Simplify Your Financial Plan with with Mark Willis | EP138

Mark is a Certified Financial Planner, a three-time #1 Best Selling Author and the owner of Lake Growth Financial Services, a financial firm in Chicago, Illinois. Over the years, he has helped hundreds of his clients take back control of their financial future and build their businesses with proven, tax-efficient financial solutions. He specializes in building custom-tailored financial strategies that are unknown to typical stock jockeys, attorneys, or other financial gurus. As host of the Not Your Average Financial Podcast™, he shares some of his strategies for working with real estate, paying for college without going broke, and creating an income in retirement you will not outlive.

 

In this episode we talked about:

• Mark’s Background
• Getting Started as a Financial Planner
• Approaching Clients
• Be your Own Bank 
• First Few Questions to ask Real Estate Investors
• Debt Aspect
• Mark’s Advice to Beginners in Real Estat

Useful links:
https://kickstartwithmark.com/

The book “The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future” by Pamela Yellen

Transcription:

Jesse (0s): Welcome to the Working Capital Real Estate Podcast. My name's Jessica Galley, and on this show we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you're looking at your first investment or raising your first fund, join me and let's build that portfolio one square foot at a time. Ladies and gentlemen, you're listening to Working Capital, the Real Estate Podcast. My name's Jesse for Galley, and my guest today is Mark Willis. Mark is a certified financial planner, a three-time best number, one best-selling author, and the owner of Lake Growth Financial Services, a financial firm in Chicago, Illinois, and co-host of the not your average financial podcast.

 

Mark, how you doing today?

 

Mark (42s): Doing great, Jesse. Thanks for having me on.

 

Jesse (44s): Well, a pleasure to have you on. I know that we, we chatted a little bit before, I thought listeners, you know, whether they are investing in real estate, are interested in entrepreneurship and business, that they would get some value about having you on as a guest. And you can talk a little bit about your, your story and, and kind of what you bring to the table in terms of the financial world. But before we do that for listeners, you know, that don't know who Mark Willis is, why don't you give us a quick background of your background for listeners and we can, we can kick it off from there.

 

Mark (1m 18s): Sure, yeah. Well, I've, I've had the great privilege of working with clients all over the country, us, Canada, and around the world. I've been able to serve many business owners, real many real estate investors, even some N F L Super Bowl champions. But Jesse, most people I work with are just interested in having a bit more certainty, you know, assurance and maybe, I guess, you know, the belief that they're gonna actually achieve what they're trying to do. I feel like a lot of people are frustrated with their real estate portfolio, their financial lives, because what they attempt to do is just not working or it's not working efficiently.

 

So a lot of people who come to me say, mark, I feel like I'm just floating down the gutter of life and I, I can't seem to catch, catch on to a a, a log to move upstream financially. I can't swim upstream. So what we get to work with, and I have the, you know, great honor to do this is work with clients that wanna move upstream financially and become, you know, more in control of their financial future.

 

Jesse (2m 18s): That makes sense. And, and I like it. Appreciate that. That kind of, I guess, philosophy or goal for, for what you do, for your, for your background. You mentioned, you know, before that, how you got into this business. We talked a bit about 2008, and if for listeners that don't know, you know, your background originally was not kind of being the self-employed, the financial planner helping people out. So how did, how did you get, get started in that and, and where you are today?

 

Mark (2m 48s): Yeah, well, I, I certainly didn't grow up wanting to be, or even knowing what a financial planner was. So I think the, the first inclination that money was a part of my life was as I graduated college, sadly enough, I just never paid attention to money and found myself in debt up to my eyeballs in the middle of a great worldwide recession, you know, six figures of student loan debt and no plan to pay the thing off, Jesse.

 

It was, it was like a mortgage around my neck. It was like a, a weight pulling me down. And given that I had no plan to pay the thing off, it was just becoming worse and worse. And it was a surprise to me that there was no training, no education on money or money management for all of the education you get in college. It was surprising that there was no real basic budgeting pla class or whatever, at least not where I went to school. So, yeah, it got me really focused really fast when I realized that, oh yeah, these guys want me to pay them back.

