Retired Early by Ditching Traditional Financial Advice - Episode 94

In today's episode, I sit down with Chris Miles, who went from being a traditional financial advisor to retiring in his twenties by creating passive income streams. Chris shares his incredible story of how he discovered that the old-school methods of saving and investing weren’t enough. He walks us through the ups and downs of his financial journey, how he bounced back from losing it all, and what he did to retire early by investing in real estate and other smart income streams.

About our guest:
Chris Miles, the Cash Flow Expert and Anti-Financial Advisor, is a leading authority teaching entrepreneurs and professionals how to get their money working for them today. Chris has used his knowledge, not once, but twice, to become financially independent where his passive income exceeded his expenses, not to mention paid off his $1 Million in debt after the last recession without filing bankruptcy. He has been featured in US News, CNN Money, Entrepreneurs on Fire, Bigger Pockets, and has a proven reputation with his company, Money Ripples getting his clients fast financial results. In fact, his personal clients have increased their cash flow by almost $300 Million in the last 12 years.

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TRANSCRIPT:

Naseema: [00:00:00] Chris Miles, the cash flow expert and anti financial advisor, is a leading authority teaching entrepreneurs and professionals how to get their money working for them today. Chris used his knowledge not once but twice to become financially independent where his passive income exceeds his expenses, not to mention paid off his million dollar in debt after the last recession You Without filing bankruptcy, he's been featured in U. S. News, CNN Money, Entrepreneurs on Fire, Bigger Pockets, and has a proven reputation with his company, Money Ripples, getting his clients fast financial results. In fact, his personal clients have increased their cash flow by almost 300 million in the last 12 years.

All right. All right. Welcome. My financially intentional people. So happy to be back with you and to be joined with Chris miles, who [00:01:00] has an incredible story that I know you'll benefit from. So welcome Chris to the financially intentional podcast. So happy to have you here.

Chris Miles: I'm so happy to be here too. This is going to be so much fun. I can already tell

Naseema: Definitely. So Chris, I wanted you to just dive into your story and just talk about your ups and downs in the personal finance space, because I know people can learn a lot from what you've gone through.

Chris Miles: that's for sure. Yeah. It's funny because I never intended to become like a financial person of any sorts. I was actually a sociology major in college. With a triple minor in psychology, Japanese and ballroom dancing. Right. So naturally, financial advisor would be the thing I would go into,

Like I, that's the thing, like I, was going through college.

I realized that if I wanted freedom, I should probably become an entrepreneur because I could tell it was really tough to do that just as a nine to five employee. So I actually dropped out of college with one class to go. I was just going to take a one year break from college. I figured let's find some business to start.

And the first business that really intrigued [00:02:00] me was a financial advisor position, right? Not knowing they took anybody off the street. As long as you can pass a test and not be a criminal, not murder anybody, you can pretty much become a financial advisor, right? And and so that's what I did. I actually got into that profession.

I ended up never finishing my degree, my bachelor's degree in college. And I was going down that route for about four years. And then four years in my dad, who is the one that inspired me a little bit. He didn't actually directly tell me to go into that field, being raised, I don't know if you guys, if you've ever had experiences like this, where you grow up and you hear things like, I can't afford this.

What do you think I am made of money? Money doesn't grow on trees. Those kinds of phrases you hear always all the time, growing up heck, if I could only get food, if it was on sale that's the thing with my dad, right?

It was like, it was so bad that he

would buy like a case lot sale of Cap'n Crunch, right? And Cap'n Crunch you know what happens? You suck on them too much. It scars the top of your mouth. I had Cap'n Crunch for a year straight. I still have scars I'm recovering from,

Naseema: Oh my [00:03:00]

Chris Miles: It's just horrible, and so I vowed I never wanted to be like him in that way. Now he did teach me other good values. He taught me to work hard. Your word is your bond, those kinds of things, but money wise, he would always say that work would literally kill him because he had already had strokes and heart attacks by the time he's in his forties and fifties.

So I want to do something different. I want to see if I can give him some of his life back rather than work until he died. I thought if I can figure out how to do this one, I'll learn about money. And then two, I can help him too. Then he reaches out to me after I was in it for four years. He says, Chris, when are you going to advise me?

And so for the first time in my entire life, he actually showed me his money. He never wanted to show it before, but now he did. He was getting desperate. He says, Chris, I'm 61 years old. I want to be able to retire today or soon sometime in the near future. I want some hope. And I looked at his finances. He was debt free house paid off free and clear.

Everything was debt free. He had stuffed money in his 401k, got his company match. He did everything right. Unfortunately, when I looked at his numbers, I said, [00:04:00] dad, if you want to retire today, you better hope you about five or six years, because that's when you're going to run out of money. You said

Naseema: Oh

Chris Miles: not what I wanted to hear.

I want to know how I can retire. I said I don't know. Cause you did everything right from what I teach as a financial advisor. You did all the things by the book. I guess the only thing you can do is just keep saving more money, just save longer, save more, and maybe you can do it someday.

And that bothered me. It bothered me a lot because I was having this dream that I could help him retire and I would be able to figure out for myself yet. He was my future. I was seeing my future saying if he did everything right, it didn't work for him.

What else is going to go wrong? And of course, it's just a few weeks later, a friend of mine and I were talking and I trained him to be a financial advisor. But he will have to go do real estate investing. And he started telling me, he's Chris, my dad and I have partnered on some real estate deals in the last four months.

