From Student Loan Debt to Financial Freedom with Mark Willis Artwork

Ebb and Glow

Welcome to Ebb and Glow — the podcast that shows you how everyday people are taking on life’s ups and downs and coming out better than before. Your host, Jenelle Tremblett, will be with you weekly and with special guests, to chat about everything from careers, relationships, mindset, and everything in between. Are you tired of only seeing the highlight reel? Me too. This podcast will instead be peeking behind the curtain to reveal all the steps, pep talks, and glasses of wine that must happen before we become strong, confident, and resilient.

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Ebb and Glow

From Student Loan Debt to Financial Freedom with Mark Willis

March 14, 2023 • Jenelle Tremblett • Episode 125

#125: After graduating with six figures of student loan debt and watching everyone around him lose their retirement savings and home equity in 2008, Mark discovered a way to turn his debt into real wealth.

Today, Mark Willis is a man on a mission to help you think differently about your money, your economy, and your future.

Mark's Ebbs

Six figures of student loan debt
Feeling controlled by his money
Not understanding money and financial planning
Distrust of banks

Mark's Glows

Gaining control back of his money and financial future
Becoming a Certified Financial Planner
Helping hundreds of other people take back control of their financial future

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Welcome to the ebb and glow podcast. I'm your host, Janelle Tremlett. And I'm a firm believer that even when life doesn't go as planned, it is taking you exactly where you're meant to be on this podcast. I'm here to help you finally release control of what you think you want and begin to just trust in the ebbs and flows of life. Each week, I will show you how to build that positive mindset radiate with self confidence and cultivate an unshakeable resilience. Let me prove to you that even when life ebb. You will glow. and while we didn't touch on that at all in this podcast, I just mean there is so many thoughts and topics in my head around money and how it affects us lately. So that's why I brought on mark as an expert to talk all about that. I want to start this by letting you know, one of the biggest quotes that mark lives by and the quote is we're all in the banking business, just on the wrong side of the desk. As you go through this episode and wherever you're listening today, you're going to understand why that quote is the overarching theme of mark and everything he stands for. So Mark Willis is a man on a mission to help you think differently about your money, your economy, and your future. After graduating with six figures of student loan debt and discovering a way to turn his debt into real wealth, as he watched everyone else lose their retirement savings and home equity in 2008, he knew then that he needed to find a more predictable way to meet his financial objectives. And those of his clients. Mark is a certified financial planner, a three time number one bestselling author, the owner of lake growth, financial services, a financial firm in Chicago and cohost of the, not your average financial podcast. Over the years, mark has helped hundreds of his clients take back control of their financial future and build their businesses with proven tax efficient financial solutions, unknown to most financial gurus. I'm sure if you're a longtime listener of this podcast, you're going to think what would, what, what, where are we going with this episode? You know, this is so unlike any of your episodes, And I think you're still going to love it. There's a part in the episode where mark is really explaining the nature of his business and the types of methods and solutions he recommends to his clients. And I am so lost in the episode. it gave me a little bit of PTSD being back in my classes in university and being in my finance classes. And having no idea what was going on. But I'm sure you'll be glad that I stuck to it and really listened to mark until I finally understood what he was saying. And while it's still a tiny bit over my head, I understood it enough to be like, Hmm. I see another way of doing this. so if you feel the way that I felt well, I was getting marked to explain everything. don't worry, because like I said, I felt the same way. If you're listening today and you really like the style of episode of having an expert on, um, as opposed to someone kind of telling the story of what they've been through, let me know, happy to mix it up. And I also have a lot of really good solo episodes coming out in the future. So anyways without further ado wherever you are today hope you love the episode and obviously have a fantastic day okay enjoy Mark, thanks so much for being here, Janelle. Thanks for having me on the. I'm super excited. I mean, as a real estate agent, I have tax season looming upon me. Mm-hmm. So the boat, when I just read the word tax, I'm like, no, no, no, no, no. Not that again, Well, yeah, it's nothing more certain in life than death and taxes, but we're here to talk about more positive things, Janelle. So let's, let's focus on the positive. Let's focus on the solutions. I'm ready. There's actually a bar here in Toronto called Death and Taxes, and I think it's such an awesome name. It's so good. Well, that's only um, rivaled by a bar here in our town. Here. It's a, the bar is called The Office. Oh, hey honey, I'm going to the office. I'll be right back. You know, So it's a great name for a bar, I love that. I've listened to a bunch of your podcasts, not, not your podcast, but the ones that you've been guessed on, and I mean, like you said, money is involved in every aspect of your life. And I mean, I'm overdue myself from organizing my finances of the past month. And sometimes you get so busy that you don't put any effort or have a good look at your finances and then all of a sudden wonder like, where is all my money going? You're right. It's sort of, it's sort of like if we don't give our money a job to do, it'll be unemployed and go look for work elsewhere. So when you think about the money in your bank account today, just, you know, maybe it takes 10 seconds to log into your bank app and see what the balance is today. What is it's job. Hmm. Is it just a big blob? Sitting there waiting to be spent on Friday night, or does every single dollar in your account have a specific and singular task for it to do? many people I meet, they either have a lot of unemployed money, in which case, again, the unemployed work workers will go find someone else to work for i e leave your account and go to the accounts of you know, the favorite brands that you like to spend money on. Mm-hmm. or you might. The other problem, which is you give your dollars like 18 jobs to do. Hmm. And what I mean by that is people will mentally in their mind say, oh yeah, I got tax bills coming up here. I need to not spend that money. And then 17 seconds later they're thinking, oh man, I really want that new flat screen TV And then 17 seconds later they're thinking, man, I really need to pay this light bill. and so they double, oh, I got it. I got no problem. I can still go on that vacation this weekend cuz I got the money for it. But they've forgotten. In other words, they didn't give their dollars just a singular job to do. They forgot