 

So that was a surprise. And I got into a couple of businesses, you know, worked my tail off for a couple years in the middle of a recession where no one was hiring, did every job I could find, including some property management positions, which put me under the, under the, under the, in, into the darkest place you could probably imagine, which is under an elevator that's being serviced. And I'm there with a, a shop vac sucking out God knows what to clean this thing out.

 

And I'm, I'm hoping that they don't snap the wire and end me right there, you know, so that was the, that was the service I had to give the debt, slavery I had to give to my slave masters, Nelnet and Sally Mae and all the rest of the banksters that had a, you know, a knife to my throat as I was trying to pay off all this debt. Fast forward a little bit, I was working for a C P A trying to get my bearings on, on income, and I was listening to her. I was mainly doing tax prep and I was listening to her as I was doing some tax prep.

 

I would overhear the calls where she would be discussing retirement plans for her clients. I wasn't doing the investing necessarily at that point, I was just tax prep guy, but she would have those calls and it was the calls that you never want to have as a financial professional where you have to tell the client, I'm sorry, Mr. Client, I know you're 63, I know you're about to retire, but I just lost you half your life savings. Sorry about it. Click, you know, that's a terrible way to run a business. I, I hadn't no desire to have anything to do with it.

 

And I almost left the financial industry until I found some strategies that had nothing to do with Wall Street that helped us meet our goals without taking a bunch of unnecessary risk. And it also happened to help me pay off my debt too. So it was a, it was a light bulb moment. And in that moment my wife had the, the wherewithal to kick me in the pants and say, start a business, don't be some w2. Go out there and start the business. And at the time I needed to borrow her courage, but I did it, man. I did it.

 

And that was 11 years ago, almost 12 years ago. And here we are with, you know, several advisors that I get the privilege of working with and a little over 1200 clients around the country and around the world. So it's been a great honor to get to serve clients and help them meet their goals.

 

Jesse (6m 8s): That's great. And on that point with clients, when it comes down to, you know, you talking about your services for individuals that, you know, for our audience group, real estate investors, people you know, potentially with a portfolio or building their portfolio, how do you approach that type of client differently if, if at all than, you know, your average, your average, say employee of large company? You know, is it, is it a different value add or is it a, a different offer or discussion, you know, with real estate investors?

 

Mark (6m 38s): Well, I'll tell you what, I, you know, I think one of the best parts of being a business owner is you get to pick your clients after a certain point. And, you know, maybe not the very beginning, but at some point you really begin to say, I want this kind of person in my life. And that's a beautiful thing. Cuz if you're a w2, you get basically got one client and that's your boss. But yeah, when you, when you get to work with real estate investors, business owners, they make up the vast majority of our clients. Not everybody, certainly not, but a good chunk of our clients want some agency in their life.

 

I believe that in many ways, part of the reason why people stumble into this insanity known as real estate investing or business ownership. And I say that with all the, the positive regard I can, being both of those things, real estate investor and business owner, the insanity of it all is you take on a lot of risk. I mean a lot of risk, but you get access to the dial on your life. You're not just a thermometer, you're a thermostat. You get to dial up the temperature, dial down the temperature.

 

You, you, you gotta understand, as a financial planner, we all swim in this thing called finance money. Money is the environment where we live most of our lives. It's half of every transaction. It's certainly not the, the most important thing in your life, but, but I do believe money touches the most important things of our life, our legacy, our children, our marriage, our health, our future, you know, these things, our retirement, our, you know, our, our capacity to feel secure.

 

So when we, when we have some manner to engage the environment in which our entire life lives, we feel a sense of security there. And so yeah, when you've got a, a business or you've got a real estate portfolio, then you can manage to manipulate the environment where you're living, you feel at ease. Much like dialing up the thermostat when it's 22 below, like it might be in, in Chicago here today or in Toronto there tomorrow.

