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Highlights from this episode include:

  • The first concept you need to grasp before you attempt to build a financial network or you’ll lose everything (4:40)
  • How to use asset integration to stop “retirement tug-of-war” from draining your bank account (9:35)
  • Two surprisingly counterproductive ways to use a cash surplus and how to put it to work growing your wealth instead (12:51)
  • How to beat the banks at their own game and use credit cards to grow wealth (14:55)
  • Why HELOCs are the smart investor’s secret weapon for money management (15:31)
  • The counterintuitive reason you should be prepared to walk away from your job today (even if things are going great) (20:57)
Read Full Transcript

Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.

(00:19): Oh, hi everybody. This is Harold Green and it is time to stop doing what you hate. How are you today? Hopefully you have had a fantastic week and I'm looking forward to sharing with you guys. Today's show, title, building a financial network. That's right. Building a financial network. Before I get into the show, I want to tell you guys about a conversation that I had yesterday with a client that I've known for many, many years, really neat guy. He's from the Boston area. And his name is dr. Elosa, but I, I call him dr. Jay and I was calling him back to do a follow up on something that he had requested. And so we got on the phone and we started talking and, you know, one thing led to the other. And somehow we got on the conversation of the things that are happening in our country, and he owns a business and I own a business, of course.

(01:23): And so we just kinda started talking as business people. And we were talking about the state of affairs here in our state of Hawaii. And he, he brought up a good friend of his in regards to what was going on with him. And he said, you know, I just had a good friend. He owned several, he owned several restaurants here, several different businesses and things of that nature. And basically he just got hammered and he had to shut everything down. And what he did was he shut his restaurants down, laid off as in his employees. And guess what he did, he left the country, Hey, he straight up, took off and went to now, he's traveling the world, doing different things. And I said, how in the world, our timeline is, can he just like up and leave like that? And he said, well, you know, he's been working hard for many years and he has saved up enough assets and resources, and he's always been ready for something like this.

(02:14): I'm going to put that out there. I'm going to say that again. He said he has always kind of been ready for something like this. I'm kind of paraphrasing what he actually said, but again, he's always been ready for something like this. And some years ago, folks, I built a program called rapid retire to put clients in position to retire seven to 10 years than they normally would so that they could be prepared for something just like this. And I didn't know at the time, how, how big of an impact this would have on people's lives because I had no idea coronavirus was going to happen or anything like that. The only thing I thought was I thought maybe people would get laid off or, you know, some sort of health issue or whatever else that I could see popping up in the future. So going to get into the disclosure and rapid retire and using our rapid retire program, there can be no guarantees made that you will be in a position to retire seven to 10 years sooner or any other specific period results of the program will vary by user.

(03:20): And that is a very important statement because I do have some clients that are doing extremely well with the rappers, our program. And then I have other clients who are, you know, they're, they're making a good effort and a good go at it, but sometimes things just don't click. So I want to get into the topic of building a financial network and why that is so important. And that's what I do inside of the rapid retire program. And if you guys want to know more, go to my website, retired now retired wild.com, download the rapid retire brochure, read through that. And if you want to know more, I'd encourage you to either give me a call at (808) 521-4401 or download the game changer form, fill that out for me and get me that information. And then I would love to get in contact with you and help you stop doing what you hate.

(04:07): All right, so you guys ready? Let's get the show today. One, two, three, let's do this. All right. Inside of building a financial network, there are some things that will have to take place. There. There are three main things that you have to be aware of, and that you have to have set up inside of your system in order to make a click in order to make it flow. The first thing you have to do is you have to make sure you understand your cashflow, your ends, and you're out on a daily basis. A lot of people are not that great. I tracking their ends and their outs. And so I encourage you to use some sort of software. And I know we do have software here in the office that we use for our clients. And what it does is they can link all of their bank accounts.

(04:52): They can link their checking accounts, savings accounts, they can link their credit cards. They can link their IRAs, their four, one K's, everything can be linked inside of the software in order to help them create that financial network. And with the cashflow, basically, it's really simple, right? You don't spend more than you make. And if you can do that, you're like, you know, 90% of the way there all the rest of it is just putting the other pieces in place. The other thing you have to have inside of your financial network, as you have to have a cash reserve system, right? You have to have a place where you can store cash or be able to get at cash. And one of the things I tell clients is when you're building your cash reserve system, number one, they have to be adequate. They have to be accessible.

