Latest / The Capitalizing Your Life Podcast / The Actuary Millionaire
Transcript
- Introduction 00:00:03 Welcome to The Millionaire Journey hosted by Glenn Yaney. Each week, Glenn sits down with his guest to take a deep dive into their current financial allocation and hear their journey to becoming a millionaire. Through personal stories of failures and successes, you'll have the road map you need to improve your financial situation and increase your net worth. Glenn 00:00:25 Hello everyone. I'm Glenn Yaney, your host for The Millionaire Journey. The goal of this podcast is to guide and empower you and your journey toward financial independence. Today, my guest is Jack Allweil. Welcome, Jack. Jack 00:00:42 Glenn, thanks so much for having me on. It's an honor. Glenn 00:00:46 I've really been looking forward to this podcast and I follow you on Twitter and and we had a little conversation before. So can we dig into the the weeds of your financial life and see how that goes? So I guess the first question is. Just tell us a little bit about your financial journey and and what brought you to where you're at today. Jack 00:01:12 Sure. So I I grew up in a very small town 100 miles north of Detroit in Michigan, so, so very rural community. But I always liked math and I liked soccer growing up. So when I went to college I was like, okay, I like math, so I'll probably study math and then I discovered econ and I kind of like that. And my junior year, I took an actuarial science class. It was an interest theory class. It was taught by an actuary. It was a night class, so he was an actuary by day and taught this class at night. And at the time. So I yeah. So I was a junior and I hadn't really done a great job networking with, like, like I was kind of shy, so I didn't really like talking to my professors and sometimes you kind of and I was at the University of Michigan, so I was kind of just a number like big classes. And, but this this professor he made the point that like as long as you passed the exams that that's kind of what these insurance companies are looking for and if you just passed the exams that's kind of you don't have to do a lot of like schmoozing with people or networking, and for a shy kid like me, that was very attractive. So I took the first actuarial exam and then I think I needed to pass. I passed two more before I got my first actuarial job in 2013 and that was like in the risk management realm. And it wasn't really till 2016 though, where I I felt like I was more like awake with the decisions I was making. So 2015, I moved down to Charlotte. So I knew zero people. I took a different actuary job. I was having trouble balancing, studying for the actuarial exams, doing well with my job, and making new friends. So and I became more social as I got older and I liked doing, I was going to a lot of events and trying to make friends because I didn't know any one, but I had trouble balancing it all. And I ended up getting fired in 2016 and when I got fired, I mean I could have done a lot of things, I could have. I guess, panicked and just started looking for another job. But I had super cheap housing at the time, luckily, and I saved up a lot of money. And so I decided to take a trip that was unlike anything I had ever done, and I called it my roots trip. So this was when I went to see where my grandparents grew up. And so my grandfather grew up in Krakow. Some of my mom's family grew up in Poland and then I had some family in Hungary, so I went to like Krakow, Warsaw. I visited Auschwitz and then oddly enough, I actually met my now wife on that trip. But the thing about that trip was because I did it. It was the first, like, big trip I did solo and it gave me a lot of time to think and I started reading a lot. And this is the first time I started reading, like in my life. And it was about World War 2 that I was reading, but that's kind of what got me at least interested in reading cause when I was younger I didn't like it at all. I mean I could do math problems for a long time, but the stuff they had us read I just wasn't interested in. I constantly found myself asking my dad to get SparkNotes for all these different books that I was supposed to have read, but that trip really got me loving reading. And World War 2 books turned into soccer books, and then I got into real estate because also on that trip I was thinking, well, you know, I'm paying rent to someone right now. And while I'm lucky that it's a small amount of rent, if I had owned a place and just rented it out to someone else and then go on the trip. Then I'd be even in a better position. So then I decided as soon as I get another job and can get financing and buy a house. I'm gonna rent out the room. So in 2017 I bought a house. It was a four bed 3 1/2 bath and I rented out three of the bedrooms and that that was my first house. And that's kind of how I got into real estate and I guess I'll stop there for now. Glenn 00:05:35 I was thinking. So you're an actuary before you went to Europe, correct? Jack 00:05:43 Correct. Yeah. And I, I still ended up getting an actuary job after. So I stuck with it and I still do it small number of hours now, but it took me like 11 years to pass all the exams. Glenn 00:05:57 I was, yeah, that's actually what I was thinking when you were talking about it. I was like you're