Camp Gagnon - How The Rich NEVER Pay Taxes, & Why You Shouldn't Either | Elliot Omanson

Episode Date: January 23, 2024

Elliot Omanson is the CEO of Owlfi and a tax genius. He spends all day trying to find loopholes and tactics to pay no taxes, and because of this has a network of some the the wealthiest and powerful people on the planet. Don't be fooled by the Chiefs Jersey, Elliot is the real deal. WELCOME TO CAMP!Thanks to Morgan and MorganBluechew for supporting this showProduced and Edited by @99OvrAll TIMECODES00:00 Intro01:13 Dressing to impress02:34 How do rich people avoid paying taxes?17:...

How do rich people like Elon Musk, Jeff Bezos, the Rothschild family, how do they avoid paying taxes? O' nothing, control everything. Now, here's a good thing about tax code. You don't have to turn a profit. You have to be attempting to turn a profit. I like that. That's sick. Start a side gig.

Take your hobby and monetize it, which is going to create the opportunity for you to generate certain deductions that you wouldn't otherwise be able to do. Can you give an example of that? There's something called the Augusta Rule, and the Augusta Rule is basically just you're able to call around in your town. find three different venues, get average costs of what they would charge you in order to hold an event at those venues. Then you just book out your own home for seven, eight, nine functions throughout the course of the year. So just throw parties with all your friends. And you get to assign that cost as if you had gone to a hotel and rent it out a ballroom.

And then you get to take that as a deduction. In America, we have this really screwed up idea where we don't communicate with our kids about money. It's the rules to the game. How can you expect to win the game if you don't know the rules? I've lived life poor. It ain't fun. Elliot, thank you so much for joining me, brother. I really appreciate it.

Oh, thanks for having me. I'm glad you wore your most professional attire for vacation. Well, you know, it's Red Friday in Kansas City, right? We're two days away from whooping the shit out of the bills again. Hell, hell yeah. I was at the last game with the 13 seconds. That was probably the most thrilling. NFL football game

insane right time it's just nuts and watching people get up and leave I was like well am I what are you all doing that's awesome game so I'm super excited for Sunday

I love it I was telling Brandon who who produces then edits the show I was like dude I got this guy Elliot coming he's like he's like one of the greatest tax dudes ever he's like a tax genius CEO of his own company

Alfa he's like he's the man like he's like a real like he manages a lot of fucking money he knows a lot of very powerful people and then you pulled up in this outfit And I was like, God, he's not going to believe me. He's not going to believe me. But just take my word for it, okay? Everyone listening, Brandon, this guy is the truth.

All right? Yeah, that's the funny thing. I gave up a long time ago on trying to dress like everybody else in the industry. Yeah, I like it. We're pretty cash. I mean, you're dressed like a winner. You know what I mean? This is what the winner wears.

I'm pretty sure this is what the winner wears. Literally. You can wear a suit and be a fake winner. You know what I mean? Or you can be like a real fucking winner. I respect it. Yeah, it's all about being authentic. Yeah, exactly.

Okay, the first thing I want to know, just out the gate, how, and this might be like a two-hour answer. Gotcha. How do rich people like Elon Musk, Jeff Bezos, the Rothschild family, the legacy old money families, new billionaires, the richest people on Earth, how do they avoid paying taxes? That is easily more than a two-hour answer. But let's break all those people you just named into two groups. Okay. Okay. So you have like the Rothschilds, the Rockefellers, right?

So let's just call it old money. And then you have new money, Musk, Zuck, Bezos. Okay. Now, the goal of the new money is to end up in the same structure as the old money. Okay. Now, I'm not going to, and I hope you don't mind, I'm not going to get into exactly how those people do it. Sure. Okay.

I Because you know exactly how I know exactly how they do it Those individual people do it Yes and I will give you the answer In this conversation But I'm not going to acknowledge that it's the answer Sure

So somewhere in here will be the truth Okay okay I just I try to keep a low profile When it comes to this kind of stuff And not attract too much attention So usually it's I don't even like doing something like this Coming on to a podcast

I've done one Yeah You're now number two. Okay. So. And this is it. No more. Probably no more.

Yeah, we're limiting the supply. Probably no more. We're going to keep the stock. We're not trying to limit the supply. Just try to keep a low profile. But so the best example. And so this is what I love about truth. Truth is being told to you all the time.

It's just shrouded and hidden inside all the nonsense that gets pumped out on a daily basis. All right. The best example of how the old money does it was actually told to you. in the media when the Queen of England passed. Okay. So what a lot of people don't realize is that U.S. law is based on where we came from, which is British common law. Okay.

There was one, there's a number of differences, but one of the most significant ones when it comes to taxes and when it comes to this conversation was that America didn't want to have a two-cast system. We didn't want to have the haves and the have-nots, even though we ended up with it anyways, right? At the time, the haves were royalty, okay, the landowners. They used structures in order to hold assets and to build and accumulate assets generation after generation after generation.

Okay? We didn't want that to be the case. So we put a limit on how long a contract can exist. and that limit initially was 99 years. And there are still places in America where you'll see like a buddy mine out in Pennsylvania has got an airplane hanger. He's got a 99 year contract on it. Right.

So there's still remnants of this. Now what happened, though, was in 1986. Right. Let me back up one second. So, right, in America, there's basically three levels of government. There's more, but three major ones. right, the federal, a state, and a municipality, or a city. Okay.

Now, the concept behind our government was that the larger the government, the less power it would have. Right. So a homeowners association, they can control the color of your house. Hmm. Right. They can control if you have a flag up, right? Now, the federal government can't do that. Right.

Right. Well, what's the purpose for that? why would a why would the smaller the government be able to have more control and the bigger the government the less assuming it's more specified it's probably more tailored to the needs of the constituents within the community well exactly right and if i and if those constituents don't like a rule in a city or a HOA or a city or a state they can move out of there and still stay part of the country right so this was why initially the federal government was limited to two things um and has since been expanded out into all sorts of crazy nonsense.

But my point to all this is that you have the tax code being written at a federal level. And the tax code is referred to – there's 52 different sections of federal law. They're called titles. Title 26 is the one that pertains to revenue to the federal government. That's federal tax. Yeah, we would refer to that as taxes. Got it. Okay.

Now, all the rules are written there at the federal level, all right? But, interestingly enough, there are things being written at a state level that impact that, okay, because we have these different levels of government. So in 1986, South Dakota passed a law that altered how long a contract could remain in force in the state of South Dakota. And they changed it to in perpetuity. Okay. So you could now, in the state of South Dakota, create a contract between you and another party that will exist forever.

Now, when you say contracts, do you mean interpersonal contracts, business contracts, are all contracts in general? All contracts in general. But a trust is a contract. I see. Okay. And so in 1986, in South Dakota became the first time in the United States since 1776 that you, you know, you could create a trust that would hold assets and exist forever. That's pretty powerful.

It's extremely so powerful. Anybody listening to your pod here can go Google. Just type in South Dakota, $500 million in Little Town. And you'll find an article in Bloomberg. Oddly enough, what blows my mind is it literally was just written a couple years ago. I think 2021. And Bloomberg just now figured out and it. that in a little town in South Dakota is an office that holds trusts for the wealthiest people

in America and sits on as far as they could figure out $500 million of assets all being held in one little town in South Dakota. Why? Because of this rule in regards to trust law. Interesting. So if I open a trust in Florida, 99 years. Well, actually, so 1986 is when South Dakota did it. Just about every other state followed suit. Got it. Do you know what pushed South Dakota to do it? No, I don't.

That's an excellent question. That's interesting. It's interesting at that time that South Dakota was like, you know, ultimately it's probably the same way everything is done. And this is one of the things that I don't know that a lot of people realize, but just about every law gets created because some lobbying organization crafts the law and then pays a politician to slap their name on it

and pushes that through. That's really the saddest part of it all. It's not done because some politician who's, you know, a good moral, upright person has an idea to benefit you. Right. There's a corporation that's like, you'll, we can make a lot of money if this thing happens. Yeah.

How much will it cost to get this guy in there to make this thing happen? Yeah, absolutely. And that happens all the way up to the highest level of politics. Well, what's crazy? It happens all the way down to the lowest level. It's happening in your little. little town of 30,000 people with the mayor. Yeah.

And if you don't think, and if something's, if they're doing it at that level, you want me to believe you're really going to believe it's not being done at a much more powerful, much more lucrative level. I'm going to be that guy. I'm going to be greasing the HOA guy. I'm going to be paying off the HOA guy. I'm like, yeah, we got to fix this. Okay.

Do my bidding. That's wild. So what is the implications of having a trust in South Dakota that can last forever? Is that basically if you are a new billionaire, you can put your, your money in South Dakota. Well, you don't even need to be a billionaire anymore, right? Because as technology advances, it makes it more like the economy of scale starts to work more to your advantage to bring it to where a lot of these things are, you know, feasible to do with much less and less and less money. Okay. But I want to go back to what I was initially saying is they told you, they explained this

to you in the media in pieces when the queen passed. And, um, and, um, So there was articles written about Prince Williams, right? And he, and one of them talked about how he's now worth a billion dollars. Well, he didn't become worth a billion dollars because the queen passed. In fact, none of the royal family truly have any net worth. I'm like, what? I know, okay? Because they don't own anything.

Okay. So in these articles, they referred to an entity called the firm, right? The firm is just a company like Alfie. Okay. Okay. that firm manages the royal family's trust. All right. Now, also, there was a lot of talk.

Megan Markle was very upset that her kids weren't getting certain titles and didn't have access to certain benefits by being part of the family, right? Well, that had nothing to, you know, and there was all these reasons given, mostly racism. It had nothing to do with any of that. Okay. Generations earlier, when the royal family's trust was established, there's a trust document that lays out all the rules. And once that's set, depending on, and I have not read their actual trust documents,

so I wouldn't know if some of these provisions are in there. Most likely the branches of generations of errors is limited. Right? Because if you didn't limit the number of errors that can all have access, You just dilute it down and nobody would have anything. Four generations would be, yeah. Yeah. Now also, when they talked about Prince Williams now being worth a billion dollars,

it sounds like their trust is set up very similar to mine. I just copied what every, you know, all the ultra wealthy people do. But within my personal trust, there are seven separate households assets all inside of a single trust. So if you think about the trust like an office building, right, where there's different floors and different suites. There's the building management that has keys to every suite and every office. And they're entrusted not to steal information and not to let people from one suite

into another suite or one office or one office or right. Well, that's the trustee of the trust. Okay. Now, within this office building, there can be as many as the creators of the trust wanted to have. Right. So in the royal family, there's some amount of offices. Each one of these offices has its own assets. Okay. So in my, in my family, in my trust, there's seven different households. Each household has their own section of the trust. It's like an office within this building.

And was that just an arbitrary number that you came up with? No, no, no. And mine's set up to where I can have even more. It's just currently only seven of, there's only seven. Okay. Right. Now as my kids have children and like this will branch out. And I did something different with mine. Instead of limiting the number, I set up provisions to where you have to be actively participating in growing the wealth of the trust to have access to the resources of the trust. Okay. Which should allow for there to be an almost unlimited number of people functioning. and living out within this trust structure. And does that provision try to curb like entitlement from your children? Absolutely. Absolutely. Got it.

So my kids have been raised knowing that you only, you like, you have to be actively participating for the team in order to have access to the team's resources. And then I always fought with, and the team will always have more resources than you. So why would you not want to actively be participating? and helping the team. Does that count just any job, like minimum wage or contributing to the trust in that regard? No, no, none of my kids would ever work a job that pays minimum wage or even provides them a W-2.