what jobs they gave it the work to do earlier in the day, or you know, late last week or whatever. You must give every dollar a job, a singular job and stick to it. Now here's the. The other side of that coin give every dollar a job, is to be able to be comfortable to change job descriptions of that dollar. So what do I mean by that? Well, life throws us curve balls. We all know that you can be laid off. You can spend too much last night at the bar. You can have a great business idea that you need to immediately invest in. Sometimes we need to roll with the punches and your, your little budget, if we call it that, should not be behind stained. Regularly break your budget. It's fine. Just roll with it. Move some money that you overspent in one category and give it. You give that money a new job to do. We spent too much on clothing. We need to spend a little less on dining out or whatever else, right? But giving that dollar a job to do and having an explicit task for it to accomplish helps you feel more in control. I'll. You can you can feel like budgets are constraining. You can feel like they are the stuff for nerds, and maybe they are, I admit that. But if you don't have something, some kind of spending strategy for your life, you will be controlled by your money. So it's either one ultimately controlled by your job and the hustle culture that surrounds it. That's right. Yeah. Yeah. I, I know people making a third of the income of somebody else, but their work feels lighter. They have more time for themselves. They're in control of their financial life, whereas you can always outspend an income. I don't care if you always, so easy. Yeah. If you're just a 20 year old outta college, or Donald Trump or the United States, you can always outspend your. yeah, what, what are your aha moments or experiences with that like in the real estate space? I'm curious. I mean, I'm gonna tell you about my personal life because I didn't grow up and I don't think anyone has grown up knowing how to manage money. It's learned and it's rare if your. Learning healthy money mindsets from your upbringing. As we all know, and as anyone who talks about money is like that. I found I didn't learn how to manage money or learn how money works. Probably until I went to university, I started thinking similar to you where you come out, you're like, oh, right, I have to pay for this. But I'm also in school right now. I can't like simultaneously work a fantastic job and go to school like. Oh, and I have groceries and I had to pay rent, and I'm, I'm 18. It's like, whoa, whoa, whoa, whoa, whoa. Like, when did my life become this? Mm-hmm. And there's some people that are waking up at 35 years old and saying, whoa, whoa, whoa, whoa, whoa. Like, how do I do any of this? Mm-hmm. when did you become financially literate? That's a good question. Mm-hmm. I think the, it's sort of a gradual, it's like driving into town. You start to hear your favorite radio station a little bit at a time and it gets more clear the closer you get. Mm-hmm. Uh, But I would say the earliest memory I have with money and financial literacy was when my mom at five years old, I had somehow scratched together like 50 bucks or something from a couple of different, You know, lemonade stands and that sort of thing. Mm-hmm. uh, and it was the, the day's activity, the air end of the day was my mom was gonna take me with my little paper bag of money to a bank to open up a checking account, and she was doing the right thing. She just wanted to be a good mom. And teach me about how money works. I saw it as a hundred percent theft. the bank is digging your money. Yeah. Well, who's this strange bozo with? Yeah. You know, a, a name tag. Uh, With a suit on saying he's gonna take and take care of my, I was doing just fine, taking care of my own money. Mm. Why do I need this bank thing? What advantage does that give me? Mm-hmm. So that's my first memory of money and my distrust of banks has only increased since then. Let me tell you. Yeah. I've learned that about you. Yeah, But, uh, but fast forward to college and I still hadn't learned much about money. Stumbled into$120,000 of student loan debt and I didn't have a, and that was, you know, 12 whatever years ago. So, fast forward a little bit of inflation since then. Mm-hmm. we're talking a lot of debt. And worst maybe I graduated in the midst of the great recession of 2008 with no job or prospects for a job really. And. You know, worse of all, no plan to pay off that debt. Yeah. You know, the no job thing we can solve that. The no plan when you're burying your head in the sand it only gets worse. So for me, that's, that was my wake up call. You might say, for financial literacy it was out of a deep need of necessity. The people were calling me at dinnertime, you know, the credit cards were calling, the student loans were calling, and I needed some kind of way to, you know, duck and cover, but like, solve that problem. And that's what stumbled me into the financial strategies that we now help our clients with today. Uh, And what I'm so proud to say has changed not only my life, but my, the life of my, my really, my entire family. Mm-hmm. it shocks me. The student loan debt issue in the states altogether, like the cost of university, the cost of getting that one piece of paper to be able to continue in society. Yeah. It's beyond me. Like I'm in Canada and so when I came out of university I had 30 grand of student loans and I mean, I worked my ass off throughout university with scholarships and paying for many things, so like coming up with 30 grand. not that bad. Yep. You know, but like at still, it was like I was getting my first job and then understanding, okay, if this is the amount of a student loan payment to be able to pay off the principal and all this. And it's funny, it's like I did a business degree, so it's like now I, I, by the time I'm graduating, I understand business and money and how to, how to make things work. But still I'm like, Similar to you. How do I ever finish this debt off? And I know people, I'm sure you do too, in their sixties about to retire and still have student loan debt. Sure. They, they've paid for 10 degrees at this point. That's right. Yeah. Well, it gives me great pause to say that, you know, the, the college solution, it, that seems like the value of a degree is going down. Cost of the degree is going up. Mm-hmm. And that's gonna, that will intersect at some point. And somebody, some, it's just like any other bubble, whether we're talking about tulip mania in the 16 hundreds and the Dutch Empire. Or if we're talking about you know, the.com bubble of 1999, 2000, 2001, when the price of something goes up, but the value of something goes down, some point somebody will say it's not. Yeah. And enough people are starting to say that, that it may come a day where, you know, the cost of college will have to reflect its real value. for me it was not so much like the, the, the big debt, and we had three private school degrees and we made those choices and all that. Mm-hmm. But for me, the biggest was how am I going to take a full advantage of this opportunity? and I was just thinking about, you know, Sherlock Combs. and there's, there's a great book about his mind and the way his mind apparently worked, according to several folks who've kind of read, read into this character, like he's a real person, was a concept called