like an actuary. What kind of pay is an actuary? Or if you're okay with talking about it. Jack 00:06:06 Sure. Yeah, sure. So in 2013, I got my first actuary job and that was like 60 grand, which I thought was like awesome cause I cause right out of school I was making like 40,000. And I actually ended up not so the my first job out of college was in Wisconsin. It was - the title was quality assurance. It's kind of like trying to find bugs in the software. It was for a medical health records company to totally unrelated, but I kept studying because I had only passed one exam when I left school, so I wasn't super marketable to come because some kids with the schools that have actuarial programs, some of them graduate college with 3-4 exams passed. So I kind of had to keep passing exams, of course, before anyone would even interview me. But so yeah, 2013 I was making sixty. And then the cool thing about the actuarial programs is typically you're incentivized by the exams you pass. So each exam you might get a 4, 5, 6 or $7000 pay raise after each exam passed. So I think after I got let go and then when I got the the new job in 2017, that's when I hit 6 figures with that one. And then it and then I passed a few more exams and once I got, it's called an FSA or a fellowship of the Society of Actuaries, I think I was at around like 1.30 at that point. Glenn 00:07:50 For some reason I always thought that an actuary made 200 grand no matter what. Jack 00:07:55 I'm sure the top ones that have been there a long time make probably much more than that. Glenn 00:07:50 Okay, and so not to get too much, I guess we can, but being an actuary that's for insurance, right? Jack 00:08:15 Well, I would say the majority of actuaries work for insurance companies, so normally it's some sort of risk projection. They're modeling probabilities into the future and often are discounting. Yeah, the probabilities of future cash flows to some number today. And so like my last like full time role, I was doing valuation on a variable annuity block so basically describing how the reserves are changing each month. And yeah, that's what it is. But yeah most extras work for insurance companies. Glenn 00:08:52 And that's where - you were working for an insurance company? Jack 00:08:56 Yeah. So yeah, so in the actuarial world, at least the way I think of it is, it's normally like life and annuities is like one track. And then there's like property and casualty more like insuring like cars or houses that those are like higher frequency events, but not as high impact as like life insurance. Whereas like the, you know, life insurance is like a one time catastrophic event. So it's like different types of actuaries. And actually when you're studying to be an actuary, at least when I was going through the exams, the first 5 exams were the same regardless of what type of actuary you wanted to be. But after the first five you kind of had to pick your track of what you wanted to kind of specialize in. Glenn 00:09:44 And then, one thing we did talk about after the podcast was the whole life. And currently do you believe in whole life insurance? Jack 00:09:59 I like to bank through it, I would not suggest someone necessarily do it just for the death benefit, but it's not like - Glenn 00:10:07 Yes. Yeah, fine. Jack 00:10:07 I'm kind of, I mean I have both term and whole life. I think if you're just interested in the death benefit, go for the term. But after reading umm, it's uhh, his names. I'm wondering if I have the book - Glenn 00:10:24 The name of the book. I can't remember anything. Jack 00:10:25 The book - Yeah, it's, R. Nelson Nash. The book is called Becoming Your Own Banker.That that book really changed my views on just like using whole life in a different way. Because the way they're using it, is it's just another asset to borrow from. And the reason I got into real estate after - and one of the books that really influenced me getting into real estate was this book, and it's totally unrelated, Shortest History of Germany. And they go through the Weimar hyperinflation and what I've learned from that book was that the people that were least affected by that Weimar hyperinflation were the super poor people because they had no savings. They were, I mean like, if you're living on the street, does it really matter the value of, like, a dollar? Like, not really. And then the other people that were least affected were the people that owned real things. So I mean the playbook is you buy real assets and then with the inevitable inflation over time, you can just borrow against those assets and that's the same way the whole life policies work. It's just that the way I would describe it. So like on your house, the crediting mechanism is whatever the real estate market is for that house. So that kind of like fluctuates and I would say is more unstable than like a whole life policy where the crediting mechanism is a stable maybe 4% or like 6%, though with the dividends and it's stable and that 4% is guaranteed by law. So if you have a long enough time horizon, I mean it's they're really quite good. And if you if you know someone that can set it up properly, you could have access to a lot of cash value early on. But you you really need to know someone that sets them up regularly. Glenn 00:12:24 Yeah, because I've actually looked and I know we talked about this a little bit, but I figured we would talk about more because I was thinking, you know, you being an actuary - I mean, I feel like you, you already kind of knew the ins and outs of insurance and the hardest part that I see with it is the taking. It's like almost like, and I understand it's not quite as like an investment, but at the same time you take the initial loss. So you take, we'll just say the premium, and I guess we're not really getting into the weeds of what infinite banking is, but we'll just - there's many podcasts on it. But I would just like to talk into the fact that if the premium is like say 10,000 and in the first year, and then on a good policy, would you say it would be between 70 and 50 percent? 