5 Stages of Wealth

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5 Stages of Wealth (CFFL 533)


Jack:                      Rental neighborhoods, it works very, very well to put in the paper.

Jill:                          Okay.

Jack:                      To like in a newspaper, actually.

Jill:                          Oh, okay.

Jack:                      If you’re trying to rent a house.

Jill:                          Got it.

Jack:                      So you can test it that way and, but even long before you even buy it, you put it right in there, and leave out a few of the details, like the APN and things like that, and just see if … If 50 people call you to rent a house that you haven’t bought yet, there’s a pretty darn good chance you’re gonna be okay.

Jill:                          Exactly.

Jack:                      Same thing with the sales in Craigslist.

Jill:                          Yeah.

Jack:                      You’ll get an indicator real quick. If two people call you in three weeks, you want to run away.

Jill:                          Right.

Jack:                      Never have for sale property.

Jill:                          Correct.

Jack:                      If you have a question, or you want to be on the show, reach out to either one of us on landinvestors.com. Today’s topic, the five stages of wealth. This is [inaudible 00:00:46] to the show. This is also a topic I wrote-

Jill:                          Yeah.

Jack:                      Because I don’t think Jill would ever want any part of this.

Jill:                          Well, I want to hear what your things are, and then I have something I want to add that what this made me think of.

Jack:                      This came up because I wrote the outline the other day for a book that I’m going to release in about three months, called, “Wealth,” or, “Your Wealth.” I haven’t titled it yet, but it’s things that I wish as a young … I’m not a young man any longer, but I wish someone would explain this to me when I was younger. Number one, here’s my five, and then Jill’s going to hopefully have some stuff to say, and maybe she’ll debunk the whole thing.

Number one, secure revenue source, i.e., get a job. All right, nothing’s gonna happen unless you … I don’t care who you are, or what you are, unless you’re a trust fund baby, you’ve got to secure an ongoing revenue source. In fact, now that I’m thinking about it, trust fund kids [crosstalk 00:01:47] have a built-in-

Jill:                          Probably need it even more.

Jack:                      They have a built-in revenue source, that’s interest income or whatever. So, secure a revenue source, number one. Number two, remove any debt or don’t accumulate, better yet, don’t take on any unless it’s business associated debt and you actually know how it’s gonna go.

Jill:                          So that’s stage two.

Jack:                      Number three … The five stages, yeah. Begin to accumulate equity. There’s two ways to do this, save the money, saving money from your revenue source that you have, your job. Or, number two, invest it, and turn it. Number two is how fortunes are made. Number one is how you live a lonely little life of savings.

Jill:                          Yeah, right and under your mattress.

Jack:                      Yeah. Number four, now you’re accumulating-

Jill:                          Step four, or stage four.

Jack:                      Number four is, start to plan with this accumulated equity for your non-working years, or also known as, retirement. So, now you put your stock [inaudible 00:02:46] away and you’re planning your exit. That’s a whole stage that gets completely overlooked by the vast majority of people, even wealthy people. And finally, number five, which is my personal favorite, create a legacy revenue stream for people after you’re gone. It may be in the form of the Bill and Melinda Gates Foundation, it may be in the form of a couple hundred thousand dollars in a bank account left for your kids, or maybe you leave a company or some assets that they can handle, but you plan for it. So what’s the theme here? Plan, plan, plan.

Jill:                          (affirmative)

Jack:                      You know what makes it more fun for me?

Jill:                          How long … Can I ask a question? How much time should you spend in these different stages?

Jack:                      That’s up to you. If you’re Steve Jobs, Steve Jobs was worth a couple hundred million dollars by the time he was 22. So, he went through all these stages, all five of them-

Jill:                          But did he do all the-

Jack:                      as an adult in like, three years.

Jill:                          I can see the secure the revenue source, got that. He did that early. Remove the debt? I’m assuming that happened cause he had the money. Accumulate the equity? I don’t know if he set out to do that, but it just kind of happened. You know what I mean? Just kind of happened. Now, plan for non-work years, retirement? I’m not sure if he did that.

