively. Money compounds positively. Um the things I do in the world, my knowledge can compound positively. But Katelyn, what if we're to your point, there's two different folks, right? What if someone's making all the right decisions and all the wrong ones? They don't just end up the the person making the wrong decisions, they don't end up at zero. They actually go negative, right, Katelyn? They go negative in their relationships, in their education, in their financial world. So you fast forward at seven years in the future. Those two people are at radically different places in their life. And that's what happened, you know, for me in college. I had to distance myself from some of my relationships early on, Katelyn. I did the work and the compounding nature of the relationship over a decade. I was in a place they couldn't even understand and it became harder to have those conversations. And so understanding that compounding works both positive and negatively, we've got to think differently about our money. So, if you go to this website bewealthycalc.com, you can go there and run different scenarios and where you're going to be at different points in the future. As

36:53you know, Katelyn, I am very, very weird. I do this all the time. And I love going to the cow calculator and playing around to see where is my net worth going to be at different points in time. And so, I always love to start here. Imagine someone out there, one of our listeners today is 40 years old and we're going to run a 30-year scenario. But if you're listening, I'm using the age 40 and 70. It's just a 30-year period of time. It wouldn't matter if it's 20 and 50. If it's 30 and 60, it's just 30-year period of time. And I'm going to assume one of our listeners, Katelyn's got a they got a half million bucks and they're going to put $3,500 away a month. They're going to make 8%. And I want to know how much money it is. But before I jump in there, you had something you want to add.
Oh, I was going to say you can use me as an example. I'm 41 years old and if I'm planning to retire at 71, let's say I'm very fortunate. I do have more than 500,000 investments today, but let's say it's 500,000. And let's say I made the right choices on my primary residence so that I had additional capital to invest and so I can contribute $3,500 a month towards my investment opportunities.

37:58
I'm making 8%.
Hey, listen. And you make 8% on your money. What's your guess? Now, you you may know the answer to this, Katelyn, because you've seen this before, but for those playing along at home, 30-year period of time, so we'll do 41 to 71. Katelyn, we're going to pretend she's got a half million. She's putting 3500 away a month, 8% return. Katelyn, how much money is that? It's $10 million,
perfect.
And what were you going to say? Most people guess what are the guesses?
Excuse me. Most people are guessing it's like 4,500 to 5500 is what I've heard people say in your rooms. But really it's 10 or excuse me 4.5 million to 5.5 million. But it's really $10.6 million. That's a ton.
It it what's really interesting to me, right, is how much did you contribute relative to the 10? So this example, your total contributions were $1.2 million. Okay, you had an initial investment of $500,000. You contributed$ 1.2. You got $10 million. So the point being the majority of the growth came from you putting your money to work. You

39:00set and forget it. You were getting an 8% return, Katelyn. You weren't messing with your money. You're putting your 30. You had your half million working. You're adding $3,500 to it. This is an 8% return. It's $10 million. That's a ton of money. So now I want to run it a little different. Katelyn, I want to go to 12%. We know that 8% return on that same 30-year scenario. I kept everything the same. You start with the same half million. You're still putting away $3,500 per month, but now you're getting a 12% return. So, Katelyn, what's your guess here? You go from an 8% return, you know, that's 10 million. What do you think happens with just 4% more? It's not crazy. Just 4% more. What happens to that?
The question I or the answer we hear a lot is around 16 million. 16 to 17 million.
Because M for the interest rate, the rate of return,
I mean, we're getting the rate of return. We're up 4% which I see people all the time walk away for 4%. Right? They're they're they don't have their money where they're getting 3 to 4% on their savings account. There's all the

40:01time people are walking away from 4%. And the reality, Katelyn, is it nearly triples your return over that 30 years. You go from 10.6 million to $30.2 million. It's $30 million. Same contribution. So now you're up there where I mean overwhelmingly 95% plus of the money you made was made just from putting your money to work, setting it and forgetting it. So again, putting the money to work and going. Now we want to look at Warren Buffett's target. Now what if we could get a 20% return for 30 years? Now that is is that very difficult to do? Beyond difficult. I'm just giving you in certain parts of your portfolio, Katelyn, you can absolutely get a 20% return. I've had many investments that were a 20% plus return from flipping homes to other things that I do in the course of our business that we teach in our mastermind. You're not going to be able to sustain that for 30 years. But I just like to show the difference between an 8% 12% and a 20% return. So 8% was 10 million. 12% is 30 million. And Katelyn, if you were able

41:06to get a 20% return over 30 years, how much is it? It's $272 billion. I'm sorry, $272 million. A quarter of a billion dollars. More than a quarter of a billion just by putting your money to work. So, Katelyn, we know that it works, right? Compounding to anchor the point. It does absolutely work. This is the Warren Buffett story how he did it. He put his money to work. He kept compounding it. So, Katelyn, if we know this, we all get it. People are saying, "Brett, I understand I should get a reasonable primary residence. I should have economic models in my life. If I understand all these things, then why am I not where I want to be? Why aren't there more millionaires? And so, in this next section, uh the first time I heard this was from Gary. He shared this with the room and it was kind of structured as a rant on why there wasn't more millionaires. And I've looked at this often and I got to tell you, it could not be more true on why people aren't getting ahead. And so I want the listeners to pay attention for the next 15 minutes as we go through this section