Defamiliarization. And that's like a$20 cocktail term. So I had to look that one up. But basically it's like, how do you take something that's familiar and make it new? Okay. And this is a pretty remarkable, you can do this in any area of your life. Yeah. When you have a regular, familiar route to work, have you ever just been on the way to like, somewhere close by your work? Maybe a friend lives by your hou your, your your office or something and you're just driving. You're just driving and you end up in your, you know, your office is parking lot and you're like, how did I get here? I was trying to get to my friend's house. It's familiarization. Yes. We're on a, a. Path and the little rat maze is telling us to go to this one place. But when we defamiliarize ourselves, Whether it's how we're gonna get to our friend's house or how we're going to lose that last 10 pounds, or how we're going to change our financial future. Defamiliarization is one way to not just see the environment, but to truly observe the reality. And that's what Sherlock Holmes did so well in his books and, and you know, the character in those books, he would not just see the environment. He would truly observe it. And there's a lot of folks. Maria Conva wrote a great book about it and she said, you know, really it was Sherlock Holmes speaking with Watson that gave him the ability to verbally experience what he was seeing in his mind. So I know I'm kind of getting into scuba gear territory, like going deep here, but what if you could do the same with your money problems? All of us have money problems. All of us. I don't care who. A hundred percent. Yeah. Yeah. So how could you see afresh the issues, concerns, whether it's inflation, whether it's potential job loss, whether it's, you know, lifestyle creep, you know, the things that are giving you problems today. How could you take that problem, see it from a different angle or a different perspective, and actually turn it into a solution? Hmm. that's been one of my great challenges with each of our clients is to think about how do we defamiliarize ourselves with the, with the rote problems. Oh, I got all this credit card debt. Hmm. Oh man, inflation's killing me. Oh man, the competitors are causing me to, you know, cut my margins. How could we take these problems and turn them, not just get rid of the problem, but how could we actually make them the solution? I'll say one last thing and then I'd like to get your feedback on this. In in a lot. Martial arts, the the skill is take the power of the enemy coming at you. Take his or her power coming at you and leverage that power against them. So you take the fist coming at your face and somehow turn it into, You know, wrapping it around them so that you now have them in a choke hold. All right, so you took the, the fierce power of the enemy and turned it around so that now you are the one, you know, leveraging that power for your own benefit. Mm-hmm. how could you do that? And that was like my presenting question for myself. How could I take my student loan? Enemy coming at me mm-hmm. and actually turn it into that liability, turning it into an asset. How could I take the, the problem of debt and actually make it part of how I was gonna be financially free? So that's sort of where, you know, It seems backwards to me. Mm-hmm. so explain it to me with your prime example. Like how do you, how are you able to look at all of that student loan debt and say, that is the exact tool that's gonna get me financially free? Yeah. It seems so backwards. Yeah. Yeah. It sure did. And it seemed kind of crazy at the same time. Yeah. Yeah. So, and. Everything we might say from here might sound crazy to the folks listening. Yeah, but I'm gonna say it anyway cuz I know it worked. It worked for me and it's worked for over, you know, a thousand clients that we work with across the country in Canada too. So we worked on thinking about why do we hate debt? That was the first question. Why is it? Is it just cause we're told to, what do you have all day? Like? We'll, I'll tell you. Yeah. Yeah. I mean, it, it really, you know, the list was pretty long. Mm-hmm. I will admit that. We started thinking like, and, and there was a great book. We read it, it's called Debt The First 5,000 Years by David Graber. Okay. And great book. Great book on the topic of debt. And it just got me thinking about how much pain and misery that four letter word debt has caused the human race. Mm-hmm. I mean, 5,000 years is a long time. For something to be around. And they say that we, we think about ourselves. We make it very personal. We sure do. Yeah. Yeah. I mean, I mean, think of how many lives have ended over debt, how many marriages how many people have, have been under the, the thumb of a banker, and yet on the other side of that, There's been so much profit that's come from debt I Yeah. Mean at the same time, on every ledger there's a borrower and a creditor. Mm-hmm. And so how could you move from the debtor to the wealth creator in your own life? And to me that was the, that was like the question. So, So we started thinking, well, why is it we don't want to just pay off this debt with cash? That's like the, the best way folks tell you to pay off your debts is to do what's called the debt snowball method. Yeah, very familiar. Very familiar. Okay, cool. So for those not familiar, I'll just quickly share. Essentially what you do is you, you pay your minimums on all your debts. Keep current on all your debts, and then any extra money you're not throwing at lifestyle. Which there is a major lifestyle creep issue. Anything we're not throwing at lifestyle should go onto one account. And generally they say the smallest balance or sometimes the highest interest, but you pick one. So you, you start feeling like you're winning. Yeah, yeah, exactly. Yeah. So you get that ball rolling, that snowball rolling. That's the snowball method. Yeah. And they generally also tell you to keep a, like a thousand bucks in a savings account while you're doing this. Mm-hmm. So I was doing. I was following the snowball method and then somewhere about halfway through I began to really get that empty feeling in my stomach, and I really began to think, well, wow, this is sort of like eating a bunch of, you know, sugary candy. It tastes great for about 15 seconds, and then I get that super empty feeling in my bank account and I think, oh, I don't have any kind of money. If I go into an emergency, I'm gonna fall back down the debt staircase again. And worse, I don't have any earning assets for my future. I'm getting older. as I'm going through my debt snowball, I'm seeing years go by and I knew as I was getting into finance that the most powerful dollars are the ones you have in your pocket today. Mm-hmm. while you're youngest. Because a dollar that you spend today is. But also gone is whatever that$1 would've just earned for you, had you just left, it invested had you just kept it growing. So, you know, when I buy my cup of coffee for$3 or$5 or whatever, I, I spent three or five bucks, but I also lost$15 in the future. Does that concept makes sense? Yeah. It makes you really. Really be conscious of your purchases and where you spend your money. Yeah, yeah. And, and purchases. True. But I was also starting to realize that I was throwing all this money into a hole called student loans, and that was money I would never see