Jack:                      I’m not either.

Jill:                          And did he create the legacy? I’m not sure.

Jack:                      He did.

Jill:                          Okay.

Jack:                      With Apple stock options and stuff.

Jill:                          Okay, cool.

Jack:                      And he’s not a … He’s very atypical.  But, I mean, to take a regular person, right, you go to school, you go to high school, you maybe go to a trade school afterward, maybe don’t. Maybe you go to college, maybe you don’t. Maybe go to college like Bill Gates and drop out. Maybe you’re smart like Mark Cuban, too. Maybe that’s what you do. But all of those things, none of it’s gonna happen unless mom and dad are helping you pay for school, or you have a job.

Jill:                          (affirmative)

Jack:                      So you have to have a job, that’s number one.

Jill:                          What if you spend too much time in stage three?

Jack:                      Accumulating equity?

Jill:                          Yeah.

Jack:                      Like, saving?

Jill:                          You just [inaudible 00:04:41] up.

Jack:                      Hung up, saving?

Jill:                          Yeah.

Jack:                      Then you need to … That’s a great question.

Jill:                          I’m really serious. You’re hung, you’ve got your revenue source, you removed your debt. Now you are creating company after this, after that, and you’re not … You’re just hung up there.

Jack:                      (affirmative)

Jill:                          I’m not speaking about anybody in particular, I’m just saying I could just see people doing that-

Jack:                      Well, yeah, I think [crosstalk 00:05:05]-

Jill:                          How do you get out of that?

Jack:                      The more frequent way that I’ve seen it, and my parents are guilty of this, is just working their whole lives.

Jill:                          Right.

Jack:                      So, they’re accumulating equity, let’s say, I’m throwing out an arbitrary number, and leave my parents out of it, any two married people, both working, at reasonably good jobs are saving two, three, four, five thousand dollars a month, it’s gonna take a long time. It’s gonna take your whole life.

Jill:                          Well some people do get hung up in stages one and two. Secure revenue, they’ve got a revenue source, but it’s not a big enough revenue source.

Jack:                      That’s right.

Jill:                          And they can’t get out from the stupid debt, you know? I mean, that’s one of the things I like about Dave Ramsey [00:05:41], that when he talks about telling people, “Well, you might need to get another job, or a better job-”

Jack:                      You gotta make more money.

Jill:                          “Cause this one’s not gonna do it.” You know, just because you have a job doesn’t mean that it’s gonna solve all the problems. You need to make some good money here to take care of this debt. That kinda makes sense. It’s such a captain obvious thing.

Jack:                      That’s what Suze Orman’s [00:06:00] famous for saying, “If you have a money problem it’s because you don’t make enough money.”

Jill:                          There you go.

Jack:                      That’s it.

Jill:                          I agree with that, that’s brilliant.

Jack:                      I totally agree with that.

Jill:                          Yeah. That’s brilliant. I love it. Well, you know what, I would like to shift this topic just a little bit, because I look at this another way, and I’m gonna share with you … This is really cool … We have a really good friend, who’s has a Middle Eastern?

Jack:                      He’s from India.

Jill:                          Okay. Yeah. Background is that. You know, anyways, so he looks at things a little bit differently.

Jack:                      He’s very spiritual.

Jill:                          Very smart.

Jack:                      Yeah, isn’t he?

Jill:                          Oh my gosh.

Jack:                      Incredibly intelligent.

Jill:                          Very smart.

Jack:                      Works for Intel.

Jill:                          So, we were a lunch one day and we had our kid number one kid, actually we were out one afternoon … Anyway, we had number one kid, and she was about to have a birthday, a big birthday, and I don’t know why we were all giving her little pieces of advice, I don’t know, but he might of come with this too. They were kind of going around the table giving her a little piece of advice of, with our wisdom, for someone in her twenties, what to do.

