Latest / Success Story with Scott Clary / Lessons - How to Build Recession-Proof Money Strategies | Chris Miles - Cash Flow Expert

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Lessons - How to Build Recession-Proof Money Strategies | Chris Miles - Cash Flow Expert · Success Story with Scott Clary

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  In this lessons episode, discover how to build lasting financial security
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  regardless of market conditions, learn why tracking your money regularly matters,
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  how maintaining cash reserves can protect your business, and why investing early and consistently
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  helps avoid costly mistakes.
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  Now, you can make the argument that if the recession never happened,
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  the strategies you were deploying in your life and what you were teaching are sound,
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  and some of them, like, still are. Like, investing in real estate is not a bad idea.
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  You could still create passive income out of that. But,
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  forget, pretend the recession, pretend we would hit another recession, which can always happen.
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  What are some ideas that you teach now that are recession proof, that you wish you had done
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  before the first recession, before the 2008-2009 financial crisis, so that you could have survived,
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  regardless of what happens with the economy, the market, the banks, anything.
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  Yeah, that's where you kind of heard the ender tones of it in that story, right?
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  I remember in 2020 when we thought, okay, this is it. This is the actual black swan event
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  that's going to create the recession that we were already expecting in 2019, because we were
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  predicting 2020 would be the year of real estate would actually get hit and possibly depreciate.
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  And then it didn't, because they sort of print money like Willy Wonka Chocobars, right?
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  Yeah, but that's not good for the future, right?
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  No, it makes the bubble bigger. It's blowing up that bubble. You get this nice little bubble
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  gun bubble and you're like, oh, that's big. Let's just keep going. It's all of your hair and stuff,
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  right? That's what I'm expecting, too. And so in 2020, it's the same advice I even get people
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  today, which is these three things, is get lean, get liquid, and get out. So, get lean means,
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  make sure you're tracking your money, right? If you're a business owner, even in real estate,
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  or wherever it might be, track your money in your business, using QuickBooks or whatever you might
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  use. Zero is another one like XERO is another one that's like QuickBooks you can use, too.
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  In the personal life, make sure you're tracking your personal home as well.
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  Try things you know, you can use like rocket money or a monarch money or good tools you can
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  use to track your money. But start really watching what's coming in, what's going out? Don't just
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  watch your spending. I mean, that's important, too. But watch what's coming in and going out,
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  know the full flow of your money. How much positive or negative cash flow are you? And understand
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  that on a very, on a very solid level. Don't just do it once a month or at tax time once a year,
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  you know, do it like I would say, if not weekly, at least every other week, you know, really start
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  to understand your money and where it's going. Don't even worry about creating budgets. If you've
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  never done this before, track your money for like at least six to 12 months, then you'll have enough
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  evidence and enough data to figure out how to actually create budgets and whatnot, which by the way,
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  I hate the word budget. I like spending planned because let's be honest. That's really what it is.
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  So that's a big one. So get lean and get rid of the expenses that just don't serve you, right?
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  Things that, you know, it could be a subscription. That's not serving you very well. Maybe it's like,
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  you know, maybe it's like you're just going out to eat one too many times or probably more like
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  10 too many times if anything, right? Or whatever it might be, like just try to find ways to
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  to be a wise steward of your money. Then get liquid. See, that's the problem. I, so first,
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  I was tracking my money, you know, in 2007, I was because money was so abundant, it was like air,
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  but also like air, when it disappears, you count every breath, don't you? And the same thing with
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  money, I didn't start counting my money until it was already too late. I was already, I was reactive,
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  not pro pro active. And so track your money for one. Two is get liquid. Get liquid means make sure
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  you have liquid reserves in business. Man, you can, you better make sure you have at least a few
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  months of expenses for your business. Now, if you're a real estate investor like, like, I was talking
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  on Steve Triang show recently, we're talking about this. If you've got like marketing strategies that
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  could take nine months to finally deliver results, then you might want to have nine months of
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  reserves or more just in case, because if it's going to take a while for that to kick in to start
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  producing some income, you don't be left high and dry because the number one failure in business
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  is not because people just suck a business. It's usually because they lack the capital. They've
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  usually haven't planned appropriately to have enough reserves. So have good cash reserve in your
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  business, have reserves at home. I found as a business owner, I recommend at least 12 months
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  is pretty of your monthly expenses. So if you already know your expenses are six, 10,000
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  month, you probably want to have about $120,000 you don't touch. In my own life, I have 400 grand
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  that I keep between, you know, typical bank savings, high yield savings, and then life insurance
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  that I keep, you know, most lines share there just so I can diversify my money a little bit,
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  but make sure you have those reserves. And don't tie your money up in those IRAs and forewing
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  ks and whatnot. I mean, I know that's counter to what everybody else wants to teach you. And even
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  in the real estate space, how some people say, oh, no, it's good to get the solo forewing ks or get
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  the, you know, the self-directed IRAs. And if you already have them, that's one thing. But if you're
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  trying to put new money into these plans and you're thinking, oh, yeah, I don't want financial
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  freedom before I'm 60. No, screw that. Like I want to make sure I'm at least 60 years old before
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  I have any kind of freedom. Well, then good. Keep putting money in those plans. We want freedom
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  before you're 60 because you don't have to deal with 59 and a half penalties and things like that.
