Group 4 Created with Sketch.
Your changes have been saved

Real Estate Thought Leader, Mark Willis - Former CEO of Keller Williams

From Audio: Be the Banker with Mark Willis

Share
station description Many businesses are started every day, but the number that lasts the test of time i... read more
‎Building a Business that Lasts
Duration: 19:03
Mark Willis speaks with Jay Owen from the Building a Business that Lasts Podcast about how to reclaim your finances after you've gone through a period of time when your business of family finances have gotten out of control. Mark teaches us how to be the bank and win in the next economic down turn.
Playlists that Real Estate Thought Leader, Mark Willis - Former CEO of Keller Williams appears on.
Up Next
Full Description
Back to Top
Mark Willis speaks with Jay Owen from the Building a Business that Lasts Podcast about how to reclaim your finances after you've gone through a period of time when your business of family finances have gotten out of control. Mark teaches us how to be the bank and win in the next economic down turn.
Transcripts
Back to Top
more time than we did before. How can we use that time wisely to put ourselves at least the right foot forward financially towards real wealth. You know, it's in these moments, like we talked about earlier, great opportunities for those that are willing to look for them and being agile and flexible and dropping the old rules as fast as you can. It's sort of like the titanic. When everyone got on the titanic, on on in europe and they started heading towards new york, it was all about who we're going to see in new york and what sort of dinner we're gonna have tonight and what sort of dress you're gonna wear, tux you're gonna wear. But as soon as they hit boom, that iceberg, it every second that they spent continuing to talk about all of that, their strategy, their shopping in new york, whatever it was, all a waste. And I would say as soon as you feel felt that crack in our nation, our world's economy every second that we spend playing the old game is, is like rearranging chairs on the titanic as they say. So the first thing you could try doing is lowering your temperature. So to be financially immune, you've got to do the same things. If you're physically sick, right? If you're, if you feel the fever coming on, what do you do? Well, you lower your, try to find ways to lower your temperature and get to a place where your imbalance. And so one of the things that means on a financial statement is, what is your burn rate? You know, what are you spending every month on your business ledger and on your family ledger? How are you able to lower that expense Where you're not shoveling money to 17 different streaming services every month? Right. What could you do possibly to negotiate your businesses rent if you have rent now is a great time to brush off your negotiating skills and talk to the people who have recurring revenue coming out of your business. Because you know for every every dollar that you spend, you're gonna have to find a customer or a client to replace that spent dollar. So really make it a game, make it fun, sit down with your employees or sit down with your family and say, how much can we cut back right now at the same time? What creative new things? I think Michael Hi, it is also famous for saying, what does this crisis make possible? So how can you increase your income and do new things? How can you take on a new skill set? I would say that if we just live the specialist most of the time, it's good and it's more profitable if you're a specialist, you know, if you're a heart surgeon, you're going to make more than maybe a family doctor would possibly, but in these moments it's okay to be a generalist. What new skills can you bring to the marketplace so that clients uh continue to come in your doors virtually or physically so that you're not without now is a good time to bring new value to the market. So those are a couple of things that might consider doing. You know, you could also re evaluate your the future revenues. And I think that's a really smart thing to do. Look at how long Into the future you can go. I wouldn't maybe go more than about 90 days into the future because that's about as far as any of us can possibly predict at this moment with where this crisis is. But find your cycles, find your new stability, your new equilibrium and again build yourself a new set of rules and figure out what new chapter your business is going to play and what your new chapter is going to be like for your family as well. Absolutely. You know, I think it's kind of like anything that is going to end well, you have to have a good plan and that's kind of a lot of what you're saying to some extent is you need to back up a little bit, take that breath that we talked about earlier and and put things down on paper, put him in a spreadsheet, do something. So you actually know what the numbers are. I think a lot of people and I've been guilty of this in seasons of life to just go day to day, week to week. And it's like, yeah, let's go out to eat, let's go do this, let's go to the movies, let's add another streaming service. Let's upgrade our cable package. Let's go to the football game and you just do them. And those things aren't all bad things, a lot of them are good things. You know, it's it's not even inherent inherently wasteful. We just need to plan for it and we and we need to have like, we need to know what that plan is, especially if you're in a place where you have a lot of debt. There's a reason that the bible says the borrower is slave to the lender and it's because that's true and that's