So, this friend of ours wrote down on napkin, and I took a picture of the napkin, and she saved the napkin, and what he thought about wealth, and adulthood, and all that good stuff. So, what he wrote was, I thought this was so cool, “At 25 you live for your parents, at 50 you live for your family, at 75 you live for your community, and at 75 plus, bonus, be there.” That’s what he wrote.

Jack:                      That’s the exact, just like him.

Jill:                          Isn’t that cool?

Jack:                      (affirmative) That’s great.

Jill:                          So, I think that kinda ties into this, so like … It’s another way to look at the stages of wealth in your life, and planning for retirement, and planning for your family, and I just thought that was interesting and I wanted to share that.

Jack:                      That’s brilliant.

Jill:                          Thank you. Do you have anything to say about it or just like, “Okay, Jill.”

Jack:                      No, that’s brilliant. That’s why this show is about information and inspiration, because you can’t really successfully have one without the other. If you just are all … We all know engineers, and they’re all information weirdos, and there’s no counter balance to anything, and you don’t wanna have lunch with an engineer more than once.

Jill:                          [inaudible 00:08:20] lunch for an engineer.

Jack:                      And the flip side is that is, there’s only so much Tony Robbins [00:08:24] you can take.

Jill:                          True.

Jack:                      Too much spiritual weirdoness. So, that’s why there’s two of us, Jill.

Jill:                          Yeah, I know. If we were both like me, it would be a disaster. [crosstalk 00:08:32] If we were both like you it would be a disaster.

Jack:                      We would have, be like, two listeners instead of seven.

Jill:                          Thank you.

Jack:                      So, those are the five stages of wealth according to me, anyway. Oh, and I’m gonna leave you with this thought: There’s a few things that will permanently throw a wrench into this program that I see people do all the time, in fact I’m guilty of it.

Jill:                          Ready.

Jack:                      Number one, get married.

Jill:                          Oh, Jack, you can’t …

Jack:                      Number two-

Jill:                          Have a kid.

Jack:                      Buy a house with 97% loan to value mortgage.

Jill:                          Oh.

Jack:                      And finally, number three, have one, or two, or three kids.

Jill:                          Jack, but everybody does those things.

Jack:                      Everybody.

Jill:                          What do we do?

Jack:                      You control yourself. Now you have all the information, listener. If you’re a young man, specifically, this was who I’m writing this book for, young men, there’s-

Jill:                          There’s gotta be a way to have it all.

Jack:                      Jill is … She doesn’t [crosstalk 00:09:29] yet-

Jill:                          What if you really wanna get married?

Jack:                      Jill doesn’t know yet, she’s writing the female version of this book.

Jill:                          Okay. What if you really want to get married-

Jack:                      Then you need to sit down.

Jill:                          and you want to buy a house, and you want to have kids?

Jack:                      I think it’s great. That’s why there’s two of us.

Jill:                          Okay.

Jack:                      I think if you really want to get married, then find out … Look at this five stage scenario, and if you really want to get married, and most people do, and that’s fine, male or female, fit it in. Do you want to be debt free when you get married, or do you want to have a ton of debt? Do you want to be in the, “Let’s accumulate equity stage?” I am very fortunate-

Jill:                          This is hard, thank you.

Jack:                      I get to meet lots of young, smart, people, and they find us, okay? We’re sending out the smart vibe, I guess. It wasn’t like that in the beginning, I’ll tell ya. Some ding-dongs in the beginning.

Jill:                          Silly.

Jack:                      And, I recently met a 22 to 24, don’t know their exact age, they were done with a four year degree, and they were gonna get married, and I gave them this little speech, and I said, “Where are you guys in this whole thing?” And they said, “Oh, no. We never had any debt. We worked our way through college,” yes it’s possible. People don’t say that you can, but you can.

Jill:                          It’s true.

Jack:                      “And we have,” and they told me how much month they were each making, and they’re making, I will say this, they’re making more than a quarter of a million dollars together, and living in an apartment, and I said, you kids are ready to get married.

Jill:                          (affirmative)

Jack:                      So, to answer your question, Jill, what I see happening way more often than not is, people get married, and then they try to figure this stuff out.