50 to 70% would be cash value. Jack 00:13:23 So normally if you get them off the shelf, I mean, you might have zero cash value that first year. But if you go through a mutual insurance company and you have someone that knows how to set up. I think the first one that I set up properly, and I say that because I set up one improperly, where where I did, I think the first one I tried I it was like a $6000 premium a year and I barely had access to any of it the first year. But the second, the second policy, I found someone that knew what they were doing. And I think I had 80, up to it was like 80%. So I - yeah - I think that that's what it was about 80%. And I mean basically what's happening, or the best way I've heard it described, is the person that's setting it up is essentially taking a cut on their commission. So normally the agents that sell these policies are getting a huge commission. Sometimes it's more than 100% of their first year premium. And what's happening is the people that are helping people set up these infinite banking policies is they're taking a huge cut to that first year commission and in doing so, you have access to more cash. So that's the best way I've heard it described. Glenn 00:07:50 Yeah. So then would you, would you say that knowing what you know now today, would that be something you are glad that you started it and went went through with? Jack 00:14:55 I'm not only...I wish I would have done more earlier and this is coming from - and another thing is - well, what's the - What are the alternatives? Like a lot of people put money into their 401K's, they don't see that money anyway, that they're - they already have like the long term thinking like they're not touching the money anyway, so if you really don't need the money, early it might be good to alternatively, dump it into something like a whole life And we are now setting up one for my wife, who this will be her first policy, and we'll do one for her also. Glenn 00:15:34 Well, yeah, I know. And I've been so close to doing one I've had like three instances where I was just, like, so close. But you know for me it's, you know, we buy real estate and kind of like what you're saying, you're borrowing against real estate, but obviously there's risks of that? You know the value of the real estate. Going down into a life policy that kind of maintains 3 to 4% growth depending on the I know they they they vary based on it but I've done a ton of research on it, but you're the first person that I think I've found that isn't selling life insurance. That that actually benefits from it. So it it you know I've always been interested in it and you know now we're pretty much tying up all our money into the deals because you know, they're starting to flow. It's good to hear, you know, kind of an unbiased person that doesn't have anything to gain from anybody else benefiting so. Yeah. So I guess, tell us a little bit about your investments and and how you got to, so you bought the the house half. The first one is it - was it a four bedroom or three bedroom? Jack 00:16:56 Yeah, it was a four bedroom in 2017 and that's when just getting like my feet wet with that. It's, you know, landlording, like one-on-one kind of on training wheels with, you know, showing the tenant the property. I updated some of the, all the rooms with like individual locks to make people feel better. And I mean that house was really cool. It had a pool in the back. So I thought that would be good for renters. But at that time that year, I really started listening to bigger podcasts and just listening to a lot of different strategies. And I always, you know, I kind of used to think, that you needed the cash before you invest. Like it didn't really dawn on me that I could try to find a way where I needed very little money. And there was one story from a bigger podcast guest that really stood out to me. I wish I remembered the guy's name. But he was just cold calling these people and just like asking them to sell. And you kept this little booklet and just like very old school. So, like, I remember I took that idea and I thought I was looking in some markets and I was living in North Carolina at the time. But I looked back up where I grew up in Michigan and it seemed like the rent ratios were a little better for cash flow. So I ended up cold calling property managers just to see if any of their clients were looking to like offload for any reason. And it took me probably two months of cold calling like rotating and I think there was like 3 or 4 property managers I was kind of like calling and keeping