 

Jesse (8m 43s): Hmm. Yeah, fair enough. And in terms of the actual, the technical aspect of, you know, a real estate investor comes to you and, you know, as opposed to say somebody that's purely a, a salaried employee, you know, real estate investors take a lot of different forms. Some of them as you know, are, are fully self-employed. They're doing that for, for a living. Other ones are working a job, but as a side hustle or, you know, part of their portfolio is real estate investors. So just from a technical aspect, when you, when those individuals come to you, you know, what are the first few questions you're asking them and what are you trying to, what are you trying to get out of that con initial conversation to be able to say, you know, this is, I, I think the best path for, for you going forward?

 

Mark (9m 25s): Yeah, most financial planners, I would say, direct you toward a set of pre-determined outcomes. It's like those old choose your own adventure books, you know, you felt like you were able to go anywhere you wanted, but really the book was moving you in one direction. And for most financial planners, that's Wall Street, that's the endgame. Let's get you into a my index fund or let's get you into my, my mutual fund or my ETF or my target date fund, or you know, your 401ks, your RSPs, whatever it is.

 

And given all that, it's sort of, it's sort of unfortunate that most real estate investors don't have a pathway with most financial planners, but like it or hate it, I've been now coined the not your average financial planner. And I love it. I personally love it because we look for strategies that don't rely on the whims of Wall Street or the typical financial products and tools. Listen, where is it written that we all have to dump a bunch of money into, you know, a a market casino that has no access and there's no outcome predictability.

 

And we don't know what the taxes are gonna be when we take the money out anyway. So, you know, where is that? Is it written on some law that I didn't read? No. So yeah, when, when I sit down to have one-on-one advisory consultations with anybody, whether real estate investor or not, I do have a, I got about 10, 12 pages of notes we end up taking and, and, and including questions like, well, what does the word retirement even mean to you? What about your spouse? Maybe it's a different thing altogether for him or her. Also, you know, in five years, let's say, let's fast forward five years and we're building this plan together and we're making it work, how will you know it's a success?

 

How will you know we're on the right path? What are the mile markers? What are the distinctive characteristics of things that are tangibly different? Is this depth gone? Is your income doubled? Do you have seven properties or 70, you know, these are the questions you'd want to ask to really get a sense of are we on the right track or not? It makes my job so much fun. I feel like your financial conversations should be some among the best conversations of your life, you know, because it, again, it touches the most important areas of your life money does.

 

So yeah, we dug, we dig into strategies that I think help be like a, a, a hinge, a small little hinge that can swing very big doors in your life if we know the right tools and tactics and strategies to take on. If you don't know those tools and tactics and strategies, I gotta say, man, real estate investing or any kind of financial project is gonna feel like swinging a very dull ax, or even worse, like a butter knife at your tree trying to chop it down. It's just gonna take forever.

 

You'll eventually get there with Wall Street with index funds, but it's so inefficient. You might as well look and see if there's better ways to leverage the finite time and money and energy that we all have in this life to put toward things that are gonna really move the needle. And again, be that leverage point that, that I think many people are looking for.

 

Jesse (12m 30s): Yeah, and I'm curious too, because we not just invest as real estate investors, but even, you know, for example, when we're raising capital from, from inve, from investors for real estate, oftentimes what investors tell me is either, you know, at the, at the best they, you know, they're invested in, you know, whether it's mutual funds or Wall Street to some, some degree stocks and bonds, but you know, they don't really have clarity exactly on the fees like that they're actually getting pay, you know, that they're actually paying on.

 

So for them, one of the value a or one of the value propositions for real estate, it's, it's that tangible aspect that people can kind of understand, even if it's commercial they've all owned or they've all rented or owned a place and they understand that. But I imagine it's somewhat similar when people come to you, if you see the current investments that they have, if they have them. I'm sure you guys fe see some red flags. So are there anything, is there anything on that, in that topic of fees that you don't realize you're actually getting charge, but you are, I assume you have conversations somewhat similar to that?