Gotcha. But if they're able to access the trust, just by doing like the bare minimum. Yeah, well, the bare minimum is like, so one of my kids wants to be a veterinarian, right? So how would they do this, right? They would go to school. They would get their degree in veterinary medicine. and then the trust would buy an existing vet clinic or give them the money to build their own vet clinic.

I see. So the trust would give them the leg up to then bring the most amount of equity back into the trust. And then the trust is going to own that vet clinic with that child. Okay. And the trust would hire them to run the vet clinic because the trust is not a person. It can't do that.

Right. So the trust is actually going to own the land that the clinic sits on. It's going to own the building that's built on it. It's going to own the brand. It's going to own the assets of the vet clinic. It's going to have hired my daughter, if that's what she wants to do, to run and manage the vet clinic. And so all your children will then be contributing to this larger trust

that can then move the money around to them fund each one of their different aspirations. Yeah, correct. Right. So in the news articles when the queen passed, it talked about Prince Williams now being worth a billion dollars. All that happened. was Prince Williams because he got bumped up a rung. So he moved up the office, right? So if the fourth floor is the, you know, if he's on the fourth floor and there's six floors and the queen passes, he jumps up to the fifth floor.

Well, the assets that are available to him are now a billion dollars. It's like a credit line or something. Like he basically just got a line of credit. Well, he just moved into a bigger suite in the trust. Right. He moved into a bigger suite in the office. And that suite had a billion. dollars of resources. He gets to live in that suites' castles. He gets to drive that suite's cars.

He has to manage that suite's business interests. Okay. And all of that is the billion dollars that they talked about. Right. So it's not like liquid cash that he's able to do whatever with. No, no, because he has a, because the firm is going to govern what can be done with it, right? They're going to ensure he can't just liquidate things, that he can't just spend it into poverty. And yeah, he has like a fiduciary obligation to the trust. And the firm has a fiduciary obligation to make sure that he manages it correctly, right? Now, they've done their job. Obviously, you know, it's not like Prince Williams' doesn't understand what his role is.

Right. He's been groomed his whole life to do this. Yeah, right? And so that's one of the most important things that I talk to people about as well. In America, we have this really screwed up idea where we don't communicate with our kids about money. And so, you know, that's one of the most tragic things that I see. my oldest daughter when she went to college and she was in a college out in the northwest and her one of her largest classes was math she was the youngest kid in there all right um they try to use

practical things to learn so one day they were talking about credit and credit scores and credit monitoring and investments and all this kind of stuff for like a section you know i don't know maybe like a week she was 19 years old and she was the old and she was the old only one with her own credit card, a credit monitoring app, and her own investment portfolio. And it's like, how are, how are you getting to college? And your parents have never, like, helped you with one of the most crucial aspects to you being able to live a life in this society, right? Understanding credit, building credit, managing your credit. Right. Well, it's probably because the parents don't know either. Most likely they don't know either, right? So you just look,

Because school's not going to teach it to you. Yeah. Right. And so it's very much dependent on parents to try and teach this stuff to their kids, but most of them don't know it either because nobody taught them. Right. Right. So I just, I just find like, all right.

So one of the guys that taught me a lot about the tax code, I asked him what made him get so into it. And he looked at me and he goes, It's the rules to the game. How can you expect to win the game if you don't know the rules? That's a bar. It hit me hard. Yeah. And I thought, yeah, this entire country is full of people waking up every day.

And they're forced into a game. None of them really even want to play it. And none of them know what the rules are. So are there little practical things that the average person can do to try to lower their tax burden that maybe are some things that the ultra wealthy are doing at scale. Yeah. So the number one key is to get out of a W2 job. It is the number one key.

A W2 job is literally just enslavement. And then a W2, could you explain what that is for PILA. Yeah. So W2 is just your traditional, you go, you apply for a job, you fill out a W2, you tell them what your tax withholdings are, they're going to send you your paycheck, they're going to withhold all your FICA taxes, they're going to contribute to Social Security for you. those are the jobs that are going to take a portion out to pay for your health care benefits, right? They're going to give you the paid time off, right?

So I guess, like, an example of this is, like, if you were, like, we're selling insurance or something. Probably not insurance, because that's probably going to be a 1099 commission-based job. Gotcha. But let's say you worked at McDonald's, you worked at Target, you worked at Starbucks, right? Those are all debut two jobs. Right. Okay. There's really two classes of people in America, and everybody wants to break it.

down on income or race or gender. No, it's all bullshit. It's W2 and non-W2. All right. And you are just extremely limited in what can be done when you're a W-2 employee. Worse, the means and the mechanisms for you to be able to accumulate wealth and to retire are antiquated and are not worth you doing, but yet everyone continues to do it. Quick example of that is the 401.

All right. Oh, but hey, my company's going to match 3% of my income. Okay, hallelujah, right? So the 401k got created in 1978 when the tax code got overhauled. A guy named William Bena is kind of responsible for it. He actually working for a consulting firm called Johnson & Johnson, not the medical company, but another company, implemented the very first 401K in 1979. between 1980 and 2000, we shifted in America from what's called defined benefit plans,

which are pensions, a benefit the company provides to you, to define contribution plans, something you're contributing to and the company's contributing to, which is your 401K. I see. Okay. Now, that shift took place over the next 20 years, and it had impacts far-ranging, like one of which, is that the market average 17.75% a year for that entire 20 years. All right. But my point, I digress.

But in 1983, so the first 401 case created in 1979. In 1983, the tax code is overhauled again. And for the first time in American history, Social Security started to become taxed. And what are the implications of that? Well, they had to figure out how were they going to tax. tax it. Now, everybody believes that they earn Social Security, that it's their money, even though the U.S. Supreme Court has ruled it's not. Okay? Now, what's really great about it is usually the government just lies to you, right? They lied when they said there would never be a federal

income tax. They lied when they said your Social Security would never be taxed. They literally, you know, they just lie all the time about everything, right? So, but when it comes to how they tax Social Security, oddly enough, they told the truth. So it's called the provisional income calculation. Now, the great thing is the word provisional means likely to change. Hey, way to nail it on the head. Okay.

Now, they also didn't want you to know they wanted a means test. So what's means testing? Means testing is whether or not you have the means to warrant receiving something. or the money to warrant receiving something. Programs that are means tested are generally considered to be welfare programs. Okay. You know, food stamps.

That's a means tested program. Head Start is a means tested program, right? You have to be lacking the means to pay for these things outside of the government program. Then you qualify the government government. If you make too much money, you can't get food stamps. You can't get them. Right.

Right. So they wanted a means test your Social Security, but if they did that and all these people believed it was their money that they had contributed and they had earned it. And then you're going to means test it. You're going to have a riot. So they had to basically shroud what they were trying to do with this bullshit, the provisional income calculation.

So the provisional income calculation takes your other sources of income and runs it through a calculation to determine how much of your Social Security you deserve to get in retirement. And the more money you have coming to you that meets the government's definition of income, the more of your Social Security they take from you. in the form of taxes. Oh, so they're effectively means testing it. Correct.

Because if you make a ton of money, then they're going to be like, hey, we're taking all that social security. Exactly. And if you don't make that much money, then they're like, all right, you can keep some of your social security. Exactly. Wow. And I have clients that because of how they did in retirement, they are literally paying every year in taxes their entire Social Security check. Their whole Social Security just goes away. Wow.

It's not, and that's a little. inaccurate, but my point is, is that the amount of taxes their paying is completely equal to the amount of or more than the Social Security they should have been receiving. And a good portion of it is because of this provincial income calculation. And then if the federal government starts taxing your Social Security, guess who wasn't far behind? The States. So you can see somebody in retirement and they're living in a state that taxes Social Security does not all do. And they will have something to occur, maybe a car repair, maybe a new roof, putting a deck on a home, taking a grandkids on vacation. They will take an extra chunk of money out of their retirement

accounts, their IRAs, their 401ks. These are what's called qualified. They're qualified for tax deferral. All income coming from them hits your tax return as fully taxable income. This drives up the federal taxes on your social security and can trigger state thresholds to where now the state takes your social security. Okay, so all I have clients who might be living off of 120,000 a year in retirement, that puts them in the 22% tax bracket. They take out an extra 10 grand. They're easily still in the 22% tax bracket.

And they just got jumped to 35% taxes, which is the equivalent of somebody making $500,000 a year. Wow. And it's all because of this provisional income calculation. And then they get clipped on that. Oh, yeah. And so I don't know how we got from trusts in England over to the, This is how casual people can get away from a...

Well, yeah, yeah, you had asked, how does the normal person, what do they got to do, right? Yeah, so get off W2. You've got to get off W2, right? Now, if you can't, the very first thing, long before you put a penny into a 401K, and it even gets worse, right? Let's say you're five years away from retiring right now. And you're still, and you're probably at the peak earning in your entire life. So you're probably putting the most into your 401K than ever before, right? Well, you're literally putting money aside at a lower tax rate today than what it's going to be taxed at when you take it out.

Okay. Give me examples of that. Okay. In 2026, it's guaranteed for your taxes to go up. Right. You're familiar to that. I mean, I'm just assuming with like, you know, election changes and shit like that. Not even. In 2017, Donald Trump got two sets of tax breaks.

pushed through. One was corporate and one was individual. Now, there's all these weird machinations that the Senate goes through to get bills passed. He only had enough political clout to get the corporate tax cuts passed on what's called a permanent basis. So it would require an actual law change to undo them. Okay. He did not have that ability to do that with the individual tax cuts. So the individual tax cuts got pushed through on a temporary basis. And it expires. They sunset. in 2026. So we lose the estate tax. It's going to get cut in half.

So right now, I think it's like $12 million, and I'm not 100% accurate there, but I think it's like $12 million. That's going to get chopped down to like five and a half or six. So when you pass any assets over that dollar value are now going to be taxed at 40%. Wow. Oh, yeah.

Is that federal? That's federal. Okay. Your individual tax rates right now cut off at 37. They jump up to 39. Your standard deduction right now is like 23, 24. It gets cut back down to like 12 and a half. Wow.

Okay. So imagine I'm approaching retirement and I'm contributing to my 401K right now. I'm putting money aside today to defer a lower amount of taxes than what I'm going to pay when I take it out. Why would I be doing that? So break that into number. So if I put $10,000 into my 401K, you know, today in 2020, I'm going to have to pay taxes to get that. I'm going to have to pay more taxes to get that $10,000 than if I just didn't put it in there at all right now.

Because the whole benefit of a 401k is that you're not going to be taxed on it at the same rate. Yeah, the benefit is I'm supposed to be putting money aside a day, deferring the taxes on it. Not having to pay taxes on it today. Earning money on the government's money, right? The money that I would have paid in taxes, I now have invested. So I'm getting to earn money on that. And then when I'm retired, I'm supposed to be living off less money and being taxed at a lower tax rate. Well, first off,

I've never met anyone ever that if they don't have to lives off less money. Right? So if I'm comfortable spending $10,000 a month before I retire, I assure you after I retire, and it's actually worse. Because what prevents people from spending money? They're busy as fuck as they have jobs. Right? Yes.

I love it. Right? Now, if I'm not, what do I do? We're going to go shop. We're going to do this. Right? Or go spend money. Yeah.

I always joke the two busiest people on the planet are the unemployed and the retired. I mean, they seem to be doing the most shit ever. Yeah, exactly. Well, that all costs money. Yeah. Right? You ain't retiring and spending less money unless you're broke to begin with. What's up, guys?