(05:42): They have to be after tax. Okay. And always there. All right. So why do they have to be after tax? Well, the problem, I see a lot of times when people are trying to build a financial network or trying to just grow their assets and grow their net worth is most of their money is tied up in their IRAs and their 401ks, or it is, is tied up in their house. And I had a neat conversation the other day with a new client that was coming on board. And you know, they wanted to save for retirement, but they also wanted to purchase real estate. And they also wanted to do some other things, but we only have a limited amount of resources to go around. So I said, well, if you do this and save for retirement, then whenever you need to buy your house, guess what you have to do.

(06:33): You have to go into debt. And a lot of times when people come in and they, you know, they started telling me about their goals and their dreams and the things they want to accomplish. I see the habit, their money's in the wrong places, not necessarily wrong as an they did something wrong, but wrong as an well, if I want to accomplish this goal and I need this money, how do I get it? Well, either you got to take a 401k loan, or you got to take out a cash out refinance on your house, or you have to go through your home equity line of credit, or you got to use your credit cards, or you have to go to the bank and get student loans and different things like that. All because your money is, is tied up. Okay? The next thing you have to have inside of your financial network is you have to have a system of generating an income.

(07:18): And a lot of times, if you're a young person and you're working, you are the income generating machine. And a lot of times clients will say, well, when can I retire? And my answer is, well, when your income generating machine can generate the same amount of income that you need on a day in and day out basis for the rest of your life, without you having to pull the gears, press the buttons you want this thing sort of on autopilot. That's what I do for my clients is they don't really have to worry about where the money is going to come from because we've built that inside of the plan so that they can do what's important to them and that's living their life. That is my ultimate goal for all of my clients is not to have to ever worry about money, but to, to live their life and to enjoy their life and to enjoy their family, without having to worry about all of these different things.

(08:11): And one of the, the, the interesting things that, that come up in the meetings when I start going through assets and looking at all of these different things, I see people playing this game and it was a game that, and I just kind of coined the phrase financial tug of war. And I'll tell you guys what that is. But tug of war is a game that, you know, a childhood game that we played in, in school grade school. And I guess, you know, you can play toward any age and be a team of people on the left side of the road, get people on the right side of the rope, put a ribbon on it. And whoever pulls the ribbon across the line first wins the game. And what I say I see is I see people playing financial tug of war, basically plea on the left side of the rope.

(08:59): They have their dreams, they have their goals and they have all the things they want to accomplish on the right side of the rope. I see them pulling as hard as they can. And what I see on the sideline, cheering them on is their assets. Like their home equity is cheering them on. Therefore one K is cheering them on, you know, their cash reserve system is cheering them on and they're not really helping them accomplish their goals. And so in order to not play financial tug of war, we're going to have to do something very important with our assets. And that's called asset assets. Integration simply means being able to go in, in and out of your assets to take advantage of things that are happening in the marketplace or in the economy. Okay. For example, and this is only for sophisticated or savvy investors who have a good amount of cashflow coming in, or they have guaranteed income coming in.

(09:59): They know that if anything goes wrong, they're going to be able to replace that. And so let me just talk to you about investments real quick, that that statement all investments, including real estate are speculative in nature and involve substantial risk of loss, right? So whenever you we'll get into building a financial network, if you're going to be taking on risk and doing things that are risky, you have to make sure you have the risk tolerance. And I shared with you guys this a little earlier and a show title, the wise investor, secret weapon, and it's all about leverage. So I'm going to kind of go through a flow chart that I've built for my clients in regards to integrating their assets. All right, the first thing we have is a checking account. All of the money flows into their checking account. They pay their bills with that.

(10:46): If they're contributing to a 401k, that money goes into the 401k first, and then whatever's left right after that, that, you know, they have their taxes deducted out of their paychecks. And then that money goes into their checking account. So they get their net paycheck. From there. I encourage all of my clients to put every single thing on a credit card versus using cash or a debit card. The reason why is with credit cards, you can go and challenge and dispute fraudulent claims. And I'm sure you can. I kind of do it on your debit cards and things like that. I do, but you really don't want your financial information floating around out there. And you especially don't want things that are linked to your, your checking account or your bank account floating out there. So I feel that credit cards are a lot safer.