a horrible feeling. I mean I remember when I got my first loan, I had a carpet when I was younger and I remember the feeling of not being sure I could make that payment that month And that was just, I was, I only had one payment and everything else. I had one little carpet wasn't that much and it was like $170 or something a month. And that was a horrible feeling and a lot of people are feeling those things right now, so we got to have a strategy, we have a plan to get us out of that. And I think one of things that's been interesting, as you kind of talked about this is you kind of leaned into personal finance and wealth and you've leaned into business finance and wealth and to some extent, especially we're talking to business owners, there's not a whole lot of difference anyway, like it's just where the where the money happens to end up and where the assets lie, but there's not a whole utterance between business wealth and personal wealth, depending on the circumstance, you're right well, and I want to kind of paint a picture quickly here. It's sort of a helpful, hopefully helpful metaphor. You know, if you think about your your financial life, like an airplane, most airplane, we'll all airplanes fly through the air. I mean, no airplane flies in a vacuum so the airplane lifts off. It's got to fly through the air, the the environment, right? So imagine you're piloting some airplane and let's say, the engine on that airplane can take you exactly 100 mph without any wind. And let's say, you're trying to fly from New York to Chicago. But the only problem is this little airplane is being hit with 345 mph, headwinds coming right at you. What's going to happen? My airplane can do 100, But the wind is pushing me at 345 mph. So no matter how hard I work, it does not matter how much I want to get to Chicago to eat that great deep dish pizza. I'm gonna be flying opposite direction out into the atlantic ocean at 200 whatever 45 miles an hour. So the headwind in that metaphor is the debt coming at us. On average, according to the U. S. Commerce Bureau, we spend about 34 a half cents on the dollar, 345 miles an hour coming right at us. You know, that's 34 a half cents every dollar we earn or excuse me, every dollar we spend, 34 cents is going to service debt just to service, not to pay down the principal just to pay down the mortgage or service the interest on the mortgage, student loans, auto loans. So again, no matter how hard our little airplane might try, we're going to be moving with a headwind, pushing us out into the ocean. Now, most people think that if we can just get rid of the headwind, we'll be fine. I mean the only solution to that problem is just land your plane in new york and wait right, wait for the wind to die down And then wait for no wind. And then you can fly at exactly 100 mph to Chicago, which is great. And most people think that's as good as it gets. The best I can ever do is be debt free. But I, I actually think there's something better than being debt free and that is being the banker. You know, imagine the airplane now has a tailwind of 345 mph, pushing that little airplane. Your wind is pushing you at 3 45. Your airplane itself can do another 100 miles an hour. So you're hitting 445 miles an hour, you're going to be the Chicago by lunch. You know, in that example, The power of the tailwind I think is too often overlooked. Most people figure out how they get their airplane to do 105 mph. Let me squeeze a little bit more rate of return out of my mutual fund. Let me squeeze a little bit more rate of return on my, you know, interest and maybe I'll refinance my mortgage to 3% rather than 4%. That doesn't matter. It doesn't matter what you're ready to returns are. And this is a C. F. P. Saying this. Okay, so the problem is not the rate of return. If I was getting a vaccine for this coronavirus, okay. It would not matter how fast they put that vaccine in my body. The rate of the injection does not matter what matters is the volume. The volume is what's either going to save my life or if they've done a gallon of that stuff in my body, I'll probably keel over dead. Right. It's the volume of interest. That really is the problem. And it's also the solution if I can again, if I can pay myself All the interest and debt payments, if you've been able to pay yourself $170 a month for that car loan, would that have been and multiply that now by our mortgage payments are student loan payments, our credit cards, our car loans, everything else our business needs our lines of credit to our business. If we can be a line of credit for ourself, just think of how easy it'll be to win in the next economic downturn if every other business is still on the hook with the bank's credit cards, the finance companies, if they live in the old game right now, right? If they're still playing the old game where they're in debt up to their eyeballs or even worse, they're just living as if paying cash is always the answer, then they're going to play the old game and they'll lose, you'll have the tail wind to push you faster and farther than any of your competitors can go. So I think I'm gonna title this episode, be the banker, we'll be, we'll be, we'll be there. So like explain that a little bit more from a practical standpoint because like what do you actually mean by that? Like you being the banker, you paying yourself, what does that look like on a day to day, week to week month month basis for a business owner? Right. Yeah there has to be a your your money needs a place to live that seems so obvious right? But where you put your money makes it do different things so you know a fish in the