42:09and really pay attention on which one of these speaks to you. Are you violating one of these rules around allowing yourself to become a millionaire? And I want you to walk through it. But before we do that, Katelyn, I want everyone to pick up their phone, hit the subscribe button so you do not miss our next episode. You've got to subscribe. Please leave us a review. Tell us what you like about our show. We our goal is to get this to more people and help more people so that they can get where they want to go. So all right Katelyn, everyone subscribe. Now what the first thing that stops people from becoming a millionaire, they need to visit their capital. They don't actually trust the assets that their wealth are in will hold their value. So Katelyn, we've got to constantly be going in and I'm going to use the word meddling. We're going into our assets. Oh, I'm using my emotion today and I'm like, "Oh, I'm going to sell that today. I've got to I I'm worried about Bitcoin today. I'm worried about the real estate market today. I'm worried about the stock that I'm in today." So, I've got to go constantly visit my capital.

43:11Katelyn, that doesn't work. We've got to do There's three keys that you've got to think about with your money. Number one, you've got to get uninterrupted returns, which means you put your money to work and you let it work for you. The second thing, it's got to be extremely passive. Katelyn, the easiest thing to do is to go get returns that you're working really hard to get. They're active. You're you're actively working your money, but you're only getting a passive return. And we talked about that one of our episodes. We got to make sure if we're working with our money to create a higher return. It's got to be that 15 20% return. And it we've got if it's passive, I'm okay taking the eight or 10%, but it needs to take none of my time. Right. Lastly, the three keys. So uninterrupted. We've got to make sure it's really passive. The last thing, Katelyn, we've got to understand compounding. As that money comes back in, we got to put it to work, right? We cannot be constantly revisiting our capital.
Next,
what are some examples of that? When people said, you know, you mentioned like

44:14you mentioned that they may want to sell something in real estate or they may want to sell something. Where do you see that most amongst your private clients where they're in and meddling with something to where what is it the right choice to deploy to to um redeploy capital out of an asset versus the right time to meddle? I'm not asking that the right way, but let's say you have a portfolio and you're analyzing it and you think you do need to sell a few of your assets and then redeploy it. What is kind of the red light green light of that versus guys you're just meddling to metal. How should people think through that?
I think the first thing is a couple rules that I would think about. Uh my first rule would be if you're not willing to invest 5% of your net worth into it, you shouldn't do it at all. Uh and I created that model for myself. If I'm not willing to take 5% of my investable capital and put it into a given asset, it's not worth doing. Like I'll get a private client say, "Hey, I'm going to go buy $10,000 worth of silver coins." And I'm like, "Okay, sure." You know, like if the price of silver

45:17triples, you know, if you put $10,000 in it, Katelyn, you make 30,000 bucks. That that's great, but is that how you're really that's probably not how to think about it. So, I would go, what's my allocations? And secondly, I would start thinking about, okay, do I have the education? Number one, how am I actually measuring ROI on my current asset? How am I looking at the returns? Both hard and soft cost. And we talk about an episode in season one. Go back and watch that. We'll link in the show notes on soft cost. Many things in life have soft cost. They're those unforeseen things like time. Um as you're thinking about in the shower, um your time just thinking about in general, your time that you put into the investment that you'll calculate and bill back. Right. So number one, we got to get the true ROI on this. And then we've got to go Kale and get the education to where we might move it into. We got to do all those things in advance, right? So education comes before the investment. We're always the one the best the best investment you'll ever make in yourself. Before you go into a new asset class,

46:19you need to go read the books, get the training, get the education so that you have an unfair advantage to compete. And so instead of constantly just moving things around based on what your neighbor's doing, you're following a documented wealth buildinging plan that's going to land you at your destination that can change over time based on where you're at. Are you looking to, you know, roll things up into a bigger asset? But one of the real risks here, Katelyn, there's lots of transactional costs people don't talk about when you go to sell an asset. Like when you go to sell a real estate asset, you know, your costs can run if you're not a licensed agent, your costs on average, we budget nine and a half percent when we flip a home. You know, 6% in commissions, which are totally negotiable, Katelyn, as we obviously know that. The other three and a half% can get picked up in other areas. And so, just I want people to think about we we've got to think differently about our capital. Second thing, Katelyn, that stops people becoming a millionaire, right? Two things. is they're a paper millionaire versus a cash flow millionaire. Paper wealth based on high multiple fills falls. So they want to

47:21get their wealth back into something tangible. And I always tell this story, Katelyn, I've got these two really wealthy buddies. And they're both worth about the same amount. Both worth about $50 million. And one is has it all of his net worth tied up in land. All land non-cash flowing largely land. Okay. Now, when you don't have cash flow and land typically doesn't cash flow, you got like farm ground or something different. This isn't in that. So, he's actually a rancher and it's like Yellowstone. Think that, but not as cool. Um, so Katelyn, but all of his money, right, you could have your a massive net worth, but if it doesn't have cash flow, you actually won't feel really wealthy. In my opinion, cash flow is what makes you feel wealthy. So, my argument here is you have two different choices. is you could invest your your money, your investable capital in two different ways. They could be in things that are paper that you believe are going to grow in the future and those investments will pay off. There's nothing wrong with that. For me, my entire net worth is focused on cash flowing assets. The more quiet the

