In this episode, we have an honest conversation about money. Chris shared his background, taking us through the several ups and downs of his financial life and the valuable lessons he learned from his failures. We spoke about how to make money work for us, the limitations of exchanging time for money, and what it means to “move the money.” We also talked about the money mindset, the snowball effect of mental victories, and American’s most significant problem when dealing with their money.
Rob Shallenberger: Welcome back to our Becoming Your Best podcast, listeners. This is your host, Rob Shallenberger. And my feeling is that this is going to be an awesome podcast today. This is one of those podcasts that will apply to every single person who’s listening to it because we’re going to talk about money – and I know that everybody is concerned about money. This is a big focus for all of us. And so, we’re pretty selective in who we invite onto the show. And I had a good friend Randy who recommended Chris Naugel as probably one of the best in the entire world when it came to money. So, I’ve looked at his background, his bio. He was a pro snowboarder turned money mogul. He’s known as America’s number one money mentor. He started 19 different companies. He’s been involved in real estate, hedge funds, all kinds of different things. On the outside, that can sound a little daunting. But I can also tell you, in just a brief conversation prior to starting this podcast, that he’s a very down-to-earth type of guy. In other words, he’s been through the School of Hard Knocks, grew up in a very normal average place, and he’s really had to work for this, and he’s very down to earth. And so I’m excited for him to share his insights and wisdom that will apply to your bank account.
Rob Shallenberger: And as we get rolling, I’ll just share two thoughts about money because I know there’s a lot of different opinions on this. I believe that money is a magnifier – it’ll magnify your ability to do good or to do bad. In other words, I’ve heard a lot of people say, “Once I have money, I’ll start doing that.” Well, probably not, actually. It’s just a reflection of who you already are. So, money can be an incredibly powerful and good thing as it magnifies who we are innately inside of us. So, regardless of what your background is, regardless of how much money you have right now in your account, I believe that money – and having that – can be a great blessing to so many people if it’s a reflection of who we already are in our heart and we’re already treating people like they deserve to be treated. And I will tell you this, I’ve lived life with money and without money, and it sure is a lot easier and less stressful to have money. So, I think we’re going to all benefit from some of Chris’s ideas. And with that being said, Chris, welcome.
Chris Naugel: Oh, wow. Thank you. That was awesome. That’s all I said. And what you just said about the money being a magnifier is the truest statement I’ve ever heard anyone say. So, great job with that.
Rob Shallenberger: Well, and give us just a little bit of background on you, Chris. And then we’re going to jump into a lot of this discussion around money and everything that goes along with it.
Chris Naugel: Yeah, I’ll keep it real simple. I grew up in a lower-middle-class family, raised by my mom, and my dad was an alcoholic. And mom did probably the greatest thing she ever could have for me, and she taught me to dream. So, my early dreams were to be a pro snowboarder. Now, I live in Buffalo, New York, we have no lack of snow but we have hills, not mountains. So, it was an uphill battle right from the get-go. And I just had to do what everybody was unwilling to do. And I was never willing to listen to people telling me I couldn’t do that, because there’s always people saying, “Oh, you want to be a pro snowboarder? That’s silly. You can’t do that here.” And I went forward with it. I didn’t have the money to go to the resort. So, I went to a country club, and I built jumps out of sand traps, and that’s how I mastered all my tricks. So, it was a very different path than most people would have taken to becoming a pro athlete, especially a pro snowboarder, and I did it.
Chris Naugel: And along that journey, obviously, I had jobs. I worked on a farm and then, at an early age, I worked in restaurants. But I had one restaurant owner that I worked for that degraded me so badly that I got clinically depressed. And I remember quitting that job – I’ll never forget that day – and at that moment, I didn’t know that was the moment where I quit trading hours for dollars but I did. And the story from there goes, I started a clothing line in my mom’s basement; printed t-shirts with my art teacher after school, and sold them out of my backpack. And a year later – this is November 1994, I was literally 18 years old – I opened my first store called Fatman Board Shops, and it was a huge task because I needed 70 grand to do this. I didn’t have any money. I had a 1986 Buick and a dirt bike as collateral. But my mom saw this dream almost die of opening the store because I couldn’t raise the money, that she did something really stupid and she put her house – this 700 square foot, two-bedroom ranch that I grew up in – on the line so that her punk snowboard kid could chase his dream. And I dove in, and that’s when I really started learning how to be an entrepreneur. And that went great.