again. So I told you I had about 120 grand of student loan debt, but it was really gonna end up being. Over my lifetime, like 800 grand. By the time, if I had not had the debt and could somehow invest that money conservatively, it'd be close to a million bucks at that point by the, by the time my trade. Yeah. But depending on the interest on your student loans, that could also be 800 grand that you owe. Exactly. So all these folks come to me and they say, mark, do I pay off my student loans or do I save? Because they see the either. in front of them. Yeah, I, I have to pay off this debt, but I am not getting any younger and I want my money compounding for my future. Mm-hmm. what do I do first? Do I save, do I pay off my debt? That was my problem too. And it wasn't until I stumbled across some strategies that helped me kind of realize, wow, I could actually find a third way here. And that changed everything for me. It was helping me think like a banker instead of a borrower. So the first piece of this is how do you. And then what are some real tactical strategies we can, like physically use in the real world? Not just a mindset thing, but like a skillset and a strategy thing to help us become our own banker. That's the, okay. That's the way we, I'm intrigued the problem, Well, that's the way I was able to overcome the problem of just, you know, staying on the debt staircase my entire life. Yeah. So how did I. This is gonna sound crazy. I'm a certified financial planner. I work with real estate investors. I work with business owners. I work with Americans. we also team up with folks in Canada. Mm-hmm. And we work with folks all over the place to help them build solid financial solutions. But when I stumbled across the solution, I really thought, this is crazy. Mm-hmm. and it took me like the better part of a year to really wrap my heart around it and my mind around it even more. Okay, so step one of the, we, we now call this the debt snowbank method, just to keep it cool. Okay. We trademarked it. Step one, you still are paying the minimum on all your debts. We're not gonna miss any payments there. We're gonna keep current on our debts. Second, instead of overpaying on one account, which leaves you with no money left at the end of the month or at the end of your life. Instead, we're gonna put it into an asset that you control that builds wealth for you. Okay? We're gonna increase that contribution, that savings bucket. We're gonna be blowing that thing up with as much money as we can possibly plow into that. That asset, that asset is growing and you have access to it. So it's liquid. And it's also guaranteed that you can always get to it if you need it. So what is the asset? It's the only one I could find that works really well is a dividend paying whole life insurance contract of all things. Yeah. I've, I've heard this on your other interviews mm-hmm. and I don't know what that means at all. Yeah, that's all right. It it, it was rude to me too, from a 29 year old, I do not have a life insurance plan like, There's no reason to right now. Yeah, exactly. And I was 27 when I was discovering all this and like, why did I need it? Right. So like I don't have dependent, like I don't have a crazy amount of net worth just yet. Yep. What's the point? Yeah, the life insurance piece was an afterthought. And again, if I could be talking about any other asset with you right now, Janelle, I would be Mm mm-hmm. but life insurance has an interesting piece to this, step one, we keep current on all of our debt. Step two, we plow money into an asset that we control. That asset I recommend is a dividend paying whole life insurance policy. What is that it? I refer to this as a bank on yourself type whole life. Mm-hmm. And here's how it works. And just real plain, simple. It's a contract. That allows you to build wealth, not just the death benefit, which is gonna be fine for somebody someday. It's not really in anyone's mind when they're getting these policies. The focus is on the living benefits called cash value, and the cash value is available to you. While you're alive, which is to me the most fun time to spend money Okay. So, yeah, you know it's better than the alternative, right? So you put money into this contract and it's liquid accessible cash. Think of it like a savings account, you might say, but with some additional features here. So first, it grows every single year outside of the stock market, g. Okay. Contractually guaranteed. No matter what the real estate market does this year, no matter what the stock market does this year, I know with a guarantee that my policies will grow in value every single year no matter what. Why the contract? The insurance company is contractually obligated to give me more money this year than I had last year. Now is this very US specific? No, it's in, um, mostly US and Canada. There's a few other countries outside of these two, but we're the, we're the cool kids in the neighborhood. Okay. Uh, Cause we have these company, am I going directly to like a life insurance company to set this up? Generally you'd wanna work with an insurance expert or a financial planner who knows how to design these. I will quickly add that there are a lot of other insurance products out there that sound like this. We call it bank on yourself. Mm-hmm. But there are a lot of kissing cousins out there. You don't want to necessarily put your money with Sure. If we're using it for this particular strategy. So my question is, so like on average, how much are people putting in a month? Like, The money that I would've put in savings or investments. Am I putting that into this insurance policy instead? Well, I'll tell you my story, okay? I put as much as I could into this policy, okay? Anything I didn't need to throw toward my debt, I wanted to be going toward my assets. Okay? So again, I'm taking the problem of my debt. and turning it into an asset like jujitsu and a life insurance policy is, is considered an asset. It is. Mm-hmm. Okay. Not term insurance. Term insurance. You're just renting that death benefit when you buy term insurance, we cannot use term insurance for what we're talking about today. Mm-hmm. If you want to use an asset, you need a cash value connected to your policy and only cash value life insurance allows us to borrow against it, use it. Grows. So I'll quickly add, okay, so it grows, guaranteed. We've talked about then. Okay. It's liquid and accessible, so it's not trapping the money. Like, typical government retirement plans might mm-hmm. for 40 years or whatever until you retire. You can access it next Tuesday if you need it for any reason. Okay? It's no taxes due. No taxes to get access to the money. And here's the key. When I access the money, I'm using it as collateral. and you know about this in real estate. Mm-hmm. houses keep growing whether you mortgage them or not. Yeah. Right. If you got a million dollar house and you put an$800,000 mortgage on that house, your house is still worth a million dollars and it's gonna grow in the neighborhood on the full 1 million. Right. The same is true with any kind of collateral. You know, if I had a special baseball card worth a million bucks and I borrowed against, I could get a bank to lend me 800 grand. My baseball card is still gonna grow at whatever the baseball cards were. Or they sell the baseball card. 800 grand goes to the bank. Exactly, exactly. And when