48:26better, but I want businesses, real estate, and debt that I own to cash flow massively. And so Katelyn, the second guy I have, my second buddy, his entire life is into the most cash flowing uh passive assets you could imagine. And he lives exactly like you think, flying across the planet, doing the most epic things, and living an incredible life with zero stress. So both the same same result at the end of the game, Katelyn, radically different lives. So we've got to think about the assets that make up our net worth differently. Are they the assets that we should have at the end of our destination? And are they getting us the peace and the results we wanted from our wealth? All right. Third thing there, what stops people becoming a millionaire? The urge to be liquid. So Katelyn, the first one's really about just selling stuff. This is just the old things real is cash, right? We can't have anything else that isn't cash. Everything else isn't real. So we're just you're going to hear this argument. You hear it in our live events. People just say, "I've got a

49:28whole bunch of money in cash and I'm sitting and saving and I don't feel comfortable in investing." And I tell this story. A lady walked up to me. I said, "Well, what is your monthly burn rate? What do you spend on a monthly basis?" And she said, "It costs you about $8 to $10,000 a month to live my life." Um, and I've got about $925,000 saved up and I just need to save a little more and I could start investing. And I said, "Can I ask you how long a question? How long have you been saying that?" And she's like, "Well, I've been saying that for for 10 years." And I said, 'Well, so we've got to come up with a multiple of your burn rate, right? You currently have like nine and a half years if you didn't work or 10 years. And so that's too much, right? There what we need to figure out is where does your head hit the pillow and we've got to start investing. And the reason we have to invest, cate Katelyn, is inflation inflation is working against our returns all the time. You know, we filmed an episode uh about three episodes ago, which we'll link in the show notes, which is all about how inflation can make you rich if you understand it. Go back and watch that episode. Josh Metal

50:31is absolutely doing it differently. So, there's things you can do to counteract it, but we've got to think different that we cannot have all of our assets in cash. We can't have everything liquid. We've got to have investments that are moving us toward our goals.
All right, killer. Next thing you did, so just those first three, it's so funny because I think you brought a lot of people some peace at the beginning of this call. You said, "Listen, we've got models." When you're choosing to buy your primary residence, when you're looking at the repairs on your cars, there's models here that give you a red light, green light. You start all of us on this wealth journey when we come into your world of how to invest to be worth 50 million within 30 years. And there's an entire model around that. When to know what to invest in and what rates of return and understanding our DRV, all of those models exist. And as I'm listening to you go through even just these first three principles of what stops people from being a millionaire, we have models

51:33for those. So visiting your capital and and the need to be liquid. We have a specific model around how to set up your bank accounts and to put your burn rate and your cash reserves aside and you teach everybody that on this podcast. So the really cool part is as you're going through this and we'll link them in the show notes. We have models around each of these to safeguard that all of our listeners don't fall into these traps. I didn't quite put that together until we started down this path. And so we'll link that in the show notes. But you put together the models to stop people from going in these. We have no excuse.
We've got we've got to have logical. We've got to make decisions based on the math. Right? There is just the universal language of business is math. Actually, most parts of your life where you have a problem is a math problem. Even the relationship with your spouse or kids, that's a math problem. like the quality time and how are you measuring it? All of it's math and if we can get better at letting the math be there and then make

52:36a decision based on it and try to remove the emotion. The next one, Katelyn, there's nothing more emotional than debt. So, what stops people from becoming a millionaire? Debt. Debt's highly personal. How much each person should have is going to vary person to person. There are some universal truths that number one, debt does create more risk, right? That's just a fact, kid. If we're borrowing some money as opposed to paying all cash, that creates risk. So, what happens to people? The weight of debt causes them to want to pay it off. And without significant cash flow, they see selling assets as the only means to pay off the debt. They don't trust the assets that are in beholder value. So, they think they're going to time the market. Katelyn, you I hear this all of the time, Katelyn, I'm going to sell. The market's at an all-time high. I'll sell and then I'll try to buy at the bottom. Well, unless you're going to sell in rent and wait, you're likely going to sell at the top and buy at the top or sell at the bottom and buy at the bottom. And so debt, the way I would think about debt, number one, I don't believe in debt on anything that isn't

53:38attached to cash flow. So other than your primary residence is the only exception. But Gayen, I don't believe in any debt to finance toys. I don't believe in for cars, boats, planes, trains, or automobiles. I don't believe in debt for any of those things. Why don't finance luxury? All you're doing is you're trading your future income, right? You're going to have less future income because debt takes advantage of your future income. Now, debt on cash flowing real estate where someone else is paying down your mortgage and you cash flow beyond it and you have reserves. I'm all about it. I'm good with it. We do it all the time. Now, Katelyn, how I think about debt is a percentage of my net worth. Everyone should look at how much total debt you have. Divide that by your total assets, right? What percentage of debt verse your net worth, what percentage of debt is currently your net worth, right? Uh divided by your net worth. And so I think you've got to determine what number is comfortable for you. Katelyn, I am uh most people think I'm one of the

54:41riskier people. I'm actually one of the more conservative folks. And so I keep a tremendous amount of reserves in all things because I have scars. we talked about here I have scars from 2008 9 and 10 that will never heal and they're good reminders of mistakes that I made uh with debt back in the 2008 910 period and so I learned from that I did a deep dive and I would just tell you that if you always focus on buying any asset I never put less than 30% down Katelyn that's just me I put 30% down or more I want to have reserves I I mean all the debt that I take on is long-term I don't believe in short-term debt I on long-term fixed debt where I can leverage inflation, paying it back with future dollars that are worth less and I'm locked into it. So, I'm using inflation as a tool. Again, debt to me is a tool that I can use to work against inflation. So, can we talk about this? What mistakes do you see people make as it relates to debt in our world? Katelyn, what are some of the mistakes you see people make?
Overleverage. That's the biggest one.