 

Mark (13m 34s): Oh yeah. Well, I mean, nothing is free except the cheese on the wrong end of a mouse trap, Jesse. So let's be clear about that. Nothing's free, not real estate. Yeah. All right. Not index funds, nothing's free, but it's egregious to me to think that, well, let me just say it this way, nothing's free and it's all, it's all in the, the perceived value that you receive. So if it's perceived as valuable enough, then pay whatever price it is. You know, I'll, I'll, if I had to, I'd chop my arm off to escape a, you know, a, a dangerous situation if I had to.

 

It's quite a price to pay, but I'd do it if it was perceived as valuable enough. The unfortunate truth is, fees are the hidden viper in your portfolio. This is according to the Department of Labor. They say a 1% fee on your 401k, your IRA or Canadian equivalent accounts over a 35 year period. That's like a typical retirement, right? Is gonna eat up a third of your nest egg, 27% of your nest egg just gone to fees.

 

And what is, what is it we're getting for that fee? Are we getting something magical? No, we're getting illiquidity and volatility and in retirement, that is not what we need. Right? When is it that we're mo when are the times we're most likely gonna need cash, probably during a crisis? When is our portfolio gonna be at its lowest value, probably during a crisis? Oh, by the way, when are banks least likely gonna lend us money?

 

Same answer, right? During a crisis? Yeah. So for all the fees, is it worth it? And I would say again, the, the best thing you can do is find the areas in your life, your financial life specifically in every area really. But on this podcast, we're talking finance and money. Find the areas in your financial life that are the leverage points. And, and I'll just go ahead and say it. One of the big aha moments of my young adult life was when I realized that underneath the importance of stocks, bonds, mutual funds underneath the importance of cash, savings, money markets, all that was the fundamental reality of banking.

 

Banking is actually the operating system of the financial world. It's actually as old as human civilization. There's great books out there. There's a good book out there by David David Frager who says Debt. The first 5,000 years is the title of the book, and it's a phenomenal book, but it kind of shakes me every time I think about it to think that this book is talking about a topic of banking debt that's been around since caveman paintings, right?

 

To have to have the four letter word of debt in our human consciousness for that long. Think of how much pain has come from all the debt that's incurred over these many years and think of all the incredible wealth that's been generated if you were the banker. So part of our experience as financial planners, I think has been focused on the tail of the elephant. When I wanna look at the whole thing, all I care all most financial planners care about is that tail of that elephant, Hey, look at this rate of return.

 

I got you last quarter, I just got off the phone with a client. He said, my, my investment guy, cuz he has another guy who does his investments for him. He said, my investment guy, the best he could tell me, mark, he said, my investment guy's best, best feedback or self aggrandizement was that he only lost him 18% last year, whereas the market lost 20. And so the best he could say is, Hey, I only lost you 18%. That's looking at the elephant's tail. I wanna look at the whole elephant. I wanna look at how do we take on the banking function to control not just the rate of return of your savings, but how do we control the environment in which your money lives and dial up, dial down that thermostat so that you can, you know, win by default in your real estate portfolio or wherever you might be focused on.

 

Jesse (17m 44s): Okay. So on that point, I think, you know, there's the, there's the de debate of, you know, whether you're, if you are a bit more of a dove or a hawk, depending on your amount of financial leverage or debt that you take on, you know, most listeners being real estate investors, we, you know, we have a love hate relationship with debt. It's, it's really the DNA of our business leverage. You know, we couldn't do what we do. The successes that we have are clearly compounded by leverage the, you know, the losses that you have are too.

 

But it is something where I think most investors would, investors would say that there's a consumer debt as opposed to debt for real estate investments where somebody else is paying off that, you know, the actual debt service of it are two different things. So on that piece of banking, if you go over to talk about what you've talked about in the past on banking, banking on yourself, or having controlling the, the debt aspect or the structure in which you invest with your portfolio, how does that look for real estate investors?

 

And, and yeah, I'll let you take it from there.