And we've doubled my dad's income as a professor at the local university. I said, Oh, [00:05:00] come on. That's too good to be true. There's no way that's possible. He said Chris, how many of your clients are really financially free where they don't worry about money? I was like of course they all worry about money.

They all worry, even if they're retired, they're worried about running out of money too soon and outliving their money. Okay. How about this? How many of you guys as financial advisors are financially free, not off the commission's earning, but actually doing those investments because. You guys should have it figured out, right?

And as I really was honest about it, and this was in 2005, right? And I realized there's guys since the mid to late 1970s, still working in my office, could not retire even that day. I realized maybe none of them could.

Naseema: You're

Chris Miles: And so he said there's your problem. And he got me down the rabbit hole of looking more into what Rich Dad, Poor Dad teaches, right?

Robert Kiyosaki's book, where he talks about going more than investor quadrant, passive income, and those kind of things. And I started going down that rabbit hole and pretty soon I realized pretty quickly that what I taught as a financial advisor wasn't working. Why should I keep teaching it?

Just because I make money from it. Either I [00:06:00] keep making money or I keep my integrity intact. I had to pick between the two. And so I chose the latter. I said, I'm going to keep my integrity intact because my dad said, your word is your bond, right? I better try to make sure I'm living to my word and not just, selling people on a bunch of hopium.

And so I quit, didn't know what I was going to do. I was teaching ballroom dancing at the university. Plus I was even like doing mortgages and things like that and stock coaching. I was even teaching people how to trade stocks and options too. But while I was doing that, I was learning about all

this

real estate investing and later that next year.

Later that next year, I was actually able to retire when I was 28, almost 29 years old just if I have enough passive income from my investments, you I didn't have to save two million plus dollars, my mutual funds. I could do with hundreds of thousands of dollars instead. And that blew my mind.

I didn't realize that was so possible. And of course, that's where I ended up like try to figure out that was 2006. Try to figure out what to do with my life. 2007 came out of retirement to teach people how to get out of the rat race. And that sort of thing. And that kind of leads the next chapter of the story where I go broke again, but yeah, like that's what [00:07:00] happened.

I feel like compelled to teach people how to do this, like how to really become truly financially free.

Naseema: I that's everybody's goal to become financially free. And I think like, so interesting, as a financial advisor, you found yourself in a position where everything that you were teaching, like your dad had done, but still could not really. Be financially free. And also you felt like the people that you were surrounded with couldn't be financially free.

I'm interested, as a financial advisor, what industry were you working in? Because I know a lot of people think financial advisors, that there's financial advisors that sell insurance, there's financial advisors that do a whole multitude of things. What specific industry did you find yourself in?

What kind of products were you offering people? What were the services you were providing?

Chris Miles: Yeah. Very traditional financial advising close to financial planning. Even though I didn't finish my studying for the CFP exam, but I was life insurance and

securities licensed too. So I sold. Everything from annuities [00:08:00] to like mutual funds of all sorts, things like that.

The traditional type of plans, like IRAs, Roth IRAs, various insurances or annuities, that kind of thing.

Naseema: Okay. And you found that with the products that you were selling, your clients can really truly become financially free.

Chris Miles: Yeah. Like the thing that kind of made the connection for me was. Just the year prior to this whole experience with my dad I started to inherit other people's clients. cause

naturally it's a very high turnover industry. Most people never make it two years in that industry. And I was in the fourth year.

And one of the leaders in my office said, Hey, listen we've got all these extra clients from like the nineties, right? These people that pretty much bought from advisors in the nineties and these advisors aren't around anymore. Either they died. Most won't quit, by this point.

And so I started

inheriting these clients that some of them had accounts from like the eighties and the nineties and so on. And I remember calling them up and what shocked me, and remember, this is like 2004, 2005. The [00:09:00] stock market was starting to come back starting 2003, but man, these people were so angry.

These people hated the advisors that a lot of them would even say, I hope that advisor's in jail because that man, I got screwed because I bought this in 1999, which is at the height of the stock market. And of course, after in 2000 is when it had Y2K crash, right? So they're all just

bitter, blaming their advisor for all the crap that happened.

And I'm like, wow, this is bad. And that's when I realized that even these people had decades of financial advisors helping them out. They weren't any better off than my dad was. And I started to see the pattern repeating over and over and over. And I've seen it over the years too. Obviously I've been in this industry for almost 23 years now.

And I'll tell you, I'm like, there's so many people that are in this same exact situation. It wasn't because they didn't save enough. That's the big mistake. Everybody keeps saying, a financial advisor is like if they just save more money, people are saving up. I hate, I hate the trolls online that tell me I'm debt free and I max out my 401k every year, and [00:10:00] I've got over a million dollars in my account.

What do you say? People don't become a millionaire. I was like, listen, the evidence says by fidelity themselves, you'll look up fidelity stats, end of 2023. You'll find out that a 45 million accounts that they have only 810, 000 have at least a million dollars in them. That's 1. 8%. So you're doing the math.

If, and we think of this way to financial advisors, the ones that are up to speed, they don't go by the 4 percent rule. They used to be all the people say, Oh, 4 percent rule, you can fire, financially independent, retire early. The 4 percent rule was debunked years ago. Even 20 years ago, we were questioning the 4 percent rule because it was made up in 1976.

By the time that the gold was taking off the U. S. standard, or the U. S. was taking off the gold standard, right? So as a result, like we have higher inflation now, people are living longer, 4 percent rule is unrealistic, 3 percent rule is the new rule that they have, right? Think about it. You have a million dollars.