in touch with. But all of a sudden one property manager called me back and said, "You know I have this couple. They're going through a divorce. They have four properties. They might be interested in selling." So I reached out to them and we got talking. There was one property that was like almost, like a subtraction to the VAT. It was a very poor area. And so we basically cut, we basically said we would just let the person that was renting that one house just buy it for like a dollar. And then I would, and they originally wanted like 100 grand, but I'm in North Carolina. And I said, "Well, I mean, I'm not. I can't come and view the properties, but I can give you like 60 grand. What do you think?" And they actually said, yes, and there's three properties. There was two single families and the three unit. The rents at the time totaled a little over $2000 a month, so they were totally rented and they were -- Glenn 00:19:44 For three properties? Jack 00:19:47 For the three properties. But so that was my, and I tried to get traditional financing. I don't know if I if I would have tried harder I would have been able to, but I felt like I was having trouble, and my agent luckily kind of said, "Well, you know, they might be open to seller financing." So I said OK. I didn't really, I mean I got the idea, but I had never heard of someone doing it at that time, but basically they wanted $20,000 down and they would finance the other 40,000 at 6%, which was high at the time. But it was a great deal. And then I raised actually 15 grand from my brother and a friend for and then I was in for five grand on the down payment. And actually with all the tax credits and the rent I think I only was like out of pocket like a grand and 1/2 at the closing. So that was like awesome and yeah that was my first foray into like acquiring properties. And then once I had those, and at the at the time I was still studying for the actuarial exams and because I was spending so much time studying I didn't really have time to think about how to invest outside, but I basically sent over a lot of extra money to the principal pay down because I figured I might as well lock in that 6% because that was a lot higher than I was would get anywhere else and it was like guaranteed. But you know. So I I just kept studying hard and paying down and I ended up paying off those properties within two years. And then, of course, it was easier for me to get traditional financing, which is how I got in 2021 is when I bought the last set of properties and I actually, and this was when I had one of my "aha" moments with like my 401K. I was like I'm not, this 401K is not helping my life right now. And like if if I just paid the 10% penalty and then buy this 7 unit that is, in my mind grossly undervalued. I would like break even like at most like half a year and then it's like gravy after that. And for for that 7 unit I got that for 259 thousand and the rents at the time were 2,800 a month and we we've now gotten those up to 4,100 a month. So that was 2021, then the prices really started going crazy, and then I kind of looked away from the rentals and now I've started just flipping raw land for the meantime. But yeah, that's where I am on my my real estate front. Glenn 00:07:50 That's awesome. So I know that the two common things that I see with the same very successful investors in real estate is one would be the house acting, which obviously you completely reduce your overhead like it can probably be cut in half by doing something like that. And then the other thing that is creative financing, you know, there's some people that I know that do the same exact thing that you're doing. They just, it's when you can learn how not to use the banks, it becomes a lot easier. And then when the banks are, you know, throwing money around with low interest rates and you can utilize it, but until then it's like it helps to be able to go outside the banks to really to make some deals happen, just like you did. That's awesome. So flipping land, so tell how many deals have you done, or what's happened with that? Jack 00:23:53 I think I've completed now about - I want to say a dozen parcels. Uh, I I group them in parcels, I guess. But very tiny, we're talking like acre, two acre and these are these are in the middle of the desert, Arizona. These are mostly by Petrified Forest National Park. And I kind of stumbled on this area. I took a land flipping class like a year and a half ago. And one of the recommendations was just go where the other investors are. And after some research, there's a lot of people like in this Apache County area. But a lot of these, you can get like an acre, just to give you a feel like an acre might retail for like 4000. So it's really just in the middle of nowhere, but the gist of that is there's a mailing system that we use, and we mail to out-of-state owners offering what we think is about a 1/4 on the dollar. And the thought is you get like, you know, 1% of the people to accept the deal and then you can either turn it around and flip it to another wholesaler for like $0.50 on the dollar. Or try to sell it to retail either for cash or on like a terms deal where you're basically the bank, and seller financing to them, because some of these people don't necessarily have the cash available. Glenn 00:25:26 So with