 

Mark (18m 46s): Sure. Yeah. Well, you're exactly right. There's good debt and bad debt. I fully agree with you on that. And I also say that leverage is a beautiful thing. And we all can acknowledge that leverage works in both directions. And I think too many people, as they've been on variable rate loans, are gonna find that out the hard way if interest rates continue to rise. So, on the other hand, you know, I think you're right. I think a great deal of opportunity can happen when we use debt to our advantage or for our convenience.

 

I think the problem is too often banks use us for their convenience. So what if it was possible to do what banks do with their money? And instead of just using a, letting the bank use us for their convenience, the regular cash flow that comes from our mortgage payments and whatnot, what if we could be the bank? You know, why, why in, why get into all the mess of, you know, even other assets. If we could just collect the payments, the mortgage payments even from other people or even ourselves, if we controlled the banking function for our real estate deals, we'd win by default.

 

And so one of the tools that I've stumbled across that's been profoundly impactful for me and for real estate investors is a little known variation of whole life insurance of all things. Now, again, as a C F P certified financial planner, I never thought I'd be talking to real estate investors or anybody really about boring old whole life insurance. It's, it's about as plain vanilla as it gets, right? It's been around 200 years. But the more I got into this and really saw how it functions, I could not look away.

 

It became more and more compelling. So I'll be quick about this and in fact, I'm a, a huge nerd for acronyms. So I'll give you a, an an acronym to help us get through the kind of primer on what is bank on yourself, and then you can help me take this wherever you want to go. Sure. So we'll use the acronym T G I F to help us kind of understand how bank on yourself works. Again, it's a modernized, more efficient form of whole life insurance and whole life insurance. If it's designed for commissions, then you're gonna have very little cash value.

 

It's gonna have a big juicy death benefit and a very fat and happy insurance agent connected to it. All right. I like to flip that upside down. How can we pack as little death benefit on this thing as possible, which is where the commissions are, and instead flood as much of your money as you comfortably can put into it. We call that premium. How can we flood as much of that as possible into the living benefits? What, what's known as the cash value of the policy? That cash value does some really cool things.

 

Okay, back to T G I F. The cash value is tax free. You can get access to the policy with tax advantages or even tax free if we design it correctly, which means that it's a lot like a Roth IRA or equivalent Canadian account. And without all the restrictions of a Roth ira, you know, there's no income phase out rules. For example, you can make whatever you want in your income and still put money into a policy. It's also no contribution limits.

 

So you can put in six grand or 60 grand or 600 grand a year into one of these policies. So that's the first one is it's, it's got some significant tax advantages. T is tax advantages, G is guarantees the policy grows on a guaranteed basis each and every year the cash value grows without market risk. And every year you're hitting an all-time record high. Just got off the phone with someone earlier today and he said, mark, all my other accounts are down, but my policy just hit another all-time record high.

 

That's awesome. All right. So, and when you get a gain from last year, it's locked in. You don't lose it this year. There's no risk of loss. If I invest in Coca-Cola or Tesla and the stock goes up last year, I could lose it. I could lose what I earned last year this year due to loss of market share and so forth. So not, so with whole life insurance, it grows guaranteed. That's g is guarantees. Third, it is insurance. So I'm taking care of my family favorite charities. It's doing what I need my money to do for me, whether I'm on this side of heaven or on the other side.

 

And then finally it's allows me to become my own source of financing. F is financing. So financing is the biggest part of your financial success or failure. Let me say that again cuz that's as a cfp. Why am I not ch you know, chomping at the bit to talk about Wall Street? Because I believe that financing is the crucial hinge that will be the difference between your success or failure in your financial life. The average American spends about a third of his or her income, 34% according to the US Commerce Bureau just covering deaths and financing costs 34% of your income.

 

If that's, if time is money, what's 34% of your day, Jesse? Right? So if I could recapture some of that money, pay myself or run my mortgage or down payments or my property taxes or my HVAC systems or any other major expense I have in my life through my policy, here's what happens next. I can borrow against life insurance policies that are designed the bank on yourself way. Okay? And the policy will continue to grow and compound on the entire cash value.