You live on three percent a year. That's thirty thousand dollars a year You're living you're a freaking broke millionaire living [00:11:00] below the poverty line, that's ridiculous And that's why transamerica also did a study last year that took the same people that had at least a million dollars And surveyed them about their confidence in retirement 35 percent said they think it will take a miracle to be able to retire.

So think about that. People that actually you've got there. And this guy of course was coming from a nice judgmental, holier than thou standpoint, but he's Oh it's easy for me. Anybody can do it. That's bull. Okay. Cause you know, you guys are hardworking, like your moms that are like trying to balance life and try to teach your kids good values and still be able to figure out how to take care of them.

Now. And also possibly even have some room for yourself in the future too, right? And so for someone to come out and say, Oh, just save more money. Oh, just save longer. Now there's even money managers saying the new retirement age should be age 70, not 65. Like they keep pushing back the number, not taking any personal responsibility themselves because they can't control the markets.

They're just as much idiots as we are when it comes to the markets. They don't know what [00:12:00] they're doing. The markets are purely guesswork, but that's what we're all told to invest in. We're all told that that's the answer. And the truth is that it's been proven not to work. So why do we keep doing it?

Naseema: mean, you're preaching here and I am hearing it all and I'm definitely one of those buyer people that are just invest a lot, know, simple investing and then early retirement. however, you're saying, that philosophy has been debunked. So I'm very interested in hearing like what alternatives you've found, to make sure people can retire comfortably.

You were able to retire in your twenties. We want to hear how you did that before we talk about how you went broke. We want to talk about what financial strategies you use to do that. And then how you bounce back from being broke. And we want to talk about how you were broke, but how you bounce back from that.

But let's focus on my. From switching your philosophy from what you were teaching traditionally through your advisory practice, what changed, what you did, how did you retire [00:13:00] early? And then we'll talk about how you went broke. Yeah.

Chris Miles: right? Because it's true. It's I love passive income. And, and that's the thing that changed. Cause think about financial advising always taught me is about this accumulation mindset. The whole compounding interest of the eighth wonder of the world that Einstein supposedly said, which he never did, but they all claim it like he did, but they'll say, compound your money forever, set it and forget it, let it sit there forever, spend nothing, save everything, save it there forever.

And hopefully someday you'll have something by living on as little as possible. That's what I was always teaching. I remember I mentioned trying to save up a couple million dollars. My goal in the early two thousands. Was to save up about 2 million and live on 3 percent or 60, 000 a year.

Cause 23 years ago, 5, 000 a month sounded awesome, right? It was like the lifestyle of at least 000 a month today. I thought if I had at least, in the equivalent, today's dollars, 10 a month, I'd be set. I'd be [00:14:00] comfortable for life. That was back then, now, if I want to live on more than double that, I would have

to save up at least 4 million by the time I got to my forties here, and that was my goal was just to do that.

What shocked me and what

changed my perspective was I finally figured out that it has nothing to do with how much money you save. It's about what kind of income are you getting? It's always about the income. The income is the thing that really makes you be able to pay your bills each and every month.

It's the income that you have

coming in predictably, stably, always coming in, that makes the difference. And so even early in my journey, before I made a single dime, anything in the passive income space, right by the time I quit being a financial advisor, I remember I had lunch with a couple of friends and these friends were financially better off than I was just a year or two prior.

And and so I go out to lunch and one of them jokes with me, he's Chris, you bought the Mercedes yet. Ha ha. Just being a, dumb butthead, and I was like, no, did I tell you I was gonna get the Mercedes because I'm actually gonna be buying that this year?

And the [00:15:00] smile, the little smirky smile just swiped off his face. He's oh, really? Oh. Oh, that's cool. He was just, 'cause he just figured, oh, he's broke, another broke financial advisor. I was like, no, I'm gonna buy a Mercedes this year. And the thing is they're like how much money have you made?

I said, none, but I'm super excited. I'm learning a lot. And cause I've already been a few months into that journey by this point, but I hadn't seen the money yet, but eventually I started getting to things like realize, like I could do rentals and I start with my own starter home is the rental that I created.

But I even realized that the, one of the biggest epiphanies to me was I could become like the bank. I could lend money to other real estate investors and get paid a return each and every month on that money. And I never knew about this hard money lending, for example, right? Or just doing any kind of money lending for that matter.

I didn't know that was even a thing. I didn't know you could partner with people in deals and go into some. I thought you had to have all the cash to buy that apartment building. I didn't know I could do what's called a syndication, pull my money with other investors. And then be able to have an ownership in that thing.

And it didn't have to be [00:16:00] apartment building. It could be self storage units, which don't have any tenants inside of it. You could be doing things like oil and gas investments. You can be doing things like even in franchise space, you can have a car wash. People can go into a car wash and get paid money off that.

And there was all this, or what we refer to as alternative investments, right? But what they really should be calling it is called main street investing. You know how we have wall street investing with stocks and bonds and mutual funds on stuff. Wall street investing has only been around really the last couple hundred years, but main street investing, investing in businesses, investing in real estate, that's been around for thousands of years yet everybody makes that the alternative investment, right?

That's the other stuff you do. They made it with all this marketing, a billion dollars in marketing. I learned, that I realized as being a financial advisor, I was the one being trained by these bigger companies to sell you that wall street was the only way to make money. And it was the best way to do it.