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This is a paid advertisement. Now let's get back to the show after the short disclaimer. A lot of what I talk about, you have to understand applies to people that have some amount of assets, some amount of money, right? I'm not talking about nothing I, nothing.

You know, you got to have, really you got to have money in order for, anything that I do to help, right? Right. Yeah, if you're not getting taxed. Yeah, there's got to be a certain threshold. You've got to meet in order for any of this to matter to you, right? Yeah, yeah, yeah.

I mean, that's, so in general, in your opinion, the 401K structure as it exists presently is pretty much useless. Absolutely. Absolutely. And we run the numbers. Mm-hmm. Okay. You can, the sooner you, now, the only time in which,

there's a caveat to everything, right? There's an exception to every rule, right? So let's say I did the math and I understood putting money to my 401K is not an effective or worthwhile strategy but there's something called the backdoor Roth.

Now Democrats are currently trying to get rid of it because that's what they love to do. But a back door Roth is basically just the idea that any amount of money I've set aside to a qualified account like a 401k or IRA, I can convert to a Roth. Now, what's great about it is contributing to Roth has all sorts of limitations. If my income exceeds a certain amount

in a certain year, I'm not allowed to contribute to a Roth. Right. Well, and then you're limited to the amount you can put in every year. Well, with a backdoor Roth, none of those restrictions exist. And why does no one know about a backdoor rock? I mean, it's a little known, but yeah, not enough people know about it, right? So let's say I was making $500,000 a year. Well, I'm not able to contribute to a Roth. But I can contribute to my 401k IRA and then take all that and convert it to a Roth. Back to a Roth.

Yeah. Well, it's just, yeah, by converting, it's just called it back to a Roth when you convert your IRA to a Roth. Okay. Into the Roth. Got it. Okay. Now, when you do that,

you're going to have to pay the taxes. Okay. But we've run the numbers. Okay. It doesn't matter how much. Right? we looked at what if I only convert enough to stay within certain tax thresholds? What if I want to keep,

what if I want to convert enough to where I'm just maxing out the amount I can do that keeps me in the 22% tax bracket and doesn't take me to 35 or 37. Absolutely minimum. It doesn't matter. It's the best thing you can do is to convert 100% of what's in a 401k in IRA over to a Roth. It doesn't matter if it pings you out at the 37% tax bracket. It does not matter. You're going to be saving more.

you're going to end up with way more money in the long run. The reason why is because the sooner you get the money out of the IRA or 401K, which is fully taxable as income, the sooner you get it out of there and you get it to a Roth where you're no longer taxed ever on the gains, the better off you are. So anyone with a 401K can open up a backdoor Roth. Correct.

It's just a Roth that you convert everything into. Got it. So if you're listening and you have a 401K and you just realize, oh, this is stupid. It is absolutely stupid. And it's worth taking the 10% penalty. So if you take money out of a 401k in IRA before age 59 and a half, you're going to hit with a 10% penalty. I'm not sure if that pertains to a Roth conversion.

I'd have to look that one up. Got it. Even if it does, doesn't matter. Take the 10% penalty, take the tax hit, and convert it over to your Roth. This is not financial advice. Legally, I think we have to say it. I don't know. Without without without without without.

I don't know the laws on that. I've never done that before. I do. But it's not a cold. No, yes. You know, well, you're totally correct. I'm glad you said that because without me knowing your specific situation, I can't truly tell you you should do something or not, right?

But stop being a broke bomb and get to it. Absolutely. But also it does not financial advice. Yeah, yeah, yeah, absolutely not. But that's a very specific thing that anybody, even if they're a W2 person, can do today to drastically improve their financial future. Okay. That's to contribute to a Roth and convert as much from an IRA or 401K or.

over to a Roth as fast as possible. Anything else for a W-2 person to do to lower their tax burden? Start a side gig. Okay, so I'm working at Target. I have a 401K, hypothetically. Yep. I just convert it to a Roth. Yep.

Now I'm good for a step. That's a good first step, okay? Now I've got to start a side gig. What's an example of that? Like, if I'm like a video editor, if I'm a videographer, or something like that? Anything. Take your hobby. Take your hobby and monetize it.

Now, here's a good thing about tax code. You don't have to turn a process. You have to be attempting to turn a profit. Oh. I like that. That's sick. Okay. Okay.

I mean, and they can't force you to turn a profit because that shit's difficult. Yeah. Right? You know. You own your own business, right? You're running a podcast, right? I'm bleeding money. Bleeding money, right?

So that's, the IRS can't tell you you're not allowed to keep trying. Right? Right. That's the whole backbone of like. American capitalism. Yeah. Keep on trying. Never stop trying.

Yeah. So create a side gig, which is going to create the opportunity for you to generate certain deductions that you wouldn't otherwise be able to do. Now, if I'm creating a side gig, should I open up an LLC? Yeah, I mean, you know, again, I can't give, like, that would fall into something you'd have to talk to, like, your CPA about. This is where it's too specific depending on what your side gig is. Yeah, but just whether or not you have an LLC or C-Corporal.

an S election. You're probably, even your LLC is probably going to have an S election, which is just going to flow the income through to you as the taxpayer. So it doesn't really, yeah, it doesn't really matter. So then should the overall goal of having this side gig be no longer to be a W2 employee and just be a sole proprietor of your own thing? I mean, if you can't eventually get there, right? In the meantime, it's just an excellent way to create deductions to offset your other income. Can you give an example of that?

Legally, you can't. Yeah. Right? So when you're owning your own business and you're trying to, you're trying to get it off the ground, right? Maybe you're driving a lot of places, right? Well, now you get a deduct, I don't know, 59.5 cents or something. They change it every year per mile that you drove, right? I understand.

Right? Now I can deduct. half my meals. I understand. Because they're all work-related. Well, of course they're all work-related. Of course, there. Is there something in your eye?

I feel like you came on blinking at me or something. Is there dust in here? Of course they're all work-related. Yeah, yeah. Right? I understand. Right. Now, the one thing, too, that the IRS does a fantastic job of is scaring the shit out

of people. Yeah, bro, I've heard they have like four employees in South Florida. They can just go knock on doors and shit. Probably way more than four. Like, apparently, who was it? Like, this last administration hired like 80,000. 80,000. 80,000.

I'm scared of the IRS, too. 80 that. Most people are. There's no need. I'm not. I'm scared. Look, who's the last guy that went to prison for tax evasion, right? Jordan Belford.

Jordan Belford? I don't know if that's true. No, no, that was a tax. I mean, they might have got him on some tax evasion. That guy's awesome. One of my all-time favorite people. No, but like, what, Wesley Snipes or something? Right?

Didn't he go to prison for tax, right? Look, the only time you get in trouble is when you're like, blatantly doing illegal things and you refuse to acknowledge it and continue not to pay. Okay. Right. Now, is any of your listeners going to do that? Hopefully not, right? What you're going to do is within the best of your abilities, you're going to do your taxes, right?

And if the IRS on the 0.036% chance audits you is going to tell you what you did wrong and you're not going to be a jerk about it, you're going to be like, oh, my bad, you know, and you're going to fix it. And there might be some minor penalty or fee, and you're going to roll on. Okay, so I'm not going to go to jail if I accidentally mess something out. No, of course not. Because I've heard this, and correct me if I'm wrong, but apparently the tax code is intentionally nebulous and convoluted

in order to preserve the interests of like these large tax conglomerates that do taxes for people la turbotax things like that. Yeah, I mean, that probably falls more to the conspiracy theory line of things. In reality, what happens is some, lobbyist is paid by somebody to get a law passed that creates some provision within the tax code. And by the way, these people, right, when they write this stuff, it's like trying to figure out every conceivable scenario, right? You're never going to do it, right?

So it gets written. The law gets passed. Tax code gets written into the tax code. well, now no one knows exactly what to do with it. Give you a quick example. When the tax cuts of 2017 got changed, it impacted the language regarding what's called intangible drilling costs. So this is the second step of if you want to convert your IRA to a Roth and you want

to do it at a high level. Okay. And I'm not saying this is not financial advice. No, never. Okay. I've seen people convert their 401k to an IRA, take a home equity line of credit out, take that money, invest it in a oil partnership,

and get what's called intangible drilling costs. Okay? What is that? All right. So for every dollar that you put into an oil investment, you're going to give about 80 to 85 cents of ID. or intangible drilling costs. You can also get some bonus depreciation

essentially bringing you to 100. Okay? So now on your tax return, you get the 1099R from the company you did the 401k conversion. You took money out of your 401k IRA. That triggers a 1099R being issued to the IRS and to you showing that you have that amount of income. So if you did $100,000, you're going to get a $199 for $100,000.

It's going to go on your tax return, creating $100,000 worth of taxable income. Right. You got to pay taxes on that. Correct. Now, you take out of home equity line of credit for $120,000. You invest that into a oil partnership. You're going to get $100,000 or more in IDCs.

That's going to also hit your tax return. And now you pay no taxes on your conversion. Because the IDC... The IDCs offset the taxes that were generated. And how hard is it to invest in an oil partnership? Not hard at all. How do you do that? There's numerous companies.

out there that, like if I were to Google oil partnership. US Energy is a great one. In veto. And when you say invest, you mean it's like, yeah, they have, they have programs set up for you to stroke them a check as an investment.

So now you own part of the general partnership that's doing the oil well drilling, all right? You're going to get the IDCs. In year two, they're going to convert you from the general partnership to a limited partnership so that you can start receiving the income from the oil. oil investment. Like a dividend basically? Yeah, basically, right? They call it a royalty. Okay. So now this income comes to you. What's really great about oil income is 15% of its tax free. So then you only have the 85% hitting your tax return as income. But you got all the, you got that initial investment to offset whatever taxes you had that first year. All right. Why were we talking about this?

ways you can Well that's like that's like level two right So the very first thing like is just to get your 401k and IRA out of that into a Roth Yeah If you want to do it in a real smart way You're gonna do you're gonna piggyback an investment into oil on top of it Oh so my point was in 2017 when they changed the tax code They they screwed up the language

So previous to 2017 it was unlimited How much you could do to offset your taxes. Oh, wow. After 2017, there's confusion. Half of the CPA specializing in oil and gas investments think it's still unlimited. That's not good. Well, I mean, no, it is or it isn't.

The other half thinks it's now limited to $250,000 for a single individual and half a million for a married couple. Okay. So this is the problem with the way these laws get passed. some lobbying group gets paid to change the, to funnel money to a politician and they craft the rule, or the law, the law gets passed. It creates the code and the tax.

Well, and there's all these unforeseen consequences. And now people don't know what to do. So then, and this is, now this is specifically done this way. What happens is someone will continue to provide, they'll take an unlimited.

tax deduction on an oil investment, right? They'll invest a million dollars and they'll take the whole million. If the IRS thinks that it should be limited to half a million for a couple and $250,000 for an individual, then the IRS is going to take them to court or audit them. And then if they want to fight it, go to court. But is it clear if it's limited or not? This is how it gets clear. This is the problem with the whole system.

The way it gets clear is by going to court. and then it gets fought out in the court system. That seems absurd. It's totally absurd. Why not just make the law clear about what it has to be? Because it's not possible. Because no one's intelligent enough to think of every conceivable scenario and interpretation that something can be, right? So there's accidentally a fray in the language.

Always, always. I mean, just, right, you would think that in the Second Amendment, right, what does it say about the Second Amendment? Shall not be infringed. I mean, that seems pretty clear, right? Seems clear to me. Don't step on the Second Amendment. And how many laws have been passed infringing on it? Because they're going to say, well, there's a comma.