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  Well, then get your money liquid. You know, have it outside of that. And then that's where I will
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  say that then get it out. And especially if you're an active real estate investor, one of the biggest
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  mistakes I've seen, and I'm in several mastermind groups where, I mean, there's like high level
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  investors, you would never think we'd go out of business and are today one because they didn't
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  have cash reserves, but two, because they were all in on their business. And so Mike, the
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  Caloitz, that's another great book. If you ever read profit first, great book to read and then
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  implementing that system into your business and make sure you actually have profit. If you're
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  always reinvesting all of your money back in your business, the thing is you're not profitable,
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  right? You're spending money, you know, and I'm all about growing a business and they can
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  be bigger and bigger, but not if it means that you stuff to keep working as a slave in that
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  business forever. I like to be work optional, right? I work because I want to because I have to,
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  because I've, I've, I've been able to retire twice and I just can't do it because I get bored,
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  right? I just, I have to have purpose. I can't just sit around my beach or go golfing because I
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  don't golf. That's big reason. You know, sorry. I know you're a Miami. I know they've got great
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  golfing out there too in that direction. But oh, you're not defending me. Listen, I grew up in
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  Toronto. So golf was the necessary side effect of playing hockey in the winter. That's all we
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  could do. But outside of that, I'm not a big golfer. Yeah, it's not my thing. It's my doors in that,
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  you know? Yeah, there's that. Listen, after moving down, I'm still acclimating to everybody loving
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  football and basketball over hockey. So that's fine. I'm, I'm getting used to it eventually. But
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  yeah, no, I also don't think that people completely should completely retire, but that's
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  besides the point, the point is, do you have the option to retire? Do you have the option to
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  work if you want to? You're, you're family safer, especially if you have other students of income
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  outside of that business. So when you have that extra profit, take that and invest in things that
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  do generate passive income for you. And that's a kind of a debated word about passive because
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  is anything truly passive? Not necessarily because you still have to manage it. You still have to
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  be a steward of your money. But it's nice for me. Like I like to be able to, well, here's an
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  example, like several guys in this high level wholesaling flipper group that I was in the match
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  mine with, you know, I don't want to say their names out, you know, out here, but they're great,
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  a great group. But in that group, there's a lot of guys that were like all in on wholesaling,
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  they're doing great. And I kept saying for years, and I wasn't the only one, even the leadership
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  was saying the same thing is take the chips off the table. And, you know, even if you got great
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  deals, maybe keep them for yourself instead of flipping that property, maybe you keep it,
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  and you rent it out, you know, or whatever it might be, like get additional streams of income.
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  And there was one guy in particular, he was out in in Pennsylvania, and he was even like,
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  dude, how do you have so much passive income? He's like, I would love to have like 10,000, 20,000 a
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  month. I was like, well, dude, just even if you're an active investor, cherry pick. Now,
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  cherry pick some of your best deals, keep them. Don't don't flip them all. Like yeah, it looks good
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  on the on the ego numbers, you know, for revenue and such, but keep maybe keep those properties
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  and cash flow and dude, when 2020, especially going to 2022 and 2023 hit, which was even worse than
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  2020 for us, right? In 2022, 2023 hit, he was one of those guys left standing because he finally
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  decided to take some of the chips off table, cherry pick and keep some of his properties. His rentals
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  literally saved his wholesaling business. If they weren't for that, he would be out of business
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  today. But because he didn't have to keep taking our family, because he knew he can maneuver and
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  pivot and do certain things, he was okay. And he even had some of the business owning some of
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  those rentals too, so that they ain't cash was still coming in even if the wholesaling had dried up.
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  And so that's where it's very I think that's that's the big thing I learned. That's why the
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  second time around and 20s end of 2016 when I was financially dependent again, you know, and I don't
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  do active stuff. I'm not the type of person to go and wholesale or flip is really anymore. Like,
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  I like other people do it. Now I just use my capital to go out and work for me and let those guys
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  do all the work, right? Because they're they're younger and full of life energy. I think that it's
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  so this is something that I see with entrepreneurs as well. They build a business at the point where
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  then they make a ton of money with an exit or an acquisition. And then they just start investing.