(11:34): They're easier to challenge and to dispute, that's just been my experience. And so put everything on your credit cards and then pay that off every single month. And if you're using a financial tracking system, that software will tell you what you're spending every single month. Because a lot of times you don't have time to sit down and balance a checkbook and bills. A lot of this stuff is done electronically and online. So you want your system to report back to you, letting you know what your inflows and outflows are. Okay. Then after that, you, after you pay all your bills, pay your credit card off, then you have surpluses. And what I've seen in the past is I've seen people sitting in their surpluses and either one or two places, either in their savings account or they're paying down their, their house, okay. They're paying down their house.

(12:24): And for me, those, depending on your situation, savings accounts, don't generate a lot of money. And sometimes they are non performing assets and inside of a proper financial network, you don't have any nonperforming assets. And that's why I like to use dividend paying whole life for my cash reserve system, because the dividend paying whole life policy will pay me dividends, even though the cash is not sitting inside the policy. And that's a very beautiful thing because I can go into my policy. I can pull the money out. I can invest it in the market. I can buy a car. I still have the death benefit they're growing for me. I still have the dividend is growing for me. It's a very beautiful thing. And so that life insurance policy is perfect for a cash reserve system because it is a performing asset, regardless of what's happening in the stock market.

(13:21): I have money invested in the market. I have money invested in other things, but the money inside my policy is still growing every single year. Well, that's one of the things that I do to integrate my life insurance policy into my financial network. The next thing I have is my investment accounts. Okay. And inside my investment accounts, I have various different stocks in there. And I also have a margin attached to my investment account because I want to use that margin account to buy stocks today at a cheaper discount than there are probably going to be in the future. And I'm looking at my future income to pay down my margin loan instead of having to wait until I accumulate assets, either in my savings or whatever, to buy the stocks, I am just using my margin and then paying my margin down. The next thing I do for asset integration is I have my primary property that I live in.

(14:16): And I also have a home equity line of credit attached to that. So with that, I'm able to flow in and out of my home equity line of credit. And I can flow into different places like my life insurance policy. I can flow into my investment accounts. I can flow in and out of those different things in order to accomplish the goals that I, that I want. So in the financial network, in order to accomplish the goals, we have to have a very strategic plan. And it goes like this and the flow chart. When you have a big ticket item, basically such as a vacation, I encourage the clients to put that on the credit card. When they come back, can you use their home equity line of credit to pay the credit card off? And then from there we can take from a cash reserve system or wherever, and we can replenish their home line of credit.

(15:03): And so what that does is it gives us the ability to continue earning revenue on our assets, because we actually don't need that money right now. There's a time delay before these things are due. And the reason why I love using the home equity line of credit is because it has a very low interest rate and I can refinance my line anytime I want. And the way it works here in Hawaii. And you can't normally you don't refinance with the same bank on your line of credit. I'm after your term is up. You can just go to another bank and they'll give you a line of credit and you, you know, take the introductory rate three or four, three years or whatever it might be. And then you go from, go from there and say, okay, when the rate changes go to, but you can go back to your same bank.

(15:45): And that's how it is works here. Some banks have a waiting period before you can redo a line with them, but if you're going to do three years and take advantage of introductory, then you can just kinda jump back, back and forth. Kind of like what people do with credit cards. You can do the same thing with your home equity line of credit. You just can't fall in love with one person tickler bank or the other. You're looking, I think for maximum efficiency in your financial plan. The other thing we can do inside of this financial network in order to increase our net worth and our assets, we can also look at rental properties, real estate. That's an option that's on the table, but it depends on the kind of market that we're in. So if we're in a, in a market that, you know, real estate makes sense, then we can do that.

(16:29): But otherwise we either in the market, the stock market, or, you know, there may be some other things like a business that you can set up. And then lastly, inside of the financial network, people have their IRAs and the 401ks. And a lot of times outside of the house, this is the biggest asset that they have. And we have to look at ways of taking advantage of that. One of the interests, things I've found is people who have the thrift savings plan. They have one of the lowest interest rates on loans available. The one of the things about the TSP is that I think it's a pretty decent program for people to save money and for their retirement, they have a lot of neat features in there. The only thing I have a problem with is they're limited in terms of their investment choices. They either have lifetime funds or an international fund on a large cap fund, the small cap fund.