 

Even what I borrowed out as if I hadn't touched a dime of the money. So I'll say this and then I'll hush and I'll get your feedback. Let's say I got a hundred grand of cash, a hundred grand of cash value in one of these policies and I borrowed out 70 grand to go put into a syndication deal that year. And every year I've, I've got that money out, my policy will continue to grow and appreciate on the entire 100,000 bucks, even the 70 grand I'd go and, and put over in the syndication deal.

 

Now, that to me is the holy grail of financial sanity because I get uninterrupted compounding growth on my policy. And of course I've still got the money out here in the real world doing things like syndication deals or buying cars or whatever else I need the money doing for me. So that is T G I F, tax advantages, guarantees, insurance and freedom and financing.

 

Jesse (25m 16s): So in terms of the, just in that example, just so I understand that if it's a hundred thousand dollars, that is that up to that point that has been paid into the policy, it's your a hundred thousand dollars and say you take 50 grand of it or 75, like you said, you want to invest in this real estate deal. So you're taking that 50 out, technically it's coming out, but the policy, you're not penalized, you're not getting charged to take it out and now whatever the growth rate is on that, a hundred remains the same on that full amount. Is that right?

 

Mark (25m 44s): That's right. Yeah. So you've got a chunk of money that you can borrow against and the policy is still there earning interest in dividends. You've just simply used the cash value as collateral for the loan that comes from the insurance company and then you're in control of repaying that loan. You could take a year, six years, 10 years, but it's up to you or never. If you never pay off the loan, they'll just deduct it from your death benefit when you pass away. Oh, I see. So it's a non-recourse collateralized loan.

 

Jesse (26m 15s): So it's not taking 50 grand cash out, it's, it's borrowing 50 grand with that as security.

 

Mark (26m 19s): That's it. That's it. Exactly. It's a lot like a home equity line of credit if your audience is familiar with that. Yeah. The difference between, you know, cuz the house grows, whether you borrow from the house HeLOCK or not. Right. The house is gonna just appreciate whether you use that HeLOCK or not. And that's where they are similar, but where they are different is the policy grows, guaranteed houses do not grow guaranteed. Right. Also, a bank can give you a HeLOCK and the bank can take it away again. Yeah. But there's a guarantee of the loan provision with life insurance that cannot take away that loan.

 

It's baked right into your contract.

 

Jesse (26m 55s): So who at the, you know, the point of you're doing this, you, you've say you've done this for a number of years now and you are looking at larger purchases with real estate who basically says how much you can take out based, you know, how much you can lend on your own nest egg or the policy and at what rate, what are like those details I assume happen at at inception, but I I guess they would change over time depending on how this, the value of this, of what you have in their changes if I, if I understand it correctly.

 

Mark (27m 25s): Yeah, well it's, it, it is a, each person is different. You know, each person's situation and numbers will be different. But let give you an example. Alright, I'll give you, you mind if I know no numbers over a podcast can be a little tricky, so I'll try to keep this simple. Sure. So let's say I've, I've got numbers in front of me here, I'll take the names off of it, but there's a 40 year old who put in some cash into a policy. He, in this case he put in 400,000 bucks, dumped it in, got a cash out from a, a syndication, he wanted to get another syndication going, but first he decided to put that money, that 400 grand into a policy.

 

That was his one and only contribution. Now, a lot of folks believe you gotta pay for these whole life policies for decades and decades. Sometimes you can, and in fact, a lot of times that's best. But in his case, he just had one, he just wanted to dump it in and that's it. So he put in 400 grand. Now right away he's got a cash value. I'm looking at it here of $378,000 and a death benefit of 1.7 million bucks. So let that sink in for a minute. He's got 94% of his cash give or take liquid right away.