But yet they've yet to deliver on that promise, and but on the real estate side, there's tens of millions of people like myself that make millions of dollars [00:17:00] doing this kind of thing, that make good money, even not even millions dollars, it could be hundreds of thousands of dollars a year.

It could be tens of thousands a year, way more than the average retiree that says, yay, I've got 300, 000 in my 401k. Now what? Oh, you can live on 9,000 a year. How does that sound? , 9,000, less than 10,000 a year doesn't sound great. And that's what changed for me. It was, oh, it's not about the accumulation of this money, it's about the acceleration, the income that comes from this.

And so when I realized I could lend my money, if I have a hundred thousand dollars, I make 1% a month, that's a thousand a month versus. 250 a month in a stock plan. And I get taxed on it, cause it's in my 401k or IRAs, and and that's where I started to have hope.

That's when I started to realize wait a minute. This could be something amazing. And so that's what really happened for me. Yeah, I had a rental, I started lending out my money and that's all I really knew how to do at the time. I started to learn more as time went on, but that's how I got my start was just doing that.

Naseema: And what were you lending money from? Did you like a life insurance policy that you were drawing down from? Or [00:18:00] did you just have that money saved that you were lending off of?

Chris Miles: Yeah. Just from like savings accounts and stuff, checking savings, just money had

sitting there that I was trying to grow or, and I did have money like in life insurance. I actually canceled some of my life insurance policies I had because there were crappy ones that I realized that were all market driven, stock market driven type of life insurance.

So I took it out of those and I started using that to make income, and I do have

insurance now, like I use different types of insurance strategies instead of the one I used to teach as a financial advisor. But yeah, I just figured out where can I get cash and there's even times I'm like, Hey guys here's a way you can make money too.

Like I was even like pulling my money with other guys just so I could make more, things like that. So it was really just starting with using my own cash, money that was trying to save and grow when I was doing stock coaching and mortgages and things like that, and just doing it that way.

And that's the other thing too, the other way I made income in that time was actually even just business, because, I mentioned I was a mortgage broker. I remember one of my friends who was in real estate investing, he asked me, he's do you like doing [00:19:00] mortgages? I said I like teaching people and help them give them the option of showing them the, Hey, you could cash out equity from your home to invest it.

And that's one thing I did too. I was able to sell off one of my house to an investor at full appraisal, get the cash out and then I can invest it. I was like, I was loving to show people, Hey, you can do a cash out refinance, for example, and get your money out of equity and then use that to

invest. And those people would say, cool, how do we start the mortgage process? And the thing that I hated the most was the mortgage process, the paperwork. What I do I remember that friend said if you don't like doing the paperwork, find somebody who does, and I said, come on, who loves doing paperwork, what kind of nerd out there loves it, he's trust me.

There are nerds that like doing paperwork.

That may not even like talking to the clients, and so I went to my broker, I said, Hey, who fits this description in our company, he says, Oh, this guy, Clark, talk to him because if you have a name, Clark, you're obviously going to be a nerd.

Right? And so I went to Clark, I said, Clark, listen. I know I'm so [00:20:00] mean, but the Clark's is a great guy. He's a nice guy. But I said, Clark, I said, listen, if I send you my business, like I send you people to do a mortgage and they already want to do it, you don't have to sell them, just help them do it.

Will you pay me 50%? And he said, yes. I said that's cool. Great. Let's do it. So I would teach people for half an hour to an hour, send them on to Clark a month or so later, I got in the check in the mail for a thousand or 2000 bucks, and I thought, my goodness, how easy was that? Because. I would try to do it all myself, right?

I was, cause I didn't want to share anything with people. I was in that scarcity world. Like I got to take every dollar I can help provide for my family. Cause at that time I had a couple of young kids, my wife wasn't working at that time, or anything like that. And so I, it was all on me.

The pressure was on me, but when I realized, wait, I can share in this wealth with other people. And in fact, I could probably make more money with less time. If I do work with people in their strengths and I work in my own strengths. It became a huge epiphany that I didn't have to work more hours. In fact, I worked less hours, but made more money [00:21:00] because I wasn't doing all these things that I hated.

Naseema: Yeah, so at that time you were doing the mortgage lending piece, the cash out refinancing, you were, doing hard money lending with your own money, which I was going to ask, it's pretty scary. So how did you secure those contracts to make sure that people paid you back?

Chris Miles: I wasn't the best person doing due diligence. And that was part of the problem, especially back then. Cause I'll tell you in 2006. I was doing all this, right? Everything was amazing in real estate. This is like 2021, but it was 2006.

And I remember, they were paying sometimes like two, 3 percent a month on my money.

It was ridiculous how much they would pay you.

And eventually when 2007 hit, it didn't work anymore, right? By the time it got to 2007, then all of a sudden the real estate game started to change, banks stopped lending money. So people can buy these properties as easily.

Someone would try to turn around like these investors would sell it to people quickly because there used to be 0 percent down payment type of mortgages. You can get, if you [00:22:00] had good enough credit 2007 banks started to realize that they're about to go under that was going away. And I also made the mistake too, because at that time I bought a new house, I bought my little big mansion.

Naseema: At the top of the market.

Chris Miles: the next thing I

know

I'm, I'm, I'm shoving all the money in equity in the house.

Yeah,

I was being risky with my money cause I was shoving that money in the house, like building equity thinking I'm a mortgage broker. If I ever need equity, just do a cash out refinance.

So why don't I be like Dave Ramsey and pay my mortgage down and then just refinance later if I ever need the money.