I, when I sell my house, it all goes away. Right? So don't sell your asset to get outta your debt. When I withdraw money from my bank account, I'm. That asset. When I remove money out of my brokerage account to pay off my debts, I'm selling those assets. Mm-hmm. I'm breaking compound growth, which is the penultimate sin of all financial planning is never, ever break compound growth. So when I borrow these, but how do we eventually path these debts with what money and when. So step one is you pay your minimum on all your debts. We've got that done. Step two, flood your whole life insurance policy with as much cash as you comfortably can. Make it a challenge for yourself, but not a burden. So if you're imagining here, you've got all your debt, big pile of money coming down slowly as you pay your debt's, minimum payments. Step two, you're flooding your whole life policy with as much cash as you can. So your policy. Increasing in value while your debts are coming down in value. And Janelle, step three is we borrow against your cash value. We can borrow against the policies cash value. How are your debts coming back down the debts? Well, you're paying your minimums on it. So they're coming down slowly. But you're paying your minimums, so that means your debts are slowly coming down as you follow step one of the debt snowbank method. Yeah. But if you're only paying your minimums, you're getting eaten alive in interest rates, so you end up paying way more over time. Well, you don't always, you don't let those minimums carry themselves out to conclusion. What do you mean by that? Step one, you pay your minimums on all your debts. Step two, you're flooding your policy with as much cash as you can. So let's say you've got a$10,000 credit card, and let's say your minimum is 200 bucks a month, just pay your 200 bucks a month on that credit card. Yeah. But then you're never clearing the balance and you keep adding more money. Of course. Not the credit card. That's the whole, that's the whole point. If you, if you paid off your credit cards, how much money do you have in your bank account? Zero. How much do you have in your future? But if you flood your whole life policy with as much cash as you can, pump, pump, pump, eventually that cash value in your whole life policy would equal 10,000 bucks, and you'd simply borrow against the cash value and wipe out your credit card all in one fell swoop. One Tuesday afternoon, you got$10,000 of credit card debt. By next Tuesday, your totally credit card debt free. We're not planning to pay those debts off. On an amortized schedule, we're just gonna slam those things with our whole life policy. We're buying back the debt from our snakes, from the creditors that own our lives. All right. I feel like this method would kill your credit score though, wouldn't it? Improve it, and why do we need a credit score in the first place except to go back for a lot of things. I, I can only speak to Canada, but majority of things, if you want a house, if you want a car, if you want really any of those assets, you're gonna need a credit score. I'll gently push back here and I'll say two things. One, I agree with you, first of all, yeah, you want to have a good credit score, and I do. But second, we only need a credit score to go back into debt. And if you've got all of your debts paid off, won't that improve your credit score? And especially if you're still paying your bills on time and other, you know, keep a credit card, fine, that's fine. But if you're riddled with debt up to your eyeballs, like most Americans are, I'll just speak for, for us on this side of the border. Yeah. Wouldn't it improve your credit to buy back that dent one after the other and Oh, by the. Having a big pile of cash in your policy, doesn't that also improve your credit worthiness? You know, I was able to buy my house with, uh, my policy. All right. Well, one of my policies, we use the policy to buy my house. I've used my policy to invest in real estate deals, syndication deals, invest elsewhere. All these things improve my overall credit worthiness. A banker looks at me and says, wow, he's got X dollars in liquid money. He can afford a payment for a boat if I wanted to buy a boat. Sure. Hmm. I don't want to be chasing a great credit. But I've got one, but I don't want to chase that. That's not my, I can't eat a credit score. Mm-hmm. what I, what can I eat? I can eat assets that I can turn into income. Step three, borrow against that asset. Wipe out your debts, one after the other. Just crushing those things, one after the other. And step four in the final step. Pay back the loan to yourself at your own pace. Why does this help? Why is this better than just paying cash for all your debts? Because your policy keeps on earning interest even on the capital you borrowed. So it's like your money's doing two things at once. Okay, so to conclude this thought, I have 10 K in credit card debt. Let's assume hypothetically 10 K in credit card debt. Then I have all of a sudden this 10 K cash built up in this insurance policy. Am I losing that 10 K when I put it on the credit card? Like I'm still zero money? No, you're not losing the asset. Do you lose your house when you mortgage it or get a HeLOCK on it? So, so who am I asking for money to when I pay off that 10 k of credit card debt? The Bank of Janelle. You, you're asking you, nobody else gives you that loan. It's from the insurance company. Okay? Okay. The money comes from the insurance company, but you are given rights to your policies. Cash value through a loan. It's written right into your contract. There's no approval process, there's no loan underwriting process. I had a guy last week, he, he went online. Did I just get 10 K of free money? You put for the insurance policy, you put the money in the policy. You're plowing money into your policy. And they look at that policy, the insurance company and they say, oh, Janelle needs a loan. Okay, she's asked for a loan. She has 10,000 here. We'll lend her money from our asset over here. The general fund of our insurance company will lend her the 10,000 bucks. Your policy is still over here in its full form. It was not eradicated, it wasn't withdrawn. It. You know, liquidated, you still have your policy over here earning interest. We've borrowed against it. Does that concept make sense? Collateralization borrowing against means we're not losing this asset over here. We're just get, if you've ever had a home equity line of credit or if your clients have in real estate, Folks get this. When I get a home equity line of credit on my house, I don't sell my house. I'm not selling my house, but I have a bunch of money in my bank account because I got a heloc. The bank gave me a home equity line of credit against my house. My house is still worth a million bucks or whatever, but I have access to, I can collateralize that loan. That's how helos and whole life insurance are similar. What's different? Whole life grows, g. But you're still 10 K debt. Well, I've got a policy loan with myself and there's, what's, what's interesting is there is no required repayment plan when you borrow against the policy. The only difference is, I'm making interest on this debt now. Exactly. With someone else. Exactly. I still have 10 K of debt. Exactly. It's debt to yourself. This makes more sense. Yeah. Okay. It's debt to yourself. We're we're, we're back. Yeah. Right