55:45Um, or leveraging with a variable rate. That's a big one. Um, but really the the common theme that we'll see is that they've overleveraged a property. So the big key for you as you mentioned, you know, you're 30% down. You'll put as much money down in a property as it takes in order to make it math into what works for you from an appropriate expense and debt load to the right rates of return. And I think that a lot of our clients are so excited and so eager to move quickly that they shortcut and overleverage on properties putting themselves at risk that isn't really necessary. Moving slower, safer, and smarter tends to get better results over time. And I think we're so excited to get going that sometimes we um we overleverage or or get ourselves into a debt situation that uh may be okay right now, but when the proverbial rattlesnake

56:49approaches, we may end up getting bit. Do you see what I did there? I tied that all the way to the first part of the story. That was that was as good as it gets, Brett.
That was a very good tieback to the rattlesnake story. But the I would say uh and when you say overlever, let's talk about examples. Uh let's talk about burr. You know, the whole buy, rehab, rent, refi, that whole it's cold. Um you know, I just call it a cash out refinance. That's what it it's always been. And then that doesn't sound as cool as burr, but overwhelmingly people find out when they burr and they get 100% of their capital back immediately. Katelyn, what happens is that asset no longer cash flows because what makes property cash flow is typically you're making a significant down payments. What make it work? Usually, if you rip all the cash out of an investment, uh, unless it's appreciated significantly over a number of years and rents have changed dramatically or you've done some value ad, typically when you pull all of your cash out immediately after purchase, okay, that's going to destroy your cash flow. And so, debt, it may be slower, but you're going to want to take

57:53less risk. And so figure out what's right for you. Do not overlever. And the last thing that I see people doing today, Katelyn, I see people borrowing the down payments. They're putting the 20% down, but they're borrowing the 20% from a third party, creating double leverage, you know, or even triple leverage on things. And it's just if you watch the last downturn, all of the people doing that uh in the in the 2008 910 the great financial crisis uh overwhelmingly got lit on fire and it didn't work out. And so debt, be careful. Find out what's right for you. Make sure if you're taking debt, the way to offset the risk is through reserves. And make sure you're not taking unnecessary risks.
All right. You say this often, um, and I think it deserves being reset. When did it become a bad thing to have your own money in a deal? When did it become a negative?
Social media created that. I don't know exactly when, but yeah, it became this game. And you're right, our clients, I hear this and it drives me crazy. I

58:58have no money in the deal. I go, why are you proud of that? Like, it's like it's a source of pride, right? Like, I don't have any money in the deal. I'm like, well, that just means it has a lot of risk. I have lots of money in all my deals. That's actually kind of what lowers my risk. So, I don't I I don't know, Katelyn, when that became a thing, but it is a people are really proud about like, you know, they get obsessed with other people's money and and leverage and leveraging the leverage of the leverage. I I don't know when that became a cool thing, but it's not cool. Um, what works in real estate and investing is having capital in the deal. And the way I I I say it, I'll challenge people in the room. I've never heard a ridiculously wealthy person say it. Okay? I'm never You're never going to hear Warren Buffet say, "Gosh, I did that deal and went and borrowed it all back and boy, I took limitless amount of risk and have no cash in the deal." They never say it. He's like, "I'm looking to deploy capital into a deal." Like, that's what investors we do. We deploy capital. So, why are we trying to go get it all out of it, Katelyn? I don't understand that. I don't I don't get it's you need to have money in deals. That's what works. So, having money in

1:00:00there is part of the game. Probably nothing stops people though, Katelyn, from becoming a millionaire more than this next thing. And that's the need or urge to live high on the on the hog before your cash flow can support them in that way. And here's what the really wealthy do. They go buy the income producing asset before they upgrade their personal life. So, Katelyn, if my wife wants to have a new Range Rover lease and that's what we're going to do, if that's a thing hypothetically is a story that kind of relates to our scenario, uh I'm not a big car lease person, but I am procar leasing with my wife because she can tear it completely apart doing whatever she does and every 3 years we can just ship that back and go get her a new one and that makes her happy. And happy wife equals happy life. So, Caleb, if I want to have the $1,700, which is the the new Range Rover lease, I will go create the $1,700 first because I'm against paying for it. I don't want to go pay for that myself. That's not cool. I want to go buy an incomeroucing asset or go create enough

1:01:04hard money loans that pay for that. So, I'm not paying for it. And if we just change that, Katelyn, and go create the cash flow first, you are always moving the right way. We're not upgrading our lifestyle in a way that's not reflective of our cash flow and that can support us in that way. So what do you the needer urge to live high on the hog, right? Are you comparing yourself and making decisions based off what you would would be cool to people you don't know who you don't even know what they would like, right? It's just not needed. And so get really clear on what actually adds value. But living high on the hog is probably the number one thing when people's burn rate, their incomes increase. and their expenses at home increase in lock step. You know, if I were to summarize um the single best skill you could do would be to grow your income dramatically and hold your expenses as close to where they are today as long as you possibly can and slowly let them incrementally increase as you grow your income. And investing that delta into things that cash flow is the best way to think about this.