Bad mistake. Everybody tells you it's smart to pay off your mortgage. It's not until it's paid off. It's not smart, right? Once you're when you're in the process of paying it off, that's the riskiest time because all your money is going out of your hands into the bank's hands. And the only way you can get it back is if they give you permission to get your money back, even though it was your money, it's no longer your money when you put it in their hands.

And so I made the big mistake of throwing all the equity in my house. I had 150, 000 of equity that I watched it disappear in 2008. [00:23:00] And in fact, by 2009, because I went from, I'd stopped like some of my income streams I had stopped because I started a new business in 2007 with some partners.

In fact, a guy, if you ever seen a book called killing sacred cows, I actually started a business with that guy and our business was going broke because even though that book came out and became a New York times bestseller, nobody gave a crap. So it didn't mean that new clients came in right away with your book.

And so we were going bankrupt as a company. My own personal financial situation was getting tight. And even though I had some cash reserves, they were gone because I was in the hole about 16, 000 a month that was short every single month.

And that's where between that and my real estate values tanking.

I think I went from like millionaire to upside down millionaire, because now I went from having a million dollars plus of assets, all of a sudden now having a negative net worth, more like a negative half million, but I had like over a million dollars of total debt. And here's the crazy thing.

Cause people will always come back and say Chris, if you were just debt free, you would have been this problem. [00:24:00] No, it wouldn't have been as hurtful, but guess what? Even debt free, even getting rid of all those payments, I was still in the hole about five or 6, 000 a month. And it wasn't about that.

It was about, again, that income, that cashflow, especially with a business that we had that was going under, we weren't bringing home paychecks. That's a stressful thing. And so yeah, like that was a really, really tough time. Collector calls every single day, multiple times a day.

My friends stopped calling, but those collectors would never stop calling. That was happening all the time. I remember my wife at that time, she's now my ex wife, but my wife at the time, is we were about to have her. Fourth child was saying, Hey, maybe I should just move in with my sister until you figure your stuff out.

Let me move out with the family. I said that's the worst thing you can do, cause that's already feel like a bum. We're already on welfare at this point. Like I was the guy that was supposed to be like this millionaire that now was on welfare. Which is why in 2007, I stopped teaching people how to get out of the rat race because I was back in it.

And,

and that was a fun, horrible time, right? It was fun looking back, but I would never ever want to do it again. [00:25:00] I'd never want to repeat that kind of process because it was about two years of hell, right? It was really hard. And I even tried to get a part time job as a paper route.

Doing a paper route, I couldn't get a call back on the paper route. How unemployable can you be when you can get hired as a paper boy as an adult, I was trying everything, this and that, and finally I started to teach people what I was doing at the time, which was how to find money.

And I think a lot of you guys can relate to

this is that you're like, okay, I have this money coming in, but where's it all going. And that was the big thing I started to hear people at that time during the was Chris, we'd love to hire you. But we just don't have the money and I'm in the back of my mind, I wouldn't say this verbally because that would be like business suicide, but in the back of my mind, I'm thinking this person is better off financially than I am. And so I came back and I'd say, listen, I know you can't say you can't afford me, but if I can help you find the money to pay me. Will you pay me? And they said, yes. I said, great. Here's some

creative ways [00:26:00] to find that and free up money in your situation, right? Here's where you can free up a few hundred bucks a month here, here, and here's where you free up some money on taxes and do this and this.

And they're like, oh, this is cool. Thanks. Yeah, I'll pay you. And we actually in 2009, after I foreclosed on my house, we had to move out with the week after my fourth child was born. It was a real rough time with postpartum and trying to move out at the same time.

But as we're doing that, I was just trying to get lean, and get out of that situation.

And so I did, and eventually it caught on. Eventually we got to the right people that we helped. I remember there's, we got into the chiropractic and dental industries, and one of these chiropractors was a coach of chiropractors. And we found out we could save him 50, 000 a year. That's 5 0, 50, 000 a year in taxes.

The guy literally bawled on the phone either because one, because he was so happy or two, because he was so sad because he probably overpaid 50 grand a year for many, many years and just found out. I'm not sure which it was, but.

Naseema: [00:27:00] right,

Chris Miles: he was happy. Now he was up 50, 000 a year. Right. And so we started, it started to catch on among those communities.

And we went from almost bankrupt to 5 million in 2010 in our company and

exploded as a result of that. And that helped me personally, because now I was able to help dig out of my own debt hole. I found creative ways to pay off debt that I even created this strategy called the cashflow index that now I started to see people are teaching out there on the web, which is weird, It was like I didn't think it would catch on like that.

And now there's other people I can see catching on as one of those financial strategies, along with like debt snowball or debt avalanche. And now they have cashflow index, which the very thing I created in 2008, when I was broke, trying to get out of my own situation, and teach my own clients how to do it too.

So just that kind of stuff really helped dig me out of the hole so that by the next time I did it, I paid off all the debt and everything else was end of 2016. Now I started to invest for passive income smarter this time around, making better decisions on how to find the right people, reputable people to put my money with that I was able to dig out of that [00:28:00] hole.

Be financially independent by the end of 2016 for the second time, by the time I was 39 years old.

Naseema: I love that. a couple of things that I want to dive into, first of all, it was like the perfect storm, right? you were in this space heavily into real estate at the time where the market totally crashed, then you had then bought your house at the top of the market at that time. I'm not sure what kind of mortgage you have, but that's when those mortgages were like insane.