wrong environment is gonna keel over dead. If you take a fish out of water it's gonna die. But if you put your money or if you put this fish in the right environment it's gonna thrive, it's gonna multiply. Okay so where is the right environment for you to be the banker to act like a banker? Most people keep their money in Wall Street, the 41 Ks brokerage accounts iras they keep their money with banks, credit cards, finance companies, they put their money by paying down their house too fast so it's trapped in the drywall or they might just put it in a shoe box. You know there's only a few places. Actually a few is the wrong word there. J I took note of how many products financial products I could keep up with when I was studying for my C. F. P. There's over 450 different financial products out there and those are just the categories. Then you get all of the combinations and every insurance company or mutual fund company or whatever it's staggering. But most of us keep our money where in our homes trapped in the walls of our house And trapped in the walls of our 41K. And that's where most of our money is. So where can we put our money so that we could serve our life like a source of financing like a bank. How can we fire our banker and be our own banker like you said. So that's, there are some particular strategies and tools, but I'll get into in just a minute. Yeah, it's interesting. I think about this idea, I don't know what you think about this one is going to put it out there and then I want you to come back to that of, you know, inside of a business. You need two different kinds of people, You need a manager and that person is responsible for essentially cutting expenses, like they gotta keep, they gotta keep things tight so you're not wasting the money that you do have and then you need an entrepreneur and that person is the person who is going to go get more revenue and I certainly am the entrepreneur. I like to spend money unfortunately sometimes too fast, but my gut and my track record of business experience has always been, well I'm just going to go get more of it like life cycle, we want to do this this and this. And I'm like, okay, well that means I gotta go get some more of it like that, that's how I think. But there has to be a, there has to be a little bit of both of that, right? There has to be this, this tension which is appropriate that goes, hey, these expenses matter and yeah, but we'll just go get some more of it. It's like, what do you think about that idea? I love it. I think that you sound like you guys have a great relationship. I'd say again, the concept of balance is an interesting one there. You know, you've got the savior and the spender, but I would actually say to define balance a little different, I would say there's no such thing as balance or at least not among living people. Here's what I mean like equilibrium. The idea of biological equilibrium is death. That's literally their definition of like if you reach absolute equilibrium with all your body systems, you're in the ground, right? You're in the ground. So balance to me is the constant overreaction to the last misstep. If you think about what it would feel like to be on a tightrope for a minute. Is that the right word? Yeah, tightrope like a high wire. I'm never just absolutely still, I'm always recalculating, right? It's like our GPS is we're always recalculating so we're always over correcting the last overreaction. So the saver and the spender we make a mr I'll make a mistake. I'll readily admit that j like I'm the spender like I always say the same thing I said you know there's more of there's more where that came from is my mantra for life and with money too. But it's true we need to have we can't just have a mouth, we have to have a digestive system and a place to put everything when we're done using our warehouse of wealth right? So we need the saver, we need the spender and it has to work in tandem together. So I totally agree with you there. So going back to that be the banker thing because this is the most intriguing like a piece of the puzzle to think through. Like are you just saying that like people should once they get their debt paid down they should then think about what they're gonna do with the money that they were paying on that debt to put somewhere else to make it multiply like another business venture. Another idea, like, is that the idea? Or is there something I'm missing? I'm going to be a little more cantankerous than even that. J I'm going to say there's a better way to pay off your debt. In fact, that student loan payment, what we did was we bought back our debt, we didn't just pay it off, We bought it, we bought it back from Sallie Mae, here's how we did it. And I'll get a little tactical here and again, I have to say, my, my original like paradigm for the financial world was Wall Street, kind of mainstream financial products, retail, amateur investor products, like index funds or whatever. But what I studied when I was studying through some of the material I was being exposed to over the last 10 years or so, I found that if you can design a very particular, very old asset in this country, it's a dividend paying whole life insurance policy And this is one fascinating little tool most of the time it's overlooked in the financial portfolios of investment advisors. But if you can design that modernized whole life policy for cash rather than commissions, if you can, so I'll say that again, If the advisor is doing this for their client, not for the commission's will be paid, then you can have a massive amount of wealth built up inside that whole life policy. This is