MASTERCLASS: The SECRET To Never Be Broke Again

"If you took this $4,000 and you bought yourself a used car with cash, a good working condition car, now you have this $4,000 car, you have no monthly payments. What you can do is instead take this $500 a month and invest it. And if you took this $500 a month and you invested it and you could get a reasonable 7% annual return on your money."

"When you save your money, your money is just sitting flat. It's not growing. Well, at the same time, the value of your savings and your dollars are losing value and being diluted because of inflation. That's why when we talk about saving money, you want to make sure you're saving your money the right way and the smart way, not the majority mindset way."

"When I save my money, I'm only saving money for three things. I'm saving money for emergencies, I'm saving money for a big purchase, or I'm saving money for an investment."

"A good savings fund should have something like 3 to 12 months worth of expenses. So, depending on what your risk tolerance is, that's where you kind of want to have the savings fund be."

"And if you took this $500 a month and you invested it and you could get a reasonable 7% annual return on your money. So you're just throwing your money on the stock market and you're hoping to get a little bit below average return. So, we're not even talking about beating the market or even trying to meet the market. We're talking about a little bit below average. You just get a 7% return and you do this for the next 30 years, you're going to have something like $600,000 in your account on the side just because you used this money to pay yourself instead of using this money to pay your car company."

"If you're not happy, it does not matter how much money you have. It does not matter how successful you are, you will never be able to appreciate the things you accomplished."

"Because if you don't understand money and if you don't have money, you become a slave to money because now you're drowning in debt."

"Why is it that 88% of millionaires are self-made. That means these are people who did not have millionaire parents. These are people who created their millions themselves. Nine out of 10 millionaires out there that are millionaires made it themselves."

"The way it works is like this. The majority of people think, okay, I have $100 in my bank account right now. And if I have $100 in my bank account, that means I can go out and I can spend $100 on a pair of shoes because I have $100 in my bank account. If I have $100, I should be able to spend $100. This is net zero thinking because if you have $100, you can spend $100. This mindset kills people's wealth because if you have $100, you cannot afford to spend $100."

"A rule of five says if you cannot buy five of them, you cannot afford one of them. So if you have a $100 in your bank account, and we're talking about things you don't need to survive. If you have a $100 in your bank account and you want to go buy something, you can only afford to buy something that costs $20. Because if you have $100 in your bank account, this $20 thing is what you can afford to buy five times over. So if you cannot buy it five times, you can't afford to buy it one time."

"So many people are financing this phone on 20, 30, $40, $50 monthly payments because they cannot afford to pay $1,000 for a phone. So they think, 'Oh, I can afford this phone because I can pay $50 a month with 0% APR financing, so I'm not paying any extra money and interest, and I can afford this phone, right?' But this is a money trap."

"Assets are things that put money in your pocket. Liabilities are things that take money away from your pocket. Your $400 umbrella, your shoes, your lottery tickets, all these things are liabilities."

"If you want to become wealthy, you got to flip this around. you need to start spending more money on assets, which are things that pay you for owning them. And then once you have more money coming in, then you can afford to buy these liabilities."

"When you save money, your money is just sitting like this. It's flat. your money isn't doing anything. The amount of money you have in your savings account today is going to be the same amount of money you have in a year assuming you don't take any money out or put it in. Right? So, if your money is in your savings account, it's just sitting there. But you can't physically always be working, right? You want to live this life where you have other sources of income coming in. This is where assets come in. When you invest your money, you can see your money grow like this. It grows quicker than your money in your savings account."

"A simple rule of thumb to help you out with this, if you want to build more wealth faster, is to follow our 5 to1 rule, which says for every $5 you spend on liabilities, spend $1 buying assets."

"More than half the stuff you see on Instagram is fake. There are people that are going into debt to finance the perfect Instagram page because people are going into debt borrowing money to buy things that way they look cool on Instagram."

"The goal is not for you to live small for the rest of your life. Okay? The goal is for you to live bigger and expand your means. But the only way you can do that is if you have more money for yourself. That way you can invest more money into yourself. That way you can have more money attracting you more money."

"In 5 years, this car is not going to be worth $50,000. It might be worth $20,000 because your car is not an asset. Your car is a depreciating liability, meaning it is losing value every single day. I mean, the moment you stick your key in the ignition and you drive it off of the lot, it loses like 15 to 20% of its value right there."