And so you found yourself like at a place where you say you went from a millionaire to a negative millionaire, negative net worth millionaire. And I understand that totally. But I want you to walk of walk us through like this cash flow index that helped you get out of Like, what does that look like?

What is finding money not as an organization, but as an individual look like, like, walk us through that a little bit, because a lot of us can benefit from learning those techniques.

Chris Miles: Yeah. Money's kinda like air. You never really start to count it until you start to run out of it. And and that's what happened with [00:29:00] me is, I was realizing I hadn't been tracking my money at all. So the first thing I always recommend clients do that I had to start doing was. Get to know the truth.

If you want to get to point Z, wherever Z is, you have to know point A. And so I started tracking my

money, and, I used to use mint mints, no longer around or not a good version of it. Now it's like Monarch money or rocket money you can use instead. But I was tracking my money every week.

I was trying to figure out what am I actually really spending every month? And what am I actually making every month? Because sometimes you think, Oh, I make X amount of dollars, but what does that really look like after you pay taxes? Or what does that really look like? By the time it comes in, what is it I'm really spending money on?

See, when people tell you to make budgets, I think that's dumb. Budget is like a step two thing to do. Maybe step three, the first thing you got to know how much you're actually spending before you make a budget. Cause. If you don't know how much you're spending, you try to make a budget blindly and then end up breaking that budget because you underestimated it, then you're going to get all depressed and you're gonna say, Oh, I can't keep a budget.

It doesn't [00:30:00] work. And you get all discouraged. No, you just didn't know how much you were spending in the first place. You got to track it for at least, I'd say at least three, six, maybe even 12 months through a whole year to really get an accurate

measure

of what you're spending. But then start to make, reduce some costs.

Don't live on rice and beans. Like some people say, you don't have to be cheap. You don't have to live like you're broken and eat the worst foods that makes, it gives you like leaky gut, irritable bowel syndrome or anything like that, because you're in such poor health, you can actually still eat your organic and do this.

But that's the thing is you just gotta be really wise with how you're spending your money. If it's an expense that really isn't making your life any better, get rid of it. As if it's essential and necessary, use it, those kinds of things, but don't get caught up in that.

So really start tracking your money. And I'll tell you, I've had so many people, like I had this one woman who came to me that she's yeah, I make a quarter million a year at Silicon Valley. But I'm paycheck to paycheck. I don't know where it's all going. So I finally got her to start doing it. It took about a month for her to finally start to track the numbers and she [00:31:00] finally took the time to do it.

And then what we found out, she was spending 5, 600 a month eating out, just eating out not even

groceries. Groceries over a thousand a month.

Eating out was 5, 600 a month. Crazy. And so I told her, I said, why don't we just scale this back to only a thousand bucks a month, which is still for most of us, a thousand bucks a month is pretty good eating out budget.

I make way more money than her and thousand a month is I spent way too much this month eating out. But we got her to scale back. And so we did that. And then she even scaled back a little bit on the grocery side because she had, one of her kids, boyfriends wanted to be a chef and he kept buying all this crappy food that she's okay, forget it.

Let's get this reigned in. In total, we saved him like 70, 000 that year with between that and other strategies, which at a quarter million is a massive chunk of change that you get back in your life, So that was one way, so just trying to track your money, just be aware of it and just being aware of it where you'll find more money.

I had one person just. Become aware. She was too busy as an entrepreneur, being a, doing her thing that she said, I couldn't track my [00:32:00] money. I just not, I don't have enough time. Once she did it, we found 1800 bucks a month back in her life. That's over 20 grand a year. Again, not cutting down your lifestyle to where you just live like a popper out of a cardboard box, but you can actually enjoy your life still, but just be a wiser steward.

So I started doing that. I mentioned investing or debt, I couldn't figure out which one to do. That's why I created the cashflow index. Here's one easy strategy you can use. The cashflow index is simply this. You take the balance of the loan and you divide it by the minimum monthly payment and you'll get the cashflow index.

So for example, say you have two 10, 000 loans. One 10, 000 loan is a 500 a month car payment at a low interest rate. The other one is a 10, 000 credit card at 200 a month. Now, if you talk to anybody like the Dave Ramsey's or any of the conventional financial people, they'll tell you, get rid of that high interest credit card debt, right?

Every single time. But here's the thing is that, [00:33:00] When it comes to stress, is it just the balance of the loan or is it the monthly payment that makes you hate it? It's always

the monthly

payment,

Naseema: payment.

Chris Miles: Exactly.

Exactly. And so what I tell people is instead of focusing on the interest rate, in fact, ignore the interest rate, focus on that loan to payment ratio, which is that cashflow index.

So the lower the index, the better. So if you take that 10, 000 divide by 500 payment on the car loan, it's a 20, 10, 000 divide by 200 on a credit card is a 50 pay off the lowest one first, because if all you have is 10, 000 bucks. Get rid of that 500 a month payment. You can always take that 500, apply it to a 200 a month credit card and pay it off within a year anyways, which really won't charge you that much in interest.

It's pretty shocking how little an interest you get charged if you just do it that way. But people always convince you, Oh, you'll pay millions of dollars in interest, not credit card. No, you won't. If you never pay it off, maybe, but not when you're just paying off an order. And and so that's why I tell people like pay off that 500 a month [00:34:00] credit card because.

Creating more cashflow creates more options. If something were to go wrong that month, this is

what happens in a debt pay down plan. Everybody tries to teach you it from this perfect world, like nothing bad is ever going to happen in your life. No unexpected expenses are going to come up. No, nothing's going to happen to your job.