Chris Naugel: Life was like a fairy tale for a period all the way up to the early 2000s. I was snowboarding professionally. I was running these stores, building them. I had four locations. And then the dot com crash hit. Now, I was a young kid, I’d never known what a recession was. But when this hit, I learned really quickly that “Holy crap! I’ve got to get a job.” And I couldn’t find a job, nobody would hire me. I had no real resume outside of being self-employed. But the one company or the one industry that really loved me was Wall Street. So, I got all these interviews with Wall Street firms, and I took a job, and I excelled at it – it’s the easiest way to say it. I became one of the top three advisors at that firm. I was making unbelievable money in retrospect to what I was making prior. And this went on all the way up until when I retired in 2018. But I had some big roller coaster rides during this period.
Chris Naugel: In 2008, I had bought a big strip mall, and I started developing, and I was doing some real estate because that’s just what the wealthy did. My clients who had money, they were in real estate, so I’m like, “Well, I’ve got to get in real estate.” And in ‘08, I got hit, like a Mack truck hitting me at full steam. I had to ask my girlfriend who just moved into my house to pay the mortgage, the utilities. I had to move people into my house just to make it through. So, I lost it all there and I made it through that period, and then I bought more real estate. Warren Buffett said, “Buy low, sell high, and don’t lose money.” So that’s what I did. ‘09 to ‘14, I bought apartment buildings. And in ‘14, I made some bad decisions, overly leveraged, the bank pulled the plug on me, wouldn’t give me any more money – that was it. So, you can see, I had a bunch of money, lost it all. Then in ‘14, had a bunch of money and now had assets, and I had to sell all of them, including the dream house that me and my fiance – that same girl that paid the mortgage – had bought. And that was the lowest point in my life. And it was also the point when I was most willing to start learning what I was doing wrong.
Chris Naugel: And up to that point, a financial advisor of my caliber — I had an ego, I’m not gonna lie. I definitely had a big ego, and that ego kept me from wanting to learn things that I needed to learn. But when I lost it all again, I was willing to learn. And this is where I met two people. I met a guy named Mike and a guy named Greg, extremely successful. He had a TV show – one guy. The other guy had millions of dollars lending it. And they started talking about money in an event. And what they said about money was the complete opposite of everything I’ve ever learned. And that’s when I began the journey of diving into “What do the wealthy do with money that we don’t learn? And why don’t we know what the wealthy do? And how do we mimic that?” And I did that from ‘14 right up to today, I’ll never stop learning. Me and my wife got a show on HGTV called Rescue Builders, flipping houses. We’ve flipped about almost 300 houses today. And I’ve become known as America’s number one money mentor. You hit the rest with the private hedge fund and multiple private funds that we do. And I literally teach people one thing, and I teach them how to solve their money problems by putting them back in control of their money. I don’t care if they live paycheck to paycheck, or they are a multi-billionaire. What I teach is so universally accepted and universally known and used. It’s simple. It’s changing just one thing in what people do.
Rob Shallenberger: That’s a great background, Chris. And prior to actually starting the podcast, we were talking about that, “What do the wealthy do with money?” And so, let’s expand on that. Share some of the things that you’ve observed, that you have recently learned over the years. You mentioned I didn’t know it, I lived the way I thought I was supposed to live but then I realized that this certain group of people did things differently. So, what are some of those things? Because as we talked about, there’s a pretty wide swath of people listening to this. There are people that live paycheck to paycheck, they’re starting out from scratch right now. And there are others that are doing really quite well. So, regardless of our background, I know this will apply to all of us, maybe you can expand on some of those ideas.
Chris Naugel: Yeah, it’s very simple. Let’s get to the basics. So, the first thing – and I want to hit these really high level; we’re not going to go down any rabbit holes because we don’t have time – the wealthy have learned through wisdom and through just application that you can only work so hard for your money. You can only trade so many hours for dollars. And at a certain point, you burn out or you just run out of hours. So, if that’s a cap, what they’ve had to learn is now how to take their money – I’m holding a $100 bill – and after they make it, they have to learn how to make that money go work for them. Because that’s how you get to that next level. So, they’ve mastered the same thing that banks do every single day, and that is the art of moving money. They make their money go out and work for them. And what money am I talking about? Well, not just the money that goes into your savings or the investments that you have; I’m talking about lazy money too: money that’s sitting in the rafters of your house, i.e., called equity, or money that’s sitting in a 401(k) just sitting there not doing much of anything.