 

Where'd the other money go? Well, it went to buy that 1.7 million gift to the family there. That's a tax-free gift to the family for sure. But he doesn't just leave that $378,000 just sitting in the policy. By the way it grows, that cash value would grow to 3 94, 411 in year three. So it's already broke even by year three there, 4 29 the next year. But in year one, again, back to our numbers there, he's got 378,000 bucks. He decides to borrow against that $360,000 in the first year within 30 days of starting this policy, he borrows out 360 grand to go invest in another multi-family deal.

 

So far so good. Any questions so far?

 

Jesse (29m 16s): No, that makes sense.

 

Mark (29m 17s): Okay, so he decides he's gonna do this loan. Now remember, the policy is still growing on the full 378,000, even though he's got the money over in the multifamily, he pays it off over an eight year period through a combination of rent and refis. Okay? So after the eighth year, his loan is completely gone. His cash value is $507,000 in year eight. That represents an increase from 400 to 5 0 7. That's an increase of 107 grant of gains.

 

That's way more than he would've had in a savings account for sure. But it's impressive when you think that he also had this syndication deal going on over here, whatever it did. I'm not even factoring into these numbers. So did he pay some loan interest? Some people might ask. Well sure he did. He paid loan interest. How much was it? It was 2.1% a p r, that was the annual percentage rate to borrow money for eight years, and that totals 54,000 bucks of interest paid. So let's kind of summarize and then I'll let you ask any question you'd like, he paid 54 grand to borrow the money, he earned 107 grand in the policy plus whatever he did over in the syndication deal.

 

How many times would you do that deal?

 

Jesse (30m 36s): Yeah, right. That sounds pretty good. Now, in terms of the actual investors that are trying to go from where they're at right now, say they have in the states agency debt or in Canada, CMHC or you know, whatever, they have standard mortgages right now that they kind of wind want to wind out of. If they were to go the route that you're talking about, is there a logical transition? Is it something that you do over time? Or is it kind of focused on what you have right now? And, and we'll build, you know, what we've just been talking about, you know, on the, on the side of what you have currently.

 

Mark (31m 10s): Well, okay, so a couple of things there. If you're, you're asking, hey, if, if I've got investors who are trying to, you know, reorganize the debt portfolio Yeah. And do it in a way that is sane and helps them get back in control. That's what you're asking. Get rid of the highest interest debt first, that sort of thing. Well, you know, there's a few ways you can do it. And I, again, I had mega student loan debts, so I could have used my earnings and just thrown that into a hole and paid off my debt, right?

 

Yep. And I would've been six years older and zero in my net worth, right? I could have just thrown all my money at my student loans and hopefully had it paid off in six, seven years, eight years and be done with it. Now I'm eight years older and I have nothing earning to my name. I didn't, I I started with that plan. That's known as the debt snowball method, by the way. However, halfway through that project, I kind of stumbled across the bank on yourself concept, Jesse. And I said, well, why not dump money into my policies first and then borrow against those policies to pay off my creditors, my banks, my loan companies.

 

And in fact, the guy who stumbled across this strategy, it was actually in 19 80, 19 81 when this concept was discovered or, or I guess expressed first in the book, becoming your own banker. And guess what was happening to interest rates back in 19 80, 19 81, he was a more, he was a real estate investor. This gentleman, Nelson Nash, he was a real estate investor. He saw his variable rate loans go from whatever it was, 5% up to 18% like overnight. And he was on the bathroom floor praying, trying to find a way out of this nightmare.

 

He had found that he was going bankrupt and he said he heard a voice, right? Heard a voice that said, you have what you need to get out of this mess, but you look at things the way everybody else does. And he got up from that prayer and said, I gotta find what, find what I'm looking at. That's not right. So he remembered that he had all these whole life insurance policies that he was just throwing little bits in, you know, pennies, pennies each month then too. And he said, I'm thinking about this the way everybody else does. This is, you know, super low interest debt.