And that comma means that next sentence doesn't apply to the first one. I mean, whatever. They come up, right? Another great example is abortion. Right? And I'm not going to get into the politics of it. But the Supreme Court, when they ruled on it, said that within the penumbra of the Constitution, well, how many people even know what that word means?

It means within the shadows. You're literally telling me you're literally just making shit up out of nowhere, right? Within the shadows of the text. Like we're not even, like we're so far off the reservation at that point, right? Right. This is what people are arguing in the spirit of the law versus the letter of the law. Correct. So if I get to say within the shadows of the text, I don't have to pay taxes.

or within the shadows of the text, I do. I mean, it's all nonsense. And then you go to court, you can argue it, and if you're ready to battle, then you can win. Exactly. But you've got to have the pockets to fight the IRS, right? This is the whole problem with our current governmental system, right? When the government wants to sue you, they have the unlimited resources, right?

You don't. Right. Unless you're super wealthy. Well, yeah. So it's great last year. There's all these strategies. that the IRS puts on their dirty dozen list. They're called known transactions.

Okay. Meaning that they're known to be used fraudulently. Right. Now, it doesn't mean that they're illegal. They're in the tax code. They can't be illegal if they're in the tax code. Okay. What's an example of these?

An example of one is a microcaptive reinsurance company. Okay. So this is a fantastic example, all right, for a number of reasons. So let's just take a 401K. And if, all right. So one of the best things you can do is just stop looking at things the way that you're told to look at them. Okay. And just break them down as to what the benefits and negatives are, right?

Everything has pros and everything has cons. Right. So one of my favorite, I mean, I think it is the book, the subtle art of not giving a fuck? Oh, yeah, Mark Manson. Yeah. Is that the book where he says, no matter what you choose, it comes with a set of problems. And so one of the great ways to make a decision is look at which problems you want to deal with.

Yeah, yeah. And then pick that. Yeah. You create a problem matrix. Yes. Yeah. So when it comes to the tax code, what I do is I just take a section of it and I make a simple T-graph with a plus and a minus. And then I write down what are the pros and what are the cons, right?

I don't care what it's called. I don't care what their intentions for it were. I just want to know what are the benefits to me doing this. What are the negatives of me doing this? So if you do this with a 401K, right, you get a defer income. Great. That's in the plus category.

Well, what's the negative? The negative is when it comes out, it's fully taxed his income. That's not good. Another negative is it's tied up till I'm 59.5. Stupid. Right? Another negative is I have limited investment options.

Another negative is I'm limited to only being able to borrow 50,000 a year or one half the value. Another negative is I'm camped as the amount of money I can put in. Right. Right? And the overall taxation might be more than what it would be if today if I took it out of it? And I'll guarantee it is. Yeah. So there's a lot of negatives.

A host of them. Yeah. Right? Now, also if I'm an employer, 401 case fauna or a Risa loss, which is the Employment Something Act. All right. So if I have highly compensated employees, people making over $150,000 a year and they're continuing to their 401K, but my lower-waged employees are not, well, now my highly compensated employees can't either. I have to kick money out of the plan back to them, which is going to screw them up tax-wise, or I have to out of my own pocket fund my lower-waged employees 401K plans even more.

So it's costing you even more money, just to help these people. Correct. Wow. Okay. Now, sit that aside. That's, all right, so a 401K, most people don't even know why it's called that, right? But it's literally Title 26, Section 401 Paragraph K. That's where the name comes from. All right. Now, I wish they would just call everything by its section of the tax code. I think it would help people get away from their own preconceived ideas and biases. Right, because the words carry loaded meanings. They do. They do, right? Life insurance, stop calling it life insurance. That's second. and 702 of the tax code. If I called it a 702 or a 702J plan, right, and I call this a 401K plan, right?

I can start to get away from the names and the means that I carry with the names and just look at what the pros and cons. The pros and cons of it are, right? Okay. So if I move from section 401K over to section 831 of the tax code, now there's A, B, and C,

there's three different types. I go to section B. And I just do the same thing. create a T-graph, the pluses, and the minuses of an 831B. Well, I can also defer income from taxes, just like I did with a 401K. That's a plus. Well, with a 401K, I'm limited to 23,000, up to 30,000. With my 831B, I'm limited to $2.5 million.

Okay. So that's already better than this 401K. I mean, if I own a company, how many years do I got a sock 23 to 30 grand aside for that to matter to me? Yeah, and you'll die before that happens. Exactly, right? 2.5 million a year, on the other hand, that's pretty sweet. Right? Well, cash is king in a business.

Cash flow is king. So to tie up money until I'm 59 and a half, that I can suck. Yeah. Right? With an 831B, my money's tied up for 12 months. That's starting to sound a little bit better, right? When the money comes out of a 401K, it's fully taxable as income. When the money comes out of an 831B plan, it's taxed at long-term capital gains rates.

So you just pay capital gains tax on it? Which is 0.15 or 20%. So I just went from a max of 37 and in 2026-39 down to 20. Okay, but there's going to be a catch with this. Right? There's no way that it's just way better than this 401K. It is and there's no catch. What's up, guys?

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I don't know, I don't really need it. What are you talking about? It could be better. It can always be better. Let's say you're in the 1% and you're about to be in the 0.01% with Bluechew. Let's get back to the show. Is there a name for this? Is there a casual name? Well, there is. There is a name for it. It's called a microcaptive reinsurance company. Okay. So micro meaning small. Yeah. So that's you're limited to 2.5 million. Okay. That's small. Okay. Okay. It's Captive, meaning it only ensures a single entity. Okay.

That's your primary business. Let's say we created a microcaptive for your podcast. All right. It's going to insure your podcast. All right. Now, why would the IRS allow you to create your own insurance company to insure you? It's specifically for what's called fortuitous risk. Fertuitous just meaning not likely to happen, but if it does, it's expensive.

Okay. If something's not likely to happen and if it does, does it's expensive, the odds are there might not be a marketplace for me to go out there and find insurance for that. But you still have a right as a business owner to protect your business. So they make this caveat that says you can basically insure yourself for the super unlikely thing. Correct.

Wow. Okay. Now what's super funny about that is even though it's supposed to be for super unlikely things, we would insure people against government shutdowns. Which is pretty unlikely. Well, the IRS said it was so unlikely. likely it's not a legitimate thing to ensure yourself against. Really?

Yep. Okay. They fought it all the time. Wow. Well, what happened in 2020? Can't fight me on it anymore. Wow. The government wouldn't shut everybody down.

It's no this precedent. Absolutely. But there didn't need to be because it's fortuitous risk. Yeah. It's already a nebulous term in the first place. Exactly. Yeah. Okay.

So if I'm a business owner and I'm trying to figure out what I should do to help myself in retirement. Why is my CPA not coming to me and telling me I need to create an 831B plan? I feel like you want me to say it's because CPAs are all fucking stupid. But I'm not going to say that, okay? Because I have a CPA that I like. So I'm not going to say that.

I feel like that's what you want me to say, okay? No. No, if you knew how little he was helping you, you wouldn't like it. So is it your opinion that most CPAs are pretty much useless? It's not that they're useless. Right. So one of my, one of my favorite sayings is to tell people I can trust everyone. Everyone.

Just as soon as I figure out who you are. Right. I can trust a liar to be a liar. Yeah. I can trust a thief to be a thief. Right? The problem comes when I refuse to acknowledge that a liar is a liar or a thief is a thief. Mm-hmm.

Right. So what is a CPA to you? What do most people think their CPA is? Right? They always complain and whine that their CPAs not saving him taxes. He's not there to save you taxes. What is he there for? He's there to act as a historian and take all the bullshit numbers you give them at the end of the year

and plug it into some software and tell you how much money you owe the government. That's it. Just one step shy, useless. Okay. So you would say they're like technicians generally. Yeah. I mean, I don't want to put them down. I employ a bunch of them.

Okay. Okay. So, yeah, but if, assume me again, we're not talking about the good ones, all right? We're talking about just like a general. I'm just saying just in general CPA. I shouldn't shit on, right? It's a bad, it's a horrible industry. There's nowhere near enough people going to school for it.

Okay, we have a huge shortage of CPAs in this country right now. Really? All right, yeah. And so I don't want to be shitting on them. But what is it that a business owner truly needs? They need a tax strategist. Yeah, you need someone that's going to be. basically look through the tax code, be like, hey, we can save you money here, we can do a little

thing here, get you some cash here. Somebody that can actually understand all these different sections and figure out what's going to apply to you, right? Well, the problem is, let's just go back to that 831B for a second. How does moving $2.5 million? How does that actually work where I move the $2.5 million from my primary business to my 831B plan? I do that by selling myself an insurance policy. So my insurance company sells my primary company insurance policies. The premium for those insurance policies is a payment from my primary business to my 831B plan. An insurance payment, you're allowed to deduct as an expense from your business. This is very clever.

Now, why? But most people would think, well, if I own two companies and Company A makes a payment to company B, well, all I did is take $2.5 million in revenue from here and assign $2.5 million in revenue to my other company, it's going to have to pay taxes on that. Exactly. So this is where you got to understand certain industries have superpowers. That's the best way I can describe it.

Banking, which you asked me if I was willing to talk about. But everybody, some people are familiar with banking superpower. That's fractional lending. Okay? The ability to basically loan money you don't have. Right? It's a pretty neat trick. I'd love to be able to do it.

oil, which is the intangible drilling costs. It's the most powerful offset to all other income. This is this IDC investment thing we're talking about. Correct. Insurance. When you make a, okay, so let's say you owned a widget-making company and I bought 10,000 widgets from you. That $10,000, and so basic algebra, right, $10,000 is revenue.

to your company. Revenue minus expenses equals profit, profit equals taxes. Yes. In the simplest form. Now, we all know that with algebra, if I change any one component of that equation, what happens to my result? It's changes. So if the first thing going in, the $10,000, if it's not revenue, then minus expenses, it ain't profit, which means it doesn't create taxes.

There's only one type of company on the planet that gets to receive money. from a client and it's not called revenue. And that's insurance. That's insurance. Wow. What is it? What is it called? Well, so when an insurance company takes your premium from you, what is occurring?

They're incurring a future risk or liability, right? They took that premium payment from you and it might be $200 for the month for your car. But you could snort four lines of blow and launch your car over your car over your car and launch your car over the and launch your car over a hill into a busload of kids or some horrible, tragic thing. Whatever. You can do something really screwed up with your car. And now how much money is the insurance company on the hook for? Now it's a liability.

I've paid millions of dollars. Way beyond your monthly insurance payment. So that wasn't revenue. That was risk. That's risk. And so how are you going to tax me on this guy's risk? Exactly. Because I don't know what the cost is yet.

Wow. Because it's going to occur to future date. plus that that that liability could be much greater the amount of money paid me which means I have to have what in order to cover it I have to have reserves so the insurance companies are allowed to take money not pay taxes on it invest that money and not pay taxes on that either wow oh yeah that is crazy okay so just let me explain it kind of like simple just to see if I'm getting it

so if you're an insurance company I like I said I sell insurance you're basically giving me money. If the government taxed me on what you gave me, I could never operate a successful insurance company because if something happened to you and for whatever I insured you for, I wouldn't be able to cover it because the government's taken whatever percent. So the government doesn't tax it because it's risk. Correct.

And then as a result, I just have all this untaxed money that then I can invest, I can do whatever the fuck I want with. Absolutely. And then I can get a percentage on that. Yes. And for whatever reason, I'm able to not get taxed on whatever I make. Yeah. So as an insurance company.