Jill:                          True.

Jack:                      And it’s just a mess. Or then they have a couple kids, and they’ve got a ton of debt.

Jill:                          They don’t have a plan.

Jack:                      Yeah. There’s no plan Jill-

Jill:                          It’s all-

Jack:                      That’s the thing-

Jill:                          They’re in catch up mode the whole time.

Jack:                      Exactly.

Jill:                          And that’s frustrating and tiring.

Jack:                      So, if you have a huge mortgage, a pretty sucky job, and a bunch of kids-

Jill:                          And a lot of debt.

Jack:                      And a bunch of debt, you need to really sit down with your partner, and put a plan together. There’s lots of free education out there about helping with money and stuff. Start with Dave Ramsey.

Jill:                          Yeah.

Jack:                      I’m not a massive advocate of Dave Ramsey cause I think in his older age now he’s getting real angry.

Jill:                          That’s really funny.

Jack:                      He was like yelling at people.

Jill:                          He does yell a lot more than I think he did in the beginning, this is very true.

Jack:                      But his whole baby steps program, and the stuff that’s written, his free written material, and even the books that he charges almost nothing for, for the value that you get out of it-

Jill:                          Yeah.

Jack:                      Are fundamentally helpful.

Jill:                          I read his books.

Jack:                      I have too.

Jill:                          I sent kid number one through the program for kids-

Jack:                      And she’s killing it.

Jill:                          At a church, and I think it’s really great stuff.

Jack:                      I do too.

Jill:                          And a lot of it’s just need those reminders and just … Sometimes you almost need to be told it’s okay. I don’t know why, but you need to … It’s totally okay to say, “No, we’re eating in, and we’re doing this, and we’re on a budget.” There’s nothing wrong with that by the way.

Jack:                      It’s okay to say, “Yeah, I like ramen noodles.”

Jill:                          Yeah. Silly. But it’s okay to-

Jack:                      I do like ramen noodles.

Jill:                          Dave does beans and rice, rice and beans, beans and rice, rice and beans, and that’s what you just had a little while ago.

Jack:                      That’s good. I did actually, that’s what I ate today.

Jill:                          It is kind of funny. Not by choice, I mean, not that cause you had to, cause you like it. That’s funny.

Jack:                      So, have a plan, break it all down, and execute.

Jill:                          Love it.

Jack:                      And, read my book.

Jill:                          I will.

Jack:                      Join us in another episode, where Jack and Jill discuss how to use information, that’s me.

Jill:                          And inspiration, that’s me.

Jack:                      So you just about anything you want.

Jill:                          We use it every day to buy property for half of what it’s worth and sell it immediately.

Jack:                      You are not alone in your real estate ambition. That was not a book plug. Did it sound like it?

Jill:                          No. No, I love it. Now I’m excited for it, and it’s-

Jack:                      Will you write the girl version?

Jill:                          Yeah.

Jack:                      Or is that a bad idea?

Jill:                          No, I’d have to really write the girl version, cause girls think differently, and we don’t, and we shouldn’t, you know what I mean?

Jack:                      I think, for all the joking around we do about relationships and stuff, I really do believe that two people, whether they’re both men, both women, or a man and woman, have so … We’re two people, obviously, so much better of a chance at doing really well in life.

Jill:                          Oh, yeah.

Jack:                      But then, just one person on their own …

Jill:                          You need someone to counter balance and-

Jack:                      Yeah.

Jill:                          And question things.

Jack:                      And, yeah. Exactly.

Jill:                          Sometimes I hate [crosstalk 00:13:49], you don’t like it, it can be frustrating and not a good thing, but you need that.

Jack:                      Every time you and I work on something together where it’s at work or home, we both … There’s parts of it that I’m good at and there’s parts of it that you’re good at.

Jill:                          Yeah.

Jack:                      And we stick to that, everything goes really well.

Jill:                          (affirmative)

Jack:                      Information and inspiration to buy undervalued property.

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