those, was it like a software that you bought to filter through all the websites and stuff to be able to search for the the vacant land and the owners? Jack 00:25:39 So we use a website called Data Tree and you can search the different like zoning, and you can search for just, and you can do all sorts of queries and filters. So like for example, when I'm mailing for Apache County owners, I'm taking out the Arizona owners. So I'm only mailing to the out-of-state owners and the thought is that they're probably less connected to the land. I I think theoretically you could do some sort of search on like delinquent taxes, which you'd probably be even more likely, but it would cut down your list a lot. So I don't really filter on that, but and you can also cut out company owned, so I'm only mailing to individuals. Glenn 00:26:34 Yeah. So the reason why I asked is that we had this, my friend had this software that filtered through whatever you want. Just like what you're talking about, you could find vacant land. We were looking for, this is before I really got into mobile home parks, and we were looking for single lot mobile homes to flip. And I mean, this is the time the mobile homes were listed for like, the market price was like 150, and we were thinking, maybe 150,000. So we were thinking that we would buy it for 5 to 10,000 dollars and we did all these mailers. And all these owners called us back, letting us know that we were wrong. It just reminded of what you were talking about with that. That's cool to do. Yeah. It sounds like it was more successful than I was finding deals doing that. Jack 00:27:35 It's right now, I'd say it seems to be cooling off a little bit. I think people are getting a little more tight with them. At least on the, in terms of me selling them, but buying right now it's it seems to be OK. But yeah, it's a little harder to sell to retail right now it seems. Glenn 00:27:54 Yeah. I imagine with, well I know with obviously. Not to compare it to 2008, it's not quite the same, but when interest rates go up, value, land values go down. So I think that now is the time to really look for those deals to, maybe not in the desert, and maybe closer to urban areas. Because this one guy I sold a townhome to, he was buying land, and he was buying for like 5,000, selling for 50,000 type stuff and in the middle of the recession. But it was because he was looking for vacant lots and certain areas. But I think the land play would be probably, maybe you get to more of a desired area. I think this is the time when people are unloading. Because land values have to be going down with the higher interest rates, I would say so. Because if there's less building, there's less construction. There's less, you know, there's less value in the land. So now today you are flipping land and you said you do actuary work on the side? Jack 00:29:09 So I've just been doing like a small like contract to do this audit for the Utah State Insurance Commissioner. So I'm doing that, like just very part time, like 10 hours a week, nothing crazy. And then spending, yeah, a lot of time, like podcasting, Youtubing. Having fun conversations like this. Glenn 00:29:32 Yeah. So I was doing a little bit of research. You have a podcast that you reviewed books? Is it mainly financial books or...? Jack 00:29:43 Yeah, so during COVID, my brother and I started a podcast called The Brothers On Books podcast and it's just kind of like a fun hobby, passion project. It is - we do some finance type books, but what we also do, it kind of runs the gamut. It's kind of whatever we're feeling like. We've done a lot of like, social issues, a lot of like, actually a lot of geography type books and social science books. But occasionally we'll do a personal finance book. Glenn 00:30:19 So we'll leave the link below for that. And then you also have your podcast that I was on, and what was that podcast called? Jack 00:30:30 I honestly don't really have a a name for it. it's just if you search my name on YouTube, you'll see it, but I don't have an official name. I guess it's just Jack Allweil on YouTube. Glenn 00:30:41 Awesome and let's talk about that because that is really kind of one of the things that inspired me to start. And I really enjoyed it and I still watch your stuff and follow it. If you could, just tell me, one thing that you've learned that from interviewing all these, I guess professional - you know - what is it financially independent people, right? Jack 00:31:11 So I started, so it's kind of funny because I discovered Twitter like back in I think May or June. I had never really used it. But when I went on it, I was like - "Wow, there's a lot of people that talk like personal findings and I kind of like these conversations." And the more I started hanging out, I was just thinking, man, if I could interview these people, maybe that that would be fun. And I would get to meet these people. But I've gotten, yeah, to meet a lot of cool people in real estate, creative finance, a lot of options people. Well, and I'm trying to think, because like one of my questions at the end of my show is, "What's the best and worst personal finance advice you've heard or received?" And I'm thinking back - a lot of the common ones, some of the myths are like invest in what you know. Some people say that you should invest in what