1:02:09you say a comment um or these are just a lot of things maybe you just say them to me but one of them is that a luxury once experience becomes a necessity and I think control the the biggest piece that was a gamecher for you and for your family was that you really ensured that you maintained your fixed expense load from house cars cars, etc. for your lifestyle and utilized all of your extra cash for investments for an incredibly long time such that all of your neighbors, all of your friends, they were curious what was happening over there at the time, Tanner household. you weren't necessarily starting to show a lot of your wealth early on because you were so so um structured and disciplined in your investment strategies. And then over time all of the sudden it looked as though your wealth or or your net worth

1:03:12grew out of nowhere. And the fact of the matter was it was because you had kept your expense load and the amount of money that your family was spending so controlled over time, living comfortably but definitely staying within that threshold such that you never compromised on the amount of money that you wanted to invest every single month. That that sweeper or that pullover of capital every single month into your war chest to go and invest with was never compromised. If anything, there was more put into it as your income grew. You didn't say, "Hey, income grew. We'll keep 30% savings rate and blow the other 70%." It was no, we're still going to take that entire amount and continue to sweep that into the investment strategy. And I think that's where a lot of us can continue to have that discipline. You're likely living comfortably today. hold exactly where you are today or reduce it today, but as your income grows, take all of that additional money and go and

1:04:16invest it today. Do not separate it out where, oh, we'll live on some of it and throw some over to investing. You'll gain incredibly if you can sweep that additional amount straight over to your investing bucket or or as you call it, your wealth coordination account.
Yeah. K. It's a really good I mean for a number of years I would say until about six or seven years ago um I think all my friends were kind of worried about us Taylor and I. They were like wow these guys don't seem like they're doing that well. Um because every dollar I made was being invested. Uh and we were really strategic about it and and we lived a good life. Um maybe a great life but we weren't flashy, right? we was all of our I just owned lots and lots of real estate and investments and companies and it it worked really it was and I did it for a long long time and then certain things started happening where I upgraded some of our our assets and you know that got the attention of others at that point but Katelyn to your point living beneath your means and holding on as long as you can is the secret to

1:05:18doing this um most importantly here on the other side of it to go massive and become a multi multi-millionaire Um, and what stops people from doing it? The people that do do it understand that people are investment. The people that aren't a millionaire look at people as a cost. And one of the trainings that I've been to, Katelyn, the the instructor said, "There's no costs in life. They're just good and bad investments." And I think it's a really good way to look at the choices we make. Was that a good or a bad investment when I go spend my time? When I think about my time or my money, if I'm going to go spend an hour doing this, is that a good or bad investment? Right? I'm going to spend my money in this. Is that a good or bad investment? So, they don't see people as an investment or an asset. So, Katelyn, I I the way I always describe it is let's imagine there's a $350,000 home out there, Katelyn, and this thing's going to net. We're going to pay all cash, okay, for this $350,000 home. It's worth 350, but we can somehow buy it, Katelyn, for 200 grand, okay? I don't know why that is. We found the greatest deal ever. Um, so we could buy it for 200,000. And we're just going to pretend

1:06:21that this deal nets $25,000 a year. So, we could buy it for $200,000. It's all cash. It's going to make us $25,000 a year in net income. And I always, you know, in a seminar, I'd say, "Raise your hand. How many people would buy this house?" If you're listening to this and that deal comes across your desk, you should 100% buy it. So, all of us should be saying yes, we would buy it. So, Katelyn, that's an investment we would all do. Now, what if we went out and hired someone for $200,000 a year? And Katelyn, they've got a crazy job. Their job is they're going to wake up every single day and this person, Katelyn, would bring you deals and based on your criteria. Every day when you walk into your office, there's five deals sitting on your desk that match your criteria. Katelyn, you could buy any one of them you want. You can sell them to your investor clients if you wanted. Um, you could sell them to your buyer database if you wanted to as well, but you could make money on these, but you could transact on the ones you wanted. So, how much money, Katelyn, if that person did that every every day for you five days a week over the course of a year or paying

1:07:25them $200,000? What's the potential if it all went well? How much could they make you in a year? Katelyn, what's a guess?
An infinite amount. Um, but a good rule of thumb, I mean, the the rule of thumb is that you should be able to get three times the investment
in the return. Yeah, you could get 200, 400, you could get your example, you could get $600,000. Is that possible? It's absolutely possible. And so I And by the way, how I know this to be true is I've had this setup, this exact setup, and it didn't cost $200,000, but I've for the last 15 years of my life, I go into my office every day and deals are coming in that we're looking at and underwriting and trying to invest capital into. And I can tell you, you can make far more than the expense that you paid. So, the analogy we use here is we've got $200,000. Most all of us would go out and buy that house. We'd be happy to do it. We would close on the house. We'd make 25 grand a year and be excited. How many people are going to go quit listening to this podcast today and