Well, until the money leaves your 831B plan. And so every insurance company operates on an 831V? No, no, no. 831B is a specific type of insurance company. Okay, so that's just for the sole. It's called a microcaptive reinsurance company. There's other types of captives that are not micro. Okay.

There's other types of captives that are not reinsurance. Okay. And then there's full-blown insurance companies. There's lots of, and every one of these is governed by a different section within Title 26. So let's just talk about these micro ones. Yeah, yeah, yeah. Because this is where you're talking about, okay, I have business A that has a million dollars in. Correct.

Can it be $10,000? Like, is there a cutoff for this? Well, I mean, I wouldn't, there's no real cutoff other than the max of 2.5, but like, there comes a point to where it doesn't make any sense to do $10,000. Got it. Right? Like. I'm just trying to think for the average person who looks in, they probably have a $10,000

business and not a million dollar business. No, no, yeah, sure. But let's say, let's say you had a hundred grand that was going to get taxed at the 35% tax bracket. That sucks. Yeah. So you could take that $100,000. buy $100,000 worth of insurance from your microcaptive. Tax-free.

Well, the $100,000 is going to come off your book, so now it's not taxed at 35% anymore, and the remaining portion of your income is taxed at that rung below. The $100,000 comes over to your insurance company. It's not taxed at all. Because that's not income, that's not revenue. That's risk. The insurance company is going to invest that money in liquid assets,

so a brokerage account of some sort of things in the stock market. Now, it can be anything that's liquid and, and publicly traded, right? So you could have a bond portfolio. If you don't want risk, you could have a bond portfolio. You could have a dividend producing portfolio. Or you could throw that $100 grand into some crazy biotech startup stock if you want. High risk, whatever.

Yeah, yeah, yeah, right? Now, at the end of that policy's term, which generally speaking is 12 months, the policy terminates. And that money now gets converted to what's called excess. All right. Now, the insurance company has to keep a certain amount of its assets still liquid to handle claims. But the rest of it doesn't have to have liquid. So just used numbers again. I had 100,000.

I moved it over. Maybe 40,000 stays liquid to handle claims. And 60,000 can now be invested in a ill-liquid asset. Now, let me take you to this. Ready? You ready for step two here? all right because all this is about layers it's just layers layers right and so let's say you got people that like to invest in real estate well in real estate if I have a capital gain so I buy a

piece of real estate I improve it and I want to sell it now I have a capital gain I'm going to have to pay capital gains taxes most likely at a federal estate level then there's also a 3.8% surcharge for the Affordable Care Act if your capital gains and your incomes over a certain level. So it can get 29% pretty easy or more if you're in stupid states like New York or California. Now, what if my primary business has built up some cash in an 831B and now my 831B buys the real estate and improves it and sells it. Those capital gains are held inside my 831B. I didn't have to do, are you familiar with the 1031 exchange at all? So in real estate, if I buy a property and I have capital gains and I don't want to realize

those capital gains and pay the taxes, I can within, I have a certain amount of time. It's like 145 days to identify the next property and then a certain amount of days to close. It has to be like kind. Yeah. I don't have to fault any of those rules. I can buy my 831B, my insurance company can buy an investment property. It can realize a gain. it doesn't have to have another property.

It doesn't have to roll it over. It doesn't, it can hold that capital gain. It can just sit there. It can hold that capital gain as excess reserves until you find another property you want to buy. So what a much better vehicle to do real estate investments. Right.

If you have a hundred forty-five days and you have to find something similar to what you just had, your options are not so small. Absolutely. But all of a sudden you can wait seven years. Yeah, who cares more? The market dips, you can buy a bunch of things. Whatever you want to do.

And now we were using an example of 100,000, but now what if you're using 50 million? All of a sudden. So remember, a microcaptive is limited to 2.5 per year. Sorry. But you could do 2.5 per year for 10 years. So now you got to have 25 million in it. 25 mil. And then you have your excess on the 25 mil, and now you can start buying.

All right. Just whatever you want, right? Wow. This is very clever. And it doesn't have to be just real estate. Okay. Right? What if I?

I've been funneling money to my 8-1B, and then I suffer some kind of economic downturn in my primary business. Well, my 831B can make a loan. Because it's insuring it. Well, I mean, just because it wants to. Just because it exists. Just because it's sitting there and it's holding all this cash reserves. It can then make a loan to my primary business,

or it can make an investment in my primary business. Either one, take your pick. It doesn't matter. Oh, and by the way, if I make a loan to my primary business, where's that interest going? Oh, back to me. So you're paying yourself. Wow.

Okay, now, but you still have the obligation as a micro insurance to insure your own business. Absolutely. So what if this fortuitous thing that you have on your actual business now has to be realized by the insurance company that you've created for yourself? Yeah, so this is, this is beautiful. And this is a little bit hard without a monitor and a screen to be able to show people numbers. But so if you go back to what an 831B specifically is a microcaptive reinsurance company. So, and I'm not trying to sit on here and sell microcaptory insurance companies. I'm using this as an example to people, right?

People are always like, well, why can you do things my CPA can't? I'm like, well, the tax code involves things like insurance. And if you don't understand insurance law, just because you're a CPA, you're not going to be able to do it. Plus, a microcaptive reinsurance company is on the IRS's dirty dozen list. it's on the known transaction list. They hate you doing them. They had 12 teams designed specifically to investigate and sue people to do these. They disbanded them last year.

They lost two consecutive cases back to back and gave up. So the IRS doesn't like it because it takes money out of their pocket. You know, I don't actually know why they don't like it. There's one thing I can't figure out about the IRS is it's like, your job's not to run around fucking the American people. Right. Right? And yet they act like it is. Right? And I don't get that.

Right. It's like your job should be to help us make sure we're following the tax code as correctly as possible. And as long as we are, you should be perfectly okay with whatever the outcome is. Right. If there's something in the tax code that lets me never pay a penny of taxes, your job is the IRS should be just to make sure that that's being done

correctly. Not to be, like right now they've submitted two different sets of rule changes to try and change the rules to eliminate certain strategies from being done. Like who went and made you in charge of trying to fleece the American people? Like that's not your job. Your job is to enforce the tax code,

not propose rule changes that screw Americans over and make us pay more taxes. Like it's such a weird mindset to me that they operate with. Yeah. Right. Okay, so sorry. We got off track.

So just to, like, if you have to insure your own company, what happens when you have to do that? So this is a microcaptive reinsurance. So reinsurance means there's a primary insurer. And underneath that is a bunch of other little insurance companies, these companies, that act as the risk pool. Okay. So let's say you bought a policy for $100 grand. That's going to give you, or let's say you bought a policy for $50,000, making this easy math. When I send the $50,000 over to my microcaptych, you.

I'm going to get a policy that's going to insure me for $200,000 of claims. All right. Now, the way the claim thing breaks down is the primary insurance company, they're going to be on the hook for 10%. I'm going to have a deductible at 10%. So there's 20, right? My insurance company is going to be on the hook for half. Now, what did it pay or what did it receive?

It received 50 grand. It received half of the 100 that it's, on the hook for. So it's on the hook for that 50%. The same amount of money it got. The primary insurance company is on the hook for 10%. I'm on the hook for 10% as a deductible, which you just don't pay because it's to you.

And the risk pool is on the hook for 30. So if you just do some math, let's say there's 200 companies in the risk pool and you have a claim that puts 30,000 on to that risk pool, well, each company is only liable for $150 bucks. That's not awesome. And do you get to choose your risk pool? Well, you're choosing it by the policies.

You're in, if you select a policy for government shutdown, you're in a risk pool with everybody else who has the government shutdown listed. If you're for brand damage, you're in a risk pool with everybody else with brand damage. God, so you're almost making like bets based off the category you're choosing to be. Yeah, yeah. Yeah, I mean, kind of. That's the one way to put it. Interesting.

Doesn't matter which thing? No, because it's all structured in a way to wear short of something really wild and weird happening. And I've been doing this for years, and I've never seen the claims be more than a few hundred dollars. Wow. To any one person in a risk pool. Now, what percentage would you say without personal experience if you had to guess of ultra wealthy people have some version of an insurance thing kind of working in their favor? I wouldn't know what percentage, but there are tens of thousands of these. Okay.

Seems actually kind of small, I'll be honest. Tens of thousands. Yeah, yeah, yeah. Yeah, there might be more. I don't really have any idea. But I will tell you that you have interacted with them multiple times in your life and you just don't know it. Okay. Every time you're offered an extended warranty program from a dealership,

you're dealing with one of their captive insurance company. Those people have been trying to call me recently. For your extended home warranty. Exactly. When you're at Best Buy, and they're trying to get you to pay extra money to cover your fridge or your PlayStation. I buy an electronic and they have some warranty attached to it.

All those extra warranties are all done through their captive insurance company. Okay. This is all very clever. Yeah. Dental insurance. If you go to the dentist and they offer you dental insurance, that's done through that dental company's captive insurance.

Wow. Yeah. This is fun. Yeah. Oh, yeah. This is fun. Yeah. Oh, I like this.

Yeah. No, it's, it's powerful, right? But, but again, why isn't your CPA telling you about this? Well, your CPA doesn't understand insurance law. Right. You have to have an intersection. Correct. You do, right?

And so that's the whole, that was the whole basis behind Alphi, and not to give myself a cheap plug. But, um, so somebody in the 1600s once said there's only two business models. bundling and unbundling. So you can be in and out. You familiar with the In-N-Out? Yeah, yeah. Right? Where it's burgers, fries, and shakes.

Yep. Or you can be Sonic or Jack in the box where they have a menu of the size of the library at Congress. Right? Which one do you want to be? Well, usually in a situation like that, most, I'm guessing, in-and-out's more profitable.

They're way more efficient. I mean, the other day I pulled into a Sonic, I left before I even ordered. Right. Like, it just takes them so much time. right because they have way too many menu items they have way too much going on also takes you a long time to choose exactly right um so in most cases being bundled or unbundled doesn't really matter it's just your preference as a business owner as to what you want to do do you want to be a

a specialist in a single thing or do you want to be a generalist right which by the way the quote um a what's the quote a um to be a master of one Oh, yeah, Jack of All Trades. Jack of All Trades, Master of None, is the quote that everyone knows. Yes, and that's completely wrong. You familiar to that? Yeah, yeah, yeah, yeah. Okay, all right.

No, hold on, but tell it, tell me. Well, I'm trying to remember the exact wording to it, but it's, Jack of All Trades is better than a master, can be better than a master of, or is a master of none, but oftentimes better than a master of one. Yes, yeah, yeah, yeah, yeah. Yes, that's the final part of that quote. Which is funny that people just cut the quote off in the middle. They do, and they go.

And it completely changes the meaning of it, right? Yeah. So one of the things that I recognized early on was that in the financial world in particular, everybody being siloed, your insurance guy, your CPA, your investment advisor, your attorneys, them being siloed is extremely damaging to the client. All right. And I'll just give you a quick example. Are you familiar with infinite banking?

Mm-mm. Infinite banking is the idea of using permanent life insurance to become your own bank. And life insurance, obviously, if you die, does it payout? Most people think of it as if you die. And that's because in this, I think it was the 70s when term insurance got invented and it very quickly became the most popular form of insurance. Before term was permanent. And permanent just means that as long as I pay my premiums, that policy stays in force no matter how old I get. Whereas term, I don't think there's a single company that offers a term policy that lasts past age 85.

Okay. Most terminate at 80. Sure. Okay. And it's very a forefirm. It's what you think of if you need a, you're married and you want to make sure that if something happens to you, the house is paid off, your kids' college is paid for. That's what term is for. Now, the ultra wealthy don't ever do that.