on. Right on. This is great. Great question. Can you picture me when I was in my business classes, like I wouldn't give up until I understood it. Well, push as hard as you can. And I did too. Okay. And this is why it took me seven plus months to really wrap my brains around this because all I had ever been told was spend or save. Yeah. You know, debt or liability or asset. Why is it either or? Why can't it be both? And. And building an asset for myself. The$10,000 in our example, But I've wiped out my credit cards. They're gone. Or in my real example, the student loans were what I paid off. And yet my policy was still earning interest and dividends on the full cash value, even what I used to pay off. That you get to keep that interest as opposed to that interest adding onto the principle. Exactly. Exactly. Ah, yeah. Now step four, I'm paying. Yeah. When do you eventually pay the debt? Whenever I want to. Yeah. On my own pace, whenever I can, if I never pay off the loan, it's deducted from my death benefit when I pass away. Yeah. And you and I have just described, hey, we may not even want a big fat death benefit Yeah. Um, At this stage in our life. But if, if you do and you decide you'd want to pay off the loan, I encourage folks to pay back loans. Why? So we can re liquidate the asset so we can have access to that money again, to go buy a real estate deal. Yeah, yeah, yeah. Or to loan it out to somebody else. Huh? Okay. You got my attention back, Yeah. Right on. Well push into it. I understand it because if, if we think about things the way Watson would, we'd only. The empty room. But if you could see it like Sherlock Holmes and truly observe it like Sherlock Holmes, see it from a unfamiliar perspective. What if we thought like bankers all the time? Mm-hmm. banks do this all the time. Look it up. Look up bank owned life insurance. Of course. Just just Google that. Right? Bank owned life insurance. They have hundreds of billions of dollars wrapped up in these contracts. They don't put money into savings accounts. No. They're just moving around Fake. That's right. Yeah. Yeah. So, someone told me the other day, he said, mark, don't do what banks tell you to do with your money. Go watch what they do. Yeah, yeah, yeah. Go do that. huh, fair enough. This is all great in theory and in concept, but I can tell you if, if I'm having a hard time wrapping my brain around it, the average 30 year old that. Building their career and just living a normal life is not gonna spend their Friday afternoon looking into this. Yeah. No matter how much it benefits them. Mm-hmm. Yeah. It's like even talking to like, the, the people I surround myself with, we talk about money all the time. We know each other's salaries. We know like what's happening and we know everything. We know credit scores, we talk about this stuff, but I can tell you the average friend group does not. That's right. Yeah. And money is still a very taboo topic. Well, that's why I'm not your average financial planner. Yeah. Fair. You know, I may, I may not be the best fit for the average person because I don't want folks to be average. Yeah. You know, the average person, it hopes and praise that their retirement account will do well in the stock market. And there's so many myths that were pushed upon us. Um, You know, like 8%, 12% rate of return. Totally a. it's closer to three and a half percent according to third party research is what you can expect over 30 years in the stock market, I agree. I think if you can't say it simply, you don't understand it. Yeah. So real simple. Either you're the banker or someone else is. Whoever sits behind the banker's desk is gonna win the financial game in your life. Yeah. It's the end of the story. It's fair. So who's gonna sit behind that Banker's desk. Mm. what kind of financial advice do you have for all the people that are getting laid off or have been laid off in the past couple months? The, the types of people that are getting laid off are people who are in the tech industry is a big one right now with a looming recession coming. I mean, I live in Toronto and work in real estate, so the phrase Toronto real estate bubble, I hear it a hundred times a day. how can someone prevent themselves or at least prepare themselves for future layoffs, and how does someone get back on the horse again, in terms of money, because it's so, once you're laid off, if you're not getting a big enough severance, you're probably gonna take the first job that comes your way just to start getting a paycheck again. Yeah. you're not in the driver's seat anymore. Yeah, that's right. Well, have you ever been in a, like a natural disaster, like a weather emergency or anything like, I pray to God. No, I haven't. Yeah. Good, good to hear. We got a lot of tornadoes here. There's earthquakes, there's, you know, hurricanes down south. When do you prepare for these emergencies when they're happening to you or before? Before. Right. Hard. It's hard to, but it's hard to prepare then when you don't know what's gonna happen. Exactly. Yeah. I mean, do you prepare for winter when the sun is shining in the summer and you wanna be out there playing? No, I, I think that's the hardest part about this whole thing, but, and we're about to go through something. We don't know what, so I'm telling clients already, get ready for if you're not ready for this one. Mm-hmm. please start getting ready for the next. because after we go through whatever we're about to go through, whether it's a recession or a deep depression, there's gonna be more volatility in the future. I don't know when, no one knows when. Mm-hmm. But the point is, get ready for that now. You know, think longer range than you're used to thinking. the world wants you to think about Saturday night. Mm, what else that you're gonna wear? Like where you go for dinner? Yeah. Yeah. The world wants you to think about Saturday night, but I think the real wealthy among us are thinking about four generations already. How do we get ready for something that's 150 years from now when you might not even get to see it come to fruition? Do you care about that stuff? Well, four generations from now. If, if you could imagine, like, what would you wanna say to your great-grandparents? Most of us don't even know their names. It's sad to say, I haven't read the book yet, but basically it's like, it's about like taking nothing with you. Like I'm not fueling the next generations of mine. Mm-hmm. like they can figure it out themselves. Yes. I'm spending every penny by the time I die, there's a book, uh, die With Zero. Maybe that's, that's, that's the book I'm talking about. The Perkins. Yeah. Yeah. Great. I've got it right behind me. It's one of my favorites. Yeah. Either you're gonna go to the country clubs and buy the sports cars or you're gonna leave it to your kids or whatever. And they'll go to the country clubs and then I'm going The sports cars. Yeah. So enjoy your life and prepare them, not just with money, but prepare them for the life that is gonna be required of them at that point. Someone once said, mark, don't just prepare a bunch of money for your. Kids prepare your kids for the money because if you raise a bunch of a-holes, if you Yeah. Raise a bunch of jerks, doesn't matter what you leave them, they're gonna blow it. Yeah, I agree. You know, I agree. There's the old phrase, shirt sleeves to shirt sleeves and three generations. And