It'll be perfect forever. They always try to put your life in a calculator. But your life is never meant to be put in a calculator. You have real life problems, right? You have unexpected twists and turns through life like I did. And so that's why you go for that payment because getting rid of that 500 a month payment is somewhere to go wrong where maybe you don't get paid as much that month.

You're a little safer if something goes wrong where you also have this unexpected expense because the car breaks down, you need to come out of pocket a couple grand, you have a smaller payment. You're only paying 200 a month, not 500 a month because you got rid of that 500 a month car loan, right?

That's the difference. So the cash flow index, you pay off the lowest index first, and then you roll up to the next one, then the next one, then the next one. Especially if it's below a 40, I aggressively try to pay those off. Just [00:35:00] last week I tested this with a client who I took on almost like almost a favor in that sense, because she had been friends with me for 10 years.

And so she didn't have any money left over. She cashed out money from her house, but unfortunately it had to go pay off certain loans, but she still had several credit cards and loans left over. So I said, tell you what, let's work out a deal. I'm going to help you find this money, essentially find money to pay me.

And and so that's what we did first meeting. She's I got a 6, 000 bonus coming from one of my jobs. I'm thinking about paying off these two credit cards. And I said, you're close, but look at the index here. If we pay off this one, this one, hey, down this one. Oh, and by the way, you've got a 401k.

What if we can actually get a 401k loan, even though I'm not a big fan of those usually, but in her case, the loans were so bad. I was like, get a 401k loan. You get a few

thousand, 3, 000 extra dollars. With this 9, 000 bucks, we can free up to 600 a month. I was like, and by the way, stop

funding your 401k. If you're negative cashflow every month, you have to [00:36:00] go into a credit card. That 401k will never beat that rate of return of that credit card. Stop funding the 401k right now. You can always go back to it later if you want to, but instead take that extra a hundred dollars a month from your 401k you've been put away.

Use that to pay off these credit cards. And so with 9, 000 bucks,

we're able to free up 600 a month. And then on top of that, as we get to paying it down, we improve her credit score, which then will allow us to actually do a cash out refinance of her mortgage, which will help free up a lot more money per month.

And so it's almost very strategic. We can

probably in the next year, free up about 2, 000 a month for her. With very little money out of pocket, right? That's the thing that

makes me excited is that it doesn't always require you having a lot of money, but it does require to be somewhat resourceful with whatever assets you do have available.

And that's the big thing I teach is get your money out of prison, right? It's your money. Stop locking your money away into equity in your house. Pay it down like normal, like a 30 year mortgage, but don't pay extra on top of that mortgage thinking that someday you might become free because. Those people [00:37:00] that become debt free and then save up a lot of money.

Mutual funds still come back to me later saying it didn't work. I don't have any passive income. How do I actually stop working? I'm stuck in this job and I have this multimillion dollar net worth. What do I do? Easy. Get your money out of prison. Stop locking away into your house where it makes 0 percent returns.

Stop putting into that 401k that even though they give you a match, doesn't really give you a 100 percent rate of return. There's a whole other conversation on that, but stop locking your money away in those things and get your money liquid. Because if you get lean, like I talked about earlier, then you get liquid.

Get that money in your possession. Then you can get it out to produce income for you. And that is where you can create freedom decades faster than you would do in the traditional stuff.

Naseema: But what I'm hearing is, even though people are, paying stuff.

off, they're reducing their monthly payments, but it's of just extending the amount of debt that they have, a little bit further. but what is the ultimate goal in that is the ultimate goal to free up money so that you can produce passive income that's going to then pay off those [00:38:00] debts.

And then is the goal, just to. Continuously leverage debt through the rest of your life to create passive income, or is it to become debt free? and then have all these passive income strengths that's going to support you and bringing in your monthly income and all of those things so that you'll be free to do what you want.

Like you'll have the money to spend. You'll have everything paid off. and you can comfortably be retired. is that what I'm hearing?

 Yeah. It's funny that you mentioned about the debt payoff because a lot of people think, Oh, if you do it that way, then you're not going to pay off as fast. The whole reason I found that method in the first place, I was trying some things out because I used to have this old, Excel calculator from when I was a financial advisor.

Chris Miles: They used to put in all of his debts and see what

order to pay them off in. And I was shocked that sometimes the high interest credit card would be put towards the bottom and they would have me pay off

other things first. Yeah. And I thought that's interesting. Why would I do that? That seems ridiculous.

It seems counterintuitive. And that's the thing, like when compared this method with cashflow index to like the, debt snowball, where you

take [00:39:00] the lowest balance and then

pay up that next one or debt avalanche, where you take the highest interest rate, or whatever it is, vice versa, when it might be with the other way around, but either way, like all those

methods, sometimes actually my method will come out faster. A lot of times. And that's what surprises people so much is they're like, Oh. Not only was it, did it feel better because I felt a little bit safer, but it actually gets me out of debt just as fast, if not faster than those other methods. And that's the secret weapon there.

Naseema: hmm. That's interesting. Okay. You got me. You got me. talk about the streams of passive income that you help people invest in.

Chris Miles: Yeah. So now if people have, I've recommended if you have at least a hundred thousand, 150, 000 or so to invest, now you start wanting to look at, okay, now what can I do with this money? How can I get it working harder for me? So I have to

work so hard for it. And I like to look for things that are more backed by real assets, like real estate, right?