1:08:27go out and hire the person for $200,000? And most people pause for a moment. And the reason we pause, Katelyn, is we don't know that that result of hiring that person will lead to the result we want. In other words, if I hire that person doesn't work, I just lost $200,000. Like that that wasn't a cost. That was a bad investment. And as the leader, we determine that investment. So if you want to become a multi multi-millionaire, recognizing that people are the greatest financial investments you could ever make. They're the greatest financial investments, but they also pay you in other ways, right? having an incredible team, the emotional connect connectivity, the wins created as a group, the culture you can be around and being around a players and what that does to lifting up the organization is so powerful. And so the people that are playing at the highest level, think just radically different about people, right? Dan Sullivan wrote this incredible book, we'll link it in the show notes, called Who, Not How. And Katelyn, we're always going out there

1:09:29and we're figuring out how am I going to do that? How am I going to double my business next year? How am I going to execute the marketing strategy? How do I go double my net worth over X period of time? And instead, Katelyn, we have to change that question. We need to go and say, who can come into my world and help me find those investments? Who do I need to be in relationship with to help fix my marketing? Who's the person if they came into my world could help me double my net worth over X period of time? Who could I hire that could go find those five deals that I'm going to look at every single day? And so if we change the way we're thinking about people is there investments that pay multiple different dividends it and they will pay exponentially more than any asset. Let's go out and figure out who those people are that are going to allow the breakthrough and start investing at them so we can get the results that we want. Katelyn, when you think about people as an investment and you see the impact in our organizations and the analogy I always use around folks is, you know, an A player costs about 30% more than a B player

1:10:32and they can create a 3x or 10x outcome, right? We've got people in our organization that they make 30 or 40 or 100% more than maybe their counterpart, right? Both human beings, both in similar, you know, I'm in administrative roles. Yet one person can produce just 1x of what you expect and one person can can produce 10x. So that 30% premium becomes the greatest deal ever because a players just outperform in a radically different way. So when you see people Katelyn as an investment, why don't more people think like this?
Well, it's bizarre, right? We we go to these welk workshops and we will literally all of us that are listening and and sitting in that audience will kill for a 20% rate of return. Like we will do anything for it. We will run through walls. You just started this entire conversation at the beginning with a 20% rate of return to worth like

1:11:35270 million putting away 20 putting away $3,500 a month over the course of 30 years, right? But here, if you got a 20% rate of return on a person, you would be disappointed. You should be able to get more. Correct?
So,
it's always hundreds of percent on a person,
right? So, why wouldn't all of us spend the same amount of time that we currently do chasing incredible real estate investments, all of these other pieces that we're looking for? What if we all slowed down and made these two investments first? number one into ourselves and our education and our leadership and number two into hiring the right person to either go find us those deals or to buy us back more of our time such that we could go and get them. And I think it's because that takes work, Brett. It's really a lot easier to plug some numbers into a spreadsheet and see if the math on a hard asset works. But to get this kind of rate of return does take time, energy

1:12:40and discipline, but the the the return is exponentially different.
I I could I I have said this uh more times than I could count, which is you are one person away from having a radically different life. You're that one relationship away. Um, I was I am blessed that one of my first ever employees, Sabrina, who started as my part-time personal assistant over 17 years as a trustee of my estate and really my boss and tells me what I can do most days. Um, and I made that in the mode best way possible. But that investment um that I've made with her has been the greatest investment in so many ways. And I would not be in the same position in the last 17 years without her help. There's no question about it. Freed me up to go do the things I'm doing. And so I want all of our people to realize when you get people that are that great, you've got to start looking at investment, you've got to pour into them. We got to think differently about our people and about how we invest in them. All right, Katelyn, this should be an issue for none of our people on here because

1:13:42they've they're listeners of our podcast. Everyone on here should have a wealth buildinging plan they trust. What stops people from becoming a millionaire? They don't have a documented plan. They got rich instead of perfectly built instead of purposely building wealth. So, they don't actually know what caused them to get rich rich. So, they can't duplicate it. And so, Katelyn, everyone on here, if you do not have the 30-year plan, you can go get it. We'll link you the video in the show notes. Go build out your 30-year plan. Follow the exercise and do it and have a wealth buildinging plan. And so, when you do your net worth every single month, you're looking at where are you at now? Where are you going to be in January of 2027? Where are you going to be in January of 2028? On the track, Katelyn, to get to where you wanted to be so you can live your best life, you've got to have a plan and you've got to have check-in points. People do not miss their goals because they didn't have a great plan when they started. People miss goals for one reason. They don't check in often enough along the way. They don't look at the mile markers on the side of their road as they're driving on the road to their plan.