"But what happens now if instead of taking the $716 a month and putting it into your car, you take this money and you put it into the stock market. And you're not trying to pick stocks, you're just throwing your money into the stock market. And you do this for 35 years because you're going to drive a car for the next 35 years as it is. and you can get just an average actually a little bit below average return of 7% a year. [...] After 35 years, you would have had $1.2 million, but instead you got a car that's worth nothing."

"And what you'll see is that the investments or assets that provided the best returns were things like stocks and real estate and then even bonds, but at the very bottom of this list, you'll see cash, which provided the worst returns."

"Investing your money takes time. Period. You need money to invest. Period. And this is where you have to understand that if somebody's selling you this idea of how you can make six figures by doing nothing but sitting on the beach and working four hours a day. Well, there might be something wrong with that because why isn't everybody else doing it?"

"You're never guaranteed to make money when you invest. In fact, you will probably lose money at some point. Every investor does. Now, the goal is to make more money than you lose."

"I mean, we just saw in America, credit card debt hit a brand new record high. What does that mean? That means people are spending money they don't have. And now, when you spend money on your credit card, not only do you have to pay this money back, but you have to pay this money back plus interest."

"I like to call buy now pay later. Broke now, broke later. And let's think about this for a second. If you went to the bank and you wanted to borrow money for six months, would they give it to you for free? No, they're going to charge you interest. Why does the bank charge you interest? Because there's a cost on borrowing money. So now, if you use buy now, pay later, and they tell you that you have the 0% APR for a certain period of time, how is it that they can give you this money for free and still be one of the most profitable or money-making, cash generating industries in fintech?"

"And number two is they know that when you go out and you spend more money, you're also less likely to pay your stuff off in time. So now when you don't pay your stuff off in time, what happens? you get slapped with a brand new fine, brand new fees, and now you're not paying 5 or 10% interest. Now you're paying 25 to 30% interest on your buy now, pay later, or as I like to call it, broke now, broke later, 0% APR financing."

"What ends up happening with Netflix is that the average American statistically is spending over two hours a day watching TV. What is TV? Netflix. And so now, if you're spending $15 a month on this TV that you're spending two hours a day watching, the cost isn't the $15 a month. The cost is the two hours of time you are devoting to the TV every single day. That's 60 hours a month. We're talking about over 700 hours a year."

"The first thing that every wealthy person tries to do which is something that anybody can do is they work to recategorize their income. They don't just work for this ordinary income. They invest their money into assets. That way they can earn this type of income. Portfolio income is when you own an investment and you sell it for profit. This is like your stock market investment income assuming you own your investments for longer than a year. And your passive income is things like rental checks or real estate properties. This is a different type of investment income and it comes with its own set of tax deductions."

"The second thing that wealthy people do is they lower their taxable income. So the question here is how do you lower your taxable income? Because you're not taxed on your gross income, you're taxed on your taxable income. This is the gross income minus all of your deductions. This is what your taxable income is."

"If you own a business, this could be a real estate investment business. This could be a business that you created. This could be a business that you bought. Now, this is completely flipped. Now, the way that it works is you make money from your business. Then, you pay your expenses right here. And then you pay taxes on whatever is left because now these expenses are deductions that you can take against your gross income which is why you have a much slower tax liability, a lower taxable income because you're paying for your expenses first."

"I own a business. I need a laptop to run my business. So my laptop was an expense that I get to deduct from my income before paying taxes. I need a phone from a business. So I deducted my iPhone from my income. I had to go to San Diego last year. I had to go to Manhattan last year. I spent about two months in San Diego and about a month month and a half in Manhattan last year. Both of those were expenses. I got to expense my travel, my flight, my Airbnb, my meals. All these things were expenses that I got to deduct from my income before my taxable income."

"So if I went out and bought a $150,000 G Wagon, I could deduct most of the value of the G Wagon against my income. Now again, I have to justify that I'm using it in my business. But this is where fancy accounting can come into play like last year, my accountant kept telling me to buy a G Wagon. Why Gwagon? because he said that we could justify that if I bought a G Wagon, he could say to the IRS, look, Jaspit is an influencer. He needs to maintain his image as an influencer. How can he do that? Well, he can buy a Gwagon. And now this Gwagon is a tax deduction for him."