Chris Naugel: The other biggest problem – and this is the thing that really hit me the hardest, and I think this is the base of what they do different – if you really think about our journey through our lives in any capacity – I don’t care what country you live in and what family life you’ve had – you’ve been taught to give up control of your money every step of the way. You make money, what’s the first thing you do with it? You give it to the bank, don’t you? You go into the bank and you feel super good. They give you one of those suckers that says “Dumb Dumbs” on, and you don’t even think about that. Every bank has a Dumb Dumb sucker, trust me. But we put money in the bank. Now, when we do that, we’re comfortable because that’s an asset to us, but who’s making the money on that? The bank is. The bank is making 400% to 1300% on the money that we leave there. And how are they doing that? Simple. They’re moving it, just look around. I mean, they don’t take your $100 and put it in a little box in the back with your name on it. No, they move it. They lend it out to your neighbor, they lend it out to your co-workers. They just keep moving that money and they make a spread on all of that. That is the act of moving money – mimicking what the banks do day in and day out. So, the wealthy didn’t do anything crazy. They just said, “Hey, banks are making all the money so, we’re going to take back control of our money, and we’re going to find a way to mimic what the bank does.”
Chris Naugel: But they ran into some problems because, in order to do what the bank does, they have to find a place where they can park their money, where that puts them in full control. And that place is not Wall Street, that place is definitely not retirement plans because you give up control for 5, 10, 15, 20 years when you do that. So, what they did is they went back to the drawing board of what the Rockefellers, the Rothschilds, JPs, Morgans, the wealthiest families in history – what did they do with money? Well, even though all of them were in banking, they didn’t use traditional banks to store their capital. They stored their capital in a place that most people don’t even think that you can put money. And that is giant mutually owned insurance companies. Because giant mutually owned insurance companies have stood the test of time and have survived every catastrophic financial collapse, including the Great Depression. So, they said, “How do we create a banking system to hold our capital with an insurance company because we want the returns the insurance company can pay.” Insurance companies are in the business of guaranteeing things, whether it’s death benefits, or guaranteed insurance payouts, whatever it is – they also can guarantee returns. But here’s the difficult part. And this is where I struggled because I come from that financial advisor role, so I knew what life insurance was, and I knew what whole life was. And I thought I knew what I didn’t know. So, I started talking to these guys and they never called it life insurance, they called it privatized banking. And I’m like, “What is privatized banking?” And they said, “It’s a whole life policy.” I’m like, “Oh, my God, here we go.” That’s exactly what I said. I was brought up to “Buy term, invest the difference;” put as much money in those managed accounts as you can and charge that 1% to 1.25% – that’s how I was taught. And now these guys that are way better at money than me are telling me they’re putting their money in whole life insurance? I’m like, “You’re nuts. You’re absolutely crazy.” Until I understood the one thing; they changed just one thing in what they did, they added one step, and that was where their money went first.
Chris Naugel: You see, when I think of a whole life, I think of a death benefit. They couldn’t care less about the death benefit. They were putting the money through a very different type of whole life, a specially designed and engineered plan that was built for banking. And here’s what they got, and this is to keep it really simple. I want you all to imagine if you had — I don’t care how much money you’ve got, $1,000 or you’ve got $100 million, and you’re trying to find a place to park that money to make the best return. Insurance companies, as of right now, the ones we use, pay a guaranteed 4% on every dollar you put through there, contractually. So, if I took my $1,000 and I put it into this specially designed and engineered whole life, I’m making 4%. Plus the insurance company pays dividends every single year. So, I can make up to 6% as of today’s 2021 numbers. But that’s only the first part. Remember, I said the wealthy move money. So, if I put my money in this policy, I can’t just leave it sit there, nobody’s excited about 6%. So, what the insurance company allows me to do is they allow me to take my money back out, but not as a withdrawal like you would from a bank. Because if you put $1,000 in the bank and the bank paid you 4% – if you could find a bank that did that – and you took $1,000 back out, how much is the bank paying you? Nothing, because you took your money out. But now I just changed where the money went first like the wealthy do and then I take the money back out, I’m still making interest in dividends on every penny, even though I’m holding the money in my hand. Most people don’t even understand that’s possible. Well, it is because you’re not using your own money. You see, your money never left the account. The insurance company is giving you money from their general account, which is an advance of a death benefit that will be paid out when you’re dead. So, therefore, now I’ve just found a way to make uninterrupted compound interest in every dollar of my money while still having control and access to it.