you can be a great business owner or a real estate agent to make it successful and then work so hard. And for what? For what? Right. So yeah, back to back to your question, how do you get. For this looming recession, one step is to get ready for the next recession. That doesn't help me today. Mark, what do I do about this one? Yeah. So my answer to your question finally is, yeah, one, figure out your employment strategy for your money first. Okay? Yeah. So back to the, the money I have now, like where is it all going? Yeah. Let's take control every single dollar. Get rid of the luxuries in your life, and then name them. So yeah, people, people's ears start perking up. What are these luxuries? Well, you know, this is where things get a little dicey, but you might have to sell that really nice car and go back to sharing a car with a buddy or a friend or a spouse or something. don't worry about lattes and stuff. Go ahead and enjoy. I'm not a big believer that you're gonna save your financial life by trimming back on your latte consumption. You gotta go for the big ones. Yeah. It's the big, it's don't buy the giant mcma. Sorry to say this real estate agent. No, no, I agree. I tell them too. Yeah. Yeah. Get the house that you can afford, not the one that you can maybe reach for. And be okay with that. the Parkinson's law rule says a luxury Once enjoyed, becomes a necessity. So find those luxuries and find ways to keep them from becoming necessities in your life. Also, I would say increase your marketability and you are your greatest asset in your own life. So how can. Beat inflation. The best and easiest way is to get a couple of side gigs or start doing something that brings in income right away. I've got clients that are doing so many creative strategies, e-commerce solutions, you know, getting their real estate license, doing side jobs, you know, or full-time jobs to add to what you're already doing. Your greatest R ROI is on assets you control, and you can't control much about the world around us, but you can control what's going on in. in inside your mind. And if you can put that thought process and mindset of success process to work, yeah. You can improve your situation and, you know, grow out of a finite limited mindset. Again, take the problem of a looming recession or a inevitable job loss. How do I turn this into a solution? I've had a lot of folks who lost their job and became their own boss, started a business. Yeah. So just some, some thoughts. I mean, you think of some of the biggest tech companies like Airbnb. It. In the procession. Yeah. Right. Yeah. With, I think those guys, I think the story is, yeah, they just needed money, so they just started renting at a room in their house, and yeah, they built an entire global business. That's it. Yeah. Yeah. Some of the best entrepreneurs will come out of a recession, some of the best future companies. I'll tell you a quick story. Have you ever, you ever used soft soap, right? I'm sure at any dispenser in a bathroom is soft soap. Uh, Where did that come from? Well, we all had bars of soap a long time ago. Bars of soap would sit on the countertops at bathrooms and there'd be this yucky, slimy ooze. Yeah. Underneath. You know what I'm talking about, right? Of course. So everyone hated that stuff. It was a mess. It was always a problem until right, until an entrepreneur thought about how he could take that problem and turn it into a solution. Created soft soap. He took the slime, the ooze, put it in a bottle and stink and sold it to us. Wow. Talk about like bold, right? Take the problem of ooze and goop and slime and sell it to us for a profit, and then we want a bottle of ooze. Yeah, yeah. We, we gladly buy it, right? Yeah. And it's way better than the, than the bar, in my opinion, you know, for washing your hands, whatever. How can you do that? How can you take a job loss, turn it into something like you said, Airbnb is a great example. Then Velcro is another example. Lots of great examples where problems became the solution. Yeah. Crazy. Hey I wanna ask you a couple more questions I know one of the things when we chatted about, we chatted at the beginning, you said a really funny comment that when you were going through your student loan debt and like, and with your wife and everything you said you could only ever talk about money in public places. I, I love when you said that, that was so funny because you knew you'd get in an. Yeah. Yeah. We needed witnesses, right? Yeah. So we needed, if, if things started going sideways, we needed to be able to, you know, have, have some public records that, how do you go from that to where you are now? A lot of money, mindset changes. A lot of, I, I guess, changes in your life. Yeah. Therapy. Yes. You know, and a humble humility and just the practice, you know, there's, there's nothing sexy about it, but I would say if you can find a regular habit to dance or learn a musical instrument or learn a foreign language, it does not happen. And it feels fake, and it feels forced, and it feels wooden for about six months there, and you're gonna break that budget for six months. Go ahead and give yourself permission to ruin. for six months, but get a little better every month. And before long you're starting to play that thing in tune. Yeah. Do you think people should be having money conversations, both with themselves and with partners, weekly, biweekly, monthly? every couple's gonna be different. Every individual single person will be different here in terms of your personality. But the key question I like to get folks asking is every. If you have to at the beginning, and then you can space space it out to weekly if you want, but every day just open up your account and say, what does this money need to do before I get paid again? Now that might be a ten second question. And you don't have to do this daily for long, but when you're learning a new instrument, you need to have an extra practice time to get yourself up and running. Maybe it's not daily, maybe it's as close to daily as possible, at least at the beginning for like a month. If you're just brand new to this budget thing, try to keep yourself on task for, you know, 15 seconds every day. Uh, And just say, what does this money need to do before I get paid? if you ask that question every single day for 30 days, you're gonna be on your way to a more financially stress free. And I find sometimes people, you, you put it off for a week, you put it off for a month and don't look at your finances, and then it's scarier to open up those accounts more and more every day. Right. When it's probably not that bad at all. Mm-hmm. Yeah. Mm-hmm. you just need to know what's going on in there. when I was just getting into this, I, I was not, I was working part-time for a A C P A firm. I was working part-time for a property management. I was working part-time for a restaurant gig. I was just all over the place trying to get outta that debt. And. I, I remember when I was working at the restaurant, I would stash all my tips in an envelope and we'd just keep it. And it was like June's tips, July's tips. And I would notice other people would leave the restaurant after their shift and they'd be off to the club to blow that money. Right. Wow. But not realizing that's a big portion of your income. Yeah, big time. They think it's free money. Right. They think it's free money. Exactly. So funny. So