1:14:45Katelyn, this this 500 mile interstate, they just set the destination. Here's where I want to be at 500 miles. And you know when most people look Katelyn where they are, they look at mile 499. Well, if you're totally off track and you wanted to be worth 50 million and you're at the mile 499 on this path, right? And you have not done anything and you're off track. Well, you're going to miss. But Katelyn, if you go off track in the first mile, you've got 499 miles to figure out how to get back on track and get to the destination you wanted. And so, we've got to get better at creating check-in points along the way. We've got to have a documented wealth buildinging plan we trust. Now, Katelyn, here's one that's very simple. If you spend more than you make or you spend all that you make, you don't have any money to invest. Every single person has money they can invest. Everyone can save 50 bucks a month. There are so many ways that you can make money out there. So, Katelyn, if someone isn't where they want to be, the f they bring me a problem and and you may have heard me do this. We'll have a salesperson who's new in our organization and they're a little behind. I'm behind on a few things and

1:15:49you know they're working 40 hours a week, right? My immediate question I ask them, "What are you doing tonight between 6:00 p.m. and midnight?" And they go, "Well, I'm going to go home." I'm like, "Yeah, you need to get another job. Get a side hustle. You've got to go do something to get yourself ahead. Life has costs. You get to choose when you pay them." If you're not where you want to be financially, start putting in more work. And I know Kayn that is just anti what about balance and I need work life balance and I need more yoga and all that stuff. At certain points in your life you just need more time on task. You need to be picking up your phone, getting in the game, hammering the phone three hours a day and doing whatever it takes. There's this bad myth out there Katelyn today that uh if you work hard it's bad. Like I don't understand why that is. What if I have really big goals and I want to have a massive life and it takes a lot of work to get that Kayn. That's okay. It's actually okay. And I've told this before it's a little aggressive. When I talk to my ridiculously wealthy friends, Katelyn and we're out there, you know, we're having a couple drinks or we're at a

1:16:51mastermind or we're talking. Do you know what never comes up? I've never heard one of them is crushing it go, you know what I'm working on right now? Just have a little more balance. Brad, I'm just looking for a little more. I'm looking for a little more balance. These are warriors and warrior S's out there. Is it Is it Warrior S? How do you How do you get there? What's the female warrior? I don't know. Imagine Lega from Vikings. Okay. The female warrior going out there. She's not worried about balance. So, we've got to go out there. If you're not where you want to be, crank it up. Grow your income. You can absolutely do it. Get your income up. Get your expenses down so you have money to invest. There is no reason today with the education resource out there. Being broke is a choice. Don't choose that choice. Katelyn, one of the last things that stops people becoming a millionaire, probably my favorite, they don't actually study the rules of investing. People don't spend the time. There's there's books, there's podcasts, there's tapes, there's trainings, there's YouTube. There's no excuse today to not

1:17:54understand things because information is so accessible. Yet, Kalin, what I believe is people have lost the art of education. It's all clouded around entertainment and they call it education, but it's just entertainment. If you're watching stuff like I think Joe Rogan is awesome, but I would call largely Katelyn Joe Rogan stuff is entertainment, right? It's highly engaging entertainment. There is some now Andrew Huberman if you're on there and the health that stuff's medically backed science data and Joe Rogan's a genius. So, I'm not making a broad statement, but Katelyn, we've got to get better at understanding the mechanics that actually drive change in performance. And a way to do that is by studying what actually works from people that have been there and done it. So, if you're not studying the rules, you're not playing the game. Learn how to go after study the things that will actually improve your life. Katelyn, reading is the lost art. And I talk this all the time, like go if you're if you're not good at reading, go get a reading class. I could show you around. I don't know if I could. I've got more books. My wife, are you in the business

1:18:57of just buying books? I'm like, well, I actually do read them, too. Um, I am like that weird guy. I'm like Bill Gates in that his documentary where he's always carrying around this satchel of books on them. I'm that guy. I am a voracious reader. I read 50 books a year. I do it every single year. And I will tell you that I make a lot of money. My fortune has been created through my education. I I believe that there's a key thing to drive down here though, Brett, because there's a big difference.
I think is the first key you're going to drive down that the books won't read themselves.
No, that was not going to be it. I was
Katelyn, that was just I was just I was just I was just joking there. I was just joking. Um, well, speaking of of interesting things on that, was it one of your kiddos, you said it too, and it was all of the secrets to the world's wealth are sitting inside the libraries and nobody's going to them. Nobody's reading the books. They're all for free at the library. We all have access to it. There's no excuse whatsoever. However,

1:20:01
the answers are b they're not buried in the conga. They're not hidden in a cave with no map, right? It's literally in a public library for free. the world's information is there.
I think there's a big difference, Brent, that you may not see as weird, you know, like Warren Buffett, uh, but it is it's different. And that's the way that you choose what and how you educate yourself on. Uh, a lot of people, myself included, at at one point before he helped me to see a different way, enjoy reading books on business and wealth from a topical perspective that is um, fun to talk about, topics that you love to talk about, right? So, a lot of times you'll just read what's the hottest new business book or what's everybody else reading that's exciting right now. And you do read some of those. I'll think of it kind of like a church. There's like a topical sermon on love and forgiveness,

1:21:04right? And there's a different way of studying at church which is much more of we're going to go verse by verse and study in a really aggressive way, right? There's two different types of sermon. There's also two different ways to study when it comes to investing comes to wealth. You can have a topical, we'll call it leadership, wide angled, and those are really, really important. But when you're looking at understanding the rules of investing and studying money, the way that you do it, Brett, is incredible sniper focused deep dives. So, for example, you wanted to become educated at a really high level on taxes. You knew enough to be dangerous, but you didn't know as much as you wanted to and knew that as your income kept growing, you better figure it out because it's going to become a very large area of opportunity for you. So for a year you went as deep as possible and read every possible book that you could interviewed as many people as you could to become an expert in that field. Directly after