Chris Naugel: So, now what am I going to do? Well, I’m going to mimic the bank. I’m going to take that money that I now am holding and that it’s still making interest, and I’m going to put it to work again. I’m going to pay off my debts and I’m going to recycle and recapture the money that I’m giving away to Visa, AmEx, Discover. Then, I’m going to pay off my car with money from that policy and I’m going to then write the check that I used to give to the car finance company back to my bank. And then I’m going to take the money and I’m going to invest it into stocks when the market drops or cryptocurrencies or what I do today, private lending – I’m going to lend it out at 10 or 12%. You see, everything I just said is, my capital found a place where it can earn uninterrupted compound interest while I still can use that money to go out and make more money. That whole concept is what I learned from the wealthiest individuals that I’ve ever been around.
Chris Naugel: And the funniest part is, the more I get into this and I talk to the wealthy in masterminds and other podcasts, I keep finding out that they’re all doing this, they’re all using this. I’m like, “You’re doing this, too? Come on.” Who isn’t doing this? But they’re never talking about it. And then I started questioning myself, Rob, I said, “Well, if they’re all doing this, how come nobody knows about this? How come when I go out there and I teach, everybody is like, ‘I’ve never even heard of this.’ Where’s the disconnect?” And I went back to when I was an advisor; we were taught to sell products that paid us good commissions or invest and manage money that made us money. To do these private banking policies, the one differentiator is the advisor or the money mentor that’s setting these plans up has to give a whole lot away, they have to give something up. And that something is their commission, a huge portion. Between 60% and 90% of the commission that they would normally make by selling a whole life is given back to the client. So, the client has 60% to 90% of their money accessible immediately in the first 30 days. So, it’s literally just why would an advisor ever talk about something that they’re going to make 90% less money on? They wouldn’t, and their brokerages wouldn’t want them talking about it either. So, that’s the secret that I’ve learned. And there’s way more but I want to kind of get back to some of the other things, but that’s the biggest differentiator is they changed where their money went first.
Rob Shallenberger: Yeah, which makes total sense. For anyone who’s familiar with the Cashflow Quadrant, you know what you’re talking about. There’s not just trading time for dollars, because I love what you said, “We can only give so much time in exchange for our dollars.” As a fighter pilot for 11 years, the government’s going to pay you X in that particular rank – time/dollars rank. But the point is making money work for us. And what you just went through, Chris, is going to be a pretty foreign concept to a lot of people. We went through it pretty quick there. And it’s like, “Okay, I’ll set a whole life and then this.” Where would someone start this journey? And then I know you have other things that you want to talk about but let’s just stay with that whole life discussion. Where do they start to learn more?
Chris Naugel: If they want to learn more – the same place I started – they would watch a 90-minute video that teaches them, start to finish, how this actually works. And then from there, they’re gonna have a lot of questions. They can get that video on my website. So, it’s free, there’s no sales involved. It’s not like you’re going to watch a video and then something can be sold. No, it’s just an education process. We have to change our mindset from what we’ve been taught about money to what is actually happening out there. And it’s a tough thing. It’s like riding a bicycle. We learn how to ride a bicycle one way. And if something was changed in that bike that when you turned it to the right, the bike went to the left, you couldn’t ride that bike. Money is exactly the same. You have to learn how to ride the backwards money bicycle. And it’s difficult. Some people will never make that transition because it’s so foreign and different to what they’ve been taught. But what you’ve been taught is to give up control to somebody else, and somebody else is making all the money while your money is sitting and not doing its best service for you.