Because the

one problem is most people will try to gamble their money. You never ever want to gamble your money in the stock market in the sense, especially when it's bad as such an all [00:40:00] time high. Okay. It's a bad time to get in the stock market right now. Now, if you did this in 2009, way better time to get the stock market, but now it's so overinflated with, especially post 2020, that the market is just on the verge of just busting, like it's a bubble.

It's about the burst. And the way you know that is because nobody's talking about a bubble bursting in the stock market. They're all saying, Oh, it's just going up. It's great. They're complacent. The worst place to be when you invest is in the place where everybody says it's good. It's safe. That's the time that, it should be out of that thing.

All right. So I'm not giving investment advice here. I'm just saying when it comes to timing, if everybody says, yeah, everybody should be buying real estate. If everybody says that that's the time to be selling your real estate. If everybody's saying, Hey, everybody should be throwing their money in the stock market and the mutual funds are in 401ks, that's usually the time that that's going to reverse, then people are going to start hating it.

When they all start hating on the stock market. That's the time when you get back in, right? But that's not that time right now. And that's for sure. So I tell people like, let's do things that are backed by real assets, like real estate, this could be getting a [00:41:00] rental, but you'd have a rental across the country.

For example, I live in the Western half of the United States, just like you do. And there's nothing that looks good in the Western half of the United States as a rental. If I look out to Oklahoma, or I'm looking out to North Carolina or Alabama or places like that, rentals are much more affordable and they still have great rent.

I can make a lot more money on those than I ever will out here in the western half of the United States. And I can have somebody else property manage it for me so I don't have to be there babysitting it. That's what they call turnkey real estate. Great, great method to do that with. And that's where I started reinvesting again, the second time to be able to make money faster.

So that's one way you can lend your money. And like I said, you want to find reputable people and you can do that either one by creating your own network or two, you borrow somebody else's what my clients do, they borrow my network and stuff like that. Syndications I mentioned where you pull your money with other investors, apartment buildings.

Self storage usually going to have to have at least a 50, 000 to 100, 000 to do that kind of thing. But [00:42:00] plenty of ways to do that. There's even debt funds. Debt is one of the best things to invest in, in real estate because, people that are like the creditors, right? The ones that loan you the money.

Those people get paid back first before equity. Just if you have a mortgage, right? When you sell off your house, the bank gets paid back first and you get whatever's left over. So when I invest, I become like the bank. I'm like, can I lend money to an investor? I have to be paid back before they get paid back.

That's my priority. I want to make sure that I get my money safe and it comes back to me first. There's a lot of debt funds, or even individual deals I can go into. That can do that, I'm even in partnerships like raw land, where I have guys that are really good at buying, selling raw land, buy it wholesale, sell it retail.

And I'm, I know that 450, 000 over the last three years that we've taken and reinvested is kicking off over 11, 000 a month for me, things like that. So there's just so many ways you can make good, good money. But so much less out of pocket than you would. If you just try to throw it in the stock market.

Naseema: [00:43:00] Yeah. So how do you work with people and how can people get in contact with you if they wanna work with you?

Chris Miles: Yeah. Best thing you do is just look up money ripples. It could be at money ripples on social media, money ripples. com. We've had the money ripples podcast where we teach a lot about a lot of this stuff as well. So you're already following podcasts. Feel free to follow the money ripples podcast.

Naseema: I love this interview because you are happy questioning. A lot of the ways that I look at investing. I look at saving money. I look at, what it looks like to retire and. This is the reason for why I have this podcast, because I want to bring people the knowledge that I feel like, was gate kept.

And, I feel like there's so many different ways to do things and there's not just one answer. And to hear, your opinions on things, it's pretty refreshing because it gives me pause to think okay, yeah, there's other ways. there's other ways to approach this. There's not like always just a cut and dry.

And there's never a cut and dry because [00:44:00] there's life, right? There's so many variables. There's never just a cut and dry, like way to, get to financial freedom. And so I really appreciate everything that you share. And like I said, I have a lot of homework to do and thinking and, really researching this cashflow index that you have.

Like I'm so intrigued and thank you so much for opening my mind up to these different alternative or art main street investments. I'm really intrigued and I know, some light bulbs in my audience will go off as well. okay, these are some things that I might want to employ because I find that, I'm at this point where these certain things don't necessarily work for me, or they don't make me feel great.

But these things do. So I really appreciate the things that you're sharing because they are, things that we don't talk about normally. And, I'm really grateful to be exposed to these and for you to expose my audience to these things. So I appreciate you so much, Chris, like you are a fountain of knowledge and, I'm sure we'll stay [00:45:00] connected so I can learn more of these things.

But, I just want to thank you for sharing these with my audience because it has been very enlightening talking to you. I must say,

Chris Miles: Well, It's my pleasure. If it wasn't for something like this, I heard almost 20 years ago, myself, I would not be on here right now talking about this stuff, right? I probably still be on the financial advisor side of the fence, but having been on both sides, I can tell which grass is greener and it's been a lot of fun ever since, so thank you so much for allowing me to share that with you guys.

Naseema: definitely. And you guys.

check out money ripples, wherever you listen to podcast, check out their website. But again, all these things will be in the show notes. And again, Chris, thank you so much for spending some time with me today. I really appreciate you.

Chris Miles: It's been a pleasure to see my, thank you.

Naseema: You're welcome.

Hey there I’m Naseema

My dream is for everyone to know that financial independence is attainable with a little intentionality. Learn how I can help you finally break the cycle of living paycheck to paycheck.

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