not the kind that Dave Ramsey talks about. So it's categorically different than what you hear on the radio, But what you do is essentially you flip there. It's playing a new game. The old game was, how little insurance can I buy for as cheap as possible. That was the old game, the new game over the last 10 years for my wife and I has been, how much premium can we pay? How much money can we plow into those assets? Those warehouses? That's our family bank in not so many words. And now that that whole life policy is established, it does a few things really well. It grows on a guaranteed basis outside of the stock market guaranteed every single year, no matter what's going on in the markets. So we call that real wealth, not paper wealth. Second that money is accessible to us, We can use it, spend it, we can go to Disney World, we can pay down our student loans, we can invest in our business. It's a literal line of credit to ourselves and we can either withdraw that money or we can use it as a line of credit. So we can use a policy loan and borrow against our life insurance. And I know it sounds crazy, but when you borrow against a policy that's designed the bank on yourself way, we call it the bank on yourself type policies. When you borrow against these policies, j if it's designed correctly, the policy itself will continue to grow as if there was not alone ticket against it, wow. So I'll say that one more time just with some numbers quickly and then I'll hush for a minute. So if I've got $100,000 in cash value And I borrow $30,000 out to buy a car that year, I'll still get the full growth dividends, guaranteed cash accumulation interest As if I had not borrowed that money on the entire $100,000. Now, what's the catch? If I die and don't pay off that loan, the death benefit would be reduced by 30 grand. Right? So if I've got $1 million dollar death benefit and I take a loan for 30 grand from my cash value, I might leave my family a million minus 30. So they have to struggle along on $970,000 income tax free. So that's what we did when we paid off our debts, we didn't just pay him off. We bought him back. We took Sallie Mae's balance and we said, all right, Sallie Mae says says we still owe her 70 grand. Well, heck we got $70,000 over here in our policies. Let's take a policy loan. That policy is going to continue to grow with dividends and interest on 70 grand. I'm going to take that and wipe out all my student loans. Now I've got alone to myself and I'm in control of that whole process. I can repay that loan this month or skip a few months right now. I control the airplane now. I've got the wind at my back. So that's how we did it on attack, fascinating. Yeah, I have never, ever heard that idea. That's very interesting. I don't even know you can take a loan against the policy like that. How do you even get that? How do you get that loan? Who does that? Does the bank do it as a financial planner? Do it. Who executes all that? Yeah, good question. So there's two types of life insurance out there, there's term insurance, which is just death benefit. You're just renting a life insurance policy and then there's cash value, life insurance or whole life insurance as the kind we recommend and whole life insurance has an equity to it. It's almost like owning your house. You know, when you rent an apartment, there's no equity can't borrow against your apartment. When you have a house, you're building equity. And just like that, a whole life policy has equity. So it's before you die, you got cash, that's the cash value, that's the equity of the policy. So loans are actually done with the life insurance company. You go online like just the other day, we took a policy loan to pay for some of our taxes that we do this year and I borrowed from my policy. It took me about two minutes to log in, click on this button, click on that button. And about five days later it was directly deposited from the life insurance company into my checking account and we pay the taxes, whatever. And then over the course of the next year will repay that loan on our schedule. You know, we're in the banker here, we're in control of that process so that we have that money ready to go again for next year's taxes. So
Up Next
Add to playlist
New playlist

Embed

COPY
Embed Options
Create Playlist
Select the Station you want to upload this audio to
Station
0 / 140
0 / 2000
Playlist Icon Image:
(.jpg, .png, min size 500x500px)
Privacy
Subscribers
Your
voice
matters.
Discover & Listen to the world’s largest free collection of audio
Password reset

Enter your email address that you used to register. We'll send you an email with your username and a link to reset your password.



If you still need help, contact Vurbl Support
Password reset sent

You have been sent instructions on resetting you password to the email associated with your account. Please check your email and signing in again.


Back to Sign In
If you still need help, contact Vurbl Support
Your
voice
matters.
Discover & Listen to the world’s largest free collection of audio
Reset password

Please enter your new password below.



If you still need help, contact Vurbl Support
Your voice matters.
Discover & Listen to the world’s largest free collection of audio
Verify Email

Enter your email address that you used to register. We'll send you an email with a link to verify your email.



Cancel
Delete Profile
Are you sure? We will miss you :'(
Delete
Delete Audio
Are you sure?
Delete
Delete Playlist
Are you sure you want to delete this playlist?
Delete
Notifications Mark all as read
    You currently have no notifications
    Edit Snippet
    0 / 140
    0 / 140