Rob Shallenberger: Yeah, making money work for you. Yes, 100%. So, you mentioned your website. Let me just give that. So, it’s chrisnaugle.com. And I just went and looked at it, there’s a 90-minute video right in the front. I love what he said there. This is a free video anyone can watch. And it really is about education. And I love this phrase, “GIGO. We can put garbage in or garbage out.” And how quickly do we spend time on the internet or watching random TV shows versus greatness in, greatness out. 90 minutes, a great education for most people. And for a lot of people, this will be new and unfamiliar territory. So, I encourage everyone to go watch that. Get a new piece of education, increase your knowledge, and then you can make some decisions based on your new knowledge that you have. So, let’s go now in a different direction. You have a lot of other tips for people as well. What are some other ideas that you’ve come across that can have a big impact with people?
Chris Naugel: Well, let’s hit one right now that’s pretty relevant for the times. Right now, we’re in a really crazy bubble when it comes to assets. And let’s talk real estate because it’s a common asset across any country and anywhere. Real estate values have skyrocketed in the last couple of years. Primarily because of lots of stimulus money in the government pumping money in and just demand. There’s a lot of people. Millennials want houses now, imagine that. So, you’ve got this huge demand for real estate, so prices are skyrocketing, which means every single person that owns real estate has something that they probably know but don’t know about it. And that’s called lazy money. They literally had been taught to work for money. Every one of you. I don’t care who you are, you’ve been taught to work for money. And you do, and some days are hard days. You come home really late at night, you’re exhausted, you open the door. I mean, I can’t even imagine being in your capacity. You’ve been a fighter pilot, correct? You probably had days where you were just mentally and physically just wiped out. So, imagine, in any capacity, you come home, you’re just having one of those really hard days, you open the front door of your house and you look into your living room. And right there on your couch is your money. And your money is laughing, eating your potato chips, drinking your soda, watching your TV. And it looks back at you and says, “What? Did you have a hard day?” That’s the money that most people have but it’s sitting in the rafters or sitting on their couch. It’s called equity. Equity in a house shouldn’t be something people get excited about. It’s something that they should be learning how to make that equity move. Now, you can access that through home equity lines of credit, you can access that through home equity loans, through private equity companies. You can get that money out of your house, and then take that money and put it to work.
Chris Naugel: It shames me sometimes to believe that there’s a ton of people buried in debt, credit card debt – the worst kind you can have. Paying credit cards 10%, 20%, 30% interest. That money is going out of their family forever, and they’re struggling just to make ends meet. But yet they come home to a home that all their money is sitting in the rafters and they’re doing nothing with it. They can get a home equity line, take that money out at let’s just say 5%, which would be high for today. And they could take that money out of their home equity line, it cost them nothing to get it. They could take that money, pay off all those credit cards, and then take the money that they used to give the credit card companies recycle and recapture it back to pay off that home equity line, which now replenishes all that usable equity. This is just a simple thing. But, again it is moving your money, and also taking money that you have accessible to you and to every one of you, and putting that money to work. But so many people don’t.
Chris Naugel: Actually, I even find people that have that emergency fund of money sitting in their savings. How many people you know that have that sacred bus fund, that emergency fund, that sits in their bank account doing nothing? But then when you look on the other side of the column, the Cashflow Quadrant and all their debts, their bad debts, all those debts are still there. But they’ve just got this emergency fund; “Oh, well, I need that in case something happens.” You know what the emergency is? Is that you’re giving all your money away to all these credit cards every month – that’s the emergency. Redeploy that capital to pay off the debts. A lot of people think paying debts off should start with the highest interest rate, it shouldn’t, it should start with the lowest balance. Pay the low balance off, take the amount you paid to that debtor, and then recapture that money. That’s what people don’t do. They just pay the debt off and they don’t do anything else. So, they’re like, “Oh, the debt’s gone.” Then they just rack it up again. You’ve got to pay it off, and then change the name on the check. You used to pay the check to Visa? Change the name of the check and pay it back to your bank. Become the bank. That’s the most important thing. When you start thinking about your money and treat your money the same as you treat the bank’s money, wealth is right around the corner for you. You can start building wealth through your own debts and expenses if you start acting like the bank. Stop giving all your money away. They’re taking every penny you give away to everybody else and recapturing it back into your bank, and then just keep recycling it, moving it back out. I mean, that’s a very simple thing that most people can accomplish.
Rob Shallenberger: And one thing you just said about the strategy to pay off credit cards starting with the lowest balance first and paying that off, there’s a mental victory that comes with that as well.