"Now, let's assume that you want to buy that G Wagon and you want to be able to deduct this G Wagon against your income. Well, if a G Wagon costs, let's just say, $100,000, well, that means you're going to be out all of your cash if you buy the G Wagon with cash. Well, option number two is you put down $20,000 and now you finance the other $80,000. If you were to finance the other $80,000, now you only put down 20 grand, which means you still have 80 grand in your bank account and now you have a Gwagon, but now you also get the tax write off for the entire Gwagon. Now, let's assume that you use 80% of the G-Wagon for your business and you use 20% of the G Wagon for your personal life. [...] So, the Gwagon is primarily business use and some of it is for your personal life. Now, what you get is an 80% deduction on the value of the G Wagon against your taxable income. 80% of the $100,000 G Wagon is an $80,000 deduction against your taxable income. So now you get an $80,000 deduction against your $100,000 income. Meaning, you only have $20,000 worth of taxable income, but you have $80,000 in your bank account. [...] But you have $5,000 in your bank account right now. You tell the IRS that you have a $55,000 loss because you could deduct 80% of the value of this G Wagon. Now, next year you might make a little bit more money. Let's assume next year that you made $35,000 in your business. Nice. Well, now you tell the IRS, 'Hey, IRS, I made $35,000 in my business this year, but last year I lost $55,000. So now you deduct this against this and again you have $0 of taxable income because now you had $35,000 of profit which is in your bank account. This plus this means you have $40,000 in your bank account but again $0 worth of taxable income because you get to carry forward this loss."

"Option number two is he can refinance out of his Tesla stock. He can use debt against the value of his Tesla stock and uses debt to pay for his lifestyle because debt isn't taxable. [...] So if you go to the bank and you say, 'Hey bank, I have a business worth $10 million. would you be willing to loan me $1 million? Most banks, assuming you go to the right one, are going to say yes. So now you go to the bank and you take out a $1 million loan because the bank wants to give you money because they see the value of your business. And if you don't pay a loan, well, now the bank will get a $10 to $20 million business. So most banks want this deal because if you fail, they're going to win big time. So this is why banks would be willing to loan you $1 million. Now you have a million dollars in your pocket taxfree because now if you were to go and refinance your home that refinance the debt that you get that isn't taxable. Debt isn't taxable. So you're just pulling cash out taxfree with debt. And now you have a million dollars to spend."

"However, you have the ability now to harvest debt that the doctor couldn't do. [...] But the risk here is what happens if your business fails. What happens if your business doesn't grow? What happens now if you run into financial struggles? You can start to see where the risk is. But this is a way now for you to use debt as a way to finance your lifestyle without having to pay any money in taxes because you're not taking any money out from your business."

"What wealthy people want to do is they want to make money to buy assets and then use these assets to buy liabilities. What the average person is doing is they're making money and then they're using this money to buy liabilities. And then what poor people, financial poor people are doing is they're making money and then they're financing these liabilities."

"See, what the average person does, the middle class person is they are working to make money to do one thing, buy nicer things. The average person is working harder to drive a better car, to earn a bigger home, and to go on nicer vacations. [...] But the reality is, your home is only an asset if you can sell it for a profit. But until you sell it for a profit, when you buy that home, not only do you have to make the mortgage payments, but you also have to pay for all the upgrades, you have to pay for all the maintenance. You have to pay for the property taxes, you have to pay for the insurance, you have to pay for the HOA, and you have to pay for anything else to take care of the property."

"Did you know that your mortgage payments are frontloaded? Meaning, if you go out and buy a home today with a mortgage, most of your mortgage payment is going to be going to interest in your bank's pocket today and tomorrow and the month after that and the month after that and the year after that and the year after that and the year after that. For the first about 14 years of your mortgage, the majority of your mortgage payment is going to be going to interest and not equity. It's about 14 and a half years into your mortgage, your 30-year mortgage. That now at least half of your mortgage payment is going to be going to your principal. So, for the first almost half of your 30-year mortgage, most of your monthly payment is going just to interest."

"I met a guy at this conference that I was at recently and he was talking to me about this problem that he had. He said, 'I'm running into a lot of financial difficulties, but they're very unique financial difficulties.' I said, 'Tell me more.' He says that I am a very aggressive investor. I said, 'I like the sound of that.' He says, 'I invest pretty much every dollar that I possibly can into cash producing assets like dividend paying stocks.' I said, 'I like the sound of that.' He said, 'The problem is I sometimes don't have enough money to eat.'"

"There's a limit to how many pennies you can squeeze out of this limited pie. Because at the end of the day, a penny saved is just a penny. And once you understand this, this is a good problem to have because now the next part is where things get really fun because now what you want to do is focus on the income side. This is what we were talking about earlier. How can you take this from $50,000 to $500,000? Because now if you follow the same ratio, you can now live off of $300,000 and save and invest $200,000."