(17:21): I think they have a mid cap fund in there or something like that. And so that's pretty much all they, you know, they have to choose from. And so in the situation like the pandemic, if you're invested in the 401k, I mean, in that you took a big hit, unless you switched it to something like the G fund, which you know, is like guaranteed funding and you don't lose money, but a lot of people didn't necessarily do that because they don't know the timing and you have to manage your own TSP. There is no one coming the site saying, Hey, let me look at your TSP and then tell you what to do with it. A lot of these people, or all of them are responsible for doing it on their own unless they call in and get help from the TSP hotline. Right? So one of the things I look at is based on the income and, and, and their financial plan, does it make sense to take a loan on the TSP and then invest that money outside?

(18:12): Does it make sense to do that? And the interest rate is like 0.7, 5%. That's really low. And, and the max we can take out is $50,000 and they give you five years to pay it back. Okay. So if you take out $50,000, you have five years to pay that back. And one of the things you can do is basically invest those funds. And then at the end of that five years, when that loan is due, if you haven't paid it back yet, you can just take your capital gains and pay it back. And depending on how well you invest it more times than not, if you chose the right mix of portfolio, you would probably be ahead. So that would be a good idea, but you're going to have to explore that risk and make sure that something that is right for you. Okay.

(19:03): I want to kind of get into something a little, a little different now, and whenever I'm working with people to, to prepare for the future and to prepare for the unexpected, I run into a couple of different I don't know what you call them roadblocks or whatever. My B, and when I was doing my college funding workshops, I would invite tens of thousands of people parents out to my events to talk about preparing for college. And I would hear things, things at the end of the conversation, or at the end of the day, the workshop, like they would come up with to me and say, Hey, you know, my kid is only, only in 19. Great. We've got time, right? I'm like, you got time for what? Well, we don't have to do this right now. Do we do, do we have to like start planning now?

(19:58): And my response is, is like, look, you should have started this a long time ago. You should have started planning for college. And when you're a kid was in elementary school, you should have start thinking about these things earlier because you have to, they engage in the process because things constantly change. And you don't know if you're behind your head. So you must engage in the process early. And that's the same thing. I was kind of getting with the rapid retire program. People will say that the common thing out here as well, my job is great right now. Everything is good right now. And I'm like, okay, everything is good right now, but everything is not guaranteed. Is it? No, it's not. So just because everything is good, it doesn't mean you should not put yourself in position to be able to walk away from your job as soon as you possibly can, because things can change at, at a moment's notice today, you have your job.

(20:57): Everything is great. Tomorrow. It may not be there today. You have your health, everything is going great tomorrow. It may not be there. So I'm not trying to be pessimistic in any sense at all. I just want you to be in a position so that if anything were to happen, you will be, Oh, okay. All right. Another one I hear as well. If I wait long enough things will work itself out. People don't say that, but that's kind of what I see in their thought process. Well, I don't have to do anything right now. Things are going to change and who knows what it's going to be. And what you're doing is you are giving up your control. You are essentially giving up your right to choices. And so while you have the ability to make choices today and to make changes today, while it is in the power of your hand to do so, I really encourage you to just get it out of the way.

(22:00): If you haven't set up your plan yet, you're not sure what things are going to look like in the future. Let's sit down and talk, let's sit down and put together a solid plan, engage in the process. And if things change, we can change things along the way, versus being in a position where now we have no choice. We're being told what to do. We're being dictated to. So going back to dr. J story, and then the friend that he had that just took off and said, you know what? Hawaii is on lockdown. Screw it. I'm outta here. I'm just going to go travel, do whatever I want to do. And then when things settle down, I'll come back and get back into the game. Again. That is a very powerful mindset to have. And I kind of thought about doing that, but I really love being here for my clients, making sure they're okay.

(22:42): And don't have time to travel and do things like that in the future. But that is a very powerful position to be in when you can just say, you know what, screw it. I'm walking away. I've done my job. I can come. I can get in the game anytime I want. And that's the position that I want for my clients so badly. So if you're listening to me and you're interested in this, you want this for yourself, do me a favor, get in contact with me, and I will help you get you from where you are to where you want to be. So thank you very much for allowing me to rant and rave at you guys today. And I really would like to have a conversation with you, and I'm looking forward to having a conversation with you. So please get in touch with me and I will definitely help you out. All right, thanks again for allowing me to share. And until next time folks, one, two, three, let's get it.

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