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  Then I'm a big fan of invest along the way and take money off the table a little bit earlier. So
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  you again, it's the same concept, right? You come from a real estate world where it's all active active
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  I come from a background in tech where it's all active building and raising the next round and
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  and whenever you have the opportunity start to learn how to invest because a good entrepreneur or a
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  good active somebody is actively participating in real estate wholesale flipping. It doesn't mean
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  you're a good investor. So you have to learn you have to practice. It's not something they teach you
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  in school. And I think that if you wait until you have this huge windfall, this huge amount of
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  money and that's when you start that's when you can make some super costly mistakes as opposed to
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  if you're just playing with a couple 10, 10,000, a couple tens of thousands as opposed to doing
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  really large investments before you've ever really had experience doing it. And what I see
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  how often is people who become good at making money and they make a lot of it, they think that
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  they're going to be good at investing. And then the mistakes they make are in the hundreds of
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  thousands, if not millions of dollars, which is horrible. I mean, they can probably afford it,
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  but that's not the point. Those mistakes could be made completely. Those mistakes never had to
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  happen. If you just start acclimating yourself and and and learning how to invest at a very small
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  level and something that can generate income all you sleep. Yeah. Make early money and money
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  and growing wealth are two very different skill sets. Very much so. And for some reason they get
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  conflated as just one one idea and which is incorrect. When you put your money and you
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  park your money into something, there's another point or an idea that we have to discuss, which is
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  say it is something passive. Is there ever a point when you should pull it out? So for example,
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  you sort of saw some signals that the market wasn't going in the right direction. You mentioned that
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  guy, the general at a California that just by chance took his money out of the market at two very
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  specific points and he had great returns. So it can be invested for the long haul for a period of
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  time. Are there signals that you should maybe liquidate and take some of those sort of longer
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  term investments and just maybe hold that cash that you've seen? There are. The thing I often
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  teach our clients is I tell them not to ignore the news, at least from the standpoint of taking any
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  advice, but listen to what people are saying, not just the news, but even like what might be like
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  the person that barely graduated high school that you went to school with, right? Or even the person
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  that's like on the street or your Uber driver for that matter. I mean, if they start talking about
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  a certain investment as being like the best investment right now, that is probably investment to
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  start selling. For example, I remember, you know, there's been ups and downs in Bitcoin, right?
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  Now, I'm not a big fan of like Bitcoin as a wealth building strategy. I think it's kind of a
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  fun thing to play with. You know, great gamble with money, but don't be, but don't be mad if you lose
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  it all, right? That's kind of why I say like don't invest more than you're willing to lose when it
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  comes to things like Bitcoin. Same thing with stock investing and whatnot. Well, I remember this is
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  in 2018. It was December. It was starting to hit a high of like 20,000 everybody's talking about
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  Bitcoin. And I said, you know what? I predict it's going to crash and it did. It crashed because
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  why every time I Bitcoin. And then it started to try to rear back up again, you know, it towards like
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  65,000 remember that like in in 2022, right? The spring of 2022. And I actually bought it when I
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  crashed down whenever he was scared of Bitcoin, that's when I bought Bitcoin. It's kind of like the
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  Warren Buffet thing like, you know, whenever things, whenever he's greedy, be fearful, whenever he's
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  fearful, be greedy, right? So I always do the opposite. Wherever the crowd is running away from or
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  running tours, I run I run the opposite direction. Well, same thing happened again. So I bought like a
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  6,000 Bitcoin. Now it's going up towards 65. And then everybody starts to say how to buy Bitcoin. I
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  even remember on Facebook had friends that barely graduated high school saying, how do I buy a Bitcoin?
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  And where do you, I mean, where do you buy it? Do you get it from a store? Like I was like, oh my gosh,
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  this is the time when dumb money's in right now. This is it. This time to get out. So I sold right
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  around 50,000. And of course, it came crash down to like 16,000, right? And and that's and that's
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  the thing. Like now real estate isn't much different. Even a real estate tends to be a little bit
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  more stable. And that's why I liked store most of my wealth in real estate backed investments.
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  But same thing can happen, right? If everybody's saying everybody buy a real estate, which I haven't
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  seen that day really happen, I've always heard people be scared of real estate ever since 2008,
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  right? Like it really everybody's like, oh, I don't know, real estate's going to come crashing any
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  minute. But you don't really hear that about the stock market. So I'm just keeps going up up
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  in a way more than it ever has in history for these last 15 years now going on 16 years.
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  And yet people are still like, oh yeah, that's where you put your money. That's where you go. Yeah,
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  put in stocks. It's great. Put in the S&P 500 index. You know, doing pay the extra fees, right? They
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  all say the same thing. That's when you know something is overvalued. So now whenever it's
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  fearful, like right now people would be fearful of buying apartment buildings. Like it's finally got
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  to the point where people now been burned so badly in the last two years. This might be a good
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  time to start looking at apartments again because the value should come down self storage not so much.
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  Self storage is still a little bit overpriced. Nobody's really said self storage is a bad deal,
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  right? So when people tell you it's a bad investment, it's usually when it's good. When they tell you
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  it's a good investment, that's usually when it's bad, at least for the timing. Thanks for tuning in.
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  episode. And if you want to dive deeper into this conversation, check out the links in the
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  description to watch the full episode. See you in the next one.