They use permanent insurance, okay? And I can get into all the superpowers of, I mean, life insurance is probably the single most powerful tool there is. Oh, yeah. It's incredible. All right. Well, that's a whole other, I'm not much more than. So usually it doesn't matter if you're not bundled together. Yes.

Right. In the financial world, the problem is that everybody's separate. They're siloed. Because of that, there's no communication as to how their different professions actually tie together via the tax code. And even worse is just human nature, right? So I'd ask you if you were familiar with Infinite Bank. I'm making infinite baking is an incredible concept.

I think life insurance is one of the most powerful tools somebody can use. But if you're my wealth manager, then I'm the client, and I got a life insurance guy, and he tries to pitch me on moving 50,000 a year into life insurance. Well, where's that 50,000 coming from? It's coming from you. Out of my pocket, yeah. Yeah, because you're making fees on that money you're managing for me. So I don't want you to do life insurance.

Of course you don't want me to do that. So when I come to you and I say, hey, I got this guy trying to convince me to do 50,000 life insurance, what do you think? That's a bad idea. Always and forever. Yeah. Right? Now, if on the other hand, you have a team, and that team is an insurance guy and investment manager, an attorney, and a CPA, and they've built a plan for you.

They understand all these things. Holistically. Correct. And they come to you and say, hey, you should put 50,000 you into life insurance. Nobody's fighting. It's like a body. Like, if I have like a shoulder doctor that I'm paying residuals every month, and I'm like, hey, my ankle doctor says I got to go pay money.

No, no, no, don't pay him money. Pay me, I know. It turns out your ankle's hurting because your shoulder's off. And let me just work more on your shoulder and that'll fix your ankle. Oh, okay. Yeah. Right? So it's all part of one body.

And so if you're able to have a team of people that are all working together that all know the different laws, all of a sudden now you can get way better financial health than if you're all silent and no one's talking to each other and add odds with each other. Absolutely. Because it's right. What is it like? It's not my idea. It's not a good idea.

Yeah, exactly. Right? You're taking money from me. It can't be a good idea. Yeah. Right. So, you know, it's funny. I have clients all the time.

They're like, well, can I keep using my CPA? Sure. But you won't. Why won't I? Oh, you just won't. Everyone's siloed. Everyone's not talking to each other. Holistically, your financial health is at risk.

Yeah, yeah. They're competing against each other to be the smartest person in the room, to be the most valuable person to you. They're competing with each other to get your money. Right. And so you as the, client just end up getting screwed, right? And so I have people all the time, they're like, hey, can I keep my CPA? Can I keep my investment advisor? And I'm just like, yeah, sure if you

want it, but you're not going to use them because we have everything. Well, and they're going to fire you. That's the funniest part about it, right? Right. So I had this client, we structured an 831B forum as part of everything else that we were doing. And when it came time at the end of the year to have their tax return filed, their CPA wouldn't file it. Because? They just didn't understand any of it. And they didn't understand how you could pay this premium over to this company and take that deduction. They weren't even being asked to file the insurance company's tax return. We do that.

Oh, wow. But because he didn't even understand. Because there was a deduction on this other company's books for an insurance payment to their 831B, I sent them a 24-page legal brief that broke down every single aspect of what we did with all the appropriate case law and all the appropriate code out of the title 26. I don't even think they read it. They just said this is too much. Yep.

And they fired the client. Wow. And I told the client, I told you when I met you, this would happen. It's not exactly how I prefer to get clients on the tank side. But you want me just to go ahead and fire your time. This is going on. Wow. Yeah.

Never been audited. I mean, it's insane. Okay. Do you have any other, like, juicy, like, little tax loopholes that people do or that people should do or people should be aware of? Like, I've heard, like, the G-wagon one. Oh, yeah. Is that a real thing? I mean, it doesn't have to be a G-Wagon.

I actually have a G-Wagon 4 squared. It was just sick. It's awesome. It is awesome. And yeah, and that's a total write-off. Can you explain how that works? Yeah. So, I mean, for some reason, the government is determined that vehicle's 6,000 pounds

and heavier qualify as like a commercial, I don't want to say commercial, but kind of like a commercial vehicle. So you can buy any kind of vehicle you'd like that 6,000 pounds or more and take it as a write-off. So this was a provision probably made for like farm equipment or something. Oh, yeah, yeah, yeah. Now, to be honest with you, I always, I make fun of it. Okay. Because when people are at the end of the year and they go to their CPA,

remember we were kind of shit on CPAs, when they go to their CPA as to how to lower their taxes, what's the same thing, every single time, the only thing the CPA's got for me, oh, go buy another piece of equipment. Yeah. Oh, go buy another vehicle. What if I don't want another fucking vehicle?

Yeah. Right? Trying to save money and have cash. Yeah, I need cash on hand. I don't need to tie my money up in some dumb shit. Yeah. Right? So that's where things like even in 831B, yeah, it ties it up for 12 months.

But then you have it liquid to be able to deploy back to your business should you need to, right? So the GWagon thing, just a button that is if you buy a GWagon, it's basically a write-off. Yeah, yeah. You make it your company vehicle and now it's a right-off. Wow. Right? Which goes back to if I'm a W-2 employee, start a freaking company on the side. Right, because then you can buy your GWagon.

G-Wagon and then put it to the company vehicle and then ride it off. Yeah. Okay. Are there any other things like that? Any of the pieces of like free game that would be helpful? Yeah, there's something called the Augusta rule. Okay. And the Augusta rule is basically just you're able

to call around in your town, find three different venues, get average costs of what they would charge you in order to hold an event at those venues. It's usually going to be thousands of dollars a time. Right? then you just book out your own home for, I can remember, seven, eight, nine functions throughout the course of the year.

So just throw parties with all your friends. And you get to assign that cost as if you had gone to a hotel and rent it out a ballroom. And then you get to take that as a deduction. Does it have to technically be a business party? technically. Okay. But what, I mean...

Yeah, of course. Okay. What differentiates a business party from a... Not a business party. And how many parties do you have to have in order to have? No, you don't have... As many... I mean, you can have one.

You could have three. You can... There's some limit to them. Okay. So let's say you're doing like a birthday party. Yeah, yeah, yeah. Just invite some, you know, invite some clients over. And charge yourself the amount that the average of three...

different facilities in your local area would have charged you. And this could be at a random night club, this could be at a strip club, this could be wherever. A strip club might be hard to pull off, but I don't know why not. Okay.

But usually you're going to call up like Marriott, and you're going to see what their conference room would cost, and then you're going to call up the Hilton and then see what their conference room costs. And then you're just going to take an average of that. And now you're going to charge yourself that. Wow. Oh, that's awesome.

Yeah, yeah, yeah. That's called the Auguster Rule. Okay, what else? I love these little, like, like, little rules. So let's go charitable deductions. Okay. You can donate stuff.

The problem is that you have to have held it for 12 months in a day. Right? Well, I can buy shares in a company. And that company could have held those items for over 12 months. And that company will then donate stuff on my behalf. And it counts as me having held it for 12 months in a day. And I get the deduction. So when you say hold it for,

for 12 months a day, you mean like the cash that you have? Not cash. Let's say, for some reason, collected stamps. Okay. I know it's kind of like an old-timey thing. Yeah, but let's say you're a virgin. Let's just say. Yeah, yeah, yeah.

You have no intention of ever associated with the opposite sex. Yes, okay. So you decide to become a stamp collector. Yes. All right. Well, the Boys Club has the largest stamp collection in the world. Okay. Well, where do you think they get it from?

Why would they have it? What's the point of it? Mm-hmm. Well, I can go have my stamp collection valued, right? And most likely it's going to be valued significantly higher than what I paid for. So I had a client, the book value of his stamp collection was a million dollars. Okay? Now, we're going to donate that stamp collection, and he now has a million dollar deduction.

All right? Now, the problem was he built that stamp collection over a long period of time. Mm-hmm. So there's companies out there that they have a million dollar deduction. that they harvest documents out of bars, literally bar tabs, but like from the 1800s. Now, they will bundle these into boxes with a,

and they're ready because they do this, they know that when you donate this box to a university's library, they're going to receive back a receipt from the university for a value of, say, $200,000. for these red documents. Now, how the hell do you know there were 200 grand?

You know, I mean, who knows? It's arbitrary. It's nonsense. Okay. So this company will charge you $50,000, so you'll pay them $50 grand. They're going to take a box and donate it to a university

and you're going to get a $200,000 deduction. For a box of old shit. For a box of old shit. Now, it gets crazier. We do this with magnesium. You buy $50,000. of magnesium, you donate it to a stroke research center, and they use the magnesium for research to help prevent strokes.

Wow. You buy $50,000 with a volcanic ash, and you donate it to farmers in Haiti, and you get a $200,000 deduction for your volcanic ash. And this circumvents the 12 months and a day rule because the company that you're buying from has had these documents. They have the ash. They have the magnesium. Wow.

So what you have right now, you don't have to buy magnesium. magnesium and sit on it for a year. No. No. You go to this company say, hey, here you go. The company takes a fee, I'm assuming? Oh, absolutely. Well, they get the, because you don't think they spent 50 grand on the volcanic ash. They didn't spend 50 grand on the rare docks.

Right, right, right, right. So there's their money. And then they make the donation. You get the receipt, and now you get your $200,000 deduction. Now, the problem with that one is that you're limited to, like, 30% of your AGI. AGI is your adjusted gross income. But, you know, it's, so look, there's two, there's two, that's so great

that's such a that's awesome there's two groups of tax strategies right there's where you come to me at the end of the year

and you want me to get you out of the taxes you incurred leading up to that point that is the least effective most expensive shit I can do

there's you come to me and we put a plan together to prevent your taxes from occurring to the future right yeah that's the most effective

doing it proactively is going to save you Always, always, always. It's way easier. It's way cheaper. It's way more effective.

There's another problem with CPAs, I'm assuming. You go to your CPA at the end of the year and go, hey, here's what I did. Oh, there's so many problems. One, you're coming to him at the end of the year. Who else is coming to him at the end of the year? Everyone. How much time do they got for you? None.

But if he says down something proactively, you say, hey, I'm going to be doing this. I'm going to be doing this. I'm going to be investing this. What can we do? How can we do it, blah, blah, blah. You go through the code. You say, hey, we're going to do this, this and this. Yeah, map out, map out an actual plan, right?

You fail the plan, you plan to fail. Wow. Okay. Do you have any other loopholes? If you don't... No, I mean, it doesn't matter. I mean, we can... These are just so fun.

Yeah. The university thing seems like such a funny little hustle. Like, if you donate money to a university... Yeah, absolutely. And then these universities have become giant hedge funds. Oh, that's all they are. It's insane. There's all they are.

Like, Harvard's endowment is... Oh, Harvard. You know, Harvard is one. Texas A&M is like the largest... buyer of gold. Literally like gold bars. Gold. Like gold.

Bullion or whatever. Yeah. One year they bought some crazy amount of it. It was just like what in the world, right? No, yeah. And I hate the whole. So I went to a community college for four days and dropped out. Hell yeah.

And it's funny, we're always hiring. And somebody on one of our hiring post is like, well, this doesn't say what degrees are required. I'm like, yeah, because there aren't any. Like, what do you mean there aren't any? I'm like, I don't have one. Why would I require anyone that works for me to have one? Right? Now, there's certain professions you have to have one.

Right? I don't think you can be a CPA without one. There's four states in which you can sit for the bar without having gone to law school. Oh, yeah. I know a guy that did this. Oh, okay. But you have to have been mentored by an attorney for four years, I think. Yeah, yeah.