you know. You know, but a lot of people are saying that's the worst advice they've heard in the sense that you need to put real money into things so that you learn. And even if you don't know anything in the beginning, if you just put a little money, you'll start paying attention. And that's how you get the knowledge and experience to take, you know, bigger chunks of your money and invest them in certain places. So that's kind of been a cool thing. And it actually inspired me to - I started looking into the Forex market. I knew very little. I knew very little about Forex and apparently it's huge outside of the US, but like in the US we're very like stock centric, but outside the US, Forex is very popular and it's like the most liquid market on the planet. So I feel like I I've at least, I only put deposited, and the cool thing about Forex is you can bet very small dollar amounts. Like I deposited $50 initially into my account. And you can bet like $0.50 to win like $1.50 and I find that now I open up like a Forex calendar it shows what, you know, central banks are releasing what information and what reports are coming out. And I just feel like I'm a little bit more in touch with what the rest of the world is going through and so I have like that idea that, don't be afraid to just get started, even if you know nothing. Glenn 00:33:45 So I mean, I know just enough to get in trouble. What if you put in - I guess - in your own words -what is Forex? Jack 00:33:56 So, okay, so Forex, sorry, is short for foreign exchange... Glenn 00:34:00 Foreign exchange, so it's currency? Jack 00:34:08 So yes, currency. So the major, or at least what I've been told that's the major currency, are like the US dollar, British pound, Euro, Japanese yen, Swiss franc, Aussie dollar. So you can basically trade those pairs, so you're always trading a pair. So t's always like, you know, the US dollar versus the yen, or the US dollar versus the pound, or Canadian dollar versus the yen. And all these different pairs have slightly different characteristics that you start to learn about. And it's kind of driven by the employment numbers in each country and how the central banks are altering the interest rates. Glenn 00:34:47 Yeah, it sounds complicated to me. Jack 00:34:50 I'm lucky I only deposited $50.00 in this account. Glenn 00:34:57 I guess - all right. The two questions I have - two questions that I think I'm gonna ask all my guests. Well you're my second guest, so we'll just run with it. But the first question is, what's your worst financial mistake that you've ever made? Jack 00:35:17 It's a good one. I would say. That there's that saying - like if you show me what you spend money on, I'll show you what you value. And I think throughout, I mean, even up to recently, I've spent probably too much money eating out. Just in general. And recently I feel like the more I've learned to cook and be exposed to what my wife cooks, and how, like healthy, some of the stuff is aimed at. It tastes better and it's just like, so much cheaper. It kind of pains me to think of how much money I've spent eating out. And I, but I guess, I don't know. I don't know if I really regret it per say cause in earlier years I used to see it as very relaxing and sometimes I would just go to a restaurant, even by myself if I had a book. And I would just... You know, but then.... The those tips really add up so. Glenn 00:36:19 I feel like when I made less money I went out to eat more. And now that I make more money I never want to eat out since. Jack 00:36:26 Yeah. Yeah, it's funny how that works. Glenn 00:36:26 So one other question, this one might be somewhat difficult, but what byproduct have you received through being financially independent that you didn't expect? Or that you received through being financially independent, that you weren't planning on? Jack 00:36:55 I think I just remember being very like, like physically tense at my 9:00 to 5:00, especially when I was just sitting in a cubicle all day. And even when I was working from home, when you're on someone else's schedule, I just felt kind of like - you don't really feel - you're not in control of your time. And you don't really know. You don't. I didn't think I really understood it until I was out of it. And honestly, I noticed it a little bit when, actually when I was fired. But it was kind of a blessing in disguise, because I felt just like so much lighter, like, and just not tense. And that's like one thing that's been a byproduct that I really wasn't expecting. I just feel healthier. Glenn 00:37:40 Yeah, I can relate. I think for me it's one of those things that once you get a taste you never want to go back. Jack 00:37:47 Yeah. Glenn 00:37:40 You know, I'll take a big pay reduction before I have to go back to the office cubicles. We'll put the contact information or where you can find Jack below. He's got two podcasts and we appreciate you being on. Jack 00:38:11 Thanks so much Glenn, so much for that. It's been a pleasure. Glenn 00:38:14 Alright, make sure you like and subscribe and we'll see you next time. Thank you. Outro 00:38:19 Thank you for listening to the Millionaire Journey podcast. We appreciate your support and hope you found today's episode inspiring and valuable. If you enjoyed the show, please take a moment to like, comment, rate, and subscribe.