I was stuffing it in this envelope, and once a month, my wife and I would say, all right. What does this money need to do for us before we get paid again? And so think about how you can live on last month's income. That's another key tip to the budgeting experience. Maybe you can't live on last month quite yet, but maybe you could live on last Tuesday's income maybe. If you're spending your money 20 days after you make it, then you can increase that to 25 days and then 30 and then a month, and then three months. So get to a point where you've got a good run rate so you're not spending the money you earned yesterday, today. Yeah, I mean, I'm in commission-based sales, so it's, it's hard to, it's hard to, like I come from the nine to five world and now in commission-based sales, so I have the skills built in to know, okay, this is the budget. Even if I made way more than what I normally did this month, let's assume I only made that much. Mm-hmm. And get used to that small amount. That's great. So then anything more is extra. Yeah. That's awesome because if I have a killer month, I cannot get used to that. Mm-hmm. so when I built my budget for 2023 on knowing like what I can spend and assuming what I will make for the year. Cuz you kind of, I like to like pay myself a salary and kind of get my mindset still around that. So what I did is I looked at what I earned in 2022. like total amount divided by 12. Mm-hmm. and then that's what I use for 2023. Assuming that I'll more than likely make more money this year. Right. So anything more is just extra. But I've budgeted out and planned my life around last year's salary. That's great. Salary, quote unquote. No, that's really smart. What you've, what you've done is you've said, all right, here's my base pay and my commission. And I think that's a great strategy for anybody. What is my minimum requi for any business owner like yourself or solopreneur? What is my base required minimum to survive? Mm-hmm. You are the most important asset in your business. I'm gonna go ahead and assume that you are more important than any other part of your business. Of course. You know, yeah. I'm, I'm, it isn't a business without me. Yeah, exactly. Mm-hmm. we gotta, you know, we, we need to take care of any investment, right? A car, you want to change the oil, fill it with gas. Yeah. Whatever. So what is the minimum requirement to keep that wonderful asset running at its best? Hmm. And then, and then maybe that's, you pick a number. Maybe that's 70 grand a year, I don't know. Yeah. And then on top of that, when you get the, the really good months, where does that money need to go? What do we want our money doing for us? If it goes into one account, it's gonna act different than it if it goes into another account. So, you know, if you want a account to be illiquid for 40 years, if you want it to be taxed in the future, when rates are most, most likely gonna be higher, if you want it to be invested into underperforming retail, amateur investment products like mutual funds or index funds, then wonderful news. We have qualified retirement plans from the government to. Right. 401k, lots of options. R RSPs, but most people don't want those things is what I guess I'm getting to. Yeah. Most people when they, when they hear their 401K or their RSP described, it's, it's not what they want. They don't want their money going there, and yet many people are pouring lots, trillions of dollars. 32 trillion currently is invested in American retirement accounts that are tax deferred. So anyway, I know we're getting close to the end of our time, but. If, if you can make more than you absolutely need to survive. The key question there, Janelle, is what do I want my money doing for me? Uh, Again, putting that money to work and deciding what its job description will be, will help you later on so that it's working for you rather than you working for your money. Last question For. what are you doing lately with your money that we haven't talked about on this podcast to maybe prepare for a recession proof business? Hmm mm-hmm. Well, I mean, I can't think of a better asset that is liquid tax free and guaranteed to grow. No matter what recession we face, all right. I want to sit on a lot of cash right now. So my policies are a perfect place for my money to sit because when real estate prices tank, I'm ready. You need that money. Liquid. Yeah. Yeah. So, and you think that's what people should be doing is at least keeping, keeping as much cash as they. Yeah. So like, so limiting your spending, limiting the luxuries, keep and save more than you would normally, but don't throw them in your RSPs. Keep it liquid. Yeah, that's right. Yeah. You got money. Or keep an account that you can access very quickly. You've, you've got a choice where you put your money matters. Yeah. And where you put it makes it act differently. So what characteristics do you want your money to have if we're going into this reality? Whatever it might look like. So I like the optionality of sitting on liquid contingency. Right now, and I have had a lot of folks say, mark, I don't want to be in the markets. I wanna be ready for the downturn. Once we hit the bottom, there's gonna be people buying. Remember, for every person who loses money in the market, someone else was a buyer at that price and making a great deal. So be the buyer. When it comes time to this recession to be at, its at its worst point. When people are capitulating, that's when it's time to jump in. Mm-hmm. And you think real estate is the. It's one, one of many, but uh, yeah, you're gonna find incredible deals. Agree over the next two years. Agree. Problems can be seen as anything if we have eyes to see. I have a lot of friends in banking and that's what we were talking about over the weekend and we, we, we kind of talked about it all and I said, all I've gathered from this is I'm gonna have a great and busy Q3 and Q4 Yeah, that's right. They're like, yeah. They're like, there's so many people within Toronto specifically that. One increase in their mortgage payment, they're gonna have to sell, and they're gonna have to sell at a loss, and there's gonna be buyers waiting to pick it up. Mm-hmm. That's right. That's right. Yeah. I, I believe that we've got some great times ahead problems too. And I don't wish pain on anyone. No, no, of course. But things are gonna move around. Mm-hmm. Yeah. Yep. For every debtor there is a banker, so Yeah. Will you be the banker? Mark, thank you so much for chatting money with me. I feel like I went through at the beginning like a, a class in university, but I'm glad we got there, You did a great job. And yeah, I, I really think the, the, I understand it now. The interview was great, so yeah, you did a great job and great, great questions. Thank you. Thank you. Did you know that I'm not only a podcast host, but in my full-time career, I met Toronto based real estate agent. If you are someone, you know, is a busy professional looking to get into the Toronto real estate market, I highly recommend reaching out to me. You can go directly to my website@wwwdotjenelletremblant.com. And you can click the let's talk button to book a call with me. I work with buyers, renters, and sellers in the downtown and east end areas. So don't hesitate to reach out to me and I would love to help you find your next home. And in the meantime, we'll see you here back next week.