He was a paralegal. And he's like, yeah, I'll just try it. Let's see what happens. And he passed. Yeah, yeah. And he became an attorney without ever going to law school. Yeah, yeah. But there's only four states you can do that in.

Yeah. And so, yeah, certain jobs within our industry, yeah, you got to have a college degree. Which is funny because, like I said, I don't. They're all allowed to work for me. Right. I mean, isn't that comical, right? Yeah. You've got to have it to do your profession, but you don't have to have it to work for the guy that employs you to do your profession.

Yeah. Right? Yeah. Okay. Can you talk to me a little bit about old wealth? Like old money? Yeah, yeah. So that's what we started off this conversation. We went way off topic, right? Yeah, yeah. Now we're back. So, you know, we hear these famous names, Rothschilds, like even more recently, the Rockefellers, the Carnegie's, the Vanderbiltz. These are old industry tycoons in America that made trillions. So why are they not listed on Forbes list of billionaires? That's a great question. Because they don't actually own anything. Okay. This is back to that royal family conversation. Exactly. None of those people actually own anything.

If I don't own it, you can't put me down on a list. I don't want to be on a list. Yeah, of course. Why do I not want to be on a list? Low profile. Exactly. I don't need that attention. Who cares?

My family, I've been, we've been running shit for, here's one for you. Alexander Dumas. He wrote the Count of Monte Cristo. Oh, yeah, yeah. Okay? In the Count of Monte Cristo, when the, main character goes to the island to get the treasure that the Frenchman had told him about while they were in prison.

He then has to take this treasure and go convert it to cash. And where does he go? He goes to a bank owned by the Rothschilds. Oh, in the book? In the book, the Khanamani Christo, written in 1846 or something. Yeah, yeah, yeah. Maybe 1860s. I can't remember.

Yeah. If they were controlling the banking industry in Europe in the 1800s, you think they've lost power in money or gained it since then. Probably gained it. I guarantee you they gained it. Yeah, yeah. I mean, their whole thing was genius. I mean, I don't know if this is true, but basically, like, Moses Rothschild, like,

gets his five sons and sends them all over Europe to set up banks. Absolutely correct. They control everything. Wow. Okay. And yet, I don't see them in the top three, five wealthy as people. Yeah. So, same thing with the British Royal family.

So all of their assets are held in trust. Okay. And these trusts have their own E-I-N. E-I-N is... Employment identification number. Mm-hmm. Okay, or T-I-N, a tax identification number. Mm-hmm.

So it's a... You have one. It's called your Social Security number. Mm-hmm. When you create an LLC or S-Corp or anything, it has one, right? But there's some very unique things about trusts that are different than corporate structures. Trust law is all created at a state level...

or to be more accurate at a domicile level. A state is a domicile. All your Indian nations, your native nations are domiciles. A country is also a domicile. Okay. So trust law is all governed at the domicile level. So these ultra wealthy families and where you want to get to, everyone wants to get to, is to where you owe nothing.

Right. Wasn't that a Rockefeller? own nothing, control everything. So your trust owns it. You are just a beneficiary of it. Okay? So you have access to the resources held in trust, but they're not yours.

Now, because they're not mine, what does that mean? That means that when I'm drunk and I hit somebody... Can't come after me. You can't come after any of my assets. I'm poor. I have nothing. The car I'm driving wasn't even mine. Okay?

Yeah. That's makes sense. Yeah. And then the way you set up the truck, is how people can access it, et cetera. Absolutely. Is this how, would you say, like, oil families in Saudi Arabia? Everybody.

Putin, I've heard, is one of the wealthiest people because there's, like, control over the oligopolis and Russia. Yeah, well, and so, I mean, some of those, when you get into things like, when you get into places like Russia and Saudi, they have other means of, like, Putin doesn't have to own, like, that's more mob mentality, right? Where I show up and threaten to break your legs

and you give me a cut. right so he gets like kickbacks from all these people that are doing that are that are operating inside his kingdom basically right um so i don't i don't i can't speak uh to how that is actually handled yeah um i would imagine it's not through legal mechanisms that makes sense that makes sense and your background and all this is so interesting too because like you said you didn't go to you know some harvard MBA program dropped out of community college uh you were like uh Correct if I'm wrong, but like kind of like you had a kid, you were 30 years old and like virtually homeless. Yeah, no, I love, yeah.

I love telling people this story because people look at you once you become successful and they for some reason just think you must have always been that way. Right. Yeah, it's easy for you to say this because you're obviously born with a trust fund and you're a rich kid. Yeah, yeah. In fact, I was at a dinner last night where you're not allowed to use your last name or tell anybody what you do.

And then afterwards they go around the room and they guess what you are. And trust fund kid was one of the. of the thing somebody guessed about me. Hilarious. Okay. Which is funny because I am to my own trust fund. Okay. You're a trust fund adult.

I'm a trust fund adult. I created, I didn't cover my parents. I created my own, I made myself a trust fund baby. Can you share where your parents did? My dad is what I kind of referred to as a serial failed entrepreneur. All right. It was all sorts of crazy things. He went to Hong Kong to start a manufacturing company and came home with a Chinese family

that lived with us for eight months. Yeah, I mean, for real. At one point, he was freezing NHRA drag race motors with cryogenic, like liquid oxygen or liquid nitrogen or some shit. I mean, just random crazy stuff. Never, just never found his place in life. My mom is basically a linguist, speaks like all these different languages, very cultured, loves the arts, foreign countries, all this kind of stuff.

Yeah. But she's the one that really taught us, like, you know, started babysitting other people's kids at the age of 10. Would come home and we had a three by five spiral bowed note card book. I'd have to write down the date. Who hired me? How much they paid me? 10% went to tithing to our church. 50% went to my bank account for the savings.

40% went to spending. By the time I was like 15 years old, I think I had about 5,000 saved up. They brought the family investment advisor over. I sat down the kitchen table. I made my first investments in the stock market. My sister was 18 months old. I mean, she's doing all the same things. I have two younger brothers.

All three of us are licensed financial advisors. Oh, that's awesome. Go figure. This is what you're doing at 10 and 15. You're all kind of set on a path. So maybe you didn't have a ton of like cash flow as a young age. No, but I had knowledge. I had teaching.

Which is arguably more important. Way more important because it literally made three of us capable of going out and doing this. Right. So, but I was still missing. something. I was a problem kid. I was arrested, thrown out of high school. What you got to rest for? I don't know that we want to get into that here. Fair. But really for being

entrepreneurial minded. Got it. Hell yeah. I love making a buck. So in fifth grade, in fifth grade I had a teacher walking by me. She saw my lunch, was so offended by it. She picked it up, threw it away, took me over, got me a free school lunch. my dad, everything was up and down, right?

We'd go to Europe one summer and, and us kids would be helping pay the bills to next. Wow. Oh, yeah. Right. So, so I started cleaning the cafeterias in fifth grade. I had cleaned the cafeteria fifth grade and sixth grade instead of going out to recess in order to get my school lunch. Wow.

Okay. That was a very, uh, defining experience for me. Um, like not being part of my peers, not going out to have fun and do what they're doing, and working, hustling, to eat. Right? So, so, so I graduate high school, raised Mormon, still go to church and everything. But so I went and did this two-year mission for my church in Southern California. And for any way, that doesn't know Mormons, a mission is basically.

Yeah, yeah, you don't work, you don't go to school. You go somewhere. Most people think it's to a foreign country. And yeah, there's a couple hundred countries that you could go to. I had a friend of mine go Vietnamese speak in Australia. Another friend of mine went to the slums of Rio. Another friend of mine went to the Ketchi Indian tribes in the jungles of Brazil. And then I get Southern California.

It was a total letdown. I was bummed. It's kind of sick, though. No, it turned out to be amazing. And I'm so glad mostly because my mission president, the guy that does, you know, he gets, he's a member who comes out to run it. his name was Margin Blanche, and he had started a company called Megadine, which I think became one of the largest medical manufacturing companies in the world.

It's now owned by Ethicon, which is a subsidiary of Johnson & Johnson. So at 19 years old, I got this guy mentoring me and teaching me, right? Even with all these advantages, I get home from my mission, and for the next nine years, I was just like my dad. I would have these momentary blips of success followed by absolute poverty. I was lazy. I was undisciplined.

I took things for granted. So getting married at 25. I have a kid. I have a second one on the way. I'm living back out in California. I'm 30 years old. I'm being evicted for the third time. We're living in an apartment complex.

I have no electricity. I got my second kid on the way. And I, oh, my car was repoed. So I'm driving around. Oh, yeah. Yeah. It was rough. It was not a good situation. Yeah, 30 years old. Kids, family. Yeah. Disaster. Kind of taking some else. Oh, like one after the other, all right. And there was this guy in the apartment complex we were friends with, and he went into the Border Patrol. And when he did, it just brought me back to these memories where, as a kid, I'd always want to be in the military. I had even tried join the military when I was 25

with a special program that didn't even exist by the time I was 30. But I had met my wife at the time and she didn't want to be married to a guy in the military so I stopped pursuing that avenue. But by the time I'm 30, I've been married for five years. It was a total shit show.

And so I'm driving on the road in my rental. I look over, I see this Army recruitment office. I just pull it in enlist. Don't even tell her. She was pissed. And I'm like confused. can you be mad? Like you're about to get a paycheck every two weeks. That's a good point. You're about to live somewhere with electricity.

Afghanistan. Yeah. You would be like Afghanistan have electricity and your shitbag husband can't provide it to you. Like to me it was just about what do I got to do? And I always felt that like, and I read a lot as a kid. And I always, and I read a lot of books like Platoon Leader and things like that. And I always felt like, you know, combat and war. was a place to go to kind of become a man. And I know that's naive and romantic and probably not true. But I know that, and I never felt like I was missing a lot. I just felt like I was missing a key thing.

And I could never just put, I can never identify it. And I can never figure it out. So I joined the Army, age of 30, it's 2006. It's the high to U.S. combat casualties in Baghdad. And I go from basic to advanced individual training, to deployed within a month, I think, to Baghdad. Wow. I spent three years, I have three years of combat time

during my six-year stint in the military. And it was incredible. Every boyhood dream or fantasy I'd ever had about being a soldier, I got fulfilled. Jumped out of helicopters, fucking doing crazy shit. The craziest shit. Yeah. Okay.

It was incredible. You feel like it gave you what you were searching? for it well it taught me how to stand up for my own ideas and values how to hold my ground how to create a space that was mine right where like hey my ideas are valid um i can hold this ground right and i can exert my will on the universe around me and up until that point i just kind of felt like i like would like let other people kind of push me around you were on the ride yeah and the life was dictating what was going to happen yeah yeah yeah And not anymore.

Now it's my terms. Right? Because once you go to combat, it changes you. And you are like it just, the first time that people die instead of you, right? It just changes your whole perspective of the universe. And so you just come out of it. It's a very different person. and so, I mean, I don't know, I think the proofs in the pudding.

You look at what's occurred in my life since then, and it's like, yeah, no. Like, yeah, it's not all positive what occurred over there, right? But I'm absolutely able of doing things like I never was able to do before. Yeah. And it's awesome. Do you feel you have an obligation to go out and get after it? No, no, no. I'm not one of those people.