Chris Naugel: Oh, my gosh! It’s huge!
Rob Shallenberger: When you know that you just mentally checked that one-off and it’s gone and done, there’s a mental victory and suddenly you say… We call it the snowball effect. It starts to snowball, and you say, “Wait a second, I can do this.” So, yeah, I’ve experienced that. Let me ask you a different question here from the other side, not playing devil’s advocate but just a question that I’m sure some people have. Let’s say that there’s very minimal debt, the person has very minimal debt, very little credit card debt, if any, and really no car debt. They’ve been really diligent about paying off their debts. They pay cash for things. And let’s say they have a home, and they have equity in the home because right now a lot of people do, certainly not everyone. And I know there’s people listening to this in other countries and it’s a different discussion but let’s just keep this going for a couple of minutes here. So, let’s say that you have someone who does have equity in their home but not a lot of debt. If they were to use their equity line of credit, what are some things they would do with that? And then I guess one of the counter discussions would be now they’re leveraging themselves, and if there was a significant pullback – you know, now you’ve got the leverage of the equity line of credit – what are your thoughts on that? If someone doesn’t have debts and they do have significant equity in their home, what would they use that equity for? And then the second question is, now they are obviously leveraging themselves, they are taking on a debt that puts them at risk, potentially, if there was a significant pullback. So, maybe talk to those two points, Chris.
Chris Naugel: So, it’s very important that you said pullback because in my heart of hearts and everything I know – which is vast in the world – we are going to have a huge pullback in the markets. It’s going to be the stock market that’s going to take the rest of it down. And it might happen very soon, in the next couple of years. So, if that’s looming, well, the first thing I would tell people not to do is “Don’t take your money and throw it into the stock market. Don’t take your money and get all excited about cryptocurrency because everybody’s throwing their money.” If everybody’s going somewhere, chances are you should probably be going the opposite direction. So, let’s get back to this equity. They don’t have any debt. They’ve got equity in their house, they get a home equity line, but what do I do with that money to make that money earn it? So, remember, Cashflow Quadrant? I love that you brought up Kiyosaki because it’s brilliant how he explains that. We need to take that money that’s in our house and make that money work. But we’ve got to be very cautious because we don’t want to ever take money out in the form of the equity when we’ve got to pay 5% – we’ve got to make that payment every month – and then do something stupid with that where we put that money at risk, where now all of a sudden there’s a potential for loss. So, you’ve got to really look at your risk tolerance. For me, one of the safest places I can move my capital through is private loans. I want to own nothing but control everything, and the only way I’ve learned how to do this from whether it’s the Rockefellers or anyone else, is real estate is a tangible asset – one that is overpriced right now but if I do it short term, I’m probably okay. So, I put money out and I lend it in a first secured position on real estate deals. I find people that are very good in the industry of real estate and I lend them money on the real estate deals at my criteria. So, that’s one way they can move money.
Rob Shallenberger: So, the average person listening to this would say, “Okay, that’s great, but I have no idea where to even start.”
Chris Naugel: That’s very simple. I hate to drive them back to my website but we teach all of this stuff. I tell you what, I’ll give your entire audience a book, The Private Money Guide. I’ll give it to them for free, and they can learn exactly how they would do this and how they would protect themselves, which is single-handedly the most important thing. If you’re going to be a private lender, which seems new to most people and all that’s risky. It’s actually far less risky than doing what you’re doing with your money now. But you have to follow the steps. And the steps are simple. If you’ve ever taken a loan from a bank or a mortgage from a bank, what did you go through with the bank? What did the bank make you sign? “Oh, I don’t even remember,” most people say. Well, that’s where we start. So, I’ll give you the free book, or you can go on my website, there’s a whole video, and it’s all free that teaches you exactly how to do that. So, there’s definitely a level of education. And I’m not saying that this is just turnkey; you have to educate yourself. You didn’t get into a jet one day and just say, “Hey, I’m gonna learn how to fly.” No, you went through a process to learn how to do that. This is no different. But everybody has to be willing to take that extra step. Too many people in this country and everywhere… And I love Will Rogers’ quote, “The biggest problem in America is not what people don’t know, it’s what they think they know that just ain’t so.” We need to start realizing that the problem isn’t what we don’t know; it’s what we think we know. So, we’ve got to learn. So, that’s a really good way.