 

The, the gentleman I just explained, he had a 2.1% annual percentage rate on that example I just gave. So Nelson back in the eighties, he just changed his thinking. I said, Hey, instead of paying pennies into my policies, I'm gonna just dump massive amounts. Everything I can goes into these policies and I'm gonna borrow against them to wipe out all these accounts that I have, all this high interest debt that I have. So for a lot of you listening, I just got off the phone with someone who has a 6.7% primary residential mortgage loan and it could go higher.

 

I've seen people with variable rates going even higher. So I don't know where the future is gonna take you, but if you want to control that process, if you want to be your own banker, maybe it's time to buy it. Buy your debt back from the banks. So we call that the debt snowbank method. We got that trademarked and it's been a lot of fun helping clients, not just with consumer debts, but also with some, you know, unimpressive real estate debt as well.

 

Jesse (34m 26s): No, that makes sense. I wanna be mindful of the time here, mark, we do have a few questions that we ask all the guests when we come to the end here. It's just for questions. And, but before we do that, why don't you let us know, we'll put it in the show notes. I want to know where people can actually get ahold of you and reach out if they, if they want to get in touch.

 

Mark (34m 47s): Sure. And I, I'll just brief as we're wrapping up, I'll just briefly say, this strategy that we've been describing is not for everybody. So do your own due diligence, make sure it's what you are looking to accomplish. We love to sit down with folks and weigh the pros and the cons, the costs and considerations. So if you're looking for a way to build real wealth outside of Wall Street, if you like the idea of controlling the, the banking function in your life, we can help, we work with clients throughout Canada and the United States and beyond. Reach out to us, you can go to kickstart with mark.com.

 

That's the website to go to. We can schedule a quick 15 minute chat that's kickstart with mark.com.

 

Jesse (35m 26s): Awesome. Okay, mark, if, if you are ready, I'll lob some of these questions over at you.

 

Mark (35m 31s): Sounds great. Okay. I'll see where it goes.

 

Jesse (35m 34s): What's something that you wish you learned a little bit earlier in your career that you know now? If you could go back in time, you talked to a younger version of Mark Willis.

 

Mark (35m 43s): So the briefest way I can answer that is, the problem of paying cash for things was the biggest aha in my life. If I pay cash, I lose the opportunity to grow that money ever again. So I no longer make major cash only purchases. I use my policies instead.

 

Jesse (35m 60s): That makes sense. In terms of mentorship, if you were to give a recommendation or advice to younger people getting in our business, whether that's in the financial side of things in real estate, or even just generally speaking, getting into the workforce, things that that tell them, or you know, your view on mentorship and if they should be, you know, seeking out mentors, how, how you see that?

 

Mark (36m 24s): Yeah, well, I mean, it's crucial. You know, you can either l learn by your own mistakes or the mistakes of others and you can dramatically lower your costs and pain if you can just learn from the expenses and mistakes of others. So yeah, absolutely. Look for people who are a few years ahead of you and stay focused and listen on only listen to one or two. Don't take 30 different mentors, you know, and make sure Jesse's in that crowd, by the way of mentors.

 

Jesse (36m 56s): There you go. Any book recommendations, podcasts or other media that you think listeners would get a get something out of?

 

Mark (37m 4s): Well, there's all the always the shameless self-promotion on my own shows, but we've done plenty of that today. So I'll point to a book behind me. It's the Bank on Yourself Revolution, New York Times bestselling book by Pamela Yellen. She coined the phrase bank on yourself, and I'd say it's the best go-to user manual for how this strategy works. And so that's the Bank on Yourself revolution.

 

Jesse (37m 27s): My guest today has been Mark Willis. Mark, thanks for being part of Working Capital.

 

Mark (37m 31s): Thank you Jesse. Appreciate it.

 

Jesse (37m 40s): Thank you so much for listening to Working Capital, the Real Estate podcast. I'm your host, Jesse for Galley. If you like the episode, head on to iTunes and leave us a five star review and share on social media. It really helps us out. If you have any questions, feel free to reach out to me on Instagram. Jesse for galley, F R A G A L E. Have a good one. Take care.