I don't think, so I refuse to believe that, that, like, I'm special in any way that I lived for any kind of particular reason. I think it's pure, fucked up chaos and randomness. I don't think that, I don't think that when one person dies and somebody else lives,

that person that lived is special for some reason. You can't tell me that your life is more important than someone else's. Right, because that means the person that died, deserved it. It's like, what the fuck is that? Yeah. Or what? They weren't as special as you? Yeah. Like, what makes you think you're special? Yeah. Like, there's eight billion of us. I assure you you're not special. Yeah, you got lucky that you weren't on the other side. That's all it is. Is it just sheer random-ass luck. And you're alive one second

and you're toast to next. And there's not a damn fucking thing you can do about it. You know, which is funny because like when I read Platoon Leader, it talked all about people that didn't pay attention to, or maybe there's another book, but they were talking about in class learning to look for things like pungy sticks where the enemy would dig holes and sharpen wooden sticks and defecate on them so you'd fall in and get hurt. Yeah, and then you'd get infected. And this story I read was this guy's talking about

these people weren't paying attention to that class and then they were more likely to get hurt. Well, my experience was it didn't matter how much attention you paid. It didn't matter how much you studied. There was no stopping it. When you were dead, you were dead. Good fucking luck.

there's nothing you can do about it. So I actually spent three years in combat, literally not giving a shit. If there was a, if we pulled up and there was an IED, fuck it, roll over it. Who cares? If it blows up and kills us, we're dead. Whatever. You just, you just got it.

I know it's a real, it's like. It's an insane way to live. Well, that's how screwed up. Oh, yeah. No, I jokingly tell people, imagine you're insane and you're stuck in an insane asylum, right? Are you insane? No, you're normal.

Because everyone's fucking nuts. That's relative to your environment. Right? But then you get out of that insane asylum and you go out to the normal world and that's when you realize, oh, I'm fucking nuts. Right? That's being in the army. When you're in the army, you're one insane fucker and surrounded by a bunch of other insane fuckers and it's not until you get

out of it. You're like, holy shit, we're screwed up. Yeah. And there's comfort in that. Yeah. Keep me in the insanity. Well, yeah, you get institutionalized. Yeah. Right.

And so that's one of the challenges with soldiers getting out. Is you have this. So I tell all the soldiers that I ever meet, take your experience, be proud of it. But box that shit up and put it behind you. Like, take the value from it. Be proud of what you did. Be grateful for lessons learned. Now box that shit up.

set it behind you and reinvent yourself. Because if you hold on to that identity, you're never going to be able to move on. Are you familiar with Sebastian Younger's work? No. He's an awesome author. You wrote this book called Tribe that talks about this exact thing. He's a war journalist.

In short, he basically says, coming home from war is so difficult for soldiers because it is simultaneously the hardest time of their life, interwoven with the greatest time of their life. that there's no time in your life where you feel more purpose where you feel more camaraderie where you feel more competent in your job

and it's confusing it's all hell and simultaneously you're seeing your closest people you are met pass away randomly for no reason platoon leaders getting shot when they weren't the ones supposed to take the bullet and then you get back in society and society's lacking all those things

there's no community no you come home you have a job you don't give a fuck about you're not you don't have a purpose you don't have commodity with those people like you did You have the joes that you were to play. Exactly. So he says like PTSD rates, even of people that experience really, really severe trauma, they recover quicker than people that were in the military that saw worse things.

Because the people that saw less worse things in the military, because the people that have severe trauma, like in a sexual assault or something terrible, the whole experience is bad. But guys that come out of the military, they go, it was kind of bad, but it was kind of the greatest thing ever and I never felt more alive in my life. Yeah, yeah, yeah. Just last night somebody says something, they're like, I think you were just like, no, it's my pleasure.

It's jokingly the most fun you can have with your clothes on. Yeah. And look at me like I'm nuts. But yeah. And at the same time, it's like the most horrendous thing you've ever been through. Exactly. And so the PTSD can be severe even for people that don't even see, you know, high-grade combat like that. It's a bizarre experience that I don't think people that are civilians really understand.

Well, no, and the problem is you spend so much time over there. You no longer are able to understand civilians. I remember when I first came home, I was sitting in an adult Sunday school class at church and this lady, I really, really like, so I'm not criticizing her. She asked this question, like, if people thought there was somewhere on earth where the light of Christ didn't exist. And in my head, I'm like, are you fucking nuts? How about count where it does?

Like, you're white, your husband makes $300,000 a year, you live in a suburb of Kansas City in Kansas. Like, what you think the light of Christ is, that's where it is. exists. Yeah. The whole, all the continent of India, the whole continent of Africa,

all of Central and South America, all of Indo Asia, like, I got news for you. You would never want to be a woman in any of those places. Like, it is horrific.

It is so bad. And so when you hear somebody, so you come from having lived in those places and having fought the wars over there, and then you hear these people make those kinds, ask those questions. And he's like, are you stupid?

Like, what is wrong with you? And you're angry. You're like, angry. They're so naive and so dumb. And then you get a couple years away from it. And you're like, you calm down. And you like, yeah, it's not. Like, you don't want them to be familiar with how bad it is. Yeah. Because you were naive like that once before. Absolutely. Absolutely. But you forget. Yeah. So, yeah, no, it's. And especially when it gives you what you're searching for, you go into the military as a boy and you come out of man, you got to be grateful for the experience. Yeah, even if you're a 30-year-old boy. Yeah, exactly. You know? And I feel like for you, again, I don't want to say,

speak for your emotions, but I can imagine it's pretty challenging. Like you have babies at home, you have a wife that's depending on you, and you're like, y'all, I'm going out here, and I'm going to go try to find something. And here's how screwed up I was, right? It was like, even if I had to go die and she got to collect my life insurance benefit, at least I would be doing my job, which I wasn't doing before I went in. Like, that was the mentality that I went in with. Yeah, that's tough to deal with as a dude.

Yeah. Like, at least if I'm dead and she's got some cash, it's better than me being alive, being a deadbeat. Yeah, yeah, yeah. That's heavy. Yeah. But you made it out. Oh, luckily. Made it out.

All my limbs, right? Not being disfigured too badly, right? I mean, I was already ugly. I don't worry about that. But yeah, and then I really feel like it gave me whatever I needed change in personality to be able to now, you know, run a multimillion-dollar company. and accomplish things that I want in life. And an appreciation for life and maybe a different way.

Big time. Big time. Yeah. When you see it get taken away for no reason, all of a sudden you go, yeah, there's something to be grateful for just waking up. Oh, absolutely. Before I deployed, I hated Christmas. Halloween was my favorite holiday. Still one of my favorite holidays.

But I hated Christmas. And then I spent my first Christmas deployed overseas. And I'll never take Christmas for grandkids. it ever again. You just, it just really changes your perspective. Why is that? Um, like, you just realize how important a holiday that is like steeped in culture and tradition and family, uh, is, right? Uh, before that, I just saw all the, you know, the hassle of Biden presence and the expense. Yeah. It's work. And the street is work, right? And now it's like, you, you spend, you spend time over in the Middle East during Christmas. And it's like, now you, now you, it's like,

it completely just reverses that. And it's like, no, this is, this is what life's about right here. Yeah. Like the family coming together, coming in from other places around town, the stupid fights that occur, everybody being packed into a small space, that proximity to each other, catching up on whatever life has occurred over the last year. You know, being able to do it every year to where you see people changing and growing, right? Yeah.

And how much do those things cost? Right? Nothing. Yeah. It's priceless. Yeah. Doesn't cost you anything to do it? I mean, it might cost you a little bit to get together, but.

Yeah. That's one of the bizarre things I think of achieving extreme success and wealth is that by the time you get it, you realize that wasn't what you were searching for the whole time. Okay, yeah. So last night, I made a comment. I was actually hanging out with the senior speechwriter to Joe Biden. Which is a hilarious job, by the way. Yeah. So many jokes I wanted to make.

Millions, billions, and $100 trillion. How do you write that? Or is what you're writing not being said? Yeah, I just think you write wingdings. I think that's the font. Is that the font of wingings? Yeah, just let them riff. No, no, no.

And she's amazing. She's really cool. But I told her, you know, what's funny is you get to the point where it's like you have, you know, the cool house. I mean, I have my own shooting range, three acres of motocross. I got this room. It's badass. It's all glass. And it's my gun room.

And I always joke, I want to put a sign above it that says in case the Democrats break glass. But, you know, and you got the cars, you know, the G-Wagon. My daily driver is like a Tesla as plaid. Yeah. You did it. You did it. You got out of the mud. Yeah.

You did it. Yeah. And you realize that shit's fun. That's all it is. And you could have it one day and it can be gone the next. And now it doesn't matter to you anymore. And so she goes, so what does matter? And I was like, you know, I had watching people get to come into your world,

getting to bring people in to your proximity and getting to help them fulfill their potential and achieve things that never thought were possible. And watching them get a buy their dream car. Like, that is way more enjoyable. than buying that shit yourself. Yeah. So, you know, I just, you know, you feel blessed.

Yeah. You know. Helping the younger Elliot's. Yeah, yeah, yeah. You know, and sometimes, like, the first person that was actually significantly older than me. The guy hugged me on a, it was a December. He hugged me and cried and thank me. And he had, and I don't want to give too many specifics, but his business.

but where he was three years earlier and where he was that day was just incredible. And he attributed it to me having brought, I mean, it took me two years to get him to come join me. And then in the next three years, it was like a life-changing amount of money. And like I said, it's not the cars, it's not bad. It's not the money per se, but money definitely, like I've lived life poor. it ain't fun. Yeah. Yeah, it's not the things.

It's the freedom that the cash can afford you and the lack of stress and anxiety of thinking that you're going to get homeless any week. But I think there's a diminishing return, right? Yeah, oh, absolutely. Yeah. I think the difference between making, you know, a million a year and 10 million a year,

I think you probably feel a similar level of happiness. You need a threshold. You need to be able to make enough to live. Yeah, in college they went over some... My daughter, when she was in college, they went over some articles. she called me up and, like, yeah, there's some study that says that it's $70,000 a year. I was like, do they mean $70,000 a month?

I'm like, I can't imagine the thresholds $70,000 a year, but they legitimately claim. Yeah, I've heard that. That once you hit $70,000 a year, it's the diminishing return thing. It's like you're not getting any more satisfied. I'm like, I don't know if that's, I think that number is a little low, but I do agree with the concept. Yeah, there is a number. There is. Yeah.

There is. And I will tell you that you have all the same problems. Yeah. I have, it's just funny to me. Like, I always joke, I'm not rich. I'm financially irresponsible. Right. And because I'm financially responsible,

all of the same issues today that I had a year ago, it's just with bigger numbers. Yeah. You know, but yeah, I don't know. It's fun. Life's fun. This is awesome. Unfortunately, I can talk to you all day.

I genuinely can talk to all that. Unfortunately, I got to run to D.C. We got some shows. Yeah. Are you going to talk about that on this podcast? What show you're doing? Yeah, yeah, yeah. So I open for this guy, Andrew Schultz.

I thought you knew that. No, I do know that. I just want to make sure that when people hear me talking to you, I get the benefit of them knowing that you know Andrew Schultz and I now get to talk to you. Exactly. So yeah, Andrew's a buddy and a mentor of mine that has helped me out to a degree that I couldn't even put into words. Yeah. And so, yeah, I'm going to do some shows to them in D.

That is awesome. I've been watching that guy's videos on the internet for I don't know how long. It feels like for years. He's the greatest. He's a, he's an excellent comedian and an even better dude. Yes. I really dig them. I got to set you up. We all got to get dinner. That'd be awesome. I love that. This would be fun. All right. Elliot, I appreciate you, brother.

Thanks so much for spending the time with me. Of course. My pleasure. Let's do it again.