Chris Naugel: But let’s talk about a simpler way. Most people, I don’t care what country you’re in, you have to buy a car. There’s three or four ways you can buy a car: you can pay cash for a car, which people do because they don’t want a monthly payment; finance a car; you can lease a car; and you can steal a car – do not do option number four. I just had to get you guys laughing about that. But when we finance a car or we lease a car, we’re buying the worst asset you can buy – a vehicle – maybe a boat is worse, but a car goes down in value, it’s the only thing it does. And we trade our money for that car, whether we pay cash or we trade monthly payments in a loan or we trade monthly payments to rent the car and the lease. But what if we took the money from our home equity line or the money that’s in our private banking or the money that’s sitting in our savings account, and we then bought the car with our money – we became the bank. Most people would just call it quits there, they’d be like, “Okay, well, I bought the car, great, I don’t have a monthly payment.” You just did the worst thing because now your money has no opportunity to earn interest, you lost the future opportunity to earn interest on that money. But if you just change one thing, if you bought that car and you said to the dealership before you paid for the car, you said, “Well, how much would this be monthly if I were to finance it?” And they came back and said, “Well, that’s gonna be $350 a month, and that’s at a rate of 3.48%.” Perfect. Pay yourself the exact same amount you would have paid the bank or the finance company. So, if it’s $340 a month that you would have given the finance company, write a check every month, set up a bill pay for $340, have that $340 go back to your home equity line, have that $340 go back to your savings, have it go back to your private bank. You literally just made additional cash flow – passive income cash flow, if you will – money that you would have given away, and you took the interest that you would have given away and now that’s going to you. Now, the only thing you gotta be careful is, let’s remember, home equity lines can have an interest rate, and it’s a variable rate. So, if you did that with a car, and it was only 3.5% in the car loan, you’re probably upside down with the home equity line. So, that would be a bad thing. You always have to look at “What is my cost for the money that I’m going to use? And how much am I going to make on it?” So, if it’s a home equity line, always use 5%, maybe even 6% as your baseline because if they’ve raised that interest rate, you want to pad that. So, use 6%. So, then if we’re paying 6%, how much do we need to make on that? I would say, north of 8%. So, you’ve got to find a place to put that money where it’s going to make 8% or more because now you’ve covered yourself. And there are lots of places to make 8% without risk. Just look at where your money goes today. Look at where you’re paying your money. And then reverse engineer it. Because you’re probably paying a lot of people 8% or more in interest and you don’t even think about it because you just have been taught to live in a world of “I want that, and I’ll exchange a monthly payment for it.”
Rob Shallenberger: Great comment. This is one of those things that I was just thinking about. And while we’re on the topic, that was very kind of you, Chris, to offer a free book to all of our listeners. How do they get that free book?
Chris Naugel: Same thing. Go to chrisnaugle.com, and there’s a section in there, Books, click on the Private Money Guide, and just get it. And if you’re in a different country, I’ll send you the eBook. So, on the website, there’s a place where you can just email me. I think you’d actually get the web eBook there. Because if you’re in a different country, we’d have to ship it and that can be costly. So, we’ll send it to you via eBook and you can read the book or there’s audiobooks, but those cost money, and I’m trying to give everybody things for free here.
Rob Shallenberger: Awesome. And I can’t believe we’ve been going for almost 30 minutes. That is amazing.
Chris Naugel: It goes fast!
Rob Shallenberger: Here’s one of the things that stands out to me about this. I’ve spent, on my own side, thousand of hours learning about money, trading in the markets, and doing different things like that. And the one thing I’ve learned along the way is, this is just like you said, Chris, it’s like anything else. It’s an education. And if we expect to have the knowledge on how to do something, then we need to make the effort to go get the education. And there are certainly people who are willing to do that, and they’re probably the people listening to this podcast. There are a lot of people not willing to do that, and they’re just going to keep going in the same cycle of life they’ve been going on, and that can be a really rough road to hold for the rest of their lives. But I’m guessing that most of the people listening to this podcast are those who are serious about their education. They’re serious about investing in themselves and getting the knowledge. I’ll just give you this insight, Chris, I know you don’t know much about our background but we spent decades researching great leaders and high performers. And what we found is there are 12 principles of highly successful leaders. And principle number 10 – and it doesn’t matter, the order, we just call it principle 10 – is “Apply the power of knowledge.” In other words, the people who are the most successful in the world, they are constantly hungry and thirsting after knowledge because we can only apply something once we have it.