1:22:08that same thing self-directed I don't know how you pick these things. You pick like the most boring topics. You then went to like self-directed IAS, right? How can I become the ultimate expert when it comes to self-directed retirement accounts? And you read as many books as you could, found the one where you thought that person is the absolute expert, and then went and literally you could befriended custodians that run self-directed um businesses, self-directed custodian businesses such that you could understand it at the highest possible level and maximize that opportunity for your friends and family. Well, here's the cool thing. Now, you've introduced us to those people, so we get that opportunity. But you've become the expert in that, closed that chapter, and went on to the next. You did the same when it came to seller finance. Notes, you did the same in every way that you're looking at leases. Every education component, you go incredibly deep on one topic for an extended period of time to become the absolute expert.

1:23:13So a lot of us might be reading 50 books every single year and a lot of us might be saying look at me I check the box I I read more than a book a week. Are we reading the right books to become the actual experts to be able to not only implement the strategy in some component but implement at the highest possible level so that we can yield beyond that 8% rate of return but now a 12 15 20% rate of return as we layer the compounding effect of our education year-over-year. So my challenge here is don't check the box guys. Don't just read books to read books. Really focus on what do you want to be the expert in? Where's the biggest area of opportunity for you today? And then go and research it and study the money and study the rules of investing.
That's so good. Well, Katelyn, I I get the question right in a room. Someone say, "Hey, what's a what's a great book you've read recently? Can you recommend a book to me?" And I always give the same answer, which is no. Um they go, "What book should I read?" Well, what's

1:24:16the biggest opportunity in your life? What area do you want? Where's the biggest challenge or opportunity? Someone says, "I want to learn, you know, if they want to learn the seller finance, you have a bunch of rentals." And I would go down that route, right? If you're if you're making a lot of money, you're paying too much as taxes, then start setting taxes. If you want to grow your income, it's not where you want to be and you're in sales. Well, study sales. If you if you're growing a team and people aren't sticking and and you've got employees that are rolling out the door all the time, well, then study leadership and management and realize those are two different things. And so, don't just pick a book up and meet it for entertainment. you're reading around topics that improve the quality of your life. So, make sure you've got a plan to go tackle that. Katelyn Jim Car's not known for being the greatest philosopher of our time. Yet, very wise dude. Uh, he's got this quote, "If you're not willing to downgrade your lifestyle for a year to have a lifestyle you want forever, you care too much of what other people think." You care too much about what other people think. Great quote by Jim Carrey. I think this is true, right?

1:25:17People are going out there to impress people they don't know with stuff they don't need. And so that was our those are the 10 the major reasons Katelyn why people aren't a millionaire. We'll have different trainings that talk and break some of these down in the future. But as we're wrapping it up here we've got this newsletter. Everyone should get on our newsletter. It's once a week. We're taking a get free moment and we're sharing with you different financial tools, strategies, ideas. We talk about what I am reading again, which may or may not be for you depending on where you're at in your journey. But everyone, go get our newsletter. You can sign up at bewealthy.com. You can scan the QR code on your screen or we will drop a link in the show notes where you can go out and chase it. I want you to write down in your notes today. Go back and look at this episode and think about the reasons that stop people from becoming a millionaire. Which of those apply to you? Which area do you need to improve? What's the area of your life you want to improve? And let's go deeper into that topic, Katelyn. And let's also go build mental models for the largest purchases in our life. Make models so you can make

1:26:21logical decisions, not emotional decisions, and you can get more out of it. Katelyn, last thought as we're leaving here, end of towards the end of 2025. What do you want to share with our audience before we leave here today? I think one one of the biggest components that can make the the largest impact for you is the compounding effect of all of this. You know, we we meet we release a podcast every single week. You've got the newsletter and we put this awesome where you put together this really great get-ree money move every week that should take someone less than 20 minutes to implement in their life. but compounding each of these small bites week over week, month over month, all compound into executing your wealth plan. So, if anyone's listening to this and a little overwhelmed, I would say just get started. Take one thing that you heard us talk about today and go do it. Maybe come back, revisit this podcast in another week and pick another

1:27:24one, but just pick one thing and get started. I think that's the biggest piece that of your private clients who've made the most um progress with us. It's that they take one piece and they get going. And so today it might be determine what the biggest opportunity of education is for you, order the top three books on it. It could be, hey, I'm going to run some numbers and sit down with my spouse and we're looking for a new home, but we're going to look at what should we really be able to afford and and how does that make sense? It could be something as simple as just going to the VW wealthy calculator and typing in and getting inspired what is possible for you. You know, not all of us look at it and say, "I need 272 million." But some of those numbers get really exciting when you put them in for your actual future and to realize that you actually can do it. So, I know it's inspired me and I'm super grateful to be on the journey and follow you. Katelyn, what they say is education without action is entertainment. So don't make this be the entertainment part. Make it actionable. Go out and

1:28:28absolutely get benefit from this. That's Katelyn Mitchell. I'm Brett Tanner. This is the Be Wealthy Podcast. And we'll see you all here next