"What the blue ocean strategy is, it says that the majority of businesses out there are operating in what's called a red ocean. It's a bloody ocean where businesses are competing against each other to do the exact same thing. [...] And what the blue ocean strategy is, it's how can you go from this bloody red ocean to a blue ocean where you have a wide range of opportunities and little to no competition."

"A completely different business model of doing something different. So now if you want to be a high achiever, the question is not how do you go out and build the next Netflix, but how can you play a game that isn't competing against everybody else doing what everybody else is doing?"

"Most of us, most people have a scarcity mindset where we think there's a limited amount of money in the world. There's a limited amount of happiness in the world. And so if somebody else is successful, if somebody else has money, if somebody else is happy, I should hate them because they're taking away the limited amount of success or winnings in the world. When in reality, there's a lot of money in the world. And there's no limit to how much happiness that's in the world."

"And this is a big mistake that so many people make is that they work to get jobs solely for the purpose of making money solely for to go out and buy the nice things. But if you really want to be able to scale yourself, whether it's in your career or in your business, you have to be willing to work to learn, not just to work to earn."

"real wealth is built over the long term over any sort of whatever you want to call it. I mean with your investments investors will beat out the traders over the long term. Traders might win in the short term but the investors are going to win time and time again over the long term. But that requires you to be investing into an asset for years if not decades. Building a business is a lot more profitable than starting a quick side hustle that's going to make you a lot of money, but it takes a lot more dedication and sacrifice and risk today to do that."

"And this one is so hard because many of us or a lot of people in general like to count other people's pennies and they're more worried about what other people are getting rather than what they get themselves. And what you'll see is that people are so focused on what other people are getting that they would rather you not become successful than they become successful themselves."

"You got to stop worrying about what other people think if you want to become successful or happy or really anything in life. Because when you're so worried about what other people think, you become a slave to other people's opinions and you got to be able to break out of that financially."

"If you are not the best CEO for your company, you want to fire yourself and bring on a new CEO. Yeah, you still own the company. And that's the point is you want to grow the profits, but if you're not cut out for it, bring somebody else on. And if you want to really be able to build a real business that you can sell, you have to make yourself replaceable."

"Plan for the worst, prepare for the best. [...] If you prepare, you can capitalize on recessions because recessions create more millionaires than any other time. Market crashes create the opportunities to build huge amounts of wealth in a short period of time because when you have these economic slowdowns, investments, assets go on sale because people are panicking."

"Have insurance, business insurance if you own a business, landlord's insurance if you're investing in rental properties. There's a lot of different types of business insurances. Protect yourself. Get health insurance. Get life insurance."

"I prefer term life insurance, not whole life insurance. Term life insurance, I look at it like a bridge insurance where I don't have the assets to support my family if I were to die tomorrow. And so I want, life insurance for 10 years until I can build my wealth or 20 years, whatever it might be. I prefer that type of term insurance. If nothing happens to you, you don't get anything, but you also save a whole bunch of money on the insurance payments because I rather you invest your money, build your assets, and not have to rely on an insurance company to build your wealth."

"Like the most obvious are when you see a stock market crash, some people lose a lot their wealth. You see some people lose their retirement funds, people lose their life savings, but that also creates opportunity for you to come in, buy good investments for half off. That's the opportunity and the bad. When the 2020 pandemic hit, people were losing everything when the stock market was crashing and some people were coming in and buying for pennies on the dollar. When the 2008 crash happened, people lost everything. people lost their homes, but real estate prices were then also selling for huge discounts."

"This is one of those traits that you see every successful person have. And this is going to be whether again you're an entrepreneur or not an entrepreneur. You have to have grit. If you're working a job, you need to have grit because guess what? Even working a job, you got to deal with a whole bunch of crap. You got to deal with the company politics. You got to deal with everybody else's crap. And then when you're working to build your wealth, you got to take the money and you got to invest it. And that means you got to deal with the crap of investing. That means you're going to have to deal with the down market cycles. You got to deal with the bad investments that you got to make. That means you might have to deal with bad tenants. You have to deal with all the crap that comes with putting your money to work."

"And the max you want to have in your savings account is something like 12 months worth of expenses in your savings account in cash liquid that you can access whenever you want. That way, in case something goes wrong, in case your kid's arm breaks, in case your AC goes out, you have cash that you can dip into. that we don't got to go into debt to fund these costs."