Rob Shallenberger: And I think today’s podcast is kind of like the case in point with an exclamation point on that is that you’ve talked about a lot of things that will be new to a lot of people, and now we have a choice. We can go learn about those things or we can just keep operating the way we have. Whether we agree or disagree is not the point. The point is, we can’t shoot an arrow that we don’t have in our quiver. And so, let’s go look out and get the knowledge. And in the end, it is everybody’s individual money, and they’ve got to make their choices with their money. But you can’t make a choice when you don’t have the knowledge about a certain part. It’s kind of like that classic blind spot. We all have blind spots. And I love what you said, Chris, it reminded me of this phrase that we’ve all heard, which is, “It shouldn’t be what we don’t know that concerns us. It should be what we don’t know that we don’t know. Because if we don’t know that we don’t know, we can’t do anything about it.” And so, I’m going to read your book. I know there’s things that I’m going to learn from it and I’ll be able to act on those because I know that I have blind spots. We all do. And that’s why you started this podcast talking about constantly learning and constantly improving. So, I would encourage everyone to read that book, The Private Lending Guide. It’s on chrisnaugel.com. It’s free, so there’s zero reasons not to. Nothing to lose, everything to gain. And money is one of those things that I think for a lot of people in my conversations with them is a great mystery. So, this is one of those where we have a choice: empower ourselves with knowledge or continue to live life and let other people dictate what happens to our money, which is one of our greatest resources and assets. Time and money – those are a couple of the great resources that are scarce, if you will. And I say scarce because we’ve got to get the knowledge and figure out how to make the most of it while we can because there’s a lot of people in this world who can help once we’re in a financial position to do so.
Chris Naugel: You said it earlier, and I just want to bring it up one more time; money is just the tool. It’s just like the shovel in your tool shed, that you take the shovel out only when you need to dig a hole. Money is that tool and can be used for everything. And it’s not about your actual resources. Everybody thinks you’ve got to have money to make money, that’s false. It’s about how resourceful you can be. And I’ll give you one more thing. Thinking about this, I’m thinking your audience might love – a lot of people have cars, but wouldn’t be nice to be able to get all the money back for every car they ever buy, drive, and own in just learning how to do that? So, that’s an easy thing to tangibly do. So, on that website – sorry to keep us driving back to the website, but that’s where everything is – there is a booklet that I just finished a week ago. It’s not even printed yet. But it teaches you in less than 60 pages, how to get all the money back for all the cars you will ever buy, drive, and own. So, that book is on there. It’s 100% free. So, make sure you grab that when you’re on there, too.
Rob Shallenberger: Awesome, Chris. Well, it’s been awesome having you here. Great insights. A lot of food for thought for people to think about saying, “What are you doing with your money? And how do you make money work for you?” And you’ve given us some great resources to use as well. Any final thoughts, Chris, before we wrap up here?
Chris Naugel: My gosh, I’ve got tons of thoughts but the biggest thing is really just everybody needs to stop listening to everybody telling them what they should be doing and how they should live their life. I think one of the big problems is, we all have dreams from a young age, and those dreams die because we start to conform to other people’s ideologies. And the thing I would say is, don’t ever lose sight of your dreams. If I had lost sight of my dreams and I conformed to what all – my family and everybody around me – wanted me to do, I wouldn’t be here talking today. I would be nowhere that I wanted to be, but I never lost sight of those dreams. And that’s the biggest advice is, they’re your dreams, hold them so close to you. Don’t let people strip them from you. Don’t let people tell you, “You can’t do anything.” You can do anything you want. And the only thing that will take that away is you conforming to what other people tell you your life should look like. Those are my parting words.
Rob Shallenberger: Great insight, Chris. Well, chrisnaugel.com. Thank you so much for being here today. Thank you to our podcast listeners. Wherever you are in the world, we love you, we appreciate you, and we hope you have a great rest of your week.
Leading authority on leadership and execution, F-16 Fighter Pilot, and father
Chris is considered America’s #1 Money Mentor.