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Section 1
SAFE: STATUS QUO KILLERS
âStatus quo, you know, that is Latin for âthe mess weâre in.ââ
âRonald Reagan
âBureaucracy defends the status quo long past the time when the quo has lost its status.â
âDr. Laurence J. Peter
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Chapter 1
LIES, ADVENTURES, AND KILLING THE STATUS QUO
I was lied to.
Lied to by Washington politicians and the Wall Street propaganda machine.
I started my career helping business owners improve their businesses, increase their cash flow, and grow their profits. Itâs always exciting to see a client increase their income and create financial independence while working with me. Itâs one of the most satisfying things I do.
As I started making money, I was shocked at how much I was paying in taxes and immediately looked for as many tax advantages as possible.
With the advice of our CPA, I created an IRA so I could get the deductions and I invested that money in stocks. I was also buying stocks on my own and putting money into several other funds managed by âexpertsâ in the market.
Seeing the numbers these investors were quoting, I was excited by the idea that my money could be doubling every seven to eight yearsâŚthat I could create a million-dollar nest egg and retire wealthy.
That was my plan. Becoming financially independent was always my goal. Having the freedom to choose whether I wanted to work or not. Having the money to travel the world, enjoy a great lifestyle, and provide a secure, happy life for my family was my top priority.
I became so excited about the funds I was investing in, I even convinced my own family members to invest their hard-earned money as well.
I listened to many of the major gurus on TV and so called experts on Wall Street and became indoctrinated by the Wall Street propaganda machine. I had been convinced that I needed âaggressive growthâ during my younger working years in order to create a nest egg and have a good retirement income in my later years.
The allure of huge returns and people getting rich in the market was blinding.
Like a fool, I didnât look deeper into the Wall Street machine to see who was really making the money.
I didnât realize that I had been indoctrinated, like millions of Americans, to do exactly what the puppet masters in their New York towers wanted us to do.
Who was getting rich in this system?
Was it the average-Joe investor?
Were there really any mutual-fund millionaires?
Or were the guys at the top who managed the funds and charged the fees making all the money?
Like one investor quipped when he visited the yacht club for the fund managers, âWhere are all the customersâ yachts?â
But I never asked those questions.
I was high on âHopium.â I was hoping that I would get great returns by investing in the market.
Then, at once, it hit.
In a heartbeat, like many Americans, I lost over 35% of the hard-earned money in my stock and IRA accounts.
This was a crushing blow.
I was sick about it.
My dad had warned me, and like a fool I ignored his advice and paid for it.
I felt terrible, but at least I was young and had time to recover. I actually felt even worse for my business partner, Ethan, and his father. Ethanâs father lost over half his retirement savings, savings he had worked over 40 years to build.
The timing couldnât have been worse.
He had just recently retired, and now the plans and dreams he and his wife had were dashed. It was financially and emotionally devastating.
The drop happened so fast that there was literally nothing I could do about it.
Many people felt the same wayâhorrified by seeing their hard-earned money disappear right before their eyes, but powerless to stop it.
Of course, any time a crash happensâ(whether itâs 1973, 1987, 1997, 2001, 2008, or the next crash)âthe money magazines, the talking heads on the TV investing shows, and the brokers on Wall Street all echo the same talking points like a chorus of trained parrots. âDonât sell, donât sell! Hold on to your stocksâtheyâll come back.â
In true fashion, over the course of five or six years the market slowly creeps up, just barely edging back to where it was before the big crash started.
People breathe a collective sigh of relief. âAt least my money is back to where it was before!â
Itâs celebrated, like getting back to even is some kind of great achievement, even though people have lost five years waiting for it to happen.
What no one will tell you is that, on average, over the past 100 years, every 5-7 years thereâs another market correction or market crash. Often, this takes investors on a yo-yo ride of ups and downs, only to see that, after 10 or 15 years theyâre about where they started.
The reality is youâve lost those five years forever.
But itâs worse than that. Itâs not just about market lossesâitâs also about taxes. The ravages of taxes can be as deadly to your wealth as market losses, or in some cases, even worse.
In this book, youâll discover the truth about the so-called âtax benefitsâ of qualified plans (i.e. 401(k)s and IRAs) and it will probably shock you, like it did to me.
After the experience of losing over 35% in my IRA, I said enough.
One of my core values is âFind a Better Way.â
So we went on a mission to discover what real-world millionaires were doing to protect their money from taxes, to grow it with good returns and keep it safe while everyone else was getting crushed.
This mission took us on trips across the country and back⌠giving us exciting experiences we never could have imagined.
One of our first mind-blowing moments happened in a small town outside of Atlanta, Georgia. Ethan and I met with a financial expert who trains thousands of financial advisors across the country on how to help their clients save on taxes.
On a whiteboard, he took us through the numbers and showed us exactly why qualified plans actually cost people more in taxes than they saved them.
We were shocked.
Even though I saw the math with my own eyes, I refused to believe it. I said audibly, âThat canât be right. Qualified plans are supposed to save us taxes, not cost more in taxes.â
He replied with a laugh, âDonât worryâEveryone says the same thing when they see the truth. At first Itâs hard to believe because youâve been sold on the status quo, but the math doesnât lie.â
In chapter 4, Iâll walk you through the exact same scenario he showed us ⌠and I think youâll be as shocked as I was.
Another amazing trip took us to Detroit.
We were picked up in a limousine at the airport and driven through a part of town that looked like a war zone.
This happened during the midst of the Great Recession. Car manufacturers were crushed, Detroit unemployment was off the charts and the city was dying.
The roads were torn up with potholes everywhere. We drove past buildings with windows completely broken out and homeless people on the sidewalks.
The trip took us 30 minutes outside of downtown Detroit to a big office in a small town. Jimâs company was making over 50 million per year, and he was a very nice, down-to-earth guy. (So down-to-earth in fact that, after our meeting, he took his motorhome into the mountains for two weeks and left his cell phone at home.)
The âah-haâ moment here was when he showed us a concept we could use that allows everyday people to earn gains on the same money twice. Banks use fractional reserve lending to earn interest on money they have already lent out. This strategy allowed us to do something similar.
We learned how to finance ourselves in buying cars, homes, vacations, and making other major purchases through a financing system we could control and profit from instead of paying banks to finance those purchases.
It was mind-blowing that everyday pe...
